Passing The “Duck Test”

The Dallas News reported on April 1, 2019, about the testimony of Michael Rimiawi, DO, a defendant in an investigation by the Department of Justice (DOJ) into alleged bribes and kickbacks involving payments to Dr. Rimiawi by Forest Park Medical Center. Dr. Rimiawi was one of twenty-one defendants in a case pending since 2016. The DOJ alleged that the defendants received more than $40 million in kickbacks that resulted in more than $500 million in charges for which the Medical Center actually collected more than $200 million.

The DOJ claimed that Dr. Rimiawi accepted $225,000 per month in kickbacks from the Medical Center in exchange for bringing his patients there. Yes, that’s right! $225,000 per month! Dr. Rimiawi said that the money he received was for marketing and that there was no expectation that he would perform surgeries at the Medical Center. Dr. Rimiawi took the stand and said that so-called “co-marketing agreements” between doctors and hospitals are legal and common in the industry. Dr. Rimiawi went on to say, “I’m totally confused why I’m even here. I never thought for one second it was illegal.”

The federal anti-kickback statute generally says that anyone who offers to give or actually gives anything to anyone in order to induce referrals has committed a crime. There are, however, a number of exceptions or “safe harbors.” These safe harbors allow providers to engage in conduct that would otherwise violate the statute, if all of the requirements of applicable exceptions or “safe harbors” are met, including payments to referring physicians.

In this case, the arrangement between Dr. Rimiawi and the Medical Center might be permissible if it met all of the requirements of the personal services and management contract safe harbor, including:
• The agreement specifies the services to be provided.
• The aggregate compensation paid to the agent over the term of the agreement is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties.
• The services preformed serve a commercially reasonable business purpose.
It’s hard to imagine what commercially reasonable services Dr. Rimiawi was required to provide under his “co-marketing” agreement with the Medical Center. It’s also hard to understand how the amount of services he provided could justify a payment of $225,000 per month, especially since Dr. Rimiawi practiced full-time as a surgeon. It certainly stretches the proverbial rubber band to try to characterize a payment of $225,000 per month as compensation at fair market value.

The anti-kickback statute was enacted in 1972. That’s 47 years ago, yet we continue to see arrangements like the one between Dr. Rimiawi and Forest Park Medical Center that prompt the response: If it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck! The arrangement simply doesn’t pass the “duck test.” The pertinent question is: Are there other arrangements still in place that don’t pass the “duck test?” If so, fix them now!

©2019 Elizabeth E. Hogue, Esq. All rights reserved.

Southern Web SupportPassing The “Duck Test”
Share this post