On April 17, 2013, the Department of Health and Human Services’ Office of Inspector General (“OIG”) released an Updated Provider Self-Disclosure Protocol (“SDP”). The SDP provides a process for all healthcare providers and suppliers, including manufacturers, subject to OIG’s Civil Monetary Penalties (“CMP”) authority to voluntarily identify, disclose, and resolve liability for potential misconduct. The SDP provides specific guidance on SDP requirements and articulates OIG’s new policies that the damages calculation will start at 1.5 times single damages and that those who self-disclose will presumptively not be subject to the imposition of a corporate integrity agreement.

  1. Improved Clarity Regarding SDP Requirements

OIG clarified that the SDP1 is available only for conduct that potentially violates federal laws for which CMPs are authorized. Specifically, the updated SDP is not available for conduct that involves only a violation of the Physician Self-Referral Law (commonly referred to as the “Stark Law”). The OIG notes that violations of the Stark Law may be disclosed through the Centers for Medicare & Medicaid Services’ Self-Referral Disclosure Protocol.

The SDP identifies 11 categories of information that must be addressed by all SDP submissions. Importantly, the disclosure must specifically identify which federal laws were potentially violated and provide an estimate of the damages to each federal health care program. In addition, prior to disclosure, the disclosing party should ensure that the disclosed conduct has ended or will conclude within 90 days of the disclosure.

The SDP also lists specific disclosure requirements depending on the type of misconduct disclosed. For example, the SDP includes additional requirements for conduct involving excluded persons. If a disclosing party has employed an excluded individual, it must disclose facts about the excluded individual and describe the existing screening process in place to identify excluded individuals, any flaws in that process that led to the employment of the excluded individual, and a description of how the conduct was discovered. In addition, before the disclosure, the provider must screen all current employees against the List of Excluded Individuals and Entities. The SDP also provides guidance for calculating damages resulting from employing or contracting with an excluded person.

In addition to the specific requirements related to disclosures involving excluded individuals, the SDP provides specific requirements for disclosures related to false billing and potential violations that implicate both the Stark Law and the Anti-Kickback Statute.

  1. Insight into Damages Calculations

The updated SDP describes OIG’s view as to appropriate settlement terms, including the calculation of damages. Critically, the OIG states that in resolving an SDP matter, it has implemented a “presumption” against imposing corporate integrity agreement obligations on disclosing parties in exchange for a “release of OIG’s permissive exclusion authority.” According to the SDP, corporate integrity agreements are not needed in such circumstances because “good faith disclosure” and “cooperation” are “typical indications of a robust and effective compliance program.”

With regard to damages, the SDP notes that disclosing parties should expect to pay above single damages for disclosed conduct. OIG’s “general practice” is to require a minimum multiplier of 1.5 times single damages. Notably, OIG will apply the multiplier to the amount actually paid by the federal health care programs, not the amount claimed. In addition, disclosing entities should expect minimum settlement amounts of $50,000 for kickback-related submissions and $10,000 for all other matters accepted into the SDP.

Importantly, the policies set forth in the SDP are not binding on the United States Department of Justice (“DOJ”). Where the DOJ is involved in the settlement negotiation, the SDP notes that “the matter will be resolved as DOJ determines is appropriate consistent with its resolution” of False Claims Act cases. However, in such circumstances, OIG will “advocate that disclosing parties receive a benefit from disclosure.”

The full text of the updated SDP is available here.