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HomeHealth LawA brand new concept of legal responsibility below the Anti-Kickback Statute: “File...

A brand new concept of legal responsibility below the Anti-Kickback Statute: “File entry concept”

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In June, the U.S. District Court docket for the Northern District of Illinois held {that a} medical administration firm (MPI) violated the Anti-Kickback Statute (AKS), False Claims Act, and Illinois False Claims Act by paying a neighborhood care group (HCI) for entry to the private data of HCI shoppers as a way to market Medicare-reimbursed healthcare companies to these shoppers. The court docket held that below a “file entry concept” of referral, the defendants had violated the AKS, which makes it against the law to knowingly and willfully pay any remuneration in alternate for referrals of things or companies reimbursable below a federal healthcare program. The case is Cease Illinois Well being Care Fraud, LLC v. Asif Sayeed, Doctor Care Companies, S.C., Administration Rules, Inc., & Important Dwelling & Healthcare, Inc., No. 12-CV-09306, 2021 WL 2331338 (N.D. Sick. June 8, 2021).

HCI is a non-governmental group that contracted with the Illinois Division of Getting older to coordinate healthcare and non-healthcare companies for low-income seniors (akin to “Meals on Wheels”  and medical companies). MPI arranges medical referrals to a wide range of healthcare firms, together with to 2 of the defendants, house well being firms below the administration of MPI. HCI and MPI had entered right into a administration companies settlement (MSA) pursuant to which MPI paid $5,000 month-to-month to HCI over 18 months, ostensibly in alternate for sure administration companies from HCI’s personnel, akin to written knowledge stories. Nevertheless, MPI’s proprietor testified that HCI by no means offered these companies and that the aim of the association was as an alternative to acquire direct entry to HCI’s recordsdata for functions of information mining. In accordance with a former MPI worker, HCI granted MPI entry to its shoppers’ private data, together with analysis, insurance coverage standing, and speak to data. The info was then utilized by MPI to solicit HCI shoppers by cellphone for Medicare-reimbursed healthcare companies. If the HCI shopper didn’t have a physician, was unable to journey, or wanted in-home nursing, MPI despatched a supplier from its sister group. The MSA didn’t point out both MPI’s entry to HCI’s uncooked knowledge or MPI’s proper to solicit HCI’s shoppers. HCI continued to grant MPI entry to HCI shopper data even after MPI terminated the MSA. Though witnesses had been unaware of something of worth being paid immediately for a referral, the court docket discovered the defendants liable below the AKS on a “file entry concept” of referral—a concept which broadens the definition of “referral” past recommending or authorizing the supply of healthcare companies. 

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On July 26, 2019, the court docket granted the defendants’ movement for a directed verdict, discovering the plaintiff had did not state a prima facie case of AKS violation in failing to attract a connection between funds from MPI and any referrals from HCI. Nevertheless, on April 29, 2020, the Seventh Circuit reversed and remanded to find out whether or not the plaintiff’s “file entry concept” constituted a referral below the AKS. The Seventh Circuit questioned whether or not the decrease court docket had utilized an “inclusive understanding” of what constitutes a referral and famous that, for AKS functions, the definition of a “referral” is far broader than mere approval of healthcare companies, as an alternative “encapsulating each direct and oblique technique of connecting a affected person with a supplier.” In accordance with the Seventh Circuit, the definition of “referral” goes “past specific suggestions to incorporate extra refined preparations[,]” and the inquiry for figuring out what constitutes a referral “is a sensible one which focuses on substance, not type.” Cease Illinois Well being Care Fraud, LLC v. Sayeed, 957 F.3d 743 (seventh Cir. 2020). On remand, the Northern District of Illinois discovered that HCI granting MPI entry to shopper contact data as a way to solicit Medicare-funded companies was substantively the identical as if HCI had immediately referred its shoppers to MPI for these companies. In consequence, the court docket endorsed the “file entry concept” of referral below the AKS in its November 24, 2020 opinion. 

The June 2021 determination targeted on whether or not the charges paid by MPI constituted unlawful remuneration below the AKS and whether or not any AKS secure harbor utilized. Because the court docket’s earlier opinion established the “file entry concept” of referral below the AKS, the testimony of MPI’s proprietor concerning the function of the month-to-month payment was adequate to point out that he “knowingly and willfully induced HCI to offer referrals (i.e. entry to knowledge)” in alternate for the month-to-month payment in violation of the AKS. The defendants had claimed as an affirmative protection that their actions had been protected below the “private companies and administration contracts” secure harbor to the AKS at 42 C.F.R. § 1001.952(d). One of many seven components of this secure harbor is that the settlement cowl all the companies that an agent gives to the principal and specify the companies to be offered by the agent. Nevertheless, earlier testimony had established the MSA didn’t explicitly cowl MPI’s entry to HCI’s uncooked shopper knowledge or MPI’s solicitation of HCI shoppers. In consequence, the defendants’ actions weren’t protected by the relevant AKS secure harbor. 

This opinion is the most recent in a virtually 9-year outdated case initially filed on November 20, 2012. The defendants requested the court docket in July to rethink the choice or grant a brand new trial, however the events ultimately agreed that the defendants’ now-withdrawn post-trial motions will be filed as soon as the court docket decides on damages. Whereas the problem has been extensively briefed and argued over the previous few months, the court docket has not but dominated on damages. Nevertheless, given the Seventh Circuit’s obvious openness to growth of the idea of “referral” below the AKS and the endorsement of the “file entry concept” by the Northern District of Illinois, any administration firm, care administration firm, commerce affiliation, or different group with paid entry to shopper lists ought to attain out to an skilled well being care legal professional to make sure such association just isn’t suspect below the AKS.  

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Kevin Kifer is an affiliate in Thompson Coburn’s Well being Legislation Follow Group.
Nicole Jobe is a companion in Thompson Coburn’s Well being Legislation Follow Group.

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