BOURLAND, WALL & WENZEL, P.C.

KAMI K. BEATY MICHAEL V. BOURLAND BETHANY L. BROOKS STEPHANIE M. DALEY DAVID P. DUNNING P. MICHELLE EATON GRAIGORY B. FANCHER DAVID J. GOODMAN BRYON R. HAMMER WILLIAM R. KORB JASON R. MAHON BOURLAND, WALL & WENZEL, P.C. ATTORNEYS AND COUNSELORS 301 COMMERCE STREET, SUITE 1500 FORT WORTH, TEXAS 76102-4115 (817) 877-1088 FAX (817) 877-1636 www.bwwlaw.com W. MARC MCDONALD ERIC J. MILLNER DARREN B. MOORE JEFFREY N. MYERS JAY B. NEWTON R. JASON PIERCE JEREMY R. PRUETT LEWIS D. WALL III KENNETH L. WENZEL DUSTIN G. WILLEY DEREN L. WORRELL Legal Issues Affecting Physician Recruitment Arrangements by: W. Marc McDonald and Kami K. Beaty Recruiting physicians to a hospital or medical group often involves the payment of incentives to physicians to induce them to relocate their practice to the area. Merritt Hawkins 2010 Survey of Physician Recruiting Incentives states: Current and past Reviews indicate that the number of hospitals, medical groups and other organizations offering physicians signing bonuses has steadily increased over the last 10 years. In the 1990s, searches offering signing bonuses were the exception; the 2010 Review indicates that they are now generally the rule. Signing bonuses were offered in 76 percent of the recruiting assignments Merritt Hawkins conducted in 2009/10 Certain other incentives, such as paid relocation, paid CME, health insurance and malpractice insurance are standard in the majority of Merritt Hawkins physician search assignments. Despite the widespread practice of offering incentives to induce physicians to relocate their practices to a new area, doing so can expose both those offering and physicians accepting such incentives to severe civil and even criminal penalties if done in a way that violates federal or state health care fraud and abuse laws. Physician recruitment arrangements are subject to complex rules and regulations, and if not properly structured can result in significant fines and penalties. For example, in 2003, a Tenet Healthcare Corporation entity and the CEO of one of its hospitals were indicted on allegations that the CEO violated physician recruitment laws by paying doctors millions of dollars to join a practice which was participating in an illegal referral scheme. This hospital paid doctors and practices more than $10 million under physician recruitment agreements, which the government alleged were disguised bribes and kickbacks used to interfere with physicians medical judgment about where to send patients for hospital care. This case demonstrates the importance of being able to differentiate the line between paying incentives to recruit physicians to the area (which can be done legally) and paying kickbacks to physicians for referrals (which is illegal). Each time high-profile instances of alleged physician recruiting abuse occur, uncertainty follows for both those seeking doctors and for the doctors themselves. Hospitals and medical groups question what incentives they are allowed to offer and how they can substantiate their need to recruit physicians to the community. Physicians who are the object of recruiting offers wonder what they can accept. While the finer points of physician recruiting laws can be complex, the procedures for steering clear of trouble generally are neither overly complicated nor onerous. There are some gray areas, but historically when it comes to violations of physician recruiting laws, the government typically targets blatant offenders, not those who may have unwittingly violated one of the subtler requirements of the law. Nevertheless, it is important that both physicians and those recruiting them have a basic understanding of what is prohibited and what is permissible in the realm of physician recruiting. Anti-Kickback Statute Key concept: no kickbacks for referrals. The Anti-Kickback Statute arose out of Congressional concern that payoffs to those who can influence health care decisions will result in goods and services being provided that are medically inappropriate, unnecessary, of poor quality, or even harmful to patients. In 1972, Congress enacted a prohibition against the payment of Page 1 of 8

kickbacks in any form for the referral of patients in an effort to protect the integrity of federal health care programs from these harms. The Anti-Kickback Statute prohibits any person or entity from knowingly or willfully making or accepting remuneration to induce or reward any person for referring, recommending or arranging for the purchase of any item or service for which payment may be made under a federally funded health care program. The statute not only prohibits outright bribes, but also prohibits offering inducements or other perks that have as one purpose the inducement of a physician to refer patients for items or services that will be reimbursed by a federal health care program. The statute ascribes liability to both sides of an impermissible kickback relationship. The Anti-Kickback Statute is a criminal law, and a violation of it can result in a felony conviction with up to $25,000 in fines and up to five (5) years imprisonment, exclusion from Medicare/Medicaid participation, and/or civil monetary penalties of up to $50,000 for each violation (plus triple damages for the illegal remuneration). Examples of Anti-Kickback violations include: giving cash or other items of value in exchange for patient referrals, contests and giveaways for referral sources, excessive compensation under Medical Director