04/13/2026
A hospital paid $345 million over a Stark Law problem that started with physician contracts.
Most Stark Law violations aren’t intentional. That’s exactly what makes them so dangerous.
The Physician Self-Referral Law (42 U.S.C. §1395nn) prohibits physicians from referring Medicare patients to entities where they or their immediate family members have a financial relationship — unless a strict exception applies.
And here’s the key issue:
Stark Law is a strict liability statute.
Intent doesn’t matter.
If a referral violates the law, the violation exists — even if no one intended to break the rules.
That’s why enforcement actions are so expensive.
Penalties can include:
• denial of payment for the services provided
• refund of payments already received
• civil penalties up to $15,000 per prohibited service
• treble damages on improper payments
• exclusion from Medicare and Medicaid
Real-world example:
An Indiana health system agreed to pay $345 million to resolve allegations that physician compensation arrangements violated Stark requirements.
What typically creates risk?
• compensation above fair market value
• undocumented indirect financial relationships
• physician ownership in entities receiving referrals
• lease agreements that fail regulatory tests
Even small things matter.
For 2026, the non-monetary compensation limit is $535 per physician per year.
The real compliance gap isn’t between legal and illegal.
It’s between:
“We think we’re compliant.” and “We can prove we’re compliant.”
That’s the gap regulators focus on.
If you’re not certain your physician arrangements would survive a Stark audit, we invite you to get a second opinion.
Sometimes a fresh set of eyes is the fastest way to identify risk.
