The False Claims Act (FCA) allows the federal government to financially reward brave citizens who blow the whistle on companies that submit fraudulent claims. The FCA allows private parties to file qui tam actions that allege defendants have defrauded the federal government. The term qui tam is a Latin expression, which means “he who brings a case on behalf of the King, as well as for himself.” This means that the “relator,” or person who brings a qui tam lawsuit on behalf of the government, can receive up to 30% of the recovered award. In the past three decades, the federal government has recovered billions of dollars in lost government money with the help of qui tam whistleblowers.

The Stark Law, as it is known, prohibits a physician from referring a Medicare or Medicaid patient to an entity with whom the physician or their immediate family member has a financial relationship. This financial relationship can include not only an ownership interest, but also a compensation scheme or even an agreement to pay the physician amounts far exceeding market value for their services. This law applies only to physicians and only to certain designated health services including:

• Clinical lab services
• Therapy services and supplies (physical, occupational, speech, radiation)
• Imaging services (ex: radiology)
• Medical equipment and nutrients (parenteral and enteral)
• Prosthetics, orthotics and prosthetic devices
• Home health services
• Inpatient and outpatient hospital services and prescription drugs

The law also prohibits the organization providing these services from seeking payment from Medicare or Medicaid for services given as a result of a prohibited referral. There are some exceptions to this general rule.

For those services above, a doctor cannot refer a patient to receive the service at an organization in which he or his family has a financial stake, and thus stands to benefit from. The flip side of that is the organization is not allowed to seek Medicare or Medicaid reimbursement for services arising from that referral.

Violations of the Stark Law most commonly come from compensation agreements rather than ownership agreements. Some examples are conspiracies between entities and physicians for laboratory services. Providers and physicians have also been found liable for compensating doctors for cancer medications.

The penalties for physicians and companies that violate the Stark Law can be incredibly costly:

• The provider and physician may be forced to refund the amount
• The provider can face a civil fine of $15,000 for each service, including a civil assessment of three times the amount claimed
• The physician or entity may also be excluded from claiming anything from Medicare or Medicaid going forward
• The physician and provider can be held liable under the False Claims Act (FCA).

Plain violations of the Stark Law do not require an intent to break the law. However, for civil monetary penalties, program exclusion, civil assessments, and False Claims Act Liability, the violation must have been done knowingly.

The Anti-Kickback Statue (AKS) is somewhat similar to the Stark law. The AKS prohibits offering, receiving, paying, or soliciting anything of value to induce or reward referrals or generate Federal healthcare business.

For example, in a kickback, also known as a bribe, the organization pays a provider to either refer a patient or purchase a piece of equipment and then seeks reimbursement from the federal government. The organization attempts to initiate a transaction that will increase profit. Other examples of kickback include:

• Conduct like paying individuals to recruit homeless patients whose services would be charged to Medicaid
• Kickbacks to hospitals in the form of rebates for medical devices
• Agreements between providers, like an orthopedic and a physical therapist, to refer patients to one another in return for a percentage of the amount collected from the government
• The fraudulent leasing of medical equipment as a way for a hospital to pay a doctor for referrals

The AKS is worded very broadly and is often wielded against hospitals, medical device companies, other healthcare entities, and even physicians.

The civil penalties for violations of the AKS are very similar to those for violations of the Stark Law except that the violator can be hit with a fine of $50,000 for each violation. Violators of the AKS are still subject to the False Claims Act. However, unlike the Stark Law, violators of the AKS can be criminally liable for fines up to $25,000 and up to a five-year prison sentence for each violation.