There are many state and federal laws that govern the payments for marketing or referral services for health care patients. Workers' compensation patients in California are also governed by the Labor Code. It is critical to have these type of arrangements reviewed by experienced counsel to ensure that there will be no legal violations. "Marketing" in many forms is legal but payment for referrals is not and how does one tell the difference?
Recently, a chiropractor, Curtis Wayne Montgomery, was charged by the Riverside County District Attorney's Office with felony charges and 28 of those counts are for receiving commissions for referring clients (Labor Code Section 3215) as well as three counts of insurance fraud and sixteen counts of money laundering.
The prosecutor's office claims that these offenses happened from 2011 to 2016. The Riverside DA contends that more than $300,000 in payments were from Dr. Montgomery DC to a company called Providence Scheduling, which was designed to field phone calls from injured workers and then refer those people to doctors and chiropractors throughout California.
The two men who owned and operated Providence Scheduling, Carlos Arguello and Fermin Iglesias, already entered guilty pleas to federal charges and are apparently cooperating. As part of their business, it is alleged that they required that medical providers refer a certain number of patients to outside companies that they owned for medical equipment, imaging and other treatments. The prosecutors allege that if doctors and chiropractors failed to refer enough patients to these outside companies, Providence Scheduling would stop or slow the number of patients they would refer to the medical providers which would be indicative of payment for referrals rather than for marketing. Dr. Montgomery has plead not guilty and is presumed innocent. Dr. Montgomery has his next court hearing on September 24, 2018 and has plead not guilty.
When a business is providing "scheduling" services to the medical provider, the way that the patients are obtained and referred will be traced. In addition, there will be an analysis of how the payments were made. These types of companies are common and there is a great deal of ignorance on what is legal and what is not in the medical community.