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What is Considered a Kickback in Healthcare

A doctor putting money in his pocket

Healthcare professionals are perhaps more regulated than professionals in any other industry. Even minor oversights can lead to significant liability to patients, insurance providers, and the government. Unlawful conduct perpetrated by physicians and other medical professionals is often punishable with serious criminal charges. Even conduct that is perfectly acceptable in other industries is criminal in healthcare, such as paying for business referrals. The federal Anti-Kickback Statute (AKBS) and other laws prohibit medical professionals from receiving payoffs in exchange for prescribing specific drugs or otherwise making patient referrals. Below, our experienced healthcare law professionals discuss how kickbacks are defined under federal healthcare laws. If you’re facing allegations of kickbacks or other criminal or regulatory violations, call a seasoned California healthcare fraud and abuse defense attorney for advice and representation.

What is a Kickback?

A kickback is an arrangement by which a healthcare professional is paid in exchange for patient referrals. The purpose of the anti-kickback law is to ensure that healthcare professionals refer items and services solely based on the medicinal quality of those goods or services, and not because the manufacturer or provider paid them to do so.

Specifically, under federal law, a healthcare professional may not “solicit or receive any remuneration” whether “directly or indirectly, overtly or covertly, in cash or in-kind” in exchange for referring a patient for any item or service, or in exchange for business regarding any good, facility, service, or item exchange under a federal healthcare program (Medicare, Medicaid, etc.). Receiving any sort of payment in exchange for prescribing a particular drug, referring a patient to a particular service provider, or otherwise referring a patient to some provisioner in the healthcare industry is illegal.

Federal law enforcement takes kickbacks very seriously. Soliciting, accepting, offering, or paying a kickback is chargeable as a felony, punishable by up to $25,000 in fines and up to five years in prison. That means that offering kickbacks and accepting kickbacks are equally criminal. Under the Civil Monetary Penalties Law (CMPL), physicians who solicit or accept kickbacks can face civil penalties of up to $50,000 per kickback on top of three times the amount of remuneration they received.

The “One Purpose Test”

It’s easy to see how there might be confusion around what constitutes a kickback, even under the definition given above. Gifts, exchanges of services, and other items can be exchanged for several reasons. Pharmaceutical representatives and physicians may have a cordial business relationship, exchanging dinners and other pleasantries out of friendship, for networking purposes, or for any other reason. How does the government determine what constitutes a kickback for the purposes of the health care laws?

The government’s answer is to take an extremely hardline approach, through what is called the “One Purpose Test.” Under the One Purpose Test, a payment to a physician or other medical provider–in cash or in-kind, etc.–is a kickback if any part of the reason behind the payment is to encourage patient referrals. Even if the primary purpose is something innocuous and legal, such as compensation for a service rendered, so long as at least one purpose of the payment is to induce referrals, then the payment constitutes an unlawful kickback.

Call a Dedicated Anti-Kickback and Healthcare Fraud Attorney to Protect Your California Medical Practice

For help responding to kickback or other healthcare fraud allegations, or for assistance with healthcare regulatory compliance, auditing, employment disputes, mergers and acquisitions, business disputes, licensing, or any other California healthcare law matter, contact the Law Offices of Art Kalantar in Los Angeles or California statewide at 310-773-0001

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