Third Circuit Affirms Geriatrician’s Conviction for Violation of Anti-Kickback Law
ElderLawGuy Jeff Marshall alerted us to this week’s ruling by the Third Circuit Court of Appeals, affirming the conviction of Eugene Goldman, M.D. for several counts of taking “kickbacks” for referral of Medicare and Medicaid patients for hospice services. Dr. Goldman’s sentence of 51 months, followed by three years of supervised release during which he is barred from practicing medicine, was affirmed. The facts, as set forth in the opinion, are interesting:
“Goldman had a geriatric medicine practice in Northeast Philadelphia. In December 2000, he secured the position of Medical Director of Home Care Hospice (‘HCH’). Alex Pugman served as Director of HCH, and his wife, Svetlana Ganetsky, was the Development Executive, responsible for marketing HCH to doctors and other healthcare professionals. According to his contract, Goldman was responsible for quality assurance, consultations, and the occasional meeting. In reality, his job was to refer patients to HCH.
Goldman was paid for the number of patients he referred to HCH and the length of their stay. Early in his relationship with HCH, Goldman was paid $200 per referral. By 2011, he received $400 per referral, with an additional $150 for each patient who stayed longer than a month. Ganetsky paid Goldman each month by check. Between 2002 and 2012, Goldman referred more than 400 Medicare patients to HCH and received approximately $310,000 in return.
In 2006 the FBI and Department of Health & Human Services began investigating HCH for Medicare fraud. The FBI followed up in 2008 by obtaining a search warrant and seizing over 500 boxes of documents and information from HCH’s servers. Shortly after the raid, Ganetsky and Pugman approached the FBI and agreed to cooperate in the investigation. Ganetsky then recorded several meetings at which she paid Goldman for his referrals. Ganetsky made these payments with funds drawn from an account opened by the FBI for the investigation.”
At issue was whether these payments violated the federal Anti-Kickback Statute, at 42 U.S.C. § 1320a-7b(b)(1)(A), which requires the prosecution to prove that the defendant (1) “knowingly and willfully”; (2) “solicit[ed] or receive[d] any remuneration” (3) “in return for referring an individual to a person for the furnishing . . . of any item or service for which payment may be made in whole or in part under a Federal health care program.”
Goldman contended that any payments accepted were provided in a “sting operation” with “sting money,” and therefore he was not in fact remunerated through Medicare for patient referrals and thus did not violate the Anti-Kickback Statute. Interesting argument — but thoroughly rejected by the Third Circuit.
This is one of a number of recent cases where the Justice Department targeted so-called “sham directors” for health care operations, where the real purpose was to disguise kickbacks for referrals. Lots of lessons here, including the tension between attempts at “business development” and “payment arrangements” prohibited by law, without regard to the potential for the treatments to be medically necessary. Further, in these types of cases, the very persons who helped to create the relationship under question may become the whistleblowers, thereby avoiding their own potential civil or criminal liability.
Attorneys Wade Miller and Kimyatta McClary from the Atlanta offices of Alston & Bird LLP’s Litigation & Trial Practice Group, wrote a very helpful article in 2014, “Medical Directorship Arrangements,” published by the Health Care Compliance Association, outlining the trend in increased government enforcement actions related to the Anti-Kickback Law, the Stark “Self-Referral” Law, and the False Claims Act, including criminal cases, and suggesting sound practices for hiring and payment in order to comply with federal law. A key recommendation:
“Ensure that medical directorship arrangements are in writing, compensate the physician at fair market value, and outline the services the physician is to perform, as well as the compensation for such services.”
Thank you for sharing this interesting (albeit “nonprecedential”) decision, Jeff.