[Federal Register Volume 60, Number 227 (Monday, November 27, 1995)]
[Rules and Regulations]
[Pages 58225-58228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28308]
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SOCIAL SECURITY ADMINISTRATION
20 CFR Part 498
RIN 0960-AE33
Social Security Programs: Fraud and Abuse; Establishment of New
Part 498 to Address Civil Monetary Penalties, Assessments and
Exclusions
AGENCY: Office of the Inspector General (OTG), SSA.
ACTION: Final rule.
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SUMMARY: This final rule establishes a new part 498, which will serve
as a repository for the Social Security Administration's existing civil
monetary penalty authorities and which will reflect and implement new
civil monetary penalty authorities provided under the Social Security
Independence and Program Improvements Act of 1994. In the first phase
of this process, the Social Security Administration in this final rule
will relocate its existing regulations for misuse of Social Security
program words, letters, symbols, and emblems to part 498. In addition,
the existing regulations will be updated in this final rule to reflect
nondiscretionary changes made by the Social Security Independence and
Program Improvements Act of 1994.
EFFECTIVE DATE: November 27, 1995.
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
Section 101 of Public Law (Pub. L.) 103-296, the Social Security
Independence and Program Improvements Act of 1994 (SSIPIA), established
the Social Security Administration (SSA) as an independent agency in
the Executive Branch effective March 31, 1995. Previously, SSA had been
a component of the Department of Health and Human Services (HHS).
In creating an independent SSA, the SSIPIA also established an
independent Office of the Inspector General (OIG) within SSA, and
authorized the Commissioner of Social Security (Commissioner) to
delegate authority to impose certain civil monetary penalties (CMPs).
In order to properly reflect its delegated authority with respect to
CMPs, the OIG is establishing 20 CFR part 498. This part will: (1)
Incorporate existing CMP authorities for misuse of Social Security
program words, letters, symbols, and emblems which had previously been
located in 42 CFR part 1003; (2) establish a new location for newly
designated and future CMP provisions; (3) set forth the basis for any
OIG penalty authorities and the factors to be considered in determining
penalty amounts; and (4) detail the hearing process to be utilized in
the imposition of these CMP provisions.
New Authorities for SSA Inspector General
Section 1129 of the Social Security Act
Section 206(b) of the SSIPIA provided expanded authority for SSA to
impose CMPs and assessments against persons who make false statements
or representations for use in determining any initial or continuing
right to or amount of benefit payments under title II or title XVI of
the Social Security Act (the Act), if such person knew or should have
known that the statement was false, misleading or omitted a material
fact. Section 206(b) of the SSIPIA added section 1129 to the Act,
effective October 1, 1994, and section 108 of the SSIPIA made
additional conforming amendments effective March 31, 1995. This section
1129 authority to impose CMPs, including the authority to issue
implementing rules, was delegated to
[[Page 58226]]
the Inspector General (IG) of Social Security by the Commissioner on
June 28, 1995. Because the regulations implementing section 1129 will
involve discretionary issues they will be developed in a separate
notice of proposed rulemaking. We have reserved certain sections in
this final rule to accommodate the regulations reflecting and
implementing section 1129 and will finalize them after we have received
and considered public comments.
Section 1140 of the Social Security Act
The SSIPIA also includes several changes to section 1140 of the Act
that require us to alter the scope and content of the existing misuse
of program words, letters, symbols, and emblems penalty regulations
currently located at 42 CFR 1003. Specifically, section 312 of the
SSIPIA amended section 1140 of the Act by adding several provisions
which broaden existing deterrents against misleading mailings and
advertisements directly involving the SSA. Section 312 of the SSIPIA:
(1) Broadened the list of prohibited words, symbols and acronyms
subject to a violation; (2) revised the standard of conduct for
determining a violation; (3) exempted any State agency (or any
instrumentality or political subdivision of the State) from the
prohibited use of these program words, letters, symbols, or emblems
where such use serves to identify these entities; (4) specifically
defined a violation in regard to mailings; (5) eliminated the annual
penalty cap of $100,000; (6) eliminated the use of a disclaimer as a
defense to a violation under this provision; and (7) repealed the
provision that required a formal declination to be obtained from the
Department of Justice before pursuing a CMP case under section 1140 of
the Act.
Section 312 of the SSIPIA also includes a prohibition against
reproducing, reprinting, or distributing forms, applications, or other
publications of the SSA for a fee, unless the person has obtained
written authorization in accordance with regulations prescribed by the
Commissioner. These regulations will involve discretionary issues and
will be published in a separate notice of proposed rulemaking.
Hearing Process
The Act mandates that all individuals subject to the imposition of
a CMP be provided with the opportunity for a hearing. We are reserving
20 CFR 498.200 et seq. to address the CMP hearing process which will be
developed at a future date.
The Handling of Dual Violations
The SSA/OIG and the HHS/OIG may make separate and independent
determinations in regard to violations of section 1140 of the Act and
impose separate CMPs against individuals, entities or organizations who
make prohibited use of both the SSA and HHS program words, letters,
symbols, or emblems in the same advertisement or solicitation.
Regulatory Procedures
Waiver of Proposed Rulemaking
When developing our regulations, we follow the notice of proposed
rulemaking and public comment procedures specified in the
Administrative Procedure Act (APA), 5 U.S.C. 553. The APA provides an
exception to its 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 in this case. Good cause exists because this
rulemaking reflects the statutory amendments to section 1140 of the
Act, with no issues of policy discretion. Therefore, opportunity for
prior comment is unnecessary and we are issuing these changes to our
regulations as a final rule.
