In June, the U.S. District Court for the Northern District of Illinois ruled that a medical management company (MPI) had violated the Anti-Kickback Statute (AKS), the False Claims Act and the Illinois False Claims Act in paying a community care organization (HCI) to access the personal information of HCI clients in order to market Medicare-reimbursed health services to those clients. The court ruled that under a “file access theory” of referral, the defendants had violated the AKS, making it a crime to knowingly and willfully pay any compensation in exchange for referrals. items or services reimbursable under a federal health care program. The case is Stop Illinois Health Care Fraud, LLC vs. Asif Sayeed, Physician Care Services, SC, Management Principles, Inc., & Vital Home & Healthcare, Inc., n ° 12-CV-09306, 2021 WL 2331338 (ND Ill. June 8, 2021).

HCI is a non-governmental organization that has contracted with the Illinois Department of Aging to coordinate health and non-health services for low-income seniors (such as “on wheels” and medical services. ). MPI arranges medical referrals to various healthcare companies including two of the defendants, home care companies under the direction of MPI. HCI and MPI had entered into a Management Services Agreement (MSA) whereby MPI paid HCI $ 5,000 per month for 18 months, apparently in return for certain management services provided by HCI staff, such as reporting. written data. However, the owner of MPI testified that HCI never provided these services and that the purpose of the arrangement was rather to obtain direct access to HCI’s files for data mining purposes. According to a former MPI employee, HCI has granted MPI access to its customers’ personal information, including diagnosis, insurance status and contact details. The data was then used by MPI to solicit HCI clients over the phone for Medicare-reimbursed health services. If the HCI client did not have a doctor, could not travel, or needed nursing home care, MPI would send a provider from its sister organization. The MSA made no mention of MPI’s access to raw HCI data or MPI’s right to solicit HCI customers. HCI continued to grant MPI access to HCI customer information even after MPI terminated the MSA. Although the witnesses were not aware that anything of value is paid directly for a referral, the court held the defendants liable under the AKS on a “file access theory” of referral – a referral theory. which expands the definition of “referral” beyond recommending or authorizing the provision of health care services.

On July 26, 2019, the court granted the defendants’ motion for a directed verdict, ruling that the plaintiff had not presented a prima facie case of AKS violation by failing to link MPI’s payments to HCI referrals. However, on April 29, 2020, the Seventh Circuit reversed and referred to determine whether the Applicant’s “File Access Theory” constituted a referral under the AKS. The Seventh Circuit questioned whether the lower court applied an “inclusive understanding” of what constitutes a referral and noted that, for the purposes of the AKS, the definition of a “referral” is much broader than the mere endorsement of health services, instead “encompassing both and indirect means of putting a patient in contact with a provider.” According to the Seventh Circuit, the definition of “reference” goes “beyond explicit recommendations to include more subtle arrangements.[,]And the investigation to determine what constitutes a referral “is a practical investigation which focuses on substance and not on form.” Stop Illinois Health Care Fraud, LLC v. Sayeed, 957 F.3d 743 (7th Cir. 2020). On remand, the Northern District of Illinois found that HCI granting MPI access to client contact information in order to request Medicare-funded services was much the same as if HCI had referred its clients directly to MPI for those services. . As a result, the court endorsed the AKS referral’s “file access theory” in its November 24, 2020 opinion.

The June 2021 ruling focused on whether the fees paid by MPI constituted illegal remuneration under the AKS and whether an AKS Safe Harbor applied. Since the court’s previous opinion established the “file access theory” of the AKS referral, the testimony of MPI’s owner on the purpose of the monthly fee was sufficient to show that he “Knowingly and willfully induced HCI to provide referrals (i.e. access to data)” in return for the monthly fee in violation of the AKS. The defendants had asserted as an affirmative defense that their activities were protected under the safe harbor of “Personal and Management Services Contracts” at AKS at 42 CFR § 1001.952 (d). One of the seven elements of this Safe Harbor is that the agreement covers all the services that an agent provides to the principal and specifies the services to be provided by the agent. However, previous testimony had established that the MSA did not explicitly cover MPI’s access to raw HCI customer data or the solicitation of customers of HCI by MPI. The activities of the defendants were not protected by the applicable AKS Safe Harbor.

This opinion is the latest in a nearly 9-year-old case originally filed on November 20, 2012. The defendants asked the court in July to reconsider the decision or grant a new trial, but the parties eventually agreed that the Defendants Now Withdrawn Post-trial motions can be filed once the court has decided damages. Although the matter has been widely publicized and debated in recent months, the court has yet to rule on damages. However, given the apparent openness of the Seventh Circuit to the expansion of the concept of “reference” under the AKS and the approval of the “theory of access to files” by the northern district of the Illinois, any management company, healthcare management company, trade association or other organization with paid access to client lists should contact an experienced healthcare lawyer to ensure that such arrangement is not suspect under the AKS.