A False Claims Act settlement resolves the civil claim the Department of Justice is pursuing, but it does not resolve the separate decision facing the Department of Health and Human Services Office of Inspector General (OIG): whether to exclude the settling provider from Medicare, Medicaid, and other federal health care programs. OIG holds that authority under Section 1128(b)(7) of the Social Security Act, and it reaches a settling provider even where the settlement itself does not admit liability. Whether OIG releases that exclusion authority, demands a corporate integrity agreement (CIA), or excludes the provider outright depends on facts the provider's counsel can shape well before the settlement is signed.
OIG's Permissive Exclusion Authority
Exclusion under Section 1128(b)(7) is permissive, not mandatory: OIG has discretion whether to use it, unlike the mandatory exclusions that follow a healthcare-related criminal conviction. A civil False Claims Act settlement, including one resolving a qui tam action a relator filed under seal, generally puts a provider within reach of permissive exclusion even without a criminal charge. OIG's published criteria for Section 1128(b)(7) describe a presumption favoring exclusion once a provider has defrauded a federal health care program, rebuttable only in the circumstances the criteria identify.
How a Release Is Obtained
OIG's published guidance on resolving these settlements lists five possible outcomes once a False Claims Act matter with the Department of Justice is ready to close: OIG can impose exclusion, apply heightened scrutiny, impose integrity obligations, take no further action, or, in the case of a good faith and cooperative self-disclosure, release Section 1128(b)(7) exclusion with no integrity obligations attached. That self-disclosure path runs through OIG's own self-disclosure protocol, separate from the Department of Justice settlement negotiation, and it is one of two routes OIG has published to a release with no OIG integrity obligations attached, the other being integrity obligations already in place with a state or the Department of Justice that OIG determines are sufficient.
When a Corporate Integrity Agreement Is Demanded
OIG does not seek a corporate integrity agreement in every False Claims Act case. Where a provider settles without a self-disclosure or where OIG's risk assessment lands on the higher end of the compliance-risk spectrum, OIG is more likely to condition a release of its exclusion authority on a CIA instead of granting one outright. A standard CIA runs five years: the provider hires a compliance officer, retains an independent review organization, screens employees against the OIG exclusion list, and reports overpayments, reportable events, and ongoing government inquiries to OIG for the full term. For the obligations a CIA imposes, see Corporate Integrity Agreements Explained. OIG closes the agreement only after it receives and reviews the final annual report, and the exclusion risk tied to that settlement ends with it.
A corporate integrity agreement is OIG's condition for releasing exclusion authority to a provider whose settlement record alone has not yet shown OIG it can be trusted without one.
Why Early Legal Counsel Is Critical
It is critical that healthcare providers promptly retain experienced healthcare defense counsel once a False Claims Act investigation reaches settlement discussions. Early legal intervention can shape the compliance record OIG will review, position a self-disclosure before the government's own investigation forecloses that path, and negotiate the scope of any corporate integrity agreement OIG does demand. Delaying legal representation can cost a provider its chance at a release and leave a five-year CIA as the likelier path to continued participation in Medicare and Medicaid.
How Health Law Alliance Can Help
Health Law Alliance advises pharmacies, physician practices, and healthcare companies on the exclusion exposure that follows a False Claims Act settlement, as part of its broader False Claims Act defense work, from the initial self-disclosure assessment through negotiating the scope of a corporate integrity agreement OIG insists on.
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience.
If your organization is negotiating a False Claims Act settlement and needs to know whether OIG will demand a corporate integrity agreement, contact Health Law Alliance's self-disclosure defense team for a free, confidential consultation before the settlement terms are set.
