Anti Kickback Statute

Anti-Kickback Statute (AKS)


Overview of the Anti-Kickback Statute (AKS), 42 U.S.C1320a7b(b)

The Anti-Kickback Statute (AKS), 42 U.S.C1320a7b(b), makes it unlawful to “knowingly and willfully offer or pay any remuneration (including any kickback, bribe, or rebate) to any person to induce such person to purchase  any good for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C1320a7b(b)(2)

The Department of Health and Human Services (HHS) may exclude from participation in federal health care programs “[a]ny individual or entity that [it] determines has committed an act” in violation of (among other provisions) the AKS. 42 U.S.C. 1320a-7(b)(7). Other penalties include straight financial penalties which are termed “civil monetary penalties”.

Under the False Claims Act (FCA), 31 U.S.C. 3729 , “a claim that includes items or services resulting from a violation of the AKS is a “false or fraudulent claim.” This specific language addressed a disagreement among courts. The federal courts had a disagreement. Was a violation of the AKS per se a false claim violation See: United States v. Starks, 157 F.3d 833, 838 (11th Cir. 1998); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901-02 (5th Cir. 1997). This is now resolved by a statutory amendment and it hurts doctors. An AKS violation is a false claim and civil penalties, qui tam (relator) lawsuits follow. And of course under 42 U.S.C. 1320a-7b(b) there are criminal prosecutions as well.

Relator Lawsuits

Even if the federal government is not looking at your structures, private individuals can be deemed “Relators” and law firms that specialize in this actions can sue you on behalf of the United States.  Here is a quote from a current case that gives you a sense of what these lawsuits allege.

“Relator, defendants knowingly submitted false claims to Medicare and TRICARE for certain compound drugs, by substituting a less expensive drug for a more expensive drug; by billing for medication that was not provided; by overcharging for certain medication; and by committing violations of the AntiKickback Statute, 42 U.S.C§ 13209-7b(b)”
UNITED STATES ex rel. TIMOTHY SCHNUPP Relator v. BLAIR PHARMACY, INC., et al., Defendants. Additional Party Names: Matthew Blair (D. Md., Dec. 9, 2022, No. CV ELH-17-2335) 2022 WL 17584381, at *1

MSO’s as a Danger Area to Doctors

MSO’s and complex structures are common in the medical field.  Doctors form partnerships to purchase equipment and then lease this equipment to hospitals or other organizations.  Lawyers prepare the MSO and corporate documents and rarely do the participating physicians receive warnings.

Despite the best of intentions, these MSO structures can lead to physicians being prosecuted under the Anti Kickback Statute (AKS). The Anti-Kickback Statute (AKS) is a federal law that can be found at 42 U.S.C. § 1320a-7b.).  The AKS is dense and it has exceptions, definitions and real world applications that make it a minefield for doctors.  Ultimately it is a criminal statute which can also lead to related civil lawsuits.  It seems clear, a doctor is prohibited from obtaining anything of value in exchange for a referral.   (This applies to federal reimbursements.)

An Example of how an MSO Structure Led to an AKS Prosecution

An example of how an MSO and referral structure can lead to a criminal prosecution is a recent Texas case.  The federal government focused on two Texas critical access hospitals which partnered with a clinical laboratory that specialized in blood testing. For a fee, the clinical laboratory allowed the hospitals to bill their blood tests to insurers as hospital outpatient services. This choice led to a higher reimbursement rate. The hospitals utilized a network of marketers. These marketers operated management services organizations (“MSOs”) that offered investment opportunities to physicians. One can imagine that many attorneys had reviewed and prepared this paperwork. The physicians and hospitals were likely not intending to violate the law. They were seeking to generate income just as any business would.
However the United States prosecutors disagreed. They claimed that the MSOs were a sham which simply provided a complex vehicle to facilitate kickback payments to physicians in return for the physicians’ laboratory referrals.

If you are facing potential AKS liability we can help.   Call us at (925) 283-1863 You will reach a live person actually in our office if you call during business hours.

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10.0Daniel Horowitz
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