Restitution in anti-kickback cases is a highly under-litigated issue. In these cases, it is not uncommon to agree to stipulate to the amount of restitution based on the total amount of the client’s gain. Although this might be beneficial for the client depending on the specific scenario, the amount of gain, as a matter of law, is not the proper barometer for measuring restitution in AKS cases.
To the contrary, in AKS cases, the Government has the burden of proving that the “victim,” usually a Government health care program, sustained an actual loss because of fraud. 18 U.S.C. Section 3664(e). United States v. Vaghela, 169 F.3d 729 (11th Cir.1999); See United States v. Martin, 195 F.3d 961, 968 (7th Cir.1999); United States v. McIntosh, 198 F.3d 995, 1003 (7th Cir.2000); United States v. Liss, 265 F. 3d 1220 (11th Cir. 2001); United States v. Yevgeniy Pikus, 13-Cr-00025-BMC (E.D.N.Y. June 16, 2015)
This is fundamentally different than the calculation the district court must perform in determining a client’s sentence under the AKS which is determined by calculating the “improper benefit conferred.” Depending on the specific factual scenario, that benefit may be limited to the client’s gain (the total amount of kickbacks received) or if the client worked for a company (e.g. for example a marketer working for a pharmacy) some courts might determine that the amount paid to the pharmacy as a result of the client’s marketing efforts represents the improper benefit conferred.
I believe that latter view of the application of the AKS Guidelines is incorrect and courts are using loss as a proxy for the improper benefit conferred. The ill gotten gains is what the Sentencing Commission sought to punish. Otherwise why else would the Commission create 2 separate Guidelines Sections?
The AKS is also not one of the offenses covered by the Mandatory Victims Restitution Act (MVRA) found at 18 USC Section 3663A because it is notan offense which involves “fraud or deceit.” The AKS, even a conspiracy to pay or receive kickbacks under Section 371, does not include fraud, deceit, or intent to defraud as an element of the offense. So, the Government must do more than simply demonstrate that on these dates, the client received these amounts of money, and received these amounts of money by check or wires. That simply is not good enough to prove a loss, as opposed to a gain which presumably will be undisputed since bank records and other documentary evidence should easily prove that amount of gain.
Equally as important, how does the Government prove a loss caused by fraud in a kickback case?
The Government must either
(1) demonstrate that services were never provided (e.g. home health care never provided or prescriptions never dispensed);
(2) the billing for the services was somehow fraudulent – (a) doctor never authorized the service and someone forged her signature (b) doctor or provider submits a claim for a service which does not represent the actual service provided but services were, in fact, provided (also known as “upcoding”); or
(3) demonstrate that the services were medically unnecessary and/or therefore the specific payer (Medicare/United Health Care) would never have paid for those services.
The first category is the easiest and there should be plenty of evidence to show the fraudulent billing or lack of services provided.
The second category also does not demand much from the Government. Nonetheless, in an upcoding scenario, the client should be able to offset the total loss/restitution amount by illustrating that, had the provider billed for service A and not service B, the government or private payer would have paid for those services and would have paid a set amount of money. If the client is able to demonstrate this point, then the court should offset the loss amount (e.g., service A $100, service B $65 – loss is $35).
This last category of “fraud” is the least compelling in my view unless the provider is the defendant. An excellent discussion of this issue is also found in a recent decision, United States v. Kim Ricard, No. 18-30047 (5th Cir. April 26 2019) (Slip Op.) (“Instead, the government relied solely on the Medicare billing data that showed the total amount paid to Progressive. Additionally, even if the government had pointed to this “red flag” testimony at sentencing, it amounts only to speculation that the services provided were illegitimate. There is no factual evidence, such as testimony from patients or medical personnel at Progressive, or even from the government, which suggests that Progressive was not providing the medical services it billed to Medicare.”)
Even in those cases, where the provider is the defendant, the Government should be ready to introduce expert testimony that the services were not “medically necessary” or implement a reliable extrapolation theory which incorporates actual data.
How else can the Government meet its burden of proving a service was medically necessary? Well, lets focus on 1 example: an optometrist bills for eye exams. A historical review of his eye examination history reveals that, over the course of 24 months where he was in the office 5 times a week for 10 hours a day, he spent no more than 28 seconds on an eye exam. Under these circumstances, the Government would likely be able to prove that either (a) not all of those eye exams were performed or (b) they were worthless and likely did not satisfy the applicable guidelines for reimbursement.
Accordingly, if the Government is not able to introduce reliable and specific evidence of the loss caused by unnecessary services or services which lack any legitimate value, especially in cases involving multiple services or multiple patients, without expert testimony or extrapolation or both, district courts should determine that the Government has not met its burden of proof.