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Attorneys warn about Medicare/Medicaid 'excluded' individuals, entities
The Indiana Attorney General Medicaid Fraud Control Unit (MFCU) and the Centers for Medicare & Medicaid Services Office of Inspector General have significantly increased enforcement activities in relation to excluded individuals employed by or contracted with participating Medicare or Medicaid providers.
Physicians who employ or contract with an individual or company on the List of Excluded Individuals/Entities (LEIE) face potentially severe penalties, advised Kristen Gentry, attorney with the Indianapolis law firm Krieg DeVault. Prohibitions extend to administrative and management services that are not directly related to patient care, but are a component of providing items and services to beneficiaries of federal health care programs.
In no event may federal program funds be used to cover an excluded individual’s salary, expenses or fringe benefits. Prohibitions also extend to vendors on the LEIE. The prohibitions apply even if the excluded individual or entity is:
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Who is excluded?
Bases for the exclusions include convictions for program-related fraud and patient abuse, licensing board actions and default on health education assistance loans. |
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Paid with non-federal funds
- Paid by an unrelated third party
- Provides items or services on an unpaid basis
Strict liability for violations
Federal and state laws contain prohibitions against physicians or other providers employing or contracting with excluded individuals or entities. Pursuant to federal law, no payment may be made by Medicare, Medicaid or any other federal health care program for an item or service furnished by an excluded individual or entity during the exclusion period.
In Indiana, prosecutions for violating this prohibition are generally asserted under the Indiana False Claims Act, which imposes liability for a person who “knowingly or intentionally presents a false claim to the state for payment or approval.”
Federal “no payment” rules for assessing penalties similarly only impose liability when the person furnishing the item or service “knew or had reason to know of the exclusion.” This “knowingly” standard, used under federal and state law, should prohibit strict liability enforcement of LEIE violations.
Consequently, physicians should either have had knowledge of the exclusion or acted in deliberate ignorance or reckless disregard of the fact that they are or may be employing or contracting with an excluded individual, to be found liable.
However, the MFCU has been taking the position that a violation of this prohibition is a strict liability violation. That means MFCU officials are not requiring a physician to know the person is on the LEIE or act in deliberate ignorance or reckless disregard of a person’s exclusion.
As a result, physicians who have a reasonable screening process in place are at risk of being found in violation of the prohibition by the MFCU.
Penalties are civil in nature, but significant. They include forfeiture of Medicaid or Medicare payments used to pay an individual or entity on the LEIE, a civil monetary penalty of up to $10,000, and the potential for treble damages and exclusion from Medicaid/Medicare.
Things have changed
“Until very recently, the prevailing wisdom in the provider community was that since physicians were already performing criminal history and licensure checks of employees, there was no risk that a licensed employee would be on the exclusion list,” said Gentry.
Most providers saw little risk in employing unlicensed office personnel who do not bill or provide Medicare- or Medicaid-covered services.
The MFCU is actively comparing lists of persons employed by Medicaid providers with names on the excluded list. Comparisons involve both licensed and unlicensed personnel — regardless of whether the person directly provides a Medicaid-covered service.
Indiana physicians are discovering state licensure does not necessarily mean an individual is not excluded.
“Since removal from the excluded list is not automatic, many individuals who receive criminal convictions or license suspensions, but who have completed probation or otherwise taken steps to resolve their licensure problems, remain on the list,” Gentry explained.
A criminal history background check will not reveal that the employee or contractor is on the LEIE. One generally reliable way of knowing if a person is excluded is to check the LEIE Web site.
If you get an inquiry
Employees or contractors should know they are on the LEIE because they receive notice from the government about exclusion. However, a physician’s first notice that an employee is excluded may come in the form of an MFCU inquiry.
“The initial inquiry may then be followed by a request for additional information or demand for the recovery of Medicaid or Medicare funds the physician used to pay individuals or entities on the LEIE,” said Gentry.
A physician may have defenses against the MFCU demand. If you receive a demand, contact counsel early to avoid waiving defenses. Call Randy Fearnow or Susan Ziel of Krieg DeVault LLP at (317) 636-4341 with questions about these issues.
Suggestions from the ISMA and Krieg DeVault:
- Impose a system whereby you routinely check each new hire or contractor against the List of Excluded Individuals/Entities (LEIE).
- Do not hire a person or contract with the entity if they appear on the list.
- Expand your corporate compliance program to check existing employees and contractors against the LEIE at least annually.
- Request maiden and other names an applicant has used and check those names against the list.
- Add a specific question to your employment application asking if the prospective employee has been subjected to Medicare/Medicaid exclusion. Discovery of Medicare/Medicaid exclusion
must, by necessity, result in immediate termination of the employee or the contractor to avoid further exposure.
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