Texas Patient Solicitation Act Violations
An experienced health law attorney can help doctors and other healthcare professionals navigate the Texas Patient Solicitation Act. We can defend you against any related charges and if there is no pending government action against you, our legal team can help you detect and prevent risks to your medical practice.
Violations under the Texas Patient Solicitation Act can be costly and draining, jeopardizing your ability to practice medicine. Our health law practice group can guide you through every step of the way so you can focus on your patients.
Texas Patient Solicitation Act
3 Tex. Occ. Code § 102.001
The Texas Patient Solicitation Act makes it a crime to pay or receive payment for referring a patient for healthcare services. This law applies to any services offered by an individual that has a license or is otherwise registered with a Texas regulatory agency.
Definition of “Payment” Under the Act
“Payment,” under this statute means any remuneration, whether it is cash or in kind, and payment does not need to be direct or overt to run afoul of the Texas Patient Solicitation Act. If the individual knowingly participated in the exchange, he or she is at risk of prosecution. This law applies even if the referral never turned into paid medical services being rendered. For licensed insurers, government entities, and certain integrated health care delivery organizations, this law does not apply. Otherwise, there is a risk of prosecution even if the payor is an entity other than the government.
A nurse at a primary care facility identifies patients that may be interested in chiropractic services, and sends them to a chiropractor who is trying to build his business. For each patient that comes in for an adjustment, the chiropractor pays her a flat fee. This could result in prosecution under the Texas Patient Solicitation Act; however, even under different circumstances, there could still be a risk of prosecution. If the nurse and the chiropractor were friends and money never changed hands, but the chiropractor gave the nurse and her family free treatments, there may still be a violation.
What Are The Federal Statutes Related To The Texas Patient Solicitation Act?
The Anti-Kickback Statute and the Stark Law are the federal corollaries to the Texas Patient Solicitation Act.
42 U.S.C. § 1320a-7b
The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, makes it a crime to knowingly pay or receive (or offer to do so) any remuneration in exchange for a referral for services to be paid for by a federal health care program.
42 U.S.C. § 1395nn
The Stark Law, 42 U.S.C. § 1395nn, prohibits a physician from referring a patient for services to be paid by Medicare or Medicaid if the physician or his or her immediate family member has a financial relationship with the receiving entity.
In general, the Stark Law is narrower in scope than the Anti-Kickback Statute. The Anti-Kickback Statute applies to referrals from anyone and for any items or services. The Stark Law applies only to physician referrals and “designated health services.” Violations under the Anti-Kickback Statute are subject to criminal and civil penalties, while the Stark Law is only subject to civil penalties. Finally, the Stark Law is limited to Medicare and Medicaid, while the Anti-Kickback Statute includes all federal healthcare programs.
The one aspect for which the Stark Law is broader is with respect to intent. Under the Anti-Kickback Statute, the intent of the offending parties must be proven as knowing and willful; however, under the Stark Law, it is not necessary to show the physician intended the violation if the improper referral resulted in an overpayment by Medicare or Medicaid.
What Are Some Related Crimes?
Beyond the Texas Patient Solicitation Act, there is another provision of state law that prohibits the solicitation of patients. Specifically, one provision makes an offense that is limited to physicians.
3 Tex. Occ. Code § 165.155.
According to 3 Tex. Occ. Code § 165.155, a physician may not reward (through payment or otherwise) or promise to reward a person or entity that solicits or brings in a patient. Advertising is generally permissible unless it is in some way deceptive or makes unverifiable claims of superiority.
2 Tex. Hum. Res. Code § 36.002
The Texas Medicaid Fraud Prevention Act, 2 Tex. Hum. Res. Code § 36.002, makes it unlawful to make false or fraudulent claims for payment from the state Medicaid program.
According to the Texas Attorney General’s Medicaid Fraud Control Unit, some examples of activities that would be a crime under this law are:
- Billing Medicaid for procedures that were never performed
- Falsifying medical records to support the need for tests that would otherwise have been unnecessary
- Billing Medicaid for care provided to a patient that is now deceased or otherwise ineligible under Medicaid
- Billing a patient for services for which Medicaid has already paid.
