OIG Exclusion Case Study: The Impact of a False Claims Act Judgment.

OIG Exclusion Case Study(August 23, 2018): In 2008, after learning that a Texas-based laboratory services company was submitting false claims to the Medicare program, a private citizen filed suit, on behalf of the United States, against the laboratory services company under the qui tam provisions of the civil False Claims Act. The qui tam provisions of the False Claims Act (31 U.S.C. §§ 3729 – 3733) allow private parties, commonly referred to as “whistleblowers” or “relators” to sue individuals and entities on behalf of the government if the defendants have “knowingly” submitted false claims to the government for payment.[1] In this case, the United States intervened in the case against the laboratory services company in 2011. In April 2018, the U.S. District Judge hearing the case ruled against the laboratory and its physician owner and awarded the United States $30.5 million for violations of the False Claims Act. Although there are a number of lessons (especially with respect to individual liability) to be learned from the underlying case, the purpose of this article to examine the collateral administrative actions that were taken against the physician owner and the laboratory services company.

I. Parallel Administrative Action — OIG Exclusion Action Overview: 

In a letter dated August 21, 2015, the Department of Health and Human Services, Office of Inspector General (OIG) proposed to exclude the laboratory services company, and its owner, from participation in Medicare, Medicaid, and other Federal health programs under 1128(b)(7)[2] of the Social Security Act, for a period of 15 years. The OIG based its proposed exclusion action on the submission of claims from August 2009 to January 2010, that the laboratory and its owner (referred to as Petitioners in the administrative case), “ knew or should have known were not provided as claims and were false or fraudulent.”
[3]

II. Why Did the OIG Exercise its Exclusion Authority Under 1128(b)(7)? 

More often than not, when dealing with allegations of the civil False Claims Act, the OIG will choose to exercise its permissive discretion to exclude an individual or entity under Section 1128(b)(7) of the Social Security Act.[4] In this particular case, the OIG did, in fact, exercise its authority to exclude the Petitioners for 15 years.

III. Petitioners’ Appeal of the OIG’s Exclusion Decision: 

In response to the proposed OIG exclusion action, in October 2015, the Petitioners filed a timely request for a hearing before an Administrative Law Judge (ALJ). Additionally, due to the unavailability of the ALJ first assigned to hear the case, a different ALJ was appointed to handle the hearing on June 2017. Throughout this period (from late 2015 to early March 2018), both sides actively engaged in discovery and a lively exchange of motions ensued. Finally, in late March 2018, the substitute ALJ assigned to take over the case conducted an in-person hearing on the exclusion action.

IV. Issues Considered by the Administrative Law Judge:  

Simply stated, the ALJ hearing the case was required to consider two issues:
ISSUE #1: Did the OIG have a basis to exclude the Petitioners from participating in Medicare, Medicaid and all other federal care programs for 15 years under 42 U.S.C. §1320a-7(b)(7)? As set out under 42 U.S.C. §1320a-7(b)(7), the Secretary may exclude individuals and entities from participation in any federal health care program (as defined in section 1320a-7(b)(f)[5]) if the Secretary determines that individual or entity has committed fraud, kickbacks and / or other prohibited activities.[6]
As the ALJ’s opinion notes, after conducting the administrative hearing in this case, a U.S. District Court with jurisdiction over the parallel civil qui tam case issued a summary judgment decision against the Petitioners, finding the liable for violations of the False Claims Act. Despite the fact that the elements considered by the U.S. District Court were essentially the same as those to be considered by the ALJ when addressing the exclusion action, the ALJ chose not to broadly apply judicial estoppel in this case. This decision appears to have been primarily based on the fact that the time frames considered by the two forums were different. The ALJ also noted that he was charged to conduct a de novo review of the evidence when assessing the exclusion decision by the OIG. The ALJ therefore ruled that it was more appropriate for him to issue a decision based on the merits. Upon consideration of the evidence in this case, the ALJ found that:

