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Lab Marketing & Staffing: 4 Common Kickback Pitfalls to Avoid

by | Oct 24, 2023 | Compliance Guidance-lca, Essential, Lab Compliance Advisor, Laboratory Industry Report, National Lab Reporter

How laboratories can avoid compliance issues involving certain marketing and staffing practices.

When labs do business with physicians, hospitals, and other providers that refer Medicare patients to them, they must consider the risk of liability under federal and state laws banning the offering, payment, or receipt of kickbacks.

The 4 Key Federal Kickback Laws

The Anti-Kickback Statute (AKS) is a criminal law that makes it illegal to exchange (or offer to exchange) anything of value to induce or reward the referral of business reimbursable by Medicare, Medicaid, or other federal healthcare programs, including payments for referrals.

The Stark Law, aka the Physician Self-Referral Law, is a civil law that bans a physician from referring a Medicare patient to an entity providing designated health services (DHS) if the physician or his/her immediate family member has a financial relationship with that entity.

The False Claims Act (FCA) is a civil law that makes it illegal to knowingly submit (or cause to be submitted) false and fraudulent claims to the government, including claims for federal healthcare program reimbursement involving a patient who was referred as the result of an arrangement in which kickbacks were offered or exchanged, with potential penalties including treble damages, i.e., triple the value of each false claim submitted.

The Eliminating Kickbacks in Recovery Act (EKRA) is a recently adopted law that bans labs, recovery homes, and clinical treatment facilities from paying, receiving, or soliciting any remuneration in return for referrals, even if those arrangements are legal under the AKS or Stark.

The compliance danger is significant for two reasons: First, business arrangements and interactions between labs and referral sources are pervasive and unavoidable. Second, remuneration that may be considered a kickback is defined broadly as including not just cash but anything of value such as free or low-cost equipment, waiver of copayments and salary, lease, and other payments that are above or below fair market value, depending on who’s on the receiving end.

If your lab were ever to run into compliance issues for violating kickback laws, it would likely be because of sales and marketing efforts since these activities commonly involve business interactions with referral sources. It’s imperative for lab compliance officers to oversee these operations. The starting point is to identify the principal risk areas for AKS, Stark, FCA, and EKRA liability. Implementing this strategy requires an understanding of the risk associated with the activity and what regulatory guidelines say should be done to manage those risks. This Special Report explains four key risk areas relating to lab sales, marketing, and staffing—and how your lab can manage them.

Risk Area 1: Contract Sales Personnel & Commission Agreements

The AKS and Stark Law impose restrictions on how lab services may be marketed, as well as who can perform sales and services on behalf of a lab and how those marketers may be compensated. However, the AKS and Stark Law include safe harbors and exceptions allowing labs to enter into bona fide employee and personal services and management contracts without incurring liability. These safe harbors and exceptions are fairly strict and require careful planning.1 Moreover, they don’t safeguard you against liability under EKRA.

Most conventional employee sales compensation arrangements meet the AKS safe harbor for bona fide employees. However, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) has repeatedly indicated that the personal services safe harbor doesn’t protect independent contractor sales arrangements that are compensated on a commission basis, or as a percentage of sales.

According to the OIG, to meet the personal services and management contracts exception to the AKS or Stark Law, the sales agreement must:2

    1. be in writing and signed by the parties,

    1. specify the services to be performed,

    1. specify the schedule for any part-time services,

    1. have a term of at least one year,

    1. fix in advance the aggregate compensation so that it’s consistent with fair market value in an arms-length transaction and isn’t determined in a manner that takes into account the volume or value of any federal program referrals,

    1. not include services involving the promotion of business that violates any federal or state law, and

  1. not include services that exceed those reasonably necessary to accomplish the commercially reasonable business purpose of the services.

