Emmanuel E. Ubinas-Brache v. Surgery Center of Texas, LP

Animated by concerns over fraud and rising costs in federal healthcare reimbursement programs like Medicare and Medicaid, Congress enacted an anti-kickback statute prohibiting renumeration for patient referrals. Here, a Texas limited partnership operating a surgical center expelled one of its surgeon-limited partners for refusing to violate that statute. Applying state contract law, a Texas appellate court deemed this permissible under a provision in the partnership agreement authorizing expulsion “for any reason, or no reason.” The question presented is: 1. Does applying state contract law to enforce a partnership agreement’s clause permitting expulsion “for any reason or no reason” obstruct Congress’s efforts to control healthcare fraud, such that the anti-kickback statute preempts state law and prohibits expelling a surgeon-limited partner for refusing to violate it?