Stark Law Violations
a.k.a. "Physician Self-Referral Law")
The Stark Law, or traditionally referred to as the “Physician Self-Referral Statute,” was created to regulate the ways that physicians make referrals to other physicians or entities. This started because of the concern that health care providers can enter into improper financial relationships that result in losing sight of the actual needs of patients and instead raise the amount of health care costs.
The Stark Law can be applied to many different individuals within the healthcare field. While many people may think that a specific kind of doctor or dentist is the only type of health care professional who can be accused of these acts, virtually any person who is responsible for making referrals for additional treatment or services can be accused as well.
The Stark Law is a civil suit, though it can lead to criminal charges. If you are found guilty, the fines and reimbursement that you may be required to pay are going to be costly. As a criminal charge, the Stark Law is referred to as the Anti-kickback Statute, which comes with fines and terms of incarceration.
If you find that you are being investigated or have been charged with violating the Stark Law, it is important that you contact a criminal defense attorney immediately. A criminal defense attorney can assess your case to minimize your charges or the penalties that you may be facing.
What Is “The Stark Law?”
The Stark Law originated from the Physician Self-Referral Statute and is intended to regulate what referrals you make and who you make referrals to. The goal and reason for implementing this statute is to allow health care providers to focus on the treatment of their patients rather than the amount of money they can receive for their services.
42 USC 1395nn – Limitations on Certain Physician Referrals
Statute 42 USC 1395nn essentially prohibits healthcare providers from making referrals if they or a family member has a financial relationship with that entity and the referral 1) is in exchange for payment of health care services, and 2) causes the entity to make a claim or bill for health care services.
The term “financial relationship” can be direct, like in owning a business together, or can extend further to include even simple business agreements.
The Department of Justice intervened in a lawsuit where a hospital claim was alleged to have been involved in the practice that violated the Stark Law. The practice offered free medical assistants and office space to doctors in exchange for referrals made to their other hospitals. The government here would be concerned that some of these patients do not need the referrals, yet are still being made because they result in the doctors receiving a benefit.
Another financial interest that can exist and would violate the Stark Statute is when there is an agreement to falsify the value of services in exchanged for bonuses. For example, recently in Texas, a medical center entered into a settlement for health care fraud that included violations of the Stark Statute. In this case, it was found that cardiologists in the hospital were charging more for their services than the normal value, which falls under the False Claims Act. How this case applied the Stark Statute is that, even though the hospital knew about these charges, they encouraged emergency room physicians who made the cardiology referrals by paying them in bonuses.
What the government focuses on in these types of cases is how the hospitals of health care providers put themselves before the patients they are treating.
42 U.S.C. § 1396b(s) Payment to States – Limitations On Certain Physician Referrals
Within Section 1903 of the Medicaid statutes is 42 U.S.C. § 1396b(s) which, similar to 42 USC 1395nn, denies the reimbursement of Medicare claims where services are based on prohibited referrals for service. By adding 42 U.S.C. § 1396b(s), the United States government has prohibited health care providers from making improper referrals to receive government assistance in providing government health care.
In 2015, the United States settled with a medical center in Westchester, New York for violating the Stark Law while providing services to seniors under the Medicare program. During its investigation, the government alleged that the medical center had formed a financial relationship with a cardiology practice, where the cardiology practice made referrals to the hospital in exchange for money. Additional alleged facts included the medical center allowing their medical fellows to work at the private offices of the cardiology practice free of charge which was not the norm.
This example shows how hospitals can take advantage of the Medicare system. Because this specific hospital was providing services to seniors, much of the billing went to the United States government. However, the violation of government regulation is when these entities enter into financial relationships that undercut the purpose they are providing to patients.
Penalties for Violating the Stark Law
42 USC 1395nn(g) – Sanctions
Sanctions for violating the Stark Law can come in three forms: denial of payment, refunding payments, monetary penalty for the improper claims, and a civil monetary penalty for helping with a referral scheme.
Denial of Payment
If you made a claim for reimbursement that was related to an improper referral, then the statute would prohibit you from receiving that payment.
For example, if you are accused of involvement in acts that violated the Stark Law, and been paid for some of those acts, some of them may still have outstanding claims. Depending on the outcome of your case, you may not see any reimbursement for the services that you provided.
Here the statute requires that if you provided services that were based on a referral that violates the Stark Law statute, then those payments received would have to be refunded to the individual who paid them. This most likely would be applied if you referred services that were not necessary.
For example, in 2015, a hospital in Georgia and one of its physicians’ entered into a civil settlement where the hospital paid $35 million and the physician to paid $425,000 for their alleged acts that lead to violations of the False Claims Act and the Stark Law. Those alleged facts included the hospital giving the doctor salary and directorship payments based on the number of referrals that the doctor made. Generally, these referrals were unnecessary health care services which also violated the false claims act. While many of the other penalties include fines, even those that can be multiplied, this section looks at the actual monetary damages caused.
Monetary Penalty for the Improper Claims
The penalty for presenting a bill or claim for services when there is knowledge that the claim should not be made is a penalty of up to $15,000. This penalty can be applied broadly because the language encompasses all people rather than just doctors.
Civil Monetary Penalty for Helping with a Referral Scheme
Under this subsection, the penalty is a lot higher, as it looks at every time that you are alleged to have made an arrangement and for each arrangement that violates the statute will be a civil monetary of up to $100,000.
You should be aware, that sections (3) and (4) may have additional penalties since the statute allows for additional fines that can be applied from 42 USC 1320a-7a. When that statute is applied for the violation of this statue, the monetary penalties can increase drastically. In some instances, 42 USC 1320a-7a takes into consideration each act that is alleged and can also count the number of days that took place.
Defenses for Alleged Stark Law Violations
One of the best defenses that may be available to you will come from the statute itself, specifically 42 USC 1395nn(b) – (e). These sections provide a complete list of exceptions that could provide defenses for why there was a referral or a pattern of referrals.
If you are accused of providing office space to another health care provider and it relates to a Stark Law violation, your specific facts would be excluded from the statute. 42 USC 1395nn(e)(1) which relates to office space can exclude you from a lawsuit because your business relationship was legal. It could require you to show the details of the agreement in writing; however, if you have the correct details in your agreement and the rent is for the fair market value, there might not be a violation.
This same defense could apply if you are accused of violating the Stark Law because you have a business relationship due to an agreement to use equipment. If this lease is in writing and legal, then you may have a defense.
Defenses in this type of case are going to revolve around your specific acts and the agreements that you have with other hospitals and health care providers. Having good documentation of agreements and reasons for payment or raises can help to defend your case.
Seek Assistance Today
If you have been accused of violating the Stark Law, it is important that you seek the assistance of an experienced defense attorney. An experienced criminal defense attorney will be able to assess your case and determine whether there are facts sufficient to support charges against you.