In June, the U.S. District Courtroom for the Northern District of Illinois held {that a} medical administration firm (MPI) violated the Anti-Kickback Statute (AKS), False Claims Act, and Illinois False Claims Act by paying a neighborhood care group (HCI) for entry to the non-public info of HCI shoppers with the intention to market Medicare-reimbursed healthcare providers to these shoppers. The courtroom held that beneath a “file entry concept” of referral, the defendants had violated the AKS, which makes it against the law to knowingly and willfully pay any remuneration in change for referrals of things or providers reimbursable beneath a federal healthcare program. The case is , Doctor Care Providers, S.C., Administration Ideas, Inc., & Very important Residence & Healthcare, Inc., No. 12-CV-09306, 2021 WL 2331338 (N.D. Sick. June 8, 2021).

HCI is a non-governmental group that contracted with the Illinois Division of Getting old to coordinate healthcare and non-healthcare providers for low-income seniors (equivalent to “Meals on Wheels”  and medical providers). MPI arranges medical referrals to quite a lot of healthcare firms, together with to 2 of the defendants, dwelling well being firms beneath the administration of MPI. HCI and MPI had entered right into a administration providers settlement (MSA) pursuant to which MPI paid $5,000 month-to-month to HCI over 18 months, ostensibly in change for sure administration providers from HCI’s personnel, equivalent to written knowledge studies. Nonetheless, MPI’s proprietor testified that HCI by no means supplied these providers and that the aim of the association was as a substitute to acquire direct entry to HCI’s information for functions of knowledge mining. In response to a former MPI worker, HCI granted MPI entry to its shoppers’ private info, together with prognosis, insurance coverage standing, and phone info. The info was then utilized by MPI to solicit HCI shoppers by telephone for Medicare-reimbursed healthcare providers. If the HCI shopper didn’t have a physician, was unable to journey, or wanted in-home nursing, MPI despatched a supplier from its sister group. The MSA didn’t point out both MPI’s entry to HCI’s uncooked knowledge or MPI’s proper to solicit HCI’s shoppers. HCI continued to grant MPI entry to HCI shopper info even after MPI terminated the MSA. Though witnesses had been unaware of something of worth being paid instantly for a referral, the courtroom discovered the defendants liable beneath the AKS on a “file entry concept” of referral—a concept which broadens the definition of “referral” past recommending or authorizing the supply of healthcare providers. 

On July 26, 2019, the courtroom granted the defendants’ movement for a directed verdict, discovering the plaintiff had didn’t state a prima facie case of AKS violation in failing to attract a connection between funds from MPI and any referrals from HCI. Nonetheless, on April 29, 2020, the Seventh Circuit reversed and remanded to find out whether or not the plaintiff’s “file entry concept” constituted a referral beneath the AKS. The Seventh Circuit questioned whether or not the decrease courtroom had utilized an “inclusive understanding” of what constitutes a referral and famous that, for AKS functions, the definition of a “referral” is way broader than mere approval of healthcare providers, as a substitute “encapsulating each direct and oblique technique of connecting a affected person with a supplier.” In response to the Seventh Circuit, the definition of “referral” goes “past specific suggestions to incorporate extra refined preparations[,]” and the inquiry for figuring out what constitutes a referral “is a sensible one which focuses on substance, not type.” Cease Illinois Well being Care Fraud, LLC v. Sayeed, 957 F.3d 743 (seventh Cir. 2020). On remand, the Northern District of Illinois discovered that HCI granting MPI entry to shopper contact info with the intention to solicit Medicare-funded providers was substantively the identical as if HCI had instantly referred its shoppers to MPI for these providers. In consequence, the courtroom endorsed the “file entry concept” of referral beneath the AKS in its November 24, 2020 opinion. 

The June 2021 determination targeted on whether or not the charges paid by MPI constituted unlawful remuneration beneath the AKS and whether or not any AKS secure harbor utilized. For the reason that courtroom’s earlier opinion established the “file entry concept” of referral beneath the AKS, the testimony of MPI’s proprietor concerning the objective of the month-to-month charge was ample to point out that he “knowingly and willfully induced HCI to offer referrals (i.e. entry to knowledge)” in change for the month-to-month charge in violation of the AKS. The defendants had claimed as an affirmative protection that their actions had been protected beneath the “private providers and administration contracts” secure harbor to the AKS at 42 C.F.R. § 1001.952(d). One of many seven parts of this secure harbor is that the settlement cowl all the providers that an agent gives to the principal and specify the providers to be supplied by the agent. Nonetheless, earlier testimony had established the MSA didn’t explicitly cowl MPI’s entry to HCI’s uncooked shopper knowledge or MPI’s solicitation of HCI shoppers. In consequence, the defendants’ actions weren’t protected by the relevant AKS secure harbor. 

This opinion is the most recent in an almost 9-year outdated case initially filed on November 20, 2012. The defendants requested the courtroom in July to rethink the choice or grant a brand new trial, however the events finally agreed that the defendants’ now-withdrawn post-trial motions will be filed as soon as the courtroom decides on damages. Whereas the difficulty has been extensively briefed and argued over the previous few months, the courtroom has not but dominated on damages. Nonetheless, given the Seventh Circuit’s obvious openness to growth of the idea of “referral” beneath the AKS and the endorsement of the “file entry concept” by the Northern District of Illinois, any administration firm, care administration firm, commerce affiliation, or different group with paid entry to shopper lists ought to attain out to an skilled well being care lawyer to make sure such association isn’t suspect beneath the AKS.  

 is an affiliate in Thompson Coburn’s Well being Regulation Observe Group.
 is a associate in Thompson Coburn’s Well being Regulation Observe Group.