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.

OIG ExclusionOffice 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]


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).


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.)

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.)


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] 

Figure 1. All Exclusions 2013-2017

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

Figure 2. All Exclusions by Specialty

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.

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]

Table 1. Permissive Exclusions

Figure 3. Compliance Risk Spectrum.

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.   

Figure 4. Entities Subject to Permissive Exclusions 2013-2017 and Percentage Breakdown


Figure 5. All Permissive Exclusions by Basis (2013-2017)

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.

Table 2. Civil Monetary Penalties and Assessments

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]

Table 3. CMP Authority For Each Exclusion Violation

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.

Table 4. Assessment Amounts Authorized by the OIG

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.


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.

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!

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Provider's Guide to OIG ExclusionsPaul 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.

“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 95142.  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).

Dental OIG Exclusions – A Review of 2017 Actions.

Dental OIG exclusion(January 12, 2018):  The Medicare and Medicaid programs are both essential, yet costly health benefit programs sponsored in whole or in part by the Federal government.  With Medicare and Medicaid costing $686 and $368 billion each year, respectively, the government has dedicated experienced investigators, auditors and prosecutors to ferret out incidents of health care fraud and abuse. While most health care fraud administrative, civil and / or criminal cases are brought against medical providers, dental providers and the members of their staff are increasingly finding that their actions are under scrutiny by Federal and State regulators. A prime example is illustrated by the various “dental OIG exclusion” actions taken against dentists and dentist office staff last year during 2017.[1] 

I. What is an “Exclusion” Action?

Simply put, under certain circumstances, the Department of Health and Human Services, Office of Inspector General, Office of Inspector General (HHS-OIG) is mandated by law to exclude” individuals and entities from participating in Federally funded health care program under 1128 of the Social Security Act (SSA),[2] and from Medicare and State health care programs under section 1156 of the SSA. Under other circumstances, HHS-OIG exercises the discretionary authority to decide whether or not to exclude a party.

During 2017, HHS-OIG took a number of administrative exclusions actions against dentists and dental practice personnel in order to meet their statutory obligations.  As set out below, a brief description of the exclusion actions taken against dental professionals, along the frequency of their occurrence are described in the section below.

II.  Exclusion Actions Taken Against Dentists and Dental Staff in 2017:

With the exception of the permanent revocation of one’s professional license, there is perhaps no administrative sanction that may be taken against a health care provider that is more serious than an exclusion action.  As we will discuss later in this article, the collateral impact of an exclusion action can be financially devastating to your dental practice.  In any event, there are a number of mandatory and permissive bases upon which HHS-OIG can base an exclusion action.  Depending on the reason for exclusion, an individual or entity can be excluded from an undetermined minimum period up to a permanent exclusion from participating in Federal health benefits programs.

Dentists and dental staff members are subject to exclusion and are regularly sanctioned by HHS-OIG.  During 2017, a handful of dental professionals were placed on HHS-OIG’s exclusion list most months but the reasons for exclusion were primarily grouped into the categories for exclusion described below:

42 U.S.C. §1320a-7(b)(14): Default on health education loan or scholarship obligations.  50% of all exclusions against dentists / dental staff. The largest group of dentists and dental office personnel excluded by HHS-OIG in 2017 were sanctioned on the basis of their default of one or more Federally-secured health education loans. Approximately 53.13% of the dental professionals and staff were excluded on this basis.  This is especially noteworthy when you consider the fact that only 2.38% of the total number of health care providers and other individuals excluded by HHS-OIG in 2017 were on the basis of a similar loan default.  Although it is never a “good” thing to be excluded from participating in Federal health benefits programs, health care providers who are excluded under this this provision are eligible to apply for reinstatement as soon as they resolve they resolve their loan default with the Federal government.  In the overall exclusion scheme, this is by far the most benign of all exclusion authorities. 

42 U.S.C. § 1320a-7(a)(1): Conviction of program-related crimes. 18.75% of all exclusions against dentists / dental staff.  This mandatory exclusion provision was the second most frequent basis cited by HHS-OIG when sanctioning dentists and dental staff in 2017.  As an example, in one case, a Charleston, WV dentist admitted that he improperly engaged in upcoding with respect to at least 7,490 tooth extractions.  These extractions led to more than $1.3 million in billings. He further admitted that if those extractions were medically necessary, and if had actually performed the procedures he claimed, then he should have been paid only $599,200.  He next admitted that he submitted other false bills and improperly received payment.  As part of his plea agreement, the dentist agreed to pay $738,067 in restitution.  He also entered into a separate civil settlement agreed to be excluded from participation in the Medicare and Medicaid programs for 13 years.  Notably, across the board, among all health care providers and individuals, 42 U.S.C. § 1320a-7(a)(1) was used as a basis for excluding individuals, in 39.09% of all cases.  In contrast, it was only cited in 18.75% of the cases involving dentists and dental staff.

