FAQ: If we hire a professional licensee as an independent contractor and share fees, do we risk being accused of participating in a kickback/rebating scheme?

YES. When you successfully create an independent contractor (IC) relationship with a licensee practicing in your clinic, and contemporaneously share fees for services rendered, you are engaging in kickback behavior. The IC is a separate entity to whom you refer your patients, and then the IC kicks back a portion of the fee for their services to the “Employer” as part of their compensation arrangement. There is no meaningful distinction between this arrangement and slipping a capper some cash for bringing a new patient into the clinic.

Further support for this view is Columbia Physical Therapy, Inc., P.S. v. Benton Franklin Orthopedic Associates, P.L.L.C., 168 Wn. 2d 421, 228 P. 3d 1260 (2010) wherein the Court concluded having MDs merge a PT clinic into their practice did not constitute a rebating or kickback situation.

“Columbia’s third claim is that the physician-members and the physical therapists of BFOA violate the antirebate statute, chapter 19.68 RCW, by receiving and paying unearned profits. Though the antirebate statute applies to a referring physician with an ownership interest in the business to which patients are referred, Day v. Inland Empire Optical, Inc., 76 Wash.2d 407, 456 P.2d 1011 (1969), the statute exempts from its coverage profits earned by an employee of a firm and flowing to the firm’s owners, provided the owners practice in the firm, RCW 19.68.040. (at page 439)”

Please note that independent contractors are not mentioned in this case as exempt or in RCW 19.68.040.

Back to Resources