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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

Changes to FFCRA Paid Leave: Congress’ Revisions to Employment COVID-19 Leave Benefits Signals the Light is at the End of the Tunnel

December 28, 2020Late in the evening on December 27th, President Trump signed into law the government’s $900 billion COVID-19 relief package (the “Stimulus Bill”). Among other economic stimulus benefits, the Stimulus Bill contains the $600 stimulus checks that will be issued to eligible individuals as well as, relevantly, changes to the Families First Coronavirus Response Act (“FFCRA”). The FFCRA was implemented in April 2020 and provided benefits to individuals who missed work as a result of an actual or suspected COVID-19 illness or to care for a child when their school or childcare service was closed because of COVID-19. Importantly, the Stimulus Bill extends eligibility for employer payroll tax refunds for leave payments made to employees on or before March 31, 2021 under the FFCRA, signaling to the American people that Congress believes many of the employed public will be vaccinated by this time, the light at the end of the tunnel. However, the Stimulus Bill does contain a caveat that employers are no longer required to provide FFCRA leave benefits after December 31, 2020, but if they do, they will receive the payroll tax credits, up to the maximums provided in the FFCRA, for payments made prior to April 1, 2021. Below we provide a list of questions and answers we received to date following the passage of the Stimulus Bill. We expect the U.S. Department of Labor (“DOL”) to issue additional questions and answers as the Stimulus Bill is implemented, and we will update this Client Alert as these are received.Client Alert

Healthcare Speaker Programs: New OIG Alert

December 11, 2020In a rare Special Fraud Alert issued on November 16, 2020 (the “Alert”), the Office of Inspector General (“OIG”) urged companies who host speaker programs to reassess their programs in light of the “inherent risks” associated with these activities. The Alert reports that, in the last three years, drug and device companies have reported paying nearly $2 billion to health care professionals for speaker-related services.Client Alert

Value-Based Care Advances – CMS Issues New Final Rules for Stark and Anti-Kickback Statutes

December 11, 2020The Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) issued two highly anticipated (and quite extensive) Final Rules to reform the Stark Law and Anti-Kickback Statute (“AKS”) regulations. The Final Rules generally take effect on January 19, 2021. The Final Rules include new safe harbors for the AKS and new exemptions to the Stark Law to allow for greater flexibility. According to the HHS, the goal of updating both laws is to make it easier for providers to engage in care coordination and value-based care programs without running afoul of the statutes. Please note that this client alert could not cover the full extent of the Final Rule changes so please contact your BMD Healthcare attorney with questions.Client Alert

Mandatory Filings Under CFIUS New Rules

December 11, 2020On September 15, 2020, the Committee on Foreign Investment in the United States (“CFIUS”) promulgated a final rule modifying its mandatory declaration requirements for certain foreign investment transactions involving “TID US businesses” (sensitive U.S. businesses dealing in critical technologies, critical infrastructure and sensitive personal data) dealing in “critical technologies” – i.e., U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies. The new rule also makes amendments to the definition of the term “substantial interest” (used to determine whether a foreign government has a substantial interest in an entity). The final rule became effective on October 15, 2020.Client Alert

IRS Guidance on Employee Retention Credit

December 11, 2020The Employee Retention Credit created under Section 2302 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Since the adoption of the CARES Act, employers have expressed concern that if one employer acquires another employer that previously received a PPP loan, the acquirer’s entire aggregated group may no longer be eligible to claim the Employee Retention Credit.
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