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Fraud and Compliance Forum

October 4-6, 2009| Baltimore, MD | Renaissance Harborplace Hotel

Suspensions, CMPs, Exclusions, and Other Authorities

Gabriel Imperato Broad and Cassel Lisa G. Veigel Administrative & Civil Remedies Branch Office of Counsel to the Inspector General U.S. Dept. of Health and Human Services

Administrative Sanctions:

Overview of Administrative Sanctions

The Civil Monetary Penalties Law Mandatory and Permissive Exclusion Authorities Other Administrative Sanctions


Civil Monetary Penalties Law (CMPL) Key Points

Section 1128A of Social Security Act, 42 U.S.C. § 1320a-7a, is the Civil Monetary Penalties Law, containing many of the OIG's CMPs as well as CMP enforcement procedures Many CMPs codified other than in CMPL incorporate the CMPL intent standards and procedures CMPL is most often used by OIG as an alternative to civil action under False Claims Act DOJ Authorization Required For OIG CMPL Action - § 1320a7a(c)(1); Case Initiated by OIG

Civil Monetary Penalties Law (CMPL) ­ Key Points (cont.)

OIG Has to Prove Elements of CMPL action by Preponderance of the Evidence/Respondent Has Burden on Mitigating Factors and Affirmative Defenses Six Year Statute of Limitations, § 1320a-7a(c)(1) CMP, Assessment, and Exclusion available in most CMPL cases; although most CMPs are up to $10,000 for each item or service improperly claimed, different CMPs are applicable for specific violations ALJ Proceeding, § 1320a-7a(c)(2) CMPL Regulations at 42 CFR Parts 1003, 1005 and 1006


Persons Subject to CMPs

CMPL applies to "Any person (including an organization, agency, or other entity)" · Not limited to health care "providers"

CMPL Intent Standard

Generally OIG must prove "Knows or Should Know" that there was violation Similar to FCA Scienter Standard - More than Negligence Definition of "should know" in statute - 42 U.S.C. § 1320a7a(i)(7), 42 CFR § 1003.101 and 1003.102(e):

· "Acts in deliberate ignorance of the truth or falsity of the information" or · "Acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required"


Overview of CMPL Remedies ­ 42 U.S.C. § 1320a-7a(a)

Civil Monetary Penalty of up to $10,000 "for each item or service" improperly claimed · Penalty is not based on actual loss sustained by government, but on amount claimed. In addition to penalty, subject to an assessment of up to 3 times "the amount claimed for each such item or service in lieu of damages sustained by the United States or a State agency because of such claim" Exclusion from participation in Federal health care programs available in most CMPL cases Notification of State agencies ­ 42 U.S.C. § 1320a-7a(h)

CMPL Versus FCA Remedies for Improper Claims

FCA liability is for civil penalty of no less than $5,000 and not more than $11,000, · CMPL monetary penalty is up to $10,000 for each item or service improperly claimed In addition, FCA is 3 times amount of damages sustained by United States · CMPL assessment may be up to 3 times the amount improperly claimed When no explicit remedy in FCA (e.g. Kickback violation) Differences in statute of limitations


CMPL Statute of Limitations

CMPL six year statute of limitations - 42 U.S.C. § 1320a7a(c)(1), 42 CFR § 1003.132 CMPL proceeding must be initiated no later than six years after date claim was presented, request for payment was made or occurrence took place. Issuance of OIG demand letter tolls statute of limitations

Overview of Available Civil Monetary Penalties

More than 40 OIG CMPs 42 CFR § 1003.102 catalogues available CMPs 42 CFR § 1003.103 catalogues the amount of penalty and assessments available for each CMP


CMPs for False/Fraudulent Claims § 1320a-7a(a)(1)(A)-(E) Items or services not provided as claimed

· Including a pattern of upcoded claims False or fraudulent claim for medical or other item or service Claim for physician service by person not licensed, or obtained license through misrepresentation, or false representation regarding board certification Pattern of medically unnecessary items or services

Kickback CMP ­ 42 USC § 1320a-7a(a)(7)

CMP of up to $50,000 for each act in violation of Anti-Kickback Statute, § 1128B(b) of SSA, 42 U.S.C. § 1320a-7b(b) Assessment of up to 3 times the total amount of the remuneration (regardless of whether part of the remuneration was for a lawful purpose) Exclusion (exclusion also available under § 1128(b)(7) of SSA, 42 U.S.C. § 1320a-7(b)(7), for violation of AKS)


Other CMPs

Violation of Physician Self-Referral Law (Stark)

· Stark prohibits physician referrals of Federal health care beneficiaries to any entity in which the physician has a prohibited financial interest or compensation arrangement · CMP of up to $15,000 for each service improperly claimed (§ 1395nn(g)(3))

· Assessment of up to 3 times the amount improperly claimed

Excluded Person Billing CMP - 42 U.S.C. § 1320a-7a(a)(6)

· Arranges or contracts with a person that is excluded · Knew or should have known that the person was excluded from Federal health care program

Other CMPs (cont.)

