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AKS – Anti Kickback Statute Explained

April 19, 2022

The Anti-Kickback Statute prohibits offering or accepting kickbacks intended to generate health care business. Violation of the Anti Kickback Statute (AKS) is a felony, with serious penalties.  Violating the Anti-Kickback Statute also results in liability under the False Claims Act, the government’s most powerful anti-fraud statute.

Understanding the scope and safe harbors to the anti-kickback statute is vital for providers and potential whistleblowers.  Below we explain what the law prohibits, and its key terms and safe harbors.  We also offer some examples of major AKS cases.


What is the Anti Kickback Statute

The Anti-Kickback Statute is the popular name for The Medicare and Medicaid Fraud and Abuse Statute, 42 U.S.C. § 1320a-7b(b). The AKS is a federal criminal law.  It prohibits offering or accepting kickbacks to generate health care business.  As a result, violation of the AKS is a felony, punishable by ten years in jail and fines of $100,000 per violation.

Violation of the AKS also triggers liability under the Civil Monetary Penalties Law (CMPL).  The CMPL carries penalties of up to $50,000 per kickback, in addition to three times the amount of the remuneration.  It also makes the resulting bills to the government false under the False Claims Act. As a result, the violator is responsible for three times the value of the bills, and a False Claims Act Penalty of up to $23,000 per bill.

Congress first enacted the AKS in 1972 as amendments to the Social Security Act. It has subsequently amended it many times. Congress was concerned that kickbacks and bribes to physicians corrupt medical decision-making.  As a result, patients receive goods and services that are medically inappropriate, unduly costly, medically unnecessary, and of poor quality.  In addition, these items often harm a vulnerable patient population. As a result, the AKS is intended to protect the integrity of government health care programs.

Anti-Kickback Statute (AKS)

What Does The Anti-Kickback Statute Prohibit?

The AKS prohibits anyone from requesting, receiving, offering, or paying kickbacks intended to generate health care business.  We will break down the specifics of this prohibition.  First, however, several key features of the Anti-Kickback Statute prohibition bear emphasis:

  1. The prohibition applies to both sides of the transaction – the kickback requester/receiver and the offeror/payer.
  2. The Anti-Kickback Statute uses the term “remuneration” which, as we shall see, is incredibly broad.  Remuneration applies to anything of value.
  3. The Anti-Kickback Statute prohibits paying remuneration to several kinds of people:
    • Doctors when referring patients to things paid for by health insurance (drugs, tests, equipment, supplies, specialists, hospital services, etc.);
    • Patients when choosing to buy or lease or order things paid for by health insurance;
    • Procurement Staff/Management when choosing what supplies to buy, lease, or order for organizations; and,
    • Marketing/Advertising/Sales – Anyone in a position to encourage the buying, leasing, ordering of things paid for by health insurance.  These individuals include all sales representatives, anyone doing advertising and marketing, anyone offering testimonials, talks, dinners, product education etc.
  4. 4. The Anti-Kickback Statue has an intent element.  It only applies when the purpose of the kickback is to reward or induce the referring, buying, etc. The intent element is satisfied at any time one purpose of the remuneration is to induce referrals or purchases

Key Terms in the Anti Kickback Law

Anti-Kickback Statute Text

(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

(A) in return for referring an individual to a person for the furnishing or arranging 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, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

(2)Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person—

(A) to refer an individual to a person for the furnishing or arranging 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, or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.

42 U.S.C. § 1320a-7b(b).

What is Remuneration Under the Anti-Kickback Statute?

Under the Anti-Kickback Statute, remuneration is defined as anything of value and includes discounts.  The Anti-Kickback Statute explicitly includes within “remuneration” any kickback, bribe, or rebate. Further, they constitute remuneration whether paid directly or indirectly, in cash or in kind.  Thus, remuneration includes goods or services. 42 U.S.C. § 1320a-7b(b).

