OIG wins appeal in anti-kickback case - Office of Inspector General - Brief Article

Healthcare Financial Management, Nov, 1991

An HHS appeals board has overturned and administrative law judge (ALJ) ruling that would have greatly reduced the HHS Office of the Inspector general's (OIG's) broad interpretation of the Medicare/Medicaid Anti-Fraud and Abuse statute and ability to prosecute under the statute. The defendant in the case is the Hanlester Network, a group of laboratories whose promoters had sought investors only from licensed physicians who could refer patients to the laboratories. The ALJ decided that a business structured to encourage referrals is not a violation of the statute if the investment opportunity was not conditioned on referrals and no explicit agreement to make referrals was struck. The Sept. 18 appeals board decision, however, supported the OIG's position that an explicit agreement was not necessary to prove a violation as long as intent was evident.

Dennis Barry, an attorney with Vinson & Elkins in Washington, D.C., and a speaker at a recent HFMA seminar on safe harbor regulations, said he expects the OIG to prosecute a "more vanilla," less egregious case to further solidify its position and to encourage providers to seek safe harbors as defined in regulations published in late July.

Among other developments regarding the new safe harbor regulations, some state legislature are considering adopting the Federal ban on self-referrals, as an effort to control utilization and costs. The Florida Legislature, armed with a widely publicized study by Florida's Health Care Cost Containment Board indicating higher utilization in joint ventures, leads the way. Other states said to be considering similar measures are New York and Virginia.