[Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]
[Proposed Rules]
[Pages 40338-40345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15077]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404 and Part 416

[Regulations Nos. 4 and 16]
RIN 0960-AF85


Mandatory Exclusion of Health Care Providers and Representatives 
From Participating in Programs Administered by the Social Security 
Administration, Including Representative Payment

AGENCY: Social Security Administration.

ACTION: Proposed rule.

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SUMMARY: This proposed rule creates a new administrative procedure 
requiring the Social Security Administration (SSA) to exclude 
representatives and health care providers who are convicted of fraud in 
the title II or title XVI disability programs administered by SSA or 
who are assessed civil monetary penalties from further participation in 
those programs for at least five years. The Foster Care Independence 
Act of 1999 amended the Social Security Act and requires SSA to create 
an administrative procedure for imposing penalties for false or 
misleading statements. This proposed rule will exclude those 
representatives and health care providers from participating in the 
programs and from serving as a representative payee.

DATES: To be sure your comments are considered, we must receive them by 
August 31, 2004.

ADDRESSES: You may give us your comments by: using our Internet site 
facility (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs or the Federal eRulemaking Portal at http://www.regulations.gov; e-mail to [email protected], telefax to (410) 
966-2830; or letter to the Commissioner of Social Security, P.O. Box 
17703, Baltimore, Maryland 21235-7703. You may also deliver them to the 
Office of Regulations, Social Security Administration, 100 Altmeyer 
Building, 6401 Security Boulevard, Baltimore, Maryland 21235-6401, 
between 8 a.m. and 4:30 p.m. on regular business days. Comments are 
posted on our Internet site for your review, or you may inspect them on 
regular business days by making arrangements with the contact person 
shown in this preamble.
    Electronic Version: The electronic file of this document is 
available on the date of publication in the Federal Register on http://www.gpoaccess.gov/fr/index.html. It is also available on the Internet 
site for SSA (i.e., Social Security Online): http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

FOR FURTHER INFORMATION CONTACT: Charles M. Urban, Social Insurance 
Specialist, Professional Relations Branch, Office of Disability 
Programs, Office of Disability and Income Support Programs, Social 
Security Administration, 6401 Security Boulevard, Room 4634 Annex 
Building, Baltimore Maryland 21235-6401, [email protected], 410-
965-9029, or TTY, 410-966-5609, or FAX 410-965-6659 for information 
about these regulations. For information on eligibility or filing for 
benefits: Call our national toll-free number, 1-(800) 772-1213 or TTY 
1-(800) 325-0778, or visit our Internet Web site, Social Security 
Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Background

    There is no provision under the present law to exclude 
representatives and health care providers convicted of violations from 
further participation in Social Security programs. Social Security and 
Supplemental Security Income (SSI) law stipulate that anyone who 
knowingly or willfully makes, or causes to be made, any false 
statements or misrepresentations in applying for or continuing to 
receive Social Security or SSI payments shall be fined under title 18 
of the U.S.C., imprisoned for not more than five years or both. Federal 
law also provides that any person who makes, or causes to be made, a 
statement or representation of material fact for use in any initial or 
continuing review of an individual's eligibility for Social Security 
disability benefits (title II) or Supplemental Security Income (SSI) 
(title XVI) benefits that the person knows or should know is false or 
misleading or omits a material fact or makes such a statement with 
knowing disregard for the truth is subject to a civil penalty of not 
more than $5,000 for each such statement or representation plus up to 
twice the value of the amount paid fraudulently.
    Fraud prevention is a top priority of the Social Security 
Administration. Professionals and others who play a role in helping 
individuals apply for Social Security and SSI have a special 
responsibility to maintain high standards of truthfulness. The 
evidence, opinion, advice and recommendations they provide are often 
crucial to the eligibility determination process. Thus, any such 
representative or health care provider who gives false or misleading 
information or otherwise commits fraud as part of the eligibility 
determination must be subject to serious penalties. This is especially 
the case since experience shows that some of these individuals commit 
fraud in many cases, thereby resulting in substantial sums of money 
being paid fraudulently to numerous recipients. For instance, in 
December 1997, a cooperative team, consisting of members from the SSA, 
the Office of the Inspector General (OIG) and the State Disability 
Determination Service (DDS), conducted a joint vulnerability review of 
an extended family in a small Georgia town. There were 181 members of 
this family, which spanned 4 generations, receiving benefits under 
title XVI of the Social Security Act (the Act). The same medical 
provider was the treating source and conducted consultative 
examinations (CEs) for many of these family members. The findings of 
the review resulted in the creation of Cooperative Disability 
Investigation (CDI) units in several major cities. The IG reported on 
February 3, 1999, in his testimony to the Subcommittee on Human 
Resources that the CDIs have produced data that illustrate the need to 
sanction third-party facilitators who engage in fraudulent activities, 
as many of the allegations involved third-party facilitators such as 
physicians, lawyers, interpreters, and other service providers. The 
1998 GAO report, ``Supplementary Security Income: Action Needed on 
Long-Standing Problems Affecting Program Integrity,'' GAO/HHS-98-158, 
also found that the title XVI program was vulnerable to fraud and 
abuse.
    We believe those representatives and health care providers who 
commit fraud or make false statements in any of the SSA administered 
programs should have administrative sanctions applied and be excluded 
from participating in any SSA program.
    For these reasons, we propose to add a new section in both part 404 
subpart P and part 416 subpart I to exclude representatives and health 
care providers who have committed fraud in any program administered by 
SSA from further participation in these programs for a period of at 
least five years.

