by Ben Vernia | October 26th, 2010
On October 20, the Office of Inspector General of HHS issued a Guidance for Implementing Permissive Exclusion Authority under Section 1128(b)(15) of the Social Security Act, describing the methods it would follow in determining whether to exclude the owners, officers, or managers of sanctioned healthcare providers. The OIG-HHS’s authority to exclude these persons is set forth in its “permissive” (i.e., vs. mandatory) exclusion statute, which is codified at 42 U.S.C. 1320a-7(b)(15). The law sets forth different standards of knowledge for owners (who knew or should have known of the conduct leading to the sanction) and officers and managing employees (who may be held strictly liable).
Under the OIG’s new guidance, the OIG will presume that owners of sanctioned entities who knew or should have known of the conduct should be sanctioned, unless “significant factors weigh against exclusion.”
The OIG’s statement concerning officers and managing employees deserves to be quoted in full:
With respect to officers and managing employees, the statute includes no knowledge element. Therefore, OIG has the authority to exclude every officer and managing employee of a sanctioned entity. A “managing employee” is defined as an individual (including a general manager, a business manager, an administrator, or a director) who exercises operational or managerial control over the entity or who directly or indirectly conducts the day-to-day operations of the entity. While OIG does not intend to exclude all officers and managing employees, when there is evidence that an officer or a managing employee knew or should have known of the conduct, OIG will operate with a presumption in favor of exclusion. As with the presumption relating to owners, the presumption may be overcome when OIG finds that significant factors weigh against exclusion.
The guidance provides four main categories of factors to be considered (with specific subsets described in more detail in the guidance):
- Circumstances of the Misconduct and Seriousness of the Offense
- Individual’s Role in Sanctioned Entity
- Individual’s Actions in Response to the Misconduct
- Information about the entity (i.e., prior history, size, etc.)
