California Anti-Kickback Statute - Business & Professions Code 650 BPC
This law prohibits licensed healthcare providers from offering, delivering, receiving, or accepting any rebate, refund, commission, preference, patronage dividend, discount, or other consideration as compensation or inducement for referring patients, clients, or customers to any person or entity.
A related law, the Chiropractic Initiative Act, codified under Business and Professions Code 1000-1057, focuses on defining the scope of practice for chiropractors and prohibits them from offering or receiving any consideration for the referral of patients.
Understanding and adhering to California's anti-kickback laws is not just important; it's crucial. Violating these laws can lead to severe consequences, including criminal penalties, fines, and disciplinary action against a provider's professional license. By understanding these laws, you can navigate your professional responsibilities with confidence and clarity.
Put simply, the AKS applies to a wide range of healthcare professionals, prohibiting them from offering or receiving any form of compensation or inducement for patient referrals. This law is not limited to a specific group, making it crucial for all healthcare providers to be aware of its implications.
California's AKS shares similarities with the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), but it's important to note that the state law specifically applies to healthcare providers licensed in California. The federal law, on the other hand, applies to healthcare services reimbursed by federal healthcare programs like Medicare and Medicaid.
Federal Anti-Kickback Statute (AKS)
The Anti-Kickback Statute (AKS) is a federal law designed to prevent fraud and abuse in the healthcare system, but it can also pose significant risks to your professional license.
The AKS prohibits offering, paying, soliciting, or receiving any form of remuneration in exchange for referrals of patients or services covered by federal healthcare programs, such as Medicare and Medicaid.
Federal courts have interpreted the AKS to prohibit any arrangement in which even one purpose of the payment or offer of payment is meant to induce the referral of services, even if the payments also serve other, legitimate purposes.
The related Stark Law (Physician Self-Referral statute) under 42 USC § 1395nn restricts physician self-referrals for certain designated health services when the physician has a financial relationship with the entity providing those services.
Violating either of these laws may result in severe penalties, including substantial fines, exclusion from healthcare programs, and even criminal charges. For example, the penalties for violating the federal Anti-Kickback Statute are severe:
- Includes fines of up to $100,000 per violation and imprisonment of up to 10 years.
- Civil penalties include fines of up to $50,000 per violation and three times the amount of the kickback.
- Exclusion from participation in federal healthcare programs.
Key Takeaways
- BPC 650 prohibits licensed professionals in healthcare and related fields from engaging in any form of consideration exchange for patient referrals, whether monetary or otherwise.
- This law is designed to safeguard patients and prevent financial incentives from influencing medical decisions.
- The Anti-Kickback Statute and the Stark Law are designed to ensure that medical decision-making is solely based on what is best for the patient, rather than influenced by the potential for monetary gain.
- These laws impose harsh penalties on medical professionals who accept kickbacks, pay for referrals, or otherwise give providers a reason to send patients for services they do not actually need.
- The law prohibits structuring compensation schemes disguised as legitimate agreements but ultimately tied to the value or volume of referred patients.
- Accepting free items or non-monetary incentives that influence referral decisions is also prohibited, unless specifically allowed by law, such as technology services under limited circumstances.
Physician Ownership and Referral Act
California's Physician Ownership and Referral Act of 1993 (PORA) and California Labor Code Section 139.3 related to workers' compensation prohibit physicians from self-referrals.
This means referrals to entities for which they have any financial interest, including any type of compensation, whether direct or indirect. PORA applies to private insurers and cash payments as well as Medicare or Medi-Cal patients. PORA is, however, limited to designated health services.
California False Claims Act
The California False Claims Act (CFCA), codified in the California Government Code, Sections 12650-12656, is designed to address healthcare fraud and abuse.
The CFCA's qui tam provisions empower any interested party with knowledge of healthcare fraud, such as violations of the Anti-Kickback Statute or Stark Law, to come forward and report the misconduct.
This provision puts the power in your hands to uphold the integrity of the healthcare system.
For example, the CFCA allows the state to recover damages and penalties from individuals or entities that knowingly submit false claims to the state's Medicaid program (Medi-Cal). Key information about the CFCA includes the following:
- It imposes liability on individuals or entities that knowingly present a false or fraudulent claim for payment or approval.
- It allows for qui tam actions, empowering private citizens to file lawsuits on behalf of a government entity against someone who obtained government money through fraud.
- It provides for treble damages and civil penalties for each false claim submitted.
What Are the Exceptions?
Under Business and Professions Code 650 BPC, there are exceptions designed to account for legitimate business relationships and operations. These exceptions are not loopholes; they're safeguards.
They ensure that your business practices are in line with the law, providing you with the reassurance that you can conduct your business ethically and legally. The exceptions include the following:
- Compensation linked to non-referral services (such as consulting or lease agreements), provided the payment is commensurate with the fair value of the service rendered.
- Federally qualified health centers can enter into financial agreements, as long as they enhance healthcare services for underserved populations and comply with federal laws.
- Licensed professionals can refer patients to businesses they own if the financial gain from ownership is strictly proportional to the individual's investment and not tied to the value or volume of referrals.
- Physicians and other healthcare practitioners can pay fees to third-party platforms for advertising, appointment bookings, or providing resources, as long as the platforms do not endorse specific providers.
Penalties for Violating CA's Anti-Kickback Statute
Violations of the California AKS are wobblers that can be prosecuted as either a misdemeanor or a felony, depending on the specifics of the case and the defendant's prior history. If convicted of a misdemeanor, the penalties include:
- Up to 1 year in county jail and/or
- A fine of up to $50,000.
If convicted of a felony, the penalties include the following:
- Imprisonment under California Penal Code 1170(h) PC, which could involve incarceration in state prison or county jail for 16 months, 2 years, or 3 years.
- A fine of up to $50,000.
What are the Defenses?
If you are accused of violating BPC 650, our California criminal defense attorneys may employ different strategies to challenge the charges. Perhaps we can argue there was a lack of intent.
Prosecutors must prove that the exchange of value was intentional and tied to patient referrals. A lack of clear evidence of intent may result in a dismissal or reduction in charges.
Perhaps we can argue that there was a legitimate business agreement. Demonstrating that the payments or exchanges were made as part of a genuine business arrangement, such as a lease or consulting contract that complies with state and federal regulations, could constitute a valid defense.
If it can be shown that the alleged compensation was unrelated to patient referrals, this may undermine the prosecution's case.
Perhaps we can prove that the conduct falls within one of the lawful exceptions outlined in the statute, such as a permitted ownership interest or certain advertising relationships.
Evidence obtained unlawfully during the investigation of the alleged kickback scheme may not be admissible in court, which could weaken the prosecution's case. For additional information, contact the Hedding Law Firm, located in Los Angeles, CA.
Related Content:
