[Federal Register Volume 74, Number 163 (Tuesday, August 25, 2009)]
[Proposed Rules]
[Pages 42831-42833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-20418]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

42 CFR Part 3

RIN 0991-AB53


Patient Safety and Quality Improvement: Civil Money Penalty 
Inflation Adjustment

AGENCY: Office for Civil Rights, Office of the Secretary, HHS.

ACTION: Proposed rule.

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

SUMMARY: The Department of Health and Human Services is publishing this 
companion proposed rule to the direct final rule, published elsewhere 
in this issue of the Federal Register, which amends the Patient Safety 
and Quality Improvement Rule by adjusting for inflation the maximum 
civil money penalty amount for violations of the confidentiality 
provisions of the Rule. We are proposing to amend the penalty amount to 
comply with the Federal Civil Penalties Inflation Adjustment Act of 
1990.

DATES: Submit written or electronic comments on this proposed rule by 
September 24, 2009. If significant adverse comment is received on this 
proposed rule or the direct final rule (discussed in the SUPPLEMENTARY 
INFORMATION section), OCR will publish a timely withdrawal of the 
direct final rule in the Federal Register.

ADDRESSES: Send comments to one of the following addresses. Please do 
not submit duplicate comments. We will treat a comment directed to 
either the direct final rule or proposed rule as being directed towards 
both, therefore there is no need to submit comments on both documents.
     Federal eRulemaking Portal: You may submit electronic 
comments at http://www.regulations.gov. Follow the instructions for 
submitting electronic comments. Attachments should be in Microsoft 
Word, WordPerfect, or Excel; however, we prefer Microsoft Word.
     Regular, Express, or Overnight Mail: You may mail written 
comments (one original and two copies) to the following address only: 
U.S. Department of Health and Human Services, Office for Civil Rights, 
Attention: PSQIA CMP Adjustment (RIN 0991-AB53), Hubert H. Humphrey 
Building, Room 509F, 200 Independence Avenue, SW., Washington, DC 
20201. Mailed comments may be subject to delivery delays due to 
security procedures. Please allow sufficient time for mailed comments 
to be timely received in the event of delivery delays.
     Hand Delivery or Courier: If you prefer, you may deliver 
(by hand or courier) your written comments (one original and two 
copies) to the following address only: Office for Civil Rights, 
Attention: PSQIA CMP Adjustment (RIN 0991-AB53), Hubert H. Humphrey 
Building, Room 509F, 200 Independence Avenue, SW., Washington, DC 
20201. (Because access to the interior of the Hubert H. Humphrey 
Building is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the mail drop slots located in the main lobby of the building.)
    Inspection of Public Comments: All comments received before the 
close of the comment period will be available for public inspection, 
including any personally identifiable or confidential business 
information that is included in a comment. We will post all comments 
received before the close of the comment period at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Andra Wicks, 202-205-2292.

SUPPLEMENTARY INFORMATION:

I. Use of a Direct Final Rule

    The Department has chosen to concurrently issue this proposed rule 
as a direct final rule because we do not expect to receive any 
significant adverse comment on the rule. A direct final rule is a rule 
that provides an opportunity for comment and then automatically becomes 
effective on a later date if no significant adverse comments are 
received. We do not anticipate significant adverse comments because 
this rule's amendment is required by the Federal Civil Penalties 
Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note, as amended by 
the Debt Collection Improvement Act of 1996 (31 U.S.C. 3701)) 
(Inflation Adjustment Act), and the Department has no discretion in how 
it calculates the adjustment.
    We are providing a 30-day comment period for both this proposed 
rule and the direct final rule. If no significant adverse comments are 
received, we will take no further action on this proposed rule and the 
direct final rule will become effective 60 days later. If we do not 
receive any significant adverse comments in response to the direct 
final rule or this proposed rule, the direct final rule will become 
effective on the date set forth in the DATES section of that rule. If 
we receive significant adverse comments on this proposed rule or the 
direct final rule, we will publish a document withdrawing the direct 
final rule in the Federal Register prior to that date.
    If we withdraw the direct final rule based on the receipt of any 
significant adverse comments, we will publish a final rule based on 
this proposed rule and any comments to the proposed or direct final 
rule.
    The Department will not provide additional opportunity for comment.

