A recent federal kickback case involving physicians and investors of a physician-owned Texas hospital system, Forest Park Medical Center, resulted in ten guilty pleas and seven guilty verdicts despite the absence of any claims to Medicare or Medicaid. The conduct of the individuals included consulting agreements, marketing arrangements, waiver of out-of-network co-payments and other arrangements that would likely be considered problematic under the Anti-Kickback Statute if federal healthcare claims were involved. However, because of the Stark Law’s restriction on physician ownership of hospitals, the hospital was not enrolled in Medicare or Medicaid and multiple defendants asserted in the litigation that they obtained legal opinions as to the compliance of the arrangements based on the absence of federal healthcare dollars.

The Department of Justice obtained this outcome through its second ever use of the Travel Act in a healthcare-related indictment. The Travel Act is a federal racketeering statute implemented in 1961 that prohibits the use of interstate commerce in the commission of an “unlawful activity”, including bribery in violation of the laws of the state where committed. In the Forest Park case, the Travel Act’s application was based on violations of the Texas commercial bribery statute that makes the intentional or knowing solicitation or acceptance of a benefit by a fiduciary, including a physician, that will influence the conduct of the physician in relation to the affairs of his or her patient a felony offence.

The majority of states have some form of commercial bribery statute that, like Texas, focuses on the acceptance of value in exchange for violating a fiduciary relationship owed to an individual. Many of these statutes specifically include a physician or other professional advisor as a fiduciary. The Forest Park case is evidence of a new willingness of the federal government to pursue physician financial relationships that may violate these state laws, even in absence of federal healthcare dollars.

For physicians and other healthcare providers desiring to structure collaborative arrangements to improve the healthcare system, focus on compliance with the Anti-Kickback Statute and Stark Law is no longer sufficient. The parties must now consider the applicable state laws and the extent to which the relationship may influence the physician or other provider’s fiduciary obligations to the patient. Where arrangements have been previously structured to comply with the Anti-Kickback Statute and Stark Law by avoiding federal healthcare programs, these arrangements must be re-evaluated for compliance with the Travel Act.