Pharmacists allegedly gave doctors rent and office staff in return for patient referrals and medically unnecessary prescriptions.
Two New York pharmacists have been arrested and charged with submitting false and fraudulent claims to Medicare and Medicaid for medically unnecessary prescriptions and over-the-counter products that were not actually dispensed. The indictment also charges the pharmacists with paying illegal kickbacks to doctors and patients.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving anything of value in exchange for referrals of items or services reimbursable by Medicare, Medicaid, or other federally-funded healthcare programs. The law was enacted to prevent healthcare providers from using financial incentives to encourage unnecessary or inappropriate medical treatment and services, which can lead to fraud and abuse in government healthcare programs.
The Anti-Kickback Statute applies to all healthcare providers who participate in federal healthcare programs, including doctors, pharmacists, hospitals, nursing homes, and medical device manufacturers.
Kickbacks to Doctors in the Form of Rent and Office Staff
The indictment asserts that the two pharmacists conspired with others to pay illegal kickbacks to doctors in the form of rent and office staff in return for medically unnecessary prescriptions filled at their pharmacies.
Under the Anti-Kickback Statute, pharmacists are prohibited from offering anything of value to healthcare providers, such as doctors or nurses, in exchange for referrals of patients who need prescription medications. “Anything of value” means what it says and is not limited to money. It also includes free or subsidized rent, office staff, and other non-monetary benefits.
While it is possible for doctors and pharmacists to enter into financial arrangements or relationships with one another, any such arrangement or relationship must be based on fair market value and may not be tied to the volume or value of patient referrals.
Kickbacks to Patients in the Form of Cash and Gift Certificates
According to the indictment, the two pharmacists also conspired with others who gave cash and supermarket gift certificates to Medicare and Medicaid recipients in return for filling prescriptions at their pharmacies.
Under the Anti-Kickback Statute, pharmacists and other healthcare providers are prohibited from offering anything of value in exchange for referrals of items or services reimbursable by federal healthcare programs, such as Medicare or Medicaid.
There are limited exceptions and safe harbors that allow for certain types of gifts or arrangements that are not considered kickbacks. For example, a pharmacist may give patients gifts of minimal value that are not intended to induce patients to use a particular pharmacy. Gifts that are of nominal value, such as promotional items like pens, notepads, calendars, or other items that are worth less than $15 are generally permissible under the nominal value exception.
However, even gifts of nominal value must meet certain conditions to avoid violating the Anti-Kickback Statute. For example, the gift must not be conditioned on the patient’s purchase of a particular medication or service, and the gift must not be given in exchange for the patient’s referral or business.
Whistleblower Rewards for Reporting Kickbacks to Doctors and Patients
The penalties for violating the Anti-Kickback Statute are severe. In this case, the pharmacists face a maximum penalty of 10 years in prison for conspiracy to commit health care fraud, 20 years in prison for conspiracy to commit money laundering, and five years in prison for conspiracy to pay illegal health care kickbacks and bribes.
Kickbacks, however, are difficult to detect and prove. For that reason, the government pays financial rewards to whistleblowers who help discover and prove kickback schemes designed to defraud Medicare and Medicaid.
The rewards range from 15% to 30% of the amount recovered by the government. This often results in whistleblowers earning hundreds of thousands of dollars in rewards, and sometimes millions of dollars in reward money.
For example, in this case, the pharmacists are accused of submitting $26 million in false claims to Medicare and Medicaid as a result of the kickback scheme. The potential whistleblower reward, therefore, is between $3.9 million and $7.8 million.
If you have evidence of kickbacks being paid to doctors or patients who benefit from Medicare or Medicaid, you should contact an experienced whistleblower lawyer immediately to protect your rights. You may be eligible for a substantial reward and legal protections as a whistleblower.
To schedule a free and confidential consultation with an experienced whistleblower lawyer, call us today at (212) 601-2728.
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