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New Law Expands Kickback Liability Beyond Public Health Care Programs

on Tuesday, 5 February 2019 in Health Law Alert: Erin E. Busch, Editor

The Eliminating Kickbacks in Recovery Act of 2018, to be codified at 18 U.S.C. § 220 (“EKRA”), expands criminal liability for any remuneration or kickback paid for referrals to laboratories, recovery homes and detoxification and substance use treatment facilities. EKRA provides for criminal sanctions including a fine in the maximum amount of $200,000 and up to ten years imprisonment.

EKRA was passed as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (“SUPPORT Act”), in October 2018. The SUPPORT Act addresses many aspects of the growing opioid crisis, including treatment, prevention, recovery, and enforcement. EKRA, as initially introduced, was intended to prevent “patient brokering” of individuals with substance use disorders to recovery homes and substance use treatment facilities. Laboratories were a late addition to EKRA’s scope, which greatly broadened the impact of the new law on the health care industry.

EKRA goes beyond the Anti-Kickback Statute (“AKS”), which limits its prohibition against kickbacks to services and items compensable under public health care programs. EKRA does not take the payor into account. It prohibits remuneration in return for the referral of services covered by any public or private plan or contract, to the provider types it affects. Accordingly, compliance programs for entities affected by EKRA will need to be broadened to extend monitoring and review to private plans.

The compliance concern raised by EKRA’s broad scope is not merely theoretical. EKRA offers some safe harbors for activities that might otherwise be viewed as offering value for referrals, but the scope of those safe harbors is not consistent with AKS. For example, there is no blanket protection for “bona fide employment” under the Act. Accordingly, commission-based payments to W-2 employees of laboratories may have criminal consequences for laboratories and the entities referring to them.

There also is a question as to whether EKRA will serve as a new basis for relators’ “qui tam” cases against health care companies under the False Claims Act (“FCA”). Today, relators can use purported AKS violations as the predicate for alleging that a defendant filed false claims for payment from the government. The theory in such cases is that a provider certified to the government, for example in a hospital cost report, that it was in compliance with all laws while there was actually an ongoing, alleged AKS violation. It is likely that relators’ counsel will now test EKRA as a predicate for similar “false certification” claims.

Regulators and courts will be needed to clarify a number of these issues. For example, because many of the AKS safe harbors are regulatory, CMS might issue rules under EKRA that harmonize the safe harbors of the two statutes. Courts will no doubt establish standards for incorporating or excluding EKRA as a basis for relators’ FCA claims. Until there is more clarity, however, providers operating service lines covered by the EKRA should take note and adjust their compliance programs to include the new law.

Thomas S. Dean


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