The OIG has stated that “many advertising and marketing activities warrant safe harbor protection under the personal services and management contracts safe harbor;”3 but the OIG has also consistently taken the position that commission-based compensation to contract sales force will not meet the personal services and management contracts safe harbor because it is not fixed in advance and is determined in a manner that takes into account the value or volume of business generated between the parties, including federal healthcare program business.4

The notorious Health Diagnostics Laboratory (HDL) and Singulex case is an example of how percentage-based third-party sales arrangements can cause issues for labs. In this case, HDL and Singulex hired BlueWave HealthCare Consultants to serve as their outside sales force on a commission basis. Under the arrangement, BlueWave marketed a panel of blood tests furnished by both labs by allegedly telling providers to use the panel as a baseline for every patient, even though it included tests that benefitted only a very limited group of patients. The result was billing of federal healthcare programs for unnecessary tests, which brought the FCA and risk of treble damages into play. BlueWave also offered doctors payments for each blood test as a “drawing fee.”5

In April 2015, HDL and Singulex settled the FCA, AKS, and other claims for $47 million and $1.5 million, respectively. Both were also obligated to enter into corporate integrity agreements (CIAs) requiring a settling party to take strict and onerous measures to ensure compliance and prevent further violations.6

But the case was far from over. Having resolved its claims against the labs, the U.S. Department of Justice (DOJ) went after the individual principals responsible for the offenses in accordance with its Yates Memo policy of seeking to hold corporate leaders personally accountable for the wrongdoing committed by their organizations. Rather than settle, three of the HDL principals decided to go to court, which turned out to be a bad move. In June 2018, after a two-week trial, the South Carolina federal jury found all three defendants jointly and severally liable for kickback and FCA violations.7 The court then had to determine the damage award. The formula:5

Treble the damage amounts (under the FCA)
Offset of settlement payments received from HDL and Singulex for the claims
$63.8 million in damages the DOJ requested
Total: $114,148,661.865

What to Do

Failure to meet the bona fide employee, services and management, or any other safe harbor/exception requirements doesn’t necessarily mean an arrangement is unlawful under AKS or Stark. But in light of OIG’s consistent disapproval, labs that participate in federal healthcare programs should consider alternatives to commission-based compensation if they choose to market their lab services through independent contractors.

Note also that certain states prohibit labs from contracting with independent contractors to sell lab testing services.8

Alternatives to percentage-based structures tied to volume or value of lab testing may include fair market value compensation that is set in advance and based upon other production-related values not determined by volume or value of lab referrals that result from the contractor’s marketing activities, such as:

    1. the amount of time spent,

    1. the number of attendees at marketing presentations,

    1. the number of sales presentations made,

    1. the overall financial performance of a region or division of the lab organization, and

  1. other pre-set financial performance targets not linked to specific customers or test volumes.

Any of these payment methodologies should be carefully spelled out in the personal services agreement between the lab and contractor.

Risk Area 2: Bonuses & Commissions that Run Afoul of EKRA

Five years after its enactment, the EKRA law remains a significant compliance concern for not only toxicology, but all medical labs. Based on analysis of key EKRA-related cases, there are three common types of lab business arrangements that raise risks under EKRA:

    • variable compensation packages that labs pay to sales and marketing personnel based on the value or volume of referrals they generate,

    • leasing of space in the offices of referring physicians, and

  • participation in Accountable Care Organizations (ACOs).

What makes this concerning is that arrangements may violate EKRA even if they satisfy AKS safe harbors/exceptions and Stark Law exceptions, exposing labs and their leaders to risk of fines of up to $200,000 and imprisonment of up to 10 years.9

EKRA Exceptions
The EKRA ban is subject to certain narrow exceptions, including for:9 certain disclosed discounts under a healthcare benefit program, certain payments to bona fide employees and independent contractors—although there are several provisos to this rule and it doesn’t mirror a similar exception in the AKS—payments for services that meet the AKS safe harbor for personal services and management contracts, certain coinsurance and co-payment waivers and discounts, certain federally qualified health center arrangements that meet the AKS exception, and remuneration made under certain arrangements that HHS deems necessary.

