The Physician Self-Referral Law, commonly referred to as the Stark law (42 U.S.C. § 1395nn), is one of several federal fraud and abuse laws. We have previously written about the federal anti-kickback statute (“AKS”) (click here to review). While the two laws may seem similar at first, they have very different rules and penalties. The Stark law has civil penalties, while the AKS has civil and criminal penalties. Moreover, the Stark law is a “strict liability” statute, which means no intent is required for those who violate Stark.

While Stark can apply to a ketamine clinic, it is especially prominent in the states that have no, or very loose, corporate practice of medicine doctrines. In those instances, a layperson or entity can have a direct ownership interest in a ketamine clinic that is owned in whole or part by a physician. Moreover, when ketamine is just one of the treatments provided by a clinic in those states, Stark can play a very important role in structuring transactions, compensation for the physicians, etc.

The Law

Stark prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family

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