How a Stark Law Attorney Can Help You Stay Compliant and Stay Out of Trouble

A Stark law attorney can help you determine whether a referral arrangement is prohibited or acceptable under Stark Law. Stark law, or the physician self-referral law, is a complex set of rules and regulations that prohibits physicians from referring designated health services (DHS) payable by Medicare or Medicaid to entities with which the physician (or his immediate family member) has a financial relationship, save for certain exceptions.

Actions of physicians and other healthcare providers are usually reviewed not only under Stark Law, but also the Anti-Kickback Statute, False Claims Act, Civil Monetary Penalties Law, and other state-related laws, that are directed against combating healthcare fraud and abuse. One act may violate several laws. For this reason, it is always important to seek counsel from a Stark Law attorney before embarking in any referral arrangement with another provider.

If you are looking for a Stark Law attorney, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected].

Stark law

Stark law prohibits: (a) a physician from making referrals for certain DHS payable by Medicare or Medicaid to entities that the physician or his immediate family member has a financial relationship with, unless an exception applies; and (b) an entity from presenting claims to Medicare that arise from these prohibited referred services. Stark law also establishes a number of exceptions and grants the Secretary authority to create regulatory exceptions for these financial relationships that do not pose a risk of program or patient abuse.

The Stark law is a strict liability statute. Intent to violate is immaterial. The mere act of violating the statute can subject the violator to penalties.


To understand the prohibitions under Stark Law, it is important to know what type of services are prohibited to be referred. The following are DHS:

  • Clinical laboratory services
  • Physical therapy services
  • Occupational therapy services
  • 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

The above services cannot be referred by a physician to an entity to whom the physician (or his immediate family member) has a financial relationship with unless an exception applies. The entity cannot bill Medicare or Medicaid for these services when they have been referred by a physician who has a financial relationship with the entity. If the entity has billed and collected these amounts from Medicaid or Medicare, these amounts must be returned.

What is a financial relationship?

A physician or his immediate family member has a financial relationship with an entity if they have an ownership or investment interest (equity or debt) in the entity or a compensation arrangement with the entity.

Stark law prohibition examples

For example, a hospital that entered into contracts with various specialist physicians requiring these physicians to refer their outpatient procedures to the hospital in exchange for compensation and who billed Medicare for these procedures was considered to have filed false claims with Medicare, requiring to return the Medicare payments back.

Another example is a medical center maintaining a financial relationship with a group of doctors, advancing money to this group of doctors to open a practice for the express purpose of generating referrals to the hospital, and permitting these doctors to use the hospital’s private office free of charge. When the hospital bills Medicare for the services provided under these prohibited referrals that should not have been reimbursable, the hospital was considered to be in violation of Stark law.

Stark law exceptions

Under 42 CFR § 411.357, the following are exceptions to the Stark law prohibitions:

  • Rental of office space
  • Rental of equipment
  • Bona fide employment relationships
  • Personal service arrangements
  • Physician incentive plan exception
  • Physician recruitment
  • Isolated transactions
  • Certain arrangements with hospitals
  • Group practice arrangements with hospital
  • Payments by a physician
  • Charitable donations by a physician
  • Nonmonetary compensation
  • Fair market value compensation
  • Medical staff incidental benefits
  • Risk-sharing arrangements
  • Compliance training
  • Indirect compensation arrangements
  • Referral services
  • Obstetrical malpractice insurance subsidies
  • Professional courtesy
  • Retention payments in underserved areas
  • Community-wide health information systems
  • Electronic prescribing items and services
  • Electronic health records items and services
  • Assistance to compensate a nonphysician practitioner
  • Timeshare arrangements
  • Limited remuneration to a physician
  • Arrangements that facilitate value-based health care delivery and payment

Each exception has its own requirements and conditions in order to be considered an exception to the Stark law referral prohibitions. Some of the following conditions are:

  1. the arrangement is in writing and signed by the parties before the provision of services;
  2. the compensation is fixed in advance;
  3. the compensation is consistent with fair market value;
  4. the compensation does not take into account the volume or value of referrals or other business generated between the parties; and
  5. the arrangement is commercially reasonable.

Each condition in the exception requires a strict interpretation. For this reason, before entering into a financial arrangement, it is important to consultant with a Stark law attorney to make sure that your arrangement does not violate laws. A Stark law attorney will evaluate your financial arrangement and make recommendations on possible changes to the arrangement to ensure it is legally compliant. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].

Attorney Albert Goodwin

Law Offices of
Albert Goodwin, PLLC
31 W 34 Str, Suite 7058
New York, NY 10001
[email protected]