CAMLAW: Complementary and Alternative Medicine Law Blog : Complementary, Alternative, & Integrative Medicine Law, Regulation, Ethics & Policy (Alternative and Complementary Medicine, Medical Spa Information, Holistic Health Attorney, and Legal Resources)

This is an excellent write-up from attorney Greg Piche of Holland & Hart through his health care blog.  The anti-kickback statute ("AKS") formerly read:

(b)(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

(2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person—

(A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.    

Mr. Piche notes:

The Act adds the following to the AKS: 

 

[W]ith respect to violations of this section, a  person need not have actual knowledge of this section or specific intent to commit a violation of this section.

 

    Under existing case law, the AKS has an elevated standard of proof with respect to mens rea or intent to violate the statute, requiring knowing and willful violation, including the specific intent to violate the AKS.  “Willfully”’ means unjustifiably and wrongly and known to be be such by the Defendant. U.S. v. Jain, 93 F. 3rd 436 8th Cir. 1996) (“good faith” is a defense to the charge of violation of the AKS, if defendant believed that he was being paid for promotion, not for referring patients). Scienter under the AKS requires 1) that the defendant know that the AKS prohibits offering or paying remuneration to induce referrals and 2) that the defendant engage in the prohibited conduct with the specific intent to violate the law. Hanlester Network, v. Shalala 51 F. 3rd 1390, 1398 (9th Cir. 1995). supra.  See U.S. v. James, 2007 WL 2174650 (W.D. KY) (payments for medical equipment referrals not a violation of AKS where defendant didn’t believe that non-physicians could give referrals and receive kickbacks under the statute).

The Act strips health care providers of an important protective barrier under the AKS and substantially tips the playing field in favor of the government by effectively eliminating the good faith defense to the AKS.

What more need be said? With the requirement of "intent" watered away, health care providers and institutions need to be ever-more careful of how they structure their compensation arrangements to as to avoid kickback penalties.

Our attorneys help clients structure their arrangements so as to properly manage thorny and complex legal arenas.  For more information on our Stark and anti-kickback / fee-splitting practice, please contact our office and/or read our additional post:

Creating Legally Successful, Multidisciplinary Health Care Practices: Fee-Splitting, Kickbacks, Stark Analysis, Corporate Practice of Medicine, Unlicensed Practice, Employment, and Other Issues

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Michael H. Cohen is an attorney providing business legal advice to green entrepreneurs and companies, and health care law advice to businesses and physicians, acupuncturists, naturopaths, homeopaths and others in the holistic health, wellness, and green industries. As a founding attorney of the Global Vision Law Group, he represents businesses poised for vertical lift, whose leaders are conscious, intuitive, and committed to shaping a better world. Michael also advises medical spas and integrative medicine clinics, physicians, chiropractors, naturopathic physicians, massage therapists, energy healers, nutritionists and herbalists, dietary supplement and cosmetics companies, and businesses with bio-energy and other technologies and medical devices. Michael offers the Entrepreneur’s Legal Toolkit as a series of legal guides to businesses. The first legal e-book deals with Contract Essentials, giving legal tips every business needs to negotiate its legal agreements; the second addresses legal issues faced by multi-level marketing companies and individuals involved in multilevel marketing and direct sales; and a HIPAA Regulations and Privacy Manual.

Michael also sponsors Being Central, a Portal for Potential, which gives access to other, pre-paid legal services. 

Read reviews of Michael’s work on the Complementary Complementary and Alternative Medicine Law Blog. And visit the Flat Rate Legal Services page for information on legal services where a  flat rate or project fee can be discussed (such as incorporation for entrepreneurs, review and drafting of business contracts, trademark, and health law services for CAM providers and others).

Michael’s clientele  through the Global Vision Law Group includes businesses not only in California, New York, Maryland, Massachusetts, Washington, D.C., and other U.S. states, but also abroad.  Our firm also provides special expertise to attorneys and law firms whose clients are involved in wellness industry projects or who require guidance regarding fee-splitting, Stark, anti-kickback, medical board discipline, and other health law and regulatory compliance issues.

To speak with a lawyer about health care law issues pertaining to complementary and alternative medicine, or to consult a business lawyer about laws and legal issues for entrepreneurs and new enterprises that are seeking legal advice, contact the Global Vision Law Group today.