OIG Proposed Rules Expand Exclusion and CMP Authority

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By Adrienne Dresevic, Esq. and Leslie Rojas, Esq. 

On May 9 and May 12, 2014, the Department of Health and Human Services, Office of Inspector General (OIG) published two proposed rules expanding the government’s exclusion and civil monetary penalties (CMP) authority. The first expands the bases for “permissive” exclusion from federal healthcare programs and proposes procedural changes to the OIG’s exclusion authority (Proposed Exclusion Update). The second expands the bases for imposing civil monetary penalties and clarifies the penalty for failure to timely report and return overpayments made by the government (Proposed CMP Update). The Patient Protection and Affordable Care Act (PPACA) increased the government’s tools to fight healthcare fraud and abuse, and the proposed rules evidence the government’s intent to codify the changes set forth in PPACA. This article provides a summary of the major provisions of the proposed rules.


Proposed Exclusion Update 

By way of brief background, “mandatory” exclusionary bases require the OIG to exclude individuals and entities from participation in federal healthcare programs if a basis for “mandatory” exclusion is present. However, “permissive” exclusionary bases do not require the imposition of an exclusion.

The Proposed Exclusion Update expands the OIG’s discretionary authority to exclude individuals and entities from participation in federal healthcare programs by adopting PPACA’s three new bases for “permissive” exclusion, which are:

  • Conviction of an offense in connection with obstruction of an audit;
  • Failure to supply payment information when not only furnishing, but also ordering, referring for furnishing, or certifying the need for items or services; and
  • Knowingly making, or causing to be made, any false statement, omission, or misrepresentation of a material fact in any application, bid, or contract to participate as a provider of services or supplier under a federal healthcare program.

Additionally, the Proposed Exclusion Update implements the authority granted to the OIG by Section 6402(e) of PPACA to issue testimonial subpoenas in investigations of exclusion actions. Previously, the OIG had authority to issue testimonial subpoenas when pursuing a civil monetary penalty claim, but not in investigations that only involved exclusion actions. The Proposed Exclusion Update enhances the OIG’s investigative authority, which will be particularly helpful for fraud, kickback, and medically unnecessary claim investigations.

The Proposed Exclusion Update also clarifies that no statute of limitations period applies to exclusions imposed under Section 1128(b)(7) of the Social Security Act (ie, the permissive exclusion for fraud, kickbacks, and other prohibited activities). The OIG reasons that if Section 1128(b)(7) is subject to a six year statute of limitations, then the statute of limitations will force the OIG to file exclusion actions prematurely.

For example, a six year time period may force the OIG to file a notice of proposed exclusion in order to toll the time for bringing an exclusion action against individuals in pending False Claims Act cases. False Claims Act cases are often resolved years after the prohibited activity occurred. The OIG’s concern is that a premature exclusion action may result in the exclusion of providers who might eventually be deemed to be trustworthy or require the OIG to devote resources to cases that would otherwise settle. Therefore, the OIG decided that it is appropriate to consider exclusion based on conduct that is more than six years old.

The full text of the Proposed Exclusion Update may be found at http://oig.hhs.gov/authorities/docs/2014/2014-10390.pdf.


Proposed CMP Update

The Proposed CMP Update codifies the five new bases for civil monetary penalties, assessments and exclusions set forth in PPACA, which are:

  • Failure to grant timely access to records for the purpose of OIG audits, investigations, evaluations, or other OIG statutory functions;
  • Ordering or prescribing while excluded;
  • Making false statements, omissions, or misrepresentations in an enrollment application;
  • Failure to report and return an overpayment; and
  • Making or using a false record or statement that is material to a false or fraudulent claim.

In addition to expanding the bases for civil monetary penalties, the Proposed CMP Update clarifies the penalty amount for failure to report and return overpayments by the later of 60 days after the date the overpayment was identified or the date any corresponding cost report is due, if applicable. The proposed default penalty for Section 1128A(a)(10) of the Social Security Act is up to $10,000 for each day a person fails to report and return an overpayment. The OIG notes that Congress did not specify a per day penalty in Section 1128A(a)(10). Therefore, the OIG is soliciting comments on whether to interpret the default penalty to attach to each item or service as pertaining to each claim identified as an overpayment, rather than to attach to each day.

The full text of the Proposed CMP Update may be found at http://oig.hhs.gov/authorities/docs/2014/fr-79-91.pdf.



The proposed rules evidence the government’s increased scrutiny on healthcare providers in its efforts to prevent fraud and abuse in the healthcare industry, as well as its intent to codify the enhanced authority granted by PPACA. Comments on the Proposed Exclusion Update are due by July 8, 2014, and comments on the Proposed CMP Update are due by July 11, 2014. 

Adrienne Dresevic, Esq. graduated Magna Cum Laude from Wayne State University Law School. Practicing healthcare law, she concentrates in Stark and fraud/abuse, representing various diagnostic imaging providers, e.g., IDTFs, mobile leasing entities, and radiology and multi-specialty group practices.

Leslie Rojas, Esq. graduated from Wayne State University Law School and is licensed to practice law in Michigan and Illinois. Practicing healthcare law, she concentrates on fraud/abuse issues, compliance with federal and state healthcare regulations, health information privacy and technology issues, and transactional and corporate aspects of healthcare.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.

For more regulatory news, visit www.ahraonline.org/news.

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