The two previous articles in this series established a pattern. Part 1 showed that veterinary fee-splitting and kickback arrangements are prohibited by the AVMA’s ethics code and outlawed by statute in multiple states — and that neither the professional association nor any state veterinary board has enforced either. Part 2 showed that when a regulatory body did attempt enforcement, using the same anti-kickback statutes, it lost — not because the law didn’t apply, but because the enforcer was structurally disqualified under federal antitrust law. The enforcers who are not disqualified have not acted.

This article examines what happens when one of those qualified enforcers does act.

Between 2024 and 2025, the United States Attorney’s Office for the Southern District of New York, working with the Federal Bureau of Investigation and the Securities and Exchange Commission, dismantled a six-year veterinary kickback scheme involving a publicly traded pharmaceutical company, a vice president of sales, a chief financial officer, an east coast sales manager, and a Kentucky veterinarian. The company entered a guilty plea. The VP of sales was convicted by a federal jury. The CFO and sales manager pleaded guilty. The SEC issued a cease-and-desist order requiring disgorgement. The total criminal exposure reached approximately $21 million.

The scheme being prosecuted was, at its core, a payment to a veterinarian in exchange for using that veterinarian’s professional credentials and referral authority to generate sales. It was a kickback. And it was prosecuted as one — by the right enforcer, using the right tools — with results that no state regulatory board proceeding, no professional ethics committee, and no industry self-governance mechanism has ever produced in the veterinary context.

The implications for veterinary teleradiology are direct and specific.

The Scheme: A Veterinarian’s License as Currency

U.S. Compounding, Inc. — a Conway, Arkansas pharmaceutical compounding company founded in 1995 — built a sales model around a simple proposition. Veterinarians have state licenses that authorize them to prescribe controlled and regulated medications. Prescription drug manufacturers and compounders need those licenses to justify shipping directly to consumers. The license is, in regulatory terms, the gateway through which an otherwise impermissible direct-to-consumer sale becomes a lawful transaction.

Beginning in 2015, a USC sales representative entered into an arrangement with a Kentucky veterinarian identified in federal court documents as participating in the scheme. Under the arrangement, the veterinarian’s state licenses would be used to generate prescriptions for USC’s products — primarily omeprazole/fenbendazole paste, a compounded equine medication treating stomach ulcers and intestinal parasites — for horses the veterinarian had not examined, had not established a valid client-patient relationship with, and in many cases had never seen. The prescriptions were, in the language of the federal indictment, a sham.

In exchange for the use of his professional credentials and the prescription authority those credentials conferred, the veterinarian received a 10% commission on all sales generated under his license. At peak, the scheme was generating approximately $1 million in annual sales — roughly one-third of the sales representative’s total book of business. Sam Glover, USC’s Vice President of Sales, supervised and directed the arrangement. He knew the prescriptions were false. He continued the scheme for six years.

In March 2016, USC was acquired by Adamis Pharmaceuticals Corporation, a publicly traded company that subsequently renamed itself DMK Pharmaceuticals Corporation. The acquisition did not end the scheme. An Adamis executive was made aware of it and participated in continuing it. When the commission payments to the veterinarian risked exposure, Glover and his co-conspirators devised a cover: a sham consulting agreement that characterized the 10% commission payments as an hourly consulting fee of $100 per hour. If questioned, the veterinarian would be described as a USC consultant. The payments would appear, on paper, to reflect legitimate services rendered.

They did not. Four USC pharmacists eventually resigned rather than continue filling prescription drug orders they believed were fraudulent. The scheme ran until approximately July 2020, when increased federal scrutiny caused the conspirators to shift tactics — reclassifying direct-to-consumer sales as office stock sales to the veterinarian’s practice, maintaining the fiction of a valid prescribing relationship while obscuring the direct-to-consumer nature of the transactions. It continued in that form until 2021.

The Federal Response: Corporate Conviction, Individual Accountability

The result: one corporate guilty plea, one jury conviction, two individual guilty pleas, one SEC enforcement action, and approximately $21 million in combined criminal fines, forfeiture, and civil exposure. All arising from a kickback arrangement between a pharmaceutical company and a single veterinarian in the equine medication market.

The Statute Gap That Made This Case Harder — and the Lesson It Teaches

Here is the most important analytical fact in this entire series, and it has been hiding in plain sight.

