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Paul Zimmerman
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Chain of Kickbacks Leads to Long-Awaited EKRA Enforcement Against Marketers, Recruiters, and Treatment Facilities

Congress enacted the Eliminating Kickbacks in Recovery Act (EKRA) back in October 2018—legislation that prohibits the payment of kickbacks in exchange for patient referrals to substance use treatment providers. Nearly two years later, a handful of men who ran a triple kickback scheme are amongst the first to plead guilty for violating the law.

Two Californians (a medical doctor among them) and three others (one from New Jersey and two Marylanders) have admitted to their part in a conspiracy that involved bribing individuals suffering from substance use disorders to enter into drug rehabilitation centers—including a California facility that was owned and operated by the physician—in exchange for cash.

Three participants in the scheme ran a “marketing company” that entered into contracts with rehab clinics nationwide and maintained a network of recruiters that identified and recruited (read: paid) insured individuals to receive treatment at those facilities. The participating patients received kickbacks from the recruiters (sometimes several thousand dollars’ worth), and the recruiters in turn received kickbacks from the marketing company. The kickback chain continued as the marketing company was paid up to $10,000 per patient by the rehabs.

This is a textbook example of the treatment industry ills that EKRA is meant to combat:  here, multiple layers of  kickbacks were paid all the way down the line from treatment facilities, to marketers, to individual recruiters, and then to patients.

The conspiracy, which has cost health insurers millions of dollars and will likely result in prison time for the wrongdoers, is particularly newsworthy given the lack of known enforcement of EKRA since its enactment, as well as the sophistication of the nationwide “body-brokering” enterprise that led to the criminal charges.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.