The Basis for Liability

OIG proposes to add a new section 1003.700 that would list the new CMP offenses created by the Cures Act related to fraud and other misconduct involving grants, contracts and other agreements when a person, excluding a program beneficiary:

• Knowingly presents or causes to be presented a specified claim related to a grant, contract or other agreement that a person knows or should know is false or fraudulent. A “specified claim” includes an application, request or demand for money or property under a grant, contract or other agreement, and would include a request for a drawdown or other payment that is made to a computerized payment administration system such as the HHS Payment Management System.
• Knowingly makes, uses, or causes to be made or used any false statement, omission or misrepresentation of a material fact in any application, proposal, bid, progress report or other document that is required to be submitted in order to directly or indirectly receive or retain funds provided in whole or in part pursuant to an HHS grant, contract or other agreement.
• Knowingly makes, uses, or causes to be made or used false records or statements material to false or fraudulent specified claims under a grant, contract or other agreement.
• Knowingly conceals, avoids or decreases an obligation to pay or transmit funds or property with respect to a grant, contract or other agreement, or knowingly makes, uses, or causes to be made or used a false record or statement material to such an obligation.
• Fails to grant timely access upon reasonable request to OIG personnel who are carrying out audits, evaluations, investigations and other statutory functions related to grants, contracts and other agreements.

The statutory definition of “other agreement” under 42 USC 1320a-7a(q)(3) is quite broad, and contains a non-exclusive list of arrangements that could constitute “other agreements,” such as a scholarship, loan, subsidy, donation agreement, award and sub-award. OIG states that when deciding to impose sanctions, it will “evaluate each matter on a case-by-case basis to determine whether the funding arrangement at issue constitutes an “other agreement” under the statute and whether the conduct at issue violates the statute.”

As discussed in the preamble, OIG appears to view these statutory authorities as broadly expanding OIG’s CMP jurisdiction beyond federal healthcare programs, such as Medicare and Medicaid, to many other HHS programs, such as National Institutes of Health or Centers for Disease Control and Prevention grants or any number of contracts that HHS enters into to manage its programs. In the current COVID-19 environment, OIG may also view these authorities as applying to the Provider Relief Fund payments, which HHS is currently administering as a grant through the Health Resources and Services Administration.

The placement of this statute in the Social Security Act (SSA) (which governs the Medicare and Medicaid programs as well as grants to states for unemployment compensation and other programs and the Social Security income benefit) raises a question of how far these CMP authorities extend to other HHS programs that are not contained in the SSA. The Cures Act does not define “grant” or “contract” in its CMPL amendment, and neither does OIG in the proposed rule. The nature of the CMPL, including being part of the SSA, suggests that these CMPs could arguably be limited to the grants, contracts and other agreements governed by the SSA.

Penalties, Assessments and Exclusion

The proposed rule codifies the statutory penalties for each of the five offenses, which range from a maximum of $10,000 to $50,000 per offense, as measured by the applicable offense trigger (such as each claim, each false record or statement, or each day an overpayment is retained or access is not granted). OIG also may impose an assessment of not more than three times the amount involved with the improper conduct and may impose an exclusion from federal healthcare programs.

The Cures Act includes federal and state healthcare program exclusion as a potential consequence of offenses involving grants, contracts or other agreements. Federal and state healthcare program exclusion is consistent with the traditional scope of the CMPL as pertaining to offenses involving the federal healthcare programs. There is, however, a disconnect in providing for exclusion as a consequence for an offense that was not connected to federal or state healthcare programs for which an HHS debarment could apply. The proposed rule does not explain this issue further and does not explain under what circumstances exclusion would be considered.

Aggravating and Mitigating Factors

OIG’s proposed rule discusses, in terms similar to other CMP authorities, the aggravating and mitigating circumstances considered when determining the amount of penalties and assessments and the period of exclusion. The list of aggravating factors is not all-inclusive, and both the aggravating and mitigating factors largely mirror the factors related to the fraudulent or false submission of healthcare claims.

The proposed mitigating factor is if:

• The violations included in an action were of the same type and occurred within a short period of time;
• There were few such violations; and
• The total amount claimed or requested related to the violations was less than $5,000.

The proposed non-exclusive list of aggravating factors includes the following:

• The violations were of several types or occurred over a lengthy period of time.
• There were many such violations (or the circumstances indicate a pattern of false or fraudulent specified claims, requests for payment or a pattern of violations).
• The amount requested, claimed or related to the violations was $50,000 or more.
• The violation resulted, or could have resulted, in physical harm to any individual.

The proposed rule can be found here.

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