Kickbacks and False Claims Act Liability: Bought Referrals, Government Bills

Anti-Kickback Statute violations can lead to False Claims Act liability when the items or services in a government claim result from the kickback. A speaker fee meant to buy prescriptions can connect a sales budget to a Medicare bill. A sales employee may know why a doctor received a payment. A billing employee may know which Medicare claims followed. The work of building a whistleblower case connects those accounts: who received the benefit, what business it was meant to buy and what the government was asked to pay.

What Does the Anti-Kickback Statute Prohibit?

The Anti-Kickback Statute prohibits knowingly and willfully offering or paying something of value to induce or reward referrals or business involving items or services payable by federal health care programs. It also reaches the person soliciting or receiving that value. Medicare, Medicaid, TRICARE and Veterans Health Administration business falls within that reach.

The HHS Office of Inspector General’s explanation makes the commercial reach clear. A kickback can be free rent, expensive hotel stays and meals, or excessive compensation for a medical directorship or consultancy. The payment need not arrive in an envelope. It can arrive under a contract and sit in an ordinary expense account.

Physicians influence which drugs patients use, which specialists they see and which supplies they receive. Buying that influence can steer patients toward the company paying the doctor. Taxpayers bear higher program costs, and honest competitors lose business to bought referrals. The Inspector General explains that the service can be medically necessary and actually delivered while the referral payment still violates the Anti-Kickback Statute.

The purpose of the payment matters. We examine the compensation, the work and the referral relationship together with healthcare kickback whistleblower lawyers who understand these arrangements.

When Does a Kickback Become a False Claim?

A claim including items or services resulting from an Anti-Kickback Statute violation is false or fraudulent under the law’s connection to the False Claims Act. Congress added that connection in 2010. The courts disagree on how closely the kickback has to be tied to the bill.

The company paying the kickback can cause a false claim even when another business submits the bill. A drug manufacturer can be responsible for prescriptions billed by a pharmacy, as the alleged payment chain in the Teva case below shows.

The referral payment and the government bill answer different questions. The Anti-Kickback Statute addresses the knowing and willful exchange. The False Claims Act also requires proof about the defendant’s knowledge of the false claim. That can include deliberately avoiding the truth or recklessly disregarding it, as well as actual knowledge.

A separate route concerns false certification: a company knowingly misrepresents compliance with a requirement that matters to government payment. The First Circuit’s decision involving Regeneron Pharmaceuticals preserves that route. We examine both how the payment affected the business and what the company represented when seeking reimbursement.

How Do Courts Connect Kickbacks to Claims?

The Third Circuit requires a connection between a patient, an illegal referral and a bill. The Eighth, Sixth and First Circuits require the kickback to have changed the business billed to the government, a test called but-for causation. Those courts ask whether the claim would have happened without the kickback.

Connecting the Patient to the Referral

In its 2018 decision involving Medco, Accredo and Hemophilia Health Services, the Third Circuit required evidence that a particular patient encountered an illegal referral or recommendation and that a reimbursement claim concerned that patient. It did not require proof that the patient would otherwise have avoided the service.

The whistleblower showed donations and identified 24 federally insured patients. The evidence did not connect any of those patients to an illegal referral. A donation record and a patient list left the decisive connection missing.

Showing What the Payment Changed

Would the claim have happened without the kickback? The Eighth Circuit required that connection in its 2022 decision involving D.S. Medical and Midwest Neurosurgeons. The court overturned the judgment because the jury had not been instructed to make it.

The Sixth Circuit applied the same test in its 2023 decision involving South Michigan Ophthalmology and Oaklawn Hospital. The allegations about a hiring arrangement did not show how it changed existing referrals or caused a claim that would not otherwise have occurred. The business already moving between the parties mattered.

In its 2025 Regeneron decision, the First Circuit also required this connection when the statutory kickback provision supplies the reason a claim is false. It kept false certification separate: what the company represented when seeking reimbursement can support a different False Claims Act theory.

The Seventh Circuit declined to choose between the competing tests in 2024. Purchased access to referral information could support liability even under the stricter test. The useful comparison separated business obtained through that information from ordinary referrals the provider already had.

