Bloomberg Law
Feb. 25, 2021, 10:30 AM

Telehealth, Electronic Records Draw Anti-Kickback Attention

Tony Pugh
Tony Pugh

Federal investigators probing possible violations of the Anti-Kickback Statute are expected to intensify their scrutiny of several areas in the health-care industry that could pose a heightened risk for fraud.

Speaker programs for health-care providers, questionable activities of electronic health records vendors, and billing and coding issues surrounding telehealth services will likely see greater attention from anti-fraud enforcers, Miranda Hooker and Allison DeLaurentis, partners with Troutman Pepper Hamilton Sanders LLP, said in an interview with Bloomberg Law.

In fiscal year 2020, the government recovered more than $1.8 billion from civil cases involving health-care fraud and false claims against the federal government. Much of that money came from violations of the Anti-Kickback Statute, which prohibits payments intended to generate business or to induce or reward patient referrals in federal health-care programs like Medicare and Medicaid.

The activity suggests the statute’s enforcement will remain a top priority for the Justice Department in 2021, even if the Department of Health and Human Services retains a Trump-era rule that allows once-prohibited financial arrangements to flourish under the statute in order to advance value-based care.

“I don’t anticipate those rules will have a dramatic impact on DOJ’s Anti-Kickback Statute enforcement,” said Hooker, a former federal prosecutor in Boston who defends clients in health-care fraud cases.

“It’s a good thing for the industry,” she said of the pending Trump administration rule, which was put on hold by the Biden administration along with other rules adopted in the final weeks of Donald Trump’s term. “I don’t expect the Biden administration to roll them back or to revise them in any way. I think they will ultimately go into effect at some point.”

The Biden administration has also delayed adoption of a similar Trump administration rule that creates exceptions, or “safe harbors,” for unique financial arrangements under the Stark law, which prohibits physician self-referrals. The Stark Law and Anti-Kickback Statute are the main anti-fraud tools targeting the health-care industry and are designed to keep caregivers’ personal financial considerations from influencing their medical decisions.

‘Focus on Compliance’

No area of health care grew faster last year than telemedicine as the pandemic forced providers and beneficiaries to conduct virtual appointments.

At the same time, several telemedicine companies were also swept up in a massive Anti-Kickback Statute enforcement action. The DOJ’s “Operation Rubber Stamp” uncovered more than $1.5 billion in allegedly fraudulent billings to federal health-care programs.

The investigation, which began before the pandemic, found telehealth officials paid bribes and kickbacks to doctors and nurse practitioners who ordered unnecessary equipment, tests, and pain medications after brief phone visits with patients, according to prosecutors.

As more doctors with limited telehealth experience provide virtual care in 2021, they should “really focus on compliance and making sure that they’re familiar with all of the regulations in this area,” said DeLaurentis, who’s based in Philadelphia and represents businesses and individuals facing federal and state regulatory investigations.

“As telemedicine services expand, providers need to focus on the regulations around their coding and how they represent the virtual services they provide when seeking reimbursement and billing for virtual services,” she said. “In-person doctors have longstanding knowledge of how to bill appropriately, but billing and coding for telemedicine may be a new area.”

In this video, we explain how this grand virtual experiment in the nation’s health-care system came to be and look at what might happen when the virus goes away.

Expanded Theory of Liability

Meanwhile, the landscape of potential Anti-Kickback Statute violations widened in 2020 as the DOJ applied an expanded theory of liability in a $145 million settlement with an electronic health records vendor that admitted accepting kickbacks to help increase opioid sales.

Practice Fusion, a San Francisco health records technology developer, paid $145 million after it admitted soliciting and receiving kickbacks from a pharmaceutical company in exchange for using its clinical decision software to nudge doctors into prescribing opioid medications.

“And the physicians had no idea,” Hooker said of the illegal kickbacks.

“That’s the novelty of the theory,” she added. “You’re sort of applying a kickback analysis between two parties— the (drug) manufacturer that’s allegedly playing the kickback, and Practice Fusion, the software manufacturer that’s soliciting and receiving the kickback. But the doctor, the person who has the actual ability to write a prescription, is totally outside of this money train. So that’s sort of what makes it novel.”

Enforcement actions against EHR companies have continued in the new year.

In January, the DOJ reached an $18 million settlement with athenahealth Inc., a Massachusetts electronic health record company that had been accused of violating the Anti-Kickback Statute and the False Claims Act by paying kickbacks to increase its sales.

“Across the country, physicians rely on electronic health records software to provide vital patient data. Kickbacks corrupt the market for health care services and risk jeopardizing patient safety,” said a recent statement by U.S. Attorney Andrew E. Lelling, who handled the case. “We will aggressively pursue organizations that fail to play by the rules; EHR companies are no exception.”

Speaker Programs

And the HHS Office of Inspector General issued a rare “Special Fraud Alert” in November 2020, warning of increased scrutiny for drug and medical device companies that sponsor speaker programs in which doctors or other health professionals induce participants to recommend, prescribe, or order a company’s products.

While in-person speaker programs were largely sidelined by the Covid-19 outbreak last year, they could resume later this year if widespread vaccinations help slow the spread of the virus, Hooker said.

To contact the reporter on this story: Tony Pugh in Washington at

To contact the editors responsible for this story: Fawn Johnson at; Brent Bierman at; Karl Hardy at