(1) Petitioners presented or caused to be presented to an agency of the United States the claims at issue in this case.
(2) The claims Petitioners presented or caused to be presented to Medicare were false.
(3) Petitioners should have known that the claims for services they presented or caused to be presented to Medicare were false. 
(4) Petitioners’ equitable defenses do not serve to undermine the OIG’s basis for excluding them. 
(5) The statute of limitations is not implicated by discussion of Petitioners’ conduct preceding the six-year timeframe that forms the basis of the proposed exclusion.[7]

In light of these findings, after conducting a de novo review of the evidence, the ALJ found that the OIG did, in fact, have a basis for excluding the Petitioners based solely on the claims they submitted within the six-year statute of limitations.
ISSUE #2: Was the 15-year exclusion period reasonable? Therefore, when deciding whether the period of exclusion imposed by the OIG was “reasonable,” the ALJ assessed the following five criteria outlined under 42 C.F.R. §1001.901(b)(1)-(5): [8]

(1) The nature and circumstances surrounding the actions that are the basis for liability, including the period of time over which the acts occurred, the number of acts, whether there is evidence of a pattern and the amount claimed; As the ALJ noted when reviewing the conduct at issue, during the period of time examined by the U.S. District Court, the Petitioners submitted more than 26,000 claims that resulted in more than $10 million in losses to the government. Even if the ALJ limited his review to the relevant conduct during the six-year period covered during this administrative hearing, the Petitioners still submitted 571 improper claims to Medicare. Additionally, despite the Petitioners’ assertions to the contrary, the ALJ found that the Petitioners’ conduct did, in fact, represent a pattern of improper behavior.

(2) The degree of culpability; When considering the Petitioners’ degree of culpability, the ALJ found that the physician owner and the lab were “highly culpable.The ALJ further found that the Petitioners were not victims of careless billing by others. Rather, he ruled that the physician owner was closely involved in the lab’s operations and exercised significant control over the organization’s billing staff. As the ALJ wrote: “There is nothing in the record to suggest Petitioners were simply absentee landlords who had no agency concerning their billing scheme. . . “

(3) Whether the individual or entity has a documented history of criminal, civil or administrative wrongdoing (The lack of any prior record is to be considered neutral);  Although the recent U.S. District Court ruling against the Petitioners for more than $30 million squarely fits within this regulatory factor, the judgment could not have been considered at the time of the exclusion action by the OIG because it had not been rendered at that time. As a result, there was no prior history of wrongdoing that the OIG could have considered. Having said that, there is nothing in the regulation that limits the OIG’s consideration of improper wrongdoing to only actions that have resulted in a judgment. Therefore, the ALJ held that it was proper for the OIG to consider the Petitioners documented conduct when it assessed the 15-year period of exclusion.  

(4) The individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion; Although the ALJ in this case declined to consider the U.S. District Court ruling as res judicata, the OIG still argued that the ALJ consider the ruling on the False Claims Act constituted an “adverse action.” After considering the positions advanced by the parties, the ALJ held that the requirements set out under 42 C.F.R. §1001.901(b)(4)[9] had not been met, primarily because the ALJ was not persuaded that a ruling by a Federal U.S. District Court could be considered an adverse action by a “agency or board.” Based on this assessment, the ALJ chose not to consider this factor in his analysis of the reasonableness of a “15-year” exclusion.

(5) Other Matters as Justice May Require. Several points were advanced by the Petitioners when addressing this factor. First, Petitioners argued that the Medicare program need no protection from them. Noting that they had improperly billed the Medicare program for millions of dollars, the ALJ concluded that should not be trusted to access program funds. The Petitioners also argued that if they excluded from participation, it would negatively impact patient access to lab care. The ALJ noted that the Petitioners failed to show that there was lack of laboratory facilities in the Houston area. Therefore, Petitioners absence would not negatively impact patients. In fact, the ALJ concluded that the Medicare “will undoubtedly be better off without them.” After considering the evidence, the ALJ found that an exclusion period of 15 years was reasonable in this case. Notably, the ALJ stated that the “circumstances surrounding Petitioners’ billing scheme indicate Petitioners are highly untrustworthy.” The ALJ further found that the mitigating evidence presented by the Petitioners kept the period of exclusion from be much lengthier than the 15-year period of excluded assessed by the OIG.

