Adjustment of Civil Monetary Penalties for Inflation; Correcting Amendment, 42748-42749 [2017-19311]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 82, Number 175 (Tuesday, September 12, 2017)]
[Rules and Regulations]
[Pages 42748-42749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19311]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 403

[CMS-6076-IFR2]
RIN 0991-AC0


Adjustment of Civil Monetary Penalties for Inflation; Correcting 
Amendment

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Interim final rule; correcting amendment.

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SUMMARY: In the September 6, 2016 Federal Register (81 FR 61538), we 
published an interim final rule (IFR) issuing a new regulation to 
adjust for inflation the maximum civil monetary penalty amounts for the 
various civil monetary penalty authorities for all agencies within HHS. 
This correcting amendment corrects a limited number of technical and 
typographical errors identified in the CMS provisions of the September 
6, 2016 IFR.

DATES: 
    Effective date: This correcting amendment is effective September 
12, 2017.
    Applicability date: The corrections indicated in this correcting 
amendment are applicable beginning September 6, 2016.

FOR FURTHER INFORMATION CONTACT: Ian Mahoney, (410) 786-4247.

SUPPLEMENTARY INFORMATION: 

I. Background

    In the September 6, 2016 (81 FR 61538) Federal Register, in the 
interim final rule (IFR) titled ``Adjustment of Civil Monetary 
Penalties for Inflation,'' there is a technical error identified and 
corrected in this correcting amendment. The provisions of this 
correcting amendment are effective as if they had been included in the 
IFR published on September 6, 2016 and, accordingly, are applicable 
beginning September 6, 2016.
    The Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 (the 2015 Act) (section 701 of the Bipartisan Budget Act of 
2015, Pub. L. 114-74, enacted on November 2, 2015), which amended the 
Federal Civil Penalties Inflation Adjustment Act of 1990 (the Inflation 
Adjustment Act) (Pub. L. 101-410, 104 Stat. 890 (1990) (codified as 
amended at 28 U.S.C. 2461 note 2(a)), is intended to improve the 
effectiveness of civil monetary penalties and to maintain the deterrent 
effect of such penalties by requiring agencies to adjust the civil 
monetary penalties for inflation on an initial basis and annually. The 
U.S. Department of Health and Human Services (HHS) lists the civil 
monetary penalties and the penalty amounts administered by all of its 
agencies in tabular form in 45 CFR 102.3.

II. Summary of Errors

    On page 61561 of the IFR, in the table indicating the changes in 
regulations text for Sec.  403.912(a)(1), we inadvertently made errors 
in the specifying the minimum and maximum civil monetary penalty 
amounts to which the inflation adjustment would be applied (the ``base 
penalty range''). Specifically, we inadvertently changed the base 
penalty range from $1,000 and $10,000 to $10,000 and $100,000, 
respectively. The statutory authority for this civil money penalty is 
section 1128G of the Act (42 U.S.C. 1320a-7h), which requires 
applicable manufacturers to report annually to CMS any payments or 
other transfers of value to covered recipients. In addition, the 
statute requires applicable manufacturers and applicable group 
purchasing organizations to report annually to CMS ownership investment 
interests held by physicians or their family members in such entities. 
Section 1128G(b)(1) of the Act provides that if an applicable 
manufacturer or applicable group purchasing organization fails to 
report the required information in timely manner to CMS, the entity is 
subject to a civil money penalty amount between $1,000 and $10,000 for 
each payment or transfer of value or ownership or investment interest 
not reported, up to an annual maximum of $150,000 per submission by a 
reporting entity. Accordingly, we are revising

[[Page 42749]]

Sec.  403.912(a)(1) to correct the typographical error in the penalty 
ranges originally established in section 1128G of the Act.

