Pennsylvania Doctor Excluded in Connection with Quality of Care


(September 26, 2019): 
Over the past year, both State and Federal law enforcement investigators and prosecutors have gone to considerable lengths to publicize the government’s fight against opioid abuse.  While much of this fight has focused on the manufacturers of prescription opioid products, the improper prescribing practices of physicians and other medical professionals found to be prescribing these drugs “without any legitimate purpose and outside the usual course of professional practice” have been repeatedly highlighted in criminal prosecutions by U.S. Attorney’s Offices around the country.  A recent case against a Philadelphia-area cardiologist provides a classic example of how improper opioid prescribing practices can lead to criminal prosecution, civil penalties AND severe administrative sanctions (in this case, exclusion from participation in Federal health care programs).  The article examines how the cardiologists was identified and steps you should take to reduce your level of risk in this regard.

 I. Background of the Case:

Like many big cities, Philadelphia has a problem with illegal drugs.  Despite the city’s efforts to curb illicit drug use, unintentional drug overdoses have steadily grown since 2010 and have only slightly tapered-off from their all-time high since 2017.[1]

Social Security Act 1128(b)(6)
While the percentage of opioid-related deaths changes from quarter to quarter, it is estimated that approximately 80% of all unintentional drug deaths in Philadelphia are due to opioid misuse and overdose.  In response to the opioid abuse crisis in Philadelphia and other areas of the country, a multi-agency team of Federal and State investigators and prosecutors, known as the Medicare Fraud Strike Force[2] (Philadelphia Strike Force) has been targeting physicians, nurse practitioners and other medical professionals who have been improperly prescribing and / or distributing opioids.  In this particular case, the prescribing practices of this Philadelphia cardiologist (defendant) were identified by the Philadelphia Strike Force as warranting further review.  Upon investigation, the government alleged that from 2016 to 2018, the defendant wrote a number of prescriptions for oxycodone and / or benzodiazepine to patients without a legitimate medical purpose.  

In light of the allegations presented, the U.S. Attorney’s Office pursued both civil and criminal claims against the cardiologist.  It is important to keep in mind that the Department of Justice has long instructed its prosecutors to pursue parallel criminal and civil actions against a defendant, when appropriate.  As Title 9, Section 27 of the Justice Manual[3] provides:

Department policy is that criminal prosecutors and civil trial counsel should timely communicate, coordinate, and cooperate with one another and agency attorneys to the fullest extent appropriate to the case and permissible by law, whenever an alleged offense or violation of federal law gives rise to the potential for criminal, civil, regulatory, and/or agency administrative parallel (simultaneous or successive) proceedings. By working together in this way, the Department can better protect the government’s interests (including deterrence of future misconduct and restoration of program integrity) and secure the full range of the government’s remedies (including incarceration, fines, penalties, damages, restitution to victims, asset seizure, civil and criminal forfeiture, and exclusion and debarment).”  (emphasis added). 

The Justice Manual guidance further notes that:
“Courts have recognized that “[t]here is nothing improper about the government undertaking simultaneous criminal and civil investigations provided that we use those proceedings and associated investigative tools for their proper purposes and in appropriate ways.”  (emphasis added).

II. Criminal Prosecution for Violations of 21 USC §841(a)(1) and (b)(1)(C):

In March 2019, the defendant pleaded guilty to eight felony counts of the unlawful distribution and dispensing of a controlled substance, in violation of 21 USC §841(a)(1) and (b)(1)(C).   The defendant’s sentencing is scheduled to take place later this year.  As a result of the criminal conviction, the defendant may be sentenced to prison for a significant period of time AND assessed criminal fines for his unlawful conduct.

III.  Civil Liability under the False Claims Act, 31 USC §3729:

Notably, it does not appear that the defendant entered into a “global” settlement at the time he decided to plead guilty to the criminal charges discussed above.  As a result, any civil and / or administrative actions that the government might choose to pursue remained active.  On July 1, 2019, the defendant agreed to enter into a False Claims Act settlement with the government and pay $107,584 in penalties and damages to the government.   

IV. Administrative Actions Taken Against the Defendant:

As part of his civil settlement reached with the government, the defendant cardiologist agreed to:
  • Surrender his medical license and Drug Enforcement Administration Certificate of Registration and further agreed not to seek to renew or reinstate either one in the future.
  • Be excluded from participation in Federal Health programs.
As HHS-OIG’s records reflects, the defendant was excluded from participation in Federal health care programs on July 18, 2019.  The basis for exclusion cited by the government is Section 1128(b)(6) of the Social Security Act – Quality of Care.