V. Points Learned from this Exclusion Case: 

Point #1.  Impact of a False Claims Act Judgment. The administrative collateral risks associated with violations of the False Claims Act cannot be underestimated. In this case, where the False Claims Act violations went to trial and resulted in a judgment, the OIG had no reason to waive its permissive exclusion authority. How could this have been avoided? It is important to keep in mind that the vast majority of cases brought by whistleblowers / relators under the civil False Claims Act are not intervened by the government and result in the dismissal of the case. Of the False Claims Act cases that are intervened, most result in a settlement with the government. When settling a False Claims Act case, defense counsel will often seek to wrap-up any outstanding administrative risks (such as exclusion) as well. In order to waive its permissive exclusion authority, the OIG typically requires that health care providers and entities enter into a Corporate Integrity Agreement (CIA) as part of the settlement. In this case, for whatever reason, the False Claims Act case was not settled and went to trial, resulting in a significant judgment and the imposition of a 15-year exclusion.  

Point #2: Issue Preclusion is a Real Possibility. As you will recall, the U.S. District Court in the associated False Claims Act case granted the OIG’s Motion for Summary Judgment. In asserting its arguments in the administrative hearing, the OIG urged the ALJ to narrowly apply estoppel and rely on the District Court’s finding that the claims submitted by the Petitioners were false. The ALJ cited several reasons for not adopting the District Court’s holding in this regard. Nevertheless, it isn’t much of a stretch to imagine a slightly different set of facts, where issue preclusion may have been granted. For instance, if the judgment was final and the time period of the claims at issue were the same, the ALJ may have been persuaded to apply estoppel in this case.

Point #3: ALJs will Give Broad Deference to the OIG When Assessing the Reasonableness of an Exclusion Action. It is important to remember that when making this type of determination, an ALJ is limited to a significant extent and cannot substitute his judgment for that of the OIG. Instead, the ALJ can only consider whether the period of exclusion was within a “reasonable range.”[10] As discussed in the Federal Register more than 25 years ago:

The OIG’s broad discretion is also reflected in the language of § 1001.2007(a)(2), restricting the ALI’s authority to review the length of an exclusion imposed by the OIG. Under that section, the ALI’s authority is limited to reviewing whether the length is unreasonable. So long as the amount of time chosen by the OIG is within a reasonable range, based on demonstrated criteria, the ALI has no authority to change it under this rule. We believe that the deference § 1001.2007(a)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.[11]

VI. Conclusion: 

This case illustrates the collateral impact of a False Claims Act judgment on the participation status of a health care provider. While the judgment itself is serious, being excluded from participation in federal health care programs is as serious, if not more serious, than the judgment. As excluded parties, the physician owner and the lab are effectively out of business. Moreover, the physician owner may find it difficult to obtain employment from another provider due to his exclusion status. Unfortunately, there is a very real chance that these actions are merely the proverbial “tip of the iceberg” in terms of what lies ahead for the physician owner and the lab. The exclusion action qualifies as an adverse action and will be reported to the National Practitioner Databank (if it has not already been reported). Additionally, to the extent that the physician owner and the lab are participating providers in any private payor insurance programs, it is very likely that they have an affirmative obligation to notify the plans of both the False Claims Act judgment and the exclusion action (depending on how their participation agreement is worded). This can result in both private payor audits of similar claims and in termination of a provider’s participation in the payor’s plan.  
How should you react if faced with a similar situation? Contact your health lawyer and make sure that you are prepared to address the various collateral administrative adverse actions that may flow from a False Claims Act judgment and / or an being excluded from participation in federal health care programs. Considering your options at the initiation of a False Claims Act investigation may help you avoid some of the consequences discussed above.

 

OIG ExclusionRobert 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, ZPIC audits, OIG investigations and Medicare exclusion actions. Is your practice facing alleged violations of the False Claims Act? We can help. For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

 

[1] Under the qui tam provisions of the False Claims Act, whistleblowers can are entitled to receive 15% to 25% of any recovery if the United States intervenes in the case, or 25% to 30% if the government declines to intervene in the case that the whistleblower has brought. Defendants who violate the civil False Claims Act are liable for three times the government’s damages plus significant civil penalties for each false claim that was improperly submitted for payment.

