Anti-Kickback Statute Referrals: The Fifth and Seventh Circuits Narrowed the Rule, the Eleventh Did Not

If you run or market for a laboratory, a DME company, or a telemedicine platform, the question that decides your case is no longer whether you were paid per patient. Recent appellate decisions have turned Anti-Kickback Statute prosecutions into a fight over one issue: whether the person taking the money could influence the physician who signed the order. The Fifth and Seventh Circuits require the government to prove that influence. The Eleventh Circuit, which governs every federal prosecution in Florida, reads the statute more broadly. Same payment structure, different circuit, different case.

Same payment structure, different circuit, different case. The Eleventh Circuit governs every federal prosecution in Florida.

Key Takeaways

• The Anti-Kickback Statute, 42 U.S.C. 1320a-7b, carries up to 10 years per count and a $100,000 fine.
• The Fifth Circuit requires proof of intent to improperly influence a healthcare decisionmaker, not merely a per-patient fee arrangement.
• The Seventh Circuit reversed a marketing conviction in 2025 where physicians declined roughly 80 percent of the orders sent to them.
• The Eleventh Circuit, which covers the Southern and Middle Districts of Florida, holds that a payee need not write or sign prescriptions to make a referral.
• Florida lab, DME and telemedicine defendants sit in the circuit least receptive to this defense, so the record has to be built before charges.

What the Courts Have Done in the Last Two Years

Start with the statute. 42 U.S.C. 1320a-7b(b) makes it a felony to pay or receive remuneration to induce a referral, or to induce the ordering or arranging for any item or service reimbursed by a federal health care program. Congress never defined referral. The circuits have been filling that gap, and not in the same way.

In 2024 the Fifth Circuit decided United States v. Marchetti, 96 F.4th 818. The court held that the structure of a compensation contract, standing alone, does not produce an Anti-Kickback Statute conviction. The government has to prove an intent to improperly influence the person who makes the healthcare decision. The court illustrated the line with a hypothetical: a salesman becomes the relevant decisionmaker when he chooses the service provider and is never overruled.

The Fifth Circuit returned to the issue in 2025 in United States v. Cockerell, 140 F.4th 213 and affirmed a conviction. The difference was the conduct aimed at prescribers: preloaded prescription pads, lavish travel, and offers of investment in management service organizations. Cockerell shows what improper influence looks like when it is there.

Roughly 80 percent of the prefilled brace orders in Sorensen were never returned. The Seventh Circuit called them proposals for care rather than referrals.

The Seventh Circuit went further in April 2025. In United States v. Sorensen, 134 F.4th 493, it reversed the conviction of the owner of a DME distributor for insufficient evidence. Marketing firms generated prefilled orthotic brace orders and faxed them to physicians. Roughly 80 percent were never returned. The court described those communications as proposals for care rather than referrals, and it asked what advertisers are hired to do anyway. The payee had no ability to leverage informal power over clinical decisions, so the payments were not kickbacks.

The Eleventh Circuit Reads the Statute More Broadly

Then there is the Eleventh Circuit. In United States v. Young, 108 F.4th 1307, decided in July 2024, the court affirmed a conviction built on payments routed to a physician office manager who steered prescriptions to pharmacies the defendant controlled. The panel held that the payee need not write or sign a prescription to be a decisionmaker. Being in a position to ensure that prescriptions went to a particular pharmacy was enough. The Eleventh Circuit also applies the one purpose rule, under which a payment violates the statute if even one purpose was to induce referrals. See United States v. Vernon, 723 F.3d 1234.

The words differ. The practical question does not, and the answers are not the same. The Eleventh Circuit has applied the same broad reading to other payment structures, including speaker program fees paid to prescribers.

What the Government Is Building Right Now

Enforcement volume has not slowed while the doctrine shifts. The 2025 national takedown charged 324 defendants with more than $14.6 billion in alleged fraud, much of it laboratory, genetic testing, DME and telemedicine arrangements. Prosecutors still build these cases the same way: bank records showing per sample payments, invoices describing those payments as something else, and text or Signal messages about volume.

The theory has adapted. Where the physician looks independent, the government argues that the marketer is the decisionmaker, because the marketer chose where the sample or order went. That argument works in the Eleventh Circuit after Young. It has failed where the marketer had no relationship with the prescriber and most of what was sent came back unsigned.

