[Federal Register Volume 60, Number 227 (Monday, November 27, 1995)]
[Rules and Regulations]
[Pages 58239-58242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28307]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1003

RIN 0991-AA81


Health Care Programs: Fraud and Abuse; Revisions to the Civil 
Money Penalty Provisions Relating to the Misuse of Certain Names, 
Symbols and Emblems

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In accordance with amendments to section 1140 of the Social 
Security Act, resulting from the Social Security Independence and 
Program Improvements Act of 1994, this final rule makes a number of 
revisions to the civil money penalty authority regulations relating to 
the misuse of certain symbols, emblems and names. Among other 
revisions, this rule eliminates the annual cap on penalties, includes 
the words and letters of the Department and Medicaid under the 
prohibition, and redefines a violation with regard to mailings. In 
addition, this final rule serves to remove references to Social 
Security and the Social Security Administration (SSA) from the HHS/OIG 
penalty regulations. The penalty regulations addressing the misuse of 
certain words, letters, symbols and emblems for SSA and its programs 
are being set forth in a new part of the Code of Federal Regulations 
published elsewhere in this edition of the Federal Register.

EFFECTIVE DATE: These regulations are effective on November 27, 1995.

FOR FURTHER INFORMATION CONTACT: Joel J. Schaer, Office of Management 
and Policy, (202) 619-0089.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 28, 1991, the Department of Health and Human Services' 
(HHS') Office of Inspector General (OIG) published final rulemaking in 
the Federal Register that implemented new section 1140 of the Social 
Security Act (the Act), as established by section 428(a) of Public Law 
100-360 (56 FR 42532). The rulemaking set forth final OIG regulations 
for imposing civil money penalties (CMPs) for the use--in advertising, 
solicitations or other communications--of certain words, letters, 
symbols and emblems associated with the Department's Social Security 
and Medicare programs in a manner that the user knows, or should know, 
would convey a false impression that (1) the communicated item was 
approved, endorsed or authorized by the Department or its programs; or 
(2) the responsible person or organization has some connection with, or 
authorization from, the Department or these programs.
    Specifically, the rulemaking was designed to assist in protecting 
citizens from misrepresentations concerning the services offered and 
the programs administered by the Social Security Administration (SSA) 
and the Health Care Financing Administration (HCFA) by imposing CMPs 
against individuals and entities that make false use of--
     The words ``Social Security,'' ``Social Security 
Account,'' ``Social Security Administration,'' ``Social Security 
System,'' ``Medicare,'' and ``Health Care Financing Administration,'' 
or any combination or variation of such words;
     The letters ``SSA'' or ``HCFA,'' or any combination or 
variation of such letters; or
     Any symbols or emblems of SSA or HCFA, or any combination 
or variation of such symbols or emblems.
    In accordance with section 1140 of the Act, the regulations 
established CMPs of up to $5,000 for each violation of this prohibition 
relating to printed media, and up to $25,000 per violation in the case 
of a misleading broadcast or telecast. In the case of a direct mailing 
solicitation, the regulations stated that each group mailing of an 
identical, non-personalized, generic letter or solicitation sent at the 
same time on the same day would be considered to be a single violation. 
Each unique or personalized letter or solicitation, such as with the 
individual's name and address appearing in the body of the 
advertisement or on the mailing envelope or covering would be treated 
as a separate and single violation. With respect to multiple violations 
consisting of substantially identical communications or productions, 
total penalties could not exceed $100,000 per year.
    The regulations set forth six mitigating or aggravating factors to 
be used in determining the amount of penalty to be imposed with respect 
to a violation, including any efforts by the individual, entity or 
organization to include a clear, prominent and conspicuously-placed 
disclaimer of Government association on the mailing envelope, the first 
page, or in the beginning of the solicitation or offering.

II. Changes Resulting From Public Law 103-296

    The passage and enactment of Public Law 103-296, the Social 
Security Independence and Program Improvements Act (SSIPIA) of 1994, 
has resulted in several refinements to the HHS/OIG penalty regulations 
that should be significant in their impact but present no apparent 
policy discretion in their implementation. However, as discussed below, 
section 312(a) of SSIPIA made one change to the statute regarding the 
reproduction, reprinting or distribution of official forms, 
applications or other publications that may require the exercise of 
policy discretion in its implementation and thus is not addressed in 
this final rule.

