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Should Health Care Providers Pay Attention to the Seventh Circuit’s New Definition of “Referral”? - Part One

The Seventh Circuit Court of Appeals, in the case of United States v. Patel[1], just expanded the definition of “referring” under the federal Anti-Kickback Statute[2] (“Statute”). In light of this case, health care providers should again review any arrangements with their peers and colleagues, as previous arrangements may now be considered illegal under the Statute.

The Statute is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business.[3]. In Patel, Dr. Patel did not refer his patients to a specific provider. Rather, his staff presented his patients with the brochures of 10-20 home health care services. After the patient had made a choice, Dr. Patel (through his medical assistant) would then certify that the patient needed the care requested. One of these home health care providers, Grand Home Health Care (“Grand”), paid Patel every time that he certified or recertified a patient who then used Grand’s services. After a governmental investigation, Patel was convicted of six counts of violating the Statute and one count of conspiracy to violate the Statute. On appeal, the task of defining the term “referring” in the Statute fell to the Seventh Circuit.

The word Referral circled in a dictionary showing its definitionThe Seventh Circuit adopted a broad reading of the term, choosing to apply it to both the common reading of “referring” as well as to a doctor’s authorization of care by a particular provider. What mattered to the court was that Patel was ultimately the gatekeeper who provided certification and approval for a patient to receive treatment, even if the patient had selected the particular provider him- or herself. According to the court, “it does not matter who first identifies the care provider; what matters is whether the doctor facilitates or authorizes that choice.”[4]

Thursday’s post will evaluate how other circuits have viewed the same question.

This article is intended as a summary of federal and state law and does not constitute legal advice.

[1] United States v. Kamal Patel, No. 14-cv-2607 (7th Cir. Feb. 10, 2015)

[2] See 42 USC § 1320a-7b

[3] Id.

[4] Patel, at 13.

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