Kickback & Stark Violations

Health Care Fraud


Medicare, Medicaid, and other federal health care programs rely upon medical providers to exercise independent judgment and focus solely on the best interests of patients in making treatment decisions. When a physician or other health care provider selects a treatment course because of a personal financial benefit, that decision is not necessarily in the patient’s best interests and can lead to increased costs, unnecessary procedures or services, and/or harm to a vulnerable patient population. This, in turn, can result in federal health care programs paying out millions of dollars’ worth of improper and fraudulent payments to providers.

To protect patients and the precious dollars allocated to government health care programs, the federal government enacted two powerful laws: the Medicare and Medicaid Anti-Kickback Statute and the Stark Law. Many states have followed suit and enacted similar prohibitions. Both laws are criminal statutes, but Congress and the courts have deemed that a violation of one of these laws renders an offending provider’s claims to government health care programs false or fraudulent, thus in violation of the civil False Claims Act (FCA) as well.

Anti-Kickback Statute

The Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b), is a criminal law that prohibits medical providers from offering, soliciting, paying, or receiving anything of value in exchange for referrals of patients whose resulting treatment will be paid for by a federal health care program (e.g., Medicare, Medicaid, TRICARE, and others). The AKS covers kickbacks in any form, including (but not limited to) cash, free or reduced rent, expensive hotel stays and meals, excessive compensation for medical directorships or consultancies, and more. Notably, a physician or other medical provider cannot avoid liability under the AKS simply by saying that she would have made the same decision even if she had not received the kickback — the kickback itself is deemed to have tainted the decision-making process.

Stark Law

Similarly, the Stark Law, 42 U.S.C. 1395nn, prohibits patient referrals where the referring physician has a financial interest in the health care provider or entity to which the patient is being referred. Unlike the AKS, the Stark Law is a “strict liability” statute, meaning that one need not have intended to violate the law in order to be held accountable under it. The Stark Law covers referrals for a wide variety of services (referred to as “designated health services” in the statute):

  • clinical laboratory services.
  • physical therapy, occupational therapy, and outpatient speech-language pathology services.
  • radiology and certain other imaging services.
  • radiation therapy services and supplies.
  • durable medical equipment and supplies.
  • parenteral and enteral nutrients, equipment, and supplies.
  • prosthetics, orthotics, and prosthetic devices and supplies.
  • home health services.
  • outpatient prescription drugs.
  • inpatient and outpatient hospital services.

Common Kickback and Stark Law Violations

Together the AKS and the Stark Law are powerful tools to root out corruption in medical decision-making throughout the health care system. Whistleblowers, including several represented by our attorneys, have been instrumental in exposing kickback and self-referral schemes around the country by filing qui tam complaints under the FCA. Here are just a few examples:

  • hospitals tying a physician’s compensation to the revenue generated by the physician’s referrals for diagnostic services like X-rays (i.e., the more referrals for the hospital’s services that the doctor makes, the more money the doctor receives).
  • a cardiac monitoring service aggressively marketing a billing scheme that made it more profitable for physicians to use its service than its competitors.
  • pharmaceutical companies providing expensive meals, travel, and speaker fees to physicians to reward physicians for and/or induce physicians to prescribe their drug product.
  • below-market rental agreements between a hospital and a physician group, two physician groups, or a physician group and a laboratory company – all designed to induce physicians to refer their patients to the other entity.

How to Report Kickback & Stark Law Violations

The above are just some examples of the many different types of AKS and Stark Law violations. Both statutes have numerous exceptions and safe harbors that should be carefully analyzed by an experienced practitioner. If you think that you have information relating to violations of either law, please contact us for a free, confidential consultation.

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