agreements, cross-referral arrangements, compensation for minimal services, and below-fair-market-value agreements between providers and suppliers. Physician recruiting arrangements constitute a violation of the Anti-Kickback Statute if the recruiting entity pays (or offers anything of value to) the physician in exchange for the physician s referral of patients to that entity. It would also be a violation if the recruiting hospital required that referrals be made in order for the physician to secure credentialing. However, the ban on illegal remuneration does not apply when an arrangement meets one of multiple Safe Harbors under the Anti-Kickback Statute. The Safe Harbor applicable to physician recruiting is discussed in more detail below. Stark Law Key concept: no referring patients to an entity with which you have a financial relationship. The federal physician self-referral law, known as the Stark law, was passed in 1989. The Stark law generally prohibits physicians and other healthcare professionals from referring their Medicare and Medicaid patients for certain delineated health care services (known as designated health services or DHS ) 1 to facilities in which they or their immediate family members have a financial interest, meaning either an ownership or investment interest or a compensation arrangement. Facilities are likewise prohibited from billing Medicare or Medicaid for items or services provided pursuant to such a prohibited referral. The idea behind the Stark law is that, if physicians are permitted to make such self-referrals, they will make more referrals than are actually medically necessary, resulting in over-utilization of the system and an unwarranted draining of the taxpayer s pocket. The Stark law is a civil statute that can result in civil monetary penalties of up to $15,000 for each item or service billed as a result of a prohibited referral, assessments of up to three times the amount of monetary penalty, and exclusion from the Medicare and Medicaid programs. An example of a Stark law violation would be if a physician referred one of his patients to an entity that his wife owns for an MRI. The Stark law, like the Anti-Kickback Statute, also contains a number of exceptions to its general prohibition, including an exception for physician recruitment, as long as certain requirements are met. A physician recruiting arrangement that does not meet the exception would result in a violation of the Stark law if the recruited physician refers a patient to the recruiting hospital for an outpatient hospital service or other designated health service. The physician recruitment exception to the Stark law is discussed in more detail below. State Law Stark and Anti-Kickback Equivalents Many states have laws that are similar to the Federal Stark law and Anti-Kickback Statute. California, Florida, Georgia, Massachusetts, New Jersey, North Carolina, and Texas all have a state version of the Anti- 1 The following are the twelve designated health services covered by the Stark law: (1) clinical laboratory services; (2) physical therapy services; (3) occupational therapy services; (4) radiology services (including MRIs, CAT scans, and ultrasounds); (5) radiation therapy services and supplies; (6) durable medical equipment and supplies; (7) parenteral and enteral nutrients, equipment, and supplies; (8) prosthetics, orthotics, and prosthetic devices and supplies; (9) home health services; (10) outpatient prescription drugs; (11) inpatient and outpatient hospital services; and (12) outpatient speech-language pathology services. A physician who refers a patient for any of these items or services to an entity with which the physician or an immediate family member of the physician has a financial relationship, the Stark law has been violated. Page 2 of 8

Kickback Statute, and many other states have some type of physician self-referral statute on the books. In Texas, for example, the Texas Illegal Remuneration Act mirrors the Federal Anti-Kickback prohibition but expands the prohibition to cover items and services reimbursed by any payor (including self-payors), rather than just federally funded health plans. Thus, in Texas, the Anti-Kickback prohibition applies in situations involving all reimbursable health care items or services. The Texas Illegal Remuneration Act, however, also includes the same Safe Harbor carve outs as the Federal Anti-Kickback Statue (as discussed in more detail below), and rarely is the law actually utilized to prosecute offenders. Nevertheless, it too is a criminal statute with harsh penalties, so extreme care should be taken to ensure compliance with both state and Federal physician referral laws alike. Distinctions Between Stark Law and Anti-Kickback Statute Distinguishing between the Anti-Kickback Statute and the Stark law can be difficult. Both deal with referrals, and both attempt to target financial relationships that may distort referrals. However, there are several differences. One is that while Stark deals with providers referring patients to other providers with which they have a pre-existing financial relationship, the Anti-Kickback Statute deals with providers referring patients to providers, regardless of pre-existing financial relationship, in exchange for some kind of remuneration in return. A second difference between the two is that the Stark law, as a civil statute, is fact-based while the Anti- Kickback Statute, a criminal law, is intent-based. This means that under Stark, it