Provider Pocketbook Penalties: Changes to CMP Regulations on the Horizon

In a notice published on May 12, 2014, the Office of Inspector General (OIG) proposed changes and clarifications to regulations governing health care fraud and abuse and Civil Monetary Penalties (CMPs). In addition to a general reorganization of the regulations for clarity, the Proposed Rule includes new categories of conduct for which OIG may impose penalties, assessments, and exclusions, and it broadens the liability of health care organizations for the actions of their agents to include contractors and suppliers. The suggested rule change also clarifies aggravating and mitigating factors the OIG will consider in determining sanctions. These changes would broaden the OIG’s authority to impose CMPs and are likely to result in higher penalties.

New Proscribed Conduct

The Patient Protection and Affordable Care Act (ACA) amended the CMP laws to include the following additional conduct for which sanctions may be imposed:

  1. Failing to grant timely access to records upon a reasonable request by the OIG;
  2. Ordering or prescribing while excluded when the person knows or should know that the item or service may be paid for by a federal health care program;
  3. Making false statements, misrepresentations, or omissions in an enrollment, bid, or application to participate in a federal health care program;
  4. Failing to report and return an overpayment when the overpayment is known to the person; and
  5. Making or using a false statement or record that is material to a false or fraudulent claim.

These additions expand health care providers’ potential liability for CMPs.

Factors for Determining Sanctions

The OIG proposes adding the following list of primary factors it will consider to determine the amount of CMPs and length of exclusion for violations:

  1. The nature and circumstances of the conduct;
  2. The actor’s degree culpability;
  3. Any history of prior offenses;
  4. Other wrongful conduct; and
  5. Other matters as justice requires.

These non-exhaustive factors would apply to all CMP violations unless otherwise stated; individual sections may also provide further explanation of a factor’s relevance and application to a particular subject matter, including its treatment as an aggravating factor.

Changes to Aggravating and Mitigating Factors

In addition to new proscribed conduct, changes to aggravating and mitigating factors may increase the likelihood of higher penalties for violations. The Proposed Rule would increase the claims-mitigating factor from $1,000 to $5,000 to reflect that an amount under $5,000 suggests less serious conduct; the claims-aggravating factor would be set at $15,000 or more (from the current “substantial” amount). Despite this increase to the mitigating amount and clarification to the aggravating figure, the addition of new aggravating factors could still expose practitioners to higher CMPs. Further aggravating factors include:

  • A level of intent higher than that sufficient to establish liability (e.g., intentional conduct when reckless would have sufficed)
  • For an entity, prior offenses or misconduct by (1) others on the part of the entity; (2) any individuals with direct or indirect ownership interest or control who knew or should have known of the violation; and (3) any officer or managing employee at the time of the violation
  • Prior offenses or misconduct “in connection with the delivery of a health care item or service” (i.e., not limited to federal health care programs)

The Proposed Rule also clarifies that the presence of even one aggravating factor may justify the maximum allowable CMP amount and would require exclusion.

CMPs for Retaining Overpayments and Engaging Excluded Persons or Entities

The Proposed Rule clarifies that the default CMP Law’s penalty of up to $10,000 applies to failures to report and return an overpayment. The deadline for return of an overpayment without penalty is the later of 60 days from when the overpayment was identified or from when a corresponding cost report was due. The $10,000 CMP would apply to every day beyond the applicable 60-day period. In the case of provider liability for employing excluded persons for non-separately billable services, the OIG proposes a new "per-day penalty" methodology based on the number of days that a penalized provider employed, contracted with, or otherwise arranged for an excluded person to provide non-separately billable items or services.

CMPs for EMTALA Violations

  1. Proposed revisions to EMTALA regulations remove all mitigating factors and include three additional aggravating factors:
  2. Requesting payment or proof of insurance prior to screening or providing treatment; Harm, unnecessary risk of harm, premature discharge, or need for additional services or subsequent hospitalization that results or could have resulted from the violation; and
  3. Whether the individual presented with an emergency medical condition.

The revised regulation would also clarify that an on-call physician would be liable for failing or refusing to report to the hospital for the examination, treatment, or transfer of a patient within a reasonable amount of time from being summoned. A physician on-call for a hospital with specialized capabilities or facilities would also be subject to CMPs for refusing an appropriate patient transfer or similarly failing to report to receive a transfer.

CMPs for Adverse Action Reporting and Peer Review Disclosure Violations

The proposed change to this section would remove current references to the Healthcare Integrity and Protection Data Bank (HIPDB), as this system is being phased out and will merge into the National Practitioner Data Bank.[1] This revision would not, however, change the reporting requirements. The regulation would further clarify that CMPs may be imposed for each failure to report an adverse action or other required information and for each improper disclosure, use, or permitting of access to reportable information.

Appeals of Exclusions, Civil Monetary Penalties, and Assessments

This section would clarify that a person must exhaust all administrative remedies before seeking review by a federal court and that, absent “exceptional circumstances,” claims must be raised at every stage of the administrative process in order to be reviewable. Finally, the OIG seeks to clarify that an Administrative Law Judge (ALJ) may not review an exercise of the OIG’s discretion to exclude an individual or entity, decide the scope or effect of an exclusion, or establish an exclusionary period of zero when the ALJ find that a violation occurred.

Should you have any questions related to CMP regulations or the effects of the Proposed Rule, please contact Peter Mellette ( or Harrison Gibbs (, or call Mellette PC at (757) 259-9200. Comments on the proposed regulations are due by July 11, 2014.

[1] The National Practitioner Data Bank may be accessed at

Mellette PC acknowledges with appreciation Caitlin Riccobono ’15 (University of Richmond Law School) for her assistance in preparing this advisory.

This Client Advisory is for general educational purposes only. It is not intended to provide legal advice specific to any situation you may have. Individuals desiring legal advice should consult legal counsel for up to date and fact specific advice.
Categories: Client Advisory