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The Federal Anti-Kickback Statute

By Shauna Itri

The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), (“AKS”) arose out of congressional concern that remuneration provided to those who can influence health care decisions would result in goods and services being provided that are medically unnecessary, of poor quality, or harmful to a vulnerable patient population. To protect the integrity of the Medicare and Medicaid programs from these harms, Congress enacted a prohibition against the payment of kickbacks in any form. First enacted in 1972, Congress strengthened the statute in 1977 and 1987 to ensure that kickbacks masquerading as legitimate transactions did not evade its reach.

The AKS prohibits any person or entity from offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or reward any person for purchasing, ordering, or recommending or arranging for the purchasing or ordering of federally funded medical goods or services:

(i)            Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind–

(a)          in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(b)          in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

(ii)           Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person–

(a)          to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(b)          to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

42 U.S.C. §§ 1320a-7b(b).  Violation of the statute can also subject the perpetrator to exclusion from participation in federal health care programs and, effective August 6, 1997, civil monetary penalties of $50,000 per violation and three times the amount of remuneration paid, regardless of whether any part of the remuneration is for a legitimate purpose.  42 U.S.C. §§ 1320a-7(b)(7) and 42 U.S.C. §§ 1320a-7a(a)(7).

The legislative and administrative history of the AKS safe harbors indicate that anything of value should be considered remuneration. In promulgating final rules on the AKS, the Office of the Inspector General of the Department of Health and Human Services stated that “the meaning of two of its [the AKS statute’s] terms deserve comment (1) ‘any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind;’ and (2) ‘to induce.’ These terms demonstrate congressional intent to create a very broadly worded prohibition.” 56 FR 35952 (1991).

The OIG continued,

Congress’s intent in placing the term “remuneration” in the statute in 1977 was to cover the transferring of anything of value in any form or manner whatsoever. The statute’s language makes clear that illegal payments are prohibited beyond merely “bribes,” “kickbacks,” and “rebates,” which were the three terms used in the original 1972 statute. The language “directly or indirectly, overtly or covertly, in cash or in kind” makes clear that the form or manner of the payment includes indirect, covert, and in kind transactions …. The meaning of the term “to induce,” which describes the intent of those who offer or pay remuneration in paragraph (2) of the statute, is found in the ordinary dictionary definition: “to lead or move by influence or persuasion”

Id. (citing The American Heritage Dictionary (2d College Ed. 1982)).

As the sponsor of the bill explained,

[K]ickbacks are wrong no matter how a transaction might be constructed to obscure the true purpose of a payment … We are in a complex area where right and wrong are often clouded with shades of gray. In such situations, the committee stresses the need to recognize that the substance rather than simply the form of a transaction should be controlling.

123 Cong. Rec. 30,280 (1977).

An opportunity to bill or earn money is remuneration that could induce a person “to channel potential Medicare payments towards a particular recipient.” Bay State Ambulance & Hosp. Rental Serv., 874 F.2d at 29; see also, United States ex rel. Fry v. Health Alliance of Greater Cincinnati, 2008 U.S. Dist. LEXIS 102411, * 17-*23 (S.D. Ohio Dec. 18, 2008) (accepting the government’s argument that an opportunity to bill is remuneration and that a doctor being “handed a stream of patients … is like receiving a voucher.”).

As the Court wrote in Fry,

Giving a person an opportunity to earn money may well be an inducement to that person to channel potential Medicare payments towards a particular recipient … Congress’s intent in placing the term ‘remuneration’ in the statute in 1977 was to cover the transferring of anything of value in any form or manner whatsoever. Id. at 21-23 (internal citations omitted).

Furthermore, a person who offers or pays remuneration to another person violates the Anti-kickback Act so long as one purpose of the offer or payment is to induce Medicare or Medicaid patient referrals. United States v. Borrasi, 639 F.3d 774 (7th Cir. 2011) (“We join our sister circuits in holding that if part of the payment compensated past referrals or induced future referrals, that portion of the payment violates [the Anti-kickback Act]”).

Specific intent is not required to establish a violation of the AKS. That is, “a person need not have actual knowledge of [the AKS] or specific intent to commit a violation of [the AKS].” 42 U.S.C. § l 320(a)-7b(h)).

A “Federal health care program” is defined at 42 U.S.C. § 1320a-7b(f) as any plan or program providing health benefits funded, whether directly or indirectly, by the United States Government. The Anti-Kickback Statute applies to claims submitted to Medicare, Medicaid, and the other government payers listed in this case. 42 C.F.R. § 405.207.

Violations of the Anti-Kickback Statute Form the Basis of False Claims Act Liability

Congress has long viewed the elimination of kickbacks as central to any efforts to combat Medicare and Medicaid fraud and abuse. See United States v. Greber, 760 F.2d 68, 70-71 (3d. Cir. 1985). Because kickback schemes negatively affect the integrity of federal health care programs, the United States has a strong interest in ensuring the continued viability of False Claims Act (“FCA”) actions to deter and redress health care fraud predicated upon kickbacks.  United States ex rel. Charles Wilkins and Daryl Willis v. United Health Group, Inc. et al., (3d Cir. Oct. 2010)(No. 10-2747) (Brief for the United States as Amicus Curie Supporting Appellant)(“Amicus Brief”).

To protect against the erosion of patient care and patient safety, courts uniformly agree that compliance with the AKS is a material condition of payment under the Medicare/Medicaid programs.

These and other courts have held that a person or entity who violates the and causes another to submit claims to the government has violated the FCA regardless of what form the claim or statement takes.  Many of these courts have reasoned that the claims are false, and thus violate the FCA, because there is a false certification – either express or implied – as to compliance with the AKS each time a claim is submitted.

Moreover, the AKS was recently amended to expressly state what these courts had already held, namely, that a violation of the AKS constitutes a “false or fraudulent” claim under the FCA.  42 U.S.C. § 1320(a)-7b(g).

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