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Illegal Kickbacks

Report Illegal Kickbacks and Earn a Reward

Kickbacks to doctors and other healthcare providers compromise the health and safety of vulnerable patients. To combat illegal kickbacks, the federal government incentivizes individuals who are aware of illegal kickbacks to blow the whistle by filing lawsuits against healthcare providers under the False Claims Act. The False Claims Act allows whistleblowers to earn significant awards for alerting the government to illegal kickbacks.

What is an Illegal Kickback?

An illegal kickback in healthcare refers to a violation of the federal Anti-Kickback Statute (AKS). The AKS prohibits medical providers from paying or receiving anything of value in exchange for referrals of patients who will receive any item or service paid for by a government healthcare program such as Medicare and Medicaid. As an example, a nursing home that pays a doctor money to refer his Medicare patients to the nursing home likely violates the AKS. The AKS is a very broad statute, and it applies to all individuals and companies.

There are several exceptions or “safe-harbors” that can make it difficult to determine if a certain type of financial relationship is in fact a violation of the AKS. The AKS is also similar to the physician self-referral law (known as the Stark Law). An experienced False Claims Act attorney should be consulted to determine if a possible kickback is in fact illegal under the AKS.

What is the Purpose of the Anti-Kickback Statute?

The purpose of the Anti-Kickback Statute is to ensure that patients are receiving treatment based on sound medical judgment and not the influence of money. The Anti-Kickback Statute is designed to make sure that a provider’s judgment is not being influenced by bribes or financial incentives. The hope is that such a law will cut down on unnecessary treatments, costs to taxpayers, and medical decisions that are not made in a patient’s best interest.

Do Kickbacks Only Involve Money?

No, a kickback only has to involve “remuneration” which is anything of value. This is a very broad definition. As an example, a urine testing company that provides doctors with free urine testing cups in exchange for test referrals likely violates the Anti-Kickback Statute. Below is a non-exhaustive list of things of value that we commonly see in illegal kickback cases:

  • Cash or checks
  • speaker, advisory board, or consulting fees
  • free medical equipment
  • advertising campaigns
  • educational grants
  • research agreements where little to no work is done
  • free lunches and dinners
  • gifts (gift cards, watches, tickets, etc.)
  • travel reimbursement or vacations disguised as training seminars
  • discounted items or services (including rent)
  • overpayments or underpayments for services
  • payments for services not provided
  • low interest rate loans
  • investment or joint venture opportunities
  • process and handling fees
  • waiving copays or deductibles or offering rebates

It is important to note that a kickback can also involve intangible economic benefits. In other words, giving a medical provider the opportunity to earn money, such as an investment, may be considered an inducement for purposes of the Anti-Kickback Statute.

What are Common Illegal Kickback Schemes?

Illegal kickbacks can take on many forms, and an experienced False Claims Act attorney should be consulted to determine if a financial relationship is in fact an illegal kickback. Some of the most common examples of kickback schemes that likely violate the Anti-Kickback Statute are described below.

  • Hospitals, nursing homes, labs, dialysis centers, and outpatient clinics providing doctors with something of value for referring patients to their facilities.
  • Medical device manufacturers offering doctors or hospitals something of value in exchange for using their product instead of competitor’s product.
  • Drug companies providing doctors, hospitals, or nursing homes with something of value for prescribing their pharmaceutical drugs instead of a competitor’s drugs.
  • Drug companies paying pharmacies to switch patients’ prescriptions from a competitor’s drugs.
  • Drug companies and medical providers that routinely waive patient co-pays or deductibles.

What are the “Safe Harbors” Under the Anti-Kickback Statute?

There are various safe harbors under the Anti-Kickback Statute that are both complicated and technical. A safe harbor allows for a financial relationship that would otherwise be considered an illegal kickback.

The most common safe harbor under the AKS is the bona fide employment relationship. Under this safe harbor, the AKS permits payment by an employer to a bona fide employee. Whether an employee is bona fide depends on a variety of factors including the amount of control an employer has over the employee, the method and timing of payment, and the location and equipment used by the employee during working hours.

If an employee is not a bona fide employee, he or she may fall under another safe harbor: personal services and management contracts. To fall under this safe harbor provision, there are many strict requirements, including a written agreement that is one year or longer, a description of all services to be provided, compensation that is set out in advance and is consistent with the fair market value, compensation that does not take into consideration referrals between the parties, and services that are no more than reasonably necessary to accomplish the parties’ business purpose.

Several other safe harbors include leasing or renting office space and equipment, referral services, and group purchasing organizations. All of these exceptions require stringent conditions to be met in order to qualify as a safe harbor. Because of the complexity of safe harbors, an experienced False Claims Act attorney should be consulted to determine if a potential kickback is covered by a safe harbor exception.

