Liles Parker PLLC
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Employing Excluded Individuals Can Cost You!

Employing Excluded Individuals(August 27, 2012):  As you may know, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) has the statutory authority to exclude providers from participation in federal health care programs. An exclusion is arguably the most serious penalty OIG can levy (we’ve previously called it the “nuclear bomb” of health care enforcement) and in essence prohibits an individual from working in the health care industry at all.  There are two types of exclusions: mandatory and permissive. Under its mandatory exclusion authority, OIG must exclude an individual, and they have no discretion to reduce or withhold the punishment. Mandatory exclusions generally last for 5 years. Permissive exclusions, on the other hand, are at the discretion of OIG, taking into account the egregiousness of the conduct, the danger to the Medicare Trust Fund or patients, and the provider’s prior history. Many permissive exclusions are for 3 years, but OIG can shorten or lengthen this time period based on mitigating or aggravating factors.

II.  Employing Excluded Individuals:

But what if it’s not you that is excluded, but instead an employee you hire? Are you on the hook for employing this excluded person? The short answer is yes. Under the civil monetary penalties (CMP) laws, OIG has the authority to assess substantial fines and penalties for several violations, including employing excluded individuals when the employer “knows or should know” that the person was excluded. In most instances, the government takes the position that the employer should have known about an employee’s exclusion based on the provider’s affirmative obligation to check the OIG and GSA databases, and the relative ease with which these databases may be accessed and searched. The knowledge requirement for employing excluded individuals essentially aligns with those of the False Claims Act (FCA): actual knowledge, reckless disregard, or deliberate ignorance.

II. Penalties for Employing Excluded Individuals:

The range of penalties OIG might assess for employing excluded individuals range far and wide. In the end, it really depends on whether the excluded individual is providing reimbursable health services that can be tied to a specific claim. If a doctor who is excluded, for instance, submits claims, the CMP laws call for a $10,000 penalty plus three times the amount claimed (not the amount the government actual pays). If, instead, a biller is excluded and works for a company, OIG usually assesses the company the value of the employee’s salary, sometimes multiplied. So if an excluded biller was paid $40,000 over the course of his or her exclusion, the company could be subject to penalties of $40,000 – $80,000, depending on the culpability of the company.

III.  Important Compliance Steps:

To prevent your company from employing excluded individuals, you should take two steps. First, you need to ensure that your Compliance Plan is effective, up-to-date, and followed by your employees. Establishing and enforcing an effective Compliance Plan is currently the most important step a health care provide can take to reduce the penalties incurred from the government, and reduce the risk of penalties altogether. We’ve discussed Compliance Plan implementation at length, but it bears repeating: get your Compliance Plan today, before you get a knock on the door from government investigators or contractors.

The other important step relates specifically to screening excluded individuals. You should check your current employees on a regular basis. We recommend every six months for smaller providers and once a month for larger providers (usually those with their own dedicated Compliance Officer). A new employee should be screened before they are officially hired, and you should ask on your employment applications if an applicant has ever been excluded from Medicare/Medicaid. In addition, and we can’t stress this enough, get an applicant’s social security number. Names change; numbers don’t. In our experience, the most common reason an employer hires an excluded individual is because they didn’t check all the possible names the individual might have. Many folks use their maiden name or some other alias, or the person checking simply hasn’t spelled the name correctly! As a result, it is best practice to also take down the applicant’s social security number and ask about other names used, so that all of these possibilities can be searched in the databases. At the end of the day, the most concrete way to establish if someone is or is not excluded is through their social security number.

Healthcare LawyerRobert Liles, in our Washington, D.C. office, advises clients on healthcare fraud and abuse matters, including exclusions and CMPs. In addition, he assists providers in implementing effective Compliance Plans and represents clients in Medicare overpayment appeals. For more information or a free 30 minute consultation, call Robert today at: 1 (800) 475-1906.

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