How are labs getting around EKRA, even Quest & LabCorp break the law.

The law says that compensation to a lab employee cannot be tied to the value of the specimens, so it can't be determined based on the number of specimens or the amount billed or the amount collected.

If you don't think this isn't something to be concerned about then you had better read some of the reports the Feds release on groups they have busted. For example, one lab was paying the marketing group per hour but they had negotiated how much they were willing to pay per specimen so ultimately the marketing group was just turning in bills for the hours needed to meet the ballpark dollar amount as if they had been paid per specimen. The Feds are not stupid and easily saw through all this. I can't tell you how many groups have approached us about being paid that way and our attorney totally squashed that idea.

Let's be honest, both LabCorp and Quest are still paying their sales force a salary and bonus where the bonus is based on growth and the dollar amount which clearly violates the law. And before someone sales that these people are W-2 it does NOT matter. The EKRA law does not allow anyone to be compensated regardless of whether they are 1099 or W-2 if that depends on a tie between the value of the specimens or number of specimens and that person's compensation.

EKRA is the most stupid law ever but it is the law of the land and the Feds are using it to bust labs and marketing groups. I personally think the only reason the Feds have not busted the big labs like LabCorp and Quest is that they don't want to take on the legal hassel. Everyone has told me "oh they are going to change the law" but its been 2 1/2 years since that law was passed so I wouldn't want to risk spending years in prison on the false hope that the law was going to be changed anytime soon. Plus how does anyone even know how they would change the law as they are not going to just repeal it. I'd love to hear of a way that is legal and fair to both the lab and the sales rep. It is just hard to compensate a rep for more productivity when you can't link what really matters which is a relationship between the value of the specimens and their compensation. It is the american way to be able to reward those people who go out and work smarter and harder and produce more but doing that with the handicap of the EKRA law is tough.

 

Thank you for the very detailed, comprehensive and well thought out post. I do have one question regarding how LabCorp and Quest are able to pay bonuses, I believe there is a carve out in EKRA where publicly traded companies are exempt. Have you heard this?

 

Yes I have heard that but its a complete lie.
I don't know where that fairly tale got started but there is no carve out for a publicly traded company.
If anyone ever tells you that, demand they prove it by providing the exact language in the law that makes that exemption and then wait for the long line of excuses as to why they can't.

We have spent a ton of money with our attorney who is nationally known and there is no carve out for publicly traded companies. I had a marketing rep today tell me that another lab had told him that if they paid him a hourly rate/salary per year that it was ok to pay a bonus per specimen. What a joke. Here is a quote I found online from a law firm about EKRA.
"Finally – and unlike the Anti-Kickback Statute’s bona fide employment exception – EKRA makes no distinction between its treatment of independent contractors and employees."

The vast majority of attorneys do not focus on healthcare because it is so specialized that unless they exclusively focus on it they will not be able to stay on top of all the changes.

There was even a national webinar hosted by a company in the laboratory arena for their lab clients all over the US. This company hired one of the leading healthcare law firms to discuss EKRA and the attorney specifically mentioned that EKRA has zero safe harbors for whether someone was W-2 or 1099. They also never mentioned any carve out for publicly traded companies. Go ahead and just Google it and look for yourself.

 

Thanks for the response

 

the feds are using EKRA as a hammer when they have other offenses on labs. They are not enforcing it separately. A sales rep will fight the law in court and will win. That is why the DOJ is not using it as they know they will lose. They can enforce it on non-lab employees that work for doctors or drug treatment centers. Once the lose in court their hammer is gone. I know if they tried to enforce this on me, I would sue them as the law is unconstitutional. Also the law contradicts itself in the first part as it pertains to safe harbors already given. It is a poorly written law that is waiting for a challenge in court!

 

Most if not all of the large labs are still paying % or by specimen. This includes Millennium, Aegis, Healthtracks, Etc.

If the government isn't going after them i would highly doubt they would be going after some small local lab that has no money to pay a major fine .

 

Actually they have used this law to prosecute individuals. BTW the cost of trying to defend yourself would no doubt cost you well over $100,000. You would not get that money back. It isn't like where someone sues you and they lose where you might be able to force them to pay for your legal fees.

I know for a fact the Feds nailed one group that where the marketing group was billing per hour for the testing that their physicians were sending to the lab. The Feds saw right through this as it always came to a fixed amount that was per test which is what the EKRA law says is illegal so right there your argument is busted.

There is nothing unconstitutional about the law at all, it is simply a law however dumb it is. Please explain exactly what is unconstitutional about this law because there isn't anything.

Yes, it is a horrible and stupid law but it is the law. Clearly you are not an attorney nor have you received any written legal opinion from a healthcare attorney telling you this. If so then please back up your statement with the name of the legal counsel who is saying this as I think we would all like to know their name. I'm sure they would appreciate the extra business they would gain.

Maybe you should read this before posting again.
5 Things You Must Know About EKRA Law in 2021 - Federal Lawyer

"Recently in September 2020, two men pled guilty for conspiracy to commit health care fraud and conspiracy to violate EKRA. Their conduct entailed an elaborate multi-state patient brokering scheme by which their marketing company recruited patient referrals in exchange for kickbacks covered by health care program reimbursements.

