Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General's Civil Monetary Penalty Rules, 27079-27103 [2014-10394]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Office of Inspector General

[Federal Register Volume 79, Number 91 (Monday, May 12, 2014)]
[Proposed Rules]
[Pages 27079-27103]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10394]



[[Page 27079]]

Vol. 79

Monday,

No. 91

May 12, 2014

Part III





 Department of Health and Human Services





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 Office of Inspector General





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42 CFR Parts 1003 and 1005





Medicare and State Health Care Programs: Fraud and Abuse; Revisions to 
the Office of Inspector General's Civil Monetary Penalty Rules; 
Proposed Rule

Federal Register / Vol. 79 , No. 91 / Monday, May 12, 2014 / Proposed 
Rules

[[Page 27080]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Parts 1003 and 1005

RIN 0936-AA04


Medicare and State Health Care Programs: Fraud and Abuse; 
Revisions to the Office of Inspector General's Civil Monetary Penalty 
Rules

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend the civil monetary penalty (CMP 
or penalty) rules of the Office of Inspector General (OIG) to 
incorporate new CMP authorities, clarify existing authorities, and 
reorganize regulations on civil money penalties, assessments and 
exclusions to improve readability and clarity.

DATES: To ensure consideration, comments must be delivered to the 
address provided below by no later than 5 p.m. Eastern Standard Time on 
July 11, 2014.

ADDRESSES: In commenting, please reference file code OIG-403-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. However, you may submit comments using 
one of three ways (no duplicates, please):
    1. Electronically. You may submit electronically through the 
Federal eRulemaking Portal at https://www.regulations.gov. (Attachments 
should be in Microsoft Word, if possible.)
    2. By regular, express, or overnight mail. You may mail your 
printed or written submissions to the following address: Patrice S. 
Drew, Office of Inspector General, Department of Health and Human 
Services, Attention: OIG-403-P, Cohen Building, 330 Independence Avenue 
SW., Room 5541C, Washington, DC 20201.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By hand or courier. You may deliver, by hand or courier, before 
the close of the comment period, your printed or written comments to: 
Patrice S. Drew, Office of Inspector General, Department of Health and 
Human Services, Attention: OIG-403-P, Cohen Building, 330 Independence 
Avenue SW., Room 5541C, Washington, DC 20201.
    Because access to the interior of the Cohen Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to schedule their delivery with one of our 
staff members at (202) 619-1368.
    Inspection of Public Comments: All comments received before the end 
of the comment period will be posted on https://www.regulations.gov for 
public viewing. Hard copies will also be available for public 
inspection at the Office of Inspector General, Department of Health and 
Human Services, Cohen Building, 330 Independence Avenue SW., 
Washington, DC 20201, Monday through Friday from 8:30 a.m. to 4 p.m. To 
schedule an appointment to view public comments, phone (202) 619-1368.

FOR FURTHER INFORMATION CONTACT: Tony Maida, (202) 619-0335, or Jill 
Wright, (202) 619-0335, Office of Counsel to the Inspector General.

SUPPLEMENTARY INFORMATION:

EXECUTIVE SUMMARY: 

I. Purpose of the Regulatory Action

A. Need For Regulatory Action

    The Affordable Care Act of 2010 (Patient Protection and Affordable 
Care Act, Pub. L. 111-148, 124 Stat. 119 (2010), as amended by the 
Health Care and Education Reconciliation Act of 2010, Pub. L. 111-152, 
124 Stat. 1029 (2010), hereafter ACA) significantly expanded OIG's 
authority to protect Federal health care programs from fraud and abuse. 
OIG proposes to update its regulations to codify the changes made by 
ACA in the regulations. At the same time, OIG proposes updates pursuant 
to the Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 and other statutory authorities, as well as technical changes 
to clarify and update the regulations.

B. Legal Authority

    The legal authority, laid out later in the preamble, for this 
regulatory action is found in the Social Security Act (Act), as amended 
by ACA. The legal authority for the proposed changes is listed by the 
parts of Title 42 of the Code of Federal Regulations that we propose to 
modify:
    1003: 42 U.S.C. 1320a-7(c), 1320a-7a, 1320b-10, 1395w-27(g), 1395w-
112(b)(3)(E), 1395w-141(i)(3), 1395y(b)(3)(B), 1395dd(d)(1), 1395mm, 
1395nn(g), 1395ss(d), 1396b(m), 1396r-7(b)(3)(B), 1396r-7(b)(3)(C), 
1396t(i)(3), 11131(c), 11137(b)(2), and 262a.
    1005: 42 U.S.C. 405(a), 405(b), 1302, 1320a-7, 1320a-7a, and 1320c-
5.

II. Summary of Major Provisions

    We propose changes to the Civil Monetary Penalties (CMP) 
regulations at 42 CFR part 1003 to implement authorities under ACA and 
other statutes. ACA provides for CMPs, assessments, and exclusion for:
     Failure to grant OIG timely access to records;
     ordering or prescribing while excluded;
     making false statements, omissions, or misrepresentations 
in an enrollment application;
     failure to report and return an overpayment; and
     making or using a false record or statement that is 
material to a false or fraudulent claim.

These statutory changes are reflected in the proposed regulations.
    We also propose a reorganization of 42 CFR part 1003 to make the 
regulations more accessible to the public and to add clarity to the 
regulatory scheme. We propose an alternate methodology for calculating 
penalties and assessments for employing excluded individuals in 
positions in which the individuals do not directly bill the Federal 
health care programs for furnishing items or services. We also clarify 
the liability guidelines under OIG authorities, including the Civil 
Monetary Penalties Law (CMPL); the Emergency Medical Treatment and 
Labor Act (EMTALA); section 1140 of the Act for conduct involving 
electronic mail, Internet, and telemarketing solicitations; and section 
1927 of the Act for late or incomplete reporting of drug-pricing 
information.

III. Costs and Benefits

    There are no significant costs associated with the proposed 
regulatory revisions that would impose any mandates on State, local, or 
tribal governments or the private sector. OIG anticipates that CMP 
collections may increase in the future in light of the new CMP 
authorities and other changes proposed in this rule. However, it is 
difficult to accurately predict the extent of any increase due to a 
variety of factors, such as budget and staff resources, the number and 
quality of CMP referrals or leads, and the length of time needed to 
investigate and litigate a case. In calendar years 2004-2013, OIG 
collected between $10.2 million and $26.2 million in CMP resolutions 
for a total of over $165.2 million.

Discussion

I. Background

    For over 22 years, OIG has exercised the authority to impose CMPs, 
assessments, and exclusions in furtherance of its mission to protect 
the Federal health care programs and their

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beneficiaries from fraud, waste, and abuse. As those programs have 
changed over the last two decades, OIG has received new fraud-fighting 
CMP authorities in response, including new authorities under ACA. With 
the addition of new authorities over time, part 1003 has become 
cumbersome. While adding new authorities, we are also reorganizing part 
1003 to improve its readability and clarity. Lastly, we are also 
addressing several substantive issues in our existing authorities.
    This notice of proposed rulemaking is part of a rulemaking 
identified in the Unified Agenda by the Title ``Medicare and State 
Health Care Programs: Fraud and Abuse; Revisions to the Office of 
Inspector General's Safe Harbors Under the Anti-Kickback Statute, 
Exclusion Authorities, and Civil Monetary Penalty Rules.'' OIG 
contemplates additional rulemaking in the following areas: Exclusion 
authorities (42 CFR parts 1000, 1001, 1002, 1006, 1007); inflation 
adjustment for CMPs (42 CFR part 1003); and safe harbors under the 
anti-kickback statute, a revised definition of remuneration in part 
1003, and a codified gainsharing CMP (42 CFR 1001.952, 42 CFR part 
1003). Each of the proposed rules is a stand-alone, independent rule, 
and the public need not wait for all of the proposed rules to be 
published to submit comments on any one of the proposed rules. Thus, 
one can comment meaningfully on this proposed rule without having seen 
the proposed rules concerning exclusion authorities, inflation 
adjustment for CMPs, or safe harbors under the anti-kickback statute.

A. Overview of OIG Civil Monetary Penalty Authorities

    In 1981, Congress enacted the CMPL, section 1128A of the Act (42 
U.S.C. 1320a-7a), as one of several administrative remedies to combat 
fraud and abuse in Medicare and Medicaid. The CMPL authorized the 
Secretary to impose penalties and assessments on a person, as defined 
in 42 CFR part 1003, who defrauded Medicare or Medicaid or engaged in 
certain other wrongful conduct. The CMPL also authorized the Secretary 
to exclude persons from Medicare and all State health care programs 
(including Medicaid). Congress later expanded the CMPL and the scope of 
exclusion to apply to all Federal health care programs. The Secretary 
delegated the CMPL's authorities to OIG. 53 FR 12,993 (April 20, 1988). 
Since 1981, Congress has created various other CMP authorities covering 
numerous types of fraud and abuse. These new authorities were also 
delegated by the Secretary to OIG and were added to part 1003.

B. The Patient Protection and Affordable Care Act of 2010

    ACA is the most recent expansion of the CMP provisions and OIG's 
ability to protect Federal health care programs from fraud and abuse. 
Sections 6402(d)(2)(A)(iii) and 6408(a) of ACA amended the CMPL by 
adding new conduct that would subject a person to penalties, 
assessments, and/or exclusion from participation in Federal health care 
programs. The new covered conduct includes: (1) Failure to grant OIG 
timely access to records, upon reasonable request; (2) ordering or 
prescribing while excluded when the excluded person knows or should 
know that the item or service may be paid for by a Federal health care 
program; (3) making false statements, omissions, or misrepresentations 
in an enrollment or similar bid or application to participate in a 
Federal health care program; (4) failure to report and return an 
overpayment that is known to the person; and (5) making or using a 
false record or statement that is material to a false or fraudulent 
claim. See Act, section 1128A(a)(8)-(12). We propose to codify these 
new authorities and remedies at 42 CFR 1003.200(b)(6)-(10), 
1003.210(a)(6)-(9), and 1003.210(b)(3).
    Section 6408(b)(2) of ACA amended section 1857(g)(1) of the Act (42 
U.S.C. 1395w-27(g)(1)), which relates to Medicare Advantage and Part D 
contracting organizations. See Act, section 1860D-12(b)(3)(E) (42 
U.S.C. 1395w-112) (incorporating 1857(g) by reference). Through this 
amendment to the Act, ACA made several changes to these authorities. 
First, section 6408(b)(2) of ACA clarifies that penalties, and, where 
applicable, assessments, may be imposed against a Medicare Advantage or 
Part D contracting organization when its employees or agents, or any 
provider or supplier who contracts with it, engages in the conduct 
described in the CMP authorities in section 1857(g) of the Act. This 
statutory change broadens the general liability of principals for the 
actions of their agents under our existing regulations at Sec.  
1003.102(d)(5) (proposed Sec.  1003.120(c)) to include contracting 
providers and suppliers who may not qualify as agents of the 
contracting organization. ACA also provides for penalties and 
assessments against a Medicare Advantage or Part D contracting 
organization that: (1) Enrolls an individual without his or her prior 
consent; (2) transfers an enrollee from one plan to another without his 
or her prior consent; (3) transfers an enrollee solely for the purpose 
of earning a commission; (4) fails to comply with marketing 
restrictions described in sections 1851(h) or (j) of the Act (42 U.S.C. 
1395w-21(h) or (j)) or applicable implementing regulations or guidance; 
or (5) employs or contracts with any person who engages in the conduct 
described in section 1857(g)(1).
    We propose to codify these new authorities in the proposed 
regulations at Sec.  1003.400(c) and their corresponding penalties and 
assessments at Sec.  1003.410. The Centers for Medicare & Medicaid 
Services (CMS) may also impose sanctions under its authorities related 
to Medicare Advantage or Part D contracting organizations. Those 
authorities are at 42 CFR parts 422 and 423.

C. Reorganization of Part 1003

    As Congress created additional CMP authorities, corresponding 
regulations have been added to the existing regulatory structure. Part 
1003 is currently structured with each basis for CMPs and assessments 
listed in Sec.  1003.102, except CMPs pertaining to managed care 
organizations are listed in Sec.  1003.103(f). Separate sections 
discuss the penalty and assessment amounts, exclusion provisions, the 
factors for determining the appropriate penalty and assessment amounts, 
and the factors for determining whether OIG should impose exclusion. 
Over time, this structure has become cumbersome. We propose 
reorganizing part 1003 to make the regulations more accessible to the 
public and to add clarity to the regulatory scheme. Except for general 
and procedural subparts, the reorganized part 1003 groups CMP 
authorities into subparts by subject matter. This revised structure 
also clarifies the differences between the various CMP authorities and 
their respective statutory remedies. For certain CMP authorities, 
penalties, assessments, and exclusion are authorized. For other CMP 
authorities, only penalties, or penalties and assessments, are 
authorized. Each subpart is intended to be self-contained, with all the 
relevant provisions concerning a particular violation included in the 
same subpart.

D. Factors Relevant to Determining Amount of Penalty and Assessment and 
Length of Exclusion

    As part of the reorganization, we propose modifying the provisions 
relating to the factors considered in determining the exclusion period 
and the amount of penalties and assessments for violations. The present 
structure separately lists factors for certain CMP

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violations in Sec.  1003.106(a) and provides additional detail on these 
factors for certain CMP violations in Sec.  1003.106(b) and (d). This 
structure is cumbersome and potentially confusing for the reader.
    To add clarity and improve transparency in OIG's decision-making 
processes, we identified the most common issues among the factors 
listed and created a single, primary list of factors in the proposed 
Sec.  1003.140. The primary factors are: (1) The nature and 
circumstances of the violation, (2) the degree of culpability of the 
person, (3) the history of prior offenses, (4) other wrongful conduct, 
and (5) other matters as justice may require. As the fifth factor 
demonstrates, these are illustrative factors rather than a 
comprehensive list. Unlike factors in the current version of the 
regulation, these factors would apply to all CMP violations, except as 
otherwise provided in the subpart relating to a specific subject 
matter, which may contain additional detail or explanation regarding a 
factor's applicability to a specific violation. For example, the 
aggravating factors currently listed in Sec.  1003.106(b)(1) relate to 
the nature and circumstances of a violation. Because these factors 
relate most directly to billing issues, the proposed regulations 
include them in Sec. Sec.  1003.220, 1003.320, and 1003.420. We are 
proposing updating the claims-mitigating factor by increasing the 
maximum dollar amount considered as mitigation from $1,000 to $5,000. 
We believe this updated amount is an appropriate threshold that is 
consistent with rationale behind the original amount. A dollar 
threshold as a mitigating factor for CMP purposes differentiates 
between conduct that could be considered less serious and more serious. 
Conduct resulting in more than $5,000 in federal health care program 
loss is an indication of more serious conduct. Given the changes in the 
costs of health care since this regulation was last updated in 2002, we 
believed the $1,000 threshold was lower than appropriate. We are also 
proposing to revise the claims-aggravating factor at 
1003.106(b)(1)(iii) by replacing ``substantial'' with ``$15,000 or 
more.'' In assigning a dollar value to the aggravating factor, we 
considered our practices in evaluating conduct for pursuing CMPs and 
believe that a loss greater than $15,000 is an indication of serious 
misconduct. We also believe replacing ``substantial'' with a specific 
dollar threshold increases transparency and provides better guidance to 
the provider community on OIG's evaluation of this factor.
    OIG will, however, continue to review the facts and circumstances 
of a violation on a case-by-case basis. For instance, when considering 
the nature and circumstances of any case, OIG will consider, among 
other things and to the extent they are relevant, the time period over 
which the conduct occurred, whether a pattern of misconduct is 
indicated, the magnitude of the violation, the materiality or 
significance of a false statement or omission, the number of people 
involved, the number of victims, and whether patients were or could 
have been harmed.
    The proposed changes also clarify that these factors apply to both 
exclusion determinations made under part 1003 as well as penalty and 
assessment amount determinations. We are removing Sec.  1003.7(c) in 
light of this reorganization. The current regulations state, at Sec.  
1003.107(c), that the guidelines regarding exclusion determinations are 
not binding. This language was used to emphasize that only the 
reasonableness of a period of exclusion is reviewable on appeal as 
opposed to OIG's decision to impose an exclusion. While OIG's 
discretion to exercise its exclusion authority remains unreviewable, 
the Sec.  1003.107(c) language is no longer necessary under the 
proposed reorganization. The revisions at Sec.  1003.140 more clearly 
state that the general guidelines relate to the length of exclusion as 
opposed to the decision whether to exclude an individual.
    At Sec.  1003.106(b)(2), the current regulations discuss a person's 
degree of culpability and list several aggravating circumstances 
concerning whether a person had knowledge of the violation. We believe 
the current language is out-of-date in light of all the CMP authorities 
that have been added to part 1003 over the years. In addition, we have 
developed significant experience over the past two decades 
investigating CMP cases and, particularly, evaluating the different 
levels of knowledge or intent a person may possess. We propose to 
consider as an aggravating factor a person's having a level of intent 
to commit the violation that is greater than the minimum intent 
required to establish liability. This new aggravating factor would more 
fully reflect our evaluation of a person's intent and more accurately 
reflect the different levels of intent required under different CMP 
authorities.
    Various CMP authorities have different intent or scienter 
requirements. Some authorities have a ``knows or should know'' standard 
consistent with the False Claims Act standard that includes actual 
knowledge, deliberate ignorance, or reckless disregard. Some 
authorities require only negligence and some have no intent 
requirement. Through our extensive enforcement history, we have 
considerable experience in investigating and evaluating scienter 
evidence and determining a person's level of intent in committing the 
violation. In cases when the ``knows or should know'' standard applies, 
actual knowledge is considered more egregious than a lower level of 
intent. When the violation has a strict-liability standard, OIG 
evaluates the evidence to determine whether the violation was the 
result of reckless disregard, actual knowledge, or any other level of 
intent. We intend to continue this practice and intend the general 
``degree of culpability'' factor to encompass this practice.
    We also propose to clarify that possessing a lower level intent to 
commit a violation is not a defense against liability, a mitigating 
factor, or a justification for a less serious remedy. Individuals and 
entities are expected to know the law and Federal health care program 
rules. While the degree of culpability is relevant in our determination 
to impose a monetary or exclusion remedy, other factors, such as the 
nature and circumstances of the violation, may justify a maximum 
monetary remedy or exclusion to protect the Federal health care 
programs and beneficiaries from fraud, waste, and abuse.
    In addition, we propose to add a mitigating circumstance to the 
degree-of-culpability factor for taking ``appropriate and timely 
corrective action in response to the violation.'' The proposed 
regulation requires that a person, to qualify as taking corrective 
action, disclose the violation to OIG through the Self-Disclosure 
Protocol (Protocol) and fully cooperate with OIG's review and 
resolution of the violation. We have long emphasized the importance of 
compliance programs that result in appropriate action when Federal 
health care program compliance issues are identified. We continue to 
believe that appropriate action for potential violations of OIG's CMP 
authorities must include self-disclosure and cooperation in the inquiry 
and resolution of the matter. We do not believe that without self-
disclosure through the Protocol, the person qualifies for mitigation of 
the potential monetary or exclusion remedies.
    The proposed change clarifies that when we are determining the 
appropriate remedy against an entity, aggravating circumstances include 
the prior offenses or other wrongful conduct of: (1) The entity itself; 
(2) any individual who had a direct or indirect ownership or control 
interest (as

