Blog Post

Kickback Cases Remain Top DOJ and OIG Priority in 2017

Observations and tips from experts

  1. Arrangements with physicians are the highest compliance risk area. Al Bassett, JD, has conducted more compliance program effectiveness evaluations than just about anyone in the country over the past 20 years. He states that the number one enforcement priority for both the OIG and DOJ will continue to be any arrangement that implicates the Anti-Kickback Statute (AKS) and Stark Law. Any arrangement that has a purpose to induce or reward referrals creates a violation of the AKS, regardless of whether there are additional, legitimate reasons for it. Almost daily, a new AKS case or settlement is announced by the DOJ or OIG. This high level enforcement activity also makes it the biggest challenge for compliance officers and warrants their close attention.
  1. Kickback cases are brought by ‘whistleblowers’ under the qui tam provision of the False Claims Act (FCA). Tom Herrmann, JD, a retired executive in the Office of Counsel to the Inspector General and nationally recognized expert on reviewing physician arrangements, notes that the vast majority of DOJ settlements and OIG CIAs are based upon ‘whistleblowers,’ who were either part of the arrangement or blocked from participating in it. These insiders, frequently physicians, file their action with the DOJ and include supporting documentation. This combination of information, in most circumstances, makes for a “slam dunk” case. All one has to do is review recent DOJ settlements and OIG CIAs to find the predominance of FCA cases predicated and supported by the AKS.
  1. Connection of kickbacks and FCA remain blurry for many. Kashish Chopra, JD, MBA, CHC, has served as an Interim Compliance Officer and has reviewed a number of physician arrangements. She notes that the DOJ and OIG see claims arising from a corrupt arrangement that violate the AKS or Stark Law as false and fraudulent. Furthermore, the Patient Protection and Affordable Care Act (PPACA) added language reinforcing this position and makes it clear that a claim which originates from a referral in violation of the AKS constitutes a “false claim.” In addition to violating the AKS, such an arrangement can also be the basis for liability under the FCA.
  1. Arrangements should be the highest risk area priority for compliance officers, but many times, it is not. Steve Forman, a CPA with more than thirty years experience as a compliance officer, consultant, and OIG executive, states that compliance officers should be ensuring on ongoing monitoring and auditing of arrangements. Further, they should be redoubling efforts to ensure that there is ongoing monitoring of arrangements with referral sources and that an Arrangements Database is created and monitored that contains all the necessary data for this effort. However, for many organizations, this is not the case. Unfortunately, many compliance officers make only minimal efforts in this area.
  1. Compliance officers often avoid questioning agreements drafted by legal counsel, a big mistake. Suzanne Castaldo, JD, has been a compliance officer, consultant, and legal advisor for many organizations and has found many compliance officers feel constrained to involve themselves with arrangement reviews and potential kickback issues, an area that has been traditionally preserved for legal counsel. All too often, they defer to the attorneys who drafted the agreements, expecting that they should know best. However, just because attorneys are involved in drafting physician agreements does not mean they are free from risk. Hundreds of settlements involving agreements drafted by attorneys that result in enforcement actions tell a different story. She states that there is more to arrangements than written documents, most of which are based upon established and tested templates. Agreements may look good on the surface, but often the underlying factors determine whether the arrangement implicates federal law. To do their jobs properly, the compliance officers must ensure that the arrangements are closely reviewed and assessed. If this is not feasible in-house due to reluctance in questioning legal work, the answer may be to turn to outside experts to conduct an independent arrangements review.
  1. FMV continues to be a major factor in questioning the legitimacy of physician arrangements. Cornelia Dorfschmid has 25 years of experience in dealing with physician arrangements. She considers one area that often is not properly nailed down by attorneys is the credible determination of fair market value. There is considerable latitude provided by the government in making the determination. However, when challenging such determinations, the government expects considerable supporting documentation. Basically, the government won’t tell organizations how to make FMV determinations, but will “know it when they see it.” That is the time that convincing evidence needs to be on hand and presented to the government.
  1. Factors surrounding arrangements are critical for legal support. Carrie Kusserow has 20 years of experience as a compliance officer with organizations under a CIA; she has also worked as a consultant who has assessed many physician arrangements. She explains that there are numerous steps involved in assessing physician arrangements, not just the document. The government recognizes that quality of care for healthcare institutions often necessitate using outside assistance, but it wants to see evidence by which the medical necessity was determined, and then how the physician was selected. The government’s concern is that the selection should not have been influenced by the amount of referrals made, or anticipated by, that party. In virtually all of the successful government enforcement actions involving the AKS, the government has found documents or emails that indicated a factor in selecting a physician involved rewarding that person for being a loyal referral source or to encourage referrals. Supporting the arrangement document are a number of factors, including (a) how FMV was determined, (b) the scope of work defined, (c) record keeping obligations, etc. After an agreement goes into effect, the physician becomes like any other vendor providing services. There should be a verification of performance before each payment is authorized; this is often one area neglected.


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