Violation of the Anti-Kickback Statute (AKS)

The prosecution against Dr. Patel for receiving kickbacks, and the appeal from his convictions under the AKS, begged the following question: What does it mean for doctors to “refer” patients for home healthcare services? The AKS does not explicitly say, because the law does not define the key term “refer.”

Defining the Term

When a statute does not define a term, the courts first consider the “ordinary meaning” of the language. Dr. Patel argued that “refer” means “to personally recommend to a patient that he seek care from a particular entity.” The government countered that “refer” includes “not only a doctor's recommendation of a provider, but also a doctor's authorization of care by a particular provider.”

Dictionaries, including the OED (which defines “referral” as “the directing of a patient, usually by a general practitioner, to a consultant or institution for specialist treatment”), supported Dr. Patel's interpretation. But other sources, such as an Illinois law and some case law, endorsed the government's broader reading.

Left with these “two plausible readings” of the AKS, the Seventh Circuit looked to what it understood to be the “main purposes” of the law, concluding that “the central purpose of the [AKS] is to prevent Medicare and Medicaid fraud” and that, therefore, “Congress intended the [law] to extend to certification and re-certification of patients for government-reimbursed care.” The appeals court had no trouble imagining “the danger of fraud” from certifying or re-certifying that services are medically necessary for patients. Stated the court, “At the certification stage, a physician could refuse to certify a patient to a patient-chosen provider unless the provider paid the physician a kickback. This behavior could increase the cost of care. It could also contravene the second purpose of the Anti-Kickback Statute ' protection of patient choice ' by interfering with the patient's choice if the selected provider refused to pay.”

Letting this parade of horribles march on, the Seventh Circuit continued: “[C]onsider a patient who goes to his physician seeking authorization to visit a certain provider. If that physician will receive a kickback for a certification to that provider, he will have an incentive to certify the patient even if he thinks that the care is unnecessary or believes that the patient-chosen provider is substandard.”

The Case Against Patel

The problem, however, was that Dr. Patel did none of these things. True, the government established that he accepted kickbacks ($400 per certification and $300 per recertification) from a home healthcare provider, and there was some evidence that Dr. Patel knew that his conduct was improper. But as the appeals court readily acknowledged, he never directed any of his patients to the provider that paid him kickbacks. Indeed, he never even discussed the selection of providers with his patients. Dr. Patel “played no role in his patients' initial selection of [the provider that paid kickbacks] or their decision to continue using [that provider].” Rather an employee in the medical office typically provided brochures for as many as 20 providers, and “[e]ach patient independently chose a provider.” Furthermore, the government conceded that all of the patients were, in fact, qualified to receive home health care service, and it did not allege that any of them received “sub-par treatment” or otherwise “suffered any tangible harm” due to anything that Dr. Patel had done.

The Ruling

None of that mattered, however, according to the appeals court ' it held that Dr. Patel illegally “referred” his patients to the kickback-paying provider in violation of the AKS because, in certifying or re-certifying that home health care was medically necessary, he “acted as a gatekeeper to federally-reimbursed care.” The unanimous three-judge panel of the Seventh Circuit put it this way: “Without his permission, his patients' independent choices were meaningless.” As a matter of law, therefore, whenever doctors or any other persons serve in such “gatekeeping roles,” they “refer” their patients to specific providers.

Conclusion

The takeaway from United States v. Patel is that potential criminal liability under the AKS is far broader than many may have thought. The statute criminalizes not only soliciting or receiving a fee (or anything of value) for directing a patient to a particular provider, but also authorizing the patient to receive medically necessary care from the provider, if that certification or recertification is a condition of reimbursement. It may seem counterintuitive that a person can be convicted of illegally referring a patient to a healthcare provider, if the person does not select, recommend or even discuss the specific provider with his or her patient. Yet that is the law, at least in the Seventh Circuit.

Daniel N. Marx is a partner in the Litigation Department and the White Collar Crimes and Government Investigations Practice Group at Foley Hoag LLP.

Dr. Kamal Patel, a Chicago-area physician who commonly prescribed home health care services for his patients, was recently convicted, following a bench trial, of violating the Anti-Kickback Statute (AKS), 42 U.S.C. ' 1320a-7b, and also for conspiring with a home health care provider to break that same law. Dr. Patel was sentenced to eight months in prison and 200 hours of community service, and he was also ordered to forfeit $31,900 in payments that he received from the provider. He appealed, but in United States v. Patel, No. 14-cv-2607 (7th Cir. Feb. 10, 2015), the United States Court of Appeals for the Seventh Circuit affirmed his criminal convictions, holding that merely “authorizing” medically necessary services can constitute illegally “referring” patients under the AKS, if improper payments are made to the authorizing doctor.

