Federal Regulations Relating to Kick-Backs

Solution Preview

Hi,

Interesting scenario! Let's take a closer look at each of the questions, which can then act as a tentative outline for your paper.

RESPONSE:

Scenario: You are the head administrator for Sundown Community Hospital. The board of directors has directed you to enter into a joint venture agreement with Central Park Medical Group, a physician group practice whose patient population (60%) consists of Medicare patients. To make the bid attractive, you have been authorized to offer permanent staff privileges to the physician owners as well as monthly bonus arrangements.

In this scenario, you need to analyze whether or not offering permanent staff privileges to the physician owners as well as monthly bonus arrangements violates federal regulations relating to kickbacks based on the applicable regulations and case law.

1. Identify and discuss applicable federal regulations relating to kickbacks.

A kickback is effectively a quid-pro-quo bribe ? a collusive agreement ?designed to help or influence an individual, company, or government entity. When a contractor promises to "kick back" some of the proceeds from a contract to the hiring decision-makers, a kickback has been offered. If the official suggests such an arrangement, a kickback has been solicited. Kickbacks can be in the form of money, credits, gifts, gratuity, offering of services, or anything of value. Kickbacks can take place in a variety of settings, such as politics, government, games, and the health care industry. Kickbacks are often referred to colloquially as "under the table" payments. Federal rules and regulations against kickbacks deal primarily with federal issues such as public works that receive financing from the US government. Health care-related kickbacks (drug companies kicking back to doctors, for example) are also gaining the attention of authorities. Issuing and accepting kickbacks are both serious crimes.

1. The Anti-Kickback Act of 1986 (http://www.law.cornell.edu/uscode/uscode41/usc_sec_41_00000051----000-.html) (also see http://www.dol.gov/compliance/guide/kickback.htm and http://www.dol.gov/compliance/laws/comp-copeland.htm) prohibits government contractors and subcontractors from issuing or accepting kickbacks, as well as forcing an employee to kick back part of his or her compensation. Violators may face a $5000 fine and/or five years in prison.

2. The US Code's Title 18, section 874, focuses on public works employees. The law essentially states that whoever induces any person employed in the repair of any public building, for example, to give up any part of the compensation, the person doing the inducing (soliciting the kickback) shall be imprisoned for up to five years, fined, or both. Beyond building repair, the law applies to anyone employed in any work financed in whole or in part by loans or grants from the United States.

3. Title 12, section 2607 of the US Code explicitly prohibits kickbacks and unearned fees "incident to or a part of a real estate settlement service involving a federally related mortgage loan." The law prohibits fees and kickbacks for referrals and the splitting of charges made or received ...