Health Care Fraud and the Anti-Kickback Statute

A "kickback" refers to a method of bribery where something of value is exchanged for a positive outcome or favorable decision. Although they may vary in forms, kickbacks are always unlawful and can impact various aspects of life including health care.

For instance, suppose you're a Medicaid patient who was hurt in an accident and went to your physician for treatment. The physician refers you to a specific home health care agency, but unbeknownst to you, the doctor received cash and sports tickets for making the referral. Because this kickback concerns health care, the physician could face criminal charges stemming from an Anti-Kickback Statute violation.

This article is an overview of the federal Anti-Kickback Statute (AKS), with details about what the law prohibits, who it covers, what safe harbors are allowed, and what penalties exist for violations.

What the Anti-Kickback Statute Prohibits

The Anti-Kickback Law or Anti-Kickback Statute (AKS) is the federal criminal law that forbids kickbacks involved in federal health care programs. The intent of the law is to protect patients and eliminate abuse and health care fraud from federal programs such as Medicare, Medicaid, and the Children's Health Insurance Program (CHIP), among others.

The law makes it a crime to knowingly and willfully exchange (or offer to exchange) a gift or anything of value with the intent to gain something from the exchange. For instance, a health care provider accepts a payment, product, or services to solicit Medicare or another federal program. The following is a list (not exhaustive) of examples of things of value, other than money:

• Free rent;
• Free vacations;
• Complimentary meals;
• Paid contracts/physician compensation; or
• Appointments for consultancies.

Coverage of the AKS

The scope of the statue is broad; it covers both the person and the company that offers or pays the kickback and the person or company that solicits or receives it. For instance, in a case where a hospital participates in a scheme to pay patient recruiters kickbacks for the recruitment of homeless patients, both the hospital owners and the recruiters violated the AKS.

The Anti-Kickback Statute: Safe Harbors

"Safe harbor" regulations allow specific transactions and arrangements which would otherwise be AKA violations to be exempt. If the parties meet various tests to qualify for the "safe harbor," then they aren't in violation. Examples of protected practices include the following, among others:

• Payments made for space rentals or equipment rentals;
• Referrals made as part of an employment or professional service agreement; or
• Specific payments made for health practitioner recruitment purposes.

Penalties Under the Anti-Kickback Statute

Unlike the Stark Law, which is another federal law that deals with improper referrals, there are both civil and criminal penalties that apply when a person or entity makes an AKS violation. Possible penalties for an AKS violation include the following:

• Criminal Penalties: fines up to $25,000 per violation and/or imprisonment up to 5 years.
• Civil Penalties: fines up to $50,000 per violation, additional fines up to 3x the amount of damages.
• Additional Penalties: Possible exclusion from participation in federal healthcare programs.

AKS Violations: Liability Under the False Claims Act

As a form of health care fraud, kickback schemes steal billions of dollars away from taxpayers annually. Patients are harmed by these activities because they're often saddled with unneeded treatment and services. Because practitioners involved in kickback schemes may be steering patients toward specific medications and treatments so that they can bill for them, patients can be misdiagnosed or left untreated for legitimate problems.

In cases like this, providers can be liable under the False Claims Act, a federal statute that prohibits businesses from submitting false claims to defraud the government.

For instance, a claim can be filed if a physician prescribed unnecessary medication to a patient (based on a kickback scheme) and bills Medicaid when the patient can't benefit from the prescription. All providers must be mindful that the damages and penalties under the False Claims Act can be quite severe (penalties between $5,500 to $11,000, plus triple damages, per false claim).

Learn More About the Anti-Kickback Statute from an Experienced Attorney

Maybe you're a patient that suspects that you might be negatively impacted by a AKS violation. Or perhaps you're a provider concerned with running afoul of the Anti-Kickback Statute. The best way to gain more information about how the Anti-Kickback Statute impacts you is by working with a skilled health care attorney who can guide you through the complexity of the law.