As you will recall, under Section 1128 of the Social Security Act, if an individual or entity is convicted of certain crimes, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) is required by law to exclude the individual or entity from participation in Federal health care programs.  These types of actions are referred to as “Mandatory Exclusions.”  The bases for imposing a mandatory exclusion are set out in Section 1128(a)(1) through Section 1128(c)(3)(G)(ii).  In contrast to mandatory exclusion actions, there are also a number of “Permissive Exclusion” authorities that may be used (at the agency’s discretion) by HHS-OIG to bar an individual or entity from participating in Federal health benefit programs.  The permissive exclusion authorities that may be exercised by HHS-OIG are covered in the Social Security Act from Section 1128(b)(1)(A) through 1128(b)(16).  HSS-OIG may also exercise its permissive exclusion authority under Social Security Section 1156, if a provider fails to meet its obligations to provide medically necessary services that meet the professional recognized standards of care.
In this particular case, HHS-OIG chose to exercise its permissive exclusion authority under Section 1128(b)(6) of the Social Security Act – Quality of CareThis particular basis for excluding an individual or entity can be assessed if a defendant or target is alleged to have submitted:
“Claims for excessive charges, unnecessary services or services which fail to meet professionally recognized standards of health care, or failure of an HMO to furnish medically necessary services.”
Under this statutory provision, an individual or entity can be excluded for a minimum period of one year.  In light of the allegations presented, the defendant cardiologist was excluded from participation by HHS-OIG for a total of seven years.[4]

V. Impact of Medicare Exclusion on the Defendant’s Career:

As the case synopsis above reflects, Federal law enforcement prosecuted the defendant in this case to the full extent of their abilities.  In addition to facing incarceration, the defendant was also assessed penalties and damages of more than $107,000 under the False Claims Act.  While the criminal and civil actions taken against the defendant are quite serious, the cardiologist’s problems are further magnified by the fact that he has also been excluded from participation in Federal health care programs.  At the end of the day, it is quite conceivable that the U.S. Sentencing Guidelines, the defendant’s criminal sentence will be relatively brief.  Depending upon the terms of his civil / administrative settlement, he may be free to seek licensure in another state upon his release from jail. 

VI. Final Thoughts:

Even assuming that the defendant regains licensure in another state, the administrative exclusion action taken against him will effectively bar him from enrolling in Federal health care benefit programs for the entire period that he remains excluded.  While excluded, he will not be eligible to work for any provider or supplier who participates in one or more Federal health care plans.  Should a health care provider or supplier choose to employ the defendant (an excluded party), each of the claims submitted to Medicare, Medicaid and other government plans may be subject to significant civil monetary penalties. 

How can you protect your practice?  Consistent with your obligations under the law, it is imperative that you screen your employees, agents, contractors and vendors against all of the 43 exclusion databases currently in operation.  Unfortunately, it is practically impossible for a medical practice or other entity to screen one or more of its employees against all 43 databases.  Luckily, the folks at Exclusion Screening can take this time-consuming (and often frustrating) task off of your shoulders.  Give us a call at 1 (800) 294-0952 for a complimentary discussion of your screening needs and a quote.


[2] The government’s Medicare Fraud Strike Force is primarily composed of Federal agents and investigators of the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the Federal Bureau of Investigation (FBI), along with Federal prosecutors working for U.S. Attorneys Offices around the country.  First established in March 2007, the Strike Force has been instrumental in investigating and prosecuting cases of health care fraud, waste and abuse. 
[4] “Pennsylvania physician Agrees to Voluntary Exclusion” https://oig.hhs.gov/fraud/enforcement/cmp/cmp-ae.asp

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]

LEGISLATIVE BACKGROUND

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

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

WHAT IS AN OIG EXCLUSION? WHAT IS ITS IMPACT?

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

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

The “payment prohibition” is a complete payment ban applicable to “all methods of Federal program reimbursement” regardless of whether it is from an itemized claim, cost report, capitated payment, or other bundled payment. It extends beyond direct patient care and includes, for example, services performed by excluded individuals who work for or under an arrangement with a hospital, nursing home, home health agency, or managed care entity where they are separately billed or part of a bundled payment. (See 2013 Special Advisory, at pages 6 and 7.) The following are examples of activities identified by the OIG in the Special Advisory as potentially problematic and susceptible to the imposition of civil money penalties if not properly screened for exclusions:
  • Management, administrative or any leadership roles;
  • Surgical support such as the preparation of a surgical tray that indirectly assists in care;
  • Claims processing and information technology;
  • Providing transportation services with excluded ambulance drivers or by employing excluded ambulance company dispatchers;
  • Selling, delivering or refilling orders for medical devices or equipment (whether reimbursed directly or indirectly);
  • Review of treatment plans, and other support services, whether billed separately or as part of a bundled payment.
Even unpaid volunteers can trigger overpayment and CMP liability if the items or services they furnish are not “wholly unrelated to Federal Health Care Programs” and the provider “does not ensure that appropriate exclusion screening was performed!” (Emphasis added, 2013 OIG Special Advisory, at 11-12, 16; see also Advisory Opinion No. 18-01.)

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.)

TYPES OF OIG EXCLUSIONS

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

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.