III. Waiver of Proposed Rulemaking and Delay in Effective Date

    In accordance with section 553(b) of the Administrative Procedure 
Act (APA) (5 U.S.C. 553(b)), we ordinarily publish a notice of proposed 
rulemaking in the Federal Register to provide for a period of public 
comment before the provisions of a rule take effect. However, we can 
waive this notice and comment procedure if the Secretary finds, for 
good cause, that the notice and comment process is impracticable, 
unnecessary, or contrary to the public interest, and incorporates a 
statement of the finding and the reasons therefore in the notice. 
Section 553(d) of the APA ordinarily requires a 30-day delay in 
effective date of final rules after the date of their publication in 
the Federal Register. This 30-day delay in effective date can be 
waived, however, if an agency finds for good cause that the delay is 
impracticable, unnecessary, or contrary to the public interest, and the 
agency incorporates a statement of the findings and its reasons in the 
rule issued.
    We believe that this document does not constitute a rulemaking that 
would be subject to the requirement for a public comment period. 
Specifically, we find that undertaking further notice and comment 
procedures to correct the IFR in unnecessary and contrary to public 
interest.
    First, we believe it is unnecessary to allow for public comment 
regarding whether to correct a misstated penalty range that is 
inconsistent with, and exponentially higher than, that permitted by the 
authorizing statute. As noted previously, this correcting amendment 
merely corrects a typographical error in the base penalty range to 
which the inflation increase implemented by the IFR would be applied. 
This correction is necessary to ensure that the base penalty range does 
not exceed the range authorized under section 1128G(b)(1)(A) of the 
Act, as adjusted under the Inflation Adjustment Act. Public comment on 
this correction amendment is unnecessary because it could never change 
the statutory penalty range at issue. We note that the IFR never 
indicated that we were increasing the base penalty range identified in 
this or any other civil money penalty authority. In fact, on page 61548 
of the IFR, we indicated that the new inflation adjusted penalty range 
under Sec.  403.912(a) would be from $1,087 to $10,874 per unreported 
arrangement, up to a calendar year cap of $163,117. Furthermore, we 
note that the erroneous base range stated on page 61561 of the IFR 
makes little sense in light of the statutory calendar year cap for this 
penalty. Under the original base penalty range, CMS could impose the 
minimum penalty of $1,000 for up to 150 unreported arrangements. Under 
the erroneous regulations text in the IFR, CMS would be permitted to 
impose the minimum penalty amount of $10,000 for only a maximum of 16 
unreported arrangements. Even if we had the statutory authority to 
increase the base penalty range through rulemaking, the maximum penalty 
amount erroneously stated in the IFR is patently inconsistent with one 
of the stated policies of the IFR--to maintain the deterrent effect of 
civil money penalties. Second, we believe that providing an opportunity 
for public comment on this correcting amendment is contrary to the 
public interest. First, as noted previously, public comment in this 
case could never change the statutory penalty range at issue. We 
believe that it would not be in the public interest to offer a futile 
comment period. Second, the entities subject to civil money penalties 
authorized under section 1128G(b) of the Act should be advised, in a 
timely manner, of the correct amounts for which they could be liable. 
It is in the public interest to ensure that the regulations accurately 
reflect the statutory authority.
    For similar reasons, we are also waiving the 30-day delay in 
effective date for this correcting amendment. First, we believe it is 
unnecessary to delay the effective date of corrections to a 
typographical error in regulation text that was patently inconsistent 
with the relevant statutory authority. Second, we believe that delaying 
the effective date of these corrections would be contrary to the public 
interest because the entities subject to civil money penalties should 
be advised, in a timely manner, of the correct amounts for which they 
could be liable. Therefore, we find good cause to waive the 30-day 
delay in effective date.
    Finally, the corrections indicated in this correcting amendment are 
applicable to civil monetary penalties as if they had been included in 
the IFR. That is, the corrections are applicable to civil money 
penalties imposed under Sec.  403.912(a)(1) beginning September 6, 
2016, the date the IFR became effective. We do not believe this 
correcting amendment constitutes retroactive rulemaking because the 
erroneous base penalty range was never authorized under section 
1128G(b) of the Act. In addition, we have not imposed any penalties 
under Sec.  403.912(a)(1) since the effective date of the IFR.

List of Subjects in 42 CFR Part 403

    Grant programs--health, Health insurance, Hospitals, 
Intergovernmental relations, Medicare, Reporting and recordkeeping 
requirements.

    Accordingly, as noted in section II. of this document, the Centers 
for Medicare & Medicaid Services is making the following correcting 
amendments to 42 CFR part 403:

PART 403--SPECIAL PROGRAMS AND PROJECTS

0
1. The authority citation for part 403 continues to read as follows:

    Authority:  42 U.S.C. 1395b-3 and Secs. 1102 and 1871 of the 
Social Security Act (42 U.S.C. 1302 and 1395hh).


Sec.  403.912   [Amended]

0
2. Section 403.912(a)(1) is amended by removing the phrase ``not less 
than $10,000, but not more than $100,000'' and adding in its place the 
phrase ``not less than $1,000, but not more than $10,000.''

    Dated: August 17, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: September 6, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-19311 Filed 9-11-17; 8:45 am]
 BILLING CODE 4120-01-P