There’s one other aspect of EKRA that makes the law so difficult for labs to deal with: uncertainty. The law is vague and very broadly written and many in the industry feel it was rushed into passage without full consideration of its kickback implications. Adding to the lack of clarity is that there are no implementing regulations to flesh out crucial details, such as precise definitions of the terms “laboratory” and “laboratory services” covered by the law. Although the law authorizes the DOJ and HHS to “promulgate regulations” to clarify parts of the statute, that has yet to happen and there’s no indication it ever will.

Lessons from EKRA Enforcement

Without regulations or official guidance, the only way for labs to understand how EKRA applies in real-life situations is to look to the actual enforcement actions and case law. The first takeaway relates to EKRA’s scope and the labs it covers. Because it was enacted as part of a larger piece of legislation (the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act)10) designed to combat the opioid crisis, it was hoped/expected that EKRA would apply only to toxicology labs and their referral arrangements with sober living homes and clinical treatment facilities. In fact, most of the initial enforcement actions against labs involved toxicology and drug addiction testing.

EKRA Drug Treatment Testing Enforcement Scorecard

In September 2019, a federal grand jury indicted a former doctor for violating EKRA by paying illegal remuneration to recruit patients to the two California substance abuse treatment facilities he owned, but the case was dropped after the defendant died.11

On January 10, 2020, the office manager of a Kentucky substance abuse treatment clinic pleaded guilty to soliciting kickbacks from a toxicology lab in exchange for urine drug test referrals in violation of EKRA and then seeking to cover up her fraud, for which she received a 10-month prison sentence and $55,000 fine.12,13

On September 15, 2020, two California defendants pled guilty to conspiracy to broker patients as part of a multi-state patient scheme in which one of them directed recruiters to bribe drug-addicted individuals to enroll in drug rehabilitation and the other paid referral fees from his rehabilitation center in exchange for patient referrals.14

On October 6, 2021, the owner of two California addiction treatment facilities and a patient broker were charged under EKRA with conspiracy to pay roughly $2.7 million in kickbacks for referrals. They’re currently awaiting trial.15

In March 2022, a pair of brothers who operated addiction treatment facilities in South Florida were sentenced to 188 months and 97 months in prison, respectively, for their roles in a $112 million fraud scheme involving payment of kickbacks from patient recruiters to testing labs.16

However, it also became clear early on that the DOJ interpreted EKRA broadly as applying to all clinical labs. Thus, in May 2021, Malena Lepetich, the owner of Louisiana clinical lab MedLogic LLC, was indicted for her role in an alleged $15 million kickback scheme involving payments for referrals of urine specimens for medically unnecessary testing as well as offering kickbacks for COVID-19 and respiratory pathogen testing. It was the first enforcement action targeting a lab outside the toxicology and drug addiction testing space.17

Another notable case was the prosecution of Mark Schena, former president of Arrayit Corporation, a self-described “world leader in microarray technology empowering researchers and doctors in the life sciences, wellness, and healthcare testing markets.”18 Among the charges against Schena was conspiracy to pay kickbacks and bribes to doctors and marketing companies for patient blood samples and orders for allergy testing in violation of EKRA.19

Lessons from EKRA Case Law

The most useful source of guidance on EKRA’s real-world meaning comes from the case law. Unfortunately, there have been only two reported cases, both of which focus on sales and marketing commission agreements, and they send contradictory messages.

The S&G Labs Case: The first court ruling interpreting EKRA was a civil rather than a criminal case that began when a lab sued a former marketing employee for soliciting employees and customers for his new employer in violation of his noncompete agreement with the original lab. The employee countered by claiming the lab reneged on its obligation to pay sales commissions based on the volume of referrals. The lab responded that it made that compensation agreement before EKRA, and had to rework it as a fixed salary agreement to ensure compliance when the law took effect.