Social Security Administration as an Independent Agency

    First and foremost, section 101 of SSIPIA established the Social 
Security Administration as an independent agency in the Executive 
Branch, with the duty to administer the old-age, survivors and 
disability insurance program under title II of the Act and the 
supplemental security income program under title XVI of the Act. In 
creating an independent SSA, Public Law 103-296 also established an 
independent Office of Inspector General within that agency, with 
separate and autonomous authority for levying certain CMPs. As a 
result, a newly-established 20 CFR part 498 has been developed by the 
SSA/OIG, and is being published elsewhere in this issue of the Federal 
Register, setting forth the basis for any new SSA/OIG penalty 
authorities, the mitigating and aggravating factors to be used in 

[[Page 58240]]
assessing penalty amounts, and the due process and hearing and appeals 
mechanism to be utilized in the imposition of those CMP provisions. The 
direct effect of this action is the transfer of all references to CMPs 
for the misuse of the words, letters, symbols and emblems relating to 
SSA and its programs out of 42 CFR part 1003 and into the new 20 CFR 
part 498.

Amendments to Section 1140 of the Social Security Act

    In addition, section 312 of SSIPIA amended section 1140 of the Act 
through several provisions designed to broaden the existing deterrents 
against misleading mailings and advertisements directly involving 
Social Security and the Department's health care programs. Among other 
changes, section 312 of SSIPIA: (1) broadened the list of prohibited 
words, symbols and acronyms subject to a violation; (2) revised the 
standard of knowledge for determining a violation; (3) exempted any 
State agency (or any instrumentality or political subdivision of the 
State) from the prohibited use of these words, letters, symbols or 
emblems where such use serves to identify these entities; (4) 
specifically defined a violation with regard to mailings; (5) 
eliminated the annual penalty cap; and (6) eliminated the use of a 
disclaimer as a factor in determining a violation under this provision. 
As indicated above, these changes and their effect on violations 
specifically involving SSA and its programs are being addressed in new 
and separate rulemaking by the SSA/OIG to be codified in 20 CFR part 
498.
    Section 312 of SSIPIA also amended section 1140 of the Act by 
indicating that no individual, organization or entity may, for a fee, 
reproduce, reprint or distribute any form, application or other 
publication of the Department unless prior authorization and approval 
is obtained for such activity from the Secretary. The prohibition of 
unauthorized reproduction, reprinting or distribution for a fee of 
certain official HHS and program documents goes beyond the scope of 
these regulations. While one option may be the placement of a written 
statement on certain forms, applications or other publications allowing 
for their reproduction, reprinting or distribution, we believe 
formalized policies and procedures addressing this new requirement must 
be developed through separate rulemaking prescribed by the Secretary. 
We will be working with the Department and its programs in the near 
future to develop proposed rulemaking and seek public comment on how 
best to implement this new authority.

III. Revisions to 42 CFR Part 1003

    As a result of Public Law 103-296, we are amending the HHS/OIG 
civil money penalty regulations at 42 CFR part 1003 as follows:
     References to SSA--Current references in 
Secs. 1003.100(b)(1)(v) and 1003.102(b)(7) to the words ``Social 
Security,'' ``Social Security Account,'' ``Social Security 
Administration,'' and ``Social Security System,'' and the letters 
``SSA,'' are being deleted.
     Expanded list of prohibited words and letters--In addition 
to the words ``Health Care Financing Administration'' and ``Medicare,'' 
and the letters ``HCFA,'' we are amending Sec. 1003.102(b)(7) to 
prohibit the misuse of the words ``Department of Health and Human 
Services,'' ``Health and Human Services,'' and ``Medicaid;'' the 
letters ``DHHS'' and ``HHS;'' and the symbols and emblems of the 
Department, including the Medicare card.
     Conduct for determining a violation--The current standard 
for determining a violation under this provision is that the 
individual, entity or organization ``knew, or should have known'' that 
their use of certain words, letters, symbols or emblems would convey 
the false impression that the advertisement or solicitation was 
authorized, approved or endorsed by the Department or HCFA. In 
accordance with the amendments to section 1140 of the Act, 
Sec. 1003.102(b)(7) is being revised to further prohibit the inclusion 
of these designated words, letters, symbols and emblems where they are 
used in a manner that could be ``reasonably interpreted or construed as 
conveying'' a relationship with the Department or HCFA.
     State agency exemptions--We are further amending 
Sec. 1003.102(b)(7) by adding a new paragraph stating that any State 
agency (or instrumentality or political subdivision of the State) will 
be exempt from the prohibited use of these words, letters, symbols and 
emblems if these items are used to identify the State agency, 
instrumentality or subdivision.
     Definition of a mailing violation--The current regulations 
at Sec. 1003.103(d)(2)--that define each group mailing of an identical, 
non-personalized, generic letter or solicitation sent at the same date 
and time as a single violation--are being revised in accordance with 
the statute to indicate that each individual piece of mail or each 
individual solicitation in a mass mailing or distribution will now be 
viewed as an individual and independent violation.
     Removal of annual cap on penalties--Reference to the 
annual penalty cap of $100,000 for violations resulting from this 
provision, currently set forth in Sec. 1003.103(d)(1), is being deleted 
in accordance with the statutory rescission.
     Elimination of use of a disclaimer as a mitigating 
factor--We are revising Sec. 1003.106(a)(3) to indicate that the use of 
disclaimer of affiliation with the Government, the Department or its 
programs will no longer be considered as a mitigating factor in 
determining a violation and the amount of penalty under this provision.
    In addition to these revisions resulting from Public Law 103-296, 
we are further revising Sec. 1003.106(a)(3) to include the financial 
condition and degree of culpability of the individual, organization or 
entity as factors that the OIG will consider in determining the amount 
of any penalty in accordance with this violation. This technical 
revision is consistent with section 1128A(d)(2) of the Act, which was 
incorporated into section 1140, and was inadvertently omitted in the 
original rulemaking.

