NOTICE: New OIG Exclusion Authority for Fines and Penalties

NOTICE: New OIG Exclusion Authority for Fines and Penalties

On December 6, 2016, the U.S. Dept. of Health and Human Services, Office of Inspector General (OIG) issued rules that incorporate new civil and monetary fines and penalties (CMP) authorities, clarify existing authorities, and reorganize regulations regarding CMP’s. The Final Rule also implements provisions of the Affordable Care Act (ACA) of 2010 that authorizes CMP’s for:

  1. Failure to grant the OIG timely access to records
  2. Ordering or prescribing while excluded
  3. Making false statements, omissions, or misrepresentations in an enrollment application
  4. Failure to report and return over payments, and
  5. Making or using a false record or statement that is material to a false of fraudulent claim

In addition, under both the Federal Civil Penalties Inflation Act of 2015, Congress adjusted for inflation, certain civil fines and penalties and increased the OIG’s authority to issue exclusions, and the 21st Century Cures Act.

  • Expand CMP for false claims related to contracts and grants funded by Medicare and Medicaid or other HHS programs
  • Authorize the OIG to impose CMP on individuals or entities that knowingly submit false claims, up to $10,000 for each claim.
  • Expansion would include false statements on applications or proposals for HHS funded grants/contracts, up to $50,000 for each false statement.
  • No more than $15,000 for each day individual/entity fails to allow HHS OIG access to audit or investigate false claims
  • Filled in a gap to expand OIG authority to excluded if an Officer or Managing employee who left the organization prior to the pursuit of fraud that such person was involved in to allow the imposition of exclusions, even if they are not currently employed by the prior company.

Early Reinstatement Procedures for exclusion related to the loss of a healthcare license:

The Final Rule creates a new process to allow early reinstatement of individuals who are excluded under Section 1128(b)(4) due to the loss of their healthcare license for reasons related to their professional competence, performance or financial integrity. Under the new rule such individuals can apply for early reinstatement if they obtain a healthcare license in another state, or retain a different healthcare license in the same state, or if they don not have a valid licensed but can demonstrate that they would no longer pose a threat to Federal healthcare programs or beneficiaries of such programs.

 Term Limit for Seeking Exclusions:

The OIG agreed to limit to ten (10) years the period from which to pursue exclusion actions. So, this Final Rule is relevant to individuals and entities that are considering resolution of False Claims Act (FCA) investigations or litigation. FCA actions are also limited to ten (10) year limitation period. The OIG also set forth changes to the aggravating and mitigating factors it considers in determining whether to increase the length of the exclusion. These factors are only used if the OIG has established one or more aggravating factors.

Clarify Criteria for Claims Submission:

The Final Rule also changed the standard from “submit claims to” to “request or receive payment from.”  This is key as it closes any past argument for only submitting but not getting reimbursed with federal healthcare dollars as a defense.  Now it is clear if you simply submit the claim, whether it is paid or not by CMS or with federal healthcare dollars, the trigger is met.

Ability to Increase Length of Exclusion for Certain Financial Losses:

The OIG increased the amount of financial loss necessary to trigger an aggravating factor that can increase the length of exclusion to $15,000 for excessive claims or furnishing of unnecessary or substandard items or services and $50,000 for mandatory exclusion and permissive exclusions involving health care fraud and obstruction.

Change Presumption Against Three (3) Years:

The OIG stated in the Final Rule that the reinstatement period should be changed to 3 years for individuals without any health care licenses seeking reinstatement. This exception does not apply to health care professionals or other licensed individuals, in which the licensing board took the action leading to exclusion and assigned a license revocation or suspension that is longer than 3 years. Additionally, early reinstatement is not available to individuals who lost their health care licenses related to patient abuse and neglect until such individuals obtain the license lost from the state in which it was lost.

Exclusion period for certain individuals is the same as that for the excluded entity:

The OIG stated in  the Final Rule that certain individuals with ownership or control of an excluded entity, or who were officers or managing employees of such excluded entity, and who are determined to be untrustworthy based on the conduct of the entity should be excluded for the same period of time as the excluded entity.


2017 is expected to be another banner year for the OIG and Dept. of Justice in their pursuit to find and fine fraud. Exclusions is a component of fraud in healthcare and is considered low hanging fruit for the OIG. Fines and penalties will be imposed by the OIG and the enforcement landscape seems to be full speed ahead. Make sure your Compliance program is up to speed on these new rules and that you apprise the Compliance Committee and C-Suite of these new and avoidable fines.

Good governance is good for compliance.

Michael Rosen, ESQ

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