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U.S. Code as of:
01/19/04
Section 1320a-7a. Civil monetary penalties
(a) Improperly filed claims
Any person (including an organization, agency, or other entity,
but excluding a beneficiary, as defined in subsection (i)(5) of
this section) that -
(1) knowingly presents or causes to be presented to an officer,
employee, or agent of the United States, or of any department or
agency thereof, or of any State agency (as defined in subsection
(i)(1) of this section), a claim (as defined in subsection (i)(2)
of this section) that the Secretary determines -
(A) is for a medical or other item or service that the person
knows or should know was not provided as claimed, including any
person who engages in a pattern or practice of presenting or
causing to be presented a claim for an item or service that is
based on a code that the person knows or should know will
result in a greater payment to the person than the code the
person knows or should know is applicable to the item or
service actually provided,
(B) is for a medical or other item or service and the person
knows or should know the claim is false or fraudulent,
(C) is presented for a physician's service (or an item or
service incident to a physician's service) by a person who
knows or should know that the individual who furnished (or
supervised the furnishing of) the service -
(i) was not licensed as a physician,
(ii) was licensed as a physician, but such license had been
obtained through a misrepresentation of material fact
(including cheating on an examination required for
licensing), or
(iii) represented to the patient at the time the service
was furnished that the physician was certified in a medical
specialty by a medical specialty board when the individual
was not so certified,
(D) is for a medical or other item or service furnished
during a period in which the person was excluded from the
program under which the claim was made pursuant to a
determination by the Secretary under this section or under
section 1320a-7, 1320c-5, 1320c-9(b) (as in effect on September
2, 1982), 1395y(d) (as in effect on August 18, 1987), or
1395cc(b) of this title or as a result of the application of
the provisions of section 1395u(j)(2) of this title, or
(E) is for a pattern of medical or other items or services
that a person knows or should know are not medically necessary;
(2) knowingly presents or causes to be presented to any person
a request for payment which is in violation of the terms of (A)
an assignment under section 1395u(b)(3)(B)(ii) of this title, or
(B) an agreement with a State agency (or other requirement of a
State plan under subchapter XIX of this chapter) not to charge a
person for an item or service in excess of the amount permitted
to be charged, or (C) an agreement to be a participating
physician or supplier under section 1395u(h)(1) of this title, or
(D) an agreement pursuant to section 1395cc(a)(1)(G) of this
title;
(3) knowingly gives or causes to be given to any person, with
respect to coverage under subchapter XVIII of this chapter of
inpatient hospital services subject to the provisions of section
1395ww of this title, information that he knows or should know is
false or misleading, and that could reasonably be expected to
influence the decision when to discharge such person or another
individual from the hospital;
(4) in the case of a person who is not an organization, agency,
or other entity, is excluded from participating in a program
under subchapter XVIII of this chapter or a State health care
program in accordance with this subsection or under section
1320a-7 of this title and who, at the time of a violation of this
subsection -
(A) retains a direct or indirect ownership or control
interest in an entity that is participating in a program under
subchapter XVIII of this chapter or a State health care
program, and who knows or should know of the action
constituting the basis for the exclusion; or
(B) is an officer or managing employee (as defined in section
1320a-5(b) of this title) of such an entity;
(5) offers to or transfers remuneration to any individual
eligible for benefits under subchapter XVIII of this chapter, or
under a State health care program (as defined in section
1320a-7(h) of this title) that such person knows or should know
is likely to influence such individual to order or receive from a
particular provider, practitioner, or supplier any item or
service for which payment may be made, in whole or in part, under
subchapter XVIII of this chapter, or a State health care program
(as so defined);
(6) arranges or contracts (by employment or otherwise) with an
individual or entity that the person knows or should know is
excluded from participation in a Federal health care program (as
defined in section 1320a-7b(f) of this title), for the provision
of items or services for which payment may be made under such a
program; or
(7) commits an act described in paragraph (1) or (2) of section
1320a-7b(b) of this title;
shall be subject, in addition to any other penalties that may be
prescribed by law, to a civil money penalty of not more than
$10,000 for each item or service (or, in cases under paragraph (3),
$15,000 for each individual with respect to whom false or
misleading information was given; in cases under paragraph (4),
$10,000 for each day the prohibited relationship occurs; or in
cases under paragraph (7), $50,000 for each such act). In addition,
such a person shall be subject to an assessment of not more than 3
times the amount claimed for each such item or service in lieu of
damages sustained by the United States or a State agency because of
such claim (or, in cases under paragraph (7), damages of not more
than 3 times the total amount of remuneration offered, paid,
solicited, or received, without regard to whether a portion of such
remuneration was offered, paid, solicited, or received for a lawful
purpose). In addition the Secretary may make a determination in the
same proceeding to exclude the person from participation in the
Federal health care programs (as defined in section 1320a-7b(f)(1)
of this title) and to direct the appropriate State agency to
exclude the person from participation in any State health care
program.