FACTORS IN IMPOSING PENTALTIES AND ASSESSMENTS

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

Mitigating Factors:

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

Aggravating circumstances:

  • There were several violations, or a pattern, over a lengthy period of time;
  • The ownership, control, or responsibility implicated §1003.200(b)(3);
  • The amount claimed or requested for such items was $50,000 or more;
  • The violation caused or could have caused, adverse patient consequences.

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.

ABOUT THE AUTHOR

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.


[1]
“OIG” in this paper refers to “Office of Inspector General, Department of Health and Human Services” unless otherwise stated.  The term “OIG Exclusion” is used as shorthand for an administrative action taken by the OIG barring an individual or entity from participating in Federal health care programs pursuant to §1128(a)(1)-(4), (b)(1)-(b)(16) or §1156 of the Social Security Act (SSA).
[2] This article focuses on exclusions from a regulatory and enforcement perspective, but exclusions also play a critical role in compliance and risk management programs. See, e.g., HCCA, Measuring Compliance Program Effectiveness: A Resource Guide (Jan. 2017), available at ttps://oig.hhs.gov/compliance/compliance-resource-portal/files/HCCA-OIG-Resource-Guide.pdf. (guidance reconfigures the traditional “Seven Elements of an Effective Compliance Program” and makes the “Screening and Evaluation of Employees, Physicians, Vendors and other Agents” an element unto itself – or the new “Seventh Element of Compliance”).
[3] The Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, Public Law 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).

What to Know About the New CMS Preclusion List

By: Cason Liles

New CMS Preclusion List(February 12, 2019) Beginning April 1, 2019, CMS’s new Preclusion List will go into effect subsequently barring many healthcare professionals from receiving payment for Medicare Advantage (MA) items and services or Part D drugs furnished or prescribed to Medicare beneficiaries. But what is the Preclusion List? Who is on it? Why was created? Don’t worry, we’re going to break down everything you need to know about this new CMS action and how it can affect your organization.

 I. What is the Preclusion List?  

The Preclusion List is a list generated by CMS that contains the names of prescribers, individuals, and or entities that are unable to receive payment for Medicare Advantage (MA) items and service and or Part D drugs prescribed or provided to Medicare beneficiaries.

 II. How Does Someone End up on The Preclusion List?  

CMS has given two ways for which someone can end up on the Preclusion List. The first one way is if you:

“Are currently revoked from Medicare, are under an active reenrollment bar, and CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program”

 However, even if you are not revoked from Medicare, you still may find yourself on the Preclusion List. CMS is also precluding anyone that has:

“… Engaged in behavior for which CMS could have revoked the prescriber, individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. Such conduct includes, but are not limited to, felony convictions AND Office of Inspector General (OIG) exclusions.”


 III. Why was the Preclusion List Created?  

In April of 2018, within the Federal Register Rules and Regulations update, the Department of Health and Human Services released information on policy changes to Medicare programs. In which, they discussed the Preclusion List and their reasoning for establishing the new rule. It seems that CMS has given a few reasons for putting this new rule into effect:
  • “To focus on preventing payment for Part D drugs prescribed by demonstrably problematic prescribers”
  • “Reduce the burden on Part D prescribers and Medicare Advantage providers without compromising our program integrity efforts.” And to
  • “To replace the Medicare Advantage (MA) and prescriber enrollment requirements.”
By doing this, CMS believes that it will save $34.4 million dollars in 2019. These savings would be derived from the removal of the requirements for Part D prescribers and Medicare Advantage providers and suppliers to enroll in Medicare prior to providing health care services and items.

 IV. How do I Know if I am Precluded?  

Unlike the Office of Inspector General’s (OIG) monthly exclusion list, the Preclusion list will not be shared publicly. Precluded providers however will receive notice in a variety of ways. First, CMS will issue an initial email notification to the precluded providers using their email addressed which they provided to either the Provider Enrollment, Chain and Ownership System (PECOS), the National Provider Plan and Enumeration System (NPPES), or from the Medicare enrollment system of record. The Medicare Administrative Contractor (MAC) will also follow up by sending a written notice through the mail to the precluded provider before they are added to the Preclusion List. Within this letter you will also be informed on why exactly you are precluded, the date that your preclusion will go into effect, and your applicable appeal rights.

 V. Are Dentists at Risk of Being Precluded?  

YES.
If a dentist has been revoked from Medicare, is under an active re-enrollment bar, and CMS has found that the actions that led to their original revocation is a risk to the integrity of the Medicare program or has engaged in behavior for which CMS could have excluded them from participating in Medicare if they had enrolled.
 
 VI. When will the Preclusion List go into Effect?  

The first list of providers that were to be precluded were published and were sent notice on January 1, 2019. However, beginning April 1, 2019 Part D sponsors will become required to reject any prescriptions for Medicare Part D drugs that are prescribed by an individual or entity that is on the Preclusion List. Medicare Advantage (MA) plans will also become required to deny payments for any healthcare service or item that was provided by and individual or entity that is on the Preclusion List.

