EKRA Violations and Federal Patient Brokering: When the Recovery Industry Becomes a Prosecution Target

Federal prosecutors have dramatically escalated enforcement of the Eliminating Kickbacks in Recovery Act.

Under EKRA, paying a marketing representative a commission tied to patient referrals, even a single private-pay referral, can constitute a federal crime carrying a maximum sentence of up to 10 years in prison and a $200,000 fine per occurrence. 

If you operate a recovery home, clinical treatment facility, or laboratory, the compensation structures you have used for years may already be under scrutiny.

For the best possible outcome, consider reaching out to an experienced California federal criminal defense attorney at Eisner Gorin LLP.

We're here to support you—call us at (818) 781-1570 or contact us through our website to schedule a consultation.

What Is EKRA and Why Does It Reach Your Business?

Enacted in 2018 as part of the SUPPORT for Patients and Communities Act, EKRA was created to combat patient brokering and other corrupt practices fueled by the opioid crisis.

Codified at 18 U.S.C. § 220, EKRA makes it a federal crime to solicit, receive, pay, or offer any remuneration in exchange for referring a patient to a recovery home, clinical treatment facility, or laboratory.

The statute's reach extends far beyond what most recovery industry operators realize.

Unlike the federal Anti-Kickback Statute (AKS), which is limited to Medicare, Medicaid, and other federal healthcare programs, EKRA's health care benefit programs include not only state and federal health care programs but also private health insurance plans. EKRA's reach is therefore broader than that of the Anti-Kickback Statute.

In practical terms, if your patients have private insurance, EKRA applies to you. If your marketing staff is paid on commission, EKRA likely applies to those arrangements.

And if your independent contractors generate referrals in exchange for volume-based compensation, EKRA almost certainly applies, regardless of whether a single government-funded claim was ever submitted.

Penalties apply separately to each violation. If convicted for five separate kickback incidents, a defendant could face a maximum prison sentence of 50 years. 

The per-occurrence structure transforms what may look like a routine marketing arrangement into a multi-decade exposure.

The Critical Gap Between EKRA and the Anti-Kickback Statute

Many recovery industry operators entered compliance programs structured around the AKS, assuming that what was permitted under AKS was permitted everywhere. That assumption is now legally dangerous.

EKRA features more restrictive safe harbors and significantly higher penalties: up to 20 years in prison and a $200,000 fine per violation, compared to AKS, which imposes penalties of up to 10 years and a $100,000 fine.

The most consequential gap between the two statutes involves employee compensation. Under AKS, the bona fide employee safe harbor broadly protects commission-based compensation paid to W-2 sales staff.

Under EKRA, that protection disappears the moment compensation is tied to referral volume.

EKRA excepts from the statute any payment made by an employer to an employee or independent contractor for employment, only if the payment is not determined by or does not vary by the number of individuals referred, the number of tests performed, or the amount billed to or received from a health care benefit program.

The practical consequence: EKRA, on its face, appears to make commission-based payments to W-2 employees a criminal act when those payments vary with referral volume.

This means a compensation structure that your employment attorney reviewed and approved under AKS guidance may still expose you and your staff to federal criminal liability under EKRA.

Real-World Example

A treatment facility pays a marketing consultant based on the number of patients referred each month. The consultant directs patients to the facility, and insurance claims are billed for services.

Even if no government insurance is involved, this arrangement may violate EKRA because compensation is tied to referral volume.

What Compensation Structures Create EKRA Risk?

Understanding which arrangements are most vulnerable is the starting point for any compliance audit. The following structures carry elevated risk under the statute as currently enforced:

• Pre-referral commissions paid to independent contractors carry the highest risk. No safe harbor under EKRA protects volume-based compensation paid to non-employees, making these arrangements nearly indefensible as structured.
• Revenue-sharing agreements with third-party marketers are equally dangerous. When payments to an outside marketing company are tied to insurance billing or collections, the arrangement sits squarely within EKRA's core prohibition, regardless of how the contract is labeled.
• Percentage-based commissions paid to W-2 sales staff remain high-risk despite the employee relationship. The EKRA employee safe harbor only protects fixed compensation. The moment pay varies with referral volume, tests performed, or amounts billed, the safe harbor no longer applies.
• Sober home "finder's fee" arrangements are EKRA's original target. Any payment made in exchange for steering a patient toward a specific facility, whether cash, gift cards, free rent, or other in-kind benefits, is a textbook patient brokering violation and a federal prosecution priority.
• Lab specimen referral bonuses have drawn aggressive enforcement following the Schena decision. Payments made to treatment facilities or their staff in exchange for directing patients to a specific laboratory for drug testing are among the most actively prosecuted EKRA fact patterns.
• Flat-fee contracts for marketing services carry comparatively lower risk, provided the fee is genuinely fixed and not structured to track referral volume informally. Fixed hourly or monthly arrangements that do not vary with the number of patients referred or tests ordered are generally the safest compliant structure available.

