May 16, 2022

Volume XII, Number 136


May 13, 2022

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A Safe Harbor for Harmless Remunerations Under the Anti-Kickback Statute: Reviving Hanlester Network

I.  Introduction

Consider two hypothetical doctors, Smith and Jones.  Dr. Smith is a cardiologist and a savvy businessman.  He negotiates a special deal with SmartTick Inc., a manufacturer of cardiac stints.  SmartTick will pay a $1000 “incentive fee” to Dr. Smith every time he implants one of their stints in a patient.  Within months, Dr. Smith is performing more cardiac stint procedures than any other cardiologist in the area, even though some of his patients do not need them.  One day, an elderly man (who never needed a stint in the first place) dies due to a complication from one of Dr. Smith’s surgeries.

Dr. Jones, on the other hand, is an OB/GYN with a passion for underserved populations.  A hospital in Seymour—an impoverished, rural city—wants to hire Dr. Jones to relocate there.  The women in Seymour currently have no access to an OB/GYN.  The hospital will pay Dr. Jones an above-market salary for moving to Seymour and for the increased business that she will generate.  Dr. Jones agrees.  However, Dr. Jones’s former patients like her so much that they are willing to drive an extra hour to Seymour to continue seeing her.  At the hospital, Dr. Jones spends half of her time seeing old patients and half of her time seeing new patients from Seymour.  Dr. Jones, unlike Dr. Smith, never orders any medically unnecessary services for her patients.

To the average observer, Dr. Smith’s conduct is abhorrent, while Dr. Jones’s actions seem commendable.  Nevertheless, under current federal law, both doctors have probably committed a felony.  The federal Anti-Kickback Statute (“AKS”)[i] criminalizes the giving and receiving of remunerations in exchange for patient referrals.  The AKS is incredibly broad and applies to both Smith’s blatant fraud and Jones’s seemingly innocuous behavior.  The sweeping nature of the AKS discourages health care providers from entering into arrangements that could provide patients with better, more affordable care. 

The Ninth Circuit acknowledged this reality in Hanlester Network v. Shalala[ii] when it attempted to narrow the scope of the AKS.  Unfortunately, the Ninth Circuit’s legal analysis in Hanlester Network was ultimately unsound.  Nevertheless, the case remains significant because it points out troubling aspects of the AKS and suggests a useful framework for reforming it.

II.  Background

A.  The Anti-Kickback Statute

Federal health care programs like Medicare and Medicaid pay out enormous sums to health care providers each year.  In 2012, for instance, the federal government spent over $500 billion on Medicare benefit payments—sixteen percent of the entire federal budget![iii]  Unsurprisingly, health care providers often try to game this lucrative system.  Health care fraud costs the federal government between $80 and $100 billion each year.[iv]  This statistic can best be understood as lost care: the money that the government pays to fraudsters could be used to provide care for Americans who need it.

Congress enacted the AKS to combat one particular form of health care fraud: pay-for-patient, or “kickback,” schemes.  A kickback is essentially a payment from one health care provider to another in exchange for patient referrals.  Congress decided to prohibit remuneration schemes for two primary reasons.[v]  First, kickbacks can lead to overutilization of health care services, which drains the federal budget.  Kickbacks often encourage health care providers to prescribe more services than they would otherwise, and the federal government must then reimburse those expenses.  (Some have suggested that the AKS also prevents unfair competition in the health care marketplace, but this rationale cannot be meaningfully separated from the government’s concern with costs.[vi])  Second, kickbacks compromise patient welfare by potentially corrupting a doctor’s medical judgment.  Instead of focusing on the best interests of the patient, doctors may order unnecessary tests and risky operations to line their own pockets with kickback payments.  These concerns led Congress to pass the first version of the AKS in 1972 and to strengthen the statute with a series of amendments.

