AMARILLO, TX – When hiring an individual, it is important that the DME supplier check the applicant’s name against the OIG’s Exclusion List. On a regular basis, it is also important that the supplier check all of its employees against the OIG’s Exclusion List. If an employee of a DME supplier is on the Exclusion List, then the supplier can face severe repercussions including the obligation to repay all Federal health care program payments received while the excluded employee was employed by the supplier.
The following is Part Two of a three part series addressing exclusion from federal health care programs. Part One addressed the OIG’s exclusion authority. Part Two addresses the procedure that the OIG follows in excluding an individual following a criminal plea. Part Three addresses possible options available to the owner of a DME supplier who has been excluded.
Sections 1001.2001 through 1001.2007 of Title of the Code of Federal Regulations set forth the administrative process the OIG follows when considering whether to exclude an individual or entity. The OIG follows two administrative processes that are applied depending on the underlying offense.
Proposed Mandatory Exclusions Greater Than Five Years and Proposed Permissive Exclusions
The first process applies to all proposed mandatory exclusions longer than the mandatory minimum five-year period and most proposed permissive exclusions, including permissive exclusions under Section 1128(b)(1)(B) for a criminal conviction relating to fraud and other forms of financial misconduct. The process begins through the OIG sending a written notice of intent to exclude to the individual (or entity) which contains the basis for the proposed exclusion, and the potential effect of an exclusion. The individual (or entity) has 30 days from receipt of the notice to submit a written response with any information or evidence relevant to whether exclusion is warranted. Additionally, the response can raise other related issues such as mitigating circumstances. The OIG considers all available information before making its final decision.
If the OIG decides to proceed with exclusion, the first notification an individual or entity will receive is a notice of exclusion which contains the following information: the basis for exclusion; the length of the exclusion, and if applicable, factors considered in setting the length; the effect of the exclusion; the earliest date the OIG will consider a request for reinstatement; requirements and procedures for reinstatement; and appeal rights. Exclusions are effective 20 days after the notice of exclusion is mailed.
The exclusion may be appealed to an HHS Administrative Law Judge (ALJ), only on the issues of whether: (i) the basis for the imposition of the sanction exists, and (ii) the length of exclusion is unreasonable. The request for a hearing should contain a statement with the “specific issues or findings of fact and conclusions of law in the notice letter with which the petitioner or respondent disagrees, and the basis for his or her contention that the specific issues or findings and conclusions were incorrect.” Importantly, in a hearing on an exclusion based on a criminal conviction, the basis for the underlying conviction is not reviewable:
When the exclusion is based on the existence of a criminal conviction or a civil judgment imposing liability by Federal, State or local court, a determination by another Government agency, or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction, civil judgment or determination is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.
An adverse decision at the ALJ level may be appealed to the HHS Departmental Appeals Board (DAB). Judicial review is also available after a final decision by the DAB.
Mandatory Exclusions For the Minimum Five-Year Period
The second process applies to mandatory exclusions that are for the minimum five year period. The OIG does not send a preliminary notice of intent to exclude, and a notice of exclusion is the first notification sent. Similar to the process outlined above, exclusions are effective 20 days after the notice of exclusion is mailed, and notice to the public is provided on the OIG’s website. The exclusion may be appealed to an ALJ, and any adverse decision may be appealed to the DAB. Likewise, judicial review is also available after a final decision by the DAB.
If the individual or entity has a provider agreement under Section 1866 of the Social Security Act and the OIG intends to terminate the agreement, the OIG will indicate this in its notice of exclusion. Unless the individual or entity files a written timely request for a hearing before an ALJ, the exclusion will be effective 60 days after receipt of notice. A request for hearing will be timely if filed within 60 days from the date of notice (which is presumed five days after the date on the notice. The written request must include:
(1) The specific issues or statements in the notice with which the individual or entity disagrees;
(2) The basis for that disagreement;
(3) The defenses on which reliance is intended;
(4) Any reasons why the proposed length of exclusion should be modified; and
(5) Reasons why the health or safety of individuals receiving services under Medicare or any of the State health care programs does not warrant the exclusion going into effect prior to the completion of an administrative law judge (ALJ) proceeding in accordance with part 1005 of this chapter.
If the individual or entity submits a timely request for hearing, and if the OIG does not find immediate exclusion necessary because the health and safety of Medicare beneficiaries are at risk, an exclusion will go into effect on the date of the ALJ’s decision, if the ALJ upholds the decision to exclude.
Normal Exclusion Period
Mandatory exclusions are for a period of at least five years, unless the Secretary, after consulting with the Inspector General of the Department of Health & Human Services, determines exclusion would impose a hardship on beneficiaries (e.g., the individual or entity is the sole community physician or the sole source of essential specialized services in a community). The OIG can determine that aggravating circumstances provide a basis for lengthening the exclusion period. Notably, “acts resulting in the conviction, or similar acts, that caused, or were intended to cause, a financial loss to a Government program or to one or more entities of $5,000 or more” are considered an aggravating factor that may lengthen the exclusion period. The following are additional examples from the list of potential aggravating factors: (i) acts that were committed over a period of one year or more; (ii) whether the court’s sentence imposed incarceration; or, (iii) as a result of intentional improper billings, the individual or entity has been overpaid a total of $1,500 or more by Medicare, Medicaid, or any other federal health care program.
Only after aggravating factors are found to potentially justify a longer exclusion period, will the OIG consider mitigating factors. For example, if an individual’s cooperation with federal or state officials results in: (i) another individual or entity being convicted or excluded from Medicare, Medicaid, and all other federal health care programs, (ii) additional cases being investigated, (iii) reports being issued that identify program vulnerabilities, or (iv) civil monetary penalties being assessed, that would be considered a mitigating factor that may provide a basis for reducing the period of exclusion to no less than five years.
Permissive exclusion is for a period of three years, unless the Secretary determines that mitigating circumstances warrant a shorter period or that aggravating circumstances warrant a longer period. The aggravating and mitigating factors that apply to mandatory exclusions also apply to permissive exclusions.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or firstname.lastname@example.org.
 42 C.F.R. §§ 1001.2001-1001.2007.
 Id. § 1001.2001(a).
 Id. § 1001.2001(a).
 Id. § 1001.2002.
 Id. § 1001.2002(b).
 Id. § 1001.2003.
 Id. § 1001.2007(a)(1).
 Id. §§ 1001.2007(b); 1005.2(d).
 Id. § 1001.2007(d).
 Id. § 1005.21(a).
 Id. § 1005.21(k)(1).
 See Id. §§ 1001.2001, 1001.2002.
 Id. § 1001.2003.
 Id. § 1005.21(a).
 Id. § 1005.21(k)(1).
 Id. § 1001.2003(a).
 Id. §§ 1001.2007(b), 1005.2(c).
 Id. § 1001.2003(a)(1)-(6).
 Id. § 1001.2003(b)(2).
 42 U.S.C. § 1320a-7(c)(3)(B).
 42 C.F.R. § 1001.102(b).
 Id. § 1001.102(b)(1).
 Id. § 1001.102(b)(2).
 Id. § 1001.102(b)(5).
 Id. § 1001.102(b)(7).
 Id. § 1001.102(c).
 Id. § 1320a-7(c)(3)(D).
 42 C.F.R. § 1001.201(b)(2)-(3).