A different subsection of the law defines “remuneration” to include copayment waivers and discounts to the price of items or services. 42 U.S.C. § 1320a-7a(i)(6). The statute also outlines some limited safe harbors for waivers and discounts due to financial need, or other specified policies.

Health and Human Services Office of Inspector General Anti-Kickback Statute regulations, also highlight the breadth of this definition:

Congress’s intent in placing the term “remuneration” in the statute in 1977 was to cover the transferring of anything of value in any form or manner whatsoever.

56 Fed. Reg. 35952, 35958 (1991), See also OIG Compliance Program Guidance for Pharmaceutical Manufacturers, 66 Fed. Reg. 23731, 23734 (May 5, 2003) (Anti-Kickback Statute addresses the offer or payment of “anything of value”)

What is a Referral Under the Anti Kickback Statute?

Referrals under the Anti-Kickback Statute are not limited to recommendations that a patient receive a particular item or service.  Referrals also include any required authorizations and certifications that permit a patient to access that item or service. These constitute referrals even if the provider had no other role in selecting the item or its provider.

The Anti Kickback law does not define referral.  But the closely related Stark Law does.  The Stark Law defines referral in relevant part as

the request by a physician for, or ordering of, or the certifying or recertifying of the need for any , . . . health service . . ., including a request for a consultation with another physician and any test or procedure ordered by or to be performed by (or under the supervision of) that other physician.

42 C.F.R. § 411.351 (definition of “referral”).

Courts have confirmed that referrals under the AKS include certifications and authorizations in addition to recommendations.  For example, a doctor argued that signing forms that certify the need for home health care were not referrals . The doctor argued that he did not steer any patients to a particular provider.  The Seventh Circuit Court of Appeals decided that in the context of the Anti-Kickback Statute, refer means to authorize:

Upon considering the Statute’s main purposes, however, we are convinced that Congress intended the Statute to extend to the certification and recertification of patients for government-reimbursed care.

United States v. Patel, 778 F.3d 607, 615 (7th Cir. 2015).

Anti Kickback Statute Intent Requirement: When is Remuneration Paid “to Induce” or “to Reward”?

The Anti-Kickback Statute prohibits the payment of remuneration whenever one purpose is to reward or induce health care business.  See, e.g,, HHS-OIG Advisory Opinion No. 13-03United States v. Borrasi, 639 F.3d 774 (7th Cir. 2011); United States v. McClatchey, 217 F.3d 823 (10th Cir. 2000); United States v. Davis, 132 F.3d 1092 (5th Cir. 1998); United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. Greber, 760 F.2d 68 (3d Cir. 1985), cert. denied, 474 U.S. 988 (1985).

The AKS prohibits solicitation or acceptance of remuneration when it is intended “to reward”  business.  Likewise, the statute prohibits offering or paying remuneration when it is intended “to induce” business.  But often parties pay remuneration for several reasons.

For example, imagine a drug company invites top prescribing physicians to a lavish retreat each year.  There, the doctors share their experiences using the drug.  Sure, the drug company is genuinely interested in learning from the physicians and values their input. However, it also recognizes that the vacation rewards its top prescribers.

Under the “one purpose” test, a mixed motive like the drug company’s would violate the Anti Kickback law.

What are Goods And Services For Which Payment May Be Made Under a Federal Health Care Program?

The Anti-Kickback Statute prohibits remuneration in relation to a “good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b).

The Anti-Kickback Statute goes on to define “federal health care program” as any government funded plan or program that provides health benefits; or any State health care program. 42 U.S.C. § 1320a-7b(f).

This list includes many programs.  However, it excludes the Federal Employee Health Benefit Program. That is, the program that provides insurance to federal employees. 42 U.S.C. § 1320a-7b(f).

