Brief Fact Summary. Greber (Defendant), a specialist, compensated referring physicians in an excessive amount for the work performed by such physicians, with the intention of encouraging future referrals.
Synopsis of Rule of Law. A payment to a referring physician is illegal if it is done to encourage future referrals, even if the payment is compensatory.
If the payments were intended to induce the physician to use Cardio-Med's services, the statute was violated, even if the payments were also intended to compensate for professional services.View Full Point of Law
Issue. Is a payment to a referring physician illegal if it is done to encourage future referrals, even if the payment is compensatory?
Held. (Weis, J.)Â Yes.Â A payment to a referring physician is illegal if it is done to encourage future referrals, even if the payment is compensatory.Â Section 1395nn(b)(2) provides that anyone who knowingly and willfully offers any remuneration to induce the recipient thereof to arrange for such service shall be guilty of a felony.Â This section clearly provides that, when Medicare is involved, no payment of any kind, either gratuitous or compensatory in nature, can be used to secure a referral.Â For a violation to occur, the referral only needs to be a factor, not merely the only reason for the payment.Â In this case, that is how the jury was charged, so no error occurred.Â
Discussion. Earlier versions of Â§ 1395nn(b)(2) only prohibited “kick-backs.”Â The term “kickback” is somewhat imprecise; some courts interpreted it as referring only to gratuitous payments. The word “remuneration” was added in 1982, with the intent to cover compensatory payments made to secure referrals.