If you have any questions concerning this article, please contact:

B. Scott McBride at smcbride@bakerlaw.com or 713.646.1390; Greg Saikin at gsaikin@bakerlaw.com or 713.646.1399 from our Healthcare Investigation and Enforcement team;

John J. Carney at jcarney@bakerlaw.com or 212.589.4255; George A. Stamboulidis at gstamboulidis@bakerlaw.com or 212.589.4211 from our White Collar Defense and Corporate Investigations team; or

Hilary Cairnie at hcairnie@bakerlaw.com or 202.861.1668; Kelley P. Doran at kdoran@bakerlaw.com or 202.861.1661 from our Government Contracts team.

At the annual meeting of the American Health Lawyers Association (AHLA) held this week in Washington D.C., the U.S. Department of Health and Human Services Office of Inspector General (OIG) announced a new legal team dedicated to pursuing civil monetary penalties (CMPs) and exclusions.

The new litigation taskforce will be used to complement other enforcement efforts of the U.S. Department of Justice (DOJ) and to fill in enforcement gaps. The taskforce will focus on levying CMPs and excluding individuals and organizations from participating in the Medicare and Medicaid programs. Led by Robert Penezic, a current OIG deputy branch chief, the new litigation team will have at least 10 dedicated attorneys once it is fully staffed. Their task will be to ramp up civil enforcement actions against providers and individuals in cases initiated by the OIG, including cases related to improper billing under the Medicare and Medicaid programs, kickbacks, and compliance with corporate integrity agreement (CIA) obligations. The new enforcement team will pursue cases that arise from referrals to the OIG, False Claims Act (FCA) litigation, and monitoring of CIAs.

From a practical standpoint, the new OIG taskforce likely means more enforcement of cases that the DOJ does not pursue. Over the last few years, the OIG has reported an increase in settlements under its CMP law related to affirmative enforcement actions (as opposed to self-disclosures). Correlating to the increase in CMP settlements is an increase in individual liability and exclusions, particularly for managers, executives, and physicians. At the AHLA annual meeting, the OIG referenced several enforcement matters to further highlight their activities.

One such example was a 15-year exclusion and $1.5 million settlement for a physician who allegedly submitted physical therapy claims for services where he was not present. The OIG commented that the physician had, among other allegations, submitted claims for procedures furnished at the same time but in different locations. Another example was a settlement with a drug company for billing for drugs that were not dispersed. And another example involved an FCA lawsuit related to kickbacks pursued by the DOJ against a diagnostic center. As a separate enforcement action, the OIG affirmatively pursued CMPs against 12 physicians involved in the alleged kickback conduct. The recovery by the OIG in the individual settlements under its CMP authority was greater than the recovery in the related FCA case.

We expect that the new enforcement team will continue to substantially increase audit and enforcement activities throughout the healthcare industry. The CMPs allow for various recoveries, including treble damages and up to a $50,000 penalty for each occurrence involving certain conduct. In addition, the OIG’s exclusion authority can prevent entities from participating in the Medicare or Medicaid programs for an extended period or indefinitely. Aside from the more obvious financial implications of losing participation eligibility in government-funded healthcare programs, an exclusion can also impact participation in federal grants, cooperative agreements, and other procurement programs.

With the addition of another government enforcement team in the healthcare industry, healthcare providers as well as owners, executives, and managers should revisit their compliance policies and procedures with an eye toward strengthening their compliance programs. By testing and improving internal audit functions, developing enhanced policies and procedures, and conducting internal investigations when advisable, providers and individuals can more effectively identify, mitigate, and manage their compliance risks to better defend their actions and decisions should they become the subject of an affirmative enforcement inquiry.