DOJ addresses EKRA’s application to commission-based compensation, leaving key questions open

It has been eight years since the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) was enacted with no regulations or guidance from the US Department of Justice (DOJ) on a host of open questions. At the end of September 2026, DOJ broke its silence and published a notice denying a petition from the American Clinical Laboratory Association (ACLA). The petition asked DOJ to create a safe harbor for variable compensation paid to employed sales representatives.

The decision solidifies a key compliance consideration for covered providers, as compensation arrangements widely viewed as permissible under the Anti-Kickback Statute (AKS) employee exception may still pose enforcement risk under EKRA.

Background

EKRA was enacted as part of the SUPPORT for Patients and Communities Act and signed into law on October 24, 2018. Congress enacted EKRA to close a perceived enforcement gap. The AKS reaches only kickbacks involving federal health care programs, and the US Department of Health and Human Services (HHS) had noted that improper patient-brokering practices also affected private health insurance plans. EKRA applies regardless of payor.

EKRA’s employee exception is narrower than its AKS counterpart. The AKS employee exception and safe harbor generally protect compensation paid by an employer to a bona fide employee. EKRA’s exception, in comparison, imposes limitations on the form of compensation that an employer can pay to a bona fide employee. The EKRA exception does not protect compensation that varies with the number of individuals referred, tests or procedures performed, or amounts billed or received. As a result, variable, referral-based compensation for employed sales representatives falls outside EKRA’s statutory exception, although that compensation is not automatically unlawful.

States have also been active in this area. In 2025, New Jersey amended its criminal patient brokering statute to reach clinical laboratories and recovery residences, largely mirroring EKRA’s scope.

The ACLA petition

ACLA asked the US Attorney General to issue rules allowing a laboratory or other employer to pay an employed sales representative in any manner, including through variable compensation. The only condition ACLA proposed was to preclude the employee from knowingly and willfully providing materially false or misleading information to healthcare providers or patients.

DOJ’s response

DOJ addressed the petition in an omnibus notice, responding to 10 rulemaking requests. Some of the DOJ’s reasoning includes the following:

• EKRA is not limited to fraud. DOJ concluded that ACLA’s proposal would confine EKRA to situations involving fraud, which other statutes already prohibit. In DOJ’s view, the proposal “misunderstands the legislation’s core purpose: preventing financial incentives that could compromise patient care.” DOJ added that such arrangements can be harmful even without fraud, because they limit patient choice and lead to unfair competition, overutilization, unnecessary testing, and higher costs.
• A falsity condition would impede enforcement. DOJ’s response reflects a broader concern that the proposed exception would dilute EKRA’s restrictions on referral-based compensation. The agency stated that the arrangement could “effectively reintroduce the very kickback structures EKRA was designed to eliminate” and argued that requiring proof of knowingly providing false or misleading information would make enforcement more challenging.
• The regulatory burden is limited. DOJ observed that EKRA has been in effect for almost eight years. It also noted that laboratories have operated for decades under similar AKS restrictions on variable compensation for Medicare and Medicaid. DOJ stated that it has used its EKRA enforcement authority “judiciously” and that the petition did not allege overreach.

Analysis

Several aspects of the notice are worth noting.

DOJ did not fully address the US Court of Appeals for the Ninth Circuit’s holding in United States v. Schena. Although DOJ cited the decision for the proposition that misrepresentation is not required, the Ninth Circuit also held (and DOJ agreed in that case) that percentage-based compensation for marketing agents does not, without more, violate EKRA. Instead, in Schena the Ninth Circuit adopted the “undue influence” test that other courts have adopted under the AKS. That test says a wrongful inducement can be shown when a defendant pays remuneration to cause a marketing agent to unduly influence doctors’ referrals, such as through false or fraudulent representations about the covered medical services. The notice therefore appears to reflect DOJ’s enforcement position rather than a complete statement of the law.

DOJ’s petition denial does not fully resolve ACLA’s concern regarding bona fide employees. The AKS authorities DOJ cited largely involve compensation paid to third parties or arrangements tied to referrals, not compensation paid to employees covered by the AKS employee safe harbor. The prevailing AKS caselaw for independent marketing variable compensation applies the “undue influence” test, rather than holding that variable compensation is itself a violation. The Ninth Circuit adopted this test in Schena under EKRA’s exception.

DOJ may have chosen not to adopt ACLA’s proposed safe harbor in order to retain flexibility in its enforcement of EKRA rather than add complications to that enforcement by creating a more limited safe harbor. DOJ’s statement that laboratories that “intentionally implement commission-based payment systems to directly reward referrals” are of concern provides some insight into DOJ’s enforcement priorities. DOJ’s statement suggests that the design and justification of a compensation plan may carry significant weight in any intent analysis. DOJ also notes that the negative impacts of an arrangement, such as depriving patients of choice, unfair competition, overutilization of services, unnecessary testing, and increased health care costs, are relevant factors in DOJ’s enforcement decisions.

DOJ has continued to bring significant EKRA cases since the September 2026 notice denying ACLA’s petition. On October 22, 2026, less than a month after that denial, DOJ announced a Los Angeles health care fraud takedown charging 15 defendants, including six medical professionals, in schemes involving more than $1.8 billion in allegedly fraudulent claims to government and private health care programs. The centerpiece of the takedown, which DOJ described as the largest sober home fraud scheme it has ever prosecuted, involved more than $1.6 billion billed to private insurers for sham substance abuse treatment. The indictment alleges that the operators of dozens of treatment companies used “body brokers” to recruit vulnerable individuals, targeted patients whose insurance policies offered the most generous reimbursements, and induced those patients to travel to Southern California with free flights, housing, cash, and other items of value. Patients were then allegedly cycled through the operators’ facilities to continue billing insurance, regardless of whether treatment was medically necessary or actually provided. Four of the defendants were charged with conspiracy to violate EKRA and multiple substantive EKRA counts, and a facility manager has pleaded guilty to related fraud charges.

The case is notable in light of the ACLA denial for several reasons. The alleged conduct reflects the harms DOJ cited in denying the petition, including patient recruitment driven by financial incentives, overutilization, and unnecessary services. The case also is consistent with DOJ’s statement that it has used its EKRA authority “judiciously.” The alleged conduct is classic patient brokering accompanied by fraud allegations, not a commission plan for bona fide employees. While the takedown leaves open the employee compensation questions ACLA raised, it confirms that DOJ views EKRA as an active enforcement tool and is willing to use it in significant cases.

Takeaways

Laboratories, behavioral health and substance use disorder treatment providers, health systems with outreach laboratories, and digital health companies that route patients to testing should review their sales and marketing compensation arrangements in light of DOJ’s position. That review should cover compensation paid to employees, independent contractors, and third-party marketers and should identify any component that varies with referrals, tests, or patient volume. Because EKRA applies regardless of payor, arrangements limited to commercially insured or self-pay business should be included in the review.

Companies that are subject to both the AKS and EKRA should evaluate their arrangements separately under each statute. Compensation that qualifies for the AKS employee safe harbor does not necessarily satisfy an EKRA exception. In transactions involving laboratory or treatment businesses, sales compensation plans and marketing agreements should be a core diligence item.

We will continue to monitor EKRA developments. Please contact the authors of this article or your regular McDermott Will & Schulte lawyer with any questions.