Anti-Kickback and Stark Act Violations

What are the Anti-Kickback Statute and Stark Act Violations?

An Anti-Kickback Statute violation is the exchange of (or offer to exchange) anything of value for the referral of federal health care program business. Stark Act violations involve physician referrals for health services (covered by Medicaid or Medicare) to entities with which the physicians or their family members have financial relationships.

Qui tam whistleblower lawsuits charging companies and individuals with offering and accepting unlawful kickbacks or illegally referring to entities in which they have a financial interest are increasingly common. Compliance with both the federal Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, and the federal Stark Act, 42 U.S.C. § 1395nn, are required as conditions of receiving payment from federally-funded healthcare programs, including Medicare, Medicaid, and TRICARE. Individuals and entities may violate the False Claims Act by submitting or causing someone else to submit a claim for payment to a federally-funded healthcare program, while knowing that transactions underlying the claim violated the AKS or Stark Act.

The Stark Act, 42 U.S.C. § 1395nn, prohibits physicians in certain circumstances from making referrals for health services to entities with which the physicians or their family members have financial relationships. Compliance with the Stark Act is a condition of receiving payment from federally-funded healthcare programs. When a “designated health service” — some examples include radiology services, durable medical equipment, clinical laboratory services, therapy, and pharmacy services — has been provided in violation of the Stark Act, an entity “may not present or cause to be presented a claim … to any individual, third party payer, or other entity” for that health service. 42 U.S.C. § 1395nn(a)(i).

The AKS prohibits persons from paying, soliciting, or receiving remuneration “in return for arranging or recommending purchasing, leasing or ordering any good…or item for which payment may be made in whole or in part under a Federal healthcare program.” 42 U.S.C. § 1320a-7b(b)(1)(B). Under the AKS, “a claim that includes items or services resulting from a violation” of the AKS constitutes a false or fraudulent claim for purposes of the False Claims Act. 42 U.S.C. § 1320a-7b(g).

VSG’s Qui Tam Attorneys Are Experienced in False Claims Act Cases Alleging AKS or Stark Violations

In a qui tam whistleblower case against Fresenius, a VSG partner represented a whistleblower who alleged that Fresenius’ predecessor, National Medical Care, Inc., paid unlawful kickbacks to induce physicians and nurses to provide unnecessary intravenous nutrition to dialysis patients covered by Medicare. The Government recovered $385,000,000 in that case, and the whistleblower client, along with other relators, shared in awards of $65.8 million.

In a case against Columbia/HCA, VSG represented a qui tam whistleblower who alleged that the nation’s largest hospital chain was paying kickbacks to physicians for the referral of patients, in violation of both the AKS and Stark Act. The Government recovered $225.5 million for that portion of the case, and the whistleblower relator, along with one other relator, shared in an award of $50 million.

In False Claims Act cases against Omnicare, a nationwide long-term care pharmacy chain, and several pharmaceutical manufacturers, VSG represents a qui tam whistleblower who has alleged that the pharmaceutical manufacturers paid kickbacks to Omnicare in return for the pharmacy chain favoring the drugs made by those manufacturers over competitors’ drugs. In the settlements of those claims to date, the Government has recovered approximately $118 million.