HCCA Compliance Institute 2003HCCA Compliance Institute 2003

CASE STUDY: ANALYZING CASE STUDY: ANALYZING ANTIANTI--KICKBACK AND STARK LAW ISSUESKICKBACK AND STARK LAW ISSUES

April 28, 2003April 28, 2003

D. McCarty Thornton, Esq. D. McCarty Thornton, Esq. Gadi Weinreich, Esq.Gadi Weinreich, Esq.

Sonnenschein Nath & RosenthalSonnenschein Nath & RosenthalWashington, D.C.Washington, D.C.

Part IPart IThe AntiThe Anti--kickback Lawkickback Law

AGENDAAGENDA

PurposesPurposesElementsElementsSafe Harbors and Other GuidanceSafe Harbors and Other GuidanceMac’s Top Ten TipsMac’s Top Ten Tips

PURPOSESPURPOSES

Prevent corruption of medical decisionPrevent corruption of medical decision--makingmakingPrevent overutilizationPrevent overutilizationPrevent increased program costsPrevent increased program costsPrevent unfair competition Prevent unfair competition

ELEMENTSELEMENTS

RemunerationRemunerationOffered, paid, solicited, receivedOffered, paid, solicited, receivedTo induce Federal program referralsTo induce Federal program referralsKnowingly and willfully Knowingly and willfully

REMUNERATIONREMUNERATION

Anything of valueAnything of valueCash or inCash or in--kindkindDirect or indirectDirect or indirectExamples:Examples:

Cash, free goods, below market rent, free Cash, free goods, below market rent, free medical waste disposal, free housecleaning medical waste disposal, free housecleaning

OFFERED, PAID, OFFERED, PAID, SOLICITED, RECEIVEDSOLICITED, RECEIVED

Separate intent inquiries for payors and Separate intent inquiries for payors and payeespayeesPayors most commonly prosecuted in the Payors most commonly prosecuted in the pastpastPayees (mostly physicians) becoming more Payees (mostly physicians) becoming more frequently prosecuted (e.g., TAP, frequently prosecuted (e.g., TAP, Clearwater Clinic) Clearwater Clinic)

TO INDUCE FEDERAL TO INDUCE FEDERAL REFERRALSREFERRALS

Any Federal health care programAny Federal health care program“To induce”: a nexus between payment and “To induce”: a nexus between payment and referralsreferralsOne purpose testOne purpose test

““KNOWINGLY AND KNOWINGLY AND WILLFULLY”WILLFULLY”

Acting with knowledge and purposeActing with knowledge and purposeStandard varies by circuitStandard varies by circuit

9th circuit: knowledge of anti9th circuit: knowledge of anti--kickback kickback statute with specific intent to violatestatute with specific intent to violate8th circuit: knowledge that conduct was 8th circuit: knowledge that conduct was wrongfulwrongful11th circuit: knowledge that conduct was 11th circuit: knowledge that conduct was unlawful unlawful

PENALTIESPENALTIES

CriminalCriminalprison and/or finesprison and/or fines

ExclusionExclusionCivil monetary penaltiesCivil monetary penalties

$50,0000 plus 3x kickback$50,0000 plus 3x kickback

EXCEPTIONS AND SAFE EXCEPTIONS AND SAFE HARBORSHARBORS

Immunity availableImmunity availablePractice must meet all conditionsPractice must meet all conditionsVoluntaryVoluntary

STATUTORY EXCEPTIONSSTATUTORY EXCEPTIONS

DiscountsDiscountsPayments to employeesPayments to employeesGroup purchasing organizationsGroup purchasing organizationsWaiver of Part B coWaiver of Part B co--payments by Federally payments by Federally qualified health centersqualified health centers“Shared risk” exception“Shared risk” exception

SAFE HARBORSSAFE HARBORSInvestmentsInvestments

Large entitiesLarge entitiesSmall entitiesSmall entitiessmall entities in underserved areassmall entities in underserved areasASC’sASC’sGroup practicesGroup practices

SAFE HARBORSSAFE HARBORSOtherOther

EmployeesEmployeesDiscountsDiscountsSpace rentalSpace rentalEquipment rentalEquipment rentalPersonal servicesPersonal servicesPractitioner Practitioner Recruitment in Recruitment in underserved areasunderserved areas

Group Purchasing Group Purchasing OrganizationsOrganizationsManaged care Managed care arrangementsarrangementsShared RiskShared Risketc.etc.

GUIDANCEGUIDANCE

Advisory opinionsAdvisory opinionsFraud Alerts and Special Advisory Fraud Alerts and Special Advisory BulletinsBulletinsPreambles to the safe harbor regulationsPreambles to the safe harbor regulationsCompliance GuidancesCompliance Guidanceswww.oig.hhs.govwww.oig.hhs.gov

XX YYReferrals

Payments

AREAS OF GOVERNMENT AREAS OF GOVERNMENT INTERESTINTEREST

Medical directorshipsMedical directorships

Consultation feesConsultation fees

Marketing to Marketing to physiciansphysicians

Education/research Education/research grantsgrants

Joint venturesJoint ventures

Below market leasesBelow market leases

Below market loansBelow market loans

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 10# 10 NNICE PERSONAL FAVORS TO ICE PERSONAL FAVORS TO

REFERRAL SOURCES: END OF AN ERAREFERRAL SOURCES: END OF AN ERAMessage of TAP case and proposed Message of TAP case and proposed Pharmaceutical GuidancePharmaceutical Guidance

No fancy dinnersNo fancy dinnersNothing for spousesNothing for spousesNo NFL ticketsNo NFL ticketsNo free computersNo free computersNo unrestricted educational grants, etc.No unrestricted educational grants, etc.