Purposes of Administrative Sanctions

    Administrative sanctions are civil remedies that agencies impose 
under their own authority to protect their programs from transactions 
with untrustworthy individuals or entities

[[Page 40339]]

and to recover program funds paid improperly or fraudulently. Because 
administrative sanctions are not considered to be ``punitive,'' they 
can, and frequently are, imposed in addition to other remedies, such as 
criminal or civil judicial action.
    The administrative sanction we propose to use in this rule is 
exclusion. We define exclusion as removing an individual or entity from 
participation in a program for a designated period of time, or 
permanently, after a due process proceeding.

Administrative Exclusion of Health Care Providers and Representatives

    The principal objective of administrative sanctions activities will 
be to protect the integrity of the benefit programs SSA administers by 
excluding health care providers and representatives whose conduct 
indicates that they pose a threat to the integrity of SSA's programs. 
Excluded health care providers and representatives will be prohibited 
from serving as a representative payee. Excluded health care providers 
will be prohibited from supplying consultative examinations used to 
document the existence of impairments. All medical records produced by 
excluded parties resulting from treatment of individuals will be barred 
from use in the SSA disability evaluation process as of the date the 
exclusion takes effect. The public will be notified of the exclusion of 
health care providers and representatives. Medical records produced as 
result of treatment by the excluded providers will not be admitted as 
evidence to support a claim for benefits on account of disability.

Length of Exclusion

    This proposed rule establishes a minimum 5-year period of mandatory 
exclusion for one infraction, a 10-year exclusion for two infractions, 
and permanent exclusion for three or more infractions. The time period 
of an exclusion will be based on Federal fraud convictions and/or the 
imposition of administrative penalties under section 1129a of the Act. 
This proposed rule also adopts the practice of using specific factors 
to determine whether a permanent exclusion should be imposed. Program 
exclusion will be in addition to any penalties based on SSA's or 
another agency's actions. Individuals or entities subject to a proposed 
mandatory exclusion will receive a 30-day advance notice of the 
impending exclusion and may challenge SSA's action by submitting 
information and arguments on their behalf (see sec. 205(b) of the Act). 
The proposed exclusion can be withdrawn only if the basis for it no 
longer exists, such as when a conviction is reversed on appeal, or the 
proposed subject is incorrectly identified.

Waiver of Exclusion

    This proposed rule contains a limited waiver provision. The waiver 
would allow a party who meets the criteria for exclusion to continue to 
represent or provide health care to those who apply for benefits 
payable under title II and XVI of the Act only in cases where that 
party is the sole source of essential specialized services in the 
geographical area described in the proposed rule. This is being done so 
as not to disadvantage persons who live in sparsely populated rural 
areas. The Commissioner's waiver decision is not subject to review.

Regulatory Procedures

Clarity of These Proposed Rules

    Executive Order 12866 requires each agency to write all rules in 
plain language. In addition to your substantive comments on these 
proposed rules, we invite your comments on how to make these proposed 
rules easier to understand.

    For example:

     Have we organized the material to suit your needs?
     Are the requirements of the rules clearly stated?
     Do the rules contain technical language or jargon that 
isn't clear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
     Would more (but shorter) sections be better?
     Could we improve the clarity by adding tables, lists, or 
diagrams?
     What else could we do to make the rules easier to 
understand?

Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed these 
proposed rules in accordance with Executive Order 12866, as amended by 
Executive Order 13258.

Regulatory Flexibility Act

    We certify that these proposed rules would not have a significant 
economic impact on a substantial number of small entities because they 
would affect only individuals. Thus, a regulatory flexibility analysis 
as provided for in the Regulatory Flexibility Act, as amended, is not 
required.

Paperwork Reduction Act

    These proposed rules contain reporting requirements as shown in the 
following table.

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                                                                                Average  burden     Estimated
                   Section                     Annual number     Frequency of    per  response    annual burden
                                                of responses      responses        (minutes)         (hours)
----------------------------------------------------------------------------------------------------------------
20 CFR 404.1503b 416.903b...................             3-5                1               30           2\1/2\
----------------------------------------------------------------------------------------------------------------

    An Information Collection Request has been submitted to OMB for 
clearance. We are soliciting comments on the burden estimate; the need 
for the information; its practical utility; ways to enhance its 
quality, utility and clarity; and on ways to minimize the burden on 
respondents, including the use of automated collection techniques or 
other forms of information technology. Comments should be mailed or 
faxed to the Office of Management and Budget and to the Social Security 
Administration at the following addresses/fax numbers:

Office of Management and Budget, Attn: Desk Officer for SSA, New 
Executive Office Building, Room 10235, 725 17th Street, NW., 
Washington, DC 20503, Fax Number: 202-395-6974.
Social Security Administration, Attn: SSA Reports Clearance Officer, 
Rm. 1338 Annex Building, 6401 Security Boulevard, Baltimore, MD 21235-
6401, Fax Number: 410-965-6400.

