Good-Faith Kickbacks for Patient Referrals May Violate State But Not Federal Statutes

A physician who primarily treats low-income patients was convicted by a jury of paying fees for the referral of patients who qualified for federal and state aid programs, in violation of a state statute. At trial the physician testified that she acted with a good faith belief that her payments were legal and were furthering the public policy of providing preventative health services to the underserved. She appealed the constitutionality of the conviction on several grounds. On appeal, the conviction was affirmed.


The court of appeal first held that the California anti-kickback statute, which prohibits doctors from paying for the referral of patients, is not preempted by the federal Medicaid anti-kickback statute, which prohibits the same payments but with an added requirement that the payments were made knowingly and willingly. The state statute would be subject to conflict preemption if it would be impossible to comply with both statutes. The court ruled that deleting a scienter requirement from the state statute does not make compliance with the federal statute impossible. Further, the federal statute was intended to supplement rather than supplant state anti-kickback statutes. Therefore, the statute prohibiting consideration for patient referrals was not subject to conflict preemption by the Medicaid anti-kickback statute.


The physician’s next claim was that the state anti-kickback statute as applied to her was an obstacle to Congress’s intent to encourage the provision of health care services to the needy and was therefore subject to obstacle preemption. Instead, the court found that the language of the federal statutes demonstrates that Congress had dual purposes in mind, both the promotion of access to care, and the prevention of improper practices within that scheme, including payments made for patient referrals as set out in the anti-kickback statute. Therefore, the state statute prohibiting consideration for patient referrals was not subject to obstacle preemption by the Medicaid anti-kickback statute.


The court of appeals also rejected various other claims, including that the state statute was vague in violation of due process, and that it violated the physician’s freedom of speech.


See: People v. Guiamelon, 205 Cal.App.4th 383 (Cal.App. 2 Dist. Apr 24, 2012).