Stark law violations often surface through claims data, whistleblowers and audit trails, sometimes years after the arrangement in question was put in place.
Here are four things physicians need to know:
1. Strict liability means intent doesn’t matter.
The Stark law is a strict liability statute, meaning proof of specific intent to violate the law is not required. Each instance of an item or service billed to Medicare or Medicaid counts as a separate claim, and filing false claims may result in fines of up to three times the program’s loss plus $11,000 per claim filed, according to data from HHS Office of Inspector General. A billing pattern that looks routine can become a multimillion-dollar exposure when multiplied across years of claims.
2. A missing modifier triggered an eight-figure settlement.
In November 2024, Horizon Medical Center om Denton, Texas, paid $14.2 million to settle Stark law allegations after voluntarily self-disclosing potential Medicare violations, including failure to properly identify services at off-campus facilities using required “PN” modifiers. The modifier signals to Medicare that a service is being rendered at an off-campus provider-based department, a billing distinction that directly affects reimbursement rates. Missing it consistently across thousands of claims produced a settlement in the eight figures.
3. Referral-linked compensation is the most common trigger.
In 2025, Gulfcoast Eye Care in Florida agreed to pay $615,000 to resolve Stark and False Claims Act allegations. Federal authorities alleged the practice had a compensation arrangement with a third-party provider that created a financial incentive to refer patients for diagnostic tests tying physician compensation to the volume or value of referrals.
Above-FMV compensation carries the same risk at a larger scale. Community Health Network in Indianapolis settled a whistleblower case for $480 million over allegations that executives illegally recruited cardiovascular specialists, breast surgeons and neurosurgeons to capture their downstream referrals.
4. DOJ is increasingly pursuing Stark law violations
Since early 2023, DOJ has pursued enforcement actions featuring FCA theories that focus on Stark law violations standing alone, even when the underlying qui tam allegations also asserted Anti-Kickback Statute violations, according to a report from law firm Arnold & Porter. Several cases share common themes: relators who are the defendant’s own corporate executives or employees, allegations of physician compensation that far exceeds fair market value, and accusations that defendants furnished inaccurate information to third-party valuation companies. In fiscal year 2024, $1.67 billion of the $2.9 billion in FCA recoveries obtained by DOJ were from healthcare fraud cases.
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