EKRA and Laboratory Referrals: What the Referral Payment Buys

EKRA laboratory commissions come under a federal referral-payment law that reaches private insurance as well as public health plans. The payment formula matters, but so does what the laboratory pays its sales force to do. At Arrayit, the criminal trial evidence connected percentage commissions to misleading pitches about allergy tests and the doctors who ordered them. Patients received testing they did not need, while insurers and taxpayers faced the bills. For someone inside a laboratory, that connection may run through familiar records: the sales instructions, the requisition and the calculation that turns an insurance payment into a commission.

What Does EKRA Cover?

The Eliminating Kickbacks in Recovery Act, usually called EKRA, addresses payments for referrals to laboratories, recovery homes and clinical treatment facilities. It reaches both sides of the transaction: soliciting or receiving something of value in return for referrals, and paying or offering it to induce referrals or in exchange for someone using the service.

The money can pass directly between the parties or through someone in between. The benefit can also take a form other than cash. That is why the question extends beyond a check made out to the doctor who signs the order. A laboratory operator can pay a marketer to influence that doctor, and the marketer can stand between the laboratory’s money and the patient’s referral.

EKRA covers clinical laboratories beyond addiction treatment and toxicology. The Arrayit criminal case concerned allergy testing, a useful answer to anyone who assumes that a law named for recovery leaves other clinical laboratories outside its reach.

A clinic office manager was the subject of the nation’s first EKRA conviction, according to the Justice Department’s January 10, 2020 plea announcement. The manager worked at a substance abuse treatment clinic in Jackson, Kentucky.

Commercial Insurance Laboratory Kickbacks and AKS Versus EKRA Coverage

For commercial insurance laboratory kickbacks, the difference starts with who paid for the testing. The Anti-Kickback Statute addresses services paid by federal health care programs. EKRA uses a definition covering public or private health plans and contracts. Moving a laboratory referral arrangement into the commercial-insurance side of the business therefore leaves an EKRA question to answer.

A laboratory’s payer mix belongs beside the sales arrangement when we examine it, because the words used for the commission do not tell us which program or insurer paid for the testing.

What Does the EKRA Employee Exception Cover?

The EKRA employee exception covers employees and independent contractors only when their pay does not vary with patient referrals, tests or procedures performed, or amounts billed or received from those patients’ health plans. Laboratory compensation based on receipts is one of the payment measures the exception expressly addresses.

The Anti-Kickback Statute’s employee exception is broader. It does not impose EKRA’s limits on the way an employee’s pay is calculated. We examine how the laboratory pays its representatives and what it pays them to do. The Ninth Circuit’s laboratory decision examined both the compensation structure and how the marketers obtained the business.

Why the Commission Leads Back to the Test Order

A laboratory’s commission arrangement sits across a division of responsibilities: the treating practitioner orders, the laboratory performs and bills, and a program or insurer pays. Under Medicare’s diagnostic-testing requirements, the treating practitioner maintains the medical reason for the test. The laboratory has the claim and the information it received from the orderer.

That separation gives the sales relationship its importance. The laboratory needs orders from people outside its own testing operation. A marketer can influence which laboratory receives the specimen and what the doctor believes the test will show. The commission connects that influence to the laboratory’s revenue.

The records answer different parts of the question. The sales communication shows what the representative was told to promise. The requisition shows what the practitioner ordered. The result and claim show what the laboratory performed and billed. The compensation calculation shows how the business generated a payment to the representative. Read together, they can connect a misleading sales instruction to the testing and money it produced.

The patient’s clinical need belongs in that account too. Ethical Perspectives on Urine Drug Screening for Pain Physicians, published in Pain Physician in 2014, explains why urine-test results need clinical context: a negative result can reflect infrequent medication use or diversion, depending on the patient’s circumstances. Selling a larger volume of testing and explaining what a particular patient needs are different tasks.

What Did the Ninth Circuit Decide About Laboratory Sales Commissions?

For laboratory sales commissions paid through outside representatives, the Ninth Circuit required evidence of wrongful influence over referrals beyond the percentage-payment formula. Its July 11, 2025 opinion in the criminal case involving Arrayit’s operator also held that EKRA reaches marketers who deal with referring medical professionals, even when the marketers never deal directly with patients.

This puts the actual sales work at the center of the case. A payment can buy influence over the person ordering the test through an intermediary. The court found sufficient evidence where the laboratory operator directed marketers to mislead medical professionals about the nature of the tests and the need for them.

The Machine’s Capacity Became the Testing Plan

The criminal opinion describes Arrayit testing patients for 120 allergens because that was the most its machine could process. Trial evidence showed that the full set was unwarranted for most patients. The machine supplied the size of the panel. The patient’s needs were supposed to supply the reason for ordering it.

The opinion describes an operator who believed he could bill insurers up to $10,000 for the full suite of allergy tests and paid marketers a percentage of the revenue they brought in. According to the opinion’s account of the trial evidence, they had no salary or written contracts. The operator directed them toward medical professionals with little allergy experience, including chiropractors and naturopaths. The marketers avoided allergists, who did not believe in the tests.

The marketers represented the blood tests as highly accurate and superior to skin testing. Yet the court described tests that could indicate exposure to an allergen without establishing that the patient had an allergy. The operator was paying people to sell a clinical claim the tests could not support.

The trial evidence also reached beyond the pitch. One marketer testified that marketers controlled which laboratory received the blood samples. Another described financial incentives to push blood tests and leave skin tests out of the discussion. The sales payment, the misleading claim and the control over the sample all belonged to the same arrangement.

The same criminal opinion describes how the scheme expanded in 2020: the operator directed marketers to bundle allergy tests with COVID-19 antibody blood tests. They falsely claimed that COVID and allergies could be confused and that doctors needed to test for both. When doctors ordered only the COVID test, the operator directed laboratory staff to run allergy tests anyway. The sales pitch became extra testing on the claim.

The opinion reports that Arrayit billed Medicare an average of $5,200 per patient, more than any other laboratory in the country.

A Marketer Can Influence the Referral Through the Doctor

A marketer who works through doctors and clinics is still covered by EKRA. The Ninth Circuit held that the marketer could cause a patient’s referral through the practitioner. Its lesson for an insider is concrete: what the representative said, what management directed and who controlled the referral can matter as much as the commission calculation.

Do Doctors Get Kickbacks for Ordering Tests?

Yes. Laboratory cases have involved payments to doctors and to the marketers who reach them in return for test orders. The labels can be routine business expenses: processing fees, rent or marketing services. The useful question is what the payment bought and how the testing reached the laboratory.

What Are the Whistleblower Laws in Healthcare?

For laboratory referral schemes, the False Claims Act supplies the civil whistleblower route when the conduct connects to false claims involving government money. EKRA addresses prohibited referral payments, including arrangements involving private insurance. The Anti-Kickback Statute addresses federal health care program business, and resulting claims may also support a False Claims Act case.

Those distinctions matter to the laboratory employee who sees a commercial-insurance commission arrangement alongside Medicare billing. We examine the referrals, the tests and the claims together to determine where the government-payment connection sits.

Whether your information supports a whistleblower case is a question we work through with you. We assess which claims touch government money from the payer and billing records.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is why we work from the testing, referral and payment facts when assessing a potential laboratory whistleblower case.

When You Know What the Sales Payment Bought

If you know how your laboratory’s sales promises became test orders and commission payments, speak to one of our whistleblower experts about how those commissions were earned. We work beside you to build your strongest laboratory whistleblower case around the people directing the referrals, the tests they generated and the money behind them. We bring in laboratory fraud whistleblower lawyers with the experience your case needs and stay with you through the process.