HEALTH REFORM BILL EASES INTENT REQUIREMENT IN ANTI-KICKBACK STATUTE.

    One of the relatively unheralded changes in the Patient Protection and Affordable Health Care Act (the “Act”) passed by Congress recently is the change to the “intent” requirement of proof by the government or plaintiffs attempting to impose liability for federal program related kickbacks under the federal anti-kickback statute (“AKS”). The statute, pre-amendment, was very broad and raised legitimate concerns that it would implicate inadvertent conduct. 

The AKS used to read as follows:

(b)(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

(2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person—

(A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.    

The Act adds the following to the AKS: 

[W]ith respect to violations of this section, a  person need not have actual knowledge of this section or specific intent to commit a violation of this section.

    Under existing case law, the AKS has an elevated standard of proof with respect to mens rea or intent to violate the statute, requiring knowing and willful violation, including the specific intent to violate the AKS.  “Willfully”’ means unjustifiably and wrongly and known to be be such by the Defendant. U.S. v. Jain, 93 F. 3rd 436 8th Cir. 1996) (“good faith” is a defense to the charge of violation of the AKS, if defendant believed that he was being paid for promotion, not for referring patients). Scienter under the AKS requires 1) that the defendant know that the AKS prohibits offering or paying remuneration to induce referrals and 2) that the defendant engage in the prohibited conduct with the specific intent to violate the law. Hanlester Network, v. Shalala 51 F. 3rd 1390, 1398 (9th Cir. 1995). supra.  See U.S. v. James, 2007 WL 2174650 (W.D. KY) (payments for medical equipment referrals not a violation of AKS where defendant didn’t believe that non-physicians could give referrals and receive kickbacks under the statute).

The Act strips health care providers of an important protective barrier under the AKS and substantially tips the playing field in favor of the government by effectively eliminating the good faith defense to the AKS.

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The Health Care Reform bill passed by Congress adds shifts the playing field in anti-kickback litigation by lowering the intent requirement to achieve a successful prosecution.
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