[2] Section 1128(b)(7) of the Social Security Act

[3] ALJ decision, citing Petitioner’s Request for Hearing, Ex. A at 2.

[4] In those cases where the OIG concludes that exclusion is not necessary in order to protect the integrity of the Medicare program, it will typically require that the individual and / or entity enter into a Corporate Integrity Agreement (CIA). The purpose of the CIA is to strengthen the provider’s compliance program and reduce the level of risk to the Medicare program.

[5] Under 42 U.S.C. §1320a-7(b)(f), “Federal health care program” is defined 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); or

(2) any State health care program, as defined in section 1320a-7(h).

[6] The Secretary has delegated the authority to impose an exclusion to the OIG, pursuant to: 42 C.F.R. §1001.901(a).

[7] 42 C.F.R. §1001.901(b)(1)-(5).

[8] An abbreviated set of these five criteria were set out in the OIG’s Final Rule, ”Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General’s Civil Monetary Penalty Rule.” See 81 Fed. Reg. 88,334 (Dec. 7, 2016). The full regulatory language of 42 C.F.R. §1001.901(b)(1)-(5) reads as follows:

“(b) Length of exclusion. In determining the length of an exclusion imposed in accordance with this section, the OIG will consider the following factors—

(1) The nature and circumstances surrounding the actions that are the basis for liability, including the period of time over which the acts occurred, the number of acts, whether there is evidence of a pattern and the amount claimed;

(2) The degree of culpability;

(3) Whether the individual or entity has a documented history of criminal, civil or administrative wrongdoing (The lack of any prior record is to be considered neutral);

(4) The individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion; or

(5) Other matters as justice may require.”

[9] Under 42 C.F.R. §1001.901(b)(4), an “individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion.”

[10] Craig Richard Wilder, DAB No. 2416 at 8.

[11] Federal Register Final Rule, “Health Care Programs; Fraud and Abuse; Amendments to OIG Exclusion and CMP Authorities Resulting from Public Law 100-93. 57 Fed. Reg. 3298, 3321 (January 29, 1992).

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 Actions: 

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.”

   OIG Exclusion Check

 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 possible 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. 


OIG ExclusionRobert 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 50th 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.

Current States With Separate Exclusion Databases

Medicaid Exclusion

I. Medicaid Exclusion

Exclusion Screening, LLC conducts monthly checks of our clients’ employees, contractors, and vendors against the OIG-LEIE, GSA-SAM, and all available State Exclusion Lists. Most providers understand that they have an obligation to check their employees, contractors, and vendors against the OIG-LEIE prior to hiring and monthly thereafter. Fewer providers are aware of their obligation to screen their individual state exclusion list, if their state maintains such a list.

CMS directed state Medicaid Directors to remind all providers that they have an obligation to search their state list whenever they search the LEIE.[1] In addition, many states require providers when they enroll or re-enroll in the Medicaid program to certify that no employee or contractor is excluded from participation in any state. This requirement echoes the Affordable Care Act (ACA) Section 6501, which states that if a provider is excluded in one state, he or she is excluded in all fifty states.[2]

II.  SAFERTM 

Exclusion Screening, LLC’s proprietary database, SAFER (State and Federal Exclusion Registry), imports the most recent exclusion data from each state list constantly. We are also in regular contact with state Medicaid and Program Integrity Offices about their lists.

