Are Patient Referral Kickbacks a Crime in Arizona?

What Does A.R.S. 13-3713 Actually Prohibit?

A referral arrangement that felt like ordinary business — a bonus for front-desk staff who sign up new patients, a percentage paid to a lab for every specimen a clinic sends, a “marketing fee” a sober-living home pays for every client steered through the door — is exactly what Arizona’s patient-referral statute was written to reach. It does not matter whether the underlying care was medically necessary or whether any patient was actually harmed. It only matters that consideration changed hands for the referral itself, and that you knew it.

This article covers both branches of 13-3713: the referral-kickback crime that reaches doctors, chiropractors, dentists, and clinic, lab, and imaging-center owners, and the separate health-coverage-fraud branch aimed at false applications and misused identification. For the broader picture of how we handle these allegations, see our Arizona healthcare fraud defense page and our Scottsdale white collar crimes practice page. If you have only received a subpoena, an audit letter, or a call from an investigator so far, read what a target letter in a fraud investigation means before you respond to anyone.

Arizona’s A.R.S. 13-3713, titled “Consideration for referral of patient, client or customer; fraud; violation; classification,” combines two different crimes under one section number. Subsection A is the referral-kickback offense: knowingly offering, giving, soliciting, or accepting any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, as compensation or inducement, for referring a patient, client, or customer to any person for a product, goods, or service paid for in whole or in part by health coverage. Subsections B through F are a separate health-coverage-fraud offense built around false statements, stolen or borrowed identification, and counterfeit ID cards used to obtain coverage. They share a penalty structure, but the state has to prove entirely different facts for each branch.

What Counts as an Illegal Referral Kickback?

This branch reaches anyone in a position to send business somewhere else in exchange for something of value: a physician who refers patients to an imaging center that pays per scan, a chiropractor who takes a percentage from a physical-therapy clinic for every patient sent over, a treatment-center or sober-living operator who pays a per-head “marketing” or “admission” fee for referrals — sometimes called patient brokering — or a lab that pays a draw fee to a clinic for every specimen collected. Doctors, dentists, healthcare marketers, and clinic, lab, and imaging owners are the people this branch is aimed at.

“Consideration” is not limited to cash. A rebate, refund, discount, preference, patronage dividend, or in-kind benefit counts the same as a check under the statute. What the state has to prove is that you knowingly offered or accepted the payment as compensation for the referral itself — not that any patient was harmed, not that the underlying treatment was unnecessary, and not that the arrangement was formalized in writing.

What Is Health-Coverage Fraud Under 13-3713?

The second branch has nothing to do with referrals. It separately criminalizes: presenting false information on an application for health coverage, or failing to report a change affecting eligibility (Subsection B); obtaining coverage or benefits using identification you are not entitled to use (Subsection C); counterfeiting or altering an identification card to fraudulently obtain coverage (Subsection D); a person lawfully entitled to coverage knowingly lending their own ID to someone else for a fraudulent claim (Subsection E); and aiding or abetting any of the above (Subsection F). This branch is charged far more often against patients, cardholders, and family members than against providers — but a clinic or biller that knowingly submits claims for services rendered to someone using a borrowed or counterfeit ID can be swept in under aiding and abetting.

Lawful Marketing or Illegal Kickback: Where’s the Line?

Not every referral relationship in a medical, dental, or treatment-center practice is a crime, and 13-3713 does not turn ordinary business arrangements into felonies. What tends to separate a lawful structure from a kickback:

• Bona fide employment. Paying a salaried employee whose duties include patient intake, scheduling, or outreach is compensation for labor, not consideration for a referral.
• Fair-market-value contracts. A management, billing, or consulting agreement that pays a set rate for real services performed — a rate that does not move with the volume or value of referrals sent — looks nothing like a per-patient kickback. The moment payment is calculated per referral, per patient, or per specimen, it starts to look like Subsection A.
• Legitimate advertising. General advertising, a shared directory listing, or a flat marketing-services fee paid regardless of how many patients actually result is different from a fee that is really a disguised per-head payment.
• The knowing element. Subsection A requires that you knowingly offered or accepted the consideration as compensation for a referral. An arrangement structured around fair-market-value principles, drafted or reviewed by a lawyer or accountant, that a prosecutor later argues went too far is not automatically a crime — a genuine, good-faith belief that the structure was lawful goes directly to intent.

