Recent Settlements Show Kickbacks are Always a DOJ Enforcement Priority
The Department of Justice regularly highlights the areas of fraudulent conduct it intends to target as enforcement priorities. These identified enforcement priorities tend to cover burgeoning areas of fraud or particular misbehavior especially ripe or prevalent because of the particular times we live in. As might be expected, DOJ’s current listing of priorities includes fraud related to the pandemic, opioids, the elderly, electronic health records, telehealth services, and as most recently announced, cybersecurity.
But DOJ’s priority focus does not stop there. There are certain types of fraud that are so pernicious and pervasive they are always on DOJ’s hit list. One of the most prominent in this regard is healthcare kickbacks, which are broadly prohibited under the Anti-Kickback Statute and Stark Law, violations of which can be enforced through actions under the False Claims Act. In its simplest form, this prolific form of healthcare fraud involves providing or receiving anything of value in exchange for referrals or otherwise steering patients to products or services covered by the government healthcare programs such as Medicare and Medicaid. Such kickbacks and other unlawful financial arrangements give providers reasons to send patients for services they might not actually need or prescribe drugs they might not actually need, resulting in over-utilization and increased costs.
Government Takes Action Against Unlawful Healthcare Kickback Schemes
It seems not a month goes by when DOJ, typically with the help of whistleblowers, announces action involving unlawful kickback schemes. With the three kickback settlements DOJ reached last week alone – all originated by whistleblowers – it seems apparent there is no slowing down in the government’s commitment to stopping, or at least punishing, this never-ending blight in our healthcare system.
In the first settlement (last Monday), Florida-based medical device company Arthrex Inc. agreed to pay $16 million to settle government and whistleblower charges of paying kickbacks to a Colorado-based orthopedic surgeon. The kickbacks allegedly were in the form of royalty payments purportedly for the surgeon’s contributions to the orthopedic products at issue. But as the government and whistleblower charged, the payments were in fact intended to induce the surgeon’s use and recommendation of the Arthrex products.
In the second settlement (last Tuesday), three anesthesia providers and several Georgia outpatient surgery centers agreed to pay roughly $28 million to settle DOJ and whistleblower charges of paying and receiving payments for medications, supplies, equipment and labor as well as free staffing in exchange for patient referrals.
And in the third settlement (also last Tuesday), Virginia-based pharmaceutical manufacturer Kaléo Inc. agreed to pay $12.7 million to settle DOJ and whistleblower charges of using kickbacks to facilitate the preferential use of Kaléo’s Evzio drug to treat opioid overdosing. It was the highest-priced version of this class of drugs on the market, with many insurers requiring prior authorizations before they would approve its use. According to the government and the whistleblower, Kaléo paid prescribing doctors to send Evzio prescriptions to certain preferred pharmacies that would submit false prior authorization requests and dispense the drug without collecting co-payments from government beneficiaries.
In announcing these settlements, the government did not mince words in highlighting the dangers kickbacks pose to medical decision making and the government’s strong commitment to stopping this kind of healthcare fraud. Acting U.S. Attorney Nathaniel R. Mendell for the District of Massachusetts perhaps put it most starkly with his Arthrex settlement:
Paying bribes to physicians to distort their medical decision-making corrupts the health care system. This settlement demonstrates our dedication to ensuring that taxpayers and patients get a health care system that is on the level. Kickbacks have no place anywhere in our health care system, and we will continue to identify and punish this illegal conduct.
What is an unlawful kickback?
Paying doctors for patient referrals or to use particular medicines or medical devices is the most obvious form of an unlawful kickback. However, the sweep of the prohibition and the variety of schemes to get around it extends well beyond the classic kickback paradigm. Other examples include:
- Hospitals, nursing homes, labs, dialysis centers, drug companies, or medical equipment companies paying doctors through big salaries or “consulting” fees to serve as Medical Directors, proctors, or consultants, where the doctors do little real work.
- These same healthcare operations allowing doctors to buy into surgical centers, distributorships, joint ventures, or other investment opportunities on favorable financial terms — especially if those terms depend on the amount of business the doctor will refer.
- Hospitals paying their physicians salaries or bonuses tied to the number of x-rays, lab tests, or other procedures they order.
- Hospitals or other providers buying physician practices for inflated prices, with a requirement that the physician continue to work at the practice and refer business to the hospital or provider.
- Hospitals offering physicians below-market-rate rent for office space, free access to clinical or administrative support staff, or other special deals on overhead expenses.
- Drug companies paying pharmacies to switch patient prescriptions.
- Drug companies paying insurers to get on their formularies.
- Specialty pharmacies, medical equipment suppliers, therapy centers, or nursing homes paying patient recruiters or patients directly.
- Drug companies or medical equipment providers waiving patient co-payment
How Whistleblowers Can Stop Unlawful Kickbacks
The big takeaway from the recent enforcement actions is that no matter the efforts DOJ is committing to attacking all the newly conceived frauds that continue to abound, the agency continues to treat among its highest priorities the various kickback schemes that remain rampant in our healthcare system. And it is counting on whistleblowers to help join in and even lead the charge.
Claims for payment submitted to Medicare or Medicaid that include items or services resulting from a violation of the Anti-Kickback Statute are deemed to be false claims under the False Claims Act. The FCA allows private persons to bring actions on behalf of the government and claim a share of any amounts recovered by the government.
So if you are aware of any healthcare providers paying or receiving kickbacks, especially if it is interfering with medical decision making and the best interests of the patient, please contact us. Our experienced whistleblower lawyer team is standing by ready and able to tell you everything you need to know on what these prohibitions are all about and what it means to be a whistleblower in exposing this type of healthcare fraud.
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