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California Prohibits Kickbacks and Fee-Splitting

By Michael H. Cohen, Esq.

California law prohibits fee-splitting and kickbacks, but it does allow payments based on fair market value that are not tied to patient volume.

 

The key is "B&P 650."

California Business & Professions Code Section 650 states:

(a) Except as provided in Chapter 2.3 (commencing with Section 1400) of Division 2 of the Health and Safety Code, the offer, delivery, receipt, or acceptance by any person licensed under this division or the Chiropractic Initiative Act of any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person, irrespective of any membership, proprietary interest, or coownership in or with any person to whom these patients, clients, or customers are referred is unlawful.

(b) The payment or receipt of consideration for services other than the referral of patients which is based on a percentage of gross revenue or similar type of contractual arrangement shall not be unlawful if the consideration is commensurate with the value of the services furnished or with the fair rental value of any premises or equipment leased or provided by the recipient to the payer.

(c) The offer, delivery, receipt, or acceptance of any consideration between a federally qualified health center, as defined in Section 1396d(l)(2)(B) of Title 42 of the United States Code, and any individual or entity providing goods, items, services, donations, loans, or a combination thereof to the health center entity pursuant to a contract, lease, grant, loan, or other agreement, if that agreement contributes to the ability of the health center entity to maintain or increase the availability, or enhance the quality, of services provided to a medically underserved population served by the health center, shall be permitted only to the extent sanctioned or permitted by federal law.

(d) Except as provided in Chapter 2.3 (commencing with Section 1400) of Division 2 of the Health and Safety Code and in Sections 654.1 and 654.2 of this code, it shall not be unlawful for any person licensed under this division to refer a person to any laboratory, pharmacy, clinic (including entities exempt from licensure pursuant to Section 1206 of the Health and Safety Code), or health care facility solely because the licensee has a proprietary interest or coownership in the laboratory, pharmacy, clinic, or health care facility, provided, however, that the licensee's return on investment for that proprietary interest or coownership shall be based upon the amount of the capital investment or proportional ownership of the licensee which ownership interest is not based on the number or value of any patients referred. Any referral excepted under this section shall be unlawful if the prosecutor proves that there was no valid medical need for the referral.

(e) Except as provided in Chapter 2.3 (commencing with Section 1400) of Division 2 of the Health and Safety Code and in Sections 654.1 and 654.2 of this code, it shall not be unlawful to provide nonmonetary remuneration, in the form of hardware, software, or information technology and training services, as described in subsections (x) and (y) of Section 1001.952 of Title 42 of the Code of Federal Regulations, as amended October 4, 2007, as published in the Federal Register (72 Fed. Reg. 56632and 56644), and subsequently amended versions.

(f) "Health care facility" means a general acute care hospital, acute psychiatric hospital, skilled nursing facility, intermediate care facility, and any other health facility licensed by the State Department of Public Health under Chapter 2 (commencing with Section 1250) of Division 2 of the Health and Safety Code.

(g) A violation of this section is a public offense and is punishable upon a first conviction by imprisonment in a county jail for not more than one year, or by imprisonment in the state prison, or by a fine not exceeding fifty thousand dollars ($50,000), or by both that imprisonment and fine. A second or subsequent conviction is punishable by imprisonment in the state prison or by imprisonment in the state prison and a fine of fifty thousand dollars ($50,000).

            The excepted provision, Cal. Health & Safety Code Section 1400, states:

(a) It is unlawful for any person, association, or corporation to establish, conduct or maintain a referral agency or to refer any person for remuneration to any extended care, skilled nursing home or intermediate care facility or a distinct part of a facility providing extended care, skilled nursing home care, or intermediate care, without first having obtained a written license therefor as provided in this chapter from the director or from an inspection service approved by the director pursuant to Section 1257.

(b) It is unlawful for any person, association, or corporation to establish, conduct, or maintain a referral agency or to refer any person for remuneration to any person or agency outside a long-term health care facility, as defined in Section 1418, for professional services for which the long-term health care facility does not employ a qualified professional person to furnish a specific service, including, but not limited to, laboratory, diagnostic, or therapy services, unless the long-term health care facility complies with current federal and state laws regarding the provision of these services and all of the following conditions are met:

 (1) The services will be provided in accordance with professional standards applicable to the provision of these services in a long-term health care facility.

 (2) The long-term health care facility assumes responsibility for timeliness of the services.

 (3) Services are provided or obtained only when ordered by the attending physician and a notation is made in the resident's medical chart reflecting that the service has been provided to the resident.

 

If you have legal questions concerning telemedicine and telehealth practices, or about kickback and fee-splitting legal issues in New York, California, Massachusetts, Washington DC, and other states, contact a lawyer who knows the rules.

Consult an experienced health care law attorney who knows complementary medicine and integrative medicine for legal advice pertaining to any project involving allied health or CAM professionals.

***

Michael H. Cohen is a health care law and business law attorney providing business legal advice to green entrepreneurs and companies, and health care law advice to businesses and physicians, acupuncturists, naturopathic doctors, homeopaths and others in the holistic health, wellness, and green industries. He works with telemedicine, medical devices, and cutting-edge technologies and gives clear legal advice to grow your business.

As a founding attorney of the Global Vision Law Group, he represents businesses poised for vertical lift, whose leaders are conscious, intuitive, and committed to shaping a better world. Michael also advises medical spas and integrative medicine clinics, physicians, chiropractors, naturopathic physicians, massage therapists, energy healers, nutritionists and herbalists, dietary supplement and cosmetics companies, and businesses with bio-energy and other technologies and medical devices. The website also offers the Entrepreneur's Legal Toolkit as a series of legal guides to businesses.

See what clients say about his work, visit the Legal Services page for information on business law and healthcare legal services where alternative billing arrangements (such as a flat rate or project fee) can be discussed for discrete projects such as incorporation for entrepreneurs, review and drafting of business contracts, trademark, and package health law services.

Our healthcare law and business law firm also provides special expertise to attorneys and law firms whose clients are involved in wellness industry projects or who require guidance regarding fee-splitting, Stark, anti-kickback, medical board discipline, and other health law and regulatory compliance issues.

To speak with a lawyer about health care law issues pertaining to complementary and alternative medicine, or to consult a business lawyer about laws and legal issues for entrepreneurs and new enterprises that are seeking legal advice, contact the Global Vision Law Group today.

 

Full post as published by Complementary And Alternative Medicine Law Blog on September 17, 2010 (boomark / email).