42 U.S.C. § 1320a–7a — Civil monetary penalties

(a) Improperly filed claims. Any person^*, including an organization, agency, or other entity but not a "beneficiary" defined in subsection (i)(5), is subject to these penalties if the person does any of the following:

(1) The person knowingly presents, or causes to be presented, to an officer, employee, or agent of the United States^* or one of its departments or agencies, or to a State^* agency defined in subsection (i)(1), a "claim" defined in subsection (i)(2), and the Secretary^* determines that the claim—(A) is for a medical or other "item or service" that the person knows or should know was not provided as claimed. This includes a pattern or practice of presenting claims based on a code that the person knows or should know will produce a greater payment than the code the person knows or should know applies to the item or service actually provided; (B) is for a medical or other item or service and the person knows or should know that the claim is false or fraudulent; (C) is for a physician's service, or an item or service related to a physician's service, presented by a person who knows or should know that the individual who furnished or supervised it—(i) was not licensed as a physician^*; (ii) was licensed but obtained the license through a material misrepresentation, including cheating on a required licensing examination; or (iii) told the patient when the service was furnished that the physician was certified in a medical specialty by a specialty board when the individual was not certified; (D) is for an item or service furnished while the person was excluded under Federal law from the Federal health-care program under which the claim was made; or (E) is for a pattern of medical or other items or services that the person knows or should know are not medically necessary.

(2) The person knowingly presents, or causes to be presented to any person, a request for payment that violates the terms of (A) an assignment under section 1395u(b)(3)(B)(ii); (B) an agreement with a State agency, or another State-plan requirement, not to charge more than the permitted amount; (C) an agreement to be a participating physician or supplier under section 1395u(h)(1); or (D) an agreement under section 1395cc(a)(1)(G).

(3) The person knowingly gives, or causes to be given to any person, false or misleading information about inpatient hospital services covered under subchapter XVIII and subject to section 1395ww, when the information could reasonably be expected to influence when that person or another individual is discharged.

(4) The person is not an organization, agency, or other entity; is excluded from a program under subchapter XVIII or a State health-care program under this subsection or section 1320a–7; and, when violating this subsection, either (A) retains a direct or indirect ownership or control interest in an entity participating in such a program and knows or should know of the action that caused the exclusion, or (B) is an officer or managing employee of that entity. The knowledge condition in subparagraph (A) applies to the ownership-or-control branch; subparagraph (B) separately covers an officer or managing employee.

(5) The person offers or transfers "remuneration" to an individual eligible for benefits under subchapter XVIII or a State health-care program, knowing or having reason to know that it is likely to influence the individual to order or receive from a particular provider, practitioner, or supplier an item or service payable in whole or part under that program.

(6) The person arranges or contracts, through employment or otherwise, with an individual or entity the person knows or should know is excluded from a Federal health-care program, for items or services payable under that program.

(7) The person commits an act described in paragraph (1) or (2) of section 1320a–7b(b).

(8) The person knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim for items or services furnished under a Federal health-care program.

(9) The person fails to give the Inspector General of the Department of Health and Human Services timely access, after a reasonable request defined by the Secretary in regulations, for audits, investigations, evaluations, or other statutory functions.

(10) The person orders or prescribes an item or service while excluded from a Federal health-care program, knowing or having reason to know that a claim for it will be made under that program.

(11) The person knowingly makes or causes to be made a false statement, omission, or material misrepresentation in an application, bid, or contract to participate or enroll as a provider or supplier under a Federal health-care program. This includes Medicare Advantage organizations, prescription drug^* plan sponsors, Medicaid managed-care organizations, and entities applying to participate as providers or suppliers in those managed-care organizations and plans.

(12) The person knows of an "overpayment" defined in section 1320a–7k(d)(4) and does not report and return it as that section requires.

The person is subject, in addition to other penalties allowed by law, to a civil money penalty of up to $20,000 for each item or service. The alternatives are up to $30,000 for each individual in paragraph (3), $20,000 for each day the prohibited relationship in paragraph (4) occurs, $100,000 for each act in paragraph (7), $100,000 for each false record or statement in paragraph (8), $15,000 for each day of the failure in paragraph (9), and $100,000 for each false statement or material misrepresentation in paragraph (11). The person is also subject to an assessment of up to three times the amount claimed for each item or service, instead of damages suffered by the United States or a State agency because of the claim. For paragraph (7), the alternative is damages of up to three times all remuneration offered, paid, solicited, or received, even if some of it was for a lawful purpose. For paragraph (11), the alternative assessment is up to three times the total amount claimed for each item or service paid on the basis of the application containing the false statement or misrepresentation. In the same proceeding, the Secretary may exclude the person from Federal health-care programs and direct the appropriate State agency to exclude the person from State health-care programs.

