How the Federal Anti-Kickback Statute Can Land You in Prison

If you work in the healthcare industry, you need to be cognizant of the federal Anti-Kickback Statute (AKS). The AKS imposes criminal and civil liability on anyone who offers, solicits, pays, or receives any form of payment in exchange for the referral of services or products covered by a federal health care program. In simple terms, if you accept a kickback for referring a Medicaid patient to a particular testing lab or pharmacy, you are committing a serious federal crime.

Appeals Court Reverses Restitution Order Due to Absence of “Victim’s” Losses

To help illustrate this point, consider this recent decision from the United States 11th Circuit Court of Appeals, United States v. Young, which upheld the conviction and 57-month prison sentence of a former health care products distributor charged with violating the AKS. The appellate court did, however, reverse one part of the defendant’s sentence related to a restitution order.

Here is what happened. The defendant owned a distributorship that initially sold medical devices related to spinal surgeries. She later expanded into selling over-the-counter pain relief patches and creams to doctors who treated workers’ compensation payments. As relevant to this case, the defendant marketed two products called Terocin and LidoPro.

According to the evidence presented at trial, the defendant arranged for a longtime personal friend who was working in a Georgia doctor’s office to order Terocin and LidoPro from a pharmacy in Florida. The pharmacy then agreed to pay a kickback of 50 percent of the profits on these sales to the defendant. The defendant, in turn, then kicked back some of that money to her friend in the doctor’s office through the latter’s boyfriend, whom the defendant hired as a “sales representative” despite his lack of experience in the health care industry.

Altogether, the federal workers’ compensation program paid approximately $2.9 million to have Terocin and LidoPro prescriptions filled at two pharmacies paying kickbacks to the defendant. The defendant herself received about $1.5 million in kickbacks, of which she paid around $338,000 to her two co-conspirators.

A federal jury convicted the defendant of conspiring to pay and receive kickbacks. In addition to her prison sentence of nearly 6 years, the trial court entered both a civil forfeiture judgment and restitution award of $1.5 million each.

The 11th Circuit reversed the restitution order, however, because the government failed to prove the victim in this case–namely the federal workers’ compensation program–actually suffered any losses as a result of the defendant’s conduct. While the defendant received kickbacks, the Court explained, that did not prove the underlying Terocin and LidoPro prescriptions were fraudulent or medically unnecessary. Nor was there any proof that the government paid more for these drugs then they would have but-for the defendant’s kickback scheme. Indeed, the 11th Circuit noted that the reimbursement rates were fixed by the federal programs, so this was not a case where the “victim” was overcharged.

Contact the Joshi Law Firm Today

Some people assume that just because an alleged crime only involves money that there will not be serious penalties involved. Cases like the one above illustrate the fallacy of such reasoning. If you are charged with any type of fraud-related offense and require representation from a dedicated Orlando federal crimes attorney, call the Joshi Law Firm, PA, today at 844-GO-JOSHI or contact us online to schedule a free initial consultation.

Source:

media.ca11.uscourts.gov/opinions/pub/files/202013091.pdf