42 USC 1320a-7b — The Federal Anti-Kickback Statute

42 USC 1320a-7b, known as the federal Anti-Kickback Statute (AKS), makes it a felony to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward the referral of business — or the purchase or ordering of items or services — reimbursable under a federal health care program like Medicare or Medicaid. Each violation carries up to 10 years in federal prison and a fine of up to $100,000, and the statute reaches both the person who pays a kickback and the person who receives it. Critically, it is an intent-based crime, which is exactly where most defenses begin.

This page explains what the Anti-Kickback Statute prohibits, the elements the government must prove, the criminal and civil penalties, the role of regulatory “safe harbors,” and how these cases are defended. It is written as a plain-English legal reference for anyone trying to understand a kickback allegation in California. To see how we approach defending these matters, visit our federal health care fraud defense page.

Summary of the Statute

The Anti-Kickback Statute is codified at 42 USC 1320a-7b(b), within the Social Security Act’s fraud and abuse provisions. Its purpose is to keep medical decision-making free from financial influence — to ensure that referrals, prescriptions, and orders are driven by the patient’s needs, not by who is paying whom. When money changes hands to steer federal health care business, Congress concluded, the integrity of the entire program is at risk.

The breadth of the statute is what makes it so dangerous in practice. “Remuneration” means anything of value, in cash or in kind, direct or indirect. It is not limited to envelopes of cash; it can include below-market office rent, inflated consulting or medical-director fees, free or discounted services and equipment, lavish meals and travel, or sham employment. The statute applies to any item or service reimbursable under a federal health care program, as defined in 42 USC 1320a-7b(f), which covers Medicare, Medicaid, TRICARE, and similar programs.

Two points often surprise people. First, unlike the physician self-referral law, the AKS applies to anyone — not just physicians — and to a far wider range of conduct. Second, it is frequently charged alongside the central fraud statute, because a claim that results from a kickback is, by law, also a false claim. For the relationship between the two, see our reference page on 18 USC 1347 health care fraud.

Elements the Government Must Prove

To convict under the criminal Anti-Kickback Statute, prosecutors must prove the following beyond a reasonable doubt. Each is also a point the defense can contest.

1. Knowing and Willful Conduct

The defendant must have acted knowingly and willfully. A 2010 amendment clarified that a person need not have actual knowledge of the statute itself, or a specific intent to violate it, to be convicted. Even so, the government must still prove the defendant knew the conduct was wrongful — and a genuine, good-faith belief that an arrangement was lawful remains a meaningful defense. This is the battleground in most AKS cases.

2. Offering, Paying, Soliciting, or Receiving Remuneration

The conduct must involve remuneration — something of value — that was offered, paid, solicited, or received. The defense frequently disputes whether a payment was truly remuneration for referrals at all, or instead fair-market-value compensation for legitimate services rendered or property provided. The economic reality of the arrangement, not just its label, is what matters.

3. Intent to Induce or Reward Referrals

The remuneration must have been intended to induce or reward referrals, or the purchasing or ordering of covered items or services. Here courts apply the widely adopted “one purpose” test: the statute is violated if even one purpose of the payment was to induce referrals — even where the arrangement also served a legitimate business purpose. That rule is what makes mixed-motive arrangements so legally perilous, and why careful structuring matters.

4. Connection to a Federal Health Care Program

The referred or ordered business must be reimbursable under a federal health care program. Where only private-pay business is involved, the federal AKS does not apply — though state anti-kickback laws may reach the same conduct.

Safe Harbors

Because the statute is written so broadly that it could sweep in many legitimate business arrangements, federal regulators created “safe harbors” — defined categories of conduct that, if every requirement is met, are protected from prosecution. Common safe harbors cover bona fide employment relationships, properly structured space and equipment rentals, personal-services and management contracts, and certain investment interests.

Safe harbors are construed strictly: an arrangement either fits squarely within one, satisfying every condition, or it does not. Importantly, falling outside a safe harbor does not automatically make conduct illegal — it simply removes the automatic protection and invites scrutiny, leaving the question of intent to be litigated. Much of AKS compliance and defense work involves analyzing whether an arrangement met a safe harbor and, if not, whether the government can actually prove the required wrongful intent.

Penalties Under 42 USC 1320a-7b

The Anti-Kickback Statute carries layered criminal and civil consequences. Because each prohibited payment or referral can be charged separately, a single arrangement can generate many counts and substantial cumulative exposure.

The criminal fine and prison maximums above reflect increases enacted in recent years. Older sources — including some still in circulation online — cite a $25,000 fine and a 5-year maximum, but those figures no longer apply; the penalties were increased to $100,000 and 10 years. Beyond the statutory penalties, a kickback finding can make every related claim “false,” opening the door to the substantial treble-damages exposure described on our 31 USC 3729 False Claims Act page.

Related Federal Statutes

• 18 USC 1347 (health care fraud) — the central fraud statute frequently charged alongside kickback counts.
• 42 USC 1395nn (Stark Law) — the physician self-referral law; civil in nature but closely related to kickback analysis and often charged together.
• 31 USC 3729 (False Claims Act) — turns kickback-tainted claims into false claims carrying treble damages.
• 18 USC 1349 (conspiracy) — used to charge everyone alleged to be part of a kickback arrangement at the same penalty level.

How Anti-Kickback Charges Are Defended

Because the statute is intent-based, defenses often center on showing that a payment reflected fair market value for genuine services or property rather than an inducement for referrals, or that the defendant acted in good faith believing the arrangement was lawful. Establishing that an arrangement fit within a safe harbor — element by element — can defeat a charge outright, and even where a safe harbor is not a perfect fit, demonstrating a sincere effort to comply undercuts the willfulness the government must prove.

Other defenses establish that no federal program business was actually involved, attack the credibility of cooperating witnesses who are testifying in exchange for leniency, or challenge whether the government can prove that referrals were the real purpose of a payment as opposed to legitimate compensation. A frequent and important point: a written contract helps, but a contract that does not reflect economic reality can itself become evidence of a sham, so the facts behind the paperwork are what truly matter.

For a practical, example-driven look at where the line falls between lawful business and an illegal inducement, see our discussion of health care kickbacks and how prosecutors build these cases. The strongest defense depends on the specific arrangement and the evidence behind it.

Accused of a Kickback Violation? Contact Us

Anti-Kickback allegations are among the most common — and most defensible — health care fraud charges, but they carry severe criminal, civil, and professional consequences. If you have received a subpoena, target letter, or civil investigative demand, the time to act is now, while there is still room to shape how the government views your arrangements. KN Law Firm, APLC defends these cases in the U.S. District Court for the Central District of California and before the Ninth Circuit. Call (888) 950-0011 for a free, confidential consultation with attorney Chris Nalchadjian, available 24/7 in English and Spanish.