US Pharm. 2006;5:72-76.

Being charged with a violation of the federal Anti-Kickback Statute¹ can result in termination of a provider's status to participate in the Medicare program. If the situation involves payment to a participating pharmacy under the guise of some other revenue source, the pharmacy may still be found in violation if it can be shown that the recipient of Medicare payments routed money back to the individuals who referred patients to a Medicare provider.

In a recent case,² a federal Court of Appeals reviewed this statute and discussed how it should be interpreted. The primary question for the court to decide was whether a violation of the Anti-Kickback Statute can form the basis for a qui tam action under the False Claims Act. This Latin term is an abbreviation of the phrase "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur," meaning "one who sues on behalf of the king as well as for himself." This provision allows a private citizen to file a suit in the name of the U.S. government, charging fraud by government contractors and other entities who receive or use government funds. If the qui tam plaintiff is successful, he or she will share part of the money judgment with the U.S.³ Some consider a qui tam proceeding a "whistleblower's action," because it does provide protection against retaliation from a company that is being sued by an employee for legal violations, as well as by employees who bring concerns about a company's alleged violations to the attention of law enforcement authorities.

Facts
In December 2001, the plaintiff, a former employee of a medical services company called Haleyville Medical Supplies, owned by defendants Gerald and Frances Burleson, filed a qui tam action against the Burlesons and four other medical services companies that they owned, for violations of the False Claims Act.⁴ The companies included The City Pharmacy, Care Medical, Care Pharmacy, and Winfield Medical.

As is common in this kind of lawsuit, in 2002, the U.S. Attorney for the Northern District of Alabama opened parallel criminal and civil investigations of the Burlesons' activities. The plaintiff alleged that the defendants were Medicare providers and that they violated the Anti-Kickback Statute¹ by paying kickbacks camouflaged as rental payments and commissions to pharmacists and other individuals. The plaintiff claimed that the owners issued monthly checks to referring pharmacists and others and in turn submitted invoices to Medicare for reimbursement of services rendered to Medicare patients who had been referred by the individuals receiving the kickbacks. The court held that the government had alleged a valid claim against the owners.

Proceedings
While this qui tam proceeding was in active litigation, the federal Department of Justice--the administrative agency in charge of enforcing the False Claims Act--filed itsintervention complaint for criminal and civil relief. Intervention is the method used when the federal government wants to move in and take over representation of the plaintiff. This is somewhat akin to a class action lawsuit, where one or two plaintiffs sue for, and on behalf of, other similarly situated individuals. In a qui tam case, the Department of Justice lawyers represent both the government and the named plaintiff.

The government alleged that the defendants violated the Anti-Kickback Statute and that compliance with that statute was necessary for reimbursement under the Medicare program. The government alleged that the owners had submitted claims for reimbursement while knowing that they were ineligible for the payments. The government identified numerous false claims that the owners had submitted to Medicare. More specifically, the government claimed that the companies owned by the defendants were Medicare providers and that they violated the Anti-Kickback Statute by paying kickbacks camouflaged as rental payments and commissions to pharmacists and other individuals. The Burlesons issued monthly checks to referring pharmacists. The amount of the checks was a percentage, typically 20% to 25%, of the amount the Burlesons received from Medicare for services provided to the patients referred by those pharmacists. To conceal the nature of the kickback payments, the Burlesons characterized each check as "rent" in the "memo" portion of the check.

The federal trial court judge, hearing the qui tam case, ordered that the discovery investigations be stopped pending the criminal investigation and any later criminal proceedings, unless and until all defendants waived their Fifth Amendment privilege against self-incrimination. Following this order, the defendants filed an interlocutory appeal for review of a decision from the Alabama federal trial court judge, who denied their motion to dismiss the qui tam claim under the False Claims Act. An interlocutory order temporarily stops all the proceedings until the court can resolve other issues that could dramatically affect the current case. Here, the trial court judge certified a question to the Eleventh Circuit Court of Appeals related to the dismissal to the court. As used in this situation, certification is the process whereby a trial court judge asks a panel of the next-highest court to rule on a specific issue before the trial court proceedings restart. The question certified to the panel of three judges in the Eleventh Court of Appeals was whether a violation of the Anti-Kickback Statute can form the basis for a qui tam action under the False Claims Act.

