On January 12, 2017, just a week prior to President Trump’s Inauguration, the Department of Health and Human Service (HHS) Office of Inspector General (OIG) published a final Rule (Rule) regarding one of its most important enforcement mechanisms: its exclusion authority. The Rule, published nearly three years after it was initially proposed by the OIG back in May 2014, expands the OIG’s authority to exclude individuals and entities participation in federal healthcare programs and codifies certain provisions of the Affordable Care Act (ACA). The Rule’s original effective date was February 13, 2017, but due to the Trump Administration’s administrative freeze on the effective date of regulations that had not yet gone as of January 20, 2017, the Rule’s effective date is now set for March 21, 2017.

Expansions to the OIG’s Permissive Exclusion Authority under the ACA

With the new Rule, the OIG codifies a number of provisions from the ACA that expand the OIG’s exclusion authority.  In particular, pursuant to the ACA, the Rule expands the OIG’s permissive exclusion authority for (i) those individuals and/or entities that obstruct fraud and/or abuse audits and investigations; (ii) those individuals and/or entities that make false statements or misrepresent material facts in enrollment or similar applications to participate in federal healthcare programs; (iii) those individuals and/or entities that make false statements or misrepresent material facts in requesting reimbursement from federal healthcare programs; and (iv) those individuals and/or entities that make false statements or misrepresent material facts when certifying the medical necessity of covered items or services.

Furthermore, the new Rule implements ACA provisions that permit the OIG to issue testimonial subpoenas in investigations of potential cases conducted under its exclusion authorities.

Other Key Components of the Rule

Under the Rule, the OIG adopts a ten-year statute-of-limitations for permissive exclusions.  By adopting a ten-year statute-of-limitations, the Rule harmonizes the statute of limitations for permissive exclusions with the statute of limitations under the federal Civil False Claims Act. The Rule also updates the loss threshold that needs to be met for the OIG to impose the maximum exclusion period.  Most notably, it increases the financial loss aggravating factor amount to $50,000.

The Rule also updates current law, which allows for the exclusion of an individual who has a “direct or indirect ownership or control interest in a sanctioned entity” and knew or should have been aware of the conduct at issue. The Rule clarifies that such an individual will be excluded for the same period of time applicable to the entity’s exclusion.

Additionally, the Rule finalizes the process for early reinstatement for certain individuals excluded because of a licensure action, setting forth several factors that will be considered in determining whether such reinstatement is appropriate.


The exclusion authority remains one of the OIG’s most powerful compliance tools, and the Rule certainly shows that the OIG remains active in updating and bolstering its enforcement authority. Given just how far-reaching the effect of exclusion is, individuals and entities in the healthcare space should be aware of these changes in order to better ensure regulatory compliance. At the same time, given the Trump Administration’s efforts to repeal the ACA, it will also be important to monitor whether this Rule or other Rules with authority based in the ACA become at risk or impacted in the event of a repeal.