This is where most 13-3713 defenses actually live: not in denying that a payment happened, but in showing the payment was for real services at a fair rate, or that there was no knowing intent to buy referrals.

How Do the Federal Anti-Kickback & Stark Laws Apply?

Arizona’s statute is not the only law in play. If any of the referred care is billed to Medicare, AHCCCS (Arizona’s Medicaid program), or another federal health program, the federal Anti-Kickback Statute and the Stark Law can apply on top of, or instead of, state charges. Federal healthcare-fraud cases are prosecuted by the U.S. Attorney’s Office, not the county attorney, and carry their own separate penalty structure. A single referral arrangement can trigger a state 13-3713 investigation, a federal healthcare-fraud investigation, or both running at the same time. Knowing which agency is actually behind the questions you are getting changes the defense from day one.

Who Actually Gets Charged Under 13-3713?

In practice, 13-3713 investigations tend to center on a handful of recurring fact patterns:

• A physician, chiropractor, or dentist receiving a percentage or flat fee from an imaging center, lab, or physical-therapy practice for every patient referred.
• A sober-living home or treatment center paying — or being paid — a per-head “marketing” or “admission” fee for steering clients into a program, commonly called patient brokering.
• A healthcare marketing company structuring commission-based lead-generation deals that a prosecutor later characterizes as a disguised kickback.
• A clinic offering a discount, gift, or preferred scheduling to whoever sends the most new patients.
• A coverage-fraud case built around a patient, family member, or biller accused of misrepresenting eligibility or using someone else’s identification.

How Do You Defend a 13-3713 Kickback Charge?

Beyond the lawful-marketing distinction above, several angles come up repeatedly in 13-3713 cases:

• Challenging the causal link. The state has to show the payment was for the referral, not merely that a payment and a referral both happened to exist in the same business relationship.
• Fair-market-value documentation. Contracts, time logs, and comparable-rate analysis showing the payment matched real services at a market rate undercuts the “compensation for referral” theory.
• Absence of knowing intent. If the arrangement was set up by counsel or an accountant and you reasonably relied on that advice, that reliance is powerful evidence against the knowing element.
• Attacking the valuation. Because your felony class turns on a specific dollar figure, a forensic accounting review of how the state calculated “consideration” or “coverage value” can move a case from one class to another — or eliminate the felony threshold entirely.
• For the coverage-fraud branch: records showing you were in fact authorized to use the identification, or that any misstatement on an application was a clerical or good-faith error rather than a knowing misrepresentation.

Where Is a 13-3713 Case Heard?

A felony charge under 13-3713 — class 3, 4, 5, or 6 — is filed in Maricopa County Superior Court and prosecuted by the Maricopa County Attorney or, because Subsection G grants concurrent authority, by the Arizona Attorney General, which frequently leads healthcare-fraud matters. The class 1 misdemeanor version, for coverage value of $100 or less, is handled in justice or municipal court. If federal healthcare programs were billed, the case can instead — or also — be investigated and charged by the U.S. Attorney’s Office under separate federal statutes, which changes both the forum and the stakes substantially.

How Tamou Law Group Defends 13-3713 Cases

These cases are won on documents, valuation, and intent — not on denying that money moved. In the first days we secure the referral contracts, invoices, and coverage records at issue, retain a forensic accountant to test how the state is valuing the “consideration” or “coverage” involved, and identify whether the arrangement fits a recognized fair-market-value or bona fide employment structure. We also look immediately at whether the case is state, federal, or both, because a Medicare or AHCCCS-billed referral can bring the U.S. Attorney’s Office into a matter the county attorney already opened.

Our team includes former prosecutors, law enforcement officers, and public defenders who know how the Maricopa County Attorney’s Office, the Arizona Attorney General’s healthcare-fraud section, and federal prosecutors build these cases — and how to take apart the theory before it becomes an indictment. Same-day consultations are available at our Scottsdale office near Camelback Road, or by phone if you cannot come in. Call 623-321-4699 for a confidential consultation, or learn more on our Scottsdale criminal defense overview.