Is Your Medical Practice or Healthcare Company at Risk of Anti-Kickback Penalties?

The Department of Justice Continues to File Anti-Kickback Cases

The Federal Anti-Kickback Statute makes it illegal to offer, pay, or accept any remuneration (whether direct or indirect), in cash or in kind for:

  • Referring someone to another person where items or services will be provided and where the payment while be made, partially or wholly, by a federal healthcare program.
  • Buying, leasing, ordering, or arranging to buy/lease/or order goods, facilities, or items where the payment is made, partially or wholly, by a federal healthcare program.

Federal health care programs include Medicare, Medicaid, TRICARE (a military health care program) and other federal programs. The Anti-Kickback Statute also applies to payments by state health care programs.

The purpose of the Anti-Kickback Statute is to discourage physicians and health providers from making recommendations for their patients that aren’t completely in the best interest of the patient.

The US Department of Justice and state prosecution offices do file criminal charges against physicians and health providers who violate the statute. The criminal and civil consequences for violating the kickback laws can be quite severe as an experienced Anti-Kickback Statute attorney can explain.

Several cases in 2018 illustrate what actions violate the Anti-Kickback Statute and what the penalties for violations can be.


While federal Stark and anti-kickback laws, and state law equivalents (often known as “mini-Stark” and “fee-splitting prohibitions”) are very complex, there 5 key legal rules you’ll want to know. […]

Dallas Woman Pleads Guilty to Violating the Anti-Kickback Statute

The U.S. Department of Justice issued a press release on December 19, 2108 that a seventh-person in an illegal kickback scheme pled guilty to violating the federal Anti-Kickback Statute. The plea was entered before the Chief US District Justice for the Eastern District of California. The woman, aged 41, was part of a scheme involving TRICARE. TRICARE is a federal health care program that provides civilian health care benefits for members of the military, military retirees, and dependents of current and retired members of the US Armed Forces.

The scheme involved a marketing representative, a medical assistant, and five patient recruiters. In October, the marketing representative pled guilty to originating the scheme to offer kickbacks to patient recruiters who gave him beneficiary information of TRICARE members and additional kickbacks to “rubber stamp prescriptions” in the names of the beneficiaries. Duke worked for a drug compounding company based in Mississippi. The company paid commissions when “affiliated doctors prescribed its drugs.” TRICARE, for parts of 2014 and 2015, paid tens of thousands of dollars each month for patients who needed the prescriptions.

The illegal scheme to generate false prescriptions through kickbacks resulted in TRICARE paying $10 million for compound drug prescriptions for more than 100 beneficiaries. The patient list included people across the United States.

The woman who pled guilty was the last of the five involved in the scheme to plead guilty. The medical assistant had previously admitted that she “inserted the name of the Little Rock [Arkansas] doctor she worked for onto the prescription forms – without the doctor’s knowledge.” The patient recruiters used various incentives to entice TRICARE beneficiaries. These incentives included:

  • Cash
  • Gift cards
  • Paying subordinates (including current and former members of the military) to recruit still more TRICARE beneficiaries on their behalf. The woman who was the last to plead guilty admitted before the District court that she had used a subordinate network to recruit 20 TRICARE beneficiaries. One of the members of the network was a member of the Army National Guard.

The following federal agencies, in addition to a regional US Attorney, helped bring about the pleas:

  • A special agent for the FBI
  • A special agent for the US Department of Health and Human Services
  • The Office of the Inspector General (HHS-OIG)

All seven of the co-conspirators pled guilty to violating the Anti-Kickback Statue. Offenses of this law can carry sentences of up to five years in prison, fines of up to a quarter-million dollars, and up to three years of supervised probation. The US District Judge also ordered that nearly $3 million dollars be forfeited by the seven defendants. A little less than half of that $3 million has already been recovered.

Two Doctors and a Man Indicted by an Oklahoma Grand Jury on Charges of Violating The Federal Anti-Kickback Statute

On December 10, 2018, the US Attorney’s Office of the Department of Justice announced that two physicians were charged with violation of the Anti-Kickback law. They were also charged with committing health fraud of more than $4.7 million. The US attorney stated that charges for violations like these are necessary to protect taxpayers who fund federal health care programs and beneficiaries who need the services and medications these agencies provide. Some of the health care agencies that suffer from fraud include Medicare, Medicaid, TRICARE, and federal workers compensation.


This is a story about how Harry, a healthcare entrepreneur, worked through a proposed arrangement that was raising Stark and Anti-Kickback issues.

The government encourages witnesses to step forward. In some cases, people who disclose fraud involving federal health care programs may be entitled to a whistleblower fee.

Two of the criminal indictments alleged that one doctor and another person conspired to pay illegal kickbacks and bribes to doctors to induce the doctors to write compounding prescriptions on behalf of pharmacies that then submit the prescriptions to federal health programs and private insurance companies for payment. These two defendants were affiliated with several pharmacies.

Another defendant, a doctor from Texas, was charged with conspiring with the other two defendants to commit health care fraud. The indictment claims the Texas doctor “solicited and received over $860,000 in illegal bribe and kickback payments” from the other two defendants.

Compound prescription drugs are very expensive. Federal agencies and private insurers pay high amounts for these compound drugs.