III. State Exclusion Lists

The states that currently maintain a separate excluded provider list are: 


IV.  Some States Require Screening Extraneous Lists

In addition to these states’ excluded provider lists, many states also require providers to check other various Medicaid Exclusion databases. In Ohio, for example, providers must search the Ohio Department of Developmental Disabilities Abuser Registry, the Ohio Auditor of State – Finding for Recovery Database, Ohio Department of Developmental Disabilities Abuser Registry, Social Security Administration’s Death Master File, The National Plan and Provider Enumeration System, in addition to the LEIE, SAM, and Ohio Exclusion List.[3] New Jersey providers must check the LEIE, New Jersey Division of Consumer Affairs licensure databases, New Jersey Department of Health and Senior Services licensure database, and the certified nurse aide and personal care assistant registry on a monthly basis.[4] 

For additional information visit “OIG Exclusion and State Exclusion Lists: Which Exclusion Lists Need to Be Screened? What Is the Difference Between Them?”
V.  A Simple and Affordable Solution

Without a doubt, state and federal exclusion screening requirements are incredibly burdensome for most providers. If screening your employees against each federal and state list that your state requires is not cost effective for your office to do in-house, contact Exclusion Screening, LLC today at 1-800-294-0952 or fill out our online service form. We would be happy to discuss your specific state obligations, provide a cost assessment, and help you create your employee and vendor list.

Medicaid oig Exclusion

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article.


[1] See Letter from Centers for Medicare and Medicaid Services (CMS) to State Medicaid Directors 5 (Jan. 16, 2009).

[2] See 42 U.S.C. § 1396a(a)(39) (2012), available at http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf (codifying the termination requirements of ACA § 6501); see also Letter from Centers for Medicare and Medicaid Services (CMS), CPI-CMS Informational Bulletin, Affordable Care Act Program Integrity Provisions – Guidance to States — Section 6501 – Termination of Provider Participation under Medicaid if Terminated under Medicare or other State Plan (Jan. 20, 2012), available at http://downloads.cms.gov/cmsgov/archived-downloads/CMCSBulletins/downloads/6501-Term.pdf.

[3] See Ohio Admin. Code § 5160-1-17.8(c)(ii); Ohio Medicaid Provider Exclusion and Suspension List, Ohio Dep’t of Medicaid, http://medicaid.ohio.gov/PROVIDERS/EnrollmentandSupport/ProviderExclusionandSuspensionList.aspx (last accessed Jan. 22, 2015).

[4] Newsletter to All Providers, from the New Jersey Dep’t of Human Servs., et al., Excluded, Unlicensed or Uncertified Individuals or Entities (Oct. 2010).

Why Should I Screen Against Every State Exclusion List?

man overwhelmed by paper - state exclusion list

The Office of the Inspector General (OIG) issued a Special Advisory Bulletin in May 2013, which states that providers can “avoid potential Civil Monetary Penalty (CMP) liability” simply by checking the List of Excluded Individuals and Entities (LEIE) to “determine the exclusion status of current employees and contractors.” This past fall, September – November 2014, OIG collected $1.54 Million in Civil Money Penalties (CMPs) in cases involving the employment of persons that have been “excluded” from Medicare.

These providers were held liable because they “knew or should have known” that an employee or contractor was excluded from participation in the Federal health care programs. The “knew or should have known” standard arises from the same 2013 OIG Special Advisory Bulletin. OIG states that because the LEIE is updated monthly, so OIG recommends that providers check their employees and vendors against the LEIE and SAM monthly in order to avoid CMP liability.  The CMPs a provider may face for employing or contracting with an excluded individual or entity include liabilities of $10,000 for each item or service furnished directly or indirectly by an excluded individual, in addition to an assessment of up to three times the total damages, and exclusion from participation in the Federal health care programs.

In addition to the federal lists, thirty-six states now have their own excluded provider lists.  These states require, at a minimum, that providers check their employees and contractors against their state list in addition to the LEIE as a requirement to participate in Medicaid and other state health care programs like SCHIP.  State mandates to search are hidden in a variety of documents such as Medicaid Provider Applications and Agreements, Disclosure of Ownership Interest, the State Code, or even the State’s Excluded Provider List.

At Exclusion Screening, LLCSM, we recommend screening your employees and contractors against not only the federal lists and your state’s list, but every available state list. The reason we recommend screening your employees against every available federal and state list is simple.  Do you want a person another state has determined is not permitted to bill to their Medicaid or SCHIP program working for your practice? A majority of individuals, at least according to the LEIE, are excluded because his or her license was revoked.  Other reasons include felony and misdemeanor convictions for committing health care fraud or for controlled substance offenses. 

