Providers Should Ensure That They Are Fully Aware of All of the Collateral Consequences that May Occur When Settling with the Government

There are a number of collateral consequences that can arise out of a settlement or plea agreement.

(December 2, 2019): Over the past several years, several clients have come to our Firm who have resolved disputes through such mechanisms as settlement agreements, criminal pleas, or consent orders, either because they specified minimal penalties or because they did not include any time in incarceration. Later they discover that agreeing to these resolutions has resulted in collateral consequences that have far reaching consequences that they did not anticipate.

In one matter, a provider had signed a consent order before a professional board that contained a fine that was not substantial, only to later be terminated from the Medicaid program which was the sole source of that person’s practice. In another instance, a provider had accepted a plea in a Medicare fraud case that avoided incarceration, only to discover that the he was later excluded from federal health programs and faced possible disciplinary action by the state professional board. In each of these cases, the providers had been represented in those actions by counsel who were extremely competent in their specialty -- litigation, but who did not specialize in health care and thus were unfamiliar with the special nuances of the health care statutes, rules and practices.

I. Collateral Consequences -- Traps for the Unwary:

It is essential that you be aware of the possible derivative collateral consequences that may flow from settling matters that involve federal health programs, tort or insurance matters, or other government bodies. These include such actions as:

  • Medical malpractice payments made for the benefit of a health care practitioner resulting from a written claim or judgment.
  • Certain adverse licensure actions related to professional competence or conduct .
  • Professional review actions based on reasons related to professional competence or conduct adversely affecting clinical privileges for a period longer than 30 days, or voluntary surrender or restriction of clinical privileges while under, or to avoid, an investigation.
  • Professional review actions based on reasons relating to professional competence or conduct adversely affecting membership
  • DEA administrative actions seeking to revoke a provider’s Certificate of Registration.
  • Exclusions from participation in Medicare, Medicaid, and other federal health care programs.
  • Negative actions or findings by peer review organizations or private accreditation actions.
  • A variety of adverse actions by state licensing and certification authorities.
  • A variety of law enforcement or administrative activities involving health care related actions.
  • A variety of federal licensure and certification actions.

A report that is made to the NPDB can have a number of derivative collateral consequences such as adversely affecting hospital admitting privileges, credentialing for purposes of participating in insurance or public programs, and the ability to obtain professional liability insurance or the rates that a clinician pays for such coverage. In the initial case discussed, above, the health care practitioner who was terminated from the Medicaid program was able to have privileges and enrollment restored, but only after significant legal expense and time away from the practice that likely could have been avoided had health care counsel been involved in the earlier proceeding.

Additionally, there are a number of grounds under federal health care law that provide for mandatory or permissive exclusion from all federal health care programs including the Medicare and Medicaid programs. Thus, any provider, practitioner, or entity that is convicted of a program related crime, patient abuse, or a felony related to health care fraud or manufacture, distribution, prescription or dispensing of a controlled substance must also be excluded from participation in federal health care programs, generally for at least five years.

Also, among the grounds for permissive exclusions are: convictions relating to fraud in a variety of areas, including misdemeanors; obstruction of an investigation or audit; misdemeanor relating to controlled substances; license revocations – probably the most often used ground for permissive exclusion; exclusion or suspension under another federal or state health care program; and a variety of other grounds. And, there are also a number of insurance and state-specific health care statutes that can generate consequences that would not be readily apparent without familiarity in the area.

II. The Lesson to be Learned About Collateral Consequences:

In short, anyone who operates in the health care space and who is considering entering into a voluntary resolution of a dispute that involves a governmental entity, needs to make sure that the proposed resolution won’t trigger unanticipated collateral adverse consequences. Here, as in many other aspects of participating in the health care system, an ounce of prevention is worth a pound of cure. And, it literally can be the difference between successfully managing the consequences of an adverse event and suffering a serious and career-ending experience.

Collateral Consequences  - Micheal Cook
Liles Parker attorneys are experienced in handling these types of matters, and acutely aware of the collateral consequences that can occur from resolving what can sometimes appear to be minor disputes. Anyone having questions in this area should feel free to contact Michael Cook for a free initial consultation. Attorney Michael Cook can be reached at (202) 298-8750 or