A State Conviction for “Patient Neglect” Will Result in Mandatory Exclusion from Participation in Federal Health Benefit Programs

(March 27, 2020): The Department of Health and Human Services (HHS), Office of Inspector General (OIG) may be required by law under Section 1128 of the Social Security Act to exclude individuals and entities from participating in Federal health care benefits programs if an individual or entity has been convicted of certain crimes or has engaged in certain conduct. Depending on the nature of an adverse action, the OIG’s statutory obligation may be to impose a mandatory exclusion or permissive. This article examines the impact of a State-based conviction for patient neglect or abuse and discusses the OIG’s obligations to exclude an individual when faced with these facts.

I. Case Background:

On January 31, 2017, a New York Licensed Practical Nurse (LPN) pleaded guilty to violating New York Public Health Law §§ 12-b(2) and 2803-d(7), both of which were misdemeanors, as well as to disorderly conduct. By pleading guilty, LPN admitted that they, “willfully violated a provision of the Public Health Law by subjecting [a nursing home Resident]. . . to an act of negligent [sic] by failing to provide that person with timely, consistent, safe, adequate and appropriate services, treatment and care.”

Under the plea agreement, if the defendant completed a 12-week elder abuse program and agreed not to provide health care to elderly persons for a period of a year she would be eligible to receive a, “conditional discharge on a violation . . . [w]ith a $250 fine.” On January 31, 2018, the New York Supreme Court held a sentencing hearing and found that the defendant had met these two conditions. They therefore vacated the defendant’s guilty plea (except for the disorderly conduct charge, which was reduced to a “violation”). The New York Supreme Court then entered a conditional discharge and imposed a $250 fine.

II. Does a State Misdemeanor Conviction Related to Patient Abuse or Neglect Trigger the Individual’s Exclusion from Federal Health Care Programs?

When analyzing the possible exclusion impact of an adverse event (such as a criminal conviction or a State Medical board disciplinary action), you must first determine whether the event triggers either a mandatory or permissive exclusion of an individual or entity from participation in Medicare, Medicaid and other Federal health benefits programs. A list of the current mandatory and permissive exclusion authorities is below:

As a recap, the LPN in this case pleaded guilty to two misdemeanor violations of New York Public Health Law §§ 12-b(2) and 2803-d(7), and to a count of disorderly conduct. Since the underlying facts were that the LPN neglected a patient under their care, the OIG was obligated to mandatorily exclude the LPN from participation in Federal health programs under 42 U.S.C. §1320a-7(a)(2).

III. Under 42 U.S.C. § 1320a-7(a)(2), Must a “Conviction” be a Federal Offense in Order to Trigger a Mandatory Exclusion Action?

As a plain reading of 42 U.S.C. § 1320a-7(a)(2) reflects, “any individual or entity that has been convicted, under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service…” shall be excluded from participation in any Federal health care program. The LPN’s conviction under New York State law would still trigger their mandatory exclusion from Federal health care programs.

IV. What is Required in Order for a Conviction Under 42 U.S.C. § 1320a-7(a)(2) to be “Related to Neglect or Abuse” of Patients in Connection with the Delivery of a Health Care Item or Service:

A mere conviction isn’t enough to trigger a mandatory exclusion action under 42 U.S.C. § 1320a-7(a)(2). It must also be related to the neglect or abuse of patients in connection the delivery of a health care item or service. What is meant by the term “related to neglect or abuse”? As discussed in the Federal Register, it is a:

“legal determination to be made by the Secretary [for Health and Human Services] based on the facts underlying the conviction. Further, the offense that is the basis for the exclusion need not be couched in terms of patient abuse or neglect . . . Since a determination as to whether an offense related to patient abuse or neglect is fact-intensive, we feel it is most appropriate for the OIG to exercise its authority to make such determinations on a case-by-case basis.”

In other words, it really comes down to an assessment of the facts in each case. As part of their plea agreement, the defendant admitted that they, “willfully violated a provision of the Public Health Law by subjecting [a nursing home Resident]. . . to an act of negligent [sic] by failing to provide that person with timely, consistent, safe, adequate and appropriate services, treatment and care.” In light of the facts in this case, there is little argument that the defendant’s conviction was not related the neglect or abuse of a patient.

V. Does a “Conviction” Under 42 U.S.C. § 1320a-7(a)(2) Have to be a Felony in Order to Trigger a Mandatory Exclusion Action?

As 42 U.S.C. § 1320a-7(a)(2) reflects, the framers of this statutory provision did not limit mandatory exclusion to only “felony” convictions. State law misdemeanor convictions relating to neglect or abuse of a patient also require that the offending individual or entity be subjected to mandatory exclusion.

VI. Under 42 U.S.C. § 1320a-7(a)(2) Does a Conviction have to be Related to Health Care Services Provided Under Medicare, Medicaid or Another Federal Health Care Program?

42 U.S.C. § 1320a-7(a)(2) is codified in Code of Federal Regulations (C.F.R.) at 42 C.F.R. §1001.101(b). As this regulation expressly notes, the OIG is required to exclude an individual or entity that has been convicted of a criminal offense under Federal or State law related to the neglect or abuse of a patient “. . . whether or not reimbursed under Medicare, Medicaid or any Federal health care program.” In summary, a qualified conviction related to the neglect or abuse of a patient, in connection with the delivery of a health care item or service will result in mandatory exclusion, even if the service is covered by a private payor, paid for in cash by a patient or not paid at all.

VII. Is Exclusion Required When a Misdemeanor Conviction is Effectively Discharged by the Court?

In this case, the defendant reportedly satisfied the two conditions established at her sentencing in order to have the misdemeanor discharged by the Court. Under 42 U.S.C. § 1320a-7(i), an individual or entity is considered to be “Convicted” of a criminal offense:

(1) When a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to criminal conduct has been expunged;

(2) When there has been a finding of guilt against the individual or entity by a Federal, State, or local court;

(3) When a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court; or

(4) when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

Despite the fact that the defendant ultimately satisfied the conditions set out in their plea agreement to have the misdemeanor charges discharged by the New York Supreme Court, the record in this case clearly established that the defendant had, in fact, pleaded guilty to a crime related to the neglect or abuse of a patient. Therefore, the OIG mandatorily excluded the defendant from participation in Medicare, Medicaid and Federal health care programs for a period of 5 years, based on the requirements set out under 42 U.S.C. § 1320a-7(a)(2). The defendant appealed the OIG’s exclusion action, arguing that the discharge of the misdemeanor charges did not constitute a conviction under 42 U.S.C. § 1320a-7(i).

On February 5, 2020, the Departmental Appeals Board issued its ruling in this case. As the opinion reflects, the presiding Administration Law Judge (ALJ) affirmed the OIG’s exclusion of the defendant for a period of 5 years. As the opinion reflects, the ALJ in this case found that the defendant was convicted for purposes of exclusion.

While the presiding ALJ found that the defendant’s guilty plea to the misdemeanor charges cited was a conviction, it is worth noting that the ALJ further found that even if, for the sake of argument, the discharged misdemeanor charges did not constitute a conviction, the remaining conviction of a “violation” would still trigger the mandatory exclusion obligations of 42 U.S.C. § 1320a-7(a)(2).

VIII. Conclusion:

As the analysis above reflects, there are a number of issues to be considered by a defendant before he or she enters into a plea agreement. The fact that the ALJ in this case found that a conviction for a mere violation for disorderly conduct (that did not constitute a misdemeanor or a felony) would still trigger a mandatory exclusion action, may very well constitute a dangerous new precedent for exclusion actions by the OIG.

Are you properly screening your employees, contractors, agents and vendors against all available Federal and State exclusion databases each month? The failure to do so can result in overpayments, Civil Monetary Penalties and can result in violations of the civil False Claims Act.

Need assistance? Give the folks at Exclusion Screening a call at 1 (800) 294-0952 or fill out the form below!

Read more about exclusions by clicking here!

And find out more about our Exclusion Screening services by clicking here!

In-Depth Articles

A Provider’s Guide to OIG Exclusions

A Provider’s Guide to OIG Exclusions

Federal Exclusion Regulations and Enforcement Authorities, and How Providers Can Avoid Risk with Proper Exclusion Screening–Part 1

Paul S. Weidenfeld, JD

This article was originally written by Paul Weidenfeld and published by GreenBranch Publishing. This article is Part I from a 2-Part article originally published by GreenBranch Publishing on their website.

