OIG / HHS Admin Proceedings

The False Claims Act of 1863 authorized the Attorney General and private qui tam whistleblowers to file suit in federal court for the recovery of massive amounts of money in civil penalties against those who present false claims to the government. From the perspective of the OIG, which is the department of HHS’s investigation and enforcement arm, there was a significant problem.  Only the AG or a whistleblower was authorized by the FCA to file suit.   With the passage of the Civil Monetary Penalties Act of 1987,  42 USC § 1320a–7a, the OIG no longer need to convince a busy assistant AG that a case has merit.

The OIG may rely upon the CMP statute (and the CFR provisions which are enabled by the CMP law) to impose $10,000 per claim fines for most violations, and up to $50,000 per claim for Anti-Kickback Statue violations.  The CMP statue (the part that is designated under 43 U.S.C.) outlaws the major violations, such as Stark Law, AKS, and False Claims, while CFR regulations (designated as 42 C.F.R ) prohibit, and some allege, micro-manage  a mind-numbing list of behaviors which the federal government has no business regulating, such as the prohibition under 42 C.F.R. §1003.102 a.(4)(ii) ( presenting a claim for payment by a “person who, although a physician, cheated on his licensing exam.”)  

The regulations describing the administrative appeals process for the OIG's CMP cases are at 42 CFR part 1005. The formal initiation of a CMP case occurs when the OIG issues a demand letter describing the sanction sought (CMP, assessment, and/or exclusion) and the factual basis for the sanction. The subject of the action (the respondent) has the right to request a hearing before an administrative law judge (ALJ) within HHS. In such a hearing, the OIG and the respondent have the right to present evidence and make arguments to the ALJ, who issues a written decision. The ALJ's decision may be appealed administratively and to federal court.

Prior to initiating formal administrative CMP proceedings, the OIG seeks to resolve matters through negotiation. Most CMP cases are resolved through settlement with no decision having been made on the merits of the OIG's allegations or the respondent's defenses. If the OIG and the respondent cannot reach a negotiated settlement, the case will result in an administrative decision, and, if appealed, additional administrative and court decisions. Any administrative or court decision represents a finding on the OIG's allegations and the respondent's defenses. 

Contested decisions are handed down by an Administrative Law Judge (ALJ) after evidence and documents are admitted, including testimony. Appeal to a federal court is normally limited to an appeal of the application of legal principles, while findings of fact are deemed conclusive, if supported by substantial evidence.  

If you have been contacted by the OIG regarding a question of a violation of the CMP and would like to schedule a free initial consultation, contact Martin Merritt by clicking here.




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