1.  Prima Facie Case

To prove a violation of the AKS, the government must show, beyond a reasonable doubt, that the defendant (1) knowingly and willfully (2) gave, received, or solicited a remuneration (3) in return for patient referrals (or other business) (4) in connection with a federal health care program.  The first element—the scienter requirement—was the focus of Hanlester Network, which will be discussed in more detail below.  Moreover, the fourth element is self-explanatory: the AKS only safeguards federal health care programs from kickbacks (though many states have their own anti-kickback laws[vii]).  The second and third elements require further elaboration.

The second element of the AKS requires the provision of some sort of “remuneration.”  The original AKS only prohibited schemes involving a “kickback,” “bribe,” or “rebate.”  However, when federal courts began reading these terms narrowly, Congress broadened the statute to cover “any remuneration.”  This change in terminology underscores the broad scope of the AKS.  Remunerations include essentially anything of value—including kickbacks, bribes, rebates, and gifts, as well as leases, equipment, employment contracts, and other arrangements that depart from fair market value.  Remunerations are prohibited under the AKS whether they are paid “directly or indirectly, overtly or covertly, in cash or in kind.”  Thus, health care providers can even face AKS liability for seemingly innocent behavior like providing free donuts in the doctors’ lounge.

The third element in the AKS statute—that the remunerations were given to induce patient referrals—has been the subject of extensive litigation.  Nevertheless, a strong majority of courts agree with the approach taken by the Third Circuit in United States v. Greber.[viii]  There, the Third Circuit held that the inducement element of the AKS is satisfied if soliciting patient referrals was even “one purpose” of the remuneration scheme.

2.  Safe Harbors & Advisory Opinions

As the preceding discussion suggests, liability under the AKS is broad, and health care providers are often surprised by the types of conduct that the statute prohibits.  Congress acknowledged this reality when it enacted several statutory “safe harbors” and gave HHS the authority to create more.[ix]  Congress also authorized the HHS Office of Inspector General (“OIG”) to issue binding advisory opinions, which function like case-by-case safe harbors.[x]  Together, these safe harbors protect conduct that would otherwise violate the AKS.  Examples include bona fide employment contracts, group practices, sales of physician practices, and several others.[xi]

However, the AKS safe harbors are no panacea.  Courts interpret the AKS broadly and the safe harbors narrowly.  A health care provider’s conduct must fit squarely within the four corners of a safe harbor, or it will be judged by the unforgiving “one purpose” standard from Greber.[xii]  In short, the safe harbors are a step in the right direction, but they are by no means an all-encompassing solution for health care providers who are worried about the broad reach of the AKS.

3.  Penalties

The penalties for violating the AKS are quite severe.  The AKS is a criminal statute, and a conviction amounts to a felony.  The available criminal punishments include five years in prison and fines of $25,000 per violation.  On the civil side, the government can seek monetary penalties of $50,000 and treble damages for each violation of the AKS.[xiii]

Violations of the AKS can also render a health care provider liable under the civil False Claims Act.  Health care providers must comply with the AKS under the terms of their enrollment agreements with Medicare.  Accordingly, each time a provider submits a claim for reimbursement while simultaneously violating the AKS, that claim is “false” because the provider is lying about being in compliance with federal health care laws.[xiv]  Providers face treble damages and penalties up to $10,000 for each false claim submitted to the government.[xv]  Significantly, private whistleblowers can bring FCA claims as qui tam actions—even without the government’s blessing—and recover a percentage of the ultimate recovery.  Thus, the FCA subjects health care providers to the threat of lawsuits from a large number of plaintiffs motivated by the prospect of a blockbuster recovery.[xvi]

Finally, the government has powerful administrative remedies to levy against health care providers who violate the AKS.  A conviction under the AKS is grounds for mandatory exclusion from federal health care programs.[xvii]  Exclusion is known as the “death penalty” for health care providers because they cannot stay solvent without access to the nation’s fifty million Medicare patients.[xviii]

In short, the AKS dramatically raises the stakes for health care providers.  If they violate the broad terms of the statute, providers face large fines, financial ruin, and even prison time.  This stark reality likely loomed large in the background of the Ninth Circuit’s decision in Hanlester Network.