Office of Inspector General (OIG) exclusions[1] are one of the most powerful weapons available to the law enforcement in its efforts to fight healthcare fraud. Individuals and entities subject to an OIG exclusion are barred from participation in all Federal healthcare benefit programs, resulting in a payment prohibition on all items and services they provide, whether directly or indirectly. Additionally, providers that employ or contract with excluded individuals or entities risk the imposition of civil money penalties, overpayment liability, and even potential exposure under the False Claims Act. However, even though OIG exclusions are one of law enforcement’s oldest tools, many providers often fail to appreciate their compliance obligations and the risks associated with employing or contracting with excluded individuals or entities. Indeed, many providers take only minimal efforts to screen their employees and contractors to ensure compliance—and some make no effort at all. This article seeks to educate providers on the existing legal and regulatory framework, the risks and potential consequences of a failure to comply with those laws and regulations, and how best to comply and avoid those risks.[2]

LEGISLATIVE BACKGROUND

Congress initially authorized the use of exclusions as an enforcement tool in the battle against healthcare fraud over 40 years ago with the passage of the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977. The bill granted the Department of Health, Education and Welfare, which later became the Department of Health and Human Services (HHS), the authority to exclude physicians and others convicted of crimes related to Medicare and Medicaid from participating in those programs.[3] In 1981, the Civil Money Penalties Law (Public Law 97-35 [codified at section 1128A of the SSA]) extended the authority to impose penalties to providers that submitted claims for items or services that had been furnished by an excluded entity, and the Secretary of HHS delegated his exclusion authority to its Office of Inspector General (OIG) in 1988 (53 Fed. Reg. 12,993 (April 20, 1988)). The current framework of mandatory and permissive exclusions was then established by the Medicare and Medicaid Patient and Program Protection Act of 1987.

In 1995, Attorney General Janet Reno declared healthcare fraud to be one of the top priorities of the Department of Justice, second only to violent crime.[4] Shortly thereafter, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L.105-33, 111 Stat.1936, enacted August 21, 1996) extended the OIG’s exclusion authority to all Federal healthcare programs.[5] The Balanced Budget Act of 1997 (BBA) (Pub.L.105-33, 111 Stal. 251. enacted August 5, 1997) expanded the OIG’s Civil Money Penalty (CMP) authority to apply to providers that employed or contracted with entities subject to an OIG exclusion. Prior to the passage of the BBA, the OIG could impose penalties only on excluded entities or persons who submitted claims on their behalf. The OIG’s permissive exclusion authorities were expanded in both the Medicare Modernization Act of 2003 (MMA) (Public Law No: 108-173, enacted December 8, 2003) and the 2010 Affordable Care Act (ACA). Initially passed as the “Patient Protection and Affordable Care Act,” Pub. L. No 111-148 (2010), and shortly thereafter amended by the “Health Care and Education Reconciliation Act of 2010,” Pub. L. No. 111-152 (2010), these two pieces of legislation are collectively referred to as the “Affordable Care Act” (ACA).

^{Are you unsure your screening requirements depending on your business and location?}^{Our FREE Consultation has you covered. It includes: An overview of exclusions in addition to an}^{overview of your specific requirements and obligations. Furthermore a demonstration of our product and service (SAFER) will be performed prior to a presentation of your personalized solutions. This consultation is a free of charge consultation for your benefit only!}

WHAT IS AN OIG EXCLUSION? WHAT IS ITS IMPACT?

OIG exclusions are final administrative actions that bar individuals and entities from any and all participation in Medicare, Medicaid, and all other federal healthcare programs.[6] They are imposed “to protect beneficiaries…stem fraud and abuse…ensure that federal health care programs are protected…and help make sure excluded individuals are not involved in any way in the care of federal program beneficiaries.”[7] Excluded entities are deemed, as a matter of fact and law, to pose unacceptable risks to federal healthcare programs and to the patients they serve.

The effect of an OIG Exclusion is extremely broad. Federal healthcare programs, broadly defined to include “any plan or program that provides health benefits either directly or indirectly, will not pay for “any items or services” that are “furnished” by an excluded individual or entity, or at the medical direction or on the prescription of an excluded person. (see 42 C.F.R. 1001.1901(b), 42 C.F.R. § 1001.10). “Items or services” include any item, device, drug, biological, supply, or service—including management or administrative services; and they are “furnished” if provided or supplied, either directly or indirectly, by an individual or entity; and an “indirect claim” is “furnished” even if a non-excluded provider submits the claim if an excluded entity actually provided the service in the first place.[8]

The “payment prohibition” is a complete payment ban applicable to “all methods of Federal program reimbursement” regardless of whether it is from an itemized claim, cost report, capitated payment, or other bundled payment. It extends beyond direct patient care and includes, for example, services performed by excluded individuals who work for or under an arrangement with a hospital, nursing home, home health agency, or managed care entity where they are separately billed or part of a bundled payment. (See 2013 Special Advisory, at pages 6 and 7.) The following are examples of activities identified by the OIG in the Special Advisory as potentially problematic and susceptible to the imposition of civil money penalties if not properly screened for exclusions:

Management, administrative or any leadership roles;
Surgical support such as the preparation of a surgical tray that indirectly assists in care;
Claims processing and information technology;
Providing transportation services with excluded ambulance drivers or by employing excluded ambulance company dispatchers;
Selling, delivering or refilling orders for medical devices or equipment (whether reimbursed directly or indirectly);
Review of treatment plans, and other support services, whether billed separately or as part of a bundled payment.

Even unpaid volunteers can trigger overpayment and CMP liability if the items or services they furnish are not “wholly unrelated to Federal Health Care Programs” and the provider “does not ensure that appropriate exclusion screening was performed!” (Emphasis added, 2013 OIG Special Advisory, at 11-12, 16; see also Advisory Opinion No. 18-01.)

TYPES OF OIG EXCLUSIONS

There are two types of OIG Exclusions – Mandatory and Permissive. Mandatory Exclusions are identified in Sections 1128(a)(1) – 1128(a)(4) of the Social Security Act (SSA), (42 U.S.C. §1320a-7(a)(1)-(4)) and they are imposed as a result of convictions for program fraud, patient abuse and certain drug offenses. Permissive exclusions, on the other hand, are discretionary and can be imposed for broad range of conduct. These are identified in §1128(b)(1)–§1128(b)(16) and §1156 of the Act. [9]

[caption id="attachment_57987" align="alignleft" width="359"]

Figure 1. All Exclusions 2013-2017[/caption]

The following figures provide a general breakdown of OIG Exclusions over the last five years. Figure 1A illustrates that permissive exclusions based on licensing disciplinary actions and mandatory exclusions based on federal health care fraud convictions accounted for over 75% of all exclusions during this period (41% and 35% respectively). The first chart also illustrates that mandatory exclusions accounted for 55% of all exclusions.

Figure 2 breaks down exclusions by “specialty” as labeled by the OIG in the LEIE postings.[10] It shows that nurses, nurse aides, personal care providers, home health care aides and physicians account for almost two-thirds of all exclusions over the last five years. Taken together, these two charts demonstrate the OIG’s dual focus on patient safety and program integrity.

Mandatory Exclusions

[caption id="attachment_57988" align="alignright" width="300"]

Figure 2. All Exclusions by Specialty[/caption]

Sections 1128(a)1-(a4) of the Social Security Act identify the four legal basis which warrant the imposition of a mandatory exclusion by the Office of Inspector General. They are:

1128(a)(1): Conviction related to the delivery of an item or services to a Federal or State Health Care Program;
1128(a)(2): Conviction under State or Federal law relating to neglect or abuse of patients in connection with the delivery of a health care item or service;
1128(a)(3): Felony conviction relating to health care fraud program (other than Medicare or Medicaid); and,
1128(a)(4): Felony conviction relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

It is important to note that though a mandatory exclusion under sections 1128(a)(1) and (a)(2) must be based on a “conviction,” the term is extremely broadly defined. “Nolo contendere” pleas, for example, qualify as convictions under this section; even dispositions under first offender programs and deferred adjudications – programs where no finding of guilt is ever entered – satisfy the conviction requirement for purposes of the Act. In addition, Section 1128 is satisfied by any “State, Federal or Local Court.” (See §§ 1128(i)(1)- (i)(4) of the Social Security Act.) Thus, it has been held that a deferred adjudication agreement in a local court for misdemeanor theft is a sufficient basis for the imposition of a mandatory exclusion under (a)(1) because it was related to Medicaid services. (Department of Health and Human Service, Departmental Appeals Board Civil Remedies Division, Okwilagwe v. The Office of Inspector General, Docket No. C-13-322, Decision No. CR2920, September 6, 2013.) The same standards would apply to exclusions under (a)(2).

Mandatory exclusions be must be imposed for at least five years, however they are often imposed for much longer periods if warranted by the underlying facts and circumstances. Once a mandatory exclusion is imposed, the person must wait at least five years before applying for reinstatement if this is their first exclusion, but ten years must pass before reinstatement may be sought after a second mandatory exclusion, and a third mandatory exclusion is permanent. If the OIG seeks to impose a mandatory exclusion, the only viable defense that can be raised is the length of the exclusion is subject to challenge. (42 C.F.R. 402.214.)

Finally, it is worth noting that the “balance” of mandatory to permissive exclusions appears to be changing. The current composition of all exclusions on the List of Excluded Individuals and Entities (LEIE) is 47% mandatory and 53% permissive, but Figure 1B shows us that during the period 2013 to 2017 the percentages essentially switched as mandatory exclusions increased from 47% to 55%. And in 2017 the mandatory exclusions increased to almost 63% of all exclusions.[11] Althought these data are relatively new and there is no ready explanation, it is a trend worth watching.

