The Eliminating Kickbacks in Recovery Act in 2025: New Developments and New Questions for Laboratory Sales Compensation — EnforceMintz

Eliminating Kickbacks in Recovery Act (EKRA) enforcement remains uncertain for clinical laboratories, even after the Ninth Circuit’s Schena decision and New Jersey’s recent patient brokering amendments. This update covers EKRA’s impact on laboratory sales compensation, Department of Justice (DOJ) interpretation, and state-level patient referral laws, offering key compliance insights for 2026.

KEY POINTS:

• Ninth Circuit clarifies EKRA’s scope in Schena. The court ruled that percentage-based compensation for laboratory sales reps is not a per se EKRA violation unless tied to “wrongful inducement,” such as fraudulent efforts to influence referrals. DOJ appeared to agree with this interpretation during oral argument.
• DOJ EKRA guidance still absent. Despite industry requests, DOJ has not issued regulations clarifying EKRA’s exceptions, including the exception for employee compensation, leaving laboratories unclear about whether certain traditionally permissible compensation structures are EKRA compliant.
• Supreme Court review possible. Mark Schena has petitioned the US Supreme Court to review EKRA’s interpretation, which could lead to broader clarity (or further uncertainty) on the statute’s application.
• New Jersey expands state-level kickback law. New Jersey amended its patient brokering statute to criminalize payments tied to referrals for clinical labs and other facilities, with limited exceptions. Labs operating in New Jersey must ensure compensation plans comply with both EKRA and state law.

This article is part of EnforceMintz: Healthcare Enforcement Trends in 2025 & 2026 Outlook, a series exploring key developments and practical strategies for health care organizations navigating enforcement risks. Read more articles from EnforceMintz to stay current on enforcement trends and compliance strategies.

Since 2018, many in the health care industry — particularly clinical laboratories — have been waiting for clarity around enforcement of the EKRA. One particularly thorny issue is EKRA’s application to sales representative compensation paid by clinical laboratories, especially with respect to percentage-based and other forms of variable compensation paid in compliance with the Anti-Kickback Statute (AKS) safe harbors. 

The Ninth Circuit Court of Appeals considered this issue in 2025 in United States v. Schena, where the court found:

• Percentage-based compensation does not trigger EKRA as remuneration “to induce a referral” unless there is evidence of “wrongful inducement.”
• Example of “wrongful inducement”: marketing agents unduly influencing doctors’ referrals through false or fraudulent representations.
• DOJ agreed at oral argument that percentage-based payments are not a per se EKRA violation.

While this singular appellate decision offers some reassurance and insights (which we discuss further below), the laboratory industry is still left to wonder whether the Ninth Circuit’s interpretation will be widely adopted or limited in its application, and whether the government’s position at oral argument represents DOJ’s official interpretation of the statute in this context. This article discusses how, despite the fact some notable EKRA-related developments have taken place in 2025, laboratories and other providers covered by EKRA remain largely in the dark regarding whether and how this statute might be applied to some long-standing business practices.

The Ninth Circuit’s Decision in Schena

While EKRA is similar in many ways to the AKS, the two statutes appear to contemplate different protections for compensation paid to employees:

• AKS broadly exempts from the definition of “remuneration” any amount “paid by an employer to an employee, who has a bona fide employment relationship with the employer....”
• In contrast, Section (b)(2) of EKRA excepts from the statute “any payment made by an employer to an employee or independent contractor (who has a bona fide employment or contractual relationship with such employer) for employment,” only if the payment “is not determined by or does not vary by” the number of individuals referred, the number of tests performed, or the amount billed to or received from a health care benefit program.

