Lawmakers enacted the Eliminating Kickbacks in Recovery Act (EKRA) in 2018 to help address the use of illegal kickbacks to physicians who would refer patients to certain treatment centers. Unfortunately, because drafters wrote the law so broadly it likely extended beyond what the drafters intended — including certain diagnostic labs.
It’s been a couple of years since EKRA’s enactment, and we’ve learned a few things. Here are two of the top lessons from 2021.
#1: We have a better idea of how EKRA applies to commission-based payments
EKRA is pretty vague on how it would apply to employees who receive income based on commission. This was recently tested in Hawaii at the U.S. District Court. In that case a lab sued an employee for violating a noncompete agreement and the employee countered with a claim for breach of employment contract. This led the court to review how EKRA would apply to the employee’s compensation package.
As discussed in more detail in a previous post, available here, the court ultimately decided the payment agreement turned on convincing physicians that the lab’s services were superior to the competitor, not on actually convincing patients to use the lab. The lab would then pay the employee, not the physician, for an increase in lab use. As such, it was not a violation of EKRA.
It is important to note that this case is not precedent and other states could find differently on similar issues, but it does provide some guidance.
#2: We know EKRA is a strong tool in cases involving private insurance companies
A second case that moved forward addressing EKRA in 2021 comes out of Florida. In that case the courts found the owners of addiction treatment centers guilty of conspiracy to violate EKRA when they provided patients with illegal drugs, plan tickets and transportation to a drug treatment center. The illegal drugs allegedly assured the patients would test positive and qualify for the most expensive treatment available. The owners of the center would then bill private insurance companies for payment.
The courts found the two brothers who led these efforts guilty of multiple healthcare fraud crimes, including EKRA violations.
Attorney John Rivas is responsible for this communication