Comments can be received for between 30 and 60 days after publication 
of this notice and will be most useful if received by SSA within 30 
days of publication.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security Disability Insurance; 96.002, Social Security Retirement 
Insurance; 96.004, Social Security

[[Page 40340]]

Survivors Insurance; and 96.006, Supplemental Security Income)

List of Subjects

20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security.

20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental Security Income (SSI).

    Dated: April 7, 2004.
Jo Anne B. Barnhart,
Commissioner of Social Security.
    For the reasons set forth in the preamble, we propose to amend 
subpart P of part 404 and subpart I of Part 416 of chapter III of title 
20 of the Code of Federal Regulations as set forth below.

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950- )

Subpart P--[Amended]

    1. The authority citation for Subpart P of part 404 continues to 
read as follows:

    Authority: Secs. 202, 205(a), (b), and (d)-(h), 216(i), 221(a) 
and (i), 222(c), 223, 225 and 702(a)(5) of the Social Security Act 
(42 U.S.C. 402, 405(a), (b), and (d)-(h), 416(i), 421(a) and (i), 
422(c), 423, 425, and 902(a)(5); sec. 211(b), Pub. L. 104-193, 110 
Stat. 2105, 2189.

    2. Add a new Sec.  404.1503b to read as follows:


Sec.  404.1503b  Mandatory exclusion of health care providers and 
representatives from participating in SSA programs including serving as 
a representative payee.

    (a) Reasons for mandatory exclusions. We will exclude from 
participation in social security programs any representative or health 
care provider who, on or after December 14, 1999:
    (1) Has been convicted of a violation of section 208 or section 
1632 of the Act;
    (2) Has been convicted of any violation under title 18, U.S.C., 
relating to an initial application for or continuing entitlement to, or 
amount of, benefits under title II of the Act or an initial application 
for or continuing eligibility for, or amount of, benefits under title 
XVI of the Act; or
    (3) Has been determined by the Commissioner to have committed an 
offense described in section 1129(a)(1) of the Act.
    (b) Effect of exclusion on the individual. When we exclude an 
individual, we will prohibit that individual from:
    (1) Acting as a medical source who provides items or services for 
claimants or beneficiaries for the purpose of assisting claimants or 
beneficiaries to demonstrate that they are disabled;
    (2) Being appointed or recognized as a representative of claimants 
or beneficiaries, in dealings with us, under subpart R of this part and 
subpart O of part 416; and
    (3) Being selected in the future, or from continuing to act as a 
representative payee, under subpart U of this part and subpart F of 
part 416.
    (c) Effect of exclusion on information or evidence from health care 
providers. Beginning with the effective date of the exclusion, we will 
not consider the provider's medical source statements, opinions on 
issues reserved to the Commissioner, or other evidence prepared for the 
purpose of assisting a claimant or beneficiary in demonstrating 
disability. We will consider information or evidence derived from the 
services of an excluded medical source only when those services were 
rendered before the effective date of the exclusion.
    (d) Effect of exclusion on the records of the excluded 
representative. An exclusion under this section will not be construed 
as having the effect of limiting access by a claimant, beneficiary, 
State disability determination agency, or us to records maintained by 
the excluded representative for services provided to a claimant or 
beneficiary before the effective date of an exclusion.
    (e) Length of exclusion. We will exclude an individual for a period 
of five years, ten years or permanently.
    (1) The minimum length of time for an exclusion will be:
    (i) Five years if an individual has been subject to one excluding 
event as stated in paragraph (a) of this section;
    (ii) Ten years if an individual has been subject to two separate 
excluding events as stated in paragraph (a) of this section (one of 
those events may have occurred before December 14, 1999); and
    (iii) Permanent exclusion if an individual has been subject to 
three or more excluding events as stated in paragraph (a) of this 
section (one or two of those events may have occurred before December 
14, 1999).
    (2) Notwithstanding the time periods set forth in paragraph (e)(1) 
of this section, we shall impose a permanent exclusion upon the first 
or second excluding event if two or more of the following exist:
    (i) The criminal sentence is for five or more years of 
incarceration and/or probation;
    (ii) The criminal sentence includes payment of restitution to us in 
an amount equal to or more than $30,000;
    (iii) The criminal conviction includes five or more separate 
violations of law;
    (iv) The assessment of civil monetary penalties is equal to or more 
than $50,000;
    (v) The assessment of civil monetary penalties was based on five or 
more violations of law;
    (vi) The individual has been convicted of fraud, making false 
statements, or misrepresentations in any other government program or 
has been administratively determined to have committed such acts;
    (vii) A State licensing authority has revoked or suspended any 
license issued to the individual in the past for fraud, false 
statements or misrepresentations; or
    (viii) The individual failed to comply with Sec.  404.1503b(v).
    (f) Exclusion determination. The Inspector General is responsible 
for providing us with pertinent documentation regarding the excluding 
event within 45 days of the conviction or of the date upon which the 
determination under section 1129a of the Act becomes final. The 
information supplied by the Inspector General should, whenever 
practical, include the charging documents, plea agreements, agreements 
for deferred adjudication or pre-trial diversion, judgments of 
conviction, and in cases decided under section 1129a of the Act, a copy 
of the final decision that imposes civil monetary penalties. When we 
obtain evidence that an individual meets one or more of the criteria in 
paragraph (a) of this section, we will make a proposed determination to 
exclude that individual.
    (1) We will use all of the information that we have collected.
    (2) Based on this information, we will prepare a proposed 
determination that explains the reasons why we believe the individual 
should be excluded. Once we determine that the individual meets the 
criteria for exclusion, we will provide the individual with notice of 
the date on which the exclusion takes effect. We will also notify the 
individual of his or her right to appeal the determination to an 
administrative law judge and his or her right to request waiver of the 
exclusion.
    (3) The exclusion determination will become effective 35 days after 
it is issued unless a request for hearing is