B.  Hanlester Network v. Shalala

The Hanlester Network case involved a somewhat complicated arrangement between Hanlester Network (“Hanlester”) and Smithkline BioScience Laboratories (“SKBL”).  Hanlester and several individual employees were accused of violating the AKS for two reasons.  First, Hanlester sold partnership interests in their laboratories to individual physicians, which was allegedly intended to induce the doctors to refer patients to the labs.  Second, Hanlester allegedly received payments from SKBL in exchange for patient referrals.  Under the terms of their agreement, SKBL provided various management services for the Hanlester labs—such as staffing, billing, collection, and equipment—and Hanlester referred 85–90% of their patients to SKBL facilities.  Instead of bringing criminal charges, the government sought the administrative remedy of exclusion against the Hanlester defendants. The district court ultimately sided with the government, concluding that many of the defendants had violated the AKS and should be excluded from further participation in federal health care programs.

On appeal, the Ninth Circuit overturned most of the district court’s decision.  According to the Court of Appeals, the misconduct at issue was solely attributable to one rogue employee—Hanlester’s former vice president of marketing—so the other individuals lacked the requisite intent for an AKS violation.  Yet, the real value of Hanlester Network stems not from its facts but rather from the Ninth Circuit’s extrapolation of the legal framework surrounding the AKS. 

Hanlester Network stands for two interesting points of law.  First, the Ninth Circuit significantly narrowed the scope of the scienter requirement in the AKS.  The court interpreted the phrase “knowingly and willfully” in the statute to require that the defendant (1) knew that the AKS prohibits pay-for-patient schemes and (2) decided to participate in such a scheme anyway.  In other words, defendants need “specific intent” to violate the AKS; if defendants are unaware that the AKS exists, then they cannot be punished under the statute.  The Ninth Circuit did not derive this requirement from the text or the legislative history of the AKS, but rather from a few Supreme Court decisions that had interpreted the term “willfully” in other statutes.

The second interesting holding from Hanlester Network dealt with the question of harm.  For the defendants who violated the AKS, the Ninth Circuit held that they should not be excluded from further participation in federal health care programs.  The court came to this conclusion, in part, because there was “no evidence that Hanlester [or its affiliated labs] caused harm to the Medicare or Medicaid programs.”  The court refused to impose the draconian penalty of exclusion when there was no actual harm to the government because doing so would not serve the “remedial purpose” of administrative sanctions, i.e. “protect[ing] federal-funded health care programs and their beneficiaries and recipients from future conduct which is or might be harmful.”

Taken together, these two holdings made Hanlester Network stand out among the cases interpreting the AKS.  When the decision was handed down, Hanlester Network was referred to as “dramatic,” “ground-breaking,” and a “shocking defeat for the government.”[xix]  These reactions likely stem from the fact that the Ninth Circuit’s reasoning was legally questionable, despite its normative desirability.

III.  Hanlester Network Was Bad Law, but Good Policy

A.  The AKS Does Not Require Specific Intent, but the “One Purpose” Test Is Overly Broad

The first notable holding from Hanlester Network—that the scienter requirement of the AKS requires specific intent—was not the best interpretation of the AKS at the time and is a forbidden interpretation today.  After Hanlester Network, every other federal court rejected the Ninth Circuit’s interpretation.[xx]  As the Eleventh Circuit explained, a specific intent requirement violates the “traditional rule” of criminal law that “ignorance of the law is no excuse.”[xxi]  The only recognized exceptions to this rule are cases involving “highly technical tax or financial regulation[s]” where the law itself is so complex that it is difficult to determine what conduct is illegal.  This exception does not apply to the AKS because it is a relatively straightforward law that flatly prohibits pay-for-patient schemes.  In other words, the AKS may be broad, but its breadth is clear from the text of the statute.  Indeed, federal courts outside of the Ninth Circuit interpret the AKS to only require that defendants know their conduct was “unlawful” or “wrongful,” regardless of whether they knew that the AKS existed.

