Illegal kickbacks occur when health care providers or entities provide certain payments or “remuneration”, such as bribes or rebates, to encourage the referral of patients who receive items or services that may be paid for by under a federal health care program. Examples of federally-funded health care programs include Medicare, Medicaid, or Tricare, which provides care to members of the armed forces and their families. An example of an illegal kickback scheme could involve a home health care company using agents to identify and refer patients for services, and then paying the agent for each new patient. Or, a pharmaceutical company may provide a doctor with gifts like football tickets, extravagant meals, or even cash payments to encourage the doctor to prescribe that company’s drugs.
The federal Anti-Kickback Statute, among other things, prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or other federally-funded programs. States often have their own anti-kickback statute patterned after the federal Anti-Kickback statute.
The federal physician self-referral law, more commonly known as the Stark Law, prohibits improper physician referrals. Specifically, the Stark law prohibits a physician for referring a patient to an entity for certain health services (called “Designated Health Services” or “DHS”) if the physician or a member of his immediate family has a financial relationship with the entity, unless an exception applies. Claims resulting from a prohibited referral may not be presented to federal health care programs for payment.
Both the Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives, and is based solely on the best interests of the patient.
Examples of successful cases:
- Orthofix International and Blackstone Medical, Inc. agreed to pay $32 million to settle False Claims Act cases alleging illegal marketing of a bone growth stimulation device and illegal kickbacks paid to doctors.
- Major laboratory companies agreed to pay $49.5 million to settle a whistleblower lawsuit claiming the company overcharged California’s Medicaid program and gave doctors kickbacks for patient referrals. The complaint claimed that the companies offered discounted or free testing to doctors, hospitals and clinics that referred Medi-Cal patients and other business to the labs. The companies subsidized those low prices by overcharging Medi-Cal for testing services.
- A Florida radiology clinic paid $3 million to settle a False Claims Act case alleging the company submitted false claims to Medicare between 2000 and 2008 by entering into leasing and service agreements that violated the Anti-Kickback Statute and Stark Law.