A federal jury convicted a California man for paying illegal kickbacks for patient referrals to his addiction treatment facilities located in Orange County, California. According to court documents and evidence presented at trial, the defendant orchestrated payments of nearly $2.9 million in kickbacks to intermediaries known as “body brokers,” who were responsible for referring patients to his facilities. These brokers engaged in unethical practices, including paying cash to patients to entice them to attend treatment, some of which was reportedly used to purchase drugs.
The defendant concealed the illegal kickbacks by entering into sham contracts with the body brokers which purportedly required fixed payments and prohibited payments based off of the volume or value of the patient referrals. In reality, the payments were negotiated based on patient insurance reimbursements and the duration of billable treatment days. He also laundered the proceeds of the conspiracy through payments to the mother of one of the body brokers, which he falsely characterized as consulting fees.
The defendant was convicted of one count of conspiracy to solicit, receive, pay, or offer illegal remunerations for patient referrals, seven counts of illegal remunerations for patient referrals, and three counts of money laundering. He is scheduled to be sentenced on Jan. 17, 2025, and faces a maximum penalty of five years in prison on the conspiracy charge, 10 years in prison on each illegal remuneration count, and 20 years in prison on each money laundering count.
Compliance Perspective
Issue
The Anti‑Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded healthcare programs. Under federal and state anti-kickback statutes, you may not knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward for referrals of federal or state healthcare program business. The prohibition against kickbacks applies to those who pay for referrals and to those who receive them. Kickbacks can take various forms, such as bribes or rebates. They can be given in cash or in kind. Failure to promptly report a kickback can result in lawsuits, fines, and other sanctions.
Discussion Points
- Ensure your policies and procedures for preventing and reporting anti-kickback violations are current. Update them as necessary to align with federal and state regulations.
- Provide comprehensive training for all staff on federal and state anti-kickback statutes, including what constitutes a kickback and the reporting process for concerns or suspected violations. Emphasize the importance of prompt reporting and document all training sessions. Store signed documents in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect an illegal kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
