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.”

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).

Pharmacies Targeted for Exclusion Violations by OIG and States

By Catalina Jandorf

OIG Exclusion

In what appears to be a growing enforcement trend, the Department of Health and Human Services, Office of Inspector General (HHS/OIG) and State Medicaid Fraud Units are aggressively pursuing pharmacy retailers for exclusion violations.  In recent investigations, pharmacies are being targeted for failing to screen prescribers as well as employing pharmacists who have been excluded from Federal and State health care programs.  This new focus has resulted in sizable settlement recoveries, and evidences a broadening of the scope of Federal and State exclusion enforcement efforts.

Significant State Exclusion Enforcement Actions

New York Attorney General Eric T. Schneiderman entered into an agreement with a pharmacy in May 2016 to resolve allegations that it had billed Medicaid for prescriptions written by an excluded Medicaid provider.  Between April 2010 and January 2013, the pharmacy submitted and received payment for approximately 4,600 Medicaid claims for prescriptions written by an excluded physician.  Under Medicaid rules, prior to filling a prescription pharmacies are required to first determine whether the prescriber’s services are eligible for reimbursement.  In this case, they had not done so and had filled and delivered prescriptions written by a provider ineligible to receive Medicaid reimbursement.  As a result of the settlement, the pharmacy agreed to pay New York State $442,000 plus $36,000 in damages pursuant to the New York False Claims Act.  In a statement, A.G. Schneiderman says, “My office will continue working to root out Medicaid fraud and recover unlawfully claimed funds, so that Medicaid can continue providing critical services for those in need.”  The Attorney General’s Medicaid Fraud Control Unit (MFCU) investigated, prosecuted, and entered into a resolution independent of any OIG investigation.  The prescriber in this case was excluded under the New York State list first and then under the GSA’s System for Award Management (SAM), but never appeared on the OIG’s List of Excluded Individuals and Entities (LEIE).  This is significant since the State used its own enforcement authority to target this pharmacy and launch its own investigation without any Federal involvement.

However, this is not the first time the States have expressed an interest in pursuing exclusion violations against a pharmacy.  In a prior case from 2011, a large national retail pharmacy entered into a $1 million settlement with the U.S. Attorney’s Office in the District of New Jersey in connection to allegations that it had employed a pharmacist who had been banned from participating in Federal health care programs due to a drug conviction.  The excluded pharmacist had worked at three pharmacy locations in New Jersey and New York for a period of about four years and ending in July 2009.  Prior to his employment, he had been convicted of attempted criminal sale of a controlled substance, and as a result had been excluded from Federal health care programs in September 2005.  Any claims he had submitted while employed by the company were deemed false.  An investigation concluded that the pharmacy was responsible for the amount billed by the excluded individual because it failed to investigate whether he was banned from Federal health programs.  Although the company claims that it maintains a comprehensive pre-employment screening process, it did not follow its own protocols to determine if the conviction excluded the individual from the programs.  If these two cases are any indication, it appears as if the States will be taking more of an initiative in pursuing their own enforcement actions against pharmacies in the future.

Federal Enforcement Efforts Initiated by OIG

The Federal governState Exclusionment has also remained vigilant in cases involving excluded pharmacists.  In August 2016, a Texas pharmacy and pharmacy manager entered into a $30,000 settlement agreement with OIG.  Their investigation reveals that the excluded individual, a store manager and pharmacy technician, had provided items or services that were billed to Federal health care programs.  In another case from January 2015, a Minnesota pharmacist entered into a nearly $100,000 settlement agreement with OIG.  The settlement resolved allegations that from March 2006 to July 2013, the pharmacist owned and managed a pharmacy that participated in Federal health care programs while he was excluded from participating in those programs.

We have previously reported on a case in which OIG entered into a massive settlement with an Ohio-based corporation that operates pharmacies and supermarkets in thirty-four states, in connection to its employment of excluded pharmacists.  In December 2015, the company self-disclosed to Office of Inspector General that they employed and utilized pharmacists who were banned from participation in Federal health care programs.  An investigation confirmed that the company had employed fourteen individuals that were debarred and therefore could not submit claims for items or services they furnished.  In addition to employing excluded pharmacists, the settlement alleges that the company had filled prescriptions from eighty-four excluded providers.  According to OIG’s May 2013 Special Advisory Bulletin, insurance claims for items or services provided by, or at the medical direction of or on the prescription of debarred individuals are not reimbursable.  The company agreed in a civil settlement to pay Federal health care programs $21.5 million in restitution and penalties, and almost $1 million more to the Office of Personnel Management (OPM) for employing individuals who had been debarred from participating in the Federal Employee Health Benefit Program (FEHBP).

Takeaways

These cases highlight some recent trends in enforcement actions against pharmacies that employ excluded pharmacists and fail to properly screen prescribers.  It is evident that both State and Federal entities are interested in pursuing exclusion violations, and have been doing so independent of each other.  Even the most stringent pre-employment background checks can result in omitted excluded individuals, and consequently the pharmacy itself would be liable for submitting false claims.  Pharmacies especially can be susceptible to substantial settlement amounts because of the large volume of prescriptions they handle every day, and since it can be very costly and time-consuming to screen every prescriber.

