[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