California Doctors Face $2.4M Reminder About Kickbacks Credit: Jeff Cohen
Backlink to: https://www.justice.gov/usao-edca/pr/fresno-doctors-agree-pay-24-million-resolve-kickback-allegations
Two California doctors recently found themselves in hot water over an “arrangement” with mail-order pharmacies that resulted in $2.4 million in settlements. Here’s what happened—and why healthcare professionals and businesses should take notice.
The doctors invested in management services organizations (MSOs) with financial returns labeled as “investment returns.” While these seemed to resemble “real” investments, the U.S. Attorney’s investigation pointed to a troubling connection—the higher the scripts sent to the pharmacies, the more financial returns the doctors received.
Key takeaways from the case:
- Alarming Pattern: Investments “paid off” multiple times the original capital, and prescribing physicians were offered new opportunities to invest in profit-making MSOs.
- Kickback Red Flags: One representative stated, “If he doesn’t write, he can’t have shares,” highlighting the clear linkage between prescribing volume and financial rewards.
- Critical Compliance Reminder: Regardless of appearances, no investment or arrangement can involve referral-based incentives, particularly when state or federally funded healthcare programs (like TriCare, Medicare, or Medi-Cal) are involved.
For Healthcare Professionals
Never exchange anything of value—whether direct payments, investment returns, or other financial incentives—for referrals or orders. Even arrangements that appear to comply with “safe harbor” rules can come under intense scrutiny if there’s a financial link to prescribing behavior.
This case serves as a stark reminder that healthcare compliance goes beyond legal advice or documentation—it requires ensuring every action prioritizes ethical care and keeps patient trust intact.
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