 VII. Is This the Same as the OIG’s Exclusion List?  

The OIG Exclusion List is NOT the same as this new CMS List. That being said, there is some overlap. If you have been excluded, you can still find yourself on the Preclusion List if you fall into the either of the two criteria listed above under the “How Does Someone End up on The Preclusion List? ” section. As you can see in the diagram below, there is some overlap, but not much.

New CMS Preclusion List


 VIII. How can I Screen for Precluded Individuals or Entities?  
Unfortunately, access to the Preclusion List is Extremely Restricted. However, under certain circumstances, we here at Exclusion Screening, LLC can provide guidance and help. Contact us info@exclusionscreening.com or give us a call at (800)-294-0952 for a free consultation and quote.

A Review of OIG Enforcement Actions in Fiscal Year 2018

By Cason Liles

OIG in Fiscal Year 2018(February 6, 2019): The Department of Health and Human Services (HHS), Office of Inspector General (OIG) is an independent, objective law enforcement and investigative agency that is responsible for protecting the financial integrity of the more than 300 programs that are administered by HHS.  Collectively, these programs represent approximately 24% of the Federal budget.  Although OIG is responsible for investigating allegations of fraud, waste and abuse related to literally hundreds of HHS programs, most of OIG’s investigative and enforcement activities arise out the Medicare and Medicaid programs.  Simply put, OIG’s mission is fighting fraud, waste and abuse.  In the pursuit of this mission, OIG aggressively investigates allegations of wrongdoing to identify and recover improper payments made to health care providers, suppliers and other parties who have engaged in fraudulent, wasteful or abusive conduct.  One of the key tools used by OIG to protect patients and safeguard the financial integrity of the Medicare and Medicaid programs is its authority to exclude individuals and entities from participation in Medicare, Medicare and other Federal health care benefit programs.  This article examines a number of the exclusion-related enforcement actions taken by the OIG in Fiscal Year (FY) 2018.  

 I. An Overview of FY 2018 Exclusion Actions:  


At the outset, it is important to keep in mind that “exclusion” actions aren’t new.  They were first mandated in 1977 as part of the “Medicare-Medicaid Anti-Fraud and Abuse Amendments,” Public Law 95-142.  The responsibility for imposing mandatory and permissive exclusion actions rests with OIG.  As in prior years, OIG aggressively exercised its exclusion authorities in FY 2018 and excluded 2,712 individuals and entities from participating in Federal health care benefit programs.  A number of the more noteworthy exclusion actions taken in FY 2018 are outlined below:


 II. Noteworthy Civil Monetary Penalty and Affirmative Exclusion Actions Taken by OIG in FY 2018:  


Oklahoma.
 
(January 2018). Assisted Living Facility Settles Case Involving Excluded Individual.  In this case, an Oklahoma assisted living facility (ALF) improperly employed an excluded individual who was hired to work as an “Admissions Specialist.”  As a result of the organization’s wrongful employment of this excluded individual (likely caused by a failure to properly screen all of its staff), the ALF may have faced significant civil monetary penalties (CMPs).  Ultimately, the ALF entered into a settlement agreement with OIG and agreed to pay more than $96,000.  This case illustrates the importance of screening ALLemployees, not merely direct patient caregivers such as physicians, nurses, medical assistants and other licensed health care professionals. 


Oklahoma.
 
(February 2018). Management Company Settles Case Involving Excluded Individual.  An organization that owns and manages a skilled nursing facility in Oklahoma City, Oklahoma, was alleged to have hired a licensed practical nurse (LPN) who was excluded from participating in any Federal health care program. An OIG investigation found that this individual had provided items or services that were reimbursed by Federal health care programs. This resulted in the skilled nursing facility entering into a settlement agreement with OIG and agreed to pay more than $140,000 to the government.


New Jersey.
 
(March 2018). Pharmacy and Owner Settle Case Involving Excluded Individual.  In this New Jersey case, a pharmacy and its owner were alleged to have employed a pharmacist who was excluded from participating in Federal health care benefit programs. Upon investigation it was found that this excluded pharmacist had provided items or services to patients that were reimbursed by Federal health care programs. The pharmacy entered into a settlement agreement with OIG and agreed to pay more than $300,000 to the government.


Pennsylvania.
 
(March 2018). Physician Agrees to Voluntary Exclusion.  In this case, a Pennsylvania physician accepted an exclusion from participation in all Federal health care programs for 10 yearsunder 42 U.S.C. § 1320a-7(b)(6)(B).[1]OIG alleged that the physician had  issued opioid prescriptions to patients that were in excess of their needs and fell substantially short of the professionally recognized standards of care. This cause illustrates just how serious the OIG currently is when dealing with these opioid-related issues.


New Jersey.
(September 2018).  New Jersey Health Center Pays Penalties for Improperly Employing an Excluded Individual.  In this New Jersey case, a community health center was alleged to have improperly employed a physician who was excluded from participation in Federal health care benefit programs. Notably, the excluded physician was found to be working in quality assurance and risk management.  Additionally, the excluded physician had provided items and services that were ultimately billed to Federal health care programs. As a result of this wrongful hire, the community health center entered into a settlement agreement with OIG that required the organization to pay more than $98,000.

