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How We Turn a Self-Referral Pattern Into a Stark Law Claim
Our skilled team begins every Stark Law case by mapping who owns or profits from the lab, imaging center, or therapy practice receiving the referrals. We pull the lease agreements, compensation contracts, and ownership filings ourselves, then test that financial relationship against the statute's narrow exceptions before we file anything on your behalf.
Once the fact pattern holds up, we connect the improper referral to the bills submitted for it. A referral that violates the Stark Law and still reaches Medicare or Medicaid becomes a false claim under the federal False Claims Act, and our New York Stark Law claims attorneys build that link into a case that can recover money for both you and the government.
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Report What You Know
Our team can tell you in one call whether the pattern you found crosses the line. Reach out today, before you raise it with anyone at work.
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Categories of Designated Health Services at the Center of Stark Law Cases
Stark Law claims cluster around a set list of services that the Centers for Medicare & Medicaid Services (CMS) has designated as high-risk for self-referral abuse. We sort a potential case into one of the following groups before deciding how to build it.
Diagnostic Imaging and Laboratory Referrals
Clinical laboratory work and imaging studies such as MRI, CT, and ultrasound draw the heaviest Stark Law enforcement attention because ordering physicians can direct volume toward a facility they own or lease space from. A referral pattern that consistently favors one lab or imaging center, especially alongside above-market lease payments or a management fee tied to test volume, quickly draws government attention.
Physical Therapy, Home Health, and Durable Medical Equipment
Physical therapy, home health, and durable medical equipment are all designated health services under the federal Stark Law. New York's Public Health Law § 238-a also covers physical therapy referrals, though its list doesn't specifically include home health or durable medical equipment.
Physicians who co-own a therapy practice or equipment company and refer their own patients there face scrutiny under federal law when the ownership stake or compensation structure fails to meet an exception's requirements.
Hospital and Physician Compensation Arrangements
Hospitals recruit physicians with salary guarantees, medical director stipends, and reduced-rate office space, and each arrangement must be priced at fair market value and set without regard to referral volume. Compensation that quietly rises alongside a physician's referrals, or a written agreement that expired years ago but is still followed in practice, is a common fact pattern behind large hospital settlements.
Outpatient Prescription Drugs and Radiation Therapy
Oncology and radiation practices raise Stark issues when a referring physician holds an interest in the facility delivering radiation therapy or in a pharmacy filling outpatient prescriptions billed under Medicare Part B. These arrangements often involve joint ventures structured to route referrals back to physician investors, a setup regulators have targeted directly in past enforcement actions.
Whichever category a referral falls into, the same question drives the case: does the financial relationship behind it fit inside one of the statute's narrow exceptions, or does it fall outside every one of them?
Federal Stark Law and New York's Self-Referral Statute
The federal Stark Law restricts physician self-referral for services billed to Medicare. New York's Public Health Law § 238-a covers a narrower list of services but applies no matter which payer receives the bill, so a case can proceed under state law even where the federal statute would not reach it. When a violation of either statute results in a bill to Medicaid, it can also trigger liability under the New York False Claims Act.
The Elements a Stark Law Case Has to Establish
A viable claim generally needs five things:
- A referral by a physician;
- For a Medicare or Medicaid patient;
- For a designated health service;
- Provided by an entity with which the physician or an immediate family member has a financial relationship;
- Where no exception fully applies.
Missing any one of these breaks the claim, which is why a detailed early review of ownership or compensation documents matters before filing a complaint.
Exceptions That Can Defeat or Support a Claim
Regulators built narrow exceptions into the statute, including fair market value compensation, in-office ancillary services performed within the same practice, bona fide employment relationships, and short-term rental of office space or equipment priced at market rates. Many disputes turn on whether every technical requirement of an exception was met on paper and in practice, since a written agreement that looks compliant can still fail if payments in fact tracked referral volume.
When New York's Statute Fills a Federal Gap
A referral scheme built around privately insured patients, or one where the entity receiving referrals never bills a federal program, can still violate Public Health Law § 238-a even though the federal Stark Law never comes into play. That gap matters most in specialty practices with a mixed patient population, where only part of the overall referral pattern touches Medicare.
Who Can Be Named in a New York Stark Law Case
Liability in these cases rarely stops with the referring physician alone.
- Referring physicians: A doctor who directs patients to a lab, imaging center, therapy practice, or equipment supplier tied to personal or family finances can face liability directly, separate from any entity that later bills for the service.
