Traditionally, if physicians violated the terms of their contracts with private insurers, the insurer could refuse to pay the claim and/or deselect the physician from the plan. The insurer could also sue the physician for fraud. In extreme cases, the local district attorney or U.S. Attorney could prosecute the physician for mail and wire fraud for using the mail and electronic communications to file the fraudulent claims. The Health Insurance Portability and Accountability Act of 1996 (HIPAA), better known as the Kassebaum- Kennedy bill, now makes it a federal crime to defraud private insurance companies. Violations of the contracts with a private insurer are criminal fraud under HIPAA and could result in fines and criminal prosecution.

To date, there have been no reported cases, prosecutions, or settlements solely based on professional courtesy to medical care providers. Looking at general patient care, rather than just professional courtesy, there have been private insurance fraud actions based on illegally waiving copays and/or providing discounts that were not passed on to the insurer. There have been federal actions for the same violations, as well as for using waivers and discounts to induce Medicare patients to use other medical care services.

Professional courtesy means making no charge to anyone, patient or insurance, for medical care. There are no special exceptions in the law that allow professional courtesy to physicians in situations where the same courtesy could not be extended to all patients. Conversely, there are some situations where such courtesy can be extended to all patients except physicians and other medical care providers. Medical care providers must examine their professional courtesy policies to ensure that they do not violate either the contractual terms in private insurance policies or the Medicare/Medicaid laws and regulations. Although there may be situations where it is defensible to “no charge” for services to medical care professionals, the physician should ensure that this professional courtesy is not linked to referrals, either in reality or in appearance.