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

Client Alert
May 7, 2021

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.

Healthcare LawHospital LawJeana SingletonBMD Healthcare & Hospital Law GroupRachel Stermer
Client Alert

Ramping Up – A Quick Guide to Pressing COVID-19 Employment Law Issues

November 19, 2020As the country continues to grapple with a global pandemic that now seems to be never-ending, businesses everywhere are waking up to realize that the calming of the COVID-19 employment issues over the summer has come to an end. As cases rise exponentially in all 50 states as we head into the winter months, the number of employment issues related to COVID-19 will also increase dramatically. For these reasons, it is important that we return to the employment law basics that were covered this prior spring, while highlighting the many lessons we have learned along the way. As COVID-19 matters and concerns continue to hinder the working environment of every business, it is important that you reference this review to guide you through these tough issues and questions.Client Alert

Your Workplace Under Biden

November 9, 2020This is my favorite recurring post – Predictions of How a New Administration Will Affect Your Workplace. Four years ago, we accurately called the emasculation of the 2016 proposed FLSA Overtime Rules (the salary exemption threshold was set at $35,568 in 2019, rather than $47,476 as proposed), we forecasted a conservative shift of the NLRB and its results (a roll-back of employee rights, social media policy evaluations, and joint employer rules), and we nailed the likelihood of multiple conservative appointments to the United States Supreme Court and its long-term effects (although I completely failed to predict that my ND classmate Amy Coney Barrett would fill the final vacancy during the Trump administration). This time, the L+E Practice of BMD has decided to make it a group effort at predicting what will happen, what probably happen, and what might happen under President Biden. As always, please save this in your important files and pull it out four (or eight) years from now to judge our accuracy.Client Alert

HHS Provider Relief Funds Reporting Requirements: Important Updates Every Provider Should Know

November 4, 2020HHS continues to revise its reporting requirements for the use of the Provider Relief Funds. Providers with more than $10,000 in Provider Relief Fund payments must report on the use of the funds through December 31, 2020. The reporting window will begin on January 15, 2021 and providers must complete reporting obligations for FY 2020 by February 15, 2021 through a portal designed by HHS. However, providers that have unexpended funds as of December 31, 2020, will have an additional 6 months to use the remaining funds through June 30, 2021. These providers must submit a second and final report no later than July 31, 2021.Client Alert

Should I Apply for Phase 3 Funds? Important Considerations Every Provider Should Know

November 2, 2020On October 1, 2020, the Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers through a Phase 3 distribution. Importantly, providers that previously received HHS Provider Relief Funds or already received payments of approximately 2% of annual revenue from patient care are eligible to apply. Eligible providers have until November 6, 2020 to apply for these Phase 3 Funds. However, the question from providers continues to be: Should I Apply for Phase 3 Funds?Client Alert

CISA Ransomware Practices

October 29, 2020On October 28, 2020, the United States Cybersecurity and Infrastructure Security Agency (CISA) issued an alert warning of imminent threats to US hospitals and healthcare providers. The specific threat involves RYUK Ransomware attacks. RYUK is a novel ransomware that goes undetected by commercial anti-virus/malware detection programs. Once deployed, RYUK encrypts all data and disables systems. In short, it cripples all functionality down to phone systems and automated doors. Healthcare providers should alert their employees to remain hyper-vigilant and report any suspicious activity seen in email or on networks. It has been reported healthcare providers in New York, Pennsylvania and Oregon have been targeted in the last 48 hours. If your organization encounters issues, BMD can assist in mobilizing a response team and has contacts with forensic IT firms that are familiar with RYUK. It is advisable to engage professionals with experience dealing with this specific threat.
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