[[Page 40341]]

filed as described in paragraph (i) of this section or a request for 
waiver is made.
    (4) If the individual requests a waiver of the proposed exclusion, 
that individual must submit to us a written statement and any relevant 
documentary evidence as required in paragraph (h) of this section. The 
statement and evidence to support the request for waiver must be 
submitted within 30 days of receiving the notice of proposed exclusion. 
We assume that the individual will receive the notice five days after 
the date that the notice of proposed exclusion is mailed.
    (g) Notice of proposed exclusion. We will send the notice of 
proposed exclusion to the individual's last known address by certified 
mail. This notice will provide the following information:
    (1) The basis for exclusion;
    (2) The effect of the exclusion;
    (3) The proposed effective date of the exclusion;
    (4) The proposed period of exclusion; and
    (5) The procedure and timeframe by which the individual may object 
to the exclusion and submit a written statement and relevant documents.
    (h) Waiver of exclusion. We may waive the exclusion of an 
individual if we determine that he or she is the sole source of 
essential services in a community. We will consider only the location 
in which the infraction(s) took place in our determination. We will not 
consider situations where the party has moved to a remote location 
after the excluding event. Our decision concerning waiver of the 
exclusion shall not be subject to review.
    (i) Right to a hearing before an administrative law judge. If an 
excluded individual is dissatisfied with our determination to exclude, 
the individual may request a hearing. The Associate Commissioner for 
Hearings and Appeals, or his or her delegate, will appoint an 
administrative law judge to conduct the hearing.
    (1) The request for a hearing must be made within 30 days of the 
date that the excluded individual receives the determination to 
exclude.
    (2) The individual must submit, with the request for a hearing, all 
exhibits that the individual wants to be received into the record, a 
list of any witnesses whom the individual intends to call at the 
hearing, and a statement of the issues being raised.
    (3) A failure to submit a timely request for hearing, evidence, or 
witness list may be excused for good cause. If there is an untimely 
submission of a request for hearing and the administrative law judge 
does not find that there is good cause to excuse the untimely filing, 
the administrative law judge will dismiss the request for hearing. If 
there is an untimely submission of evidence or a witness list and the 
administrative law judge finds that there is no good cause to excuse 
the untimely filing, the administrative law judge will not enter such 
evidence into the record and will not permit the witnesses to testify 
at the hearing.
    (j) Disqualification of administrative law judge. An administrative 
law judge shall not conduct a hearing if he or she is prejudiced or 
partial with respect to any party or has any interest in the matter 
pending for decision. The excluded individual has the right to object 
to the administrative law judge assigned to hear the individual's 
appeal. The individual must inform the administrative law judge, in 
writing and at his or her earliest opportunity, of the objection. The 
administrative law judge will consider the objection and decide whether 
to proceed with the hearing or withdraw. If he or she withdraws, the 
Associate Commissioner for Hearings and Appeals, or his or her 
delegate, will appoint another administrative law judge to conduct the 
hearing.
    (k) Issue before the administrative law judge. The administrative 
law judge may only decide whether the basis for an individual's 
exclusion exists and whether the length of exclusion meets the 
requirements of paragraph (e) of this section. The administrative law 
judge has no authority to review the factual or legal conclusions of 
the conviction or determination that is the basis for the determination 
to exclude.
    (l) Pre-hearing procedures. An administrative law judge may dismiss 
any hearing request that fails to state either an issue of disputed 
material fact or law regarding a matter that is subject to review; 
i.e., whether the underlying conviction or civil monetary penalty 
exist. If the individual's hearing request and supporting documentation 
does not reveal the existence of a material factual or legal dispute, 
the administrative law judge will issue an order to show cause why the 
hearing request should not be dismissed. The individual must respond to 
the order to show cause 30 days from the date of receipt, which will be 
presumed to be five calendar days from the date of mailing. The 
administrative law judge will decide whether a material factual or 
legal dispute exists and will either dismiss the hearing request or set 
a date for the hearing.
    (m) Hearing procedures. The procedures in Sec. Sec.  404.936-
404.938, 404.944, 404.948-404.949, 404.950(c-e), 404.953(a), and 
404.957(a-b), 404.961 will apply to the hearing before the 
administrative law judge. If the administrative law judge dismisses a 
case, the administrative law judge may, within 60 days of the 
dismissal, vacate such dismissal if good cause exists.
    (n) Appeals Council review. The Appeals Council may, on its own 
motion and within 60 days of the issuance of an administrative law 
judge's decision or dismissal, initiate review of the administrative 
law judge's decision or dismissal. We or the excluded individual may 
request the Appeals Council to exercise its authority to take own 
motion review. Sections 404.970(a), 404.973-404.975, 404.976(a) and 
(b)(2), will apply to the Appeals Council review of an administrative 
law judge's decision or dismissal. The Appeals Council will issue a 
decision or remand the case to the administrative law judge. The 
Appeals Council may affirm, modify, or reverse the administrative law 
judge's decision. A copy of the Appeals Council's decision will be sent 
to the excluded individual at his or her last known address.
    (o) Effect of Appeals Council review on exclusion. Unless the 
Appeals Council reviews the decision or dismissal, the administrative 
law judge's decision or dismissal shall become the Commissioner's final 
decision 60 days after it is issued. If the Appeals Council decides to 
review the administrative law judge's decision within 60 days from the 
date it is issued, and the Appeals Council issues a decision, it will 
become the Commissioner's final decision.
    (p) Judicial review. The excluded individual has the right to file 
a civil action in a Federal district court within 60 days of the date 
of the Commissioner's final decision. The excluded individual shall 
serve a copy of any civil action on the Commissioner at 6401 Security 
Boulevard, Baltimore, Maryland 21235-6401. Sections 404.983-404.984 
will apply to any cases remanded by a Federal court.
    (q) Termination of exclusion. (1) An individual excluded from 
participation under this section may request that we terminate an 
exclusion:
    (i) At the end of the minimum period of exclusion;
    (ii) If the individual becomes the sole source of essential 
services in a community; or
    (iii) If the judgement or conviction that is the basis of the 
exclusion is set aside or expunged.
    (2) We may terminate the exclusion if we determine, based on the 
conduct of the excluded individual that occurred after the date of the 
notice of exclusion, or which was unknown to us at the time of the 
exclusion, that:

