As we sat in the conference room, a new client looked me in the eye and said he had never broken a law in his life. He never even received a speeding ticket. Not that it mattered, but I believed him. He was having a hard time understanding how he could be facing federal charges for marketing routine medical products and services.
This was a matter that pertained to the federal Anti-Kickback Statute (AKS). Under the AKS, Title 42 U.S.C. Section 1320, payments to induce the referral of patients for services or equipment paid for by federal health care programs is prohibited.
The key aspect of the AKS is triggered when a person offers, pays, solicits or receives anything of value (i.e., “remuneration”) in return for a referral or to induce the generation of business reimbursable under a federal health care program such as Medicare and Medicaid.
Our client began his career selling storage sheds. Like many sales professionals, he received a commission for every sale. Over the last 20 years, he worked as a marketing representative for many different companies. Although the products changed many times, his getting paid via commission stayed the same.
He had recently started his own call center business — where he employed three sales representatives who also were paid by commission — and company was hired to market genetic tests to health care benefit program beneficiaries. Through cold calling, his employees tried to get customers to accept shipments of DNA test kits. The company would receive a flat $150 for each test kit mailed out, and the employee would be paid $75 for each kit.
The script used by his employees read something like this:
“We have partnered with one of your medical providers, and your records indicate that you qualify for a new state-of-the-art genetic test. Many people are taking advantage of this new technology because this test can predict your risk for cancer. The best part? Medicaid and Medicare covers this test completely. The test is done through a quick and easy cotton swab of the inside of your mouth, and your results will be sent directly to your doctor. Please give us a call when you receive your kit so we can get your results processed quickly.”
In this client’s case, a disgruntled former employee tipped off law enforcement. Special agents from the FBI and the Department of Health and Human Services (DHHS) Office of Inspector General (OIG) sent a subpoena to his corporation. The subpoena sought employee records and contracts, agreements, and correspondence relating to the genetic testing company.