Healthcare professionals need to make sure their practice not only operates in compliance with federal regulations but also that any agreements with other businesses are in compliance as well. This can be particularly difficult when it comes to arrangements with Management Services Organizations (MSO). Recent legal actions highlight the dangers of a failure to comply, showing how an arrangement can be in violation of the Anti-Kickback Statute (AKS).
How can an MSO violate the AKS?
The AKS makes it illegal to exchange remuneration to induce referrals of items or services covered by federal health care programs. Violations can lead to severe penalties, including imprisonment and forfeiture of criminal proceeds. In a recent case out of Tyler, Texas, the government accused two former laboratory sales executives of violating the AKS. The government claimed the pair were part of a scheme incentivizing physicians to refer patients to specific hospitals and labs in exchange for kickbacks disguised as investment returns. The prosecution built a case claiming the scheme involved:
- Partnering with rural hospitals and a clinical laboratory to process blood tests,
- Billing insurers at higher rates than standard clinical laboratory fees, and
- Utilizing MSOs to facilitate payments to physicians for referrals.
The prosecution was successful and the two were convicted. The court sentenced one of the former lab sales executives to 18 months imprisonment, the other 12 months. The court also ordered each to pay hundreds of thousands in mandatory restitution.
The case serves as a cautionary tale for healthcare professionals and those running MSOs. It is important to carefully review these arrangements to make sure they fall within a safe harbor of the AKS as well as comply with other applicable state and federal regulations.
Attorney John Rivas is responsible for this communication.