[[Page 40342]]

    (i) There is no basis for a continuation of the exclusion; and
    (ii) There are reasonable assurances that the types of actions that 
formed the basis for the original exclusion have not recurred and will 
not recur.
    (3) Our decision regarding termination of exclusion is not subject 
to review.
    (r) Penalties are not exclusive. Exclusion imposed under this 
section is in addition to any other penalties or sanctions prescribed 
by law.
    (s) Notice to State agencies and the public. (1) We will notify the 
State agencies employed for the purpose of making disability 
determinations of the exclusion of an individual from participating in 
Social Security programs when the Commissioner has issued a final 
decision to exclude. We will provide the following information:
    (i) The facts and circumstances of the exclusion of the individual; 
and
    (ii) The period that the exclusion will be in effect.
    (2) We will also notify the state agencies of the fact and 
circumstances of each termination of exclusion made under paragraph (q) 
of this section. We will also provide the public with appropriate 
notice of individuals or entities who have been excluded from 
participation in our programs.
    (t) Notice to State licensing authorities. We will notify 
appropriate State or local licensing agencies or other licensing 
authorities when the Commissioner has issued a final decision to 
exclude. We will provide those agencies or authorities with the facts 
and circumstances of the exclusion. We will also request that an 
appropriate investigation in accordance with State law be conducted, 
that appropriate sanctions be invoked, and that the State or local 
licensing agency or other licensing authority keep us currently and 
fully informed of their actions in response to our request.
    (u) Definitions. As used in this section--
    (1) Individual means any representative or health care provider.
    (2) Representative will have the same meaning as stated in section 
404.1703 of this part.
    (3) Health care provider means any person or entity that employs a 
person or persons who would be considered a medical source.
    (4) Medical source means any health care provider who is defined 
under section 404.1513(a) and (d)(1) of this part.
    (5) Act means the Social Security Act.
    (6) Social security programs means the program providing for 
monthly insurance benefits under title II of the Act and the program 
providing for monthly supplemental security income payments under title 
XVI of the Act (including State supplementary payments that we make.)
    (7) Sole source of essential services in a community means that, in 
the case of health care providers, no other health care providers who 
perform similar services or, in the case of representatives, no other 
representatives who perform similar services exist within a 50 mile 
radius of the limits of the town, county or city in which the 
infraction took place.
    (8) Convicted means:
    (i) A judgment of conviction that has been entered against the 
individual by a Federal, State, or local court, except if the judgment 
of conviction has been set aside or expunged;
    (ii) A finding of guilt against the individual by a Federal, State 
or local court;
    (iii) A plea of guilty or nolo contendere by the individual has 
been accepted by a Federal, State or local court; or
    (iv) The individual has entered into participation in a first 
offender, deferred adjudication, or other arrangement or program where 
judgement of conviction has been withheld.
    (v) Reporting requirements. Any individual participating in or 
seeking to participate in any Social Security programs will inform us 
by letter, as soon as practicable, of any excluding event stated in 
paragraph (a) of this section. If the individual is a health care 
provider the letter must be sent to the following address: Social 
Security Administration, Office of Disability and Income Security 
Programs, Section 1136 Exclusion, Room 4634 Annex Building, 6401 
Security Boulevard, Baltimore, MD 21235-6401. If the individual is a 
representative, the letter must be sent to the following address: 
Social Security Administration, Office of Hearings and Appeals, 
Attention Special Counsel Staff, 5107 Leesburg Pike, Suite 1605, Falls 
Church, VA 22041. This letter must include a copy of the conviction, 
judgment, or administrative determination. The individual making such a 
report to us must comply with any further requests that we make for 
information regarding the reported matter.

