| Course | HSC 432 Legal Issues in Health Care |
|---|---|
| Module | Module 5 |
| Paper type | Legal case study analysis |
| Length | About 632 words, 5 pages |
| Format | APA 7 student paper |
| School | Arizona State University |
| Program | BS in Health Sciences |
| Updated | October 2026 |
Free sample paper for HSC 432 Module 5
Three Deals and Two Laws: Stark and Anti-Kickback Analysis for an Orthopedic Group
Student Name
BS in Health Sciences, Arizona State University
HSC 432: Legal Issues in Health Care
Instructor Name
Month Day, Year
Three Deals and Two Laws: Stark and Anti-Kickback Analysis for an Orthopedic Group
The Fact Pattern
Desert Bone and Joint, a six-physician orthopedic group in Arizona that treats many Medicare patients, is considering three arrangements:
1. Buying an MRI scanner for its own office and billing Medicare for scans its physicians order.
2. Buying a 30% stake in an imaging center owned by a radiology group, to which its physicians would refer patients.
3. Leasing office space in a hospital's medical building at half the market rent, in a hospital where the group performs most of its surgeries.
The Two Laws
Stark Law. Stark works in two directions. Doctors in Desert Bone and Joint could not route Medicare patients' MRI scans, or any other designated health service, to a company they or their relatives own or are paid by, and that company could not collect from Medicare for those scans, unless the deal satisfies a specific statutory exception (42 U.S.C. § 1395nn). Stark is a strict liability law: intent does not matter. Penalties include denial of payment, refunds and civil monetary penalties.
Anti-Kickback Statute. The kickback statute is criminal: offering or accepting cash, discounts, free rent or any other benefit as a reward for steering patients whose care federal programs pay for is a felony when done knowingly and willfully (42 U.S.C. § 1320a-7b(b)). Violations can bring fines of up to $100,000 and up to 10 years in prison, along with exclusion from federal programs. Safe harbors protect arrangements that meet every listed condition (42 C.F.R. § 1001.952).
Deal 1: In-Office MRI
Stark. The group's ownership creates a financial relationship, and MRI is a designated health service. The in-office ancillary services exception can protect it if the scans are supervised and performed in the group's own office building and billed by the group, and the group meets the definition of a group practice (42 C.F.R. § 411.355). For MRI, the group must also give patients written notice that the scan may be obtained elsewhere, with a list of other suppliers nearby.
Anti-Kickback. Profits flow within the group from its own services, so the risk is lower, but the incentive to order more scans remains. Orthopedists who started billing for their own MRI ordered roughly 38% more scans in the month after a first visit (Baker, 2010).
Recommendation: lawful if structured to meet the exception, with an appropriateness review of ordering.
Deal 2: Investment in an Outside Imaging Center
Stark. An ownership interest in an outside entity that furnishes MRI creates a financial relationship, and the in-office exception does not apply to a separate center the group does not run. Unless a narrow ownership exception fits, such as publicly traded securities, referrals would be prohibited.
Anti-Kickback. Returns tied to referral volume would look like payment for referrals. The small-entity investment safe harbor has strict limits on how much of the investment and revenue can come from referring investors, which a referral-dependent stake would likely fail.
Recommendation: do not proceed.
Deal 3: Below-Market Hospital Lease
Stark. A lease is a compensation arrangement. The rental of office space exception requires a signed written lease of at least one year, rent set in advance at fair market value and terms that do not reflect referrals (42 C.F.R. § 411.357). Half of market rent fails.
Anti-Kickback. Discounted rent from a hospital to surgeons who bring it cases is a classic inducement. The space rental safe harbor also requires fair market value.
Recommendation: renegotiate at fair market value, documented by an independent appraisal, or decline.
Conclusion
Only the in-office MRI can be structured lawfully, and even then the group should monitor ordering. The outside investment and the discounted lease present serious risk under both laws. The group should involve health care counsel before signing any of the three.
References
Baker, L. C. (2010). Acquisition of MRI equipment by doctors drives up imaging use and spending. Health Affairs, 29(12), 2252-2259. https://doi.org/10.1377/hlthaff.2009.1099
Criminal penalties for acts involving Federal health care programs, 42 U.S.C. § 1320a-7b (2024).
Exceptions, 42 C.F.R. § 1001.952 (2025).
Exceptions to the referral prohibition related to compensation arrangements, 42 C.F.R. § 411.357 (2025).
General exceptions to the referral prohibition related to both ownership/investment and compensation, 42 C.F.R. § 411.355 (2025).
Limitation on certain physician referrals, 42 U.S.C. § 1395nn (2024).
HSC 432 Module 5 instructions, in plain terms
Case Study #2 in HSC 432, also worth 50 points, closes Module 5, Transactional Legal Issues. As with the first case study, you read the facts provided and apply the module's material in roughly 500 to 1,000 words, graded with a rubric in Canvas. Transactional fact patterns often involve business arrangements between physicians, hospitals and other providers, so identify each arrangement separately, decide which laws apply and test each against the relevant exception or safe harbor. Cite the statutes and regulations you rely on and keep the analysis tied to the facts given. Treat each arrangement in the facts as its own mini-analysis, then bring them together in a short conclusion.
How this HSC 432 Module 5 example is built
The sample lists the three arrangements, explains the two governing laws once, with their intent standards and penalties, and then analyzes each deal under both laws. Each section names the specific exception or safe harbor, tests the facts against its requirements and ends with a one-line recommendation. Evidence on imaging use explains the policy concern behind self-referral rules, and the conclusion ranks the deals by risk and advises involving counsel. Each deal ends with a clear recommendation, so the reader knows what to do as well as what the law says. The conclusion ranks the three arrangements by risk, which is the practical advice a client would want.
Where the marks sit in the HSC 432 Module 5 rubric
Graders award the 50 points for identifying every arrangement and the correct laws, explains the difference between strict liability and intent-based laws, applies the right exceptions or safe harbors with their key conditions and gives practical recommendations. Marks drop for treating Stark and the Anti-Kickback Statute as the same law, for naming exceptions without testing their requirements, for skipping one of the arrangements and for exceeding the word range with background unrelated to the facts. Strong analyses also recognize that an arrangement can satisfy one law and still violate the other, and they point out where more facts, such as an appraisal or the group's billing structure, would change the answer. Precise citations to the regulations show research beyond the lecture slides.
HSC 432 Module 5 help with common mistakes
Make a table of each arrangement, the money that flows and who refers to whom. For Stark, ask three questions: is there a referral, is it for a designated health service and is there a financial relationship? For the Anti-Kickback Statute, ask whether anything of value could induce referrals. Look up the exact conditions of each exception or safe harbor. Give each deal its own recommendation. If the overlap between the two laws confuses you, the desk can help sort it out. Read the exact wording of each exception you rely on in the Code of Federal Regulations, not a summary. Check whether the service is a designated health service. Write recommendations a nonlawyer could follow.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Arizona State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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HSC 432 Module 5 questions, answered
Where can I find a free HSC 432 Module 5 sample paper?
The full Stark and Anti-Kickback analysis of an orthopedic group's three deals is on this page.
How do Stark and the kickback statute differ?
Stark is civil and applies even without bad intent; the kickback law is criminal and needs proof that someone acted knowingly and willfully.
Is MRI a designated health service under Stark?
Yes; radiology and certain imaging services, including MRI, are designated health services.
What does the in-office ancillary services exception require?
Services furnished and billed by the group in its own office setting under required supervision, plus patient notice for MRI.
Can a hospital rent office space to referring physicians below market rate?
Not safely; Stark and the safe harbor both require fair market value rent.