Kickbacks: CA Physician Paid for Referrals

July 27, 2012 | Strategic Insights for Ambulatory Care


A California appellate court upheld a three-year probation sentence against a physician who paid several “marketers” to bring patients to her clinic. The physician had argued that conflicting state and federal statutes made it impossible for her to comply with their antikickback regulations. The physician, a native of the Philippines, established her pediatric specialty practice in California in 2003 and treated primarily low-income Spanish-speaking patients. After initially having difficulty building a patient base, the physician engaged marketers from 2007 to 2009 who brought approximately one-third of her daily patients. When the marketers brought patients who subsequently enrolled in state or federal programs to subsidize care for at-risk children, the physician used personal checks to pay the marketers $20 per patient. The physician reported the payments as business expenses on her federal and state tax returns and issued federal 1099 tax forms to the marketers; she testified that she did not consider the payments to be “kickbacks, rebates, or commissions.” The physician was charged with several violations of state antikickback laws, including grand theft, presenting false claims, receiving unlawful remuneration, and offering rebates for patient referrals.

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