On October 24, 2018, the Eliminating Kickbacks in Recovery Act (“EKRA”) was enacted. Broadly speaking, EKRA prohibits soliciting, receiving, paying, or offering “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind,” for referring or to induce a referral to a recovery home, clinical treatment facility, or laboratory, as those terms are defined in EKRA.[1] While modeled after the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), EKRA applies more broadly to any public or private plan or contract providing medical benefits, items, or services.[2] EKRA is a criminal statute enforced by the U.S. Attorney General. A violation of EKRA may result in a fine of $200,000, up to 10 years imprisonment, or both for each violation.[3]

EKRA contains several statutory exceptions. Among them are:

[A] payment made by an employer to an employee or independent contractor (who has a bona fide employment or contractual relationship with such employer) for employment, if the employee’s payment is not determined by or does not vary by–
(A) the number of individuals referred to a particular recovery home, clinical treatment facility, or laboratory;
(B) the number of tests or procedures performed; or
(C) the amount billed to or received from, in part or in whole, the health care benefit program from the individuals referred to a particular recovery home, clinical treatment facility, or laboratory.[4]

Since enactment, there has not yet been much enforcement of EKRA. However, a recent decision sheds some light on how the courts may choose to interpret the provisions of EKRA.[5] In S&G Labs, a clinical laboratory compensated an account manager with a “a base annual salary of $50,000 and percentages of the monthly net profits generated by his client accounts and by the client accounts handled by the S&G employees who he managed.”[6] “Clients” under the contracts were not patients, but “were ‘the physicians, substance abuse counseling centers, or other organizations in need of having persons tested.’”[7] Following passage of EKRA, the laboratory attempted to renegotiate the contract, on the basis that EKRA made the contract illegal.[8]

The Court determined that the provisions of EKRA were to be “read in the context of the anti-kickback statute.”[9] The court held that EKRA applies when there is a payment for the referral of an individual patient for laboratory services.[10] Because Graves was not compensated in a manner that took into account the referral of patients, and Graves had not ability to refer patients, the court ruled that EKRA did not apply to the arrangement between the laboratory and Graves.

While this is a single case in which the EKRA itself was not the basis of the cause of action, this case offers some potential clarifications as to the types of referrals to which EKRA applies. Under this interpretation, EKRA would only apply if the payments were being made directly for the referral of patients.

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This article was originally published in Healthcare Michigan, February 2022.

Related Services:

Health Care | Health Care Antitrust

About the Author:

Jeremy Belanger is an Associate in Dickinson Wright’s Troy office. He can be reached at 248-433-7542 or His bio can be accessed here.

[1] 18 U.S.C. § 220.

[2] 18 U.S.C. § 220(e)(3).

[3] Id.

[4] 18 U.S.C. § 220(b)(2).

[5] S&G Labs Hawaii, LLC v. Graves, No. 19-00310 LEK-WRP, 2021 WL 4847430, at *9-12 (D. Hawaii Oct. 18, 2021).

[6][6] Id. at *2.

[7] Id. at *11.

[8] Id.

[9] Id. at *10.

[10] Id. at *11