Greenspoon Marder Health Law Blog: Marketing Laboratory Services

Jun 4, 2019

By Lee Lasris, Esq.

On October 24, 2018, the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) was signed into law. EKRA is one of the bills included in the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the “Support Act”). The Support Act, including EKRA, is intended to address the national opioid crisis and regulate the drug rehab industry. EKRA outlaws and imposes criminal penalties on those who receive or pay kickbacks to drug rehab facilities, recovery homes, clinical treatment of these, or laboratories. The law does not limit the definition of a laboratory to strictly those toxicology labs involved in the treatment of substance abuse, but rather includes all clinical laboratories, including those who test blood and tissue samples. The law applies both to government and private payors and specifically applies to the sales and marketing staff, including employees or independent contractors, of clinical laboratories who are compensated for generating business for such laboratories. Specifically, EKRA makes it a crime to pay employees and independent contractors based upon:

a. The number of individuals referred to the clinical laboratory.

b. The number of tests or procedures performed.

c. The amount billed to or received from a healthcare benefit program with respect to individuals referred to a clinical laboratory.

The bottom line for the clinical laboratory industry is that, to the extent that their marketing representatives are compensated based upon the above metrics, they need to examine their compensation methodology and perhaps find other ways to compensate their marketers.

EKRA differs from the Medicare anti-kickback laws in that employees and independent contractors are lumped together with no distinction between the two categories. Safe harbors typically available under the Medicare laws are not available under EKRA. Accordingly, laboratories and others in the substance abuse space should review their marketing arrangements carefully under EKRA and be prepared to terminate non-compliant arrangements immediately. Violation of EKRA is punishable by a fine of up to $200,000 and/ or imprisonment of up to 10 years for each occurrence.

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