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED , BLIND, AND 
DISABLED

Subpart I--[Amended]

    3. The authority citation for Subpart I of part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1611, 1614, 1619, 1631(a), (c), and 
(d)(1), and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 
1382, 1382c, 1382h, 1383(a), (c), and (d)(1), and 1383b); secs. 4(c) 
and 5, 6(c)-(e), 14(a), and 15, Pub. L. 98-460, 98 Stat. 1794, 1801, 
1802, and 1808 (42 U.S.C. 421 note, 423 note, 1382h note).

    4. Add a new Sec.  416.903b to read as follows:


Sec.  416.903b  Mandatory exclusion of health care providers and 
representatives from participating in SSA programs including serving as 
a representative payee.

    (a) Reasons for mandatory exclusions. We will exclude from 
participation in social security programs any representative or health 
care provider who, on or after December 14, 1999:
    (1) Has been convicted of a violation of section 208 or section 
1632 of the Act;
    (2) Has been convicted of any violation under title 18, U.S.C., 
relating to an initial application for or continuing entitlement to, or 
amount of, benefits under title II of the Act or an initial application 
for or continuing eligibility for, or amount of, benefits under title 
XVI of the Act; or
    (3) Has been determined by the Commissioner to have committed an 
offense described in section 1129(a)(1) of the Act.
    (b) Effect of exclusion on the individual who has been excluded. 
When we exclude an individual, we will prohibit that individual from:
    (1) Acting as a medical source who provides items or services for 
claimants or beneficiaries for the purpose of assisting claimants or 
beneficiaries to demonstrate that they are disabled;
    (2) Being appointed or recognized as a representative of claimants 
or beneficiaries, in dealings with us, under subpart R of part 404 of 
this chapter and subpart O of this part; and
    (3) Being selected in the future, or from continuing to act as a 
representative payee, under subpart U of part 404 of this chapter and 
subpart F of this part.
    (c) Effect of exclusion on information or evidence from health care 
providers. Beginning with the effective date of the exclusion, we will 
not consider the provider's medical source statements, opinions on 
issues reserved to the Commissioner, or other evidence prepared for the 
purpose of assisting a claimant or beneficiary in demonstrating 
disability. We will consider information or evidence derived from the 
services of an excluded medical source only when those services were 
rendered before the effective date of the exclusion.

[[Page 40343]]