(b) Payments to induce reduction or limitation of services
(1) If a hospital or a critical access hospital knowingly makes a
payment, directly or indirectly, to a physician as an inducement to
reduce or limit services provided with respect to individuals who -
(A) are entitled to benefits under part A or part B of
subchapter XVIII of this chapter or to medical assistance under a
State plan approved under subchapter XIX of this chapter, and
(B) are under the direct care of the physician,
the hospital or a critical access hospital shall be subject, in
addition to any other penalties that may be prescribed by law, to a
civil money penalty of not more than $2,000 for each such
individual with respect to whom the payment is made.
(2) Any physician who knowingly accepts receipt of a payment
described in paragraph (1) shall be subject, in addition to any
other penalties that may be prescribed by law, to a civil money
penalty of not more than $2,000 for each individual described in
such paragraph with respect to whom the payment is made.
(3)(A) Any physician who executes a document described in
subparagraph (B) with respect to an individual knowing that all of
the requirements referred to in such subparagraph are not met with
respect to the individual shall be subject to a civil monetary
penalty of not more than the greater of -
(i) $5,000, or
(ii) three times the amount of the payments under subchapter
XVIII of this chapter for home health services which are made
pursuant to such certification.
(B) A document described in this subparagraph is any document
that certifies, for purposes of subchapter XVIII of this chapter,
that an individual meets the requirements of section 1395f(a)(2)(C)
or 1395n(a)(2)(A) of this title in the case of home health services
furnished to the individual.
(c) Initiation of proceeding; authorization by Attorney General,
notice, etc., estoppel, failure to comply with order or procedure
(1) The Secretary may initiate a proceeding to determine whether
to impose a civil money penalty, assessment, or exclusion under
subsection (a) or (b) of this section only as authorized by the
Attorney General pursuant to procedures agreed upon by them. The
Secretary may not initiate an action under this section with
respect to any claim, request for payment, or other occurrence
described in this section later than six years after the date the
claim was presented, the request for payment was made, or the
occurrence took place. The Secretary may initiate an action under
this section by serving notice of the action in any manner
authorized by Rule 4 of the Federal Rules of Civil Procedure.
(2) The Secretary shall not make a determination adverse to any
person under subsection (a) or (b) of this section until the person
has been given written notice and an opportunity for the
determination to be made on the record after a hearing at which the
person is entitled to be represented by counsel, to present
witnesses, and to cross-examine witnesses against the person.
(3) In a proceeding under subsection (a) or (b) of this section
which -
(A) is against a person who has been convicted (whether upon a
verdict after trial or upon a plea of guilty or nolo contendere)
of a Federal crime charging fraud or false statements, and
(B) involves the same transaction as in the criminal action,
the person is estopped from denying the essential elements of the
criminal offense.
