Stark Law (Physician Self-Referral Law)

The Stark Law, formally known as the Physician Self-Referral Law, is one of the most important — and most complex — regulations in healthcare fraud enforcement.

At its core, Stark Law prohibits physicians from referring Medicare or Medicaid patients to entities in which they (or an immediate family member) have a financial interest. For example, if a doctor owns part of a diagnostic imaging center, they generally cannot send patients there and bill the government program for services.

The law was first passed in 1989 and expanded in the 1990s. It is named after Congressman Pete Stark, who introduced the legislation to curb overutilization and conflicts of interest in healthcare. Unlike the Anti-Kickback Statute, Stark Law is a strict liability statute — meaning intent does not matter. If a physician makes a prohibited referral, it can trigger penalties, even if they did not mean to break the law.

Penalties under Stark Law can include repayment of claims, civil fines, and exclusion from federal healthcare programs. Violations may also form the basis for False Claims Act cases, multiplying the consequences.

There are, however, detailed exceptions — such as legitimate employment relationships and certain in-office ancillary services — that make compliance complicated. These exceptions are why many providers seek legal counsel to navigate the law.

At Barrett Johnston, we view Stark Law as essential to ensuring medical decisions are based on patient needs, not financial gain. For whistleblowers, spotting patterns of improper referrals can be the first clue to larger fraud schemes.