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defined in section 1124(a)(3) of the Act (42 U.S.C. 1320a-3)) in the 
sanctioned entity at the time the violation occurred and who knew, or 
should have known, of the violation; or (3) any individual who was an 
officer or a managing employee (as defined in section 1126(b) of the 
Act (42 U.S.C. 1320a-5)) of the entity at the time the violation 
occurred. We also propose to change ``any other public or private 
program for reimbursement for medical services'' to ``in connection 
with the delivery of a health care item or service.'' This change 
broadens the types of prior offenses or conduct that we may consider to 
include private insurance fraud in addition to other offenses that have 
a nexus to the delivery of health care items or services. Also, this 
proposed change would be consistent with the aggravating circumstance 
``other wrongful conduct'' at proposed Sec.  1003.140(a)(4).
    Finally, the proposed rule would clarify when OIG considers the 
financial condition of a person in determining penalty or assessment 
amounts. The current regulations discuss financial condition in various 
sections with varying degrees of specificity: Sec.  1003.106(a)(1)(iv); 
(a)(3)(i)(F); (a)(4)(iv); (b)(5); and (d)(4). We propose a more uniform 
and specific standard to apply after OIG evaluates the facts and 
circumstances of the conduct and weighs the aggravating and mitigating 
factors to determine an appropriate penalty and assessment amount. Once 
OIG proposes this penalty and assessment amount, the person may request 
that OIG consider its ability to pay the proposed amount. To permit OIG 
to evaluate a person's ability to pay, the person must submit 
sufficient documentation that OIG deems necessary to conduct its 
review, including audited financial statements, tax returns, and 
financial disclosure statements. This ability to pay review may also 
consider the ability of the person to reduce expenses or obtain 
financing to pay the proposed penalty and assessment. If a person 
requested a hearing in accordance with 42 CFR 1005.2, the only 
financial documentation subject to review would be that which the 
person submitted to OIG, unless the ALJ finds that extraordinary 
circumstances prevented the person from providing the financial 
documentation to the OIG in the time and manner requested by the OIG 
prior to the hearing request.

E. Technical Changes and Clarifications

    Because we intend each subpart to be self-contained, we propose 
incorporating the exclusion sections, which are currently found at 
Sec. Sec.  1003.105 and 1003.107, into the subparts in which exclusion 
is available: False Claims; Anti-kickback and Physician Self-Referral; 
EMTALA; and Beneficiary Inducement. This proposed revision more clearly 
reflects the statutory scheme, which permits both monetary and 
exclusion remedies for these violations.
    The proposed changes clarify in each subject matter subpart that we 
may impose a penalty for each individual violation of the applicable 
provision. As we explain below, the statutory authorities are clear 
that each act that constitutes a violation is subject to penalties. The 
proposed revisions to the regulatory language better reflect this 
statutory framework.
    Throughout part 1003, we propose replacing references to Medicare 
and State health care programs with ``Federal health care programs'' 
when the provision concerns exclusion to more completely reflect the 
full scope of exclusion. The proposed changes also remove all 
references to the penalties and assessments available before 1997 
because any conduct prior to 1997 falls outside the CMPL's statute of 
limitations.
    The proposed changes clarify that a principal's liability for the 
acts of its agents does not limit liability only to the principal. 
Agents are still liable for their misconduct. In our enforcement 
litigation, we have encountered the argument that agents are not liable 
for their misconduct where the principal is liable for the same 
misconduct. We believe the current law provides that the agent remains 
liable for his or her conduct and may not use the principal as a 
liability shield. The proposed revision clarifies this point. In 
addition, we propose to consolidate the current Sec.  1003.102(d)(1)-
(4), which addresses situations in which multiple parties may have 
liability for separate CMP provisions. This proposed revision clarifies 
that each party may be held liable for any applicable penalties and 
that the parties may be held jointly and severally liable for the 
assessment.

II. Provisions of the Proposed Rule

A. Civil Monetary Penalty Authorities

Subpart A--General Provisions
    Subpart A contains the general provisions that apply to part 1003. 
The proposed changes revise the ``Basis and Purpose'' section to state 
more succinctly part 1003's purpose and to include a complete listing 
of CMPs. We also propose updates to statutory authority citations at 
proposed Sec.  1003.100(a)-(b).
1003.110 Definitions
    The proposed revision includes several changes to the 
``Definitions'' section, proposed Sec.  1003.110 (current Sec.  
1003.101), for clarity and readability. First, we propose to 
redesignate Sec.  1003.101 as Sec.  1003.110. We propose to remove 
terms from this part that duplicate definitions in part 1000 or are no 
longer used in this part. We also propose clarifying the definition of 
``knowingly,'' currently found at Sec.  1003.102(e), to cover acts as 
opposed to information.
Claim
    We propose to revise the definition of ``claim'' by changing the 
word ``to'' in the current definition to ``under.'' This change more 
closely aligns the regulations to the CMPL's definition of ``claim'' to 
avoid any misinterpretation that a claim is limited to an application 
for payment for an item or service made directly to a Federal health 
care program (e.g., a claim also includes applications for payment to 
contractors).
Contracting Organization
    We propose to update the definition of ``contracting organization'' 
to include all entities covered by sections 1857, 1860D-12, 1876(b) (42 
U.S.C. 1395mm(b)), or 1903(m) of the Act.
Item or Service
    We propose revisions to the definition of the term ``item or 
service.'' Section 1128A of the Act provides that the term ``item or 
service'' ``includes'' various items, devices, supplies, and services. 
By using the word ``includes'' in section 1128A, Congress created an 
illustrative statutory definition that is broad enough to capture all 
the uses of the term in section 1128A of the Act. The term is used in 
section 1128A of the Act in two different contexts: One, in reference 
to submitting claims for items and services reimbursed by a Federal 
health care program, and two, in the definition of ``remuneration'' to 
beneficiaries in reference to section 1128A(a)(5) of the Act. We 
propose clarifying the definition to ensure that it reflects the broad 
meaning of ``item or service'' in both contexts.
Knowingly
    We also propose removing the reference to the False Claims Act from 
the definition of ``knowingly'' because it is unnecessary. As used in 
part 1003, the term ``knowingly'' applies only to acts, such as the act 
of presenting a claim. When a person's awareness or knowledge of 
information is at issue, the CMPL and other statutes use either a 
``knows or should know'' or a ``knew or

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should have known'' construction. ``Knowingly'' is defined at section 
1128A(i)(7) of the Act. For example, section 1128A(a)(2) of the Act 
subjects a person to liability when the person knowingly presents, or 
causes to be presented, a claim that the person knew or should have 
known is false or fraudulent. Here, the act is presenting the claim or 
causing the claim to be presented. The information is that the claim 
was false or fraudulent.
Material
    We propose a definition of ``material'' that mirrors the False 
Claims Act definition.
Overpayment
    We propose a definition of ``overpayment'' that is taken from 
section 1128J(d)(4) of the Act (42 U.S.C. 1320a-7k(d)(4)), as amended 
by section 6402(a) of ACA.
Reasonable Request
    We propose a definition of ``reasonable request'' as part of 
implementing the new ACA CMP authority for failure to grant OIG timely 
access to records, as discussed below under Sec.  1003.200, Subpart B.
Responsible Official and Select Agent Program
    We propose definitions of ``Responsible Official'' and ``Select 
Agent Program'' as these terms relate to the select agent and toxin CMP 
authority. We propose to amend the definition of ``select agent and 
toxin'' as the term relates to the select agent and toxin CMP authority 
(42 U.S.C. 262a(i); Act, section 1128A(j)(2)).
Responsible Physician
    We also propose revising the definition of ``responsible 
physician'' to more closely conform to statutory intent, as discussed 
below under Sec.  1003.500, Subpart E.
Separately Billable Item or Service and Non-Separately-Billable Item or 
Service
    We also propose definitions of ``separately billable item or 
service'' and ``non-separately-billable item or service'' to create an 
alternate method for calculating penalties and assessments for 
violations of section 1128A(a)(6) of the Act, as discussed below.
1003.140 Determinations Regarding the Amount of Penalties and 
Assessments and the Period of Exclusion
    As explained above, the proposed regulation would consolidate the 
aggravating and mitigating factors that OIG would consider when 
determining penalty and assessment amounts and periods of exclusion in 
proposed Sec.  1003.140. Proposed Sec.  1003.140(c)-(d) clarifies that 
if any single aggravating circumstance is present: (1) The imposition 
of a penalty and assessment at or close to the maximum amount may be 
justified and (2) if exclusion is available, the person should be 
excluded.
1003.150 Delegation of Authority
    The proposed rule also adds an express delegation of authority from 
the Secretary to OIG to impose penalties, assessments, and exclusions 
against persons that violate any of the provisions of part 1003. 
Currently, several Federal Register notices and delegation letters, 
spanning over 20 years, delegate various authorities to OIG. Some of 
these older notices and letters are no longer easily accessible by the 
public, such as 53 FR 12,993 (April 20, 1998). This provision, at 
proposed Sec.  1003.150, reiterates OIG's existing authority to pursue 
these matters.
1003.160 Waiver of Exclusion
    We also propose changes to part 1003's exclusion-waiver provisions 
to clarify the criteria for a waiver request from a State agency. 
Currently, the regulations state that OIG will consider an exclusion 
waiver request from a State agency for exclusions imposed pursuant to 
42 CFR 1003.102(a), (b)(1), and (b)(4) and 1003.105(a)(1)(ii) under 
certain circumstances. We propose updating the regulations to permit an 
administrator of a Federal health care program to request a waiver, 
similar to the waiver in part 1001. Also, we propose removing the 
limitations concerning when a waiver may be requested by such 
administrator.
Subpart B--CMPs, Assessments, and Exclusions for False or Fraudulent 
Claims and Other Similar Misconduct
    Subpart B contains most of the provisions found in the current 
regulations at Sec.  1003.102(a) and several of the provisions in the 
current Sec.  1003.102(b). The text of the proposed provisions remains 
largely unchanged from the current version, except for a separate 
provision we created to address section 1128A(a)(6) of the Act. Section 
1128A(a)(6) of the Act subjects persons to liability for arranging or 
contracting with (by employment or otherwise) a person that the person 
knows or should know is excluded from participation in a Federal health 
care program for the provision of items or services for which payment 
may be made under that program. This authority is included in the 
current regulations describing false or fraudulent claims at Sec.  
1003.102(a)(2). Because of our desire to improve the clarity of the 
regulations generally and because of the proposed penalty and 
assessment provisions discussed below, the proposed regulation would 
address section 1128A(a)(6) of the Act in a separate subsection at 
Sec.  1003.200(b)(4).
    On the basis of our lengthy experience enforcing section 
1128A(a)(6) of the Act, we are proposing an alternate methodology for 
calculating penalties and assessments. This alternate methodology 
recognizes the variety of ways in which items and services are 
reimbursed by Federal health care programs and the numerous types of 
health care professionals and other individuals and entities that 
contribute to the provision of those items and services.
    Excluded individuals and entities may be involved in providing 
items and services in two ways. First, an excluded person may provide 
items or services that are identifiable on claims submitted by the 
person or another person (i.e., separately billable items or services). 
These include items or services for which the excluded person may 
directly bill under such person's provider number or where the person 
assigned their provider number to another entity, such as an employer. 
In this case, the items or services for which no payment may be made 
are identifiable because the claims should include the identity of the 
person that provided the item or service. For example, the performing 
physician's provider number should be listed on claims for office 
visits. If the performing physician is excluded, then the entire claim 
for the office visit is prohibited.
    An excluded person may also provide, furnish, order, or prescribe 
items or services that are billed by another person, who also is 
involved in providing the item or service. In this situation, the claim 
itself may not identify the excluded person by name or provider number. 
For example, a claim for a prescription drug may not include the 
identity of the prescribing physician or dispensing pharmacist. The 
claim for the prescription drug is a separately billable item because 
it is an item for which an identifiable payment is made. If either the 
prescribing physician or the dispensing pharmacist is excluded, the 
claim for the drug is prohibited. The same would be true for a 
physician who orders a diagnostic test. If the physician who orders the 
diagnostic test is excluded, the claim for the test is prohibited 
regardless of who provides and bills for the test.

[[Page 27085]]

    The second way an excluded individual or entity may be involved in 
providing items and services is through non-separately billable items 
or services. Many health care professionals and other individuals and 
entities are involved in providing items and services that are included 
within the federal health care program's payment for the item or 
service. In the physician office visit example, the nurse employed by 
the physician also contributes to the office visit paid for by the 
programs. The nurse's services are not separately billable, but are 
included as part of the claim made for the office visit and are 
included in the program's reimbursement.
    We interpret ``the provision of items or services'' to include 
furnishing, providing, ordering, or prescribing an item or service. 
Thus, an excluded pharmacist furnishes or provides every prescription 
that he or she fills. Each prescription is separately billable, and 
under the CMPL, OIG may collect the full amount of each prescription 
the pharmacist fills while excluded. This analysis extends to each 
person who is in the supply chain or who has a role in the process that 
leads to an item or a service provided. For example, a manufacturer, a 
wholesaler, and a distributer have all participated in providing an 
item or a service.
    Difficulties exist in determining the appropriate penalty and 
assessment amount for claims that are not separately billable by the 
excluded person. The Federal health care programs' movement to various 
forms of bundled and prospective payment has increased these 
difficulties over time. In light of these changes, the involvement of a 
single excluded person could cause the total bundled claim or 
prospective payment to be prohibited. When the excluded person provides 
items and services that are not separately billable, prohibiting the 
entire payment could lead to disproportionate assessment amounts in 
comparison to the harm to the programs. We believe the proposed 
alternate methodology achieves the purpose of section 1128A(a)(6) of 
the Act while recognizing the programs' various reimbursement methods 
and the different types of individuals and entities that may be 
involved in providing items and services.
    The proposed regulations address how penalties and assessments will 
be imposed for two distinct types of violations: (1) Instances when 
items or services provided by the excluded person may be separately 
billed to the Federal health care programs and (2) instances when the 
items or services provided by the excluded person are not separately 
billable to the Federal health care programs, but are reimbursed by the 
Federal health care program in some manner as part of the item or 
service claimed.
    To achieve this distinction, we propose to define two new terms: 
``separately billable item or service'' and ``non-separately-billable 
item or service.'' A ``separately billable item or service'' is defined 
as ``an item or service for which an identifiable payment may be made 
under a Federal health care program.'' This type of item or service 
exists when a person provides, furnishes, orders, or prescribes an 
identifiable item or service for which a claim for reimbursement may be 
made to a Federal health care program, e.g., a physician office visit, 
by either the person or another person.
    A ``non-separately-billable item or service'' is defined as ``an 
item or service that is a component of, or otherwise contributes to the 
provision of, an item or service, but is not itself a separately 
billable item or service.'' Non-separately-billable items or services 
are reimbursed as part of the claim submitted under the applicable 
payment methodology, e.g., nursing services associated with a physician 
office visit, care covered by the skilled nursing facility per diem 
payment, nursing care covered by a hospital diagnosis-related group 
(DRG) payment, or radiology technician services associated with a 
specific procedure.
    In instances when the item or service provided by the excluded 
person is separately billable, the employing or contracting person 
would continue to be subject to penalties and assessments based on the 
number and value of those separately billable items and services. For 
instances when the item or service provided by the excluded person is 
non-separately-billable, we propose an alternate methodology to 
calculate penalties and assessments. Penalties would be based on the 
number of days the excluded person was employed, was contracted with, 
or otherwise arranged to provide non-separately-billable items or 
services. Assessments would be based on the total costs to the employer 
or contractor of employing or contracting with the excluded person 
during the exclusion, including salary, benefits, and other money or 
items of value.
    We believe the per-day penalty would achieve the purposes of 
section 1128A(a)(6) of the Act by penalizing the act of employing or 
otherwise contracting with the excluded person in proportion to the 
number of days the prohibited relationship with the excluded person 
existed. In the claims-based penalty provisions of section 1128A, the 
number of penalties increases by the number of claims submitted. We 
propose that similarly the number of penalties increase by the number 
of days the prohibited relationship with the excluded person existed.
    We believe the cost-based assessment achieves the purposes of 
section 1128A(a)(6) of the Act by capturing the value of the excluded 
person to the employing or contracting person. The value of an excluded 
person includes, but is not limited to, salary, health insurance, 
disability insurance, and employer taxes paid related to the employment 
of the individual (e.g., employer's share of Federal Insurance 
Contributions Act (FICA) and Medicare taxes). The health care industry 
has been on notice for over a decade that employing or contracting with 
excluded persons who provide items or services paid for by the Federal 
health care programs is prohibited. See Special Advisory Bulletin on 
the Effect of Exclusion From Participation in Federal Health Care 
Programs, 64 FR 52,791 (Sept. 30, 1999). We also recognize, however, 
that billable items or services generally include numerous non-
separately-billable items or services. The involvement of one excluded 
person can cause the entire claim to be prohibited when a number of 
other individuals and entities that were not excluded may have been 
involved in the claim. Through the proposed regulation, we seek to 
avoid this disproportionate result for purposes of calculating the 
assessment. We believe that the total costs paid by the employing or 
contracting person with respect to the excluded person appropriately 
represents the value of non-separately-billable items or services that 
the excluded person provided during his, her, or its period of 
employment or contract.
    As discussed above, ACA added five new violations and corresponding 
penalties to the CMPL. These new violations and the corresponding 
penalties are at proposed Sec. Sec.  1003.200(b)(6)-(10), 
1003.210(a)(6)-(9), and 1003.210(b)(3). The proposed regulatory text 
closely mirrors the statutory text. However, section 6402(d)(2)(A) of 
ACA amends the CMPL by adding a violation for knowingly making or 
causing to be made ``any false statement, omission, or 
misrepresentation of a material fact in any application, bid, or 
contract to participate or enroll as a provider of services or a 
supplier under a Federal health care program.'' (Emphasis added.) ACA 
does not, however, include

