The Business of Healthcare

Physician is 10th Person Found Guilty in Kickback Scheme

March 7, 2016

Green scrubs might be the new orange. And no matter the trendy branding on Netflix, orange isn’t the new black.

The first week of March 2016 brought the 10th conviction for federal Anti-Kickback Statute (“AKS”) violations in connection with the now-closed Sacred Heart Hospital in Chicago.

Dr. Venkateswara Kuchipudi, an internist, was found guilty of receiving kickbacks from Sacred Heart in exchange for his referrals. He faces up to five years in prison plus up to $250,000 in fines for each of the nine counts on which he was convicted.

The kickbacks took the form of free labor by physician assistants and nurse practitioners provided by Sacred Heart in connection with Dr. Kuchipudi’s patients inside the hospital as well as in Chicago-area nursing homes where many of Dr. Kuchipudi’s patients resided.  Sacred Heart allowed Dr. Kuchipudi to bill Medicare and Medicaid for the services of the physician assistants and nurse practitioners as if he employed them himself.

Dr. Kuchipudi’s conviction is the latest in a series centering around kickbacks at Sacred Heart unearthed by the Health Care Fraud Prevention & Enforcement Action Team (the “HEAT” program), a joint Department of Justice/HHS anti-fraud initiative.

Other physicians, as well as the hospital’s CEO, CFO, and two COOs, were among the 9 individuals previously found guilty in the larger scheme at Sacred Heart.

Note carefully that although other physician defendants, such as Shanin Moshiri, a podiatrist, were found guilty of receiving cash kickbacks, illegal remuneration for referring a federal health care program patient does not have to be in the form of cash. In the Kuchipudi case, the remuneration, that is, the kickback, was in the form of free services: the labor of physician assistants and nurse practitioners on the hospital’s payroll.

The AKS is not an academic exercise. People actually go to jail for violating its terms. They’re fined. They lose the right to participate in Medicare and Medicaid.

Get competent counsel and carefully consider the compliance aspects of any transaction or relationship with a referral receiving, or referral giving, person or entity.

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