Some you’ve probably never heard of. Here is a non-exhaustive list:

  • Medicare
  • Medicaid
  • The State Children’s Health Insurance Program (CHIP or SCHIP)
  • TRICARE and Tricare for Life
  • VA Services
  • Indian Health Services
  • Federal Health Program for Alaska Natives
  • Railroad Employees National Health and Welfare Plan
  • Federal Employees’ Compensation (“FECA”),
  • The Longshore and Harbor Workers’ Compensation Act (“LHWCA”)
  • The Federal Black Lung Benefits Act (“FBLBA”)
  • The Energy Employees Occupational Illness Compensation Program Act (“EEOIC”) (also known as the “Beryllium Exposure Compensation Act”)
  • Refugee Medical Assistance (RMA)
  • Federal Reimbursement of Emergency Health Services to Undocumented Aliens
  • Ryan White HIV/AIDS Program

These programs cover the breadth of health services offered.  So nearly every good, facility, service, or item is potentially payable by a federal health care program.

Who does the Anti Kickback Statute Apply To?  It’s Not Just Physicians

The Anti-Kickback Statute applies to a broad range of participants in the health care system. Its prohibitions extend to anyone who offers, pays, accepts or solicits money to generate health care business. This includes

  1. Doctors who refer patients for items or services paid for by health insurance ;
  2. Patients when choosing to buy or lease or order things paid for by health insurance;
  3. Procurement Staff/Management responsible for choosing what supplies to order for organizations; and,
  4. Marketing/Advertising/Sales  anyone in a position to encourage the buying, leasing, ordering of things paid for by health insurance.  This includes all sales representatives, anyone dong advertising and marketing, anyone offering testimonials, talks, dinners, product education etc.

Of course, the AKS applies to both sides of the kickback arrangement.  Therefore, its prohibitions also apply to the entity offering or paying these parties to generate health care business.

Anti Kickback Prohibition on Referrers

The AKS prohibits remuneration in connection with referring an individual for items or services paid by the government.

This applies primarily to doctors who recommend or authorize patients to utilize health care items and services.  For example, tests, pharmaceutical drugs, specialists, medical equipment, surgery hospitalization, etc.

Anti Kickback Prohibition on Buyers/Leasers/Orderers

The AKS prohibits remuneration in connection with the purchasing, leasing, or ordering any good, facility, service paid by the government.

This applies to patients who choose to purchase items and services .

It also applies to procurement staff who select items and services for hospitals, nursing homes, and other facilities. This is true so long as there is some connection between the supplies and government payment.  However, the connection can be fairly attenuated.  These supplies can include, for example, surgical supplies, some drugs, some medical equipment, etc.

Anti Kickback Prohibition on Recommenders or Arrangers

The AKS prohibits remuneration in connection with arranging for and recommending  purchasing goods and services paid by the government.  Above all, this applies to marketing advertising and sales staff.  These individuals are paid to recommend that patients and facilities buy health care items and services.

Anti Kickback Statute Safe Harbors

Everyone agrees that kickbacks should have no place in the health care industry.  However, the broad AKS prohibition sweeps in beneficial conduct that doesn’t implicate kickbacks. For example, it includes drug manufacturers offering discounts or rebates.  It also prohibits hospitals from waiving co-pays for indigent patients.  Likewise, it prohibits any health care provider from hiring marketing or advertising employees.

For this reason, the statute includes eleven safe harbors.  It also empowers the Health and Human Services Office of Inspector General to define additional safe harbors.  To date, OIG has created 37 regulatory safe harbors.  However, several of these merely expand upon statutory safe-harbors.  The regulatory safe harbors are listed at 42 C.F.R. §§ 1001.952(a)-(kk).

Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. An arrangement is only protected if it fits squarely in the safe harbor and satisfies all of its requirements.  Some of the more common safe harbors include:

Anti-Kickback Statute (AKS) Safe Harbors

Bona Fide Employment

The AKS excludes employer payments to bona fide employees employed to furnish items or services payable by government health care. 42 CFR 1001.952(i).  However, HHS-OIG does not consider independent contractors to be employees. The regulations interpreting the Anti-Kickback Statute specifically confine “employees” to those common-law employees as described at 26 U.S.C. § 3121(d)(2). 42 CFR 1001.952(i).

