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Legal Defense for Self-Referral Law Violations

Under what circumstances can physicians have a financial interest such as ownership in an entity to which those physicians refer patients? May a physician refer patients to an X-ray facility that this physician partially owns? Can surgeons make money on their physical therapy referrals? More generally, when can physicians financially benefit from their referrals?

The answer, as so often, depends. Not just State laws vary widely in their application. For example, Arizona’s self-referral law applies only to medical doctors and surgeons, while California’s Stark laws include all healing arts. Another common distinction is the type of service or activity contemplated. For example, Montana’s self-referral law specifically prohibits medical practitioners from owning pharmacies, but Montana law does not, for example, prohibit physicians to own surgery centers, implant companies, or clinical laboratories.

Designated health services (DHS) in this context include clinical laboratory services, physical and occupational therapy, radiology services, durable medical equipment and supplies prosthetics, orthotics and prosthetic devices and supplies, home health services, outpatient prescription drugs, inpatient and outpatient hospital services.

A “financial relationship” can consist of a direct or indirect ownership or investment interest in, or a compensation arrangement with, a DHS Entity. A “direct” financial relationship exists if remuneration passes between a referring physician and the DHS Entity without any intervening persons or entities. By contrast, an “indirect” financial relationship consists of an unbroken chain of either ownership and investment interests or compensation arrangements between the referring physician and the DHS Entity.

By way of simplification, three types of self-referral standards can be distinguished.

Category 1

No or very minor state law prohibition against physician self-referrals.
Representative States:

  • Alabama
  • Arkansas
  • Nebraska

Category 2

Some restrictions, but overall similar to federal law.
Representative States:

  • Georgia
  • Louisiana
  • Texas

Category 3

Strong restrictions.
Representative States:

  • California
  • New Jersey
  • Nevada

Solid knowledge about self-referral restrictions helps both the physician and the business partner to effectively target those states with low or no self-referral restrictions. Literally every day, our experienced health care fraud defense attorneys advise physicians and health care companies across the country to find optimal solutions to their self-referral concerns.

Our Proven Self-Referral Analysis Includes:

  • The exact contours of self-referral restrictions
  • Proven loopholes without circumventing the law
  • Proper documentation to protect all parties
  • Professional disclosure protocols to facility and patients

Oberheiden Law Group, PLLC has the documents and success rates to navigate you and your company before and during health care investigations. Contact us today.

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