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Stark Law is Complicated, and Violations Can Have Serious Consequences

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Healthcare providers must carefully maneuver within a complicated maze of federal laws and regulations. One of the most difficult and potentially dangerous is the physician self-referral prohibition found in section 1877 of the Social Security Act [42 U.S.C.S. § 1395nn], commonly known as the Stark Law. Generally, the Stark Law:

  • Prohibits a physician from making referrals for certain designated health services (DHS), payable by Medicare, to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies.
  • Prohibits the entity from presenting, or causing to be presented, claims to Medicare (or billing another individual, entity, or third party payer) for those referred services.
  • Establishes a number of specific exceptions and grants the Secretary the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse.

Initially Only Clinical Lab Services Were Covered

When the Stark Law was first enacted in 1995, it applied only to relationships between physicians and clinical laboratories. As with many other programs and laws associated with the federal government, the DHS list has grown significantly over the years. Currently, the DHS list includes the following items or services:

  • Clinical laboratory services
  • Physical therapy services
  • Occupational therapy services
  • Outpatient speech-language pathology services
  • Radiology and certain other imaging services
  • Radiation therapy services and supplies
  • Durable medical equipment and supplies
  • Parenteral and enteral nutrients, equipment, and supplies
  • Prosthetics, orthotics, and prosthetic devices and supplies
  • Home health services
  • Outpatient prescription drugs
  • Inpatient and outpatient hospital services

Severe Penalties Unless an Exception Applies

Stark Law regulations cover a broad swath. Not only direct, but also indirect financial arrangements, are covered. If the physician or healthcare provider cannot qualify for an exception, he or she can be subjected to severe penalties, including the following:

  • Denial or refund of payment
  • $15,000 per service civil monetary penalty
  • $100,000 civil monetary penalty for each arrangement that is considered to be a “circumvention scheme”

Strict Liability

Unlike the Anti-Kickback Statute – a separate law found in Section 1128B(b) of the Social Security Act – the Stark Law is a strict liability statute. That is to say that the government does not have to show that the violation was intentional. A violation is a violation, whether intentional, negligent, or even inadvertent.

Stark Law is Broad

As noted above, the Stark Law’s coverage is quite broad. Indeed, without explicit exceptions and “safe harbors,” many ordinary day-to-day commercial arrangements would subject the physician to penalties. For example, without an explicit exception, a physician who receives free or discounted parking while working at a hospital would be in violation of the law. Likewise, were it not for an exception, a physician would not be able to own stock in some publicly traded companies whose businesses are related to the healthcare industry.

Are You the Target of a Stark Law Investigation?

Are you under investigation for an alleged violation of the Stark Law? The Oberheiden, P.C. has successfully represented clients in both Stark Law and Anti-Kickback proceedings. If you choose to work with us, we will use our decades of experience, including time spent as federal prosecutors, to help protect your vital interests. To start building your Stark Law defense, call (800) 701-7249 or or contact us online now.

Orange County 714-294-2000
Los Angeles 310-873-8140
Detroit 313-888-8807
Nationwide 888-452-2503