42 U.S.C. § 1320a-7(a)(3):  Felony conviction relating to health care fraud. 3.13% of all exclusions against dentists / dental staff.  This mandatory exclusion provision requires that HHS-OIG exclude an individual who is convicted of felony health care fraud for a minimum of 5 years.  In one 2017 case citing this basis for exclusion, a long-time claims manager in a dental practice went to the State Dental Board to complain that the dentist for whom she worked was engaging in fraud.  She alleged that he was billing Delta Health Systems[3] for dental services not rendered, performing medically-unnecessary dental services and offering cash and noncash incentives to his staff to make appointments. The claims manager was then implicated in the wrongdoing and both the dentist and the claims manager were charged with Federal crimes. The claims manager was subsequently sentenced to 21 months in prison and the dentist for whom she worked was sentenced to three years, 10 months in prison.  Both defendants were ordered to jointly pay $726,300 in restitution.  3.13% of the exclusion actions against dentists and dental staff were on the basis of 42 U.S.C. § 1320a-7(a)(3).  Similarly, 7.68% of the exclusion actions taken against all health care providers by HHS-OIG were on this basis. 

42 U.S.C. § 1320a-7(b)(4): License revocation, suspension, or surrender. 12.50% of all exclusions against dentists / dental staff.  Under this basis for permissive exclusion, HHS-OIG may choose to exclude a provider if the provider’s license is revoked, suspended or surrendered. In one 2017 case, the State of Utah alleged that the one of its licensed dentists had engaged in unprofessional conduct.  The conduct supposedly included using controlled substances from prescriptions written to family members, treating family members for opioid addiction without being trained to do so, having a conviction for impaired driving and providing false information on an application.  The dentist’s licenses were revoked, the revocations were stayed and the dentist’s licenses were placed on probation for five years. Based on the licensure actions taken, HHS-OIG exercised its permissive exclusion authority under 42 U.S.C. § 1320a-7(b)(4).  Globally, licensure-based exclusion actions constituted 30.81% of the actions taken by HHS-OIG against health care providers and other individuals during 2017.  In contrast, only 12.50% of the exclusion actions against dentists and dental staff were based an underlying licensure disciplinary action.

42 U.S.C. § 1320a-7(a)(4): Felony conviction relating to controlled substance. 6.25% of all exclusions against dentists / dental staff.  This mandatory basis for exclusion was only cited 6.25% of the time by HHS-OIG when sanctioning dentists and dental staff.  Consistent with its finding for dentists, HHS-OIG only based exclusions on this authority 5.63% of the time among all health care providers (and other individuals) during 2017.  In one of the cases we reviewed, a South Dakota dentist pleaded guilty to a charge of “Obtaining Possession of Controlled Substance by Fraud or Deception,” a Class 4 Felony.  In light of the plea, HHS-OIG was required by law to exclude the dentist from participation in Federal health benefits program for a minimum of 5 years.[4]  

Two other bases for exclusion, 42 U.S.C. § 1320a-7(b)(3): Misdemeanor conviction relating to controlled substance, and 42 U.S.C. § 1128b7:  Fraud, kickbacks, and other prohibited activities, were infrequently cited by HHS-OIG in connection with exclusion actions it took against dentists during 2017.  None of the other mandatory or permissive exclusion authorities were relied upon by HHS-OIG when sanctioning dentists and / or dental personnel during 2017.

III.  Impact of Exclusion on Dentists and Dental Staff:

Former Federal prosecutor and the current Compliance Officer for Exclusion Screening, Paul Weidenfeld, best described the impact of an exclusion action when he stated:

“If an individual is excluded from participating in Federal health benefits programs, for all practical purposes, they are likely unemployable by anyone who accepts insurance from Medicare, Medicaid, TriCare, FEHBP or another health benefit program that is funded in whole or in part by Federal funds. Moreover, each year we are seeing more and more private payors insist that their participating providers screen out any excluded employees, contractors, vendors and agents.
Ultimately, this is a matter of RISK.  You must screen your staff, vendors, agents and contractors every 30 days.  The last thing you want is to have a staff member with either a suspended / revoked license or a felony conviction for fraud or patient abuse working in your practice without your express knowledge.”

A. Are Your Lax Practices Exposing You to CMPs?

In 1981, Congress enacted the Civil Monetary Penalties (CMP) law, Public Law 97-35 codified at section 1128A of the Social Security Act).  Under this statute, HHS-OIG was authorized to impose CMPs against any individual or entity found to have submitted claims for payment by Medicare or Medicaid for items or services furnished by an excluded individual.  Since first being passed, there have been several additional statutes further expanding HHS-OIG’s authority to assess CMPs.  As it now stands, if a health care provider fails to properly screen to ensure that no excluded individuals are employed, virtually every claim that an excluded individual is associated with will be regarded as “tainted” and will be subject to CMPs.

B. Don’t Judge a Book by Its Cover – Screen All Applicants Before Bringing on New Hires.

Merely asking an applicant on their application if they are currently excluded from Medicare or Medicaid (or have ever been excluded from Medicare or Medicaid) is totally insufficient.  After filling out one or two applications for employment, individuals who have been excluded are savvy enough to realize that anytime they check the box “YES,” they will not even qualify for an interview.  As a result, over the last year, our Firm has handled several voluntary disclosure matters where an applicant lied about his exclusion status in order to get a job.  Six to a year later, the provider learned that the new employee was excluded and had been excluded when initially hired at the practice.  The lesson to be learned is simple – you cannot rely on any assertions made by an applicant regarding the applicant’s exclusion status.  You need to verify it yourself, prior to onboarding a new hire.

