Stark Law

Healthcare fraud often hides in plain sight. One of the most important terms for anyone exploring fraud in the healthcare system is the Stark Law, also known as the Physician Self-Referral Law. It’s a concept that comes up frequently in whistleblower cases, yet many people outside the legal and medical fields aren’t sure what it really means or what types of conduct the law covers.

In simple terms, the Stark Law prohibits physicians from referring patients for certain health services to an entity with which the physician (or an immediate family member) has a financial relationship—unless some explicit exception applies. For example, if a doctor owns part of a lab, they cannot legally refer Medicare or Medicaid patients to that lab for testing, because it creates a financial conflict of interest.

The Stark Law is important because it protects patients from doctors making referrals based on profit rather than medical need. Violations can lead to repayment obligations, fines, and exclusion from federal healthcare programs. For whistleblowers, understanding Stark Law can be the key to recognizing when fraud is taking place in their workplace.

This law is also different from—but often overlaps with—the Anti-Kickback Statute, which addresses bribes and improper payments. The biggest difference between the two laws is that the Stark Law is a “strict liability” statute, meaning intent does not need to be proven. If a referral arrangement violates the law, penalties may apply regardless of whether the doctor “meant” to break it.