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The OIG Narrows the Self-Disclosure Protocol to Exclude Stark Violations

Health Law Update Sarah E. Coyne, Kevin J. Eldridge

In a new Open Letter, released March 24, 2009, the U.S. Department of Health and Human Services Office of Inspector General ("OIG") narrowed the scope of the Self-Disclosure Protocol ("SDP"), a program through which health care providers may disclose certain compliance issues to the government. In its latest Open Letter, OIG announced that it no longer will accept disclosures that involve potential violations of the physician self-referral ("Stark") Law unless there is also a "colorable" violation of the anti-kickback statute.

For the past three years, OIG had been accepting SDP disclosures involving Stark Law violations. In its April 24, 2006 "Open Letter to Health Care Providers," the OIG encouraged health care providers, especially hospitals, to report potential Stark violations through the SDP. By utilizing the SDP, providers were able to resolve potential violations with fewer penalties than what otherwise could be assessed by OIG.

Although the OIG implied it didn't have the resources to continue processing technical Stark Law violations through the SDP, it warned providers not to assume it was decreasing enforcement efforts related to the Stark Law.

While the SDP is not the only avenue for disclosing potential violations of the Stark Law, the position taken in this Open Letter significantly decreases the incentive to providers to disclose violations of the Stark Law to the government. Providers have no assurances of leniency from other agencies to which they might report violations, such as Medicare or the local United States Attorney. Considering the staggering overpayments that might be associated with Stark violations, providers now, more than ever, must carefully decide whether and by what means to disclose Stark violations to the government.

Minimum Settlements for Anti-Kickback Disclosures

In addition to its policy change related to violations of the Stark Law, in its March 24 Open Letter, the OIG also notified providers that it will settle antikickback violations disclosed through the SDP for a minimum of $50,000. Because the OIG has the authority to impose a penalty of $50,000 for each kickback, plus an assessment of three times the kickback, a $50,000 settlement for a single kickback of, for example, $15,000 is still well below the maximum penalties the OIG may assess.

Despite the announced minimum settlement, the OIG assured providers that it will generally resolve matters disclosed through the SDP for less than the maximum penalties.

If you have any questions about the SDP or compliance issues generally, please contact Sarah Coyne at (608) 283-2435 / sarah.coyne@quarles.com, Kevin Eldridge at (608) 283-2452 / kevin.eldridge@quarles.com or your Quarles & Brady attorney.