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

Client Alert

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.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.