The recent decision in United States ex. rel. Drakeford v. Tuomey Healthcare Sys. Inc., No. 10-1819 (4th Cir. Mar. 30, 2012) provides a sobering reminder that hospital-physician contracts should be drafted carefully in order to avoid containing any provisions that could inadvertently result in Stark law liability.

Subject to certain limited exceptions, the federal Stark Law prohibits a physician
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Employment arrangements between hospitals and physicians often include productivity-based compensation.  This can be in the form of bonuses or adjustments to salary.  A common measure of productivity is the physician’s work Relative Value Units (“RVUs”).  Such productivity measures are intended to motivate newly-hired physicians and to support the fairness of compensation paid and earned.

 The “Stark Law” (42 U.S.C. §
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