False Certification Concerns What the Company Told the Payer

False certification can involve an express statement of compliance or a claim that becomes misleading because it leaves material information out. The Supreme Court’s 2016 decision involving Universal Health Services recognized liability where specific statements about goods or services became misleading half-truths through undisclosed noncompliance with important requirements.

We look at what the company represented, what the responsible payer knew and how the requirement affected payment. The First Circuit’s distinction keeps that inquiry separate from whether a kickback caused the claim.

What the Payment Records and Claims Show Together

The evidence connects the value offered or received, the referral or recommendation, the patient or item, and the submitted claim. Where the court requires it, the comparison also reaches what would have happened without the arrangement.

That is why commercial records can matter alongside billing data. Compensation records describe the benefit. Referral records connect the business to a patient or service. Claims identify the request for government payment. Communications about why a person received money can explain the purpose behind an otherwise ordinary-looking expense.

The cases put different parts of that connection under pressure. In the Third Circuit decision, the missing link was between the patients and the referral. In the Sixth Circuit decision, the allegations had not shown how the arrangement changed an existing referral stream. We work through those relationships with you, so the case reflects what the business actually did and what your knowledge can establish.

How Kickbacks Can Hide in Ordinary Healthcare Spending

Speaker programs and charitable copay funding show how a referral payment can travel through a familiar business expense. The government’s cases describe the purpose of the spending and the prescriptions it allegedly generated.

Novartis Paid for Speeches That Never Happened

Novartis agreed to pay the United States $591,442,008 in False Claims Act damages under its 2020 settlement. The company admitted that it sometimes paid doctors speaker fees for events that never took place.

It also admitted that some sales representatives intended the payments to induce more prescriptions, and that doctors sometimes rotated the paid speaker role while the same group repeatedly dined together.

The government alleged that representatives selected high-volume prescribers, pressured them to increase prescriptions and dropped some who failed to do so. The alleged federal payment connection was reimbursement for prescriptions written by those doctors.

We have a hard time calling a fee for a nonexistent speech education. The useful evidence is who selected the paid doctor, what the company expected in return and which prescriptions followed. A whistleblower first brought the matter to the government’s attention through a qui tam complaint. The FBI, HHS Office of Inspector General and Defense Criminal Investigative Service investigated.

Teva’s Alleged Copay Payments Went Through Foundations

Teva agreed to pay $450 million in a civil settlement announced in 2024 covering copay and price-fixing allegations. In the copay case, the government alleged that the company coordinated with a specialty pharmacy and copay assistance foundations to cover Medicare patients’ copays for Copaxone, its multiple sclerosis drug.

The alleged donations were directed toward patients using Teva’s own drug while the company raised its price. The government alleged that the arrangement caused false claims to Medicare. The FBI and HHS Office of Inspector General provided investigative support for the copay matter.

We see the problem with calling this charity: the alleged help kept patients buying the donor’s own drug while its price rose. Who directed the funding, whose patients received it and which drug generated reimbursement tell more than the name on the expense account.

Stark Uses a Different Connection to Payment

The Stark Law addresses physician referrals for designated health services when the physician or an immediate family member has a financial relationship with the receiving entity, unless an exception applies. The law separately prohibits billing and payment for services furnished through prohibited referrals.

That payment prohibition differs from the Anti-Kickback Statute’s resulting-from connection. A compensation arrangement can raise questions under both laws, and the False Claims Act’s knowledge requirement still needs its own examination.

Who Can File?

Employees, business partners, patients and competitors can bring a False Claims Act whistleblower case. In a kickback matter, your position may give you access to the payment decision, the referrals or the billing that connects them.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. When you are considering reporting a referral payment tied to government claims, we start with the arrangement you know and the evidence behind it.

When You Know What the Referral Cost

If you know why a doctor, referral source or intermediary received money, speak to one of our Whistleblower Experts about the business that payment bought. We connect your knowledge of the arrangement to the claims and build the case with False Claims Act whistleblower lawyers who understand healthcare referrals. We stay beside you as your partners through the case.