One issue that arises is when are referral fees illegal and when are they legal marketing, promotion or management fees? A recent case shows how important it is for medical professionals to obtain legal opinions before they enter into such agreements.
Chiropractors in Southern California were stunned when fifteen chiropractors were charged by the Los Angeles County District Attorney's Office for alleged illegal referral fees from January 31, 2015 to June 30, 2018. A copy
of the Felony Complaint can be downloaded here.
The defendant chiropractors are presumed innocent and a felony complaint is not evidence. The charges include:
🔺 insurance fraud in violation of Penal Code Section 550(a)(1) involving four carriers (Alliance United, Nations Insurance, Farmers Insurance and Geico Insurance);
🔺 conspiracy to commit insurance fraud in violation of Penal Code Section 550(b)(3);
🔺 participating in patient referral rebates as licensed chiropractors.
In addition, the chiropractor who is alleged to have been the organizer of the referral business was charged with additional counts of money laundering (Penal Code Section 186.10) and failure to file tax returns for certain years.
Given the provisions of the California Insurance Code, Business and Profession Code and Penal Code when it comes to accepting compensation for the referral of a patient, it is key to ensure that any referral arrangements are compliant with the law.
Posted by Tracy Green, Esq.