C. Exclusions are Not Restricted to Merely Licensed Professionals:

The impact of an exclusion action on a health care provider’s ability to conduct business can be significant.  Moreover, the severe consequences of exclusion have been a constant warning of HHS-OIG since it first published its Special Advisory Bulletin in 1999 entitled “The Effect of Exclusion From Participation in Federal Health Care Programs. 
Importantly, virtually anyone can be excluded from participation Federal health care programs.  Moreover, the adverse impact of an exclusion action is not merely limited to licensed individuals such as dentists, oral surgeons and / or dental hygienists.  Non-clinical staff who furnish administrative and management services that are payable by the Federal health care programs are also affected by an exclusion action and can expose your dental practice to liability.  As HHS-OIG’s “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs” goes on to further clarify:
“. . . 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.”

D. Exclusion Actions are Reported to the NPDB:

If an individual is excluded from participation in Federal health care benefits programs, HHS-OIG considers the matter to be a reportable event and will report the administrative sanction to the National Practitioner Databank (NPDB) for inclusion in its system.  As a result, all payors (both public and private), will be notified of the adverse action.   Since most dental practices participate in at least one dental insurance program, you are likely required to notify the payor of any adverse actions brought against you within 30 – 60 days of the event (the time to report varies from contract to contract).  Dentists placed in this position often find it difficult to effectively respond to private payor inquiries regarding an exclusion order.  If the dentist notifies a payor immediately after being excluded, most payors will initiate their own administrative review of the facts to determine whether they want to continue to allow the provider to continue work as a participating provider.  If a dentist fails to notify the payor of the exclusion action within the 30-60 day deadline imposed under the parties’ contract, a payor will typically initiate a termination action based on the provider’s breach of its contractual obligations.

IV.  The Solution – Reducing Your Level of Risk:

To reduce your level of risk, a dental provider should screen its applicants, clinical staff, administrative staff, contractors, vendors and agents on a monthly basis.  At the time of the writing of this article, there a total of 40 different databases that need to be checked.  These 40 databases include:

(1) List of Excluded Individuals and Entities (LEIE). Maintained by HHS-OIG.
(2) System for Award Management (SAM). Maintained by the General Services Administration.
(3) 38 State Medicaid Exclusion Registries. Maintained by either the State Attorney General’s Office or the State Medicaid Fraud Control Unit (MFCU).

Neither the Federal nor the State governments currently maintain a “consolidated” database that incorporates all of the Medicare and Medicaid exclusion actions into a single records system that can easily be checked by providers.   From a practical standpoint, it is rarely cost-effective for a provider to check all 40 databases on an individual basis.  Therefore, we strongly recommend that you utilize the services of an organization such as Exclusion Screening.  Their services are inexpensive yet comprehensive.   

V.  Conclusion:

The implementation of an effective screening program is perhaps the least expensive step you can take to help bring your dental practice into at least partial compliance.  Although, it won’t satisfy all of your obligations as a health care provider, it is a significant step in the right direction and can greatly reduce your level of overall risk.  We therefore strongly recommend that you fully comply with the recommendations of HHS-OIG and screen your employees, contractors, agents and vendors every 30 days. 

If handling this task is too burdensome to complete in-house, call the Exclusion Experts at Exclusion Screening at 1-800-294-0952 or fill out the form below!



Healthcare AttorneyRobert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, PLLCLiles Parker is a health law firm representing dentists and dental practices around the country in connection with Medicare, Medicaid and private payor audits.  We also represent dentists in State Dental Board disciplinary actions.  For a complimentary consultation, give Robert a call at: (202) 298-8750.


[1] Please keep in mind, the List of Excluded Individuals and Entities (LEIE) that is maintained by HHS-OIG only includes Medicare exclusion actions and other exclusion actions that have been reported to it by one of the states.  Despite their obligation to do so, many states do not report all or some of the exclusion actions they have taken against health care providers, individuals and entities.  For a complete analysis of the exclusion actions taken against dentists and dental staff in 2017, a review of each of the state exclusion actions taken must also be conducted.

[2] Under the provisions of the 1977 Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142 (now codified at Section 1128 of the Social Security Act), physicians and other practitioners convicted of program-related crimes were first excluded from participation in the Medicare and Medicaid programs.
[3] In this case, Delta Health Systems was the program administrator for United Parcel Service Inc. (UPS) employees.
[4] It is also worth noting that in a case where a pharmacist entered into an agreement to plead guilty if the state would not oppose a “deferred judgment,” HHS-OIG still took the position that it was appropriate to exclude the pharmacist from participation from participation in Federal health benefits programs. Unfortunately, the author does not give a citation for the case. HHS-OIG may have exercised its exclusion authority under one of the applicable permissive exclusion provisions.