Exclusion Screening, LLC is proud to offer those interested in trying our product and service a no cost, no obligation TRIAL Period. Our trial is multi-faceted and is aimed to expose the client to as much of our service and product as possible in a short time. The trial starts with a FREE consultation/training that will present an overview of exclusions, a demonstration of our product and service, and a presentation of a personalized solution. The client will also receive access to our SAFER Exclusion Screening system for 14 days in addition to a sample report of up to 20 names.

Permissive Exclusions

The OIG’s permissive exclusion authority has been expanded a number of times over the years, and the imposition of permissive OIG exclusions includes convictions for obstructing heatlhcare investigatiosn adn/or audits, improper certification for items or services, and making false statements or misrepresentations in applicatiosn to participate in Medicare.[12] The following is a list of the permissive exclusions as found on the OIG website:[13]

[caption id="attachment_58001" align="alignleft" width="346"]

Table 1. Permissive Exclusions[/caption][caption id="attachment_57986" align="alignright" width="300"]

Figure 3. Compliance Risk Spectrum.[/caption]

Unlike its mandatory exclusion authority which is virtually automatic when specific convictions occur, the OIG has the discretion to impose permissive exclusions over a wide range of conduct (or misconduct). OIG guidance on the implementation of its permissive exclusion authority, begins with a presumption favoring exclusion under certain circumstances. The guidance outlines a “compliance risk spectrum” that is based on the risks posed to patients and to federal health care programs. The factors to be considered include a company’s underlying conduct during the investigation, in addition to current and historical compliance efforts.[14] The OIG also issued specific guidance with respect to the imposition of permissive exclusions based on an excluded individual’s ongoing role or interest in a company.[15]

Although the OIG is authorized to impose permissive exclusions over a wide range of conduct, figure 4 shows that the agency actually invokes its permissive exclusion authority over a narrow range of persons and limited circumstances. For example, Figure 4A shows that nurse and nurse aides alone account for approximately 70% of all permissive exclusions, with “other licensed professionals” (mostly therapists, mid-level providers and counselors) and physicians accounting for 16% and 9% respectively. As nurses and nurse aides are the persons in the best positions to impact both patient care and claims arising from that care, it is not surprising that they comprise a significant percentage of the exclusions. However, it is somewhat surprising that business owners only account for 3% of all permissive exclusions.

[caption id="attachment_57992" align="aligncenter" width="405"]

Figure 4. Entities Subject to Permissive Exclusions 2013-2017 and Percentage Breakdown[/caption]

[caption id="attachment_57989" align="alignleft" width="300"]

Figure 5. All Permissive Exclusions by Basis (2013-2017)[/caption]As seen in Chart 5, despite the many permissive exclusion options available to the OIG, the vast majority of permissive exclusions it has imposed over the last five years (a surprisingly high 90%) were based on final disciplinary actions such as license suspensions and revocations that had been taken by a State licensing board. The only other measurable bases were health care fraud misdemeanors, State exclusions, fraud or kickbacks, and defaults on student loans – though none of which accounted for more than 3% of the permissive exclusions imposed.

Process, Finality and Appeal Rights for OIG Exclusions

The process of imposing and appealing an exclusion depends upon the exclusion the OIG seeks to impose as is governed by 42 C.F.R. §§ 1001.2001- 1001.2007. When the OIG seeks to impose a mandatory exclusion, it may initiate the process by sending the party a Notice of Intent to Exclude, which identifies the basis for the proposed exclusion, describes the potential effect of an exclusion, and gives the individual or entity 30 days to respond in writing with relevant information or evidence. At this stage in a mandatory exclusion, there is no provision for a hearing. Indeed, the OIG can skip the “Notice of Intent” when seeking a mandatory exclusion and begin the process with a “Notice of Exclusion.” This must include the basis and length of the exclusion, the earliest reinstatement date, the requirements for reinstatement, and the excluded party’s appeal rights. When the OIG seeks a permissive exclusion, in most instances it begins the process with a “Notice of Intent to Exclude.” However, if the OIG seeks to exclude based on something other than an underlying final determination (such as a license revocation or State exclusion action), the process may include a “Notice of Proposal to Exclude.”

Exclusions may be appealed first to an Administrative Law Judge (ALJ), then to the Departmental Appeals Board (DAB), and then to a United States District Court. However, appeals of exclusions are limited to two issues: (1) whether the OIG had a “basis for the imposition of the sanction,” and (2) whether the length of the exclusion is unreasonable. 42 C.F.R. 402.214. In addition, an ALJ considering these issues is prohibited from reviewing the “exercise of discretion” by the OIG, 42 C.F.R. §1005.4(c)(7), and if the sanction is based on a “prior determination,” the underlying basis may not be attacked if a “final decision was made.” § 1001.2007(d). As a result, most exclusion appeals, particularly those of mandatory exclusions, are focused on the length of the exclusion.

Mandatory exclusions are final 20 after the Notice of Exclusion. They are not stayed pending the outcome of the appeal upon finality. The OIG posts the exclusion on the LEIE, and it sends notices of the exclusion to various State and Federal interests including, but not limited to, State licensing boards, State health programs, medical societies, Medicaid fraud control units, and the National Practitioner Data Bank.

Enforcement Tools for Exclusion Violations

“Exclusion Violations” are actions taken by an individual or entity in contravention of the “payment prohibition” as defined in 42 C.F.R. § 1001.1901, and the authority to impose CMPs and assessments is delegated by the Secretary to the OIG pursuant to 42 CFR § 1003.150. The specific exclusion violations for which the OIG has the authority to impose civil money penalties and assessments are presented in Table 2.

[caption id="attachment_58005" align="aligncenter" width="677"]

Table 2. Civil Monetary Penalties and Assessments[/caption]

Most of the exclusion cases pursued by the OIG have been for violations of § 1003.200(b)(4) —employing or contracting with an individual or entity. Recently, however, the OIG has been actively investigating and pursuing cases involving the ordering and prescribing of medicine from excluded persons. 42 C.F.R. § 1003.200(b)(6). Investigations involving the direct submission of a large number of claims by an excluded person (such as an excluded physician continuing to practice medicine and submit claims in violation of § 1003.200(a)(3)), or the retention of ownership or control through fraudulent representations in violation of § 1003.200(b)(3)) are fewer in number, and those that have been reported have typically resulted in criminal and/or false claims act resolutions. To date, there have been few, if any, enforcement actions involving MCOs, Medicare Advantage (MA) or Part D contracting organizations that have been reported.

Civil Money Penalties for Exclusion Violations

CMPs are “remedial measures designed to protect the Federal health care programs from any person whose continued participation in the programs constitutes a risk to the programs and their beneficiaries.”[16] designed to protect program integrity and patient safety. They are the favored weapon of the OIG in its enforcement of exclusion violations. As stated in the 2016 final rule amending CMP authorities and incorporating new ones:

“The CMP authorities in this part, as a general matter, aim to redress fraud on the Federal health care programs by recovering funds, protecting the programs and beneficiaries from untrustworthy providers and suppliers, and deterring improper conduct by others. Accordingly, it is highly relevant if the conduct put beneficiaries at risk of patient harm.”[17]

Tabel 3 identifies the OIG’s CMP authority for each exclusion violation.[18] As can be seen, the OIG may impose a penalty of up to $10,000 for each individual violation of § 1003.200(a)(3) and § 1003.200(b)(6); up to $10,000 for each day § 1003.210(b)(3) is violated; and up to $10,000 for each item or service provided, furnished, ordered, or prescribed in violation of § 1003.200(b)(4). MCOs, MA, and Part D contracting organizations that employ or contract with excluded persons or entities face a penalty of $25,000 for each offense. [19]

[caption id="attachment_58002" align="alignright" width="531"]

Table 3. CMP Authority For Each Exclusion Violation[/caption]

Assessment Authority of the OIG for Exclusion Violations

In addition to its authority to impose CMPs, the OIG is also authorized to impose assessments for OIG Exclusion violations. Assessments differ from CMPs in that they are not considered to be sanctions; instead, they may be imposed “in lieu of damages sustained by the Department or the State agency because of the violation.” 42 C.F.R. § 1003.130. [20] That is, assessments act as a proxy for damages presumed to have been sustained by either the Federal or State agency as a consequence of the violation, and the OIG is specifically authorized to impose them in exclusion violations in 42 C.F.R. § 1003.210 and § 1003.410. Section 1129 of the Social Security Act [42 U.S.C. § 1320a–8(a)(1)]. Since assessments are considered to be a form of restitution and not a penalty or sanction, the OIG theoretically could impose both a CMP and an assessment for an exclusion violation. Table 4 Shows the assessment amounts the OIG is authorized to impose for exclusion violations.

[caption id="attachment_58003" align="alignleft" width="566"]

Table 4. Assessment Amounts Authorized by the OIG[/caption]

The assessment provisions for employing or contracting with excluded individuals were recently amended in an effort to recognize the difference in effect between exclusions involving direct billers (such as a doctor) and those involving persons that provide support services not directly billed (such as an aide).[21] The amended assessment regulations permit an assessment to be as much as three times the amount of each service billed for employing or contracting with a person that provides directly billable services, whereas the assessment for persons that provide a “non-separately-billable” service is limited to three times the amount of the costs associated with that individual. As will be discussed later, this is consistent with the methodology of calculating the federal “loss” in self-disclosures involving exclusion violations.