The DOJ plans to continue its aggressive approach in 2021, especially in the midst of the rapid increase in COVID-19-related frauds."

 

You prove my point with your writing. They have not prosecuted a W2 employee, just marketing groups or employees of prescribers. If they go after a W2 employee, they will have to go after the lab as well. Which means the lab and employee are tied together. The Feds & Congress will lose in court on this. They can't regulate pay at a private employer. It is unconstitutional. I spoke with 5 healthcare attorneys off the record on this. They all agree with me. It was off the record due to the fact that EKRA is the law and they could get in trouble for giving advice contradicting the law. COVID-19 will bring about prosecutions due to wild west some of these labs have created. They will use EKRA as the hammer to get guilty pleas.

 

"Because of the lack of federal guidance, individuals and entities are left in an uncertain state as to which conduct is prohibited and how to reconcile the differences between EKRA and other federal and state legislation prohibiting kickbacks."

This is from your link. Ambiguity is the friend of the defendant as judges hate when the Government oversteps. The Feds are not issuing guidance for the reasons I have stated. EKRA is the hammer, not the nail!

 

You make it sound as if there is some safe harbor from someone being employed as a W-2 and there isn't. If you are a W-2 getting paid a salary and are also being paid a commission based on the % of the money collected it is a violation of EKRA. All of the healthcare attorney's have said in writing that it doesn't matter whether a sales rep is a 1099 or W-2 when it comes to the compensation and EKRA.

 

No safe harbor for W2, just a legal opening due to exemptions under ADK/Stark and how poorly written EKRA is. I know what the attorney write. Talk to them privately and they are salivating at taking the Feds to court to challenge this. This is why the Feds will not issue guidance. EKRA defines a sales rep as a referrer of samples. This is not true and under current Medicare laws in the federal registry it states only licensed practitioners can refer/write orders for lab specimens. The Feds know congress screwed up. They are using this to make labs submit to sanctions/penalties they charge them with. I even spoke to a Federal Judge who is a family friend. He said this law will be thrown out the minute a W2 employed rep challenges it. You can't challenge it until you have standing. This means they must charge you.

 

I am guessing the one person on this thread crying about how you can't pay %'s or per sample is a lab owner who is trying to scare reps into leaving their current situation and come to his lab and take some bogus payment that is hidden as a base salary.

If you feel so strongly about EKRA that's great but why the smear campaign on cafephrama? Please don't say you are trying to save reps from prosecution. We all know they would go after the deep pockets of the lab first.

And those two clowns that got prosecuted for EKRA were doing other more nefarious activities and EKRA was an add on charge.

 

Wrong, I guess some people are so used to thinking everyone is up to no good that you never think anyone is trying to be ethical, honest and compliant. I agree it is a crappy law but don't think for a split second that the Feds don't go after the reps because it has been proven time after time that they do. Sure they always target those with the most money but the DA's love to nail everyone they can to make a bigger splash.

 

There’s a difference between an existing law and enforcement. You’re not going to chase after companies who are giving out bonuses to reps who are bringing in business to the company.

The law was created to prevent scammers from bribing doctors into sending specimens. The Feds know who the criminals are. They know who the ones are bribing/performing kickbacks are. They’re just allowing them to hang them selves as time goes on.

The Feds aren’t interesting in labs that doing things the right way. It’s the Tox labs who are being hammered.

 

You are an idiot and obviously don't know ANYTHING about the lab space.

 

In the beginning of EKRA it is written that nothing in the law will effect safe harbors under AKS or Stark. Later in the law it says you can't pay based on volume/revenue and that this provision trumps safe harbors in AKS or Stark. The law is poorly written and ambiguous due to the contradictory sections. This is what LC & Q rely on to get around this. AKS & Stark have safe harbors for W2 employees of labs. This is why EKRA is being enforced on 1099's, marketing companies and employees of doctors taking kickbacks. If the Feds try to go after a W2 employee of a lab or the lab itself, the law will be thrown out. They have not pursued this for a reason.

 

Yes, but they COULD pursue it. That's the problem and that's what's driving a lot of legal exploration, reorganizations of sales forces and wasted time & money.

Labs are all operating illegally by paying any sort of incentivized comp to sales reps now, based on the wording in the EKRA statute.

Labs that are creating elaborate work-arounds to make it not look like they're paying on sales productivity are not fooling anyone. As you see in a previous post, it's a transparent attempt to skirt the wording of the law.

It shouldn't take a multi-million dollar court challenge to get this poorly written law fixed. Our lawmakers are paid to work on stuff like this. We have Rubio & Klobuchar to thank for these poorly-written regulations and as a result, every lab in the country is in jeopardy now.

We shouldn't have to put up with this bush-league BS from our leaders.

 

The law is contradictory. This is why no W2 lab rep will be prosecuted. Name a W2 rep that has been prosecuted? You can't! Most healthcare lawyers suck. Labcorp & Quest have the best attorney's and they still pay commissions. Why? Because they know the law is contradictory for labs and won' hold up in court.

 

Read the entire law. The first section says nothing in the EKRA law will supersede established law in Stark or AKS. Then in the lab section it say you can't pay commission. AKS & Stark give W2 exemptions for commissions. The law is contradictory.