    (d) Effect of exclusion on the records of the excluded 
representative. An exclusion under this section will not be construed 
as having the effect of limiting access by a claimant, beneficiary, 
State disability determination agency, or us to records maintained by 
the excluded representative for services provided to a claimant or 
beneficiary before the effective date of an exclusion.
    (e) Length of exclusion. We will exclude an individual for a period 
of five years, ten years or permanently.
    (1) The minimum length of time for an exclusion will be:
    (i) Five years if an individual has been subject to one excluding 
event as stated in paragraph (a) of this section;
    (ii) Ten years if an individual has been subject to two separate 
excluding events as stated in paragraph (a) of this section (one of 
those events may have occurred before December 14, 1999); and
    (iii) Permanent exclusion if an individual has been subject to 
three or more excluding events as stated in paragraph (a) of this 
section (one or two of those events may have occurred before December 
14, 1999).
    (2) Notwithstanding the time periods set forth in (e)(1) of this 
section, we shall impose a permanent exclusion upon the first or second 
excluding event if two or more of the following exist:
    (i) The criminal sentence is for five or more years of 
incarceration and/or probation;
    (ii) The criminal sentence includes payment of restitution to us in 
an amount equal to or more than $30,000;
    (iii) The criminal conviction includes five or more separate 
violations of law;
    (iv) The assessment of civil monetary penalties is equal to or more 
than $50,000;
    (v) The assessment of civil monetary penalties was based on five or 
more violations of law;
    (vi) The individual has been convicted of fraud, making false 
statements, or misrepresentations in any other government program or 
has been administratively determined to have committed such acts;
    (vii) A State licensing authority has revoked or suspended any 
license issued to the individual in the past for fraud, false 
statements or misrepresentations; or,
    (viii) The individual failed to comply with section 416.903b(v).
    (f) Exclusion determination. The Inspector General is responsible 
for providing us with pertinent documentation regarding the excluding 
event within 45 days of the conviction or of the date upon which the 
determination under section 1129a of the Act becomes final. The 
information supplied by the Inspector General should, whenever 
practical, include the charging documents, plea agreements, agreements 
for deferred adjudication or pre-trial diversion, judgments of 
conviction, and in cases decided under section 1129a of the Act, a copy 
of the final decision that imposes civil monetary penalties. When we 
obtain evidence that an individual meets one or more of the criteria in 
paragraph (a) of this section, we will make a proposed determination to 
exclude that individual.
    (1) We will use all of the information that we have collected.
    (2) Based on this information, we will prepare a proposed 
determination that explains the reasons why we believe the individual 
should be excluded. Once we determine that the individual meets the 
criteria for exclusion, we will provide the individual with notice of 
the date on which the exclusion takes effect. We will also notify the 
individual of his or her right to appeal the determination to an 
administrative law judge and his or her right to request waiver of the 
exclusion.
    (3) The exclusion determination will become effective 35 days after 
it is issued unless a request for hearing is filed as described in 
paragraph (i) of this section or a request for waiver is made.
    (4) If the individual requests a waiver of the proposed exclusion, 
that individual must submit to us a written statement and any relevant 
documentary evidence as required in paragraph (h) of this section. The 
statement and evidence to support the request for waiver must be 
submitted within 30 days of receiving the notice of proposed exclusion. 
We assume that the individual will receive the notice five days after 
the date that the notice of proposed exclusion is mailed.
    (g) Notice of proposed exclusion. We will send the notice of 
proposed exclusion to the individual's last known address by certified 
mail. This notice will provide the following information:
    (1) The basis for exclusion;
    (2) The effect of the exclusion;
    (3) The proposed effective date of the exclusion;
    (4) The proposed period of exclusion; and
    (5) The procedure and timeframe by which the individual may object 
to the exclusion and submit a written statement and relevant documents.
    (h) Waiver of exclusion. We may waive the exclusion of an 
individual if we determine that he or she is the sole source of 
essential services in a community. We will consider only the location 
in which the infraction(s) took place in our determination. We will not 
consider situations where the party has moved to a remote location 
after the excluding event. Our decision concerning waiver of the 
exclusion shall not be subject to review.
    (i) Right to a hearing before an administrative law judge. If an 
excluded individual is dissatisfied with our determination to exclude, 
the individual may request a hearing. The Associate Commissioner for 
Hearings and Appeals, or his or her delegate, will appoint an 
administrative law judge to conduct the hearing.
    (1) The request for a hearing must be made within 30 days of the 
date that the excluded individual receives the determination to 
exclude.
    (2) The individual must submit, with the request for a hearing, all 
exhibits that the individual wants to be received into the record, a 
list of any witnesses whom the individual intends to call at the 
hearing, and a statement of the issues being raised.
    (3) A failure to submit a timely request for hearing, evidence, or 
witness list may be excused for good cause. If there is an untimely 
submission of a request for hearing and the administrative law judge 
does not find that there is good cause to excuse the untimely filing, 
the administrative law judge will dismiss the request for hearing. If 
there is an untimely submission of evidence or a witness list and the 
administrative law judge finds that there is no good cause to excuse 
the untimely filing, the administrative law judge will not enter such 
evidence into the record and will not permit the witnesses to testify 
at the hearing.
    (j) Disqualification of administrative law judge. An administrative 
law judge shall not conduct a hearing if he or she is prejudiced or 
partial with respect to any party or has any interest in the matter 
pending for decision. The excluded individual has the right to object 
to the administrative law judge assigned to hear the individual's 
appeal. The individual must inform the administrative law judge, in 
writing and at his or her earliest opportunity, of the objection. The 
administrative law judge will consider the objection and decide whether 
to proceed with the hearing or withdraw. If he or she withdraws, the 
Associate Commissioner for Hearings and Appeals, or his or her 
delegate, will appoint another administrative law judge to conduct the 
hearing.
    (k) Issue before the administrative law judge. The administrative 
law judge may only decide whether the basis for an individual's 
exclusion exists and whether the length of exclusion meets

[[Page 40344]]

