What are the Anti-Kickback Statutes?

The United States government pays billions of dollars every year to pay for medical care and healthcare-related expenses through programs like Medicare, Medicaid, and the Veterans Administration. Most of that money is paid to hospitals, clinics, laboratories, pharmacies, drug companies, medical device manufacturers, and individual and group physician practices. To get paid, those service providers submit bills to the government.

Federal Anti-Kickback Statute (AKS) (42 U.S.C. § 1320a-7b(b))

The federal Anti-Kickback Statute criminal statute with that prohibits any of the people or institutions in the healthcare industry from offering, soliciting, paying, or receiving anything of value to another individual or business entity in exchange for referrals of either patients, or sales. The AKS applies to all government prime contractors, prime contractor employees, subcontractors, and subcontractor employees.

Who are the contractors, subcontractors, and employees? The law covers any of those persons who receive payment under any federal healthcare program, like Medicaid, Medicare, the VA, etc. The kickback does not need to involve a patient whose bill is paid by the government. Instead, the prosecution must only prove that the accused defendant is a covered contractor.

For example, a doctor might agree to waive a patient’s copay if the patient refers people to the doctor’s practice. More patients means more services and more billings. Another example might involve a doctor who receives money or other valuable gifts from the drug company prescribing certain medications to patients. The government program may pay part of the patient’s drug expenses and the drug company sells more drugs. Still, one more example could be a laboratory paying a doctor a fee for every patient they send to that lab for testing.

Under the federal statute, penalties for violating the Anti-Kickback Statute include:

Federal prison for up to 5 years for each violation
$25,000 fine per violation
Exclusion from all federal payment programs (Medicaid, Medicare, VA, etc.)
Revoked Medical License
Civil fine of up to $50,000 per violation
Civil assessment of up to 3x the amount of the kickback for each violation

Federal Conviction Requires Proof of These Elements

As with all criminal statutes, government prosecutors must prove every element of the crime beyond a reasonable doubt. With the Anti-Kickback Statute, a conviction requires that the government prove the following:

the defendant acted “knowingly and willfully”
attempted or completed a “kick-back” (e.g., solicited, offered, paid, received, etc.)
the defendant is a covered government contractor, subcontractor, or employee
nature of the government contract (reimbursement from any govt. contract; which one?)

Defenses and Exceptions to the Anti-Kickback Statute

Since federal law is so strict and the penalties are so harsh, it’s understandable that anyone in the healthcare services business would be a little worried about any financial dealings with other healthcare individuals or businesses.

What if a laboratory was paying rent to a doctor whose patients often use the laboratory for their testing? As experienced Anti-Kickback Statute defense attorneys, we at Stechschulte Nell know that some legitimate financial transactions between healthcare providers may be misconstrued as illegal kickbacks.

The key is whether the terms and conditions of the transaction meet certain standards:

Is the agreement covering the transaction in writing? (Lease, reimbursement, etc.)
Are the terms of the agreement consistent with the market value of the subject?
Is the transaction reasonable compensation to an employee or for services rendered?
Is the agreement a reasonable joint venture?
Is the thing of value just complimentary transportation?
Is the subject of the agreement consistent with the reasonable needs of the party?
For example, a doctor paying rent for a warehouse but only occupying one corner of the property is paying more rent than they need, perhaps to disguise kickback payments to the landlord.

If you are the subject of a government investigation or an allegation of violating the Anti-Kickback Statute, contact a criminal defense attorney immediately. An experienced AKS defense lawyer will be able to highlight evidence supporting your legitimate financial transactions or challenge the allegation that you acted knowingly and willfully to violate the statute.

Florida Anti-Kickback Statute (F.S. § 817.505)

The State of Florida also has its own anti-kickback statute that is referred to within the category of Fraudulent Practices as “Patient Brokering.”

The Florida statute covers much of the same conduct described in the federal AKS but focuses on offenders who commit the prohibited acts within Florida and not involving the federal government payments programs.

In reality, though, very few healthcare providers in today’s economy could operate profitably without some contractual agreement with the federal government to receive payments through either Medicaid, Medicare, or similar programs.

Florida criminalizes any solicitation, offer, payment, receipt of a commission, benefit, bonus, or another item of value, or any fee-splitting “to induce the referral of a patient or patronage to or from a healthcare provider or facility. It also criminalizes any such conduct in exchange for acceptance or acknowledgment of treatment.

Unlike the federal statute, Florida law does not require any contractual relationship with the government.

The Florida statutory penalties are enhanced as the offense involves an increasing number of patients.

Any violation constitutes a 3rd-degree felony punishable by up to 5 years in state prison, a mandatory fine of $50,000,
Any violation involving at least 10 but not more than 20 patients constitutes a 2nd-degree felony carrying a penalty of up to 15 years in prison and a mandatory fine of $100,000,
Any violation involving 20 or more patients is a 1st-degree penalty punishable by a state prison sentence of up to 30 years and a mandatory fine of $500,000.

Just as the federal Anti-Kickback Statute has exceptions and defenses, so too does the Florida law against “patient brokering.” As with the feds, the defense to a charge of Florida “patient brokering” includes evidence that the suspected patient-brokering transactions were actually legal financial transactions with legitimate purposes and consistent with reasonable market values.

The federal and state anti-kickback law requires your attorney to have a full understanding of the applicable law, the exceptions, and every defense available to you. Your freedom and your livelihood are at stake. Contact experienced criminal defense lawyers for your kickback-related charges.

Learn More > Penalties for Healthcare Kickbacks