(b) Payments to induce reduction or limitation of services. (1) A hospital or critical access hospital that knowingly pays a physician, directly or indirectly, to induce the physician to reduce or limit medically necessary services for an individual under the physician's direct care is subject to a civil money penalty of up to $5,000 for that individual. The individual must be entitled to Medicare part A or B benefits or medical assistance under an approved Medicaid State plan. (2) A physician who knowingly accepts that payment is subject to a civil money penalty of up to $5,000 for each such individual. (3) A physician who knowingly signs a document certifying for Medicare that an individual meets the home-health requirements in section 1395f(a)(2)(C) or 1395n(a)(2)(A), when those requirements are not met, is subject to a penalty of up to the greater of $10,000 or three times the Medicare home-health payments made because of the certification. A qualifying document is one that makes that certification for home-health services.

(c) Initiation of proceeding; authorization, notice, estoppel, and sanctions. (1) The Secretary may begin a proceeding under (a) or (b) only with the Attorney General's authorization under procedures they agree on. The Secretary may not begin an action later than six years after the claim was presented, the payment request was made, or the other occurrence happened. Notice may be served in any manner authorized by Rule 4 of the Federal Rules of Civil Procedure. (2) Before an adverse determination, the person must receive written notice and an opportunity for a record hearing, with counsel, witnesses, and cross-examination of opposing witnesses. (3) In a proceeding against someone convicted by verdict, guilty plea, or nolo contendere plea of a Federal fraud or false-statement crime, when the proceeding concerns the same transaction, that person cannot deny the crime's essential elements. (4) The hearing official may sanction a person, party, or attorney for disobeying an order or procedure, failing to defend, or other misconduct interfering with a speedy, orderly, or fair hearing. The sanction must reasonably relate to the seriousness and nature of the failure or misconduct. It may include negative factual inferences or treating the matter or facts as established when discovery is refused; barring evidence or support for a claim or defense; striking pleadings in whole or part; staying the proceeding; dismissing the action; entering a default judgment; ordering the party or attorney to pay attorneys' fees and other costs caused by the failure or misconduct; and refusing to consider a motion or other action filed late.

(d) Amount or scope of penalty, assessment, or exclusion. When deciding the amount or scope of a penalty, assessment, or exclusion under (a) or (b), the Secretary must consider (1) the nature of the claims and the circumstances in which they were presented; (2) the person's degree of culpability, history of prior offenses, and financial condition; and (3) other matters that justice may require.

(e) Review by courts of appeals. A person adversely affected by the Secretary's determination may seek review in the United States Court of Appeals for the circuit where the person resides or where the claim or specified claim was presented. The person must file a written petition asking to modify or set aside the determination within 60 days after being notified of it. The court clerk must promptly send a copy to the Secretary, who must file the proceeding's record as section 2112 of title 28 provides. The court then has jurisdiction and may affirm, modify, remand for further consideration, or set aside all or part of the determination, and enforce it to the extent affirmed or modified. The court will not consider an objection not raised before the Secretary unless extraordinary circumstances excuse the failure. The Secretary's factual findings are conclusive if supported by substantial evidence on the whole record. If a party shows that additional evidence is material and that reasonable grounds prevented presenting it at the Secretary's hearing, the court may order the evidence taken before the Secretary and added to the record. The Secretary may change or make findings because of that evidence and must file the changed or new findings and any recommendation to modify or set aside the original order. The court's jurisdiction is exclusive after the record is filed, and its judgment is final subject to Supreme Court review under section 1254 of title 28.

(f) Compromise, recovery, and use of recovered funds. The Secretary may compromise penalties and assessments. They may be recovered in the United States' name in a civil action in the United States district court for the district where the claim or specified claim was presented or where the claimant resides, as the Secretary determines; for a person described in subsection (o), the action may be where that person resides. Recovered amounts are paid to the Secretary and disposed of as follows: (1)(A) For an amount arising from a Medicaid claim, the State agency receives the same proportion of the recovery as the State's share of the amount paid for the claim bears to the total amount paid. (B) For an amount arising from a State allotment under subchapter V, the State agency receives three-sevenths of the recovery. (2) The portion determined to have been paid from the trust funds under sections 1395i and 1395t is repaid to those trust funds. (3) For a recovery arising from a Federal health-care-program claim, the portion determined to have been paid by the program is repaid to the program, and the portion attributable, as estimated by the Secretary, to amendments made by the Health Insurance Portability and Accountability Act of 1996 is deposited in the Federal Hospital Insurance Trust Fund under section 1395i(k)(2)(C). (4) The remainder is deposited as miscellaneous receipts of the United States Treasury. A finally determined penalty or assessment, or an amount agreed in compromise, may be deducted from money then or later owed by the United States or a State agency to the person; for a penalty or assessment under (o), it may be deducted from money owed by a specified State agency.