7 Tex. Penal Code § 35.02
Generally, insurance fraud is also related to the specific crimes discussed above. In Texas, according to 7 Tex. Penal Code § 35.02, insurance fraud occurs when a person makes a false or misleading statement either directly or indirectly to the insurer.
The statement must be made with the intent to defraud or deceive the insurer. Under Texas law, a person only needs to submit a fraudulent claim to violate the law, meaning no payment needs to be made for the insurance fraud to occur.
What Are The Statutory Penalties If You Are Convicted Of This Crime?
Violations of the Texas Patient Solicitation Act are subject to criminal, civil, and administrative penalties. The base level of criminal offense is a Class A misdemeanor, which can result in up to a year in jail and a $4,000 fine. If the person has previously been convicted under this law or if the person was a government employee at the time of the offense, the offense becomes a third-degree felony, which carries a jail sentence of between two and ten years.
The Texas Patient Solicitation Act also creates a cause of action for non-government entities to pursue alleged violations of this law. Civil action is also a possible course of action, even if there are no government agencies pursuing prosecution. For each solicitation, the maximum civil penalty is $10,000. Additionally, expense associated with bringing the claim for civil penalties can also be added to the lawsuit.
What Are Some Of The Additional Consequences To Being Convicted?
Any violation under the Texas Patient Solicitation Act puts the person at risk for disciplinary action by the regulatory agency that issued his or her license, certification, or registration. Disciplinary action may include a warning, suspension, or revocation of the authority to practice one’s profession.
This conviction, like for any other crime, may come up with prospective employers or clients in the future. Even if a person retains his or her ability to practice and stays out of jail, his or her reputation will remain tarnished. A prospective patient that researches a doctor online before choosing to come to his or her practice will see the case, so a conviction may deter potential clients.
The process of fighting prosecution will also be taxing, and the financial losses associated with penalties and inability to work can grow quickly. Conviction will only exacerbate the challenges of a prosecution under the Texas Patient Solicitation Act.
What Are Some Of The Essential And Impactful Cases?
Some essential cases related to the Texas Patient Solicitation Act deal primarily with safe harbors or exceptions to the statute. One key area where solicitation is permitted is marketing and advertising services. While payment may be provided to secure such services, they do not run afoul of the Texas Patient Solicitation Act.
Plano Surgery Center v. New You Weight Management Center.
One key case relevant to the advertising exception is Plano Surgery Center v. New You Weight Management Center. In this case, New You Weight Management Center was receiving a share of the profits from Plano Surgery Center for patients referred for lap-band surgeries. After a contract dispute between the two parties, Plano Surgery Center contended that the contract was unenforceable because the agreement was not legal under the Texas Patient Solicitation Act. The Dallas Court of Appeals upheld the agreement, concluding that New You Weight Management Center was providing marketing services on behalf of Plano Surgery center including running ads to recruit patients, conducting informational seminars for prospective patients, and forwarding information to the surgeons.
Nursing Home Consultants, Inc. v. Quantum Health Services Inc.
This was the first case to interpret the current version of the Patient Solicitation Act, and the court took a broad interpretation of the advertising exception. Nursing Home Consultants, Inc. v. Quantum Health Services Inc., a federal case with a similar arrangement in question, had the opposite outcome. Given that the safe harbors in the Texas Patient Solicitation Act are those of the federal Anti-Kickback Statute, the Texas case is particularly impactful because it creates a greater opportunity for defense against this type of allegation.
What Are Some Defenses To Violations Of The Texas Patient Solicitation Act?
