Lee Health System Paid $18.8 Million Including Penalties Tied to Two Excluded Employees

On October 27, 2025, Lee Health System in Fort Myers, Florida, agreed to pay $18,848,530.40 to resolve allegations under the Civil Monetary Penalties Law. The OIG enforcement summary contains the sentence that should focus every health system board: "Lee Health employed two individuals that it knew or should have known were excluded from participation in Federal health care programs."

Two people. At a 17,000-employee, roughly 1,000-location, multi-billion-dollar health system. That is the headline. It is also why this case is the most important exclusion settlement of 2025: it shows that scale does not protect you. If anything, scale makes the exclusion screening problem harder, because the volume of hires, contractors, and credential events is too large to manage by spreadsheet and the consequences of a single miss are no smaller than they are at a small SNF.

What is actually in the $18.8 million

This part matters and the OIG summary itself flags it. The $18,848,530.40 settlement covers two distinct categories of conduct:

• The exclusion piece: Lee Health employed two individuals it knew or should have known were excluded from federal health care programs. Press coverage and the OIG summary indicate this portion of the settlement is approximately $1.88 million.
• The non-performed-services and coverage-criteria piece: a separate, larger set of allegations involving claims submitted for services that were not performed or that failed to meet coverage criteria. This is the bulk of the $18.8 million and is unrelated to the exclusion screening allegations.

We are flagging this distinction because it is easy to read "$18.8M, two excluded employees" as if the entire settlement is the exclusion math. It is not. The exclusion arithmetic for two employees at a system Lee's size produced a $1.88M figure, which is itself substantial and which is the part of this case directly relevant to exclusion screening. The remaining $17M reflects independent allegations about billing accuracy and medical necessity.

That said, the two pieces are linked. The OIG and DOJ frequently bundle exclusion findings with broader billing allegations because exclusion screening is treated as a foundational compliance control. A breakdown in exclusion screening is read as evidence about the compliance program overall, which then frames the negotiation on adjacent allegations. See what an excluded provider is for the categories that put a person on the LEIE in the first place.

The verified facts

• Settling entity: Lee Health System (also known as Lee Memorial Health System), a public, not-for-profit health system in Fort Myers, Florida. Roughly 17,000 employees across approximately 1,000 facility locations.
• Settlement date: October 27, 2025.
• Total settlement: $18,848,530.40.
• Approximate exclusion-related portion: $1.88 million, tied to two employees the system knew or should have known were excluded from participation in federal health care programs.
• Statutory authority: 42 USC 1320a-7a, the Civil Monetary Penalties Law.

The "knew or should have known" standard

That phrase is doing real work in the OIG summary. The CMP statute sets a knowledge standard that is meaningfully lower than actual knowledge. "Should have known" means the OIG can establish liability by showing that a reasonable compliance program would have caught the exclusion. It does not require proof that any specific person at Lee Health was aware the employees were excluded.

In practice, "should have known" gets satisfied when the LEIE was publicly available, the employer's screening cadence was insufficient to catch a routine update, and the period between the exclusion attaching and the violation being discovered is long enough to make the gap obvious. For a national-scale health system, the bar for "should have known" is functionally tied to whether the system had a documented, automated, monthly screening program covering its full workforce. If it did not, the standard is met essentially by default.

Why two employees produces $1.88 million

At a system Lee's size, two employees can touch a remarkable number of federal claims. The math depends entirely on the roles, the duration of employment after exclusion attached, and the volume of federal payer mix in the units where they worked. Without internal facts, we cannot back-solve the exact item count, but the structural arithmetic for two clinical employees over some bounded period at a multi-thousand-bed system gets to seven figures fairly directly:

• Per-item CMP rate (currently up to $25,595 in 2025; lower in prior years; see the per-claim rate breakdown).
• Multiplied by the number of items each excluded individual touched.
• Plus three-times-claimed assessments on the underlying claim amounts.
• Minus negotiated reductions reflecting cooperation, the size of the entity, and the rest of the settlement context.

$1.88M divided across two excluded employees lands at a per-employee figure that is consistent with what we have seen at the system level. Sharp Healthcare paid $153,072.64 for one nurse. The Estates of St. Louis paid $300,000 for one charge nurse. The Lee Health per-employee figure sits above those because the touched-claim count at a national-scale system is meaningfully larger.

What this tells you about screening at scale

Lee Health has the budget. Lee Health has compliance staff. Lee Health is the kind of operator that, on paper, has every reason to be running monthly LEIE screening as a matter of routine. The settlement record indicates that the screening program in place was not sufficient to catch two employees within a window that would have prevented federal claim exposure.

That is the compliance lesson, and it is uncomfortable. Exclusion screening at scale is an automation problem. Manual processes (HR sends a list to compliance, compliance runs the LEIE search, compliance returns the results) do not survive the volume and velocity of a 17,000-employee operation. The screening either runs continuously, against the full active workforce, with documented results, or it does not work. There is no middle path that scales.

See what happens if you employ an excluded Medicaid provider for the full statutory framework, and the ASC compliance due diligence framework for how the same screening regime applies in surgical settings, where the per-role credential stack is even more dependent on automated continuous monitoring.

The capital budget framing

Lee Health operates on a capital budget that has historically run in the hundreds of millions annually. A monthly LEIE and SAM.gov screening platform across 17,000 employees costs a small fraction of one percent of that. The asymmetry is not a budget question. It is an operational priority question, and the cases that make it into the OIG enforcement summary tell you what happens when exclusion screening is treated as a clerical task rather than a continuous control.

The takeaway

Two excluded employees, at the largest health system in southwest Florida, produced a $1.88M exclusion-related settlement embedded inside a $18.8M total. The lesson is not that Lee Health is uniquely careless. It is that exclusion screening fails the same way at small SNFs and at multi-billion-dollar systems: hire-date checks, manual processes, and the assumption that someone else is keeping the workforce list current.

The audit trail is the deliverable. Monthly automated screening produces a timestamped log entry against every employee against the LEIE on every update. That log is what answers the "should have known" question in the negotiation that follows. Without it, the answer is whatever the OIG's opening calculation says it is.

For the per-claim rate that frames every CMP negotiation in 2025, see the $25,595 per-claim breakdown. For the comparison across federal exclusion sources, see OIG vs SAM.gov vs NPDB.