Did you find this article interesting and/or helpful? Are you interested in hearing more insights, exclusion news, and updates about upcoming webinars and promotions? If so, please take the time to Subscribe to Our Newsletter. We will not share, sell, or distribute your information in anyway under any circumstances. The information provided will be used to send you Newsletter’s as you have requested.

FACTORS IN IMPOSING PENTALTIES AND ASSESSMENTS

When considering the imposition of penalties and assessments, the OIG considers the nature and circumstances of the violation, the degree of culpability of the individual being assessed, the history of prior offenses, other wrongful conduct (if any) and any other matters the OIG deems relevant to its determination. 42 C.F.R. § 1004.140(a). Relevant mitigating and aggravating factors contained in the regulation and discussed in subsequent OIG guidance include the following:[22]

Mitigating Factors:

If the length of time was short and the amount claimed was less than $5,000.

Aggravating circumstances:

There were several violations, or a pattern, over a lengthy period of time;
The ownership, control, or responsibility implicated §1003.200(b)(3);
The amount claimed or requested for such items was $50,000 or more;
The violation caused or could have caused, adverse patient consequences. The payment prohibition also extends to providers that furnish items or services on the basis of orders or prescriptions they receive from others. Thus, in addition to screening their own employees, vendors, and contractors, providers such as laboratories, imaging centers, and pharmacies “should ensure, at the point of service, that the ordering or prescribing physician is not excluded. A failure to do so on their part would violate the payment prohibition and could result in both overpayments and CMPs. (2013 Advisory, page 8.)

Appeal Rights for Civil Money Penalties and Assessments

The appeal rights of parties with respect to CMPs and assessments are found in 42 C.F.R. § 1005 et seq. Parties have the right to request a hearing before an ALJ to challenge the imposition of penalties and assessments if they make a written request within 60 days of receiving notice of the sanction. The process allows for representation by counsel, discovery rights, the right to present and cross examine witnesses, a hearing, and the right to present oral and written arguments to the ALJ. The ALJ has full authority over the pre-hearing process and the hearing itself. However, the ALJ does not have the authority to compel negotiations, enjoin the Secretary in any way, invalidate existing regulations, or refuse to follow them. The ALJ is also not permitted to review the exercise of discretion by the OIG to impose a CMP or assessment. At the conclusion of the hearing, the ALJ issues an “initial decision” which includes findings of fact and conclusions of law in which he may increase or reduce penalties and assessments.

An “Initial Decision” can be appealed to the DAB; a timely appeal stays the imposition of a CMP. The DAB has broad authority in the manner in which it handles the appeal. It can decline to review the case; increase, reduce, or remand a penalty or assessment determined by the ALJ; and remand the matter to the ALJ for consideration of additional evidence. The decision of the DAB is final 60 days from issuance unless it involves a remand, and the parties have the right to appeal the DAB ruling to federal district court. A stay of the imposition of a CMP may be requested during the federal appeal process. However, the request goes to the ALJ that imposed the penalty in the first instance, and the ALJ is not authorized to grant the stay unless a bond or other security is posted.

Potential Overpayment and False Claims Act Liability for Exclusion Violations

Providers have the burden of ensuring that they comply with exclusion-related regulations and that they do not employ or contract with an excluded individual or entity. Those that fail in this obligation are at risk for overpayment liability regardless of whether they have actual knowledge of the person’s status at the time of their transaction. As the OIG states: “If a hospital contracts with a staffing agency for temporary or per diem nurses, the hospital will be subject to overpayment liability … if the nurse furnishes items or services reimbursed by a federal health care program. 2013 Special Advisory, at 15.

Exclusion violations can also give rise to potential False Claims Act (FCA) liability under the Fraud Enforcement Recovery Act of 2009 (FERA) and the Affordable Care Act of 2010 (ACA).[23] FERA expands the scope of “reverse false claims” liability under the FCA by making the retention of an “obligation” to the government a false claim, and the ACA specifically states that retained overpayments are legal “obligations” under FERA. Thus, since providers “know” they have a legal obligation to ensure compliance with exclusion regulations and that overpayments result from exclusion violations, any failure of compliance that results in an overpayment may be viewed as the result of conduct that constituted a “reckless disregard” or a “deliberate ignorance” of the rules – and that therefore violated the FCA.

> Click here to read part 2 of this article!

For a quote and for more information about how Exclusion Screening can help you please call us at 1-800-294-0952 or fill out the form below.

ABOUT THE AUTHOR

Paul Weidenfeld is a former federal healthcare fraud prosecutor and Department of Justice National Health Care Fraud Coordinator. His principle area of practice is healthcare fraud and abuse and the Federal False Claims Act, and he has represented providers and individuals in healthcare matters since leaving government in 2006. He is currently “Of Counsel” to the firm of Liles Parker. Mr. Weidenfeld also has an extensive litigation background that includes numerous trials and appeals and appearances before the United States Supreme Court, the Federal 5tht Circuit Court of Appeals, and the Louisiana Supreme Court. He has received recognition both as a prosecutor and as defense counsel and has been recipient of numerous awards. These include Nightingale’s Outstanding Healthcare Litigators, the Attorney General Award for Fraud Prevention, the Office of Inspector General Cooperative Achievement Award, and the National “Case of the Year” honors by the NHCAA. In 2014, Mr. Weidenfeld cofounded Exclusion Screening, LLC. Exclusion Screening helps providers navigate the difficulties and issues related to the screening for excluded individual and entities, and along the way he has become one of the foremost experts in the field of IG exclusions and Exclusion-related issues.

[1]“OIG” in this paper refers to “Office of Inspector General, Department of Health and Human Services” unless otherwise stated. The term “OIG Exclusion” is used as shorthand for an administrative action taken by the OIG barring an individual or entity from participating in Federal health care programs pursuant to §1128(a)(1)-(4), (b)(1)-(b)(16) or §1156 of the Social Security Act (SSA).
[2] This article focuses on exclusions from a regulatory and enforcement perspective, but exclusions also play a critical role in compliance and risk management programs. See, e.g., HCCA, Measuring Compliance Program Effectiveness: A Resource Guide (Jan. 2017), available at ttps://oig.hhs.gov/compliance/compliance-resource-portal/files/HCCA-OIG-Resource-Guide.pdf. (guidance reconfigures the traditional “Seven Elements of an Effective Compliance Program” and makes the “Screening and Evaluation of Employees, Physicians, Vendors and other Agents” an element unto itself – or the new “Seventh Element of Compliance”).
[3] The Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, Public Law 95–142. In 1979, the Department of Health Education and Welfare was renamed the Department of Health and Human Services (HHS).
[4]See e.g. Crackdown on Health Care Fraud, https://www.nytimes.com/1995/12/22/us/in-crackdown-on-health-care-fraud-us-focuses-on-training-hospitals-and-clinics.html.
[5] In addition to establishing the principle of insurance portability, HIPAA contained several provisions related to health care fraud enforcement, including containing legislation that significantly increased the ability of law enforcement agencies to obtain and share information and establishing the Health Care Fraud and Abuse Fund (HCFAC) as a permanent funding source specifically designated for health care fraud enforcement.
[6] The effect of an OIG Exclusion is addressed in the Special Advisory Bulletin on the Effects of Exclusion from Federal Health Care Programs,” issued September 2, 1999, and in the “Updated Special Advisory Bulletin on the Effect of Exclusions from Participation in Federal Health Care Programs,” issued May 8, 2013. Hereinafter, the initial advisory will be referred to as the “1999 Special Advisory” and the update will be referred to as the “Updated Special Advisory” or the “2013 Special Advisory.” The 1999 Special Advisory can be found at: https://oig.hhs.gov/fraud/docs/alertsandbulletins/effected.htm; the 2013 Updated Special Advisory can be found at https://oig.hhs.gov/exclusions/files/sab-05092013.pdf.
[7] Inspector General June Gibbs Brown, in the press release for the 1999 Special Advisory.
[8] See 42 C.F.R. § 1001.10. Definitional changes were made to direct and indirect claims pursuant to rulemaking authority granted to the OIG in the MMA and the ACA; See also, OIG Advisory Opinion No. 18-01 at 5 (Feb. 20, 2018) available at https://oig.hhs.gov/fraud/docs/advisoryopinions/2018/AdvOpn18-01.pdf.
[9] The Data in the figures in this section come from the exclusion data reportered in the List of Excluded Individuals/Entities (LEIE) by calendar year.
[10] The data in the charts in this section comes from exclusion data reported in the List of Excluded Individuals/Entities (LEIE).
[11] These calculatiosn are based on the composition of the LEIE through December 31, 2017.
[12] See, §§ 1128(c)(3)(G)(i) and (G)ii of the SSA. See also 82 Fed. Reg. 4100.
[13] See https://oig.hhs.gov
[14] See Criteria for implementing section 1128(b)(7) exclusion authority (April 18, 2016) available at https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf. The OIG breaks these down into “high risk factors,” “low risk factors,” and factors that have “no effect.” High risk factors include the impact on beneficiaries cooperation, and whether an adverse licensing action occurred. “Lower risk” factors include acceptance of responsibility and self-disclosure. Factors that are “expected,” and thsu have “no effect”, are coopearation in the investigation and having a compliance plan with the seven elements of compliance.
[15] See Guidance for the Implentation of its Permissive Exclusion Authority Under Sectino 1128(b)(15) at 1, available at https://oig.hhs.gov/fraud/exclusions/files/permissive_excl_under_1128b15_10192010.pdf. The guidance was issued because 1128(b)(15) provides for exclusion based on whether the individual in question is either an owner or an officer or a managing employee and the analysis is different for each.
[16] Criteria for implementing section 1128(b)(7) exlcusion authority (April 18, 2016) avialable at https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf.See also 81 Fed. Reg. 88, 334 (Dec. 7, 2016): “In 1981, Congress enacted the CMPL, section 1128A of the Act (42 U.S.C. §1320a-7a), as one of several administrative remedies to combat fraud and abuse in Medicare and medicaid”
[17]Id. 81 Fed. Reg. at 88.
[18] This is a listing of the CMP authorities related to exclusion violations. A complete listing of the OIGs CMP authorities can be found on the OIG’s website, or at 42 C.F.R. § 1003.210.
[19] The OIG may also impose a penalty or, when applicable, an assessment, against a Medicare Advantage or Part D contracting organization with a contract under section 1857 or 1860D-12 of the SSA if any of its employees, agents, or contracting providers violate § 1003.400(a) – (d).
[20] The penalty amounts for CMPs and assessments are updated annually and are published at 45 C.F.R. § 102.
[21] A discussion of the change is found in 81 Fed. Reg. 88, 334 (Dec. 7, 2016).
[22] See 42 CFR § 1004.140(c); see also Criteria for implementing section 1128(b)(7) exclusion authority (April 18, 2016), available at https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf..
[23]See § 3729(a)(1) of the Fraud Enforcement Recovery Act of 2009 and § 6401of the Affordable Care Act (2010).

