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Important lesson from recent whistleblower case for Stark Law violation

A healthcare system recently reached a settlement agreement with the federal government to resolve a whistleblower suit. One of the primary charges in the case involved allegations of improper compensation. The government, through the whistleblower, claimed that over a span of three years the healthcare system paid improper compensation to a referring physician and another physician employed by his practice. The government claims the healthcare system tried to use a consulting, medical director, and related services agreement to legitimize the payment. It is important to note that in this case the payments occurred before the agreement officially took effect, and neither physician was employed by the healthcare system during that time.

What is the Stark Law?

The Stark Law bans physicians from referring Medicare or Medicaid patients to entities with which they have a financial relationship unless specific exceptions apply. Violations can result in severe penalties, including fines and exclusion from federal healthcare programs.

How did it apply in this case?

The case originated from a whistleblower complaint filed in October 2016 by three former employees at the healthcare facility. This triggered an investigation and subsequent settlement.

The healthcare center has agreed to pay $735,000 to resolve the allegations. Of this amount, the three whistleblowers will receive $154,350 as part of the settlement. The settlement does not constitute an admission of wrongdoing by the healthcare center. However, the financial penalty underscores the seriousness of the alleged violations.

What can physicians learn from this case?

The case serves as a striking reminder that healthcare facilities need to remain vigilant about compliance with healthcare laws.

The Stark Law aims to maintain transparency, prevent conflicts of interest, and protect patients. Familiarize yourself with its provisions, seek legal guidance when necessary, and ensure that your practice adheres to the highest ethical standards. By doing so, physicians can mitigate the risk of a violation.

Attorney John Rivas is responsible for this communication.