What Are the Anti-Kickback Statute and False Claims Act?
The Anti-Kickback Statute (“AKS”) is a criminal statute that was originally passed in 1972 in order to rein in healthcare abuses that had proliferated in the years immediately after the creation of Medicare and Medicaid. At its core, the AKS makes it illegal for anyone to exchange a payment of “remuneration” knowingly and willfully in order to induce the referral of a patient who is covered or involves a federal health care program reimbursement. As originally drafted, the Anti-Kickback Statute only covered, “kickbacks, “bribes” and “rebates” but was soon amended to broaden the definition to “any remuneration” while leaving the earlier terms as examples of what “any remuneration” would entail going forward to today. One of the reasons for the statute’s creation, along with addressing fraud, is because doctors/hospitals engage in a “learned profession” which requires expertise that no layman could be expected to have, the public needs to be confident that their treatment/referral for healthcare is in their best interest and not resulting from a financial gain to the referring individual.
The False Claims Act (“FCA”), also known as the “whistleblowers act,” is a federal law that imposes liability on individuals and/or companies that submit fraudulent monetary claims submitted to the government through civil suits and allows any “whistleblower” that brings the suit to recover a portion of any recovered money. Critically, as a civil matter, it has a lower bar for success than the AKS, and also allows for damages to be increased up to three times the actual fraudulent amount gained.
How the Anti-Kickback Statute and False Claims Act Are Utilized
While the FCA covers virtually any type of fraud that can be visited upon the government (such as involving defense contracts, research grants, airlines, medical expenses, etc.), the AKS is confined to healthcare only. In practice, the two are often used in conjunction with one another to levy large fines while pursuing criminal charges against those accused of violating federal healthcare law. In recent years, the use of the FCA in healthcare cases has proliferated to around 80% of all recoveries annually under the act, and in 2021 that figure rose to 90% for the first time.
The Fight Against Enforcement and the Emerging Split of Authority in the Appellate Courts
Companies and individuals in the industry have fought back against AKS enforcement since its inception, to varying degrees of success. While just about everyone would agree that outright healthcare fraud needs to be prosecuted by the government, many in the healthcare industry have long maintained that the generalized language of the statute provides little guidance to the profession and has led to the misuse of the FCA and the AKS.
In recent years, a circuit split amongst the federal appellate courts has emerged over what constitutes “remuneration” under the AKS and, perhaps more importantly, does the FCA statute contain a “but-for” causation requirement. In late March of this year, the Sixth Circuit Court of Appeals in United States ex rel. Martin v. Hathaway narrowed the definition of what is considered “remuneration” in an alleged scheme, holding that it only covers payments or other transfers of value when it considered the general referral arrangement between a hospital and private healthcare provider, in contrast to a hospital hiring an internal specialist (which means both entities would directly benefit from the referral) which did not qualify under the statute. In addition, the Sixth Circuit joined the Eight Circuit in requiring a showing that but-for the alleged violation, the referrals would not have been made (in this case, the hospital and private practice had a long-standing history of referrals that predated the alleged conduct and thus was merely a continuation of previous conduct). This causation requirement stands in stark contrast to the Third Circuit which only requires “a casual link” for a case brought through the enforcement of the FCA. Given the circuit split that has emerged, there will be considerable litigation over FCA enforcement going forward, particularly in circuits that have yet to weigh in on the issue and provide insight to viable defenses for companies/individuals facing prosecution.
If you are being sued for violations of the False Claims Act, believe you are under investigation, or have been charged with criminal offenses related to false claims, violation of the Anti-Kickback statute, or other health care fraud, contact an experienced attorney to help defend you or your organization and best navigate this complex area of law where the stakes are heightened.
