Home Health & Hospice Week

Watch out: If you’re paying someone to use their client list for marketing, that could be considered an illegal kickback. So indicates a recent court ruling in the whistleblower lawsuit Stop Illinois Health Care Fraud, LLC v. Sayeed et al.

In the case, Vital Home & Healthcare Inc., two related entities, and their owner violated the antikickback statute by paying a community care organization, Healthcare Consortium of Illinois, $5,000 a month for access to Healthcare Consortium’s client files, recount attorneys Travis G. Lloyd and Justin K. Brown with law firm Bradley Arant Boult Cummings. The U.S. District Court for the Northern District of Illinois handed down its decision on June 8.

“To reach this conclusion, the district court applied a broad definition of ‘refer’ under the AKS,” Lloyd and Brown say. “Paying Healthcare Consortium to access its clients’ contact information to solicit these clients, the court reasoned, was the functional equivalent of paying Healthcare Consortium to refer its clients to Vital Home. Because Vital Home’s payments were intended to induce Healthcare Consortium to ‘indirectly refer’ its clients to Vital Home, these payments violated the AKS, the court found.”

Pointing to testimony that the $5,000 per month fee was intended, at least in part, for the agency and related entities’ access to HCI’s client data, “the Court found that the fees were partially intended as remuneration for a referral,” note attorneys Matt Brothers and Moses Suarez with law firm SmithAmundsen.

Important: The arrangement didn’t qualify for the AKS safe harbor for personal services and management contracts because the agreement between Vital Home and Healthcare Consortium failed to specify all of the services provided to HCI for the term of the agreement, Brothers and Suarez note. “While certain types of arrangements are allowed, the safe harbors do not apply unless all of their requirements are met,” they stress. “If an arrangement is intended to fall within the safe harbor allowing for payment made by a principal to an agent for the agent’s services, the principal and the agent must enter into a written agreement that clearly sets forth the services to be provided by the agent. A service not specifically contemplated by the agreement likely will result in liability under the AKS.”

See the decision online at www.leagle.com/decision/infdco20210609c40.