Chapter 10.E (or 4.E) -- Referral Fees

Click here to read the referral fee and fraud and abuse provisions governing Medicare and Medicaid
Click here to read the federal false claims act, governing "qui tam" actions.

Advisory rulings under the anti-kickback statute can be found at http://oig.hhs.gov/w-new.asp. 

HHS finally finalized it's regulations under the Stark law, 72 Fed. Reg. 51011 (Sept. 5, 2007), but each year it makes further amendments – sometimes twice a year – as part of the rulemakings that update physician and hospital payment rates. So, there is a constant back-and-forth between the agency and regulated industry and it lawyers about adapting the rules’ complexities to the intricacies of how health care delivery and finance are organized (or disorganized). See, e.g., Ramy Fayed, et al., An Overview of CMS’s Latest Proposed Changes to the Stark Regulations, 17 BNA Health L. Rep. 719 (2008). By one account, crafty lawyers and providers seek to exploit technicalities in the rules, clumsy but well-meaning regulators then seek to plug the discovered loopholes, causing new and unsettling ambiguities, which then require further clarification, leading to another round of the same.

An excellent practitioner's treatise is Alice G. Gosfield, Medicare and Medicaid Fraud and Abuse (2008).

The Am Health Lawyers Assoc’s Public Interest Committee has released a whitepaper discussing the public policy dimensions of the Stark Law. “A Public Policy Discussion: Taking Measure of the Stark Law” (2009).

Recent rulings have renewed scrutiny of the potential abuses of hospital-physician joint investments, and the guises under which legitimate joint ventures can form. See Leigh Walton, et al., Hospital Syndications: Opportunities and Options, or Poised for Extinction?, 21(4) ABA Health L. 1 (April 2009); Paul DeMuro, Eye of the Storm: The Government’s Focus on Hospital-Physician Arrangements, 21(5) ABA Health L. 30 (June 2009).

The U.S. Sup. Ct. articulated the intent standard that must be met to bring a False Claims Act case (including a qui tam action), to require proof that the defendant intended to defraud the government, rather than merely having made a false statement that led to an unsupported payment. This is especially relevant when the defendant is a subcontractor, rather than a direct contractor with the government. Allison Engine Co. v. U.S., 553 U.S. ___ (2008).

The Florida Sup. Ct. established new precedent in ruling that it's state anti-kickback statute was pre-empted by the federal law.   State v. Harden, 938 So. 2d 480, 495 (Fla. 2006).   See Comment, 112 Penn St. L. Rev. 631-657 (2007).

In a rare ruling, a New York court held that it constitutes illegal "fee-splitting" for a medical school to charge a 10% "dean's tax" on clinical revenues by part-time adjunct faculty members whose clinical practice is not part of the university's medical system and is not supported by the school.  Odrich v. Trustees of Columbia University, 764 N.Y.S.2d 448 (N.Y. App. Div. 2003).   The Washington state Supreme Court ruled that physicians who resell prescription drugs at a mark-up do not violate the state's antikickback statute.  Wright v. Jeckle, 158 Wash.2d 375, 144 P.3d 301 (2006).

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