Washington Supreme Court Decision Interpreting Anti-Rebating Statute
On October 12, 2006, the Washington Supreme Court published a decision which interprets Chapter 19.68 RCW, Washington's "anti-rebating" statute for "practitioners of healing professions." The decision in Wright v. Jeckle¹ is of interest to health care providers and their counsel.

Plaintiff patients sued their physician, Dr. Milan Jeckle, alleging that he had engaged in deceptive acts in connection with dispensing weight-loss drugs, specifically that he had violated the anti-rebating statute by profiting from dispensing the drugs known as fen-phen to patients in his medical clinic. The trial court had found in 2002 that Dr. Jeckle violated RCW 19.68.010 by selling fen-phen to his patients for a profit.

On direct appeal, the Supreme Court held that RCW 19.68.010 prohibits licensed practitioners from doing only two things: paying anything of value in return for a referral and receiving anything of value in return for referring patients (i.e., making or receiving kickbacks). The Court held that the statute does not prohibit a physician from selling prescription drugs to patients at a profit. The court in Wright v. Jeckle also stated that the statute does not prevent a patient from paying a health care provider for services rendered or medications received, and it does not prevent a health care provider from profiting from goods or care furnished to patients.

Other than Jeckle, there few published cases which interpret the anti-rebating statute. In the one prior appellate-level case which interprets the statute, Day v. Inland Empire Optical, Inc.², the Supreme Court held that a group of ophthalmologists, who had an ownership interest in an optical shop which was separate from their practice, could not receive income or profits from the referral of patients to the optical shop.

The Attorney General has also addressed the intent of the statute several times. The Attorney General has indicated that the following arrangements would violate RCW 19.68.010:

(1) charging fees that unreasonably exceed the fair market value of the services rendered;

(2) billing for services that the physician failed to provide; and

(3) billing for services for which the physician received payment from a different source (e.g., an insurer or third party payor).³

The Attorney General's most recent 2005 opinion indicates that physicians should only earn a profit from services they actually render.⁴ In that Opinion, the Attorney General concluded that physicians are not prohibited from billing for the services of another provider if the referring physician specifically identifies the nature of these charges and refrains from marking up the cost of the services rendered by another provider.

The Jeckle decision reaffirms the notion that unearned profits from referrals to third parties are prohibited under the anti-rebating statute. However, physicians are not prohibited from profiting from treating patients or providing goods or services to their patients.

If you have any questions regarding this decision, please contact any of the attorneys in the Health Professionals and Organizations Practice Area.


¹ Wright v. Jeckle, No. 98-2-07410-2 (2006).
² 76 Wn.2d 407, 456 P.2d 1011 (1969).
³ Off. Atty. Gen. 1992 No. 30 at 7.
⁴ See Off. Atty. Gen. 2005 No. 13; see also Off. Atty. Gen. 1992 No. 30; Off. Atty. Gen. 1988 No. 28.