Fraud Alert for PODS

The U.S. DHHS Office of Inspector General Has Issued a Fraud Alert for PODS

The Office of Inspector General (OIG) for HHS has issued a Special Fraud Alert regarding Physician-Owned Distributorships (PODs) that sell surgical implants. The POD does not manufacture the device, but merely acts as the distributor between the manufacturer and the physician.

The OIG has identified these types of entities as having potential anti-kickback statute violations. The anti-kickback statute (found at 42 U.S.C. §1320a-7(b)) generally prohibits remuneration or payment (in cash or in kind) for the arrangement of healthcare services for any federally funded healthcare program beneficiary. The State of Texas also has an anti-kickback statute in the Occupations Code, §102 that directly tracks the federal anti-kickback statute, but additionally covers all other types of beneficiaries, not just those under federal healthcare programs.

While there are exceptions to the anti-kickback statute that allow payments for some arrangements for health care services (such as employee marketers), the exceptions are narrowly tailored and specific in their requirements. Meeting these requirements is often difficult.

Further, an anti-kickback statute violation carries criminal penalties, which leads not only to potential prison/jail time, or plea agreements, but often results in the exclusion of the company and/or individuals found to be violating the anti-kickback statute from participating in any federally funded health care program. The State of Texas may exclude persons or entities from State funded programs.

If you need assistance understanding anti-kickback statute rules and regulations, consult our experienced Dallas health law attorneys for guidance.

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