Historically, many laboratories have compensated their employed sales representatives using variable compensation (e.g., a base salary plus commission that might be calculated based on revenue received, among other factors). This approach to compensation is generally considered to be consistent with the AKS safe harbor for bona fide employee relationships. (Compensation paid to marketers not employed by the laboratory would need to meet a different AKS safe harbor.) However, since EKRA took effect in 2018, laboratories have questioned whether this statute would protect these same compensation arrangements. As of the date of this publication, DOJ has not exercised its authority to issue regulations clarifying EKRA’s exceptions. While the American Clinical Laboratory Association reports having engaged with DOJ to seek clarity on the scope of EKRA as applied to variable incentive compensation paid to laboratories’ employed sales and marketing personnel, DOJ has not yet published regulations interpreting EKRA’s exceptions or issued any guidance on this point.

Despite the absence of guidance from DOJ, the Ninth Circuit Court of Appeals weighed in on this question in its July 2025 decision affirming Mark Schena’s conviction for EKRA violations premised on percentage-of-revenue compensation paid to marketers selling inaccurate COVID-19 testing and medically unnecessary allergy testing. In short, the Ninth Circuit found that Section (b)(2) of EKRA did not protect this method of compensation because it “did vary based on the number of tests or procedures performed.” Standing alone, this interpretation might have deepened laboratories’ concern that EKRA prohibits AKS-compliant compensation to sales representatives, but in interpreting Section (a)(2)(A) and the phrase “to induce a referral,” the court found that such payments would not necessarily even trigger the application of EKRA, commenting that “the mere fact of a percentage-based marketing arrangement, without more, would [not] constitute a per se violation of EKRA....” During oral argument, DOJ apparently agreed with this interpretation, offering some marginal comfort to laboratories that otherwise law-abiding laboratories are not a target for EKRA enforcement solely based on how they compensate their sales force.

The court further explained that “all marketing efforts are intended to influence the recipient,” but without a “clearer indication in the statute, [the court was] hard pressed to read EKRA to criminalize (with major federal penalties) a standard payment structure for marketing personnel, even when the marketing personnel are persuasive in driving business.” Instead, to find that percentage-based compensation was intended to induce referrals in violation of EKRA, the court was looking for “specific circumstances in which payments to a marketing agent reflect a wrongful effort to unduly influence the decisions of doctors and medical professionals making referrals.”

More Questions than Answers

It remains to be seen whether other federal Circuit Courts or DOJ will take the same approach to sales representative compensation as the Ninth Circuit when faced with different facts. And, again, we are still waiting to see if DOJ will issue regulations interpreting EKRA’s exceptions.

We can add to the list of open questions whether the Supreme Court will accept Schena’s invitation to weigh in on the meaning of Section (a)(2)(A), as Schena filed a Petition for a Writ of Certiorari with the US Supreme Court in October 2025. As of the date of this publication, the Court has not yet made a decision.

Laboratories doing business in New Jersey also should examine whether they are in compliance with the state’s recently amended EKRA-like patient brokering statute. In August 2025, New Jersey amended its existing patient brokering statute, N.J. Stat. Ann. § 2C:40A-6, to expressly criminalize the making, solicitation, offer, or receipt of any payment, commission, kickback, bribe, or rebate to any person “in connection with the referral of patients to” a clinical laboratory, among other facilities. Similar to EKRA, these amendments (accessible here and here) were adopted to combat patient referral schemes in the context of treating or diagnosing substance use disorder, but the text of the statute does not limit its application to laboratories performing substance use disorder–related services.

The New Jersey statute includes one exception that protects the payment or receipt of “any fee, commission, or rebate that does not vary based on” (1) the number of patients referred; (2) the duration, level, volume, or nature of the substance use disorder treatment services provided to a patient; or (3) the amount of benefits provided by a carrier for treatment or services provided to a patient. While the Schena opinion provided some comfort that laboratories can compensate their sales representatives using percentage-based compensation arrangements in compliance with EKRA so long as those arrangements do not include any “wrongful effort to unduly influence” the test-ordering decisions of health care providers, laboratories doing business in New Jersey will still need to ensure that those compensation plans do not vary based on factors prohibited under the state’s amended statute.

So, as much as 2025 offered some helpful EKRA insights, many questions remain for laboratories trying to navigate this increasingly complex legal landscape.

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