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Healthcare fraud: Kickbacks and anti-kickback statutes

Mar 23, 2021 | White Collar Crimes |

Healthcare fraud is a serious federal offense that can carry felony charges and jail time. Taking kickbacks is an area of fraud that can have serious consequences and both federal and state charges. It is also an offense that carries penalties for both the provider of the kickback and the recipient of the kickback.

What is a kickback?

A kickback can be defined very broadly as bribing someone to provide services in exchange for compensation of some kind, which is generally negotiated in advance. Kickbacks can range from free products in exchange for using a specific vendor to drug cartels buying police protection. It is one of the most common forms of corruption in government but is found in all industries, including healthcare.

What is considered a kickback in healthcare?

Any time a medical provider uses any type of compensation or payment to either encourage other providers to refer patients to their practice or as a way to entice patients to come to their office, that is considered a kickback. Courts use the “One Purpose Test” to determine if a payment represents a kickback, which means that if one purpose of the payment is to encourage referrals, it is considered a kickback. Because of this very broad litmus test, it can be very easy to unintentionally receive or provide a kickback. Unfortunately, in both federal and state statutes, it is not required for the parties involved to be willing or have knowledge of the kickback to be prosecuted.

Anti-Kickback Statute (AKS) penalties

There are federal and state Anti-Kickback Statutes (AKS), in addition to the False Claims Act (FCA) and the Physician Self-Referral Law (Stark Law). All three laws are intertwined, if a Medicare claim is from a kickback or violates the Stark Law, it will also violate the FCA as the claim will be considered fraudulent. Penalties range from a fine up to $50,000, in addition to three times the amount of the kickback, to up to five years in jail. Each kickback is charged individually, and can also include civil penalties, particularly for violations of the FCA. In addition to fines and jail time, providers can also be excluded from participation in Federal healthcare programs and may have their medical license revoked.

Violating anti-kickback laws carries severe consequences and some forms can be very subtle. Regardless of how subtle the kickback is, whether you had knowledge or were a willing participant, kickbacks in healthcare are considered fraud and are subject to federal and state felony charges.    

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