The federal Anti-Kickback Statute — 42 U.S.C. § 1320a-7b(b), the primary federal tool for prosecuting kickback arrangements in healthcare — did not apply to the USC scheme. The reason is structural: the federal AKS prohibits remuneration for referrals of items or services reimbursable by Medicare, Medicaid, or other federal healthcare programs. The drugs at issue in the USC case were equine medications. Horses are not covered by Medicare. Veterinary services are not reimbursable by federal health programs. The single most powerful federal anti-kickback enforcement tool in existence was unavailable to the prosecutors who brought this case.

They prosecuted it anyway. And they won.

Without the federal AKS, the SDNY built its case on FDCA misbranding — the prohibition on distributing prescription drugs without valid prescriptions — and on federal securities fraud, because DMK was a publicly traded company that had falsified its filings to conceal the kickback payments. The veterinarian’s commission was characterized in the company’s books as a legitimate consulting expense. It was not. That mischaracterization, recorded in annual reports filed with the SEC, provided an independent federal enforcement pathway that had nothing to do with anti-kickback law at all.

The practical implication is stark. The prosecutors who dismantled the USC scheme operated under a significant statutory constraint that does not apply to state-level enforcement of veterinary teleradiology kickbacks. The anti-kickback provisions in state veterinary practice acts — the statutes documented in Part 1 of this series covering Texas, Florida, California, Pennsylvania, New York, Nevada, and North Carolina — are not limited to Medicare-reimbursable services. They apply to any remuneration for referrals in the practice of veterinary medicine, full stop. A state attorney general enforcing those provisions against a teleradiology platform’s volume-based incentive structure begins from a stronger statutory position than the federal prosecutors who convicted Sam Glover.

The Structural Parallel to Veterinary Teleradiology

The USC scheme and the veterinary teleradiology fee-splitting model are not identical. They differ in their mechanics, their scale, their transparency, and the specific statutes most directly implicated. But they share the essential structure that anti-kickback law was written to address: a commercial entity that needs professional referrals to generate revenue, paying the referring professional in exchange for directing that referral volume.

In the USC case, the currency was a 10% commission on sales, later disguised as a consulting fee. In the teleradiology model, the currency is a markup — a referring practice billing a client at more than double the cost of the board-certified radiologist’s professional fee, retaining the spread as income generated by the referral decision.

The USC case involved false prescriptions — an additional layer of fraud that is not present in the standard teleradiology arrangement. Teleradiology platforms do not need false prescriptions. The referral mechanism is the case submission itself, which is real, clinically legitimate, and generates genuine diagnostic value. The kickback concern in teleradiology is not about fraudulent transactions. It is about whether the financial structure of the platform relationship corrupts the independence of the referring veterinarian’s clinical judgment — whether a general practitioner chooses to use Platform A rather than Platform B, or chooses to perform a study that might not be strictly indicated, because Platform A’s loyalty program generates more income for the practice than Platform B’s does, or than not ordering the study at all.

That distinction — fraud vs. structural incentive corruption — does not favor the platforms. It indicts them more directly under anti-kickback theory, because it means the prohibited conduct is not incidental to the business model. It is the business model.

The Consulting Agreement as Warning

One detail of the USC prosecution deserves particular attention, because it appears in a form recognizable to anyone familiar with how corporate veterinary platform relationships are structured.

When the 10% commission payments to the veterinarian risked exposure, the conspirators did not stop paying him. They restructured the payments into a consulting agreement — an arrangement that characterized the kickback as an hourly fee for professional consultations. The consulting agreement was designed to make the payments look legitimate on paper, to make the veterinarian look like a service provider rather than a referral source, and to give the company a defensible narrative if federal investigators asked questions.

Federal prosecutors saw through it immediately. The consulting agreement was characterized in the indictment as a sham. The jury agreed. The payments were kickbacks regardless of what the contract called them.

The veterinary teleradiology industry has its own version of this structure. Platform contracts that designate referring practices as preferred providers, clinical advisors, or beta testing partners — and that attach financial benefits to those designations — are consulting agreements in the functional sense. Service credits described as compensation for “feedback” or “quality review” that scale with referral volume are hourly fees in the functional sense. The structure the USC conspirators used to disguise a kickback is not exotic. It is familiar. And federal prosecutors demonstrated that its familiarity does not make it legal.

The Comparison That Closes the Gap

Three cases. Three outcomes. One consistent legal principle.

