Toggle Menu
October 04, 2022 | North Carolina Whistleblower

A Guide to the Anti-Kickback Statute and Its Penalties

In some industries, it is an acceptable practice to pay for business references, but in the healthcare industry paying for patient referrals is illegal. Payments for patient referrals, called kickbacks, are prohibited by the Anti-Kickback Statute (AKS), a federal law that was enacted to protect U.S. citizens from corruption in medical decision-making.

Unfortunately, medical industry kickbacks still happen as individuals and organizations attempt to cheat federal healthcare programs for personal gain, and the results can be serious. Improper incentives in patient care can lead to increased healthcare costs as patients are directed away from valid healthcare services and treatments. Healthcare decisions should be guided by what’s in the best interest of the patient, not by a medical provider’s financial relationships.

Individuals who observe false or fraudulent claims involving federal healthcare programs can help fight them.

A Definition of the Anti-Kickback Statute and Who Should Adhere to It

The federal Anti-Kickback Statute (42 U.S. Code 1320a-7b) is a criminal statute that prohibits kickbacks (inducements or rewards) in exchange for medical referrals of any item or service received through federal healthcare programs, such as Medicare, Medicaid, and TRICARE.

The AKS states that is it a crime to offer or pay kickbacks, as well as to solicit or receive them, so it targets the payers of kickbacks, as well as the receivers. Accepting gifts or kickbacks for referrals and claiming that the same decisions and actions would have been made without them is not a defense under the AKS. Even if a physician performs a medical service and that service was deemed medically necessary, he or she can be guilty of violating the AKS if the referral was compensated.

For example, if an orthopedic surgeon accepts an expensive vacation package from a medical device manufacturer as a reward for using its devices during surgery, both the doctor and the manufacturer could potentially be in violation of the AKS.

The AKS does not prohibit doctors from referring patients, it only prohibits them from receiving payment for referring them. Physician referrals are an integral part of the healthcare system due to the high degree of specialization in the field. The AKS also includes exemptions, called “safe harbors,” that protect specific business arrangements in the medical community from being prosecuted under the statute.

The anti-kickback statute prohibits paying or receiving payment to induce referrals from federal healthcare programs.

Key Terms to Better Understand the Anti-Kickback Statute

To better understand the implications of the Anti-Kickback Statue, it is helpful to understand some of the terms commonly associated with it:

  • Kickback – Funds, incentives, or anything of value offered to influence a medical referral decision
  • Remuneration – Anything of value, including bribes, kickbacks, rebates, discounts, goods, and services, that is paid directly or indirectly
  • Referral – A recommendation that a patient receive a service or item, or an authorization or certification of patients for government-funded healthcare
  • Federal healthcare programs – A healthcare program funded by the federal government, such as Medicare, Medicaid, and TRICARE

How the Anti-Kickback Statute Works

The Anti-Kickback Statute works in conjunction with the False Claims Act (FCA). If you are aware of a violation of the AKS, you cannot independently bring a claim against the alleged perpetrator, but you can file a FCA claim on behalf of the government as a whistleblower based on alleged violations of the AKS.

The law requires that you must have an attorney file an FCA lawsuit for you. If you suspect that someone is violating the AKS, contact Carolina Whistleblowers Attorneys today to discuss your case and next steps. We want to help you try to hold the fraudsters accountable.

Examples of Unlawful Kickbacks and Financial Arrangements

Kickbacks in the medical industry can include anything of value that is paid as a reward for referrals of patients or goods funded by a federal healthcare program. They can take many different forms, including:

  • Cash
  • Rebates
  • Discounts
  • Gifts
  • Vacations
  • Meals
  • Free services or equipment
  • Free or under market-price rent
  • Above market-price payments for services provided
  • Above market-price payments for unnecessary services
  • Payments for services not provided

Doctors are responsible for understanding the federal and state laws where they practice. Becoming familiar with the AKS and being able to identify a kickback or offer of a kickback can help them avoid violations – and report others who may be in violation.

How Kickbacks Hurt Healthcare

Reminder! You don't need to know exactly how the AKS is being violated. If you suspect something even before you have evidence, call us.Kickbacks are dangerous to the government healthcare system because they can lead doctors to make medical decisions based on personal gain instead of the health of their patients. When a healthcare provider accepts kickbacks, he or she may be encouraged to prescribe certain medications and treatment plans, regardless of the patients’ needs, or they may direct patients to inferior treatment centers for a kickback.