(g) Finality. A Secretary's determination under (a) or (b) becomes final when the 60-day period in (e) expires. Matters raised or that could have been raised before the Secretary or on appeal cannot be used as a defense in the United States' civil collection action.

(h) Notification. When a determination becomes final, the Secretary must notify the appropriate State or local medical or professional organization; State agencies administering or supervising State health-care programs; the appropriate utilization and quality-control peer-review organization; and the appropriate State or local licensing agency or organization, including the agencies specified in sections 1395aa(a) and 1396a(a)(33), of the final penalty, assessment, or exclusion and its reasons.

(i) Definitions. For this section: (1) "State agency" means the agency established or designated to administer or supervise the State plan under subchapter XIX, or designated to administer the State's program under subchapter V or division A of subchapter XX. (2) "Claim" means an application for payment for items and services under a Federal health-care program. (3) "Item or service" includes a particular item, device, medical supply, or service claimed to have been provided to a patient and listed in an itemized payment claim, and, for a cost-based claim, each entry in the cost report, books of account, or other documents supporting the claim. (4) "Agency of the United States" includes a contractor acting as a fiscal intermediary, carrier, fiscal agent, or other claims-processing agent for a Federal health-care program. (5) "Beneficiary" means an individual eligible to receive items or services payable under a Federal health-care program, but not a provider, supplier, or practitioner. (6) "Remuneration" includes waiving coinsurance or deductibles, or transferring items or services for free or below fair market value. It does not include: (A) a waiver of coinsurance or deductibles that is not advertised or solicited, is not routine, and is made either after a good-faith determination of financial need or after reasonable collection efforts fail; (B) subject to (n), a permissible practice described in any paragraph of section 1320a–7b(b)(3) or in the Secretary's regulations; (C) disclosed coinsurance or deductible differences in a benefit-plan design that meet the Secretary's regulatory standards; (D) incentives the Secretary permits by regulation to promote preventive care; (E) a reduction in the copayment for covered outpatient department services under section 1395l(t)(5)(B); (F) other remuneration designated by the Secretary in regulations that promotes access to care and poses a low risk of harm to patients and Federal health-care programs; (G) free or below-market coupons, rebates, or other retailer rewards offered on equal terms to the general public regardless of insurance and not tied to program-reimbursed services; (H) free or below-market items or services not advertised or solicited, not tied to program-reimbursed services, reasonably connected to the individual's medical care^*, and provided after a good-faith determination of financial need; (I) beginning on a date specified by the Secretary, but not before January 1, 2011, a qualifying first-fill generic-drug copayment waiver by a Part D plan sponsor or MA organization for an enrolled individual; or (J) on or after January 1, 2019, telehealth technologies defined by the Secretary provided by a provider or renal dialysis facility to an individual with end-stage renal disease receiving paid-for home dialysis, if not advertised or solicited, used to furnish related telehealth services, and provided under the Secretary's other regulatory requirements. (7) "Should know" means acting, about information, in deliberate ignorance of its truth or falsity or in reckless disregard of its truth or falsity. No specific intent to defraud must be proved.

(j) Subpoenas. Subsections (d) and (e) of section 405 of title 5 apply to this section to the same extent they apply to subchapter II. The Secretary may delegate the authority under section 405(d), as applied here, to the HHS Inspector General for an investigation under this section. The Secretary may also delegate authority under this section and section 1320a–7 to that Inspector General.

(k) Injunctions. If the Secretary has reason to believe a person has engaged, is engaging, or is about to engage in conduct covered by this section, the Secretary may ask the proper United States district court to enjoin that conduct. The injunction may also prevent the person from concealing, removing, encumbering, or disposing of assets, and may seek other appropriate relief.

(l) Principal's liability for an agent. A principal is liable under this section for penalties, assessments, and exclusion based on an agent's actions within the scope of the agency.

