California's Anti-Kickback Statute

Business & Professions Code § 650 Explained

California's Anti-Kickback Statute (AKS), codified at Business & Professions Code § 650, prohibits licensed healthcare professionals and certain related providers from offering, receiving, or soliciting anything of value in exchange for patient referrals.

The statute is designed to protect patients, preserve medical ethics, and ensure that healthcare decisions are based solely on medical necessity—not financial incentives.

Violations of BPC 650 can result in criminal prosecution, substantial fines, incarceration, and disciplinary action against a professional license. For healthcare professionals, the consequences can be career-ending.

Your best hope for a favorable outcome is with a highly experienced criminal defense attorney at Cron, Israels & Stark in Los Angeles. To schedule a consultation, call (424) 372-3112 or contact us here.

What Does California's Anti-Kickback Statute Prohibit?

Under BPC 650, it is illegal for a licensed professional to:

Offer or accept money, gifts, commissions, or anything of value
In exchange for referring patients
Or as a reward for patient volume or business generation

The statute applies regardless of whether the referral was medically appropriate. Even if the patient received legitimate care, a financial incentive tied to the referral can violate the law.

Examples of Prohibited Conduct

Common examples of unlawful kickbacks include:

Paying or receiving referral fees for patients sent to labs, imaging centers, or clinics
Receiving commissions tied to the number of patients referred
Accepting free services, equipment, or benefits that influence referral decisions
Disguising referral payments as consulting fees or marketing arrangements

Example:
A physician receives $500 from a diagnostic lab for each patient referred for testing. Because the payment is tied to referrals, this conduct violates California's Anti-Kickback Statute.

What Conduct Is Allowed Under BPC 650?

Although strict, California's Anti-Kickback Statute includes important exceptions for legitimate business arrangements.

Permitted activities may include:

Fair-Market-Value Services: Payment for legitimate consulting, leasing, or professional services not tied to referral volume
Ownership Interests: Referrals to an entity the provider owns, provided compensation is proportional to ownership and not referrals
Licensed Health Center Arrangements: Certain financial relationships with federally qualified health centers
Internet-Based Advertising Services: Paying third-party platforms for listings, appointment scheduling, or advertising—so long as the platform does not recommend or endorse providers

Each exception is narrowly construed, and improper structuring can still lead to prosecution.

Federal Anti-Kickback Statute & Stark Law

In addition to California law, healthcare providers may face federal charges under:

Federal Anti-Kickback Statute

42 U.S.C. § 1320a-7b(b) prohibits offering or receiving anything of value to induce referrals for services reimbursed by Medicare, Medicaid, or other federal healthcare programs.

Federal courts interpret this statute broadly. If any purpose of a payment is to induce referrals—even if other legitimate purposes exist—the law may be violated.

Stark Law (Physician Self-Referral Law)

The Stark Law prohibits physicians from referring patients to entities with which the physician or an immediate family member has a financial relationship for designated health services paid by federal healthcare programs.

Unlike the AKS, the Stark Law is a strict liability statute, meaning intent need not be proven.

California Physician Ownership and Referral Act (PORA)

California's Physician Ownership and Referral Act (PORA) further restricts physician self-referrals.

Key distinctions:

Applies to private insurance and cash-pay patients, not just federal programs
Covers designated health services
Prohibits referrals where the physician has a financial interest

PORA operates alongside BPC 650 and often expands liability beyond federal law.

Safe Harbors and Statutory Exceptions

Both state and federal anti-kickback laws recognize safe harbors for certain arrangements, including:

Bona fide employment relationships
Equipment and office space leases
Practitioner recruitment arrangements
Patient engagement and support programs
Electronic health records
Referral services that do not endorse providers

California amended its statute to address modern healthcare marketing. As of January 1, 2022, compliant online provider directories and appointment-booking services are excluded from enforcement, provided they do not promote specific clinicians.

Penalties for Violating California's Anti-Kickback Statute

A violation of BPC 650 is a wobbler offense, meaning it may be charged as either a misdemeanor or a felony.

Misdemeanor Penalties

Up to 1 year in county jail
Fines up to $50,000

Felony Penalties

16 months, 2 years, or 3 years under Penal Code § 1170(h)
Fines up to $50,000
Possible professional license suspension or revocation

Federal violations may carry even harsher penalties, including prison time, civil penalties, restitution, and exclusion from federal healthcare programs.

Common Defense Strategies in Anti-Kickback Cases

Being accused of an AKS violation does not mean conviction. Effective defenses may include:

Lack of Intent: No evidence that payments were meant to induce referrals
No Quid Pro Quo: Compensation unrelated to patient volume or referrals
Legitimate Business Purpose: Payments reflected fair market value for real services
Statutory Exceptions: Conduct falls within a recognized safe harbor
Unlawful Evidence: Suppression of evidence obtained through improper investigations

Early intervention is critical in these cases, particularly before charges are formally filed.

Why Experienced Legal Representation Matters

Anti-kickback investigations often involve:

Complex financial records
Regulatory agencies
Parallel civil, criminal, and licensing exposure

A skilled criminal defense attorney can:

Intervene early with prosecutors
Structure defenses around statutory exceptions
Protect professional licenses
Seek dismissal or charge reductions

Speak With a California Anti-Kickback Defense Lawyer

If you are under investigation or charged under California's Anti-Kickback Statute, the stakes are exceptionally high. Your career, license, and freedom may be at risk.

Cron, Israels & Stark represents healthcare professionals throughout California in complex regulatory and criminal matters.

📞 Call (424) 372-3112 for a confidential consultation
📍 Los Angeles Criminal Defense Attorneys

Related Content:

CA Anti-Kickback Statute