What Are Kickbacks?


What are kickbacks and how can Scrofano Law P.C help you fight kickback charges? Contact for more information about kickbacks and their defenses.

Kickback Definition


A kickback is an illegal payment made to someone, often in a position of power or influence, as compensation for facilitating a service, favor, or preferential treatment. While kickbacks often involve cash, they can include anything valuable to another party, such as a credit, a gift, or an act done in return.

Kickbacks undermine an individual’s ability to make impartial decisions, whether they hold a position in a public office or work for a private company. Regarded as a type of bribery, kickbacks are unlawful practices. Engaging in either offering or accepting kickbacks can lead to criminal charges and severe repercussions.

An individual can be engaged in this practice without fully realizing they are doing something illegal. Facing kickback charges should be considered serious. Kickback charges in association with federal programs are especially severe. An individual can spend several years in a federal correctional facility if convicted. An attorney with proven white-collar crime experience may be able to help.

How Do Kickbacks Work?


Kickbacks may be considered “business as usual” in some cases, but that doesn’t make them legal. They are often disguised in the normal operations of an entity. That makes it hard to detect them.

Kickbacks are usually initiated by either the payer or the receiver. Sometimes an intermediary is involved in facilitating the transaction. The exchange of goods or services between the parties often takes place with negative intentions or bad motives in mind.

Kickback schemes occur across different areas, including:

  • Healthcare industry: Kickbacks can involve illegal payments for referrals, certain medical services, or products. That can include prescriptions for certain types of drugs or preferential treatment.

  • Government corruption: This occurs when government officials, contractors, or subcontractors enter into relationships involving kickbacks.

  • Financial institutions: Kickbacks can include different banking transactions. For example, these transactions can be related to providing mortgage loans.

  • Public works: Kickbacks can be included in contracts entered into by local governments.

Government officials are strictly prohibited from giving or taking kickbacks under federal law. Additionally, if paying kickbacks to government officials involves using mail or phone communications, that can result in additional charges such as federal fraud charges.

Conviction involving government kickbacks can have a long-lasting impact. It can affect the person’s freedom and ability to earn a living after serving their penalty. It can also result in the possible loss of professional licenses.

Laws Governing Kickbacks


Several federal laws forbid kickbacks in federal programs and government contracting. Medicaid and Medicare are probably government programs most affected by kickbacks. The Anti-Kickback Statute (AKS) and the Stark Law are two major laws that govern kickbacks in the healthcare industry.

The AKS (42 U.S.C. § 1320a-7b) covers a wide range of activities. The law prohibits anyone from offering or receiving remuneration in exchange for referrals, goods, or services. It extends to all healthcare providers that can recommend or arrange medical services. In addition, it also forbids kickbacks between a contractor and a government official.

An Anti-Kickback Statute violation can result in a fine of up to $50,000 and up to five years in jail. Additionally, an AKS violation can sometimes serve as a basis for a False Claim Act liability. The False Claim Act (18 U.S.C. § 287) makes submitting fraudulent or false claims to the U.S. government a crime. It can result in up to five years in federal prison and a fine.

The Stark Law (42 U.S.C. § 1395nn) deals exclusively with patient referrals. In other words, it forbids a physician self-referral. A physician can’t obtain personal or financial gain from referring a Medicare or Medicaid patient to a specific healthcare entity.

Penalties for a Stark violation can include civil monetary fines, exclusion from federal healthcare programs, and the requirement to repay any improper reimbursement received as a result of the violation. In some cases, individuals involved in the violation may also face criminal charges, leading to potential imprisonment or probation.

Finally, there is also the Foreign Corrupt Practices Act of 1977. It makes payments to foreign government officials to obtain or retain business unlawful.


Examples of Kickback Schemes

Suppose a government is planning an infrastructure project, such as building a bridge. Several contractors may want to be a part of that project. Not all contractors want to play fair when bidding for a government contract. Some may want to gain an unfair advantage. So, they may contact a government employee responsible for managing contractors. They can offer a kickback if an employee chooses one contractor over the others. Because of that, a better-qualified contractor may lose the bid.

A physician can also receive a kickback for prescribing certain products. Pharmaceutical companies behind the products can provide compensation for these physicians. It is one of the most common examples of kickbacks in the healthcare industry. Physicians then prescribe certain medicine to their patients for personal or financial gain. A kickback affects their ability to make an unbiased medical decision.

Cases involving doctors accused of paying or receiving kickbacks can be complex. Those accused risk significant punishment in federal prison. Don’t take these charges lightly if you are charged with an AKS or Stark law violation. You can benefit from the assistance of an experienced federal healthcare fraud lawyer.

What Is the Difference Between Bribery and Kickbacks?


Bribery and kickbacks may seem similar. They both involve the exchange of something of value for preferential treatment. And while kickbacks are often classified as a type of bribery, there are some differences between the two offenses.

A bribe is typically given to corruptly influence the actions of another person. In such cases, one party may be coerced or extorted into acting in a certain way. It is also possible that only one party benefits from the bribe transaction.

Kickbacks, on the other hand, are different. They usually involve a pre-negotiated deal. Both parties stand to gain from the illegal exchange.

However, both bribery and kickbacks can result in honest services fraud charges. This federal crime involves depriving someone of honest services through bribery or kickbacks. Possible penalties can include prison time of up to 20 or 30 years. Additionally, fines may be imposed, and defendants may be obligated to pay restitution and any damages caused by the crime.

How Can an Attorney Help With Kickback Charges?


Facing kickback charges can be frightening. A skilled attorney can help you understand your charges. They can also guide you through the process and explain the potential consequences.

An attorney can help with kickback charges by providing legal counsel, building a solid defense, and representing the individual in court. They will work to protect the defendant’s rights and seek the best possible outcome, which may include reducing charges or negotiating plea agreements.

Time can be of the essence. Reach out to a reputable attorney from Scrofano Law, PC, and schedule a consultation. 


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