In-Depth Articles

Health Care Providers Should Consider the Ramifications of “Taking a Plea” in a Criminal Case or Agreeing to a Licensure Action. It May Trigger a Mandatory or Permissive OIG Exclusion Action.

(July 16, 2018): Perhaps the most severe administrative sanction available under the Social Security Act stems from the authority of the Secretary for the Department of Health and Human Services (HHS) to exclude individuals and entities from participating in Federal and State health benefits programs.[1] The Secretary has delegated[2] this authority to the HHS, Office of Inspector General (OIG)[3]. As a recent comprehensive, first-of-its-kind study by ExclusionScreening.com found that during the period 2013 to 2017, approximately 90% of the permissive OIG exclusion actions taken were based on an adverse administrative action taken against a healthcare provider’s license. This article examines a decision issued earlier this year by the HHS Departmental Appeals Board (DAB or Board) where the Board examined a licensure-related exclusion action in considerable detail.

I. Brief Overview of OIG Licensure-Related Exclusion Action:

With the passage of the Medicare-Medicaid Anti-Fraud and Abuse Amendments[4] in 1977, mandatory OIG exclusion became mandated in cases where a physician and other practitioner has been convicted of program-related crimes. (now codified at section 1128 of the Social Security Act). Since that time, various additional bases for both mandatory[5] and permissive[6] exclusion have been enacted. Collectively assessed, the most frequent statutory basis relied on by the OIG when seeking to exclude an individual from participation in Federal and State health care programs is “42 USC §1320a-7(b)(4) License Revocation or Suspension.[7]” As this provision set out:

“Any individual or entity—

(A) whose license to provide health care has been revoked or suspended by any State licensing authority, or who otherwise lost such a license or the right to apply for or renew such a license, for reasons bearing on the individual’s or entity’s professional competence, professional performance, or financial integrity, or

(B) who surrendered such a license while a formal disciplinary proceeding was pending before such an authority and the proceeding concerned the individual’s or entity’s professional competence, professional performance, or financial integrity.”

II. Case Study: DAB ALJ Decision No. CR4985[8]; DAB Appellate Div. Decision #2848.[9]

In this case, a Virginia-licensed Chiropractor pled guilty in 2016 to one count of manufacturing marijuana, a felony. He was sentenced by the Court to 5 years of incarceration (4 years and 11 months suspended) and ordered him to pay a $2,500. Based on this felony conviction, the Virginia Board of Medicine suspended the individual’s license to practice chiropractic indefinitely.[10]

The OIG excluded the individual under 42 USC §1320a-7(b)(4).

The OIG based its exclusion on the indefinite suspension, which links reinstatement to the term of the licensure suspension. The OIG cited 42 USC §1320a-7(b)(4) as its basis for exclusion.

ALJ review of the OIG’s exclusion action.

The Chiropractor (Petitioner) subsequently filed a timely request for review by an Administrative Law Judge (ALJ). Both the OIG and the Petitioner subsequently filed arguments and related documentation in support of their position. Notably, the Petitioner’s submissions included (but were not limited to) a copy of his North Carolina chiropractic license and certificates showing his successful completion of chiropractic training courses. As the ALJ’s decision reflects, after the record had closed, the Petitioner submitted additional documentation, including a letter attesting to his competence and a copy of his active North Carolina chiropractic license. The ALJ refused to admit the additional materials into record based on the fact that were not submitted in a timely fashion and were irrelevant.

Further complicating the case was the fact while the matter was pending before the ALJ, the OIG issued a second exclusion notice, advising the Petitioner that pursuant to section 1128(a)(4) of the Social Security Act (as codified at 42 USC §1320a-7(a)(4)), he was being mandatorily excluded from program participation for five years. As set out under 42 USC §1320a-7(a) Mandatory exclusion

“The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1320a-7b(f) of this title). . . ”

Since this mandatory exclusion action was based on the Petitioner’s felony conviction of a criminal offense related to the manufacture, distribution, prescription, or dispensing of a controlled substance, it fell under the following exclusion provision:

“(4) Felony conviction relating to controlled substances:

Any individual or entity that has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”

Notably the Petitioner does not appear to have appealed the five-year exclusion action.

Upon consideration of the facts and the evidence, the ALJ sustained the OIG’s decision to exclude the Petitioner from participating in Medicare, Medicaid, and other federal health care programs.

Appellate review of the ALJ’s decision.

The Petitioner appealed the ALJ’s decision sustaining the OIG’s decision to exclude him from participation in Medicare, Medicaid and all Federal health care programs. As the ALJ’s ruling reflects, the Petitioner was to be excluded as least until he regained his Virginia chiropractic license. On appeal, the Petitioner raised several issues that were addressed by the Appellate Board:

Petitioner Issue #1: First, the Petitioner argued that the time frame for exclusion was not adequately addressed by the judge. The Petitioner further stated that he “did not agree with the length of exclusion because it was excessive and unjust.”

Board Response to #1: As the Board noted in its appellate ruling, in situations where the OIG has excluded an individual’s health care license is revoked or suspended for reasons bearing on the individual’s professional competence, professional performance or financial integrity, the Social Security Act does not delegate an ALJ the discretion to set the length of the exclusion for less than the period during which the individual’s license is suspended. (See, Social Security Act Act § 1128(c)(3)(E); 42 C.F.R. § 1001.501(b)).

Petitioner Issue #2: Petitioner argued that the ALJ failed to consider letters from patients and colleagues attesting to the Petitioner’s professional competence and good character in support of a reduction in the length of Petitioner’s exclusion.

Board Response to #2: As the Board noted in its decision, neither it nor the ALJ has the authority to consider the letters from the Petitioner’s patients and colleagues attesting to his professional competence and good character for the purpose of reducing the length of Petitioner’s exclusion. Simply put, equitable arguments and evidence submitted in an effort to obtain a reduction in the length of exclusion cannot be considered.

Petitioner Issue #3: The Petitioner’s appeal also raised the imposition of a second and separate OIG five-year exclusion action (based on 1128(a)(4) of the Social Security Act; 42 USC §1320a-7(a)) that was imposed while the Petitioner’s appeal was pending before the ALJ. In the Board proceeding, the Petitioner argued that he was “appealing the five-year exclusion because it is excessive and unreasonable in [his] case.” He further stated that he was “requesting that [his] exclusion remain as originally reported: three years or until I regain my Virginia license because that would support my position for Inclusion.”

Board Response to #3: As the Board noted in its decision, the Petitioner only appealed the initial permissive exclusion action under 1128(b)(4), 42 USC §1320a-7(b)(4). There was no evidence that the Petitioner had requested an ALJ hearing to contest the OIG’s second exclusion action brought under 1128(a)(4) of the Social Security Act; 42 USC §1320a-7(a). As a result, the Board could not consider the second exclusion action.

Lessons to be learned from this case.

Both the ALJ and Board decisions in this case really highlight the lack of discretion that these adjudicators have when it comes to “adjusting” or “reducing” a health care provider’s length of exclusion for less than the period during which the individual’s license is suspended. As the case noted, the Petitioner was also licensed in North Carolina, and presumably there were no restrictions on his North Carolina.[11] Unfortunately, the fact that the Petitioner was fully licensed in North Carolina was irrelevant to the decisions of both the ALJ and the Board. As 42 C.F.R. § 1001.501(b) expressly provides:

“(b)Length of exclusion.

