Federal Anti-Kickback Statute Involving Federal Healthcare Programs

42 U.S.C. § 1320a-7b(b) – Criminal Penalties for Illegal Healthcare Referrals

Paying for referrals is common in many industries. Businesses often reward individuals who generate clients or customers.

In the healthcare industry, however, this practice can constitute a serious federal felony when it involves services reimbursed by federal healthcare programs.

Under the Federal Anti-Kickback Statute (AKS), offering or receiving anything of value in exchange for patient referrals connected to Medicare, Medicaid, or other federal healthcare programs is a crime.

Healthcare professionals accused of violating this statute face severe penalties, including up to 10 years in federal prison, substantial fines, exclusion from federal healthcare programs, and long-term professional consequences.

Your best hope of avoiding the worst outcomes is with a skilled criminal defense attorney at Eisner Gorin LLP.

To schedule a consultation, call (818) 781-1570 or contact us here.

What Is the Federal Anti-Kickback Statute?

The Anti-Kickback Statute, codified at 42 U.S.C. § 1320a-7b(b), is a federal criminal law designed to protect patients and taxpayer-funded healthcare programs from fraud and abuse.

The statute makes it illegal to knowingly and willfully:

Solicit or receive remuneration in exchange for referrals of federally reimbursable healthcare services or items
Offer or pay remuneration to induce another person to make such referrals

“Remuneration” is interpreted broadly and includes anything of value, not just cash. This may include free services, gifts, travel, inflated compensation, or disguised financial benefits.

Medical upcoding happens when healthcare providers submit exaggerated insurance billing codes to secure higher reimbursements. Federal prosecutors often accuse this practice of being health care fraud under 18 U.S.C. § 1347.

Why the Anti-Kickback Statute Is Enforced So Aggressively

Kickbacks can distort medical decision-making by incentivizing financial gain over patient care. Federal authorities aggressively prosecute AKS violations because kickbacks can:

Increase unnecessary medical services
Drive up healthcare costs paid by taxpayers
Undermine patient trust in healthcare providers
Corrupt competitive healthcare markets

Importantly, a violation can exist even if the medical services were necessary and no patient was harmed.

Who Can Be Prosecuted Under the AKS?

The Anti-Kickback Statute applies broadly to individuals and entities connected to federal healthcare programs, including:

Physicians and surgeons
Hospitals and medical groups
Medical device manufacturers
Pharmacies and pharmacists
Home health agencies
Healthcare executives and administrators
Marketing and referral companies

Liability may extend to both sides of the transaction—the person paying the kickback and the person receiving it.

18 U.S.C. § 287, known as the False Claims Act, is a federal law that prohibits submitting false claims to the U.S. government.

How Anti-Kickback Statute Violations Are Prosecuted

Federal prosecutors frequently bring AKS cases in which individuals profit by recruiting or steering patients to federally reimbursed healthcare services.

Common examples include:

Physicians paying per-patient referral fees
Providers compensating marketers based on patient volume
Pharmacists paying for patient referrals involving high-cost prescriptions
Medical suppliers offering incentives to physicians for product usage

AKS enforcement often overlaps with other federal statutes, significantly increasing exposure.

Common Conduct That Triggers AKS Investigations

Anti-kickback investigations frequently arise from:

Whistleblower complaints
Medicare or Medicaid audits
Billing irregularities
Financial relationships lacking documentation
Stark Law violations evolving into criminal cases

What begins as a compliance inquiry can quickly escalate into a federal criminal investigation.

Safe Harbor Provisions Under the Anti-Kickback Statute

The AKS includes regulatory safe harbors designed to protect legitimate business arrangements that might otherwise fall within the statute's broad scope.

To qualify, an arrangement must fully comply with every requirement of the applicable safe harbor.

Common Safe Harbor Categories Include:

Bona Fide Employment Relationships
Compensation paid to employees for legitimate services, at fair market value, may qualify when properly structured.

Properly Disclosed Discounts
Discounts are permitted when fully disclosed and accurately reflected in reimbursement claims.

Personal Services and Management Contracts
Permissible when compensation is set in advance, reflects fair market value, and does not vary based on referrals.

Investments in Ambulatory Surgical Centers (ASCs)
Certain ownership interests may qualify if strict regulatory requirements are met.

Failure to meet any single requirement eliminates safe-harbor protection.

Penalties for Violating the Anti-Kickback Statute

A conviction under the AKS carries severe consequences:

Criminal Penalties

Up to 10 years in federal prison
Fines of up to $100,000 per violation

Civil and Administrative Penalties

Civil monetary penalties under the CMPL
Treble damages
Per-claim fines
Mandatory compliance monitoring

Exclusion from Federal Healthcare Programs

Convicted individuals may be excluded from Medicare, Medicaid, and other federal healthcare programs, effectively ending many healthcare careers.

Possible Defenses to Anti-Kickback Statute Charges

An experienced federal criminal defense attorney may explore defenses such as:

Lack of Intent – Prosecutors must prove knowing and willful conduct
Safe Harbor Compliance – Full regulatory compliance may bar liability
Statutory Exceptions – Certain lawful arrangements are exempt
Good-Faith Compliance Efforts – Legal advice and compliance programs may mitigate exposure

AKS cases are complex and fact-intensive, making early legal intervention critical.

Why Early Legal Representation Is Essential

Anti-kickback investigations often begin long before charges are filed. Subpoenas, audits, or informal inquiries may signal escalating exposure. Early legal representation may:

Prevent criminal charges
Limit financial and sentencing exposure
Preserve professional licenses
Protect against exclusion from federal programs

Once prosecutors allege intent, defending these cases becomes significantly more difficult.

Speak With a Federal Criminal Defense Lawyer

If you are a physician, healthcare executive, or provider under investigation for possible violations of the Federal Anti-Kickback Statute, immediate legal guidance is essential.

Contact Eisner Gorin LLP, a law firm experienced in defending healthcare professionals facing high-stakes federal fraud and compliance prosecutions.

We represent clients in Los Angeles and throughout California in complex federal healthcare investigations.

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