Medicare Fraud: Kickbacks

A kickback is when payments are made with the intent of influencing or gaining something from a company or a person. Medicare kickbacks are when health care providers intentionally accept payments, products, or services for the purposes of soliciting Medicare or other healthcare program business. This is considered fraud.

Anti-Kickback Legislation

In 1977, Congress enacted a law that prohibited the payment of kickbacks to medical provider in any form. It came from the Congressional concern that providers could be influenced to provide or make healthcare decisions that were unnecessary, inappropriate, or of poor quality through the receipt of payoffs. 

This statute further prohibits anyone from making or accepting payments to, or rewarding anyone for referring, recommending, or arranging for the purchase of items being paid for by federally funded programs. Medicare is a federally funded program, so bribes of any kind constitute fraud by the person making as well as the person receiving the bribe.

Medicare Kickback Fraud Cases

There have been several important Medicare kickback fraud cases.

  • Harborside Healthcare in Boston settled a kickback claim of almost $1.4 million for allegedly receiving kickbacks and assistance when they purchased durable medical equipment from McKesson Corp and its affiliates. Harborside allegedly billed Medicare for the same goods they received kickbacks for and thereby violated the False Claims Act.
  • The owner of a Detroit infusion clinic, along with a medical doctor and office manager working at the clinic, was indicted for healthcare fraud for an alleged scheme to commit fraud with Medicare of $2.3 million. They opened the fraudulent infusion and injection therapy operation and agreed to split money from Medicare beneficiaries who received kickbacks for visiting the clinic and signing documents that they received treatments that were either medically unnecessary or never provided. They also altered and falsified medical records to try to cover up and justify the services.
  • St. Jude Medical Inc, a manufacturer of heart devices and two health care facilities were guilty of false claim allegations that accused St Jude of paying kickbacks to the hospitals to secure their heart device business. It stated that St. Jude received retroactive payments based on the purchase of the heart device equipment and also paid to purchase heart device equipment made by competitors to induce similar purchases in the future.

These examples of kickback fraud are often hard for the government to uncover. Many times authorities are made aware of the fraudulent practices by whistleblowers, or concerned people who want to right a wrong-doing. People may be hesitant to act as a whistleblower from fear of consequences, so the Anti-Kickback Statute which prevents payoffs to the people who can influence health care decisions also contains language that provides protection to whistle blowers. 

The whistleblower law suits provide economic incentives to the person who reports medical providers who are accepting kickbacks in any form. These are considered qui tam lawsuits, where a person suing on behalf of the government can actually be paid a percentage of whatever is recovered from the lawsuit.