Health care lawyers have long debated whether the AKS safe harbor provides full protection for employees who are paid to market a supplier’s services. In Carrel v. AIDS Healthcare Foundation, 898 F.3d 1267 (Aug. 7, 2018), the Eleventh Circuit might have come a step closer to answering this question. The Carrel court affirmed the dismissal of a False Claims Act suit against the AIDS Healthcare Foundation, Inc. (the “Foundation”), holding that the Anti-Kickback Statute (“AKS”) safe harbor for employment relationships protected bonuses the Foundation paid to employees who referred HIV/AIDS patients to the Foundation for treatment. The outcome of this case was unsurprising given the facts and relevant precedents in the Eleventh Circuit, but highlights an important potential limitation to the AKS’s employment safe harbor.
Carrel Put the Strict Terms of the Employment Safe Harbor to the Test
The AKS criminalizes knowingly and willfully offering, paying, soliciting, or receiving any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program (e.g., Medicare or Medicaid). 42 U.S.C. § 1320a-7b(b). One of the most common AKS safe harbors protects “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services.” 42 U.S.C. § 1320a-7b(b)(3)(B). Regulations provide a parallel exemption for “any amount paid by an employer to an employee … for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare, Medicaid, or other Federal health care programs.” 42 C.F.R. § 1001.952(i).
The plaintiffs in Carrel alleged that the Foundation violated the AKS by paying its employees bonuses for each HIV-positive individual they referred to the Foundation for treatment. Specifically, the Foundation had a contract with the State of Florida under which it conducted HIV testing. The contract (funded by the federal Ryan White Act) required the Foundation to refer clients with positive test results to health care providers for treatment, and compensated the Foundation for such referral services. In an apparent effort to incentivize these referrals, the Foundation offered cash bonuses to employees for each HIV-positive patients they successfully directed to the Foundation for follow-up medical care. The bonuses were allegedly not available if the patients received follow-up care from a provider that was not affiliated with the Foundation. Continue Reading