Furthermore, even if the Ninth Circuit’s interpretation was correct at the time, it is certainly untenable today.  The Patient Protection and Affordable Care Act of 2010 (“PPACA”) amended the AKS to overrule Hanlester Network.[xxii]  The PPACA added subsection (h) to the statute, which clarifies that “a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”

Although the Ninth Circuit ultimately lost the debate over specific intent, its desire for ratcheting up the scienter requirement in the AKS was understandable.  The “one purpose” standard articulated by the Third Circuit in Greber is incredibly broad.  In the words of two prominent health care attorneys, “The Anti-Kickback Act prohibits conduct that is engaged in every day, at all levels, throughout the health care industry.”[xxiii]  Even HHS admits that the AKS reaches “many harmless or efficient arrangements.”[xxiv]  The AKS bans rewards, gifts, and other incentives that are commonplace and perfectly acceptable in industries outside of the medical field.  Some courts have attempted to narrow the “one purpose” test by clarifying that the mere “hope or expectation” of referrals is not enough to trigger AKS liability.[xxv]  However, health care providers cannot take much comfort in these decisions; the sweeping “one purpose” language of Greber is still the black letter law, and the difference between a “hope or expectation” and “one purpose” is anything but clear.

The breadth of the AKS creates a very uncertain regulatory environment for health care providers.  Providers face prison time and financial ruin based on metaphysical distinctions like the difference between a “purpose” and an “expectation.”  Health care attorneys cannot alleviate this uncertainty for their clients: it is impossible to determine whether a particular scheme is lawful under the AKS (if it does not clearly fall within a safe harbor) because the lawyer can never really know the client’s intent.  This confusing regulatory environment discourages health care providers from entering into relationships that could expand patients’ access to affordable health care.  After all, health care is a market, and markets hate uncertainty.

Commentators and legislators have proposed amending the AKS to overrule the Greber “one purpose” test.  Under these amendments, a remuneration scheme would not violate the AKS unless securing patient referrals was a “significant purpose” of the defendant’s conduct.[xxvi]  However, these proposals are unsatisfactory because they still rely on complex determinations of intent.  A “significant purpose” standard would require courts to weigh how much a defendant was motivated by a desire for patient referrals vis-à-vis other possible motivations—hardly an easy determination.  This would inflate the costs of litigating AKS cases and actually increase uncertainty about how the law applies.[xxvii]  Thus, for health care providers seeking to escape the shroud of Greber, a “significant purpose” test does not add enough certainty to make much of a difference.  The commentators who propose this solution are understandably bothered by the broad definition of intent under the AKS, like the Ninth Circuit was in Hanlester Network.  However, something more is needed.

B.  The AKS Does Not Have a Harm Requirement, but It Should

The second significant holding from Hanlester Network was the Ninth Circuit’s refusal to exclude the defendants from further participation in federal health care programs.  The Ninth Circuit justified this conclusion, in part, on the fact that the defendants did not actually cause any economic harm to the government.  Of course, the appropriateness of exclusion is a different question from whether the defendants violated the AKS in the first place.  Nevertheless, the court’s consideration of the financial impact of the defendants’ conduct exposes a particularly interesting feature of the AKS—the lack of a harm requirement in the government’s prima facie case.

A simple reading of the text of the AKS reveals that Congress did not include a harm requirement in the statute.  This omission is odd, since one of the main purposes of the AKS is to prevent overutilization of federal health care (i.e., economic harm to the government).  The lack of a harm requirement emphasizes the expansiveness of the concept of “fraud” in the AKS.  Other federal fraud statutes—including mail fraud and wire fraud—require the government to demonstrate harm as part of the prima facie case.[xxviii]  These harm requirements ensure that the fraud statutes remain narrow and only criminalize conduct that has some measurable negative effect.

