The Stark Law and Anti-Kickback Statutes
WHISTLEBLOWER PROTECTION STATUTES
The Physician Self-Referral Law, commonly known as the Stark Law, and the Anti-Kickback Statutes are two federal laws that protect whistleblowers and prohibit a wide range of conduct by healthcare providers.
These laws are intended to protect the integrity of the healthcare system and to maintain the financial stability of government healthcare programs like Medicare and Medicaid. The Stark Law prohibit providers from seeking to obtain referrals for treatment and ultimately, reimbursement from a government healthcare program. Violating these laws often result in:
- over using the healthcare system
- increased costs of healthcare programs
- unfair competition
- corrupt medical decision-making
Those with knowledge of kickbacks, or bribes, by healthcare providers are in a unique position to protect vulnerable patients. Whistleblowers can call attention to decisions made in the financial interests of a provider, and not in the interests of the patient. The attorneys at Price Armstrong can help those seeking to report Medicare fraud – contact us if you are aware of any Stark Law or Anti-Kickback Statute violations.
THE STARK LAW
The Stark Law, as it is known, prohibits a physician from referring a Medicare or Medicaid patient to an entity with whom the physician or their immediate family member has a financial relationship. This financial relationship can include not only an ownership interest, but also a compensation scheme or even an agreement to pay the physician amounts far exceeding market value for their services. This law applies only to physicians and only to certain designated health services including:
- Clinical lab services
- Therapy services and supplies (physical, occupational, speech, radiation)
- Imaging services (ex: radiology)
- Medical equipment and nutrients (parenteral and enteral)
- Prosthetics, orthotics and prosthetic devices
- Home health services
- Inpatient and outpatient hospital services and prescription drugs
The law also prohibits the organization providing these services from seeking payment from Medicare or Medicaid for services given as a result of a prohibited referral. There are some exceptions to this general rule.
For those services above, a doctor cannot refer a patient to receive the service at an organization in which he or his family has a financial stake, and thus stands to benefit from. The flip side of that is the organization is not allowed to seek Medicare or Medicaid reimbursement for services arising from that referral.
Violations of the Stark Law most commonly come from compensation agreements rather than ownership agreements. Some examples are conspiracies between entities and physicians for laboratory services. Providers and physicians have also been found liable for compensating doctors for cancer medications.
The penalties for physicians and companies that violate the Stark Law can be incredibly costly:
- The provider and physician may be forced to refund the amount
- The provider can face a civil fine of $15,000 for each service, including a civil assessment of three times the amount claimed
- The physician or entity may also be excluded from claiming anything from Medicare or Medicaid going forward
- The physician and provider can be held liable under the False Claims Act (FCA).
Plain violations of the Stark Law do not require an intent to break the law. However, for civil monetary penalties, program exclusion, civil assessments, and False Claims Act Liability, the violation must have been done knowingly.
THE ANTI-KICKBACK STATUTE
The Anti-Kickback Statue (AKS) is somewhat similar to the Stark law. The AKS prohibits offering, receiving, paying, or soliciting anything of value to induce or reward referrals or generate Federal healthcare business.
For example, in a kickback, also known as a bribe, the organization pays a provider to either refer a patient or purchase a piece of equipment and then seeks reimbursement from the federal government. The organization attempts to initiate a transaction that will increase profit. Other examples of kickback include:
- Conduct like paying individuals to recruit homeless patients whose services would be charged to Medicaid
- Kickbacks to hospitals in the form of rebates for medical devices
- Agreements between providers, like an orthopedic and a physical therapist, to refer patients to one another in return for a percentage of the amount collected from the government
- The fraudulent leasing of medical equipment as a way for a hospital to pay a doctor for referrals
The AKS is worded very broadly and is often wielded against hospitals, medical device companies, other healthcare entities, and even physicians.
The civil penalties for violations of the AKS are very similar to those for violations of the Stark Law except that the violator can be hit with a fine of $50,000 for each violation. Violators of the AKS are still subject to the False Claims Act. However, unlike the Stark Law, violators of the AKS can be criminally liable for fines up to $25,000 and up to a five-year prison sentence for each violation.
The AKS Is Different from the Stark Law in Several Important Ways:
- The AKS requires proving intent (i.e. the fraud was not a mistake)
- It’s both a civil and criminal violation that can result in fines and jail time.