The pattern the DOJ is most aggressively targeting is sometimes called the “sober home to lab” pipeline: a recovery home refers patients for drug testing, the lab pays per-specimen fees or kickbacks to the home or its staff, and private insurers are billed for testing that may or may not be medically necessary.

This arrangement has been prosecuted repeatedly and is well within the center of federal enforcement activity.

Penalties for EKRA Violations (18 U.S.C. § 220)

Key Insights

• Penalties apply per violation, not per case
• Even small referral arrangements can create large cumulative exposure
• Financial penalties often extend beyond fines to include restitution and forfeiture
• Related charges (fraud, conspiracy) can significantly increase total penalties

This chart provides a general overview. Actual penalties depend on the number of violations, the amount of money involved, and the specific facts of the case.

The 2025 Schena Decision: What It Changed and What It Did Not

The most significant EKRA development in recent years came from the Ninth Circuit, which covers California and most of the western United States.

In July 2025, in United States v. Schena, the Ninth Circuit upheld Mark Schena's conviction for violating EKRA. Schena, who owned a laboratory, had paid marketing intermediaries to encourage referrals for questionable allergy tests.

The Ninth Circuit became the first federal appellate court to interpret EKRA's reach, and its ruling has direct consequences for every recovery and lab operation in the country.

The Ninth Circuit concluded that marketing intermediaries that interact with ordering providers may fall within the scope of EKRA, further clarifying that payments need not go directly to the provider to violate EKRA. 

This is a watershed holding. It means that structuring payments through a third-party marketing company does not shield those payments from EKRA liability. The intermediary is covered.

The arrangement is covered. And the entity that authorized and funded the payments is covered. What the court did not do is equally important for defendants.

The Ninth Circuit ruled that percentage-based compensation for laboratory sales reps is not a per se EKRA violation unless tied to "wrongful inducement," such as fraudulent efforts to influence referrals. DOJ appeared to agree with this interpretation during oral argument.

Essentially, commission-based compensation alone does not, in and of itself, constitute an EKRA violation.

The government must still show that the compensation was used to induce referrals through wrongful means, including false representations to physicians or other referral sources. This distinction is critically important to the defense of EKRA cases and represents a viable point of attack in many prosecutions.

How Federal EKRA Investigations Develop

Recovery industry operators rarely see an EKRA investigation coming until it is well advanced. Federal agents and prosecutors typically build these cases over extended periods using the following investigative tools:

• Whistleblower complaints: EKRA violations can be reported under the False Claims Act's qui tam provisions, meaning a former employee, a disgruntled contractor, or a competing facility can trigger a federal investigation with a confidential filing. The government then investigates quietly, often for a year or more, before contacting the target.
• Insurance company referrals: Private insurers have fraud investigation units that report suspicious billing patterns to the DOJ and HHS Office of Inspector General. A spike in lab billing from a single referring facility is a classic trigger.
• Grand jury subpoenas: When a recovery home, lab, or treatment facility receives a grand jury subpoena for financial records, marketing agreements, and compensation documentation, a serious EKRA investigation is already underway. The subpoena is not the beginning of the investigation. It is the moment the government decides it has enough to move.
• Coordinated takedowns: During the 2025 National Fraud Takedown, several cases involved alleged breaches of both EKRA and the AKS. These coordinated enforcement actions, involving multiple defendants across multiple states, are the DOJ's preferred method for signaling prosecutorial priority. The recovery industry is now a named target.

The window between the start of a federal Investigation and a formal indictment is the most important period for building a defense.

Related Federal Crimes and Charges

EKRA violations are often charged alongside other federal offenses, increasing potential penalties.

Healthcare fraud — 18 U.S.C. § 1347

Billing for unnecessary or fraudulent services connected to referral schemes.

Federal hospice fraud offenses involve the misuse of hospice care programs—primarily funded through Medicare—for illegal financial gain.

Under 18 U.S.C. § 1349, merely agreeing to participate in a scheme to defraud a federal health benefit program is a crime known as a healthcare fraud conspiracy.

Wire fraud — 18 U.S.C. § 1343

Section 1343 concerns the use of electronic communications to carry out fraudulent billing or referral schemes.

Anti-Kickback Statute violations — 42 U.S.C. § 1320a-7b

Illegal remuneration tied to federal healthcare program referrals.

False Claims Act — 31 U.S.C. § 3729

Submitting false claims to insurers or government programs.

Defending against compounding pharmacy TRICARE fraud charges requires careful examination of intent, relevant documentation, and adherence to compliance procedures.

Conspiracy — 18 U.S.C. § 371

Under federal conspiracy, agreements between multiple parties to engage in unlawful referral practices.

Money laundering — 18 U.S.C. § 1956

Money laundering involves financial transactions designed to conceal the proceeds of illegal activity.

EKRA Defense Strategies: Where the Government's Case Can Fail

A well-constructed EKRA defense targets the elements the government must prove, and the statute requires more than the government's narrative typically suggests.