The AKS, due to its lack of a harm requirement, may hinder innovative approaches to health care that would deliver real benefits for patients.  Consider managed care organizations (“MCOs”).  Medicare is traditionally a fee-for-service program, whereby health care providers are compensated for each service rendered.  Accordingly, providers in a fee-for-service system have an incentive to overutilize health care, since they get paid for each service provided (a problem that is only exacerbated when kickbacks are introduced).  MCOs, on the other hand, are compensated on a capitated basis; the government pays a flat fee to the MCO regardless of the volume of health care services.  Thus, MCOs have an incentive to cut costs and avoid unnecessary services, which empirically decreases the overall cost of health care.[xxix]  As the amount of spending on medical care in the U.S. continues to rise,[xxx] the cost savings generated by MCOs should only be encouraged.  Presently, the AKS provides only some safe-harbor protection for MCOs, subjecting them to fairly stringent conditions.  However, managed care arrangements—and other schemes that fall just outside of the current AKS safe harbors—are often socially beneficial and warrant more protection.

Commentators have proposed various safe harbors under the AKS that would protect health care providers who cause no economic harm, or a cost-beneficial level of economic harm, to the government.  For instance, William Kucera argues that the government should borrow the “rule of reason” from antitrust and exempt health care schemes from AKS liability if they do not cause overutilization of health care resources.[xxxi]

Yet, these harm-centric proposals are necessarily incomplete.  Although preventing overutilization is certainly one purpose behind the AKS, the statute also protects patient welfare.  A doctor receiving kickbacks could still endanger a patient by prescribing unnecessary procedures, even if the scheme caused no economic harm to the government.  For example, a doctor in an MCO could order a medically inappropriate operation because he will receive a kickback individually, even though the government is not injured because it pays a capitated payment to the doctor’s group.  Thus, proposals for reform that only address the economic dimension of the AKS without considering patient welfare are not completely satisfactory.

IV.  A Regulatory Safe Harbor Inspired by Hanlester Network

The Ninth Circuit in Hanlester Network exposed some of the weaknesses in the current AKS regime.  Yet, many of the proposed reforms mentioned above are either too difficult to apply or pay insignificant attention to the patient-welfare aspect of the AKS.  This Article identifies a middle ground that would reduce uncertainty for health care providers while protecting the interests of the government and individual patients.  Specifically, HHS should create a regulatory safe harbor that immunizes defendants from AKS liability when (1) the remuneration scheme at-issue does not increase health care costs for the federal government and (2) the affected patients give their informed consent to the arrangement. 

The first prong of the safe harbor essentially adds a harm requirement to the AKS.  Defendants could satisfy this condition by demonstrating that their conduct did not cause the government to pay out more money than it would otherwise or did not exceed the fair market value for the services provided.  This element would bring the AKS in line with other federal fraud laws, such as mail and wire fraud, by making “no harm, no foul” a legitimate defense for health care providers.

The second prong of the safe harbor—the informed consent requirement—is a safeguard that protects patients, thus resolving the other main purpose behind the AKS.  Informed consent is a state-law doctrine that is already well-developed in most jurisdictions.  Essentially, informed consent requires a physician, when recommending a particular treatment to a patient, to explain the risks and the available alternatives.[xxxii]  Under the safe harbor proposed here, doctors would need to disclose the existence of any remuneration schemes and explain the nature of their financial interest in them.  Doctors would also need to inform their patients about the alternative ways that they could obtain the same treatment.  Armed with this information, patients would then have the option of accepting or declining the doctor’s recommendation.

Informed consent is a better method to protect patients than the blunt instrument of the AKS.  In fact, the patient-welfare rationale for the AKS is often explained in terms of patient choice.  According to a former Inspector General for HHS, “[T]he [AKS] helps to ensure that patients have freedom of choice among providers . . . . [T]he patient should not be steered to a particular provider for the service because the referrer is paid a referral fee.”[xxxiii]  Yet, if the AKS is intended to promote patient choice, why does it completely remove certain options from the table (i.e., options where the doctor receives some sort of remuneration)?  The government would likely argue that informed consent is no solution because doctors will just convince their patients to choose whichever treatment pays the doctor a kickback.  However, in the world of WebMD and myriad other sources of medical information, patients are increasingly able to make informed decisions about their own health care.[xxxiv]  The assumption behind the AKS—that patients cannot be trusted to accurately assess the risks and benefits of a particular treatment—is outdated and fundamentally paternalistic.  The informed consent prong of the safe harbor proposed here would better respect patient autonomy by lodging the ultimate decision about what is best for the patient where it belongs—with the patient.

