Stark Law vs. the Anti-Kickback Statute: What Michigan Physicians (and the Employees Who Report Them) Need to Know

Szura & Delonis, PLC

Two federal laws often get invoked in health care fraud cases, and they get confused constantly as well. The Stark Law and the Anti-Kickback Statute (AKS) both regulate financial relationships between physicians and the people or entities they refer patients to — but they work differently, require different proof, and carry different consequences. If you’re a practice administrator, biller, compliance officer, or physician who has noticed a compensation arrangement, lease, or referral pattern that feels off, understanding which statute you’re actually looking at matters, because it changes what has to be proven and what your options are.

This guide breaks down what each law actually prohibits, how they differ, and how violations of either one typically come to light.

Two Laws, One Underlying Problem: Referrals Driven by Money, Not Medicine

Both statutes exist to address the same basic risk: that a physician’s referral decisions might be influenced by financial self-interest rather than what’s best for the patient — and that federal health care programs end up paying the bill for it. Where they diverge is in what conduct they reach, who they apply to, and what has to be shown to prove a violation.

The Stark Law: Strict Liability for Physician Self-Referral

The Physician Self-Referral Law, commonly called the Stark Law (42 U.S.C. § 1395nn), prohibits a physician from referring Medicare patients for certain designated health services (DHS) — things like clinical lab services, physical therapy, imaging, durable medical equipment, and home health services — to an entity with which the physician (or an immediate family member) has a financial relationship, unless that relationship fits squarely within a specific regulatory exception.

A few things make Stark distinctive:

• It’s a strict liability statute. The government doesn’t have to prove the physician intended to violate it, or even knew the arrangement was improper. If the financial relationship exists, the referral happened, and no exception applies, it can be a violation — full stop.
• It only applies to physicians (and DHS entities billing for services referred by them) — not hospitals, device companies, or other referral sources in isolation.
• Exceptions must be fully satisfied. Stark exceptions (for things like bona fide employment relationships, fair market value compensation, or in-office ancillary services) have detailed technical requirements. Missing even one element — a lease that isn’t in writing, a compensation formula that isn’t set in advance, a term that runs month-to-month when it should be for at least a year — can knock an otherwise legitimate arrangement outside the exception entirely.

What this looks like in practice: A physician who has a financial interest in an imaging center (through ownership, a lease payment, or a medical directorship) and refers his own Medicare patients there. A compensation arrangement between a hospital and an employed physician where pay increases directly track the physician’s referral volume rather than actual work performed (RVUs for personally performed services, for example, are generally fine; compensation tied to referrals for DHS is not).

The Anti-Kickback Statute: A Criminal Law That Requires Intent

The Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) is broader and, in some ways, harder to prove. It makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive remuneration — money, free services, excessive lease payments, sham consulting fees, anything of value — in exchange for referring, or in exchange for arranging or recommending, business reimbursable by a federal health care program.

Key differences from Stark:

• Intent matters. The government has to show the payment was knowingly and willfully made or accepted with at least one purpose being to induce or reward referrals. If remuneration flows for a legitimate reason and inducing referrals isn’t even one of the intended purposes, it may not violate the AKS — even if referrals happened to follow.
• It applies to anyone, not just physicians — device manufacturers, pharmaceutical companies, home health agencies, hospitals, and marketers can all be liable.
• It has safe harbors, not exceptions. Safe harbors describe arrangements that are protected if every element is met, but falling outside a safe harbor doesn’t automatically mean a violation occurred — it just means the arrangement gets evaluated under the statute’s intent standard instead of getting automatic protection.

What this looks like in practice: A hospital covering the salary of a referring physician’s office staff. A device company paying “speaker fees” to physicians who are, in substance, being compensated for using and recommending the product.

Where They Overlap — and Where the False Claims Act Comes In

Neither statute creates a private right of action on its own. What makes both of them relevant to whistleblowers is that claims submitted to Medicare or Medicaid resulting from a Stark or AKS violation can also become false claims under the False Claims Act (31 U.S.C. §§ 3729–3733):

• Stark Law itself provides that no Medicare payment may be made for a DHS referral made in violation of the statute — billing for it anyway creates FCA exposure.
• The AKS, as amended by the Affordable Care Act, expressly states that a claim resulting from a kickback violation constitutes a false claim for FCA purposes.

That connection is what allows a private individual with inside knowledge — a relator — to bring a qui tam lawsuit on the government’s behalf over conduct that, standing alone, only the government could otherwise prosecute or pursue civilly.

How These Violations Typically Come to Light

Unlike upcoding or phantom billing, Stark and AKS violations usually aren’t visible in the claims data itself — the claim submitted often looks completely normal. The problem lives in the underlying business relationship, which means the people most likely to spot it are the people who see the paperwork behind the referral, not the billing:

• Practice administrators and office managers, who see the actual lease terms, management agreements, or medical directorship contracts — and notice when payment amounts don’t track any documented work product or fair market value analysis
• In-house counsel and compliance officers, who are often asked to review (or paper over) arrangements after the fact rather than before they’re signed
• Physicians themselves, who are offered a compensation structure and recognize that their pay is quietly tied to how many patients they send to a particular lab, imaging center, or specialist
• Billing and coding staff, who notice a referral pattern that consistently and disproportionately favors one entity — especially one with an ownership or leadership overlap with the practice
• Sales and marketing employees at device, pharmaceutical, or home health companies, who are told to structure a payment as a “consulting fee” or “speaker fee” for work that isn’t actually happening, or is far out of proportion to any legitimate service

Because these arrangements are often documented in contracts, compensation formulas, and emails rather than hidden entirely, the evidence frequently already exists — the person who has seen it usually just doesn’t recognize its legal significance until later.

What to Do If You’ve Noticed One of These Arrangements

• Preserve what you’ve already seen in the ordinary course of your job — compensation formulas, lease terms, referral logs, emails discussing the structure of a deal — without accessing files or systems outside your normal duties to go looking for more
• Write down the specifics while they’re fresh, including who set up the arrangement, how compensation is calculated, and whether it was ever explained to you as being tied to referral volume
• Understand that Stark and AKS analysis may be technical — an arrangement that looks improper on its face sometimes fits squarely within an exception or safe harbor, and one that looks routine sometimes doesn’t
• Talk to an attorney, particularly if you’re weighing whether to pursue a qui tam claim — how and when you report can affect both your legal protections and your standing to bring a claim later

Talk to a Michigan Health Care Fraud Attorney

Stark Law and Anti-Kickback Statute cases turn on details most people never get trained to spot — a compensation formula, a lease term, a directorship agreement that doesn’t match the work being done. At Szura & Delonis, PLC, our qui tam practice draws on the same health care regulatory background we use to advise physicians and practices on Stark and AKS compliance — so when you describe what you’ve seen, we recognize immediately whether it fits a known violation pattern or falls into a genuine compliance gray area.

Every initial conversation is confidential and free of charge. Learn more about our Qui Tam and False Claims Act practice, or call us directly to discuss what you’ve observed.

Phone: (248) 716-3600

Email: admin@szuradelonis.com

Address: 29777 Telegraph Rd #2401, Southfield, MI 48034

This article is provided for general informational purposes only and does not constitute legal advice. Whether a specific arrangement violates the Stark Law or the Anti-Kickback Statute depends on the facts involved, including the precise terms of any compensation arrangement and, for AKS purposes, intent. If you believe you have information about a Stark Law or Anti-Kickback Statute violation, consult an attorney about your specific situation before taking any action.