[[Page 27086]]

the word ``omission'' in its description of the penalty and assessment 
for this violation. In order to give full effect to the amendment 
adding ``omission'' to the CMPL, OIG believes the word ``omission'' 
must also be included in the penalty and assessment sections.
    Also, we propose clarifying the penalty at section 1128A of the 
Act, as amended by section 6402(d)(2) of ACA, for failure to report and 
return overpayments. Under the amended section 1128J(d) of the Act, 
overpayments must be reported and returned by the later of 60 days 
after the date the overpayment was identified or the date any 
corresponding cost report is due, if applicable. The new CMPL authority 
under section 1128A(a)(10) of the Act does not contain a specific 
penalty amount, but instead uses the default penalty amount in the 
CMPL, which is up to $10,000 for each item or service. In this context, 
we have proposed regulatory text interpreting the CMPL's default 
penalty as up to $10,000 for each day a person fails to report and 
return an overpayment by the deadline in section 1128J(d) of the Act. 
Because the act that creates liability under section 1128A(a)(10), 
failing to report and return overpayments within 60 days of 
identification, is based on the 60-day period passing, we believe that 
the penalty could be interpreted to attach to each following day that 
the overpayment is retained. However, we note that Congress specified a 
per day penalty in sections 1128A(a)(4) and (12) and did not do so for 
section 1128A(a)(10). Thus, we also solicit comments on whether to 
interpret the default penalty of up to $10,000 for each item or service 
as pertaining to each claim for which the provider or supplier 
identified an overpayment.
    Section 6408(a)(2) of ACA amends the CMPL by adding a violation for 
failure to grant timely access, upon reasonable request, to OIG for the 
purpose of audits, investigations, evaluations, or other statutory 
functions. Section 1128(b)(12) of the Act and 42 CFR 1001.1301 
currently authorize exclusion based on similar, but not identical, 
conduct-failure to grant immediate access. We believe Congress expanded 
OIG's authority to exclude, and created an authority to impose a 
penalty, in a broader set of circumstances than covered by section 
1128(b)(12) of the Act by using the phrase ``timely access'' in section 
6408(a)(2) of ACA. Thus, we believe conduct that implicates section 
1128(b)(12) of the Act is a subset of the conduct implicated by the new 
CMPL authority created by section 6408(a)(2) of ACA. In these 
situations, OIG has the discretion to choose whether to pursue 
exclusion under section 1128(b)(12) of the Act or penalties and/or 
exclusion under section 6408(a)(2) of ACA. In drafting regulations 
pursuant to section 6408(a)(2) of ACA, we evaluated the conduct covered 
by section 1128(b)(12) to ensure that this proposed rule is consistent 
with Sec.  1001.1301.
    The proposed definitions of ``failure to grant timely access'' and 
``reasonable request'' give OIG flexibility to determine the time 
period in which a person must respond to a specific request for access 
depending on the circumstances. Given the different purposes for which 
OIG may request access to material, such as audits, evaluations, 
investigations, and enforcement actions, we believe the best approach 
to defining these terms is for OIG to specify the date for production 
or access to the material in the OIG's written request. In making this 
decision, OIG will consider the circumstances of the request, including 
the volume of material, size and capabilities of the party subject to 
the request, and OIG's need for the material in a timely way to fulfill 
its responsibilities. The exception to this approach is a case when OIG 
has reason to believe that the requested material is about to be 
altered or destroyed. Under those circumstances, timely access means 
access at the time the request is made. This exception is the same as 
provided in Sec.  1001.1301.
    Finally, we propose revisions to the current regulation's 
aggravating factors for these violations. The aggravating factors 
listed in proposed Sec.  1003.220 are based on those that apply to the 
violations in the current regulations. We propose moving the 
aggravating factors to one section and consolidating similar factors 
into one factor. For instance, the first aggravating factor, i.e., the 
violations were of several types or occurred over a lengthy period of 
time, is found at current Sec.  1003.106(b)(1)(i). We interpret the 
phrase ``several types'' to include, but not be limited to, billing for 
services that are covered by different billing codes. The final 
aggravating factor relates to the amount or type of financial, 
ownership, or control interest, or the degree of responsibility a 
person has in an entity with respect to actions brought under Sec.  
1003.200(b)(3). While we will consider whether a person is a CEO or a 
manager, job titles alone will not guide our consideration of this 
factor; we will look at the degree of responsibility and influence that 
a person has in an entity.
Subpart C--CMPs, Assessments, and Exclusions for Anti-Kickback and 
Physician Self-Referral Violations
    Subpart C contains the anti-kickback and physician self-referral 
provisions, which are found in the current regulations at Sec.  
1003.102(a)(5), (b)(9), (b)(10), and (b)(11). The proposed changes 
include various technical corrections to improve readability and ensure 
consistency with the statutory language.
    We propose revising the provisions relating to the physician self-
referral law to incorporate statutory terms that are unique to this 
statute (section 1877 of the Act (42 U.S.C. 1395nn)). These revisions 
include using ``designated health service'' instead of ``item or 
service'' and ``furnished'' instead of ``provided.'' In addition, we 
propose revising the authority regarding ``cross-referral 
arrangements'' in the current regulations at Sec.  1003.102(b)(10) to 
more closely reflect the statutory language. Section 1877(g)(4) of the 
Act provides for CMPs and exclusion against any physician or other 
person that enters into any arrangement or scheme (such as a cross-
referral arrangement) that the physician or other person knows, or 
should know, has a principal purpose of ensuring referrals by the 
physician to a particular person that, if the physician directly made 
referrals to such person, would violate the prohibitions of 42 CFR 
411.353. The current regulations, at Sec.  1003.102(b)(10)(i), contain 
an example of a cross-referral arrangement whereby the physician-owners 
of entity ``X'' refer to entity ``Y'' and the physician-owners of 
entity ``Y'' refer to entity ``X'' in violation of 42 CFR 411.353. 
While this is one example of a cross-referral arrangement, cross-
referral arrangements and circumvention schemes can take a variety of 
forms. The proposed changes to the regulatory language more closely 
align the regulations to the statute to avoid any misinterpretation 
that Sec.  1003.102(b)(10)(i) limits the conduct that circumvents the 
prohibitions of the physician self-referral law.
    The proposed changes also include minor technical corrections to 
the anti-kickback statute authorities to improve consistency with the 
statute. First, we added the phrases ``to induce'' and ``in whole and 
in part'' to Sec.  1003.300(d) to better mirror the statutory language. 
The proposed change also clarifies that the anti-kickback CMP statute, 
at sections 1128B(b) and 1128A(a)(7) of the Act, permits imposing a 
penalty for each offer, payment, solicitation, or receipt of 
remuneration and that each action constitutes a separate violation. In

[[Page 27087]]

addition, we include the statutory language stating that the 
calculation of the total remuneration for purposes of an assessment 
does not consider whether any portion of the remuneration had a lawful 
purpose.
Subpart D--CMPs and Assessments for Misconduct by a Managed Care 
Organization
    Subpart D contains the proposed provisions for penalties and 
assessments against managed care organizations. We propose several 
stylistic changes to the regulations currently listed at Sec.  
1003.103(f). We changed the verbs in this subpart from past tense to 
present tense to conform to the statutory authorities and many other 
regulations in this part. The proposed regulation also removes 
superfluous phrases, such as ``in addition to or in lieu of other 
remedies available under law.'' The proposed regulation replaces 
references to ``an individual or entity'' with ``a person'' because 
``person'' is defined in the general section as an individual or 
entity. The proposed regulation also removes the phrase ``for each 
determination by CMS.'' OIG may impose CMPs in addition to or in place 
of sanctions imposed by CMS under its authorities.
    We also added to the regulations OIG's authority to impose CMPs 
against Medicare Advantage contracting organizations pursuant to 
section 1857(g)(1) of the Act and against Part D contracting 
organizations pursuant to section 1860D-12(b)(3) of the Act.
    As discussed above, ACA amended several provisions of the Act that 
apply to misconduct by Medicare Advantage or Part D contracting 
organizations. We have included these provisions in the proposed 
regulations. We added the change in section 6408(b)(2)(C) of ACA 
regarding assessing penalties against a Medicare Advantage or Part D 
contracting organization when its employees or agents, or any provider 
or supplier that contracts with it, violates section 1857. We propose 
to add the five new violations created in ACA, and their corresponding 
penalties, at Sec.  1003.400(c). We also propose to include the new 
assessments, which are available for two of the five new violations, at 
Sec.  1003.410(c). The proposed regulatory text closely mirrors that of 
the statute.
    The violations in this subpart are grouped according to the 
contracting organizations they apply to. For instance, Sec.  
1003.400(a) violations apply to all contracting organizations. Section 
1003.400(b) violations apply to all Medicare contracting organizations, 
i.e., those with contracts under sections 1857, 1860D-12, or 1876. 
Section 1003.400(c) violations apply to Medicare Advantage and Part D 
contracting organizations, i.e., those with contracts under sections 
1857 or 1860D-12 of the Act. Section 1003.400(d) violations apply to 
Medicare Advantage contracting organizations, i.e., those with 
contracts under section 1857 of the Act. Section 1003.400(e) violations 
apply to Medicaid contracting organizations, i.e., those with contracts 
under section 1903(m) of the Act.
    We also propose to remove the definition of ``violation,'' which is 
currently found at Sec.  1003.103(f)(6), because throughout this part, 
violation means each incident or act that violates the applicable CMP 
authority. We also propose including aggravating circumstances to be 
used as guidelines for taking into account the factors listed in 
proposed Sec.  1003.140. These aggravating circumstances are adapted 
from those listed in the current regulations at Sec. Sec.  
1003.106(a)(5) and 1003.106(b)(1) and those published in the Federal 
Register in July 1994. 59 FR 36072 (July 15, 1994).
Subpart E--CMPs and Exclusions for EMTALA Violations
    Subpart E contains the penalty and exclusion provisions for 
violations of EMTALA, section 1867 of the Act (42 U.S.C. 1395dd). 
EMTALA, also known as the patient antidumping statute, was passed in 
1986 as part of the Consolidated Omnibus Budget Reconciliation Act of 
1985 (COBRA), Public Law 99-272. Section 1867 of the Act sets forth the 
obligations of a Medicare-participating hospital to provide medical 
screening examinations to individuals who come to the hospital's 
emergency department and request examination or treatment for a medical 
condition. EMTALA further provides that if the individual has an 
emergency medical condition, the hospital is obligated to stabilize 
that condition or to arrange for an appropriate transfer to another 
medical facility where stabilizing treatment can be provided. EMTALA 
also requires hospitals with specialized capabilities or facilities to 
accept appropriate transfers of individuals from other hospitals. 
Finally, EMTALA creates obligations for physicians responsible for the 
examination, treatment, or transfer of an individual in a participating 
hospital, including a physician on-call for the care of that 
individual. The regulations created pursuant to section 1867 of the Act 
are found at 42 CFR 489.24.
    Under section 1867(d) of the Act, participating hospitals and 
responsible physicians may be liable for CMPs of up to $50,000 ($25,000 
for hospitals with fewer than 100 State-licensed and Medicare-certified 
beds) for each negligent violation of their respective EMTALA 
obligations. Responsible physicians are also subject to exclusion for 
committing a gross and flagrant or repeated violation of their EMTALA 
obligations. OIG's regulations concerning the EMTALA CMPs and exclusion 
are currently at 42 CFR 1003.102(c), 103(e) and 106(a)(4) and (d).
    We propose several clarifications to the EMTALA CMP regulations. 
First, as part of our proposed general reorganization, we have included 
the EMTALA authorities within a separate subpart. Further, the proposed 
revision removes outdated references to the pre-1991 ``knowing'' 
scienter requirement. We also propose minor revisions to clarify that 
the CMP may be assessed for each violation of EMTALA and that all 
participating hospitals subject to EMTALA, including those with 
emergency departments and those with specialized capabilities or 
facilities, are subject to penalties.
    As discussed above, we propose revising the ``responsible 
physician'' definition to clarify that on-call physicians at any 
participating hospital subject to EMTALA, including the hospital the 
individual initially presented to and the hospital with specialized 
capabilities or facilities that has received a request to accept an 
appropriate transfer, face potential CMP and exclusion liability under 
EMTALA.
    Section 1867(d) of the Act provides that any physician who is 
responsible for the examination, treatment, or transfer of an 
individual in a participating hospital, including any physician on-call 
for the care of such an individual, and who negligently violates 
section 1867 may be penalized under section 1867(d)(1)(B). The current 
definition of ``responsible physician'' also provides for on-call 
physician liability. We propose to revise the definition to clarify the 
circumstances when an on-call physician has EMTALA liability. An on-
call physician that fails or refuses to appear within a reasonable time 
after such physician is requested to come to the hospital for 
examination, treatment, or transfer purposes is subject to EMTALA 
liability. This includes on-call physicians at the hospital where the 
individual presents initially and requests medical examination or 
treatment as well as on-call physicians at a hospital with specialized 
capabilities or facilities where the

[[Page 27088]]

individual may need to be transferred. In addition, an on-call 
physician at the hospital with specialized capabilities or facilities 
may violate EMTALA by refusing to accept an appropriate transfer.
    Under a plain reading of section 1867(d)(1)(B), the statute makes 
no distinction between physicians who are on-call at the presenting 
hospital and those who are on-call at a hospital with specialized 
capabilities or facilities. In fact, the statute refers to 
``participating hospitals'' and that term includes both. Thus, we 
propose modifying the definition of ``responsible physician'' to more 
clearly reflect the statutory scheme.
    We also propose revising the factors, currently set forth in 
Sec. Sec.  1003.106(a)(4) and (d), to improve clarity and better 
reflect OIG's enforcement policy. First, we propose clarifying that the 
factors listed in proposed Sec.  1003.520 will be used in making both 
CMP and exclusion determinations. Further, we propose incorporating the 
general factors listed in Sec.  1003.140 and provide additional 
guidance on the EMTALA subpart at proposed Sec.  1003.520. Many of the 
factors in the current Sec.  1003.106(a)(4) and (d) duplicate those 
general factors.
    Finally, we examined the factors currently at Sec.  1003.106(d) in 
light of our lengthy enforcement experience. We concluded that for 
several reasons, the mitigating factors should be removed. Because of 
the overall statutory purpose, the fact-specific nature of EMTALA 
violations, and the CMS certification process, the mitigating factors 
currently found at Sec.  1003.106(d) are not useful in determining an 
appropriate penalty amount. First, Congress enacted EMTALA to ensure 
that individuals with emergency medical conditions are not denied 
essential lifesaving services. 131 Cong. Rec. S13904 (daily ed. Oct. 
23, 1985) (statement of Sen. David Durenberger); H.R. Rep. No 99-241, 
pt. 1, at 27 (1986), reprinted 1986 U.S.C.C.A.N. 579, 605. In light of 
this statutory purpose, the circumstances surrounding the individual's 
presentment to a hospital are important to determinations about whether 
and to what extent a CMP or an exclusion is appropriate. Thus, the 
proposed regulations would revise the factors to clarify that 
aggravating circumstances include: A request for proof of insurance or 
payment prior to screening or treating; patient harm, unnecessary risk 
of patient harm, premature discharge, or a need for additional services 
or subsequent hospital admission that resulted, or could have resulted, 
from the incident; and whether the individual presented with a medical 
condition that was an emergency medical condition. While we removed the 
language at current Sec.  1003.106(a)(4), we consider these 
circumstances to be included in the general factors listed at proposed 
Sec.  1003.140. Thus, while the proposed regulations do not state that 
OIG will consider ``other instances where the respondent failed to 
provide appropriate medical screening examination, stabilization and 
treatment of individuals coming to a hospital's emergency department or 
to effect an appropriate transfer,'' OIG will consider each of these 
failures when determining a penalty because they relate to a 
respondent's prior history.
    EMTALA violations necessarily involve a case-by-case inquiry into 
the circumstances of the incident. Through our enforcement experience, 
we have found that the current regulation's mitigating factors do not 
assist in that inquiry. For example, Sec.  1003.106(d)(5) states that 
it should be considered a mitigating circumstance if an individual 
presented a request for treatment, but subsequently exhibited conduct 
that demonstrated a clear intent to leave the respondent hospital 
voluntarily. In our enforcement activities, however, we have found 
situations when the individual may have demonstrated a clear intent to 
leave because the hospital failed to properly screen the individual 
within a reasonable amount of time. We do not believe that in this 
circumstance, the hospital's penalty should be mitigated. Further, the 
factor at Sec.  1003.106(d)(6)(A) in the current regulation is not 
relevant to mitigation because developing and implementing a corrective 
action plan is a requirement of the CMS certification process following 
an investigation of an EMTALA violation.
    We will continue to evaluate the circumstances of each EMTALA 
referral to determine whether to exercise our discretion to pursue the 
violation and to determine the appropriate remedy.
Subpart F--CMPs for Section 1140 Violations
    Subpart F applies to violations of section 1140 of the Act (42 
U.S.C. 1320b-10). The most significant proposed change to this subpart 
is clarifying the application of section 1140 of the Act to 
telemarketing, Internet, and electronic mail solicitations. Section 
1140 of the Act prohibits the use of words, letters, symbols, or 
emblems of the Department of Health and Human Services (HHS), CMS, 
Medicare, or Medicaid in connection with ``an advertisement, 
solicitation, circular, book, pamphlet, or other communication, or a 
play, motion picture, broadcast, telecast, or other production'' in a 
manner that could reasonably be interpreted as conveying the false 
impression that HHS, CMS, Medicare, or Medicaid has approved, endorsed, 
or authorized such use. (Emphasis added.)
    We previously defined conduct that constituted a violation for (1) 
direct or printed mailing solicitations or advertisements and (2) 
broadcasts or telecasts. The proposed regulations are updated also to 
reflect telephonic and Internet communications. Under a plain reading 
of the Act, telemarketing solicitations, email, and Web sites fall 
within the statutory terms emphasized above. We believe these 
communications are analogous to, and therefore propose imposing 
penalties that would apply in the same manner as, those for direct mail 
and other printed materials. The number of individuals who received 
direct mail and other printed materials can be more easily quantified 
than the number of individuals who saw a television commercial or heard 
a radio commercial. Telemarketing calls, electronic messages, and Web 
page views can be similarly quantified. Thus, we propose subjecting 
telemarketing, email, and Web site violations to the same $5,000 
penalty as printed media. Each separate email address that received the 
email, each telemarketing call, and each Web page view would constitute 
a separate violation. We are also soliciting comments on how to 
interpret section 1140 in the context of social media, such as Facebook 
and Twitter.
Subpart G--Reserved
Subpart H--CMPs for Adverse Action Reporting and Disclosure Violations
    Subpart H covers violations for failing to report payments in 
settlement of a medical malpractice claim in accordance with section 
421 of Public Law 99-660 (42 U.S.C. 11131); failing to report adverse 
actions pursuant to section 221 of Public Law 104-191 as set forth in 
section 1128E of the Act (42 U.S.C. 1320a-7e); or improperly 
disclosing, using, or permitting access to information reported in 
accordance with part B of Title IV of Public Law 99-660 (42 U.S.C. 
11137).
    The language in proposed subpart H remains largely unchanged from 
the current regulations at Sec.  1003.102(b)(5)-(6) and Sec.  
1003.103(c), (g). We propose to remove the reference to the Healthcare 
Integrity and Protection Data Bank (HIPDB) in conformity with section 
6403(a) of ACA, which removed the reference from section 1128E of the 
Act.

