[Federal Register Volume 60, Number 227 (Monday, November 27, 1995)]
[Proposed Rules]
[Pages 58305-58308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28309]
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SOCIAL SECURITY ADMINISTRATION
20 CFR Part 498
RIN 0960-AE23
Civil Monetary Penalties, Assessments and Recommended Exclusions
AGENCY: Office of the Inspector General (OIG), SSA.
ACTION: Proposed rule.
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SUMMARY: We propose to add new rules that would establish procedures to
impose civil monetary penalties and assessments against certain Old-
Age, Survivors, and Disability Insurance beneficiaries, Supplemental
Security Income recipients, third parties, physicians, medical
providers, and other individuals and entities who make false statements
or representations for use in determining any right to or amount of
title II or title XVI benefits under the Social Security Act. These
proposed rules would implement the civil monetary penalty provisions of
section 206(b) of the Social Security Independence and Program
Improvements Act of 1994.
DATES: To be sure that your comments are considered, we must receive
them no later than January 26, 1996.
ADDRESSES: Comments should be submitted in writing to the Inspector
General of the Social Security Administration, c/o Commissioner of
Social Security, P.O. Box 1585, Baltimore, MD 21235, sent by telefax to
(410) 966-2830, sent by E-mail to ``[email protected]'' or delivered
to 3-B-1 Operations Building, 6401 Security Boulevard, Baltimore, MD
21235, between 8:00 a.m. and 4:30 p.m. on regular business days.
The electronic file of this document is available on the Federal
Bulletin Board (FBB) at 9 a.m. on the date of publication in the
Federal Register. To download the file, modem dial (202) 512-1387. The
FBB instructions will explain how to download the file and the fee.
This file is in WordPerfect and will remain on the FBB during the
comment period.
FOR FURTHER INFORMATION CONTACT: Judith A. Kidwell, Office of the
Inspector General, (410) 965-9750 or Glenn Sklar, Office of the General
Counsel, (410) 965-6247.
SUPPLEMENTARY INFORMATION:
Background
These proposed rules would implement the civil monetary penalty
(CMP) provisions of section 206(b) of the Social Security Independence
and Program Improvements Act of 1994, Public Law (Pub. L.) 103-296,
which added section 1129 of the Social Security Act (the Act),
effective October 1, 1994. Section 108 of Pub. L. 103-296 made
additional conforming amendments to section 1129, effective March 31,
1995, to reflect the Social Security Administration's (SSA) new status
as an independent agency.
Section 206 provides expanded authority for SSA to prevent, detect,
and terminate fraudulent claims for Old-Age, Survivors, and Disability
Insurance (OASDI) benefits and Supplemental Security Income (SSI)
benefits. The new CMP provision contained in section 1129 of the Act is
intended to deter applicants, beneficiaries, employees, employers,
interpreters, physicians, medical providers, recipients, representative
payees, representatives, translators, and other individuals and
entities from providing false or misleading information, or omitting
material information in connection with benefit claims.
Previously, the SSA relied on provisions of the Civil False Claims
Act (CFCA) or the Program Fraud Civil Remedies Act (PFCRA) for imposing
CMPs against persons who submitted fraudulent claims to SSA. These
statutory provisions have been of limited usefulness in imposing CMPs
for SSA fraud, inasmuch as the CFCA requires the Department of Justice
to initiate civil action in Federal court to impose penalties, and the
applicability of PFCRA is restricted to fraudulent action on initial
benefit applications in some circumstances. The new CMP and assessment
authority provides an alternative censure in cases not acceptable for
action under the CFCA or the PFCRA.
Section 1129 of the Act provides that the Commissioner may delegate
authority under this section to the Inspector General of the Social
Security Administration (IG). On June 28, 1995, the Commissioner
delegated to the IG authority under the CMP provisions in section 1129.
However, the Commissioner has retained the authority to conduct
hearings and to review initial hearing decisions related to the
imposition of administrative sanctions.
Provisions of the Proposed Rule
These proposed regulations reflect and implement section 1129 of
the Act. Section 1129 provides the Agency with direct authority, after
approval by the Department of Justice, to impose a CMP and assessment
against any individual, organization, agency, or other entity that
knowingly makes or causes to be made a statement or representation of a
[[Page 58306]]
material fact for use in determining initial or continuing rights to
OASDI or SSI benefit payments when such statement or representation is
false, misleading, or omits a material fact. Under section 1129, each
offense is subject to a penalty of not more than $5,000 and an
assessment, in lieu of damages, of not more than twice the amount of
benefits paid as a result of such statement, representation or
omission. In addition, medical providers or physicians who commit an
offense described in section 1129 may be subject to exclusion from
participation in the Medicare program (title XVIII of the Act).
