April 2009Client Alert

OIG Approves Concurrent Agreements for Employment and Sale of Real Estate

On April 2, 2009, the Department of Health and Human Services Office of Inspector General (“OIG”) posted Advisory Opinion 09-02. This advisory opinion reviewed an agreement for the employment of a mental health practitioner (“Practitioner”) that was entered into concurrently with an agreement whereby the Practitioners’ employer (“Requestor”) would purchase real estate from the Practitioner (“Arrangement”). Because the Anti-Kickback Statute prohibits any financial arrangement where one purpose of the arrangement is to provide or receive remuneration in exchange for the referral of services or to induce further referrals, OIG reviewed the Arrangement to determine if there were grounds for sanction or civil money penalty under the Anti-Kickback Statute (“Statute”).


The Requestor is a corporation that provides outpatient mental health services. The Practitioner is a licensed professional clinical counselor and supervising counselor. The Requestor and Practitioner entered into an agreement whereby the Requestor would purchase the building that housed the Practioner’s former practice, on the condition that the Requestor would open a clinic in the building and employ the Practitioner as a counselor and director of the clinic. Thus, after purchasing the building, the Requestor opened the clinic and employed the Practitioner to perform services for which payment may be made in whole or in part under Medicare, Medicaid, or other federal health care programs.

Legal Analysis

The Statute provides for a safe harbor for remuneration paid by an employer to an employee for the provision of medical services. For purposes of this opinion, the OIG assumed the Practitioner was a bona fide employee of the Requestor as that term is defined in the statute. Because the Requestor certified that the compensation the Practitioner received was based on professional services which the Practitioner personally performed, the OIG determined the wages do not constitute prohibited remuneration under the Statute. Further, the Requestor and the Practitioner entered into a separate agreement by which the Requestor purchased the clinic building for market value. Thus, because the Arrangement was not based upon the volume or value of referrals or the generation of business between the parties the OIG did not factor the purchase into its analysis.


While the employment agreement could potentially violate the Statute if prohibited payments were made by the Requestor to the Practitioner, the OIG decided, based on the facts and circumstances related to OIG by the Requestor, that it would not subject the parties to sanctions because no prohibited payments were made. Please note that the OIG has limited this Advisory Opinion to the particular facts and circumstances of the Arrangement and, therefore, this Advisory Opinion does not have the force of law.

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