[[Page 27089]]

The relevant reporting requirements, violation, and penalties would 
remain unchanged. Under section 1128E of the Act, providers must still 
report the same information. Once the HIPDB is phased out pursuant to 
section 6403(a) of ACA, the information will be collected and stored in 
the National Practitioner Data Bank established pursuant to the Health 
Care Quality Improvement Act of 1986 (42 U.S.C. 11101 et seq.). In the 
penalty section, we propose to clarify that a CMP may be imposed for 
each failure to report required information or adverse action and for 
each improper disclosure, use, or permitting of access to information.
Subpart I--CMPs for Select Agent Program Violations
    Subpart I contains the penalties for violations involving select 
agents, currently found at Sec.  1003.102(b)(16) and Sec.  1003.103(l). 
The Public Health Security and Bioterrorism Preparedness and Response 
Act of 2002 (Bioterrorism Act of 2002), Public 107-188, provides for 
the regulation of certain biological agents and toxins (referred to 
below as ``select agents and toxins'') by HHS. The regulations created 
pursuant to the Bioterrorism Act of 2002 are found at 42 CFR part 73. 
The regulations set forth requirements for the possession and use in 
the United States, receipt from outside the United States, and transfer 
within the United States of the select agents and toxins. For each 
violation of 42 CFR part 73, OIG is authorized to impose CMPs of up to 
of $250,000, in the case of an individual, and $500,000, in the case of 
an entity.
    Proposed subpart I clarifies that the CMP may be assessed for each 
individual violation of 42 CFR Part 73. The Bioterrorism Act of 2002 
states that any person who violates ``any provision'' of the 
regulations is subject to the maximum statutory penalty. The plain 
meaning of ``any provision'' means that any single violation can 
subject a person to the maximum penalty. The provisions of 42 CFR 72.7 
state that the penalties for a violation of part 73 should be 
calculated ``per event,'' also indicating that the maximum penalty may 
be assessed on a per-violation basis. Thus, we propose amending the 
regulation to add ``each individual'' before ``violation'' to clarify 
our longstanding interpretation of this section to mean that each 
violation subjects a person to a CMP up to the maximum amount.
    In addition, proposed subpart I includes several aggravating 
circumstances to guide our penalty determinations. Aggravating factors 
include: (1) The Responsible Official participated in or knew or should 
have known of the violation; (2) the violation was a contributing 
factor, regardless of proportionality, to an unauthorized individual's 
access to or possession of a select agent or toxin, an individual's 
exposure to a select agent or toxin, or the unauthorized removal of a 
select agent or toxin from the person's physical location as identified 
on the person's certificate of registration; and (3) the person 
previously received a statement of deficiency from HHS or the 
Department of Agriculture for the same or substantially similar 
conduct.
Subpart J--CMPs, Assessments, and Exclusions for Beneficiary Inducement 
Violations
    Subpart J covers two statutory provisions concerning beneficiary 
inducement violations. We propose moving the existing regulation, Sec.  
1003.102(b)(13), concerning the beneficiary inducement provision in the 
CMPL (section 1128A(a)(5) of the Act), to this subpart. We also propose 
regulatory language for the authority at section 1862(b)(3)(C) of the 
Act. The statutory authority is self-implementing and does not require 
a regulation. We propose adding the regulatory language at this time in 
light of the general reorganization. Under section 1862(b)(3)(C) of the 
Act, a penalty of up to $5,000 may be imposed against any person who 
offers any financial or other incentive for an individual entitled to 
benefits under Medicare not to enroll, or to terminate enrollment, 
under a group health plan or a large group health plan that would, in 
the case of such enrollment, be a primary plan as defined in section 
1862(b)(2)(A). The proposed regulatory text closely follows the 
language of the statute.
    We propose to incorporate the general factors listed in Sec.  
1003.140 for determining amounts of penalties and assessments for 
violations in this subpart and to clarify that we will consider the 
amount of remuneration, other financial incentives, or other incentive. 
This provision is in the current regulations at Sec.  
1003.106(a)(1)(vii).
Subpart K--CMPs for the Sale of Medicare Supplemental Policies
    Subpart K covers violations relating to the sale of Medicare 
supplemental policies. The statutory authority is self-implementing and 
does not require a regulation. Omnibus Budget Reconciliation Act of 
1990, Public Law 101-508, section 4354(c), 104 Stat. 3327 (1990); 42 
U.S.C. 1395ss(d). However, we propose adding the regulatory language at 
this time in light of the general reorganization.
    OIG may impose a penalty against any person who it determines has 
violated section 1882(d)(1) of the Act (42 U.S.C. 1395ss(d)(1)) by 
knowingly and willfully making or causing to be made or inducing or 
seeking to induce the making of any false statement or representation 
of material fact with respect to the compliance of any policy with 
Medicare supplemental policy standards and requirements or with respect 
to the use of the Secretary's emblem (described at section 1882(a)(1) 
of the Act (42 U.S.C. 1395ss(a)(1)) indicating that a policy has 
received the Secretary's certification. We propose to add this 
violation at Sec.  1003.1100(a).
    OIG may impose a penalty against any person who it determines has 
violated section 1882(d)(2) of the Act (42 U.S.C. 1395ss(d)(2)) by 
falsely assuming or pretending to be acting, or misrepresenting in any 
way that he is acting, under the authority of or in association with, 
Medicare or any Federal agency, for the purpose of selling or 
attempting to sell insurance, or in such pretended character demands or 
obtains money, paper, documents or anything of value. We propose to add 
this violation at Sec.  1003.1100(b).
    OIG may also impose a penalty against any person who it determines 
has violated section 1882(d)(4)(A) of the Act (42 U.S.C. 
1395ss(d)(4)(A)) by mailing or causing to be mailed any matter for 
advertising, soliciting, offering for sale, or the delivery of Medicare 
supplemental insurance policy that has not been approved by the State 
commissioner or superintendent of insurance. We propose to add this 
violation at Sec.  1003.1100(c).
    OIG may impose a penalty against any person who it determines has 
violated section 1882(d)(3)(A)(i) of the Act (42 U.S.C. 
1395ss(d)(3)(A)) by issuing or selling to an individual entitled to 
benefits under Part A or enrolled in Part B (including an individual 
electing a Medicare Part C plan) (1) a health insurance policy with the 
knowledge that the policy duplicates Medicare or Medicaid health 
benefits to which the individual is otherwise entitled; (2) a Medicare 
supplemental policy to an individual who has not elected a Medicare 
Part C plan where the person knows that the individual is entitled to 
benefits under another Medicare supplemental policy; (3) a Medicare 
supplemental policy to an individual who has elected a Medicare Part C 
plan where the person knows that the policy duplicates health benefits 
to which the individual is otherwise entitled under

[[Page 27090]]

the Medicare Part C plan or under another Medicare supplemental policy; 
and (4) a health insurance policy (other than a Medicare supplemental 
policy) with the knowledge that the policy duplicates health benefits 
to which the individual is otherwise entitled, other than benefits to 
which the individual is entitled under a requirement of State or 
Federal law. We proposed to add this violation at Sec.  1003.1100(d).
    OIG may also impose a penalty against any person who violated 
section 1882(d)(3)(A)(vi)(II) of the Act (42 U.S.C. 
1395ss(d)(3)(A)(vi)(II)) by issuing or selling a health insurance 
policy (other than a policy described in section 1882(d)(3)(A)(vi)(III) 
of the Act) to an individual entitled to benefits under Part A or 
enrolled under Part B who is applying for a health insurance policy 
without furnishing a disclosure statement (described at section 
1882(d)(3)(A)(vii) of the Act). We propose to add this violation at 
Sec.  1003.1100(e).
    OIG may also impose a penalty against any person who it determines 
has violated section 1882(d)(3)(B)(iv) of the Act (42 U.S.C. 
1395ss(d)(3)(B)(iv)) by issuing or selling a Medicare supplemental 
policy to any individual eligible for benefits under Part A or enrolled 
under Part B without obtaining the written statement from the 
individual or written acknowledgement from the seller required by 
section 1882(d)(3)(B) of the Act (42 U.S.C. 1395ss(d)(3)(B)). We 
propose to add this violation at Sec.  1003.1100(f).
    For violations of section 1882(d)(1), (d)(2), and (d)(4)(A) of the 
Act, OIG may impose a penalty of not more than $5,000 for each 
violation. We propose to add this penalty at Sec.  1003.1110(a). For 
violations of section 1882(d)(3)(A) and (B) of the Act, OIG may impose 
a penalty of not more than $25,000 for each violation by a seller that 
is also the issuer of the policy and a penalty of not more than $15,000 
for each violation by a seller that is not the issuer of the policy. We 
propose to add these penalties at Sec.  1003.1110(b) and (c). In 
determining the amount of the penalty in accordance with proposed 
subpart K, OIG would consider the factors listed in the proposed Sec.  
1003.140.
Subpart L--CMPs for Drug Price Reporting
    Subpart L contains the CMPs for drug-price reporting found in 
section 1927(b)(3)(B)-(C) of the Act (42 U.S.C. 1396r-8(b)(3)(B)-(C)). 
Although the statutory authority is self-implementing and does not 
require a regulation, we propose adding the regulatory language at this 
time in light of the general reorganization. The proposed regulation 
text closely mirrors the language of the statute.
    Section 1927(a) of the Act and section 340B of the Public Health 
Service Act implement a drug-pricing program in which manufacturers 
that sell covered outpatient drugs to covered entities must agree to 
charge a price that will not exceed an amount determined under a 
statutory formula. Under section 1927(a) of the Act, manufacturers must 
provide certain statutorily mandated discounts to covered entities. 
Section 1927(b)(3)(A) requires manufacturers with Medicaid Drug Rebate 
Agreements to provide specified drug-pricing and product information to 
the Secretary, including, but not limited to, average manufacturer 
price (AMP), average sales price (ASP), wholesale acquisition cost, and 
best price. Labelers are required to certify each product and pricing 
data submission made to CMS.
    The fact that many manufacturers submit late or incomplete product 
and pricing data adversely affects the efficient administration of 
Federal health care programs. See Drug Manufacturers' Noncompliance 
With Average Manufacturer Price Reporting Requirements (OEI-03-09-
00060) (September 2010); Average Sales Prices: Manufacturer Reporting 
and CMS Oversight (OEI-03-08-00480) (February 2010); Deficiencies in 
the Oversight of the 340B Drug Pricing Program (OEI-05-02-00072) 
(October 2005). As described in our Special Advisory Bulletin dated 
September 28, 2010, OIG inspections have established that manufacturers 
continue to provide untimely or incomplete pricing data. The September 
2010 report found that more than three-quarters of manufacturers failed 
to comply with quarterly AMP reporting requirements in at least one 
quarter in calendar year 2008.
    In response to the September 2010 report's findings, CMS stated 
that it would begin referring manufacturers that submit incomplete 
quarterly and monthly data to OIG for CMP consideration. CMS stated 
that it would also refer manufacturers that report late or incomplete 
ASP data. As discussed in two 2010 Federal Register notices CMS 
proposed to establish a process for addressing manufacturers' failure 
to report manufacturer ASP data in a timely fashion, noting that while 
delays in reporting ASP data have been uncommon, they create risks. 75 
FR 40139, 40153 (July 13, 2010); 75 FR 73169, 73462 (November 29, 
2010). CMS further stated that it had recently encountered situations 
when delays in manufacturer ASP reporting could have led to significant 
ASP payment limit fluctuations for highly utilized Health Care Common 
Procedure Coding System codes (HCPCS). 75 FR at 40153; 75 FR at 73462. 
To minimize ASP payment limit fluctuations because of missing data, CMS 
proposed that, in situations when missing ASP data would result in a 10 
percent or greater change in the calculation of the HCPCS payment limit 
for multiple source drugs, CMS would carry over previously reported 
manufacturer ASP data, as subject to certain conditions. CMS noted that 
its carryover proposal should not be interpreted by manufacturers to 
mean that CMS and OIG will refrain from collecting penalties for ASP 
reporting violations. As stated in the CMS proposal, submission of late 
reports and failure to submit reports will not be tolerated.
    As set forth in the Special Advisory Bulletin dated September 28, 
2010, OIG intends to impose CMPs on those manufacturers that submit or 
certify late or incomplete product and pricing information. Under 
section 1927(b)(3)(C) of the Act, OIG may impose a penalty of not more 
than $10,000 per day for each day that a manufacturer with an agreement 
under section 1927 of the Act fails to provide the information required 
by section 1927(b)(3)(A) of the Act.
    Manufacturers submit the product and pricing information required 
by section 1927 using the National Drug Code (NDC) product identifier. 
Manufacturers submit ASP data to CMS at the 11-digit NDC level, 
including the number of units of the 11-digit NDC sold. Manufacturers 
submit AMP data to CMS through the Web-based Drug Data Reporting system 
at the 9-digit NDC level.
    OIG proposes calculating CMPs under section 1927(b)(3)(C) of the 
Act at the 9-digit NDC level for both AMP and ASP data. For example, a 
manufacturer that fails to provide the information required by section 
1927(b)(3)(A) of the Act for five separate 9-digit level NDCs may be 
penalized for each item, in an aggregate amount of not more than 
$50,000 per day for each day that the information is not provided. If, 
after 2 days, the manufacturer in this example submitted information 
for two of the missing drugs, the manufacturer would be subject to an 
aggregate penalty of not more than $30,000 per day for each additional 
day that information was not provided for the remaining three items. 
OIG believes that this interpretation is supported by the statutory 
text, which refers to NDCs, and by the reporting systems employed by 
CMS, under which manufacturers are required to

