Healthcare providers are increasingly feeling the cost of employing excluded individuals.Indeed, over the past year, the number of enforcement actions taken against physician's offices, pharmacies and other entities employing excluded individuals have risen sharply. "Excluded individuals" are parties excluded from Federally-funded healthcare programs due to certain healthcare or fraud-related convictions or misconduct finding(s), or in conjunction with other sanctions being imposed. Excluded individuals are prohibited from involvement in providing services under the Medicare/Medicaid Programs, including as an employee.

In these enforcement actions, the Office of the Inspector General of the U.S. Dept. of Health and Human Services ("OIG") and/or the Office of the Medicaid Inspector General ("OMIG") subpoenaed or otherwise demanded records of claims associated with the excluded individual.Harsh penalties then ensued.First, OIG/OMIG insisted on recouping payment for all such claims submitted to the Medicare and/or Medicaid Program by the employer.Then, "multiplier" penalties were imposed. In some cases, the multiplied penalty doubled the amount of the underlying recoupment. It is important to note that ignorance is absolutely not an excuse: OIG/OMIG place the burden on employers to verify a potential employee's eligibility under the Medicare/Medicaid Programs, and to continue monitoring the employee's status, once hired.

Given the financial risk posed by employing excluded individuals, it is incumbent upon employers to protect themselves. Indeed, depending on the scope of the excluded individual's responsibilities, a recoupment could encompass claims for services that he/she did not directly perform. Here, robust hiring and monitoring protocols aimed at identifying excluded individuals are essential, as are policies for promptly ending any association with excluded individuals and making certain notifications required by Medicare/Medicaid regulations.As always, healthcare employers are well-advised that a strong offense—in the form of detailed compliance procedures—is the best defense for avoiding OIG and OMIG enforcement and penalties.

If you have questions or require expert legal guidance about protecting your business from an exclusion-based enforcement action, or regarding any other compliance matters, feel free to call the experienced attorneys in our Regulatory & Compliance Practice at (212) 668-0200 or email the firm at info@mdrxlaw.com