The future of the Stark law is uncertain following a recent district court decision that a False Claims Act lawsuit against South Charleston, W.Va.-based Thomas Health System could not be resolved without further briefings on the U.S. Supreme Court's recent reversal of the Chevron deference doctrine.
In July, the Supreme Court overturned Chevron deference, a 40-year-old precedent directing judges to defer to federal agency interpretations in cases involving ambiguous laws when reasonable. This shift now requires judges to independently interpret regulations rather than automatically defer to agency interpretations.
The district judge in the Thomas Health case ordered supplemental briefings, noting the need to "carefully consider the regulations without blindly referring to any agency interpretation." The lawsuit, filed in 2020, was ultimately dismissed earlier this month for lacking sufficient detail in the plaintiff's allegations, casting further uncertainty on the Stark law's application.
"Over time the Stark law (and accompanying regulations) has evolved into a labyrinth of multipart compliance requirements where the exception-to-the-exception is the norm," the judge said in his ruling. "...That deference is no longer required; indeed, that deference is no longer acceptable."
Scott Colston, CEO of St. Paul (Minn.) Eye Clinic, discussed the implications of these changes at Becker's 30th Annual Business and Operations of ASCs Meeting in Chicago Nov. 1.
"I think one of the real policy questions is going to be on the legal side, which is what is going to happen to the Stark law and anti-kickback issues associated with the Chevron case," Mr. Colston said. "I think the opportunity to challenge the agency's interpretation and the rules is real."
Under the Stark law, physician investors must derive at least one-third of their medical practice income from procedures they personally perform at the ASC. Additionally, they must perform at least one-third of their procedures that could be done in an ASC setting at the invested ASC if it is multispecialty.
"We all twist ourselves into pretzels complying with the one-third rule," Mr Colston added. "And I'm not saying that's not important or that the regulatory framework isn't important, but we've given a lot of deference to the agencies and I think it'll be fascinating to see how we kind of manage all that."