The Office of the Inspector General of the Department of Health and Human Services took it on the chin this month from an administrative law judge who disagreed with the office's enforcement of the Medicare/Medicaid antifraud and abuse law.
Judge Steven Kessel ruled against the OIG this month in a case that involved banning a clinical laboratory from performing Medicare services on the grounds that the lab was inappropriately compensating physician investors in the lab for patient referrals.
The judge ruled that for a violation of the antifraud and abuse law to occur, joint ventures must explicitly agree to make kickback payments to physicians for their referrals. The conclusions in this case would apply to all businesses providing medical services, including freestanding imaging centers, according to the OIG.
Although the decision is seen as a setback for the OIG, the office played down the ruling.
"The first thing to realize is that this is an administrative judge's decision, not a Supreme Court ruling," said Judy Holtz, OIG spokesperson. Administrative law judges review only internal matters, in this case the legality of actions taken by the DHHS.
Five of the 10 counts in the case involving a California laboratory were upheld, said Thomas S. Crane, the attorney who represented the OIG in the proceedings. The OIG has filed an appeal on parts of the ruling, Crane said.
If the DHHS safe harbor regulations outlining appropriate referring physician investments are enacted, those rules are likely to take precedence over the judge's decision regarding imaging centers, he said.
In the meantime, the OIG continues to pursue its antifraud and abuse investigations according to the way it interprets the law.
"On that basis, as well as our belief that the ruling will be overturned, we are disregarding Judge Kessel's decision," Crane said.
