Ninth Circuit Holds Physician Joint Venture Liable for Anti-Kickback Violation

Extract

Hanlester Network v. Shalala (51 F.3d 1390 (9th Cir. 1995)) marks the first test of the application of the Medicare-Medicaid anti-kickback statute to physician self-referral joint ventures. The most recent development in this ongoing litigation was the April 6, 1995 decision of the Ninth Circuit Court of Appeals, holding the Hanlester Network vicariously liable for its marketing vice president's knowing and willful violation of the antikickback statute. The vice president had offered to pay physician-investors in order to induce their referrals of program-related business.

The Hanlester Network was a California general partnership comprised of corporations, clinical laboratories, and individual investors. In April 1987, it entered into a management agreement on behalf of the clinical laboratories with SmithKline BioScience Laboratories (SKBL).