Reporting Kickback Schemes

A kickback is a kind of a bribe. One party, the briber, offers an inducement to another party, the bribe-taker, to participate in an illegal scheme. The bribe can take many different forms: cash, goods, services or intangible valuables like vacations, paid contracts and other indirect forms of remuneration.

Kickback schemes are very common in business. The government is especially eager to crack down on kickback schemes that come at taxpayer’s expense. At Fischer Legal Group, we handle qui tam cases that come under the False Claims Act. We work with clients who believe they have evidence of fraud that violates state False Claims Acts or the Federal False Claims Act.

Health Care Fraud And Kickbacks

These cases can occur in any business that is reimbursed by the U.S. government — defense contractors, construction contractors and most especially, health care groups and individuals reimbursed by Medicare or Medicaid. The Anti-Kickback Act of 1987 requires providers to make decisions based on the real needs of patients, not those who profit from influencing their decisions.

Whistleblowers come from every part of the health care industry — employees of pharmaceutical companies, ambulance fleets, makers of medical devices and equipment and many other organizations. If you are struggling with the challenge of doing the right thing, you will want to work with an attorney who understands the stress of reporting against one’s employer or business partner and who also understands the legal intricacies of qui tam cases. Our firm can advise you on the best strategy for going forward, protecting you against retaliation and seeking restoration if you have already been terminated or demoted. You are also eligible for substantial rewards described in the False Claims Act.

What Is The Anti-Kickback Statute?

The Anti-Kickback Statute represents one of the federal government’s most powerful tools for combating fraud in health care programs. This criminal statute prohibits knowingly and willfully offering, paying, soliciting or receiving any remuneration to induce referrals for services covered by federal health care programs, including Medicare and Medicaid. The law recognizes that when financial incentives influence medical decisions, patient care suffers, and program costs increase unnecessarily.

Unlike many health care regulations, the Anti-Kickback Statute applies broadly to all parties involved in the health care industry, including physicians, hospitals, pharmaceutical companies, medical device manufacturers and even non-health care entities that arrange for referrals. Violations carry severe penalties, including criminal fines of up to $100,000, imprisonment for up to 10 years, civil monetary penalties and exclusion from participation in federal health care programs.

The statute’s reach extends beyond obvious cash payments to cover virtually any transfer of value, including gifts, free rent, excessive compensation and lavish trips or entertainment. Even if patient care was not compromised or the government did not suffer financial harm, a kickback arrangement may still violate the law if one purpose of the arrangement was to generate referrals for services reimbursed by government programs.

While the Anti-Kickback Statute includes certain “safe harbors” that protect specific arrangements from prosecution, these exceptions are narrowly defined and require strict compliance with all conditions. Navigating these safe harbors demands careful analysis by attorneys who understand the complex interplay between business arrangements and federal regulations. Our firm can help individuals identify potential Medicare fraud or Medicaid fraud involving kickbacks and determine appropriate next steps.

Different Kinds Of Kickback Schemes In Government Health Care Programs

Health care kickbacks take numerous forms, often disguised as legitimate business arrangements:

Referral Fees

Referral fees in health care contexts often constitute illegal kickbacks when they involve government program patients. Unlike legitimate business referrals in other industries, health care providers cannot pay to influence referral decisions for patients covered by Medicare, Medicaid or other federal programs.

Prohibited referral arrangements often include:

• “Per-click” fees for each patient referred to a service provider
• Percentage-based compensation tied to the volume or value of referrals
• Disguised payments labeled as marketing or advertising fees
• Waived copayments or deductibles to induce patient self-referrals

Determining whether a particular arrangement constitutes an illegal kickback requires thorough legal analysis. Our attorneys can assess your specific situation, identify potentially applicable exceptions and develop a strategic approach that maximizes your legal protections.

Sham Consulting Agreements

Sham consulting agreements represent a sophisticated form of kickback in which providers appear to compensate others for legitimate services when the arrangement actually rewards referrals. These agreements typically involve a referral source receiving payment for “consulting services” that are unnecessary, never performed or vastly overcompensated.

For example, a pharmaceutical company might pay physicians substantial “consulting fees” for minimal work, with the actual purpose being to influence prescribing patterns. Similarly, hospitals may engage referring physicians as “consultants” with vague responsibilities and compensation that exceeds fair market value.

Red flags include:

• Compensation disproportionate to work performed
• Lack of documentation regarding consulting services
• Qualifications that do not match the purported consulting role
• Correlation between payment and referral volume

These arrangements typically fail to withstand scrutiny when examined by experienced investigators.

Excessive Compensation For Medical Directorships

Excessive compensation for medical directorships serves legitimate purposes in health care settings, providing clinical oversight and leadership. However, they become problematic when compensation exceeds fair market value or when little actual work is required, suggesting the position primarily rewards referrals rather than services.

How Do You Report Kickbacks In Government Programs?

