On March 26, 2009, the Office of Inspector General (“OIG”) issued Advisory Opinion 09-02, concluding that a contract for the employment of a mental health practitioner entered into concurrently with a contract for the employer to purchase real estate from the employee satisfied the anti-kickback statutory employment exception and the employment safe harbor and, therefore, would not generate prohibited remuneration under the anti-kickback statute.

Advisory Opinion 09-02 involves the employment of a mental health practitioner (the “Practitioner”) by a corporation providing outpatient mental health services (“Requestor”). Prior to Requestor’s employment of Practitioner, she maintained an active mental health practice in a building she owned (the “Building”). In November 2007, Practitioner approached the Requestor about purchasing the Building. Requestor agreed to do so, on the condition that Practitioner would be employed by the Requestor as a counselor and clinic director. Requestor and Practitioner subsequently entered into an employment agreement which was expressly contingent upon the Requestor’s purchase of the Building.

Requestor certified to the OIG that: (i) Practitioner is a bona fide employee within the meaning of the applicable Internal Revenue Code provisions; (ii) Requestor paid “market value” for the Building, and the purchase price did not include payment for referrals; and (iii) Practitioner was compensated based upon professional services (including administrative services) she personally performed, and that such services are reimbursable by Medicare, Medicaid and other federal healthcare program services.

The OIG noted that “the anti-kickback statute does not prohibit payments made by employers to their bona fide employees for employment in the furnishings of items or services for which payment may be made under Medicare, Medicaid, or other Federal health care programs.” The OIG further noted that, similarly, the safe harbor regulations that prohibited remuneration do not include such amounts paid to bona fide employees.

Based on Requestor’s certification on the status of Practitioner’s employment and the terms of her compensation, the OIG concluded that the employment arrangement satisfied the statutory employment exception, and, therefore, Practitioner’s wages did not constitute prohibited remuneration under the anti-kickback statute. While the OIG declined to opine on whether Requestor’s purchase of the Building implicates the fraud or abuse laws, the OIG found that neither the purchase of the Building nor the purchase price Requestor paid was a factor in its opinion regarding the employment arrangement.

A copy of Advisory Opinion NO. 09-02 (Dept. of Health and Human Servs. Office of Inspector Gen. Mar. 26, 2009) can be found at http://www.oig.hhs.gov/fraud/docs/advisoryopinions/2009/AdvOpn09-02.pdf.