Defending Against Anti-Kickback Violations & Stark Law Charges

Defending Against Anti-Kickback Violations & Stark Law Charges

Healthcare providers often find themselves facing allegations of violating anti-kickback and Stark laws. While the laws are meant to prevent fraud and abuse, ambiguous wording leaves providers vulnerable to charges. Defending against such allegations requires a nuanced understanding of these complex regulations. This article examines common allegations, potential defenses, and best practices for compliance.

The Anti-Kickback Statute

The federal Anti-Kickback Statute (AKS) prohibits knowingly and willfully soliciting, receiving, offering or paying remuneration to induce referrals of federal healthcare program business. Remuneration includes anything of value and can take many forms – cash, free rent, expensive hotel stays and meals, and more. Healthcare providers can face criminal penalties for violating AKS.

AKS allegations often arise from financial relationships between hospitals and physicians. For example, a physician receives free office space in return for referring patients to the hospital. Such arrangements must be structured carefully to comply with exceptions to the law.

AKS Defenses

There are several defenses healthcare providers can raise if accused of AKS violations:

• The “safe harbor” provisions – An arrangement fits within a regulatory safe harbor that exempts it from prosecution.
• No improper intent – The government must prove the defendant knowingly and willfully violated AKS. Evidence showing a provider acted in good faith can defeat allegations.
• Legally sufficient written agreement – Having a written agreement spelling out fair market value compensation can demonstrate compliance.
• Advice of counsel – Relying on advice from legal counsel who approved an arrangement may be exculpatory.

Other defenses focus on attacking the strength of the government’s case and evidence.

The Stark Law

The Stark Law prohibits physicians from referring Medicare patients to hospitals in which they have a financial interest, unless an exception applies. The law is intended to prevent conflicts of interest driving up healthcare costs. Stark Law is a strict liability statute – intent is irrelevant.

Common Stark Law violation allegations include:

• Physician receives compensation varying with the volume/value of referrals
• Physician invests in hospital service line to which they refer
• Hospital leases office space to physician below fair market value

Unlike AKS, Stark Law is not a criminal statute. But violations result in denial of payment and potential False Claims Act liability.

Stark Law Defenses

Successful Stark Law defenses often rely on showing:

• Technical violations – Minor paperwork errors that do not compromise program integrity. For example, a signed lease agreement exists but is missing one required term.
• Fair market value compensation – If a financial relationship exists, the defendant must show compensation is at fair market value for bona fide services.
• Compliance with exceptions – Demonstrating the financial arrangement fits within a Stark Law exception. Requires strict satisfaction of all requirements.

In some cases, providers can self-disclose technical violations and repay overpayments to avoid penalties.

Best Practices for Compliance

Given the risks and complexity of healthcare regulations, providers should implement compliance programs centered on:

• Conducting regular audits and internal reviews of arrangements
• Seeking fair market value and commercial reasonableness opinions
• Carefully drafting agreements to comply with AKS safe harbors and Stark exceptions
• Training staff on compliance policies and procedures
• Encouraging anonymous reporting of suspected violations

It is also critical to consult experienced healthcare attorneys when structuring novel financial relationships. Lawyers can help design arrangements to satisfy regulatory requirements.

While not exhaustive, this overview covers key issues in defending anti-kickback and Stark Law allegations. Healthcare providers should take compliance seriously and proactively identify potential violations before the government comes knocking.

References

Anti-Kickback Statute – OIG

OIG Red Flags: Hospital-physician relationships at risk of Stark, Anti-Kickback violations