Home Health & Hospice Week

But don't take the decision as a free ride on outside marketers' pay.  In a surprising move, a federal appeals court has overturned home health agency owners' kickback convictions in one of the biggest HHA fraud cases in recent memory. In a Feb. 13 ruling, the U.S. 5th Circuit Court of Appeals reversed 11 kickback counts against Carrie Hamilton and Alice Miles of the former Houston-based Affiliated Professional Home Health. Hamilton and Miles were convicted of 28 and 29 fraud counts, respectively, in October 1999 in U.S. v. Miles. They were sentenced to 17 years and 14 years in prison, respectively, and ordered to repay more than $4 million to Medicare. Affiliated, which closed its doors in June 1998, engaged Premier Public Relations to distribute marketing literature and HHA business cards to area physicians, according to the decision. The convictions came about based on Affiliated's agreement to pay Premier $300 for each patient referral generated from the marketing activity. Prosecutors charged that such a volume-based marketing arrangement violated the anti-kickback statute's prohibition on paying for referrals, and the jury agreed. But the appeals court said that in fact, the arrangement doesn't violate the anti-kickback statute provisions prosecutors invoked. Premier distributed marketing materials for 10 different HHAs to physicians, and the only inducement offered to docs was an occasional plate of cookies, the court noted. Further, physicians contacted Premier only once they had made a decision on which HHA to refer to. Thus, it was the physician who made the referral decision, not Premier, the court reasoned. And neither Affiliated nor Premier paid the physicians for the referrals, so kickbacks between the physician and HHA didn't take place, the court ruled. "Tying payments to the number of Medicare patients is done at your own peril," says attorney Mark Langdon. "The government views any percentage arrangement as risky." The decision "is a somewhat surprising, but certainly welcome, development," observes attorney John Wester with Sidley Austin Brown & Wood in Washington DC. "The defendants' payments to a firm for marketing their home health services to physicians could not constitute payment for referrals because the physicians, not the marketing firm, actually determined which home healthcare provider would be selected," Wester notes. "The fact that the PR firm had no say over which doctor selected which home care agency and ... that those doctors received nothing of value for their referrals ... goes to the very heart of what is not a kickback," says attorney Virginia Caudill with Indianapolis-based Gilliland & Caudill. The decision that Premier did not unduly influence referrals to Affiliated "is critical because the kickback statute applies only when payments are made to a referral source, or one in a position to arrange referrals," [...]