Prohibition on paid referrals not limited to ‘relevant decisionmakers’

The Seventh Circuit affirmed the conviction of an individual under the Anti-Kickback Statute (AKS) (42 U.S.C. § 1320a-7b) whose referral agency had provided referrals to a home health company in exchange for $500 per referral. In affirming the lower court’s decision, the Seventh Circuit found that criminal liability under the AKS is not limited to relevant decisionmakers and that no safe harbors applied (U.S. v. George, August 14, 2018, Rovner, I.).

Referrals for money

The referrer was a certified homemaker employed by Help at Home, a home healthcare agency, beginning in 2007. In 2010, she decided to start a referral agency and signed a work for hire agreement with another home health service, Rosner Home Health Care, Inc. (Rosner), in which she agreed to convince providers, including doctors, case managers, discharge planners, and social workers, to refer patients to Rosner. In exchange, Rosner paid the referrer $500 for each patient referred. In 2015, the referrer was indicted and then found guilty of two counts of violating the AKS and one count of violating the general conspiracy statute (see Receipt of per-patient referrals, knowledge of illegality enough to overcome doubt, Health Law Daily, March 25, 2016).

Appeal

Under the AKS, the government must demonstrate that the referrer knowingly and willfully solicited or received remuneration in return for referring an individual to Rosner to provide or arrange services paid at least in part under Medicare. The referrer appealed her conviction arguing that there was insufficient evidence to support the substantive counts of her conviction falling under the AKS. According to the court, rather than merely demonstrate that evidence could have supported a finding of innocence, the referrer must demonstrate on appeal that the evidence could not have allowed a reasonable trier of fact to find her guilty.

Relevant decisionmakers

The referrer argued that she could not be held liable, as the statute applied only to “relevant decisionmakers,” which she was not. In making this argument, the referrer relied on a previous Fifth Circuit decision in which the court held that payments to a marketing firm distributing advertisement brochures of a provider to physicians did not fall within the AKS because they were not payments made to the relevant decisionmaker in exchange for sending patients to the provider. However, the court cited a subsequent case rejecting an interpretation of that case limiting criminal liability to persons would could be deemed relevant decisionmakers.

Safe harbors

The referrer also argued that she had a reasonable basis to believe she fell within the safe harbor provision of the AKS applying to “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services. However, her written agreement with Rosner specifies that she was acting as an independent referral agency, not an employee. The court also noted that the referrer was paid for referrals, not for the provision of items or services covered by Medicare. Thus, the safe harbor provision did not apply.