Texas Docs' Kickback Convictions: A Warning for Physicians

Leigh Page

Disclosures

October 07, 2019

Such payments can be legal, he says, as long as the doctors aren't paid above fair market value and the services are necessary. However, arrangements to pay doctors for referrals are by definition unnecessary and are thus illegal.

Edquist says that a hospital may lease space from a referring physician, for example, but it leases more space than it actually needs. Or a hospital may pay a physician to be a medical director, but it already has a medical director for that department.

Can Doctors Avoid Conviction?

To obtain convictions, prosecutors have to prove that doctors taking payments for referrals knew that their arrangements were illegal. Some of the doctors charged in these cases claimed they had no idea what they were doing was illegal.

For example, a family physician was charged with taking $200,000 in payments in the BioDiagnostic case. His attorney said the company had "sold him on the legality" of the arrangement. BioDiagnostic agreed to pay the doctor rent for workspace in his office so that a BioDiagnostic phlebotomist could draw blood there and send it on to the lab, the attorney told the Associated Press.

The prosecution, however, identified the rental payments as bribes to the doctor for sending laboratory samples to BioDiagnostic, according to Elberg, the attorney who led prosecution of the case. He says the jury accepted the prosecution's argument and the doctor was found guilty.

Elberg also says it is often possible to find evidence of a doctor's knowledge that the arrangement is illegal, such as in an email or in testimony from a witness. In the Forest Park case, doctors were paid through shell companies, which is a clear indication that something was not on the up-and-up, according to health law attorneys.

Sometimes, however, doctors named in these cases are acquitted. A general surgeon who was acquitted in the Forest Park case, for example, showed that the frequency and types of his surgeries at the hospital did not substantially change when the hospital was handling marketing for him, his attorneys wrote. This showed that the payments had no effect on his referrals.

In addition, there may be no charges filed against doctors who accept relatively small payments. For example, Forest Park paid $500 a month to each of 40 primary care practices that referred patients there, but none of the doctors in those practices were charged.

However, Edquist says doctors who take smaller payments should not assume they are exempt from prosecution. "In some cases, prosecutors start with the small fr[ies], and try to get them to flip and provide information on the big fish," he says.

Lawyers say physicians should be sure to avoid payment for any referrals. The lesson for physicians from the Forest Park and BioDiagnostic cases is that they are no longer safe if they take money for referring private-pay patients, according to Edquist.

"Physicians should not assume that they are immune from liability in these situations," he says. "When you take this money, there is no free pass. The bottom line is that providers should not pay, offer to pay, solicit, or receive any payments in exchange for referrals, Medicare or otherwise."

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