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What Are Stark Law Violations and Kickbacks?

Written by Ankin Law Office

Last month, several doctors, executives and the owner of Chicago’s Sacred Heart Hospital were arrested and charged with a health care scandal that involved the orchestration of a massive kickback scheme and administering unnecessary medical treatments.

According to the Department of Justice, Sacred Heart’s owner, a high level executive, and some of its doctors violated the Stark Law by offering kickbacks to doctors in return for referrals of Medicare and Medicaid patients. Sacred Heart executives allegedly tried to conceal the fraudulent scheme by referring to payments as fictitious rental payments, paying the salaries of physicians’ employees, providing physicians ghost contracts for duties without any real responsibilities, creating alternative billing arrangements, and purporting to pay physicians to supervise and teach non-existent medical students.

What is the Stark Law and what are illegal kickbacks?

The Stark law consists of the following provisions that govern physician self-referral for Medicare and Medicaid patients:

  • Physicians are prohibited from referring patients to an entity for a designated health service (DHS), if the physician or a member of his or her immediate family has a financial relationship with the entity (with limited exceptions).
  • Hospitals and healthcare entities are prohibited from presenting a claim to Medicare or to any person/entity for DHS that was provided under a prohibited referral.

Designated health services include:

  • Clinical laboratory services
  • Physical therapy services
  • Occupational therapy services
  • Radiology services (including MRI, CT scans, ultrasound services, and nuclear medicine)
  • Radiation therapy services and supplies
  • Durable medical equipment (DME) 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 hospitalization services

There are five general exceptions to the ownership and exceptions to the ownership and compensation prohibitions, including:

  • Physician services
  • In-office ancillary services
  • Prepaid plans
  • Intra-family rural referrals
  • Academic medical centers

Many states also have laws similar to the federal Stark law that prohibit or restrict physician self-referrals based on state law.

Stark law violations and illegal kickbacks can result in substantial fines and penalties, in addition to repayment of the ill-gotten funds and exclusion from further participation in the Medicare and Medicaid program.

Moreover, Stark law violations and illegal kickbacks can often affect a patient’s health and well-being since a doctor receiving kickbacks may not be qualified to perform the medical procedures and the patient’s best interests may not be the driving factor in determining medical treatment. If substandard medical care was provided as a result of Stark law violations or illegal kickbacks, the doctor or hospital could be liable in a medical malpractice claim.

The Chicago medical malpractice attorneys at Ankin Law Office, LLC focus on representing the victims of medical malpractice in lawsuits against negligent doctors, hospitals, and other health care providers. We are committed to ensuring that patients and the public are protected from unscrupulous doctors, and to protecting the rights of patients injured by dishonest doctors and health care providers.

If you or a loved one was a patient of Sacred Heart Hospital or the victim of medical malpractice, contact our office at (312) 600-0000 to schedule a free consultation with one of our skilled Chicago medical malpractice attorneys.

Categories: Medical Malpractice