 
Illinois. (September 2018).  Psychologist Agrees to 20-Year Exclusion.  In this Illinois case, a licensed psychologist was alleged to have billed for psychological services that were either: (1) not provided as claimed; (2) false or fraudulent because the dates of service billed were times when either the patient was hospitalized, OR the psychologist was travelling out of the state. Based on the allegations, the psychologist agreed to be excluded from participation in all Federal health care programs for a period of 20 years under 42 U.S.C. § 1320a-7(b)(7).[2]


Tennessee.
 
(September 2018).  Advanced Practice Nurse (APRN) Agrees to 10-Year Exclusion.In this Tennessee case, an advanced practice nurse (APRN) agreed to be excluded from participation in Federal health care benefit programs for 10 yearsunder 42 U.S.C. § 1320a-7(b)(6)(B) and42 U.S.C. § 1320a-7(b)(6).[3]  Importantly, this particular exclusion action was imposed due the APRN’s inappropriate opioid prescribing practices.  It is also worth noting that the OIG further alleged that the APRN prescribed controlled substances without appropriately documenting: (1) A clear objective finding of a chronic pain source to justify the ongoing and increasing prescribing; (2) Attempts to identify the etiology of reported pain; (3) A thorough history or adequately inquiring into potential substance abuse history; or (4) A written treatment plan with regard to the use of the prescriptions.  If OIG audits your controlled substance prescribing practices, the agency will be looking for each of these items in the record.


 III.   Noteworthy Exclusion Self-Disclosures Reported to OIG in 2018:  


Hawaii.
 
(January 2018). General Hospital Self-Discloses Employment of Excluded Individual. After voluntarily self-disclosing the employment of an excluded individual, a Hawaii based hospital agreed to pay $100,000 for accusations of violating the Civil Monetary Penalties Law. OIG alleged that the hospital knew or should have known that the individual had been excluded from participation as a provider in Federal health care benefit programs.


Rhode Island.
 
(March 2018). Nursing Home Self-Discloses Employment of Excluded Individual.  A nursing home in Rhode Island learned that it had improperly employed an individual who was excluded from participation in Federal health care benefit programs. After subsequently choosing self-disclosing of this employment to OIG, the nursing and rehabilitation center agreed to pay more than $42,000 to resolve violations of the Civil Monetary Penalties Law.


Ohio.
(April 2018). Ohio County Health District Self-Discloses the Improper Employment of Excluded Individual.  In this Ohio case, a County Health District agreed to pay more than $55,000 for alleged violations of the Civil Monetary Penalties Law. The County Health District voluntarily disclosed that it had improperly employed an individual that it knew or should have known was excluded from participation in Federal health care benefit programs.


Texas.
(September 2018). Rehabilitation Center in Texas Self-Discloses Employment of Excluded Individual.  In this Texas case, arehabilitation and care center learned that their organization had unwittingly hired an individual that had been excluded from participation in Federal health benefits programs.  To their credit, the rehabilitation center self-disclosed the violation directly to OIG.  Ultimately, the rehabilitation center was required to pay more than $129,000 in civil monetary penalties to the government in connection with this wrongful employment.


 IV.
Points to Consider:  


 
As several of the cases above reflect, opioid related audits and investigations are increasingly resulting in OIG exercising its permissive exclusion authority under 42 U.S.C. § 1320a-7(b)(6).  It is important to keep in mind that this statutory provision can be applied to practically any situation where a health care provider’s services “fail to meet professionally recognized standards of health care.”  Now, more than ever before, it is imperative that health care providers remain up-to-date with respect to the standards of care applicable in their specific field of practice.  Additionally, their compliance with applicable standards of care must be fully and accurately documented their actions in the patient’s medical records.


Health care providers and suppliers MUST ensure that they are taking the appropriate steps to ensure that their employees, agents, contractors and vendors have not been excluded from participation in Federal health benefit programs. Based on the OIG’s actions in 2018, we should fully expect for the agency to continue to increasingly focus on exclusion-related administrative actions in 2019.


Is your practice or health care organization meeting its screening obligations?  Call the experienced staff at Exclusion Screening for help with your screening needs.

[1]42 U.S.C. § 1320a-7(b)(6)(B) permits the OIG to impose a permissive action if an individual or entity has furnished or caused to be furnished items or services to patients (whether or not eligible for benefits under subchapter XVIII of this chapter or under a State health care program) substantially in excess of the needs of such patients or of a quality which fails to meet professionally recognized standards of health care.”

[2]42 U.S.C. § 1320a-7(b)(7) is one of the permissive exclusion authorities that may be exercised (at the discretion of OIG). This permissive exclusion authority is used when excluding an individual or entity for Fraud, kickbacks, and other prohibited activities.”

[3]42 U.S.C. § 1320a-7(b)(6) is another one of the permissive exclusion authorities that may be imposed, at the sole discretion of OIG.  This permissive exclusion authority is used when excluding an individual for the wrongful submission of Claims for excessive charges, unnecessary services or services which fail to meet professionally recognized standards of health care, or failure of an HMO to furnish medically necessary services.”