[[Page 27091]]

report AMP and ASP product and pricing data using NDCs.
    Section 1927(b)(3)(B) provides for verification surveys of AMPs and 
establishes that a penalty of not more than $100,000 may be imposed 
against a wholesaler, direct seller, or manufacturers that directly 
distribute their covered outpatient drugs for refusing a request for 
information by, or for knowingly providing false information to, the 
Secretary about charges or prices in connection with such a survey.
    Pursuant to section 1927(b)(3)(C) of the Act, OIG may impose a 
penalty of not more than $100,000 against any manufacturer with an 
agreement under section 1927 of the Act that knowingly provides false 
information for each item of false information.
    OIG will consider the general factors listed in Sec.  1003.140 when 
determining the amount of the penalties.
Subpart M--CMPs for Notifying a Skilled Nursing Facility, Nursing 
Facility, Home Health Agency, or Community Care Setting of a Survey
    In subpart M, we propose to add regulations providing for CMPs for 
notifying a skilled nursing facility, nursing facility, home health 
agency, or a community care setting of the date or time of a survey. 
The statutory authority for these CMPs is self-implementing and does 
not require a regulation. Act, sections 1819(g)(2)(A), 1919(g)(2)(A), 
1891(c)(1), 1929(i)(3)(A); 42 U.S.C. 1395i-3(g)(2)(A), 1396r(g)(2)(A), 
1395bbb(c)(1), 1396t(i)(3)(A). However, we propose adding the 
regulatory language at this time in light of the general 
reorganization. The proposed regulation text closely mirrors the 
language of the statute.
    Skilled nursing facilities (SNF), nursing facilities (NF), home 
health agencies, and community care settings are subject to State 
compliance surveys without any prior notice. Sections 1819(g)(2)(A), 
1919(g)(2)(A), 1891(c)(1), and 1929(i)(3)(A) of the Act provide for 
imposing a penalty of not more than $2,000 against any individual who 
notifies, or causes to be notified, a SNF, NF, home health agency, or 
community care setting of the time or date on which a survey is 
scheduled to be conducted.
    OIG will consider the general factors listed in Sec.  1003.140 when 
determining the amount of the penalties to be imposed under proposed 
subpart M.
Subpart O--Procedures for the Imposition of CMPs, Assessments, and 
Exclusions
    Subpart O contains the procedural provisions that apply to part 
1003. We propose several clarifying changes to procedures in this 
subpart. We propose amending the methods permitted for service of a 
notice of intent to impose a penalty, assessment, or exclusion under 
part 1003. The current Sec.  1003.109 requires service by certified 
mail, return receipt requested. Section 1128A(c)(1) of the Act, 
however, permits service by any method authorized by Rule 4 of the 
Federal Rules of Civil Procedure (FRCP). This rule has been amended to 
authorize various service methods depending on whether the recipient is 
a domestic or foreign individual or corporation. Therefore, we are 
amending our regulation at Sec.  1003.1500(a) and 1003.1510 to permit 
service under FRCP Rule 4. By referencing the rule, the regulation 
would reflect any future amendments to Rule 4 automatically.
    We also propose technical changes to the judicial review provision 
currently at Sec.  1003.127 and redesignated as Sec.  1003.1540 to 
better conform to the statutory scheme that a person must exhaust his 
or her administrative remedies before filing a claim in Federal court. 
Exhaustion of administrative remedies is a well-settled legal 
principle, particularly concerning section 405(g) of the Act (42 U.S.C. 
205(g)). Consistent with existing law, the proposed regulations clarify 
that a person may not bring a claim in Federal court without first 
raising that claim at every applicable stage within the administrative 
process, including any administrative appeal process. In the context of 
part 1003, that administrative process consists of timely requesting a 
hearing before an Administrative Law Judge (ALJ) pursuant to 42 CFR 
1005.2 and, if the respondent loses at the ALJ level, timely filing an 
appeal of the ALJ decision to the Departmental Appeals Board. Only 
after the Departmental Appeals Board makes a final decision under 42 
CFR 1005.21(j) is the respondent eligible to file an action in Federal 
court.
    We also propose a technical change to the regulatory language to 
clarify the statutory limit on issues eligible for judicial review. 
Section 1128A(e) of the Act provides that ``[n]o objection that has not 
been urged before the Secretary shall be considered by the court, 
unless the failure or neglect to urge such objection shall be excused 
because of extraordinary circumstances.'' We interpret this to mean 
that a person is precluded from making arguments or raising issues in 
Federal court that were not first raised in the administrative process, 
unless the court finds that extraordinary circumstances prevented 
raising those arguments or issues. For example, we interpret 
``extraordinary circumstances'' to mean that those arguments or issues 
were beyond the authority of the administrative process.
Other Changes in Part 1003
    OIG has the authority to impose CMPs against endorsed sponsors 
under the Medicare Prescription Drug Discount Card Program that 
knowingly commit certain violations. The discount card program has been 
defunct since January 1, 2006, when Medicare Part D went into effect. 
We propose to remove this CMP from the regulations as the statute of 
limitations has expired for any conduct that might implicate this CMP.

B. Appeals of Exclusions, Civil Monetary Penalties, and Assessments

    We propose changes to the OIG regulations at 42 CFR part 1005 to 
correct an internal inconsistency in Sec.  1005.4(c). The regulation 
currently states at Sec.  1005.4(c)(5)-(6) that an ALJ is not 
authorized to (1) review the exercise of discretion by OIG to exclude 
an individual or entity under section 1128(b) of the Act, (2) determine 
the scope or effect of the exclusion, or (3) set a period of exclusion 
at zero when the ALJ finds that the individual or entity committed an 
act described in section 1128(b) of the Act. Currently, Sec.  
1005.4(c)(7) states that an ALJ is not authorized to review the 
exercise of discretion by OIG to impose a CMP, an assessment, or an 
exclusion under part 1003. The second and third limits on ALJ authority 
with respect to exclusions under section 1128(b) of the Act should also 
apply to exclusions imposed under part 1003. To correct this 
inconsistency, we propose to clarify that when reviewing exclusions 
imposed pursuant to part 1003, an ALJ is not authorized to (1) review 
OIG's exercise of discretion to exclude an individual or entity, (2) 
determine the scope or effect of the exclusion, or (3) set a period of 
exclusion at zero if the ALJ finds that the individual or entity 
committed an act described in part 1003. We believe that this 
requirement is consistent with congressional intent in enacting the 
statutes providing authority for part 1003 that explicitly provide for 
exclusion as an appropriate remedy for the commission of any of the 
acts specified in those statutes. Thus, in every case when OIG has 
exercised its discretion to impose an exclusion and when the ALJ 
concurs that a violation did occur, exclusion is appropriate.

III. Regulatory Impact Statement

    We have examined the impact of this proposed rule as required by 
Executive Order 12866, Executive Order 13563,

[[Page 27092]]

the Regulatory Flexibility Act (RFA) of 1980, the Unfunded Mandates 
Reform Act of 1995, and Executive Order 13132.

Executive Order Nos. 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulations are necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects; distributive impacts; and equity). 
Executive Order 13563 is supplemental to and reaffirms the principles, 
structures, and definitions governing regulatory review as established 
in Executive Order 12866. A regulatory impact analysis must be prepared 
for major rules with economically significant effects, i.e., $100 
million or more in any given year. This is not a major rule as defined 
at 5 U.S.C. 804(2); it is not economically significant because it does 
not reach that economic threshold.
    This proposed rule is designed to implement new statutory 
provisions, including new CMP authorities. This proposed rule is also 
designed to clarify the intent of existing statutory requirements and 
to reorganize CMP regulation sections for ease of use. The vast 
majority of providers and Federal health care programs would be 
minimally impacted, if at all, by these proposed revisions.
    Accordingly, we believe that the likely aggregate economic effect 
of these regulations would be significantly less than $100 million.

Regulatory Flexibility Act

    The RFA and the Small Business Regulatory Enforcement and Fairness 
Act of 1996, which amended the RFA, require agencies to analyze options 
for regulatory relief of small businesses. For purposes of the RFA, 
small entities include small businesses, nonprofit organizations, and 
government agencies. Most providers are considered small entities by 
having revenues of $5 million to $25 million or less in any one year. 
For purposes of the RFA, most physicians and suppliers are considered 
small entities.
    The aggregate effect of the changes to the CMP provisions would be 
minimal.
    In summary, we have concluded that this proposed rule should not 
have a significant impact on the operations of a substantial number of 
small providers and that a regulatory flexibility analysis is not 
required for this rulemaking.
    In addition, section 1102(b) of the Act (42 U.S.C. 1302) requires 
us to prepare a regulatory impact analysis if a rule under Titles XVIII 
or XIX or section B of Title XI of the Act may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. This analysis must conform to section 604 of the RFA. Only 
one proposed change has been made under the relevant title, the 
amendments to the Medicare Contracting Organization Rule at proposed 
Sec.  1003.400, et seq. This rule applies only to Medicare contracting 
organizations, not to rural hospitals, and would have no effect on 
rural hospitals. Thus, an analysis under section 1102(b) is not 
required for this rulemaking.

Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4, also requires that agencies assess anticipated costs and 
benefits before issuing any rule that may result in expenditures in any 
one year by State, local, or tribal governments, in the aggregate, or 
by the private sector, of $110 million. As indicated above, these 
proposed revisions comport with statutory amendments and clarify 
existing law. We believe that as a result, there would be no 
significant costs associated with these proposed revisions that would 
impose any mandates on State, local, or tribal governments or the 
private sector that would result in an expenditure of $110 million or 
more (adjusted for inflation) in any given year and that a full 
analysis under the Unfunded Mandates Reform Act is not necessary.

Executive Order 13132

    Executive Order 13132, Federalism, establishes certain requirements 
that an agency must meet when it promulgates a rule that imposes 
substantial direct requirements or costs on State and local 
governments, preempts State law, or otherwise has Federalism 
implications. In reviewing this rule under the threshold criteria of 
Executive Order 13132, we have determined that this proposed rule would 
not significantly affect the rights, roles, and responsibilities of 
State or local governments.

IV. Paperwork Reduction Act

    These proposed changes to Parts 1003 and 1005 impose no new 
reporting requirements or collections of information. Therefore, a 
Paperwork Reduction Act review is not required.

List of Subjects

42 CFR Part 1003

    Fraud, Grant programs--health, Health facilities, Health 
professions, Medicaid, Reporting and recordkeeping.

42 CFR Part 1005

    Administrative practice and procedure, Fraud, Investigations, 
Penalties.

    For the reasons set forth in the preamble, the Office of the 
Inspector General, Department of Health and Human Services, proposes to 
amend 42 CFR chapter V, subchapter B as follows:

PART 1003--CIVIL MONEY PENALTIES, ASSESSMENTS AND EXCLUSIONS

0
1. The authority citation for part 1003 continues to read as follows:

    Authority: 42 U.S.C. 262a, 1302, 1320-7, 1320a-7a, 1320b-10, 
1395u(j), 1395u(k), 1395cc(j), 1395w-141(i)(3), 1395dd(d)(1), 
1395mm, 1395nn(g), 1395ss(d), 1396b(m), 11131(c), and 11137(b)(2).

0
2. Designate Sec. Sec.  1003.100 through 1003.135 as Subpart A, and add 
a heading for subpart A to read as follows:

Subpart A--General Provisions

0
3. Revise Sec.  1003.100 to read as follows:


Sec.  1003.100  Basis and purpose.

    (a) Basis. This part implements sections 1128(c), 1128A, 1140, 
1819(b)(3)(B), 1819(g)(2)(A), 1857(g)(2)(A), 1860D-12(b)(3)(E), 1860D-
31(i)(3), 1862(b)(3)(C), 1867(d)(1), 1876(i)(6), 1877(g), 1882(d), 
1891(c)(1); 1903(m)(5), 1919(b)(3)(B), 1919(g)(2)(A), 1927(b)(3)(B), 
1927(b)(3)(C), and 1929(i)(3) of the Social Security Act; sections 
421(c) and 427(b)(2) of Pub. L. 99-660; and section 201(i) of Pub. L. 
107-188 (42 U.S.C. 1320a-7(c), 1320a-7a, 1320b-10, 1395i-3(b)(3)(B), 
1395i-3(g)(2)(A), 1395w-27(g)(2)(A), 1395w-112(b)(3)(E), 1395w-
141(i)(3), 1395y(b)(3)(B), 1395dd(d)(1), 1395mm(i)(6), 1395nn(g), 
1395ss(d), 1395bbb(c)(1), 1396b(m)(5), 1396r(b)(3)(B), 1396r(g)(2)(A), 
1396r-7(b)(3)(B), 1396r-7(b)(3)(C), 1396t(i)(3), 11131(c), 11137(b)(2), 
and 262a(i)).
    (b) Purpose. This part--
    (1) Provides for the imposition of civil money penalties and, as 
applicable, assessments and exclusions against persons who have 
committed an act or omission that violates one or more provisions of 
this part and
    (2) Sets forth the appeal rights of persons subject to a penalty, 
assessment, and exclusion.
0
4. Remove Sec. Sec.  1003.102 through 1003.110, 1003.114, 1003.126 
through 1003.129, and 1003.132 through 1003.135.
0
5. Redesignate Sec.  1003.101 as Sec.  1003.110.
0
6. Amend newly designated Sec.  1003.110 by:

[[Page 27093]]

0
a. Removing the definitions ``Act'', ``Adverse effect'', ``ALJ'', 
``CMS'', ``Department'', ``Exclusion'', ``Inspector General'', ``Item 
or service'', ``Medicaid'', ``Medicare'', ``Secretary'', ``State'', 
``State health care program'', and ``Transitional assistance''.
0
b. Revising the definitions of ``Assessment'', ``Claim'', ``Contracting 
organization'', ``Enrollee'', ``Medical malpractice claim or action'', 
``Participating hospital'', ``Penalty'', ``Physician incentive plan'', 
``Responsible physician'', ``Select agents and toxins'', and ``Should 
know, or should have known'', ``Social Services Block Grant Program'', 
and ``Timely basis''.
0
c. Adding the definitions of ``Items and services or items or 
services'', ``Knowingly'', ``Material'', ``Non-separately-billable item 
or service'', ``Overpayment'', ``Reasonable request'', ``Responsible 
Official'', ``Select Agent Program'', ``Separately billable item or 
service'' in alphabetical order.
0
d. Amending the definition ``Remuneration'' by removing ``as set forth 
in Sec.  1003.102(b)(13) of this part,'' and by adding after 
``Remuneration,'' ``for purposes of Sec.  1003.1000(a) of this part,''.
    The revisions and additions read as follows:


Sec.  1003.110  Definitions.

* * * * *
    Assessment means the amounts described in this part and includes 
the plural of that term.
    Claim means an application for payment for an item or service under 
a Federal health care program.
* * * * *
    Contracting organization means a public or private entity, 
including a health maintenance organization, Medicare Advantage Plan, 
Prescription Drug Plan sponsor, or other organization that has 
contracted with the Department or a State to furnish services to 
Medicare or Medicaid beneficiaries pursuant to sections 1857, 1860D-12, 
1876(b), or 1903(m) of the Act.
    Enrollee means an individual who is eligible for Medicare or 
Medicaid and who enters into an agreement to receive services from a 
contracting organization.
* * * * *
    Items and services or items or services includes without 
limitation, any item, device, drug, biological, supply, or service 
(including management or administrative services), including, but not 
limited to, those that are listed in an itemized claim for program 
payment or a request for payment; for which payment is included in any 
Federal or State health care program reimbursement method, such as a 
prospective payment system or managed care system; or that are, in the 
case of a claim based on costs, required to be entered in a cost 
report, books of account, or other documents supporting the claim 
(whether or not actually entered).
    Knowingly means that a person, with respect to an act, has actual 
knowledge of the act, acts in deliberate ignorance of the act, or acts 
in reckless disregard of the act, and that no proof of specific intent 
to defraud is required.
    Material means having a natural tendency to influence, or be 
capable of influencing, the payment or receipt of money or property.
* * * * *
    Medical malpractice claim or action means a written complaint or 
claim demanding payment based on a physician's, dentist's, or other 
health care practitioner's provision of, or failure to provide, health 
care services and includes the filing of a cause of action based on the 
law of tort brought in any State or Federal court or other adjudicative 
body.
* * * * *
    Non-separately-billable item or service means an item or service 
that is a component of, or otherwise contributes to the provision of, 
an item or a service, but is not itself a separately billable item or 
service.
    Overpayment means any funds that a person receives or retains under 
Title XVIII or XIX to which the person, after applicable 
reconciliation, is not entitled under such title.
    Participating hospital means either a hospital or a critical access 
hospital as defined in section 1861(mm)(1) of the Act that has entered 
into a Medicare provider agreement under section 1866 of the Act.
    Penalty means the amount described in this part and includes the 
plural of that term.
* * * * *
    Physician incentive plan means any compensation arrangement between 
a contracting organization and a physician or physician group that may 
directly or indirectly have the effect of reducing or limiting services 
provided with respect to enrollees in the organization.
* * * * *
    Reasonable request, with respect to Sec.  1003.200(b)(10), means a 
written request, signed by a designated representative of the OIG and 
made by a properly identified agent of the OIG during reasonable 
business hours. The request will include a statement of the authority 
for the request, the person's rights in responding to the request, the 
definition of ``reasonable request'' and ``failure to grant timely 
access'' under part 1003, the deadline by which the OIG requests 
access, and the amount of the civil money penalty or assessment that 
could be imposed and the effective date, length, and scope and effect 
of the exclusion that would be imposed for failure to comply with the 
request, and the earliest date that a request for reinstatement would 
be considered.
* * * * *
    Responsible Official means the individual designated pursuant to 42 
CFR part 73 to serve as the Responsible Official for the person holding 
a certificate of registration to possess, use, or transfer select 
agents or toxins.
    Responsible physician means a physician who is responsible for the 
examination, treatment, or transfer of an individual who comes to a 
participating hospital's emergency department requesting examination or 
treatment, including any physician who is on-call for the care of such 
individual and fails or refuses to appear within a reasonable time at 
such hospital to provide services relating to the examination, 
treatment, or transfer of such individual. Responsible physician also 
includes a physician who is responsible for the examination or 
treatment of individuals at hospitals with specialized capabilities or 
facilities, as provided under section 1867(g) of the Act, including any 
physician who is on-call for the care of such individuals and refuses 
to accept an appropriate transfer or fails or refuses to appear within 
a reasonable time to provide services related to the examination or 
treatment of such individuals.
* * * * *
    Select Agent Program means activities relating to the possession, 
use, and transfer of select agents and toxins as regulated by section 
351A of the Public Health Service Act and 42 CFR part 73.
    Select agents and toxins is defined consistent with the definition 
of ``select agent and/or toxin'' and ``overlap select agent and/or 
toxin'' as set forth in 42 CFR part 73.
    Separately billable item or service means an item or service for 
which an identifiable payment may be made under a Federal health care 
program, e.g., an itemized claim or a payment under a prospective 
payment system or other reimbursement methodology.
    Should know, or should have known, means that a person, with 
respect to information, either acts in deliberate ignorance of the 
truth or falsity of the information or acts in reckless disregard

[[Page 27094]]

of the truth or falsity of the information. For purposes of this 
definition, no proof of specific intent to defraud is required.
    Social Services Block Grant Program means the program authorized 
under Title XX of the Act.
* * * * *
    Timely basis means, in accordance with Sec.  1003.300(a) of this 
part, the 60-day period from the time the prohibited amounts are 
collected by the individual or the entity.
* * * * *
0
7. Add Sec.  1003.120, 1003.130, 1003.140, 1003.150, and 1003.160 to 
subpart A to read as follows:


Sec.  1003.120  Liability for penalties and assessments.