Finally, the safe harbor recommended in this Article addresses the flaws in many of the other proposals for reforming the AKS.  First, as explained above, the proposed safe harbor adds a safeguard to protect patient welfare.  Proposals focusing on cost-benefit analysis or a “rule of reason” either pay insignificant attention to patient welfare or require overly complex after-the-fact determinations about whether an arrangement benefited the patient.  Second, the proposed safe harbor draws a bright line between harm/no-harm and consent/no-consent that should be relatively easy for courts to apply.  Scholars who try to modify the Greber “one purpose” test by requiring patient referrals to be a “main purpose” or “significant purpose” force courts to get inside the heads of individual defendants and determine the relative weight of their various motives.  Intent is already a complicated, multi-faceted question; adding a weighing process to this determination would be burdensome for courts and unpredictable for health care providers.  The bright-line test proposed here is a preferable approach.

Some commentators might characterize the safe harbor proposed in this Article as wholly unnecessary given the federal government’s current practice of prosecutorial discretion.  Indeed, when deciding whether to prosecute an AKS violation, OIG already considers the extent to which the remuneration scheme at-issue “increases Medicare or Medicaid program costs” or “results in unnecessary utilization.”[xxxv]

However, prosecutorial discretion does not resolve the uncertainty that the AKS creates for health care providers.  OIG refuses to specify a complete list of factors that it will consider when deciding whether to prosecute.  Accordingly, even if the government does not go after borderline cases in practice, the AKS still allows them to in theory.  The mere possibility of prosecution may be enough to deter health care providers from engaging in innovative and beneficial arrangements in the first place.  Furthermore, some zealous prosecutors have shown a willingness to go after health care providers even in borderline cases.  For example, a management company for a psychiatric hospital was prosecuted under the AKS for paying the airfare of patients who came to their facility, even though the arrangement was medically appropriate and did not increase costs to the government.  Thus, health care providers can never be sure whether the government will choose to make an example out of them.

Most significantly, the FCA allows private whistleblowers to bring suits against health care providers based on violations of the AKS.  Even if the government exercises prosecutorial discretion, there is no reason for health care providers to think that private individuals—who are often disgruntled employees—will exercise the same restraint.  Thus, without some sort of legally binding safe harbor, prosecutorial discretion is not much of a solution to the sweeping nature of the AKS.  Only a safe harbor like the one proposed in this Article can provide the type of certainty that health care providers need to forge ahead with remuneration schemes that are harmless and potentially beneficial.

It is also important to note that the safe harbor proposed in this Article would not overburden the government.  A safe harbor is an affirmative defense, so the burden of proof would be on the defendant to show that the exemption applies.  Specifically, under the safe harbor proposed here, the defendant must prove that the remuneration scheme at-issue did not cause harm to the government (and that any affected patients gave their informed consent).  The question of whether harm occurred will often require intricate proof, which may be quite costly and time-consuming.[xxxvi]  If the government had the burden to demonstrate harm as part of its prima facie case, the prosecution of health care fraud under the AKS may become too expensive, even for cases involving truly dangerous fraudsters.  A safe harbor strikes a good balance: it informs health care providers about how to legally structure their health care services without imposing overly burdensome requirements on government prosecutors.

Furthermore, the notion that the safe harbor proposed here would overly hamper the government seems disingenuous.  HHS already considers economic harm and patient welfare when deciding whether to prosecute AKS violators.  The proposed safe harbor merely codifies those criteria into a legally binding affirmative defense that health care providers can rely on, rather than leaving the determination up to the unfettered discretion of federal prosecutors. 