(1) Except as provided in paragraph (b)(2) of this section, an exclusion imposed in accordance with this section will not be for a period of time less than the period during which an individual’s or entity’s license is revoked, suspended, or otherwise not in effect as a result of, or in connection with, a State licensing agency action.” (Emphasis Added).

So, what should a health care provider do if he or she receives notice that the OIG is seeking to exclude him or her based on a licensure suspension action? It is important to keep in mind that a licensure-based exclusion action is a permissive action that may or may not be pursued by the OIG. To the extent that there is any chance to convince the OIG that the agency should decline to exercise it permissive exclusion authority, now is the time for your legal counsel to make its pitch.

Once the OIG has formally exercised its permissive exclusion authority, the restrictions set forth under 42 C.F.R. § 1001.501(b) must be applied. Neither an ALJ nor the Board has the discretion to deviate from the time period requirements imposed by statute. Although the OIG rarely waives its discretion to pursue a permissive licensure-based exclusion action, providers should.

This case also serves as a stark reminder that neither an ALJ nor the Board is in a position to “weigh” the equities in a licensure-based exclusion case when assessing the length of time imposed for the exclusion. Adjudicators are required by statute to determine whether an exclusion determination made by the OIG was consistent with the law. Equitable arguments and evidence such as those submitted by the Petitioner in this case cannot be considered in a licensure-based exclusion case. An individual cannot have an exclusion lifted until his or her license is reinstated. Period.

In recent years, the number of exclusion actions imposed by the OIG has continued to grow. While there is little or no flexibility with respect to some of the bases for exclusion, every case is based on a unique set of facts, some of which may present opportunities to negotiate a more favorable period of exclusion with OIG, or even avoid exclusion all together.

We strongly recommend that you contact experienced health law counsel at the first sign that you may be excluded from participation in Federal and State health care programs. In terms of strategy, a health care provider’s best course of action is to engage experienced health law counsel at the earliest opportunity, preferably before an adverse action has been taken against your professional license. A comprehensive response strategy is essential so that you minimize the adverse collateral effects of an adverse licensure action. The attorneys at Liles Parker have extensive experience representing health care providers in exclusion-related proceedings.

Need help with your required monthly Exclusion Screening verification? Call us at 1-800-294-0952 or fill out the form below for more information and a free consultation and assessment of your needs!

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law. Liles Parker attorneys represent health care providers and suppliers around the country in connection with UPIC audits, OIG exclusion actions and state licensure board disciplinary proceedings. Has an exclusion action been proposed against your license? We can help. For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] The term “Federal health care programs” is defined under Section 1128B(f) of the Social Security Act as:

(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under chapter 89 of title 5, United States Code); or

(2) any State health care program, as defined in section 1128(h).

42 U.S.C. § 1320a-7b(f) (2012).

[2]See Updated: Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, U.S. Dep’t of Health & Human Servs.: Office of Inspector Gen., at 2-3 (May 8, 2013) (stating that ““. . . the Secretary has delegated authority to OIG to exclude from participation in Medicare, Medicaid, and other Federal health care programs persons that have engaged in fraud or abuse and to impose civil money penalties (CMPs) for certain misconduct related to Federal health care programs”).

[3] The OIG maintains a website containing up-to-date information on federal health care program exclusion rules, which can be found at http://oig.hhs.gov/fraud/exclusions.asp.

[4] While Public Law 95-142’s “exclusion” provisions are important, the legislation is best known for its impact on the Federal Anti-Kickback Statute. More specifically, the legislation made violations of the Federal Anti-Kickback Statute a felony. It also made those who offered remuneration for referrals and those who received them, subject to various penalties.

[5] Under the government’s mandatory exclusion authority (as set out under Section 1128(a) of the Social Security Act), any individual or entity convicted of certain offenses must be excluded from participation in federal health care programs. The length of a mandatory exclusion action taken can last a minimum of five years.

[6] Depending on the circumstances, OIG may also exercise “permissive” or discretionary authority to exclude an entity or an individual from participation in federal health care programs.

[7] Under 42 USC §1320a-7(b)(4), any individual or entity whose professional license to provide health care has been revoked or suspended, or has lost the right to apply for a license, CAN be excluded from participation, at OIG’s options.

[8] DAB ALJ Decision No. CR4985, dated December 13, 2017.

[9] DAB Appellate Div. Decision No. 2848, dated February 6, 2018.

[10] Under the Virginia Code, the Board of Medicine may suspend a license indefinitely for “acts of unprofessional conduct,” which include “knowingly and willfully” committing a felony; violating any statute or regulation relating to the manufacture, distribution, dispensing, or administration of drugs; and conviction of a felony. See Virginia Code §§ 54.1-2915(A)(10), (17), and (20).

[11] This is an interesting point raised by the Petitioner. In some states, the revocation of a professional license is permanent and can only be reinstated upon the submission of a new application. Even then the state board has the discretion of whether or not to consider the new application. Theoretically, a health care provider could be licensed in 49 states and still be excluded due to a suspension action in the 50^th state.

As an aside, the public record does not address whether North Carolina, like many states, normally imposes reciprocal disciplinary actions based on those taken in other jurisdictions.

What Medical Practices Need to Know About OIG Exclusion Screening

By Paul Weidenfeld [1] The Office of Inspector General (OIG) has steadily increased its enforcement of OIG Exclusion Screening violations since the issuance of its Special Advisory stressing the effect of an OIG Exclusion in May, 2013. Among other things, they have created a special unit to focus specifically on Civil Money Penalties (CMPs) (its favored enforcement tool), supported numerous prosecutions by both its Office of Audit and its Office of Evaluations and Inspections, and sought greater regulatory authority from Congress. This article was originally directed (and is still intended) to give a basic tutorial on what an exclusion is, how it effects them, and what they can do to protect themselves.

I. What is an OIG Exclusion?

The Department of Health and Human Services (HHS) is responsible for administering the Medicare and Medicaid Programs and it decides who may receive benefits under these programs as well as who will be allowed to provide them. When it is determined that a person or entity will not be permitted to provide services to the program, that person or entity is said to be “excluded.” The authority to exclude individuals and entities from Federal health care programs has been delegated by the Secretary of HHS to the OIG.[2]

There are two types of OIG exclusions, mandatory and permissive, and both have the effect of barring an individual or entity from participating in all Federal health care programs until such time, if ever, that their privilege has been reinstated.[3] Mandatory exclusions last a minimum of 5 years and must be imposed if a person or entity is convicted of certain criminal offenses. These include, among others, offenses related to defrauding Federal or State health care programs, felony convictions for other health care related offenses, most drug related felony convictions, and patient abuse or neglect.

Permissive exclusion authority implicates a much wider range of conduct. The type of conduct for which permissive exclusions may be imposed include misdemeanor convictions related to defrauding health care fraud programs; drug related misdemeanors; suspension, revocation or surrender of a health care license based on competence, performance, or financial integrity; providing unnecessary or substandard services; submitting false claims; defaulting on health education loans or student loans, and so on.

II. What is the Impact of an OIG Exclusion?

The impact of an OIG exclusion extends to any provider who employs or contracts with the excluded person or entity. The regulation that grants OIG the exclusion authority states that payments cannot be made for items or services furnished “by an excluded individual or entity, or at the medical direction or on the prescription of a physician or other authorized individual who is excluded when the person furnishing such item or service knew or had reason to know of the exclusion.” 42 CFR § 1001.1901(b).

Though the language of the regulation appears to be directed at excluded persons who provide direct, billable services, the OIG broadly interprets the regulation to create a “payment prohibition” that includes virtually any item or service performed by an excluded person that contributes to any claim for reimbursement from any Federal or State Health Care Program.[4] For example, the OIG considers the preparation of a surgical tray or the inputting of information into a computer by an excluded person in violation of the prohibition. Similarly, administrative and management services, IT support, and even strategic planning would also be problematic. Even an excluded volunteer’s assistance might trigger the prohibition unless his activities were “wholly unrelated to Federal health care programs.”[5]

As indicated earlier, the favored enforcement tool is the imposition of civil penalties pursuant to 42 CFR §1003.102(a)(2). Though this regulation also appears to be restrictive in nature,[6] the OIG interprets it to authorize CMPs for the failure of providers to screen their employees, vendors and contractors for exclusions. In its view, any time an “excluded person participates in any way in the furnishing of items or services that are payable by a Federal health care program,” [7] a employer/provider that fails to screen will be held to have “known” — or “should have known” — of the exclusion.[8]

III. OIG Exclusion Screening Requirements

Federal screening requirements are contained in the May, 2013 Special Advisory Bulletin.[9] The Advisory Bulletin states that in order for a provider to “avoid potential CMP liability,” they must check the List of Excluded Individuals and Entities (LEIE) to “determine the exclusion status” of their current employees, vendors and contractors. This can be done, according to the Bulletin’s guidance, by reviewing “each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a Federal health care program,” and then “screen everyone that perform[s] under that contract or in that job category.[10]

While the OIG concedes that it does not have the authority to require that screening be performed every 30 days, it makes it clear that providers who fail to screen their employees, contractors, or vendors monthly risk the imposition of CMPs and overpayment liability. In addition, the OIG observes that the LEIE is updated on a monthly basis, that CMS mandated monthly screening for all State Medicaid Units in 2009 and 2011, and it requires monthly screening in all of its corporate integrity agreements.