    (a) In any case when it is determined that more than one person was 
responsible for a violation described in this part, each such person 
may be held liable for the penalty prescribed by this part.
    (b) In any case when it is determined that more than one person was 
responsible for a violation described in this part, an assessment may 
be imposed, when authorized, against any one such person or jointly and 
severally against two or more such persons, but the aggregate amount of 
the assessments collected may not exceed the amount that could be 
assessed if only one person was responsible.
    (c) Under this part, a principal is liable for penalties and 
assessments for the actions of his or her agent acting within the scope 
of his or her agency. This provision does not limit the underlying 
liability of the agent.


Sec.  1003.130  Assessments.

    The assessment in this part is in lieu of damages sustained by the 
Department or a State agency because of the violation.


Sec.  1003.140  Determinations regarding the amount of penalties and 
assessments and the period of exclusion.

    (a) Except as otherwise provided in this part, in determining the 
amount of any penalty or assessment or the period of exclusion in 
accordance with this part, the OIG will consider the following 
factors--
    (1) The nature and circumstances of the violation;
    (2) The degree of culpability of the person against whom a civil 
money penalty, assessment, or exclusion is proposed. It should be 
considered an aggravating circumstance if the respondent had a greater 
level of knowledge than the minimum level of knowledge required to 
establish liability (e.g., for a provision that establishes liability 
if the respondent ``knew or should have known'' a claim was false or 
fraudulent, it will be an aggravating circumstance if the respondent 
had actual knowledge the claim was false or fraudulent). It should be a 
mitigating circumstance if the person took appropriate and timely 
corrective action in response to the violation. For purposes of this 
part, corrective action must include disclosing the violation to the 
OIG through the Self-Disclosure Protocol and fully cooperating with the 
OIG's review and resolution of such disclosure;
    (3) The history of prior offenses. Aggravating circumstances 
include, if at any time prior to the violation, the person--or in the 
case of an entity, the entity itself; any individual who had a direct 
or indirect ownership or control interest (as defined in section 
1124(a)(3) of the Act) in a sanctioned entity at the time the violation 
occurred and who knew, or should have known, of the violation; or any 
individual who was an officer or a managing employee (as defined in 
section 1126(b) of the Act) of such an entity at the time the violation 
occurred--was held liable for criminal, civil, or administrative 
sanctions in connection with a program covered by this part or in 
connection with the delivery of a health care item or service;
    (4) Other wrongful conduct. Aggravating circumstances include proof 
that the person--or in the case of an entity, the entity itself; any 
individual who had a direct or indirect ownership or control interest 
(as defined in section 1124(a)(3) of the Act) in a sanctioned entity at 
the time the violation occurred and who knew, or should have known, of 
the violation; or any individual who was an officer or a managing 
employee (as defined in section 1126(b) of the Act) of such an entity 
at the time the violation occurred--engaged in wrongful conduct, other 
than the specific conduct upon which liability is based, relating to a 
government program or in connection with the delivery of a health care 
item or service. The statute of limitations governing civil money 
penalty proceedings will not apply to proof of other wrongful conduct 
as an aggravating circumstance; and
    (5) Such other matters as justice may require. Other circumstances 
of an aggravating or mitigating nature should be considered if, in the 
interests of justice, they require either a reduction or an increase in 
the penalty, assessment, or period of exclusion to achieve the purposes 
of this part.
    (b)(1) After determining the amount of any penalty and assessment 
in accordance with this part, the OIG considers the ability of the 
person to pay the proposed civil money penalty or assessment. The 
person shall provide, in a time and manner requested by the OIG, 
sufficient financial documentation, including audited financial 
statements, tax returns, and financial disclosure statements, deemed 
necessary by the OIG to determine the person's ability to pay.
    (2) If the person requests a hearing in accordance with 42 CFR 
1005.2, the only financial documentation subject to review is that 
which the person provided to the OIG during the administrative process, 
unless the ALJ finds that extraordinary circumstances prevented the 
person from providing the financial documentation to the OIG in the 
time and manner requested by the OIG prior to the hearing request.
    (c) In determining the amount of any penalty and assessment to be 
imposed under this part the following circumstances are also to be 
considered--
    (1) If there are substantial or several mitigating circumstances, 
the aggregate amount of the penalty and assessment should be set at an 
amount sufficiently below the maximum permitted by this part to reflect 
that fact.
    (2) If there are substantial or several aggravating circumstances, 
the aggregate amount of the penalty and assessment should be set at an 
amount sufficiently close to or at the maximum permitted by this part 
to reflect that fact.
    (3) Unless there are extraordinary mitigating circumstances, the 
aggregate amount of the penalty and assessment should not be less than 
double the approximate amount of damages and costs (as defined by 
paragraph (e)(2) of this section) sustained by the United States, or 
any State, as a result of the violation.
    (4) The presence of any single aggravating circumstance may justify 
imposing a penalty and assessment at or close to the maximum even when 
one or more mitigating factors are present.
    (d) In determining whether to exclude a person under this part, 
where there are aggravating circumstances, the person should be 
excluded.
    (e)(1) The standards set forth in this section are binding, except 
to the extent that their application would result in imposition of an 
amount that would exceed limits imposed by the United States 
Constitution.
    (2) The amount imposed will not be less than the approximate amount 
required to fully compensate the United States, or any State, for its 
damages and costs, tangible and intangible, including, but not limited 
to, the costs attributable

[[Page 27095]]

to the investigation, prosecution, and administrative review of the 
case.
    (3) Nothing in this part limits the authority of the Department or 
the OIG to settle any issue or case as provided by Sec.  1003.1530 or 
to compromise any penalty and assessment as provided by Sec.  
1003.1550.
    (4) Penalties, assessments, and exclusions imposed under this part 
are in addition to any other penalties, assessments, or other sanctions 
prescribed by law.


Sec.  1003.150  Delegation of authority.

    The OIG is delegated authority from the Secretary to impose civil 
money penalties and, as applicable, assessments and exclusions against 
any person who has violated one or more provisions of this part. The 
delegation of authority includes all powers to impose civil monetary 
penalties, assessments, and exclusion under section 1128A of the Act.


Sec.  1003.160  Waiver of exclusion.

    (a) The OIG will consider a request from the administrator of a 
Federal health care program for a waiver of an exclusion imposed under 
this part as set forth in paragraph (b) of this section. The request 
must be in writing and from an individual directly responsible for 
administering the Federal health care program.
    (b) If the OIG subsequently obtains information that the basis for 
a waiver no longer exists, the waiver will cease and the person will be 
excluded from the Federal health care programs for the remainder of the 
exclusion period, measured from the time the exclusion would have been 
imposed if the waiver had not been granted.
    (c) The OIG will notify the administrator of the Federal health 
care program whether his or her request for a waiver has been granted 
or denied.
    (d) If a waiver is granted, it applies only to the program(s) for 
which waiver is requested.
    (e) The decision to grant, deny, or rescind a waiver is not subject 
to administrative or judicial review.
0
8. Add subparts B through F to read as follows:
Subpart B--CMPs, Assessments, and Exclusions for False or Fraudulent 
Claims and Other Similar Misconduct
Sec.
1003.200 Basis for civil money penalties, assessments, and 
exclusions.
1003.210 Amount of penalties and assessments.
1003.220 Determinations regarding the amount of penalties and 
assessments and the period of exclusion.
Subpart C--CMPs, Assessments, and Exclusions for Anti-Kickback and 
Physician Self-Referral Violations
1003.300 Basis for civil money penalties, assessments, and 
exclusions.
1003.310 Amount of penalties and assessments.
1003.320 Determinations regarding the amount of penalties and 
assessments and the period of exclusion.
Subpart D--CMPs and Assessments for Contracting Organization Misconduct
1003.400 Basis for civil money penalties and assessments.
1003.410 Amount of penalties and assessments.
1003.420 Determinations regarding the amount of penalties and 
assessments.
Subpart E--CMPs and Exclusions for EMTALA Violations
1003.500 Basis for civil money penalties and exclusions.
1003.510 Amount of penalties.
1003.520 Determinations regarding the amount of penalties and the 
period of exclusion.
Subpart F--CMPs for Section 1140 Violations
1003.600 Basis for civil money penalties.
1003.610 Amount of penalties.
1003.620 Determinations regarding the amount of penalties.

Subpart B--CMPs, Assessments, and Exclusions for False or 
Fraudulent Claims and Other Similar Misconduct


Sec.  1003.200  Basis for civil money penalties, assessments, and 
exclusions.

    (a) The OIG may impose a penalty, assessment, and an exclusion 
against any person who it determines has knowingly presented, or caused 
to be presented, a claim that was for--
    (1) An item or service that the person knew, or should have known, 
was not provided as claimed, including a claim that was part of a 
pattern or practice of claims based on codes that the person knew, or 
should have known, would result in greater payment to the person than 
the code applicable to the item or service actually provided;
    (2) An item or service for which the person knew, or should have 
known, that the claim was false or fraudulent;
    (3) An item or service furnished during a period in which the 
person was excluded from participation in the Federal health care 
program to which the claim was made;
    (4) A physician's services (or an item or service) for which the 
person knew, or should have known, that the individual who furnished 
(or supervised the furnishing of) the service--
    (i) Was not licensed as a physician;
    (ii) Was licensed as a physician, but such license had been 
obtained through a misrepresentation of material fact (including 
cheating on an examination required for licensing); or
    (iii) Represented to the patient at the time the service was 
furnished that the physician was certified in a medical specialty board 
when he or she was not so certified; or
    (5) An item or service that a person knew, or should have known was 
not medically necessary, and which is part of a pattern of such claims.
    (b) The OIG may impose a penalty; an exclusion; and, where 
authorized, an assessment against any person whom it determines--
    (1) Has knowingly presented, or caused to be presented, a request 
for payment in violation of the terms of--
    (i) An agreement to accept payments on the basis of an assignment 
under section 1842(b)(3)(B)(ii) of the Act;
    (ii) An agreement with a State agency or other requirement of a 
State Medicaid plan not to charge a person for an item or service in 
excess of the amount permitted to be charged;
    (iii) An agreement to be a participating physician or supplier 
under section 1842(h)(1) of the Act; or
    (iv) An agreement in accordance with section 1866(a)(1)(G) of the 
Act not to charge any person for inpatient hospital services for which 
payment had been denied or reduced under section 1886(f)(2) of the Act;
    (2) Has knowingly given, or caused to be given, to any person, in 
the case of inpatient hospital services subject to section 1886 of the 
Act, information that he or she knew, or should have known, was false 
or misleading and that could reasonably have been expected to influence 
the decision when to discharge such person or another person from the 
hospital;
    (3) Is an individual and who is excluded from participating in a 
Federal health care program in accordance with sections 1128 or 1128A 
of the Act, and who--
    (i) Knows, or should know, of the action constituting the basis for 
the exclusion and retains a direct or indirect ownership or control 
interest of 5 percent or more in an entity that participates in a 
Federal health care program or
    (ii) Is an officer or a managing employee (as defined in section 
1126(b) of the Act) of such entity;
    (4) Arranges or contracts (by employment or otherwise) with an 
individual or entity that the person knows, or should know, is excluded 
from participation in Federal health care programs for the provision of 
items or services for which payment may be made under such a program;

[[Page 27096]]

    (5) Has knowingly and willfully presented, or caused to be 
presented, a bill or request for payment for items and services 
furnished to a hospital patient for which payment may be made under a 
Federal health care program if that bill or request is inconsistent 
with an arrangement under section 1866(a)(1)(H) of the Act or violates 
the requirements for such an arrangement;
    (6) Orders or prescribes a medical or other item or service during 
a period in which the person was excluded from a Federal health care 
program, in the case when the person knows, or should know, that a 
claim for such medical or other item or service will be made under such 
a program;
    (7) Knowingly makes, or causes to be made, any false statement, 
omission, or misrepresentation of a material fact in any application, 
bid, or contract to participate or enroll as a provider of services or 
a supplier under a Federal health care program, including contracting 
organizations and entities that apply to participate as providers of 
services or suppliers in such contracting organizations;
    (8) Knows of an overpayment and does not report and return the 
overpayment in accordance with section 1128J(d) of the Act;
    (9) Knowingly makes, uses, or causes to be made or used, a false 
record or statement material to a false or fraudulent claim for payment 
for items and services furnished under a Federal health care program; 
or
    (10) Fails to grant timely access to records, documents, and other 
material or data in any medium (including electronically stored 
information and any tangible thing), upon reasonable request, to the 
OIG, for the purpose of audits, investigations, evaluations, or other 
OIG statutory functions. Such failure to grant timely access means:
    (i) Except when the OIG reasonably believes that the requested 
material is about to be altered or destroyed, the failure to produce or 
make available for inspection and copying the requested material upon 
reasonable request or to provide a compelling reason why they cannot be 
produced, by the deadline specified in the OIG's written request, and
    (ii) When the OIG has reason to believe that the requested material 
is about to be altered or destroyed, the failure to provide access to 
the requested material at the time the request is made.
    (c) The OIG may impose a penalty against any person who it 
determines, in accordance with this part, is a physician and who 
executes a document falsely by certifying that a Medicare beneficiary 
requires home health services when the physician knows that the 
beneficiary does not meet the eligibility requirements in sections 
1814(a)(2)(C) or 1835(a)(2)(A) of the Act.
    (d) The OIG may impose a penalty against any person who it 
determines knowingly certifies, or causes another individual to 
certify, a material and false statement in a resident assessment 
pursuant to sections 1819(b)(3)(B) and 1919(b)(3)(B).


Sec.  1003.210  Amount of penalties and assessments.

    (a) Penalties. (1) Except as provided in this section, the OIG may 
impose a penalty of not more than $10,000 for each individual violation 
that is subject to a determination under this subpart.
    (2) The OIG may impose a penalty of not more than $15,000 for each 
person with respect to whom a determination was made that false or 
misleading information was given under Sec.  1003.200(b)(2).
    (3) The OIG may impose a penalty of not more than $10,000 per day 
for each day that the prohibited relationship described in Sec.  
1003.200(b)(3) occurs.
    (4) For each individual violation of Sec.  1003.200(b)(4), the OIG 
may impose a penalty of not more than $10,000--
    (i) For each separately billable item or service provided, 
furnished, ordered, or prescribed by an excluded individual or entity, 
or
    (ii) For each day the person employs, contracts with, or otherwise 
arranges for an excluded individual or entity to provide, furnish, 
order, or prescribe a non-separately-billable item or service.
    (5) The OIG may impose a penalty of not more than $2,000 for each 
bill or request for payment for items and services furnished to a 
hospital patient in violation of Sec.  1003.200(b)(5).
    (6) The OIG may impose a penalty of not more than $50,000 for each 
false statement, omission, or misrepresentation of a material fact in 
violation of Sec.  1003.200(b)(7).
    (7) The OIG may impose a penalty of not more than $50,000 for each 
false record or statement in violation of Sec.  1003.200(b)(9).
    (8) The OIG may impose a penalty of not more than $10,000 per day 
for each overpayment that is not reported and returned in accordance 
with section 1128J(d) of the Act in violation of Sec.  1003.200(b)(8).
    (9) The OIG may impose a penalty of not more than $15,000 for each 
day of failure to grant timely access in violation of Sec.  
1003.200(b)(10).
    (10) For each false certification in violation of Sec.  
1003.200(c), the OIG may impose a penalty of not more than the greater 
of--
    (i) $5,000; or
    (ii) Three times the amount of Medicare payments for home health 
services that are made with regard to the false certification of 
eligibility by a physician, as prohibited by section 1814(a)(2)(C) or 
1835(a)(2)(A) of the Act.
    (11) For each false certification in violation of Sec.  
1003.200(d), the OIG may impose a penalty of not more than--
    (i) $1,000 with respect to an individual who willfully and 
knowingly falsely certifies a material and false statement in a 
resident assessment; and
    (ii) $5,000 with respect to an individual who willfully and 
knowingly causes another individual to falsely certify a material and 
false statement in a resident assessment.
    (b) Assessments. (1) Except for violations of Sec.  1003.200(b)(4), 
(5), and (7), and Sec.  1003.200(c) and (d), the OIG may impose an 
assessment for each individual violation of Sec.  1003.200, of not more 
than 3 times the amount for each item or service wrongfully claimed.
    (2) For violations of Sec.  1003.200(b)(4), the OIG may impose an 
assessment of not more than 3 times--
    (i) The amount claimed for each separately billable item or service 
provided, furnished, ordered, or prescribed by an excluded individual 
or entity or
    (ii) The total costs (including salary, benefits, taxes, and other 
money or items of value) related to the excluded individual or entity 
incurred by the person that employs, contracts with, or otherwise 
arranges for an excluded individual or entity to provide, furnish, 
order, or prescribe a non-separately-billable item or service.
    (3) For violations of Sec.  1003.200(b)(7), the OIG may impose an 
assessment of not more than 3 times the total amount claimed for each 
item or service for which payment was made based upon the application 
containing the false statement, omission, or misrepresentation of 
material fact.


Sec.  1003.220  Determinations regarding the amount of penalties and 
assessments and the period of exclusion.

    In considering the factors listed in Sec.  1003.140--
    (a) It should be considered a mitigating circumstance if all the 
items or services or violations included in the action brought under 
this part were of the same type and occurred within a short period of 
time, there were few such items or services or violations, and the 
total amount claimed or requested for such items or services was less 
than $5,000.
    (b) Aggravating circumstances include--

[[Page 27097]]

    (1) The violations were of several types or occurred over a lengthy 
period of time;
    (2) There were many such items or services or violations (or the 
nature and circumstances indicate a pattern of claims or requests for 
payment for such items or services or a pattern of violations);
    (3) The amount claimed or requested for such items or services, or 
the amount of the overpayment was $15,000 or more;
    (4) The violation resulted, or could have resulted, in patient 
harm, premature discharge, or a need for additional services or 
subsequent hospital admission; or
    (5) The amount or type of financial, ownership, or control interest 
or the degree of responsibility a person has in an entity was 
substantial with respect to an action brought under Sec.  
1003.200(b)(3).

