OIG Exclusion Defense

By Elizabeth Franklin-Best, Esq., and Christopher Zoukis, JD, MBA

Exclusion is not a fine, a suspension, or a licensing action

It helps to be precise about what exclusion is, because providers routinely assume it is a version of something they already understand.

It is not a license revocation — your state medical board is a separate body with separate rules, and you can be excluded while fully licensed. It is not a criminal sentence, and it is not the forfeiture of practice assets that can accompany one — see asset forfeiture for that separate proceeding. It is not a payment suspension, which is a temporary withholding pending investigation. It is not a fine. It is a determination by the HHS Office of Inspector General that no federal health care program will pay for anything you furnish, order or prescribe, for a stated period, enforced through the payment system rather than through a court.

The consequence is economic rather than custodial, and for most providers it is more serious than the fine that accompanies it. A physician who can be paid by no federal program is, for practical purposes, unemployable by any employer who bills those programs — which is nearly all of them. The sanction does not say you may not practice medicine. It says nobody who bills Medicare or Medicaid can afford to have you do it.

Exclusion also arrives from three directions, and the direction matters for how it is fought:

• After a criminal conviction. This is the most common route and it is largely automatic. A conviction for a program-related crime triggers mandatory exclusion, and the conviction itself cannot be re-argued in the exclusion proceeding.
• After a civil resolution. An FCA settlement can be accompanied by exclusion, or by an integrity agreement negotiated in lieu of it. The mechanics of that civil track are on our false claims act attorney page.
• Standing alone. Several permissive grounds require no conviction and no judgment at all.

Because the first route is so common, the single highest-value moment in an exclusion case is often before there is an exclusion case — when the criminal charge is still being negotiated. Which statute a plea is entered under can decide whether exclusion is mandatory or discretionary. That is a sentencing-and-charging problem, and it is discussed with our federal sentencing work rather than after the fact.

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Mandatory versus permissive: the distinction that organizes everything

Every question a reader has — how long, can I appeal, can it be waived, what can I argue — turns first on which subsection of 42 U.S.C. § 1320a-7 OIG is proceeding under.

Mandatory exclusion under § 1320a-7(a)

The statute is written in the imperative. “The Secretary shall exclude the following individuals and entities from participation in any Federal health care program.” There are four grounds:

§ 1320a-7(a)	Ground	Statutory language
(a)(1)	Program-related crimes	“convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII or under any State health care program”
(a)(2)	Patient abuse or neglect	“convicted, under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service”
(a)(3)	Felony health care fraud	conviction for a post-21 August 1996 offense “in connection with the delivery of a health care item or service” consisting of “a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct”
(a)(4)	Felony controlled substance offense	conviction for a post-21 August 1996 felony relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance

Table: the four mandatory exclusion grounds, quoted from 42 U.S.C. § 1320a-7(a).

Three features of the mandatory track matter enormously and are frequently missed.

There is no discretion about whether. OIG is not weighing whether exclusion is appropriate. If the predicate conviction exists, the exclusion follows. Argument about fairness, remorse, patient outcomes or professional record has no purchase on the whether question — it is directed entirely at the how long question, and even that is unavailable in the most common case.

The minimum is five years. Section 1320a-7(c)(3)(B) provides that “in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years,” and 42 C.F.R. § 1001.102(a) repeats it: “No exclusion imposed in accordance with § 1001.101 will be for less than 5 years.”

Note the width of (a)(3). It reaches a felony “relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct” in connection with the delivery of a health care item or service — or with respect to any act or omission in a government-financed health care program. That language is broad enough to capture offenses that are not health care offenses in any ordinary sense. A conviction for embezzlement from a medical practice, a Medicare billing count, or a wire fraud count arising from billing conduct, or a money laundering count layered onto either, can all satisfy it. The exclusion consequence is a reason to care about the label on the count of conviction, not only the sentence attached to it.

Permissive exclusion under § 1320a-7(b)

Here the statute switches verbs: “The Secretary may exclude.” Discretionary means discretionary — OIG decides whether to proceed at all, and that decision is where advocacy has room to work.

