Company Must Prove Bona Fide Employment Relationship AKS Safe Harbor at Trial

Case: According to the DOJ, physician-investors/employees of spinal implant distribution companies were paid a portion of company profits from sales of implant devices to Medicare patients. By then billing for spinal surgeries to implant the devices, the companies also submitted false claims. The companies insisted that its agreements with the physicians were perfectly legitimate under the Anti-Kickback Statute bona fide employment relationship safe harbor and asked the California federal court to dismiss the claims. The court refused.    Significance: The safe harbor states that “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered goods or services” doesn’t constitute “illegal remuneration” under the AKS. The evidence showed that the investor-doctors did sign an employment agreement and keep timesheets. But that wasn’t enough to justify dismissing the charge at this point. As a result, the case would have to go to trial where the companies would face the burden of proving they met all of the safe harbor requirements [United States v. Reliance Med. Sys., LLC, 2021 U.S. Dist. LEXIS 218111].