Physician Self Referral (“Stark Law”)
If you are a healthcare provider, you need to make sure you understand the law regarding physician self-referrals. When you refer any patient to certain designated health services (DHS) and are billing Medicare, you need to make sure that you do not have any financial relationship with the DHS.
The Stark Law was passed to combat physician self-referrals in an attempt to reduce overcharges to Medicare. When a physician makes a referral they get a referral fee and when they are referring to a DHS where the physician is getting money from it drives up the cost of health care.
In addition to civil penalties under the Stark Law, you may also face criminal penalties under the False Claims Act. If you knowingly are submitting false billing records to Medicare or Medicaid, you may be held criminally liable. One way to submit false records is through submitting records that are in violation of the Stark Law.
Medicare and Medicaid rely on health care providers to submit accurate information to reimburse them for services provided to program beneficiaries. Due to the presence of dishonest health care providers, certain sets of laws were enacted, including the Stark Law and the False Claims Act.
The Stark Law 42 U.S.C. Section 1395nn states that you may face civil liability if you self-refer patients. A physician self-referral is the practice of a physician referring a patient to a DHS where the physician has a financial relationship. DHS includes all the following services:
- Clinical laboratory
- Physical therapy
- Occupational therapy
- Ration therapy
- Durable medical equipment
- Parental supplies
- Home health services
- Outpatient prescription drugs
- Hospital services
- Outpatient speech-language pathology
There are certain exemptions to the Stark Law, most notably that if you are part of a medical group and refer within the group, you may be exempt. Additionally, the Stark Law is a strict liability charge, so regardless of your knowledge or intent if you practice the act of self-referral, you may be found liable.
Informed consent may be used as a defense against a physician self-referral charge. Proof of informed consent can show that the procedure’s or treatment’s risks have been adequately disclosed by the referring health care provider and the patient submitted to the procedure or treatment by exercising his or her own judgment.
The penalties for being in violation of the Stark Law may include:
- $15,000 for each claim submitted for an improper referral
- $100,000 for each scheme put into place to make money off of self-referrals
- Paying restitution for all payments improperly received and disclosed to receive future payments
When in violation of the Stark Law by submitting a record to Medicare or Medicaid, you can get charged under the False Claims Act. 18 U.S.C. Section 287 of the False Claims Acts imposes criminal sanctions for submitting a false claim to Medicare or Medicaid. If you submit payments for self-referrals, you will get prosecuted under the False Claims Act as well as civil penalties.
The punishment for a violation of the False Claims Act is up to 5 years of imprisonment and a fine. To prove the False Claim, unlike the Stark Law, they need to prove you knowingly were submitting false reports to Medicare and Medicaid, which means you have to know you are in violation of the self-referral laws.
Detection and Investigation
Physician self-referrals can be found in various ways, including reporting by patients or investigations performed by a government agency. Several government agencies investigate claims of fraud in the health care industry like the Office of the Inspector General, the FBI and the divisions of Medicare and Medicaid.
Self-referrals are usually found in conjunction with other problems, so it is common for a case to come up through an investigation for another reason. For instance, if you have clients complaining about the bills they are receiving it might prompt an investigation that may find instances of self-referrals.
If a pattern of problems exists, Medicare and Medicaid may investigate a practice to make sure that they are in compliance. If a health professional is referring clients to a DHS from which they get proceeds, they have an incentive to overprescribe visits to increase their profits. To avoid unnecessary procedures, Medicare and Medicaid prevent self-dealing through the Stark Law.
There is a potential for your practice to be audited by the federal government, and if they begin an audit against you, it would be helpful to have an experienced attorney to help you with the audit. If during the audit they find any problems in your records, they may begin a full investigation where they may question patients and workers to find more evidence.
If you are under investigation for health care fraud, it is important to know your rights. During an investigation, you may retain an attorney and that attorney may be present for all questioning. If you are questioned by the authorities, you still maintain the right to remain silent to not incriminate yourself, and you have the right to speak to an attorney.
An attorney will help you through a government investigation. Just because you are under investigation, it does not mean that you have done anything wrong or that you will get charged, but that having an attorney from the onset of an investigation may help you defeat any charges for self-referrals.
It recommends that all financial arrangements be evaluated by legal counsel with experience in medical law to determine the risk of Stark Compliance. An internal audit can also be done at the direction of outside legal counsel. This can be particularly useful when considering protection under attorney-client privilege and internal politics.
