Physicians often have more financial flexibility than the general public. They can often find high paying jobs and set themselves up with extra funds to pursue different investment options. In some cases, these strategies can lead to a steady stream of additional income. In others, they could trigger a federal investigation and allegations of a Stark Law violation.
What is the Stark Law?
Lawmakers created the Stark Law, also known as the physician self-referral law, to help better ensure physicians focus on patient care instead of potential financial incentives when making recommendations for additional medical care.
This law applies to many different services, including lab work, therapy, pathology, imaging, radiation, home health services, prescriptions, and medical devices like prosthetics. In general, the government will pursue a potential violation of the Stark Law if a physician recommends a patient receive services at a location where they have a financial connection.
When is an investment a violation?
Physicians are often encouraged to consider medically adjacent businesses as wise investment options. On the surface it can make sense. No one knows which businesses are worth the investment quite like those who regularly use these types of services. But it is important to move forward with such options carefully. Even an unintentional mistake can result in a violation. This is because the Stark Law is a strict liability statute. This means the government does not need to gather evidence of intent or knowledge to build a successful case. Evidence of the violation is enough.
In general, whenever a physician refers a patient for services to a location where they have a financial interest the government is likely to build a successful case. Those who are interested in investment options that could trigger allegations of a violation are wise to seek legal counsel to review the arrangement before moving forward.
Attorney John Rivas is responsible for this communication.