Excluded Individual Conducts Elaborate Health Care Fraud Scheme



The owner of a New Jersey ambulance company was indicted for health care fraud in mid-August of 2015. The owner was excluded from participation in the federal health care programs after being convicted of defrauding New Jersey health care programs in 2003. This is just the latest in a steady stream of health care related enforcement actions by state attorney generals.


New Jersey prosecutors allege that the provider has been the owner and operator of a New Jersey ambulance company to which Medicare and Medicaid have paid out a combined $7.5 million since 2010. The provider allegedly hid his involvement in the company by paying employees in cash. The defendant has owned and operated the ambulance company since 2005, which is only two years after he was excluded from participation in the federal health care programs for a period of 11 years. The provider now faces a 17-count federal indictment with a possible sentence of 30 years in prison for conducting the health care fraud scheme.


It may be difficult to protect yourself from individuals like this New Jersey provider who explicitly sought to defraud the federal health care programs. Providers should, however, try to protect themselves by conducting monthly exclusion screening searches of their employees and contractors. Providers should also maintain proper records of these searches. States, like the federal government, are actively pursuing those who are in violation of federal health care regulations. Remember, compliance is always the best policy!

Ashley Hudson

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.

Exclusion Screening of Contractors and Vendors

screen with hole - exclusion screening of contractors and vendors
Exclusion Screening of Contractors and Vendors

By now, providers should be aware that the Office of Inspector General (OIG) requires exclusion screening of contractors and vendors, in addition to employees, if they provide items or services that are payable by Federal health care programs. This article identifies the OIG’s guidance on the issue, explains the difficulties it poses, and concludes by suggesting a framework for applying the guidance to screening vendors and contractors.

OIG Guidance: An Emphasis on Patient Care – A Focus on Payment

The OIG states that its emphasis on screening vendors and contractors for exclusions regards “items or services integral to the provision of patient care.”2 This is sensible as many exclusions are the result of licensing issues and drug offenses which could result in a risk of harm to patients.

With that said, the OIG’s guidance focuses heavily on considering the nexus between vendor/contractor activities and any resulting claims. Providers are advised to review the “job category or contractual relationship” of each and every contractor and vendor. Then, if the provider determines that the vendor or contractor provide items or services payable “directly or indirectly, in whole or in part … by a Federal health care program,”3 the vendor or contractor should be screened for exclusions monthly.

The Breadth of the Guidance

The OIG guidance is so broad that it is difficult to apply in a meaningful way. For instance, Exclusion Screening, LLC is sometimes asked by providers who make claims that include facility fees or some other overhead component whether they are obligated to screen contractors or vendors of such basic services as garbage collection and utilities out of a concern that they could be considered to be payable “indirectly” and at least “in part” by Medicare. While it is hard to believe that the OIG expects providers to screen the city sanitation service, the question raises a valid point.

While the guidance contains a number of examples that describe potentially problematic conduct when furnished by an excluded individual, the OIG seems to emphasize the broad scope of the screening obligation instead of providing a better understanding of it. For instance, the preparation of a surgical tray by an excluded person (who may not be in the operating theatre) and the inputting of information into a computer by an excluded person (who probably would not have written the prescription or participated in making the claim) are both identified as potentially problematic conduct. The guidance further states that virtually any service (administrative, management, IT support, etc.), even volunteer services, can trigger Civil Monetary Penalties (CMPs) if an excluded person provides the service unless the service is “wholly unrelated to Federal Health Care Programs.”

A Possible Framework for Applying the OIG Guidance4

Screening decisions based solely on whether the item or service provided was “wholly unrelated” to claims (or, stated another way, could possibly have contributed in some way to a claim) fail to recognize the OIG’s stated emphasis on services integral to patient care. In addition, it may also take a provider down a path that leads toward screening every conceivable vendor or contractor, including the city sanitation service as discussed above. As an alternative to this rigid (and unrealistic) approach, Exclusion Screening, LLC suggests using a framework that considers both the potential impact to patient safety of the activity in question, as well as the relationship between the vendor or contractor and any claims made to, or paid by, Federal Health Care programs. This is a sensible and workable approach that is consistent with the OIG’s dual priorities of patient safety and fiscal responsibility.

The framework would create a continuum of sorts, with contractors or vendors most closely associated with both patient care and claims on one end (such as an agency nurse or a physical therapist), and the vendors and contractors who have nothing to do with care and are only incidentally connected to reimbursement on the other (like the city garbage collection service). The closer a vendor or contractor is to the end that encompasses both patient care and claims (i.e., the nurse provided by a staffing company), the more likely it will be that the person or entity should be screened. Conversely, as one moves along the continuum to the other end, the necessity of screening decreases.

