Key Takeaways
- To prove intent to induce referrals under the AKS, the Seventh Circuit applied the relevant decisionmaker test, which asks: whether the payee is in a position to exert improper influence over healthcare decisions.
- The Court reversed a jury conviction where there was no evidence that 1099 marketers (the payees) leveraged or exerted any sort of informal power or influence over any doctors’ independent healthcare decisions.
- This case provides additional theories and arguments that may be raised when defending against AKS allegations, particularly in the Fifth and Seventh Circuits.
On April 14, the Seventh Circuit in United States v. Sorensen[1] issued a decision reversing a jury conviction and narrowing the scope of the Anti-Kickback Statute[2] (AKS) as applied to marketers and advertisers. Specifically, a three-judge panel held that defendant Sorensen, who distributed durable medical equipment (DME), did not violate the AKS because the entities he paid were not in a position to “leverage fluid, informal power and influence” over healthcare decisions. The payees had no special influence over any physicians’ exercise of independent medical judgment or over any patients’ choice of healthcare provider.
To briefly summarize the facts, the payees in this case were two marketing companies that published aggressive advertisements for orthopedic braces. Patients who responded to their advertisements would be contacted by sales agents to discuss ordering braces. If the patient consented, the sales agent faxed prefilled (but unsigned) prescriptions to the patient’s physician, and the physician would then independently determine whether to sign the prescription or ignore it; the physicians, however, rejected 80 percent of the prescriptions. The marketers were paid based on the number of patient leads generated, and the DME manufacturer was paid 79 percent of the Medicare funds collected by defendant Sorensen.
The Seventh Circuit, in reversing defendant Sorensen’s jury conviction, held that there was insufficient evidence that the defendant intended to induce referrals; rather, he intended to compensate marketers for ordinary advertising services. The AKS “primarily targets payments to individuals with influence over or access to patients that lets them control or influence the patients’ choice about medical care.” But here, the marketers lacked the power to authorize medical care, and they did not “unduly influence the doctors’ decisions.”
The key fact the Court pointed to was that the physicians always had ultimate control over the patients’ healthcare choices and applied independent judgment in exercising that control. Unlike in other cases such as Polin,[3] where a sales rep was considered a decision-maker in making referrals because his recommendations to providers had never been questioned in 14 years, the physicians here declined 80 percent of the prescriptions faxed to them (i.e., they were not rubber-stamping orders). Therefore, the payees were not decisionmakers in positions to “leverage fluid, informal power and influence” over healthcare decisions. Instead, the payments made to the marketers were in exchange for ordinary and legal services, not for referrals.
Practically speaking, the government has long prosecuted certain payment arrangements involving independent contractor marketers and sales representatives in the healthcare industry because of the immensely broad scope of the AKS. However, this recent decision provides an additional step in the legal analysis involving payments to non-physicians, at least in the Seventh Circuit – whether the payee leverages fluid, informal power and influence over healthcare decisions.
[1] United States v. Sorensen, No. 24-1557, 2025 WL 1099080, at *1 (7th Cir. Apr. 14, 2025).
[2] In general, the AKS criminalizes the willful and knowing payment of remuneration to induce the referral of patients or the purchase of any item or service reimbursable in part by a federal healthcare program. 42 U.S.C. § 1320a-7b(b).
[3] United States v. Polin, 194 F.3d 863 (7th Cir. 1999).
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