But the Hawaii federal court disagreed. Commissions based on referrals is remuneration, the court acknowledged. However, the agreement in this case didn’t violate EKRA because the employee wasn’t referring individual patients, but rather marketing to doctors. In other words, the court ruled that EKRA only bans percentage-based compensation payments to marketers based on direct patient referrals [S&G Labs Hawaii, LLC v. Graves, No. 1:19-cv-310, 2021 WL 4847430 (D. HI Oct. 18, 2021)].20

The Schena Case: The S&G Labs case raised eyebrows. Legal experts questioned the validity of the decision, contending it ignored the purpose of EKRA and failed to consider the plain meaning of “to induce,” as well as the way marketers and physicians interact in obtaining lab test orders. The case was an outlier and labs that relied on it did so at their own risk, the experts cautioned.

One group that didn’t heed that message were the defense attorneys representing former Arrayit president Mark Schena in the EKRA case mentioned earlier. In pretrial motions, Schena’s legal team asked the court to dismiss the case, citing S&G Labs in arguing that the statute “does not prohibit payments to persons who do not themselves refer an individual to a clinical laboratory.”21

But the Northern District of California federal court rejected the motion to dismiss and the S&G Labs case on which it was based. EKRA bans both direct and indirect referrals of patients to labs, the court reasoned. That includes percentage-based compensation to recruiters—both employees and independent contractors—even if those recruiters interact only with the doctors and not the actual patients [USA v. Schena, Case No. 5:20-cr-00425-EJD-1, 2022 WL 1720083 (N.D. Cal. May 28, 2022].21

What to Do

The practical takeaway from what we know about the current state of EKRA is that the statute applies to all medical labs and not just toxicology labs. We also know that notwithstanding the S&G Labs case, paying sales commissions to lab marketers and recruiters is extremely risky, at least outside of the federal judicial district of Hawaii where the case is binding precedent. Based on key EKRA cases, practices to avoid include entering into compensation arrangements based on:

    • numbers of individual referrals,

    • numbers of tests performed, and

  • the amount billed or received from the referred individuals’ payer.

Of course, these arrangements were also risky before EKRA existed. However, AKS safe harbors allow for such arrangements when the salesperson is an employee and not an independent contractor. But because the AKS safe harbor doesn’t apply to EKRA, such arrangements are problematic regardless of the salesperson’s status as an employee or contractor.

One potential solution is to offer sales personnel compensation incentives that are based not on referral volume or value, but more neutral metrics that will incentivize effective performance, such as:22

    • number of visits to an existing client,

    • number of meetings with prospective new clients,

    • number of new accounts generated,

    • how long the salesperson has had a relationship with the client,

    • efforts to educate clients and ensure submission of clean claims, e.g., number of medical necessity denials per client, and/or

  • the results of client satisfaction surveys.

Risk Area 3: Paying Healthcare Practitioners to Provide Personal or Professional Services

It’s common for labs to enlist other healthcare professionals to provide services to assist in delivering high-quality lab testing, and/or perform research, education, training, and other services. These arrangements may call for compensation in the form of consulting fees, or payment for serving as a faculty member or as a speaker for a continuing medical education program, honoraria, research funding, or grants.

When the healthcare professional is a current or prospective source of federal program referrals, the relationship must satisfy applicable safe harbor/exceptions to the AKS and Stark laws, whether for bona fide employment or for personal services and management contracts.