(4) The official conducting a hearing under this section may
sanction a person, including any party or attorney, for failing to
comply with an order or procedure, failing to defend an action, or
other misconduct as would interfere with the speedy, orderly, or
fair conduct of the hearing. Such sanction shall reasonably relate
to the severity and nature of the failure or misconduct. Such
sanction may include -
(A) in the case of refusal to provide or permit discovery,
drawing negative factual inferences or treating such refusal as
an admission by deeming the matter, or certain facts, to be
established,
(B) prohibiting a party from introducing certain evidence or
otherwise supporting a particular claim or defense,
(C) striking pleadings, in whole or in part,
(D) staying the proceedings,
(E) dismissal of the action,
(F) entering a default judgment,
(G) ordering the party or attorney to pay attorneys' fees and
other costs caused by the failure or misconduct, and
(H) refusing to consider any motion or other action which is
not filed in a timely manner.
(d) Amount or scope of penalty, assessment, or exclusion
In determining the amount or scope of any penalty, assessment, or
exclusion imposed pursuant to subsection (a) or (b) of this
section, the Secretary shall take into account -
(1) the nature of claims and the circumstances under which they
were presented,
(2) the degree of culpability, history of prior offenses, and
financial condition of the person presenting the claims, and
(3) such other matters as justice may require.
(e) Review by courts of appeals
Any person adversely affected by a determination of the Secretary
under this section may obtain a review of such determination in the
United States Court of Appeals for the circuit in which the person
resides, or in which the claim was presented, by filing in such
court (within sixty days following the date the person is notified
of the Secretary's determination) a written petition requesting
that the determination be modified or set aside. A copy of the
petition shall be forthwith transmitted by the clerk of the court
to the Secretary, and thereupon the Secretary shall file in the
Court (!1) the record in the proceeding as provided in section 2112
of title 28. Upon such filing, the court shall have jurisdiction of
the proceeding and of the question determined therein, and shall
have the power to make and enter upon the pleadings, testimony, and
proceedings set forth in such record a decree affirming, modifying,
remanding for further consideration, or setting aside, in whole or
in part, the determination of the Secretary and enforcing the same
to the extent that such order is affirmed or modified. No objection
that has not been urged before the Secretary shall be considered by
the court, unless the failure or neglect to urge such objection
shall be excused because of extraordinary circumstances. The
findings of the Secretary with respect to questions of fact, if
supported by substantial evidence on the record considered as a
whole, shall be conclusive. If any party shall apply to the court
for leave to adduce additional evidence and shall show to the
satisfaction of the court that such additional evidence is material
and that there were reasonable grounds for the failure to adduce
such evidence in the hearing before the Secretary, the court may
order such additional evidence to be taken before the Secretary and
to be made a part of the record. The Secretary may modify his
findings as to the facts, or make new findings, by reason of
additional evidence so taken and filed, and he shall file with the
court such modified or new findings, which findings with respect to
questions of fact, if supported by substantial evidence on the
record considered as a whole, shall be conclusive, and his
recommendations, if any, for the modification or setting aside of
his original order. Upon the filing of the record with it, the
jurisdiction of the court shall be exclusive and its judgment and
decree shall be final, except that the same shall be subject to
review by the Supreme Court of the United States, as provided in
section 1254 of title 28.
(f) Compromise of penalties and assessments; recovery; use of funds
recovered
Civil money penalties and assessments imposed under this section
may be compromised by the Secretary and may be recovered in a civil
action in the name of the United States brought in United States
district court for the district where the claim was presented, or
where the claimant resides, as determined by the Secretary. Amounts
recovered under this section shall be paid to the Secretary and
disposed of as follows:
(1)(A) In the case of amounts recovered arising out of a claim
under subchapter XIX of this chapter, there shall be paid to the
State agency an amount bearing the same proportion to the total
amount recovered as the State's share of the amount paid by the
State agency for such claim bears to the total amount paid for
such claim.
(B) In the case of amounts recovered arising out of a claim
under an allotment to a State under subchapter V of this chapter,
there shall be paid to the State agency an amount equal to
three-sevenths of the amount recovered.