The pattern the table reveals is not subtle. When a properly constituted federal enforcer pursued a veterinary kickback arrangement — even one where the primary federal anti-kickback statute was unavailable — it prevailed. When a structurally disqualified state regulator pursued a transparent, documented, multiply-approved pharmacy delivery model on anti-kickback grounds, it lost. And the veterinary teleradiology industry — whose platform relationships share the structural characteristics of both the USC scheme and the VetSource model, but at a scale and opacity that exceeds either — has never been the subject of a formal enforcement proceeding by any regulator, federal or state.

What Proper Enforcement Would Require

The USC prosecution was not a simple case. It required six years of scheme activity to document, involved a publicly traded company with SEC reporting obligations that created a secondary enforcement pathway, and was prosecuted by one of the most sophisticated federal prosecutorial offices in the country. It is not a template that transfers directly to every veterinary teleradiology platform relationship in every state.

But it establishes the framework. And the framework has three components that apply directly to the teleradiology context.

First: Document the Economic Relationship

The USC prosecution worked because federal investigators could document the economic relationship precisely — the 10% commission, the sales data, the consulting agreement, the internal communications showing that participants knew the arrangement was a sham. The equivalent documentation in the teleradiology context would be the platform contracts, the loyalty program terms, the per-case pricing schedules, the volume threshold structures, and the referral pattern data that platforms hold in their PACS systems. That data exists. It is contractually accessible to the practices that generated it. It is discoverable in civil litigation. And if a state AG issued a civil investigative demand to a national teleradiology platform, it would be producible under state law.

Second: Compare the Economic Relationship to the Statute

The USC prosecutors compared the 10% commission to the FDCA’s requirements for valid prescriptions and to the SEC’s requirements for accurate financial reporting. A state AG enforcing a veterinary anti-kickback statute would compare the platform’s loyalty incentive structure to the statute’s prohibition on remuneration for referrals. The analytical question is the same: does the economic relationship between the platform and the referring practice create a financial benefit for the referring practice that is conditioned, in whole or in part, on directing case volume to the platform? If yes — if the benefit increases with volume, decreases without it, or is structured as compensation for the referral relationship rather than for a discrete professional service — the statute applies.

Third: Identify the Enforcer Who Cannot Be Stopped

Part 2 of this series established the four categories of enforcers who do not face the NC Dental Examiners structural disqualification that defeated the Nevada Pharmacy Board: state attorneys general, the FTC, properly supervised veterinary boards, and private litigants. The USC case adds a fifth: federal prosecutors working through the U.S. Attorney’s office, who demonstrated that the institutional will to pursue veterinary kickback arrangements exists at the federal level and has produced results even where primary federal anti-kickback tools were unavailable.

The USC prosecution did not arise from a veterinary board complaint. It did not arise from an AVMA ethics referral. It arose from the kind of investigative attention that follows when a publicly traded company’s internal controls collapse — when pharmacists resign in protest, when false filings accumulate in SEC records, when a cooperating witness decides the personal risk of continued silence exceeds the risk of cooperation. The veterinary teleradiology industry is not a collection of publicly traded companies with SEC reporting obligations that create automatic secondary enforcement pathways. But it is a collection of corporate entities with contractual relationships, internal communications, and referral data that a civil investigative demand, a whistleblower complaint, or a private antitrust action could reach.

When the Kickback and the Monopoly Are the Same Transaction

The USC case involved a single veterinarian, a single compounding company, and a single product line. The harm was real but bounded: one prescriber’s clinical judgment corrupted by a 10% commission over six years. The federal government treated that harm as worth a jury trial, a corporate guilty plea, and $21 million in criminal exposure.

The veterinary teleradiology market presents a structurally different and significantly larger version of the same harm — one in which the kickback concern and an independent antitrust concern operate simultaneously, reinforcing each other, and in which the affected population is not one veterinarian and one drug but the entire companion animal diagnostic imaging market across the United States.

This series has previously examined how IDEXX Laboratories has assembled what its own marketing describes as a fully integrated veterinary imaging ecosystem: PACS software, cloud image storage, hardware, reading services, and a loyalty program that ties pricing across all of those layers to case submission volume. The vertical integration analysis in this series documented how that stack creates structural lock-in — a practice that adopts IDEXX’s PACS system, enrolls in the VetConnect PLUS loyalty program, and relies on IDEXX’s cloud archive for image storage has not made a series of independent vendor decisions. It has entered a single economic relationship in which every component generates data about the practice’s referral behavior, every component’s pricing is contingent on volume thresholds, and switching any one component requires abandoning the benefits of all the others. The contract terms governing that relationship — including the perpetual, irrevocable image license and the liability disclaimers that transfer interpretive responsibility to the referring veterinarian — formalize the lock-in in writing.

