Understanding Kickbacks in the Healthcare Industry

The healthcare industry is big business in America. It also receives a significant amount of government spending. Medicaid, for example, results in over $400 billion a year in benefits. Medicare adds another $600 billion. Total spending on healthcare in the United States amounts to about 17% of our total Gross Domestic Product (GDP) at about $2.7 trillion.

With so much at stake, it is no wonder the industry is fraught with fraud, kickbacks and schemes to get an unfair “piece of the action.” The government has laws in place to discourage fraud, including kickbacks, and has significant penalties in place. Doctors are warned of the dangers of getting involved. There are even laws that protect whistleblowers who come forward with information about medical kickbacks. Yet, the problems persist. In many cases, whistleblowers may be afraid to come forward for fear of reprisals or of losing their jobs. Others may simply not fully understand the ramifications of remaining silent. Still, others may not know the laws regarding fraud and kickbacks in the healthcare industry, and how they can financially benefit from their knowledge of such kickbacks. This is where talking with an experienced attorney qualified in working with medical fraud and handling whistleblower cases can be invaluable.

What is a Kickback in Healthcare?

A kickback in healthcare is the exchange of money or anything else of value in order to influence a healthcare provider or a physician to make decisions that may financially benefit the party offering the incentive. While the familiar “fee for a referral” type of kickback has become increasingly obvious, and to some degree less frequent, kickback schemes have become increasingly sophisticated.

There have been schemes where home health care providers have offered to supply doctors and staff with laptops, printers, and free supplies to help them carry out their referrals. While not offering cash, this is still an attempt to influence and is considered a kickback.

In other cases, doctors have been offered a fee for services provided to a healthcare supplier such as in-house lab work. Again, this is a clever attempt at getting around the laws regarding fraud and kickbacks. In still other cases, physicians may have been offered administrative assistance at no charge to the doctor. Yes, a fee for referral cases is still relatively common.

One has to remember that because the amount of money involved, and in many cases taxpayer money, what may simply be considered an inducement in the consumer world can be fraud in the medical industry. For example, many car dealers will offer a rebate to consumers with the purchase of a new vehicle. There is no problem with this incentive, and it is perfectly legal. A pharmaceutical company offering such rebates to doctors for referring their products would be breaking the law. There are several reasons for this. One is that a physician is not making the purchase but is getting compensated for a referral. The doctor should also be acting in the best interest of the patient, not the medical supplier. Medical decisions may be influenced by financial or other gains, and not by referring patients to the best or most cost-effective medical solutions. It is a temptation some medical professionals and organizations can have a difficult time passing up.

Government Regulations Regarding Kickbacks

There are three main statutes in place that address fraud and kickbacks in the medical industry. They are the Stark Law, the Anti-Kickback Statute, and the False Claims Act. Here is a quick look at the three and what they are designed to do.

1. The Stark Law – The Stark Law is actually several laws that prohibit physicians from “self-referrals.” These specifically address referring a Medicare or Medicaid patient to a facility where the physician or an immediate family member may have a financial relationship or interest.
2. The Anti-Kickback Statute – This is a wide-ranging statute that makes it illegal to exchange anything of a value in order to influence the referral of a federal healthcare program business.
3. False Claims Act – Sometimes referred to as the “Lincoln Law,” this imposes penalties on individuals and companies who defraud any government program, including healthcare. Often, this law targets federal contractors.

In spite of laws like the above, kickbacks and fraud in healthcare remain prevalent. This is due, in part, because fraud either is generally discovered by a government investigation or by self-reporting in the industry. There is, however, another valuable way these kickbacks can be uncovered.

The Importance of Whistleblowers

Many cases of fraud and kickbacks are uncovered with the help of whistleblowers. These are people with first-hand knowledge that fraud or kickbacks are taking place. In the case of the healthcare industry, this may be a nurse, administrative personnel, accountant or even a receptionist. It could be a medical supply or equipment representative or a pharmaceutical rep. It could be a member of management or someone on the ground floor. Whistleblowers help stop waste and fraud in government programs by helping to identify where such activity may be taking place. Not only is their testimony of value, but they may also have access to hard evidence of kickbacks and fraud.

How important are whistleblowers to the government? From 2009 through 2015, the U.S. Department of Justice recovered about $16.5 billion in healthcare fraud, much of it with the help of whistleblowers through the False Claims Act. These people can be compensated up to 30% of the recovered funds. This can not only have a significant impact on limiting medical fraud and kickbacks but can financially benefit the whistleblower for coming forward.

The whistleblower process starts with an initial consultation with legal representation.

If pursued, the next step would be the filing of a Qui Tam Lawsuit through the False Claims Act. If successful, this lawsuit can result in significant financial compensation for the whistleblower.

Choosing the Right Attorney in a Whistleblower Situation

If you believe you have been witness to Medicare or Medicaid fraud or kickbacks, we invite you to contact the Louthian Law Firm. Bert Louthian is The Whistleblower Lawyer with the knowledge, tools, and experience to see that you are fairly compensated for your actions in stopping fraud against the government. There is a new epidemic of medical fraud in the United States, and if you’ve been witness to it, you can help resolve it. Call the Louthian Law Firm at 877.947.4260. You can also start the conversation with a Live Chat on our website. Don’t wait. If you have information about kickbacks in the medical industry, call The Louthian Law Firm today.