Beware: Government is Now 
Targeting Kickback Payments 
– Both Big and Small

Thursday, December 13, 2012

Big-time defrauders are not the only ones on the government’s radar these days. The Office of Inspector General (OIG) — the agency tasked with enforcing the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b) — has begun cracking down on health care providers who receive kickback payments in amounts as low as $200. One recent enforcement action has shown that the government is now willing to enforce the Anti-Kickback Statute against physicians and others who solicit or receive any type of kickbacks, no matter how small the illegal payments or other remuneration might be.

Several doctors and a nurse practitioner were recently charged for allegedly accepting illegal kickback payments in exchange for referrals of patients to an Orange, NJ, diagnostic imaging center. Between 2010 and 2011, Orange Community MRI (OCM) allegedly entered into agreements with these individuals to pay monthly kickback payments in exchange for their referral of Medicare and Medicaid patients to OCM for diagnostic imaging services. According to the OIG, at the end of each month, OCM printed patient reports that showed how many diagnostic tests each health care provider referred to the facility, and the facility used these reports to calculate what it owed to each provider.

Historically, the OIG has gone after big fraudsters or those who received kickback payments in egregious amounts. That is why this New Jersey case is so important. In the New Jersey case, the alleged kickback payments, which were paid to 15 health care providers, totaled only $51,500. The highest payment made to any single provider was approximately $5,000, and most of the payments were for far less amounts. The smallest payment was only $200.

Each of the New Jersey health care providers involved in this case is charged with one count of violating the federal Anti-Kickback Statute by soliciting and receiving kickbacks. Because the statute is criminal in nature, violations of the statute can result in jail time, criminal money penalties and exclusion from federal health care programs, including Medicare and Medicaid. These penalties apply to any party involved in a prohibited transaction, including both the party paying and the party receiving the prohibited remuneration. In this case, an employee of OCM, its executive director, was also charged with violating the statute and faces the same maximum potential penalties as OCM.

Even the most innocent physicians might be swayed into taking a seemingly harmless referral payment that might be illegal under federal laws. To help protect you and your practice against potential liability under the Anti-Kickback Statute, you should discuss any proposed referral arrangements with an experienced health care attorney. We also recommend that you familiarize yourself with the restrictions of the Anti-Kickback Statute and carefully assess all relationships to ensure proper compliance. The following are a few of the resources available to educate physicians about compliance with the Anti-Kickback Statute as well as other fraud and abuse laws:

The OIG recently published a road map that discusses the basics of fraud and abuse laws and provides tips on how physicians should comply with these laws in relationships with their payers, vendors and fellow providers. To access this information, visit

The American Medical Association has issued guidance in the form of formal statements, opinions and a Code of Medical Ethics designed to ensure ethical conduct of physicians. To access these documents, visit

The Advanced Medical Technology Association (AdvaMed) has issued an ethics code — known as the AdvaMed Code on Interactions with Health Care Professionals — that provides additional guidance on interactions between medical device manufacturers and physicians. To access the code and other AdvaMed resources, visit

Although the government does not have the time or resources to go after every suspicious deal, recent actions like this New Jersey case show the OIG is now turning its attention to physicians when it can prove its case, no matter how small the illegal payment or other remuneration may be.

Kathleen Quiroz and Vanessa Russell-Evans are members of the health law group in the San Antonio office of Strasburger Price Oppenheimer Blend. This group, collectively, has 67 years of experience representing corporate, health care and life sciences clients. You can reach Quiroz and Russell-Evans at (210) 250-6148.