Background
On the heels of the Sixth Circuit's recent decision in Martin v. Hathaway, previously discussed on Health Law Observer, a critical issue in that case, i.e., the meaning of the term "remuneration" for purposes of the federal Anti-Kickback Statute ("AKS"), is again being litigated. Though, this time the case involves Methodist Le Bonheur Healthcare and Methodist Healthcare-Memphis Hospitals ("Methodist"), a nonprofit health care system in Memphis, TN.
Methodist has been sued by a whistleblower, with the government intervening, alleging that Methodist, in entering into certain contractual arrangements with private oncology practice The West Clinic ("West"), violated the False Claims Act by submitting claims to Federal health care programs resulting from violation of the AKS, with the AKS violation on account of Methodist allegedly paying illegal remuneration to West in exchange for referrals with the requisite scienter.
At this juncture, the case, which is being litigated in the U.S. District Court for the Middle District of Tennessee (i.e., in the Sixth Circuit, the same circuit as in Hathaway), centers on a motion for summary judgment filed by Methodist and the government's opposition to that motion. The question principally presented (as discussed below) is a burden of proof question because it involves the definition of the term "remuneration," without which there can be no AKS violation. Resolution of this question is of substantive significance beyond its importance in the litigation.1
Remuneration Notwithstanding Fair Market Value and the Question of Burden of Proof
The AKS prohibits the knowing and willful payment of "remuneration" to induce or reward patient referrals or the generation of business involving any item or service payable by a federal health care program. While both parties in the Methodist case acknowledge that the term is not defined in the statute, they disagree as to its meaning.
In its brief in support of its motion, Methodist asserts that summary judgment should be granted because, among other things, (i) it has presented evidence that all payments to West have been at fair market value and thus cannot constitute remuneration as is required for an AKS violation, and (ii) the government offered no evidence of its own regarding the fair market value of the physicians' services; this notwithstanding that, according to Methodist, the government (or if applicable a qui tam plaintiff) carries the burden to offer evidence that...
