Overview
On August 11, 2025, New Jersey Lieutenant Governor Tahesha Way, acting for Governor Phil Murphy, signed into law two bills, A3973/S3952 and A3974/S3955 (collectively, the 2025 amendment), that modify New Jersey’s existing criminal patient brokering statute to expand its reach to recovery residences and clinical laboratories. The New Jersey patient brokering statute now prohibits making or receiving a fee, commission, or rebate in connection with the referral of patients to these entities, as well as to licensed substance use disorder (SUD) treatment providers or facilities.
Many of the changes made by the 2025 amendment to New Jersey’s patient brokering statute mirror language included in the federal Eliminating Kickbacks in Recovery Act (EKRA), 18 U.S.C. § 220.
In Depth
How does the 2025 amendment affect the existing New Jersey patient brokering statute?
New Jersey’s existing patient brokering statute focused on payments for referrals to SUD treatment facilities. The 2025 amendment broadens the scope of this statute, N.J. Stat. Ann. § 2C:40A-6, in several important ways:
- The criminal prohibition now applies to recovery residences and clinical laboratories, not just licensed SUD providers and facilities.
- The amendment expands the definition of prohibited remuneration to cover kickbacks, bribes, and in-kind gifts, whether offered directly or indirectly.
- While the patient brokering statute previously applied to any “person,” the revisions clarify that a healthcare provider, healthcare facility, or nonprofit organization may be liable under the statute for making, soliciting, offering, or receiving a prohibited payment under the statute.
- The amendment escalates penalties for violations of the New Jersey criminal patient brokering statute. A violation is now a third-degree crime, punishable by up to five years in prison and a mandatory $50,000 fine per incident, plus restitution.
Additionally, the New Jersey Department of Health (DOH) can investigate and penalize healthcare facilities and laboratories, and the New Jersey Department of Community Affairs (DCA) has authority over recovery residences. Both agencies can suspend or revoke licenses and impose civil fines of up to $20,000 per violation.
Why did the legislature make the change?
Although the legislative history is sparse, a press release from the New Jersey governor’s office accompanying the 2025 amendment indicates that New Jersey lawmakers may have been motivated to respond to increasingly sophisticated referral schemes that were not addressed by the 2021 law. The press release references a 2024 report by the New Jersey State Commission of Investigation titled “The Dirty Business Behind Getting Clean,” which discussed patient brokering and deceptive marketing. The report recommended stronger laws to restrict such practices, including expanding prohibitions to entities and nonprofit organizations (instead of being limited to providers), and establishing oversight regimes for peer recovery coaches who made treatment recommendations without clinical credentials. The legislature acted with unusual unanimity, passing the amendment through both chambers without a single “no” vote.
Does the law apply only to toxicology laboratories and SUD treatment providers and facilities?
No. This is one of the most important nuances of these recent changes.
The 2025 amendment explicitly prohibits any payments to any person in exchange for the patient using the services of any clinical laboratory. The statute is not limited to toxicology laboratories. As a result, the prohibition on offering, making, or receiving any payment in connection with the referral of patients to a clinical laboratory applies to entities that perform biochemistry, genetics, microbiology, pathology, and other laboratory testing on human specimens for diagnosis, prevention, or treatment.
In other words, if a laboratory processes human samples outside of a research environment and is subject to the Clinical Laboratory Improvement Amendments of 1988, referral payments tied to the services of the laboratory implicate the New Jersey patient brokering law.
How will New Jersey enforce the law?
The revised patient brokering statute introduces tougher enforcement mechanisms, including criminal, financial, and administrative consequences for violations:
- Criminal penalties. Violations are considered a third-degree crime, subject to up to five years in prison, an obligation to make restitution, and a fine of $50,000 for each violation.
- Civil penalties. DOH and DCA can levy civil penalties of up to $20,000 per violation.
- Licensure risk. Regulators have authority to suspend or revoke facility, laboratory, or recovery residence licenses.
Because enforcement now rests with both prosecutors and state agencies, providers should be prepared for more robust enforcement of New Jersey’s patient brokering statute.
Are there any safe harbors or exceptions?
New Jersey’s law is not as detailed as the federal Anti-Kickback Statute (AKS), nor does it include the same exceptions as EKRA. However, the statute does provide a limited safe harbor for fees, commissions, or rebates that do not vary based on the number of patients referred; the duration, volume, or nature of SUD services provided to a patient; or the amount of insurance benefits provided for treatment or services furnished to a patient.
This exception means that payments for legitimate marketing or services, whether to employees or independent contractors, do not violate the New Jersey law if the compensation does not vary based on the volume of patients referred or the amount of reimbursement generated by such referrals.
Subsection 1(a) of the amended statute reads as a flat prohibition without an express intent element, creating the appearance of strict liability where remuneration is tied to referrals. By contrast, subsection 1(b) applies to those who “knowingly” aid or participate in such a scheme, introducing an intent element. This structural difference and the absence of additional formal safe harbors or exceptions like those included in EKRA makes New Jersey’s patient brokering statute more restrictive than EKRA or the federal AKS. Providers should not assume that arrangements acceptable under the AKS or EKRA will be safe in New Jersey.
