On June 6, 2025, the Ninth Circuit issued its decision in United States v. Schena, the first appellate decision interpreting the Eliminating Kickbacks in Recovery Act (“EKRA”) since its passage in 2018. In Schena, the Court held that kickbacks under EKRA include payments to third-party marketing agents to indirectly induce referrals from providers. The opinion clarifies longstanding ambiguity regarding the types of arrangements subject to liability under EKRA, marking a significant update in a statute that’s seen little regulatory guidance or interpretation to date. In this article, we break down the Court’s ruling and what it means for the future of EKRA compliance.
Background
Passed in 2018, EKRA prohibits kickbacks, bribes, and other forms of remuneration designed to solicit referrals to recovery centers, clinical treatment facilities, or laboratories. EKRA was designed to curb the practice of “patient brokering,” where “brokers” receive payments in exchange for the number of patients referred to addiction treatment centers.
At the heart of the case is defendant Mark Schena, president of Arrayit Corporation, a medical testing laboratory based in California with a primary focus on allergen and COVID-19 antibody blood testing. Schena was convicted on EKRA charges for paying marketers to give misleading pitches to elicit referrals from doctors, who lacked allergy testing expertise. In his appeal, Schena contended that the payments were not “kickbacks” under EKRA, arguing that kickbacks must be made to referring providers to incur EKRA liability.
In a landmark decision, the Ninth Circuit upheld Schena’s EKRA conviction. The Court explained that EKRA is not limited to payments that are made directly to referring providers to induce referrals; rather, the statute prohibits kickbacks that directly or indirectly induce an improper referral to a recovery home, clinical treatment facility, or laboratory. The Court further explained that while simply paying the marketing agents would have triggered EKRA liability, commission-based payment structures that involve “undue influence” are within EKRA’s scope. The Court found that Schena’s marketing scheme, which directed marketers to provide physicians with misleading and deceptive information to induce referrals, violated EKRA.
While the case is likely to be influential as other circuits decide how to interpret EKRA, the case leaves many questions unanswered. While it’s clear that directing marketers to mislead or deceive providers about the nature of the services for which referrals are sought, the Court fell short of developing any bright-line tests. The ruling also leaves the future of EKRA’s safe harbor uncertain, leaving providers guessing as to how to manage existing marketing relationships without incurring significant risk.
How Health Law Alliance Can Help
While the Ninth Circuit’s opinion in Schena provides much-needed clarity on compliant referral arrangements for labs, recovery centers, and addiction treatment providers, Schena falls significantly short of providing a true roadmap for providers. With uncertainty sure to loom as other courts grapple with this ruling, it’s never been more important to have healthcare fraud and compliance experts in your corner.
At Health Law Alliance, our attorneys are experts in helping providers structure compliant referral arrangements to prevent fraud risks before they happen. Facing EKRA charges? Led by former prosecutors, our healthcare fraud group has decades of experience defending providers from kickback allegations, using tailored defense strategies designed to protect your practice, finances, and professional reputation.
Don’t wait until your practice is at stake. Contact us today and get Health Law Alliance on your side.
MORE: Learn more about Health Law Alliance's defense against Healthcare Fraud matters.
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