State Anti-Kickback Laws

[Updated May 2020] Anti-kickback laws prohibit offering, paying, soliciting or accepting a kickback or bribe to induce or reward the referral of services payable by a government funded healthcare program. In this post we will breakdown how these laws work and discuss the many states with such laws.  We also discuss cash rewards available for information about healthcare providers who violate these laws.

The anti-kickback laws primarily relate to government funded healthcare. That means Medicare, Medicaid and Tricare (VA and military).

Presently 39 states have anti kickback laws. These apply to Medicaid. Federal law also prohibits kickbacks. The federal Anti-Kickback Statute applies to Medicare and Tricare and the federally funded portion of Medicaid in all fifty states. That is important because if you have information about kickbacks involving the Medicaid program and your state doesn’t have its own anti kickback law, you can still receive a partial reward from the feds.

Federal Anti-Kickback Statute

Congress passed the federal anti kickback law in 1972. It is a criminal law although few people are sentenced to prison for violating its provisions. Most violators are given civil fines which are assessed pursuant to the Civil Monetary Penalties Law (CMPL). That law imposes civil fines of up to $50,000 per kickback plus three times the value of the kickback.

Kickbacks rarely involve actual cash bribes. The law recognizes that anything of value can be evidence of a kickback. Common examples are expensive meals or trips, phony research grants, medical directorships that don’t require any work, discounted rent and discounted staff support.

Let’s look at two examples. Pharmaceutical company offers inducements to doctors that prescribe a high quantity of their expensive drug to Medicare patients. The inducement is to these top prescribers comes in  the form of a research grant (although the doctor is never expected to produce any meaningful research). In our second example, a hospital pays ER doctors who admit high numbers of Medicare patients a higher salary than other doctors.

In both examples it is clear that something is being offered of value (higher salary or “research grants”) in return for Medicare referrals.

Since the law was passed in 1972, Congress has created several “safe harbors” in the law. Often the determination of whether a payment or kickback violates the law requires individual analysis.

If you believe you have information on an Anti-Kickback violation, contact us. We will gladly help you determine whether you have a case and are eligible for an award.

In many industries, offering kickbacks, purchasing leads and giving gifts to referral sources is a common practice. When federal healthcare programs are involved, however, it is a crime.

The anti-kickback statute covers both providers who receive or solicit kickbacks and anyone that offers them. Frequently the one paying the kickback is a hospital. Some hospitals try to “reward” physicians that admit more patients. When those patients are Medicare or Medicaid patients, the rewards or financial benefits become illegal.

Physicians are attractive targets for illegal kickback schemes. Sometimes it is a hospital, laboratory, drug company or MRI facility looking for patients. At other times, it could be another physician such as an orthopedist or other specialist seeking referrals.

Congress outlawed kickbacks for many reasons. The Centers for Medicare and Medicaid Services say that kickbacks lead to:

• Overutilization (patients receiving more services than they need)
• Increased program costs (and therefore more taxes and patient co-pays)
• Corruption of medical decision making
• Patient steering
• Unfair competition

Medical decisions should always be based on medical necessity and the best interests of the patient. Kickbacks corrupt the decision-making process and put profits before the needs of patients.

Anti-Kickback Law and Patient “Bribes”

Sometimes illegal kickbacks can look innocent at first. For example, waiving patient co-pays is really a form of kickback. So is offering patients gas cards, gift baskets and other items of value simply for showing up for a treatment or service. We know of one clinic that offers beautician services as a way to coax patients to come to the clinic.

Patient Copay Waivers

The rules regarding patient copay waivers can be tricky. A doctor probably can’t legally waive copays for all Medicare or Medicaid patients and advertising copay waivers is clearly illegal. On a case by case basis, however, a doctor can waive copays if the patient is truly indigent and unable to pay or is in collections.

Another variation of the copay waiver scheme occurs when doctors advertise to provide discounted services to uninsured people.

Yet another law, the Beneficiary Inducement Statute, can also give rise to fines and whistleblower rewards if the wrongful conduct involves payments to Medicare and Medicaid patients.

Laboratory Kickback Schemes

One of the most common schemes are labs that pay healthcare providers to use their labs. Earlier this year three men were indicted in a kickback case tied to the now closed  Richmond-based blood testing lab, Health Diagnostic Laboratory.

Patient Recruiter Schemes

A blatant form of kickbacks violations involves “patient recruiters.” These are individuals who get paid to refer new patients. Often these schemes involve paying someone to pick up homeless, economically challenged, mentally ill and drug addicts. These “patients” are then brought in for services they don’t need. The recruiter and patients get paid in cash, booze or cigarettes.

In Santa Monica, a substance abuse clinic offered choice beach housing at no cost to alcoholics who agreed to attend a certain number of counseling sessions. In New York, patients were paid in top-of-the-line sneakers!

The worst patient recruitment scams involve individuals who offer to take addicts to “pain management centers” or phoney rehab facilities. The center gets a new patient, the addict gets drugs they certainly don’t need and the recruiter either gets paid in cash or a percentage of the addict’s pills.

These schemes are usually found in urban areas although we have seen some schemes involving pill mills and pain management clinics in rural towns.

Several states including New Jersey and Texas have made patient recruitment schemes punishable by prison.

State Anti-Kickback Laws

Any federally funded healthcare is covered by the federal Anti Kickback Statute. Since states pick up a significant portion of Medicaid funding, it is always helpful to know if the state has its own anti kickback law. 39 states do.

The state laws are often broader than the federal law. That means some activities or payments that might not be illegal under federal law could violate state law.

Like the federal law, state anti-kickback laws typically pay rewards for inside information about the kickback.