(2) Such portion of the amounts recovered as is determined to
have been paid out of the trust funds under sections 1395i and
1395t of this title shall be repaid to such trust funds.
(3) With respect to amounts recovered arising out of a claim
under a Federal health care program (as defined in section
1320a-7b(f) of this title), the portion of such amounts as is
determined to have been paid by the program shall be repaid to
the program, and the portion of such amounts attributable to the
amounts recovered under this section by reason of the amendments
made by the Health Insurance Portability and Accountability Act
of 1996 (as estimated by the Secretary) shall be deposited into
the Federal Hospital Insurance Trust Fund pursuant to section
1395i(k)(2)(C) of this title.
(4) The remainder of the amounts recovered shall be deposited
as miscellaneous receipts of the Treasury of the United States.
The amount of such penalty or assessment, when finally determined,
or the amount agreed upon in compromise, may be deducted from any
sum then or later owing by the United States or a State agency to
the person against whom the penalty or assessment has been
assessed.
(g) Finality of determination respecting penalty, assessment, or
exclusion
A determination by the Secretary to impose a penalty, assessment,
or exclusion under subsection (a) or (b) of this section shall be
final upon the expiration of the sixty-day period referred to in
subsection (e) of this section. Matters that were raised or that
could have been raised in a hearing before the Secretary or in an
appeal pursuant to subsection (e) of this section may not be raised
as a defense to a civil action by the United States to collect a
penalty, assessment, or exclusion assessed under this section.
(h) Notification of appropriate entities of finality of
determination
Whenever the Secretary's determination to impose a penalty,
assessment, or exclusion under subsection (a) or (b) of this
section becomes final, he shall notify the appropriate State or
local medical or professional organization, the appropriate State
agency or agencies administering or supervising the administration
of State health care programs (as defined in section 1320a-7(h) of
this title), and the appropriate utilization and quality control
peer review organization, and the appropriate State or local
licensing agency or organization (including the agency specified in
section 1395aa(a) and 1396a(a)(33) of this title) that such a
penalty, assessment, or exclusion has become final and the reasons
therefor.
(i) Definitions
For the purposes of this section:
(1) The term "State agency" means the agency established or
designated to administer or supervise the administration of the
State plan under subchapter XIX of this chapter or designated to
administer the State's program under subchapter V of this chapter
or subchapter XX of this chapter.
(2) The term "claim" means an application for payments for
items and services under a Federal health care program (as
defined in section 1320a-7b(f) of this title).
(3) The term "item or service" includes (A) any particular
item, device, medical supply, or service claimed to have been
provided to a patient and listed in an itemized claim for
payment, and (B) in the case of a claim based on costs, any entry
in the cost report, books of account or other documents
supporting such claim.
(4) The term "agency of the United States" includes any
contractor acting as a fiscal intermediary, carrier, or fiscal
agent or any other claims processing agent for a Federal health
care program (as so defined).
(5) The term "beneficiary" means an individual who is eligible
to receive items or services for which payment may be made under
a Federal health care program (as so defined) but does not
include a provider, supplier, or practitioner.
(6) The term "remuneration" includes the waiver of coinsurance
and deductible amounts (or any part thereof), and transfers of
items or services for free or for other than fair market value.
The term "remuneration" does not include -
(A) the waiver of coinsurance and deductible amounts by a
person, if -
(i) the waiver is not offered as part of any advertisement
or solicitation;
(ii) the person does not routinely waive coinsurance or
deductible amounts; and
(iii) the person -
(I) waives the coinsurance and deductible amounts after
determining in good faith that the individual is in
financial need; or
(II) fails to collect coinsurance or deductible amounts
after making reasonable collection efforts;
(B) subject to subsection (n) of this section, any
permissible practice described in any subparagraph of section
1320a-7b(b)(3) of this title or in regulations issued by the
Secretary;
(C) differentials in coinsurance and deductible amounts as
part of a benefit plan design as long as the differentials have
been disclosed in writing to all beneficiaries, third party
payers, and providers, to whom claims are presented and as long
as the differentials meet the standards as defined in
regulations promulgated by the Secretary not later than 180
days after August 21, 1996; or
(D) (!2) incentives given to individuals to promote the
delivery of preventive care as determined by the Secretary in
regulations so promulgated.
