Anti Kickback Statute Resolving Challenges of Fraud and Penalties

anti kickback statute fraud and government contractThe Federal Anti-Kickback Statute, cf. 42 USC1320a-7b(b), is a criminal law making it a felony to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in order to induce business that is reimbursable under any federal healthcare program, cf. 42 U.S.C. § 1320a-7b(b). (Healthcare programs include drugs, supplies, or health care services for Medicare or Medicaid patients).

The meaning of remuneration is anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies.

In Federal health care programs, paying for referrals is a crime punishable under 42 USC 1320a-7b(b).The statute targets both payers of kickbacks and the recipients of kickbacks-those who solicit or receive remuneration. Each party’s intent is a key element of their liability under the AKS.

Violations of the Anti-Kickback Statute are among the most common allegations in governmental investigations, physician disciplinary proceedings, and board actions. Violations of the Anti-Kickback Statute require two elements: remuneration between the parties and illegal intent.

Government contractors or healthcare agencies accused of violating the Anti Kickback Statute or
fraud can be in for some huge fines if a court rules against them. Having sound internal practices and a thorough understanding of the applicable laws can greatly benefit companies alleged violations.

Contractor complaints and defenses against the AntiKickback Statute include being duplicative, unconstitutional or prohibited when used in conjunction with the False Claims Act.

  • The bottom line is that many courts tend to reject these arguments.

 Litigation Approach for Government Contractors : Once a court determines that you have committed fraud for specific contract issues, the unambiguous language of 28 USC 2514 requires the court also to declare that your contract claims are also forfeited. It would seem that the best course of action when dealing with the Anti Kickback Statute and False Claims Act is to focus on defeating the fraud issues first.

Courts typically disagree with the view that imposing civil penalties under the Anti-Kickback Statute, separate civil penalties and treble damages under the False Claims Act for the same facts, are either duplicative or prohibited.

  • Approaches to defending anti kickback allegations start early during the investigative stages;
  • Defenses are based upon facts and disproving the government’s legal requirements.
  • No facts are the same in any one case.
  • Consult with an anti kickback attorney early in your case.

Rationale for Steep Penalties in Anti Kickback Statute: Given the cost of government investigations, doubling the kickback payment compensates for these greater costs but keeps the award tied to the size of the kickback itself.

  • In allowing for an extra award of up to $10,000, the court is given the discretion to give greater recovery when it is due. The extra award can also provide a sufficient deterrent amount when the kickback amount itself is small.

Constitutional Arguments Against Anti Kickback Statute Allegations Generally Fail: Sometimes, defense attorneys raise the argument that the Anti Kickback Statute violates the  Excessive Fines Clause of the Eighth Amendment to the United States Constitution. However, since Anti-Kickback Act civil penalties have a punitive component, a court may choose not to decide to find out whether an award is “grossly disproportionate to the gravity of the offense.

The bottom line here is that a more likely approach to dealing with the Anti Kickback Statute and False Claims Act is to first try to deal with the government’s allegation of fraud because once that determination is made, the courts will have no choice but to apply the statute to penalties.

Anti-Kickback Civil Penalties

The United States may, in a civil action, recover a civil penalty from any person who knowingly engages in conduct prohibited by the statute.

The amounts of such civil penalty shall be –

(A) twice the amount of each kickback involved in the violation; and

(B) not more than $10,000 for each occurrence of prohibited conduct.

(2) The United States may, in a civil action, recover a civil penalty from any person whose employee, subcontractor or subcontractor employee violates a section of the statute by providing, accepting, or charging a kickback. The amount of such civil penalty shall be the amount of that kickback.

Keep in mind that in 1986, the Anti Kickback Statute was amended:

  • To enhance the government’s ability to prevent and prosecute kickback practices.
  • These practices have become a pervasive problem in Federal procurement.
  • This form of commercial bribery has a tremendous impact.
  • Kickbacks directly inflate contract costs paid by the taxpayer.
  • Kickbacks destroy competition, and they foster corruption.

Anti-Kickback Criminal Penalties

Anti-Kickback investigations can be either criminal or civil. Depending on the approach from the investigators, an anti kickback law lawyer will get to know at the beginning whether your case is criminal or civil, or both.  Criminal penalties and sanctions for violating the AKS include severe fines, still jail time, and removal from participating in the federal healthcare programs. government contractors or physicians who pay for or accept kickbacks can face criminal penalties of up to $50,000 per kickback plus three times the amount of the remuneration.


For more help with litigation allegations of government healthcare fraud or Anti Kickback Statute penalties, call one of our anti kickback law attorneys at 1-866-601-5518. 

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