“Compounding prescriptions is a practice in which a pharmacist or physician combines, mixes or alters ingredients of a drug or multiple drugs to create a medication that is tailored to the specific needs of a patient. These medications are prescribed when standard Food and Drug Administration (FDA) approved drugs are unsuitable for the patient.”

When a compound drug is necessary for a patient, Physicians should write the prescription and then let the patient take the prescription to the pharmacy of the patient’s choice. Instead, the doctors involved in the scheme were given pre-printed prescriptions that covered the compounding medications. The doctors then just checked the compound prescription of their choice and faxed the prescription directly to an “associated pharmacy.”

The illegal kickbacks and fraud sham business dealings included the payment to  the physicians for acting as a “medical director” for a pharmacy even though they never performed any medical director duties. Additionally, the doctors were “allegedly paid kickbacks for writing prescriptions for medications whether or not their patients needed them. The prescriptions were then sent to the affiliated pharmacy.

Conspiracy to violate the Anti-kickback statute carries a maximum sentence of five years. Actually violating the Anti-Kickback statute can mean up to 10 years in prison. Health care fraud that don’t cause injury or death can result in up to 10 years. If a patient dies or is injured, the sentence for health care fraud can be up to 25 years. The fines for conspiring to violate or violating the Anti-Kickback statute can be quite substantial.

The criminal indictment was brought about by US Attorneys and the following agencies:

  • The Defense Criminal Investigative Service, Department of Labor-Office of Inspector General (OIG)
  • IRS – Criminal Investigation
  • S. Postal Service-OIG
  • Federal Bureau of Investigations (FBI)
  • Department of Health and Human Services-OIG

Seven ambulance industry defendants agree to pay more than $21 million for knowing violations of the Anti-Kickback Statute

On August 27, 2018 , seven defendants agreed to settle claims by the US Department of Justice that it had violated the False Claims Act. The False Claims Act allows the government to file claims against anyone who knowing submits false claims to federal healthcare agencies such as Medicare and Medicaid to obtain payment for medical services, medical devices, or medications. The Justice Department claimed that basis for the False Claims Act allegations were based on violations of the Anti-Kickback Statute. The case was brought in the Eastern District of Texas.

The case was initiated by a whistleblower who is entitled to a share of the successful recovery. That share amounts over $4.9 million – nearly a fourth of the overall settlement.

The US Department of Justice agreed to intervene in the lawsuit.

The defendants included:

  • ETMC Defendants:
    • East Texas Medical Center Regional Healthcare System, Inc.
    • East Texas Medical Center Regional Health Services, Inc.
  • Their affiliated ambulance company, Paramedics Plus, LLC (“Paramedics Plus”).
  • The ETMC defendants and Paramedics Plus agreed to pay $20.649 million. The company agreed to pay $300.000.
  • The former president of the Paramedics Plus agreed to pay $80,000.
  • Emergency Medical Services Authority (“EMSA”). EMSA settled for $300,000
  • Alameda County, California. EMSA agreed to pay $50,000.
  • Pinellas County Emergency Medical Services Authority in Florida (“Pinellas EMSA”). Pinellas EMSA agreed to pay $66,000 plus another $5,200 to the state of Florida.

Acting Assistant Attorney General Chad A. Readler, for the Justice Department’s Civil Division said,

“These settlements demonstrate our commitment to ensuring that health care decisions are made based on patient needs, not a health care provider’s financial interests.”

The defendants did not admit to liability. The payments were made to settle the DOJ’s formal complaint. The Department of Justice did allege that Paramedics Plus “paid millions of dollars in illegal inducements” over a span of many years. The president of Paramedics Plus was charged with being the recipient of illegal gifts and also with directing Paramedics Plus to make political contributions to local Oklahoma politicians, which EMSA could not do on its own.

U.S. Attorney Joseph D. Brown said,

“Sophisticated health care companies do not simply give away millions of dollars to referral sources without expecting something in exchange. Quid pro quo arrangements for the referral of health care business are illegal.”

The agencies and people involved in bringing and investigating the claim included:

  • The US Attorney’s Office for the Eastern District of Texas
  • The Civil Division of the U.S. Department of Justice,
  • The U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG),
  • California, Florida, Indiana, and Oklahoma.

The US Department of Justice will file charges against individuals, companies, and entities that violate the Anti-Kickback Statute. This includes doctors, medical assistants, medical directors, physician assistants, and marketing professionals. Defendants can also include pharmacies, hospitals, ambulance services, and any type of health care provider.

The FBI, the Office of Inspector General, the US Attorney’s Offices, and other agencies will work together to prosecute claims against wrongdoers.

There are safe harbors to the Anti-Kickback Statutes. These safe harbors can protect physicians and health care providers from criminal and civil prosecution. Medical practices and companies should consult with an experienced health care fraud attorney to understand what safe harbors apply and the best ways to implement those safe harbors. For help preparing your marketing and practice against claims of health care fraud, contact Cohen Healthcare Law Group PC today by calling 310-844-3173 or using our online contact form.

Contact Us

Book your Legal Strategy Session now
Cohen Healthcare Law Logo

Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.

Start typing and press Enter to search