The Fifth Circuit has affirmed the convictions of former Boston Heart Diagnostics executives and sales representatives in a criminal Anti-Kickback Statute case arising from what prosecutors described as a sham management-services organization structure used to funnel payments to physicians in exchange for referrals. The decision in United States v. Theiler leaves intact conspiracy convictions tied to a broader healthcare-billing and referral scheme involving Boston Heart Diagnostics, Inc. and several individual defendants, including Susan Hertzberg, Matthew Theiler, David Kraus, and Thomas Hardaway.
For healthcare enforcement practitioners, the ruling is a notable appellate endorsement of the government’s theory that formally documented business arrangements can still amount to criminal kickback conduct when the substance of the arrangement is referral-driven. That is especially significant in cases involving management-services entities, marketing relationships, and consulting structures that may appear legitimate on paper but are alleged to function as payment vehicles for patient referrals.
The Fifth Circuit’s decision matters because it reinforces how difficult it can be for defendants to unwind jury verdicts in complex healthcare fraud prosecutions once the government has established evidence of intent, financial flows, and the practical operation of the arrangement. In other words, the use of intermediary entities and contractual labels will not necessarily insulate participants from criminal exposure where prosecutors can show the underlying purpose was to induce reimbursable referrals.
For litigators, the opinion is a reminder that appellate courts may give substantial deference to the jury’s view of how these arrangements worked in practice. For in-house counsel and compliance teams, it underscores the continuing enforcement risk around physician-facing compensation structures, particularly where payments correlate with expected test volume or referral generation. Internal reviews of management-services agreements, sales compensation plans, and physician marketing arrangements should focus not only on documentation, but on operational reality.
The underlying prosecution has been closely watched in the Eastern District of Texas. Readers tracking the district court record can review USA v. Hertzberg, et al on Docket Alarm for filings and case activity.
More broadly, the ruling fits within the government’s sustained effort to pursue criminal healthcare fraud cases built around sophisticated compensation and referral structures rather than simple billing falsity alone. That makes the decision particularly relevant for defense counsel, healthcare companies, laboratories, and compliance officers evaluating whether existing commercial arrangements could be recast by prosecutors as unlawful inducements under the Anti-Kickback Statute.