When an Underlying Misdemeanor or Felony Conviction is Expunged, Does That Extinguish an Exclusion Action?
(October 25, 2021): Medicare and Medicaid providers / suppliers are prohibited from employing individuals who have been excluded from participation in Federal health care benefits programs. Similarly, participating providers and suppliers are also obligated to ensure that any business affiliates (such as vendors, contractors and agents) have not been excluded from participation. This article examines whether an individual convicted of a qualifying misdemeanor or felony who has been excluded is eligible to be hired if his or her felony conviction is later expunged from the criminal record.
I. Exclusion Basics:
The Department of Health and Human Services (HHS), Office of Inspector General (OIG) has been the proverbial “tip of the spear” with respect to protecting Medicare, Medicaid and more than 100 other programs from waste, fraud and abuse. During Fiscal Year 2020 alone, the OIG provided law enforcement oversight of more than $2.2 trillion in spending by HHS. One of the primary ways that the OIG protects patients and safeguards the financial integrity of the Medicare and Medicaid programs is through the agency’s exclusion of certain individuals and entities from participation in Federal health care programs.
II. Mandatory vs. Permissive Exclusion Actions:
The OIG’s exclusion authority falls into two categories — “Mandatory Exclusions” and “Permissive Exclusions.”
Comments: Notably, a covered conviction under 42 U.S.C. §1128(a)(1) would include either a misdemeanor or a felony, as long as it is related to the delivery of an item or service under the Medicare, Medicaid or another State health care program (such as the Children’s Health Insurance Program).
(2) Conviction relating to patient abuse — 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.
(3) Felony conviction relating to health care fraud — Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in paragraph (1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.
(4) Felony conviction relating to controlled substance — Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 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.
Permissive Exclusions — Permissive exclusion actions are discretionary and can be imposed by the OIG for a broad range of offenses and improper conduct. There are currently eighteen different bases upon which the OIG may choose to exercise its permissive exclusion authority. These authorities are outlined in 42 U.S.C. §§ 1128(b)(1)-(17) and 42 U.S.C. §1156 of the SSA. Of the 18 permissive bases for exclusion, two of the statutory provisions (42 U.S.C. §§ 1128(b)(1) and (2)) involve an individual’s conviction of fraud or relating to obstruction of an investigation or audit.
In some instances, an individual convicted of a misdemeanor or felony who has subsequently been excluded by the OIG has subsequently gone in and succeeded in having his or her conviction expunged from the record.
III. What is an Expungement Action?
In the United States, practically all expungement actions involve State court convictions and it is important to remember that the requirements for an expungement will vary from State to State. Each State, for example, has its own laws about whose records are eligible for expungement, which offenses may be expunged, and the procedures that must be followed. They will also have their own definitions and processes regarding the handling and management of records under an expungement order. Expungement orders from Federal courts, on the other hand, are limited and extremely rare, and there is no Federal statute governing its application at the Federal level.
IV. If an Individual’s Conviction is Expunged, Can a Medicare / Medicaid Participating Provider Employ the Individual?
Despite the fact that an individual may succeed in getting an underlying conviction expunged, an excluded individual will still be barred from participating in Federal health care programs for the entire period of exclusion imposed by the OIG.
(i) Convicted Defined — For purposes of subsections (a) and (b), an individual or entity is considered to have been “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. (emphasis added).
As an employer, you may encounter situations where an individual will argue that since his or her conviction was expunged, any associated period of exclusion was no longer in effect. As discussed above, such a contention is incorrect.
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- 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
- any State health care program, as defined in section 1128(h). 42 U.S.C. § 1320a-7b(f).