OIG’s Proposal to Expand Exclusion Authority

Vol. 10 No. 10

AuthorOn May 9, 2014, the Department of Health and Human Service’s (“HHS”) Office of Inspector General (“OIG”) issued a proposed rule which, if finalized, would implement several provisions contained in the Patient Protection and Affordable Care Act (“PPACA”) that expand the OIG’s authority to exclude individuals and entities from participating in federal healthcare programs such as Medicare, Medicaid and TRICARE.1   Although the changes proposed in the rule will not take effect until after a period of public comment that closes on July 8, the proposed changes will likely have a significant impact for any healthcare practitioner that accepts money from government payors.  This article briefly explains the changes contained in the proposed rule.2

The OIG’s Pre-PPACA Exclusion Authority

Even before PPACA became law in 2010, the OIG had substantial exclusion authority.  Certain events, including a conviction of a criminal offense related to healthcare services, a conviction related to patient abuse, a felony conviction related to healthcare fraud, or a felony conviction related to controlled substances called (and still do call) for mandatory exclusion from participation in any federal healthcare program for a period of at least five years.3  Prior to  PPACA, the OIG had permissive exclusion authority for, among other things, certain fraud-related convictions, a conviction related to obstruction of an investigation, a misdemeanor conviction related to controlled substances, license revocation or suspension, claims for excessive charges or unnecessary services, fraud and kickbacks (including False Claims Act violations), and for failure to provide certain disclosures and information.4

PPACA’s Expansion of the OIG’s Exclusion Authority

Among its numerous provisions related to healthcare fraud and abuse, PPACA contains several provisions related to the exclusion statute.  The OIG’S proposed rule, which would implement several of PPACA’s amendments to the exclusion statute, includes (but is not limited to) provisions related to the following:

Convictions Relating to Obstruction of an Investigation or Audit.  Prior to PPACA, as part of its permissive exclusion authority, the OIG could exclude individuals or entities that had been convicted under either federal or state law for interfering with or obstructing certain criminal investigations.5  PPACA expanded this section to include interference with or obstruction of “any investigation or audit” related to certain enumerated criminal offenses or related to the use of funds received either directly or indirectly from any federal healthcare program.6  This means obstruction of an administrative audit could now lead to permissive exclusion by the OIG.

Financial Loss Aggravating Factor For Obstruction-Related Permissive Exclusion.  Under the current version of the exclusion statute, the period of exclusion for convictions relating to obstruction of an investigation or audit is three years unless there are mitigating circumstances justifying a shorter period or aggravating circumstances justifying a longer period.7   The OIG’s proposed rule would add a financial loss aggravating factor that would allow the OIG to increase the period of exclusion if the acts, or similar acts, that resulted in the obstruction conviction caused a financial loss of $15,000 or more.8 

Failure to Supply Payment Information.  Prior to PPACA, the OIG could use its permissive exclusion authority to exclude “[a]ny individual or entity furnishing items or services” that failed to provide payment information requested by HHS or a state agency.9   PPACA (and the OIG’s proposed rule implementing PPACA’s changes) expands this section to “[a]ny individual or entity furnishing, ordering, referring for furnishing, or certifying the need for items or services.”10  This means that permissive exclusion for failure to supply requested payment information applies not only to the furnishing provider, but also to other providers, such as referring physicians and medical directors. 

Making False Statements or Misrepresentations of Material Facts.  The proposed rule also addresses PPACA’s additional ground for permissive exclusion — making false statements or misrepresentations of material facts.  Specifically, that addition permits the OIG to exclude “[a]ny individual or entity that knowingly makes or causes to be made any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program,” including Medicare Advantage organizations, Part D prescription drug plan sponsors, and Medicaid managed care organizations.11 

In the proposed rule, the OIG states that in determining whether to impose an exclusion under this new provision, it would consider information “from various sources, including, but not limited to[:]” The Centers for Medicare & Medicaid Services (“CMS”), state Medicaid entities, fiscal agents and contractors, private insurance companies, licensing and certification authorities, and law enforcement agencies.12  The proposed rule also provides: “In determining the period of exclusion, we propose to consider what the repercussions of the false statement are and whether the individual or entity has a documented history of criminal, civil, or administrative wrongdoing.”13

Period of Limitations on Affirmative Exclusions.  The OIG also proposes adding language to its regulations that would provide that “there is no time limitation to exclusions imposed under this authority, even when the exclusion is based on violations of another statute that might have a specific limitations period.”14   For example, if exclusion is based on a violation of the Civil Monetary Penalties statute (which has a six-year statute of limitations), that six-year limitations period would not limit OIG’s exclusion authority under the exclusion statute. 