Concealing Information Regarding an Excluded Party and Lying on a Medicare CMS-855a Enrollment Application Will Swiftly Make a Bad Situation Even Worse!

CMS-855a Enrollment Application(January 8, 2019): Since first being enacted in 1965, Congress has enacted a number of measures to safeguard the financial integrity of the Medicare and Medicaid programs. The Medicare-Medicaid Anti-violations Fraud and Abuse Amendments of 1977 (Public Law 95-142) are among the most significant. In addition to making of the Federal Anti-Kickback Statute a felony, the legislation also mandated that physicians and other practitioners convicted of program-related crimes be excluded from participating in Medicare and Medicaid.  Since 1977, the scope of mandatory and permissive bases that can result in program exclusion has expanded significantly. Exclusion actions are the proverbial “kryptonite” of administrative sanctions that may be imposed on health care providers and suppliers.  As the exclusion statute now stands, if a health care provider or supplier is excluded from participation in Medicare, Medicaid or other Federal health care benefit plans, no payment can be made for any of the services or items “furnished, ordered, or prescribed by an excluded individual or entity.”[1]

From a practical standpoint an excluded individual or entity cannot bill or work for any practice or entity that bills Federal health care benefit programs. The Department of Health and Human Services (HHS), Office of Inspector General (OIG), is the agency responsible for imposing Federal exclusion actions[2] that are mandated[3] under the law. At its discretion, the OIG may also choose to pursue an exclusion action against individuals and entities that have been subjected to a number of other adverse actions.[4] Although both mandatory and permissive exclusion actions are administrative in nature, the seriousness of an exclusion action cannot be understated. This article examines a recent case where the failure to disclose the ownership of a home health agency by excluded individuals resulted in the indictment and conviction of the agency’s owners and two members of the agency’s staff.

 I. The Medicare Enrollment Process is the First Line of Defense to Prevent Program Fraud:

Among its many responsibilities, the Centers for Medicare and Medicaid Services (CMS) is responsible for administering the Medicare, Medicaid and Children’s Health Insurance Program (CHIP) health care benefits programs. To serve as a participating provider or supplier in the Medicare program, an enrollment application must first be completed.[5]  The specific enrollment application form to be completed, varies depending on the type of provider or supplier entity. For example, home health agencies are required to complete enrollment application CMS-855A.[6] 

A number of items in the enrollment application are specifically intended to identify various adverse actions that may have been imposed against an entity, its owners or managers.  For example, applicants must disclose whether the provider or supplier has a history of any final adverse actions, such as convictions, exclusion actions, revocation actions, or suspensions. Administrative adverse legal actions that must be reported are listed on page 16 of the CMS-855a.  As the application states, the following administrative adverse actions must be disclosed:


If the applicant has a history of one or more final adverse legal actions (either a qualifying conviction or one of the administrative actions listed above), the actions must be detailed in SECTION 3 of the CMS-855a.



Finally, SECTION 15 of the CMS-855a requires that applicants attest to the following: 
SECTION 15, further requires that applicants certify that all of the information contained in CMS-855a is “true, correct and complete. . .”