No Intent to Defraud or Deceive
In order to be convicted under the Texas Patient Solicitation Act, prosecutors must prove intent. A person must knowingly be involved in an exchange of remuneration for referrals. In a health care practice with multiple professionals, only those that are knowingly involved in the scheme can be convicted. In addition, there needs to be a remuneration or offer of remuneration. Since the prosecutor must prove that there was a solicitation or referral, a defense attorney could help show that any prospective patients came from other sources or were already patients of the defendant’s practice.
The one area where the prosecutor has a lower burden of proof is a specific situation that creates a presumption that the Texas Patient Solicitation Act has been violated. If there is a paid referral for outpatient services while a person is in an inpatient mental health or chemical dependency facility, and no outpatient services are rendered upon discharge, the presumption is created. A defense attorney can help rebut, or disprove, this presumption and show that his or her client did not actually violate the law.
The Texas Patient Solicitation Act sets out several safe harbors that create clear defenses to alleged violations. Advertising and marketing is a well-established exception to the Texas Patient Solicitation Act, and a defense attorney can help demonstrate that actions under question were actually a legal marketing arrangement and not a violation.
What Federal Agencies Detect And Investigate This Crime?
The Texas Patient Solicitation Act can be investigated at the state level by the Texas Attorney General, typically through the Medicaid Fraud Control Unit. However, if there is a federal payor that is involved in the problematic referral scheme, there will likely be a federal investigation.
The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) has an Office of Investigations that is focused on looking into potential cases of fraud, including unlawful referrals. The Office of Investigations receives tips of suspected fraud, works with the U.S. Department of Justice and other law enforcement groups to investigate, and recommends enforcement actions.
HHS OIG also has an Office of Audit Services that audits federal health care programs overseen by HHS. The Office of Audit Services also works with the Office of Investigations and the DOJ to assist on any active investigations. This applies to criminal, civil, and administrative investigations.
What Federal Agencies Are Involved In Prosecuting These Crimes?
Where it appears that there has been an improper referral scheme under the Texas Patient Solicitation Act, the Texas Attorney General could bring a lawsuit to prosecute the offending party or parties. If a federal payor is impacted, the DOJ will prosecute under federal law. In cases of Medicaid fraud, the federal agencies often collaborate with state agencies to prosecute the fraud of both the federal and state Medicaid programs.
The federal government is interested in how to update the Anti-Kickback Statute and the Stark Law to better allow for coordinated care among different providers. A task force comprised of four sub-agencies within HHS is leading this effort to solicit comments and feedback, and will recommend action as appropriate. Any changes to safe harbors at the federal level will automatically apply to the Texas Patient Solicitation Act, but other changes may require action by the Texas Legislature to remain consistent.
Why Do I Need A Lawyer?
Violations of the Texas Patient Solicitation Act can result in stress and major financial losses for you and your loved ones. A lawyer can help guide your practice when you are making contractual arrangements to help avoid the pitfalls of this law. If you are under investigation, a lawyer can help you communicate with the enforcement agency so that you are cooperative without being damaging to yourself.
If you are charged and facing prosecution, an experienced attorney can help you negotiate a deal to minimize the impacts on your career. Civil penalties can also be negotiated and settled out of court to control the costs you face. A lawyer can help reduce the chances of facing a trial.
If you do go to court for a violation of the Texas Patient Solicitation Act, your legal team will be able work with you on the best strategy for your defense. With your career and future at stake, you need an experienced team in your corner.
“Violations of the Texas Patient Solicitation Act” in the News
A Note from the Texas Attorney General on Health Care Fraud
The Texas Attorney General describes what health care fraud looks like, and the most common types of health care fraud the Texas AG prosecutes. Health care fraud includes any deceptive practices or misrepresentations made deliberately, and which result in improper reimbursement claims.
The three most common categories of health care fraud seen by the Texas AG relate to insurance billing, Medicare and Medicaid, and home health care. Kickbacks for patient referrals are considered a type of insurance billing fraud. If the insurance being billed is Medicare or Medicaid, it also falls into that category of fraud.
