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June 12, 2015

OIG Fraud Alert Warns Doctors That They Will Be Personally Accountable for Violations of Federal Anti-Kickback Statute

By Kelly McGee

A new Fraud Alert from the Office of the Inspector General (OIG) reminds and warns physicians that they, as well as the health care facilities or groups they contract with, will be held personally liable for violations of the Federal Anti-Kickback Statute. The Fraud Alert, issued on Thursday, June 9, states that physicians who enter into compensation arrangements such as medical directorships must ensure that the compensation is for fair market value and is not based on referrals for Federal health care program business. If even one purpose of a compensation arrangement is to pay a physician for referrals, the arrangement violates the Anti-Kickback Statute. Physicians who enter into such compensation arrangements may be held personally liable for criminal and civil financial penalties, imprisoned and/or excluded from participation in the Medicare program.

The June 9 Fraud Alert discusses recent settlements with twelve physicians who the OIG alleged violated the Anti-Kickback statute by receiving compensation for medical director services that did not reflect fair market value and by entering into arrangements that took into account the volume and value of referrals. Over the course of fourteen months, the OIG settled with each of the physicians, with penalties ranging in amounts from $50,000 to almost $200,000, for which the physicians were personally liable.

This Fraud Alert is one of a series of recent Alerts from the OIG signaling a shift in the OIG’s attention from hospitals and other large health care entities to individual physicians. In March of 2013, the OIG cautioned that physician-owned distributorships (PODs) that sell implantable medical devices used in procedures by the physician-owners are inherently suspect under the Anti-Kickback Statute. In June of 2014, the OIG warned in another Fraud Alert that arrangements in which laboratories provide free or below-market goods or services to physicians, or make payments to physicians that are clearly based on referrals are suspect under the Anti-Kickback Statute.

In the past, physicians may not have fully realized their risk for personal liability due to non-compliant compensation arrangements, but the OIG’s shift in scrutiny from larger providers to individual physicians serves as a warning to physicians. Physicians need to ensure that the arrangements they enter into meet fair market value and are not based on the volume or value of referrals.

Click here to read the Fraud Alert in its entirety.

About the Author

Kelly McGee

Kelly McGee is a Rhode Island attorney providing general corporate and regulatory legal services, as well as strategic advice, to healthcare clients. You can find her on LinkedIn.

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