The Feds take aim at kickback schemes

October 8, 2004

Scrutiny is increasing. Here are some real-life examples of how the antikickback statute is being enforced in the healthcare environment.

Fast May, three primary care physicians were charged in New York federal court with taking kickbacks in return for referrals to a gastroenterologist. If convicted, Paul Branda, Naum D. Tsynman, and William G. Johnson each face a maximum penalty of five years in prison and a $250,000 fine for violating the federal antikickback statute.They could also be excluded from government programs, including Medicare and Medicaid.

Just a few weeks before the three doctors were arrested, a senior Justice Department official told healthcare lawyers at an American Bar Association meeting that the federal government would be focusing on kickback arrangements in the healthcare industry. While there hasn't been a dramatic escalation in federal prosecutions of physicians, "the government is becoming more aggressive in its investigation of potential kickback cases than it was 10 years ago," says Sanford V. Teplitzky, chairman of the health law department at the Baltimore-based firm of Ober Kaler Grimes & Shriver. One reason for the increased number of investigations, he adds, is the rise in qui tam (whistleblower) suits over the past decade against those suspected of healthcare fraud.

Kickbacks as blatant as the alleged actions of the New York physicians seem fairly uncommon, judging by official reports and interviews with people in the industry. But a variety of more-sophisticated techniques have been used to reward doctors for referrals and admissions, as well as for lab, supply, and durable medical equipment orders. To supplement the "Physicians' Guide to antikickback regulations" ( http://www.memag.com/memag/article/articleDetail.jsp?id=127167) here are some real-life examples of things to watch out for, along with a few tips on how to avoid running afoul of the law.

Disguising kickbacks as rent is apparently such an obvious technique for avoiding detection that the HHS Office of Inspector General has put out a Special Fraud Alert entitled, "Rental of space in physician offices by persons or entities to which physicians refer." (Among the "entities" in question are outpatient rehabilitation facilities, mobile diagnostic equipment suppliers, and suppliers of durable medical equipment, prosthetics, orthotics, and supplies.) So if you rent space to doctors to whom you refer, avoid any possible appearance of illegality by making sure your charge is reasonable based on your overhead cost, advises Jeff Denning, a consultant in La Jolla, CA.