Kickback Disguise Schemes: Oh, What a Tangled Web We Weave


“Psst! Send me some referrals. I can’t pay you directly, so I’ll pay your spouse.”

“Hey, keep your voice down. Send me some referrals. I can’t pay you directly, so set up an LLC and I’ll pay it.”

Oh, what a tangled web we weave
when first we practice to deceive!

I doubt that Sir Walter Scott was thinking into the future of American healthcare when he wrote those lines in his epic poem Marmion. But he could have been. They apply to kickback avoidance schemes all the time. Eventually, the web folds in on itself and someone ends up stuck.

Take Tracy Nemerofsky, for example. A Florida-based owner of five healthcare businesses including A Plus Home Healthcare, Inc., who was charged with submitting false claims to Medicare in violation of the Federal Anti-Kickback Statute.

The OIG alleged that A Plus induced eight physicians to make referrals to it in exchange for payment to the physicians’ spouses who were disguised as A Plus employees.

There are several take-aways here for you:

1. Fitting an arrangement into the form of an AKS safe harbor (here, the employment safe harbor) is not effective if there is no real employment relationship.

2. Thinking you can avoid a kickback arrangement by directing money or other value away from the referrer but to a related third party is a losing strategy. In fact, it’s not really a strategy. It’s just a loser.

3. A violation of the AKS can lead to severe penalties. Tracy entered into a False Claims Act monetary settlement with the U.S. government – between her and her father, $1.65 million. It included an agreement to be excluded from participation in federal health care programs for 5 years. And, it included an agreement to divest her interest in all five of her healthcare businesses, not just from A Plus.

As to what will happen to the physicians and their spouses, only time will tell. But it won’t be a happy ending for them, either. They’re stuck in the same tangled web.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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