Individuals who provide false or misleading information in connection with an application for coverage to an ACA exchange like Covered CA may be subject to penalties. The Centers for Medicare & Medicaid Services' ("CMS") final rules (45 CFR section 155.285) set forth the penalties for failure to provide accurate information to an Exchange relating to eligibility determinations under section 1411 of the ACA. One factor that determines the penalty amount is "[w]hether any person received a more favorable eligibility determination for enrollment in a QHP or insurance affordability program, such as greater advance payment of the premium tax credits or cost-sharing reductions than he or she would be eligible for if the correct information had been provided."
If a person or entity fails to provide correct information to an Exchange, and acts with negligence or disregard of the rules, that individual or entity is subject to a maximum civil money penalty of $25,000 for each application to an Exchange. If a person or entity knowingly or willfully provides false or fraudulent information, the maximum penalty for each application is $250,000. An "application" is defined as a submission of information, where the information is provided in relation to an eligibility determination or redetermination.
Other factors that determine the amount of the penalty include, but are not limited to, the nature and circumstances of the violation (i.e., the number of violations, the severity of the violations, whether there is a pattern of violations) and the nature of the harm resulting from, or reasonably expected to result from the violation (i.e., whether the violation resulted in actual or potential financial harm or reputational harm and whether the violation hindered or could have hindered an individual's ability to obtain health insurance coverage).
The Department of Health and Human Services will provide notice, opportunity to be heard and appeal rights to a person who allegedly violates the rule.
For additional information, please see page 406 of the rule at:http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/508-CMS-9949-F-OFR-Version-5-16-14.pdf.