Reporting Stark violations (kickbacks, referrals or self-dealing) as fraud against Medicare

This article addresses how to get a whistleblower reward for reporting Stark law violations for self-dealing or for paying referral fees or kickbacks, which amounts to fraud against Medicare.

Whistleblower rewards for reporting “Stark violations”

It is a Stark law violation for doctors/physicians, hospitals, and all other healthcare providers (or their immediate family members) to benefit financially for making patient referrals for any designated health services (DHS) for any Medicare/Medicaid recipient. In short, Stark laws bar doctors/physicians/hospitals from referring a patient to any designated health services (DHS) performed by any person, group or entity that they or an immediate family member have a financial relationship. If you report a Stark violation, you may be eligible for a whistleblower reward, as explained below.

There are basically two elements to a Stark violation. The first element for a Stark violation to occur is that there be a financial relationship between the doctor/physician or hospital and the person or company providing the service. The second element for a Stark violation is that the referral be for a designated health services (DHS).

Stark Law Violation Element One: Financial relationship

The Stark law defines very broadly a “financial relationship” between the doctor/physician or healthcare provider (or their family) and the entity providing the service, to include not only any direct or indirect ownership interests in the entity providing the service, but also any investment in the entity by the doctor/physician, or any form of compensation to the doctor/physician for a referral such as a finder’s fee or free office space in return.

Stark Violation Element Two: designated health services (DHS)

The Stark laws define designated health services (DHS) to include clinical laboratory services, radiology or other imaging services, medical equipment, physical and occupational therapy services, and outpatient pharmacy services and prescription drugs. This means that it is a Stark law violation for a doctor/physician (or other healthcare provider, such as a hospital) to refer a Medicare patient to its own radiology lab or services or any other lab such as for blood work. It also means that that it is a Stark law violation for a doctor from prescribing a wheel chair or medical device and then refer the Medicare patient to a company that he gets any benefit, such as a referral fee or has an ownership interest.

Basically it is a Stark violation for a doctor/physician (or hospital) to prescribe something to a Medicare recipient and then supply or have a family member supply the equipment, drugs or services. This smacks of a kickback. In fact, Stark violations are similar to kickbacks (which are similarly illegal and unethical) because they have a tendency to influence the doctors’ decision to prescribe services.

Examples of Stark Law Violations

In 2013 alone, the federal government was pursing three allegations of Stark violations of between $250 million and $500 million that are brought to their attention by whistleblowers claiming a reward.

For instance, one hospital was asking the doctors/physicians working there to steering patients toward nuclear stress tests conducted by an entity the hospital had a financial interest. The whistleblower claimed that it was a Stark violation because, in exchange, the hospital provided the prescribing doctors with below-market office space in the hospital as well as an off-the-books payment arrangement whereby the hospital gave the physicians a portion or share of the fees the hospital charged Medicare. The whistleblower alleged that these secret payouts were not paid or recorded right away to hide any trail. If proven, these are Stark violations that would entitle the whistleblower a reward of millions of dollars.

In another whistleblower case, a hospital is accused of violating the Stark law by paying or compensating over a dozen local specialists based upon the volume of services they referred to the hospital.

In other words, it is a Stark law violation for a hospital to give a doctor/physician any financial reward based upon the number of services that are referred to the hospital. This is a classic example of violation Stark.

In a similar alleged Stark violation case, a whistleblower alleged that over $500 million in Medicare services were affected by oncologists receiving financial benefits that were based on the operating margin of the system’s cancer program.

If proven, the whistleblowers could receive millions in rewards for reporting Stark violations.

How much reward for reporting Stark violations?

The amount you may receive as a whistleblower reward is a percentage of the total amount of money the government recovers based on your Stark violations. Take for example, the $500 million Stark allegation mentioned earlier. The government could require the hospital to repay the full amount of the services that amounted to a Stark violation. For purposes of explaining how a reward is calculated, however, let’s assume the government collects $100 million from the hospital for the Stark violations. Under the reward program, the whistleblower may receive between 15% and 25% of that amount, or between $15 million and $25 million. The largest whistleblower awards in a Medicare fraud case have exceeded $100 million. But, again, there are a lot of technical requirements and procedures you must follow to be eligible for a reward.

Because Medicare/ Medicaid cannot detect a Stark violation without the help from whistleblowers, it is offering large rewards to encourage you to step forward and report Stark violations.

Tips for reporting Stark violations

This portion of the article answers how to report Stark law violations schemes that affect Medicare/Medicaid. It also shows how to apply for a whistleblower reward for reporting Stark violations.

First, you cannot receive a whistleblower reward for calling a hotline to report Stark violations. By law, the whistleblower reward program can only pay a reward for reporting Stark violations if you use an attorney and file a qui tam suit under the False Claims Act. (Your attorney should charge only a contingency fee or a percentage of any reward.)

Second, your allegations must be detailed and specific about the Stark violations and how each of the two Stark elements were violated. The Department of Justice turns down 75% of reward claims, so it’s very important for you to hire an experienced attorney to review your case. He will do that in confidence and should give you candid advice about whether you have the right type of Stark violations to get a reward.

How to report Stark Law violations

Mr. Hesch devoted 15 years as an attorney at the Civil Fraud Section of the U.S. Department of Justice in Washington, D.C. This is the nationwide office overseeing the whistleblower reward program. He now represents whistleblowers report Medicare fraud, such as Stark violations.

The link below “Do I have a case” shows you how to ask Mr. Hesch to review your potential Stark violation and how to earn a reward.

The link below “Report Fraud” contains more information regarding how to get a reward for reporting Stark law violations.