IV. The Handling of Dual Violations

    The HHS/OIG and the SSA/OIG may make separate and independent 
determinations with regard to violations of section 1140 of the Act--
and levy separate CMPs--against individuals, entities or organizations 
who make prohibited use of words, letters, symbols or emblems of both 
the Department and SSA in the same advertisement or solicitation.

V. Waiver of Proposed Rulemaking

    In developing our regulations, we follow the notice of proposed 
rulemaking and public comment procedures set forth in the 
Administrative Procedure Act (APA) (5 U.S.C. 553). The APA provides an 
exception to the notice and comment procedures when an agency finds 
there is good cause for dispensing with such procedures on the basis 
that they are impracticable, unnecessary or contrary to the public 
interest. We have determined that under 5 U.S.C. 553(b)(3)(B) good 
cause exists for dispensing with the notice of proposed rulemaking and 
public comment procedures in this case. Specifically, this rulemaking 
comports and is consistent with the revised statutory authority set 
forth in section 1140 of the Act, with no issues of policy discretion. 
As a result, we believe that opportunity for prior comment is 
unnecessary and we are issuing these revised regulations as a final 
rule that will apply to all 

[[Page 58241]]
pending and future cases under this authority.

VI. Regulatory Impact Statement

Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed this final 
rule in accordance with the provisions of Executive Order 12866 and 
determined that it does not meet the criteria for a significant 
regulatory action. As indicated above, the provisions contained in this 
final rulemaking set forth the revised authorities for levying CMPs 
against those individuals, entities and organizations that misuse 
specific Departmental and HCFA program words, letters, symbols and 
emblems. These revisions are as a result of statutory changes to 
section 1140 of the Social Security Act, and serve to clarify 
departmental policy with respect to the imposition of CMPs against 
those who violate the statute. We believe that the great majority of 
individuals, organizations and entities do not engage in such 
prohibited activities and practices discussed in these regulations. As 
a result, we believe that the aggregate economic impact of these 
revised regulations will be minimal, affecting only those limited few 
who may engage in prohibited behavior in violation of the statute. As 
such, this final rule should have no direct effect on the economy or on 
Federal or State expenditures.

Regulatory Flexibility Act

    In addition, we generally prepare a regulatory flexibility analysis 
consistent with the Regulatory Flexibility Act (5 U.S.C. 601 through 
612) unless the Secretary certifies that a regulation will not have a 
significant economic impact on a substantial number of small business 
entities. While some sanctions and penalties may have an impact on 
small entities, it is the nature of the violation and not the size of 
the entity that will result in an action by the OIG. In either case, we 
do not anticipate that a substantial number of small entities will be 
significantly affected by this revised rulemaking. Therefore, we have 
concluded, and the Secretary certifies, that a regulatory flexibility 
analysis is not required for this final rule.

Paperwork Reduction Act

    This final rule imposes no new reporting or recordkeeping 
requirements necessitating clearance by OMB.

List of Subjects in 42 CFR Part 1003

    Administrative practice and procedure, Fraud, Grant programs--
health, Health facilities, Health professions, Maternal and child 
health, Medicaid, Medicare, Penalties.
    Accordingly, 42 CFR part 1003 is amended as set forth below:

PART 1003--CIVIL MONEY PENALTIES, ASSESSMENTS AND EXCLUSIONS

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

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

    2. Section 1003.100 is amended by republishing paragraph (b)(1) 
introductory text, and by revising paragraph (b)(1)(v) to read as 
follows:


Sec. 1003.100  Basis and purpose.