Though this may be an imperfect system that does not create bright lines, it specifically identifies and considers the factors important to the OIG. The continuum also gives context and focus to a provider’s screening decisions. By way of example, if one substitutes a hazardous waste collector for the city sanitation service and uses the continuum analysis, one can immediately see that the important considerations are (1) the risk a hazardous waste removal company and its employees pose to patient safety, and (2) the nexus between the hazardous waste removal service and reimbursement for the claim. Finally, and perhaps most importantly, since the framework is premised on the OIG’s principle concerns, using a framework helps make provider screening decisions defensible and supportable in the event of an audit.


The OIG’s guidance on exclusion screening of vendors and contractors is so broad that providers are left to draw their own lines and make their own decisions regarding whether or not to screen a specific individual or entity. In drawing these lines and making these decisions, Exclusion Screening, LLC believes providers are best served if they use a framework that incorporates both patient safety and financial considerations. Such a framework helps providers by giving analytic context to their decisions, demonstrating their commitment to compliance, and, ultimately, making their actions all the more defensible if subjected to scrutiny.

For an in-depth discussion of which vendors and contractors need to be screened, listen to our on-demand webinar

OIG Exclusion

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. Contact Paul should you have any  questions at: pweidenfeld@www.exclusionscreening.com or 1-800-294-0952.

1   Paul Weidenfeld is a co-founder of Exclusion Screening, LLC. A noted health care lawyer now in private practice, Paul frequently writes and speaks on issues relating to exclusions, fraud and abuse and the false claims act. Before entering private practice, he was a federal health care fraud prosecutor for a number of years, and the Department of Justice Health Care Fraud Coordinator from 2005 – 2007.

2   May, 2013, Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, Health and Human Services, Office of Inspector General, p. 16

3   Id. at p. 15

4 Exclusion Screening, LLC is not a law firm and does not provide legal advice. As such, this is not intended, and should not be taken, as legal advice. We strongly recommend that you seek the advice of counsel whenever decisions that may have legal consequences are made.

Hospital Enters into False Claims Settlement for Employee with Lapsed License

false claims
I.  Hospital Employed Therapist with Lapsed License

The Department of Justice (DOJ) entered into a settlement with a nonprofit Michigan hospital this week resolving allegations that the hospital submitted false Medicaid claims. The services had allegedly been rendered by a therapist with a lapsed license. Further, in an unusual move, DOJ required the hospital to acknowledge in the false claims settlement that it should have known of the lapsed license when it submitted the claims.

II.  No Difference Between a Lapsed License and an Exclusion for False Claims Liability

This case is of particular interest because when analyzing the potential for False Claims Act liability, there is no appreciable difference between a person with a lapsed license and a person that has been excluded from Medicare or Medicaid. That is, the claims are said to be legally “false” because of the individual’s status (having no license and being excluded). Unless an employer can come up with a satisfactory explanation (in the eyes of DOJ or HHS/OIG) why he or she wasn’t aware, that employer will either be presumed to have “known” of the status or it can be determined that he or she “should have known” of it. Of course, in either event, liability can attach!

So, beware and be sure to screen your employees, vendors and contractors as required!

OIG Exclusion

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.

DC Contractor for Dental Providers Indicted for False Claim

False Claim
I.  Fraud Found in HHS’ Backyard

A Virginia contractor for dental providers was recently indicted by a grand jury on charges of wire fraud, health care fraud, identity theft and making false statements relating to health care matters. The contractor’s company provided administrative and consulting services to dental practices in and around the Washington, D.C. area. She faces ten years in prison for each count of health care fraud and five years in prison for each count of making a false claim regarding health care matters. The contractor faces several more years for all other charges against her. 

The contractor allegedly used her company as a way to gain admission to dental practices in order to steal identities from patients and the dentists themselves. She would then use the stolen identities to create merchant accounts with dental financing programs by sending in several false enrollment applications. With these accounts, the contractor billed patients for inflated and unauthorized charges. The contractor went so far as to submit false charge slips bearing fake patient signatures for services that were never rendered. To support these false claims, the contractor created false patient records.  

II.  False Claim

This particular provider may be convicted of submitting false claims to Federal or State health care programs. This underscores why screening contractors and vendors is essential to running a fully compliant practice. Any individual or entity that is convicted for submitting a false claim or committing health care fraud can be automatically excluded from receiving funds from any Federal or State health care program. Furthermore, any provider who contracts with an individual or entity that the provider “knew or should have known” was excluded (i.e., was not screening for exclusions on a monthly basis or screening improperly) risks incurring Civil Monetary Penalties (CMPs) of up to $10,000 per item claimed and assessments of up to three times the amount of each item claimed.

