The Most Powerful Federal Watchdog
 You've Never Heard Of

The Most Powerful Federal Watchdog
 You’ve Never Heard Of

August 2019

This is a personal account from a recent PBI course graduate. Some names and identifying details have been changed to protect the privacy of individuals.

After his license was indefinitely suspended for a boundary violation, Frank H. (not his real name) began considering his options. After enrolling in several PBI Education classes and beginning therapy, Frank found work as an office manager in a local drug-prevention program. It helped pay the bills, but just barely. So after a year, he decided to go back to school and get a degree in health care administration. That was before the letter from the Department of Health and Human Services (HHS) arrived.

It was a form letter from the Department’s Office of the Inspector General (OIG), informing Frank that the OIG was considering whether to exclude him from participation in Medicare, Medicaid and all other Federal health care programs. Like virtually all licensed health care professionals, Frank had never heard of the OIG or the List of Excluded Individuals/Entities (LEIE). He was about to get a crash course.

Seventy-three federal departments and agencies have an OIG. Health and Human Services has the largest. It employs approximately 1,600 auditors, inspectors, lawyers, administrators, and investigators dedicated to fighting waste, fraud and abuse in Medicare, Medicaid and more than 100 other HHS programs. The LEIE is one of its primary tools.

What it means to be on the exclusion list

The letter Frank received explained that if Frank did end up on the exclusion list, his ability to work in health care in this country would be significantly limited. According to the letter, “No payment would be made to any Federal health care program (such as Medicare, Medicaid, Veterans Administration, TRICARE, etc.) for any items or services you furnish, order or prescribe in any capacity.”

In the final paragraph, Frank learned that he had 30 days to provide any information or documents he wanted the OIG to consider before making its decision. About a month later, he received another letter. This one told him he was now on the exclusion list.

At first, said Frank, “I didn’t understand how all-encompassing the exclusion was. I thought, ‘OK, I can’t work as a doctor. That’s not a problem since I don’t have a license.” 

But the exclusion list means much more than that. Once you are on the LEIE, you cannot be employed by any organization that is even remotely connected to health care if it accepts federal funds. That includes hospitals, clinics, social service agencies, managed care facilities, the VA, and research groups. It doesn’t matter how remote the connection to health care is. A company that provides cleaning or billing services to a hospital cannot hire you, not even as an unpaid volunteer.

And it doesn’t matter how much or how little contact you have with patients. Once you are on the LEIE you cannot be hired for any job — not as a technician, a secretary or a cashier — by any organization in the health care field that accepts federal funds directly or indirectly. As Frank soon learned, you cannot even work as an office manager in a local drug-prevention program.

Employers are responsible for complying with the LEIE 

Since the position he was applying for did not involve any contact with patients, the drug-prevention program had not been overly troubled by Frank’s history, which he fully disclosed during the hiring process. As they do with all new employees, the program had run his name through the System for Award Management (SAM.gov), a U.S. government website organizations use to search exclusion records, among other things. Frank’s name had not set off any alarms when he was hired, because at the time he was not yet on the LEIE. 

But when the program repeated the search a year later, there was a match. Since the organization had a federal grant, Frank’s employment was terminated. He lost his job and his employer had to reimburse the government for the salary it had paid him. Fortunately for the program, the OIG did not levy any additional fines. 

The OIG can fine an organization that hires someone on the exclusion list $10,000 for each improperly submitted item or service. It can also add an assessment of up to three times the amount claimed. These penalties can add up quickly. In July 2014, for example, the University of Utah agreed to pay $198,000 for hiring three excluded individuals. (Employers who try to escape these penalties by hiding what they have done face criminal charges.) 

To avoid these stiff penalties, employers are urged to check the exclusion list monthly, which is how often it is updated. For a small program like the one Frank worked for, this is a time consuming task. For larger entities, checking all employees against the database every month can be daunting. Many farm out the work to private companies. The risk more than justifies the expense.

Getting off the list can take time

There are two types of exclusion. The first is Mandatory Exclusions. In cases of Medicare and Medicaid fraud, patient abuse, and felony convictions for health care-related financial crimes, the OIG must place the perpetrator on the LEIE. Felony convictions involving the unlawful manufacture, distribution, prescription, or dispensing of controlled substances also fall into the mandatory category. Mandatory exclusions carry a minimum duration of five years, although the OIG can extend the term.

The other type of exclusion is Permissive. This category covers a wide array of offenses, ranging from license suspension or revocation to defaulting on health education loans or scholarship obligations. As the name implies, the OIG has discretion when it comes to permissive exclusions. It can choose whether or not to add the offender to the list and for how long. Often, the exclusion period coincides with the length of the initial disciplinary action. In Frank’s case, he was told the exclusion would end either when his old license was reinstated or when he obtained a new license.

Regardless of the type, exclusions do not end automatically at the conclusion of the specified period. The person or entity on the list first has to file an application for reinstatement. So when Frank was granted a new license by the medical board in another state, he applied to the OIG.

Friends had warned him to expect a long and difficult process, so Frank hired a lawyer before applying. Looking back on the experience now, he thinks that probably wasn’t necessary. There was only one complication. “When you apply for reinstatement, the OIG asks if you have violated any of the terms of the exclusion,” he said. “I had to explain the fact that I was employed for a while by the drug-prevention program.” The OIG accepted Frank’s explanation and about a month later, removed his name from the LEIE. 

Restarting a career

Shortly after receiving his new license, Frank received a job offer. It had been five years since he last practiced medicine, so he had to pass a competency evaluation before he could be hired. Not long after that, the U.S. Drug Enforcement Administration gave him back his DEA number, and he began seeing patients again. 

But when a patient went to fill a prescription, the local pharmacy’s third-party verification software flagged Frank for being on the LEIE. 

“It was maddening,” said Frank. “I made lots of phone calls, explaining that I was no longer in the OIG database. But no one was willing to take responsibility for the error.” Eventually, the verification system caught up with the OIG database, and the pharmacy started filling Frank’s prescriptions.

Frank’s story had a happy ending. Now in addition to helping patients, he wants to help spread the word about the OIG and the exclusion list. “I wish I had known about the LEIE and how the whole thing worked when all this began. Nobody does.  When I tell other physicians about all this, they’re amazed. They have no idea what the exclusion list is.”