Anti-Kickback Act

1. Anti-Kickback Act and United States Civil False Claim Act
The Anti-Kickback Statute makes it a felony to offer kickbacks or other payments in exchange for referring patients “for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2)(A).
The False Claims Act is the primary law on which the federal government relies to recover losses caused by fraud. Avco Corp. v. Dept. of Justice, 884 F.2d 621, 622 (D.C. Cir. 1989).
The Act creates civil liability for making a false claim for payment by the government:
Any person who–
(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; [or]
…
(3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid;
…
is liable to the United States Government…
31 U.S.C. § 3729(a). The Act also permits private citizens to bring qui tam suits to enforce the Act. Id. § 3730(b).
2 Is The session of Witch Hunt open?
The U.S. Supreme Court on United States ex rel. McNutt v. Halleyville Medical Supplies, INC., 04-14458 (2005) – (McNutt) affirms the empirical theory of whether a violation of the Anti-Kickback Statute can form the basis for a “qui tam” action under the False Claims Act (FCA).
The FCA contains qui tam provisions that “supplement federal law enforcement resources by encouraging private citizens to uncover fraud on the government.” Rost, 507 F. 3d at 727. Under “qui tam” provisions whistleblowers bring certain fraud claims on behalf of the United States; in return, “[a] private relator is entitled to a portion of any proceeds from the suit, whether the United States intervenes as an active participant in the action or not.” Id. at 727.
The United States Attorney for the Northern District of Alabama, who opened parallel criminal and civil investigations against the defendants, brought the issue in 2002, which was decided by U.S. Supreme Court in 2005.
The U.S. Supreme court pointed out that when a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable, under FCA, for its submission of those false claims, quoting United States ex rel. Clausen v. Laboratory Corp. of America, Inc., 290 F.3d 1301, 1311(11th Cir. 2002).
It is undisputed that a violator of the Anti-Kickback Statute is disqualified from participating in a Medicare program. The government can state a claim, under the False Claims Act, when the company allegedly submitted claims for Medicare reimbursement with knowledge that it was ineligible for that reimbursement.
The rationale of the validity claim against the violators is plain and simple: the violation of the regulations (ex vi, Anti-Kickback Act) and the corresponding submission of claims, for which payment is known by the claimant not to be owed, makes the claims false under sections 3729(a)(1) and (3) of the FCA.
In McNutt, the U.S. Supreme Court affirmed the Northern District Court of Alabama decision and set out that, medical service providers who submitted ineligible claims for reimbursement to Medicare, while also certifying that they complied with the Anti-Kickback Statute, violated the FCA.
More recent case decided by the 1st Circuit Court of the United States Court of Appeals, in United States, ex rel. Mark Eugene Duxbury and Dean McClellan v. Ortho Biotech Product, LP., 08-1409 (2009), confirms the cause of action brought by Duxbury on Anti-Kickback claims and the statutory scheme of the FCA “qui tam” provisions, and discuss the grounds of court’s subject matter jurisdiction over “qui tam” actions and its jurisdictional bars.
The first, known as the “public disclosure” bar, provides that a court does not have subject matter jurisdiction over any qui tam action that is “based upon the public disclosure of allegations or transactions” concerning the alleged fraud, unless, among other things, “the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A). A relator qualifies as an "original source" if (i) she has “direct and independent knowledge” of the information supporting her claims and (ii) she “provided the information to the Government before filing an action.” Id. § 3730(e)(4)(B).
The second, known as the “first-to-file” bar, provides that when a potential relator brings an FCA action, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” Id. § 3730(b)(5).
3 The bottom line
For the medical devices and services providers, the implications of McNutt are alarming and its standard is too prissy or draconian, for whether accepting the government’s reimbursement and complying with all Heath Care Regulations and programs, or stay away from them.
For the time being, a number of cases brought under Anti-Kickback Act combined with FCA, raised a red flag for the health care industry to adopt a carefully calculated compliance program targeting the transactions, the process, and its disclosure of information to the government.