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Picking Off the “Bad Apples” and their Increasingly Sophisticated Unlawful Kickback Schemes

Date Published
May 18, 2023

18 May 2023. The Anti-Kickback Statute (AKS) has been in place for over five decades, aimed at protecting patients from the ramifications of financial conflicts of interest in the healthcare industry. However, this law has not deterred the evolution of kickback schemes over time, with perpetrators resorting to more sophisticated methods in exchange for referrals or purchases. The U.S. Department of Justice predicted that the new digital frontier of Electronic Health Records (EHR) would likely open up a new avenue for fraud, waste, and abuse of taxpayer dollars. Law360 recently ran a series of articles querying attorneys on both sides of the aisle about False Claims Act lawsuits involving Anti-Kickback Statute violations, and TZ Partners Eva Gunasekera and Renée Brooker provided commentary. This blog provides a high-level overview of the world of AKS, exploring the evolving landscape of kickback schemes and their enforcement within the healthcare industry.

The AKS makes it illegal for physicians, healthcare providers, suppliers, or anyone else to receive any form of remuneration for referring patients with government-funded insurance such as Medicare to a particular healthcare provider, service, or facility. The goal of the AKS is to ensure that medical decisions are not swayed by monetary or financial interest, leading to the provision of high-quality healthcare services at an appropriate price. Despite this, perpetrators have found ways around the AKS, engaging in kickback schemes to entice providers to refer Medicare or Medicaid patients or purchase their products for use by patients with government-funded health insurance.

Traditional kickbacks include cash payments, gifts, or trips, but with the advancements in technology, the landscape has evolved, with digital tools, free services, and other more sophisticated offerings being used to induce healthcare providers. Pharmaceutical companies are at the forefront of sophisticated kickback schemes, with creative approaches that are sometimes difficult to detect. Partner Eva Gunasekera, a former senior healthcare fraud lawyer at DOJ, said about the fraud schemes,

Pharmaceutical companies have become shrewder in their attempts to evade fraud detection. As the government enforces fraudulent kickback schemes, the pharma companies adapt their schemes rather than stop paying kickbacks. … Paying nonmedical staff in doctors’ offices to circumvent prior authorization protections is the up-and-coming fraud scheme that pharma insiders are reporting to the government.

Regarding how these schemes are evolving, Partner Renée Brooker added,

Some in the pharma industry — the bad apples, the bad players — are appreciating that people are looking more closely at them, and they try not to be so transparent about their fraud.

A 2017 settlement with an EHR vendor allegedly paying kickbacks to people who promoted its software was the first of several regarding kickbacks and electronic medical records systems. Purdue Pharma, Miraca Life Sciences Inc., and other companies have all paid significant settlements due to fraud allegations involving EHRs used for services. This indicates that EHRs present new inducements for health care providers, making them susceptible to AKS violations.

The Department of Health and Human Services Office of Inspector General (HHS-OIG) has issued guidance on healthcare fraud issues earlier this year, including EHRs, offering warnings regarding potential AKS violations associated with EHR software. These risks might occur when EHR technology gives the healthcare provider the power to manipulate the data or adjust the diagnosis template to fit into a higher CPT code to receive a higher reimbursement.

As technology continues to evolve, so do kickback schemes within the healthcare industry, making it challenging to detect and prevent them effectively. However, the False Claims Act remains a powerful tool in combating this type of fraudulent activity, for pursuing and shutting down financial conflicts of interests between healthcare providers, pharmaceutical companies, and EHR vendors. Enforcement of this law is crucial, and the new trends surrounding EHRs illustrate how crucial company or industry insider knowledge is to detecting and prosecuting fraud schemes.

If you would like to report a kickback scheme, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at

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