Put simply, the AKS prohibits, among other things, paying or getting paid for “referring” patients for health care services that are paid for, in whole or part, by any federal program, such as Medicare or Medicaid. The relevant part of the statute reads:

Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind'in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program ' shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

The prosecution against Dr. Patel for receiving kickbacks, and the appeal from his convictions under the AKS, begged the following question: What does it mean for doctors to “refer” patients for home healthcare services? The AKS does not explicitly say, because the law does not define the key term “refer.”

Defining the Term

When a statute does not define a term, the courts first consider the “ordinary meaning” of the language. Dr. Patel argued that “refer” means “to personally recommend to a patient that he seek care from a particular entity.” The government countered that “refer” includes “not only a doctor's recommendation of a provider, but also a doctor's authorization of care by a particular provider.”

Dictionaries, including the OED (which defines “referral” as “the directing of a patient, usually by a general practitioner, to a consultant or institution for specialist treatment”), supported Dr. Patel's interpretation. But other sources, such as an Illinois law and some case law, endorsed the government's broader reading.

Left with these “two plausible readings” of the AKS, the Seventh Circuit looked to what it understood to be the “main purposes” of the law, concluding that “the central purpose of the [AKS] is to prevent Medicare and Medicaid fraud” and that, therefore, “Congress intended the [law] to extend to certification and re-certification of patients for government-reimbursed care.” The appeals court had no trouble imagining “the danger of fraud” from certifying or re-certifying that services are medically necessary for patients. Stated the court, “At the certification stage, a physician could refuse to certify a patient to a patient-chosen provider unless the provider paid the physician a kickback. This behavior could increase the cost of care. It could also contravene the second purpose of the Anti-Kickback Statute ' protection of patient choice ' by interfering with the patient's choice if the selected provider refused to pay.”

Letting this parade of horribles march on, the Seventh Circuit continued: “[C]onsider a patient who goes to his physician seeking authorization to visit a certain provider. If that physician will receive a kickback for a certification to that provider, he will have an incentive to certify the patient even if he thinks that the care is unnecessary or believes that the patient-chosen provider is substandard.”

The Case Against Patel

The problem, however, was that Dr. Patel did none of these things. True, the government established that he accepted kickbacks ($400 per certification and $300 per recertification) from a home healthcare provider, and there was some evidence that Dr. Patel knew that his conduct was improper. But as the appeals court readily acknowledged, he never directed any of his patients to the provider that paid him kickbacks. Indeed, he never even discussed the selection of providers with his patients. Dr. Patel “played no role in his patients' initial selection of [the provider that paid kickbacks] or their decision to continue using [that provider].” Rather an employee in the medical office typically provided brochures for as many as 20 providers, and “[e]ach patient independently chose a provider.” Furthermore, the government conceded that all of the patients were, in fact, qualified to receive home health care service, and it did not allege that any of them received “sub-par treatment” or otherwise “suffered any tangible harm” due to anything that Dr. Patel had done.

The Ruling

None of that mattered, however, according to the appeals court ' it held that Dr. Patel illegally “referred” his patients to the kickback-paying provider in violation of the AKS because, in certifying or re-certifying that home health care was medically necessary, he “acted as a gatekeeper to federally-reimbursed care.” The unanimous three-judge panel of the Seventh Circuit put it this way: “Without his permission, his patients' independent choices were meaningless.” As a matter of law, therefore, whenever doctors or any other persons serve in such “gatekeeping roles,” they “refer” their patients to specific providers.

Conclusion

The takeaway from United States v. Patel is that potential criminal liability under the AKS is far broader than many may have thought. The statute criminalizes not only soliciting or receiving a fee (or anything of value) for directing a patient to a particular provider, but also authorizing the patient to receive medically necessary care from the provider, if that certification or recertification is a condition of reimbursement. It may seem counterintuitive that a person can be convicted of illegally referring a patient to a healthcare provider, if the person does not select, recommend or even discuss the specific provider with his or her patient. Yet that is the law, at least in the Seventh Circuit.

Daniel N. Marx is a partner in the Litigation Department and the White Collar Crimes and Government Investigations Practice Group at Foley Hoag LLP.