Behind the News

OHIO:  A recent series of cases, all based on the same set of facts, got a pair of Ohio chiropractors as well as other health care providers in deep trouble. The facts were the same in all situations. In exchange for referring patients to a diagnostic company, the providers received “lease” payments for office space. The amount of payment under these sham leases was directly related to the number of referrals made, and had no relation to the actual fair market value for rental of the leased space. The tests were found to be medically unnecessary.

The chiropractors pleaded guilty. One DC was required to pay $50,000 to defrauded insurers, and she was lucky; the other DC had to pay in excess of $67,000, spent four months in prison and another four months in home detention.

The government is not happy with doctors who receive money for the referral of patients. If you do enter into a business arrangement with a referral source or with someone, to whom you refer patients, make certain that your business arrangement fits into a bona fide safe harbor.

Keep in mind that the federal anti-kickback statute prohibits knowingly and willfully soliciting, receiving, offering, or paying anything of value to induce referrals of items or services payable by a federal health care program. The government considers kickbacks to be harmful because they distort decision-making; cause over utilization; increase costs to the federal health care programs; and result in unfair competition by freezing out competitors unwilling to pay kickbacks.

Both parties to an impermissible kickback transaction may be liable. Violation of the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment for up to 5 years, or both. The government may also initiate administrative proceedings to exclude persons from the federal health care programs or to impose civil money penalties for kickback violations.  Many states have similar laws in effect so, even if you do not treat Medicare/Medicaid patients, you may still be liable under your state’s laws.

What Does This Mean to You?  In order to avoid problems, consider the following issues when analyzing a proposed transaction—they signify potential problems.

1. Will the new source of income generated be provided by your existing patients?

2. Will the company that you’re working with pre-dominantly, or exclusively, service your existing patient base (or patients under your control or influence)?

3. Is your primary contribution to the venture referrals?

4. Are you required to make little or no financial or other investment in the business, delegating almost the entire operation to the other party, while retaining profits generated from your captive referral base?

5. Is the practical effect of the arrangement, viewed in its entirety, to provide you with the opportunity to bill insurers and patients for business otherwise provided by an outside party?

6. Does the remuneration from the venture to you (i.e., the profits of the venture) take into account the value and volume of business that you generate?

7. Is someone making you promises that sound to good to be true?

8. Is the other party telling you that you can rely on his lawyer and that you do not need to go to the expense of hiring your own?

If your answer is, “Yes,” to any of the foregoing questions, make sure that your health care lawyer carefully reviews this “terrific deal” before you, too, are discussing a “deal” of a different nature with your local district attorney.


If you have any questions with regard to the above or with respect to any other legal health care issues, FAX your questions to Deborah A. Green, Esq., at 954-971-3787 or call 954-971-7778 or e-mail [email protected]. In future columns, she will be answering those questions which are of interest to the broadest audience.

Ms. Green has been a practicing attorney since 1977. She is admitted to the practice of law in the State of New York and Florida and is a member of the American Health Lawyers Association, the New York State Bar Association Health Care System Design Committee, the New York State Bar Association Health Care Providers Committee, the American Bar Association Health Law Section and the Florida Bar Health Law Section. She has formed numerous multi-discipline practices throughout the country.


Because this column is being presented to you by an attorney, it would not be complete without a disclaimer. This column is provided subject to and governed expressly by the terms of this disclaimer. This column is provided for educational purposes only. The accuracy or timeliness of the information presented herein is not warranted. The information presented herein is not intended to be advice as to a specific fact pattern with which you may be presented.  Accordingly, please note that the information contained herein is not being presented as legal advice with respect to any matter and that no attorney-client relationship is hereby established.

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