An accountant who enabled the owner of a Long Beach hospital to pay more than $40 million in illegal kickbacks to doctors, in exchange for them referring thousands of spinal surgery patients, was sentenced to 15 months in federal prison for a tax offense related to the scheme. He was also ordered to pay an $8,000 fine and forfeit $500,000 in proceeds from the scheme.
The accountant was the financial officer for various companies controlled byāÆthe owner of a hospital in Long Beach, California. The owner of the hospital conspired with doctors, chiropractors, and marketers to pay kickbacks in return for the referral of thousands of patients to the hospital for spinal surgeries and other medical services paid for primarily through the California workersā compensation system.
During its final five years, the scheme resulted in the submission of more than $500 million in bills for kickback-tainted surgeries. To date, 22 defendants have been convicted for participating in the kickback scheme.
Beginning in 1997, the accountant supported the kickback scheme by facilitating payments to individuals receiving bribes and kickbacks pursuant to sham contracts that were used to conceal the illicit payments. He falsified tax returns by characterizing the bribes as legitimate business expenses. He was a salaried employee and did not directly profit from the kickbacks and bribes.
In January 2018, the hospital owner was sentenced to five years in federal prison for his crimes in this matter. He is awaiting a March 2023 sentencing hearing after pleading guilty to three criminal charges forāÆviolating a court forfeiture orderāÆin the hospital case by illegally selling his luxury cars.
Issue:
Under federal and state anti-kickback statutes, you may not knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward for referrals of federal or state healthcare program business. The prohibition against kickbacks applies to those who pay for referrals and to those who receive them. Kickbacks can take various forms, such as bribes or rebates. Failure to promptly report a kickback can result in lawsuits, fines, and other sanctions.āÆAll members of the healthcare team should be knowledgeable of what may be considered an illegal kickback. Confirm that staff are aware that a violation can be illegal, whether it is intentional or not intentional. A kickback, or failure to report a kickback, can result in fines and other sanctions, including placement on the OIGās List of Excluded Individuals and Entities.
Discussion Points:
- Review your policies and procedure for preventing and reporting an anti-kickback statute violation. Update your policies and procedures as needed.Ā
- Train all staff on federal and state anti-kickback statutes and what can be considered a kickback. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Document that the trainings occurred and place in each employeeās education file.Ā
- Periodically audit to ensure that staff are aware of what should be done if they suspect an illegal kickback has occurred, whether intentionally or unintentionally.Ā
