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Healthcare Alert: EMR donations violate Washington Anti-Rebate Statute

In an Attorney General opinion dated November 20, 2012, the Washington Attorney General ruled that the donation by a laboratory to a referring physician of 85 percent of the software cost of the physician’s electronic health record, when the physician either continued a referral arrangement with the laboratory or subsequently initiates a referral relationship with the laboratory, violates the Washington Anti-Rebate Statute. The Washington Anti-Rebate Statute (RCW 19.68.010) provides that it is unlawful to “request, receive, or allow, directly or indirectly, a rebate, refund, commission, unearned discount or profit by means of a credit or other valuable consideration in connection with the referral of patients . . .” The Washington Attorney General considered a donation by a laboratory to a referring physician for 85 percent of the electronic health record software expenses as well as a donation to a physician practice transferred its referrals to the donating laboratory. While such a donation can be structured to fall within the applicable exception under the Stark Law and the applicable safe harbor under the Medicare and Medicaid Anti-Kickback Law, the Washington Attorney General ruled that such a donation would still be in violation of RCW 19.68.010. 

The State Attorneys General of Missouri and Pennsylvania also have issued opinions that question the legality of EMR donations, and regulations in New Jersey and New York also place limitations upon EMR donations. Many states have fraud and abuse laws, and these recent Attorney General opinions raise the possibility that other state Attorney Generals could issue similar opinions.

For more information, please contact:

Jane Pine Wood

Healthcare Practice

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© 2012 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.