Recently, the Office of Inspector General (OIG) published newly-issued guidance on the HHS OIG Grant Self-Disclosure Program (“Program”), which creates a formal framework for recipients, sub-recipients, and applicants for federal grant money to disclose potential violations of federal criminal, civil, or administrative law that may impact federally-awarded grants. Similar to the OIG’s Provider Self-Disclosure Protocol, the program offers incentives for self-disclosures in the form of reduced penalties and sanctions. The Program will be particularly important for individuals and  entities, such as research universities, that receive federally-funded grants, as the Program establishes a specific process for making certain mandatory disclosures already required by law as well as provides guidance and incentives for making voluntary disclosures.

The Program contains two disclosure protocols — one for mandatory disclosures and one for voluntary disclosures.

  • The Mandatory Disclosure Protocol: The mandatory disclosure protocol establishes a specific process for recipients, sub-recipients, and applicants for federal grants to satisfy the reporting obligations of 45 C.F.R. § 75.113, which requires written disclosure of “all violations of Federal criminal law that involve fraud, bribery, or gratuity violations potentially affecting their award.”
  • The Voluntary Disclosure Protocol: The voluntary disclosure protocol provides a framework for recipients, sub-recipients, and applicants for federal grant money to make similar written disclosures for conduct “causing liability under the Civil Monetary Penalties Law (CMPL), 42 U.S.C. § 1320a-7a, or any other conduct—such as conduct that might violate civil or administrative laws—that does not clearly fall within the scope of offenses” requiring mandatory disclosure under 45 C.F.R. § 75.113.
  • Self-Disclosure Submission Form: Both protocols use the same new submission form. The submission form makes it clear what information the OIG expects from the disclosing party. Specifically, the submission form requests that the disclosing party:

    • “Provide a full description of the nature of the violation(s) being disclosed, including the period during which the violation occurred, names of individuals involved and an explanation of their roles in the allegations and the relevant periods of their involvement.”
    • Identify the specific grants affected by the disclosed conduct, the principal investigators for each affected grant, and the purpose of each grant, and indicate whether the program office has been notified.
    • Estimate the financial impact or overpayment to the government and describe how the financial impact or overpayment was calculated and the methodology that was used.
    • Identify any measures taken to “remediate, correct, and prevent harm to beneficiaries of the grant sponsored services.”

Potential Benefits from the Program:

The OIG explains that it will reward parties that self-disclose violations (whether mandatory or voluntary) by reducing the penalties and sanctions that would normally be imposed. Specifically, the guidance states that “OIG’s general practice in the settlement of self-disclosed CMPL matters is to require a multiplier of 1.5 times the damages instead of the 2 or 3 times multiplier that would normally apply to violations that were not self-disclosed.”

In addition to reducing the penalty amount, the guidance states that there is a “strong presumption against” imposing integrity agreements on parties that self-disclose. While each integrity agreement is different, they typically require parties to undertake certain compliance obligations in exchange for the OIG agreeing not to seek their exclusion from federal healthcare programs. This presumption against integrity agreements creates a strong incentive to self-disclose, as these agreements can be costly and burdensome to administer.

OIG also has posted a listing of recent settlements under the Grant Self-Disclosure Program.

The Program and the False Claims Act:

Notably, the Program does not provide an avenue for resolving violations of the False Claims Act (FCA), which, similar to the CMPL, imposes liability for persons or entities that knowingly submit materially false claims for payment to the government. FCA violations must be resolved with the Department of Justice, which is generally not party to CMPL settlements with the OIG.

The recent guidance explains that if a party “seeks releases under the [FCA] or DOJ chooses to participate in a matter, then DOJ will determine how to resolve the FCA liability.” It also states that the OIG will investigate and refer “all potential criminal conduct to DOJ” and it “cannot guarantee in advance how a disclosure will be resolved…with the awarding agency and with DOJ.”

Although the Grant Self-Disclosure Program does not provide an avenue for resolving FCA liability through a voluntary disclosure, it does create a pathway for potentially reducing a party’s exposure to liability for other potential violations of criminal, civil, and administrative law. Moreover, it is possible that making a voluntary disclosure under the Program would qualify as a “public disclosure” within the meaning of the FCA, which would bar future whistleblower suits based on the same conduct.

Bottom Line:

Recipients, sub-recipients, and applicants for federally-funded grants that discover potential violations of federal criminal law involving fraud, bribery, or gratuity violations now have a clear process to follow in order to satisfy their reporting obligations under 45 C.F.R. § 75.113. That process involves providing the information requested by the new submission form.

Recipients, sub-recipients, and applicants that become aware of improper conduct that could give rise to civil or administrative liability or other types of criminal violations not covered by 45 C.F.R. § 75.113 should carefully consider whether a voluntary disclosure using the same submission form may be appropriate.