OIG ratcheting up anti-kickback enforcement

OIG senior counsel says the agency is about to start picking up cases Justice passes up

The anti-kickback statute is alive and well, and health care providers should brace for increased enforcement activity in that area, warns Vicki Robinson, senior counsel at the Department of Health and Human Services’ Office of Inspector General (OIG).

"You’re going to see more enforcement in this area," Robinson said at the recent Healthcare Financial Management Association compliance conference in Washington, DC. "It’s important to be aware of the anti-kickback statute and scrutinize your business arrangements."

Until now, the anti-kickback statute has mainly been enforced by the U.S. Department of Justice, Robinson notes. But that’s about to change. "We [the OIG] have actually hired a former U.S. attorney whose primary focus is going to be bringing kickback cases," she says. "We intend to pursue cases that may not rise to the level of a case the Justice Department would prosecute criminally due to resource limitations or other factors, but still warrant prosecution."

According to Robinson, one new vehicle for enforcement will be the OIG’s authority to impose civil monetary penalties (CMPs) for kickbacks, granted by the Health Insurance Portability and Accountability Act of 1996.

But it doesn’t stop there. Robinson says the OIG is dramatically increasing the types of kickback arrangements it is investigating. Not long ago, she says, anti-kickback cases were relatively straightforward and easy to spot, a simple quid pro quo of patient referrals in exchange for money. But while this type of garden-variety kickback is still relatively common, more sophisticated ways of disguising payments for referrals in complex business transactions have surfaced as the business of medicine has become more complex. "This trend is requiring us to get more sophisticated in how we look at health care business transactions," says Robinson.

"We see floors of hospitals reconstituted as separate hospitals with physician investors," she reports. "In some cases, these arrangements are potentially designed to circumvent the Stark whole-hospital’ exception."

Robinson says the OIG is also scrutinizing clinical joint ventures, where hospitals close existing services and reopen them, sometimes right next door as joint ventures with physicians, thereby cutting physicians in on the profits from the services.

According to Robinson, other examples of potential kickback violations include a range of consulting, management, and research grants, as well as space and equipment rental arrangements that providers use to create "a paper cover for unlawful payments for referrals." Often, the agreed-upon services are not rendered, or the payments exceed fair-market value for whatever services are rendered, she maintains.

"The bottom line is that, whether you call it an investment interest, a consulting fee, a research fee, or a rental payment, if it is a payment for referrals, it is a kickback," she argues. "You can’t paper it over with 20 different complicated business structures or contractual arrangements."

Gabe Imperato, a health care attorney who specializes in that area, says the trend Robinson is warning about is already in evidence. "There has been aggressive enforcement under the kickback statute both in terms of volume and sophistication," reports Imperato, of Broad & Cassel in Fort Lauderdale, FL. However, criminal enforcement by U.S. attorneys in some of those kickback cases would have been more appropriately handled as a CMP or exclusion case by the OIG, he argues.

Imperato says the problem is that a case does not get to the OIG for administrative action unless the local U.S. attorney can’t or won’t prosecute it criminally. "They have to decline before the OIG gets into the picture," says Imperato, who argues there should be some mechanism for a decision to be made up front about whether it is a criminal or a civil kickback matter.

Imperato says most OIG attorneys have considerable experience in that area, and "a basic appreciation for the kickback statute and its application." But newer FBI agents and U.S. attorneys who lack the same experience are sometimes too eager to bring cases. In fact, some cases involve dollar amounts and numbers of physicians that would suggest half the physician population in an area is involved in kickback arrangements, he adds.