By Vasilios J. Kalogredis, Esquire*

Printed in the Legal Intelligencer – July 5, 2016

Federal healthcare programs such as Medicare, Medicaid, CHAMPUS, VA, etc. are prohibited from issuing payments for goods or services that are directly or indirectly provided by an individual or entity that has been deemed by the Office of Inspector General as “excluded.” This article will explain what it means to be an “excluded” individual or entity and the negative effects a healthcare practice could suffer if it engages, employs, or consults with an excluded person or organization.

The Office of Inspector General (“OIG”) (U.S. Dept. of Health & Human Services) has the authority to exclude individuals and entities from federally funded health care programs pursuant to sections 1128 and 1156 of the Social Security Act and maintains a list of all currently excluded individuals and entities called the List of Excluded Individuals and Entities (“LEIE”). Anyone who hires an individual or entity on the LEIE may be subject to civil monetary penalties (“CMP”).

OIG’s exclusions process is governed by regulations that implement sections of the Social Security Act. When an individual or entity receives a Notice of Intent to Exclude, it does not necessarily mean that they will be excluded.  OIG will carefully consider all material provided by the person who received the Notice as it makes its decision. All exclusions implemented by OIG may be appealed to an HHS Administrative Law Judge (ALJ), and any adverse decision may be appealed to the HHS Departmental Appeals Board (DAB). Judicial review in Federal court is also available after a final decision by the DAB.

There are two types of exclusions that apply to health service employees and entities: mandatory exclusions and permissive exclusions. There two categories specify types of misconduct that shall or may require an employee or entity to be placed on the LEIE.

Mandatory Exclusions

OIG is required by law to exclude from participation in all Federal health care programs individuals and entities convicted of the following types of criminal offenses: Medicare or Medicaid fraud, as well as any other offenses related to the delivery of items or services under Medicare, Medicaid, SCHIP, or other State health care programs; patient abuse or neglect; felony convictions for other health care-related fraud, theft, or other financial misconduct; and felony convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances.

Permissive Exclusions

OIG has discretion to exclude individuals and entities on a number of grounds, including misdemeanor convictions related to health care fraud other than Medicare or a State health program, fraud in a program (other than a health care program) funded by any Federal, State or local government agency; misdemeanor convictions relating to the unlawful manufacture, distribution, prescription, or dispensing of controlled substances; suspension, revocation, or surrender of a license to provide health care for reasons bearing on professional competence, professional performance, or financial integrity; provision of unnecessary or substandard services; submission of false or fraudulent claims to a Federal health care program;  engaging in unlawful kickback arrangements; and defaulting on health education loan or scholarship obligations; and controlling a sanctioned entity as an owner, officer, or managing employee.

LEIE Online Database

The LEIE online database contains the following information: (1) the name of the excluded person at the time of the exclusion, (2) the person’s provider type, (3) the authority under which the person was excluded, (4) the State where the excluded individual resided at the time of exclusion or the State where the entity was doing business, and (5) a mechanism to verify search results via Social Security Number (SSN) or Employer Identification Number (EIN).

OIG plans to update the LEIE soon to include a National Provider Identifier, or NPI, for individuals and entities excluded after 2009 that have such an identifier and to include information regarding waivers of exclusion granted by OIG. This will allow for an additional verification mechanism separate from SSN or EIN verification.

The primary effect of being tagged as an excluded employee or entity is that no payment will be provided for any items or services furnished, ordered, or prescribed by an excluded individual or entity. This includes Medicare, Medicaid, and all other Federal plans and programs that provide health benefits funded directly or indirectly by the United States (other than the Federal Employees Health Benefits Plan).

If a health care provider arranges or contracts (by employment or otherwise) with a person that the provider knows or should know is excluded by OIG, the provider may be subject to CMP liability if the excluded person provides services payable, directly or indirectly, by a Federal health care program. OIG may impose CMPs of up to $10,000 for each item or service furnished by the excluded person for which Federal program payment is sought, as well as an assessment of up to three times the amount claimed, and program exclusion

A provider could be subject to CMP liability if an excluded person participates in any way in the furnishing of items or services that are payable by a Federal health care program. CMP liability would apply to the furnishing of all of the categories of items or services that are violations of an OIG exclusion, including direct patient care, indirect patient care, administrative and management services, and items or services furnished at the medical direction or on the prescription of an excluded person when the person furnishing the services either knows or should know of the exclusion. CMP liability could result if the provider’s claim to the Federal health care program includes any items or services furnished by an excluded person, even if the excluded person does not receive payments from the provider for his or her services (e.g., a non-employed excluded physician who is a member of a hospital’s medical staff or an excluded health care professional who works at a hospital or nursing home as a volunteer). An excluded person may not provide services that are payable by Federal health care programs, regardless of whether the person is an employee, a contractor, or a volunteer or has any other relationship with the provider.

For these reasons, I advise my healthcare clients to check the LEIE before hiring anyone. OIG maintains the LEIE on the OIG Web site (http://oig.hhs.gov/exclusions), which also contains more detailed OIG program exclusion information.

*Katherine LaDow, Esquire, an associate with Lamb McErlane PC also contributed to this article.