The permissive list is long. It includes, among others:

• Misdemeanor fraud convictions — § 1320a-7(b)(1), covering a misdemeanor “relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct” in connection with health care delivery, and also such an offense in a non-health-care government program.
• Obstruction of an investigation or audit — § 1320a-7(b)(2), reaching convictions “in connection with the interference with or obstruction of any investigation or audit.”
• License revocation or suspension — where a licensing authority has acted for reasons bearing on professional competence, professional performance or financial integrity.
• Excessive charges or unnecessary services — § 1320a-7(b)(6), covering bills “for items or services furnished substantially in excess of such individual’s or entity’s usual charges,” and services “substantially in excess of the needs of such patients or of a quality which fails to meet professionally recognized standards of health care.”
• Fraud, kickbacks and other prohibited activities — § 1320a-7(b)(7), the ground OIG uses where it believes an Anti-Kickback or similar violation occurred without a conviction. The kickback analysis itself is on our stark law attorney page.
• Controlling a sanctioned entity — § 1320a-7(b)(15), reaching an individual with “a direct or indirect ownership or control interest in a sanctioned entity” who knew or should have known of the basis for the sanction, or who is an officer or managing employee of one.
• Default on health education loans — § 1320a-7(b)(14).
• Failure to disclose required information, or to grant immediate access to OIG or a state Medicaid Fraud Control Unit.

Applied Insight — Elizabeth Franklin-Best, Esq., Principal Attorney: The first question we ask on an exclusion file is not “what happened” but “which subsection.” Under a mandatory ground with a five-year period, the reviewable questions are narrow and the work is front-loaded into the criminal case. Under a permissive ground — especially § 1320a-7(b)(7), where there is no conviction to point at — OIG is exercising judgment, there is a written submission that is actually read, and the record we build goes to whether the sanction should issue at all.

One permissive ground carries a procedural protection the others do not. Under § 1320a-7(f)(2), “[u]nless the Secretary determines that the health or safety of individuals receiving services warrants the exclusion taking effect earlier, any individual or entity that is the subject of an adverse determination under subsection (b)(7) shall be entitled to a hearing by an administrative law judge … before any exclusion based upon the determination takes effect.” A hearing before rather than after the sanction bites is a materially different posture, and it is available only there.

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What exclusion actually does

This is the section providers say they wish they had read earlier, because the practical reach of exclusion is wider than the words “excluded from Medicare” suggest.

The payment bar

42 C.F.R. § 1001.1901(b)(1) states the rule:

“Unless and until an individual or entity is reinstated into the Medicare, Medicaid, and other Federal health care programs in accordance with subpart F of this part, no payment will be made by Medicare, including Medicare Advantage and Prescription Drug Plans, Medicaid, or any other Federal health care program for any item or service furnished, on or after the effective date specified in the notice— (i) By an excluded individual or entity; or (ii) At the medical direction or on the prescription of a physician or an authorized individual who is excluded when the person furnishing such item or service knew, or had reason to know, of the exclusion.”

Read clause (ii) again. It is not limited to services the excluded person personally performs. It reaches items and services furnished by other people at the excluded person’s direction or on their prescription. An excluded physician who writes a prescription creates a payment problem for the pharmacy that fills it, if the pharmacy knew or had reason to know.

Two further provisions close off the obvious workarounds. Section 1001.1901(b)(2) provides that the bar “applies regardless of whether an individual or entity has obtained a program provider number or equivalent, either as an individual or as a member of a group.” And § 1001.1901(b)(3): “An excluded individual or entity may not take assignment of an enrollee’s claim on or after the effective date of exclusion.”

Why it is a bar on employment, not just on billing

The sentence that does the most work in the whole regulation is this one, also in § 1001.1901:

“In addition, submitting claims, or causing claims to be submitted or payments to be made, for items or services furnished, ordered, or prescribed, including administrative and management services or salary, may serve as the basis for denying reinstatement to the programs.”

“Administrative and management services or salary” is the phrase that turns exclusion from a billing restriction into an employment one. A provider who takes a non-clinical role — practice management, billing supervision, consulting, an administrative post — at an entity that bills federal programs is not obviously outside the sanction, because the entity’s federal reimbursement is what funds the salary. Providers who assume they can simply move to the back office frequently create a reinstatement problem for themselves while doing it.