IV. Are the OIG Exclusion Screening Requirements Difficult to Meet?

The logistics of the screening process are extremely challenging for most providers despite the fact that the LEIE is a “searchable and downloadable database that can assist in identifying excluded employees.”[11] Providers can elect to use the “search function” of the LEIE, but can only screen five employees at a time and each name must be entered manually. In addition, potential matches can only be verified individually by entering the social security number. This may work well if a provider only has to screen a handful of employees or contractors, but how would this work out if a provider has 200, 2,000, or even 20,000 employees?

The alternative, downloading the LEIE database and comparing the employee list to it, is equally problematic. Most providers simply do not have the capability to download the LEIE (which contains almost 60,000 names) and compare it with their own employee database in any reliable, or economically viable way. Another issue is the requirement that providers apply the same standard to contractors and sub-contractors as to their own employees. Contractors are unlikely to want to share their employee lists, and a provider would not want to screen the employee list of a large contractor. While the OIG does seem to recognize the issue by suggesting that providers can “choose to rely [on] screening conducted by the contractor,” it immediately follows the suggestion by reminding providers that they remain responsible for both overpayment liability and CMPs if they fail to ensure that “appropriate exclusion screening” has been conducted.[12]

V. State OIG Exclusion Screening Requirements

It is important to remember that the OIG’s guidance addresses only federal concerns. While the OIG may be satisfied with just screening the LEIE on a “regular” basis, there are only a handful of State Medicaid Programs that would find that this satisfied their requirements. Indeed, most States require, at a minimum, that providers screen their State Exclusion List (37 States have them) in addition to the LEIE, and many also require screening of the GSA/SAM[13] and/or other State specific exclusions lists (such as sex offender lists, elder abuse lists, etc.).

States also commonly include additional screening requirements through their provider agreements — some of which can be quite onerous. For example, in some States, applicants are required to certify that no employees or contractors are “suspended, or excluded from Medicare, Medicaid or other Health Care Program in any state”.[14] Additionally, State exclusion lists have a wide range of formats that vary from excel spreadsheets to unsearchable PDF documents further adding to the problems with screening.

For additional information refer to OIG Exclusion and State Exclusion Lists: Which Exclusion Lists Need to Be Screened? What Is the Difference Between Them?

VI. Outsourcing of OIG Exclusion Screening is a Simple, and Affordable Solution

Exclusion Screening, LLC was created because we recognized the difficulties providers faced when seeking to comply with their exclusion screening obligations. We were determined to provide a simple, cost-effective solution to the problem and we feel strongly that we accomplished our goal.

Exclusion Screening is simple (we do all the work), cost-effective (likely to cost less than the monthly cost of the water delivered to your office), and best of all, it is a complete solution to your screening needs. Call or email me if you have any questions at: pweidenfeld@exclusionscreening.com or 1-800-294-0952.

Want to know more about Exclusion Screening or need help with understanding your requirements? Fill out the form below!

[1] This is an update of an article that was first published in by the National Alliance of Medical Auditing Specialists (NAMAS) and posted on this website in November, 2014. It was done with the assistance of Jonathan Culpepper.

[2] Sections 1128 and 1156 of the Social Security Act. Though loosely defined to include any program that provides any health benefits, the most significant of these programs are Medicare and TRICARE. Medicaid exclusions are left to the State Fraud Control Units.

[3] Mandatory exclusions are found at 42 USC § 1320a-7; permissive exclusions at 42 USC § 1320a-7(b).

[4] The Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs issued May, 8, 2013 replaced and superseded the 1999 Bulletin and states: “This payment prohibition applies to all methods of Federal health care program payment, whether from itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system or other bundled payment, or other payment system and applies even if the payment is made to a State agency or a person that is not excluded (at page 6 of the Bulletin).

[5] These are examples taken from the Special Advisory Bulletin, id.

[6] The regulation seems to be explaining the circumstances under which CMPs are available, not extending them stating that they may be assessed where a person making a claim stating: “knew, or should have known, that the claim was false or fraudulent, including a claim for any item or service furnished by an excluded individual employed by or otherwise under contract with that person.”

[7] Id. at 11.

[8] This is the language that appears in the OIG press releases announcing settlements of exclusion violations.

[9] Special Advisory Bulletin, at 13-18.

[10] Id. at 15-16.

[11] Id. at 14.

[12] Id. at 16.

[13] The System for Award Management (SAM) is the Official U.S. Government system that consolidated the capabilities of the CCR/FedReg, ORCA, and EPLS which were pre-existing debarment databases.

[14] See, for example, Rule § 352.5 of the Texas Administrative Code which specifically requires such a certification and the Louisiana Medicaid Provider Agreement.

OIG Trumpets Exclusions, New Actions and Recoveries in its Semi-Annual Report to Congress

I. OIG Report

In the Office of the Inspector General’s (OIG) semiannual report to Congress, it claimed credit for excluding 2,297 individuals and entities from Medicare, Medicaid, and other Federal health care programs. The OIG also claimed credit for initiating 506 criminal and 267 civil actions. According to the OIG report, most of the exclusions resulted from convictions for crimes relating to Medicare or Medicaid, patient abuse or neglect, or license revocations. The civil and criminal actions were primarily initiated against “individuals or entities engaged in health-care related offenses.” In addition, the OIG told Congress that it was responsible for generating $1.26 billion in investigative receivables due to the Department of Health and Human Services.^[1]

II. Failure to Screen

The OIG also identified some of the cases that were felt to be important. Two of these cases involved exclusion related issues. In one case, the OIG imposed $15,000 in penalties against a company under a corporate integrity agreement for failing to timely screen employees and other “covered persons.” This is of particular interest to us because the penalty was not imposed for having an excluded employee. Instead, the penalty was imposed for failing to screen! This, again, demonstrates the interest and concerns of the OIG in exclusion issues.

III. Mandatory Exclusion

In the other case, a physician who had been excluded due to a conviction for a health care related offense, arranged an elaborate scheme to hide his involvement in a dermatology practice so that it could bill Medicare and Medicaid for services despite his excluded status. His scheme was eventually discovered, and he was tried by a jury. He was then convicted of health care fraud, bankruptcy fraud, identity theft, and the filing of false tax returns. Ultimately, he was sentenced to 8 years and 3 months of incarceration, ordered to pay $265,330 in restitution, and fined $2.6 million.

IV. Permissive Exclusion

Finally, the OIG report also states that the OIG continues to enforce the HEAL (Health Education Assistance Loan) Program. It further states that 20 individuals entered into settlement agreements, and $1.5 million was collected during the reporting period. We bring this up as a reminder that vigilance in this area is a necessity! There are any number of different ways for individuals and entities to be excluded from Medicare and Medicaid. Let the experts at Exclusion Screening^SM help ensure your organization does not employ an excluded individual or entity.

Contact us for a free consultation at 1-800-294-0952 or fill out the form below.

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article.

[1] U.S. Dept. of Health & Human Services Office of Inspector General Semiannual Report to Congress, at 26.

The Administrative Process of Imposing an OIG Exclusion

I. Mandatory OIG Exclusions

When the Office of Inspector General (OIG) considers imposing a mandatory exclusion, it sends the individual or entity a Notice of Intent to Exclude.^[1] The Notice includes the reason for the proposed exclusion and the possible effect of an exclusion. It also gives the individual or entity 30 days to respond in writing with information and evidence that he or she wants the OIG to consider in making its final decision.

The OIG will almost always decide to impose a mandatory exclusion. The individual or entity is then sent a Notice of Exclusion that includes his or her appeal rights. The exclusion goes into effect 20 days after the Notice of Exclusion is mailed and notice to the public is provided on the OIG website.

The OIG’s decision to exclude can be appealed to an U.S. Department of Health and Human Services (HHS) Administrative Law Judge (ALJ). Adverse decisions by an ALJ can then be appealed to the HHS Departmental Appeals Board (DAB). Individuals may also seek judicial review of any final decision by the DAB.

II. Imposing OIG Exclusions

There are actually four different administrative processes for permissive exclusions and all of them differ from the process detailed above. As described below, the process utilized for permissive exclusions is dependent on the reason for the exclusion.

OIG may consider imposing a permissive exclusion for submitting claims for excessive charges, unnecessary services, services which fail to meet professionally recognized standards of health care, or the failure of an HMO to furnish medically necessary services.^[2] The person or entity to be excluded has a right to request an opportunity to present oral argument to an OIG official before a decision may be reached. The request must be made after the individual or entity receives the Notice of Intent to Exclude, and as an addition to the right to submit evidence in writing.

OIG is not required to send the individual or entity a Notice of Intent to Exclude if it considers imposing a permissive exclusion for the failure to grant immediate access,^[3] or for the failure to take corrective action.^[4] Instead, OIG will send a Notice of Exclusion that includes information about the right to appeal. The exclusion becomes effective 20 days after the Notice of Exclusion is mailed and notice is provided to the public on OIG’s website. Importantly, the same appeals process that applies to mandatory OIG exclusions also applies to permissive exclusions.

