EKRA Convictions Send Message About Enforcement and Risks of Payments for Referrals to Substance Use Disorder Treatment Providers
This Bulletin is brought to you by AHLA’s Behavioral Health Task Force.
- November 25, 2020
- Anna Stewart Whites , Anna Whites Law Office
Since it became law in October 2018, practitioners have attempted to figure out exactly what conduct was prohibited by the Eliminating Kickbacks in Recovery Act (EKRA) and how it would be enforced. A recent New Jersey action that involved marketing companies and addiction treatment providers in a multi-state area gave a stark reminder of the expanded enforcement and the risks inherent in commissions and referral fees.
Congress enacted EKRA as a part of the bipartisan Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act of 2018 (SUPPORT Act), to respond to the opioid epidemic. EKRA prohibits patient brokering and kickback arrangements involving recovery homes, clinical treatment facilities, and clinical laboratories regardless of whether the service was paid for by a government payer.
EKRA makes it a federal crime to “knowingly and willfully”:
(1) solicit, or receive, any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory; or
(2) pay, or offer, any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—(A) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or (B) in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory.
Penalties for violating EKRA include a fine of not more than $200,000, imprisonment of not more than ten years, or both, per violation. The government has been slow to release any guidance about the application and scope of EKRA or its interaction with existing anti-kickback laws and safe harbors, leaving practitioners guessing and potentially giving inconsistent guidance to clients.
In the New Jersey prosecution a physician pleaded guilty to EKRA violations in a recent criminal action. Three marketing company agents who acted as patient brokers and referral agents for various health care providers pleaded guilty to health care fraud for their actions in referring patients to the physician’s addiction treatment facility. The information referenced the federal Substance Abuse and Mental Health Services Administration (SAMHSA) guidelines under 42 U.S.C. § 290aa, which charged the United States with establishing and implementing a program to improve treatment and related services to persons with substance abuse and protecting the rights of substance abusers. The charges were brought as an EKRA action and reflect the scope and breadth of potential enforcement under that law.
The underlying allegations show that drug treatment facilities around the country hired a marketing company to make patient referrals to their facilities. The treatment facilities billed private payers for the care rendered to patients. According to the allegations, upon a successful referral by the marketing company, the drug treatment facility would pay the recruiters for each such patient referral. The marketing company allegedly had a national network of recruiters or salespeople who located potential patients suffering with addiction. The recruiters would engage with potential patients about their insurance coverage to determine if they fit the patient profile required. Patients with private insurance containing health care coverage for substance abuse care were referred to residential treatment facilities. Dr. Mohammad owned such a facility and entered a marketing agreement with the company providing such referrals.
The marketing company directed the recruiters to arrange for and pay travel expenses for the patient to get them to the treatment facility. The criminal Information alleged that additional bribes were paid to the potential patients as a means of ensuring that they would agree to residential care if the patients were reluctant to seek treatment. Once the patients were accepted into the facility, the recruiters would continue to communicate with the patients to ensure the patient stayed for the minimum ten days required for sufficient payment by the insurer, regardless of quality of care or medical necessity. Mohammad’s facility and other facilities typically paid the marketing company a fee of $5,000 to $10,000 per patient referral, with larger fees for longer lengths of stay, according to the Information. Thus, the recruiters financially benefitted more from patients who were encouraged to stay in the program for longer lengths of time and to incur greater charges against their insurance coverage.
Interestingly, the Department of Justice’s press release does not reference federal payers or discuss the harm done to the public taxpayers who help fund the Medicaid and Medicare programs. Often health care fraud prosecutions have focused on federal payers and have not dealt as frequently with private payer fraud. As a result, some practitioners have encouraged providers who wish to avoid federal prosecution to limit novel activities to those patients who are not covered by Medicare and Medicaid. In this case the guilty pleas for health care fraud and EKRA violations related to patients with private insurance. This serves as a clear statement by prosecutors that health care fraud prosecutions will extend to activities involving private payers.
Unlike the Anti-Kickback Statute safe harbors, the EKRA safe harbor for payments to “bona fide” employees and independent contractors expressly provides that payments to such personnel may not “vary by (A) the number of individuals referred to a particular . . . laboratory; (B) the number of tests or procedures performed; or (C) the amount billed to or received from, in part or in whole, the health care benefit program from the individuals referred to a particular [facility or provider].” In the New Jersey case, the amount of referral payments was based on (1) the number of patients referred in a given month, (2) the duration of the patient’s stay at the drug treatment facility, (3) the level of treatment the patient received, and (4) the patient’s type of insurance. The fact that fees paid to the marketing company and the fees paid to the recruiters increased based on revenue as well as on number of patients was a key part of the criminal charges brought. While this case was an egregious example of large sums being paid for patient referrals, a key takeaway is that commissions or fees paid on the basis of patient volume or increased reimbursement is illegal, regardless of insurance type.
AHLA’s Behavioral Health Task Force thanks Kelly J. Epperson for editing this Bulletin.
 Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), Pub. L. No. 115-271.
 18 U.S.C. § 220(a).
 U.S. Attorney’s Office for the District of New Jersey, Two California Men Admit Roles in Multi-State Recovery Home Patient Brokering Scheme (Sept. 15, 2020), https://www.justice.gov/usao-nj/pr/two-california-men-admit-roles-multi-state-recovery-home-patient-brokering-scheme.
 United States v. Dickau (D.N.J.), https://www.justice.gov/usao-nj/press-release/file/1316956/download.
 Id. at p. 2, ¶ 1(h).
 United States v. Mohammad (D.N.J.), p. 6, ¶¶10-11, https://www.justice.gov/usao-nj/press-release/file/1316956/download.
 United States v. Dickau, supra note 5, at p. 5, ¶8.
 Id. at p. 5, ¶10.
 Id. at p. 6, ¶11.
 Compare 18 U.S.C. § 220(b) with 42 C.F.R. § 1001.952.
 U.S. v. Mohammad, supra note 7 at p. 6, ¶11.