II. Background

    The Patient Safety and Quality and Improvement Act of 2005 (Patient 
Safety Act), 42 U.S.C. 299b-21 to 299b-26, amended Title IX of the 
Public Health Service Act, 42 U.S.C. 299 et seq., the authorizing 
statute for the Agency for Healthcare Research and Quality. The Patient 
Safety Act creates a voluntary program through which health care 
providers can share information related to patient safety events and 
concerns (known as patient safety work product (PSWP)) with patient 
safety organizations (PSOs) for the purpose of improving patient safety 
and the quality of care nationwide. The Patient Safety Act requires the 
Department of Health and Human Services (``HHS'' or ``the Department'') 
to maintain a listing of PSOs. The Patient Safety Act provides that 
PSWP is both privileged and confidential. While participation in the 
patient safety program is voluntary, a violation of the Patient Safety 
Act's confidentiality requirements is subject to a civil money penalty 
(CMP) of up to $10,000. 42 U.S.C. 299b-22(f).
    On November 21, 2008, the Department promulgated regulations to 
implement the Patient Safety Act. 73 FR 70732, Nov. 21, 2008, adding 42 
CFR part 3. The regulations provide for the listing and delisting of 
PSOs, the confidentiality and privilege protections of PSWP, and 
procedures for enforcement against violations of the regulations' 
confidentiality requirements. In particular, under Sec.  3.404, a 
person who discloses identifiable PSWP in knowing or reckless violation 
of the Patient Safety Act and 42 CFR part 3 shall be subject to a CMP 
of not more than $10,000 for each act constituting a violation.
    The Agency for Healthcare Research and Quality administers the 
provisions of the regulations relating to PSOs. The Office for Civil 
Rights investigates and enforces compliance with the confidentiality 
provisions and, if warranted, may assess CMPs for knowing or reckless 
violations of confidentiality.

[[Page 42832]]

III. The Inflation Adjustment Act

    Congress enacted the Inflation Adjustment Act based on its findings 
that the impact of CMPs had been reduced by inflation and that reducing 
the impact of CMPs had weakened their deterrent effect. Inflation 
Adjustment Act Sec.  2, 28 U.S.C. 2461 note. In general, the Inflation 
Adjustment Act requires Federal agencies to issue regulations to adjust 
for inflation each CMP provided by law within their jurisdiction. The 
Inflation Adjustment Act applies to civil penalties found within the 
Public Health Service Act, such as the Patient Safety Act's CMP 
provision.\1\
---------------------------------------------------------------------------

    \1\ We note that Sec.  4 of the Inflation Adjustment Act, found 
at 28 U.S.C. 2461 note, excludes a small number of statutes, such as 
the Social Security Act, from the requirement for agencies to adjust 
their CMPs for inflation. Because the CMPs for title II, subtitle F 
(Administrative Simplification) of the Health Insurance Portability 
and Accountability Act of 1996 (HIPAA) are found at section 1176 of 
the Social Security Act, the Department has not made similar 
inflation adjustments to the HIPAA administrative simplification 
CMPs at 45 CFR 160.404.
---------------------------------------------------------------------------

    The Inflation Adjustment Act directs agencies to issue regulations 
to adjust CMPs under their authority by October 23, 1996, and to make 
additional adjustments at least once every four years thereafter. 
Because the Patient Safety Act was enacted after October 23, 1996, we 
interpret the Inflation Adjustment Act as requiring the Department to 
issue a regulation to adjust for inflation the Patient Safety Act's CMP 
amount at least once every four years, beginning from the Patient 
Safety Act's date of enactment, which was July 29, 2005. Thus, we are 
proposing this rule four years from the Patient Safety Act's enactment.

IV. Description of Amendment

    The Inflation Adjustment Act provides for the adjustment of a 
penalty amount through a three-step process. First, we calculate an 
increase in the penalty amount by a ``cost-of-living adjustment.'' 
Inflation Adjustment Act Sec.  5(a), 28 U.S.C. 2461 note. The Inflation 
Adjustment Act defines the cost-of-living adjustment as ``the 
percentage (if any) for each civil monetary penalty by which--(1) The 
Consumer Price Index for the month of June of the calendar year 
preceding the adjustment, exceeds (2) the Consumer Price Index for the 
month of June of the calendar year in which the amount of such civil 
monetary penalty was last set or adjusted pursuant to law.'' Inflation 
Adjustment Act Sec.  5(b), 28 U.S.C. 2461 note. Second, we round the 
adjustment amount pursuant to the methodology set forth in section 5(a) 
of the Inflation Adjustment Act, which rounds the increase based on the 
size of the underlying penalty, as follows:

    Any increase determined under this subsection shall be rounded 
to the nearest--
    (1) Multiple of $10 in the case of penalties less than or equal 
to $100;
    (2) Multiple of $100 in the case of penalties greater than $100 
but less than or equal to $1,000;
    (3) Multiple of $1,000 in the case of penalties greater than 
$1,000 but less than or equal to $10,000;
    (4) Multiple of $5,000 in the case of penalties greater than 
$10,000 but less than or equal to $100,000;
    (5) Multiple of $10,000 in the case of penalties greater than 
$100,000 but less than or equal to $200,000; and
    (6) Multiple of $25,000 in the case of penalties greater than 
$200,000.