Subpart C--CMPs, Assessments, and Exclusions for Anti-Kickback and 
Physician Self-Referral Violations


Sec.  1003.300  Basis for civil money penalties, assessments, and 
exclusions.

    The OIG may impose a penalty, an assessment, and an exclusion 
against any person who it determines in accordance with this part--
    (a) Has not refunded on a timely basis, as defined in Sec.  
1003.110, amounts collected as a result of billing an individual, third 
party payer, or other entity for a designated health service furnished 
pursuant to a prohibited referral as described in Sec.  411.353 of this 
title.
    (b) Is a physician or other person that enters into any arrangement 
or scheme (such as a cross-referral arrangement) that the physician or 
other person knows, or should know, has a principal purpose of ensuring 
referrals by the physician to a particular person that, if the 
physician directly made referrals to such person, would be in violation 
of the prohibitions of Sec.  411.353 of this title.
    (c) Has knowingly presented, or caused to be presented, a claim 
that is for a payment that such person knows, or should know, may not 
be made under Sec.  411.353 of this title;
    (d) Has violated section 1128B(b) of the Act by unlawfully 
offering, paying, soliciting, or receiving remuneration to induce or in 
return for the referral of business paid for, in whole or in part, by 
Medicare, Medicaid, or other Federal health care programs.


Sec.  1003.310  Amount of penalties and assessments.

    (a) Penalties. The OIG may impose a penalty of not more than--
    (1) $15,000 for each claim or bill for a designated health service, 
as defined in Sec.  411.351 of this title, that is subject to a 
determination under Sec.  1003.300(a) or (c);
    (2) $100,000 for each arrangement or scheme that is subject to a 
determination under Sec.  1003.300(b); and
    (3) $50,000 for each offer, payment, solicitation, or receipt of 
remuneration that is subject to a determination under Sec.  
1003.300(d).
    (b) Assessments. The OIG may impose an assessment of not more than 
3 times--
    (1) The amount claimed for each designated health service that is 
subject to a determination under Sec.  1003.300(a), (b), or (c).
    (2) The total remuneration offered, paid, solicited, or received 
that is subject to a determination under Sec.  1003.300(d). Calculation 
of the total remuneration for purposes of an assessment shall be 
without regard to whether a portion of such remuneration was offered, 
paid, solicited, or received for a lawful purpose.


Sec.  1003.320  Determinations regarding the amount of penalties and 
assessments and the period of exclusion.

    In considering the factors listed in Sec.  1003.140:
    (a) It should be considered a mitigating circumstance if all the 
items, services, or violations included in the action brought under 
this part were of the same type and occurred within a short period of 
time; there were few such items, services, or violations; and the total 
amount claimed or requested for such items or services was less than 
$5,000.
    (b) Aggravating circumstances include--
    (1) The violations were of several types or occurred over a lengthy 
period of time;
    (2) There were many such items, services, or violations (or the 
nature and circumstances indicate a pattern of claims or requests for 
payment for such items or services or a pattern of violations);
    (3) The amount claimed or requested for such items or services or 
the amount of the remuneration was $15,000 or more; or
    (4) The violation resulted, or could have resulted, in harm to the 
patient, a premature discharge, or a need for additional services or 
subsequent hospital admission.

Subpart D--CMPs and Assessments for Contracting Organization 
Misconduct


Sec.  1003.400  Basis for civil money penalties and assessments.

    (a) All contracting organizations. The OIG may impose a penalty 
against any contracting organization that--
    (1) Fails substantially to provide an enrollee with medically 
necessary items and services that are required (under the Act, 
applicable regulations, or contract) to be provided to such enrollee 
and the failure adversely affects (or has the substantial likelihood of 
adversely affecting) the enrollee;
    (2) Imposes a premium on an enrollee in excess of the amounts 
permitted under the Act;
    (3) Engages in any practice that would reasonably be expected to 
have the effect of denying or discouraging enrollment by beneficiaries 
whose medical condition or history indicates a need for substantial 
future medical services, except as permitted by the Act;
    (4) Misrepresents or falsifies information furnished to a person;
    (5) Misrepresents or falsifies information furnished to the 
Secretary or a State, as applicable;
    (6) Fails to comply with the requirements of 42 CFR 417.479(d) 
through (i) for Medicare and 42 CFR 417.479(d) through (g) and (i) for 
Medicaid regarding certain prohibited incentive payments to physicians; 
or
    (7) Fails to comply with applicable requirements of the Act 
regarding prompt payment of claims.
    (b) All Medicare contracting organizations. The OIG may impose a 
penalty against any contracting organization with a contract under 
section 1857, 1860D-12, or 1876 of the Act that--
    (1) Acts to expel or to refuse to reenroll a beneficiary in 
violation of the Act or
    (2) Employs or contracts with a person excluded, under section 1128 
or 1128A of the Act, from participation in Medicare for the provision 
of health care, utilization review, medical social work, or 
administrative services, or employs or contracts with any entity for 
the provision of such services (directly or indirectly) through an 
excluded person.
    (c) Medicare Advantage and Part D contracting organizations. The 
OIG may impose a penalty, and for Sec.  1003.400(c)(4) or (c)(5), an 
assessment, against a contracting organization with a contract under 
section 1857 or 1860D-12 of the Act that:
    (1) Enrolls an individual without the individual's (or his or her 
designee's)

[[Page 27098]]

prior consent, except as provided under subparagraph (C) or (D) of 
section 1860D-1(b)(1) of the Act;
    (2) Transfers an enrollee from one plan to another without the 
individual's (or his or her designee's) prior consent;
    (3) Transfers an enrollee solely for the purpose of earning a 
commission;
    (4) Fails to comply with marketing restrictions described in 
subsection (h) or (j) of section 1851 of the Act or applicable 
implementing regulations or guidance; or
    (5) Employs or contracts with any person who engages in the conduct 
described in paragraphs (a) through (c) of this section.
    (d) Medicare Advantage contracting organizations. The OIG may 
impose a penalty against a contracting organization with a contract 
under section 1857 of the Act that fails to comply with the 
requirements of section 1852(j)(3) or 1852(k)(2)(A)(ii) of the Act.
    (e) Medicaid contracting organizations. The OIG may impose a 
penalty against any contracting organization with a contract under 
section 1903(m) of the Act that acts to discriminate among individuals 
in violation of the Act, including expulsion or refusal to reenroll an 
individual or engaging in any practice that would reasonably be 
expected to have the effect of denying or discouraging enrollment by 
eligible individuals with the contracting organization whose medical 
condition or history indicates a need for substantial future medical 
services.


Sec.  1003.410  Amount of penalties and assessments.

    (a) Penalties. (1) The OIG may impose a penalty of up to $25,000 
for each individual violation under Sec.  1001.400, except as provided 
in this section.
    (2) The OIG may impose a penalty of up to $100,000 for each 
individual violation under Sec.  1003.400(a)(3), (a)(5), or (e).
    (b) Additional penalties. In addition to the penalties described in 
paragraph (a) of this section, the OIG may impose--
    (1) An additional penalty equal to double the amount of excess 
premium charged by the contracting organization for each individual 
violation of Sec.  1003.400(a)(2). The excess premium amount will be 
deducted from the penalty and returned to the enrollee.
    (2) An additional $15,000 penalty for each individual expelled or 
not enrolled in violation of Sec.  1003.400(a)(3) or (e).
    (c) Assessments. The OIG may impose an assessment against a 
contracting organization with a contract under section 1857 or 1860D-12 
of the Act (Medicare Advantage or Part D) of not more than the amount 
claimed in violation of Sec.  1003.400(a)(4) or (a)(5) on the basis of 
the misrepresentation or falsified information involved.
    (d) The OIG may impose a penalty or, when applicable, an 
assessment, against a contracting organization with a contract under 
section 1857 or 1860D-12 of the Act (Medicare Advantage or Part D) if 
any of its employees, agents, or contracting providers or suppliers 
engages in any of the conduct described in Sec.  1003.400(a) through 
(d).


Sec.  1003.420  Determinations regarding the amount of penalties and 
assessments.

    In considering the factors listed in Sec.  1003.140, aggravating 
circumstances include--
    (a) Such violations were of several types or occurred over a 
lengthy period of time;
    (b) There were many such violations (or the nature and 
circumstances indicate a pattern of incidents);
    (c) The amount of money, remuneration, damages, or tainted claims 
involved in the violation was $15,000 or more; or
    (d) Patient harm, premature discharge, or a need for additional 
services or subsequent hospital admission resulted, or could have 
resulted, from the incident; and
    (e) The contracting organization knowingly or routinely engaged in 
any prohibited practice that acted as an inducement to reduce or limit 
medically necessary services provided with respect to a specific 
enrollee in the organization.

Subpart E--CMPs and Exclusions for EMTALA Violations


Sec.  1003.500  Basis for civil money penalties and exclusions.

    (a) The OIG may impose a penalty against any participating hospital 
with an emergency department or specialized capabilities or facilities 
for each negligent violation of section 1867 of the Act or Sec.  489.24 
of this title.
    (b) The OIG may impose a penalty against any responsible physician 
for each--
    (1) Negligent violation of section 1867 of the Act;
    (2) Certification signed under section 1867(c)(l)(A) of the Act if 
the physician knew, or should have known, that the benefits of transfer 
to another facility did not outweigh the risks of such a transfer; or
    (3) Misrepresentation made concerning an individual's condition or 
other information, including a hospital's obligations under section 
1867 of the Act.
    (c) The OIG may, in lieu of or in addition to any penalty available 
under this subpart, exclude any responsible physician that commits a 
gross and flagrant, or repeated, violation of this subpart from 
participation in Federal health care programs.
    (d) For purposes of this subpart, a ``gross and flagrant 
violation'' is a violation that presents an imminent danger to the 
health, safety, or well-being of the individual who seeks examination 
and treatment or places that individual unnecessarily in a high-risk 
situation.


Sec.  1003.510  Amount of penalties.

    The OIG may impose--
    (a) Against each participating hospital, a penalty of not more than 
$50,000 for each individual violation, except that if the participating 
hospital has fewer than 100 State-licensed, Medicare-certified beds on 
the date the penalty is imposed, the penalty will not exceed $25,000 
for each violation, and
    (b) Against each responsible physician, a penalty of not more than 
$50,000 for each individual violation.


Sec.  1003.520  Determinations regarding the amount of penalties and 
the period of exclusion.

    In considering the factors listed in Sec.  1003.140, aggravating 
circumstances include:
    (a) Requesting proof of insurance, prior authorization, or a 
monetary payment prior to appropriately screening or initiating 
stabilizing treatment for an emergency medical condition, or requesting 
a monetary payment prior to stabilizing an emergency medical condition;
    (b) Patient harm or unnecessary risk of patient harm, premature 
discharge, or a need for additional services or subsequent hospital 
admission resulted, or could have resulted, from the incident; or
    (c) The individual presented to the hospital with a request for 
examination or treatment of a medical condition that was an emergency 
medical condition, as defined by Sec.  489.24(b) of this title.

Subpart F--CMPs for Section 1140 Violations


Sec.  1003.600  Basis for civil money penalties.

    (a) The OIG may impose a penalty against any person who it 
determines in accordance with this part has used the words, letters, 
symbols, or emblems as defined in paragraph (b) of this section in such 
a manner that such person knew, or should have known, would convey, or 
in a manner that reasonably could be interpreted or construed as 
conveying, the false impression that an

[[Page 27099]]

advertisement, a solicitation, or other item was authorized, approved, 
or endorsed by the Department or CMS or that such person or 
organization has some connection with or authorization from the 
Department or CMS.
    (b) Civil money penalties may be imposed, regardless of the use of 
a disclaimer of affiliation with the United States Government, the 
Department, or its programs, for misuse of--
    (1) The words ``Department of Health and Human Services,'' ``Health 
and Human Services,'' ``Centers for Medicare & Medicaid Services,'' 
``Medicare,'' or ``Medicaid'' or any other combination or variations of 
such words;
    (2) The letters ``DHHS,'' ``HHS,'' or ``CMS,'' or any other 
combination or variation of such letters; or
    (3) A symbol or an emblem of the Department or CMS (including the 
design of, or a reasonable facsimile of the design of, the Medicare 
card, the check used for payment of benefits under Title II, or 
envelopes or other stationery used by the Department or CMS) or any 
other combination or variation of such symbols or emblems.
    (c) Civil money penalties will not be imposed against any agency or 
instrumentality of a State, or political subdivision of the State, that 
uses any symbol or emblem or any words or letters that specifically 
identify that agency or instrumentality of the State or political 
subdivision.


Sec.  1003.610  Amount of penalties.

    (a) The OIG may impose a penalty of not more than--
    (1) $5,000 for each individual violation resulting from the misuse 
of Departmental, CMS, or Medicare or Medicaid program words, letters, 
symbols, or emblems as described in Sec.  1003.600(a) relating to 
printed media;
    (2) $5,000 for each individual violation in the case of such misuse 
related to an electronic message, Web page, or telemarketing 
solicitation;
    (3) $25,000 for each individual violation in the case of such 
misuse related to a broadcast or telecast.
    (b) For purposes of this paragraph, a violation is defined as--
    (1) In the case of a direct mailing solicitation or an 
advertisement, each separate piece of mail that contains one or more 
words, letters, symbols, or emblems related to a determination under 
Sec.  1003.600(a);
    (2) In the case of a printed solicitation or an advertisement, each 
reproduction, reprinting, or distribution of such item related to a 
determination under Sec.  1003.600(a);
    (3) In the case of a broadcast or telecast, each airing of a single 
commercial or solicitation related to a determination under Sec.  
1003.600(a);
    (4) In the case of electronic mail (email) messages, each separate 
email address that received the email message that contains one or more 
words, letters, symbols, or emblems related to a determination under 
Sec.  1003.600(a);
    (5) In the case of a Web page (such as an Internet site) accessed 
by a computer or other electronic means, each instance in which an 
individual views such Web page that contains one or more words, 
letters, symbols, or emblems related to a determination under Sec.  
1003.600(a); and
    (6) In the case of a telemarketing solicitation, each individual 
unsolicited telephone call regarding the delivery of an item or service 
under Medicare or Medicaid related to a determination under Sec.  
1003.600(a).


Sec.  1003.620  Determinations regarding the amount of penalties.

    (a) In considering the factors listed in Sec.  1003.140, the 
following circumstances are to be considered--
    (1) The nature and objective of the advertisement, solicitation, or 
other communication and the degree to which it had the capacity to 
deceive members of the public;
    (2) The frequency and scope of the violation and whether a specific 
segment of the population was targeted; and
    (3) The prior history of the individual, organization, or entity in 
its willingness or refusal to comply with informal requests to correct 
violations.
    (b) The use of a disclaimer of affiliation with the United States 
Government, the Department, or its programs will not be considered as a 
mitigating factor in determining the amount of penalty in accordance 
with Sec.  1003.600(a).
0
9. Add and reserve subpart G to read as follows:

Subpart G--[Reserved]

0
10. Add subparts H through M to read as follows:
Subpart H--CMPs for Adverse Action Reporting and Disclosure Violations
Sec.
1003.800 Basis for civil money penalties.
1003.810 Amount of penalties.
1003.820 Determinations regarding the amount of penalties.
Subpart I--CMPs for Select Agent Program Violations
1003.900 Basis for civil money penalties.
1003.910 Amount of penalties.
1003.920 Determinations regarding the amount of penalties.
Subpart J--CMPs, Assessments, and Exclusions for Beneficiary Inducement 
Violations
1003.1000 Basis for civil money penalties, assessments, and 
exclusions.
1003.1010 Amount of penalties and assessments.
1003.1020 Determinations regarding the amount of penalties and 
assessments and the period of exclusion.
Subpart K--CMPs for the Sale of Medicare Supplemental Policies.
1003.1100 Basis for civil money penalties.
1003.1110 Amount of penalties.
1003.1120 Determinations regarding the amount of penalties.
Subpart L--CMPs for Drug Price Reporting
1003.1200 Basis for civil money penalties.
1003.1210 Amount of penalties.
1003.1220 Determinations regarding the amount of penalties.
Subpart M--CMPs for Notifying a Skilled Nursing Facility, Nursing 
Facility, Home Health Agency, or Community Care Setting of a Survey
1003.1300 Basis for civil money penalties.
1003.1310 Amount of penalties.
1003.1320 Determinations regarding the amount of penalties.

Subpart H--CMPs for Adverse Action Reporting and Disclosure 
Violations


Sec.  1003.800  Basis for civil money penalties.

    The OIG may impose a penalty against any person (including an 
insurance company) who it determines--
    (a) Fails to report information concerning--
    (1) A payment made under an insurance policy, self-insurance, or 
otherwise for the benefit of a physician, dentist, or other health care 
practitioner in settlement of, or in satisfaction in whole or in part 
of, a medical malpractice claim or action or a judgment against such a 
physician, dentist, or other practitioner in accordance with section 
421 of Public Law 99-660 (42 U.S.C. 11131) and as required by 
regulations at 45 CFR part 60 or
    (2) An adverse action required to be reported under section 1128E, 
as established by section 221 of Public Law 104-191.
    (b) Improperly discloses, uses, or permits access to information 
reported in accordance with part B of Title IV of Public Law 99-660 (42 
U.S.C. 11137) or regulations at 45 CFR part 60. (The disclosure of 
information reported in accordance with part B of Title IV in response 
to a subpoena or a discovery request is considered an improper 
disclosure in violation of section 427 of Public Law 99-660. However, 
disclosure or release by an entity of

[[Page 27100]]

original documents or underlying records from which the reported 
information is obtained or derived is not considered an improper 
disclosure in violation of section 427 of Pub. L. 99-660.)


Sec.  1003.810  Amount of penalties.

    The OIG may impose a penalty of not more than--
    (a) $11,000 for each payment for which there was a failure to 
report required information in accordance with Sec.  1003.800(a)(1) or 
for each improper disclosure, use, or access to information in 
accordance with a determination under Sec.  1003.800(b); and
    (b) $25,000 against a health plan for each failure to report 
information on an adverse action required to be reported in accordance 
with section 1128E of the Act and Sec.  1003.800(a)(2).


