On November 6, 2018, the Office of Inspector General (OIG) of the Department of Health and Human Services published a favorable Advisory Opinion regarding a proposed arrangement comprised of substantial donations that were earmarked for biomedical research purposes, made by a charitable trust (“Trust”) to a public-private medical research institute (“Research Institute”). The Research Institute had been formed by a health care system (“Health Care System”) and a public university (“University”). In addition, one of the Trustees planned to make a separate, individual donation to the Research Institute, through the University’s foundation, under substantially identical terms.

All of the Trustees have ownership and financial interests in long-term care facilities that, in turn, have longstanding, ongoing business relationships with the Health Care System. None of the described relationships are exclusive arrangements. The Trust itself has no ownership or other financial interests in the long-term care facilities.

The Research Institute:

• has faculty and researchers whose roles do not involve the practice of clinical medicine;
• is not enrolled in Medicare or Medicaid, and does not provide items or services reimbursable by Federal health care programs;
• was formed using an initial financial contribution from the Health Care System, which remains affiliated with it;
• has a budget controlled solely by the University, and is subject to State budgetary oversight;
• is under a separate and distinct governance structure from the Health Care System, a private, not-for-profit entity with a board determined by its governance documents; and
• is part of the University, and members of the University’s board are appointed by the State governor and confirmed by the State senate.

The Research Institute would have full discretion on using the donation, other than the restriction on using it to promote and conduct biomedical research. Further, the Trust and the individual donor Trustee certified to the OIG that the proposed donation would not be explicitly or implicitly tied to, or conditioned on, the generation of any referrals to the Trustees’ long-term care facilities. Nor would the amount of the proposed donation be determined in a manner that varies with, or otherwise takes into account, the volume or value of any referrals or any other business that the Health Care System might generate for the long-term care facilities.

Where a party commits an act described in the Federal anti-kickback statute at section 1128B(b) of the Social Security Act, the OIG may initiate administrative proceedings to impose civil monetary penalties under section 1128A(a)(7). The OIG may also initiate administrative proceedings to exclude the party from the Federal health care programs under section 1128(b)(7).

The OIG concluded that although the proposed arrangement would provide remuneration that implicates the Federal anti-kickback statute, the risk of fraud and abuse was sufficiently low. Accordingly, it would not impose administrative sanctions under its exclusion authority or civil monetary penalties.

The OIG reasoned, based on the facts above:

• the donations would not explicitly or implicitly be conditioned on referrals by the Health Care System to the Trustees’ long-term care facilities;
• the amount of the donations would not be determined in a manner that varies with, or otherwise takes into account in any way, the volume or value of referrals or other business the Health Care System might generate for the long-term care facilities;
• the Research Institute is positioned to make decisions about the use of the donations in an independent manner, reducing the risk of improper ties between the remuneration and the source of referrals — the Health Care System;
• there was a substantial amount of business already existing between the Health Care System and the long-term care facilities before the proposed arrangement to make donations which, in combination with the factors in the last bulleted item below, makes it less likely that the proposed donations are motivated by the prospect of increased referrals to the long-term care facilities; and
• the Trust was established almost 30 years earlier for the purpose of supporting higher learning institutions and local charitable endeavors, and the purpose of the proposed donations was consistent with this.

Finally, the OIG emphasized this Advisory Opinion was issued only to the requestors of the opinion, and has no application to, and cannot be relied upon by, any individual or entity, nor may it be introduced into evidence by anyone other than the requestors to prove the individual or entity did not violate the anti-kickback statute, or any other law.

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