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Chicago-Area Doctor Convicted of Violating Federal Anti-Kickback Statute

In March, a federal jury convicted a Chicago-area physician on ten counts related to violations of the federal anti-kickback statute (AKS). According to a release by the United States Department of Justice (DOJ), Dr. Venkateswara Kuchipudi is the tenth defendant convicted as a result of a multi-year investigation into Sacred Heart Hospital on Chicago’s West Side. The investigation was executed by the Medicare Fraud Strike Force, a part of the Health Care Fraud Prevention & Enforcement Team (HEAT), and resulted in closure of the hospital.

The AKS prohibits healthcare providers from providing or receiving any form of remuneration in return for the referral of Medicare, Medicaid or other federal healthcare program business. The AKS is a criminal statute and interpreted broadly, and a violation of the AKS has significant implications on health care providers and suppliers. Violation of the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to 5 years, or both, and a conviction will also lead to exclusion from Federal health care programs, including Medicare and Medicaid.

According to the DOJ, Dr. Kuchipudi provided extensive referrals to Sacred Heart Hospital. The trial also revealed that Dr. Kuchipudi engaged in a scheme to ensure that his nursing home patients were transported to Sacred Heart Hospital for treatment even when there were better hospitals closer to the nursing homes at which Dr. Kuchipudi had privileges. In return, Sacred Heart Hospital provided physician assistants and nurse practitioners to Dr. Kuchipudi in the hospital and in Chicago-area nursing homes where Dr. Kuchipudi’s patients resided. The physician assistants and nurse practitioners were paid by the hospital, however Dr. Kuchipudi billed Medicare and Medicaid for their services as if he employed them himself.

Under the AKS, prohibited remuneration includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind. Pursuant to Office of Inspector General (OIG) guidance, whenever a health care provider offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce referrals. Accordingly, providing free labor to a referring physician that relieves the physician of costs otherwise incurred by that physician constitutes remuneration under the AKS.

The conviction marks another victory for the Medicare Fraud Strike Force and HEAT, which is a joint initiative between the DOJ and the U.S. Department of Health and Human Resources aimed at preventing fraud and enforcing Medicare law across the country.

Wachler & Associates
represents healthcare providers and suppliers nationwide in a variety of health law matters, including compliance with the federal Anti-Kickback Statute (AKS), the federal Stark law, and False Claims Act. Our attorneys also advise health care entities to remain compliant with state fraud and abuse laws governing relationships between healthcare providers and referral sources. If you or your health care entity have any questions regarding compliance with the AKS, Stark law or other healthcare laws pertaining to Medicare or Medicaid, or healthcare regulatory compliance in general, please contact an experienced healthcare attorney at (248) 544-0888, or via email at You may also subscribe to our health law blog by adding your email at the top right of this page.

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