 II. What’s the Best Way to Make an Administrative Exclusion Action Even Worse? Lie About it:

A recent criminal prosecution out of the Northern District of Texas provides a real-life example of how a health care provider can make things go from bad to worse.  In that case, the concealment of an administrative exclusion action, along with the falsification of Medicare and Medicaid enrollment and re-validation paperwork, resulted in the criminal prosecution and conviction of four individuals associated with this north Texas home health agency.  A chronology of the case is set out below:
  • April 2001. A north Texas-based home health agency (referred to as “NTHHA”) was incorporated as a Texas limited liability company with a business address in Garland, Texas. After being incorporated, NTHAA applied to become a participating home health provider in the Medicare program. The agency also applied to provide Personal Assistance Services (PAS) to Medicaid beneficiaries. The home health agency was owned by Defendant #1 (who also served as Administrator and Director of the agency), and his wife, Defendant #4. 
  • April 2010. The owner of NTHAA (Defendant #1) and one of the agency’s management officials who served as an Administrator / Director of the agency (Defendant #2) were facing state felony charges associated with the delivery of a health care item under the Medicaid program. More specifically, the Medicaid Fraud Control Unit (MFCU) of the Texas Attorney General’s Office conducted an investigation of the defendants in connection with defendants both played roles in the wrongful billing of
  • November 2011. Defendant #3 (an Administrator and Registered Nurse for NTHHA), signed and submitted a Medicare re-validation application for NTHHA. The government alleged that the application submitted by Defendant #3 concealed and failed to disclose that Defendant #1 was an owner of the home health agency and that Defendant #2 was a manager at the same agency. Moreover, Defendant #3 failed to disclose that both Defendant #1 and Defendant #2 had been indicted on felony charges associated with the delivery of a health care item.
  • March 2012. Defendant #1 filed a Texas Franchise Tax Public Information Report for NTHAA and failed to identify himself as an officer, director or member of the home health agency.
  • June 2012. Defendants #1 and #2 pled guilty Texas State District Court to a Class A Misdemeanor Offense of Attempted Theft, in violation of PENAL CODE ANN. § 31.03, related to their 2010 indictment. The defendants were placed on community supervision for one year and an Order of Deferred Adjudication was entered by the District Court. In approximately December 2012, the defendants were granted early discharge from their community service obligations the District Court dismissed all of the proceedings, including the indictments against the defendants.
  • January 2013. The OIG notified Defendants #1 and #2 that they were being excluded from participation from Medicare, Medicaid and all Federal health care benefit programs for a period of 5 years pursuant to Section 1128(a)(1) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(1). Both defendants appealed the exclusion, but the 5-year period of administrative exclusion was upheld by the Administrative Law Judge assigned to hear their respective cases. 
  • April 2013. Defendant #1 signed and filed a Texas Franchise Tax Public Information Report for NTHAA which listed himself as an Administrator and Director of NTHHA.
  • May 2013. Defendant #3 signed and submitted a contract re enrollment application with the Texas Department of Aging and Disability Services (DADS). The re-enrollment application falsely certified that no persons with an ownership interest or managerial role at NTHHA had been convicted of a crime relating to a Federal health care program.  During this time period, Defendant #3 also falsely certified that none of the principals, including officers, directors, owners, partners, or person’s having a primarily management or supervisory responsibility in NTHHA were presently excluded from participation in the Medicare or Medicaid programs.
  • May 2014. Defendant #1 signed and filed a Texas Franchise Tax Public Information Report for NTHAA which listed himself as an Administrator and Director of NTHHA.
  • May 2015. Defendant #1 signed and filed a Texas Franchise Tax Public Information Report for NTHAA which listed himself as an Administrator and Director of NTHHA.
  • September 2015. Defendant #1 opened a bank account under the name of the home health agency, NTHHA. 
  • October 2015. Defendant #3 signed and submitted a Medicaid Advantage Plan provider application for NTHHA which falsely certified that no employees of the agency had been, or were currently excluded, from participation in a government program such as Medicare or Medicaid. The Medicaid Advantage Plan provider application submitted also falsely certified that no representatives of NTHAA had pled guilty to any legal action. Finally, Defendant #3 concealed and failed to disclose that Defendants #1 and #2 had no ownership interests and managerial roles in NTHAA.
  • October 2015. Defendant signed and submitted a provider application to a second Medicaid Advantage Plan, certifying that NTHHA had not been excluded under its current or former name or business identity from any Federal or State health care program.
  • January 2013 – May 2016. Despite their exclusion in January 2015, Defendant #1 and Defendant #2, continued to submit home health and PAS claims to Medicare and Medicaid for payment through May 2016. More than $4 million was billed to the Medicare and Medicaid during this period and Defendant #1 paid himself approximately $346,000 from NTHHA’s bank accounts.   Moreover, during this period, Defendant #1 paid Defendant #2 approximately $77,000 from NTHHA bank accounts.
  • June 2016. In June 2016, a Federal Grand Jury in the Northern District of Texas indicted Defendant #1, Defendant #2, and Defendant #3 (an Administrator and Registered Nurse for NTHHA) for “Conspiracy to Commit Health Care Fraud.”  (Violation of 18 U.S.C. 1349) and (18 U.S.C. 1347).  The government alleged that from approximately April 2010 through May 2016, the three defendants conspired to defraud the Medicare and Medicaid program by making materially false and fraudulent representation and promises in connection with the delivery of services billed to the Medicare and Medicaid programs.
  • December 2017. A Superseding Indictment by a Federal Grand Jury was issued in this case, charging Defendant #1 and Defendant #3 with additional counts of “False Statements in Health Care Matters.” (Violation of 18 U.S.C. 1035). Two unindicted physician co-conspirators were also named in the Superseding Indictment. Additionally, an additional defendant was added to the indictment. Defendant #4 (the wife of Defendant #1) was indicted for one count of “Conspiracy to Commit Health Care Fraud” for her role in the concealment of and falsification of ownership interests in NTHAA.

  • October 2018. After a six-day trial, a Federal jury found that: (A) Defendant #1 was guilty of Conspiracy to Commit Health Care Fraud and of making a False Statement for his role in concealing his ownership interest in NTHAA; (B) Defendant #2 was guilty of Conspiracy to Commit Health Care Fraud for his role in concealing his ownership interest in NTHAA; and (C) Defendant #3 was guilty of Conspiracy to Commit Health Care Fraud and of making a False Statement for her role in concealing the ownership interests of Defendant #1 and Defendant #2.  Defendant #3 was also found to have falsely certified that no one associated with home health agency was excluded.  Moreover, she supposedly indicated that another party owned NTHAA, when in fact, Defendant #1 and Defendant #2 were both excluded parties and had an ownership interest in the agency. 