doesn t matter what the physician intended to do if the physician s actions violate the Stark law s prohibitions, the physician is in violation, even if it s an innocent mistake. The Anti-Kickback Statute, on the other hand, requires the government to prove that a person willfully and intentionally sought to offer or receive remuneration in exchange for referrals. An additional difference is that the Stark law only applies if a referral is being made for designated health services and Medicare or Medicaid is billed for such DHS. The Anti-Kickback Statute, however, applies to the referral of a patient for any item or service that is reimbursed by Medicare or Medicaid, not just designated health services. Finally, while both the Stark law and Anti-Kickback Statute have legal loopholes permitting certain referrals that would otherwise constitute a violation, the loopholes differ in several respects. Under Stark, these provisions are called exceptions ; under the Anti-Kickback Statute, they are called Safe Harbors. In order to be safe and avoid a violation of the Stark law, an arrangement that would otherwise be prohibited must strictly comply with the requirements of the applicable Stark exception. However, an arrangement may still be considered in compliance with the Anti-Kickback Statute even if each requirement under the applicable Safe Harbor is not met. This stems from the intent-based versus fact-based difference between the two laws. Because Stark is based on fact rather than intent, a physician is automatically in violation of the Stark law if there is a prohibited financial relationship, unless an exception applies. Under the Anti-Kickback Statute, while a person is definitely in the clear if the arrangement strictly complies with one of the Safe Harbors, the person may also be in the clear even if it does not, because the government still has to prove the person intended to violate the law. In short, under Stark, exceptions are required; under the Anti-Kickback Statute, Safe Harbors are not mandatory, but they are a guarantee of safety if the arrangement falls within one. Both the Stark law and Anti-Kickback Statute contain prohibitions against recruiting arrangements that are meant to induce referrals. Recruitment can be done safely only if certain requirements are met. Unfortunately, both the doctors being recruited and the organizations doing the recruiting often fail to see to it that those requirements are met, putting both sides at risk. Rather, the parties to a recruiting arrangement should be knowledgeable about what is and is not allowed under the Stark and Anti-Kickback laws and ensure that they arrange the relationship properly to avoid suffering the harsh penalties the laws impose. Stark Exception for Physician Recruitment Payments by hospitals to persuade doctors to move to the hospital s service area and become a member of the medical staff are excepted from Stark if certain conditions are met. The arrangement can be structured one of two ways: the recruited physician can either relocate to the hospital s service area and start his or her own practice, or the recruited physician can join an existing group practice in the hospital s service area. This exception is available to hospitals, federally qualified health centers, or rural health clinics. Page 3 of 8

Remuneration provided by a hospital to recruit a physician is permissible under the Stark law if the following conditions are met: (1) Relocation: the physician relocates his or her medical practice to the geographic area served by the hospital ; The geographic area served by the hospital is the area composed of the lowest number of contiguous zip codes from which the hospital draws at least seventy-five percent (75%) of its inpatients. Special rules apply with respect to (i) a hospital that draws fewer than seventy-five percent (75%) of its inpatients from all of the contiguous zip codes from which it draws inpatients, as well as (ii) a hospital located in a rural area. A physician will be considered to have relocated his or her medical practice if: (a) Previously Outside the Area: the medical practice was previously located outside the geographic area served by the hospital; (b) Moves Into the Area: the physician moves his or her medical practice into the geographic area served by the hospital; and (c) (i) Moves at least 25 Miles: the physician moves his or her medical practice at least twentyfive (25) miles; or (ii) 75% of Revenues from New Patients: the physician s new medical practice derives at least seventy-five percent (75%) of its revenues from professional services furnished to patients (including hospital inpatients) not previously seen or treated by the physician at his or her prior medical practice site during the preceding three (3) years. (Note: for the initial start-up year of the recruited physician s practice, the seventy-five percent (75%) test will be satisfied if there is a reasonable expectation that the recruited physician s medical practice for the year will meet the seventy-five percent (75%) requirement.) A physician who establishes his or her medical practice in the geographic area served by the recruiting hospital is not subject to the relocation requirement if the physician (i) is a resident or has been in practice one year or less, or (ii) was employed on a full-time basis for not less than the preceding two years by a federal or state prison, by the Department of Defense or Department of Veteran Affairs, or