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Elizabeth Hogue on Kickbacks for Referrals

One of the health care industry’s finest attorneys when it comes to laws pertaining to Medicare Certified agencies has generously shared the following information with our readers. Questions about the content of the information should be directed to Elizabeth Hogue at her email below. Your comments below are always welcome.

Home Care Providers Indicted for Paying Kickbacks for Referrals

Elizabeth E. Hogue, Esq.

Office:  877-871-4062

Fax:  877-871-9739


On December 18, 2008 a federal grand jury indicted owners and employees of eight home health agencies in the Metro-Detroit area on charges that they took part in a plan to solicit and pay kickbacks in exchange for Medicare patient referrals.  This plan was devised by Rebecca Sharp, president of Continuing Senior Care, Inc. in Ypsilanti, Michigan, who allegedly received over $1.1 million in kickbacks.

According to the indictment, Sharp obtained potential home health patients by directing her staff to randomly telephone senior citizens in order to offer them medical services and chore workers.  If any senior citizen was curious as to how Continuing Senior Care received his or her contact information, employees were instructed to state that this information came from Medicare.  When a senior citizen agreed to the offer, employees would acquire patients’ Medicare information.  Patients would then be visited by a doctor, employed by Sharp, who measured vital signs and prescribed home health care to all patients, whether or not it was medically necessary.

Following this, Sharp referred the Medicare patients to home health care agencies.  She allegedly offered to refer eighty patients and Medicare numbers each week in exchange for a $250 fee per patient.  In addition, Sharp claimed that the doctors whom she employed would sign plans of care regardless of patients’ actual medical needs.

With regard to the ramifications of this case, U.S. Attorney Terrence Berg stated that “when Medicare is abused by unscrupulous persons to pay for unnecessary treatment and to garner kickbacks, that conduct harms both legitimate Medicare recipients as well as the program itself.”

There is a federal law that prohibits illegal remuneration.  This law is often called the anti-kickback statute.  It generally says that anyone who either offers to give or actually gives anything to anyone in order to induce referrals has engaged in illegal conduct.  In this case, the payments allegedly made by home health agencies to Continuing Senior Care seem to have been made in exchange for referrals in direct violation of the anti-kickback statute.

In addition, it is important for providers to note that if the referrals were obtained illegally in violation of the anti-kickback statute and agencies submitted claims for services provided to patients referred by Continuing Senior Care, such claims may also violate the federal False Claims Act.  The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services, the primary enforcer of fraud and abuse prohibitions, has clearly stated that claims submitted for services provided to patients who were referred in violation of applicable prohibitions are “false claims.”   Submission of false claims may also result in criminal prosecution and/or civil liability, amounting to many thousands of dollars and suspension or exclusion from participation in the Medicare and Medicaid Programs and other federal and state healthcare programs.

In addition to the necessity to avoid payment of kickbacks, therefore, providers must be scrupulous about avoiding all illegal strategies for obtaining referrals.  When referrals are obtained by any unlawful means, the consequences can be extremely significant for providers.

Consequently, as part of the development of new marketing strategies, management must always explore the legal boundaries of proposed methods of marketing prior to implementation.  In order to do so, marketing staff cannot be allowed to implement new marketing programs without review and approval by management.  Review must include a thorough examination of whether the marketing program, as proposed, violates applicable prohibitions and, if so, whether it can be changed so that it passes muster.

(To learn more about the above issues from a book titled Preventing Fraud and Abuse, send a check for $30.00 that includes shipping and handling made out to Elizabeth E. Hogue, Esq. to Fulfillment, 107 Guilford, Summerville, SC  29483.  To obtain an 80-minute DVD that educates marketing staff and others about fraud and abuse compliance, send a check for $105.00 that includes shipping and handling to the above address.)

One Comment Post a comment
  1. carol #

    Hi Elizabeth, I was considering beccoming a community liaison/Marketer. I am a Physician Assistant and very active in the community especially with seniors. I have been asked by several home health agency to join there staff as a marketer. So far I have declined because I believe it would be a conflict of interest.

    Can you please give your opinion.

    June 11, 2011

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