Key Takeaways
- No AKS-Style Employment Safe Harbor. DOJ declined to create a broader EKRA employment exception mirroring that found in the federal Anti-Kickback Statute (AKS). Variable, referral-based compensation for employed and contracted sales representatives remains outside EKRA’s existing statutory employment exception, although such compensation is not automatically unlawful.
- EKRA Reaches Beyond Fraud. Even absent fraudulent misrepresentation, financial incentives can violate EKRA when they improperly induce referrals. DOJ identifies compromised patient choice and overutilization as potential consequences of these arrangements.
- Variable Compensation Is a Core Risk. DOJ cautioned that allowing commission-based pay “could effectively reintroduce the very kickback structures EKRA was designed to eliminate.”
- Proposed Misrepresentation Limitation Rejected. DOJ found that limiting the employment exception to arrangements without knowing and willful misrepresentation would “hinder efforts to prosecute” commission-based referral schemes.
- No Regulatory Burden Relief. EKRA has been in effect for nearly eight years, and similar AKS restrictions have applied for decades — DOJ’s position is that laboratories have had “ample time” to adapt their compensation arrangements and compliance programs.
On Sept. 25, 2026, the U.S. Department of Justice (DOJ) denied a petition from the American Clinical Laboratory Association (ACLA) seeking a broad employment safe harbor under the Eliminating Kickbacks in Recovery Act of 2018 (EKRA). ACLA requested that the attorney general permit laboratories to pay variable, commission-based compensation to employed sales representatives, provided that those employees did not knowingly provide false or misleading information. DOJ rejected the petition in full, leaving EKRA’s existing employment exception unchanged and reiterating its position that referral-based financial incentives can violate the statute even in the absence of fraud.
EKRA and the ACLA Petition
EKRA, enacted in late 2018 as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), prohibits accepting or paying kickbacks for referrals to recovery homes, clinical treatment facilities or laboratories. EKRA was the first significant federal law intended to regulate payment for the referral of patients or services billed to private insurance, rather than those billed to federal healthcare programs such as Medicare or Medicaid. In other words, while other government payer-focused statutes, such as the AKS, were in place that regulated the ability to pay and receive referral commissions in connection with federal healthcare reimbursement, EKRA was the first statute that also regulated conduct for the referral of patients or services to private insurance.
On Sept. 30, 2024, ACLA submitted a petition asking the U.S. Attorney General (AG) to issue rules creating a safe harbor that would permit laboratories to provide remuneration — including variable compensation — to employed sales representatives, provided those employees do not knowingly and willfully provide materially false or misleading information. The petition was modeled on the AKS employee safe harbor, which provides broader protections for bona fide employment arrangements. Unlike the AKS, where Congress granted rulemaking authority to the Office of Inspector General of the Department of Health and Human Services, EKRA vests that authority in DOJ and the AG.
DOJ’s Reasoning
DOJ’s denial, published in the Sept. 25, 2026, Federal Register, rested on several grounds. First, DOJ found that ACLA’s proposal would “circumscribe the scope of the statute to apply only in situations involving fraud, which is already prohibited under other statutes.” This reading would effectively render EKRA duplicative. DOJ emphasized that it “has used its criminal enforcement power under EKRA judiciously and there are no allegations in the request for rulemaking that it has overreached.”
Second, DOJ cited the U.S. Court of Appeals for the Ninth Circuit’s decision in United States v. Schena, which held that sales representatives providing misleading information “is not a necessary set of circumstances” for violating EKRA, “although it is sufficient.” However, the Ninth Circuit, in upholding the defendant’s conviction, also held that percentage-based compensation for marketing agents, without more, does not violate EKRA, leaving the circumstances constituting improper inducement beyond fraudulent misrepresentations for future cases. The U.S. Supreme Court subsequently denied Schena’s petition for certiorari in March 2026, leaving the Ninth Circuit’s interpretation as the leading appellate authority on EKRA’s reach.
DOJ also pointed to case law recognizing that kickback payments to physicians that induce referrals are independently illegal under EKRA. Finally, DOJ noted that “[t]he existing EKRA framework already permits reasonable employee compensation structures unrelated to referral volume, while restricting arrangements that create direct financial incentives for increasing referrals.”
What This Means for Your Organization
DOJ’s denial leaves EKRA’s existing requirements unchanged and confirms that DOJ does not intend to adopt ACLA’s proposed employment exception. Healthcare providers subject to EKRA — specifically laboratories, recovery homes, substance use disorder treatment facilities and related entities — should consider the following steps.
- Audit sales compensation arrangements now. Review all compensation structures for employed and contracted sales representatives, marketing agents and referral sources. Any arrangement tying pay to referral volume — including bonuses, commissions and productivity incentives linked to test orders or patient referrals — should be flagged for legal review.
- Do not assume AKS compliance equals EKRA compliance. EKRA’s exceptions are narrower than the AKS safe harbors. Compensation models that are permissible under the AKS employee safe harbor may still violate EKRA. Compliance teams should map each compensation arrangement against EKRA’s specific statutory exceptions independently.
- Update compliance training and policies. Ensure that sales teams, business development personnel and management understand that EKRA applies regardless of payer type — covering privately insured patients as well as government-program beneficiaries — and that no broad employment safe harbor exists.
- Document your compensation rationale. For any compensation arrangement that could be scrutinized, maintain contemporaneous documentation showing that pay is tied to legitimate, nonreferral-based metrics (e.g., hours worked, administrative duties or fixed salaries unrelated to volume).
- Monitor DOJ enforcement activity. DOJ characterized its EKRA enforcement as “judicious,” but this denial signals its commitment to the statute’s broad reach. Track new prosecutions and case law developments — particularly decisions addressing the circumstances in which commission-based compensation constitutes improper inducement following Schena — to stay ahead of evolving enforcement priorities.
McGuireWoods is monitoring EKRA enforcement and related state-level developments and can assist in tracking and assessing the impact of these evolving regulatory efforts. For questions about how these changes affect your management arrangements, M&A transactions or regulatory compliance strategy, contact the authors, your McGuireWoods contact or a member of the Healthcare Compliance, Regulatory & Policy Practice Group.