Healthcare providers have long been aware that there can be severe penalties for submitting claims to a federal healthcare payment program where the services were provided by a person excluded from participation in the program. Eligibility of personnel to participate in such programs is determined through background checks, with appropriate updating, that include checking the U.S. Department of Health and Human Services’ Office of the Inspector General’s list of excluded persons.
But healthcare personnel are not the only ones who may be severely penalized for not checking a government list. The U.S. Department of Treasury, Office of Foreign Assets Control, maintains a list on its website of Specially Designated Nationals and Blocked Persons (SDNs) with whom U.S. persons are prohibited from engaging in any transactions. SDNs can be front companies, state-owned entities, or individuals determined to be owned or controlled by, or acting for or on behalf of, targeted countries or groups. SDNs can also be identified individuals such as terrorists or narcotics traffickers. SDNs are designated primarily under the authority of the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Anti-Terrorism and Effective Death Penalty Act, and the Foreign Narcotics Kingpin Designation Act. Criminal penalties for violations can include fines ranging up to $20 million and imprisonment up to 30 years. Civil penalties can range between $65,000 to $1,075,000 per violation depending on which of the Acts are violated.
The SDN List may soon be greatly expanded. On April 1, 2015, the President issued an Executive Order that targets cyber threats that harm or significantly compromise critical infrastructure, or that significantly disrupt computer systems, or that misappropriate funds or economic resources, trade secrets, or personal, financial or commercial information. The Executive Order provides that persons and entities determined to have engaged in malicious cyber-related activities may be added to the SDN list. Such persons and entities are subject to sanctions if they are responsible for, engaged or complicit in, or materially assist or support malicious cyber-related activities that pose a significant threat to U.S. national security, foreign policy, economic health, or financial stability. U.S. persons and businesses, particularly the technology industry and those who engage in online commerce, must now ensure that a more broad spectrum of parties with whom they transact, or seek to transact, business are not designated on the SDN List.
U.S. persons and businesses should also be aware that the U.S. Department of Commerce maintains a separate Denied Persons List of individuals and companies that have been denied export and re-export privileges because these foreign end-users pose an unacceptable risk of diverting U.S. exports to alternate destinations for use in the development of weapons of mass destruction. This Department of Commerce list is not included in the SDN List and must be separately searched. In addition, a debarment or suspension by another federal agency may potentially cause a government-wide program exclusion for an individual so it may also be prudent to check for other lists, such as the excluded parties list of the Government Services Administration.
For questions, contact Daniel O. Jamison at (559)432-4500.