III.  Final Thoughts

Helping providers avoid hefty fines for exclusion violations is our business. We work to ensure that providers stay compliant with health care regulations by screening employees, contractors and vendors for exclusions monthly through the two Federal and all available State exclusion lists. Our proprietary exclusion database, SAFER (State and Federal Exclusion Registry), incorporates exclusion data from both the OIG-LEIE and GSA-SAM, as well as 37 individual state exclusion lists. SAFER allows providers to have peace of mind that their practice complies with the many different Federal and State exclusion obligations. Contact the experts at Exclusion Screening, LLC today for a free consultation at 1-800-294-0952 or fill out our online  price quote form.  

OIG Exclusion

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.

Who Should Be on my OIG Exclusion List?

oig exclusion list
I. Federal and State Agencies Conducting Audits

As many health care providers and suppliers have painfully learned over the last year, federal and state law enforcement agencies, along with many of the contractors with whom they work, are actively conducting audits of Medicare and Medicaid claims submitted to the government for coverage and payment.

One of the least understood mandatory obligations applicable to virtually every health care provider and supplier who accepts Medicare or Medicaid is the requirement that all participating providers are REQUIRED to screen more than just their staff. Instead, they must also screen contractors, vendors, and agents to ensure that they and their employees have not been excluded from participation in federal and state health care programs. The fact that these individuals and entities must be screened through literally dozens of federal and state exclusion databases further complicates this mandate. 

II. Broad Scope of OIG Exclusion Action

Importantly, the scope of an exclusion action is extremely broad. The Department of Health and Human Services, Office of Inspector General (HHS-OIG) has taken the position that if a vendor, contractor or supplier of administrative, management or support services has been excluded from participating in the Medicare or Medicaid programs, they are effectively barred from working with most health care provider and supplier entities. As HHS-OIG writes:

Excluded persons are prohibited from furnishing administrative and management services that are payable by the Federal health care programs. This prohibition applies even if the administrative and management services are not separately billable. For example, an excluded individual may not serve in an executive or leadership role (e.g., chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, etc.) at a provider that furnishes items or services payable by Federal health care programs. Also, an excluded individual may not provide other types of administrative and management services, such as health information technology services and support, strategic planning, billing and accounting, staff training, and human resources, unless wholly unrelated to Federal health care programs.”1

At Exclusion ScreeningSM, we realize that compiling a list of all employees, vendors and contractors can be a daunting task. That’s why we help our customers evaluate and determine exactly who needs to be included during their monthly Exclusion Screening. 

III.  Creating Your OIG Exclusion List

A partial listing of the parties you are required by law to screen include:

All employees and Staff: To properly screen you should be sure to examine (or submit this information to us so we can conduct the screens for you):

1.  SSN.

2.  Maiden names.

3.  Any former names.

4.  Birthdate.

Vendors, Contractors and Agents: You MUST screen vendors that provide items or services directly OR indirectly that are payable in whole or in part by the Federal health care programs2

Some potential vendors that must be included on your list:

1.  Ambulance and other Transportation Service Providers.

2.  Volunteers.

3.  IT Solution Providers.

4.  Security Technicians.

5.  Medical Equipment Managers.

6.  Food Service Workers.

7.  Lab Technicians.

8.  Pharmacists.

9.  Nurses and other Individuals Provided by Staffing Agencies.

10. Physician Groups that Provide Emergency Room Coverage.

11. Billing or Coding Contractors.

12. Directors.

13. Administrators.

14. Managers.

IV.  Contractors and Vendors

When it comes to contractors and vendors, HHS-OIG offers some interesting guidance in its 2013 Special Advisory. The OIG gives providers two options: (1) providers themselves may screen their contractors’ or vendors’ employees;3 or (2) a provider may rely on a contractor’s or vendor’s certification that the contractor or vendor is conducting screening of its own employees and contractors. Note that HHS-OIG recommends that the provider validate that the contractor is conducting such screening on behalf of the provider. One way providers can validate this information is by requesting and maintaining screening documentation from the contractor.4

V.  Screen for Exclusions: Avoid CMPs!

Screening this list can seem like a daunting task, but not doing so can create a world of hurt. The phrase “leave no stone unturned” couldn’t be more appropriate in this case. An effective compliance policy demands that providers employ comprehensive screening practices. Although the process may seem arduous, the risks providers face, if they do not screen, are dire. The Civil Monetary Penalty (CMP) for any item or service provided by an excluded individual or entity is up to $10,000. On top of CMPs, the providers may be required to pay up to three times the total amount of claims submitted to Medicare.  

Considering the hefty liabilities tacked on for merely employing even one excluded individual, it’s easy to see that making the effort to properly screen for exclusions pays for itself. If you’re worried that your organization isn’t screening the right individuals and entities, the exclusion experts at Exclusion ScreeningSM are happy to help you create your employee and vendor list. Feel free to contact us at 1-800-294-0952 or fill out our online service form.

Ashley Hudson

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]  Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs p. 15

[2]  Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs p. 15

[3]  Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs p. 15-16

[4]  Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs p. 16