What Should I Do if I Suspect Illegal Kickbacks?

If you suspect a healthcare provider or dug company of being involved in illegal kickbacks, you can blow the whistle by filing a lawsuit under the False Claims Act. We have found that taking the following steps are helpful in blowing the whistle on illegal kickbacks.

  1. Identify the parties: You need to be able to identify who is giving a thing of value and who is receiving a thing of value.
  2. Identify the thing of value: What does the illegal payment consist of? In many cases, there is more than one type of thing of value being given to a healthcare provider.
  3. Identify the reason for the payment: A kickback is typically only illegal if the purpose is to induce referrals.
  4. Identify payments and referrals: It is helpful if you can provide specific payments that were made (i.e., type, amount, date, etc.) as well as the referrals that were made in exchange (i.e., patient names). This is usually achieved by gathering documents and evidence. We often see emails from employees of the offending company discussing the kickbacks. Documents may also include receipts or invoices that were given to the healthcare provider.
  5. Contact a False Claims Act attorney experienced in kickback cases Determining if a kickback is illegal is often complex. What the government considers to be a kickback may change over time and what appears to be a kickback may actually fall under a safe harbor. A False Claims Act attorney can help you determine if a company or individual is engaging in illegal kickbacks and build the strongest case possible against the offender.
  6. File your whistleblower lawsuit: After conducting an investigation, your attorney will decide if filing a False Claims Act lawsuit is in your best interest. If you have a strong case, your attorney will file a whistleblower lawsuit under seal in federal court. The government will then investigate your case and decide if it wants to litigate the case against the offending company. If a False Claims Act lawsuit is successful, a whistleblower can earn between 15 to 30% of the amount of money recovered by the government.

Our Experience in Illegal Kickback Cases

Our firm has obtained millions of dollars in settlements from companies that provided illegal kickback to healthcare providers. This includes a $108 million settlement, which was one of the largest False Claims Act cases in the country in 2019.

Our largest illegal kickback case involved a pharmaceutical company, Avanir, which provided large speaking fees and free dinners to physicians who prescribed significant amounts of its drug, Nuedexta. We were able to show that the amount of money paid to doctors increased as the doctors’ prescriptions for Nuedexta increased. We argued that this financial relationship was a violation of the Anti-Kickback Statute, because the payments induced the doctors to prescribe Nuedexta when they otherwise would not have done so.

This case was a big win for residents in nursing homes. Nuedexta is primarily used to treat a condition seen in elderly patients. By putting a stop to the inducement, we were able to make sure that nursing home residents were being prescribed drugs based on sound medicine judgment and not money. As a result of our firm’s efforts, the whistleblowers in this case received more than $17 million as an award.

If you work in healthcare and think you may be aware of illegal kickbacks, contact us now to learn more about becoming a whistleblower and earning a substantial reward. There is no charge or obligation to review your case, and it’s completely confidential.

The 7 steps you need to follow to win a whistleblower reward.

 

Recent Developments in Kickback Cases

The number of False Claims Act cases involving illegal kickbacks has always been high and that trend is expected to continue. The Department of Justice currently places particular emphasis on violations of the Anti-Kickback Statute. This is partly due to the fact that a violation of the AKS carries steep criminal and civil penalties and automatically constitutes a violation of the False Claims Act. It is also presumed that patients are being harmed whenever doctors or healthcare providers are being bribed.

Some of the largest False Claims Act cases from 2020 involved allegations of illegal kickback schemes. For example, the Department of Justice announced a $642 million settlement against the pharmaceutical company Novartis for alleged kickbacks to doctors. The case involved Novartis’s speaker program in which it would pay doctors for speaking engagements. Last year the Department of Justice also announced a $122 million settlement against Universal Health Services and Turning Point Center, LLC. One of the allegations was that Turning Point Center provided free transportation services to patients to induce them into seeking rehabilitation treatment at its facilities. This is a good example of how illegal kickbacks can be paid to patients (not just doctors and healthcare providers). It is also a good reminder that illegal kickbacks can involve more than just money.

We have also noticed a trend in the Department of Justice using evidence of illegal kickbacks to bolster other claims made under the False Claims Act. For instance, cases involving the off-label marketing of drugs and medical devices used to be powerful allegations in a False Claims Act case. In recent years, however, drug companies have argued that the free speech clause of the First Amendment protects off-label marketing. To get around this argument, it is extremely helpful if a whistleblower has evidence of an illegal kickback as it provides leverage to settle the off-label allegations. In our experience, any whistleblower lawsuit is greatly strengthened if the whistleblower can provide evidence of illegal kickbacks.