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.

This page explains what the Anti-Kickback Statute prohibits, the elements the government must prove, the criminal and civil penalties, the role of “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 and orders are driven by patient need, not payment.

The breadth of the statute is what makes it so dangerous. “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 services, lavish meals, or discounted equipment. 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.

Unlike the physician self-referral law, the AKS is an intent-based criminal statute that applies to anyone — not just physicians — and to a much wider range of conduct. It is frequently charged alongside the central fraud statute; 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. Notably, a 2010 amendment clarified that a person need not have actual knowledge of the statute or specific intent to violate it. Even so, the government must still prove the defendant knew the conduct was wrongful, and a good-faith belief that an arrangement was lawful remains a meaningful defense.

2. Offering, Paying, Soliciting, or Receiving Remuneration

The conduct must involve remuneration — something of value — that was offered, paid, solicited, or received. The defense can dispute whether a payment was truly remuneration for referrals or instead fair-market-value compensation for legitimate services or property.

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. Under the widely applied “one purpose” test, the statute is violated if even one purpose of the payment was to induce referrals — so a real consulting arrangement can still be unlawful if part of its purpose was to steer business.

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 law may.

Safe Harbors

Recognizing that many legitimate business arrangements could otherwise appear to violate such a broad statute, federal regulators created “safe harbors” — categories of conduct that, if every requirement is met, are protected from prosecution. Common safe harbors cover bona fide employment, properly structured space and equipment rentals, personal-services and management contracts, and certain investment interests.

Safe harbors are strictly construed: an arrangement either fits squarely within one or it does not. Falling outside a safe harbor does not automatically make conduct illegal, but it removes the automatic protection and invites scrutiny. Much of AKS defense and compliance work involves analyzing whether an arrangement met a safe harbor and, if not, whether the required intent can be proven.

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.

The criminal fine and prison maximums shown above reflect increases enacted in recent years; older sources still cite a $25,000 fine and 5-year maximum, which no longer apply. Beyond the statutory penalties, a kickback finding can make every related claim “false,” opening the door to the substantial damages 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.
• 31 USC 3729 (False Claims Act) — turns kickback-tainted claims into false claims with treble damages.
• 18 USC 1349 (conspiracy) — used to charge everyone alleged to be part of a kickback arrangement.

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. Other defenses establish that an arrangement fit within a safe harbor, that no federal program business was involved, or that the government cannot prove the required willful intent.

For a practical 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 and professional consequences. If you have received a subpoena, target letter, or civil investigative demand, the time to act is now. 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.