Earlier this month, the U.S. District Court for the Northern District of Georgia entered an order critiquing the government’s lack of evidence in a criminal case alleging violations of the Anti-kickback Statute (AKS). The court’s analysis provides several key takeaways for potential AKS and False Claims Act defendants and other regulated entities:

• Government Alleged “Sham” Contracts Were Meant to Disguise Kickbacks. The government alleged that a hospital entered into “sham” contracts for management and translation services with a community obstetrics clinic to disguise kickbacks for referrals, claiming that many of the contracted services were not needed, not justifiable, duplicative, substandard, or simply not rendered. The government was seeking to introduce co-conspirator statements in the case and to do so it had to show by a preponderance of evidence that a conspiracy existed. In assessing whether the government had adequately demonstrated the existence of a conspiracy to violate the AKS, the court made several findings leading to its conclusion that the government’s evidence could not prove defendants acted “willfully.”
• Application of AKS “One-Purpose Rule” Is “Unsettled and Unclear.” The government argued that under the judicially-created “one-purpose rule,” if the transaction was in any way meant to reward or increase referrals, it violated the AKS, regardless of whether the payments were legitimate, fair-market value, or even if the transaction met a statutory...

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