V.  Conclusion

Today, Hanlester Network has lost much of its legal relevance.  The Ninth Circuit’s holdings have since been rejected, overruled, or marginalized.  Nevertheless, Hanlester Network is still an interesting case to study because it both exposes the breadth of the AKS and presents a model for reforming it.  This Article proposed a regulatory safe harbor that would immunize remuneration schemes that do not threaten the federal budget or patient welfare.  This safe harbor would ensure that the federal government and private whistleblowers do not prosecute AKS violations unless the purposes behind the statute are truly implicated.  A safe harbor of this nature would decrease the uncertainty that health care providers currently face and allow them to explore innovative arrangements that could benefit patients and society as a whole.

[i]42 U.S.C. § 1320a-7b(b) (2012).

[ii]51 F.3d 1390, 1394 (9th Cir. 1995).

[iii]Medicare Spending and Financing Fact Sheet, Kaiser Family Found. (Nov. 14, 2012), KFF].

[iv]Health Care Fraud, Fed. Bureau Investigation, (last visited Oct. 15, 2013).

[v]Richard P. Kusserow, The Medicare and Medicaid Anti-Kickback Statute and the Safe Harbor Regulations--What’s Next?, 2 Health Matrix 49, 52 (1992).

[vi]See James F. Blumstein, The Fraud and Abuse Statute in an Evolving Health Care Marketplace: Life in the Health Care Speakeasy, 22 Am. J.L. & Med. 205, 222 n.152 [hereinafter Blumstein, Health Care Speakeasy] (arguing that, if unfair competition is occurring, this would be impossible to prove without first demonstrating increased costs).

[vii]See generally Kathryn Leaman, State Anti-Kickback Statutes: Where the Action Is, 2 Health L. & Pol’y 22 (2008) (surveying a sample of state anti-kickback statutes).

[viii]760 F.2d 68 (3d Cir. 1985).  See also, e.g., United States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998); United States v. Kats, 871 F.2d 105, 108 (9th Cir. 1989); United States v. McClatchey, 217 F.3d 823, 835 (10th Cir. 2000).

[ix]Medicare and Medicaid Patient and Program Protection Act of 1987, Pub. L. No. 100-93, 101 Stat. 680, 697 (1987).

[x]Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191; 110 Stat. 1936, 2000–02 (1996).

[xi]See 42 U.S.C. § 1320a-7b(b)(3) (2012); 42 C.F.R. § 1001.952.

[xii]See Health L. Handbook § 7:9 (5thed. 2009) (“[A]rrangements that do not fit squarely within an exception or safe harbor do not necessarily violate the AKS, but certainly may be subject to scrutiny and challenge.”).

[xiii]42 U.S.C § 1320a-7a(a) (2012).

[xiv]See, e.g., United States ex rel. Pogue v. American Heatlhcorp, 914 F. Supp. 1507 (M.D. Tenn. 1996); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899 (5th Cir. 1997).

[xv]31 U.S.C. § 3729(a) (2012).

[xvi]See, e.g., Melissa Rifai, Department of Justices’ Historic FCA and AKS Settlement, Health reform Watch (Apr. 4, 2013), (discussing a $26.1 million qui tam settlement under the FCA against a dermatologist who received illegal kickbacks.

[xvii] 42 U.S.C. § 1320a-7.

[xviii]Pamela H. Bucy, Symposium, The Path from Regulator to Hunter: The Exercise of Prosecutorial Discretion in the Investigation of Physicians at Teaching Hospitals, 44 St. Louis L.J. 3, 39 (2000).

[xix]William R. Kucera, Jr., Hanlester Network v. Shalala: A Model Approach to the Medicare and Medicaid Kickback Problem, 91 Nw. U. L. Rev. 413, 416 & nn.22–24 (1996) (collecting sources).

[xx] See, e.g., United States v. Starks, 157 F.3d 833, 838–39 (11th Cir. 1998); United States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998); United States v. Jain, 93 F.3d 436, 441 (8th Cir. 1996); United States v. Neufeld, 908 F. Supp. 491, 497 (S.D. Ohio 1995).