In the preamble to those regulations, HHS-OIG rejected requests to expand this definition to include independent contractors.  HHS-OIG cited “the existence of widespread abusive practices by salespersons who are independent contractors and, therefore, who are not under appropriate supervision and control .” 56 Fed. Reg. 35952, 35981 (July 29, 1991).  A decade later, the office issued an advisory opinion stating the same thing.

Any compensation arrangement between a Seller and an independent sales agent for the purpose of selling health care items or services that are directly or indirectly reimbursable by a Federal health care program potentially implicates the anti-kickback statute, irrespective of the methodology used to compensate the agent. Moreover, because such agents are independent contractors, they are less accountable to the Seller than an employee. For these reasons, this Office has a longstanding concern with independent sales agency arrangements.

HHS-OIG, Advisory Opinion 99-3 (Mar. 16, 1999).

Personal Services and Management Contracts

Non-employee agents, such as contractors and certain vendors may qualify for the personal services and management contracts exception.  The numerous requirements to the exception must be followed exactly.  Notably, the agreement must be in writing, signed, and cover at least a year.  In addition, compensation must be set in advance, and consistent with fair market value.  In addition, the compensation may not be based on the value or volume of referrals. 42 CFR 1001.952(d).

Therefore, when an entity seeks to utilize this safe harbor, it cannot pay the agents on commission. This is often as surprise as sales and marketing contractors are paid on commission in most settings.  However, a covered entity wants to pay  commissions, it must treat agents as bona fide employees not independent contractors.

Discounts And Rebates

Sellers may discount their goods and services so long as they report the discount.  That allows government health care programs to take advantage of the price.  Generally, the exception protects discounts that are “made at the time of the sale,” or rebates whose terms are “fixed and disclosed in writing to the buyer at the time of the initial sale” 42 C.F.R. § 1001.952(h)(1)(iii)(A).

Generally the offeror must (1) fully and accurately report the discount to the buyer; (2) inform the buyer in of its obligations to report the discount; and (3) avoid impeding the buyer from meeting its obligations to report the discounts.

HHS-OIG has repeatedly emphasized that the “exception covers only reductions in the product’s price.” Additionally, it only applies if the discount is “given at the time of sale or, in certain cases, set at the time of sale, even if finally determined subsequent to the time of sale (i.e., a rebate).” HHS-OIG, Compliance Program Guidance, 68 Fed. Reg., at 23735.

In July 2000, HHS-OIG further reiterated that upfront discounts do not qualify as rebates. “Simply put, discounts are price reductions at the time of sale of goods, and rebates are discounts subsequent to the sale.”  HHS-OIG, “Up front Rebates,” “Prebates” and “Signing Bonus” Payments”, Opinion Letter (Jul. 17, 2000).

Space Rental

The space rental exception allows a provider to rent space to a potential referral source.  As an example, hospitals frequently lease space to independent physicians, pharmacies, or testing laboratories.  Rental agreements must be in writing signed by the parties for at least a year.  In addition, payments must be  fair market value and cannot take into account the value or volume of referrals. 42 CFR 1001.952(b).

Copay and Deductible Waiver

Generally, providers must not advertise or routinely offer copay and deductible waivers.  Providers may only make waivers pursuant to good faith determinations of financial need, and not to induce additional business. Different standards apply depending on what type of provider is at issue. 42 CFR 1001.952(k).  We have a full explainer on when Copay Waiver violates the law.

Anti-Kickback Statute Penalties and Enforcement

AKS Criminal Penalties

The AKS is a criminal law.  Each violation. therefore, is a felony punishable with a fine of up to $100,000 and up to 10 years in prison. 42 U.S.C. § 1320a-7b (b).

Exclusion from Participation

Providers who violate the AKS can be excluded from participation in Federal Health Care programs. 42 U.S.C. § 1320a-7 (7).

