By: Neil C. Brown
On March 7, 2020 – just as the COVID-19 pandemic was starting to grip the nation – the West Virginia Legislature passed House Bill 4422, titled “The Patient Brokering Act” (hereafter sometimes referred to as the “Act”). Perhaps due to the timing of the COVID-19 pandemic, there has been seemingly scant discussion about the Act, and its potential implications for health care providers. This article details some important highlights of the Act, and also illuminates some of the Act’s uncertainties.
The Act, codified at W. Va. Code § 16-62-1 et seq., becomes effective on June 5, 2020. It generally prohibits individuals, health care providers, and health care facilities from receiving or paying remuneration in exchange for making or receiving patient referrals, unless the arrangement meets one of several enumerated “exceptions.”1
If this framework sounds familiar, it is because the Act conceptually resembles existing federal laws which prohibit certain remuneration-for-referral arrangements. For example, the Anti-Kickback Statute (“AKS”)2 generally prohibits the “knowing and willful” payment of remuneration to induce or reward patient referrals encompassing payment from a federal health care program (e.g. Medicare, Medicaid, and Tricare).
Akin to the “exceptions” included in the West Virginia Patient Brokering Act, the AKS contains several “safe harbors” that protect certain payment and business practices – that could otherwise implicate the AKS – from criminal and civil prosecution. West Virginia’s new Patient Brokering Act even specifically references the AKS “safe harbors” in its “exceptions” section, specifying that if an otherwise prohibited arrangement meets an existing AKS safe harbor, the arrangement does not violate the Act.3
While the Patient Brokering Act is conceptually similar to the AKS, it has some critically important distinctions.
First, unlike the AKS, the Act’s prohibited remuneration-for-referral arrangements are not limited to those which encompass payment under federal health care programs. In other words, for purposes of arrangements prohibited by the Act, it is immaterial whether a governmental payor or private payor is involved. A provider cannot immunize himself or herself from the Act’s prohibitions simply by not participating in a federal health care program.
Additionally, unlike the AKS, there is no “intent” language contained in the Act. As noted above, the AKS makes it a criminal offense to “knowingly and willfully” offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services.4 This requisite intent must therefore be proven to establish a violation of the AKS.
Quite alarmingly, the words “knowingly and willfully” are not contained within the new West Virginia Patient Brokering Act. If the Act is construed as a strict liability statute – which means proof of specific intent to violate the law is not required – it would potentially make West Virginia law more stringent than the federal AKS, since prosecutors may theoretically not have to prove that an individual “knowingly and willfully” violated the Act. While at least one West Virginia court has determined that the lack of “intent” language does not necessarily make a criminal statute a strict liability statute, the factual circumstances of that case do not reflect the Act’s subject matter – hence, the issue remains unclear.5
The Act also contains several “exceptions” which are distinct from the AKS’ “safe harbors.” Some of these distinct “exceptions” include:6
- Remuneration within a group practice;
- Remuneration to insurance agents, as well as remuneration for insurance advertising and promotional gifts;
- Remuneration to a resident of an assisted living facility who refers a friend, family member, or other person with whom the resident has a personal relationship;
- Remuneration to a health care provider or facility for professional consultation services;
- Remuneration to an entity providing referral services to nurses; and
- Remuneration to certain entities that provide health care related informational services, provided that the entity meets specified conditions.
It is important to remember that the West Virginia Patient Brokering Act is a state law and is wholly separate from the AKS and other federal laws. Thus, even if an arrangement meets one of these distinct “exceptions,” a provider must separately ensure that the implicated arrangement is compliant with other applicable federal laws.
The Patient Brokering Act makes it illegal to “[a]id, abet, advise, or otherwise participate in the conduct prohibited by [the Act].”7 Thus, each individual who is involved in structuring arrangements implicated by the Act must be keenly aware of its scope and requirements – or they too can be potentially held criminally liable.
Penalties for violating the Act are set forth in two tiers, which correlate to the number of patients involved in the arrangement.8 If the arrangement involves less than ten (10) patients, the offence is a felony, punishable by a fine not to exceed $50,000, and/or imprisonment for not less than one (1) year, nor more than (5) years. If the arrangement involves ten (10) or more patients, the offence is a felony, punishable by a fine not more than $100,000, and/or imprisonment for not less than two (2) years nor more than (5) years.
The Act is a significant development in West Virginia health care fraud and abuse law. West Virginia providers – as well as those who structure implicated arrangements – must be cognizant of the Act, and must monitor any developments which clarify the Act’s uncertainties. Jackson Kelly attorneys are ready to serve as trusted advisors to help you comply with the Act, and to help you meet all your health care compliance goals.
1 W. Va. Code §16-62-2; see also W. Va. Code §16-62-3.
2 42 U.S.C. § 1320a-7b(b).
3 W. Va. Code §16-62-3(1).
4 See 42 U.S.C. § 1320a–7b(1). The AKS has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain money for the referral of services or to induce further referrals. See, e.g., United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. Greber, 760 F.2d 68 (3d Cir. 1985), cert. denied, 474 U.S. 988 (1985).
5 See Syllabus, State v. Great Atlantic & Pacific Tea Co. of America, 111 W.Va. 148, 161 S.E. 5 (1931).
6 W. Va. Code §16-62-3 et seq.
7 W. Va. Code §16-62-3(4).
8 W. Va. Code §16-62-3(2)(b).