Referral or Kickback?

The Anti-Kickback Statute (AKS) is a federal law in the United States that prohibits the exchange of anything of value in an effort to induce or reward the referral of federal healthcare program business. It is designed to prevent fraud and abuse in government healthcare programs.

Distinguishing between a lawful referral and an illegal kickback under the AKS can be crucial for healthcare providers and entities. Here are some key points to consider:

1. Intent Matters: The AKS requires a showing of intent. A lawful referral involves a genuine recommendation for services based on the patient’s needs, while a kickback involves an inducement or reward with the intent to generate business.
2. Financial Arrangements: A key factor is whether there is a financial arrangement involved. If there is any form of remuneration or payment made to induce referrals, it raises the suspicion of a kickback. Legitimate referrals are made in the best interest of the patient without financial incentives.
3. Purpose of the Payment: Consider the purpose of the payment or benefit. If it is intended to reward or induce referrals, it may be considered a kickback. If the payment is for legitimate services provided, such as fair market value for consulting services, it may be less likely to be considered a kickback.
4. Patient Choice: A lawful referral is typically based on the patient’s choice of healthcare provider. If a referral is made with the intention of limiting or steering patients to a particular provider for financial gain, it may be indicative of a kickback.

Prema Thekkek, her management company, Paksn Inc. (Paksn), and six California skilled nursing facilities owned by Thekkek and/or operated by Paksn ignored these rules.

The scheme: From 2009 to 2021, the defendants, acting under the direction of Thekkek and Paksn, entered into medical directorship agreements with physicians who acted as a means for large amounts of referrals to the nursing facilities. The defendants sought physicians that would agree in advance to refer patients to the nursing facilities, and in return would pay the physicians according to the number of referrals. Those who did not meet Thekkek’s standards were terminated. For example, a Paksn employee informed Thekkek of the hiring of two physicians because they promised to refer at least 10 patients in exchange for $2000 a month. Thekkek was pleased, and told the employee, “Good job. Make sure they give you patients every day.” Thekkek overemphasized the importance of promptly paying the referring physicians, fearing that if they did not receive payment, the defendants would not receive patients.

The whistleblower: Paksn’s former Vice President of Operations and Chief Operating Officer, blew the whistle and filed a qui tam lawsuit. In successful qui tam suits, whistleblowers are entitled to 15-30% of the funds collected by the government.

If you would like to report healthcare fraud including violations of the Anti-Kickback Statute and Stark Law, you can contact attorneys at Markowitz Herbold PC. Vivek Kothari is a former federal prosecutor who represents whistleblowers under the False Claims Act. For a free consultation, you can contact Vivek at 503-274-7425 or vivek@markowitzherbold.com.