Ninety days after giving South Shore Hospital and Medical Center thirty days to correct its "repeated and egregious failure to abide by its CIA," the OIG formally excluded the Miami hospital from participating in federal health care programs. The exclusion, announced March 10, 2006, was "largely moot," according to John Schwartz, the hospital's attorney, because South Shore had filed bankruptcy, ceased admitting new patients, and discharged its remaining patients two weeks earlier. Schwartz asserted that the hospital's financial circumstances afforded the OIG an opportunity to send a strong enforcement message while avoiding any adverse impact on beneficiaries. The OIG, on the other hand, cited the numerous hospitals located within a 10-mile radius of South Shore as the safety net providing beneficiaries with alternative resources for their health care.

South Shore entered into the five-year CIA with the OIG in 2002 to resolve FCA allegations that the hospital had submitted false cost reports for unallowable program costs. According to the OIG, South Shore's "long history" of violating the terms of the CIA began in 2003, when the OIG imposed a $50,000 Stipulated Penalty on the hospital. The exclusion threat came December 7, 2005, after South Shore's alleged repeated failure to comply with the CIA's reporting and Independent Review Organization requirements, and its failure to notify the OIG of its sale to new owners, also required under the CIA.

This matter reinforces the importance of ensuring that a provider can live with the terms of a CIA. That document constitutes a valid and binding contract with the OIG and can itself be used as grounds for additional sanctions, such as the imposition of civil penalties and the ultimate economic death penalty, exclusion from the federal health care programs.