March 18, 2022 | By Rachel Rose, JD, MBA
Enacted in 1972, the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) remains a government enforcement favorite, despite being described by some as archaic. As articulated by the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG), “[t]he five most important Federal fraud and abuse laws that apply to physicians are the False Claims Act (FCA), the Anti-Kickback (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL).” The AKS extends beyond impacting physicians and the entities that they have agreements with. Unlike the Stark Law, violating the AKS may carry civil and/or criminal penalties and applies to all government programs, with the exception of the Federal Employee Health Benefits Program.
Essentially, as summarized by HHS-OIG, the AKS “prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or healthcare services).” It is common for the AKS to be the basis of a FCA case.
It is undisputed that both the FCA and the AKS are two of the U.S. Department of Justice’s (DOJ) most effective tools to root out fraud and recover monies for the federal fisc. As the DOJ espoused in its annual statement – Justice Department’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021 (Second Largest Amount Recorded, Largest Since 2014), which was released on February 1, 2022,
Kickbacks in the healthcare industry are pernicious because of their potential to subvert medical decision making and to increase healthcare costs. In addition to pursuing improper payments by drug manufacturers, the department resolved other schemes involving the willful solicitation or payment of illegal remuneration to induce the purchase of a good or service paid for by a federal health care program.
In its statement, the DOJ provided examples of AKS violations, which led to significant recoveries:
- Arriva Medical LLC and its parent, Alere, Inc. (mail-order diabetic testing supply company) – paid $160 million to settle allegations that Arriva paid kickbacks to Medicare beneficiaries by providing them “free” or “no-cost” diabetic testing glucometers and by routinely waiving or not making reasonable efforts to collect their copayments for glucometers and diabetic testing supplies.
- Athenahealth, Inc. (electronic health records (EHR) technology vendor) – paid $18.25 million to resolve allegations that it invited customers and prospective customers to lavish all-expense-paid sporting, entertainment, and recreational events to generate sales of its EHR product.
- Taro, Sandoz, and Apotex (pharmaceutical companies that manufacture generic drugs) – paid over $400 million to resolve allegations that they paid and received compensation prohibited by the Anti-Kickback Statute through arrangements on price, supply, and allocation of customers with other pharmaceutical manufacturers as part of a conspiracy to fix the price of certain generic drugs.
The DOJ’s use of the AKS shows no signs of slowing during the law’s 50th Anniversary Year. On February 10, 2022, the U.S. Attorney for the Northern District of Texas announced that ten people, including two physicians, were “indicted in a $300 million healthcare fraud.” The defendants are accused of the following illegal acts, which are articulated in a 26-count indictment: conspiracy to commit healthcare fraud, conspiracy to pay and receive healthcare kickbacks, offering or paying illegal kickbacks, and soliciting or receiving illegal kickbacks for referring patients to labs in exchange for illicit remuneration. “Between 2015 and 2018, Dr. Maldonado alone received more than $400,000 in kickbacks for ordering more than $4 million worth of lab tests and Dr. Canova received more than $300,000 in kickbacks for ordering more than $12 million worth of lab tests.”
In sum, the AKS remains a powerful weapon and may be costly to those who fail to fit squarely within one of its safe harbors. For compliance officers and persons involved in healthcare, creating a “culture of compliance” is critical to warding off the temptation to either pay or accept remuneration in exchange for referrals.
Rachel V. Rose, JD, MBA, advises clients on compliance, transactions, government administrative actions, and litigation involving healthcare, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.