Healthcare fraud continues to be a government priority. And right now the government is focusing on cases with healthcare business referrals in exchange for something of value.
The government usually prosecutes these cases under the federal anti-kickback statute, 42 U.S.C. §1320a-7b(b). The anti-kickback statute criminalizes the offering, paying, soliciting or receiving anything of value to induce or reward referrals of items or services paid in whole or in part under a federal healthcare program. Based on the “federal healthcare program” limitation in the anti-kickback statute, many practitioners believed or were even advised, that as long as they did not accept federal funds, arrangements that could run afoul of the anti-kickback statute were not a concern to them.
In order to combat these types of relationships, the government has begun using the Travel Act to target healthcare providers who do not accept federal money. In these cases, the federal government has indicted healthcare providers under the Federal Travel Act predicated on violations of state commercial bribery statutes, even when there are little or no federal funds involved.
The Travel Act, 18 U.S.C. §1952
The Travel Act is not a new statute. It was enacted in 1961 as part of Kennedy’s focus on organized crime. The Travel Act criminalizes traveling in interstate or foreign commerce or using the mail or interstate or foreign commerce with intent to:
(1) distribute the proceeds of any unlawful activity; or
(2) commit any crime of violence to further any unlawful activity;
(3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity….
“Unlawful Activity” is defined as (1) any business enterprise involving gambling or liquor on which the federal excise tax has not been paid, narcotics or controlled substances or prostitution offenses in violation of state or federal law, (2) extortion, bribery, or arson in violation of state or federal law, or (3) any act which is indictable under 31 U.S.C. Chapter 53, regarding certain financial transaction, money laundering, gambling, and money laundering, under18 U.S.C. §§1956 or 1957. 18 U.S.C. §1952(a) and (b) (emphasis added).
What is new, however, is the use of the bribery language in the Travel Act to target healthcare providers. Specifically, there have been a few, recent prosecutions in California, New Jersey, Florida and Texas in which the federal government has utilized this strategy. The government has indicted defendants under the Travel Act based upon a violation of the corresponding states’ commercial bribery statutes.
Because most of these prosecutions have resulted in guilty pleas, the cases generally provide little guidance. For example, in United States v. Aponte, Case No. 13-cr-00464 (D. N.J.), three doctors were indicted for accepting bribes in exchange for sending blood samples to Biodiagnostic Laboratory Services. The doctors plead guilty to Travel Act violations which were predicated on the use of the New Jersey commercial bribery statute, NJSA 2C:21-10.
In December 2016, in United States v. Beauchamp, Case No. 16-cr-016 (N.D. TX.), 21 individuals were indicted in for an alleged kickback scheme under the Travel Act and other statutes. The Travel Act violations were predicted upon the Texas commercial bribery statute, Tex. Pen. Code §32.43. The indictment focused on Forest Park Medical Center’s payments for advertising services benefiting physicians and others who allegedly referred patients to the hospital in exchange for these payments.
Several of the defendants in United States v. Beauchamp unsuccessfully challenged the government’s use of the Travel Act in motions to dismiss. The motions to dismiss asserted that (1) the Texas commercial bribery statute is preempted by the federal anti-kickback statute; (2) the Texas commercial bribery statute conflicts with the later-enacted Texas patient solicitation act, which, unlike the Texas commercial bribery statute, incorporates the federal safe harbors; (3) the Texas commercial bribery statute is unconstitutionally vague as applied because it fails to provide adequate notice of what conduct it prohibits and encourages arbitrary and discriminatory enforcement; and (4) application of the Travel Act violates principles of federalism because Texas has never prosecuted healthcare providers under the Texas commercial bribery statute. In denying the motions, the Court held the following regarding the challenges to the Travel Act: (1) the Texas commercial bribery statute was not preempted under federal law; (2) the anti-kickback statute and Texas commercial bribery statute address different conduct so they are not irreconcilable; (3) the Texas commercial bribery statute is valid and was not superseded by the Texas patient solicitation act; and (4) the Texas commercial bribery statute is not unconstitutionally vague.
In addition to the issues raised in the United States v. Beauchamp motions to dismiss, there are other concerns with using the Travel Act in healthcare fraud cases predicated on state commercial bribery statutes. First, the statutes of limitations under state commercial bribery statutes are generally shorter than the Travel Act. Consequently, the Travel Act allows the government to bring charges that are arguably time barred. Second, the penalties under the two statutes also usually differ significantly. For example, the Texas commercial bribery statute is a state jail felony, with a maximum term of imprisonment of two years. On the other hand, the penalty for violation the Travel Act is usually five years imprisonment. Finally, depending on differing state commercial bribery statutes, conduct that is legal in one state may run afoul of the Travel Act in another state. This could be difficult to navigate for a healthcare provider with a multi-state presence.
The government, white collar criminal practitioners and healthcare providers will be closely watching United States v. Beauchamp, which is tentatively scheduled for trial in October 2018. The result of this case may impact the government’s willingness to use the Travel Act in future healthcare fraud prosecutions. Regardless, based on the recent Travel Act cases, healthcare providers and those doing business with them need to remember that not taking government funds is not a shield from the government bringing a bribery case against them.
Sarah Wirskye is the founding shareholder of the Wirskye Law Firm and represents one of the defendants in United States v. Beauchamp.
 It is important to note that many state statutes, including the Texas Patient Solicitation Act, which criminalize healthcare referrals in exchange for benefits are not limited to government pay. See Tex. Occ. Code §102.001. Similarly, many federal healthcare fraud statues are not limited to providers who accept government funds. See e.g. Health Care Fraud, 18 U.S.C. §1347.