Specifically, section 1129(a)(1) provides that the Commissioner may
make a determination, as part of the same proceeding in which penalties
and assessments are determined, to recommend that the Secretary of
Health and Human Services (Secretary) exclude as provided in section
1128 of the Act, such medical providers or physicians from
participating in the Medicare program. Because of policy issues that
need to be addressed and coordinated with the Department of Health and
Human Services, we are reserving this issue at this time.
The criteria for exclusions of physicians and medical providers are
in many instances discretionary and involve policy issues within the
Department of Health and Human Services. The SSIPIA amended section
1128 of the Act to provide that fraud under section 1129 of the Act
constitutes a basis for exclusion from the Medicare and Medicaid
programs by the Secretary.
We are discussing these issues with the Department of Health and
Human Services and have decided to reserve the issue of recommended
exclusions in the regulations at this time. However, as provided in
section 1129 of the Act, we will notify the Secretary upon a final
determination to impose a penalty or assessment with respect to a
physician or medical provider.
A CMP may be imposed for misrepresentation of a material fact.
Section 1129(a)(2) defines a material fact as one which the Agency may
consider in evaluating whether an applicant has initial or continuing
entitlement to or eligibility for OASDI or SSI benefit payments.
Section 1129(b) provides that after a violation has occurred, the
IG has six years to initiate a proceeding, in accordance with Rule 4 of
the Federal Rules of Civil Procedure, to determine whether to impose a
CMP or assessment. Department of Justice authorization must be obtained
before such a proceeding may be initiated. The IG must give the
respondent written notice and an opportunity for the determination to
be made on the record after a hearing at which the respondent is
entitled to be represented by counsel, to present witnesses, and to
cross-examine witnesses. Persons who have previously been convicted of
a Federal or State crime charging fraud or false statement(s) are
estopped from denying the elements of the criminal offense.
The IG will determine the amount or scope of the penalty and
assessment after considering, as provided in section 1129(c), the
nature of the statements or representations and the circumstances under
which they occurred, the degree of culpability, the history of prior
offenses, the financial condition of the person who committed the
offense, and other matters as justice may require.
These proposed rules would implement the notice requirements of
section 1129(b) by providing in Sec. 498.109 that, if the IG proposes
to impose a penalty or assessment in accordance with this part, the IG
must send written notice to the respondent of the IG's intent to take
such action. Under the proposed rules, the notice will describe the
statutory basis for the penalty or assessment. The notice will also
provide instructions for responding and will explain the respondent's
hearing rights. The IG's detailed CMP hearings and appeal procedures
will be published in the Federal Register in the near future, and will
be located at 20 C.F.R. Sec. 498.200 et seq.
These proposed CMP regulations have been modeled after longstanding
regulations in 42 C.F.R. part 1003 which implement similar statutory
CMP provisions for false claims in the Medicare and Medicaid programs.
Regulatory Procedures
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and have determined that these rules do not meet the criteria for a
significant regulatory action under Executive Order 12866. Thus, they
are not subject to OMB review.
Paperwork Reduction Act
These proposed regulations impose no new reporting or recordkeeping
requirements requiring OMB clearance.
Regulatory Flexibility Act
We have determined that no regulatory impact analysis is required
for these proposed regulations. While the penalties and assessments
which the IG could impose as a result of section 1129 of the Act and
these regulations might have a slight impact on small entities, we do
not anticipate that a substantial number of these small entities will
be significantly affected by this rulemaking. Based on our
determination, the IG certifies that these proposed regulations would
not have a significant economic impact on a substantial number of small
business entities. Any impact on small businesses would primarily be a
result of the legislation rather than these regulations. Therefore, we
have not prepared a regulatory flexibility analysis.
Effect of NPRM on Pending Actions
Until the promulgation of final regulations, the IG intends that
these proposed regulations shall provide guidance with respect to the
imposition and adjudication of the CMPs and assessments.
(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social
Security-Disability Insurance; 96.002, Social Security-Retirement
Insurance; 96.004, Social Security-Survivors Insurance; 96.006,
Supplemental Security Income Program)
List of Subjects in 20 CFR part 498
Administrative practice and procedure, Fraud, Penalties.
Approved: October 10, 1995.
June Gibbs Brown,
Inspector General.