How does New Jersey compare to other states?
The 2025 amendment modified New Jersey’s patient brokering statute to expand restrictions to clinical laboratories, similar to Florida’s patient brokering statute (Fla. Stat. § 817.505). Florida’s statute prohibits referral payments for a broad set of healthcare providers and facilities and has been applied in fee splitting and anti-kickback cases, such as State v. Rubio, 917 So. 2d 383 (Fla. Dist. Ct. App. (2007)). The language of Florida’s patient brokering statute is broad, applying to “any person, including any health care provider or health care facility,” and to clinical laboratories in addition to SUD treatment facilities and toxicology laboratories.
Other states have patient brokering prohibitions that are narrower in scope. For example, California’s law (Cal. Health & Safety Code §§ 11831.6 and 11831.7) applies only to licensed treatment providers and recovery housing. Arizona (Ariz. Rev. Stat. 13-3730) prohibits referral payments in sober living and behavioral health facilities, and Georgia (O.C.G.A. § 26-5-80) applies its prohibition to substance use providers and includes an insurance fraud provision targeting high-tech drug testing. None of these three states extends the restriction to cover laboratories or laboratory services.
To date, state patient brokering statutes that explicitly apply to clinical laboratories appear to be limited to Florida and New Jersey, although other anti-kickback and analogous state fraud and abuse laws and regulations may also apply to clinical laboratories. Multistate providers should be cognizant of conflicting state regimes and recognize that the same compensation structure may be permissible elsewhere but may expose organizations to liability in New Jersey.
How does the New Jersey law relate to EKRA?
EKRA is a federal law that prohibits referral kickbacks for recovery homes, clinical treatment facilities, and clinical laboratories, regardless of payor. New Jersey’s revised law mirrors EKRA’s scope in many respects:
- Both cover SUD treatment facilities, recovery residences, and all clinical laboratories.
- Both prohibit direct and indirect payments, whether in cash or in kind.
- Both carry criminal penalties. EKRA violations can lead to $200,000 in fines and 10 years in prison. New Jersey imposes a $50,000 fine per violation plus up to five years of imprisonment.
EKRA’s own text includes an express clause that “nothing in this section shall be construed to occupy the field . . . to the exclusion of State laws on the same subject matter.” Although no court has addressed the contours of EKRA’s preemption language, a fair read suggests that Congress did not intend EKRA to preempt state statutes, allowing states to adopt stricter anti-referral rules. Thus, New Jersey’s patient brokering statute may legitimately operate alongside EKRA, even if it is more restrictive, and providers might be subject to liability under both EKRA and the New Jersey patient brokering statute for the same conduct, increasing the importance of compliance focusing on arrangements that may implicate these laws.
How is EKRA being enforced, and what should we expect in New Jersey?
Since 2018, federal prosecutors have used EKRA against toxicology laboratories and marketers focused on SUD services, but have also pursued cases involving other kinds of laboratory testing. Courts are still clarifying whether EKRA prohibits percentage-based pay for employees, but the US Department of Justice recently stated that it does not view percentage-based payments to employees to be per se illegal under EKRA.
However, federal prosecutors have already applied EKRA to multistate patient brokering operations, including in New Jersey. In one case, a California man was sentenced in the US District Court for the District of New Jersey for running a marketing company that paid recruiters between $5,000 and $10,000 per referral to funnel patients from New Jersey, Maryland, and other states into addiction treatment centers. This case was one of the first EKRA convictions and underscores how federal prosecutors are prepared to pursue patient brokering schemes that cross state lines and involve patients with private insurance coverage.
New Jersey’s state enforcement may mirror federal efforts, given the legislative unanimity and prior New Jersey enforcement agencies’ focus on the types of activities targeted by the 2025 amendment. Initial cases are likely to target toxicology and recovery residence schemes, but because the law explicitly covers all laboratories, routine diagnostic, genetic, and microbiology labs may also be subject to scrutiny.
What should providers, recovery residences, and labs do now?
The 2025 amendment to New Jersey’s patient brokering statute took effect on August 11, 2025. Organizations with operations in New Jersey should:
- Review compensation arrangements tied to referrals, patient volumes, or test orders for laboratory and/or recovery home treatment or services.
- Review and update compliance policies and train staff.
- Monitor New Jersey state enforcement trends. The first actions brought by DOH, DCA, or prosecutors will set important precedents.
Bottom line
New Jersey’s updated law reflects a continued focus on patient brokering activities across the United States. By extending prohibitions to all clinical laboratories, adding mandatory fines, and empowering regulators, the state has dramatically raised the stakes for noncompliance.
Providers, recovery residences, and laboratories should expect increased scrutiny of referral arrangements and should proactively reassess contracts, policies, and practices to ensure compliance under both New Jersey law and EKRA.