Challenging knowing and willful intent

To procure a conviction, federal prosecutors must prove that you knowingly and willfully participated in the kickback. EKRA is not a strict liability statute.

Legitimate misunderstanding of the law's requirements, reliance on counsel's prior advice, good-faith compliance efforts, and genuine belief in the legality of a compensation arrangement are all potential defenses to the mens rea element.

Contesting the inducement element post-Schena

The Ninth Circuit's ruling in Schena clarified that percentage-based compensation is not automatically prohibited. The government must show that the compensation arrangement was used to induce referrals through wrongful means.

Establishing safe harbor compliance

If the compensation arrangement at issue satisfies the EKRA employee or independent contractor safe harbor, meaning the payments were fixed and did not vary with referral volume, tests performed, or insurance billings, that safe harbor is an absolute defense. Defense counsel should audit all compensation records to identify any arrangements that can be affirmatively shown to fall within a safe harbor.

Attacking the referral nexus

EKRA requires that remuneration be paid for referring a patient to a covered facility. If the payment can be shown to have been made for legitimate marketing services, administrative support, or other non-referral activities, the causal connection the government requires may not hold.

Suppressing improperly obtained evidence

EKRA investigations frequently involve financial subpoenas, wiretaps, and digital surveillance. Evidence obtained without proper legal authority, or in violation of Fourth or Fifth Amendment protections, is subject to suppression.

Hypothetical Case Study: How We Shielded a Clinic Owner from EKRA Overreach

The Conflict: Not long after the Ninth Circuit handed down its decision in United States v. Schena, a Los Angeles clinic owner found themselves in the crosshairs of a federal grand jury. 

The Department of Justice took a look at the clinic's "marketing fees" paid to an outside consultant and saw something sinister: a disguised kickback scheme.

Because these fees varied slightly with monthly patient volume, prosecutors alleged a criminal violation of 18 U.S.C. § 220, claiming the owner was essentially "buying" private-pay referrals for their toxicology lab.

The Strategy: We didn't wait for the handcuffs. Our team launched an immediate "shadow investigation" to get ahead of the government's timeline.

We knew the DOJ was leaning on an overly broad reading of EKRA, so we hit back with the very case they relied on—Shena. We argued that a fluctuating paycheck isn't a "smoking gun" for fraud; the government still has to prove "wrongful inducement" or some form of undue influence.

By pulling back the curtain on the consultant's actual workload—specifically their role in digital branding and complex intake logistics—we proved their compensation was for professional labor, not for "brokering" patients.

We demonstrated that our client had operated with a clear conscience, in accordance with established regulatory benchmarks.

This aggressive, evidence-first approach worked: we convinced the U.S. Attorney's Office that their case was legally thin, leading them to drop the investigation entirely before a single charge was ever filed.

Compliance Best Practices

Businesses can reduce risk by:

• Avoiding compensation tied to referral volume
• Using fixed-fee marketing agreements
• Conducting regular compliance audits
• Training staff on federal healthcare laws
• Reviewing contracts with experienced counsel

Key Takeaways

• EKRA applies to both private and public healthcare referrals
• Commission-based compensation creates significant legal risk
• Penalties apply per violation and can be severe
• Investigations often begin long before contact from authorities
• Early legal intervention is critical

FAQs About EKRA and Patient Brokering

What is patient brokering?

It is the practice of offering or receiving compensation in exchange for referring patients to healthcare services.

Does EKRA apply to private insurance?

Yes. EKRA covers both private and government healthcare payors.

Are commissions always illegal under EKRA?

Not always, but compensation tied to referral volume creates high risk.

What triggers an investigation?

Whistleblowers, audits, billing patterns, or subpoenas.

Can I be charged even if I didn't intend to break the law?

Intent is required, but prosecutors may infer it from conduct.

How serious are EKRA penalties?

Each violation can carry up to 10 years in prison and significant fines.

Can businesses defend against EKRA charges?

Yes. Several defenses may apply depending on the facts.

When should I contact a lawyer?

As soon as you suspect an investigation or receive a subpoena.

Consult With Eisner Gorin LLP Before the DOJ Audits Your Compensation Structures

EKRA enforcement is accelerating. The 2025 Schena decision gave federal prosecutors their first appellate roadmap, the 2025 National Fraud Takedown signaled that the recovery industry is a priority target, and the per-occurrence penalty structure means that a business model built on volume-based marketing commissions can expose a business to decades of theoretical prison exposure across multiple defendants.

Eisner Gorin LLP's federal defense team has deep experience in healthcare fraud, patient brokering, and EKRA-adjacent prosecutions.

We represent recovery home operators, laboratory owners, treatment facility executives, and marketing professionals facing federal investigation or indictment. 

We engage at the investigation stage, not after charges are filed, because the decisions made in the first weeks of a federal inquiry shape everything that follows. Contact Eisner Gorin LLP for a confidential consultation with our federal defense team.

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