Blog January 26, 2018
Third Circuit Says Health Care Company’s Donations Didn’t Violate Anti-Kickback Statute

The U.S. Court of Appeals for the Third Circuit has cleared Medco Health Solutions of violating the Anti-Kickback Statute, finding in a precedential ruling that a whistleblower failed to show a connection between alleged kickbacks and subsequent claims for reimbursement of treatment costs.


The Anti-Kickback Statute prohibits knowingly and willfully offering or paying remuneration to any person to induce that person to refer an individual for services that are paid for by a federal health care program. The Anti-Kickback Statute provides that a claim that includes services resulting from a violation of the Anti-Kickback Statute constitutes a false claim for purposes of the FCA.


In the suit, the relator alleged that Accredo, a Medco affiliated specialty pharmacy, violated the Anti-Kickback Statute by donating to charities to induce them to refer patients to Accredo. The relator claimed that Accredo violated the FCA by falsely certifying compliance with the Anti-Kickback Statute when it submitted claims for reimbursement for services provided to federally insured patients.


Although DOJ had declined to intervene in the case, it filed an amicus curiae brief on appeal, arguing that the district court erred in holding that the FCA required proof that a patient actually chose Accredo because of the charities’ referrals. DOJ argued that the district court improperly required the relator “to prove a causal connection between the kickbacks and the claims.” DOJ further argued that the district court’s opinion appeared to require proof that Accredo’s federal claims sought reimbursement for medical care that would not have been provided but for the kickback scheme but that this was not required under the FCA. Instead, DOJ argued, the relator need only “show a connection between the alleged kickbacks paid by Accredo to the charities and the claims Accredo submitted for federal beneficiaries.”


The Third Circuit held that to prevail under the FCA, the relator “must show, at a minimum, that at least one of the 24 federally insured patients for whom Accredo provided services and submitted reimbursement claims was exposed to a referral or recommendation of Accredo by HSI/HANJ in violation of the Anti-Kickback Statute,” Judge Thomas Ambro wrote for the Court.


In other words, the relator needed to “point to at least one claim that covered a patient who was recommended or referred to Accredo by [the charities].” The relator provided no such link. Not only did he fail to demonstrate that any of Accredo’s 24 federally insured patients even saw the charities’ approved provider list that included Accredo, but he also failed to establish that any of the patients received the charities’ communications regarding Accredo.


The Third Circuit’s opinion defining the scope of FCA liability based on an alleged Anti-Kickback Statute violation comes in the midst of DOJ scrutiny of pharmaceutical manufacturers’ donations to charities as well as recent Department of Health and Human Services Office of Inspector General (HHS-OIG) actions modifying and rescinding advisory opinions related to such charitable contributions.


While charitable contributions to potential referral sources will likely remain a focus of DOJ and HHS-OIG scrutiny, the Third Circuit’s Greenfield opinion establishes that charitable donations cannot form the basis of FCA liability absent a link between the contribution and a specific claim for payment.


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