The employer’s exposure, and why employers will not take the risk

The reason an excluded provider cannot find work is not squeamishness. It is that the employer has its own liability.

42 U.S.C. § 1320a-7a(a)(6) imposes a civil money penalty on any person who “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 … for the provision of items or services for which payment may be made under such a program.” The standard is knows or should know — not actual knowledge — which is precisely why compliance departments screen.

The statutory penalty is “not more than $20,000 for each item or service,” and the statute adds “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.” The Secretary may also, in the same proceeding, exclude the employer.

A note on the figures. The civil money penalty amounts in § 1320a-7a are adjusted annually for inflation, and the adjusted table is published at 45 C.F.R. § 102.3. The amounts quoted above are the statutory figures; the operative number in any given year is the adjusted one, and it must be read off the current table rather than assumed. We give the statutory figures here because they are stable and verifiable; do not treat them as the amount OIG would seek today.

Two related provisions reach the excluded person directly. Section 1320a-7a(a)(8) penalizes one who “orders or prescribes a medical or other item or service during a period in which the person was excluded,” where they know or should know a claim will be made. And under § 1320a-7a(a)(4), an excluded person who retains an ownership or control interest in, or serves as an officer or managing employee of, a participating entity faces a per-day penalty for “each day the prohibited relationship occurs.” Divesting and resigning are not optional steps.

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How long — and why we will not tell you

The length question is governed by 42 C.F.R. § 1001.102, and it works differently from the way most people assume.

We do not predict exclusion periods. The factors below are the ones OIG weighs; how it weighs them in a particular file is a judgment we cannot make from a web page, and anyone who tells you what period you will receive is guessing.

The aggravating factors

Any of these “may be considered to be aggravating and a basis for lengthening the period of exclusion”:

§ 1001.102(b)	Aggravating factor
(b)(1)	Financial loss to a government agency, program or other entities of $50,000 or more — counted in full “regardless of whether full or partial restitution has been made,” and including loss from similar acts not adjudicated
(b)(2)	The acts “were committed over a period of one year or more”
(b)(3)	Significant adverse “physical, mental or financial impact” on one or more beneficiaries or others
(b)(4)	In patient abuse or neglect cases, conduct that “was premeditated, was part of a continuing pattern of behavior, or consisted of non-consensual sexual acts”
(b)(5)	“The sentence imposed by the court included incarceration”
(b)(6)	A prior “criminal, civil or administrative sanction record”
(b)(7)	A previous conviction “of a criminal offense involving the same or similar circumstances”
(b)(8)	Convictions of other offenses besides those forming the basis for exclusion
(b)(9)	Any other adverse action by a federal, state or local government agency or board, where the action is based on the same set of circumstances

Table: the nine aggravating factors under 42 C.F.R. § 1001.102(b).

Factor (b)(1) deserves attention because it is counted in an unfamiliar way. The regulation counts “[t]he entire amount of financial loss … including any amounts resulting from similar acts not adjudicated,” and expressly disregards restitution. A defendant who has paid the money back has not reduced the number OIG uses. That is a different accounting from the one used at sentencing, and the divergence surprises people who have just finished negotiating loss in the criminal case.

The mitigating factors — and the one-way ratchet

Here is the structural point almost no published summary makes clearly. Section 1001.102(c) provides:

“Only if any of the aggravating factors set forth in paragraph (b) of this section justifies an exclusion longer than 5 years, may mitigating factors be considered as a basis for reducing the period of exclusion to no less than 5 years.”

Mitigation is therefore not a route to a shorter-than-minimum exclusion. It is only available as a counterweight once OIG has already gone above the floor, and it can only bring the period back down to the floor. If OIG imposes exactly five years, mitigating evidence has nowhere to operate.

And the list is closed — “[o]nly the following factors may be considered mitigating”:

1. For a § 1001.101(a) exclusion, that the person “was convicted of three or fewer misdemeanor offenses” and the entire financial loss, actual and intended, “is less than $5,000”;
2. That the criminal record, “including sentencing documents, demonstrates that the court determined that the individual had a mental, emotional or physical condition before or during the commission of the offense that reduced the individual’s culpability”; or
3. Cooperation with federal or state officials that resulted in others being convicted or excluded, additional investigations or reports identifying program vulnerabilities, or the imposition of a civil money penalty or assessment on anyone.

