Tread carefully when using Stark voluntary disclosure protocol

Self-reporting can be the right move, but formulate a plan

When you've made a serious mistake, sometimes it is best to step forward and confess before the government regulators find out on their own. The federal Stark Law, governing physician self-referral, provides a mechanism for voluntary disclosing a violation, but using that option requires a carefully crafted game plan.

This situation is not one in which you can provide a general disclosure and then sort out the details once the Centers for Medicare & Medicaid Services (CMS) starts asking questions, says John B. Garver III, JD, an attorney with the law firm of Robinson Bradshaw in Charlotte, NC.

"Disclosing a Stark violation can lead not only to penalties for that actual violation, but also investigations that can uncover other problems," Garver says. "You're better off providing a detailed, thorough report rather than a more general one that will just prompt CMS to start investigating and discovering things on their own."

The Stark Law has a simple premise, explains Garver's colleague Jennifer Csik Hutchens, JD, also an attorney in the Charlotte, NC, office of Robinson Brandshaw. Its purpose is to bar physicians from making referrals for certain health services to entities with which they, or their immediate family members, have a financial relationship, Hutchens explains. However, she says this simple premise has not been simple in application.

There can be severe consequences for violating the prohibition under the Stark Law against claims by providers and suppliers, including hospitals, submitted to anyone for services rendered as a result of improper referrals from physicians, Hutchens says. The government can require refunds of overpayments, impose fines, and exclude the offender from federal health programs. (For the text of the Stark law, go to

"Due to the complex nature of the Stark Law and its exceptions, even vigilant providers may find themselves having inadvertently sought and received reimbursement for services rendered in violation of the law," Hutchens says.

Historically, the government has provided channels for providers to self-report violations, and the Patient Protection and Affordable Care Act (PPACA) directed the Department of Health and Human Services (HHS) to develop a process for providers to self-report violations of the Stark Law in return for potentially reduced liability. In response, the Centers for Medicare & Medicaid Services (CMS) issued its Stark Voluntary Self-Referral Disclosure Protocol (SRDP) in September 2010. (For the entire text of the SRDP, go to The SRDP offers a way for providers to report their violation and lay out an argument for why they should not be subject to the harshest penalties.

Coming forward under the SRDP can be daunting, Hutchens says. "People really need to be careful to set a game plan, taking into account the legal and practical ramifications," she says. "For instance, you have to consider how far back you are going to pull electronic records and who you need to engage to do that process. That can be a big task, and it's that kind of thing that you need to think about before you jump into this process."

The Stark Law defines the look back period as "the time during which the disclosing party may not have been in compliance with the physician self-referral law," but Garver says some people still argue that the definition is ambiguous. Garver and Hutchens say it is unclear how CMS will interpret the look-back period, and providers have to ask where they will cut it off. Garver says, "Whatever you decide, you want to be able to explain it fully and satisfactorily, without any corner-cutting. In our interactions with CMS regarding SRDP, they have been very polite, very professional, and very thorough. They not only ask what the provider has told them, but also what the provider has not told them."

Garver and Hutchens note that since the program began, one settlement has been publicized: Saints Medical Center, in Lowell, MA, agreed to pay $579,000 to resolve its Stark Law liability, well below its estimated exposure. By spring 2011, CMS reportedly was processing more than 60 SRDP disclosures. "Although only one settlement under the SRDP program has been publicized so far, it is clear that participating in the SRDP is a lengthy and protracted process that requires careful legal and financial analyses of a provider's business relationships over many years," Garver says. "Providers should seek immediate counsel by a qualified attorney if they suspect that they have violated the Stark Law."

Under the SRDP, providers may report only actual and potential violations of the Stark Law and not violations of other federal fraud and abuse laws such as the Anti-kickback Statute or False Claims Act, Garver notes. However, if CMS determines that conduct disclosed under the SRDP also might violate other federal laws, the agency may refer the disclosing party's submission to the HHS Office of the Inspector General (OIG) or the Department of Justice (DOJ) for further investigation. That piece of the SRDP means that an effort to proactively report a Stark violation could trigger other government investigations without allowing you get a head start on defending those other violations, Garver explains.

With that risk in mind, Garver and Hutchens say providers should carefully weigh the benefits of using the SRDP option: the pros of likely reducing their exposure under the Stark Law versus the possibility of unanticipated consequences. The decision to make a SRDP submission should be made by a corporate fiduciary, such as a hospital's board of directors, they say.

Garver notes that there still are many unanswered questions about how the government will respond to SRDPs. With only one settlement so far, it is not clear how lenient the HHS OIG or DOJ will be in interpreting violations or how much goodwill can be engendered by voluntarily disclosing, he says.

"I don't think anybody knows all the answers to how all this will play out," Garver says. "There are still a lot of unknowns, so the only thing that is certain is that you do expose yourself to some risks and liabilities when you self-report. Whether those risks are outweighed by the benefits of disclosure is what we have to spend a lot of time considering."


• John B. Garver III, JD, Robinson Bradshaw, Charlotte, NC. Telephone: (704) 377-8377. E-mail:

• Jennifer Csik Hutchens, JD, Robinson Bradshaw, Charlotte, NC. Telephone: (704) 377-8122. E-mail: