Consulting Fees and Gas Cards

Start with what the payment actually is. A payment computed per referral is not a consulting fee. Calling it one does not change its character; the invoice is evidence of the arrangement, not a shield.

Federal. The Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) prohibits remuneration to induce referrals of items or services payable by a federal health care program. Funeral services are generally not Medicare-reimbursed, so the direct AKS hook is weaker than it first appears - but that is not the end of the analysis. Hospice care is a Medicare benefit with a defined bundle, and a hospice employee accepting per-head payments from a vendor creates a compliance problem for the hospice, an inducement problem under its own program integrity obligations, and a potential false-certification issue if the hospice's cost report or attestations are affected. The hospital discharge planners are agents of a Medicare-certified provider; per-referral gas cards to them are the paradigm of an inducement.

Pennsylvania. This is where the conduct clearly fails. The Funeral Director Law and Board regulations prohibit paying or offering commissions, rebates, or fees to procure funeral business, and treat fee-splitting and paid solicitation as unprofessional conduct. A $150-per-family payment to a social worker is precisely what that prohibition targets. Independently, paying an employee to influence her employer's referral decision implicates Pennsylvania commercial bribery (18 Pa.C.S. § 4108), and misrepresenting the payments as consulting services supports a UDAP claim.

The 'personal account' argument is irrelevant. The source of funds does not matter; the inducement does. Using personal money for an improper payment is an aggravating fact, not a defense.

Also address the HIPAA piece. Health care providers may disclose information to funeral directors as necessary to carry out their duties, but that permission is not a referral pipeline, and a nurse's 'heads-up' about a terminal patient must comply with the facility's privacy and marketing rules. The hospice compliance officer's letter should be answered truthfully and promptly, with counsel involved.

The gift card: same problem, different wrapper. A $500 holiday gift card to the director of nursing - the person who influences where the facility's families are referred - is remuneration to an agent of a referral source. It is not tied to volume, which distinguishes it from the per-head payments, but it is still an inducement, it violates most facility gift policies, and it looks worse in a Board file because it is a decision-maker gift rather than a staff courtesy. Nominal, non-cash courtesies (a tray of cookies for the unit, pens, a $10 coffee card for the whole shift) are commonly tolerated and are not what this is. A $500 card to one administrator is a gift with an expected return.

The $1,200 plaque: potentially legitimate - if it is real advertising. Payments to a facility for advertising space can be lawful where:

• there is a written agreement;
• the price is fair market value for the advertising actually delivered;
• the amount is not tied to the volume or value of referrals;
• the firm can prove the advertising ran (photographs of the plaque, dates, placement); and
• the facility's own solicitation policy permits it.

If the plaque is a fiction - no one tracks it, the payment continues regardless of whether any advertising exists, or the facility expects referrals in return - it is a disguised kickback and collapses into the same category as the gas cards.

The test to apply to every arrangement. Three questions: (1) Is the payment contingent on referrals, directly or in practical effect? (2) Does the firm receive fair market value in a legitimate good or service? (3) Is there a written agreement and a paper trail proving delivery? A 'yes' to the first or a 'no' to the second and third means stop.

Practical answer for D.L. Keep the plaque only with a signed advertising agreement, documented placement, a fair-market price, and no referral expectation. Kill the gift card to the DON.

Disclosure does not cure it. Informing families that the firm pays referral fees does not make paid solicitation lawful. The prohibition on fee-splitting exists to protect the public from being steered by someone with a financial stake in the choice, and a family's consent cannot authorize commercial bribery. Disclosure is a solution for conflicts of interest, not for illegal inducements. In fact, a written disclosure that the firm pays $150 per referral would be the Board's best exhibit.

What a compliant program looks like.

1. General advertising is fine. Print, radio, digital, direct mail, community seminars, and sponsorships of community events, as long as pricing claims are truthful and match the actual general price list.
2. Pay only for value received. Sponsorships, advertising, and educational programs paid to a facility - not to an individual employee - at fair market value, under a written agreement, with proof the benefit was delivered.
3. Nothing per referral. No commissions, gas cards, finder's fees, or 'consulting' invoices tied to families. This applies to hospice staff, hospital discharge planners, clergy, nursing home staff, and funeral home employees who might be tempted to pay an outsider.
4. Nominal gifts only, and only with the facility's policy permitting them.
5. Written policy and annual training for every employee and marketer, with a signed acknowledgment and a hotline for questions.
6. Contracts and records. Keep every advertising agreement, invoice, and proof of performance, and audit marketing spend annually.

Immediate steps for D.L. Terminate the social worker and discharge planner arrangements in writing; demand return of any documentation; stop the marketer's 'heads-up' requests at the oncology center; reconstruct the last 18 months of invoices; and consider self-disclosure and restitution where permitted. Answer the hospice compliance officer's letter truthfully and through counsel - do not destroy the invoices.

Board perspective. The Board will look at whether the conduct was knowing, whether it continued after notice, and whether the firm cooperated. A prompt stop, a written policy, and proof of training convert a revocation case into a penalty-and-conditions case.