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The Anti-Kickback Statute for Whistleblowers

THE ANTI-KICKBACK STATUTE IS A FEDERAL LAW THAT PROHIBITS PAYMENTS TO INDUCE REFERRALS FOR ITEMS OR SERVICES THAT ARE COVERED BY A FEDERAL HEALTHCARE PROGRAM, SUCH AS MEDICARE AND MEDICAID. WHISTLEBLOWERS PLAY AN INSTRUMENTAL ROLE IN ENFORCING THE ANTI-KICKBACK STATUTE.
Being a patient requires a certain level of trust. When a physician or other healthcare provider prescribes a drug, orders a test, or recommends a procedure, patients should be able to assume that they are receiving sound advice and quality care. At the very least, patients should be able to trust that the physician or hospital is acting in their best interest. Unfortunately, this isn’t always the case.

While most medical professionals put their patients first, there are some providers that are more concerned with their own financial gain. It can be as blatant as a pharmaceutical company paying physicians to prescribe their drugs or as subtle as a hospital charging below-market rent to a physician group in exchange for sending patients to the hospital. Call it a bribe or a kickback, the problem is the same: sound medical judgment has been compromised by a financial conflict of interest. These arrangements cause patients to receive improper or unnecessary medical care.

Protecting medical judgment from financial conflicts

To protect patients from this kind of harm, Congress passed the Anti-Kickback Statute in 1986. The Anti-Kickback Statute makes it a federal criminal offense to offer, pay or accept compensation in exchange for referrals for healthcare services that are covered by the federal healthcare programs. Any healthcare provider—whether it is a hospital, laboratory, pharmaceutical company, hospice, or home health agency—is also prohibited from submitting claims to Medicare or Medicaid that are generated through violations of the Anti-Kickback Statute. A closely related law, the Physician Self-Referral Law, or “Stark Law” as it is sometimes called, prohibits certain types of compensation to physicians from entities that received referrals for certain “Designated Health Services.”

Opportunities for Whistleblowers

The U.S. medical system is complex and not transparent, making it difficult for patients and law enforcement to uncover violations of the Anti-Kickback Statute. Fortunately, the False Claims Act allows individuals with knowledge of fraud against a government program—including claims submitted to Medicare or Medicaid in violation of the Anti-Kickback Statute—to file a case on behalf of the government and receive a reward of 15 to 30 percent of the government’s recovery as an incentive for providing information about these types of violations. Many of the largest healthcare fraud cases involved allegations of kickbacks or improper compensation between healthcare providers.

Common Violations

  • Healthcare facilities, such as hospitals, nursing facilities, or outpatient clinics, may violate the Anti-Kickback Statute by paying physicians referrals fees or other compensation for referring patients to their facilities.
  • Drug companies and pharmacy providers may violate the Anti-Kickback Statute by paying physicians, facilities, or pharmacy providers to prescribe or use their drugs instead of competitors’. Revenue sharing or any other payment that is based on the volume or value of the healthcare items ordered may also violate the Anti-Kickback Statute.
  • Clinical Laboratories or medical device manufacturers may violate the Anti-Kickback Statute by paying any compensation to physicians or healthcare facilities for using their services or products. Common schemes include fake clinical trials or research fees, paying a processing or specimen collection fee, or paying to rent storage space from the physicians at above fair-market value.
  • Investment deals and other transactions that are not fair-market value. Several healthcare providers have violated the Anti-Kickback Statute by offering investment interests, excessive compensation, or space and equipment deals to physicians that is designed to encourage the physician to refer patients or utilize a specific facility or healthcare services.
  • Mergers and acquisitions. Over the past several years, there has been a well-documented trend toward consolidation among hospitals and other healthcare providers. Mergers and other transactions that include compensation for existing or future patient volume (i.e., “goodwill”) as part of the purchase price or future compensation guarantee may violate the Anti-Kickback Statute.

Kickback schemes can be complex and take many different forms. There are also numerous safe harbors that allow certain financial relationships between healthcare providers. If you think you may have knowledge of an improper financial arrangement in the healthcare field, the whistleblower attorneys at Levy Konigsberg have experience with Anti-Kickback Statute issues and can provide a free and confidential evaluation of your potential whistleblower case. To speak with an attorney, please contact us by calling (800) 315-3806 or by submitting an online inquiry on this website.

Examples of Major Anti-Kickback Statute Cases filed by Whistleblowers

DaVita Healthcare Partners (2014) – In October 2014, DaVita, one of the leading providers of dialysis services in the United States, agreed to pay $350 million to resolve allegations that it offered improper investment deals to physicians in exchange for the physicians’ referral of Medicare and Medicaid patients to DaVita. The whistleblower, a former DaVita employee, will reportedly receive $65 million plus interest under the whistleblower or “qui tam” provisions of the False Claims Act.

OmniCare Inc. (2014) – On June 25, 2014, it was announced that Omnicare, the nation’s largest provider of pharmacy services to nursing homes, agreed to pay $124.24 million for allegedly offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries. One of the whistleblowers, a former Omnicare employee, was awarded $17.2 million under the whistleblower or “qui tam” provisions of the False Claims Act.

RehabCare Group Inc. (2014) – In January 2014, the government announced that RehabCare Group, a nation-wide contract therapy provider, agreed to pay $30 million to resolve allegations that it paid a large nursing operator to provide therapy services to its patients. The whistleblower was awarded $5.7 million under the whistleblower or “qui tam” provisions of the False Claims Act.

Johnson and Johnson (2013) – Although commonly referred to as an “off-label marketing” case, Johnson and Johnson’s $2.3 Billion settlement announced in November of 2013 also resolved allegations that it paid kickbacks to physicians to prescribe Risperdal, as well as kickbacks to nursing home pharmacy provider Omnicare, Inc. to encourage use of J&J’s drugs over competitors’. Three different groups of whistleblowers were awarded $112 million, $27.7 million, and $28 million for their contributions to the case.

Sanofi-Aventis U.S. Inc. (2012) – In December 2012, international drug manufacturer Sanofi agreed to pay $109 million to resolve allegations that it violated the False Claims Act by giving physicians free units of Hyalgan, a knee injection, in violation of the Anti-Kickback Statute, to induce them to purchase and prescribe the product. The whistleblower was awarded $18.5 million under the whistleblower or “qui tam” provisions of the False Claims Act.

If you have knowledge and proof of Anti-Kickback Statute Violations, then give us a call today for a free consultation and case review with an experienced whistleblower attorney.

This information is for educational purposes. It is not offered as and does not constitute legal advice or legal opinions. You should not act or rely upon this information without seeking the advice of an attorney.

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