Anti-Kickback Statute, Stark Law, and Fraud & Abuse Issues


  • Federal and State Anti-Kickback Statutes
  • Federal (Stark Law) and State Self-Referral Laws
  • Fee Splitting Laws
  • Corporate Practice of Medicine Laws
  • Other Fraud & Abuse Issues

The Federal Stark Law (Stark) and Anti-Kickback Statute (AKS) may be the most frequently referenced and contemplated Federal health care laws. This makes sense considering their impact upon the industry.

Examples of common health care relationships that can implicate Stark and AKS, and that need to be structured in accordance with these requirements, include, but are not limited to, physician employment and independent contractor agreements, equipment and space lease agreements, medical director agreements, hospital/physician recruitment agreements, physician owned distributorships, ancillary health care businesses, joint ventures andther arrangements.

Federal Stark Law

Generally speaking, Stark prohibits physicians from referring Medicare beneficiaries to an entity in which they (or an immediate family member) have a financial relationship (including compensation and ownership relationships) for “designated health services” (often referred to as DHS), unless an exception applies.

Although the Stark referral prohibition summarized above is extremely broad, there are numerous Stark exceptions that cover a wide-range of relationships. That being said, to qualify for an exception, each and every technical element of the exception must be fully satisfied and can be best analyzed and explained by a knowledgeable, effective Stark attorney.

Penalties for violating these provisions can be severe, further illustrating why having effective representation from an expert Stark attorney is necessary. Stark penalties include denial of payment, refund of payment and imposition of civil
monetary penalties. Health care providers also should bear in mind that Stark violations can be raised in the context of civil false claims suits brought by whistleblowers, making hiring a knowledgeable Stark attorney very important.

Federal Anti-Kickback Statute

AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. Where remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the AKS is violated. For purposes of the AKS, “remuneration” includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind. The AKS has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain money for the referral of services or to induce further referrals. A person need not have actual acknowledge of the AKS or specific intent to commit a violation of the AKS in order to do so.

The Department of Health and Human Services has promulgated safe harbor regulations that define practices that are not subject to the AKS because such practices would be unlikely to result in fraud or abuse. The safe harbor regulations set forth specific conditions that, if met, assure entities involved of not being prosecuted or sanctioned for the arrangement qualifying for the safe harbor. However, safe harbor protection is afforded only to those arrangements that precisely meet all of the conditions set forth in the safe harbor.

By its terms, the AKS ascribes criminal liability to parties on both sides of an impermissible “kickback” transaction. Violation of the AKS constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to five years, or both. Conviction will also lead to automatic exclusion from Federal health care programs, including Medicare and Medicaid. The Office of Inspector General (the OIG) may initiate administrative proceedings to impose civil monetary penalties on any party that commits a violation of the AKS.

The attorneys at The Health Law Partners provide counsel to clients, including, planning and structuring transactions to comply with Stark and to minimize fraud and abuse implications. We also regularly assist healthcare providers and suppliers with analysis of arrangements that have already been implemented by reviewing and providing opinions on potential areas of concern or restructure options. Several of our attorneys are nationally recognized authors with publications to legal and professional organizations regarding Stark, Anti-kickback, and fraud and abuse topics.

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