The Stark Law, or Physician Self-Referral Law, 42 U.S.C. § 1395nn, prohibits physicians from referring patients to an entity for “designated health services,” such as inpatient hospital, laboratory, or radiology services, in which the physician has a financial relationship, such as an ownership interest or compensation arrangements where the remuneration exceeds fair market value. Although there is no private right of action under the Stark Law, an alleged Stark Law violation can provide the basis for a civil qui tam or whistleblower action under the False Claims Act.
For example, in March 2024, in United States ex rel. Lisa Parker v. Mohammad Athari M.D., et al. (4:20-cv-02056), the DOJ intervened and settled a claim for Stark Law violations where the qui tam relator asserted that a Houston-based physician had allegedly referred neurology patients to a diagnostic imaging center the physician owned. The settlement also resolved allegations that the physician falsely billed for medically unnecessary services under Medicare Part B. The whistleblower received 18% of the $1.8 millon settlement. Similarly, in October 2023, the DOJ intervened and settled the qui tam action styled U.S. ex rel. Pinto v. Cardiac Imaging, Inc., et al., No. 18-cv-2674 (S.D. Tex.), where the defendant, Cardiac Imaging Inc. and its owner, paid referring cardiologists fees exceeding fair market value for their referrals. The settlement value totaled $85,480,000.
While the anti-kickback laws are often the vehicle for claims under the False Claims Act, healthcare providers and entities doing business with them should be aware of the potential for Stark Law claims arising out of compensation arrangements for services and be focused on compliance accordingly.