The Department of Health and Human Services (HHS) is increasing maximum civil monetary penalty (CMP) amounts applicable to HHS agencies and programs, in compliance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (which was part of the Bipartisan Budget Act of 2015).  The magnitude of the individual CMP increases varies depending on when the specific type of penalty was last adjusted and consequently how large a “catch-up” adjustment is applied.  Increases range from 1% to 150%.  For instance:

  • The maximum CMP for willfully and knowingly certifying a material and false statement in a skilled nursing facility resident assessment pursuant to 1396r(b)(3)(B)(ii)(I), established in 1987, is increasing by 106%, from $1,000 to $2,063.
  • The maximum CMP for improper “gainsharing” payments — payments by a hospital or critical access hospital to induce a physician to reduce or limit services to individuals under the direct care of a physician or who are entitled to certain medical assistance benefits, or for physicians who knowingly receive such payments – established in 1986 pursuant to 1320a-7a(b) – is increasing by about 115.6%, from $2,000 to $4,313.
  • The maximum CMP for improper billing by hospitals, critical access hospitals, and skilled nursing facilities, established in 1972 pursuant to 1395cc(g), is increasing by 150%, from $2,000 to $5,000.
  • The maximum CMP for knowing provision of false information by a drug manufacturer with a rebate agreement under 1396r–8(b)(3)(C)(ii)) is increasing from $100,000 (set in 1990) to $178,156 (a 78% increase).
  • The maximum CMP for submitting or causing to be submitted claims in violation of the Stark Law’s restrictions on physician self-referrals (1395nn(g)(3)) – set in 1994 – is increasing 59% (from $15,000 to $23,863).  Likewise the penalty for circumventing the Stark Law’s restrictions on physician self-referrals (1395nn(g)(4)) is increasing 59%, from $100,000 to $159,089.
  • The maximum CMP for a supplier of durable medical equipment, prosthetic devices, prosthetics,  orthotics, or supplies that knowingly and willfully distributes a certificate of medical necessity (CMN) in violation of Section 1834(j)(2)(A)(i) (limitation on information provided by suppliers on CMNs), also is increased by 59%, from $1,000 to $1,591.
  • The calendar year CMP cap for manufacturers or group purchasing organizations that fail to report “Sunshine Act” information required under 42 U.S.C. 1320a–7h(a), relating to physician ownership or investment interests, set in 2010, is increasing by about 8.7%, from $150,000 to $163,117.

The adjusted CMP amounts are applicable to penalties assessed after August 1, 2016, whose associated violations occurred after November 2, 2015 (the date of enactment of the 2015 Amendments).  HHS also is updating certain regulatory language to conform with the CMP update.  The HHS rulemaking follows similar action by the Department of Justice (DOJ), which in June 2016 increased the maximum CMP for False Claims Act violations (note that the DOJ solicited comments on its inflation adjustment, but HHS did not).