According to a press release issued by Forest Laboratories, Inc. (Forest), the Office of the Inspector General, Department of Health and Human Services (HHS OIG) informed Forest’s Chief Executive Officer and President, Howard Solomon, in a letter dated August 5, 2011, that it had decided not to exclude him from participation in federal healthcare programs.  The agency’s decision is significant as this case was one of HHS OIG’s leading exclusion actions brought against an individual.

Social Security Act Section 1128(b)(15) authorizes HHS OIG to exclude an officer, officer or managing employee of an entity that has been either excluded from participation in federal healthcare programs or convicted of certain offenses.  Perhaps signaling an intent to pursue more exclusion actions against such categories of individuals, on October 20, 2010, HHS OIG released guidance explaining the factors it would consider in deciding whether to exclude an officer or managing employee under Section 1128(b)(15).  Among the factors to be considered, in addition to the circumstances surrounding the underlying misconduct and seriousness of the offense, are the positions held by the individual with the sanctioned entity, particularly during the time of the underlying misconduct; the degree of authority associated with the individual’s position; whether the individual took steps to stop the misconduct or mitigate its effects; and whether the individual disclosed the misconduct or cooperated in the investigation.

The HHS OIG letter to Solomon does not detail why it elected not to pursue his exclusion.  According to a Forest press release, the August 5, 2011 HHS OIG letter provides a brief one sentence explanation.  That letter states that the HHS OIG has decided to close the case “based on a review of the information in our file and consideration of the information that your attorneys provided to us, both in writing and during the in-person meeting.”  Although the decision does not provide detailed insight into HHS OIG’s application of its October 2010 exclusion guidance, the decision is encouraging for the healthcare industry and healthcare company officers to the extent it demonstrates the opportunity for advocacy before the HHS OIG regarding the interpretation and application of the general criteria set out in its exclusion guidance.

A copy of Forest’s August 5, 2011 press release is available by clicking here. A copy of the OIG 2010 exclusion guidance is available by clicking here and a copy of the OIG’s Fact Sheet is available by clicking here.