by an Indian Health Service facility. (2) Must Join Medical Staff: the physician becomes a member of the hospital s medical staff (no existing privileges are permitted); (3) Written Agreement: the arrangement is set out in writing and signed by both parties; (4) No Referrals Required: the arrangement is not conditioned on the physician s referral of patients to the hospital; (5) Remuneration not Based on Referrals: the remuneration paid to the physician is not determined based on the volume or value of actual or anticipated referrals by the physician or other business generated between the parties; and (6) No Restriction on Staff Privileges or Referrals Elsewhere: the physician is allowed to establish staff privileges at any other hospital(s) and to refer business to any other entities. In the case of remuneration provided by a hospital to a physician either indirectly through payments made to another physician practice, or directly to a physician who joins a physician practice, the following additional conditions must be met: Page 4 of 8

(1) Agreement Signed by All Parties: the written agreement must also be signed by the physician practice; (2) Remuneration Passed Through: except for actual costs incurred by the physician practice in recruiting the new physician, the remuneration is passed directly through to or remains with the recruited physician; (3) Incremental Costs Only: in the case of an income guarantee, the costs allocated by the physician practice to the recruited physician do not exceed the actual additional incremental costs attributable to the recruited physician; (4) Records: records of the actual costs and the passed-through amounts are maintained for a period of at least five (5) years and made available to the government upon request; (5) Remuneration not Based on Referrals: the remuneration from the hospital is not determined in a manner that takes into account the volume or value of any actual or anticipated referrals by the recruited physician or the physician practice; (6) Restrictive Covenants: the physician practice may not impose on the recruited physician practice restrictions that unreasonably restrict the recruited physician s ability to practice medicine in the geographic area served by the hospital 2 ; and (7) No Remuneration for Referrals: the arrangement does not violate the Anti-Kickback Statute, or other applicable federal or state law or regulation. If the recruiting arrangement is with an existing group practice, no payment under the recruitment agreement may inure to the benefit of the group practice. To ensure that this criterion is satisfied, the following may be considered: (1) Payment to Physician: that all payments under the agreement be made directly to the recruited physician, and not to the group; or alternatively, any payments made to the group will be directly passed through to the physician (except for actual incremental costs); (2) Determination of Fair Market Value: that the fair market value of the payments be determined by an independent third party appraisal; (3) Group Acknowledgments: that the group be made a party to the agreement to acknowledge: (a) that no payments to the physician under the agreement will be used for any purpose other than the incremental costs of adding the recruited physician to the practice, and the hospital has the right to get data from the group to confirm this; (b) to the extent the practice has entered into a separate employment agreement with the recruited physician that includes a non-competition provision, such provision does not unreasonably restrict the recruited physician s ability to practice medicine in the geographic area served by the hospital; (c) the group will timely credential the physician and bill for his/her services; (d) the group will compensate the physician in an amount not less than the amount payable under the recruitment package; and (e) the hospital will hold a security interest in the recruited physician s receivables as security for the repayment obligations under the recruitment note; 2 CMS does not consider the following provisions to have a substantial effect on the recruited physician s ability to remain in the hospital s service area: (i) restrictions on moonlighting; (ii) non-solicitation provision; (iii) requirement to treat Medicaid and indigent patients; (iv) confidentiality requirement; (v) repayment requirement for losses absorbed by the practice in excess of the hospital recruitment payments; (vi) liquidated damages clause that is not unreasonably restrictive if the physician leaves the practice and remains in the community; and, most significantly (vii) a limited reasonable non-compete clause. Page 5 of 8

