Exercise Caution Regarding Financial Relationships with Personal Injury Attorneys

By Adrienne Dresevic, Esq. and Robert Dindoffer, Esq. The Health Law Partners, P.C.

It is a scenario that many imaging providers and suppliers are presented with: A personal injury lawyer, who is in a position to provide a stream of business—via auto insurance claimants or other injured persons—requests something in return. For example, the attorney may want a referral fee, or even an equity interest in the provider.

Most providers understand that for Medicare and Medicaid patients, these types of arrangements could violate the federal Anti-Kickback Statute. However, even when auto insurance or other insurers are involved, state laws oftentimes prohibit these types of financial relationships between providers/suppliers and their referral sources.

Providers and suppliers should be aware that other payers, including auto insurers, have increased scrutiny and enforcement of these types of arrangements. In a recent example, State Farm accused a prominent personal injury attorney and an imaging center of engaging in a kickback scheme. The attorney allegedly referred auto insurance claimants to an imaging center that was partially owned by his brother-in-law. According to State Farm, the imaging center funneled large payments back to the attorney through various entities and arrangements.

It is important to note that most states have adopted state-level anti-kickback laws that apply to health care services that are paid for by private health insurance, auto insurance, or paid out-of-pocket by the patients. For example, California has adopted an all-payer, anti-kickback law that generally prohibits physicians and other licensed professionals from paying or receiving compensation in return for referrals of patients. In Michigan, the Health Care False Claim Act makes it illegal for a health care provider to pay a kickback or bribe to anyone in connection with the furnishing of services that are paid for by most insurers. The penalty in each state can be substantial, with fines of up to $50,000 for violations and/or imprisonment of up to 1 year (California) or 5 years (Michigan).

Further, various state laws that prohibit using runners, cappers, and steerers often apply to referral arrangements between referral sources and imaging providers. A “runner, capper, or steerer” is typically defined as a person who directs patients to a particular provider in return for payment from the provider. Many states prohibit the use of a runner, capper, or steerer for the purpose of generating false or fraudulent claims. In some states, even when no false claim was actually submitted, the provider who hires a runner, capper, or steerer with the intention of submitting false claims can be imprisoned. Other states provide a private right of action for an insurer that believes a provider used a runner, capper, or steerer to generate unnecessary services and false claims. Financial arrangements with personal injury attorneys (or other referral sources) often times may violate these laws.

It is important for providers and suppliers to carefully scrutinize financial relationships with all referral sources, regardless of the payment source. Whenever an imaging provider is presented with the opportunity to enter into a financial arrangement with a potential referral source, it is highly advisable to consult with counsel.

Adrienne Dresevic, Esq. is a Founding Shareholder of The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York.Practicing in all areas of healthcare law, she devotes a substantial portion of her practiceto providing clients with counsel and analysis regarding compliance, Stark Law, Anti-Kickback Statute, and compliance related issues. Ms. Dresevic serves on the American Bar Association Health Law Section’s Council, which serves as the voice of the national health law bar within the ABA. Ms. Dresevic also serves as the ABA Health Law Section’s Co-Chair of the Physicians Legal Issues Conference Committee, Vice Chair of the Programs Committee (Executive Leadership), and Vice Chair of the Sponsorship Committee. She is licensed to practice law in Michigan and New York, and can be contacted at adresevic@thehlp.com.

Robert Dindoffer, Esq. graduated from the University of Michigan Law School. Practicing healthcare law, he concentrates in fraud/abuse, compliance, payor contracting, and the corporate and financial aspects of healthcare practice.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.