[Federal Register Volume 61, Number 195 (Monday, October 7, 1996)]
[Rules and Regulations]
[Pages 52299-52301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25256]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Part 1003
45 CFR Part 79
RIN 0991-AA
Medicare and State Health Care Programs and Program Fraud Civil
Remedies: Fraud and Abuse; Civil Money Penalties Inflation Adjustments
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Final rule.
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SUMMARY: In accordance with Federal Civil Monetary Penalty Inflation
Adjustment Act of 1990, as amended by the Debt Collection Improvement
Act of 1996, this final rule incorporates the penalty inflation
adjustments for the civil money penalties for health case fraud and
abuse. These inflation adjustment calculations are not applicable to
those civil money penalties contained in the Social Security Act, which
are exempted from this adjustment.
EFFECTIVE DATE: This rule is effective on November 6, 1996.
FOR FURTHER INFORMATION CONTACT:
[[Page 52300]]
Joel J. Schaer, Office of Management and Policy, (202) 619-0089.
SUPPLEMENTARY INFORMATION:
I. The Debt Collection Improvement Act of 1996
In an effort to maintain the remedial impact of civil money
penalties (MPSs) and promote compliance with the law, the Federal Civil
Monetary Penalty Inflation Adjustment Act of 1990 (Pub. L. 101-410) was
amended by the Debt Collection Improvement Act of 1996 (Pub.L. 104-134)
to require Federal agencies to regularly adjust certain CMPs for
inflation. As amended, the law requires each agency to make an initial
inflationary adjustment for all applicable CMPs, and to make further
adjustments at least once every four years thereafter for these penalty
amounts.
The Debt Collection Improvement Act of 1996 further stipulates that
any resulting increases in a CMP due to the calculated inflation
adjustments (i) should apply only to the violations that occur after
October 23, 1996--the Act's effective date--and (ii) should not exceed
10 percent of the penalty indicated. In addition to those penalties
that fall under the Internal Revenue Code of 1986, the Tariff Act of
1930 and the Occupational Safety and Health Act of 1970, CMPs that come
under the Social Security Act are specifically exempt from the
requirements of this Act.
Method of calculation
Under the Act, the inflation adjustment for each applicable CMP is
determined by increasing the maximum CMP amount per violation by the
cost-of-living adjustment. The ``cost-of-living'' adjustment is defined
as the percentage of each CMP by which the Consumer Price Index (CPI)
for the month of June of the calendar year in which the amount of the
CMP was last set or adjusted in accordance with the law. Any calculated
increase under this adjustment is subject to a specific rounding
formula set forth in the Act.
II. OIG Civil Money Penalties Affected by this Adjustment
While the vast majority of penalty sanctions delegated to the OIG
derive from CMP authorities set forth under the Social Security Act,
and therefore are exempt from these inflation adjustment calculations,
there are several penalty authorities, within our jurisdiction, as
described below, for which adjustments are required and are now being
made.
The Health Care Quality Improvement Act of 1986
In 1986, sections 421(c) and 427(b)(2) of the Health Care Quality
Improvement Act (HCQIA) of 1986 (Title IV of Pub. L. 99-660)
established OIG CMP authorities for failure to report medical
malpractice payment information to the National Practitioner Data Bank,
and for breaching the confidentiality of information reported to the
Data Bank established to collect and disseminate such information. To
assure the timely collection and reporting of medical malpractice
payments to the Data Bank, the final regulations--published in the
Federal Register (56 FR 28492, June 21, 1991) and codified at 42 CFR
part 1003--set forth a CMP of up to 410,000 against any person or
entity that fails to report each such payment in a timely and complete
manner.
In addition, to protect the confidentiality of information reported
to the Data Bank under these provisions, the final regulations also
established a CMP of up to $10,000 against any person or entity who
improperly discloses information reported to the Data Bank.
Based on the penalty amount inflation factor calculation, derived
from dividing the June 1995 CPI by the CPI from June 1986, after
rounding and the 10 percent maximum ceiling, we are adjusting the
maximum penalty amount for the two CMPs under the HCQIA to $11,000 per
violation.
The Program Fraud Civil Remedies Act of 1986
In 1986, sections 6103 and 6104 of the Omnibus Budget
Reconciliation Act of 1986 (Pub. L. 99-501) set forth the Program Fraud
Civil Remedies Act (PFCRA) of 1986. Specifically, this authority
established a CMP and an assessment against any individual who--with
knowledge or reason to know--makes, presents or submits a false,
fictitious or fraudulent claim or statement to the Department. The
Department's regulations--published in the Federal Register (53 FR
11656, April 8, 1988) and codified at 45 CFR part 79--set forth a CMP
of up to $5,000 for each false claim or statement made to the
Department.
Based on the penalty amount inflation factor calculation, derived
from dividing the June 1995 CPI by the CPI from June 1986, after
rounding and the 10 percent maximum ceiling, we are adjusting the
maximum penalty amount for this CMP to $5,500 per violation.
III. Waiver of Proposed Rulemaking
In developing this final rule, we are waiving the usual 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 for this rule. Specifically, this rulemaking
comports and is consistent with the statutory authority set forth in
the Debt Collection Improvement Act of 1996, with no issues of policy
discretion. Accordingly, we believe that opportunity for prior comment
is unnecessary and contrary to the public interest, and are issuing
these revised regulations as a final rule that will apply to all future
cases under this authority.
