From: The Honorable Charles W. Boustany, Jr.
Sent By:
Bill: H.R. 3776
Date: 4/10/2014

Time to Reform the Penalties for Unintentional Stark Law Violations

Dear Colleague:

Each year, the hospitals in your district dedicate significant resources and thousands of dollars to avoid unintentional violations of the Stark Law. These “paper work-type violations,” which typically come in the form of a missing signature or expired contract, could result in a hospital paying millions of dollars in Stark Law penalties, even if there has been no overutilization of health care services, harm to the Medicare program or violation of any other federal law.

In response to this discrepancy, we introduced H.R. 3776, the Stark Administrative Simplification Act.  This bipartisan bill would limit the excessive and disproportionate penalties that hospitals can incur by creating alternative sanctions for “technical noncompliance” with the Stark Law, which is defined as any:

  • arrangement not signed by one or more parties;
  • verbal agreement not put into writing; or
  • expired arrangement where the parties continued to provide services as if the arrangement was still in effect.

Any self-disclosure of “technical noncompliance” made to CMS within one year would be subject to a $5,000 penalty. If disclosed more than one year from the date of technical noncompliance, the penalty doubles to $10,000.

In addition, CMS would have 90 days to determine whether a disclosure of “technical noncompliance” qualifies for a lower penalty using criteria set forth in the legislation. If CMS fails to act within 90 days, the disclosure would be deemed to be accepted. In order to clear the current backlog of disclosures waiting for review, which now totals almost 400, the measure would retroactively apply to any eligible disclosure that is pending before CMS at the time the bill is signed into law.

The fixed penalty structure and simplified self-disclosure process in H.R. 3776 would give hospitals in your district more certainty and predictability regarding the outcome of a technical noncompliance disclosure while freeing CMS resources to pursue more egregious violations of the Stark Law.  Furthermore, industry analysis of the bill shows it could generate as much a $1.03 billion in new revenue over 10 years.

For these reasons, H.R. 3776 has been formally endorsed by the American Hospital Association, National Rural Health Association and the Healthcare Financial Management Association. If you are interested in cosponsoring or have any questions about H.R. 3776, please contact Mike Thompson with Rep. Boustany’s office at 202-225-2031 ( or Elizabeth Stower with Rep. Kind’s office at 202-225-5506 (  


               Charles W. Boustany, Jr. MD                                                            Ron Kind

               Member of Congress                                                                        Member of Congress