(4) No Compensation in Excess of Fair Market Value: that combined compensation for the recruited physician, including any and all amounts paid under the recruitment agreement and any and all amounts paid under the employment agreement, will not exceed fair market value for services rendered; and (5) Report of Changes in Compensation: that the recruited physician agrees to report to the hospital any increase in base compensation under the employment agreement to an amount that exceeds fair market value as established in the recruitment agreement, and agrees that the hospital has the right to decrease the amounts payable under the recruitment agreement as it deems appropriate, in its sole discretion, to ensure that payments to physician do not exceed fair market value. Because, as discussed above, the Stark law is a strict liability statute, a physician recruitment arrangement whereby a hospital is recruiting a physician to its geographic area must meet each criteria of the Stark exception for physician recruitment. Even a slight or unintentional deviation from the exception can result in liability and harsh consequences, so it is very important that all parties involved be familiar with the legal requirements for physician recruitment. Anti-Kickback Safe Harbor and OIG Guidance A hospital s loan to a physician in exchange for the physician agreeing to relocate to the hospital s service area, at which point the physician would be in a position to refer to the hospital, could implicate the Anti-Kickback Statute. Such an arrangement would involve prohibited remuneration under the Anti-Kickback Statute if the requisite intent to induce or reward referrals of federal health care program business were present. A physician recruitment arrangement is guaranteed to be safe under the Anti-Kickback Statute if it meets the Practitioner Recruitment Safe Harbor. Protection under the Practitioner Recruitment Safe Harbor is limited to arrangements with practitioners who are either: (i) initially establishing a practice (within one year of completing a residency) in a health professional shortage area (HPSA) or (ii) relocating a practice to a HPSA. HPSAs currently recognize only three types of specialties: primary care, dentistry, and mental health. Nine (9) standards must be met to qualify for the Safe Harbor: (1) Written Agreement: the arrangement is set forth in a written agreement; (2) Revenue from New Patients: if a practitioner is leaving an established practice, at least seventy-five percent (75%) of the revenues of the new practice must be generated from new patients not previously seen by the practitioner at his or her former practice. (3) Length of Benefits: the benefits are provided by the entity for a period not in excess of three (3) years; (4) No Referrals Required: there is no requirement of referrals; (5) No Benefit to Third Party: the payment or exchange of anything of value may not directly or indirectly benefit any person (other than the practitioner being recruited) or entity in a position to make or influence referrals to the entity; (6) Revenue from HPSA: at least seventy-five percent (75%) of the revenues of the new practice must be generated from patients residing in a HPSA or a Medically Underserved Area (MUA) or who are part of a Medically Underserved Population (MUP); (7) Privileges not Restricted: the practitioner is not restricted from establishing staff privileges at or referring to any other entity of his or her choosing; (8) Benefits Not Based on Referrals: the amount or value of the benefits provided by the entity do not vary (and are not adjusted or renegotiated) in any manner based on the volume or value of any expected referrals; and Page 6 of 8

(9) Must Treat Medicare/Medicaid Patients: the practitioner agrees to treat patients receiving medical benefits or assistance under the Medicare and Medicaid programs. However, even if a particular arrangement does not satisfy each element of the Safe Harbor, the arrangement is not necessarily in violation of the Anti-Kickback Statute because in order for there to be a violation of the Anti- Kickback Statute, there must be an intent to induce or reward referrals. Therefore, if the Physician Recruitment Safe Harbor is not satisfied, an individualized facts and circumstances evaluation of the risk of fraud and abuse posed by a particular arrangement is necessary to determine whether there is an Anti-Kickback violation. The Office of Inspector General (OIG) has provided some guidance for hospitals regarding additional considerations when determining whether the recruitment arrangement is prohibited under the Anti-Kickback Statute: (1) Duration of the Payout of the Recruitment Benefit: whether the total benefit extends beyond three (3) years (if total benefit exceeds three (3) years, there is a risk of heightened scrutiny); (2) Existing Referrals: whether the practitioner has an existing stream of referrals in the recruiting entity s service area; (3) Need for the Recruitment: whether there is documented evidence of an objective need for the practitioner s services; (4) Narrowly Tailored Benefit: whether the incentives are designed to be the minimum necessary to attract the recruit to the area (the OIG noted that benefits of greater value and benefits provided over longer durations are more suspect); and (5) Benefit to Third Parties: whether the incentives also directly or indirectly benefit other referral sources, such as assistance given to a local physician practice to recruit new practitioners. The OIG has addressed some common recruitment incentives and found potentially problematic incentives to include: (i) the use of free or significantly discounted billing, nursing, or other staff services, office space, or equipment; (ii) free training of a physician s office staff in areas such as management techniques, CPT coding and laboratory techniques; (iii) private practice guarantees; (iv) low-interest/interest-free loans or loans that can be forgiven if the physician refers patients to the hospital; (v) paying for a physician s continuing medical education; (vi) coverage of a hospital s group insurance plans at inappropriately low costs; or (vii) paying for services in excess of fair market value of the services. The OIG has cleared several