April 2026
TO: ALL INTERESTED PHYSICIANS
The “Eliminating Kickbacks in Recovery Act,” (EKRA), was enacted in 2018. The purpose was to expand the prohibition against remunerations for patient referrals, (“kickbacks”).
The previously passed Anti-Kickback Statute, (AKS), only applies to services covered by federal and state programs, (Medicare / Medicaid). EKRA expanded the prohibition to private health insurance plans for recovery homes, clinical treatment facilities and laboratories. EKRA penalizes anyone who knowingly and willfully pays or offers to pay directly or indirectly for the purpose of inducing a referral.
As reported in the New York Law Journal, in the matter of United States v. Schena, No. 23-2989, [1] the Court of Appeals affirmed a jury conviction of a laboratory operator due to their improper payments to marketers.
The Ninth Circuit held that – similar to AKS – EKRA applies to any payments made to marketing agents who act as intermediaries, (not just to physicians who interact directly with patients). The Court found that although a percentage payment arrangement between non-professionals might not per se violate EKRA, inducing referrals through undue influence on physicians is a violation.
The Court went on to interpret what it means to “induce” a referral, (based on AKS case law), finding that “induce” equates to ANY undue influence on those making health care decisions, including directing marketers to convey false, fraudulent or misleading representations about covered medical services.
In Schena, it was found that the defendant lab directed marketers to mislead doctors about the lab’s blood testing services, in their effort to generate referrals. The marketers also misrepresented the speed and efficacy of the lab’s COVID-19 blood tests compared to PCR and claimed that COVID and allergy symptoms could be confused with each other and therefore it was necessary to test for both.
Some argue that EKRA has too broad of a reach into private payors and non-physicians, however this Court upheld a jury conviction based on EKRA, (while borrowing from AKS case law in its reasoning).
To be noted, although percentage-based payment arrangements for non-professionals are disfavored, (under AKS payments cannot take into account volume or the value of business generated), this Court found that a lack of compliance of the AKS safe harbor, is not tantamount to a violation of EKRA.
HOWEVER, if payments were made to “induce” a referral, – as a result of undue influence on the decision-making process- (as found in this matter), then EKRA is violated.
Respectfully submitted,
Schaum Law Offices