The Office of Inspector General (OIG) recently issued guidance related to its permissive exclusion authority. The guidance identified factors that the OIG will consider in determining whether to exercise its discretionary authority to exclude owners, officers and managing employees of an entity that has been excluded or convicted of certain offenses.

Federal law allows the OIG to exclude individuals who have an ownership or control interest in a sanctioned entity if the individual knew or should have known of the conduct that led to the sanction. The law also allows the OIG to exclude officers and managing employees of a sanctioned entity based solely on their position in the company and without regard to what they knew or should have known.

With respect to owners, the OIG notes that if there is evidence that supports that the owner knew or should have known of the conduct, the OIG will "operate with a presumption in favor of exclusion." The presumption can be overcome if the OIG finds that "significant factors weigh against exclusion."

With respect to officers and managing employees, the OIG asserts that it can exclude every officer and managing employee although the OIG says it does not intend to do so. Rather, the OIG notes that if an officer or managing employee knew or should have known of the conduct, the OIG will "operate with a presumption in favor of exclusion." As above, the presumption can be overcome if the OIG finds that "significant factors weigh against exclusion."

The OIG guidance includes a series of questions that will be considered in determining whether to exercise its permissive exclusion authority. The questions relate to various factors, including the circumstances of the misconduct, the seriousness of the offense, the individual's role in the sanctioned entity, the individual's actions in response to the misconduct and information about the entity. For example, the OIG will consider the following factors:

  • Whether beneficiaries were harmed;
  • The extent of any financial harm to federal healthcare programs;
  • Whether the misconduct is an isolated incident or represents a pattern of wrongdoing;
  • If the entity previously has had any similar problems with the government;
  • The individual's role and responsibility in the entity including such person's position and relationship to the underlying misconduct; and
  • The size of the entity and its corporate structure.

It is important to note that the OIG's decision to exercise its discretionary authority to exclude individuals is not subject to administrative or judicial review.