physician recruitment arrangements that do not strictly comply with the Safe Harbor. However, because an arrangement that falls outside of the Safe Harbor may ultimately be deemed to be in violation of the Anti-Kickback Statute (and because the further an arrangement falls from meeting the Safe Harbor criteria, the more likely it is to be deemed a violation), the more conservative approach to avoid prosecution is to come as close as possible to meeting the Safe Harbor s criteria. And, of course, to be compliant with the Anti- Kickback Statute, the parties must ensure that the intent of the recruitment benefits being provided is not to induce or reward referrals, but rather is to fulfill a legitimate need in the community. Tax Considerations Many hospital organizations are tax exempt under Section 501(c)(3) of the Internal Revenue Code (IRC). Tax exempt entities need to consider how recruitment arrangements may impact their tax-exempt status. Under Section 501(c)(3), a tax-exempt entity may not engage in any substantial unlawful activity. Thus, in order to retain tax-exempt status, an entity must be in compliance with all applicable federal and state laws, including Stark and the Anti-Kickback Statute. However, the IRC and the Internal Revenue Service (IRS) highlight additional issues to consider regarding recruiting incentives offered to physicians by 501(c)(3) entities. Section 501(c)(3) provides, in pertinent part, that no part of the tax-exempt entity s net earnings may inure to the benefit of any private individual (referred to as private inurement). The IRC does not prohibit transactions Page 7 of 8

between tax-exempt entities and private parties, but rather requires that any such transactions be tested against a standard of reasonableness. If recruitment incentives provided to a physician by a 501(c)(3) entity go beyond what is reasonable, then there may be private inurement to that physician, thus risking the entity s tax-exempt status. Defenses to private inurement-type claims include: (i) the transaction involves an exchange of services for fair market value; (ii) the transaction is in furtherance of the entity s exempt purposes (i.e., charitable, educational, or religious purpose); and (iii) the transaction imparts a community benefit. IRS Revenue Ruling 97-21 seems to indicate that hospitals may provide significant recruitment incentives, as long as they are reasonable. This Revenue Ruling approves compensation packages that include signing bonuses, payment of professional liability insurance premiums for a limited time, payment of professional liability insurance for a physician s former practice, provision of office space in a hospital-owned building at below-market rates for a limited period of time, moving expenses, and a guarantee of a minimum level of private practice income for a limited period of time. The Ruling also indicates that compensation packages must be in writing, negotiated at arms length, and in conformity with guidelines established by the hospital s board of directors. The Ruling also suggests that remuneration packages are presumed to be reasonable if they reflect regional or national surveys regarding income earned by physicians in the same specialty. It is important for tax-exempt entities to keep these tax considerations in mind when recruiting physicians so that there is no negative impact on their tax-exempt status. There are also tax-related considerations applicable to both tax-exempt and for-profit entities relevant to physician recruitment. Regardless of whether the recruiting hospital is a 501(c)(3) organization or for-profit entity, consideration must also be given to the tax consequences to the hospital, the physician, and the physician group, as applicable, for the payments made under the recruiting agreement and the repayment obligations. This will also impact the timing of the issuance of the Form 1099 when the physician/physician group must treat the payment as income. Under current advice issued by the IRS, payments to a physician under a recruitment agreement must either satisfy certain requirements common for a standard commercial loan (e.g., require repayment at a time certain, applying interests rates and requiring specified payment amounts) or must be treated as income to the physician at the time the payment is made to the physician. Conclusion Physician recruitment arrangements are commonplace transactions between a hospital and a physician who is relocating to the hospital s community. Despite the prevalence of such arrangements, care must be taken in structuring the financial incentives offered to the physician. When it comes to physician recruiting, the government is concerned about several things. The Internal Revenue Service does not want individuals such as physicians to profit unduly through a financial relationship with a not-for-profit entity such as a hospital. The Anti-Kickback Statute endeavors to deter hospitals from recruiting physicians merely to capture patient referrals particularly referrals of Medicare or Medicaid patients. The Stark law seeks to limit financial relationships between physicians and hospitals. The laws discussed herein directly affect physician recruitment, and it is imperative that those involved in the recruitment process be familiar with the requirements of these laws and that they consult competent legal counsel when necessary to ensure the arrangement is structured properly. 2010 Bourland, Wall & Wenzel, P.C. Page 8 of 8