In today’s video, we are going to discuss patient brokering, fee-splitting and kickbacks.

I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients just like you navigate healthcare and FDA legal issues so you can launch, or keep scaling, your health and wellness product or service.

Recently we got a call from a physician who refers patients to multiple rehab centers.  In the course of our legal consultation, the doctor wanted to know whether he could receive any fees in exchange for that referral.

The classic answer is, of course: you cannot receive fees in exchange for referring patients.

Naturally, we come across all sorts of creative arrangements, and we think about them with considerable creativity and finesse. We don’t give a blanket “no” every time.  Sometimes we do come up with compensation arrangements that can push the envelope.  With anti-kickback law, there are safe harbors, and whether there is a violation is a fact-and-circumstances-based analysis; so, it is hardly black-and-white.

The general rule, though, is that healthcare providers can only be compensated for their professional services when they are rendering professional services and not for making referrals.  The law prohibits any “inducement” or incentive to refer.  Classically, an inducement is the referral.

Another way to put this is that the healthcare provider cannot “split” their professional fee with a non-professional, which means they can neither give nor receive any money in exchange for receiving or giving a patient referral, respectively.

In all my years representing clients, I have had only one client really press for a “way around” this prohibition.  This client pressed and prodded and pushed and insisted that our Firm had a reputation for “getting around” anti-kickback laws.  For sure, this Client had our brand completely wrong.  In my career I’ve specifically dedicated time to studying, writing about, and as law professor and then medical school professor, teaching about ethics.  Finally, after a couple of rounds of the Client insisting and asking: “is there any way to get paid to give the referral?” I said, well: “make sure you have a suitcase and use unmarked bills.”

The joke went over the client’s head, so, I had to be very clear that this was meant in a humorous way and it was a rare occasion for me to say it like that. But it’s just like saying, “don’t go rob a bank.” It seemed like the only way to get the message through for this client. I’m not even sure if it got through but that was not a client that our Firm would retain for a long-term basis.  For all I know they are still out there, looking for that lawyer, who can give them the “workaround.”

One of the risks with anti-kickback law is that enforcement can attack from so many different angles. We talked about kickbacks, and, sometimes there’s a prohibition against splitting fees.

There is a third very large pothole to worry about, and that is a prohibition against patient “brokering.” Who wants to “broker” patients?  Sounds awful.  Florida is one of those states with an express prohibition on patient brokering.  But California also prohibits making referrals for a profit.  Even if addiction centers are outside the corners of Health & Safety Code 445, judges can always apply the “spirit” of the law, sometimes they talk about the “policy” behind the prohibition.

And of course, the Federal U.S. Department of Justice also found ways to prosecute so-called patient brokering, such as clinical labs involved in Urine Drug Screening fraud.

Such prohibitions can also extend to marketing companies, hired to market on behalf of a medical clinic or practice.

For example, California Health & Safety Code Section 11831.6 prohibits giving or receiving anything of value for referring people to an alcohol or drug abuse recovery and treatment center.

On the federal side, the relatively new SUPPORT Act, includes a provision that similarly prohibits the knowing and willful solicitation, receipt, payment or offer of remuneration with respect to patient referrals to recovery homes, clinical treatment facilities, and certain laboratories.

There is a lot to digest. The safest way might be for example, to compensate people on a flat fee, per-hour basis.

Thanks for watching. If you have any questions, click on the link below, cohenhealthcarelaw.com/contact, to send us a message or book an appointment. We look forward to working with you soon.