The federal government has begun focusing on physicians and individuals in kickback cases. The HHS Office of Inspector General's Chief Counsel recently indicated that the government's focus on large organizations was an "ineffective strategy" and that the government was going to begin doing a better job holding the physician gatekeepers accountable for their role in kickback cases. The OIG is also focusing on other individuals responsible for steering organizations into illegal kickback schemes and inadequate quality of care circumstances to help address repeat offenders, particularly among pharmaceutical manufacturers and long-term-care providers.

The U.S. Department of Justice in its investigations is also identifying physicians who have aided organizations' kickback schemes by signing prescriptions and other documents used to present fraudulent claims. The agencies now believe that physicians, in many cases, are the lynchpin required for the success of these fraudulent arrangements. Kirk Ogrosky, Deputy Chief of Health Care Fraud at the DOJ, has indicated that more physicians will be "going to jail" along with their patients who knowingly participate in the schemes. The OIG also indicated that it will more aggressively use civil monetary penalties against individuals where the criminal threshold isn't satisfied.

Recently, the government entered into deferred and non-prosecution agreements with five major orthopedic device manufacturers which required the manufacturers to publicly disclose all of their payments to physicians over the last several years. The OIG is reviewing the "consulting" payments to determine if they were actually inducements to use the company's products and, if warranted, impose administrative sanctions. Physicians being investigated include both hospital-employed physicians and nonhospital-employed physicians. In particular, it appears that the OIG is focusing on whether the physicians performed work commensurate with the payment or simply received the payment for little or no work.

The lists of involved physicians and the payments received are available through the following links: 

Biomet

DePuy

Smith & Nephew

Stryker

Zimmer

The U.S. Attorney for the District of New Jersey is conducting a similar investigation against Wright Medical Group, Inc., and Exactech, Inc., which were announced by the companies yesterday. The U.S. Attorney subpoenaed records related to the companies' consulting and professional service agreements with orthopedic surgeons and other medical professionals. If the underlying relationships are similar, we would anticipate these companies will disclose more physician names and compensation amounts.

In some cases, state Boards of Medical Examiners are reviewing the orthopedic device manufacturers' lists of consulting physicians to determine whether any disciplinary action is warranted under the state's Medical Practice Act or whether a referral to a prosecutor is appropriate under state commercial bribery laws. Commercial bribery laws generally prohibit a fiduciary, such as a physician, from intentionally or knowingly soliciting or accepting remuneration from a third party, such as a manufacturer, to influence his or her conduct in respect of a beneficiary, such as a patient, without the beneficiary's consent.

The South Florida multiagency health care fraud task force has likewise stated that it is working to identify and prosecute physicians who actively participate in illegal kickback schemes by signing prescriptions, certificates of medical necessity and other documents used by others to operate the schemes. For example, an 80-year old physician medical director was recently sentenced to 18 months in prison for authorizing and approving the use of a drug, knowing that the patients did not need the drug and that the drug could actually harm them.

The OIG and state Medicaid Fraud Control units have also indicated that they will be focusing on individual executives who make decisions affecting patient care, particularly with respect to quality of care fraud cases in nursing home and long-term-care settings. The OIG, in particular, has indicated an interest in examining management decisions that deprive facilities of adequate funding for staffing or patient needs which result in poor quality of care.

The government's prosecution emphasis is a variant of its prior "friends and family" emphasis with respect to health care consulting firms' client lists several years ago and the IRS' current tax shelter promoter strategy. In these investigations, the government typically uses the consultant's client list as a "road map" to probe the consultant's other clients' practices for the suspected violation. In some cases, the consultant's settlement with the government expressly requires the consultant to cooperate fully and in good faith with the government agency in the civil or criminal prosecution of any client to whom the consultant provided advice.

Careful selection and review of your medical staff members, business associates and contractors is an important step in minimizing exposure to wrong-doing and investigations. As Mom said, "be careful who you play with."