Civil Monetary Penalties Law

Physicians who pay or accept kickbacks also face liability under the Civil Monetary Penalties Law.  CMPL penalties for kickbacks include $100,000 per kickback plus three times the amount of the remuneration. 42 U.S.C. § 1320a-7a (a).

The HHS-OIG and the Department of Justice enforce each of these provisions.

False Claims Act Liability

A provider submitting a claim to government health care programs implicitly promises to comply with federal and state anti-kickback laws.  Therefore, if the provider violates the AKS, all tainted claims become false under the federal and state False Claims Acts. This is because, as we explain, the False Claims Act pulls in other theories of liability. When a service rendered by a provider is motivated by kickbacks, the resulting claims are false or fraudulent as well.  Consequently, civil False Claims Act complaints will often allege a violation of criminal law as grounds for civil liability.

Damages under the False Claims Act include three times the value of the tainted claims caused to the Government by the fraud plus a False Claims Act penalty. The penalty also increases each year. By February 2022, False Claims Act penalties ranged as high as $23,607 per violation.

A key feature of the False Claims Act is the qui tam (or whistleblower) provision.  Because of this provision,  an individual or entity with first-hand knowledge of the fraud can file a lawsuit on behalf of the United States. If the case is successful, the relator shares the Government’s recovery.

Anti-Kickback Statute Examples

Monetary Kickbacks to Doctors and Medical Practices

Cardinal Health

One of the nation’s largest wholesalers of drugs and supplies paid $13.125 million to settle AKS claims.  Cardinal induced practices to contract with it rather than competitors by paying large upfront cash bonuses.  It paid these bonuses, described as “rebates,” well before and without any connection to actual purchases of products.

Arthrex, Inc.

A Florida-based medical device maker paid $16 million to resolve claims that it paid kickbacks to a surgeon. Arthrex agreed to pay the surgeon purported royalty payments.  However, the payments were actually not for his inventions but to induce him to prescribe Arthrex products.

Pfizer Inc.

The pharmaceutical company paid a record-breaking criminal recovery of $1.3 billion dollars in addition to $1 billion in civil recoveries to settle claims including marketing drugs off-label and paying health care professionals in exchange for prescribing those drugs.  Pfizer paid illegal remuneration in the form of speaker programs, mentorships, preceptorships, and so-called “journal clubs.”  Pfizer also offered gifts (including entertainment, cash, travel and meals) to health care professionals to induce them to promote and prescribe several drugs, including Lipitor, Norvasc, Viagra, Zithromax, and Zyrtec.

Amgen, Inc.

The biotechnology company paid $762 million to settle criminal and civil claims related to multiple drugs.  These claims included incentivizing doctors to prescribe its drug Aranesp rather than its competitor’s product. Amgen intentionally overfilled single-use vials of Aranesp, to increase the vial volume beyond that needed to ensure delivery of the labeled dosage.  Amgen then encouraged doctors to bill Medicare and Medicaid for the overfill, which typically was more than the indicated dose, and thereby increased the doctor’s reimbursement from government insurers.

MedNet Healthcare Technologies, Inc., 

This Independent Diagnostic Testing Facility (IDTF) provided remote cardiac monitoring services under exclusive supplier agreements with physicians and hospitals.  It paid $1.35 million to settle claims that it paid illegal kickbacks to providers. MedNet aggressively marketed the financial advantage of “Split Bill Medicare and Fee for Service for Private Payors” to doctors. It did this to induce doctors to use MedNet’s cardiac monitoring services as it was more profitable to the provider than using the services of MedNet’s competitor.

Paying Kickbacks to Doctors To Practice At A Facility

Catholic Medical Center

A New Hampshire hospital paid $3.8 million to resolve claims that it provided its employee cardiologists to cover for Dr. Mary-Claire Paicopoli after-hours, on weekends, and on holidays.  The hospital did this because Dr. Paicoplis referred patients to the hospital.

Halifax Hospital Medical Center

A Florida hospital system paid $85 million to settle claims that it paid illegal bonuses to physicians based on the number of patients they referred and number of prescriptions they wrote. Compensation tied to referrals is a violation of the Stark Law, also known as the Physician Self-Referral Law.