After an investigation, it will be determined if charges will be brought against you under the False Claims Act and if an action will commence under the Stark Law. If charged at any point, you may enter into a plea deal with the prosecutor. Yet, it is advised that you speak to an attorney before entering into such a deal. A plea to the False Claim Act holds certain civil penalties.
The authorities may begin questioning you to try to elicit incriminating information either before or after charges are brought. During questioning, you have the right to not involve yourself, and you have the right to have an attorney present. Having an attorney present with you while you are being questioned is important, they can assert your rights and guide you through the process.
If there is enough evidence, charges will most likely be brought; then there will be a grand jury hearing where the grand jury will decide if there is enough evidence to indict. It is important to speak to an attorney to help you prepare for a grand jury hearing because there is a chance to get the charges dropped.
After the indictment, your attorney and the government may work towards a case settlement or move towards its dismissal. If there is no settlement or dismissal, it may end up on trial. Your attorney must work with you to review all the evidence and prepare your defense for trial. For all your criminal convictions, you will have the right to have a jury trial before a jury of your peers.
Importance of a Strategic Defense
A physician self-referral charge could result in massive financial loss through criminal and civil penalties and through restitution. It is important to get ahead of any charges because any violation of the Self Referral law could result in you not being able to receive any Medicare or Medicaid patients.
There are exceptions to the Stark law, so it is crucial to consult an Attorney to understand the application of these laws and their exceptions. Experienced health care lawyers can analyze your issues and provide a legal evaluation and risk analysis of the proposed venture, relationship, or arrangement.
If you fall into an exception, you could refer a patient to a DHS that benefits you, but contact an attorney before making this move. They can assist you in ensuring your practices do not violate self-referral laws and fit within legal exceptions. If you are not in compliance, an attorney can remedy any current non-compliance problems that you are facing to avoid future liability.
If you are charged under the Stark Law, you can face a multitude of other crimes and civil liabilities. If you are faced with multiple charges, contact your attorney to work through each of the charges. It is important to have an attorney who knows how to deal with various different health care related charges, so they will know how each charge and case will impact the others.
Recent Cases and Their Impact
In the past few years, billions of dollars have been returned to Medicare and Medicaid through both the Stark Law and the False Claims Act. The prosecution of these cases is also encouraged through the whistleblower provisions of the False Claims Act, which give a portion of the money received to the whistleblower.
In U.S. ex rel, Drakeford v. Tuomey, a whistleblower, brought a suit for violation of the False Claims Act. It was this suit that brought attention to claims that were in violation of the Stark Law. The hospital, in this case, obtained referrals from local physicians and received payments for their acts. At the end of the case, the court held the defendant liable for over $237 million.
Several hospitals have been charged under both the Stark Law and the False Claims Act for self-referral practices. In 2013 Tuomey Healthcare System in North Carolina faced charges under both laws, and a jury returned a verdict of $39 million. The hospital routinely entered into contracts with the physician to retain referrals from the physicians for payment.
It is important for an attorney to review all contracts made by medical professionals, especially for referrals.
Proactive Advice and What to Do if Accused
Understanding of the law on self-referrals is important for any health care professional that refers clients. It recommends that all financial arrangements be evaluated by legal counsel with experience in medical law to determine the risk of Stark Compliance.
An internal audit could find any potential problems so you may address them. Internal auditing and monitoring measures may be taken to assess and ensure compliance with physician self-referral laws.
The best way to avoid liability under the Stark Law is not to refer clients anywhere that you have a financial incentive or with the assistance of counsel to work within the exceptions if you are going to self refer.
If any violations of the Stark Law are found, corrective actions should be taken and documented. If there were bills sent to Medicare and Medicaid in violation of the Stark Act, you may be held criminally liable under the False Claims Act. You should speak to your attorney about any problematic bills you have sent out to determine your best course of action.
If you are under investigation or if you are being charged with physician self-referral, contact an attorney to establish a defense. Having an attorney who understands the intricacies of the law will help you plan the best course of action for you. If found to have violated the Stark Law, your money and your ability to see Medicare and Medicaid patients could be on the line.
An experienced attorney will plan the next steps and will be present during questioning to help you through the investigation process. The charge of physician self-referral can be a serious charge and having a criminal attorney that specializes in federal criminal health care law can make all the difference.