III. Conclusion

Finally, if OIG is considering excluding a person or entity for fraud, kickbacks or other prohibited activity,^[5] OIG will again initiate the process by sending a Notice of Proposal to Exclude. This notice will include information about the basis for the proposed exclusion, the length of the exclusion period, the factors OIG considered when setting the exclusion period, the effect of the exclusion, appeal rights, and reinstatement information. In this situation, the exclusion goes into effect 60 days after the individual or entity receives the Notice of Proposal to Exclude, unless the individual or entity enters a timely request for a hearing. If there is a request for a hearing, the exclusion will not be effective until an ALJ upholds OIG’s decision to exclude. Adverse decisions by an ALJ may be appealed to the DAB and judicial review is available after the DAB enters a final decision.

Need help conducting your required monthly Exclusion Screeing process? Call us at 1-800-294-0952 or fill out the form below to hear how we can help your organization!

Click to read more on OIG Exclusions

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Feel free to contact us at 1-800-294-0952 or online for a free consultation.

[1] Dep’t of Health and Human Servs. Office of the Inspector Gen., Exclusions FAQ, https://oig.hhs.gov/faqs/exclusions-faq.asp (last accessed November 26, 2014).
[2] Section 1128(b)(6) of the Social Security Act.
[3] § 1128(b)(12).
[4] § 1128(b)(13).
[5] § 1128(b)(7).

What is an OIG Exclusion?

By Paul Weidenfeld

I. What is an OIG Exclusion?

An OIG Exclusion is a final administrative action by the Office of the Inspector General (OIG) that prohibits participation in any Federal Health Care Program. Exclusions are imposed because the individual or entity is found to pose unacceptable risks to patient safety and/or program fraud. As a result, Federal health care programs such as Medicare, Medicaid and TRICARE will not pay for any service provided — either directly or indirectly — by an excluded person or entity.

II. Who Has the Authority to Impose an OIG Exclusion?

The Department of Health and Human Services (HHS) has the overall responsibility of administering the Medicare and Medicaid Programs. HHS decides who may receive benefits under these programs and who will be allowed to provide them.

The authority to exclude individuals and entities from federal health care programs is delegated to OIG.^[1] OIG enforces the exclusion penalty through its authority to impose civil money penalties (CMPs) where claims are submitted for services performed or furnished by an excluded person or entity and the person making the claim “knew or should have known” of the exclusion.

III. OIG Exclusion Types

There are two types of OIG exclusions, mandatory and permissive, and both have the effect of barring an individual or entity from participating in all Federal health care programs from the time they are excluded until such time, if ever, that their privilege is reinstated.^[2] Mandatory exclusions last a minimum of 5 years and must be imposed if a person or entity is convicted of certain criminal offenses. These include:

Conviction for Medicare or Medicaid fraud, or any other offense related to the fraudulent delivery of items or services to Federal or State health care programs;
Patient abuse or neglect;
Felony convictions for other health care related fraud, theft, or other financial misconduct; and
Felony convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances.

The discretionary authority to exclude individuals and entities implicates a much wider range of conduct. We discuss this topic in a later article, but examples for which permissive exclusions may be imposed include:

Misdemeanor convictions related to defrauding a heath care fraud program,
Misdemeanor convictions relating to the unlawful manufacture, distribution, prescription, or dispensing of controlled substances,
Suspension, revocation, or surrender of a license to provide health care for reasons bearing on professional competence, performance, or financial integrity,
Provision of unnecessary or substandard services;
Submission of false or fraudulent claims to a Federal health care program,
Engaging in unlawful kickback arrangements,
Defaulting on health education loan or scholarship obligation, and
Controlling a sanctioned entity as an owner, officer, or managing employee.

IV. Consequences of OIG Exclusion

Federal health care programs, principally Medicare and Medicaid, will not pay for any item or service that is furnished or performed by, or on the prescription or direction of, an excluded individual.^[3] Since federal health programs subsidize virtually all hospitals and account for 60-65% of all health care dollars spent, exclusion is a severe restriction and is often a death knell to providers.

Providers of the federal health care programs must ensure that their employees, contractors, and vendors are not excluded and the failure to do so can result in significant penalties. The OIG has the authority to impose penalties of up to$21,562.80 for each item or service furnished by the excluded person or entity, as well as assessments of up to three times the amount claimed.^[4]In addition, providers may be liable for overpayments.

Even when a provider is unaware that a person was excluded at the time the claim was made, OIG has issued guidance advising that such inadvertent violations must be reported and repaid.^[5] In light of this guidance, any claim that might involve an excluded person or entity could potentially have False Claims Act implications under the Affordable Care Act if it is not dealt with in a timely and proper manner.

v. Conclusion

This article is just intended to be an introductory outline of the basics to answer the question, What is an OIG Exclusion? Our other posts have additional information, but if you have any questions about exclusions and your screening obligations, feel free to contact any of us at Exclusion Screening, LLC^SM, at 1-800-294-0952 or fill out the form below.

Click here to read more on OIG Exclusions

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally. Contact Paul should you have any questions at: pweidenfeld@exclusionscreening.com or 1-800-294-0952.

[1] Sections 1128 and 1156 of the Social Security Act.

[2] Mandatory exclusions are found at 42 USC § 1320a-7; permissive exclusions are principally found at 42 USC § 1320a-7(b).

[3] Section 1862(e)(1) of the Social Security Act and 42 CFR § 1001.1901(b)(1).

[4] 42 CFR §1003.102 (a)(2).

[5] It was issued April 17, 2013 and it is also the subject of an article posted on our site.

In-Depth Articles

	Facebook
	Twitter
	LinkedIn
	YouTube

A State Conviction for “Patient Neglect” Will Result in Mandatory Exclusion from Participation in Federal Health Benefit Programs

A State Conviction for “Patient Neglect” Will Result in Mandatory Exclusion from Participation in Federal Health Benefit Programs

I. Case Background:

II. Does a State Misdemeanor Conviction Related to Patient Abuse or Neglect Trigger the Individual’s Exclusion from Federal Health Care Programs?

III. Under 42 U.S.C. § 1320a-7(a)(2), Must a “Conviction” be a Federal Offense in Order to Trigger a Mandatory Exclusion Action?

IV. What is Required in Order for a Conviction Under 42 U.S.C. § 1320a-7(a)(2) to be “Related to Neglect or Abuse” of Patients in Connection with the Delivery of a Health Care Item or Service:

V. Does a “Conviction” Under 42 U.S.C. § 1320a-7(a)(2) Have to be a Felony in Order to Trigger a Mandatory Exclusion Action?

VI. Under 42 U.S.C. § 1320a-7(a)(2) Does a Conviction have to be Related to Health Care Services Provided Under Medicare, Medicaid or Another Federal Health Care Program?

VII. Is Exclusion Required When a Misdemeanor Conviction is Effectively Discharged by the Court?

VIII. Conclusion:

A Provider’s Guide to OIG Exclusions

A Provider’s Guide to OIG Exclusions

LEGISLATIVE BACKGROUND

WHAT IS AN OIG EXCLUSION? WHAT IS ITS IMPACT?

TYPES OF OIG EXCLUSIONS

Mandatory Exclusions

Permissive Exclusions

Process, Finality and Appeal Rights for OIG Exclusions

Enforcement Tools for Exclusion Violations

Civil Money Penalties for Exclusion Violations

Assessment Authority of the OIG for Exclusion Violations

FACTORS IN IMPOSING PENTALTIES AND ASSESSMENTS

Mitigating Factors:

Aggravating circumstances:

Appeal Rights for Civil Money Penalties and Assessments

Potential Overpayment and False Claims Act Liability for Exclusion Violations

Contact Form

ABOUT THE AUTHOR

Health Care Providers Should Consider the Ramifications of “Taking a Plea” in a Criminal Case or Agreeing to a Licensure Action. It May Trigger a Mandatory or Permissive OIG Exclusion Action.

I. Brief Overview of OIG Licensure-Related Exclusion Action:

What Medical Practices Need to Know About OIG Exclusion Screening

I. What is an OIG Exclusion?

II. What is the Impact of an OIG Exclusion?

III. OIG Exclusion Screening Requirements

IV. Are the OIG Exclusion Screening Requirements Difficult to Meet?

V. State OIG Exclusion Screening Requirements

VI. Outsourcing of OIG Exclusion Screening is a Simple, and Affordable Solution

OIG Trumpets Exclusions, New Actions and Recoveries in its Semi-Annual Report to Congress

I. OIG Report

II. Failure to Screen

III. Mandatory Exclusion

IV. Permissive Exclusion

The Administrative Process of Imposing an OIG Exclusion

I. Mandatory OIG Exclusions

II. Imposing OIG Exclusions

III. Conclusion

What is an OIG Exclusion?

By Paul Weidenfeld

I. What is an OIG Exclusion?

II. Who Has the Authority to Impose an OIG Exclusion?

III. OIG Exclusion Types

IV. Consequences of OIG Exclusion

v. Conclusion