- The AKS applies to patient referrals from anyone, not just physicians.
- The AKS applies to any items or services that are covered by any government healthcare program, not just Medicare and Medicaid.
- The AKS provides “safe harbors.”
What Is a Safe Harbor?
A safe harbor describes various payment and business practices, that although would typically result in a violation of the anti-kickback law, are not treated as an offense under the statute. There are numerous safe harbor arrangements and the most commonly used safe harbors include:
- Investment interests
- Space rental
- Equipment rental
- Personal services and management contracts
- Sale of Practice
- Referral services
- Group purchasing organizations
- Waiver of beneficiary coinsurance and deductible amounts
- Price reductions offered to health plans
- Practitioner recruitment
- Investments in group practices
- Ambulatory surgical centers
- Referral arrangements for specialty services
- Price reductions offered to eligible managed care organizations
- Price reductions offered by contractors with substantial financial risk to managed care organizations
- Ambulance replenishing
- Federally Qualified Health Centers
- Electronic health records items and services
STARK LAW & ANTI-KICKBACK STATUTE WHISTLEBLOWER PROTECTION & BENEFITS
Healthcare providers that are reimbursed through Medicare and Medicaid are parties to agreements with the government. This makes them government contractors and, most of the time, subject to the False Claims Act (FCA).
What Is the False Claims Act?
The FCA allows the government to recoup funds it has given to contractors based on false claims for payment. When a provider submits a claim for payment that is in violation of the Stark Law or the AKS, it amounts to a false claim for payment.
The FCA also allows individuals with knowledge of false claims, or whistleblowers, to file suit on behalf of the government to recoup monies that have been fraudulently obtained by contractors, including health care providers.
Protection and Rewards for Whistleblowers
When a whistleblower initiates a case under the FCA, they file their complaint under seal, making them highly confidential. It also offers these whistleblowers legal protection from employment retaliation if they work for the healthcare provider when they file a complaint alleging an illegal kickback scheme.
Additionally, the whistleblower is entitled to compensation for bringing a successful FCA case on behalf of the government. This amount can range between 15% and 25% of the total amount recovered depending on the type of information the whistleblower provides. However, if the whistleblower provides only public information their award is limited to 10% of the total recovered.
The amount of the award is also dependent on the role of the government in the litigation. Under the FCA, the government has the right to intervene in the case and is provided a period of time to decide whether they will take over the case. If the case is taken over by the government, the whistleblower can obtain between 15% and 25% of the funds recouped by the government depending on their involvement with the government effort and the quality of information they provide. The whistleblower is also entitled to reimbursement of their costs and fees in bringing the action. If the government chooses not to intervene, a whistleblower is entitled to between 25% and 30% of the total recovered plus their costs and fees.
The rewards for both the government and the whistleblower can be significant. FCA cases for violations of the Stark Law and Anti-Kickback Statutes in the past few years have been substantial—recovered amount ranged from $1.2 million to $237.5 million.
Because it’s difficult to detect kickback schemes from a pure auditing perspective, whistleblowers are crucial to a great number of these FCA cases.
Reporting a Stark Law or Anti-Kickback Statute violation through an FCA case is extremely difficult and complex. Drafting complaints under the False Claims Act and working with the Department of Justice requires a close attention to detail, hard work, and knowledge of the elements of a successful kickback claim. That’s why it’s important to consult a knowledgeable medical fraud attorney.
Whistleblowers can face severe personal and professional harm for reporting fraud if they are not backed by an attorney who knows the law and the process of an FCA case. The attorneys at Price Armstrong have experience in successfully representing whistleblowers in FCA cases. If you have information about a kickback scheme, an attorney at Price Armstrong is available for a free consultation regarding your options.
The Stark Law applies only to referrals from physicians and certain itemized services to be paid by Medicare and Medicaid. The Anti-Kickback Statute applies to any referral regarding any expenditure that any federal government healthcare program will pay for.
No. The False Claims Act protects whistleblowers from employment retaliation for those who file a case on behalf of the government.
If you are a Medicare Beneficiary, you can call the CMS hotline at 1-800-633-4227 or the OIG hotline at 1-800-447-8477. You can also report on the OIG website. If you are a Medicare Provider, you can use either of those resources or contact your local Medicare Administrative Contractor. A map of contractors can be found here.
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If you have been harmed by a defective product, a financial institution or other business, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!