Two of the most important fraud laws that regulate doctors and healthcare providers are the Anti-Kickback Statute and the Physician Self Referral Law (Stark Law). These laws prohibit physician self dealing and kickbacks in return for referrals. Violations of these laws can result in huge whistleblower awards and sometimes prison for offenders.
Anti Kickback Statute
The anti-kickback statute is a 1972 criminal law that prohibits the payment of anything of value made to induce (or reward) the referral of federal health care program business. Federal healthcare programs include Medicare, Medicaid and VA healthcare.
Kickbacks were once limited to cash but today can be found in many forms. A kickback can include anything of value including discounted rent, meals, use of medical facilities at below market prices, vacations, payments for phony research grants or medical directorships and free staff support.
There are several exceptions to the Anti-Kickback Statute that offer safe harbors in certain limited cases. These rules are quite complex and are often very fact specific. If you believe you have information on an Anti-Kickback violation, call 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 are 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 the folks that offer them. Frequently the one paying the kickback is a hospital. Some hospitals try to “reward” physicians that admit more patients.
Few people go to prison for anti-kickback statute violations. Instead, providers are often assessed monetary fines under 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.
Anti kickback statute violations are also commonly punished under the federal False Claims Act. That law pays awards to whistleblowers reporting these kickback arrangements. More on the awards below.
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:
- Increased program costs
- 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. They should never be based on who can pay the highest bribe or kickback.
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.
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 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.
Patient Recruiter Schemes
A new form of Anti-Kickback Statute violations involves “patient recruiters.” These are usually individuals who drive around inner cities in vans looking to pick up homeless, economically challenged, mentally ill and drug addicts.
They are typically offered cash, booze or cigarettes in return for going to certain clinics and receiving medical services they probably don’t need.
In Brooklyn, patient recruiters had joined forces and operated a shoe store! Depending on the price point of the shoes, a patient would have to attend so many services to “earn” a pair of shoes. 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.
The worst patient recruitment scams involve individuals who offer to take addicts to “pain management centers.” The center gets a new patient, the addict gets drugs they certainly don’t need and the recruiter either gets paid in cash or “helps” patients fill their prescriptions in return for a certain percentage of their pills.
Patient recruiter schemes are common in Detroit, Dearborn, New Orleans, Chicago, New York City and Houston.
Physician Self-Referral Law “Stark Law” [42 U.S.C. § 1395nn]
The Physician Self-Referral Law, also known as the Stark law, prohibits physicians from referring patients to “designated health services” with which the physician or an immediate family member has a financial relationship.
Like the anti-kickback law, the referral arrangements become illegal when Medicare or Medicaid dollars are involved. Many states have their own state laws that prohibit these arrangements when private insurance is involved.
The Stark law does not prevent a physician from owning or investing in a healthcare service provider. But if a physician chooses to invest or own certain types of healthcare services, he or she can’t send patients there.
The three most common Stark law violations center on physician owned laboratories, home healthcare services and radiology / imaging services (MRI). Other “designated health services” under the law include:
- physical therapy,
- occupational therapy;
- radiation therapy services;
- durable medical equipment (DME) and supplies;
- prosthetics, orthotics, and prosthetic devices and supplies;
- outpatient prescription drugs; and
- inpatient and outpatient hospital services.
Like violations of the Anti Kickback Statute, a violation of the Stark Law can trigger substantial fines and penalties and can also trigger cash whistleblower awards.
Whistleblower Awards for Information about Kickbacks and Stark Law Violations
The False Claims Act allows whistleblowers with inside information about kickbacks, improper self referrals and other illegal conduct to obtain a cash award of up to 30% of whatever the government collects from the wrongdoer. Because the law includes triple damages and penalties of up to $20,000 per violation, awards can be huge.
In 2014, a Baton Rouge home healthcare company, Amedisys, paid a $150 million penalty to settle a whistleblower case alleging illegal kickbacks. The whistleblower in that case received an award of $26,000,000.00!
Also that year, Omnicare paid $124 million for allegedly offering nursing homes illegal incentives in return for being the pharmacy of choice for nursing home patients.
In 2016, a medical device company, Olympus, paid a record $623 million in criminal and civil fines for illegal kickbacks. The whistleblower in that suit received $51 million.
Pharmaceutical kickback cases have sometimes exceeded $1 billion with even higher whistleblower awards.
Today, illegal kickbacks are one of the hottest areas in False Claims Act and whistleblower world.
Interested in Receiving Your Own Whistleblower Award or Learning More?
If you are aware of kickbacks or illegal self-referral schemes, give us a call. We offer a free and no obligation evaluation or your case. All inquiries are protected by the attorney – client privilege and kept confidential.
At MahanyLaw, we work with whistleblowers to stop fraud, protect our whistleblower clients from retaliation and help them obtain the maximum possible awards. Our services are offered on a contingency basis, meaning there are no legal fees or costs unless you receive an award. Our team of experienced prosecutors can handle the case from investigation through trial.
For more information, please use our reward eligibility form or contact us at 414-258-2375