For the reasons set out in the preamble, part 498 of chapter III of
title 20 of the Code of Federal Regulations would be amended as set
forth below.
PART 498--CIVIL MONETARY PENALTIES, ASSESSMENTS AND RECOMMENDED
EXCLUSIONS
1-2. The authority citation for part 498 is revised to read as
follows:
Authority: Secs. 702(a)(5), 1129, and 1140 of the Social
Security Act (42 U.S.C. 902(a)(5), 1320a-8, and 1320b-10).
3. Section 498.100 is amended by revising paragraphs (a), (b)
introductory text, and (b)(1) to read as follows:
Sec. 498.100 Basis and purpose.
(a) Basis. This part implements sections 1129 and 1140 of the
Social Security Act (42 U.S.C. 1320a-8 and 1320b-10).
(b) Purpose. This part provides for the imposition of civil
monetary penalties and assessments, as applicable, against persons
who--
(1) Make or cause to be made false statements or representations,
or omissions of material fact for use in determining any right to or
amount of benefits under title II or benefits or
[[Page 58307]]
payments under title XVI of the Social Security Act; or
* * * * *
4. Section 498.101 is amended by adding the following definitions
and revising the definition of ``Respondent'' to read as follows:
Sec. 498.101 Definitions.
* * * * *
Assessment means the amount described in Sec. 498.104, and includes
the plural of that term.
* * * * *
Material fact means a fact which the Commissioner of Social
Security may consider in evaluating whether an applicant is entitled to
benefits under title II or eligible for benefits or payments under
title XVI.
* * * * *
Respondent means the person upon whom the Commissioner or the
Inspector General has imposed, or intends to impose, a penalty and
assessment.
* * * * *
5. Section 498.102 is amended by revising the section heading and
adding paragraph (a) to read as follows:
Sec. 498.102 Basis for civil monetary penalties and assessments.
(a) The Office of the Inspector General may impose a penalty and
assessment against any person whom it determines in accordance with
this part--
(1) Has made, or caused to be made, a statement or representation
of a material fact for use in determining any initial or continuing
right to or amount of:
(i) Monthly insurance benefits under title II of the Social
Security Act; or
(ii) Benefits or payments under title XVI of the Social Security
Act; and
(2)(i) Knew, or should have known, that the statement or
representation--
(A) Was false or misleading; or
(B) Omitted a material fact; or
(ii) Made such statement with knowing disregard for the truth.
* * * * *
6. Section 498.103 is amended by adding paragraph (a) to read as
follows:
* * * * *
Sec. 498.103 Amount of penalty.
(a) Under section Sec. 498.102(a), the Office of the Inspector
General may impose a penalty of not more than $5,000 for each false
statement or representation.
* * * * *
7. Section 498.104 is added to read as follows:
Sec. 498.104 Amount of assessment.
A person subject to a penalty determined under Sec. 498.102(a) may
be subject, in addition, to an assessment of not more than twice the
amount of benefits or payments paid as a result of the statement or
representation which was the basis for the penalty. An assessment is in
lieu of damages sustained by the United States because of such
statement or representation.
8. Section 498.106 is amended by adding paragraph (a) to read as
follows:
Sec. 498.106 Determinations regarding the amount or scope of penalties
and assessments.
(a) In determining the amount or scope of any penalty and
assessment in accordance with Sec. 498.103(a) and Sec. 498.104, the
Office of the Inspector General will take into account:
(1) The nature of the statements and representations referred to in
Sec. 498.102(a) and the circumstances under which they occurred;
(2) The degree of culpability of the person committing the offense;
(3) The history of prior offenses of the person committing the
offense;
(4) The financial condition of the person committing the offense;
and
(5) Such other matters as justice may require.
* * * * *
9. Section 498.108 is revised to read as follows:
Sec. 498.108 Penalty and assessment not exclusive.
Penalties and assessments imposed under this part are in addition
to any other penalties prescribed by law.
10. Section 498.109 is revised to read as follows:
Sec. 498.109 Notice of proposed determination.
(a) If the Office of the Inspector General seeks to impose a
penalty and assessment, as applicable, it will serve written notice of
the intent to take such action. The notice will include:
(1) Reference to the statutory basis for the penalty and
assessment, as applicable;
(2) A description of the false statements, representations, and
incidents, as applicable, with respect to which the penalty and
assessment, as applicable, are proposed;
(3) The amount of the proposed penalty and assessment, as
applicable;
(4) Any circumstances described in Sec. 498.106 that were
considered when determining the amount of the proposed penalty and
assessment, as applicable; and
(5) Instructions for responding to the notice, including--
(i) A specific statement of respondent's right to a hearing; and
(ii) A statement that failure to request a hearing within 60 days
permits the imposition of the proposed penalty and assessment, as
applicable, without right of appeal.
