The $6.5M Mistake: When a Home Health Agency Employed an Excluded Nurse

In 2019, a home health agency in the Southeast agreed to pay $6.5 million to resolve allegations that it had employed a nurse who was excluded from federal healthcare programs. The nurse had been excluded years before she was hired. Nobody checked.

This is not an unusual case. It is a typical one. OIG publishes enforcement actions on its website, and the pattern is consistent: a healthcare provider hires someone without checking the LEIE, the excluded individual provides services for months or years, and the provider ends up paying penalties that dwarf whatever revenue those services generated.

How the Penalties Accumulate

The Civil Monetary Penalties Law gives OIG three levers:

1. Per-service penalties. Up to $10,000 for each item or service furnished by the excluded individual. Adjusted for inflation, the current figure is $22,427 per item or service. For a home health aide making daily visits, that is $22,427 per visit. Five visits per week for a year is over $5.8 million in potential penalties—from a single employee.
2. Per-arrangement penalties. Up to $100,000 for each arrangement or contract with an excluded individual. This covers the employment relationship itself, separate from the services provided.
3. Treble damages. Three times the amount claimed for each item or service. If you billed Medicaid $150 per visit for 260 visits, that is $117,000 in treble damages on top of the per-service penalties.

The math gets catastrophic fast. And these are not theoretical maximums. OIG regularly imposes penalties in the millions for cases that involved a single excluded individual.

Real Enforcement Patterns

Reviewing OIG's published enforcement actions reveals consistent patterns. In fiscal year 2024, OIG's enforcement actions recovered over $1.8 billion across all case types, per OIG's Semiannual Report to Congress. While not all of these involved employed excluded individuals (many involved fraud and kickback schemes), the exclusion-related employment cases are notable for their severity relative to the size of the offending organization.

Common patterns from published OIG settlements:

• Small agencies pay proportionally massive penalties. A 50-person home health agency that employed one excluded aide for two years can face penalties that exceed the agency's entire annual revenue. OIG does not scale penalties to ability to pay.
• The discovery trigger is usually a claim audit. Most cases begin when a routine claims audit reveals that services were furnished by an excluded individual. OIG then investigates the provider's screening practices and employment records.
• Self-disclosure reduces but does not eliminate liability. OIG's Self-Disclosure Protocol encourages providers to voluntarily report exclusion violations. Self-disclosure generally results in lower penalties—OIG's guidance suggests a minimum settlement of $50,000 per excluded individual plus 1.5x the amount of damages. But even a favorable self-disclosure settlement runs into six figures.
• Corporate Integrity Agreements follow. Beyond the monetary penalty, OIG typically requires the provider to enter a Corporate Integrity Agreement (CIA)—a multi-year compliance oversight regime that imposes reporting requirements, independent review organizations, and board-level compliance obligations. The cost of complying with a CIA can exceed the penalty itself.

How It Happens

The most common scenario is the simplest: the agency never checked. They hired a clinician based on their license, references, and background check. The state licensing board did not flag the exclusion because state licensing and federal exclusion are separate systems. The background check company did not check the LEIE because it was not part of their standard package.

The second most common scenario: the agency checked at hire but never again. The employee was clean when hired, then was excluded two years into their employment after a conviction. The agency continued employing them for another year before the next annual screening caught it.

The third scenario: the agency screened monthly but used exact-match searching. The employee's LEIE entry used their maiden name, or a different spelling, or included a suffix that the agency's records did not include. The monthly screen came back clean every time. The exclusion was only discovered during an OIG audit. This is exactly the problem that fuzzy name matching technology is designed to solve.

The Self-Disclosure Calculation

If you discover that you have employed an excluded individual, OIG strongly encourages self-disclosure through their Provider Self-Disclosure Protocol. The alternative—waiting for OIG to discover the violation through an audit or whistleblower—results in substantially higher penalties.

Under the self-disclosure protocol, the minimum settlement amount is:

• $50,000 per excluded individual, plus
• 1.5 times the damages (the amount paid by federal healthcare programs for the excluded individual's services)

Compare that to the enforcement route: $22,427 per service, plus treble damages, plus the arrangement penalty, plus potential exclusion of the entire organization.

Self-disclosure is always the better option. But the best option is not needing to disclose at all.

Prevention Is Not Expensive. Penalties Are.

The cost of comprehensive OIG screening for a 100-person agency is a rounding error compared to the cost of a single enforcement action. Monthly automated screening, dual-database checks (LEIE and SAM.gov), and fuzzy name matching are the baseline requirements for a defensible compliance program.

ClientCare handles all of this automatically. We screen your entire roster against both databases every month, using fuzzy matching that catches name variations, maiden names, accented characters, and suffixes. When we find a potential match, you get a risk ticket immediately—not a surprise from OIG months later.