• Health Care: Stark Law Qui Tam Exposure
  • November 1, 2004 | Author: J. A. (Tony) Patterson
  • Law Firm: Fulbright & Jaworski L.L.P. - Dallas Office
  • With the Stark Law taking effect in July, physicians can expect increased scrutiny and enforcement. While exceptions exist, they are detailed and sometimes complex. Violation can result in exclusion from Medicare, civil penalties of up to $15,000 for each claim wrongfully filed and a requirement that the billing entity refund money paid by Medicare. A wrongfully filed claim may also violate the False Claims Act, which would subject parties to an additional penalty of $5,000 to $10,000 per claim and up to three times the damages suffered by the government.

    While federal prosecutors can bring False Claims Act suits, physicians' greatest exposure lies in private citizen actions brought on behalf of the federal government in qui tam litigation. Qui tam plaintiffs can recover between 15% and 25% of the claim if the government intervenes in the action and between 25% and 30% if the government does not. Since 1986, 4,281 qui tam actions have been brought in False Claims Act cases with recovery of over $12 billion for the government and $1 billion for qui tam plaintiffs.

    Given the size of these recoveries, physicians should prepare for a significant increase in actions brought under Stark. They will likely be based on parties' failure to comply with criteria for exceptions to the law, as well as challenging parties' determination of fair market value -- a common criterion in many exceptions. Counsel representing physicians and entities providing designated health services must become knowledgeable and vigilant about Stark compliance, as the pain of non-compliance will be great.