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Stark Law contains a set of U.S. federal laws, with a focus on healthcare abuse and fraud. The law prohibits doctors from referring patients to a specific health care provider that is paid for by Medicare if they have a financial arrangement or will otherwise benefit financially. Given the potential broad interpretation of a financial arrangement, the government has actually defined it as the referring physician having either a direct or indirect investment interest or ownership. This interpretation includes any of the physician’s family members.
Since Stark Law isn’t a criminal statute, there are several agencies that can pursue civil action if it’s violated. This is something that is generally pursued by Health and Human Services through the Inspector General and can result in thousands of dollars in monetary penalties for each one of the services billed to Medicare. There are other penalties associated with this violation that could potentially triple the penalty.
When a claim is brought against a physician for violating Stark Law, the practitioner’s attorney will generally have to defend them against Medicare, Medicaid, the Inspector General, and the Department of Justice. The charge is that the physician violated Stark Law, when intentional or unintentional.
What’s tricky about Stark Law is that there is no requirement to prove that the physician intended to violate the law. This is because it’s a strict liability statute. In other words, a physician that made prohibited referrals and did so accidentally, can be found responsible for breaking the law. This means a physician can unknowingly break Stark Law and be subject to steep penalties. It’s worth noting that practitioners who violate the law with intent are subject to greater penalties.
Fortunately, there are Stark Law exceptions that offer a limited capacity in which a physician can refer patients to designated health services that are federally funded. For instance, they can make a referral for radiology or laboratory services. This often occurs when a physician is part of a medical group that offers these services. Another example is when there is a compensation agreement in writing that spells out what’s involved. This agreement should also satisfy the Anti-Kickback Statute. These are just two examples of multiple exceptions that an attorney would consider when defending a client accused of violating Stark Law.
Enforcement of Stark Law can be severe. In fact, there have been cases of medical centers paying more than $80 million in penalties for violating the law. Specifically, there were instances of physicians having payment arrangements that clearly violated Stark Law. The severity of the penalties is one of many reasons why practitioners should consult with legal counsel concerning internal processes and practices.
Many physicians choose a proactive approach to ensuring compliance with Stark Law by having legal counsel review referral practices and provide training to practitioners. This approach is beneficial for many reasons, but it’s practical because penalties can be assessed even when the violation was an innocent mistake. It’s important for physicians to retain legal counsel that has experience actually responding to investigations conducted by the Department of Health and Human Service. It’s also prudent to secure counsel that has experience dealing with the Inspector General.
If you are a physician and you do not currently have procedures in place that specifically address compliance with Stark Law, your attorney can help you both understand the law and ensure compliance through the implementation of best practices. The time and effort involved in preventing a violation is of significant value, especially as it relates to mitigating the potential costs of non-compliance.