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 9# 9 DDON’T BE THE “LOW HANGING ON’T BE THE “LOW HANGING

FRUIT”FRUIT”

In a period of shrinking investigatory In a period of shrinking investigatory resources, don’t stick out of the crowd.resources, don’t stick out of the crowd.

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 8# 8 BBUT ALSO BE WARY OF BEING IN UT ALSO BE WARY OF BEING IN

THE CROWDTHE CROWDCrowds not to be in (examples)Crowds not to be in (examples)

clinical lab ordering in the early 90’sclinical lab ordering in the early 90’sPATH in the mid 90’sPATH in the mid 90’spharma marketing in the late 90’spharma marketing in the late 90’s

Avoid being in the next “national project”Avoid being in the next “national project”Ask frankly: “has competition in X area gone Ask frankly: “has competition in X area gone

to far?”to far?”

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS#7#7 AALWAYS START ANALYSIS WITH LWAYS START ANALYSIS WITH

THE BASIC PURPOSES OF THE THE BASIC PURPOSES OF THE STATUTESTATUTE

Prevent corruption of medical decisionPrevent corruption of medical decision--makingmakingPrevent overutilizationPrevent overutilizationPrevent increased program costsPrevent increased program costsPrevent unfair competitionPrevent unfair competition

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 6# 6 GGET AS CLOSE TO A SAFE HARBOR ET AS CLOSE TO A SAFE HARBOR

OR ADVISORY OPINION AS POSSIBLEOR ADVISORY OPINION AS POSSIBLE

Document business reasons why full Document business reasons why full compliance with an applicable safe harbor is compliance with an applicable safe harbor is not possiblenot possibleAdopt principles from relevant OIG guidance Adopt principles from relevant OIG guidance

to extent possibleto extent possible

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 5# 5 FFAIR AIR MMARKET ARKET VVALUE: “ALUE: “TTHE HE SSAFE AFE

UUNHARBOR”NHARBOR”Never will be an official safe harbor, but . . .Never will be an official safe harbor, but . . .Excellent overall protection if FMV Excellent overall protection if FMV

established:established:for necessary, justifiable services/investmentfor necessary, justifiable services/investmentby independent, reliable sourceby independent, reliable sourceusing recognized methodologyusing recognized methodology

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 4# 4 DDON’T MUDDY YOUR OWN SHOESON’T MUDDY YOUR OWN SHOES

don’t acquiesce to any fooling around with don’t acquiesce to any fooling around with documents (e.g., shredding, altering, backdating)documents (e.g., shredding, altering, backdating)don’t acquiesce to withholding information to the don’t acquiesce to withholding information to the government or to producing literally true but government or to producing literally true but incomplete information (half truth)incomplete information (half truth)ask for express numeric “odds” on being detected ask for express numeric “odds” on being detected or being prosecuted (Note: it’s OK to assess legal or being prosecuted (Note: it’s OK to assess legal risk generally where law is ambiguous)risk generally where law is ambiguous)

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 3# 3 CCHECK COMPLIANCE ON AN HECK COMPLIANCE ON AN

ONGOING BASISONGOING BASIS

Check to see that:Check to see that:

deal properly implementeddeal properly implementedparties fulfilling substantive responsibilitiesparties fulfilling substantive responsibilitiesongoing documentation (if any) properly maintainedongoing documentation (if any) properly maintained

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 2# 2 DDOCUMENT! OCUMENT! DDOCUMENT! OCUMENT! DDOCUMENT!OCUMENT!

Document:Document:legitimate business purposeslegitimate business purposesfair market valuefair market valueservices to be provided and time spent providing themservices to be provided and time spent providing them

Powerful evidence of good faith and a turnPowerful evidence of good faith and a turn--off to off to investigatorsinvestigatorsBut a twoBut a two--edged sword if documentation is:edged sword if documentation is:

inaccurate when createdinaccurate when creatednot fulfilled going forwardnot fulfilled going forward

MAC’S TOP TEN TIPSMAC’S TOP TEN TIPS# 1# 1 ““GGREED IS GOOD” REED IS GOOD” ---- NOTNOT

#1 red flag to investigators:#1 red flag to investigators:return on investment that appears excessivereturn on investment that appears excessivecompensation that appears excessivecompensation that appears excessive

D. McCarty Thornton, Esq.D. McCarty Thornton, Esq.Sonnenschein, Nath & RosenthalSonnenschein, Nath & Rosenthal1301 K Street1301 K StreetSuite 600, East TowerSuite 600, East TowerWashington, D.C. 20005Washington, D.C. 20005Telephone: (202) 408Telephone: (202) 408--64326432Fax: (202) 408Fax: (202) 408--63996399mthornton@sonnenschein.commthornton@sonnenschein.com

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