“Stark” Raving Mad: Making The Self-Referral Disclosure Protocol Better, Faster, Stronger

“Stark Law” is the popular name for section 1877 of the Social Security Act, which prohibits physician self-referrals of Medicare patients. Congress enacted the law in 1989 due to concern over the increasing rate of Medicare patients referred for testing services at facilities in which the referring physicians have an ownership interest. Stark Law is enforced, overseen, and regulated primarily by the Centers for Medicare and Medicaid Services (“CMS”). The vast majority of Stark Law claims, however, are filed as qui tam suits by relators (private persons) pursuant to the False Claims Act (“FCA”). When a relator brings a suit, the U.S. Department of Justice (“DOJ”) decides whether to intervene or to let the relator proceed on his own. The harsh reality of a Stark Law violation coupled with a colorable claim under the FCA can clearly be seen in the case of Tuomey Healthcare System, Inc. In July of 2015, Tuomey incurred civil monetary penalties levied in excess of $237 million as a result of a qui tam suit. In his concurring opinion, Judge James Wynn described the “troubling picture the case paints: An impenetrably complex set of laws and regulations that will result in a likely death sentence for a community hospital in an already medically underserved area.”

In the United States, “Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease.” In 2014, there were an estimated fifty-four million people enrolled in Medicare programs. Despite the increase in Medicare enrollees since 1990, the number of inpatient hospital beds has decreased by forty-five percent. As part of its initial mandate, CMS stated that Medicare did not “authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided or over the selection, tenure, or compensation…of any institution, agency, or person providing health services.”

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