The Stark Law: Keeping Bad Actors in Line

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Mr. Louthian and the Louthian Law Firm provided me with excellent legal services regarding a legal issue with a major corporation.

Errick Bethel Sr.

Whistleblower LawyerMedicare enjoys one potent method for keeping the small minority of bad-acting physicians in line. It’s called the Physician Self-Referral Law, or the Stark Law, and it’s meant to keep a doctor from receiving any financial benefit from referrals. The Stark Law was originally enacted in 1989 and has been amended more than once to expand and define the list of designated health services covered by the law.

Briefly, the Stark Law prohibits doctors from benefiting financially from referring Medicare patients for certain designated health services (DHS), which can include lab tests, medical equipment, and hospital admission. The financial benefits include those received by the doctor and by members of the doctor’s immediate family. If a referral is made which benefits the physician or physician’s family financially, the doctor is prohibited from presenting any claims for payment to Medicare for the referred services. [More About Medicare Fraud]

Doing so would create a false claims situation and create liability under the False Claims Act, opening up the possibility of whistleblower actions and qui tam suits.

How is the Stark Law Different from the Anti-Kickback Statute?

The Anti-Kickback Statute (AKS) is broader in scope. Basically, it prohibits compensation that is intended to help a transaction happen, and it applies to all federal health care programs—Medicare, Medicaid, and other programs such as TRICARE. The AKS is a criminal law with civil components, as opposed to the Stark Law, which assesses only civil penalties. The differences can be summarized in the following chart:

Anti-Kickback Statute Stark Law
Prohibitions Financial and material compensations that facilitate transactions across all federal health care programs Physicians referring Medicare patients for DHS in order to receive personal financial gain, including gains by immediate family
Referrals From anyone Only from a physician
Goods and Services Any goods and services Only designated health services (DHS)
Need for Intent Intent must be shown to be deliberate and knowing No intent standard when overpayment by Medicare is involved; intent must be knowing with regard to referrals in order to assess monetary penalties
Exceptions Voluntary “safe harbors” as defined by law Mandatory exceptions as defined by law
Penalties Criminal penalties include up to $25K and 5 years in prison per violation. Civil penalties include False Claims Act liability, exclusion from health care program reimbursement, up to $50K per violation, and an assessment of three times the kickback amount Civil penalties include obligation to refund overpayment, False Claims Act liability, monetary penalties and exclusion from health care program reimbursement for knowing violations, up to $15K per violation, and an assessment of three times the amount falsely claimed
Programs All federal health care programs Medicare/Medicaid


Perhaps the most important takeaway is this one: The Stark Law is, in many ways, a subset of the Anti-Kickback Statutes. In other words, if a physician has broken the Stark Law, they have likely broken the Anti-Kickback Statutes as well.

Recent Successful Qui Tam Stark Law Cases

Violations of the Stark Law, just like the Anti-Kickback Statute, are grounds for bringing a whistleblower suit. Recently, a number of Stark Law cases have been successfully resolved, as have certain AKS cases with no Stark Law component. All of the following Stark Law-related settlements originated with whistleblowers as qui tam cases. The first two happened in South Carolina:

  • July, 2016: A settlement of $17 million was reached against Lexington Medical Center, of West Columbia, SC, for violations of the Stark Law. Twenty-eight doctors were involved in improper financial arrangements. The whistleblower, a doctor who formerly worked at Lexington Medical, was awarded $4.5 million.
  • October, 2015: Tuomey Healthcare System’s $237 million judgment resolved allegations that they illegally billed Medicare for services that originated from certain physician referrals. The doctors providing the referrals had improper financial relationships with Tuomey, located in Sumter, SC. The alleged “sweetheart deals” were a clear violation of the Stark Law. Because Tuomey was sold to Palmetto Health in Columbia as part of the settlement, the U.S. government actually received $72.4 million. The whistleblower was awarded $18.1 million of that amount.
  • September, 2015: A special taxing district in Florida known as the North Broward Hospital District that operates health care facilities and hospitals settled allegations that it violated the Stark Law for $69.5 million. The doctor who initially brought the suit was awarded slightly over $12 million.

Because not everyone has access to the details of illegal medical financial relationships, most Stark Law and AKS violations cases are brought by employees on the inside, either former or current. However, keep in mind that, if your career encompasses both medical goods or services and federal health care programs, you might uncover fraud in the course of your work. In such a situation, it’s possible you could bring a qui tam suit.

The Whistleblower Lawyer.

If you think you have the facts needed to bring a whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the government will intervene, or join in your lawsuit.

Your chances of succeeding are greater if your whistleblower claim is substantive, clear, and to the point. Because of this, meeting with a qualified whistleblower attorney can increase your chances of winning. The Louthian Law Firm can help you form your claim so that the government will be more inclined to intervene in your case; government intervention can sometimes increase the chances of recovering reward money. Even if the government decides not to intervene, it could still be a good idea to pursue your case without government involvement. Our strong support system can assist you through every step of the process.

For a free, confidential evaluation of your case, call the Louthian Law Firm today at 1-803-454-1200 or, if you prefer, you can fill out our online contact form.

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