On April 8, 2003, the OIG issued an Alert cautioning the health care industry that it is a violation of federal law (42 U.S.C. § 1320b-10) for individuals or organizations to misuse HHS departmental words, symbols or emblems to market their services. The OIG issued the Alert in light of what it termed an egregious violation of the prohibition by U.S. Seminar Corporation (U.S. Seminar), a La Mesa, California, company offering Medicare reimbursement and coding seminars.

Over the past 15 years, the OIG has issued approximately 30 cease-and-desist letters to various companies suspected of misusing HHS or Medicare words or symbols in their marketing practices. The overwhelming majority of recipients immediately comply with those letters, allowing for informal resolution of the matter. Those who do not comply with the cease-and-desist letter may find themselves the recipients of an OIG demand letter, which initiates a formal administrative proceeding.

After U.S. Seminar failed to comply with two cease-and-desist letters notifying the company that its marketing practices violated federal law, the OIG served U.S. Seminar and its corporate executives with a demand letter on April 3, 2003. In the demand letter, the OIG sought civil monetary penalties from U.S. Seminar in excess of one million dollars, based on the alleged misuse of the word Medicare in its marketing practices over a six-year period. The OIG's allegations centered around the more than 362,000 mailings that U.S. Seminar distributed, which the OIG asserted could reasonably be construed to mean that the Medicare reimbursement and coding seminars offered by U.S. Seminar were approved, endorsed, or authorized by Medicare.

The misuse of words, letters, symbols, or emblems of Medicare or HHS in an advertisement, solicitation, or other form of communication that reasonably could be construed as conveying the false or misleading impression of approval, endorsement, or authorization of the government is a violation of 42 U.S.C. § 1320b-10. The statute provides that the OIG may impose a penalty of up to $5,000 for each violation related to printed media and a penalty of up to $25,000 in a case of such misuse related to a broadcast or telecast. Each piece of mail in a direct mailing, solicitation, or advertisement constitutes a separate violation. Civil monetary penalties automatically go into effect 65 days from the date a demand letter is received, unless an appeal is filed within 60 days of receipt of the letter.

In determining the amount of civil monetary penalty to impose, the OIG considers the following factors: (1) the nature and objective of the solicitations, (2) the degree of culpability, (3) the frequency and scope of the violations, and (4) history of cooperation with formal requests to correct violations. 42 C.F.R. § 1003.106 (a)(3)(i). The OIG explained that U.S. Seminar's solicitations were "clearly designed to induce Providers to pay to attend [its seminar] programs based on a false impression that such programs were required by or were affiliated with Medicare or HHS." Second, noting the corporation's failure to cooperate with repeated requests to correct violations, the OIG determined that U.S. Seminar had a high degree of culpability. OIG interviews with providers also revealed that U.S. Seminar's representatives held themselves out to be Medicare representatives and advised providers that Medicare mandated attendance at the seminars. Third, in considering the frequency and scope of the violations, the OIG noted that U.S. Seminar sent thousands of solicitations over a six-year period. Finally, the OIG determined that U.S. Seminar's failure to seize upon the numerous opportunities afforded the company to voluntarily bring its marketing practices into compliance indicated an overall "lack of willingness to comply." All told, the OIG determined that a penalty totaling $1,086,258, $3.00 per misleading solicitation, was appropriate.