 III.  How Did a State Class A Misdemeanor That Was Ultimately Dismissed Lead to an OIG Exclusion Action?

 In the case discussed above, the OIG excluded Defendants #1 and #2 from participation in the Medicare and Medicaid programs for 5 years, citing the mandatory exclusion requirements of Social Security Act, 1128(a)(1).
Let this sink in for a moment . . . the defendants pled guilty to a state Class A Misdemeanor in Texas District Court, and the charges, including the indictment, were later dismissed pursuant to an Order of Deferred Adjudication by the Texas State District Court.  Nevertheless, the OIG really had no choice but to exclude the defendants. 
The mandatory exclusions of Defendant 1# and Defendant #2 were brought under Section 1128(a)(1) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(1). This provision of the Act requires the exclusion of any individual or entity convicted of a criminal offense related to the delivery of an item or service under the Medicare or Medicaid programs.[7] Importantly, this mandatory exclusion provision is not limited to only felony convictions.  It also covers misdemeanor convictions. Additionally, it is important to note that the Social Security Act defines “conviction” as including a number of situations.  A summary of actions that qualify as a conviction is set out below:

Social Security Act § 1128(i)(1): When a judgment of conviction has been entered against the individual by a Federal, State, or local court.

Social Security Act § 1128(i)(2): When there has been a finding of guilt against the individual by a Federal, State, or local court. 

Social Security Act § 1128(i)(3): When a plea of guilty or nolo contendere by the individual has been accepted by a Federal, State, or local court.

Social Security Act § 1128(i)(4): When the individual has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld

Simply put, the OIG was required by law to exclude Defendant #1 and Defendant #2 from the Medicare program for 5 years, despite the fact that the conviction was a state misdemeanor that was ultimately discussed pursuant to an Order of Deferred Adjudication.

 IV. Lessons Learned:

Lesson #1. Always consider the administrative ramifications of accepting a plea agreement. Even if the charges are later dismissed under a deferred adjudication agreement. pleading guilty to a Class A misdemeanor will lead to an individual’s mandatory exclusion from participating in the Medicare program if the underlying criminal offense was related to the delivery of an item or service under the Medicare or Medicaid programs.  In this case, the OIG had no choice but to exclude these individuals from the Medicare program for 5 years under Section 1128(a)(1) of the Social Security Act.  

Lesson #2.  Medicare and Medicaid providers need to exercise caution when completing Medicare and Medicaid program enrollment applications.  As this case reflects, Federal prosecutors won’t hesitate to pursue false or deceitful conduct that has been taken to hide an excluded party’s ownership interest or involvement with a health care entity. Although an exclusion action is only an administrative sanction, if you are excluded from participation in the Medicare program and attempt to set up a “straw owner” in an effort to hide your ownership interest in a health care entity, you risk turning an administrative sanction into a criminal case.

 V. Concluding Remarks:

In this case, the defendants’ worst enemies were, in fact, themselves.  After being excluded form participation in the Medicare program. The defendants failed to properly divest and dissociate themselves from the home health agency.  Instead, they essentially doubled-down and took steps to conceal their ownership and involvement with the home health agency. This false and deceitful conduct ultimately led to their indictment on federal criminal charges.  Additionally, their actions led to the criminal involvement of another home health agency management official (Defendant #3), and the agency owner’s wife (Defendant #4).  Ultimately, all four individuals were convicted of “Conspiracy to Commit Health Care Fraud,” making a“False Statement,” or both counts. All of the defendants are currently awaiting sentencing.

As a participating provider or supplier in the Medicare, Medicaid or other Federal health care program, you have an affirmative obligation to ensure that no owners, employees, agents or contractors have been excluded from participation in one or more of these programs.  The folks at Exclusion Screening can greatly assist you in meeting those obligations. They can be reached at:  1 (800) 294-0952.

[2]States also have the ability to exclude individual and entities from participating the state’s Medicaid program.
[3]Mandatory exclusion actions must be imposed by the OIG if an individual or entity is convicted of a number of felony criminal health care related statutes or convictions related to fraud, theft of other financial misconduct.  A list of mandatory exclusion bases can be found in the following article.
[4]Permissive exclusion actions are not required by law but may be pursued at the option of the OIG.  A list of permissive exclusion bases can be found in the following article.  
[5]After successfully enrolling in the Medicare program, 42 CFR §424.515 requires that in order to maintain Medicare billing privileges, a provider or supplier (other than a DMEPOS supplier) must resubmit and recertify the accuracy of its enrollment information generally every 5 years. DMEPOS Suppliers must revalidate at least every three years.
[6]A copy of CMS-855A can be found here.
[7]See, Tamara Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367; Boris Lipovsky, M.D., DAB No. 1363 (1992); Lyle Kai, R.Ph., DAB CR1262 (2004), rev’d on other grounds, DAB No. 1979 (2005); see also Russell Mark Posner, DAB No. 2033, at 5-6 (2006).