EMTALA - "Patient Dumping" § 1867 of SSA, 42 U.S.C. § 1395dd

· For hospitals with emergency departments, requires appropriate medical screening examination to determine if emergency medical condition · Stabilizing treatment or appropriate transfer required for emergency medical condition · Hospitals ­ CMP $50,000 for each violation ($25,000 for hospitals with less than 100 beds). CMP may be imposed for negligent violation. · Physicians ­ CMP of up to $50,000 for each violation (violation need only be negligent) and subject to exclusion for repeated or flagrant conduct

Improper possession and use of Select Agents and Toxins


Recent CMPs

West Valley Imaging LP

· West Valley performing radiology tests not ordered by treating physician · $2,000,000 settlement plus interest · 5 year Integrity Agreement with quarterly IRO reviews · One of largest CMPs ever settled

Recent CMPs

Ediberto Soto-Cora, M.D.

· Cardiologist upcoded claims and submitted claims without any supporting medical documentation · $534,000 settlement · One of largest CMPs against individual provider


Effect of Exclusion ­ Key Points

No payment will be made by any Federal health care program for any items or services furnished, ordered, or prescribed by an excluded individual or entity. 42 U.S.C. § § 1320a-7(a), 1320a-7(b), 1320a-7b(f) Federal health care programs include Medicare, Medicaid, and all other plans and programs that provide health benefits funded directly or indirectly by the United States (other than the Federal Employees Health Benefits Plan). Applicable regulations at 42 CFR § 1001.1901. This payment prohibition applies to the excluded person, anyone who employs or contracts with the excluded person, any hospital or other provider where the excluded person provides services. The exclusion applies regardless of who submits the claims and applies to all administrative and management services furnished by excluded person. Exclusion statute is remedial in purpose, not punitive. OIG Special Advisory Bulletin (Sept. 1999) provides general guidance.

Mandatory Exclusions ­ SSA § 1128, 42 U.S.C. § 1320a-7(a)

Mandatory Exclusions based on convictions for: · · · · Medicare or State health care program criminal offense Patient Abuse or Neglect Felony relating to health care fraud Felony relating to unlawful manufacture, distribution, prescription, or dispensing of a controlled substance

Conviction is broadly defined - § 1320a-7(i). At least 5 year exclusion term, § 1320a-7(c)(3), adjustment upward based on factors at 42 CFR § 1001.102(b) and related mitigating factors at 1001.102(c)


Permissive Exclusions, SSA § 1128(b), 42 U.S.C. § 1320a-7(b)

15 · · · Bases, most are derivative, including: Misdemeanor conviction relating to health care fraud Criminal obstruction Misdemeanor conviction relating to unlawful manufacture, distribution, prescription, or dispensing of a controlled substance · License revocation or suspension · Failure to supply payment information or grant immediate access

Underlying basis of conviction cannot be attacked Adjustments to term based on aggravating and mitigating factors set out at 42 CFR Subpart C

Examples of "Affirmative" Permissive Exclusions

OIG has to prove elements of underlying offense, 42 CFR § 1001.2007 Fraud/Kickbacks ­ 42 U.S.C. § 1320a-7(b)(7) Potentially relevant in all FCA cases involving Federal health care programs Right to pre-exclusion hearing, 42 U.S.C. § 1320a-7(f)(2) Quality of Care ­ 42 U.S.C. § 1320a-7(b)(6)(B)

· · · Failure to meet professionally recognized standards of care Substantially in excess of patients' need All patients - not just Federal health care program beneficiaries


Exclusions as part of Criminal/FCA Settlements

Criminal · OIG advises on applicability of exclusion authorities · OIG may enter into stand-alone exclusion agreement

OIG determines appropriate length of exclusion

Civil · Negotiated in FCA settlement or administrative litigation · Corporate Integrity Agreement in lieu of exclusion


Not automatic, but must apply to OIG · Applicable regulations at 42 CFR §§ 1001.3001-3004 Within discretion of OIG to grant/deny No judicial review of decision to deny Billing while excluded most common reason for denial


Recent Exclusions

Purdue Pharma Executives

· Excluded former (1) CEO and COO, (2) Chief Scientific Officer, and (3) General Counsel for 15 years. · Officers pleaded guilty to misdemeanor misbranding of Oxycontin in their role as responsible corporate officers · Argued that they did not personally engage in any wrongdoing, had no knowledge, and their convictions were based solely on status as responsible corporate officers · ALJ upheld exclusion finding that they were in a position to prevent and correct misbranding and failed to do so. · Decision upheld by DAB on August 28, 2009.

Recent Exclusions

Emmanuel Bernabe

· Sole owner and President of Pleasant Care Corporation · Agreed to permanent exclusion · Through Bernabe's management and oversight of Pleasant Care, he caused items and services to be furnished that failed to meet professionally recognized standards of health care, including services that resulted in severe harm to patients · First affirmative exclusion of owner of nursing home chain


Internet Resources HHS: HHS-OIG: CMS:


Gabe Imperato Managing Partner, Broad and Cassel 954-764-7060 [email protected] Lisa Veigel Senior Counsel Administrative & Civil Remedies Branch 202-205-4489 [email protected]



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