What is a Z1 Offense Wanted by HHS?
The term Z1 offense wanted by HHS relates to an individual who has been excluded from the System for Award Management database who also appears on HHS’ Office of Inspector General’s “Fugitive List”. Most individuals wanted by HHS for a Z1 offense have been charged with – or convicted of – healthcare fraud, but have fled before being sentenced.
To help explain what is meant by the System for Award Management exclusions, wanted by HHS, and Z1 offences, it is best to go back to the 1980s. At the time, federal agencies were adopting computerized databases – allowing them to more easily create, maintain, and share lists of approved or excluded contractors. Early examples include the Department of Defense’s Central Contractor Registry (CCR), and HHS’ Office of Inspector General’s Exclusions List (LEIE).
By the early 2000s, many federal agencies shared the same database of excluded contractors – the Excluded Parties List System (EPLS). This system categorized exclusions according to the excluding agency and the reason for the exclusion using Cause and Treatment (CT) codes. By 2012, there were seventy-three CT codes in use. The CT code allocated to exclusions from publicly funded healthcare programs initiated by HHS’ Office of Inspector General was Z1.
In 2012, the Excluded Parties List System and other databases not yet included in the EPLS were combined into one database – the System for Award Management (SAM). At the same time, the seventy-three CT codes were reduced to just four “Exclusion Types”. The exclusion type for HHS Office of Inspector General exclusions is Prohibition/Restriction. Z1 is no longer used on the SAM database, but the term Z1 offense wanted by HHS (and the abbreviated version, Z1 offense HHS) still exists.
HHS OIG Exclusions List
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Despite SAM, Healthcare Organizations Must Still Check LEIE
When an individual or entity is convicted of health care fraud, patient abuse, or neglect, they are added to the HHS’ OIG’s List of Excluded Individuals or Entities (LEIE). Inclusion on the list debars an individual or entity from participating in publicly funded healthcare programs for as long as their exclusion lasts. For example, an individual could appear on the LEIE for defaulting on a health education loan. As soon as the loan is repaid, the individual can request removal from the LEIE.
Organizations in the healthcare industry are required to check the LEIE for exclusions before engaging an employee, agency worker, contractor, or vendor. Organizations that engage an excluded individual or entity will not be paid by the federal government for any items or services contracted from the excluded individual or entity. They could also face civil monetary penalties for engaging an excluded individual or entity contrary to §1128A of the Social Security Act, and themselves be added to the LEIE list.
SAM’s list of HHS OIG exclusions is populated from the LEIE database. aAlthough the objective of SAM is to have a “one-stop-shop” for federal agencies and private organizations to check the eligibility or debarment of employees, contractors, and vendors in federal programs, HHS’ OIG still requires organizations in the healthcare industry to check the LEIE database for exclusions rather than the SAM database. The reasons for this are explained in a 2013 Special Bulletin.
To summarize what is said in the bulletin, the SAM database is not updated as frequently as the LEIE and cannot be relied upon for “point of time” accuracy. Furthermore, the LEIE includes more details about the excluded individual or entity (i.e., the nature of the offense) and whether the exclusion is mandatory or (the less serious) permissive. The bulletin also states that because the LEIE database is maintained by OIG, the OIG’s staff can better respond to questions about exclusions and verify information.
What is “Wanted by HHS” in Z1 Offense Wanted by HHS?
If an individual is “wanted by HHS”, it means they appear on HHS’ OIG Fugitive List. This list contains the names, descriptions, and last known whereabouts of individuals wanted for healthcare fraud, abuse, or child support obligations. Individuals wanted for healthcare fraud have usually been charged with, or convicted of, their offense and appear on the LEIE database.
When the data on the LEIE database is exported to SAM, the fugitives are wanted by HHS for an offence now classified by SAM as a Prohibition/Restriction offense, but was previously known as an HHS Z1 offense. However, not all individuals who appear on the Fugitive List are guilty of healthcare fraud. Some fugitives appear on the list due to the failure to comply with child support obligations. Because they have not committed healthcare fraud or abuse, these individuals do not appear on the LEIE or SAM databases.
Therefore, the term Z1 offense wanted by HHS distinguishes individuals who appear on the Fugitive List for healthcare fraud and abuse from those who are wanted by HHS for other reasons. While neither category of individuals should be employed by healthcare organizations, employing those categorized Z1 offense wanted by HHS may result in a civil monetary penalty for violating §1128A of the Social Security Act, whereas employing fugitives not guilty of a HHS Z1 offense will not attract the same penalty.
