DAB Upholds OIG Demand for Stipulated Penalties

On June 1, 2020, the Departmental Appeals Board (DAB) upheld OIG’s demand that Friendship Home Health, Inc., et al. (Friendship Entities) pay $1,322,500 in stipulated penalties for breaches of their CIA. On November 19, 2018, OIG sent the Friendship Entities a demand for $1,322,500 in stipulated penalties for their failure to repay overpayments identified in their second and third annual reports. The Friendship Entities appealed this demand and requested a hearing with a DAB Administrative Law Judge (ALJ). On October 31, 2019, the ALJ upheld OIG’s demand. The Friendship Entities then appealed to the DAB. In its decision, the DAB agreed with the ALJ’s conclusions that the CIA’s auditing and repayment provisions created independent obligations to repay overpayments to Medicare and Medicaid, and that each time the Friendship Entities violated those obligations to repay overpayments, it created a separate basis for OIG to demand stipulated penalties. The DAB also agreed that the Friendship Entities were properly subject to stipulated penalties arising from those failures and further held that the CIA authorizes per-day stipulated penalties to run concurrently for each failure to make timely repayment.

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