Compliance Kickback

Physician Goes to Jail In Referral Scheme

June 12, 2014

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Yet another kickback scheme. Yet another physician, with more to come, sentenced to federal prison.

On June 5, 2014, a New Jersey physician was sentenced to 20 months in prison for soliciting and receiving kickbacks from an MRI facility. 18 defendants, including 16 physicians, were charged in the scheme. Two have been sentenced to date.

In addition to the obvious illegality of the defendants exchanging thousands of dollars in cash for the referrals, the scheme also involved one of the common ruses seen in the context of kickbacks both within the surgery center and physician office realm: the phony lease.

In the New Jersey case, the referring physician received more than $25,000 from the MRI facility in kickback payments disguised as rental payments and documented by a bogus, $1,000-per-square-foot lease.

From cash kickbacks to the company model to phony leases, deals between referring physicians and those physicians and facilities receiving referrals are subject to increasing scrutiny.

It’s not that deals, legitimate deals, can’t be done; rather, it’s that deals should only be done after proper vetting of the compliance issues, both in respect of federal and state anti-kickback laws and of federal and state prohibitions on self-referral (e.g., Stark).

Sure, the price of compliance planning can be in the tens of thousands. But the price paid by the defendants in this case to date is reported as 20 months in prison plus multiple millions in fines and restitution.

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