In addition to endangering patients’ health and welfare, kickbacks can drive up the expenses of government-funded healthcare programs such as Medicare, Medicaid, and TRICARE. They can also alter the competitive marketplace. Without competition, medical services and care can become subpar.

An Alleged Anti-Kickback Statute Violation Case

When Carolina Whistleblower Attorneys’ Bill Nettles was the U.S. Attorney of the District of South Carolina, his office reached a settlement to resolve allegations that Respironics, Inc. violated the Anti-Kickback Statute by providing free call center services to durable medical equipment (DME) suppliers that bought its masks for patients.

Respironics agreed to pay $34.8 million to resolve allegations of fraud against the Medicaid program, of which $5.38 million goes to the whistleblower who brought the lawsuit under the qui tam provisions of the False Claims Act.1,4

“Americans deserve to know that when they are prescribed a device to treat a serious healthcare problem, the supplier’s judgement has not been compromised by illegal payments from equipment manufacturers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division at the time.

Penalties for Violating the Anti-Kickback Statute

Because the AKS is a criminal law, a violation of it can lead to a felony conviction and prison sentence and/or fine. Violations can also result in possible exclusion from federal healthcare programs and liability under the False Claims Act.

The FCA provides that violators are liable for treble damages (three times the value of damage to the government) plus a False Claims Act penalty for each violation of the FCA. For violations occurring after May 9, 2022, the FCA penalties range from $12,537 to $25,076 per violation.

Frequently Asked Questions About the Anti-Kickback Statute

What Other Laws Fight Government Healthcare Fraud?

The Anti-Kickback Statute is joined by several other laws intended to prevent organizations and people from cheating the government in healthcare, such as the Health Care Fraud Statute, the Stark Law, the False Claims Act, the Patient Access and Medicare Protection Act, and the Civil Monetary Penalties Law. This Centers for Medicare & Medicaid Services fact sheet describes most of these in more detail.

Are There Rewards for Blowing the Whistle on Kickbacks?

Yes, if an FCA claim is filed on behalf of the government alleging violations of the AKS, and the claim is successfully resolved via a settlement, the whistleblower could potentially receive up to 30% of the recovery.

Who Does the AKS Regulate?

The AKS prohibits paying kickbacks to doctors and patients, as well as to marketing and procurement professionals who can buy or influence purchases paid by health insurance or government funds.

How Do I Report a Violation of the Anti-Kickback Statute?

Carolina Whistleblower Attorneys will listen to your story and can help you determine the best path forward. If it is in your best interest to proceed with an FCA claim based on an Anti-Kickback Statute violation, we can fight for you. Contact or call us today at 1-888-292-8852 for a free and confidential case evaluation.

 

John L. Warren, III avatar

John L. Warren, III

Phone

About the Author

John Warren has spent a significant portion of his legal career in federal court handling whistleblower cases. After receiving his JD from Elon University School of Law, he clerked for the Supreme Court of South Carolina, the U.S. District Court of South Carolina, and the U.S. Court of Appeals. In private practice, he has worked alongside two former U.S. Attorneys for the District of South Carolina to fight for the rights of whistleblowers. John is admitted to practice in the U.S District Court for the District of South Carolina and the U.S. Court of Appeals for the Fourth Circuit.

Similar Articles

North Carolina Whistleblower | October 04, 2022

A Complete Guide to FCA Whistleblower Rewards

When whistleblowers provide information that leads to the successful recovery of funds stolen from the...

North Carolina Whistleblower | April 07, 2020

A Guide to the North Carolina False Claims Act

  Did you witness, or know of, some suspicious activity at work? Maybe your employer...

North Carolina Whistleblower | January 28, 2020

7 Signs That You May Have a Whistleblower Claim

  As a child, when you saw someone doing something wrong, there was no question...

Contact the Carolina
Whistleblower Attorneys

If you’re wondering if it’s a good idea to speak with a whistleblower lawyer about what you know, let us set the record straight.

  • Corporate ethics hotlines can be risky and may lead to termination. If you’ve already done this, call us immediately.
  • Your coworkers could be aware of the fraud – or complicit in it – and you should not talk to them about it.
  • The first claim to be filed under the False Claims Act can proceed – if you’re not first, you’re at a serious disadvantage and may get nothing (another reason not to speak to your coworkers about it).
  • A confidential discussion costs you a few minutes, but could save you time, stress, and money.

1-888-292-8852

* Denotes required

Disclaimer: Submission of any information to CarolinaWhistleblower.com does not constitute an attorney-client relationship. We have attorneys licensed to practice law in North and South Carolina.

This field is for validation purposes and should be left unchanged.