As of December 2014, 26,178 individuals, or nearly half of the total individuals and entities excluded from participation in the Federal health care programs on the LEIE, were excluded due to a license revocation.  An immediate concern following this statistic is that, according to Deputy Inspector General for Investigations Gary Cantrell, not all state licensing boards provide information regarding adverse action taken against providers to OIG.  Cantrell reported to House Subcommittee on Oversight and Investigations within the Committee on Energy and Commerce, that States are not required to provide this information by statute leaving the OIG with incomplete exclusion information.

Furthermore, the under ACA Section 6501, all states are required to deny or terminate enrollment of any provider that is terminated “for cause” by Medicare or another State’s Medicaid or SCHIP program.  While the parameters of this new mandate are not yet flushed out, we believe that it is good practice to stay ahead of OIG when it comes to exclusions.  Under an ACA sister provision, 6401(b)(2), the Centers for Medicare and Medicaid Services (CMS) was required to create a national database where State agencies could share and access information about individuals and entities that were terminated from the Medicare, Medicaid, or SCHIP programs.  CMS created the Medicaid and Children’s Health Insurance Program State Information Sharing System (MCSIS) to make this information available to all State Medicaid agencies so that other states could identify providers that needed to be terminated.

Even though CMS had the authority to require states to submit this information, it only asked states to comply; CMS’s failure to make reporting mandatory resulted in a very deficient database with only 33 states submitting information, most of which was incomplete.  After two years of insufficient reporting, CMS discontinued the MCSIS database.  It plans to create a new private database, but CMS has not provided a proposed completion date for this new OnePI system or stated whether it would share information with the OIG-LEIE.

Additionally, some states have imposed their own strict requirements on providers.  Louisiana providers are required to check the LEIE, SAM, and the Louisiana Department of Health and Hospital Adverse Actions website upon hire and monthly thereafter for all employees and or subcontractors.  Louisiana providers are required to maintain proof in their records that these monthly checks were done for employees and or subcontractors, which may be evidenced by printing out search results. Providers are required to check all current and previous names  including first, middle, maiden, married, or hyphenated names and aliases for all owners, employees, and contractors.  If a provider learns an employee or subcontractor is excluded after hiring, the provider must notify the Department of Health and Hospitals within ten working days.

Texas, like Louisiana, requires that before a provider submits a Medicaid enrollment application, “the applicant or re-enrolling provider must conduct an internal review to confirm that neither the applicant or the re-enrolling provider, any of its employees, owners, managing partners, or contractors, have been excluded from participation” in Medicare, Medicaid, or SCHIP. In addition, Texas requires that an applicant or re-enrolling provider must also not be terminated from participation in another state’s medical assistance program or SCHIP. Texas Medicaid providers are responsible for checking the LEIE monthly and the Texas Medicaid Excluded Provider (HHSC) list upon hiring and periodically thereafter.  While Texas does not define periodically, it does remind providers that they are liable for all fees paid to them by Texas Medicaid for services provided by excluded individuals and “strongly recommend[] that providers conduct frequent period checks of the HHSC exclusion list.” The list is updated weekly.

Ohio also has a unique set of requirements.  Ohio Medicaid providers must, according to the Medicaid Provider Agreement, certify that he or she has no employment, consulting, or any other arrangement with excluded individuals or entities.  Managed Care Programs must, at a minimum on a monthly basis, search for excluded providers on the LEIE, the Ohio Department of Job and Family Services (ODJFS) Excluded Provider Page, and the applicable discipline pages of state boards that license providers.  Ohio providers are also required to search the SAM, the Ohio Department of Developmental Disabilities Abuser Registry, and the Ohio Auditor of State.

In addition to various state requirements, private health care companies also have begun including exclusion screening requirements.  Aetna, for example, requires that all health care professionals verify that all employees and “downstream entities that perform administrative or health care services to Aetna’s Medicare Plans” are not excluded on the LEIE or SAM.  If an Aetna provider discovers it has employed or contracted with an excluded provider, then he or she must immediately remove this individual or entity from Aetna related work and immediately notify Aetna.  Humana has nearly identical provisions for their physicians, hospitals, and other health care providers.