[xxi]Starks, 157 F.3d at 838.

[xxii]  Patient Protection & Affordable Care Act, Pub. L. No. 111-148, §6402(f), 124 Stat. 119, 759 (2010).

[xxiii]Michael M. Mustokoff & Robin Locke Nagele, Health Care Providers Do Not Deserve to Be Treated as “Drug Dealers”: An Analysis of the Criminal Intent Standard Under the Anti-Kickback Act,” 13 No. 4 Health Law. 13, 17 (2001).

[xxiv]Medicare and Medicaid Programs; Fraud and Abuse OIG Anti-Kickback Provisions, 54 Fed. Reg. 3,088-01, 3,088 (Jan. 23, 1989).

[xxv]See, e.g., Hanlester Network v. Shalala, 51 F.3d 1390, 1398 (9th Cir. 1995); United States v. McClatchey, 217 F.3d 823, 835 (10th Cir. 2000).

[xxvi]See, e.g., Medicare Preservation Act of 1995, H.R. 2425, § 15,212, 104th Cong., 1st Sess. (1995); James F. Blumstein, Rationalizing the Fraud and Abuse Statute, 15 Health Aff. 118, 126 (1996).

[xxvii]Timothy S. Jost & Sharon Davies, The Fraud and Abuse Statute: Rationalizing or Rationalization?, 15 Health Aff. 129 (criticizing recommendations like the “significant purpose” test on these grounds).

[xxviii]Of course, the government can still satisfy its burden under the mail and wire fraud statutes without demonstrating that harm actually occurred.  It is enough that the defendant’s fraud would have caused harm if it was successful.  See 49 Am. Crim. L. Rev. 985, 1000 (2012).  However, this requirement is still more stringent than the AKS, since remuneration schemes that have no potential to cause harm could still be prohibited under that statute.

[xxix]Managed Care Has Slowed Growth in Medical Spending, Nat’l Bureau Econ. Res. (1998), available at (“[F]or every 10-percentage-point increase in the HMO enrollment rate, the growth of health spending falls by 0.5 percentage points per year.”).

[xxx]How Does Growth in Health Care Costs Affect the American Family?, RAND Health (2009), available at (“[H]ealth care expenditures, including insurance premiums, out-of- pocket expenditures, and taxes devoted to health care, nearly doubled between 1999 and 2009.”).

[xxxi]See Kucera, supra note 19, at 448.

[xxxii] Peter H. Schuck, Rethinking Informed Consent, 103 Yale L.J. 899, 916 (1994).

[xxxiii]Kusserow, supra note 5.

[xxxiv]Frances H. Miller, Health Care Information Technology and Informed Consent: Computers and the Doctor-Patient Relationship, 31 Ind. L. Rev. 1019, 1021 (1998) (“[P]atients are becoming increasingly assertive and confident when it comes to computerized searches for medical information. . . . [A]n estimated 10,000 to 25,000 websites are now dedicated to health care issues . . . .”).

[xxxv]Medicare and State Health Care Programs: Fraud and Abuse; OIG Anti-Kickback Provisions, 56 Fed. Reg. 35,952 (Jul. 29, 1991).

[xxxvi]See Aspinwall, supra note 82, at 195–96 (advocating an affirmative defense under the AKS as a more efficient strategy that would conserve government resources because defendants have “the greatest access to the data and the most control over the clinical outcomes”).

Copyright © 2014 Cameron Thomas NorrisNational Law Review, Volume IV, Number 35

About this Author

Cameron T. Norris, Law Student, Vanderbilt University
Law Student

Cameron T. Norris is currently a third-year student at Vanderbilt Law School with an expected graduation date of May 2014. He earned his B.A. in Mathematics, Political Science, and Philosophy from Vanderbilt University in 2011. He currently enjoys editing student writing as the Senior Notes Editor of the Vanderbilt Law Review and coaching Vanderbilt's undergraduate debate team.