Experienced Defense Lawyers Protecting Clients through Stark Law Investigations

May a physician refer to an entity in which the physician has a financial interest? While the question appears simple, the answer is not. Decades of legislative activism have turned the issue of physician self-referrals into one of the most convoluted and complex areas of health care law. Because of the severe penalties for wrongdoings, Stark Law is not a place to experiment.

Stark Law Explained

Under section 1877, a physician may not refer a Medicare patient for certain designated health services to an entity with which the physician or an immediate family member of the physician has a financial relationship, unless an exception applies. In this context, the following definitions and explanations apply.

  • Referral. The definition of a referral is broad and encompasses any request, order, or certification of medical necessity by a physician for an item or service that is reimbursable under Medicare or a state health program.
  • Physician. Notably, Stark Law only applies to physicians. Federal law defines a physician to be an MD, DO, DDS, DPM, Optometrist, or Chiropractor. Thus, the Stark Law does currently not apply to nurse practitioners or physician assistants.
  • Family Members. To avoid circumventions, by which a physician simply makes his children owners of the entity to which the physician refers his Medicare DHS-business, the Stark Law extends the definition of prohibited owners to includes immediate family members. Those are husband and wife, birth or adoptive parents, children, siblings, stepparents, stepchildren, stepbrothers, stepsisters, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, grandparents, grandchildren, and a spouse of a grandparent or grandchild.
  • Designated Health Services (“DHS”). In order to implicate the Stark Law, a physician’s referral must be for a designated health service, which is defined to include referrals for laboratories, physical and occupational therapy, radiology, radiation therapy, durable medical equipment, parenteral and enteral nutrients, equipment, devices, supplies, orthotics, prosthetics, home health, outpatient prescription drugs, and inpatient and outpatient hospital services.
  • Financial Relationship. Is there a financial relationship between the referring physician or immediate family member and the entity that is providing the designated health service? In this context, a financial relationship includes both ownership or investment interests as well as compensation arrangements, see 42 C.F.R. Sect. 411.354(b)(1).

Examples

  • Physician-owned laboratory accused of processing federal samples
  • Physician-owned pharmacy investigated for accepting Medicare scripts
  • Physician splitting investments with his wife
  • Home health care center offering shares to a referring physician
  • Financial relationship between hospice care center and referring physician
  • Surgeon referring physical therapy patients to a PT clinic that he co-owns.

Penalties

Federal Stark Law provisions are a government tool to prosecute improper financial relationships between referring physicians and businesses. Stark Law violations can be costly. Entities that violate the statute may be denied future claims, may have to refund amounts collected in violation of the statute, and may be subject to civil monetary penalties. Because every claim submitted in violation of the Stark Law necessarily also constitutes a false claim under the False Claims Act at 31 U.S.C. Sect. 3729-3733, the government often pursues the two statutes jointly.

Defending Stark Law

The difference between avoiding and admitting Stark Law liability is strategic analysis. Most people are overwhelmed by the complexity of the laws and its loopholes. Importantly, just because the provisions of the Stark Law are implicated, the government hasn’t proven its case. In fact, there are many avenues to pursue and many reasons exist to persuade the government that its recoupment request is unjustified.

The criminal defense attorneys of the Oberheiden Law Group have negotiated a great number of high-stake Stark Law cases and we are profoundly familiar with all exceptions and carve-outs including but not limited those for academic medical centers, electronic health records, direct compensation exceptions, and indirect compensation exceptions. Contact one of us to determine if your arrangement falls under one of these exceptions. Ask attorney Lynette Byrd or Dr. Nick Oberheiden about their Stark Law experience.

When it comes to Stark Law investigations, our fraud defense attorneys regularly defeat Stark Law investigations on behalf of our clients. The experience gained in these government investigations help us greatly to structure financial relationships between referring physicians and affiliated businesses in a Stark Law compliant manner. Across health care industries, we have advised several hundred clients in Stark Law and continue to do so on a daily basis.

  • Representation of Physicians as Potential Investors
  • Representation of Physician Owned Hospitals
  • Representation of Physician Owned Laboratories
  • Representation of Physician Owned Pharmacies
  • Representation of Physician Owned DNA Testing Centers
  • Representation of Physician Owned Blood Testing Centers
  • Representation of Physician Owned Distributorships
  • Representation of Physician Owned Factoring Companies
  • Representation of Physician Owned PT Clinics
  • Representation of Physician Owned DME Businesses

In addition to Stark Law compliance work, we have appeared at U.S. Attorney’s Offices across the country to defend actual Stark Law prosecutions — with astounding success.

Success Stories (Stark Law)

  • Stark Law Investigation of Physician Practice Group by the Department of Justice and the U.S. Attorney’s Office
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Health Care Services Company by the Office of Inspector General, the Department of Justice, and the Department of Health and Human Services
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Laboratory by the Department of Health and Human Services and the Office of Inspector General
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Nationally Operating Health Care Business by the Department of Defense
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Health Care Business by the Office of Inspector General
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Physician Owned Entity by the Department of Health and Human Services
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Physician Owned Entity by the Office of Inspector General
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Physician Owned Entity by the Department of Justice
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Physician Owned Entity by the Office of Inspector General
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Physician Owned Entity by the Office of Inspector General
    Result: No civil or criminal liability, case dismissed.
  • Stark Law Investigation of Health Care Management Organization by the Office of Inspector General, the Department of Justice, and the Department of Health and Human Services
    Result: No civil or criminal liability, case dismissed.

If you have been accused of violating the Stark Law, you need aggressive legal representation. Contact our experienced attorneys today to schedule a free consultation.