For example, Cincinnati-based non-profit hospital system Mercy Health paid $14.25 million to settle charges of providing above fair market value employment compensation to five internal medicine physicians and one oncologist.23 The size of the settlement is somewhat surprising given that Mercy Health self-disclosed the violations after discovering “errors in the administration of a small number of physician arrangements” during an internal audit; it also fully cooperated with the investigation. By the same token, Mercy Health had run into previous compliance issues for false billing. Recently, Mercy hospitals in Missouri and Maine have faced—and ultimately settled—charges of paying oncologists and other physicians for referrals.24

Medical Advisory Services Fees

Kickbacks may be disguised as salary payments or fees for medical advisory services made to physicians in exchange for lab referrals. This practice was at the center of a $300 million Medicare fraud in which the founders of lab companies Unified Laboratory Services, Spectrum Diagnostic Laboratory, and Reliable Labs LLC, pled guilty to paying kickbacks to induce medical professionals to order millions of dollars worth of medically unnecessary lab tests; they then violated the FCA by billing Medicare and other federal healthcare programs for the tests.25

According to court documents, the lab companies disguised the kickbacks as payments for medical “advisory services” that were never provided. They also paid portions of referring doctors’ staff salaries and office lease payments based on how many tests the doctors referred each month. The labs even threatened to cut off one of the providers unless he stepped up his referrals. The threat worked; before long, the provider was generating an average of 20 to 30 referrals per day. Another strategy they used to cover their tracks was to turn one of the labs, Reliable, into a physician-owned lab in which physicians were offered ownership interests depending on how many referrals they made.25

What to Do

The key to avoiding liability is to ensure the arrangement meets the applicable ASK safe harbor and/or Stark exception.

Bona Fide Employee Exception

To the extent a lab chooses to hire a physician as a bona fide employee (assuming such an arrangement is permitted by applicable state corporate practice of medicine laws), the Stark bona fide employee exception requires that the employment:26

    • be for identified services,

    • have a rate of pay that’s consistent with the fair market value of those services, and

  • not be determined in a manner that takes into account the volume or value of any federal program referrals by the employee.

Personal Services & Management Contracts Exception

In most cases, these arrangements don’t consider the lab’s actually hiring the physician or provider as an employee. Result: Use of the bona fide employee exception may not be viable. In this situation, the best alternative may be to ensure the arrangement qualifies for the personal services and management contract exception. To do this, there must be a carefully structured written contract between the lab and the healthcare provider with terms that meet the personal services safe harbor stipulated by the OIG. The agreement must: 27

    • Be in writing and signed by the parties

    • Specify the services to be performed

    • Specify the schedule for any part-time services

    • Have a term of at least one year

    • Fix in advance the aggregate compensation so that it’s consistent with fair market value in an arms-length transaction and isn’t determined in a manner that takes into account the volume or value of any federal program referrals

    • Not include services involving the promotion of business that violates any federal or state law

  • Not include services that exceed those reasonably necessary to accomplish the commercially reasonable business purpose of the services. Also note that labs owned by medical device manufacturers are subject to the Physician Payments Sunshine Act, which requires tracking and disclosure of physician payments or gifts valued above $10, and of physician ownership and investment interests

Risk Area 4: Placing Lab Employees in a Referring Physician’s Office

It’s a long-standing industry practice for labs to place their personnel in a physician’s office to perform phlebotomy services for the physician’s or physician group’s patients. Although prohibited in some states, according to federal government guidance, such practices are acceptable under the AKS and Stark, provided that the employee doesn’t perform any duties that would normally be carried out by the physician’s office staff.

Regarding Stark, CMS has explained:

“[I]f the phlebotomist is purely performing laboratory functions for the laboratory that places the phlebotomist, then there would be no remuneration to the physician or group practice. However, if the phlebotomist performs services that are not directly related to the collection or processing of laboratory specimens for the laboratory that has provided the phlebotomist, he or she may be providing a benefit to the physician or group practice, thus creating a [prohibited] compensation arrangement…”28

The OIG has also weighed in on the practice:

“When permitted by state law, a laboratory may make available to a physician’s office a phlebotomist who collects specimens from patients for testing by the outside laboratory…While the mere placement of a laboratory employee in the physician’s office would not necessarily serve as an inducement prohibited by the Anti-Kickback Statute, the statute is implicated when the phlebotomist performs additional tasks that are normally the responsibility of the physician’s office staff…These tasks can include taking vital signs or other nursing functions, testing for the physician’s office laboratory, or performing clerical services.

