FEDERAL HEALTHCARE FRAUD LAW - The Anti-Kickback Statute (AKS)
Medical fraud laws such sa Anti-Kickback Act of 1986, 41 U.S.C. § 51 and the statutes following provide complex rules to avoid kickbacks in federally funded medical programs.
The law provides a broad outline of prohibited conduct and covers a very broad scope of people and entities covered by the law. The prohibited conduct is "kickbacks". An AKS kickback includes receiving money, fees, commission, credit, gift, tips, anything with value even if it is not money or an object which includes compensation of any type.
The earlier law drew a clear connection between the payoff and an actual contract being created. This gave defendants more room to argue that there was no connection even if there was some sort of payoff. The new act is broader and requires less proof. Favorable treatment is all that is needed. A payment for some benefit is a lower standard for the government to prove against the medical provider. Any government contract is covered by this provision which contrasts with earlier laws that covered only specific types of contracts.
The best protection for those accused of AKS violations is the state of mind requirement. You can’t be convicted for even a stupid mistake. The AKS law requires that the individual knowingly and willfully engaged in the prohibited conduct.
Healthcare Fraud Laws in General
Federal healthcare regulation are complex so that the ordinary physician cannot invest the time to fully understand them. However, any medical practice is presumed to have a full understanding of these laws. It is expensive but often prudent to hire established third party administrators for all but the most simple of practices. If there are violations of federal laws or regulations there is always the threat of criminal fraud charges or expensive civil legal entanglements. There a criminal FCA (18 U.S.C. § 287) but that is a different discussion.
The five main federal fraud laws affecting a medical practice are:
1. False Claims Act (FCA)
2. Stark Law (Physician Self Referral Prohibition)
3. Anti-Kickback Statute (AKS)
4. Exclusion Authorities
5. Civil Monetary Penalties Law (CMPL)
There are many federal agencies that enforce these laws. The main three are:
Department of Justice (meaning the Attorney General, FBI)
Department of Health & Human Services through the Office of Inspector General (OIG)
Centers for Medicare & Medicaid Services (CMS)
The penalties for violating the federal laws include:
Prison and massive fines
Civil fines
Restitution to the government or other payors
Exclusion from federal health care programs
Medical Board or Medical Commission action against a medical license
Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b))
The Anti-Kickback Statute (AKS) is a criminal statute carrying potential time in federal prison. It is a crime that requires a low level of criminal intent. You need not intend to violate the law (counterfeiting is an example of a crime where there is a clear (and obvious) intent to violate the law. To violate the AKS you need only act knowingly and intentionally to do something that is prohibited.
What is prohibited under the AKS? Many things including paying (remuneration) money or providing something in exchange for getting a patient referral. It gets more complex and involves creating business for any item reimbursed from a federal healthcare program.
The word “Remuneration” is a legal catchall and it includes cash, checks, gift cards, lowered rent, free rent, vacations, meals etc.. It is often disguised as payment for services when no services are rendered. “Directorships” are hot buttons for DOJ scrutiny since many directorships are non-functional positions other than to receive payments.
AKS penalties include prison terms, fines and exclusion from participation in the Federal health care programs.
State Action
Many state statutes are similar to the AKS. In 2025, California Attorney General Rob Bonta announced a settlement against pharmaceutical manufacturer QOL Medical (“QOL”) and Frederick E. Cooper, the company’s Chief Executive Officer. The charges were submitting false claims to the Medicaid and other healthcare programs. The settlement resolves allegations that QOL engaged in a kickback scheme between 2018 and 2022, by providing free Carbon-13 (“C13”) test kits to providers then using the test results to sell their drug, Sucraid. This resulted in some patients taking Sucraid even though it wasn't medically necessary. As a part of the settlement, QOL and Cooper, will pay a total of $47 million to resolve federal and state violations of various fraud and kickback statutes, with the State of California receiving $384,406.