Adventist Health System Self-Discloses Stark Law Violations

Friday, June 20, 2014
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

When I served with the federal government, a frequent saying used over and over was: "It's better to ask for forgiveness than to ask for permission." This may be what Adventist Health System is hoping for in making its latest self-disclosure to the Office of Inspector General (OIG).

Documents released on May 12, 2014, reveal that Adventist, which owns Florida Hospital and 44 other hospitals nationwide, allegedly violated the federal Stark Law. The Altamonte Springs, Florida, based not-for-profit hospital system is working with the Department of Justice (DOJ) after the organization self-reported that some of its referral pay arrangements with doctors may have broken federal laws. According to the Orlando Sentinel, the initial report to bondholders was first made public in the health system's December 2013 consolidated financial statement. The statement was released to the general public in March 2014.

The Stark Law violations are still under investigation by the DOJ and have not been resolved. Both the amount of the physician payments at issue and the possible fines expected to be paid by Adventist as part of any settlement has not been released. This self-reported violation comes on the heels of Florida Hospital's competitor, Halifax Health, having to pay $85 million in settlement for Stark Law violations. This is the largest amount ever settled in a Stark Law case in U.S. history. To read my previous blog on Halifax, click here.

To read full coverage from the Orlando Sentinel on the Adventist Stark Law situation, click here.

Let's Review: The Stark Law (Anti-Self-Referral Law).

The Stark Law was created in order to combat problems related to physician self-referrals. The law prevents healthcare providers from referring patients to another business or entity in which they are owners or with which they have financial interests. Self-referrals are defined as physician orders for tests or services. It includes prescriptions. The problem which Congress hoped to eliminate was the increase in costs from having unnecessary tests, x-rays and diagnostic studies, labs and other services ordered by physicians merely for the purpose of increasing their own bottom line.

Revisions Of The Stark Law.

The Stark Law was revised and re-released on January 1, 1995. The second revision of the law, "Stark II," expanded the initial referral regulations to include a list of "designated health services," not just clinical lab testing and x-rays. Stark II also clarified that the prohibitions apply to both the referring doctor and the doctor receiving the referral. The doctor receiving the referral is just as liable for punishment if he or she willingly accepts an illegal referral.

Although Stark and Stark II do not cover services which are not paid for by Medicare or other federal funds, many states have their own laws and regulations prohibiting similar referrals. To read more on Stark and similar state laws please see our prior blog, click here.

The Stark Law In Action.

Self-referrals for financial gain can ultimately cause doctors and healthcare providers to prescribe unnecessary medications, tests and treatment. The Stark Law prohibits this to avoid unnecessary ordered tests and procedures, prevent fraudulent billing and to protect patient safety. I analyzed the ramifications of unnecessary tests and treatments in a prior article published in Medical Economics.

According to the Orlando Business Journal, Stark Law violations also impact a community's healthcare economy. If doctors are improperly referring patients to specific healthcare facilities, that action can drain patient volume from other facilities within the community. A healthcare monopoly can occur if a consistent flow of patients is referred to a specific healthcare service provider. This creates an unfair advantage. To read more on this business analysis from the Orlando Business Journal, click here.

Self-Disclosure Is The Way To Go.

Unlike Halifax Health, Adventist took a proactive approach and self-reported the federal violations. This is a smart move strongly recommended by many experts. As the government aggressively cracks down on healthcare fraud, more providers are making voluntary disclosures to avoid large penalties and harsh punishments.

The Office of Inspector General's (OIG) website contains an overview of the self-disclosure protocol. Self-disclosing overbilling, fraudulent billing and other statutory violations is a difficult decision. To encourage it, there are several benefits. Healthcare providers that self-report violations as they occur are likely to pay a smaller amount of damages and incur fewer penalties compared to those who attempt to conceal illegal activity. They will have a legal defense to whistle blower (qui tam) cases and to prosecution.

According to the OIG, self-reported cases will not cause the reporter to suffer greater federal oversight through a corporate integrity agreement. Self-reported cases are also expedited in order to produce quicker resolutions. To read more on the OIG's self-disclosure protocol, click here for the OIG self-disclosure files.

Don't Self-Disclose Without Some Help.

Fraudulent activities in the healthcare industry are usually uncovered. By acknowledging billing errors, over-payments, fraudulent activities or violations of the law, and self-reporting these, you can save yourself not only a large sum of money, but you can decrease the odds of serious punishment as well.

Once you have made the decision to self-report violations, find yourself an experienced health law attorney to assist you in the process. An attorney experienced in health law is vital to have on your side as you settle agreements in a healthcare fraud case or report Stark violations. Attorneys experienced in health law can guide you through the complex court cases with which you may not be familiar with.


Do you have any predictions on how the Adventist case will carry out? What do you think the biggest difference will be between this case and the Halifax Health case? Please leave any thoughtful comments below.

Contact Health Law Attorneys Experienced in Handling Stark Compliance.

If you are involved in referring or providing DHS it is crucial that your arrangements are reviewed for compliance with Stark and other anti-fraud laws. Violations of these laws can carry severe financial and criminal penalties. One of the best ways to avoid these sanctions is to have your current or potential arrangement reviewed by an attorney who is experienced in these matters. The Health Law Firm routinely advises healthcare providers on Stark compliance issues for practitioners and providers of all types of DHS. We can advise you on the legality of a particular arrangement and can assist with remedying any perceived compliance issues.

If you need advice or assistance on making self-disclosures to the OIG, we can help.

Our firm also routinely prepares legal opinion letters for clients on whether or not such matters must be reported. An opinion letter from an experienced law firm can often insulate you from civil and criminal liability.

Our firm also represents healthcare professionals who are whistleblowers. These are individuals who are aware that their employer or organization is billing falsely, ordering unnecessary services or violating the Medicare and Medicaid laws. Whistleblowers are entitled to a percentage of the money the government gets back.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at


Jameson, Marni. "Florida Hospital Owner Admits It Violated Federal Law." Orlando Sentinel. (May 28, 2014). From:,0,7724165.story

Aboraya, Abraham. "Adventist Health System Violated Federal Law On Doc Referrals." Orlando Business Journal. (June 6, 2014). From:

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

Tag Words: Medicare, Medicare fraud, Medicare fraud prevention, Stark Law, Stark I, Stark II, kick-backs, fraud, compliance, whistle blower, qui tam case, fraud attorney, medicare fraud lawyer, department of justice, DOJ, self-disclosure, self-report, office of inspector general, OIG, designated health services, DHS, self-referral, physician self-referral, stark law case, Florida defense attorney, Florida defense lawyer, heath law attorney, health law lawyer

"The Health Law Firm" is a registered fictitious business name of George F. Indest III, P.A. - The Health Law Firm, a Florida professional service corporation, since 1999.
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