IV. 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
has 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 inflation adjustments in compliance with
the Debt Collection Improvement Act of 1996 for specific applicable
civil money penalties under the authority of the OIG. The great
majority of individuals, organizations and entities addressed through
these regulations do not engage in such prohibited activities and
practices, and as a result, we believe that any 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 statutes. As such, this final rule and the inflation adjustment
contained therein should have no effect on Federal or State
expenditures.
Regulatory Flexibility Act
In addition, we generally prepare a regulatory flexibility analysis
that is consistent with the Regulatory Flexibility Act (5 U.S.C. 601-
612), unless the Secretarty certifies that a regulation will not have a
significant economic impact on a substantial number of small business
entities. While some penalties may have an impact on small entities, it
is the nature
[[Page 52301]]
of the violation and not the size of the entity that will result in an
action by the OIG, and the aggregate economic impact of this rulemaking
on small business entities should be minimal, affecting only those few
who have chosen to engage in prohibited arrangements and schemes in
violation of statutory intent. Therefore, we have concluded, and the
Secretary certifies, that this final rule will not have a significant
economic impact on a number of small business entities, and that a
regulatory flexibility analysis is not required for this rulemaking.
Paperwork Reduction Act
This final rule imposes no new reporting or recordkeeping
requirements necessitating clearance by OMB.
List of Subjects
42 CFR Part 1003
Administrative practice and procedure, Fraud, Grant programs--
health, Health facilities, Health professions, Maternal and child
health, Medicaid, Medicare, Penalties.
45 CFR Part 79
Administrative practice and procedure, Fraud, Investigations,
Organizations and functions, (Governmental agencies), Penalties.
Accordingly, 42 CFR part 1003 and 45 CFR part 79 are amended as set
forth below:
A. TITLE 42--PUBLIC HEALTH
CHAPTER V--OFFICE OF INSPECTOR GENERAL--HEALTH CARE; DEPARTMENT OF
HEALTH AND HUMAN SERVICES
42 CFR part 1003 is amended as set forth below:
PART 1003--CIVIL MONEY PENALTIES, ASSESSMENTS AND EXCLUSIONS
1. The authority citation for past 1003 continues to read as
follows:
Authority: 42 U.S.C. 1302, 1320a-7, 1230a-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 1003.103 is amended by revising paragraph (c) to read as
follows:
Sec. 1003.103 Amount of penalty.
* * * * *
(c) The OIG may impose a penalty of not more than $11,000 \1\ for
each payment for which there was a failure to report required
information in accordance with Sec. 1003.102(b)(5), or for each
improper disclosure, use or access to information that is subject to a
determination under Sec. 1003.102(b)(6).
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\1\ As adjusted in accordance with the Federal Civil Monetary
Penalty Inflation Adjustment Act of 1990 (Pub. L. 101-140), as
amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-
134).
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B. TITLE 45--PUBLIC WELFARE
Subtitle A--Department of Health and Human Services, General
Administration
45 CFR part 79 is amended as set forth below:
PART 79--PROGRAM FRAUD CIVIL REMEDIES
1. The authority citation for part 79 is revised to read as
follows:
Authority: 31 U.S.C. 3801-3812.
2. Section 79.3 is amended by revising paragraphs (a)(1) and (b)(1)
to read as follows:
Sec. 79.3 Basis for civil penalties and assessments.
(a) Claims. (1) Except as provided in paragraph (c) of this
section, any person who makes a claim that the person knows or has
reason to know--
(i) Is false, fictitious, or fraudulent;
(ii) Includes, or is supported by, any written statement which
asserts a material fact which is false, fictitious, or fraudulent;
(iii) Includes, or is supported by, any written statement that--
(A) Omits a material fact;
(B) Is false, fictitious, or fraudulent as a result of such
omission; and
(C) Is a statement in which the person making such statement has a
duty to include such material fact; or
(iv) Is for payment for the provision of property or services which
the person has not provided as claimed, shall be subject, in addition
to any other remedy that may be prescribed by law, to a civil penalty
of not more than $5,500 \1\ for each such claim.
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\1\ As adjusted in accordance with the Federal Civil Monetary
Penalty Inflation Adjustment Act of 1990 (Pub. L. 101-140), as
amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-
143).
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(b) Statements. (1) Except as provided in paragraph (c) of this
section, any person who makes a written statement that--
(i) The person knows or has reason to know--
(A) Asserts a material fact which is false, factitious, or
fraudulent; or
(B) Is false, factitious, or fraudulent because it omits a material
fact that the person making the statement has a duty to include in such
statement; and
(ii) Contains, or is accompanied by, an express certification or
affirmation of the truthfulness and accuracy of the contents of the
statement, shall be subject, in addition to any other remedy that may
be prescribed by law, to a civil penalty of not more than $5,500 \2\
for each such statement.
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\2\ As adjusted in accordance with the Federal Civil Monetary
Penalty Inflation Adjustment Act of 1990 (Pub. L. 101-140), as
amended by the Debt Collection Improvement Act of 1996 (Pub. L 104-
143).
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* * * * *
Dated: September 11, 1996.
June Gibbs Brown,
Inspector General.
Approved: September 17, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-25256 Filed 10-4-96; 8:45 a.m.]
BILLING CODE 4150-04-M