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Brian Kuester
Attorney Brian Kuester
Kickbacks Team Lead
Former US Attorney
Former District Attorney
Ellen Comley
Attorney Ellen Comley
Defense Team Lead
Senior Counsel
Roger Bach
Roger Bach
Team Consultant
Former Special Agent (OIG)

Federal health care programs like Medicare and Medicaid pay out enormous sums to health care providers each year. Healthcare fraud costs the federal government between $80 and $100 billion each year, which means its monitoring is a high priority for government investigators. The Anti-Kickback Statute (AKS) is one tool that the government uses to prosecute actions of fraud, waste, and abuse. The AKC essentially criminalizes the giving and receiving of remunerations in exchange for patient referrals: 42 U.S.C. § 1320a-7b.

Health Care Kickback Charges Explained

Innocent relationships may be scrutinized as kickback schemes. It can be tricky to distinguish between a healthy relationship that benefits both doctors and patients, with the harmful kickback schemes that the AKS was designed to prevent.

Kickbacks can lead to overutilization of health care services, which drains the federal budget. They can also compromise patient welfare by potentially corrupting a doctor’s medical judgment. Therefore, instead of focusing on the best interests of the patient, doctors may order unnecessary tests and risky operations to line their own pockets with kickback payments.

Proving a Violation of the Anti-Kickback Statute
To prove a violation of the AKS, the government must show, beyond a reasonable doubt, that the defendant knowingly and willfully gave, received, or solicited a remuneration in return for patient referrals (or other business) in connection with a federal health care program.

Remuneration can include essentially anything of value, including:

  • Kickbacks.
  • Bribes.
  • Rebates and gifts.
  • Leases.
  • Equipment.
  • Employment contracts.
  • Other arrangements that depart from fair market value.

Remunerations are prohibited under the AKS whether they are paid “directly or indirectly, overtly or covertly, in cash or in kind”. Thus, health care providers can even face AKS liability for seemingly innocent behavior like providing free bagels in the lounge at the doctor’s office.

Anti-Kickback Safe Harbor Provisions
The Secretary of Health and Human Services (HHS) and the Office of Inspector General (OIG) have created “safe harbor” exceptions to the AKS that define business transactions that will not subject the parties to penalties under the federal Anti-Kickback Statute: 42 U.S.C. § 1320a-7b(3)(E).

The OIG has promulgated two safe harbor provisions for practice acquisitions, one of which protects practitioner-to-practitioner transactions and the other protects certain practitioner-to-hospital or other entity transactions: 42 C.F.R. § 1001.952(e)(1) and (2); 56 Fed. Reg. 35964, 35965 (1991).

Practitioner-to-Practitioner Safe Harbor
To satisfy the practitioner-to-practitioner safe harbor, the following requirements must be met:

  1. The sale must be to another practitioner.
  2. The period from the date of the first agreement pertaining to the sale to the completion of the sale is not more than one year.
  3. The seller cannot be in a professional position to make referrals to or otherwise generate business for the purchasing practitioner after one year from the date of the first agreement pertaining to the sale (i.e., the selling physician must retire, cease to practice, or relocate within one year of the commencement of the transaction). See 42 C.F.R. § 1001.952(e)(1)(ii).

Practitioner-To-Other Entity Safe Harbor
To satisfy the practitioner-to-other entity safe harbor, the following requirements must be met:

  1. The period from the date of the first agreement pertaining to the sale to the completion date of the sale is not more than three years.
  2. The practitioner who is selling his or her practice will not be in a professional position after the completion of the sale to make or influence referrals to, or otherwise generate business for, the purchasing hospital or entity for which payment may be made under Medicare, Medicaid or other Federal health care programs.
  3. The practice being acquired must be located in an HPSA, as defined in Departmental regulations, for the practitioner’s specialty area.
  4. Commencing at the time of the first agreement pertaining to the sale, the purchasing hospital or entity must diligently and in good faith engage in commercially reasonable recruitment activities that:
    • May reasonably be expected to result in the recruitment of a new practitioner to take over the acquired practice within a one year period; and
    • Will satisfy the conditions of the practitioner recruitment safe harbor in accordance with 42 C.F.R.§ 1001.952(n).

Defending Against Anti-Kickback Violation Charges

If you or your business is facing allegations of anti-kickback violations, we encourage you to contact us as soon as possible. By the time you find out that you are under investigation, the government may have already taken substantial steps toward building a case for criminal charges. The sooner you act, the sooner we can help you.

Penalties for Violating the Anti-Kickback Statute

The penalties for violating the AKS are quite severe. The AKS is a criminal statute, and a conviction amounts to a felony Charges under the AKS can lead to five years in prison and fines of $25,000 per violation. On the civil side, the government can seek monetary penalties of $50,000 and treble damages for each violation of the AKS.

Violations of the AKS can also render a health care provider liable under the civil False Claims Act. Each time a provider submits a claim for reimbursement while simultaneously violating the AKS, that claim is “false” because the provider is lying about being in compliance with federal health care laws.

The government also has powerful administrative remedies to impose against health care providers who violate the AKS. A conviction under the AKS is grounds for mandatory exclusion from federal health care programs.

The scope of the AKS creates a very uncertain regulatory environment for health care providers. This confusing regulatory environment discourages health care providers from entering into relationships that could expand patient’s access to affordable health care.

Contact Us

At The Criminal Defense Firm, we offer free, confidential consultations and the services of two former federal prosecutors and experienced defense counsel. To speak with us about a health care fraud investigation, call The Criminal Defense Firm at 866-603-4540, or you can contact us online today.

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