OIG Imposes Medicare Exclusions Longer Than Mandatory Minimum

A criminal conviction relating to health care will result in an exclusion from Medicare and related health care programs. The length of the exclusion imposed depends on a variety of factors. Thinking about how to mitigate the impact of an exclusion should begin at the outset of representation in the criminal matter.   

As is widely known in health care and life sciences, the mission of the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS), is to protect the integrity of HHS programs, and in order to carry out its mission, the OIG has been granted the authority by way of the Social Security Act, specifically 42 U.S. Code § 1320a–7, to exclude individuals and entities from Federally funded health care programs for various reasons, including convictions for Medicare or Medicaid fraud. The primary impact of an exclusion is the denial of payments by a Federal health care program, meaning excluded individuals and/or entities can receive no payment from Federal healthcare programs for “any items or services furnished, ordered or prescribed by an excluded individual or entity.” Notably, the exclusion applies not only to the excluded individual, but – except in some very limited circumstances  – also to anyone who employs, or contracts with, the excluded individual, regardless of who submits the claims.

There are two types of exclusion that are imposed by the OIG: mandatory and permissive. Mandatory exclusions are required by statute, whereas permissive exclusions are a matter of OIG discretion. This article deals with mandatory exclusions and their length.

Mandatory exclusions must be imposed for any of the following reasons:

  • Conviction of program-related (HHS) crimes
  • Conviction relating to patient abuse or neglect
  • Felony conviction relating to healthcare fraud
  • Felony conviction relating to a controlled substance
  • Conviction of two mandatory exclusion offenses
  • Conviction on three or more occasions of mandatory exclusion offenses

The statutory definition of “conviction” is very broad, and includes: (i) a finding of guilt or judgment of conviction against the individual or entity in a Federal, State, or local, court regardless of whether there is an expungement or an appeal pending;  (ii) when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court; or (iii) when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

Under the corresponding regulation, 42 CFR § 1001.102, the length of a mandatory exclusion may not be fewer than 5 years; as such, mandatory exclusions may be longer than 5 years, but they cannot be fewer than 5 years. A second mandatory exclusion category requires a minimum exclusion period of 10 years, and a third category requires a permanent exclusion.

The OIG has not been bashful in imposing exclusions longer than the mandatory minimum of 5 years when it identifies one or more of nine aggravating factors, as identified in the same regulation. The aggravating factors typically associated with an exclusion beyond the mandatory minimum are: (i) a conviction where the financial loss to a government agency or program is more than $50,000; (ii) the conduct underlying the conviction took place over a period of one year or more; or (iii) the sentence imposed by the court included incarceration.   

The length of an exclusion in excess of the mandatory minimum of 5 years can be successfully challenged if an aggravating factor cited by OIG was not applicable, or if an aggravating factor applies, but there is an applicable mitigating factor that reduces or neutralizes the impact of the identified aggravating factor. However, mitigation is strictly limited by regulation to the following three factors:

  •  In the case of conviction for an offense relating to an HHS program, if the excluded “individual or entity was convicted of three or fewer misdemeanor offenses and the entire amount of financial loss (both actual loss and intended loss) is less than $5,000;
  •  The record in the criminal proceedings, including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability; or
  • The individual or entity cooperated with Federal or State officials and the cooperation resulted in others being convicted or excluded from Medicare, Medicaid and all other Federal health care programs, additional cases being investigated or reports being issued by the appropriate law enforcement agency identifying program vulnerabilities or weaknesses, or the imposition against anyone of a civil money penalty or assessment. 

The summary of statutory and regulatory factors in this article demonstrates that pre-trial decisions regarding plea negotiations on the loss amount, whether to cooperate with the Government and to what extent, and whether to raise substance abuse or other mental, emotional or physical condition issues at sentencing can all impact on the length of exclusion, a factor that is critical when trying to resume a career in health care or life sciences after a “time-out” caused by a criminal conviction. It needs to be part of the “global resolution” thought process during representation in the criminal case, not an after-thought following conviction. Moreover, clear findings of fact must be made in the sentencing record in order to demonstrate to the OIG the applicability of the permissible mitigating factors. 

How Frier Levitt Can Help

Frier Levitt has successfully reduced the length of exclusions in excess of mandatory minimums. If you are involved in a criminal investigation, have been charged with a criminal offense,  have received a Notice of Intent to Exclude, or a Notice of Exclusion, or you need advice regarding your contractual relationship to an excluded individual or entity, contact Frier Levitt immediately to speak with an attorney in its White Collar Criminal Defense and Government Investigations or Health Care Regulatory practice groups.  



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