(D) (!2) a reduction in the copayment amount for covered OPD
services under section 1395l(t)(5)(B) (!3) of this title.
(7) The term "should know" means that a person, with respect to
information -
(A) acts in deliberate ignorance of the truth or falsity of
the information; or
(B) acts in reckless disregard of the truth or falsity of the
information,
and no proof of specific intent to defraud is required.
(j) Subpoenas
(1) The provisions of subsections (d) and (e) of section 405 of
this title shall apply with respect to this section to the same
extent as they are applicable with respect to subchapter II of this
chapter. The Secretary may delegate the authority granted by
section 405(d) of this title (as made applicable to this section)
to the Inspector General of the Department of Health and Human
Services for purposes of any investigation under this section.
(2) The Secretary may delegate authority granted under this
section and under section 1320a-7 of this title to the Inspector
General of the Department of Health and Human Services.
(k) Injunctions
Whenever the Secretary has reason to believe that any person has
engaged, is engaging, or is about to engage in any activity which
makes the person subject to a civil monetary penalty under this
section, the Secretary may bring an action in an appropriate
district court of the United States (or, if applicable, a United
States court of any territory) to enjoin such activity, or to
enjoin the person from concealing, removing, encumbering, or
disposing of assets which may be required in order to pay a civil
monetary penalty if any such penalty were to be imposed or to seek
other appropriate relief.
(l) Liability of principal for acts of agent
A principal is liable for penalties, assessments, and an
exclusion under this section for the actions of the principal's
agent acting within the scope of the agency.
(m) Claims within jurisdiction of other departments or agencies
(1) For purposes of this section, with respect to a Federal
health care program not contained in this chapter, references to
the Secretary in this section shall be deemed to be references to
the Secretary or Administrator of the department or agency with
jurisdiction over such program and references to the Inspector
General of the Department of Health and Human Services in this
section shall be deemed to be references to the Inspector General
of the applicable department or agency.
(2)(A) The Secretary and Administrator of the departments and
agencies referred to in paragraph (1) may include in any action
pursuant to this section, claims within the jurisdiction of other
Federal departments or agencies as long as the following conditions
are satisfied:
(i) The case involves primarily claims submitted to the Federal
health care programs of the department or agency initiating the
action.
(ii) The Secretary or Administrator of the department or agency
initiating the action gives notice and an opportunity to
participate in the investigation to the Inspector General of the
department or agency with primary jurisdiction over the Federal
health care programs to which the claims were submitted.
(B) If the conditions specified in subparagraph (A) are
fulfilled, the Inspector General of the department or agency
initiating the action is authorized to exercise all powers granted
under the Inspector General Act of 1978 (5 U.S.C. App.) with
respect to the claims submitted to the other departments or
agencies to the same manner and extent as provided in that Act with
respect to claims submitted to such departments or agencies.
(n) Safe harbor for payment of medigap premiums
(1) Subparagraph (B) of subsection (i)(6) of this section shall
not apply to a practice described in paragraph (2) unless -
(A) the Secretary, through the Inspector General of the
Department of Health and Human Services, promulgates a rule
authorizing such a practice as an exception to remuneration; and
(B) the remuneration is offered or transferred by a person
under such rule during the 2-year period beginning on the date
the rule is first promulgated.
(2) A practice described in this paragraph is a practice under
which a health care provider or facility pays, in whole or in part,
premiums for medicare supplemental policies for individuals
entitled to benefits under part A of subchapter XVIII of this
chapter pursuant to section 426-1 of this title.
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