OIG Releases Updated Criteria for Determining Permissive Exclusions

April 20, 2016

On April 18, 2016, the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services issued updated non-binding criteria that the OIG will utilize to evaluate whether the OIG will exclude an individual or entity from participation in Federal health care programs for false claims or anti-kickback violations. Under Section 1128(b)(7) of the Social Security Act (42 U.S.C. 1320a-7(b)(7), the OIG has permissive authority to exclude an individual or entity from participation in Medicare, Medicaid, and all Federal health care programs for engaging in conduct prohibited by Sections 1128A and 1128B of the Act (42 U.S.C. 1320a-7a and 1320a-7b). The updated criteria supersede and replace guidance previously issued by the OIG in 1997 and can be found here.

The OIG continues to assert (as it did in 1997) that there is a presumption in favor of some period of exclusion for an individual or entity that has defrauded Medicare or any other Federal health care program. However, the OIG now notes that this presumption in favor of exclusion is rebuttable and the OIG’s new guidance sets forth the circumstances in which the presumption may be rebutted and other non-binding criteria the OIG will apply to make a determination of whether to exercise its permissive exclusion authority.

The updated guidance provides more information than previous guidance regarding when the OIG will seek exclusion or request a corporate integrity agreement. Specifically, exclusion is often not necessary if the person or entity agrees to enter into a corporate integrity agreement that will strengthen the person’s or entity’s compliance and enhance the OIG’s oversight. Further, the OIG will evaluate permissive exclusion cases on a continuum where a determination of exclusion is based on the assessment of future risk to Federal health care programs. For example, an exclusion or integrity obligations may not be necessary when there is no egregious conduct such as patient harm or intentional fraud and relatively low financial harm. The OIG will consider the financial loss to the Federal health care programs in proportion to the size of the entity. Further, the OIG believes there is less risk when the party is a successor owner and certain conditions exist such as whether the new owner purchased after the conduct occurred, has an existing compliance program, does not have a history of past non-compliance or settlements, took steps to address the conduct and reduce the risk of future misconduct, and can demonstrate other relevant facts lowering the risk.

The OIG also notes that there are two limited circumstances where the OIG will usually release its exclusion authority without requiring a corporate integrity agreement: (1) the person files a self-disclosure and cooperates with the OIG; or (2) the person agrees to integrity obligations with a state or the Department of Justice that are sufficient to protect against future misconduct.

The OIG’s updated criteria are provided under four categories as follows: (1) the nature and circumstances of the conduct; (2) conduct during the government’s investigation; (3) significant ameliorative efforts; and (4) history of compliance. These four categories differ slightly from the OIG’s prior four broad categories but generally capture the same elements as the 1997 guidance.

Nature and Circumstances of the Conduct

Under this category, the OIG will consider the adverse impact on individuals and specifically whether the conduct caused or had the potential to cause any adverse physical, mental, financial or other impact to beneficiaries or put patients at risk. Another factor is the amount of the actual or intended damages to a Federal health care program where higher risk will be associated with a higher amount of damages. Further, conduct that appears to indicate a pattern of misconduct, takes place over a substantial time period, is repeated or continual, is currently ongoing, or that continued until or after learning of the government’s investigation would weigh more in favor of exclusion. The OIG will also consider leadership positions and whether such people led or planned the unlawful conduct as weighing in favor of exclusion. Finally, the OIG will continue to consider the person’s or entity’s past history of fraudulent conduct.

Conduct During the Investigation

As with the 1997 guidance, the OIG will continue to look toward the person’s or entity’s conduct with the government during any investigation. Efforts to impede or obstruct the investigation or conceal conduct will be considered high risk factors. Conversely, efforts to initiate an internal investigation before any knowledge of a government investigation and self-disclosures will lower the risk and weigh in favor of not excluding the individual or entity. In that same vein, cooperation with any investigation will be viewed favorably. Finally, adverse licensure actions, criminal convictions based on the misconduct, and the inability to pay monetary penalties and/or damages will point towards exclusion.

Significant Ameliorative Efforts

The OIG will consider efforts by the individual or entity to address the misconduct such as whether any disciplinary action was taken against responsible individuals, whether more resources have been dedicated to compliance, and whether individuals have received additional education to improve their ability to provide services in a compliant manner.

History of Compliance

The OIG will continue to consider the person’s or entity’s past history of compliance, such as whether the person or entity has a history, prior to having knowledge of an investigation, of engaging in self-disclosures. Notably, the OIG states that the existence of a compliance program that utilizes the U.S. Sentencing Commission Guidelines Manual’s seven elements of an effective compliance program does not affect whether exclusion is appropriate but the absence of such a compliance program does weigh in favor of exclusion.


Providers should review the OIG’s updated guidance regarding its permissive exclusion authority to gain a firm understanding of the criteria the OIG considers in determining whether to pursue an exclusion. The criteria provide a firm basis for providers to protect against exclusion if the provider were to engage in prohibited conduct regarding false claims or anti-kickbacks.

If you have any questions about OIG’s permissive exclusion guidance or need assistance implementing changes to your organization’s compliance program, please contact a member of Hancock Daniel’s Compliance Team.

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel & Johnson, P.C., PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel & Johnson, P.C., PC be liable for any direct, indirect, or consequential damages resulting from the use of this material.

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