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EKRA Updates: COVID-19 Testing, Employment Agreements, and More

Ever since the Eliminating Kickbacks in Recovery Act (“EKRA”) was passed by Congress in 2018, we have been waiting to see how the law is interpreted and ultimately enforced. As a reminder, EKRA seeks to eliminate kickbacks in return for patient referrals to facilities that treat those overcoming addiction, such as recovery homes, clinical treatment centers, and laboratories.[1] (NOTE: EKRA applies to all laboratories, not just those related to addiction treatment.) It is essentially an expansion of the Anti-Kickback Statute, which only applies to those services that are reimbursable through federal healthcare programs such as Medicare and Medicaid, to now also cover services reimbursable through private insurers.[2]

Guidance and enforcement actions pertaining to EKRA are still sparse.  However, this is a good time to remember that our addiction treatment provider and laboratory clients should keep EKRA top of mind. All compliance policies, training, and risk assessments for addiction treatment homes and centers, as well as all laboratories, should address EKRA. Here is a quick summary of some key developments since EKRA went into effect.

First Criminal Conviction Under EKRA – January 2020

The first criminal conviction under EKRA occurred in January 2020. In that case, a Kentucky woman received $40,000 in kickbacks from the CEO of a toxicology laboratory for referring patients for urine tests at the CEO’s lab.  

COVID-19 Testing – March 2020

Early in the COVID-19 pandemic, the Department of Justice (“DOJ”) issued a warning that EKRA also applies to COVID-19 testing sites. On March 30, 2020, the Department of Justice (“DOJ”) released information that a Georgia man, Erik Santos, was prosecuted for receiving kickbacks on a test-by-test basis from testing facilities for referring people to get tested for COVID-19 at their sites.[3] Santos ran his own marketing firm, which was supposed to help people find testing companies for a variety of services, not just for COVID-19. However, when the pandemic hit the United States, he expanded his business to those companies testing for the illness. Specifically, he received kickbacks for referring patients and then bundled them with a respiratory pathogen panel (RPP) test that was unnecessary in determining whether someone has COVID-19.[4]

Profiting off COVID-19 in particular was especially heinous, per the DOJ, because those that are affected by COVID-19 the most are people over the age of 65, a large number of which are covered under Medicare, implicating the Anti-Kickback Statute as well. Therefore, the DOJ stated that “Santos sought to maximize his kickback profits and to bleed federal health care resources at a time when Medicare beneficiaries across the United States were in dire need of coverage for medical treatment and services.”[5]

Employment Agreements – February 2021

In February 2021, a case was heard before the U.S. District Court of Hawaii that involved a medical laboratory, S&J, changing their sales team’s employment agreements from compensation-based to a flat-rate in order to comply with EKRA.[6] One of the employees argued that the laboratory did not have to change its employment agreements, and was subsequently fired for threatening to leave and refusing to sign the new agreement. The employee then sued S&J, and S&J filed counterclaims against him.[7]

Thus far, the only matter that has been resolved is whether or not summary judgment was proper in favor of the employee, for the counterclaims that S&J had brought against him.[8] Therefore, the decision of whether or not it was proper for the employment agreements to be changed to a flat-rate has yet to be decided, but the decision will impact other laboratories and other entities covered under EKRA.

Compliance Plan Updates

All healthcare providers should have a living, breathing compliance plan that addresses key healthcare regulations. For those in the addiction treatment space, as well as laboratories, it is important that these plans include EKRA compliance. 

If you have questions concerning EKRA, policies and forms you can use to comply with EKRA, or healthcare regulatory compliance in general, please contact Jeana M. Singleton at jmsingleton@bmdllc.com or 330-253-2001, or any member of the BMD Healthcare and Hospital Law group.

[1] 18 U.S.C. § 220

[2] JDSUPRA, EKRA Guidance for Clinical Laboratories in the Wake of COVID-19 Testing Surge, https://www.jdsupra.com/legalnews/ekra-guidance-for-clinical-laboratories-24711/#:~:text=EKRA%20broadly%20prohibits%20soliciting%2C%20receiving,are%20significant%2C%20and%20penalties%20per, (accessed April 22, 2021).

[3] United States Department of Justice, Georgia Man Arrested for Orchestrating Scheme to Defraud Health Care Benefit Programs Related to COVID-19 and Genetic Cancer Testing, (Mar. 30, 2020), https://www.justice.gov/usao-nj/pr/georgia-man-arrested-orchestrating-scheme-defraud-health-care-benefit-programs-related (accessed April 20, 2021).

[4] Id.

[5] Id.

[6] S&G Labs Hawaii, LLC v. Graves, 2021 IER Cases 54692, 2021 WL 621429, at *1 (D. Haw. Feb. 17, 2021), reconsideration denied, No. CIVIL1900310LEKWRP, 2021 WL 1081114 (D. Haw. Mar. 19, 2021)

[7] Id.

[8] Id.

El Contrato Escrito: La Herramienta Predilecta

No existe mejor herramienta a una disputa contractual que un documento firmado por las partes en el cual se expongan las obligaciones y acuerdos entre éstas.

New State Budget Institutes Licensure Requirement for Ohio’s Hospitals

On July 1, 2021, Governor Mike DeWine signed Ohio’s final budget codified at Ohio Revised Code 3722.01 et seq., which includes a new licensing requirement for Ohio’s hospitals. For years, Ohio was the only state in the country that did not license its hospitals. This approach will now be replaced with new, detailed requirements that will require careful review and compliance. Here are some of the highlights concerning these new changes:

Healthcare Provisions in the Ohio FY 22-23 Budget

Governor Mike DeWine signed Ohio’s Fiscal Year 2022-2023 budget bill (HB 110) into law on July 1, 2021. At almost 1,000 pages and 74.1 billion dollars, the budget lays out the State’s spending for the next two years. Below are a few highlighted provisions from the budget that will be important for the healthcare industry in Ohio

Interim Final Rule for Surprise Billing

In an effort to implement the new bipartisan No Surprises Act, on July 1, 2021, the Department of Health and Human Services (HHS), along with the Departments of Labor and Treasury, issued an interim final rule to safeguard patients against unforeseen medical bills arising from out-of-network care.

President Biden Seeks to Limit Non-Compete Agreements

Today, President Biden announced he would issue an Executive Order that calls on the Federal Trade Commission (FTC) to adopt rules to curtail worker non-compete agreements. Interestingly, a week ago, the FTC approved changes to its Rules of Practice to modernize and expedite the way it issues Trade Regulation Rules. If you have followed our alerts, we predicted the elimination of non-competes would probably happen. In 2016, then-Vice President Biden was a vocal opponent against non-compete agreements. He led the Obama administration’s initiative seeking to limit or eliminate non-compete agreements. In his presidential campaign, Biden promised to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets . . ..”