Screening employees, vendors, and contractors against the LEIE and the SAM, as well as all 38 State lists every month is critical to avoid being found liable of an exclusion violation and consequently having to pay a large settlement amount.  To eliminate the risk of having to self-disclose or undergo a State or Federal investigation, contact the Exclusion Experts at 1-800-294-0952 or online for a free consultation.

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).

CMS Finds Fault with Exclusion Information Sharing Between States

CMS
I.  Take It from CMS: If You’re Excluded in One State, You’re Excluded in All States

Section 6401(b)(2) of the Affordable Care Act (ACA) required the Centers for Medicare and Medicaid Services (CMS) 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 CHIP programs.[1] This platform would help states comply with ACA section 6501,[2] which mandates that a provider must be terminated in all state Medicaid programs if he or she were terminated “for cause”[3] in one state. CMS created the Medicaid and Children’s Health Insurance Program State Information Sharing System (MCSIS) to make this exclusion information available to all State Medicaid agencies.[4]

  Under section 6401(b)(2), states were asked to submit the terminated provider’s name, National Provider Identifier (NPI), and other identifying information to MCSIS. This information was incorporated into MCSIS so that other states could identify providers that needed to be terminated. Even though CMS has the authority[5] to require states to submit this information, it has only asked states to comply. CMS’ failure to make reporting mandatory resulted in a very deficient database.

II.  CMS’ Comprehensive List…Not So Comprehensive

  Only thirty-three states[6] submitted information to CMS and many of the records were incomplete. For example, CMS asked states to only submit providers that were terminated “for cause,” but over 2,000 records lacked a “for cause” termination.[7] In addition, 59 percent of the records also did not include provider NPIs,[8] which the ACA specified as a mandatory database component.[9] Many other data fields, like provider type[10] and address, were blank.

  Seventeen states[11] and the District of Columbia failed to submit any data in the two years between MCSIS’s creation and the Office of the Inspector General’s (OIG) review.[12] Four states[13] submitted 72 percent, or 3,413 of 4,713 total Medicaid records.[14] The other states that reported information reported very small numbers. For example, Massachusetts only submitted two excluded providers between 2011 and 2013.[15] Even though, it excluded fifteen providers in 2012.[16]

 OIG concluded that CMS needed to improve its exclusion information-sharing process.[17] Specifically, CMS should mandate that state agencies report all “for cause” terminations.[18] OIG also stated that CMS should also remove all providers that were not terminated “for cause,” or if it would like to expand its database, then it must issue new guidance instructing the states as to which providers must be terminated under section 6501.[19]

III.  CMS Creates New List: OnePI Portal

  CMS agreed with OIG, and disclosed that it is in the process of creating a private database, the OnePI portal.[20] OnePI is accessible to only CMS, State Medicaid agencies, and CHIP. It provides a private platform for states to share information about terminated providers.

 Under this new system, CMS will require states to submit a copy of the termination letter sent to the provider. Then, CMS will review these letters to ensure that the provider should be included in the OnePI database.[21]

 CMS has not provided a proposed completion date for OnePI.[22] Furthermore, there is no information available in regard to whether this data will be incorporated into the LEIE, if it will be available to providers, or if states will be required to integrate excluded providers from other states into their Medicaid termination lists.

IV. Conclusion

This inaccurate reporting of data illustrates why it is critical to check all state Medicaid lists in addition to OIG-LEIE and GSA-SAM. You will be held responsible if you employ or contract with an excluded individual. A provider that is excluded in one state is excluded in all states. 

CMS

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Contact the exclusion experts at Exclusion Screening, LLCSM today for a free consultation by calling 1-800-294-0952 or online.


[1] Dep’t of Health and Human Servs. Office of the Inspector Gen., CMS’s Process for Sharing Information about Terminated Providers Needs Improvement, 1–2 (Mar. 2014).

[2] 42 C.F.R. § 455.416(c).

[3] States are only required to terminate providers from their Medicaid programs if they were terminated “for cause” under another state program. “For cause” means a provider was terminated due to fraud, integrity or quality.  Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 2.

[4] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 1.

[5] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 13.

[6] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 7.

[7] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 7.

[8] Not all providers are assigned NPIs. Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 4, 9.

[9] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 2.

[10] Thirty-three percent of MCSIS records did not contain information about the provider type. Furthermore, some states identified 95 percent of providers as “other” when 25 different specific provider types were provided in a drop-down menu. See Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 11.

[11] The seventeen states were: Colorado, Hawaii, Kentucky, Minnesota, Montana, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Texas, Utah, West Virginia, and Wyoming. See Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 16.

[12] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 7.

[13] California, New York, Pennsylvania, and Illinois. See Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 7.

[14] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 7.

[15] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 16.

[16] Massachusetts Health and Human Services, Suspended/Excluded MassHealth Providers as of 5/31/2014, 2, http://www.mass.gov/eohhs/docs/masshealth/provlibrary/suspended-excluded-masshealth-providers.pdf (last accessed June 6, 2014).

[17] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 13.

[18] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 13.

[19] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 14.

[20] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 22.

[21] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 22.

[22] Dep’t of Health and Human Servs. Office of the Inspector Gen., supra note 1, at 22–23.