SEC Tickets and Nail Salon Outings

What do SEC football tickets and nail salon outings have in common?  Both were “gifts” to physicians who referred business to a free standing imaging center in a recent settlement.  Outside of health care, such gifts are often a regular part of rewarding clients for their business.  But the federal anti-kickback law prohibits such activity when it is intended to induce or reward referrals.  A recent settlement highlights this risk.

American Health Imaging operates free standing imaging centers in the Southeast.  The case started when a former employee of AHI brought a “qui tam” action as a whistleblower.  In that whistleblower action, the U.S. Attorney for the Northern District of Georgia charged that AHI and its CEO provided physicians with tickets to sporting events (including SEC games) and concerts, fishing trips, happy hours, sponsorship of “open houses” at physician offices, outings at nail salons, and gifts of alcohol, gas cards, and free scans to induce such physicians to refer diagnostic scans to its testing facilities.  The U.S. Attorney noted that there was no discernable educational purpose associated with any of the events.  The U.S. Attorney also alleged payments to referring physicians with above fair market value compensation to interpret the scans they referred to AHI—again to induce them to refer scans. 

The U.S. Attorney recently announced a settlement under which AHI and its CEO will pay $5,250,000 to resolve the allegations.  The whistleblower was awarded 17% of all payments to be received under the Settlement Agreement–$892,500. 

In announcing the settlement, the U.S. Attorney stated: “The use of inducements to obtain referrals from medical professionals jeopardizes the integrity of our healthcare programs. This settlement demonstrates our Office’s commitment to hold accountable providers who ignore Medicare and Medicaid’s strict prohibition against using kickbacks for personal greed.”

Comment from Author:  The anti-kickback statute is intent based and courts have held that a violation exists if “one purpose” of the payment is to induce or reward referrals.  So, all aspects of making such gifts should be evaluated to determine the risk of violation.  For example, charging such gifts to your marketing budget and tracking referrals resulting from those receiving such gifts as a part of justifying such expense puts you squarely within the ambit of the anti-kickback law.  While apparently not a part of this case, the Stark law also applies to any such gifts to physician referral sources.  Providers should develop and enforce compliance policies to address any such programs with referral sources in light of the Stark and anti-kickback law.