What happens if you employ an excluded individual?

Last updated 2026-11-09 · Starry Night

If an excluded person works for or with you on anything paid for by Medicare, Medicaid or another federal health care program, two things follow: the programs should not pay for that work, and your organization can face civil monetary penalties. This guide sets out what the rules say, with links, and the steps OIG points to.

The payment ban

42 CFR 1001.1901(b)(1) says that, until reinstated, no payment will be made by Medicare, Medicaid or any other federal health care program for any item or service furnished by an excluded person, or at the medical direction or on the prescription of an excluded physician when the person furnishing it knew or had reason to know of the exclusion.

OIG's Updated Special Advisory Bulletin on the Effect of Exclusion (May 8, 2013) explains how far this reaches. It covers services that are not separately billed, such as preparing surgical trays or reviewing treatment plans; pharmacy staff who enter prescription information; ambulance drivers and dispatchers; and administrative and management services:

"an excluded individual may not serve in an executive or leadership role (e.g., chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, etc.)"
OIG's Updated Special Advisory Bulletin on the Effect of Exclusion (May 8, 2013), p. 7

The bulletin also says the ban applies whether the person is an employee, a contractor or a volunteer.

Civil monetary penalties

The Civil Monetary Penalties Law, 42 U.S.C. 1320a-7a(a)(6), applies to a person who "arranges or contracts (by employment or otherwise) with an individual or entity that the person knows or should know is excluded" for items or services payable by a federal health care program. On "should know", the bulletin notes that providers have been able to use the LEIE to find out whether a person is excluded since at least 1999.

OIG's regulation sets the amounts. Under 42 CFR 1003.210(a)(4), OIG may impose a penalty of not more than $20,000 for conduct after February 9, 2018, for each item or service provided, furnished, ordered or prescribed by the excluded person. Under 1003.210(b)(2), it may add an assessment of up to three times the amount claimed for separately billable items or services, or up to three times the total costs of the excluded person (including salary, benefits and taxes) for services that are not separately billable. These amounts are adjusted for inflation each year; HHS's table at 45 CFR 102.3 lists $25,595 as the 2025 maximum for employing or contracting with an excluded individual (read on eCFR, 2026-11-09). OIG can also exclude the employer.

These are maximums the law allows, not typical outcomes. OIG publishes its resolved cases, including settlements for employing excluded individuals, on its enforcement actions page.

Separately from penalties, the bulletin says the provider is subject to overpayment liability for any items or services an excluded person furnished that the programs paid for.

When employing an excluded person is allowed

The bulletin describes two limited situations: the excluded person provides items or services that federal health care programs do not pay for, directly or indirectly; or the person serves only patients who are not federal program beneficiaries, with no claims to the programs for that work. Those are the limited situations; OIG's conclusion is that a provider receiving federal program payments may employ or contract with an excluded person "only in limited situations".

If a screening turns up a possible match

1. Do not act on the name alone. Confirm it on OIG's online search with the person's SSN (or the business's EIN), and print the result. For a state-list match, confirm with the state agency.
2. If confirmed, follow OIG's pointers. OIG's FAQ says to check the 2013 bulletin and, if you have already employed the individual, its Self-Disclosure Protocol, which OIG offers for resolving potential CMP liability.
3. Involve counsel. Whether to remove the person from federally payable work, what to repay and whether to self-disclose are legal decisions that depend on the facts.
4. Check the rest of your roster so you have a complete picture before you act.
5. Document what you found, when and how you verified it, and what you did.

Contractors and staffing agencies

The bulletin's footnote 21 says a hospital may reduce or eliminate CMP liability if it can show it reasonably relied on a staffing agency that agreed by contract to screen the LEIE, and that the hospital exercised due diligence that the agency was doing so. OIG recommends validating a contractor's screening, for example by requesting and keeping its screening documentation.

Prevention is a routine, not a one-time check

Screen before hiring and monthly after that (see how often to check), include the state lists that apply, and keep a record of each run.

This guide explains public rules and OIG guidance in plain English. It is not legal advice; for a decision about a specific person or claim, talk to your health care counsel. Healthcare Exclusion Lookup is published by Starry Night and is not affiliated with HHS-OIG, CMS or any state agency.

Questions

Can a health care provider ever employ an excluded person?

Only in limited situations. OIG's 2013 bulletin says a provider may employ or contract with an excluded person for items or services that federal health care programs do not pay for, directly or indirectly, or that relate solely to patients who are not federal program beneficiaries.

What should I do if I discover an employee is excluded?

First confirm the match with the SSN on OIG's online search. OIG's FAQ says to check its 2013 bulletin on the effect of exclusion and, if you have already employed the individual, its Self-Disclosure Protocol. Talk to health care counsel before deciding how to proceed.

Does relying on a staffing agency's screening protect the provider?

Partly. OIG's 2013 bulletin says a hospital may reduce or eliminate CMP liability if it can show it reasonably relied on a staffing agency that agreed by contract to screen, and that it exercised due diligence. The provider still has overpayment liability for any services an excluded person furnished.