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.
The federal Anti-Kickback Statute (AKS), Title 42 U.S.C. Section 1320, prohibits payments to induce the referral of patients for services or equipment paid for by federal health care programs. 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:
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.
The agents began building the health care fraud conspiracy component of their case by focusing on the marketing sales call scripts, as well as emails encouraging sales reps to lie and make false promises to customers. The agents also obtained the company’s sales calls, which were “recorded for quality control purposes.” Fake medical files, fraudulent invoices and falsified testing orders showing physician approval occurred after the DNA kits were mailed out; these further supported the existence of health care fraud.
The most incriminating anti-kickback evidence? A spreadsheet clearly showing the renumeration” (the $150 fee paid to the client for each kit sent to a customer). The spreadsheet column showing the fees had been highlighted by the client.
After conducting interviews with former company employees and the customers who “ordered” the testing kits, the agents appeared at our client’s door “to get his side of the story.” When told he was facing an indictment alleging violation of the AKS, as well as Health Care Fraud Conspiracy (Title 18 U.S.C. Section 1349), Health Care Fraud (Title 18 U.S.C. Section 1347), Mail Fraud (Title 18 U.S.C. Section 1341) and Wire Fraud (Title 18 U.S.C. Section 1343), the client smartly declined to speak with the agents. Instead, he called the Chapman Law Group for help.
If you find yourself facing similar allegations, we are here to help. Contact us for a professional consultation.
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