Getting caught up in a Stark Law violation can be scary. Let’s break down what Stark Law is, who enforces it, and how a knowledgeable lawyer can help.
What is the Stark Law?
The Stark Law (also called the Physician Self-Referral Law) prohibits doctors from referring Medicare patients to healthcare companies they or their family have a financial interest in. This helps avoid conflicts of interest where the doc profits off sending patients to their own business.
Specifically, Stark Law says if a doctor (or immediate family member) has a financial relationship with an entity, the doctor can’t refer Medicare patients to that entity for certain designated health services. The financial relationship could be an ownership/investment interest or a compensation arrangement.
For example, Dr. Stark owns shares in Acme Imaging Center. He can’t refer his Medicare patients there for MRIs, CT scans, etc. That’s illegal self-dealing.
Note that exceptions exist if specific requirements are met. But in general, docs can’t profit off their own referrals.
Why Was Stark Law Created?
The law addresses a serious problem—the overutilization of medical services.
Back in the day, some unethical doctors would steer patients to medical businesses they owned shares in. Cha-ching! This led to rampant over-ordering of unnecessary tests, hospitalizations, etc.
To curb this behavior, Stark Law was introduced in 1989 and strengthened over the years. It removes financial incentives that promote overutilization.
As a result, the law saves Medicare boatloads of cash. One study found it saved $3.4 billion on imaging services alone in its first 5 years.
Common Stark Law Violation Examples
What exactly constitutes an illegal self-referral? Here are some common examples:
- Dr. Lee owns a stake in Cedar Sinai Hospital and refers her Medicare patients there for surgery. Violation!
- Dr. Kendrick leases office space from Allied Health Partners at below-market rates. He refers Medicare patients to Allied’s home health agency. Violation!
- Dr. Cook is paid by New Life Clinical Labs to be their medical director. He refers Medicare patients to New Life for testing. Violation!
- Dr. Adler refers Medicare patients to the catheterization lab where he performs procedures. The hospital pays him based on productivity. Violation!
Anytime a financial relationship exists alongside referrals, it’s time to worry. There are nuances though…
The Stark Law’s “Component” Parts
To prove an actual violation occurred, the government must establish:
- A financial relationship between the referring physician (or immediate family member) and the referred-to entity
- A referral from the physician to the entity for designated health services
- A Medicare claim submitted for those services
- No applicable exception was met
If any part is missing, there’s no Stark violation. But once all components exist, illegal self-dealing has occurred.
This is key when building a defense. Oftentimes technicalities get physicians off the hook.
Hefty Penalties for Running Afoul
When a Stark violation is proven, steep fines apply:
- Up to $15,000 per improper claim
- Denial of payment for all designated health services referred during the time of noncompliance
- Potential False Claims Act liability with treble damages
- Possible exclusion from federal healthcare programs
Plus, the referred-to entity must refund all amounts collected for the prohibited referrals.
With figures that high, physicians must tread carefully in their financial arrangements. Otherwise one misstep can spell financial ruin.
Self-Disclosing Violations to Lessen the Blow
When a Stark issue is detected, self-disclosure can significantly reduce penalties. The provider reports it, refunds payments, and implements a compliance plan. Then the matter is usually settled more favorably.
For example, Tuomey Healthcare paid $237 million for alleged Stark violations but avoided False Claims charges. Self-disclosure helped mitigate the damage.
So if an issue arises, don’t stick your head in the sand. Consult experienced legal counsel on the best way to proceed.
Defenses Against Stark Allegations
When facing a Stark investigation, possible defenses include:
- Lack of financial relationship – No ownership, investment, or compensation ties existed between parties
- No actual referrals – The physician never directly referred Medicare patients to the entity
- Referral exception met – An exception for space leases, physician recruitment, or other matters applied
- No Medicare billing – The entity never billed Medicare for referred designated health services
- Technical errors in claim forms – For instance, referrals were documented improperly
- Statute of limitations expired – Too much time passed between alleged violation and charges being filed
A seasoned lawyer can analyze the facts to craft the strongest defense. Subtle technicalities often get physicians off the hook.
Finding the Right Legal Team
When facing Stark allegations, retaining an experienced legal team is critical. Here’s what to look for:
- Deep knowledge of Stark Law nuances
- Successful track record defending Stark cases
- Relationships with prosecutors to negotiate effectively
- Ability to construct technical arguments
- Skill at navigating complex government investigations
- Expertise guiding clients through settlement processes
Don’t go it alone against the formidable Department of Justice. The right lawyer can mitigate penalties and possibly get charges dismissed on technical grounds.
The Bottom Line
Stark Law is complicated with many exceptions and gray areas. Before entering any financial arrangement, seek qualified legal advice to avoid missteps. If issues arise down the road, experienced counsel can strategically defend and limit damage. Don’t panic—a skilled lawyer can stand between you and the government.
With the right help, even Stark Law violations can be resolved favorably. Now you’ve got a primer on the key issues at stake. Here are a few more resources with additional details:
Let me know if you have any other questions! I’m always happy to chat more about Stark law compliance.