| Read Time: 4 minutes | Healthcare Business Law
stark law

Have you ever faced a situation where your doctor referred you to a “miracle” clinic, only to find that your same doctor owns that clinic too?

Or how about when your doctor recommends a treatment, and you later discover his brother owns the company providing it?

These situations may violate the Stark Law, and you may be entitled to compensation.

The Stark Law, also known as the physician self-referral rule, prohibits medical professionals from making patient referrals to an entity with which they or someone in their immediate family has a relationship.

It also imposes limitations on the types of financial transactions medical professionals can become involved with.

This law has developed into one of the most important anti-fraud statutes that the U.S. government has to help fight Medicare abuse.

In this article, the healthcare lawyers at Massingill will explain what the Stark Law is and how to comply with its provisions.

If you have questions, please contact us today. 

Stark Law Definition

Under the Stark Law, healthcare providers must comply with a set of regulations that prohibits them from self-referring patients covered by Medicare.

It imposes limitations on any financial and business transactions physicians may become involved in.

Under the Stark Law, those considered “medical professionals” includes: 

  • Medical doctors, 
  • Doctors of osteopathy, 
  • Doctors of optometry, 
  • Dentists, 
  • Dental surgeons, 
  • Doctors of podiatric medicine, and
  • Chiropractors.

Under the Stark Law, immediate family members of medical professionals may also be subject to some of the law’s restrictions.

The definition of family members includes:

  • Spouses, 
  • Parents, 
  • Stepparents,
  • Children, 
  • Siblings, 
  • Stepchildren, 
  • Stepsiblings, 
  • Grandparents, 
  • Grandchildren, 
  • Spouses of grandparents and grandchildren, and
  • In-laws.

For instance, if a dentist referred patients to his brother, the dental surgeon, this might be a violation of the Stark Law. 

If you have a concern about whether the Stark Law might apply to you as either a medical professional or an immediate family member of one, contact a knowledgeable healthcare law attorney today.

The Massingill team can help.

Stark Law Basics

It is important to note that the Stark Law applies only to Medicare payments and not to most private healthcare transactions.

If you have concerns about physician self-referrals and are part of a private healthcare network, you can still contact an experienced attorney.

Depending upon your circumstances, you may have options to pursue a different kind of complaint.

The Stark Law consists of three key components: 

  • Healthcare providers are prohibited from referring Medicare patients for certain health services to a business in which the physician has a financial or familial interest; 
  • Medicare or other insurance providers for health services cannot be billed when an improper physician referral was made; and
  • The Department of Health and Human Services (HHS) has the authority to create case-specific exceptions for referrals where no conflict of interest will result.

The HHS Office of the Inspector General identifies the Stark Law as one of the five most important anti-fraud laws affecting the medical profession.

But remember, this law applies only to physician referrals regarding Medicare patients.

In addition, the law narrows the category of Medicare patients to only those patients who receive a referral for designated health services. 

Designated Health Services

What is a “designated health service”? The Stark Law’s applicability is limited not only to Medicare patients but to a narrower class of Medicare patients receiving a “designated health service.”

The Center for Medicare & Medicaid Services (CMS) defines a designated health service to include: 

  • Clinical laboratory services;
  • Durable medical equipment and supplies;
  • Home health services;
  • Inpatient and outpatient hospitalizations;
  • Occupational therapy;
  • Outpatient prescription drugs;
  • Outpatient speech-language services;
  • Artificial nutrition supplies;
  • Physical therapy;
  • Prosthetics, orthotics, and related devices and supplies;
  • Radiation therapy; and
  • Radiology and certain other imaging services.

This is a defined list created by CMS. Any services that are not listed here are not covered under the Stark Law.

If you have questions about the applicability of the Stark Law to the services you have received, contact a member of the Massingill team.

We can help assess your claim and discuss with you what next steps might be.

Let’s get down to business. Book a consultation with Massingill Law now.

Stark Law Exceptions

There are numerous exceptions to the Stark Law. If you are a physician questioning whether you may encounter a Stark Law violation, contact an experienced attorney to discuss the issue.

Some Stark Law exceptions include: 

  • Essential, non-monetary remuneration exclusively used to send and receive electronic prescription information;
  • Referrals to a specialty hospital where the physician has an ownership or investment interest;
  • The bona fide employment exception; 
  • In-office ancillary services exception; and 
  • Whole hospital exception. 

This list is non-exhaustive, and an attorney can help you navigate each detail of a Stark Law exception.

Each referral arrangement is considered under a strict-liability standard and receives individual scrutiny.

This analysis can become extremely complex, and an experienced Stark Law business lawyer can help.

Penalties For Stark Law Violations

Covered healthcare providers who violate the Stark Law are held strictly liable. Strict liability is similar to getting a parking ticket.

It is a form of legal liability where the individual who violated the law is held liable regardless of whether they had any intent to commit a violation.

Under the Stark Law, a healthcare system or hospital found at fault for a violation could be required to do the following:

  • Refund all payments for the improper amounts; 
  • Pay up to $15,000 per improper referral; and 
  • Be excluded from all federal healthcare programs. 

If the violator is found to have violated the law intentionally, they could face civil penalties of up to $100,000 per violation. 

How a Healthcare Law Attorney Can Help

Our experienced healthcare lawyers at Massingill know how frightening it can be to feel you may be the victim of fraud or deception.

We understand how important it is for physicians and healthcare professionals to have solid plans that cover all potential conflicts of interest.

Contact us today to set up a free consultation to learn more about how we can help with your individual situation.

Author Photo

Joshua Massingill

Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.

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