Recent Stark Law Cases

What is the Stark Law?

The Stark Law (42 U.S.C. § 1395nn) is a federal regulation that prohibits physicians from referring patients for certain "designated health services" to entities with which the physician has a financial relationship.

Currently overseen by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the FBI, these statutes are a cornerstone of federal fraud and abuse prevention, designed to ensure that medical decisions are based on patient needs rather than a doctor's financial gain.

Doctors often have months or even years of warnings as civil billing audits and civil lawsuits often presage a greater criminal investigation.  The Horowitz office often warns clients of these oncoming prosecutions and attempts to head off the larger criminal prosecution (no guarantees!)

Key Components of the Stark Law

To make this easier to digest, here is a breakdown of what the law actually entails:

Fraud and Stark Law Trends

The integrity of the American healthcare system relies on a simple premise: medical decisions should be based on patient needs, not provider profits. However, many physicians find themselves targeted for fraud because computer detection software identifies their billing as an “outlier.” Without further evidence, these algorithms often label legitimate practitioners as fraudulent, essentially allowing software—not doctors—to define the boundaries of "patient needs."

The types of cases brought against doctors vary from complex Stark Law violations to hard-to-defend drug diversion. In most instances, doctors have months or even years of notice. Simple Medicare audits often morph into criminal prosecutions as state investigators or the FBI track billing disputes to see if they cross the line into criminal intent.

The 2025 National Health Care Fraud Takedown

The federal government’s 2025 "Takedown" resulted in charges against 324 defendants, uncovering over $14.6 billion in alleged false billings. High-profile cases include the following "Stark Law Examples":

The $68M "Ghost" Office Visit: Vincent Thayer (San Jose) was charged with wire fraud for allegedly submitting claims for COVID-19 testing and visits that never occurred, allegedly misappropriating a doctor’s identity to enroll in Medicare.

DME Schemes: Sevendik Huseynov, CEO of Vonyes, Inc., was arrested for seeking $137 million for back and knee braces that patients never requested or received.

Telemedicine Fraud: Dr. Yasmin Pirani was indicted in a $35.2 million scheme involving unnecessary prescriptions signed without a legitimate doctor-patient relationship.

When "Guilt" Isn't So Clear: Dropped Cases and Grey Areas

While DOJ press releases paint a picture of clear-cut criminality, a closer look often reveals substantial "grey areas." One person’s "excessive care" is another’s "medically necessary treatment." When defense counsel can prove that clinical judgment—not greed—drove the billing, the government's case often falls apart.

Example: The "Over-Utilization" Reversal
In a recent federal case, an oncologist was accused of "upcoding" and over-utilizing expensive chemotherapy treatments. The government dropped the charges after the defense presented peer-reviewed data showing the doctor was actually following a cutting-edge protocol that resulted in higher survival rates, proving the "outlier" billing was actually superior patient care.

Example: The Lack of "Scienter" (Intent)

A multi-state physical therapy group faced a $20 million False Claims Act suit regarding billing for "unbundled" services. The case was ultimately dismissed when it was revealed that the provider had repeatedly sought guidance from their Medicare Administrative Contractor (MAC) and received conflicting instructions, proving there was no "knowing" intent to defraud.

Stark Law & Massive Settlements: A Costly Lesson

The Stark Law (physician self-referral law) remains a primary tool for curbing improper financial relationships. Recent settlements highlight the massive financial risk:

Community Health Network: In 2025, the network paid an additional $135 million to settle claims regarding a long-running kickback scheme, following a $345 million settlement in 2023.

Hospital & Home Health Collision: In January 2026, the DOJ initiated a $34 million settlement with a home health provider and filed a complaint against a Louisiana hospital group over improper medical directorship payments—a classic pitfall where administrative roles are used to disguise referral bribes.

Local Fraud and Drug Diversion

Fraud isn't always a billion-dollar corporate scheme; it often happens at the clinical level:

New York Medicaid Fraud: A New Windsor couple was charged in October 2025 with grand larceny for allegedly siphoning $2 million in false Medicaid claims.

Tampering with Narcotics: Clinton Johnson Christian (Fairfield, CA) was indicted for "rifling"—extracting hydromorphone from hospital vials and replacing it with saline. This directly endangers patient safety by leaving them without necessary pain management.

The Bottom Line

The message from the DOJ is clear: whether you are a CEO in Silicon Valley or a surgeon in Texas, the "greed-over-patients" model is a fast track to federal prison. As Attorney General Pamela Bondi recently noted, the administration will not tolerate criminals who "line their pockets with taxpayer dollars."

However, because the government focuses on large-scale "loss amounts," individual doctors face 10 years or more in prison based on billing totals rather than actual harm. Mitigating this risk requires aggressive defense to separate clerical errors or aggressive clinical choices from actual criminal intent.

Are you concerned about your organization's compliance with Stark Law or the False Claims Act? Call the criminal defense lawyers at the Law Office of Daniel Horowitz at (925) 283-1863.