Ruling on Home Health Referrals Broadens Risk

Home health providers may have to reexamine they way they conduct and compensate for referrals or risk violating the Anti-Kickback Statute, according to a recent U.S. Court of Appeals ruling.

On February 10, the U.S. Court of Appeals for the Seventh Circuit expanded the definition of “referral,” arguing for a broader reading of the term to include not only a doctor’s recommendation of a provider, but also the doctor’s authorization of care that allows a patient to go to particular provider.  

The greater interpretation of “referral” stems from a recent Illinois court case.


In the case United States v. Patel (Case No. 14-2607), the Seventh Circuit Court affirmed the ruling of the Northern District Court of Illinois, which upheld that Kamal Patel, M.D., a Chicago-area internist, had violated the Anti-Kickback Statute when he received payments after his patients opted for Grand Home Care, a home health agency that operates in Chicago.

The Statute makes it illegal to “knowingly and willfully solicit or receive any remuneration (including any kickback, bribe or rebate) directly or directly, overtly or covertly, in cash or in kind—in return for referring an individual to a person for the furnishing” of health care services paid for by a federal health care program. 

Specifically, court documents indicated Patel had received, from Grand, payments of $400 for each signed home health certification representing a new admission, as well as payments of $300 for each signed recertification to the company.


It is important to note that the case against Patel did not dispute that all of these patients required home health care services. 

Patel argued that the most common usage of “refer” is a doctor’s recommendation that a patient see a particular specialist or provider. While this is a common usage of the term, the court indicated that is is not the only meaning.

“The Anti-Kickback Statute prohibits a doctor from receiving kickbacks that are made in return for a referral,” the court stated. “It does not require that the referral be made in return for a kickback. A reasonable fact-finder could conclude that Patel ‘willfully and knowingly’ received a kickback paid by Grand because Patel gave Grand referrals; that was all the government needed to prove.”

More than Cash

On at least one occasion, court documents revealed, Patel indicated over the phone that he was not ready to sign the certification/recertification forms for patients who selected Grand until the company’s owner, Nixon Encinares, was able to bring cash along with the forms.  

It was also revealed that Encinares and Grand Co-Owner Maria Buendia kept notebooks to keep track of Patel’s patients being treated by their company, as well as the company’s payments to Patel.

Each month, Encinares and Buendia would refer to the notebooks to determine how much money Patel “was due,” the court noted, adding that the notebooks contained entries reflecting multiple payments of over $1,000 to “Dr. Patel” or “Dr. P.”

In addition to normal cash payments, it was also noted that Patel was, at times, compensated by the company in the form of incremental loan forgiveness for an $8,000 loan Patel previously received from Grand.

The actions led to a government investigation of Grand for health care fraud in the spring of 2011. 

With the cooperation of Encinares and Buendia, who provided several recorded phone calls and meetings with individuals involved in the alleged scheme, including Patel, the government filed a 42-count indictment on November 13, 2012 against Patel, Encinares, Buendia and others, alleging violations of the Anti-Kickback Statute. 

In June 2013, Patel filed a motion for a judgement of acquittal on all counts, arguing that he had not made any “referrals” to Grand; however, on February 19, 2014, the district court denied his motion and found him guilty on all counts. 

As a result, Patel was sentenced to serve eight months’ imprisonment, 200 hours of community service and was required to forfeit $31,900 of kickback payments. 

“Patel is correct that it does not matter who first identifies the care provider; what matters is whether the doctor facilitates or authorizes the choice,” the appeals court stated in its recent ruling. Patel in fact acted as a “gatekeeper,” that ruling determined, and without his approval, the patient could not receive treatment from the provider the patient had selected.

Written by Jason Oliva

Companies featured in this article: