On April 14, 2025, the U.S. Court of Appeals for the Seventh Circuit (the “Court”) reversed the conviction of Mark Sorensen under the federal Anti-Kickback Statute (“AKS”), holding that payments to marketing firms and manufacturers – absent influence over health care decisions – do not constitute illegal kickbacks. Notably, this marks the Seventh Circuit’s first occasion to consider the AKS’s application to advertising and narrows the statute’s “outer boundaries.”
Background
The AKS, codified at 42 U.S.C. § 1320a-7b(b), prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or reward the referral of services reimbursable by a federal health care program. For a payment to be unlawful under the AKS, “a payor must act with the intent to induce referrals from the payee.” Although commonly applied to health care professionals, the AKS can also extend to payments made to non-physicians. Penalties for violation include criminal charges, False Claims Act liability, civil monetary penalties and exclusion from federal health care programs. The AKS is designed to prevent payments that could improperly influence clinical decision-making, thereby safeguarding patients from unnecessary or low-quality care driven by financial incentives.
Sorensen owned SyMed Inc., a Medicare-registered distributor of durable medical equipment. SyMed collaborated with marketing firms and a manufacturer to advertise and promote orthopedic braces. Interested patients provided their information in response to advertisements. This information was used to generate prefilled, unsigned prescription forms sent to their physicians. Physicians retained full discretion to sign and return these forms. If a physician signed the prescription, the brace was shipped and Medicare was billed accordingly.
A jury convicted Sorensen of one count of conspiracy and three counts of offering and paying kickbacks for Medicare referrals. He was sentenced to forty-two months in prison and was subject to a nearly $2 million forfeiture. Sorensen appealed, challenging the sufficiency of the evidence supporting his conviction.
The Court’s Analysis
The Court reversed Sorensen’s conviction, finding insufficient evidence that Sorensen’s payments constituted illegal kickbacks. In analyzing Sorensen’s conduct, the Court relied on United States v. George, which holds that a payment is made to induce referrals if the payee can “leverage fluid, informal power and influence” over health care decisions. Thus, the Court determined that the conviction could not be upheld due to the advertisers’ lack of power and influence over any medical decisions.
As supporting evidence, the Court highlighted that a vast majority of the prescriptions sent by the advertisers to physicians were ignored and never returned. The Court reasoned that the lack of returned prescriptions conveyed that the faxed prescriptions were not “referrals” and were instead “proposals” and that the physicians still retained full discretion over all medical decisions involving their patients at all times.
In contrast, the Court distinguished Sorensen’s conduct from United States v. Polin, where payments to a sales representative violated the AKS because the representative’s device recommendations effectively dictated patient care. In Polin, the absence of physician pushback signaled improper influence over medical decisions. Sorensen’s case stood in stark contrast – the marketing firms engaged in lawful advertising, never exploited relationships with patients or providers and had no role in clinical judgment. Because physicians retained and exercised full discretion, the Court found no intent to induce referrals and therefore no basis for an AKS conviction.
Practical Takeaways
- Advertising Activities Are Not Prohibited under the AKS: Advertising activities are not prohibited under the AKS in the Seventh Circuit so long as the advertisers do not hold any influence or power over any medical decisions being made.
- Evaluate Marketing Relationships: Health care providers should assess their marketing arrangements to ensure compliance, focusing on whether any party involved has the ability to influence health care decisions.
If you have questions or would like more information about this topic, please contact:
- David Honig at (317) 977-1447 or dhonig@hallrender.com;
- Kennedy Bunch at (317) 977-1420 or kbunch@hallrender.com;
- Connor Wallace at (317) 429-3680 or crwallace@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