This article also outlines resources for consumers and others to file complaints. In general, any suspected fraud can be reported by consumers or health care providers to Texas Health and Human Services. This agency investigates allegations of waste and abuse, so potential fraud is one component of their work. If the fraud being reported is specific to Medicaid, the Medicaid Fraud Control Unit would be responsible for investigating.
601 Individuals Arrested in Nationwide Health Care Fraud Case
As part of a nationwide health care fraud enforcement action, 601 individuals were arrested. The Texas AG’s Medicaid Fraud Control Unit helped arrest 12 Houston-area individuals, in collaboration with the HHS OIG, local branch of the FBI, and the federal Medicare Fraud Strike Force.
The arrests were related to allegations of a large-scale scheme to defraud Medicare and Medicaid of more than $2 billion. The specific types of fraud included illegal kickbacks like those that violate the Patient Solicitation Act, as well as billing for services and prescription drugs that were not medically necessary.
The article identifies the past successes of the Texas AG’s Medicaid Fraud Control Unit and underscores how prolific the Texas AG is in prosecuting health care fraud, particularly with respect to Medicaid. In addition to bringing numerous successful cases and recovering large sums of money, the group also works with federal groups to pool resources and collaborate.
Texas AG and FBI Prosecute Texas Doctors for Improperly Soliciting Patients
Investigators with the Texas AG and the FBI provided information that led to two convictions and guilty plea in the Austin area. The scheme in question involved soliciting patients for psychological services, and there were three parties involved: two doctors and a man who worked at an emergency shelter.
Glen McKenzie, Jr. worked at an emergency shelter outside Austin. In that role, he identified children to refer to a facility owned and operated by Dr. William Durbin and his son Dr. David Durbin. Medicaid was then billed for mental health services provided to the referred patients. For each child referred to the facility, the older Dr. Durbin provided Mr. McKenzie 10 percent of the payment.
The younger Dr. Durbin used one patient’s information to bill for another patient. In addition, unlicensed individuals performed work that was then billed as if it were conducted by licensed professionals. The older Dr. Durbin will face up to five years for each of the three illegal kickback convictions, and his son will receive a minimum of two years and up to 10 years in prison.
Hospital Administrator in Texas Convicted of $16 Million Health Care Fraud Scheme
A hospital administrator in Texas was convicted in federal court for a $16 million scheme to defraud Medicaid. The case was prosecuted by the DOJ but came out of investigative efforts from HHS, IRS, and the Texas AG’s Medicaid Fraud Control Unit.
The individual was the administrator of a facility offering a partial hospitalization program (PHP). A PHP offers to individuals with severe mental illness an intensive outpatient treatment. Through the Atrium Medical Center facility and Pristine Healthcare, Starsky Bomer provided bribes and kickbacks to owners of group homes and to patient recruiters for sending patients to the PHPs run by Atrium and Pristine.
Bomer attempted to disguise the illegal payments as legitimate ones. Part of the fraud was due to Bomer knowing that most of the patients recruited for the PHP did not qualify for nor receive the treatment for which Medicaid was billed. Bomer was convicted of paying and receiving kickbacks, violating the Anti-Kickback Statute, and conspiracy to commit health care fraud.
Texas Hospital Accused of Illegal Referral and Kickback Scheme
A whistleblower suit was brought against Pine Creek Medical Center. The physician-owned hospital, located in the Dallas/Fort Worth area, was accused of being part of an illegal referral and kickback scheme. The hospital paid physicians that referred patients to Pine Creek for surgical procedures.
These kickbacks to the physicians were claimed by Pine Creek were done through marketing services as opposed to a direct remuneration for a patient solicitation or referral. Pine Creek paid for radio and TV ads, marketing materials, billboards, online ad campaigns, and website improvements on behalf of the referring physicians.
Pine Creek sought to settle the case by agreeing to pay $7.5 million, and of that money, over $1 million was given to the two whistleblowers who were former employees. This whistleblower lawsuit was an action brought under the False Claims Act but tied into the charges that fall under the Texas Patient Solicitation Act and related laws.