In support of this proposal, OIG states that although “recent acts are more indicative of current trustworthiness than acts that took place in the distant past . . . conduct that is more than 6 years old may sometimes form a proper basis to conclude that a person should be excluded.”15  According to the proposed rule, “[t]he age of the conduct is a factor in determining the weight the conduct should be afforded, not whether the exclusion should be imposed at all.”16

Testimonial Subpoena Authority.  The proposed rule also implements the PPACA provision that grants testimonial subpoena authority to the HHS Secretary in investigations related to exclusion.17 PPACA amended the exclusion statute to give the HHS Secretary the power to issue subpoenas compelling the attendance and testimony of witnesses and the production of any evidence that relates to any matter under investigation.18  The provision also permits the HHS Secretary to delegate that authority to the Inspector General (“IG”) “for purposes of any investigation under this section.”19   According to the proposed rule, “[t]he expanded testimonial subpoena authority gives OIG an additional investigative tool . . . for pursuing exclusions for conduct such as submitting improper claims.”20  Similar to the Civil Investigative Demand (“CID”) authority of the Department of Justice under the False Claims Act,21 the IG’s subpoena authority is nationwide and enforceable in federal court.22

Conclusion

The OIG’s proposed rule related to its exclusion authority will, if it becomes final, implement many of the provisions contained in PPACA that amend the exclusion statute.  These updates will significantly expand the OIG’s permissive exclusion authority, which was already relatively broad even prior to PPACA’s amendments. Because exclusion is, in many cases, the “death penalty” for a healthcare provider, this expansion of authority could have a significant impact on any healthcare provider that accepts money from the government.

The proposed rule will also allow the OIG to issue administrative subpoenas as part of any exclusion investigation.  As with the expansion of CID power under the False Claims Act in 2009 and 2010,23 this expansion and delegation to the OIG will almost certainly increase the cost and time required to respond to an OIG exclusion investigation, thus placing an even greater financial burden on healthcare providers that come under investigation.

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Scott R. Grubman is an attorney with Rogers & Hardin, LLP in Atlanta, where he represents both businesses and individuals, particularly in the healthcare industry, in connection with government and internal investigations, False Claims Act (“FCA”) litigation, and other white collar matters.  Mr. Grubman also advises clients on issues related to government billing, Stark, and Anti-Kickback compliance, as well as antitrust issues.  Prior to joining Rogers & Hardin earlier this year, Mr. Grubman served as an Assistant U.S. Attorney for the Southern District of Georgia, where he investigated and prosecuted cases under the FCA and other federal fraud statutes.  In 2013, Mr. Grubman was recognized by the Department of Health and Human Services, Office of Inspector General (“OIG”) for his work investigating healthcare fraud.  He may be reached at (404) 420-4651 or at sgrubman@rh-law.com.

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1

79 Fed. Reg. 26810 (May 9, 2014).  The proposed rule also contains updates pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”).

2

On May 12, 2014, the OIG also issued a proposed rule related to its Civil Monetary Penalty (“CMP”) rules.  Although this article is limited to the May 9 proposed rule related to exclusion, the CMP proposed rule also implements certain amendments from  PPACA and MMA and, among other things, proposes changes for CMPs, assessments and exclusion for failure to grant the OIG timely access to records (up to $15,000 per day), making false statements, failure to report and return an overpayment (up to $10,000 per day), and making or using a false record.  79 Fed. Reg. 27080 (May 12, 2014).

3

42 U.S.C. § 1320a-7(a), (c).

4

Id. § 1320a-7(b) (2009).

5

Id. § 1320a-7(b)(2) (2009).

6

Id. (2010) (emphasis added).

7

Id. § 1320a-7(c)(3)(D).

8

79 Fed. Reg. 26814.

9

42 U.S.C. § 1320a-7(b)(11) (2009).

10

42 U.S.C. § 1320a-7(b)(11) (2009).

11

Id. § 1320a-7(b)(16) (2010).

12

79 Fed. Reg. 26816-17.

13

Id. at 26817.

14

Id. at 26815.

15

Id.

16

Id.

17

Id. at 26819.

18

42 U.S.C. § 1320a-7(f)(4) (cross-referencing 42 U.S.C. § 405(d) and (e)).

19Id.
20

79 Fed. Reg. 26819.

21

31 U.S.C. § 3733.

22

31 U.S.C. § 3733.

23

The Fraud Enforcement and Recovery Act of 2009 (“FERA”), P.L. No. 111-21, modified the section of the FCA relating to CIDs, 31 U.S.C. § 3733, to permit the Attorney General to delegate CID authority to the U.S. Attorneys.  In early 2010, this delegation of CID authority took place.  

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