Furthermore, the mere existence of a contract between the laboratory and the healthcare provider that prohibits the phlebotomist from performing services unrelated to specimen collection does not eliminate OIG’s concern, where the phlebotomist is not closely monitored by his [or her] employer or where the contractual prohibition is not rigorously enforced.”29

As noted above, some states prohibit this practice, including New York, Florida, and California. Violation of such state laws has served as a basis of federal enforcement under the FCA. For example, in November 2010, Ameritox, a national toxicology lab, paid $16.4 million to resolve a qui tam lawsuit, including claims, among others, that it offered:30

“[R]emuneration in the form of the services of personnel placed in providers’ offices, which remuneration was intended by Ameritox, in whole or in part, to induce such referrals, in violation of the AKS and Stark Law, including, but not limited to, with respect to drug testing referred by providers in California, Florida, and New York, where provision of personnel by laboratories to healthcare providers may be deemed by such states to violate state law.”30

A more recent example is the $84.5 million FCA settlement made by William Beaumont Hospital for allegedly providing free or below-market office and employment assistance to eight physicians in exchange for referrals of lab and other services over an eight-year period.31

Risks of Having Phlebotomists at MD Offices Taking Kickbacks

While placing phlebotomists in the offices of referring physicians is inherently risky, a recent federal case may extend the liability risks to a new and unexpected level. As so many other cases seem to do these days, this case stems indirectly from the HDL and Singulex kickback scandal. Whistleblowers in South Carolina filed a qui tam suit contending that Labcorp technicians stationed inside the offices of doctors taking illegal processing fees were aware of the kickback arrangement but continued to draw blood from patients knowing that the specimens would be referred to HDL and Singulex for tests that would be subsequently billed to Medicare. Because those tests were the product of an illegal kickback, billing for them amounted to making a false claim under the FCA, the whistleblowers contended.32

The case has been going on for years, but the government has declined to intervene and the South Carolina federal district court has dismissed three of the four broad sets of claims. But the claims related to whether Labcorp conspired in false claims made by HDL and Singulex, and submitted false claims of its own, continued. In 2021, the court denied Labcorp’s motion to dismiss the case without a trial.

As even the whistleblowers acknowledged, Labcorp didn’t submit any false claims. But they argued that, because Labcorp’s phlebotomists were aware of the HDL and Singulex scam and failed to intervene, Labcorp caused a false claim to be submitted under Section 3729(a)(1)(A)) of the FCA. Labcorp claimed the relator’s theory was legally invalid, but the court disagreed, finding that it was foreseeable to Labcorp that HDL and Singulex would present claims to Medicare for the illegally referred tests. And the fact that Labcorp phlebotomists were drawing blood for the tests was a “substantial factor” in causing the claims to be submitted.32

Having found that there were genuine, trial-worthy disputes over whether the same was true of whether Labcorp had knowingly presented, or caused to be presented a false or fraudulent claim for payment under Section 3729(a)(1)(A), the remaining issue was whether the company had also conspired with HDL and Singulex to commit such violations (in violation of the Section 3729(a)(1)(C) ban on conspiring to violate subparagraph (A)). Unfortunately for Labcorp, the court said there was. Essentially, the same evidence showing that Labcorp knew what was going on but allowed its phlebotomists to continue drawing blood for physicians receiving kickbacks was enough to raise a trialable issue on conspiracy [United States ex. rel. Lutz v. Lab. Corp. of Am. Holdings, 2021 U.S. Dist. LEXIS 112832, 2021 WL 2457693].32

