By Rachel V. Rose, JD, MBA Rachel V. Rose - Attorney at Law, PLLC |
If Conduct Appears to Buck the Legal Norm, Chances Are That It Does


If Conduct Appears to Buck the Legal Norm, Chances Are That It Does

Date Posted: Wednesday, August 02, 2023


It's akin to wearing Doc Martens to a professional cocktail party reception or Uggs to court. In other words, the wardrobe choice jumps out as not being appropriate for the situation. Likewise, certain conduct that violates the Anti-Kickback Statute (AKS) and the False Claims Act (FCA) unequivocally jumps out as being unlawful under the facts and circumstances, yet persons engage in the inappropriate behavior. 


Codified at 42 U.S. C. § 1320a–7b(b), the AKS has been around since 1972. The AKS was "enacted to ensure that clinical decisions and medical services are provided to patients based on their medical needs and not on the improper financial considerations of providers." Unless a "safe harbor" (42 U.S.C. §1001.952) is met, then liability is highly probable. According to the U.S. Department of Health and Human Services - Office of the Inspector General (HHS-OIG), a safe harbor is to "describe various payment and business practices that, although they potentially implicate the Federal anti-kickback statute, are not treated as offenses under the statute."

The FCA is the federal government's primary tool in fighting fraud. As the U.S. Department of Justice (DOJ) explained in its annual press release relaying the results for the previous fiscal year (FY 2022), the FCA "imposes treble damages and penalties on those who knowingly and falsely claim money from the United States or knowingly fail to pay money owed to the United States. The False Claims Act thus serves to safeguard government programs and operations that provide access to medical care, support our military and first responders, protect American businesses and workers, help build and repair infrastructure, offer disaster and other emergency relief, and provide many other critical services and benefits." 

In this same FY2022 Report, the DOJ emphasized the impact that the AKS has on FCA cases. Before delving into specific examples, it is important to note material changes that occurred as a result of the Affordable Care Act, which was signed into law on March 23, 2010. ACA changed the language of the AKS to expressly include claims submitted in violation of the AKS that automatically constitute false claims for purposes of the FCA. Specifically, the language provides that "a claim that includes items or services resulting from a violation of [the Anti-Kickback Statute] constitutes a false or fraudulent claim for purposes of subchapter III of chapter 37 of Title 31 [the False Claims Act]" (42 U.S.C. § 1320a-7b[g]). Additionally, Congress added a new provision that eliminates the requirement that a person have actual knowledge of the law or speci?c intent to commit a violation of the statute. See 42 U.S.C. § 1320a-7b(h). 

This brings us to some key FCA settlements, which were premised on AKS violations and were expressly mentioned by the DOJ. Specifically:

  • The department intervened and pursued claims under the False Claims Act in several qui tam actions alleging kickback violations. For example, the department filed a complaint against two laboratory CEOs, a hospital CEO, six physicians, and other individuals and entities, alleging False Claims Act violations based on patient referrals in violation of the Anti-Kickback Statute (AKS) and the Stark Law, as well as alleging that defendants caused claims to be improperly billed to federal healthcare programs for medically unnecessary laboratory testing. 
  • The department also filed suit against a chiropractor, 15 office-based labs primarily owned by the chiropractor, and five affiliated companies owned by the chiropractor, alleging that the defendants offered physicians the opportunity to invest in the labs to induce them to refer their Medicare and TRICARE patients to the labs for the treatment of peripheral arterial disease.
  • Fiscal year 2022 also saw the resolution of numerous matters involving kickback violations. In a case pursued by a whistleblower, the pharmaceutical company Biogen Inc. paid $843.8 million to resolve allegations that the company offered and paid kickbacks, including in the form of speaker honoraria, speaker training fees, consulting fees, and meals, to physicians who spoke at or attended Biogen programs in connection with Biogen's multiple sclerosis drugs Avonex, Tysabri, and Tecfidera. The relator alleged that this conduct occurred between 2009 and 2014.
  • Durable medical equipment manufacturer Philips RS North America, LLC, formerly Respironics, Inc., paid $24.75 million to resolve allegations that it knowingly provided unlawful kickbacks to DME suppliers to induce them to select Respironics' respiratory equipment. The inducements allegedly came in the form of physician prescribing data that Respironics provided free of charge yet knew was valuable in assisting DME suppliers' marketing efforts to physicians.
  • Flower Mound Hospital Partners LLC, a partially physician-owned hospital, paid $18.2 million to resolve allegations that it knowingly submitted claims to federal healthcare programs that arose from violations of the Stark Law and the AKS. The government alleged that the hospital repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians, impermissibly taking into account the volume or value of physician referrals when selecting the physicians to whom the shares would be resold and determining the number of shares each physician would receive.
  • Kaléo Inc. paid the United States $12.7 million for alleged false claims for the drug Evzio, used to reverse opioid overdoses, for providing illegal remuneration to prescribing physicians and their office staff, and for directing physicians to send Evzio prescriptions to certain preferred pharmacies that, in turn, submitted false prior authorization requests to insurers. In addition, the United States obtained a $1.3 million settlement from pharmacy Solera Specialty for submitting false and misleading prior authorizations for the drug.

This is not the first time that the DOJ or OIG has pursued this type of conduct-it has been doing it for years. It begs the question: Why would entities engage in conduct that is glaring and runs afoul of any comprehensive and substantive compliance program? Stated another way, why would one wear shoes that are not considered appropriate for a legal professional environment? 


While I don't have the answer to one's choice of footwear or ignorance of the law when it comes to kickbacks, what I do know is that other people notice. In relation to AKS violations, either OIG or a whistleblower will hone in on the glaring choice. In turn, an FCA case will be filed and consequences for the perpetrator will ensue. Some whistleblowers attempt to raise these concerns and are met with resistance and retaliation, while others simply collect evidence and go to an attorney to file an FCA case. Either way, it's as glaring as wearing Uggs into federal court. A caveat for whistleblowers, make sure that a safe harbor does not apply. 

Rachel V. Rose, JD, MBA, is an Attorney at Law in Houston, TX. Rachel advises clients on healthcare, cybersecurity, securities law and qui tam matters. She also teaches bioethics at Baylor College of Medicine. She has been consecutively named by Houstonia Magazine as a Top Lawyer (Healthcare) and to the National Women Trial Lawyer's Top 25. She can be reached at rvrose@rvrose.com. www.rvrose.com

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