Mars, Incorporated has constructed a parallel architecture at the practice ownership level. As this series has documented in its examination of Mars’s veterinary consolidation, the company that owns Banfield, VCA, Blue Pearl, and Antech Diagnostics — the nation’s largest veterinary laboratory network — has assembled a vertically integrated structure in which the clinic, the laboratory, and the diagnostic imaging referral pathway are all owned by the same corporate parent. A veterinarian employed by a Mars-affiliated practice does not choose a teleradiology platform in the same sense that an independent practitioner does. The referral pathway is determined upstream, at the corporate level, by the entity that also determines the veterinarian’s compensation, the practice’s software contracts, and the laboratory relationships that generate the diagnostic context within which imaging decisions are made.

The legal significance of this vertical structure for the anti-kickback analysis is direct. Anti-kickback law is designed to protect the independence of professional referral decisions — to ensure that a veterinarian recommending a diagnostic study, and directing that study to a particular reading service, is doing so because it serves the patient’s clinical needs rather than the practice’s financial interests. That protection assumes the referring veterinarian has a genuine choice. When the platform relationship is not a choice but a condition of employment or a consequence of structural lock-in, the kickback concern does not disappear. It compounds. The veterinarian who uses IDEXX’s reading service because the practice’s PACS system will not integrate with any other reader, and who earns loyalty credits for case volume that reduce the practice’s platform costs, is simultaneously subject to a structural constraint and a financial incentive — both pointing in the same direction. The referring veterinarian who works for a Mars-affiliated practice and directs imaging cases through a Mars-affiliated platform is not exercising independent clinical judgment about which reading service best serves the patient. The corporate architecture has already made that decision.

This compound structure — kickback plus foreclosure — is not beyond the reach of existing enforcement tools. It is squarely within them. The FTC has statutory authority under Section 5 of the FTC Act to address both unfair methods of competition and unfair or deceptive acts or practices in commerce. It has Sherman Act enforcement authority. It has examined Mars’s acquisition of veterinary practices and laboratories through its premerger notification program. An FTC investigation that combined a vertical monopolization theory — tying, exclusive dealing, and market foreclosure through platform lock-in — with an anti-kickback theory under FTC Act Section 5 would address both the market structure harm and the referral corruption harm in a single proceeding. Those are not separate cases requiring separate agencies. They are two descriptions of the same commercial reality.

The USC prosecution established that the federal government’s enforcement will to pursue veterinary kickback arrangements is real and has produced results. The vertical integration analysis of IDEXX and Mars establishes that the kickback concern in veterinary teleradiology does not exist in isolation — it exists inside a market structure that is itself the subject of active antitrust scrutiny. Those two facts, taken together, describe an enforcement environment that is materially different from the one the industry has operated in for the past decade. The question is not whether enforcement is legally available. It is which enforcer decides to combine these theories first.

The Series Conclusion: The Gap Is Closing, Whether the Industry Acknowledges It or Not

This series began with a simple observation: the profession’s own ethics code prohibits fee-splitting, multiple states have enacted statutes that criminalize it, and no one has enforced either against the platforms that the industry’s consolidation wave has made dominant. The enforcement gap appeared total.

It is not total. It is selective. It has been applied to a transparent pharmacy delivery model that eight state boards approved, producing an antitrust counterattack that the enforcer lost. It has been applied to a fraudulent equine prescription scheme by the federal government, producing convictions, guilty pleas, and $21 million in criminal exposure. It has not been applied to the integrated teleradiology platform relationships that generate the highest revenue, involve the most credentials, and create the most direct financial incentive for the clinical referral decisions that anti-kickback law was designed to protect.

That selective application is not a permanent feature of the legal landscape. It is a current condition. Conditions change. The federal Anti-Kickback Statute’s Medicare limitation did not stop the SDNY from prosecuting a veterinary kickback scheme. The absence of a Medicare analog in veterinary medicine did not stop the SEC from issuing a cease-and-desist order against a company whose kickback payments corrupted its financial reporting. The NC Dental Examiners defense did not stop VetSource from winning — and it does not protect state attorneys general, the FTC, or private litigants who choose to apply the same statutes the Nevada Board misused.

The legal infrastructure is built. The precedents are set. The statutes are on the books and have been tested in court. The only thing missing is the institutional decision to direct enforcement at the right targets.