The Anti-Kickback Statute (AKS) is a federal law to prevent fraud and abuse in healthcare, particularly the influence of money on medical decisions. It is not uncommon for hospital CEOs, given their influential positions, to find themselves facing allegations of violating this statute. Hospital CEOs may face AKS allegations in several contexts, including:
- Negotiating vendor contracts where the government suspects kickbacks in the form of rebates or other financial incentives.
- Establishing referral agreements with other healthcare providers or facilities that include compensation arrangements the government may find questionable.
These scenarios can lead to investigations and charges if they appear to incentivize referrals or the purchasing of products and services.
What types of penalties do CEOs face when the government accuses them of an AKS violation?
If the government can build a case, potential penalties can include criminal charges resulting in imprisonment, financial penalties, and exclusion from federal health programs such as Medicare and Medicaid, which can be devastating for a hospital’s operations. It is important to note that the implications of AKS allegations extend beyond legal penalties. Allegations alone can tarnish the reputation of a hospital and its leadership.
Unfortunately, cases against CEOs are not uncommon. In a recent example, the government built a successful case against a CEO of a Texas hospital. The government was able to successfully argue that the CEO was involved in a scheme to incentivized physicians to refer patients to their rural hospitals and an affiliated lab for certain tests. The kickbacks to the physicians were disguised as investment returns. The court recently sentenced the CEO to 36 months in federal prison in addition to the agreed upon payment of over $5 million.
What should a CEO do if they face these allegations?
It is important to build a defense to the allegations that centers on the specifics of your case. Evidence of proactive compliance measures, such as the implementation of compliance programs that prevent illegal kickbacks, can help to establish compliance. It may also be helpful to conduct internal reviews at the first hint of irregularities to mitigate potential damages.
For hospital CEOs, the stakes are high when it comes to compliance with the Anti-Kickback Statute. As such it is important to take the matter seriously and, if under investigation for similar allegations of wrongdoing, begin working on a defense tailored to your situation.
Attorney John Rivas is responsible for this communication.