In a speech at the American Bar Association’s Physician Legal Issues Conference on June 11, 2105, a representative from the Office of Inspector General (OIG) noted that the OIG is currently hiring attorneys to gear up to pursue claims against physicians under the OIG’s administrative penalty authorities. This means that the OIG will not wait for whistleblowers to pursue qui tam actions. Instead, the OIG will target physicians on its own. These comments come on the heels of the OIG issuing a Fraud Alert titled “Physician Compensation Arrangements May Result in Significant Liability. (For more information, visit our recent blog on this Fraud Alert, available here. Physicians should review their relationships with vendors and other entities to which they refer for compliance.
During the same speech, a representative of the U.S. Department of Justice offered practical guidance for physicians and their legal counsel. He discussed seven factors to consider when determining if these physician-vendor relationships are compliant. The seven factors include:
1) Physician Selection: How were the physicians selected by the vendor? Were they selected because of the physicians’ ability to refer patients to the vendor?
2) Purpose of the Relationship: Is the inducement of referrals one purpose of the relationship – even if there are other reasons for the relationship?
3) Referrals: What was the referral relationship between the physician and the vendor before, during and after the relationship? Does the physician track his or her referrals to the vendor? If so, why? Does the arrangement include consequences for a low volumes referrals or bonuses for a high volume of referrals?
4) Business Structure: Is the vendor a shell entity, is business actually transacted, does the entity even own equipment? What kind of capital contribution was made to get the entity up and running?
5) Compensation: Is the physician’s compensation fair-market value, does it vary with the volume or value of referrals, was it negotiated in an arm’s length transaction? If multiple physicians are involved, how is each physician compensated relative to the other physicians? If the compensation is not the same for all physicians but their responsibilities are the same, then why is, for example, Physician A being paid more than Physician B?
6) Capital Contribution and Risk: Is the physician’s investment nominal? Is the return on investment proportional to the ignition investment contribution? Is the physician’s level of risk proportionate?
7) Disclosure: Are patients informed of the relationship? Even within the joint venture itself, is everything transparent to the parties involved?
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