Referring or Receiving Referrals from Individuals and Entities? Here are the consequences

July 29th, 2014 by haber Leave a reply »

Haberslaw, Fmr. Assistant United States Attorney and Fmr. Senior Attorney OIG: Healthcare Fraud Attorneys – Healthcare Compliance Attorneys – Medicare Fraud Attorneys – OIG Attorney – FBI Attorney – Healthcare Defense Attorney – healthcare audit lawyers – false claims attorney – RAC Attorney – ZPIC Attorney

Business Relationships with Physicians By Persons Or Entities To Whom or From Whom Physicians Refer or Receive Referrals Can Have Dire Consequences.
By Kenneth Joel Haber, Esq.

Mr. Haber is a former Assistant United States Attorney and former Senior Attorney for the Office of Inspector General – United States Department of Health and Human Services. After leaving federal service, Mr. Haber found this firm in 1984, and has been servicing healthcare practitioners ever since.
The OIG has issued a Special Fraud Alert concerning rental of space in physician’s offices by persons or entities to whom physicians make referrals. Anti-kickback and Stark violations can arise from such relationships. In the Special Fraud Alert, the OIG focused on the rental of space in physicians’ offices by persons or entities that provide health care items or services (suppliers) to patients that are referred either directly or indirectly by their physician-landlords. These issues are not limited to only rental space. Equipment rental can be a cover for improper payments as can be most any other aspect of a medical practice. Rental of staff personnel can also be used to cover-up improper payments for referrals. A physician needs the counsel of an experienced healthcare attorney to avoid getting into trouble. White collar crime lurks wherever there is money available from business arrangements. There is always someone who is looking for an easy dollar by breaking the rules and dragging some innocent uninformed individual into their scheme. When the OIG expresses concerns over relationships, it is serious on a number of levels: criminal, civil and administrative. Stark and Anti-kickback statutes can be implicated with their draconian consequences and no healthcare provider is immune unless he/she follows the appropriate regulatory requirements.

That is why every healthcare provider must find an experienced healthcare attorney from whom they can obtain advice concerning Medicare fraud, proper billing documentation, licensing board issues, CMS compliance, CMS audits, RAC audits, ZPIC investigations, DEA issues, healthcare compliance and a multitude of other issues that physicians routinely face even when they are unaware of the net thrown about them. The attorneys of Haberslaw are healthcare audit lawyers that know how healthcare auditors think because Mr. Haber was in the OIG at its infancy and helped birthed it when he was an AUSA.
Physicians routinely need assistance with establishing and implementing Compliance Programs, Defensive Medicine, Fraud Avoidance, Medicare, CMS, DOJ, OIG, DEA as well as many other issues. Topical information of the day is available on the Haberslaw E-education page at as well as on the Haberslaw Article page.
As to questionable rent:

The OIG asserted that a number of suppliers, who sell and provide health care items or services to patients, rent space in the offices of physicians or other practitioners who in fact make referrals of patients for those supplies. In particular, the OIG was aware of rental arrangements between physician-landlords and:
• comprehensive outpatient rehabilitation facilities (CORFs) that provide physical and occupational therapy and speech-language pathology services in physicians’ and other practitioners’ offices;
• mobile diagnostic equipment suppliers that perform diagnostic related tests in physicians’ offices; and
• suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) that set up “consignment closets” for their supplies in physicians’ offices.

The OIG is concerned that in such arrangements, the rental payments may be disguised kickbacks to the physician-landlords to induce referrals. The OIG advised that it has received numerous credible reports that in many cases, suppliers, whose businesses depend on physicians’ referrals, offer and pay “rents” — either voluntarily or in response to physicians’ requests — that are either unnecessary or in excess of the fair market value for the space to access the physicians’ potential referrals.

As the OIG explained in its Alert, Kickbacks can distort medical decision-making, cause overutilization, increase costs and result in unfair competition by freezing out competitors who are unwilling to pay kickbacks. Kickbacks can also adversely affect the quality of patient care by encouraging physicians to order services or recommend supplies based on profit rather than the patients’ best medical interests.

The Anti-kickback statute, Section 1128B(b) of the Social Security Act (the Act), prohibits knowingly and willfully soliciting, receiving, offering or paying anything of value to induce referrals of items or services payable by a Federal health care program. Both parties to an impermissible kickback transaction are liable. Violation of the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to five years, or both. The OIG may also initiate administrative proceedings to exclude persons from Federal health care programs or to impose civil money penalties for fraud, kickbacks and other prohibited activities under sections 1128(b)(7) and 1128A(a)(7) of the Act. These violations are extremely serious and are not limited to rental issues.

Most financial relationships can implicate these statutes; such as, personal service contracts, guaranteed income arrangements, ownership arrangements, equipment and other leases, etc. There exist regulatory “Safe Harbor” provisions, which if complied with, afford you substantial protections. If you find yourself in such a relationship without having first taken steps to insure compliance with these regulatory “Safe Harbor” requirements, then you need to seek experienced counsel. Also, if you desire to legitimately enter such a relationship, then you need to seek experienced counsel so as to insure that you comply with the respective “Safe Harbor” requirements.

The OIG looks at questionable features of suspect rental arrangements for space in physicians’ offices that may be reflected in three areas:

• the appropriateness of rental agreements;
• the rental amounts; and
• time and space considerations.

The same type of issues can be transposed to other relationships. As noted, personal Service arrangements, ownership arrangements, equipment leases, etc can all create situations where kickback payments are concealed. To avoid getting into difficulty concerning such relationships, it is important to comply with what are commonly known as Safe Harbors. These are regulatory definitions of relationship that if complied with, generally afford the parties safety in their business dealings. It takes a skilled, experienced attorney to advise you about such relationships. If you may have violated the prohibitions of these statutes, you must get pro-active advice and not wait until the OIG is knocking at your door.

As mentioned, if you need more specific information concerning this topic or the implications of this article [all other healthcare issues], the staff of haberslaw is available for a no obligation initial consultation at 301-670-0016.


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