News Alert: New OIG Exclusions Target Individuals and Company Fraudsters

Compliance and fines are two things that go together in healthcare. The environment for imposing those fines and issuing exclusions for individuals or companies that violate the rules and regulations continues to be the focus of the U.S. Department of Health and Human Services (HHS), Office of the Inspector General (OIG).

Lately, there have been efforts to coordinate those regulations and their enforcement. The Strike Forces are a perfect example.

In the last 60 days, Congress and the OIG have finalized several rules regarding the expanded authority to impose exclusions, and increased civil fines and penalties.

The impetus stems from the issuance of the Yates Memo, with increased actions against individuals and emphasizing the government’s focus on compliance and individual accountability as well as the need to coordinate and update regulations in accordance with the Patient Protection and Affordable Care Act (PPACA) provisions of 2010.

Yates Memo:

Deputy Attorney General Sally Yates issued a memo, now known in the legal and compliance world as the Yates Memo, which directs DOJ attorneys conducting investigations of healthcare providers and companies to also investigate individuals involved in possible misconduct.

The purpose of the Yates Memo, outlining the importance of individual accountability in DOJ prosecutions, was to articulate several changes to the department’s policy, particularly regarding the definition of cooperation credit for corporations. 

The Memo alerts prosecutors that punishment should reach those who perpetrated the fraud, and result in not just a fine to the corporation itself. This brings personal accountability and responsibility to a whole new level. Deputy Yates wants you to know that the Justice Department is serious about accountability of bad actors and that individual accountability is real. She wants to make the marketplace a “level playing field.”

Further, to be eligible for any cooperation credit in a criminal or civil matter, an organization must identify all individuals involved in or responsible for the misconduct at issue, regardless of their positions, status, or seniority, and provide the Department all facts relating to that misconduct. Healthcare employees should proceed with caution, given this new focus of law enforcement.

New Exclusion Authority and Penalties:

On Dec. 6, 2016, the OIG issued rules that incorporate new civil monetary policies (CMP) authorities, clarify existing authorities, and reorganize regulations regarding CMPs. The final rule also implements provisions of the PPACA of 2010 that authorize CMPs for the following:

  1. Failure to grant the OIG timely access to records
  2. Ordering or prescribing while excluded
  3. Making false statements, omissions, or misrepresentations in an enrollment application
  4. Failure to report and return overpayments
  5. Making or using a false record or statement that is material to a false of fraudulent claim

In addition, under both the Federal Civil Penalties Inflation Act and the 21st Century Cures Act, Congress adjusted certain civil fines and penalties for inflation and increased the OIG’s authority to issue exclusions for the following:

  • Expand CMP for false claims related to contracts and grants funded by Medicare and Medicaid or other HHS programs.
  • Authorize the OIG to impose CMP on individuals or entities that knowingly submit false claims, up to $10,000 for each claim.
  • Expansion would include false statements on applications or proposals for HHS-funded grants/contracts, up to $50,000 for each false statement.
  • No more than $15,000 for each day individual/entity fails to allow HHS OIG access to audit or investigate false claims.
  • Filled in a gap to expand OIG authority to allow the imposition of exclusion of an officer or managing employee who left the organization prior to the pursuit of fraud that such person was involved in, even if they are not currently employed by the prior company.

Early Reinstatement Procedures for Exclusion:

The Final Rule creates a new process to allow early reinstatement of individuals excluded under Section 1128(b)(4) due to the losses of their healthcare licenses for reasons related to their professional competence, performance, or financial integrity. Under the new rule such individuals can apply for early reinstatement if they obtain a healthcare license in another state, or retain a different healthcare license in the same state, or if they do not have a valid license but can demonstrate that they would no longer pose a threat to Federal healthcare programs or beneficiaries of such programs. 

Finally, the OIG agreed to limit to ten (10) years the period to pursue exclusion actions. So this Final Rule is relevant to individuals and entities considering resolution of False Claims Act (FCA) investigations or litigation. FCA actions are also limited to ten (10) years. The OIG also set forth changes to the aggravating and mitigating factors it considers in determining whether to increase the length of the exclusion. These factors are only used if the OIG has established one or more aggravating factors.  


The OIG has modernized the exclusion process by mirroring those requirements in the PPACA. The authorities to impose CMP and exclusions have been increased and the associated fines have doubled in some cases. Now is the time to make sure your compliance plan reflects these new changes, your training incorporates them, and your staff is aware that federal prosecutors will look to individual liability for bad actors.  

Read the OIG Final Rule:



Michael Rosen, Esq.

Michael Rosen brings more than 20 years of experience in founding and leading service-oriented businesses. He co-founded Background America, Inc., which was acquired by Kroll Inc. He was promoted to president of the Background Screening Division, which employed 1,000 people in seven countries. He is now the co-founder of ProviderTrust, Inc. a national healthcare compliance service that helps facilities stay in compliance. He has received numerous accolades, including the Inc. Magazine 500 Award, Nashville Chamber of Commerce Small Business of the Year award, and the Music City Future 50 Award.

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