My great-grandfather was a country doctor in Alabama during the Great Depression.
He did emergency surgery wherever he had to — including once, to
the great consternation of my great-grandmother, right smack in the middle
of the dining room table. He never, ever asked whether a patient could
pay; there wasn’t any point because almost nobody could pay, at
least not in the usual sense. If a person needed surgery, he or she got
it — and Dr. Terry knew a pig or a chicken or a “big mess
of collard greens” would show up on his doorstep as soon as the
person’s family could pay it.
Dr. Terry would never have dreamed that one day Congress would need to
pass an Anti-Kickback Statute to keep bribery out of the healthcare field.
It would never have occurred to him that one day the number one type of
False Claims Act case would be lawsuits brought by whistleblowers reporting
on kickbacks and bribes taking place in the medical field.
But today the healthcare industry is a big business — in fact, the
number one business in America. When you go to the doctor nowadays you
expect to show your insurance card or pay up front.
The Increasing Problem of Kickbacks and Unnecessary Healthcare
We all agree that a doctor deserves to be paid for what he does. But we
still have the idea that when today’s Dr. Terry sticks us on the
high-tech steel gurney that has replaced the dining room table, it is
because we really need surgery. We cling to the notion that when a doctor
tells us we need to go to the hospital, or take a certain drug, or have
surgery — he means “need” in the sense of what is best
for us, not in terms of how much money he will add to his bank account.
But Congress saw a rise in instances where healthcare providers were paying
money to generate patient referrals. The practice is nefarious for two
reasons: first, it sets up the wrong incentives, giving healthcare providers
incentive to push healthcare that a patient doesn’t need. Just as
disturbingly, when patients find out what has happened, it destroys their
ability to trust their healthcare providers. No one wants to receiveunnecessary medical care; it’s unpleasant, expensive and creates health risks of its own.
In response, Congress passed the Anti-Kickback statute to make it illegal
to bribe a doctor to make particular healthcare decision.
What is the
The Anti-Kickback Statute is codified at 42 USC § 1320a-7b(b). (How
a statute could wind up with a provision numbered “b(b)” remains
a mystery to me.) The statute makes it illegal to offer, pay, solicit
or receive something of value in order to induce or reward healthcare
referrals or generate business reimbursed under the Federal healthcare program.
How is the Anti-Kickback Statute different from the Stark Act?
The Stark Act is aimed at stopping “bought and paid for” referrals
from doctors, and the services and goods that cannot be referred are designated.
The AKS is broader, encompassing referrals of any items or services from anyone.
If a healthcare provider violates the Stark Act, it is “strictly
liable,” which means that the provider has to pay the money back
even if he did not intend to cheat Medicare. However, the Government won’t
charge any civil monetary penalties unless there was an “intent”
to violate the statute. By contrast, in order to violate the AKS, a person
must have “intent,” which is defined as a “knowing and
One day soon I will add a web page explaining all of the differences between
those two statutes, but for purposes of this next series of blog entries,
those differences are the most important. In my next blog posts, I will
be describing the AKS cases of 2014 where healthcare providers paid the
Government to resolve allegations that they had paid or taken kickbacks
or bribes to generate medical business that wound up getting paid for
by federal healthcare programs, generally Medicare or Medicaid.