Bank records showing per sample payments, invoices describing those payments as something else, and messages about volume. That is how these cases are still built.

A second theory runs alongside it. When the kickback count looks vulnerable, the government charges a conspiracy to defraud the United States under 18 U.S.C. 371 and points to concealment: sham marketing invoices, ownership interests, consulting agreements, and loan paper that disguise the real payment terms. Concealment is what turns a documentation problem into a criminal intent problem, and it is the most dangerous proof in these cases.

Exposure and Charges

A single Anti-Kickback Statute count under 42 U.S.C. 1320a-7b(b) carries up to 10 years in prison and a $100,000 fine. Conspiracy under 18 U.S.C. 371 adds five. Health care fraud under 18 U.S.C. 1347 carries 10 years per count, and 20 if serious bodily injury results. Where the money is traced into purchases, prosecutors add monetary transaction counts under 18 U.S.C. 1957, which carries another 10 years and drags the proceeds of the underlying counts into the case.

The statutory maximums are rarely the real exposure. The guidelines are. The driver is the value of the improper benefit or the loss the government attributes to the arrangement, under USSG 2B4.1 and 2B1.1. In genetic testing and DME cases that figure is usually the full Medicare reimbursement paid to the billing entity, not the smaller amount the marketer received. A loss amount dispute is often worth more years than any role adjustment, and a 3553(a) variance built on what the defendant did can be worth more than both.

The Mistakes That Cost People the Defense

Talking to agents without counsel. They arrive with the invoices and texts in hand. The interview exists to lock in a statement they can impeach later.

Producing records in response to a civil investigative demand or a federal grand jury subpoena without counsel. The production defines the case, and an incomplete one creates obstruction exposure.

Cleaning up the paperwork after the subpoena arrives. Reissuing an invoice, backdating a contract, or coaching a marketing partner converts a defensible case into an obstruction case.

Assuming the arrangement is safe because a lawyer papered it years ago. A safe harbor analysis under 42 C.F.R. 1001.952 helps only if the facts matched the paper. Prosecutors read the paper against the bank records.

Waiting for the indictment. Pre-indictment defense is where the decisionmaker issue is worth the most, because charging decisions are still open.

How This Defense Is Built

The decisionmaker defense is a record, not an argument, and most of that record is created while the business is running.

Declination rates matter. Sorensen turned on physicians ignoring roughly 80 percent of what was sent. Know your number before the government tells the jury what it is.

Disclosure matters. If the requisition named the laboratory and the physician could have crossed it out, the physician was not boxed in. If the selection was hidden, the government has its case.

Independent judgment matters. Certification language on the order, compliance checks that rejected noncompliant samples, and a refusal to use telemedicine physicians who never saw the patient separate marketing from inducement.

"What kills these cases is concealment of the structure, not the structure."— Aaron M. Cohen, AMC Defense Law

Payment basis matters less than lawyers assume. A per-patient fee arrangement is not by itself an illegal kickback under Marchetti, and volume-based marketing compensation survived in Sorensen. What kills these cases is concealment of the structure, not the structure.

Why the Timing Matters

Once the government charges a laboratory fraud or genetic testing fraud conspiracy, the documents are fixed, the cooperators are signed, and what is left is a fight about degree. Before charges, three things are still open: whether you are charged, what you are charged with, and whether the government adopts the loss figure that will control your guideline range.

If you have received a target letter, if a subpoena has landed at your business, or if agents have contacted your marketing partners, the investigation is further along than it looks. That is when federal investigation defense is worth the most, and when the circuit you sit in should shape every decision you make.

Common Questions

Under Investigation for a Kickback or Laboratory Billing Arrangement?

AMC Defense Law represents laboratories, DME companies, telemedicine platforms, marketers and physicians in federal Anti-Kickback Statute and health care fraud investigations, in South Florida and nationwide. If you have received a target letter, a grand jury subpoena, or a visit from federal agents, the firm can review the arrangement and the records with you confidentially and advise on next steps. Consultations are confidential. Call 561.542.5494.

Aaron M. Cohen, founder of AMC Defense Law, represents laboratories, DME companies, telemedicine platforms, marketers and physicians in federal Anti-Kickback Statute and health care fraud investigations.

If you or your loved ones have been arrested, are under federal investigation, or have received a target letter, call Aaron M. Cohen, 24 hours a day to get help.