If you possess information about illegal kickbacks involving government health care programs, following these steps can help ensure your report receives proper attention while minimizing personal risk. As such, acting fast matters:

• Document everything possible about the suspected kickback scheme, including dates, participants, amounts and any communications that suggest improper intent. Contemporaneous notes, emails and other records significantly strengthen a case against wrongdoers.
• Consult an experienced whistleblower attorney before reporting. This step protects your legal rights, allows assessment of your evidence and helps determine the optimal reporting pathway. Our attorney communications remain confidential and privileged, providing a safe environment to discuss concerns.
• Several options exist when ready to report kickbacks. The Department of Health and Human Services Office of Inspector General maintains a fraud hotline (1-800-HHS-TIPS) for Medicare fraud and Medicaid fraud reports. The Department of Justice and FBI also accept health care fraud complaints. However, filing a qui tam lawsuit under the False Claims Act often provides the strongest protection and potential financial rewards for whistleblowers.
• Throughout the process, protect yourself by avoiding discussions about your concerns with colleagues, following document retention policies while gathering evidence and maintaining detailed records of any retaliation.

Remember that filing a qui tam case requires skilled legal knowledge. That is why working with our experienced lawyer can significantly improve your outcomes. Our past experience handling such cases put us in a favorable position to handle all the details needed under state law.

What Are The Protections For Whistleblowers Reporting Kickbacks In Government Programs?

Individuals who report kickback schemes affecting government health care programs receive significant legal protections. These whistleblower protections encourage reporting by shielding whistleblowers from retaliation while potentially providing substantial financial rewards.

The False Claims Act contains robust anti-retaliation measures that protect employees, contractors and agents who take lawful actions to stop violations. Protected activities include internal reporting, government disclosures and participation in False Claims Act investigations or lawsuits. If an employer terminates, demotes, harasses or otherwise retaliates against a whistleblower, the law provides remedies, including reinstatement, double back pay and compensation for litigation costs.

Beyond the False Claims Act, numerous laws provide additional protections. The Affordable Care Act strengthened anti-retaliation provisions specifically for health care workers, while the Whistleblower Protection Act covers federal employees. State laws often provide supplemental protections varying by jurisdiction.

To fully benefit from these protections, whistleblowers should consult our experienced lawyers before reporting, carefully document any retaliatory actions and adhere to filing deadlines for retaliation claims.

How Do Kickbacks On Government Health Care Impact Costs And Quality?

Kickback schemes significantly harm government health care programs, driving up health care costs while undermining patient care quality. Several impacts illustrate why the government aggressively pursues these cases.

From a financial perspective, kickbacks increase health care spending through multiple mechanisms. They incentivize unnecessary services, tests and procedures that would not occur without financial motivation. Additionally, they steer patients toward more expensive options when equally effective but less costly alternatives exist. They also create administrative waste through increased bureaucracy and compliance costs.

Studies estimate that fraud, including kickbacks, consumes between 3 to 10% of all health care spending–translating to tens of billions in annual losses for Medicare and Medicaid alone. These diverted resources limit the program’s capacity to serve legitimate patient needs and contribute to the financial instability of these essential programs.

Beyond financial damage, kickbacks compromise patient welfare by replacing medical judgment with financial incentives. When health care providers make decisions based on personal gain rather than patient needs, unnecessary procedures expose patients to risks without corresponding benefits. Additionally, kickbacks often channel patients to health care providers selected for financial arrangements rather than clinical excellence, potentially reducing care quality.

The systemic effects extend further, eroding trust in health care institutions and creating unfair competition that jeopardizes ethical providers unwilling to participate in illegal schemes. By disrupting the health care marketplace, kickbacks ultimately harm all stakeholders in the system.

What Are The Differences Between Kickbacks And Stark Law Violations In Government Programs?

While the Anti-Kickback Statute and Stark Law both address improper financial relationships in health care, they represent distinct legal frameworks with important differences. Understanding these distinctions helps identify potential violations and determine appropriate reporting approaches.

The Anti-Kickback Statute prohibits knowingly and willfully offering or receiving remuneration to induce referrals for services covered by federal health care programs. As a criminal statute, it:

• Requires proving intent
• Applies to all types of referrals and health care services
• Covers relationships between any health care entities regardless of provider specialty

In contrast, the Stark Law (Physician Self-Referral Law) is a civil statute that prohibits physicians from referring Medicare or Medicaid patients to entities with which they or immediate family members have financial relationships unless an exception applies. Unlike the Anti-Kickback Statute, Stark is a strict liability statute – meaning no intent to violate the law is required for penalties to apply.

Other key differences include:

• Stark applies only to designated health services, while Anti-Kickback covers all health care services
• Stark penalties are primarily civil, while anti-kickback penalties include criminal sanctions and enforcement approaches.
• While Anti-Kickback violations are commonly pursued through False Claims Act cases, Stark violations may be addressed through self-disclosure protocols or other regulatory mechanisms.

Notably, an arrangement may violate both laws simultaneously, and whistleblowers often report conduct implicating both statutes. Our firm’s experience with these complex overlapping regulations enables us to categorize potential violations properly and develop appropriate reporting strategies.

Let Us Walk You Through The Process

Talk to our lawyers at the Fischer Legal Group. Communications are confidential and protected under attorney-client privilege. Email us at your convenience or call us at 212-577-9231 or toll-free at 212-577-9231