Note what is absent. Length of practice, patient testimonials, community need, remorse, charitable work, the absence of patient harm — none of these appears on the list. The mitigating factor most often available in practice is the second, and it depends on something being in the sentencing record. That is a reason to think about exclusion while the criminal case is still live, not after.

The repeat-conviction tiers

Section 1001.102(d) sets harder floors for repeat offenders, for convictions occurring on or after 5 August 1997:

• Not less than 10 years where the individual “has been convicted on one previous occasion” of one or more offenses for which a mandatory exclusion may be effected. The aggravating and mitigating factors can then push the period above ten years.
• Permanent where the individual “has been convicted on two or more previous occasions” of such offenses.

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The process, and the deadlines

The deadlines are short, they run from dates rather than from when you understood what had happened, and an untimely hearing request is dismissed rather than excused. This is the most actionable content on the page.

Stage	Deadline	Runs from	Authority
Response to notice of intent to exclude	30 days to submit documentary evidence and written argument	Receipt, “which will be deemed to be 5 days after the date on the notice”	42 C.F.R. § 1001.2001(a)
Exclusion takes effect	20 days	“from the date of the notice” of exclusion	42 C.F.R. § 1001.2002(b)
Request an ALJ hearing	60 days, in writing to the DAB, signed, by certified mail	Receipt of the § 1001.2002 notice; receipt “presumed to be 5 days after the date of such notice”	42 C.F.R. § 1005.2(c)
Appeal the ALJ decision to the DAB	30 days (extendable by up to 30 more for good cause, if requested within the first 30)	“the date of service of the initial decision”	42 C.F.R. § 1005.21(a)
DAB decision becomes final and binding	60 days	The date the DAB serves the parties	42 C.F.R. § 1005.21(j)
Petition for judicial review	60 days	“after the DAB serves the parties with a copy of the decision”	42 C.F.R. § 1005.21(k)(1)

Table: the complete OIG exclusion deadline chain, from notice of intent to judicial review. Where service is by mail, the date of service is deemed to be 5 days from the date of mailing.

The notice of intent — which you may not receive

Section 1001.2001(a) requires a notice of intent to exclude only in defined circumstances: where OIG proposes to exclude “in accordance with subpart C of this part, or in accordance with subpart B of this part where the exclusion is for a period exceeding 5 years.” Subpart B is the mandatory track; subpart C is the permissive track.

The practical translation: if you are facing a permissive exclusion, or a mandatory exclusion longer than the minimum, you get advance notice and a 30-day window to submit evidence and argument before the decision. If you are facing a straight five-year mandatory exclusion, you do not. The first document is the exclusion itself.

Section 1001.2001(c) removes the notice requirement for several further categories, and § 1001.2001(b) adds something worth asking for where it is available: for exclusions under §§ 1001.701, 1001.801 and 1001.1552, the person “may request an opportunity to present oral argument to an OIG official” alongside the written submission.

The notice of exclusion

Under § 1001.2002(c) the notice must state six things: the basis for the exclusion; the length “and, where applicable, the factors considered in setting the length”; the effect of the exclusion; the earliest date OIG will consider a reinstatement request; the requirements and procedures for reinstatement; and the appeal rights available.

That second item is worth reading closely. Where OIG has gone above five years, it must say which factors it relied on — and those stated factors are what a hearing request must engage with.

What the ALJ may and may not decide

42 C.F.R. § 1001.2007 draws the boundary, and it is narrow. An excluded person may request a hearing “only on the issues of whether: (i) The basis for the imposition of the sanction exists, and (ii) The length of exclusion is unreasonable.”

Two limits follow.

For a five-year mandatory exclusion, the second issue disappears. Section 1001.2007(a)(2): “When the OIG imposes an exclusion under subpart B of this part for a period of 5 years, paragraph (a)(1)(ii) of this section will not apply.” There is nothing to argue about length, because the length is the statutory minimum.

