By Melinda Young


Healthcare providers pay tens of millions of dollars each year in settlements and fines resulting from violations of the federal False Claims Act and the Anti-Kickback Statute.

  • The Anti-Kickback Statute prohibits someone from offering, paying, or receiving any remuneration in exchange for referrals for Medicare/Medicaid services.
  • In addition to gift cards and cash, illegal kickbacks may include meals and payments as a speaker at pharmaceutical and device companies’ functions.
  • Case managers and other healthcare professionals could be charged with violating the Anti-Kickback Statute even if they do not know that they are violating the law — or even if they do not know that the law exists.

Hundreds of healthcare providers are investigated and fined or reach settlements with the federal government each year under federal fraud, abuse, and kickback statutes.

In one recent case, the federal government reached a $35 million settlement with MedStar Health in Columbia, MD, after allegations under the False Claims Act (FCA) and the Anti-Kickback Statute (AKS) that the organization paid kickbacks to a cardiology group in exchange for referrals. (Read more about the case at:

Federal investigators have pursued hospital case managers, as well as physicians and other providers.

For example, in a case that did not receive public attention, the federal government sued several healthcare organizations in 2018 over alleged FCA and AKS violations, says Jessica Gustafson, Esq., founding shareholder of The Health Law Partners in Farmington Hills, MI.

The government alleged that an ambulance provider paid $500 cash, plus gift cards, clothing, and alcohol, to hospital case management directors for every 20 Medicare calls they received from those hospitals, Gustafson says. The government ultimately lost its case for failure to state the claims with particularity, as required by the laws, she adds.

Although the government failed in its case, the hospital case management department was wrapped up in an investigation that took up staff time and resources, Gustafson notes. The investigation shows that case managers should be better educated and more aware of fraud and abuse laws so they do not even give the appearance of improper conduct.

“Fraud and abuse laws are always something case managers and anybody in the healthcare sector needs to be mindful of,” says Abby Pendleton, Esq., founding shareholder and president of The Health Law Partners.

“Case managers need to make sure they’re fully aware of the Anti-Kickback Statute, which prohibits someone from either offering or paying or receiving any remuneration in exchange for referrals for Medicare/Medicaid services, under the federal law,” Pendleton explains. “And there are state law equivalents, as well.”

In some other businesses, it is legal, and maybe even common practice, to give gifts to clients for referrals. This marketing strategy is illegal in healthcare because it is seen as affecting federal and state health funding and, possibly, harming patients.

“If you have a relationship with a local nursing home, and the nursing home folks are providing some type of benefit — and it doesn’t have to be cash in a paper bag, but any kind of benefit with the intent or any purpose of paying them in exchange for referrals to that particular nursing home facility — then that is a kickback,” Pendleton says.

This is true whether the hospital is paying the benefit or receiving it, and it has potential criminal liability, she adds.

Kickbacks can be in the form of gift cards and other financial benefits.

In 2018, the U.S. Department of Justice resolved criminal and civil healthcare fraud cases involving pharmaceutical and device companies’ use of meals and speakers bureaus as potential kickbacks to physicians for referrals. (Find out more at:

For instance, a device company paid $3.1 million to resolve allegations that it induced physicians to use its products by paying for expensive meals for physicians and their spouses and by listing fictitious attendees at such meals.

In a criminal case, a physician was sentenced to four years in federal prison for asking for and receiving kickbacks of more than $188,000 for speaker fees from a pharmaceutical company in exchange for prescribing an opioid drug.

Another case, settled in June, involved a Florida doctor who agreed to pay more than $900,000 to settle allegations that he received improper payments for making referrals to a certain drug testing lab. (More information is available at:

Not Only Physicians

Physicians often are the targets of these investigations, but they are not the only healthcare professionals who could be caught up in a government fraud investigation.

For instance, the Department of Justice has targeted several people, who define their role as “patient recruiter,” who allegedly made referrals in exchange for kickbacks. One case involved a Michigan woman who pleaded guilty to a $1.2 million kickback scheme. She admitted to receiving illegal kickbacks in exchange for referring Medicare beneficiaries to a particular healthcare organization. (Read more at:

Physicians, discharge planners, case managers, and others making referrals must ensure they are following all federal and state laws, as well their organization’s policies.

“Case managers have to be mindful of the fact that there will be compliance policies and procedures and rules they need to follow from the facility’s perspective, and they need to understand those types of exchanges,” Pendleton explains. “You can have someone who was just being nice and the person thinks, ‘They’re giving me something,’ and they could be an unknowing participant in this.”

Case managers and other healthcare professionals could be charged with violating the AKS, even if they are unaware that they have done so, she adds.

“There can be 10 reasons why a transaction is taking place, but if one purpose is to influence referral patterns, then that can trigger the Anti-Kickback law,” Pendleton says.

One problem is that hospital staff might not be as well educated about false claims and anti-kickback laws as they are about HIPAA, privacy, security, and compliance.

Hospitals have fraud and abuse compliance policies, but these requirements are not always prioritized in staff education and training, Pendleton notes.

“Sometimes when you’re given stacks and stacks of information, you do not always pick up on the policies,” she says.

Tips for Staying Compliant

The following are strategies for preventing False Claims Act violations and other federal fraud and abuse problems:

• Know the definitions. According to the U.S. Office of Inspector General (OIG), theFCA protects the government from being overcharged or sold shoddy goods or services. False claims occur when someone submits a bill to Medicare or Medicaid for services that the person knows — or should know — are false or fraudulent. (Read more at:

The Anti-Kickback Statute prohibits people from paying to induce or reward patient referrals or to generate business involving any item or service paid by Medicare or Medicaid.

As OIG suggests, these could include gifts, money, free rent, hotel stays, meals, and excessive compensation for medical directorships or consultancies.

• Educate case manager’s on the hospital’s fraud policies. Hospital compliance officers can educate case managers and other staff about how fraud and abuse laws work and why every employee must be vigilant in preventing problems that would trigger a federal investigation.

The government can investigate an FCA violation as a civil and/or criminal act. If a healthcare provider is investigated under the civil False Claims Act, the government does not have to show that the person specifically intended to defraud. The employee could have accepted a gift without realizing that it was a violation. These civil penalties can occur in cases where a “person acted in deliberate ignorance or reckless disregard of the truth or falsity of the information,” according to the OIG. (Find out more at:

Criminal penalties can be levied on individual providers, including imprisonment and criminal fines.

Case managers are not permitted to accept gifts from pharmaceutical companies, home health agencies, medical device or supply companies, or any organization that might provide goods or services to Medicare/Medicaid patients.

The AKS also applies to routinely waiving copays from patients unless there is an individual determination that the patient cannot afford to pay or if collection efforts fail. (Read more at:

• Reinforce a hospital’s compliance program. The federal government typically focuses on physicians, healthcare systems, and other providers when conducting fraud and abuse investigations. But case managers and other healthcare professionals can be caught up in fraud, as well.

For example, the OIG states that any time a healthcare business offers something to a healthcare worker at free or below market value, he or she should ask, “Why?” This is suspect and should be avoided. (Find out more at:

A successful compliance program will reinforce these goals:

  • Demonstrate the hospital’s commitment to honesty and responsible conduct;
  • Make it easier and more likely that employees will prevent, identify, and correct unlawful and unethical behavior at an early stage;
  • Encourage staff to report potential problems and to follow-up these reports with an internal inquiry and corrective action;
  • Minimize financial loss to the government, taxpayers, and the hospital through early detection and reporting.