Third, pursuant to the Debt Collection Improvement Act of 1996 Sec.  
31001(s)(2)'s amendment to the Inflation Adjustment Act, we must limit 
the first adjustment of a CMP to ten percent of the penalty amount.
    With respect to step 1 of the adjustment, the Consumer Price Index 
(CPI) for June of 2008 (the calendar year preceding this adjustment) 
was 218.815.\2\ The CPI for June of 2005 (the calendar year in which 
the Patient Safety Act CMP was last set) was 194.5. The percent change 
in these CPIs is an increase of 12.5 percent. This leads to an 
unrounded increase in the Patient Safety Act's CMP of $1,250.
---------------------------------------------------------------------------

    \2\ The Inflation Adjustment Act defines ``Consumer Price 
Index'' as ``the Consumer Price Index for all-urban consumers 
published by the Department of Labor.'' Historic data on the 
Consumer Price Index for all-urban consumers, including the data 
relied upon in this rulemaking, can be found at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
---------------------------------------------------------------------------

    Under step 2, we round the amount of the increase ($1,250) based on 
the size of the penalty ($10,000). Because the penalty of $10,000 is 
``greater than $1,000 but less than or equal to $10,000,'' we round the 
increase to the nearest multiple of $1,000. This leads to a rounded 
increase of $1,000, for an increased penalty of $11,000.
    Step 3 requires that the first adjustment to a civil penalty be 
limited to 10 percent of the penalty amount. This is the first 
adjustment to the Patient Safety Act's CMP. Therefore, this 10 percent 
cap is applicable. Pursuant to this cap, the adjusted penalty cannot 
exceed $11,000. Because the adjusted penalty is $11,000, it does not 
exceed the cap. Accordingly, the Patient Safety Act's revised maximum 
CMP amount, after adjusting for inflation pursuant to the Inflation 
Adjustment Act, is $11,000.
    Based on the above, we are proposing to amend 42 CFR 3.404(b) to 
provide that the Secretary may impose a CMP of not more than $11,000, 
rather than the current limit of $10,000, for a violation of the 
Patient Safety Act's confidentiality requirements.

V. Environmental Impact

    We have determined under 21 CFR 25.30(a) and (h) that the proposed 
action is of a type that does not individually or cumulatively have a 
significant effect on the human environment. Therefore, neither an 
environmental assessment nor an environmental impact statement is 
required.

VI. Paperwork Reduction Act 1995

    We have concluded that the CMP adjustment in this proposed rule is 
not subject to review by the Office of Management and Budget under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) because it does 
not constitute a ``collection of information.'' That is, the adjustment 
does not require disclosure of any information to the Department, third 
parties, or the public.

VII. Federalism

    The Department has analyzed this proposed rule in accordance with 
the principles set forth in Executive Order 13132. We have determined 
that the rule does not contain policies that have substantial direct 
effects on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Accordingly, 
we have concluded that the rule does not contain policies that have 
Federalism implications as defined in the Executive Order and, 
consequently, a Federalism summary impact statement is not required.

VIII. Analysis of Impacts

    The Department has examined the impacts of the proposed rule under 
Executive Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-
612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). 
Executive Order 12866 directs agencies to assess all costs and benefits 
of available regulatory alternatives and, when regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). The Department believes 
that this proposed rule is not a significant regulatory action under 
the Executive Order.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any

[[Page 42833]]

significant impact of a rule on small entities. Because this proposed 
rule simply adjusts the maximum amount of a CMP, and because the 
adjustment is required by the Inflation Adjustment Act, the Department 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and Tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $133 million, using the most current (2008) Implicit 
Price Deflator for the Gross Domestic Product.\3\ The Department does 
not expect this proposed rule to result in any 1-year expenditure that 
would meet or exceed this amount.
---------------------------------------------------------------------------

    \3\ According to the U.S. Department of Commerce, Bureau of 
Economic Analysis, the implicit price deflator for gross domestic 
product was indexed at 92.106 in 1995 (the year of the Unfunded 
Mandates Reform Act) and 122.422 in 2008. See http://www.bea.gov/national/nipaweb/ (Table 1.1.9).
---------------------------------------------------------------------------

List of Subjects in 42 CFR Part 3

    Administrative practice and procedure, Civil money penalty, 
Confidentiality, Conflict of interests, Courts, Freedom of information, 
Health, Health care, Health facilities, Health insurance, Health 
professions, Health records, Hospitals, Investigations, Law 
enforcement, Medical research, Organization and functions, Patient, 
Patient safety, Privacy, Privilege, Public health, Reporting and 
recordkeeping requirements, Safety, State and local governments, 
Technical assistance.

    For the reasons stated in the preamble, HHS proposes to amend part 
3 of title 42 of the Code of Federal Register as follows:

PART 3--PATIENT SAFETY ORGANIZATIONS AND PATIENT SAFETY WORK 
PRODUCT

    1. The authority citation for part 3 continues to read:

    Authority: 42 U.S.C. 216, 299b-21 through 299b-26; 42 U.S.C. 
299c-6.

    2. Amend Sec.  3.404 by revising paragraph (b) to read as follows:


Sec.  3.404  Amount of a civil money penalty.

* * * * *
    (b) The Secretary may impose a civil money penalty in the amount of 
not more than $11,000.

    Dated: August 18, 2009.
Kathleen Sebelius,
Secretary.
[FR Doc. E9-20418 Filed 8-24-09; 8:45 am]
BILLING CODE 4160-90-P