Updated: A Statewide Health Care Anti-Bribery Law Investigation – UPDATED June 2023 | JD Supra

Lowenstein Sandler LLP

The Federal Health Care Anti-Bribery Statute (Federal AKS) targets bribery and corruption in the health care sector. There are two basic provisions of the federal AKS: one addressed to the recipient of the bribe and one addressed to the payer of the bribe. In particular, the articles of association prohibit the receipt of “any remuneration . . . in exchange for “health care referrals or purchases reimbursable under a federal health insurance program, such as Medicare.[1] And it prohibits paying any compensation “to induce” health care referrals or reimbursable purchases under such a federal program.[2]

The federal AKS is a far-reaching law that provides federal law enforcement agencies with an arsenal of weapons to target questionable business deals in the healthcare sector. The term “remuneration” is loosely defined to mean “anything of value”.[3] And “anything of value” means just that: it’s not there de minimis remuneration under the federal AKS.[4] To prove a violation of the statute, the government need only demonstrate that one of the many possible purposes of the payment of remuneration was to induce the purchase of federally reimbursable goods or services.[5] Furthermore, courts generally do not engage in a “hair splitting” when it comes to discerning the meaning of words such as “report” and “recommend”, relying instead on the broad and prophylactic purposes of the statute.[6] Furthermore, the plain language of the federal AKS suggests that a quid pro quo is not required for a remuneration payer (i.e., a bribe payer) to violate the statute, raising the possibility that a business, provider, or individual of may violate the law by simply paying money to induce use of the product, even if the recipient has not agreed to use the product in exchange for the money (i.e., even if the recipient of the “bribe” does not know that he or she is corrupt) .[7]

Given the broad scope of federal AKS, there are a number of statutory and regulatory exceptions and “safe havens” to the law. For example, statute restrictions do not apply to “a discount or other price reduction” if a number of requirements are met.[8] Similarly, “good faith employment relationship[s]” are isolated from the prohibitions of the statute,[9] as well as “personal services and management contracts”,[10] as well as formal “referral services”.[11] But even these “safe havens” typically have numerous and cumbersome requirements, and if any of these requirements are not strictly met, the conduct is subject to prosecution or other coercive measures.

Compliance with the federal AKS is something of an industry unto itself, but the federal statute represents only part of the risk for healthcare organizations, providers and individuals. All but one of the 50 states, as well as the District of Columbia, have similar commercial bribery laws on the books targeting bribery in the healthcare industry.[12] And of these 51 jurisdictions, 35 prohibit bribes and the like in the healthcare sector even if the goods or services are reimbursable only by private health insurance and do not involve any public money. These additional state laws and regulations often go far beyond their federal counterpart. Accordingly, any comprehensive and thorough analysis of an individual’s or entity’s anti-bribery exposure necessarily requires a separate consideration of these state law analogues.

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*Graph reflects updates as of June 12, 2023.

[1] 42 USC § 1320a-7b(b)(1).
[2] 42 USC § 1320a-7b(b)(2).
[3] For example, United States v. Narco Freedom, Inc., 95 F. Supp. 3d 747, 756 (SDNY 2015) (citing Klaczak v. Consul. Med. Transp., 458 F. Supp. 2d 622, 678 (ND Ill. 2006)).
[4] See Medicare and State Health Programs: Fraud and Abuse; Safe Harbor Revisions Under the Anti-Bribery Statute and Civil Fines Rules Regarding Beneficiary Incentives, 81 Fed. Reg. 88368, 88379 (December 7, 2016) (“[T]The anti-bribery statute does not provide exceptions for goods or services of nominal value.”); Medicare and State Health Programs: Fraud and Abuse; OIG Anti-Bribery Provisions, 56 Fed. Reg. 35952, 35954 (July 29, 1991) (rejecting commentators’ appeal to de minimis safe harbor).
[5] See, e.g, United States versus Nagelvoort856 F.3d 1117, 1130 (7th Cir. 2017); United States against Borrasi639 F.3d 774, 781-82 (7th Cir. 2011); United States vs. Kats871 F.2d 105, 108 n.1 (9th Cir. 1989); United States versus Greber760 F.2d 68, 71-72 (3d Cir. 1985); Polk County v. Peters, 800 F. Supp. 1451, 1455-56 (ED Tex. 1992) (holding that it was unlawful and therefore unenforceable an agreement by a hospital to grant a doctor an interest-free loan in exchange for the doctor’s exclusive use of the hospital for its patients, it being understood that “the hospital may have been motivated to a greater or lesser extent by a legitimate desire to make better medical services available to the community”).
[6] United States vs. Polin194 F.3d 863, 866 (7th Cir. 1999) (upholding conviction of defendants operating a pacemaker monitoring company who offered to pay a pacemaker sales representative to refer patients to the company, even though the representative sales was not the last decision- manufacturer on which company was selected to monitor the pacemaker); See also United States vs. Patel778 F.3d 607, 612-16 (7th Cir. 2015) (rejecting a doctor-defendant’s argument that a “referral” cannot by definition occur when a patient “self-chooses a provider” without any “input from part of the doctor”, arguing that the purpose of the provision extends the meaning of “referral” to the certifications and recertifications of medical necessity of the doctor-accused for services provided by a home care service that paid him bribes); see Consulting of the OIG op. No. 99-8, July 13, 1999 (vaguely referring to new podiatrist patients obtained as a result of free screenings at shoe stores as “references”).
[7] See Hanlester Network v Shalala51 F.3d 1390, 1397 (9th Cir. 1995); Vain versus Vista Hosp. Sys, Inc.No. 233623, 1993 WL 597402, at *7 (Cal. Super. Ct. Riverside Cty. Nov. 15, 1993) (finding that an agreement may be illegal even if only one party has improper intent).
[8] 42 USC § 1320a-7b(b)(3)(A); 42 CFR § 1001.952(h).
[9] 42 USC § 1320a-7b(b)(3)(B); 42 CFR § 1001.952(i).
[10] 42 CFR § 1001.952(d).
[11] 42 CFR § 1001.952(f).
[12] Some of these are probably even more onerous than federal law. For example, administrator of New Jersey. Code § 13:45J-1.3(c) (prohibiting a physician from accepting from a drug company “anything of value that does not promote disease or treatment education,” including “pens, notepads, clipboards , mugs or other objects with a company or product logo, [as well as] floral arrangements).

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