Here are is a list of state anti-kickbacks laws:

Alabama’s anti-kickback statute: Ala. Code §22-1-1(b)-(c) and §34-24-360

Alaska: Alaska Stat. Ann. §11-46.660 and §11.46.670(a)

Arizona: Ariz. Rev. Stat. §13-3713(A) and §§32-1403(A)(2), 32-1401(27)(v)

Arkansas: Ark. Code Ann §§5-55-116(6)-(7) and 20-77-902(6) and (7)

California: Cal Bus & Prof Code §§ 650, 650.1 and Cal Welf & Ins Code §14107.2,

Colorado: C.R.S.A. §§ 25.5-4-414 and 24-31-809

Connecticut: Conn. Gen. Stat. §†53a-161c,

Delaware: 31 Del. C. §1005,

District of Columbia: D.C. Code §4-802(c)-(d) and 3-1205.14(a)(14)

Florida: Fla. Stat. § 409.920(c) and (e), §456.054(2), §395.0185 and §817.505(1)

Georgia: Ga. Code §43-34-8(a)(9) and §43-1B-4(7)

Hawaii: Haw. Rev. Stat. §431:10C-308.7(b0-(c)

Idaho: Idaho Code Ann. §§41-348 and 54-1814

Illinois: 305 ILCS 5/8A-3(b) of the Illinois Public Aid Code (Vendor Fraud and Kickbacks),

Indiana: Indiana Code § 5-11-5.5 et seq.,

Iowa: Iowa Admin Code r. 441-79.2 and r. 653-q3.7

Kansas: Kan. Stat. Ann. §21-5928(a)(1)-(2)

Kentucky” Ky. Rev. Stat. §216.2950

Louisiana: La Rev Stat Ann § 438.2(A),

Maryland: Md. Code Ann. Crim. Law §8-511 and Md. Code Ann. Health & Occupations Law §14-404(a)(15)

Massachusetts: Mass. Gen. Laws Ann. Chap. 118E § 41,

Michigan: Mich. Comp. Laws Ann. § 400.604,

Minnesota: MSA § 256B.0914,

Mississippi: Miss. code Ann. §43-13-207

Missouri: Mo. Rev. Stat. §191.905

Montana: MCA § 45-6-313,

Nebraska: Ne, Rev. Stat. §28-613

Nevada: Nev. Rev. Stat. §422-560 and §616D.390

New Hampshire: N.H. Rev. Stat. §167:61-a

New Jersey: NJSA § 30:4D-17,

New Mexico: N.M. Stat. Ann §§ 30-44-7 et seq,

New York: N.Y. Soc. Serv. Law § 366-d,

North Carolina: N.C.G.S.A. § 108A-63 and §90-401

North Dakota: N.D. Cent. Code Ann. §50-24.8-11(1)

Ohio: Ohio Rev. Code §2913.40(C) § 3999.22(B) and § 4731.22(B)

Oklahoma: 56 Okla. St. Ann. § 1005 and 63 Okla. St. Ann. §1-742(A)

Oregon: Ore. Admin. R. 410-120-1400

Pennsylvania: 62 Pa. Stat. and Cons. Stat. Ann. §1407(a)(2), Title 17 §1039.3(b) and Title 35 §2163.1(b)(1)

Rhode Island: Gen. Laws 1956 § 40-8.2-9,

South Carolina: S.C. Code Ann. §44-113-60

South Dakota: S.D. Codified Laws §22-45-4(3) and § 36-430(10)

Tennessee: Tenn. Code Ann. §63-6-225(b)

Texas anti-kickback and patient recruiter statutes: Tex. Occ. Code § 102.001 and Texas Administrative Code § 371.1669

Utah: Utah Code Ann. §26-20-4

Vermont: Vt. Stat. Ann. Title 26 §1354(12)

Virginia: VA Code Ann. § 32.1-315 and §54.1-2962

Washington: RCWA 74.09.240

West Virginia: W. Va. Code §9-7-5(a)

Wisconsin: Wis. Stat. Ann. §448.08

Wyoming: Wyo. Stat. Ann. §43-4-407

Maine is the only jurisdiction without state anti-kickback laws. The cities of Chicago and New York also have laws prohibiting these practices.

Cash Whistleblower Rewards for Inside Information on Kickbacks

Many of the states with anti-kickback statutes also have whistleblower reward programs as do the feds. These so called False Claims Acts allow whistleblowers with inside information about Medicare and Medicaid fraud to collect cash whistleblower rewards. The typical reward is 15% to 30% of whatever the government collects from wrongdoers.

Because violations of state anti-kickback laws are considered healthcare fraud, whistleblowers who report are eligible for a reward.

Why should you report? Medical decisions should only be based on the best interests of the patient. Introducing money and other things of value often leads to medically necessary services and lower quality services. Healthcare providers should want what is best for their patients instead of what is best for the provider’s wallet.

How you report is critical to receiving a reward. Calling a hotline won’t earn you a reward. The only way to collect a reward is by filing a sealed complaint in court. That may sound scary but we do the investigation, file the complaint and even prosecute the complaint in the name of the government if the government declines to intervene.

To learn more, visit our anti-kickback whistleblower information page. Although that page is geared to Medicare fraud, there is typically no difference between Medicare and Medicaid fraud schemes. In fact, we usually find that a healthcare provider defrauding one program is also defrauding the other.

Ready to see if you have a case? Contact us online, by email or by phone 202-800-9791. All inquiries are protected by the attorney – client privilege and kept strictly confidential). Cases are handled on a contingency fee basis meaning no fee unless we win and collect money for you.