(b) Any person upon whom the Office of the Inspector General has
proposed the imposition of a penalty and assessment, as applicable, may
request a hearing on such proposed penalty and assessment.
(c) If the respondent fails to exercise the respondent's right to a
hearing, within the time permitted under this section, any penalty and
assessment, as applicable, becomes final.
11. Section 498.110 is revised to read as follows:
Sec. 498.110 Failure to request a hearing.
If the respondent does not request a hearing within the time
prescribed by Sec. 498.109(a), the Office of the Inspector General may
seek the proposed penalty and assessment, as applicable, or any less
severe penalty and assessment. The Office of the Inspector General
shall notify the respondent by certified mail, return receipt
requested, of any penalty and assessment, as applicable, that has been
imposed and of the means by which the respondent may satisfy the amount
owed.
12. Section 498.114 is added to read as follows:
Sec. 498.114 Collateral estoppel.
In a proceeding under section 1129 of the Social Security Act
that--
(a) Is against a person who has been convicted (whether upon a
verdict after trial or upon a plea of guilty or nolo contendere) of a
Federal or State crime charging fraud or false statements; and
(b) Involves the same transactions as in the criminal action, the
person is estopped from denying the essential elements of the criminal
offense.
13. Section 498.127 is revised to read as follows:
Sec. 498.127 Judicial review.
Sections 1129 and 1140 of the Social Security Act authorize
judicial review of any penalty and assessment, as applicable, that has
become final. Judicial review may be sought by a respondent only in
regard to a penalty and assessment, as applicable, with respect to
which the respondent requested a hearing, unless the failure or neglect
to urge such objection is excused by the court because of extraordinary
circumstances.
14. Section 498.128 is amended by revising paragraph (a) and adding
paragraphs (b), (d), and (e) to read as follows:
[[Page 58308]]
Sec. 498.128 Collection of penalty and assessment.
(a) Once a determination has become final, collection of any
penalty and assessment will be the responsibility of the Commissioner
or his or her designee.
(b) In cases brought under section 1129 of the Social Security Act,
a penalty and assessment imposed under this part may be compromised by
the Commissioner or his or her designee, and may be recovered in a
civil action brought in the United States district court for the
district where the statement or representation referred in
Sec. 498.102(a) was made, or where the respondent resides.
* * * * *
(d) As specifically provided under the Social Security Act, in
cases brought under section 1129 of the Social Security Act, the amount
of a penalty and assessment when finally determined, or the amount
agreed upon in compromise, may also be deducted from:
(i) Monthly title II or title XVI payments, notwithstanding section
207 of the Social Security Act as made applicable to title XVI by
section 1631(d)(1) of the Social Security Act; or
(ii) A tax refund to which a person is entitled to after notice to
the Secretary of the Treasury under 31 U.S.C. 3720A; or
(iii) By authorities provided under the Debt Collection Act of
1982, as amended, 31 U.S.C. 3711, to the extent applicable to debts
arising under the Act; or
(iv) Any combination of the foregoing.
(e) Matters that were raised or that could have been raised in a
hearing before an administrative law judge or in an appeal to the
United States Court of Appeals under sections 1129 or 1140 of the
Social Security Act may not be raised as a defense in a civil action by
the United States to collect a penalty and assessment under this part.
15. Section 498.129 is added to read as follows:
Sec. 498.129 Notice to other agencies.
As provided in section 1129 of the Social Security Act, when a
determination to impose a penalty and assessment with respect to a
physician or medical provider becomes final, the Office of the
Inspector General will notify the Secretary of the final determination
and the reasons therefore.
16. Section 498.132 is revised to read as follows:
Sec. 498.132 Limitations.
The Office of the Inspector General may initiate a proceeding in
accordance with Sec. 498.109(a) to determine whether to impose a
penalty and assessment only--
(a) In cases brought under section 1129 of the Social Security Act,
after receiving authorization from the Attorney General pursuant to
procedures agreed upon by the Inspector General and the Attorney
General; and
(b) Within 6 years from the date on which the violation was
committed.
[FR Doc. 95-28309 Filed 11-24-95; 8:45 am]
BILLING CODE 4190-29-P