Under federal law, individuals and entities in the healthcare industry who violate laws and rules can be barred from participating in federal health programs, such as Medicare, and state-level programs, such as Medicaid.
This process is known as exclusion, and its legal basis is found in Section 1128 of the Social Security Act, codified at 42 U.S.C. § 1320a-7.
This law, often called the "Exclusion Statute," grants the Department of Health and Human Services (HHS) Office of Inspector General (OIG) significant authority to exclude parties for a range of offenses.
An exclusion means that any federal healthcare program will make no payments for items or services furnished, ordered, or prescribed by the excluded individual or entity.
This includes not only direct patient care but also administrative and management services. The severe consequences of exclusion from these programs can make it extremely difficult, if not impossible, for excluded health care professionals or institutions to continue operating.
Key Takeaways
- Title 42 U.S. Code 1320a-7 allows for excluding individuals and entities from Medicare and state health programs if they are convicted of specific crimes or involved in certain fraudulent or abusive behaviors.
- Mandatory exclusions are required for crimes such as program-related fraud, patient abuse, and controlled substance felonies.
- Permissive exclusions may apply to other offenses, including healthcare fraud or misdemeanor convictions related to healthcare.
- Program-related crimes refer to individuals or entities convicted of a crime connected to providing an item or service under a Federal health care program, such as Medicare, or a State health care program.
- Patient abuse or neglect refers to a conviction for a crime related to mistreating or neglecting a patient in connection with providing a health care item or service.
- Controlled substance felony refers to a conviction for illegally manufacturing, distributing, prescribing, or dispensing controlled substances.
- Fraud refers to a conviction related to fraud, theft, embezzlement, or other financial misconduct involving any government-funded program.
- The OIG has the authority to exclude individuals and entities for reasons beyond those listed, such as misdemeanor convictions for health care fraud (excluding Medicare or a State health program) and fraud in non-healthcare programs funded by government agencies.
- Under 18 U.S.C. § 1349, merely agreeing to participate in a scheme to defraud a federal health benefit program is a crime known as a healthcare fraud conspiracy.
Let's delve into the specific violations that can result in exclusion from these programs under 42 U.S.C. 1320a-7.
Mandatory Exclusions
The OIG is legally required to exclude individuals and entities from participation in federal healthcare programs for certain criminal convictions.
The minimum period for a mandatory exclusion is five years. However, for those with prior convictions, the exclusion can last up to 10 years or become permanent. The following convictions trigger mandatory exclusion:
- Conviction of Program-Related Crimes: Any individual or entity convicted of a criminal offense related to the delivery of an item or service under Medicare or any state healthcare program (e.g., Medicaid) must be excluded. This targets direct fraud against these government programs.
- Conviction Relating to Patient Abuse or Neglect: A conviction under federal or state law for a criminal offense related to the neglect or abuse of patients is grounds for mandatory exclusion. This provision aims to protect vulnerable patient populations from harmful providers.
- Felony Conviction Relating to Healthcare Fraud: This applies to any individual or entity convicted of a felony offense, under federal or state law, in connection with the delivery of a healthcare item or service. The offense must involve fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct within any healthcare program financed by a federal, state, or local government agency.
- Felony Conviction Relating to a Controlled Substance: Any individual or entity convicted of a felony, under federal or state law, related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance will face mandatory exclusion.
Permissive Exclusions
In addition to mandatory exclusions, the OIG has the discretionary authority to exclude individuals and entities for a wider range of misconduct.
The duration of these exclusions varies depending on the offense and can be influenced by mitigating or aggravating factors. The OIG may choose to impose exclusion for the following reasons:
- Misdemeanor Convictions Related to Healthcare Fraud or Controlled Substances: Where felony convictions for these offenses result in mandatory exclusion (see above), the misdemeanor versions of these crimes can also result in exclusion at the discretion of the OIG.
- Conviction for Obstruction of an Investigation or Audit: Interference with or obstruction of an investigation or audit into healthcare-related criminal offenses can result in a permissive exclusion.
- License Revocation or Suspension: Exclusion may be imposed if a healthcare provider's license is revoked, suspended, or surrendered for reasons related to professional competence, performance, or financial integrity.
- Exclusion or Suspension from Other Federal or State Programs: If an individual or entity has already been excluded or suspended from another federal or state healthcare program, the OIG may impose its own exclusion.
- Submitting Excessive Charges or Unnecessary Services: Providers who submit claims for services substantially in excess of patients' needs or of a quality that fails to meet professional standards may be excluded.
- Fraud, Kickbacks, and Other Prohibited Activities: Committing acts described in the civil monetary penalties law or the Anti-Kickback Statute can be grounds for permissive exclusion.
- Entities Controlled by a Sanctioned Individual: An entity can be excluded if it is owned or controlled by an individual who has been convicted of certain offenses, assessed a civil monetary penalty, or is already excluded.
- Failure to Disclose Required Information or Making False Statements: Entities that do not fully and accurately disclose required information, or who misrepresent material facts on an application to participate in a federal healthcare program, can be excluded.
- Failure to Grant Immediate Access: Refusing to grant immediate access to government agencies (e.g., HHS, OIG, or a state Medicaid Fraud Control Unit) for reviews or surveys can lead to exclusion.
- Default on Health Education Loans: Defaulting on government-backed health education loans or scholarship obligations can be a basis for exclusion.
How An Attorney Can Help
Individuals or entities that are excluded cannot receive payment from Federal health care programs for any items or services they provide, order, or prescribe.
Anyone who knowingly employs or contracts with an excluded individual or entity may face penalties, including civil monetary fines and the requirement to repay any amounts related to the excluded individual's or entity's services.
If you are facing accusations that could lead to exclusion from Medicare or state health programs under the Exclusion Statute, the importance of hiring a federal criminal defense attorney cannot be overstated. It can greatly improve your chances of avoiding this outcome.
In cases warranting mandatory exclusion, a good attorney can review the facts of the case and devise a powerful defense strategy to get charges dismissed, obtain an acquittal at trial, or have charges reduced to permissive exclusion levels as part of a plea agreement.
In the case of permissive exclusions, your attorney can negotiate on your behalf with the OIG to present mitigating circumstances, provide proof of compliance, and other strategies aimed at preventing exclusion. For more information, contact our federal defense lawyers at Eisner Gorin LLP in Los Angeles, CA.