(m) Claims within another department or agency's jurisdiction. (1) For a Federal health-care program outside this chapter, a reference here to the Secretary means the Secretary or Administrator^* of the department or agency with jurisdiction over that program, and a reference to the HHS Inspector General means the applicable department or agency's Inspector General. (2)(A) Those Secretaries or Administrators may include claims within another Federal department's or agency's jurisdiction if the case primarily involves claims submitted to the initiating department's or agency's programs and the initiating official gives notice and an opportunity to participate in the investigation to the Inspector General with primary jurisdiction over the programs receiving the claims. (B) If those conditions are met, the initiating department's or agency's Inspector General may exercise all powers granted under chapter 4 of title 5 for the other departments' or agencies' claims, to the same extent and in the same manner provided by that chapter.

(n) Safe harbor for payment of Medigap premiums. The remuneration exception in subsection (i)(6)(B) does not apply to the described Medigap-premium practice unless the Secretary, through the HHS Inspector General, authorizes it by rule and the person offers or transfers the remuneration under that rule during the two years beginning when the rule is first issued. The practice is a health-care provider or facility paying all or part of Medicare supplemental-policy premiums for a person entitled to Part A benefits under section 426–1.

(o) Penalties for violations of grants, contracts, and other agreements. A person, including an organization, agency, or other entity but not a "program beneficiary" defined in (q)(4), is covered when, regarding a Secretary-funded grant, contract, or other agreement, the person: (1) knowingly presents or causes a specified claim that the person knows or should know is false or fraudulent; (2) knowingly makes, uses, or causes a materially false statement, omission, or misrepresentation in an application, proposal, bid, progress report, or other document required to receive or retain the funds; (3) knowingly makes, uses, or causes a false record or statement material to a false or fraudulent specified claim; (4) knowingly makes, uses, or causes a false record or statement material to an obligation to pay or transmit funds or property to the Secretary, or knowingly conceals or knowingly and improperly avoids or decreases that obligation; or (5) fails to give the Department's Inspector General timely access, after a reasonable request defined in regulations, for audits, investigations, evaluations, or other statutory functions involving the grant, contract, or agreement. The civil penalty is up to $10,000 for each specified claim under (1); $50,000 for each false statement, omission, or misrepresentation under (2); $50,000 for each false record or statement under (3); $50,000 for each false record or statement under (4), or $10,000 for each day of knowingly concealing or knowingly and improperly avoiding or decreasing the obligation; and $15,000 for each day of the failure under (5). For (1) and (3), the assessment may be up to three times the amount claimed in the specified claim, instead of damages suffered by the United States or a specified State agency. For (2) and (4), it may be up to three times the total funds described in that paragraph, or, for property to be transmitted under (4), three times the property's value. The Secretary may also exclude the person from Federal health-care programs and direct the appropriate State agency to exclude the person from State health-care programs.

(p) Rules for violations of grants, contracts, and other agreements. Subsections (c), (d), (g), and (h) apply to a penalty or assessment under (o) as they apply to a penalty, assessment, or proceeding under (a). In applying (d), a reference to a claim includes a "specified claim" under (r).

(q) Definitions for (o) and (p). "Department" means HHS. "Material" means having a natural tendency to influence, or being capable of influencing, payment or receipt of money or property. "Other agreement" includes a cooperative agreement, scholarship, fellowship, loan, subsidy, payment for a specified use, donation agreement, award, or subaward, whether or not a party is a contractor or subcontractor. "Program beneficiary" means, for a funded grant, contract, or other agreement designed to furnish benefits or assistance to individuals, an individual who applies for or receives those benefits or assistance; it does not include an officer, employee, or agent of a recipient or contracting person or entity. "Recipient" includes a subrecipient or subcontractor. "Specified State agency" means a State-government agency designated to administer or supervise a Secretary-funded grant, contract, or other agreement.

(r) Definition of "specified claim". A "specified claim" is an application, request, or demand under a grant, contract, or other agreement for money or property, whether or not the United States or a specified State agency has title to it, that is not a claim under (i)(2) and that—(1) is presented or caused to be presented to a Department officer, employee, or agent, or to a specified State agency; or (2) is made to a contractor, grantee, or other recipient when the money or property will be spent or used for the Department or to advance a Department program or interest, and the Department (A) provides or provided any portion requested or demanded, or (B) will reimburse the recipient for any portion requested or demanded.

(s) Definition of "obligation". For subsection (o), "obligation" means an established duty, whether fixed or not, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship; a fee-based or similar relationship; a statute or regulation; or retaining an overpayment. This section does not define terms it merely uses.