New OIG Fraud Alert Focuses On Physician Contracts: What to Watch Out For

Tuesday, June 23, 2015
By: Lance O. Leider, J.D., The Health Law Firm


On June 9, 2015, the U.S. Department of Health and Human Services, Office of the Inspector General issued a special fraud alert on physician compensation arrangements. The purpose of the alert was to warn physicians who enter into certain arrangements like medical directorships, department chairs, board of directors seats, and other similar positions to do so carefully. It also is used to ensure that the arrangement reflects fair market value for bona fide services actually provided. Click here to read the OIG alert.

Physician Compensation Arrangements May Result in Significant Liability.

HHS-OIG stated that it had recently entered into settlement agreements with twelve doctors who engaged in prohibited conduct and imposed liability under the federal Anti-Kickback Statute and the Civil Monetary Penalties Law. The prohibited conduct included things like compensation for services not actually performed, payment of salaries of front office staff, and payment substantially above fair market value.  
This marks a shift from prior enforcement actions by HHS-OIG which primarily focused on the hospitals and other entities who paid the prohibited remuneration. Violations of federal healthcare law can subject a physician to significant personal civil and even criminal liability.

Click here to read more about these penalties.

How Can a Physician Avoid Illegal Compensation Arrangements?

Compensation agreements must reflect fair market value for bona fide services the physicians actually provide. The compensation must not be based on or take into consideration the volume or value of the physicians's referrals. If the physician is being paid as an independent contractor, the parties must have a written agreement in place setting forth the relevant terms. If they have not done so, physicians and other health care professionals should review the OIG's compliance guidance concerning the these issues, including its "Compliance Program Guidance for Individual and Small Group Physician Practices" and the OIG's "A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse."

Before signing any employment contract or other compensation arrangement it is crucial that you have it reviewed by an attorney that is experienced in evaluating federal and state healthcare law compliance. Click here to read one of our past blogs on contract review.


What are your thoughts on physician compensation arrangements? Do you think the HHS-OIG has given fair penalties? Please leave any thoughtful comments below.

Contact a Health Care Attorney Experienced in Negotiating and Evaluating Physician and Health Professional’s Business Transactions.

At the Health Law Firm we provide legal services for all health care providers and professionals. This includes physicians, nurses, dentists, psychologists, psychiatrists, mental health counselors, durable medical equipment suppliers (DME), medical students and interns, hospitals, ambulatory surgical centers, pain management clinics, nursing homes, and any other health care provider.

The services we provide include reviewing and negotiating contracts, preparing contracts, helping employers and employees enforce contracts, advice on setting aside or voiding contracts, litigation of contracts (in start or federal court), business transactions, professional license defense, opinion letters, representation in investigations, fair hearing defense, representation in peer review and clinical privileges hearings, litigation of restrictive covenant (covenants not to compete), Medicare and Medicaid audits, commercial litigation, and administrative hearings.
To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at


"Fraud Alert: Physician Compensation Arrangements May Result in Significant Liability." Office Of The Inspector General. (June 9, 2015). From:

Bonner, Ellen. "OIG Warns Providers to Check Physician Compensation Arrangements." Holland & Hart. (June 10, 2015). From:

About the Author:
Lance O. Leider is an attorney with The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Avenue, Altamonte Springs, Florida 32714, Phone:  (407) 331-6620.

Keywords: physician employment agreement, physician employment contract, employment contract, physician employment, contract review, contract litigation, contract negotiations, health professional contracting, physician contracts, contract attorney, contract lawyer, contract terms, contract law, employment contract law, contract for services, physician agreements, U.S. Department of Health and Human Services, HHS, Office of the Inspector General, OIG, Fraud alert, settlement agreements, federal Anti-Kickback statute, Civil Monetary Penalties Law, civil liability, criminal liability, compliance, compensation arrangement, health care law, health care laws and regulations, attorney at law, The Health Law Firm reviews

"The Health Law Firm" is a registered fictitious business name of George F. Indest III, P.A. - The Health Law Firm, a Florida professional service corporation, since 1999.
Copyright © 1996-2015 The Health Law Firm. All rights reserved.

Like this blog? Add your public comments:

Items in bold indicate required information.