A New York national sales director was charged on Feb 20, 2025, in federal court in Boston for allegedly conspiring to offer and pay kickbacks to doctors in exchange for ordering medically unnecessary brain scans. The defendant, 59, of Port Jefferson, was charged and has agreed to plead guilty to one count of conspiracy to violate the Anti-Kickback Statute.
According to the charging documents, it is alleged that from at least June 2013 through at least September 2020, the defendant conspired with others, including two managers for a mobile medical diagnostics company that performed transcranial doppler (TCD) scans, to enter into kickback agreements with various doctors. It is alleged that he and his co-conspirators agreed to offer and pay doctors kickbacks based on the number of TCD ultrasounds the doctors ordered. It is further alleged that some doctors were paid in cash and others by check.
The defendant and his co-conspirators allegedly created rental and administrative service agreements. On paper, these agreements made it appear as if doctors were compensated for the TCD company’s use of space and administrative resources based on fair market value and not based on the volume or value of referrals. These agreements were allegedly shams that hid the true nature of the arrangement of paying per test.
According to the charging documents, the scheme resulted in fraudulent bills of approximately $70.6 million to Medicare.
Compliance Perspective
Issue
All medical services provided to patients, including residents, must be medically necessary in order to bill Medicare, Medicaid, or private insurance companies. A service is considered medically necessary if its results are essential for diagnosing or treating an illness, injury, condition, disease, or its symptoms. Submitting claims for unnecessary services may violate the False Claims Act, resulting in fines, criminal charges, and other sanctions. Under federal and state anti-kickback statutes, it is illegal to offer, pay, solicit, or receive anything of value with the intent to induce or reward referrals for federal or state healthcare program business. Failing to report a kickback promptly can lead to significant legal repercussions, including lawsuits, fines, and additional sanctions. The charge of conspiracy to violate the Anti-Kickback Statute provides for a sentence of up to five years in prison, three years of supervised release, and a fine of up to $250,000.
Discussion Points
- Review and update your policies and procedures for medical testing services, focusing on billing practices, verification of medical necessity, and protocols for preventing and reporting false claims and anti-kickback statute violations.
- Train appropriate staff on how to determine if services each resident is receiving are reasonable and necessary. Train all staff on the Anti-Kickback Statute and what can be considered a kickback. Ensure appropriate staff monitor for potential false claims related to unnecessary or inappropriate services that are unsupported by documentation. Include information on how to report concerns and suspected violations, and that prompt reporting is mandatory.
- Conduct regular audits to ensure staff understand procedures for reporting suspected unnecessary services or illegal kickbacks. Emphasize that reporting is essential regardless of whether the actions were intentional or unintentional, and ensure ongoing education around these procedures.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
