Matthew Blair Post-Sentencing Statement:

I have accepted my responsibility for the payment of commissions to an independent

marketing professional beginning in 2014 during the time that I was responsible for the
operations of Blair Pharmacy. Prior to 2014, I had taken the position that the AKS prohibited all
payments of commissions to independent sales marketers on federal health plan business. Then
in 2014, I engaged in closer analysis of the learned articles and Government advisories
pertaining to the use of independent marketing professionals. I became aware that there were
two schools of thought regarding the legality of commission payments under the AKS. One
school of thought was described as the “High Risk” school which interpreted the statute as
prohibiting any sort of commissioned compensation paid to or received by an independent sales
representative with respect to products and services reimbursed under a federal health program.
The second school of thought, known as the “Improper Influence” interpretation, held that
something more than mere payments based on commissions was needed to violate the terms of
the AKS. That something more was described as:
“…the seller’s intent for the agent to use improper influence
to subvert another person’s or entity’s decision regarding the
ordering or purchasing of a covered item.”1

I also read and relied on Office of the Inspector General Advisory Opinion 98-10
concerning payments of commissions to a sales representative who undertook the marketing of
hospital supplies which were reimbursed under a federal health care program. That opinion
concluded that while the arrangement could constitute prohibited remuneration under the AKS if
the requisite intent to induce referrals was present, no sanctions under the AKS would be
imposed.

OIG Advisory Opinion 98-10 led me to the conclusion that the Government’s
interpretation of the AKS was more in line with the Improper Influence interpretation.
Moreover, it was my honest assessment that for a violation of the AKS to occur there would have
to be some improper influence which induced the referral.
The Opinion further described the circumstances that would be reviewed by the OIG on a
case by case basis to determine if payment and receipt of commissions to an independent
marketing representative violated the AKS. It also confirmed that:
“Of course, in all cases the statute is not violated unless the parties have the
requisite intent to induce referrals.”2
According to Miriam Webster, the definition of the word “induce” is “to cause (someone
or something) to do something” 3. I felt that without some sort of illegal remuneration to a

1
Lynch, Jos. E., King & Spaulding, LLC, “Does Intent Matter? Applying the Federal Anti-Kickback Law to Marketing
Arrangements, American health Lawyers Association, Connections, August 2012.
2
OIG Advisory Opinion 98-10
3
https://www.merriam-webster.com/dictionary/induce
prescriber, a sales representative was incapable of causing a licensed physician to prescribe a
medication.
In this same time period, I was introduced to an experienced marketing representative
who was already marketing compounds for a large compound pharmacy under an agreement
which reimbursed him on a commissioned basis. He assured me that his attorneys had verified
that this conduct was legal and he confirmed my understanding that such agreements were in
wide use in the compound pharmacy business at that time. Based on this reasoning, I authorized
Blair Pharmacy to enter into an agreement with the independent marketing representative on a
commissioned basis knowing, however, that if the High Risk interpretation was accepted by
the courts, that I had violated the law.
The relationship between Blair Pharmacy and the representative in question lasted for
only a few months when a dispute arose over the representative’s demand for payment of
commissions on scripts for which the patients had failed to make required co-payments,
thereby subjecting the reimbursements to insurance company claw-backs. This dispute led me
to seek legal counsel who, upon review of the relationship with the sales representative,
advised me that the relationship would most probably be deemed illegal by the federal
government under the High Risk interpretation of the AKS and advised me to discontinue the
relationship immediately. I was also advised that several courts had determined to follow the
High Risk interpretation of the AKS and that OIG advisory opinions were not binding
authority on the courts. Blair Pharmacy then discontinued the relationship with this sales
representative.
Since the now accepted interpretation of the AKS by the government is in accordance
with the High Risk School of thought, and since the constitutionality of this interpretation was
affirmed by the District Court in preliminary motions filed in this case, I have accepted
responsibility for a single violation of the AKS which consists of the payment of remuneration
on a commissioned basis to an independent marketing agent of Blair Pharmacy. I have repaid
the federal government all of the monies earned by Blair Pharmacy from the referrals made by
the sales agent at issue. I aggressively defended all other counts brought against me in this case
and continue to deny the allegations made in the indictment with regard to the counts of the
indictment which have now been dropped by federal prosecutors.