When a Doctor Needs a Lawyer – Patient Referrals for Imaging: Staying Compliant with the Law

medical-doctor-1314903-mLegislation controlling self-referrals has created a complex road map that can leave doctors with questions regarding their ability to use business agreements to promote lab work and advanced imaging technology for their patients. For physicians, the rules and regulations of self-referrals for imaging can create headaches and lead to fines.

Georgia Physician Self-Referral and Fraud and Abuse Lawyers

Physician self-referrals may create conflicts of interest and can potentially result in violations of federal or state law. Previously, providers only had to worry about referrals for patients with federal insurance plans. However, the new legislative trend is expanding their liability. Physicians recently have been prosecuted for kickbacks involving patients with commercial insurance plans as well. If a physician’s referral is determined to be guided by profit and not the patient’s best interest, that referral could be violating the law.

In April, seven healthcare providers were found guilty of fraud after a $200 million-dollar referral scheme was uncovered, involving nearly $40 million in kickbacks. Surgeons, physicians, and even nurses were held liable.

Self-referrals and bribes lead to increased healthcare costs for patients, which is why government intervention has increased in recent years. With the continued utilization of advanced imaging technology and reliance on laboratory testing, business agreements between providers seeking to streamline patient access to services have challenged legislators and policy makers.

In May of 2018, a special fraud alert was issued by the Department of Health and Human Services to investigate relationships between labs and physicians. Alerts to potential kickbacks included labs requiring physicians to enter into registry agreements to perform tests at a designated frequency, compensation paid to physicians based on the volume of referrals, and compensation to physicians that was not based on the fair market value of services.

In our Georgia and South Carolina law firm, we advise physicians seeking to establish legally compliant business arrangements with labs so that patient referrals are medically necessary and appropriate in the best interests of patients.  Our firm also represents providers seeking review and preparation of agreements that are compliant with state and federal law.  Some key concepts of major federal compliance laws are as follows:

Three of the main rules that regulate fraud and abuse for physicians are the Stark Law, Anti-Kick Back Statute, and the False Claims Act.

The Physician Self-Referral Law/The Stark Law

Simply put, unless an exception applies, physicians cannot refer for Medicare or Medicaid patients to receive designated health services from providers that have an immediate relationship to the referring physician or are an immediate family member of the physician. Financial relationships with imaging centers or laboratories must fall within particular stated exceptions in order for patients to be referred to those providers in keeping with the law. Physician-owned hospitals and rural-provider agreements can potentially fall within the designated exceptions, according to the Department of Health and Human Services.

The Anti-Kickback Statute

The Anti-Kickback Statute creates limitations for referrals of patients using federal healthcare programs. Under the statute, a physician cannot receive payment, in any capacity, for referrals of Medicare or Medicaid patients. Receiving money or gifts from other physicians, hospitals, drug companies, and labs can be classified as a kickback. Physicians who pay or accept kickbacks can be held criminally or civilly liable. (42 U.S.C. § 1320a-7b(b))

The False Claims Act

It is illegal to knowingly submit fraudulent claims. “Knowingly,” is defined more broadly than the word might imply, so that standard is not a simple means to avoid liability. Courts have held that acting recklessly to avoid liability constitutes “knowing.” Under the FCA, each item billed to Medicare or Medicaid counts as a claim. Liability for violations under the FCA may be criminal or civil. Additionally, individuals may be imprisoned for violating the FCA. (31 U.S.C. § § 3729-3733), (18 U.S.C. § 287)

The Ownership Exceptions

Ownership exceptions to federal physician referral laws are often misunderstood. Helpful in understanding whether ownership exceptions apply, is to determine whether or not a facility is a “physician group practice,” and what physicians are considered to be “members of the group practice.” Some questions to consider asking your attorney about contracts with other facilities and patient referrals are:

  1. Does my business entity qualify as a group practice under 42 C.F.R. §411.351?
  2. Is the amount of payment I have paid or received considered to be of marketable value?
  3. Are the claims that I have submitted potentially fraudulent?
  4. Does my provider agreement fall under the rural-provider exceptions?
  5. As an employee of a facility that is violating these rules, what are my options and what is my responsibility in reporting?

If you are a provider who is being investigated for kickbacks, or who has a business interest in a lab/imaging facility or other practice, be sure to advise your attorney on the details of your business structure before you receive a request for an audit. Consulting a lawyer on the formation of an agreement versus discussing legal implications in hindsight may strongly impact the outcome of legal proceedings.

We advise and represent hospitals, medical practices, physicians and other healthcare providers. If you have questions about this post, contact us at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@hamillittle.com. You may learn more about our law firm by visiting www.hamillittle.com.


** Disclaimer: Thoughts shared here do not constitute legal advice. Please consult with an attorney to discuss your legal issue.

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