What It Means: Denial of summary judgment isn’t a ruling on the merits. The relators would still have to prove their claims. And holding Labcorp liable for participating in the FCA offenses committed by HDL and Singulex wouldn’t be easy. One key piece of evidence that wasn’t enough to secure summary judgment but could have been significant in defending the charges at trial involved Labcorp’s own investigation. After the company’s compliance department investigated and became aware that in-office phlebotomists were drawing blood for doctors who were paid processing and handling fees by HDL and Singulex, certain Labcorp divisions stopped drawing blood for testing by those labs, required doctors to certify that they weren’t receiving processing and handling fees, or instituted a $5 draw fee on the doctor. The key question is whether those actions were too little, too late, and why they weren’t implemented across all Labcorp divisions. In the end, Labcorp avoided a trial, settling the case in February 2023 for $19 million.33

What to Do

The key to protecting your lab from liability risks is to structure your arrangement so that it meets the OIG’s parameters. Specifically, there are five things you should do:

1. Make Sure the Arrangement Isn’t Banned by State Law

In-office placement of lab phlebotomists is only legal if it’s allowed under state law. And at least four states (CA, FL, NY, and PA) specifically ban or severely restrict such arrangements.

2. Limit Phlebotomist Duties to Strictly Lab-Related Tasks

The key to the arrangement’s legality is the scope of the phlebotomist’s duties, which should be strictly limited to tasks directly related to the collection and processing of the specimen to be tested. “Where the phlebotomist performs clerical or medical functions not directly related to the collection or processing of laboratory specimens, a strong inference arises that he or she is providing a benefit in return for the physician’s referrals to the laboratory,” a 1994 OIG Fraud Alert warns.29

3. Specify Which Tasks Phlebotomist May and May Not Perform

Spell out the exact tasks that phlebotomists can and cannot perform, as illustrated by Figure 6.1.


Permissible Duties of In-Office Phlebotomist

Legal Problematic
*Collecting specimens for testing at lab, affiliated reference lab, or lab with collection agreement
*Specimen preparation for transporting
*Specimen packaging for transporting
*Clerical duties directly related to handling + processing of lab specimens, e.g.:
> obtaining billing information for lab’s use
> ensuring accurate completion of lab requisition form
> confirming processing of specimen reports
*Assisting in any manner with point-of-care testing with a CLIA-waived cup or physician’s lab office analyzer that the physician is billing
*Performing medical or nursing assistant duties for physician’s patients, including but not limited to, taking of vital signs
*Any other medical tasks that are customarily the responsibility of the physician’s office staff
*Any administrative and/or clerical duties that are customarily the responsibility of the physician’s office, including but not limited to:
> answering the physician facility’s phones
> filing and/or reviewing patient files
> registering patient demographics into physician facility’s computer system
*Providing or offering any gifts or personal services for physician’s facility providers, management, or office staff

Source: 1994 OIG Fraud Alert, G2 Intelligence interviews.29

4.         Ensure Strict Monitoring of Phlebotomist

The mere existence of a contract between the lab and physician that bans the phlebotomist from performing services unrelated to specimen collection isn’t enough to satisfy the OIG’s kickback concerns, according to the 1994 OIG Fraud Alert. The contractual restriction must be “rigorously enforced” and the phlebotomist “closely monitored” by his/her employer.29

5.         Ensure Physician Doesn’t Charge for Phlebotomist’s Services

The host physician may not charge payers for the services the phlebotomist provides.


References and End Notes:

    1. 42 U.S.C. § 1395nn(e)(2); 42 C.F.R. § 1001.952(i)

    1. 42 U.S.C. § 1395nn(e)(3).; 42 C.F.R. § 1001.952 (d)

    1. 56 Fed. Reg. 35952 (July 29, 1991)

    1. OIG Advisory Opinion No. 98-1 (March 25, 1998)

    1. https://www.justice.gov/opa/pr/united-states-obtains-114-million-judgment-against-three-individuals-paying-kickbacks

    1. https://www.justice.gov/opa/pr/two-cardiovascular-disease-testing-laboratories-pay-485-million-settle-claims-paying

