Self-Referral Qui Tam Cases

The Stark Act, also known as Stark Law or Stark II, is designed to prevent abusive self-referrals by physicians, and curb overutilization by physicians who could profit by referring patients to entities in which they have a financial interest. The Stark Act prohibits any physician from making a referral to a provider of designated healthcare services if the physician has a “financial relationship” with the provider. A financial relationship is defined as any compensation arrangement between the physician and the provider. As with AKS violations, a Stark Law violation may lead to FCA liability under an implied certification theory. Courts have generally held that compliance with Stark Law is “material” for FCA purposes, so that Stark-tainted claims are false claims.

Stark Law is a strict liability statute, and if the prohibitions are implicated, an arrangement is unlawful unless it meets an exception to the Stark Law provisions. There are numerous potential sanctions and penalties for violating Stark’s physician self-referral prohibition. The penalties include denial of payments, payment of civil monetary penalties of up to $15,000 for each service a person “knows or should know” violated Stark Law, exclusion from participation in Medicare or Medicaid, payment of civil monetary penalties up to $100,000 for attempting to circumvent the Stark Law, and potential civil FCA liability.

The Stark Law provides several exceptions to the general self-referral prohibition. For example, physicians who work in a group practice can refer services to the other physicians in the group practice without violating the Stark Law. To meet this exception, the services must be (1) personally performed by a physician who is a member of the same group practice as the referring physician, or (2) performed under the supervision of another physician who is in the same group as the referring physician.

Much like the safe harbor exceptions to the Anti-Kickback Statute, there are multiple exceptions to Stark Law. These exceptions are designed to exclude “financial arrangements that exist for reasons independent of referrals” from the Stark Law’s prohibitions. Stark Law exceptions are affirmative defenses, and the defendant bears the burden of proof.

For more information and case citations, please see “Federal False Claims Act and Qui Tam Litigation,” published by Law Journal Press (2010).

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You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.