The underlying conviction cannot be re-litigated. Section 1001.2007(d) is emphatic: where the exclusion rests on a criminal conviction, a civil judgment, a determination by another government agency, “or any other prior determination where the facts were adjudicated and a final decision was made, the basis for the underlying conviction, civil judgment or determination is not reviewable and the individual or entity may not collaterally attack it either on substantive or procedural grounds in this appeal.”

Two further provisions of § 1001.2007 are worth having. Subsection (b) restates the deadline from the excluded person’s side — “[t]he excluded individual or entity has 60 days from the receipt of notice of exclusion provided for in § 1001.2002 to file a request for such a hearing” — so the period appears in both the appeals regulation and the hearing regulation. And subsection (c) supplies the standard: “The standard of proof at a hearing is preponderance of the evidence.” That is the government’s burden on the basis question, and it is lower than anything in the criminal case that may have generated the exclusion — another reason an acquittal or a dismissal does not settle the administrative question.

If the conviction is wrong, the exclusion proceeding is not where that is fixed. That work belongs to a federal appeal or, where the claim rests on facts outside the trial record, a § 2255 motion — and the timing of those matters, because § 1001.3001(d) provides that if a period of exclusion “is reduced on appeal (regardless of whether further appeal is pending), the individual or entity may request reinstatement once the reduced exclusion period expires.”

The hearing request itself

Section 1005.2 sets requirements that are easy to fail. The request must be in writing to the DAB, signed by the petitioner or their attorney, and “sent by certified mail.” It must contain “a statement as to the specific issues or findings of fact and conclusions of law in the notice letter with which the petitioner or respondent disagrees, and the basis for his or her contention that the specific issues or findings and conclusions were incorrect.”

A general objection is not enough. And § 1005.2(e) provides that the ALJ will dismiss a request that “is not filed in a timely manner” or that “fails to raise any issue which may properly be addressed in a hearing.” There is no equitable exception written into the rule.

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Waiver: narrow, and not yours to ask for

Providers often ask about waiver, having heard the sole-community-physician exception mentioned. It exists, and it is narrower than its reputation.

42 C.F.R. § 1001.1801 gives OIG authority “to grant or deny a request from the administrator of a Federal health care program … that an exclusion from that program be waived.” The request “must be in writing and from an individual directly responsible for administering the Federal health care program.” The excluded provider is not the applicant. A program administrator has to be persuaded to ask.

The conditions:

• For mandatory exclusions under § 1001.101(a), (c) or (d), the administrator must determine both that the person “is the sole community physician or the sole source of essential specialized services in a community” and that “[t]he exclusion would impose a hardship on beneficiaries.”
• No waiver is available at all for an exclusion under § 1001.101(b) — the patient abuse and neglect ground. Section 1001.1801(a) says so expressly: “no waiver may be granted with respect to an exclusion under § 1001.101(b).”
• For permissive exclusions under subpart C, a waiver “will only be granted if the OIG determines that imposition of the exclusion would not be in the public interest.”

Three further features limit its usefulness. A waiver “is applicable only to the program(s) for which waiver is requested” — a Medicare waiver does not touch Medicaid. If the basis ceases to exist the waiver “will be rescinded,” and the person is then excluded “for the period remaining on the exclusion, measured from the time the exclusion would have been imposed if the waiver had not been granted” — so the clock does not run during the waiver. And § 1001.1801(f) forecloses review entirely: “The decision to grant, deny or rescind a request for a waiver is not subject to administrative or judicial review.”

The statute says the same thing about the hardship waiver in § 1320a-7(c)(3)(B): “The Secretary’s decision whether to waive the exclusion shall not be reviewable.”

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Reinstatement is an application, not an expiry

This is the point at which providers most often lose time: the exclusion does not lift itself.

Under 42 C.F.R. § 1001.3001(a)(1), an excluded individual or entity “may submit a written request for reinstatement to the OIG only after the date specified in the notice of exclusion.” Two things follow. The request cannot be made early — the date in the notice is a floor, not a target. And it must actually be made; nothing happens automatically when the period runs.

