Working for Justice

How Healthcare Companies Use Kickbacks to Influence Medical Decisions

Posted August 29th, 2017 by in Whistleblower Law.

We all have a general idea of what a kickback, or a bribe, looks like. We may imagine a bag of cash discretely changing hands. Or a corrupt politician freezing money in boxes of frozen pie crusts.

But kickbacks may not always appear so seedy. Many healthcare and pharmaceutical companies have been found liable for paying or receiving kickbacks in order to induce business. Since the Government pays for so many healthcare costs through Medicare and Medicaid, the Government is always on the lookout for companies that are receiving its money by paying kickbacks.

This makes sense – you want to know that your doctor’s decisions are based on your best interests and that he or she is not unnecessarily referring you for services or referring you to sub-par providers because it is personally enriching. In fact, there is evidence that doctors who receive money from the pharmaceutical industry prescribe differently than doctors who don’t.

The Anti-Kickback Statute (“AKS”) is a federal law that prohibits paying or receiving remuneration in order to induce the referral of government paid healthcare business. See 42 U.S.C. § 1320a-7b. Most healthcare providers who participate in the Medicare or Medicaid program have to certify that they are complying with the Anti-Kickback Statute at one time or another. The Government has also made clear that any claims for payment that are submitted to the Government as a result of the violation of the Anti-Kickback Statute are “false claims,” and violate the False Claims Act.

This means that employees who witness violations of the Anti-Kickback Statute can file a case against the violating company under the False Claims Act. Cases filed under the False Claims Act are called qui tam cases. Employees who complain about AKS violations or refuse to engage in conduct that violates the AKS are also protected from retaliatory action by their employer.

Kickbacks can take many forms in the medical industry. Pharmaceutical companies have been notorious for wining and dining doctors, claiming that they are providing them “training.” While this conduct has largely abated due to the regulations and lawsuits in this area, it has not been eliminated. For example, Warner Chilcott U.S. Sales, a pharmaceutical company, paid $125 million to resolve False Claims Act allegations and related criminal liability for providing “payments, meals and other remuneration associated with so-called ‘Medical Education Events,’ which included dinners, lunches and receptions.”

Some pharmaceutical companies may also disguise their kickbacks as lawful payments for services performed. For example, pharmaceutical companies may reward high prescribing doctors with paid consultancies.

A kickback does not have to be large to get the Government’s attention. For example, the Government settled a suit brought by Sanford Heisler Sharp against Pathway Genomics, a DNA testing company, that was alleged to have paid doctors $20 for each patient sample that they referred to the Company. The payment was purported to pay the doctors for the collection of the sample.

Kickbacks can also be payments provided to the patient since these payments induce patients to pick one provider over another. Recently, the Manhattan U.S. Attorney’s Office announced a $50 million settlement with Walgreens for incentivizing its employees to enroll hundreds of thousands of government healthcare patients in a prescription saving program, in violation of its own policies.

These are just a few examples of the types of kickbacks offered in the healthcare industry. Employees in the healthcare industry should be wary of practices that would violate the Anti-Kickback Statute and the False Claims Act. Employees who complain about or avoid these practices should understand that they are protected by federal laws and that the Government may be interested in the violating conduct.

Inayat Hemani

Inayat Hemani

Inayat Ali Hemani is a Senior Litigation Counsel in the NY office who works primarily on whistleblower/qui tam cases. Learn More

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