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In January of this year, the Department of Justice announced what is believed to be the first conviction under the new Eliminating Kickbacks in Recovery Act (EKRA). EKRA is a recent addition to the war on fraud. It prohibits accepting or paying kickbacks for referrals to recovery homes, clinical treatment facilities, or laboratories. The defendant, a manager of a substance abuse treatment facility, solicited kickbacks from a urine drug testing lab. Use of EKRA promises to help stem the tide of opioid related fraud and may create False Claims Act Liability
In late 2018, Congress enacted the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the “SUPPORT Act”). Section 1822 contains EKRA, codified at 18 U.S.C. § 220.
The provision was originally sponsored by senators Marco Rubio and Amy Klobuchar. Above all, it targets “patient brokers” who improperly profit from attempts to help patients recover from addiction. Patient brokers recruit patients, and shop them to the highest bidder. They frequently defraud patients and offer them bribes.
To fund the kickbacks, facilities and brokers push patients to expensive private insurance (often government subsidized). They may even pay the premiums for the duration of the treatment. Likewise, facilities frequently over utilize expensive urine drug testing, and reap huge profits from the insurer. Urine drug testing is a multi-billion dollar a year business and so lucrative for treatment clinics, that they refer to it as “Liquid Gold.”
EKRA provides that
whoever, with respect to services covered by a health care benefit program . . . knowingly and willfully-
(1) solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory; or
(2) pays or offers any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind-
(A) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or
(B) in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory,
shall be fined not more than $200,000, imprisoned not more than 10 years, or both, for each occurrence.
18 U.S.C. § 220(a). At first glance EKRA appears similar to the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). The AKS also criminalizes solicitation and acceptance of kickbacks associated with items and services covered by government health care programs. But there are key differences that make EKRA a unique and valuable tool when it applies.
The Anti-Kickback Statute applies only to items and services “for which payment may be made in whole or in part under a Federal health care program” 42 U.S.C. § 1320a-7b(b)(1)(b). However, Federal health care programs cover the vast majority of medical items and services. Thus, the Anti-Kickback Statute theoretically applies in almost all cases. However as a practical matter, the government is unlikely to prosecute cases that do not involve substantial government money.
EKRA eliminates that concern and applies to any service “covered by a health care benefit program.” A health care benefit program means “any public or private plan or contract . . . under which any medical benefit, item, or service is provided to any individual.” Consequently, EKRA applies any time medical services are provided, whether the service is covered by government insurance, private insurance, or the patient pays herself.
This directs prosecutors to pursue all recovery-related kickbacks and bribes. Not just those that threaten to directly damage the public fisc.
The Anti-Kickback Statute criminalizes almost all payment of money in exchange for referrals. It then excepts specific permitted relationships in safe-harbors. The Anti-Kickback Statute has eleven statutory and twenty-eight regulatory safe harbors (many of which overlap).
In contrast, EKRA has seven statutory safe harbors and no regulatory safe harbors:
18 U.S.C. § 220(b)(1)-(7). Notably, the Anti-kickback employee safe harbor exempts nearly all payments to bona fide employees. The EKRA employee safe-harbor, however exempts only those that do not vary with the volume of referrals. This means that covered entities may not pay their employees on a commission basis.
However, the EKRA copay waiver exemption permits a broad range of copay waivers. Not just those that are offered for reasons of financial need.
Anti-Kickback Statute penalties include imprisonment of up to 10 years and a $100,000 fine per violation. But, a given case may include hundreds or thousands of individual payments and referrals. However, EKRA penalties are even more stringent: imprisonment of up to 20 years and a $200,000 fine per violation.
Importantly, DOJ’s first conviction relates to the type of bribes that likely would have been covered by the Anti-Kickback Statute.
The target of the prosecution was an office manager of a substance abuse treatment clinic in Kentucky. The individual admitted to soliciting kickbacks from the CEO of a urine drug testing lab in exchange for the clinic’s business. These bribes included a $4,000 check that the individual subsequently lied to investigators about.
Notably, DOJ’s press release does not address any prosecution of the urine drug testing laboratory. We would expect that DOJ will continue to pursue that entity.
We have previously explained how the Anti-Kickback Statute can subject an entity to liability under the False Claims Act. When an entity submits a claim to the government, it promises that follows all of the federal health care law. This includes the Anti-Kickback statute. This is known in False Claims Act jargon as an “implied certification theory.” Health care providers make these certifications when they join government health programs or submit claims. Moreover, federal law explicitly states that “A claim that includes items or services resulting from a violation of [The AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” 42 U.S.C. § 1320a-7b(g).
Under Supreme Court guidance, a provider violates the false claims act every time he submits claims while failing to tell the government about violating the law if he knows that the violation is material. In other words, would matter to the government’s decision to pay. EKRA is very similar to the AKS and clearly important to Congress. Thus, a violation would likely provide a basis for FCA liability.
As a practical matter, if EKRA applies and there is substantial government money at issue, then the AKS would likely be in play. But there may well be cases in which the narrowed EKRA safe harbors would make that the preferred vehicle for liability.
We will continue to watch the evolution of this law and expect it will play a significant role in reducing addiction related fraud.