Anti-Kickback Statute Defenses

Defending a charge under 42 U.S.C. § 1320a-7b is unlike defending a billing case. There is usually no dispute that money moved, no dispute that a contract existed, and often no dispute that services were delivered to patients who needed them. The contest is over purpose. The government says a payment was made to buy referrals. The defense says it was made for something else, and the proof of that is almost entirely documentary.

This page works through where a kickback case can be defeated: at the purpose element, on the evidence of valuation and performance, through the regulatory framework governing protected arrangements, on reliance and advice, and on the attribution of a structure to a particular defendant. To discuss how these apply to a specific arrangement, call (888) 437-7747.

On this page

Attacking the Purpose Element

The statute requires that a defendant act knowingly and willfully, and it contains a provision about how much a person must know of the section itself. That provision shapes the whole intent argument and should be read in the current statutory text with counsel rather than in a summary.

Courts have generally held that an arrangement can be unlawful where inducing referrals was one purpose of a payment, even where legitimate purposes existed alongside it. That approach limits the value of an argument that rests only on the presence of a commercial rationale. The doctrine is not uniform across every context and it continues to develop, so the formulation that will actually be given to a jury in the charging district should be confirmed rather than assumed.

What survives that constraint is evidence about origin. An arrangement conceived before any referral relationship existed, priced without reference to volume, offered on the same terms to parties who send no business, and documented in correspondence that discusses the work rather than the flow of patients is a different case from one whose paper trail tracks referrals.

Valuation and Performance as Evidence

Fair market value does not create immunity, but it is among the most useful evidence available. A contemporaneous valuation prepared by a qualified independent professional, based on complete information, and followed in practice is difficult for the government to characterize as a disguised payment for referrals.

Performance matters as much as price. Directorship and consulting arrangements fail in court not because the rate was wrong but because nobody can show the work was done. Time records, deliverables, meeting materials, and correspondence about the substance of the engagement are what convert a contract into evidence of legitimate purpose. Where those records are thin, the defense has to be built elsewhere, and knowing that early prevents a strategy that depends on documents which do not exist.

The Regulatory Framework for Protected Arrangements

Regulations establish safe harbors describing categories of arrangement that will not be prosecuted under the statute. Their conditions live in the regulatory text, are not reproduced on this page, and are assessed against the version in force at the relevant time rather than against a summary or an earlier recollection of the rule.

Two propositions matter for the defense. Falling outside a safe harbor is not itself a violation, so the government cannot rest on that fact alone; the arrangement is still evaluated on its purpose. And an attempt to comply, documented at the time by people who identified the applicable rule and structured toward it, is evidence about state of mind even where the attempt fell short. That is a different argument from claiming protection, and it is often the more durable one.

Advice of Counsel and Compliance Review

Many arrangements are reviewed by lawyers or compliance staff before execution. Genuine reliance on that advice can negate willfulness where the client disclosed the material facts, received advice on the specific structure, and followed it. It fails where facts were withheld, where the opinion addressed a different arrangement, or where the advice was obtained to paper a decision already made.

Asserting the defense has a cost, because it can waive privilege over related communications, and the scope of that waiver is frequently broader than clients expect. The decision therefore belongs early in the case, once the relevant files have been collected and it is clear what a waiver would put in the government’s hands.

Attribution and the Cooperating Insider

These cases usually involve several parties: a marketer, a clinician, a supplier or laboratory, and often a management entity. The indictment describes one arrangement, but the participants frequently had different information, different incentives, and different understandings of what the others were doing.

Separating a client from a structure means showing what that client was told, what the client could see, and what the client was actually paid for. Much of the government’s narrative comes from insiders who resolved their own exposure, and those accounts can be tested against the documents and against the terms of their agreements. Where the paper record contradicts the narrative, the documents usually control, because they were created before anyone had a reason to shape them.

Frequently Asked Questions

Is a written contract enough to defend an arrangement?

Rarely, on its own. A signed agreement establishes what the parties said they intended, and the government routinely charges arrangements that were documented carefully. What carries weight is evidence that the agreement described reality: that the work was performed, that the price was set independently of referral volume, and that the parties behaved consistently with the terms. Contracts that were drafted well and then ignored tend to help the prosecution, because the gap between paper and practice is itself evidence of purpose.

Does a fair market value opinion protect me?

It is strong evidence and it is not a shield. A valuation prepared contemporaneously, by an independent professional, on complete information, and actually followed makes it much harder to characterize a payment as remuneration for referrals. A valuation obtained after the arrangement began, based on facts the client selected, or disregarded in practice can undercut the defense instead. The circumstances in which the opinion was obtained matter as much as its conclusion.

What if the arrangement does not fit a safe harbor?

Falling outside a protected category is not a violation. It means the arrangement is judged on its facts and its purpose, which is the same analysis applied to most business relationships in health care. Many entirely lawful arrangements sit outside every category. What matters is the evidence of why the arrangement existed and how it operated, and whether an effort to identify and follow the applicable rule was made and documented at the time.

Can I rely on advice from my lawyer or compliance officer?

Potentially, and the conditions are strict. The advice must have been sought in good faith, based on full disclosure of the material facts, directed at the specific arrangement, and actually followed. Raising the defense generally waives privilege over related communications, and that waiver can extend further than anticipated. Because the waiver decision shapes discovery and trial strategy, it should be evaluated as soon as the file is assembled rather than close to a trial date.

How is a marketer different from a referral source?

The distinction is factual rather than semantic. Advertising and general outreach that does not target the exercise of professional judgment sits differently from compensation tied to patients delivered. Arrangements paying per patient acquired, or scaling with the volume of business generated, attract scrutiny regardless of the label on the agreement. Defending such a structure means showing what the marketer actually did, how compensation was set, and whether payment depended on services performed rather than on business produced.

The government has a cooperating witness. Does that end the case?

No. Insider testimony is powerful and it is also testable. Cooperators resolved their own exposure, they testify under agreements with defined terms, and their accounts were given after they knew what the government wanted to hear. Those accounts are compared against contemporaneous documents, against what the witness said in earlier interviews, and against the witness’s own role in designing the arrangement. Where the documents and the narrative diverge, that gap is the defense.

Working With Law Offices Of SRIS, P.C.

Kickback defense is built from the record that existed before any investigation. Valuation files, evidence that contracted work was performed, and correspondence about why an arrangement was created carry the intent argument, and they have to be located before positions are taken with the government.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

This page provides general information about defenses under the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

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These defences apply to one offence. Our page on anti kickback statute charges sets out that offence from start to finish.