* * * * *
    (b) Purpose. * * *
    (1) Provides for the imposition of civil money penalties and, as 
applicable, assessments against persons who--
* * * * *
    (v) Misuse certain Departmental and Medicare and Medicaid program 
words, letters, symbols or emblems;
* * * * *
    3. Section 1003.102 is amended by republishing paragraph (b) 
introductory text, and revising paragraph (b)(7) to read as follows:


Sec. 1003.102  Basis for civil money penalties and assessments.

* * * * *
    (b) The OIG may impose a penalty, and where authorized, an 
assessment against any person (including an insurance company in the 
case of paragraphs (b)(5) and (b)(6) of this section) whom it 
determines in accordance with this part--
* * * * *
    (7) Has made use of the words, letters, symbols or emblems as 
defined in paragraph (b)(7)(i) of this section in such a manner that 
such person knew or should have known would convey, or in a manner 
which reasonably could be interpreted or construed as conveying, the 
false impression that an advertisement, solicitation or other item was 
authorized, approved or endorsed by the Department or HCFA, or that 
such person or organization has some connection with or authorization 
from the Department or HCFA. Civil money penalties--
    (i) 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--
    (A) The words ``Department of Health and Human Services,'' ``Health 
and Human Services,'' ``Health Care Financing Administration,'' 
``Medicare,'' or ``Medicaid,'' or any other combination or variation of 
such words;
    (B) The letters ``DHHS,'' ``HHS,'' or ``HCFA,'' or any other 
combination or variation of such letters; or
    (C) A symbol or emblem of the Department or HCFA (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 HCFA) or any 
other combination or variation of such symbols or emblems; and
    (ii) Will not be imposed against any agency or instrumentality of a 
State, or political subdivision of the State, that makes use of any 
symbol or emblem, or any words or letters which specifically identifies 
that agency or instrumentality of the State or political subdivision.
* * * * *
    4. Section 1003.103 is amended by revising paragraph (d) to read as 
follows:


Sec. 1003.103  Amount of penalty.

* * * * *
    (d)(1) The OIG may impose a penalty of not more than $5,000 for 
each violation resulting from the misuse of Departmental, HCFA, 
Medicare or Medicaid program words, letters, symbols or emblems as 
described in Sec. 1003.102(b)(7) relating to printed media, and a 
penalty of not more than $25,000 in the case of such misuse related to 
a broadcast or telecast, that is related to a determination under 
Sec. 1003.102(b)(7).
    (2) For purposes of this paragraph, a violation is defined as--
    (i) In the case of a direct mailing solicitation or advertisement, 
each separate piece of mail which contains one or more words, letters, 
symbols or emblems related to a determination under 
Sec. 1003.102(b)(7);
    (ii) In the case of a printed solicitation or advertisement, each 
reproduction, reprinting or distribution of such item related to a 
determination under Sec. 1003.102(b)(7); and
    (iii) In the case of a broadcast or telecast, each airing of a 
single commercial or solicitation related to a determination under 
Sec. 1003.102(b)(7).
* * * * *
    5. Section 1003.106 is amended by revising paragraph (a)(3) to read 
as follows:


Sec. 1003.106  Determinations regarding the amount of the penalty and 
assessment.

    (a) Amount of penalty. * * * 

[[Page 58242]]

    (3)(i) In determining the amount of any penalty in accordance with 
Sec. 1003.102(b)(7), the OIG will take into account--
    (A) The nature and objective of the advertisement, solicitation or 
other communication, and the degree to which it has the capacity to 
deceive members of the public;
    (B) The degree of culpability of the individual, organization or 
entity in the use of the prohibited words, letters, symbols or emblems;
    (C) The frequency and scope of the violation, and whether a 
specific segment of the population was targeted;
    (D) The prior history of the individual, organization or entity in 
its willingness or refusal to comply with informal requests to correct 
violations;
    (E) The history of prior offenses of the individual, organization 
or entity in its misuse of Departmental and program words, letters, 
symbols and emblems;
    (F) The financial condition of the individual, organization or 
entity involved with the violation; and
    (G) Such other matters as justice may require.
    (ii) 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. 1003.102(b)(7).
* * * * *
    Approved: October 13, 1995.
June Gibbs Brown,
Inspector General.
[FR Doc. 95-28307 Filed 11-24-95; 8:45 am]
BILLING CODE 4150-04-P