Texas Docs' Kickback Convictions: A Warning for Physicians

Leigh Page

Disclosures

October 07, 2019

In April, three spine surgeons and one pain management physician were convicted of conspiracy to pay or receive healthcare bribes for referring patients to Forest Park Medical Center, a surgery hospital in Dallas, Texas.

The doctors thought they would avoid prosecution because the cases involved patients with commercial health insurance and not Medicare or Medicaid.

In the past, doctors mostly got in trouble for payments for referrals of patients who used Medicare, Medicaid, or another federal program. Such cases involving Medicare or Medicaid fall under the federal Anti-Kickback Statute (AKS), which carries criminal charges and up to a $100,000 penalty and is vigorously enforced by federal prosecutors. The federal AKS is a healthcare fraud and abuse statute that prohibits payment for referrals for services that are payable by a federal program, generally Medicare.

However, if the payments for referrals involve money from commercial insurers, the crime falls under state laws, which rarely— if ever— are enforced by the states. This peculiar circumstance led some doctors to accept payments for referrals if they involved commercial patients only.

These doctors assumed they would never be prosecuted, and some of them even came to believe they were doing nothing illegal— until now.

In the Forest Park case, the surgery hospital allegedly paid $40 million to physicians in return for referrals for expensive surgeries. The case initially resulted in 10 guilty pleas, and seven defendants who went to trial were convicted in April. In addition to doctors, the defendants were Forest Park executives and their associates.

The case created quite a stir among health lawyers who advise doctors on the legality of taking payments for referrals. "The entire healthcare industry is looking at Dallas," a local attorney told The Dallas Morning News. "I think this is a complete shake-up."

Doctors Tempted to Take Payments With 'Little' Risk

Some doctors appreciate getting extra payments for referrals, says Adam H. Laughton, a health law attorney at the firm of Seyfarth Shaw in Houston, Texas.

"They say, 'My reimbursements are down, and I could get extra payments for referring commercial patients,'" he says. "And they ask me what I think would happen to them if they did this."

"My answer," he says, "is that there are a lot of risks, and certain conduct is still out of bounds, but the enforcement in these areas is uneven, irregular, and even nonexistent in some cases."

Laughton points to state laws that bar using commercial insurance payments for referrals but that are not enforced by state prosecutors.

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