What happens next is a re-examination, not a formality. Section 1001.3001(b): “Upon receipt of a written request, the OIG will require the requestor to furnish specific information and authorization to obtain information from private health insurers, peer review bodies, probation officers, professional associates, investigative agencies and such others as may be necessary to determine whether reinstatement should be granted.” And § 1001.3001(c): “Failure to furnish the required information or authorization will result in the continuation of the exclusion.”

The regulation also disposes of the most common misconception in a single sentence: “Obtaining a program provider number or equivalent does not reinstate eligibility.” A provider who reapplies for a number, receives one, and resumes billing has not been reinstated. They have created a new problem on top of the old one — and, per § 1001.1901, submitting those claims can itself be a basis for denying reinstatement.

Applied Insight — Elizabeth Franklin-Best, Esq., Principal Attorney: Reinstatement files are built, not filed. The authorizations OIG requires reach private insurers, peer review bodies and probation officers, which means the reinstatement record is assembled out of what a provider did during the exclusion period — supervision compliance, licensing status, what any professional body was told. What we look for is a period that documents itself. The work of getting reinstated starts at the beginning of the exclusion, not at the end of it.

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Where exclusion sits among the other proceedings

Exclusion rarely arrives alone, and the pieces interact.

The criminal case comes first and controls the most. Which statute the conviction is entered under determines whether exclusion is mandatory or permissive, and whether the five-year floor applies. Whether the sentence includes incarceration is an enumerated aggravating factor under § 1001.102(b)(5). Whether the sentencing record contains a judicial finding about a mental, emotional or physical condition determines whether the second mitigating factor is even available. Those are all decided in the criminal case — see the white collar crime hub linked below for how those charges are built, and our medicare fraud attorney page for how the billing theories are investigated.

The civil case runs on its own track and its own timetable. A False Claims Act matter can resolve with an integrity agreement instead of exclusion, or alongside one. If a civil investigative demand has arrived, the civil track is already open, and the exclusion consequences belong in the settlement negotiation rather than after it.

Related exposure travels with all of it. Where money moved, forfeiture of practice assets and accounts may be in issue — see asset forfeiture. Where the entity has retained counsel and is interviewing staff, an individual asked to sit for that interview has a separate problem, addressed on our upjohn warning page. And where the underlying conduct sits in the wider federal fraud framework — conspiracy counts, grouping at sentencing, the loss calculation — that is on our white collar crime lawyer hub, with related exposure covered on our tax fraud lawyer, bank fraud attorney, securities fraud lawyer, sec defense lawyer, insider trading lawyer, investment fraud attorney and fbar penalties pages.

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What to do when the notice arrives

Not advice about your case — we cannot give that from a page — but the sequence that the regulations themselves dictate.

1. Diary the dates immediately, from the date on the notice. Not from the day you opened it. The 20-day effective date runs from the notice date; the 60-day hearing deadline runs from a receipt date that is presumed to be five days after the notice date.
2. Identify the subsection. Mandatory or permissive, and if mandatory, whether the period exceeds five years. That single fact determines whether you had a notice-of-intent window, whether length is reviewable, and where argument can go.
3. Read what the notice says the factors were. Section 1001.2002(c)(2) requires OIG to state them where length exceeds the minimum. Those are the findings a hearing request has to engage.
4. Stop anything that looks like furnishing, ordering or prescribing once the effective date passes — and treat administrative and salaried roles at billing entities as within the problem, not outside it.
5. Address ownership and officer positions. Section 1320a-7a(a)(4) exposure accrues per day the prohibited relationship continues.
6. Do not attempt to re-argue the conviction here. Section 1001.2007(d) forecloses it. If the conviction is the problem, the vehicle is an appeal or a post-conviction motion, on its own timetable.
7. Build the reinstatement record from day one, because OIG will ask for authorizations reaching back across the whole period.

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Frequently Asked Questions About OIG Exclusion

Received an Exclusion Notice?

An OIG exclusion can end a career in federal healthcare programs, and the window to respond is measured in days, not months.

Request a Consultation (843) 620-1100

Representation begins with a paid, one-hour consultation — a working session in which we review where matters stand and tell you honestly what options remain. We do not promise outcomes.

Reviewed for legal accuracy by Elizabeth Franklin-Best, Esq., Principal Attorney·September 2026