Lawmakers passed the Eliminating Kickbacks in Recovery Act (EKRA) in 2018. At the time, Congress touted it as a way to hold bad actors accountable for illegal kickbacks in drug treatment centers. Even then legal leaders voiced concern that the language within the law was too broad and would have unintended consequences — particularly when it came to charges of wrongdoing against clinical and diagnostic labs.
Lawmakers asked Congress to step in and provide additional guidance. Almost five years later we still wait … and Congress remains silent on the matter.
What do we know about the application of EKRA?
Thus far, all we know is what we have learned from previous cases. The feds have pursued EKRA actions against labs in a few occasions. These include a case out of Hawaii that involved legal analysis into whether a lab account manager could receive a bonus based on the number of accounts managed.
Although this case found the agreement was not in violation of EKRA, another that used similar reasoning out of California came to the opposite conclusion. The Department of Justice explained the case in a recent release, noting the court sentenced the owner of the marketing company that worked with the California lab to 15 months imprisonment and mandatory restitution payment of $493,104 for EKRA violations.
These contradicting holdings provide proof that labs require further guidance to understand how EKRA will impact their operations.
Why should owners of diagnostic labs care?
EKRA is a criminal statute. As currently written, a conviction for a violation can lead to $200,000 in financial penalties as well as potential imprisonment for 10 years for each, individual occurrence. These penalties are extremely harsh and, as we saw in the case noted above, courts are not afraid to sentence those accused of a violation.
Lab owners are wise to conduct internal audits to better ensure compliance and take any allegations of a violation seriously. A prompt response and focused effort to tailor and defense to such allegations is recommended.
Attorney John Rivas is responsible for this communication