We have noted the adoption of the Eliminating Kickbacks in Recovery Act (EKRA) before. We now have a 9th Circuit Court opinion which overturns a prior district court decision regarding the legitimacy of paying commission to marketers of laboratory services. The prior case said an employed salesman could be paid commission for introducing physicians and others to the laboratory which employed him. He had no contact with any individual patients whose own specimens would be tested. In USA v. Schena (No 23-2989) (July 11, 2025) the facts were egregious. The laboratory owner paid percentage commission payments to marketers who would induce physicians to refer patients to the laboratory. The statute explicitly prohibits compensation to employees based on the amount the laboratory received for the services marketed. Worse, the representations they made about the quality of the allergy blood tests were false; they specifically targeted physicians who would not be knowledgeable about allergy testing; and they performed the maximum number (120) of tests on each patient that the equipment could produce. When the allergy testing dropped in volume because of COVID, they switched to COVID testing and misrepresented the validity of their tests there as well. The appeals court explicitly rejected the lower court opinion in the earlier case. While they concluded that a percentage-based compensation for marketing does not per se violate the statute, (despite the limitation on compensation to employees) combined with the intentional misrepresentations, the defendant’s conviction was upheld.

Following on his continuing work regarding artificial intelligence applied in healthcare, Dan Shay has authored a new article focused around fraud and abuse concerns in using artificial intelligence.  “Understanding Artificial Intelligence in Health Care: The Realities and the Risks” offers practical guidance to avoid trouble in this fast burgeoning phenomenon.

In follow up to her major article “Beyond Face Time v 2.0”, Alice Gosfield has written a shorter piece focused around fraud and abuse risks in documenting and billing for services that do not require a face-to-face interaction between physician and patient. In ”Non Face-to-Face Services: What Are The Risks?” Alice crisply elucidates the problems that can arise, how to prevent them, and the OIG’s continuing interest in how these services, which are increasingly being billed, deserve attention.