    1. Subsequently, HDL co-founder and former CEO Tonya Mallory agreed to pay $10 million to settle claims brought by the bankruptcy trustee in charge of liquidating HDL’s assets. The case against Mallory is part of the trustee’s larger $600 million suit targeting more than 100 HDL executives, directors, contractors, and other defendants associated with the testing firm. https://richmond.com/three-years-after-bankruptcy-hdl-legal-issues-still-could-take-years-to-resolve-former-ceo/article_e04a73cb-b02c-5d45-94d1-e1c06e85bc8f.html

    1. NY Public Health Act § 587 (5); see also, People v. Duz-Mor Diagnostic Laboratory, 68 Cal.App.4th 654, 671 (CA 1998); People v. Guiamelon, 2012 WL 1403350 (Cal.App. 2 Dist. 2012) (Physician convicted of felony under California BPC 650 for paying “marketers” $20 to recommend her medical services to uninsured patients)

    1. https://uscode.house.gov/view.xhtml?req=(title:18%20section:220%20edition:prelim)

    1. https://www.law.cornell.edu/uscode/text/18/220

    1. https://www.justice.gov/criminal-vns/united-states-v-tarek-greiss

    1. https://www.justice.gov/usao-edky/pr/jackson-woman-pleads-guilty-soliciting-kickbacks-making-false-statements-law

    1. https://www.justice.gov/usao-edky/pr/jackson-woman-sentenced-10-months-soliciting-kickbacks-and-obstructing-justice

    1. https://www.justice.gov/usao-nj/pr/two-california-men-admit-roles-multi-state-recovery-home-patient-brokering-scheme

    1. https://www.justice.gov/criminal-fraud/file/1472076/download#page=27

    1. https://www.justice.gov/opa/pr/addiction-treatment-facility-operators-sentenced-112-million-addiction-treatment-fraud-scheme

    1. https://www.justice.gov/usao-mdla/pr/doj-announces-coordinated-law-enforcement-action-combat-health-care-fraud-related-covid

    1. https://twitter.com/arrayit

    1. https://www.justice.gov/opa/pr/medical-technology-company-president-charged-scheme-defraud-investors-and-health-care-benefit

    1. https://cases.justia.com/federal/district-courts/hawaii/hidce/1:2019cv00310/144697/148/0.pdf?ts=1616232442

    1. https://casetext.com/case/us-v-schena-1

    1. https://www.xifin.com/resource/blog-post/addressing-ekra-sales-force-compensation-mandates-improve-both-compliance-and/

    1. https://www.justice.gov/opa/pr/ohio-hospital-operator-agrees-pay-united-states-1425-million-settle-alleged-false-claims-act

    1. https://www.healthcarefinancenews.com/news/mercy-health-hit-14-million-settlement-over-alleged-improper-financial-physician-payments

    1. https://www.justice.gov/usao-ndtx/pr/11-defendants-plead-guilty-300-million-healthcare-fraud

    1. 42 U.S.C. § 1395nn(e)(2)

    1. The Physician Payments Sunshine Act, Section 6002 of the Affordable Care Act of 2010

    1. 66 Fed. Reg. 948-49 (Jan. 4, 2001)

    1. https://oig.hhs.gov/documents/physicians-resources/980/121994.pdf

    1. Maul v Ameritox, Second Amended Complaint, United States District Court, Middle District of Florida, Tampa Division, Civil Action 08J7-cv-00953-t-26eaj (Oct. 19, 2009)

    1. https://www.justice.gov/opa/pr/detroit-area-hospital-system-pay-845-million-settle-false-claims-act-allegations-arising

    1. United States ex. rel. Lutz v. Lab. Corp. of Am. Holdings, 2021 U.S. Dist. LEXIS 112832, 2021 WL 2457693

    1. https://www.justice.gov/usao-sc/pr/labcorp-pay-united-states-19-million-settle-allegations-under-false-claims-act

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