FEDERAL HEALTHCARE FRAUD LAW - The Stark Law

Federal healthcare regulation are complex so that the ordinary physician cannot invest the time to fully understand them. However, any medical practice is presumed to have a full understanding of these laws. It is expensive but often prudent to hire established third party administrators for all but the most simple of practices. If there are violations of federal laws or regulations there is always the threat of criminal fraud charges or expensive civil legal entanglements.

The five main federal fraud laws affecting a medical practice are:

1. False Claims Act (FCA)
2. Stark Law (Physician Self Referral Prohibition)
3. Anti-Kickback Statute (AKS)
4. Exclusion Authorities
5. Civil Monetary Penalties Law (CMPL)

The Stark Law aka the Physician Self-Referral Law (42 U.S.C. § 1395nn)

Alameda County Congressman Pete Stark was a champion of healthcare reform and his best known (but not only) achievement was the passage of the Physician Self-Referral Law which everyone refers to as “The Stark Law”.

On its face is simple. A doctor who bills Medicare or Medicaid cannot refer patients to receive "designated health services" when:

The physician or an immediate family member has a financial relationship with that
entity/business/equipment provider.

The web of financial relationships are both woven to avoid the law and tied together by federal investigators to pull related business interests under the umbrella of the law. It is a push and pull and of course, there are business relationships that are exempt from the Stark Law.

"Designated health services" include:

Occupational therapy
Laboratory Services
Physicial Therapy
Radiology
Imaging Services
Pathology Services
Radiation/Oncology Services
DME supplies
Prosthetics
Orthotics
Home Health Services
Prescription Drugs including Self Formulated
Inpatient Hospital Services
Outpatient Hospital Services

Intent Under the Stark Law

The Stark law is terrifying in terms of how easily it can ensnare a truly innocent person.

No criminal intent is needed. No fraudulent intent is needed. It is an on or off switch. If you violate the statute you are guilty. This means that a person who made an honest mistake can incur huge fines, payback of monies earned and be excluded from participation in Federal health care programs. The money penalties are huge. You can be charged $ 27,000 for each violation and pay 3x the actual reimbursement amount per charge.

Note: Effective May 11, 2023 COVID-19 services are no longer exempt from the Stark law.

If you are facing Stark Law sanctions, our experienced attorneys can help. We can also protect you from a related criminal investigation.