- Hospitals and health systems: Institutions that recruit physicians through compensation packages tied to referral volume, or that continue paying under an agreement that lapsed without renewal, can be named alongside the physicians involved.
- Diagnostic and imaging facilities: Laboratories, imaging centers, and radiation therapy providers that accept referrals they know or should know come from a prohibited relationship share exposure for the claims they submit.
- Home health and equipment companies: Businesses that co-own arrangements with referring physicians, particularly where compensation rises alongside referral counts, can be held liable for claims tied to those referrals.
- Billing and compliance staff: Employees who knowingly submit or approve claims tied to a prohibited referral, rather than the physicians alone, can also face individual exposure depending on their role in the arrangement.
Naming every party involved is often what separates a modest settlement from a recovery that reflects the full scope of the fraud.
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Call our lawyers before you decide anything else. The conversation costs nothing and stays confidential, whether you work in billing, compliance, or medicine.
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Consequences When Physicians Refer Based on Profit Instead of Need
A prohibited referral rarely stays contained to a single billing error.
- Unnecessary testing and treatment: A financial stake in an imaging center or lab gives a physician a reason to order studies a patient does not need, exposing them to cost, radiation, and follow-up procedures without a medical justification.
- Distorted medical judgment: Once compensation ties to referral volume, a physician's independent judgment about where to send a patient competes with a direct financial incentive, and patients rarely know the arrangement exists.
- Money pulled from public programs: Medicare and Medicaid pay for services generated by prohibited referrals, leaving less available for patients who depend on those programs for care they actually need.
- Unfair pressure on independent providers: Labs, imaging centers, and therapy practices that will not offer physicians a financial stake lose referral volume to competitors willing to structure improper arrangements, punishing providers who follow the rules.
- Retaliation against people who speak up: Employees who raise concerns internally about a referral arrangement can face demotion or termination before they ever reach an attorney, which is why early legal guidance matters.
Each of these effects gives the government and the person who reports the scheme a real stake in stopping it early.
What We Can Recover in a New York Stark Law Case
What you can recover depends on more than the size of the settlement.
- Whistleblower share: A relator who supplies original information can recover 15 to 25 percent of the government's recovery if it intervenes in the case, or 25 to 30 percent if the relator pursues the case alone, with the exact share depending on how much the relator contributed.
- Government recovery amount: Because Stark violations trigger False Claims Act liability, the government can pursue treble damages plus a per-claim penalty, and the relator's percentage is calculated against that larger recovery.
- Retaliation damages: An employee who suffered demotion, suspension, or termination for raising concerns can pursue reinstatement, double back pay, and related costs separately from the whistleblower share.
- Attorney's fees and costs: A successful qui tam action typically allows recovery of reasonable attorney's fees and litigation costs from the defendant, separate from and in addition to the relator's share.
Deadlines for Filing a New York Stark Law Claim
Federal False Claims Act claims must generally be filed within six years of the violation, or three years after the government knew or should have known, whichever is later, up to a ten-year maximum. New York's False Claims Act has its own framework, and its Medicaid Fraud Control Unit reviews sealed complaints on a similar timeline.
A few procedural rules can affect timing:
- First-to-file rule: The relator who reaches the courthouse first on a given set of facts controls the case, and anyone who files later based on the same underlying scheme is typically shut out regardless of how they learned about it.
- Public disclosure bar: A claim based on information already made public through a government report, court filing, or news coverage may be barred unless the relator qualifies as an original source of that information.
- Ongoing referral patterns: A self-referral arrangement that continues over months or years can generate a new violation with each claim submitted, which affects how the limitations period applies to later conduct.
None of these rules forgive delay, which is why the timing of that first conversation with a lawyer matters as much as the facts themselves.
Steps to Take Before You Report a Suspected Self-Referral Arrangement
A few decisions in the days before you file can shape how strong your case turns out to be.
- Note the pattern, not just one instance: A single referral rarely proves anything on its own, so track how consistently the physician sends patients to the same facility over time.
- Leave the paperwork where it lives: Reviewing documents you already have lawful access to is different from removing files or accessing systems outside your normal duties, and the second can undermine your case.
- Skip the internal complaint for now: Reporting the arrangement to compliance or HR before you talk to a lawyer can tip off the people involved before a sealed complaint is ready.
- Keep it off social media and out of casual conversation: Talking about what you found before filing can create a public disclosure problem that limits what you can recover later.
- Make the first call to an attorney, not to the physician involved: A short conversation can confirm whether the pattern you noticed actually fits the statute before you take any other step.
None of these steps require you to have already built a legal case. They just keep the one you eventually file intact.
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