Screening employees for exclusions has morphed from an easy compliance responsibility to an overbearing obligation.  “Knew or should have known” is an easily manipulated standard.  Should you have known that another state excluded one of your employees or contractors? If OIG thinks so, you will be liable for Civil Monetary Penalties of up to $10,000 for each item or service furnished directly or indirectly by the excluded individual or entity, an assessment of up to three times the total damages, and exclusion from participation in the Federal health care programs. OIG has ramped up its exclusion enforcement evidenced by CMP liabilities resulting from self-disclosures and investigations totaling 6.07 million dollars in 2014 as compared to previous years with average CMP liabilities around $3 million.

The risks of not screening your employees against every state list significantly outweighs the costs of screening, especially when Exclusion Screening, LLCSM is able to efficiently and effectively screen your employees and vendors against all 38 lists at a very reasonable cost to providers.  Call 1-800-294-0952 today to discuss your exclusion screening needs and for a free assessment.

CMP Liabilities: Why Are Some Much Higher Than Others?

A quick review of the Office of Inspector General’s (OIG) exclusion enforcement actions might make one wonder why the Civil Monetary Penalties (CMPs) for some entities are only $10,000 while others are closer to $2,000,000. We were curious as well, and took a look into the factors that might contribute to the vast differences in money owed.

 CMP Liabilities Higher

The easiest answer is that CMPs tend to be lower for entities that self-disclosed the exclusion violation as opposed to entities that were subject to an OIG investigation. “Tend” is the key word here. You’ll notice that the August 5, 2014 case (see “CMP Liabilities Higher” link above) was self-disclosed and has the highest CMP amount listed at $1,983,907.51.

I.  CMP Liability Depends on How Many Excluded Individuals Are Hired

Another contributing factor is the number of excluded individuals that the provider employed or contracted with. More individuals means that more claims were likely submitted for payment. Therefore, the government likely paid more money to these providers than providers who only employed or contracted with one excluded person. This is evident in the two exclusion actions which took place on August 5, 2014. The University Hospital employed one excluded individual and owed $10,000 in CMP liabilities, while the laboratory owed nearly $2,000,000 because it knew or should have known that four employees were excluded from participation in the federal health care programs. However, it’s important to note that the March 7, 2014 case which totaled $243,266.31 in CMPs only involved one excluded individual. So what is going on?

II.  CMP for Each Item or Service Provided

OIG has discretion to impose CMPs of up to $10,000 for each item or service that the excluded individual provided. Hence, the length of time and the number of items or services provided by the excluded individual directly contribute to the total CMP amount imposed on a provider. The March 7, 2014 case involved a nursing and rehabilitation center, so it is likely that a large majority of the entity’s claims were submitted to the Federal health care programs for payment. Additional information about the excluded individual is not available, but the rules governing CMPs lead us to believe that this individual was employed with the facility for a fairly substantial period of time and provided a large number of items and services that were directly or indirectly billed to the Federal health care programs.

The Federal health care program monies may not be used for activities that violate the law. Therefore, even a self-disclosing entity[1] will be subject to large CMPs if the excluded individual performed a lot of services that were billed (directly or indirectly) to the Federal health care programs.

III.  Our Take-Away

Our take-away from this closer look at CMPs confirms that it is best to identify an individual or entity that is excluded as soon as possible. This is where monthly screening comes in. You might screen your employee or contractor before hiring, but if you continue to let that employee or contractor conduct services that are billed directly or indirectly, you may be responsible for paying that money back. Finding out a person is excluded one month into a relationship with them is much better than learning about the exclusion six months or a year later because the person will not have had an opportunity to perform an extreme amount of services that will get you into hot water. 

CMP Liabilities

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] Providers are reminded that OIG may use a lower multiplier for damages in self-disclosure cases, but it is under no obligation to do so. Dep’t of Health and Human Servs. Office of the Inspector Gen., Updated OIG’s Provider Self-Disclosure Protocol, 14 (Apr. 17, 2013).