Offering Trips and Gifts

Athenahealth Inc.

A medical software company based in Watertown, Massachusetts, paid $18.25 million to settle two qui tam cases. The cases revealed that Athena was paying illegal kickbacks, such as all-expense paid trips, to generate referrals of its cloud-based electronic health record technology, athenaClinicals.

Serono, Inc.

The Swiss manufacturer of the AIDS treatment drug Serostim paid $704 million to settle civil and criminal claims.  Serono offered doctors free trips to France because they agreed to write 30 new prescriptions for Serostim.

Improperly Waiving Copays

We have a full explainer on why Copay Waiver violates the Anti-Kickback Statute.

Jewish Hospital & St. Mary’s Healthcare, Inc.

The Specialty Pharmacy paid over $10.1 million to settle claims that it gave patients free items and waived co-payments.

US WorldMeds LLC

Our case against this pharmaceutical manufacturer was the first successful whistleblower False Claims Act case because of a patient assistance fund. In 2019, US WorldMeds, agreed to pay the United States $17.5 million. It also entered into a five year Corporate Integrity Agreement.


In 2018 Pfizer paid $24 million to resolve claims that it used a foundation as a conduit to pay the copays of Medicare patients taking three Pfizer drugs in violation of the False Claims Act.  Pfizer then made “donations” to the foundation to cover the copays.  As a part of the settlement,  Pfizer also entered into a corporate integrity agreement.

SPR Specialty Pharmacy

The government alleged the defendants engaged in illegal behavior because it waived required co-payments and paid sales staff illegal commissions.

Teva Pharmaceuticals

According to the complaint, Teva funneled the money to two patient assistance foundations.  These were not, however, simple charitable donations.  Rather, the government contends that Teva used the foundations as conduits to illegally pay the copays of Copaxone patients.

Gilead Sciences

Gilead, a pharmaceutical company paid nearly $100 million to settle claims that it waived copays.  It allegedly used a non-profit foundation as a conduit.

Regeneron Pharmaceuticals

The pharmaceutical company is currently being sued by the United States because it allegedly paid tens of millions of dollars worth of copays for patients of its drug Eylea through a foundation called the Chronic Disease Fund.

Paying Sales and Marketing Staff Improperly

BlueWave Healthcare Consultants

The government and a whistleblower won a $111 million judgment against a testing laboratory and marketers because they illegally paid marketers to generate referrals.

Dominic Trumbo

The marketer “cold called” Medicare beneficiaries and induced them to sign up for home health care services. After that, Trumbo sold information about those beneficiaries to home health agencies. In addition, Trumbo and his co-conspirators created sham contracts and fake invoices to conceal their illegal kickback scheme. He consequently received a five year prison sentence, will pay over $1 million in restitution, and forfeit $203,000.

Jai Vijay and his wife, Anita Vijay.

Co-conspirators paid Vijay and his wife cash because they steered Medicare beneficiaries to their agencies. Jai and Anita both pleaded guilty. As a result, Jai received 24 months of probation. Anita also received a 1 month prison sentence. Both will pay $403,000 in restitution.

Ashley Hoobler Parris

Hoobler,  a medical test marketer had Medicare patients complete CGX testing. Then, she would pay kickbacks to get prescriptions for the tests.  Hoobler also received illegal kickbacks in for sending the CGX tests to a laboratory.

State Anti-Kickback Statutes

Many states also have anti-kickback laws which apply to medical providers and entities participating in their Medicaid programs.  Below are some (non-exhaustive) examples including:

Whistleblower Law Collaborative

The Whistleblower Law Collaborative LLC devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs. Under the False Claims Act, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government.  The relator also shares in the government’s recovery.  Among the firm’s many successes is the governments’ $885 million settlement with AmerisourceBergen.

For more information, contact the Whistleblower Law Collaborative LLC at 617.366.2800.

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