Reed Smith Client Alerts

On April 23, 2003, the Office of Inspector General ("OIG") of the Department of Health and Human Services issued a "Special Advisory Bulletin" ("Advisory Bulletin") highlighting the agency’s concerns about certain types of "contractual joint venture" arrangements that may potentially reward health care providers for improper Medicare or Medicaid patient referrals in violation of the federal anti-kickback statute. According to an OIG press release accompanying the Advisory Bulletin, the agency believes certain of these arrangements "use a combination of ‘shell’ entities and subcontracting arrangements with freestanding providers of related health services, such as durable medical equipment or home oxygen suppliers, to disguise illegal kickbacks." While the OIG previously issued guidance on joint venture arrangements in a 1989 Special Fraud Alert on Joint Venture Arrangements ("1989 Fraud Alert"), the OIG expressed the view that certain types of these arrangements are proliferating.