Sec.  1003.820  Determinations regarding the amount of penalties.

    In determining the amount of any penalty in accordance with this 
subpart, the OIG will consider the factors listed in Sec.  1003.140.

Subpart I--CMPs for Select Agent Program Violations


Sec.  1003.900  Basis for civil money penalties.

    The OIG may impose a penalty against any person who it determines 
in accordance with this part is involved in the possession or use in 
the United States, receipt from outside the United States or transfer 
within the United States, of select agents and toxins in violation of 
42 CFR part 73 as determined by the HHS Secretary, in accordance with 
sections 351A(b) and (c) of the Public Health Service Act.


Sec.  1003.910  Amount of penalties.

    For each individual violation of section 351A(b) or (c) of the 
Public Health Service Act or 42 CFR part 73, the OIG may impose a 
penalty of not more than $250,000 in the case of an individual, and not 
more than $500,000 in the case of any other person.


Sec.  1003.920  Determinations regarding the amount of penalties.

    In considering the factors listed in Sec.  1003.140, aggravating 
circumstances include:
    (a) The Responsible Official participated in or knew, or should 
have known, of the violation;
    (b) The violation was a contributing factor, regardless of 
proportionality, to an unauthorized individual's access to or 
possession of a select agent or toxin, an individual's exposure to a 
select agent or toxin, or the unauthorized removal of a select agent or 
toxin from the person's physical location as identified on the person's 
certificate of registration; or
    (c) The person previously received a statement of deficiency from 
the Department or the Department of Agriculture for the same or 
substantially similar conduct.

Subpart J--CMPs, Assessments, and Exclusions for Beneficiary 
Inducement Violations


Sec.  1003.1000  Basis for civil money penalties, assessments, and 
exclusions.

    (a) The OIG may impose a penalty, an assessment, and an exclusion 
against any person who it determines offers or transfers remuneration 
(as defined in Sec.  1003.110) to any individual eligible for benefits 
under Medicare or a State health care program that such person knows, 
or should know, is likely to influence such individual to order or to 
receive from a particular provider, practitioner, or supplier, any item 
or service for which payment may be made, in whole or in part, under 
Medicare or a State health care program.
    (b) The OIG may impose a penalty against any person who it 
determines offered any financial or other incentive for an individual 
entitled to benefits under Medicare not to enroll, or to terminate 
enrollment, under a group health plan or a large group health plan that 
would, in the case of such enrollment, be a primary plan as defined in 
section 1862(b)(2)(A) of the Act.


Sec.  1003.1010  Amount of penalties and assessments.

    The OIG may impose a penalty of not more than--
    (a) $10,000 for each individual violation of Sec.  1003.1000(a) and 
an assessment of not more than 3 times the amount for each item or 
service wrongfully claimed; and
    (b) $5,000 for each individual violation of Sec.  1003.1000(b).


Sec.  1003.1020  Determinations regarding the amount of penalties and 
assessments and the period of exclusion.

    In determining the amount of any penalty or assessment or the 
period of exclusion under this subpart, the OIG will consider the 
factors listed in Sec.  1003.140, as well as the amount of remuneration 
or the amount or nature of any other incentive.

Subpart K--CMPs for the Sale of Medicare Supplemental Policies


Sec.  1003.1100  Basis for civil money penalties.

    The OIG may impose a penalty against any person who--
    (a) Knowingly and willfully makes or causes to be made or induces 
or seeks to induce the making of any false statement or representation 
of a material fact with respect to--
    (1) The compliance of any policy with the standards and 
requirements for Medicare supplemental policies set forth in section 
1882(c) of the Act or in promulgating regulations, or
    (2) The use of the emblem designed by the Secretary under section 
1882(a) of the Act for use as an indication that a policy has received 
the Secretary's certification;
    (b) Falsely assumes or pretends to be acting, or misrepresents in 
any way that he or she is acting, under the authority of or in 
association with Medicare or any Federal agency, for the purpose of 
selling or attempting to sell insurance, or in such pretended character 
demands, or obtains money, paper, documents, or anything of value;
    (c) Knowingly, directly, or through his or her agent, mails or 
causes to be mailed any matter for the advertising, solicitation, or 
offer for sale of a Medicare supplemental policy, or the delivery of 
such a policy, in or into any State in which such policy has not been 
approved by the State commissioner or superintendent of insurance;
    (d) Issues or sells to any individual entitled to benefits under 
Part A or enrolled under Part B of title XVIII of the Act--
    (1) A health insurance policy with knowledge that the policy 
duplicates health benefits to which the individual is otherwise 
entitled under title XVIII or title XIX of the Act,
    (2) A health insurance policy (other than a Medicare supplemental 
policy) with knowledge that the policy duplicates health benefits to 
which the individual is otherwise entitled, other than benefits to 
which the individual is entitled under a requirement of State or 
Federal law,
    (3) In the case of an individual not electing a Part C plan, a 
Medicare supplemental policy with knowledge that the individual is 
entitled to benefits under another Medicare supplemental policy, or
    (4) In the case of an individual electing a Part C plan, a Medicare 
supplemental policy with knowledge that the policy duplicates health 
benefits to which the individual is otherwise entitled under the Part C 
plan or under another Medicare supplemental policy;
    (e) Issues or sells a health insurance policy (other than a policy 
described in section 1882(d)(3)(A)(vi)(III)) to any individual entitled 
to benefits under Part A or enrolled under Part B of title

[[Page 27101]]

XVIII of the Act who is applying for a health insurance policy and 
fails to furnish the appropriate disclosure statement described in 
section 1882(d)(3)(A)(vii); or
    (f) Issues or sells a Medicare supplemental policy to any 
individual eligible for benefits under Part A or enrolled under Part B 
of title XVIII of the Act without obtaining the written statement or 
the written acknowledgment described in section 1882(d)(3)(B) of the 
Act.


Sec.  1003.1110  Amount of penalties.

    The OIG may impose a penalty of not more than--
    (a) $5,000 for each individual violation of Sec.  1003.1100(a), 
(b), or (c).
    (b) $25,000 for each individual violation of Sec.  1003.1100(d), 
(e), or (f) by a seller who is also the issuer of the policy; and
    (c) $15,000 for each individual violation of Sec.  1003.1100(d), 
(e), or (f) by a seller who is not the issuer of the policy.


Sec.  1003.1120  Determinations regarding the amount of penalties.

    In determining the amount of the penalty in accordance with this 
subpart, the OIG will consider the factors listed in Sec.  1003.140.

Subpart L--CMPs for Drug Price Reporting


Sec.  1003.1200  Basis for civil money penalties.

    The OIG may impose a penalty against--
    (a) Any wholesaler, manufacturer, or direct seller of a covered 
outpatient drug that--
    (1) Refuses a request for information by, or
    (2) Knowingly provides false information to, the Secretary about 
charges or prices in connection with a survey being conducted pursuant 
to section 1927(b)(3)(B) of the Act; and
    (b) Any manufacturer with an agreement under section 1927 of the 
Act that--
    (1) Fails to provide any information required by section 
1927(b)(3)(A) of the Act by the deadlines specified therein, or
    (2) Knowingly provides any item information required by section 
1927(b)(3)(A) or (B) of the Act that is false.


Sec.  1003.1210  Amount of penalties.

    The OIG may impose a penalty of not more than--
    (a) $100,000 for each individual violation of Sec.  1003.1200(a) or 
Sec.  1003.1200(b)(2); and
    (b) $10,000 for each day that such information has not been 
provided in violation of Sec.  1003.1200(b)(1).


Sec.  1003.1220  Determinations regarding the amount of penalties.

    In determining the amount of the penalty in accordance with this 
subpart, the OIG will consider the factors listed in Sec.  1003.140.

Subpart M--CMPs for Notifying a Skilled Nursing Facility, Nursing 
Facility, Home Health Agency, or Community Care Setting of a Survey


Sec.  1003.1300  Basis for civil money penalties.

    The OIG may impose a penalty against any individual who notifies, 
or causes to be notified, a skilled nursing facility, nursing facility, 
home health agency, a community care setting, of the time or date on 
which a survey pursuant to sections 1819(g)(2)(A), 1919(g)(2)(A), 
1891(c)(1), or 1929(i) of the Act is scheduled to be conducted.


Sec.  1003.1310  Amount of penalties.

    The OIG may impose a penalty of not more than $2,000 for each 
individual violation of Sec.  1003.1300.


Sec.  1003.1320  Determinations regarding the amount of penalties.

    In determining the amount of the penalty in accordance with this 
subpart, the OIG will consider the factors listed in Sec.  1003.140.
0
11. Add and reserve subpart N to read as follows:

Subpart N--[Reserved]

0
12. Add subpart O to read as follows:
Subpart O--Procedures for the Imposition of CMPs, Assessments, and 
Exclusions
Sec.
1003.1500 Notice of proposed determination.
1003.1510 Failure to request a hearing.
1003.1520 Collateral estoppel.
1003.1530 Settlement.
1003.1540 Judicial review.
1003.1550 Collection of penalties and assessments.
1003.1560 Notice to other agencies.
1003.1570 Limitations.
1003.1580 Statistical sampling.
1003.1590 Effect of exclusion.
1003.1600 Reinstatement.

Subpart O--Procedures for the Imposition of CMPs, Assessments, and 
Exclusions


Sec.  1003.1500  Notice of proposed determination.

    (a) If the OIG proposes a penalty and, when applicable, an 
assessment, or proposes to exclude a respondent from participation in 
all Federal health care programs, as applicable, in accordance with 
this part, the OIG must serve on the respondent, in any manner 
authorized by Rule 4 of the Federal Rules of Civil Procedure, written 
notice of the OIG's intent to impose a penalty, an assessment, and an 
exclusion, as applicable. The notice will include--
    (1) Reference to the statutory basis for the penalty, assessment, 
and exclusion;
    (2) A description of the violation for which the penalty, 
assessment, and exclusion are proposed (except in cases when the OIG is 
relying upon statistical sampling in accordance with Sec.  1003.1580, 
in which case the notice shall describe those claims and requests for 
payment constituting the sample upon which the OIG is relying and will 
briefly describe the statistical sampling technique used by the OIG);
    (3) The reason why such violation subjects the respondent to a 
penalty, an assessment, and an exclusion,
    (4) The amount of the proposed penalty and assessment, and the 
length of the period of proposed exclusion (where applicable);
    (5) Any factors and circumstances described in this part that were 
considered when determining the amount of the proposed penalty and 
assessment and the length of the period of exclusion;
    (6) Instructions for responding to the notice, including--
    (i) A specific statement of the respondent's right to a hearing and
    (ii) A statement that failure to request a hearing within 60 days 
permits the imposition of the proposed penalty, assessment, and 
exclusion without right of appeal; and
    (7) In the case of a notice sent to a respondent who has an 
agreement under section 1866 of the Act, the notice also indicates that 
the imposition of an exclusion may result in the termination of the 
respondent's provider agreement in accordance with section 
1866(b)(2)(C) of the Act.
    (b) Any person upon whom the OIG has proposed the imposition of a 
penalty, an assessment, or an exclusion may appeal such proposed 
penalty, assessment, or exclusion to the DAB in accordance with 42 CFR 
1005.2. The provisions of 42 CFR part 1005 govern such appeals.
    (c) If the respondent fails, within the time period permitted, to 
exercise his or her right to a hearing under this section, any 
exclusion, penalty, or assessment becomes final.


Sec.  1003.1510  Failure to request a hearing.

    If the respondent does not request a hearing within 60 days after 
the notice prescribed by Sec.  1003.1500(a) is received,

[[Page 27102]]

as determined by 42 CFR 1005.2(c), by the respondent, the OIG may 
impose the proposed penalty, assessment, and exclusion, or any less 
severe penalty, assessment, or exclusion. The OIG shall notify the 
respondent in any manner authorized by Rule 4 of the Federal Rules of 
Civil Procedure of any penalty, assessment, and exclusion that have 
been imposed and of the means by which the respondent may satisfy the 
judgment. The respondent has no right to appeal a penalty, an 
assessment, or an exclusion with respect to which he or she has not 
requested a hearing.


Sec.  1003.1520  Collateral estoppel.

    (a) Where a final determination pertaining to the respondent's 
liability for acts that violate this part has been rendered in any 
proceeding in which the respondent was a party and had an opportunity 
to be heard, the respondent shall be bound by such determination in any 
proceeding under this part.
    (b) In a proceeding under this part, a person is estopped from 
denying the essential elements of the criminal offense if the 
proceeding--
    (1) Is against a person who has been convicted (whether upon a 
verdict after trial or upon a plea of guilty or nolo contendere) of a 
Federal crime charging fraud or false statements, and
    (2) Involves the same transactions as in the criminal action.


Sec.  1003.1530  Settlement.

    The OIG has exclusive authority to settle any issues or case 
without consent of the ALJ.


Sec.  1003.1540  Judicial review.

    (a) Section 1128A(e) of the Act authorizes judicial review of a 
penalty, an assessment, or an exclusion that has become final. The only 
matters subject to judicial review are those that the respondent raised 
pursuant to 42 CFR 1005.21, unless the court finds that extraordinary 
circumstances existed that prevented the respondent from raising the 
issue in the underlying administrative appeal.
    (b) A respondent must exhaust all administrative appeal procedures 
established by the Secretary or required by law before a respondent may 
bring an action in Federal court, as provided in section 1128A(e) of 
the Act, concerning any penalty, assessment, or exclusion imposed 
pursuant to this part.
    (c) Administrative remedies are exhausted when a decision becomes 
final in accordance with 42 CFR 1005.21(j).


Sec.  1003.1550  Collection of penalties and assessments.

    (a) Once a determination by the Secretary has become final, 
collection of any penalty and assessment will be the responsibility of 
CMS, except in the case of the Maternal and Child Health Services Block 
Grant Program, in which the collection will be the responsibility of 
the Public Health Service (PHS); in the case of the Social Services 
Block Grant program, in which the collection will be the responsibility 
of the Office of Human Development Services; and in the case of 
violations of subpart I, collection will be the responsibility of the 
Program Support Center (PSC).
    (b) A penalty or an assessment imposed under this part may be 
compromised by the OIG and may be recovered in a civil action brought 
in the United States district court for the district where the claim 
was presented or where the respondent resides.
    (c) The amount of penalty or assessment, when finally determined, 
or the amount agreed upon in compromise, may be deducted from any sum 
then or later owing by the United States Government or a State agency 
to the person against whom the penalty or assessment has been assessed.
    (d) Matters that were raised, or that could have been raised, in a 
hearing before an ALJ or in an appeal under section 1128A(e) of the Act 
may not be raised as a defense in a civil action by the United States 
to collect a penalty under this part.


Sec.  1003.1560  Notice to other agencies.

    (a) Whenever a penalty, an assessment, or an exclusion becomes 
final, the following organizations and entities will be notified about 
such action and the reasons for it: The appropriate State or local 
medical or professional association; the appropriate quality 
improvement organization; as appropriate, the State agency that 
administers each State health care program; the appropriate Medicare 
carrier or intermediary; the appropriate State or local licensing 
agency or organization (including the Medicare and Medicaid State 
survey agencies); and the long-term-care ombudsman. In cases involving 
exclusions, notice will also be given to the public of the exclusion 
and its effective date.
    (b) When the OIG proposes to exclude a nursing facility under this 
part, the OIG will, at the same time the facility is notified, notify 
the appropriate State licensing authority, the State Office of Aging, 
the long-term care ombudsman, and the State Medicaid agency of the 
OIG's intention to exclude the facility.


Sec.  1003.1570  Limitations.

    No action under this part will be entertained unless commenced, in 
accordance with Sec.  1003.1500(a), within 6 years from the date on 
which the violation occurred.


Sec.  1003.1580  Statistical sampling.

    (a) In meeting the burden of proof in 42 CFR 1005.15, the OIG may 
introduce the results of a statistical sampling study as evidence of 
the number and amount of claims and/or requests for payment as 
described in this part that were presented, or caused to be presented, 
by the respondent. Such a statistical sampling study, if based upon an 
appropriate sampling and computed by valid statistical methods, shall 
constitute prima facie evidence of the number and amount of claims or 
requests for payment as described in this part.
    (b) Once the OIG has made a prima facie case as described in 
paragraph (a) of this section, the burden of production shall shift to 
the respondent to produce evidence reasonably calculated to rebut the 
findings of the statistical sampling study. The OIG will then be given 
the opportunity to rebut this evidence.


Sec.  1003.1590  Effect of exclusion.

    The effect of an exclusion will be as set forth in 42 CFR 
1001.1901.


Sec.  1003.1600  Reinstatement.

    A person who has been excluded in accordance with this part may 
apply for reinstatement at the end of the period of exclusion. The OIG 
will consider any request for reinstatement in accordance with the 
provisions of 42 CFR 1001.3001 through 1001.3004.

PART 1005 -- [AMENDED]

0
13. The authority citation for Part 1005 continues to read as follows:

    Authority: 42 U.S.C. 405(a), 405(b), 1302, 1320a-7, 1320a-7a and 
1320c-5.

0
14. Section 1005.4 is amended by republishing the introductory text for 
paragraph (c) and revising paragraphs (c)(5) and (c)(6) to read as 
follows:


Sec.  1005.4  Authority of the ALJ.

* * * * *
    (c) The ALJ does not have the authority to--
* * * * *
    (5) Review the exercise of discretion by the OIG to exclude an 
individual or entity under section 1128(b) of the Act or under part 
1003 of this chapter, or determine the scope or effect of the 
exclusion;
    (6) Set a period of exclusion at zero, or reduce a period of 
exclusion to zero,

[[Page 27103]]

in any case where the ALJ finds that an individual or entity committed 
an act described in section 1128(b) of the Act or under part 1003 of 
this chapter; or
* * * * *

    Dated: January 16, 2014.
Daniel R. Levinson,
Inspector General.
    Approved: January 28, 2014.
Kathleen Sebelius,
Secretary.
[FR Doc. 2014-10394 Filed 5-9-14; 8:45 am]
BILLING CODE 4152-01-P