the requirements of paragraph (e) of this section. The administrative 
law judge has no authority to review the factual or legal conclusions 
of the conviction or determination that is the basis for the 
determination to exclude.
    (l) Pre-Hearing procedures. An administrative law judge may dismiss 
any hearing request that fails to state either an issue of disputed 
material fact or law regarding a matter that is subject to review; 
i.e., whether the underlying conviction or civil monetary penalty 
exist. If the individual's hearing request and supporting documentation 
does not reveal the existence of a material factual or legal dispute, 
the administrative law judge will issue an order to show cause why the 
hearing request should not be dismissed. The individual must respond to 
the order to show cause 30 days from the date of receipt, which will be 
presumed to be five calendar days from the date of mailing. The 
administrative law judge will decide whether a material factual or 
legal dispute exists and will either dismiss the hearing request or set 
a date for the hearing.
    (m) Hearing procedures. The procedures in Sec. Sec.  404.936-
404.938, 404.944, 404.948-404.949, 404.950(c-e), 404.953(a), and 
404.957(a-b), 404.961 will apply to the hearing before the 
administrative law judge. If the administrative law judge dismisses a 
case, the administrative law judge may, within 60 days of the 
dismissal, vacate such dismissal if good cause exists.
    (n) Appeals Council review. The Appeals Council may, on its own 
motion and within 60 days of the issuance of an administrative law 
judge's decision or dismissal, initiate review of the administrative 
law judge's decision or dismissal. We or the excluded individual may 
request the Appeals Council to exercise its authority to take own 
motion review. Sec. Sec.  404.970(a), 404.973-404.975, 404.976(a) and 
(b)(2), will apply to the Appeals Council review of an administrative 
law judge's decision or dismissal. The Appeals Council will issue a 
decision or remand the case to the administrative law judge. The 
Appeals Council may affirm, modify, or reverse the administrative law 
judge's decision. A copy of the Appeals Council's decision will be sent 
to the excluded individual at his or her last known address.
    (o) Effect of Appeals Council review on exclusion. Unless the 
Appeals Council reviews the decision or dismissal, the administrative 
law judge's decision or dismissal shall become the Commissioner's final 
decision 60 days after it is issued. If the Appeals Council decides to 
review the administrative law judge's decision within 60 days from the 
date it is issued, and the Appeals Council issues a decision, it will 
become the Commissioner's final decision.
    (p) Judicial review. The excluded individual has the right to file 
a civil action in a Federal district court within 60 days of the date 
of the Commissioner's final decision. The excluded individual shall 
serve a copy of any civil action on the Commissioner at 6401 Security 
Boulevard, Baltimore, Maryland 21235-0001. Sections 404.983-404.984 
will apply to any cases remanded by a Federal court.
    (q) Termination of exclusion. (1) An individual excluded from 
participation under this section may request that we terminate an 
exclusion:
    (i) At the end of the minimum period of exclusion;
    (ii) If the individual becomes the sole source of essential 
services in a community; or
    (iii) If the judgement or conviction that is the basis of the 
exclusion is set aside or expunged.
    (2) We may terminate the exclusion if we determine, based on the 
conduct of the excluded individual that occurred after the date of the 
notice of exclusion, or which was unknown to us at the time of the 
exclusion, that:
    (i) There is no basis for a continuation of the exclusion; and
    (ii) There are reasonable assurances that the types of actions that 
formed the basis for the original exclusion have not recurred and will 
not recur.
    (3) Our decision regarding termination of exclusion is not subject 
to review.
    (r) Penalties are not exclusive. Exclusion imposed under this 
section is in addition to any other penalties or sanctions prescribed 
by law.
    (s) Notice to State agencies and the public. (1) We will notify the 
State agencies employed for the purpose of making disability 
determinations of the exclusion of an individual from participating in 
Social Security programs when the Commissioner has issued a final 
decision to exclude. We will provide the following information:
    (i) The facts and circumstances of the exclusion of the individual; 
and
    (ii) The period that the exclusion will be in effect.
    (2) We will also notify the state agencies of the fact and 
circumstances of each termination of exclusion made under paragraph (q) 
of this section. We will also provide the public with appropriate 
notice of individuals or entities who have been excluded from 
participation in our programs.
    (t) Notice to State licensing authorities. We will notify 
appropriate State or local licensing agencies or other licensing 
authorities when the Commissioner has issued a final decision to 
exclude. We will provide those agencies or authorities with the facts 
and circumstances of the exclusion. We will also request that an 
appropriate investigation in accordance with State law be conducted, 
that appropriate sanctions be invoked, and that the State or local 
licensing agency or other licensing authority keep us currently and 
fully informed of their actions in response to our request.
    (u) Definitions. As used in this section--
    (1) Individual means any representative or health care provider.
    (2) Representative will have the same meaning as stated in section 
404.1703 of this part.
    (3) Health care provider means any person or entity that employs a 
person or persons who would be considered a medical source.
    (4) Medical source means any health care provider who is defined 
under section 404.1513(a) and (d)(1) of this part.
    (5) Act means the Social Security Act.
    (6) Social security programs means the program providing for 
monthly insurance benefits under title II of the Act and the program 
providing for monthly supplemental security income payments under title 
XVI of the Act (including State supplementary payments that we make.)
    (7) Sole source of essential services in a community means that, in 
the case of health care providers, no other health care providers who 
perform similar services or, in the case of representatives, no other 
representatives who perform similar services exist within a 50 mile 
radius of the limits of the town, county or city in which the 
infraction took place.
    (8) Convicted means:
    (i) A judgment of conviction that has been entered against the 
individual by a Federal, State, or local court, except if the judgment 
of conviction has been set aside or expunged;
    (ii) A finding of guilt against the individual by a Federal, State 
or local court;
    (iii) A plea of guilty or nolo contendere by the individual has 
been accepted by a Federal, State or local court; or
    (iv) The individual has entered into participation in a first 
offender, deferred adjudication, or other arrangement or program where 
judgement of conviction has been withheld.

[[Page 40345]]

    (v) Reporting requirements. Any individual participating in or 
seeking to participate in any Social Security programs will inform us 
by letter, as soon as practicable, of any excluding event stated in 
paragraph (a) of this section. If the individual is a health care 
provider the letter must be sent to the following address: Social 
Security Administration, Office of Disability and Income Security 
Programs, Section 1136 Exclusion, Room 4634 Annex Building, 6401 
Security Boulevard Baltimore, MD 21235-6401. If the individual is a 
representative, the letter must be sent to the following address: 
Social Security Administration, Office of Hearings and Appeals, 
Attention Special Counsel Staff, 5107 Leesburg Pike, Suite 1605, Falls 
Church, VA 22041. This letter must include a copy of the conviction, 
judgment, or administrative determination. The individual making such a 
report to us must comply with any further requests that we make for 
information regarding the reported matter.

[FR Doc. 04-15077 Filed 7-1-04; 8:45 am]
BILLING CODE 4191-02-P