Penalties for Violating the Stark Law

In our previous posts, we looked at the underlying purpose behind the Stark law against doctor self-referrals, the scope of the Stark law, and the ways in which the Stark law can be violated.  This final post in the series will look at what happens if you run afoul of the Stark law.

There is no “intent” requirement in the Stark law.  Therefore, a violation can be found, and penalized, even if it is unintentional and even if it did not result in any referral income.  The penalties for violating the Stark law can be severe.  Penalties start with the denial of payment for services performed and reimbursement of payment already received for services in violation of the law.[i]  However, that is just where they start.

In addition to repaying money earned in violation of the Stark Law, and exclusion from providing future Medicare services, the CMS can also impose monetary penalties on Stark violators. Monetary sanctions are also imposed of up to $15,000 per service performed in violation of the act, and up to $100,000 for every contractual agreement that is considered to be a circumvention of the Stark law.[ii]

The monetary sanctions can add up quickly.  News articles abound of doctors who have been forced to pay hundreds of thousands of dollars for violating Stark.  Recently, a hospital in Utah was fined $25.5 million for violating Stark by rewarding physicians for referring patients to its facility and for leasing office space to physicians at below-market rental rates.[iii]  The hospital, Intermountain Health Care, Inc., consented to the fine after it self-disclosed the violations.  Other examples include hospitals in Illinois and Michigan being fined $36 million and $30 million, respectively for similar violations of the Stark Law.[iv]

Hospitals aren’t the only targets for the CMS.  A cardiology practice group in New York recently entered into a $1.3 million settlement of alleged Stark violations over the way it compensated its members.[v]  CMS has sent the message that it will severely punish violations of the Stark Law, regardless of a party’s intentions, and even if a wrongdoer admits its mistakes and self-discloses potential violations.

Additionally, Stark violations can serve as the basis for a provider to be barred from participation in the Medicare program. This can have a significant impact on a doctor’s prospects for employment and his ability to continue practicing.

The Stark law is a potential minefield for doctors, with potentially catastrophic consequences for even unintentional violations.  Obamacare has added new layers that increase the burden on doctors to ensure they are in compliance with the Stark law and its regulations.  Additionally, other statutes, including the Anti-Kickback Statute and the Health Insurance Portability and Accountability Act (“HIPAA”), impose additional requirements on physicians, and many states have enacted state equivalents for the Stark laws, all of which increase the risk for physicians.

If you are unsure whether you are in violation of these laws, or if you are facing an investigation into a potential violation, it is essential that you consult with knowledgeable healthcare attorneys on a regular basis to ensure that they remain in compliance with the ever-shifting landscape of healthcare laws.

[i] 42 U.S.C. § 1395nn(g)(1) and (2).

[ii] 42 U.S.C. § 1395nn(g)(3) and (4).

[iii] “Intermountain Healthcare pays $25.5 million to settle claims allegations,” Salt Lake Tribune, April 3, 2013.

[iv] Justice Department press releases:

http://www.justice.gov/usao/iln/pr/chicago/2008/pr1201_01a.pdf

http://www.justice.gov/opa/pr/detroit-medical-center-pays-us-30-million-settle-false-claims-act-allegations

[v] “New York cardiology group to repay $1.3 million from referrals,” Associated Press August 16, 2014.