Whistleblower Immunity Blog



Anti-Kickback Statute Violations or AKBS

The Medicare and Medicaid Anti-Kickback Statute (or “AKBS”) is a federal criminal law that is found at 42 U.S.C. §1320a-7b(b). Under this law it is illegal to knowingly or willfully offer, pay, solicit, or receive “remuneration,” directly or indirectly, in exchange for referring a patient or furnishing or arranging for a healthcare good or service, for which payment may be made under Government insurance programs, such as Medicare or Medicaid. The Government has used the AKBS in addition to various other civil fraud statutes in its arsenal to fight healthcare fraud.

1. Is illegal “remuneration” under the AKBS limited to cash?

No. It can also include (and often does) other things of value beyond outright case payments, including: kickbacks, bribes, rebates, gifts, leased space at commercially unjustified rates, and free or discounted supplies, services or equipment, forgiven or reduced loan payments, special credit arrangements, etc. In other words, it covers just about anything of economic or monetary value.

 

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2. In what context do Anti-Kickback Statute violations typically arise?

Historically, some of the most significant AKBS cases involve Durable Medical Equipment (“DME”) manufactures paying what are (or are in effect) bribes to physicians and their staff members to prescribe the DME’s product to Medicare and Medicaid patients. But, there are examples of such cases involving all types of healthcare providers, including, hospitals, clinics, physician practice groups, stand-alone diagnostic facilities, laboratories, pharmaceutical companies, substance abuse treatment centers, ambulance companies or patient transportation services, and so on.

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3. What are some of the safe harbors for AKBS violations?

The Anti-Kickback “Safe Harbors” are set out in 42 C.F.R. § 1001.952. They include:

Wages, salaries, benefits and other payments to bona fide Employees;

Legitimate personal services and management contracts;
Space and equipment rental and lease agreements at fair market prices;
Proceeds from the sale of medical practices at commercially reasonable prices;
Investment interests for publicly traded companies and smaller entities;
Group purchasing organizations and discounts;
Waiver of beneficiary co-insurance and deductible amounts;
Product warranties;
and Health Plan/Managed care.

4. Are safe harbor arrangements sometimes fraudulent?

Without a doubt. Some unscrupulous healthcare providers study the safe harbor rules and try to construct arrangements that look like they are legitimate when, in fact, they are really disguised forms of unlawful remuneration. For example, you may need to closely decipher a personal services or management contract and compare it to the activities that are actually provided and the market value of the services to know if the arrangement is proper or improper. That is why this is one of the most challenging types of fraud to prove.

5. If someone is convicted of violating the Anti-Kickback Statute, what are the criminal penalties?

He or she will be deemed guilty of a federal felony offense and can be fined up to $25,000 or imprisoned for up to five years, or both.

6. Is an AKBS violation also a False Claims Act violation, allowing for additional civil fines, penalties and whistleblower rewards?

Yes, sub-section §1320a-7b (g) specifically says that, in addition to the AKBS’ criminal penalties, a government healthcare claim for reimbursement that includes items or services resulting from an AKBS violation also constitutes a false or fraudulent claim for purposes of the False Claims Act.


 



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