Feds Get Tough on Anti-Kickback and Stark Law Violations

Federal investigators are increasing their investigations of physicians who pay or receive kickbacks for patient referrals.  The latest target is Dr. Jack L. Baker, a prominent Houston radiologist, who has agreed to pay $650,000 to settle claims that he violated the federal Anti-Kickback Statute, Stark Statute, and False Claims Act.

Under the Stark Statute and the Anti Kickback Statute, Medicare providers are prohibited from billing Medicare for referrals from doctors with whom the providers have a financial relationship, unless that relationship falls within certain exceptions.  The government often looks past the form of the financial relationship and considers it suspect if, for example, the amount of money exchanged is tied to the number or value of referrals.

In the case of Dr. Baker, the government alleged that he entered into improper financial relationships with up to 17 physicians to induce them to refer patients to a diagnostic and imaging center he owned and operated.  The prohibited financial relationships included:  (1) personal services contracts and medical directorships which took into account the value of referrals from the medical directors; and (2) contracts to pay the salaries of employees in physicians’ offices, which also took into account the value of referrals from those physicians.

The settlement resolves allegations made in a qui tam or whistleblower lawsuit filed in federal court by Drs. Philip Blum and David Spinks, practicing physicians who refer patients to imaging centers.  Under the False Claims Act, private citizens can bring suit on behalf of the government and share in any amounts that are obtained through that legal action.  In this case, Drs. Blum and Spinks will receive 20% of the proceeds of the settlement.

As part of the settlement agreement, Dr. Baker has also agreed to a voluntary suspension from the Medicare and Medicaid programs for a period of six years.  Under this provision of the settlement agreement, Dr. Baker will not be allowed to bill these programs for treating Medicare and Medicaid beneficiaries.

John Howley
New York, New York

Sources:  The Anti-Kickback Statute, 42 USC 1320a-7b; the Stark Law, 42 USC 1395nn; Press Release for the U.S. Attorney for the Southern District of Texas.

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