Memorial Health Care System has agreed to pay $1.3 million to settle allegations that certain financial arrangements with physicians violated the Ethics in Patients Referrals Act (the “Stark law”), the Anti-Kickback Statute, and resulted in the submission of false claims to the Medicare system.

According to a press release issued by the hospital, an internal investigation disclosed that it “had lease arrangements with physicians and physician groups that may have been out of compliance with the federal Stark law.”  Upon evaluating the lease arrangements as part of its ongoing compliance program, the hospital determined that the arrangements “did not reflect the true market value of office space leased to physicians or physician groups as the law requires.”

The hospital corrected the problem and notified the government, which, unknown to the hospital, was already conducting an investigation into the matter.

The Stark law prohibits a physician from referring Medicare or Medicaid patients for designated health services to entities with which the physician has a “financial relationship,” unless an exception or safe harbor applies.  A “financial relationship” may include an office lease with a hospital.

Under the law’s “safe harbor” provision, however, a full-time lease agreement between a physician and a provider to whom the physician refers patients will not result in a violation if the agreement: (a) is set out in writing and signed by the parties; (b) covers all of the premises rented by the parties; (c) is for a term not less than 1 year; (d) has an aggregate rental charge set in advance, is consistent with fair market value in arm’s length transactions, and does not take into account the volume or value of Federal health care program referrals; and (e) the aggregate space rented does not exceed the space that is reasonably necessary to accomplish the commercially reasonable business purpose of the rental.

If you are unsure whether your leases and other financial relationships are appropriate, or if you are under investigation for possible Stark Law violations, then you should consult with an experienced lawyer immediately.  To schedule a free and confidential consultation by telephone or in person, call my office today at (212) 601-2728 or click here to communicate with me via email.

John Howley
New York, New York

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.  I invite you to contact our law offices and welcome your calls, letters and electronic mail.  Contacting us does not create an attorney-client relationship.  Please do not send any confidential information to us until such time as an attorney-client relationship has been established.  I practice law and offer legal services only in jurisdictions where I am properly authorized to do so.  I do not seek to represent anyone in any jurisdiction where this web site does not comply with applicable laws and bar rules.

09/25/2012 05:58

The insights and the opinions shared in this blog are appreciable. Blogger seems like an educated and knowledgeable writer with sensible thoughts. Good work and Keep it up.

07/19/2013 00:22

It is very necessary to consult the Lawyer if you are unsure whether your leases and other financial relationships are appropriate.


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