The government claimed that Medicare providers are required to enter a provider agreement with the government, and under the terms of the agreement, the Medicare provider certifies that it will comply with all laws and regulations concerning proper practices for Medicare providers. The government alleged that a Medicare "provider's compliance with its provider agreement is a condition for receipt of payments from the Medicare program."²

The government also alleged that the defendants paid kickbacks to two respiratory therapists and a doctor's patient representative for referring Medicare patients to their operations. The government identified specific claims that the Burlesons had submitted to Medicare for reimbursement of services that were rendered to patients referred by the individuals receiving kickbacks.²

For example, they alleged that an unnamed patient received a prescription dated April 24, 2001. Burleson submitted the claim form on June 11 and/or 13, 2001, for reimbursement for the patient. Another example of the said transactions was for a different patient who received a prescription dated September 30, 2001. The defendants submitted the claim form on November 16, 2001. The pharmacist received a commission for the referral of both patients. Several examples of similar improper claims and payments were also cited.

The government alleged that by virtue of these acts, the Burlesons knowingly presented, or knowingly caused to be presented, false or fraudulent claims for payment in violation of the False Claims Act.

Appellate Decision
The Court of Appeals first noted that the False Claims Act is the primary law on which the federal government relies to recover losses caused by fraud. The Act creates civil liability for making a false claim for payment by the government against "any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval or (2) conspires to defraud the government by getting a false or fraudulent claim allowed or paid."⁴ This same act also permits private citizens to bring qui tam suits to enforce the act. Furthermore, the statute makes it a felony to offer kickbacks or other payments in exchange for referring patients "for the furnishing of any item or service for which payment may be made in whole or in part under a federal health care program."¹

Interestingly enough, neither party disputed the fact that compliance with federal health care laws, including the statute, is a condition of payment by the Medicare program. The defendants did not complain that their failure to comply with the statute, if true, disqualified them from receiving payment as part of a Medicare program. Instead, the defendants argued that the government seeks to hold them liable for nothing more than falsely certifying on a Medicare enrollment form that they would comply with the statute. The defendants contended that the government had failed to identify a false claim. This panel of Appellate Court judges disagreed. In this opinion, they stated:

When a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable, under the Act, for its submission of those false claims. "The False Claims Act does not create liability merely for a health care provider's disregard of government regulations or improper internal policies unless, as a result of such acts, the provider knowingly asks the Government to pay amounts it does not owe."⁵ The violation of the regulations and the corresponding submission of claims for which payment is known by the claimant not to be owed makes the claims false.²

Accordingly, the court held that the government had alleged a valid complaint through evidence that the defendants violated the Anti-Kickback Statute, because compliance with the statute is necessary for reimbursement under the Medicare program. The court also held that the defendants had submitted claims for reimbursement knowing that they were ineligible for the payments demanded in those claims. This allegation is not general or speculative. The government identified several false claims that the defendants made to the federal government. Therefore, the district court properly denied the defendants' motion to dismiss.

Analysis
This case reaffirms the cliché that if it's too good to be true, it is too good to be true. There seem to be an endless number of ways that folks can come up with to get extra money out of government-sponsored health care programs. Pharmacists should understand that they too can be held personally responsible for accepting funds that were generated illegally. In this case, the pharmacies took commission for referrals disguised as rent payments. Do not even consider these kinds of offers. Maybe it's true that you may never get caught, especially if you are not greedy and only siphon off a small amount of income. But is that amount worth it if you do get caught, especially knowing that if you are "departicipated" (i.e., kicked out of the Medicare program), you could lose your right to interact in any way in a program that provides dollars from governmental programs forever? If something smells fishy, run, or at least walk quickly, away. The other point this case should cause us all to ponder is that an employee turned in his employers for their fraudulent behavior. Sometimes your own associates can be your worst enemies if they know where the skeletons are hidden.

REFERENCES
1. 42 U.S.C.S. § 1320a-7b(b).
2. McNutt v. Haleyville Medical Supplies, Slip Op No 04-14458 (September 9, 2005), 2005 Lexis 19482.
3. See www.quitam.com. The Qui Tam Information. Accessed April 12, 2005.
4. 31 U.S.C. § 3729(a).
5. United States ex rel. Clausen v. Laboratory Corp. of America, Inc., 290 F.3d 1301, 1311 (11th Cir. 2002).

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