False Claims Act and Health Care Kickbacks


Patients are supposed to be able to trust that their health care provider is putting their care ahead of any business consideration. As a result, there are many specific regulations and several important laws which are designed to preserve this relationship. When those laws are violated, it may be possible to sue under the Federal False Claims Act or the State False Claims Acts for healthcare fraud. The very idea of a “kickback” in health care is anathema to that doctor patient relationship.

The FCA and the Anti-Kickback Statute

Not surprisingly, Medicare and Medicaid providers are forbidden from taking kickbacks in exchange for referring patients, performing certain procedures, or prescribing certain drugs. The kinds of activities that are considered kickbacks under the law can involve more than just a straight cash payment for referring a patient. Specifically, the Anti-Kickback statute, 42 U.S.C. Section 1320a-7b(b), prohibits anyone from offering, soliciting, paying, or receiving anything of value (including referrals) in exchange for referring patients, performing procedures, or using/prescribing products that will in any way be paid for by any federal health care program (such as Medicare or Medicaid). The Anti-Kickback statute now also includes language that indicates any claim to a government program incident to such a kickback is a false claim under the False Claims Act.

So a drug company would be liable if it paid a doctor to prescribe its products to Medicare patients. “Payment” in this context could be virtually anything, including referring patients, providing free samples, paying for travel to conferences, or almost anything else that has some monetary value. A drug company can provide free samples or refer patients, but cannot do so in exchange for prescribing its product.

In practice, this means that a drug company that gives out free samples or refers patients must do so equally to all doctors or specialists, without regard to how much of their product the doctor actually prescribes. Therefore, thing to remember about a kickback is that it need not be in the form of cash to create liability.

Anything can be a kickback as long as it’s a value to the person being induced or the person receiving – giving the referral for business. In fact, a referral for referral could be a kickback. There’s any manner you could think of that would induce a doctor or a hospital or something like that to use a product or prescribe a drug or order a service that could be paid for by government healthcare program, anything at all could work as kickback.

As soon as the company gives preference to doctors that prescribe more of their product, they have given a kickback and violated the Anti-Kickback statute. Anyone who presents claims to a federal health care program for prescriptions or services from doctors who received such kickbacks have made implicit false certifications of compliance with the Anti-Kickback statute. The company giving the kickback would also be liable under the FCA, since by giving the kickback it caused the false certification to be made.

The anti-kickback statute allows prosecution of a kickback and makes very clear that the kickback doesn’t have to be in the form of cash, although certainly cash can be a kickback. The question is whether a doctor or anyone has been induced to provide a service or make a prescription, or something like that, illegally or whether somebody has gotten a referral in exchange for what’s called remunerations.

The FCA and the Stark Law

The Stark Law is a little more specific in that it prohibits referrals when doctors have a particular financial interest in an institution. The idea is to prevent a physician from making referrals to their own entities, separate that from a medical decision. The doctors aren’t ordering unnecessary tests and ordering unnecessary procedures just to make money for their own financial groups. That’s what the Stark anti-self-referral law is about.

Similarly, the Stark Law, 42 U.S.C. Section 1395nn, with certain exceptions (such as for members of the same practice), prohibits doctors from referring people enrolled in federal healthcare programs to other physicians or medical facilities with which they have a financial relationship. This means that a doctor who is part owner of a hospital cannot refer Medicare patients to that hospital for care. Similarly, a cardiologist could not form a relationship with a pulmonologist to refer Medicare patients only to each other, unless they are members of the same practice.

The whole point of the Anti-Kickback Statute and the Stark Law is to preserve the relationship between the health care provider and the patient. Patients are supposed to be able to trust that their health care provider is putting their care ahead of business considerations. The kinds of business considerations, which these laws are designed to protect us against are particularly egregious, but also can be particularly profitable given the amount of money involved in health care today. The temptation for practices and hospitals to take what may seem at first to be innocent inducements is tremendous. The good doctors and strong institutions know better; they know that nothing should come between patients and the advice of their health care provider.

Fight Health Care Kickbacks with the FCA

Indeed, we all want our health care provider providing us unfettered advice. We do not want financial inducements entering into the decision about our care. So, kickbacks in health care are a major area of litigation and have resulted in notable cases under the False Claim Act. The government is rightly concerned when such kickbacks are a part of a case, because it has the possibility of interfering with the best interest of the patient.

As a result, unfortunately some companies have succumbed to the temptation of illegal inducements and that’s really why kickbacks have become an issue. Nobody wants these companies to interfere with or unduly influence the advice that doctors and medical professionals give patients. So as a result, some very tough laws are out there to prevent kickbacks within the healthcare industry.

After all, if your doctor is prescribing you a medication or advocating a particular procedure because some major company is providing some financial consideration, it’s an added risk to your health. Fortunately, if the practice involves any government funding, there is a way to fight this kind of health care fraud. Filing a case under the False Claims Act may be the best way to proceed.

When we go to the doctor we expect the doctor to give us their unbiased medical advice. We don’t expect that advice to be tainted in any way by potential for the doctor to make money. That’s why these laws came into existence, because otherwise it will be such an easy way for somebody to make additional money and everybody is subject to that type of temptation.