The Stark Law

Prohibiting doctors from profiting from their own referrals

Financial inducements for healthcare professionals to use certain medical goods or services compromise their professional judgment. When economic incentives like kickbacks or payoffs influence healthcare decisions, patients are subjected to potentially unnecessary, inappropriate, expensive, and even dangerous treatments. As a result, healthcare costs and the cost of government entitlement programs such as Medicare and Medicaid rise.

Healthcare whistleblowers who report Stark Law violations play a critical role in protecting patients’ interests and ensuring doctors’ treatment decisions are not financially motivated. Patients, healthcare workers, doctors, and other individuals with information about healthcare kickbacks can file a qui tam lawsuit on behalf of the government and receive a portion of the money the government recovers using two federal statutes: the Anti Kickback Statute and the Stark Law. Both laws prohibit medical providers from giving or accepting any form of financial incentive that may influence treatment decisions.

Want to report healthcare fraud?

If you have information about a medical provider or institution committing healthcare fraud, know your rights and protections as a whistleblower. For a free and confidential consultation with an experienced whistleblower attorney, please contact us at 1-800-254-9493 or by filling out the form to the right.

Our lawyers are committed to protecting whistleblowers’ rights and recovering money that was fraudulently taken from the government. Our law firm works with whistleblowers on a contingency basis, which means there is no payment unless funds are recovered and the whistleblower is paid a reward.”

Whistleblower Protection and Reward

Under the False Claims Act, whistleblowers who file a qui tam lawsuit to prosecute Anti-Kickback and Stark Law violations are legally protected from whistleblower retaliation and job discrimination.

If the qui tam lawsuit is successful, the whistleblower is eligible to receive up to 30% of the money recovered by the government.

Examples of Anti-Kickback and Stark Law Violations

In United States ex rel. Darity v. C.R. Bard, Inc., an Anti-Kickback law whistleblower alleged medical device company C.R. Bard paid doctors and hospitals to induce them to prescribe a type of radiation therapy, for which hospitals ultimately submitted bills to Medicare.

In United States ex rel. Drakeford v. Tuomey Healthcare Sys., Inc., a whistleblower alleged that Tuomey Healthcare Systems, Inc. violated Stark Laws by providing employment contracts to physicians that compensated them above fair market value in exchange for performing outpatient procedures at Tuomey’s facilities – procedures for which Toumey sought reimbursement from Medicare and Medicaid.

Penalties for Stark Law and Anti-Kickback Violations

Violations of both the federal Anti-Kickback statute and the Stark Law can be brought under the False Claims Act, punishable by damages three times greater than the government’s losses, as well as civil penalties ranging from $5,000 to $11,000 for each false claim for payment made.

In addition to civil penalties, each violation of the Anti-Kickback statute is a felony punishable by $25,000 and a maximum five-year prison term.

Federal Anti-Kickback Statute

Passed in 1935, the Anti Kickback statute is a criminal law that prohibits medical providers from offering or accepting any form of financial inducement, also called remuneration, in exchange for referrals to federal healthcare programs, or referrals that involve payments by Medicare, Medicaid, or Tricare. Both the party making the referral and the party receiving the referral are liable for civil and criminal violations under the Anti-Kickback statute.

The law defines kickbacks broadly to include anything of value, including:

  • Cash
  • Loan reductions or payments
  • Gifts
  • Leasing agreements to rent property above or below fair market value
  • Consulting agreements
  • Research grants
  • Speaking engagements

Inappropriate financial relationships and healthcare kickback exchanges typically involve pharmaceutical companies, medical device makers, pharmacies, hospitals, nursing care facilities, medical research facilities, private medical practices, and individual practitioners.

Anti-Kickback Statute Safe Harbors

Because the anti-kickback statute was written broadly, Congress permits a series of exceptions for payment practices that are not considered violations of the anti-kickback law. Often referred to as “safe harbors,” examples of legal payment practices under the law include:

  1. Price discounts that are properly disclosed to the government
  2. Sale of a medical practice
  3. Costs associated with the operation of ambulatory surgical centers
  4. Referral arrangements for specialty services
  5. Payments made from employer to a bona fide employee
  6. Interest paid on investments
  7. Joint ventures in under-served areas, including rural and urban areas
  8. Ancillary services in the same office
  9. Prepaid plans
  10. Providers in rural areas or in Puerto Rico
  11. Academic medical centers
  12. Physicians’ services provided personally by another physician in the same practice group

The Stark Law

The Stark Law, also known as the physician self-referral law, prevents a physician from making Medicare patient referrals and referrals for designated health services (DHS) to entities with whom the physician has a financial relationship.

Under the Stark Law, a physician‘s financial relationship is defined as a direct or indirect ownership interest or investment interest in the entity, or a compensation arrangement between the physician and the entity.

If an inappropriate financial relationship exists, referrals for the following designated health services are banned under the law:

  1. Clinical laboratory services
  2. Physical therapy services
  3. Occupational therapy services
  4. Radiology services
  5. Radiation therapy services and supplies
  6. Durable medical equipment and supplies
  7. Parenteral and enteral nutrients, equipment, and supplies
  8. Prosthetics, orthotics, and prosthetic devices and supplies
  9. Home health services
  10. Outpatient prescription drugs
  11. Inpatient and outpatient hospital services
  12. Outpatient speech-language pathology services

Girard Gibbs' Stark Law Experience

Girard Gibbs’ whistleblower lawyers have more than two decades of experience prosecuting fraud. Our attorneys have successfully litigated against some of the largest companies in the United States, and we have recovered more than a billion dollars on our clients’ behalf. We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California and The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).

We proudly hold memberships in Taxpayers Against Fraud, a public interest organization dedicated to combating fraud against the government and protecting public resources. Our whistleblower lawyers support the non-profit’s educational initiatives and efforts to advance public and government support for qui tam whistleblower cases.

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