Waiver of 30-Day Delay in Effective Date
We find good cause for dispensing with the 30-day delay in the
effective date of a substantive rule, provided for by 5 U.S.C. 553(d).
As explained above, the only substantive changes we are making merely
reflect legislation and involve no discretionary policy. Thus, we find
that it is in the public interest to make this rule effective upon
publication.
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that this rule does not meet the criteria for a
significant regulatory action under Executive Order 12866. Thus, it was
not subject to OMB review.
Regulatory Flexibility Act
We generally prepare a regulatory flexibility analysis consistent
with Pub. L. 96-354, the Regulatory Flexibility Act, unless the IG
certifies that a regulation will not have a significant economic impact
on a substantial number of small business entities. While some
sanctions and penalties provided for under the Act may have an impact
on small entities, it is the nature of the violation and not the size
of the entity that will result in an action by the OIG. In either case,
we do not anticipate that a substantial number of small entities will
be significantly affected by this revised rulemaking. Therefore, we
have concluded, and the IG certifies, that a regulatory flexibility
analysis is not required for this final rule.
Paperwork Reduction Act
This rule imposes no new reporting or recordkeeping requirements
necessitating clearance by OMB.
(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.
20 CFR chapter III is amended by adding part 498 to read as
follows:
PART 498--CIVIL MONETARY PENALTIES, ASSESSMENTS AND RECOMMENDED
EXCLUSIONS
Sec.
498.100 Basis and purpose.
498.101 Definitions.
498.102 Basis for civil monetary penalties.
498.103 Amount of penalty.
498.104 [Reserved]
498.105 [Reserved]
498.106 Determinations regarding the amount or scope of penalties.
498.107 [Reserved]
498.108 Penalty not exclusive.
498.109 Notice of proposed determination.
498.110 Failure to request a hearing.
498.114-498.125 [Reserved]
498.126 Settlement.
498.127 Judicial review.
498.128 Collection of penalty.
498.129 [Reserved]
498.132 Limitations.
498.200 [Reserved]
Authority: Secs. 702(a)(5) and 1140 of the Social Security Act
(42 U.S.C. 902(a)(5) and 1320b-10).
Sec. 498.100 Basis and purpose.
(a) Basis. This part implements section 1140 of the Social Security
Act (42 U.S.C. 1320b-10).
(b) Purpose. This part provides for the imposition of civil
monetary penalties against persons who--
(1) [Reserved]
(2) Misuse certain Social Security program words, letters, symbols,
and emblems.
[[Page 58227]]
Sec. 498.101 Definitions.
As used in this part:
Agency means the Social Security Administration.
Commissioner means the Commissioner of Social Security or his or
her designees.
Department means the U.S. Department of Health and Human Services.
General Counsel means the General Counsel of the Social Security
Administration or his or her designees.
Inspector General means the Inspector General of the Social
Security Administration or his or her designees.
Penalty means the amount described in Sec. 498.103 and includes the
plural of that term.
Person means an individual, organization, agency, or other entity.
Respondent means the person upon whom the Commissioner or the
Inspector General has imposed, or intends to impose, a penalty.
Secretary means the Secretary of the U.S. Department of Health and
Human Services or his or her designees.
SSA means the Social Security Administration.
SSI means Supplemental Security Income.
Sec. 498.102 Basis for civil monetary penalties.
(a) [Reserved]
(b) The Office of the Inspector General may impose a penalty
against any person whom it determines in accordance with this part has
made use of certain Social Security program words, letters, symbols, or
emblems in such a manner that they knew or should have known would
convey, or in a manner which reasonably could be interpreted or
construed as conveying, the false impression that an advertisement or
other item was authorized, approved, or endorsed by the Social Security
Administration, or that such person has some connection with, or
authorization from, the Social Security Administration.
(1) Civil monetary penalties may be imposed for misuse, as set
forth in Sec. 498.102(b), of--
(i) The words ``Social Security,'' ``Social Security Account,''
``Social Security Administration,'' ``Social Security System,''
``Supplemental Security Income Program,'' or any combination or
variation of such words; or
(ii) The letters ``SSA,'' or ``SSI,'' or any other combination or
variation of such letters; or
(iii) A symbol or emblem of the Social Security Administration
(including the design of, or a reasonable facsimile of the design of,
the Social Security card, the check used for payment of benefits under
title II, or envelopes or other stationery used by the Social Security
Administration), or any other combination or variation of such symbols
or emblems.
(2) Civil monetary penalties will not be imposed against any agency
or instrumentality of a State, or political subdivision of a State,
that makes use of any symbol or emblem, or any words or letters which
identify that agency or instrumentality of the State or political
subdivision.
(c) The use of a disclaimer of affiliation with the United States
Government, the Social Security Administration or its programs, or any
other agency or instrumentality of the United States Government, will
not be considered as a defense in determining a violation of section
1140 of the Social Security Act.
Sec. 498.103 Amount of penalty.
(a) [Reserved]
(b) Under section Sec. 498.102(b), the Office of the Inspector
General may impose a penalty of not more than $5,000 for each violation
resulting from the misuse of Social Security Administration program
words, letters, symbols, or emblems relating to printed media, and a
penalty of not more than $25,000 in the case of such misuse related to
a broadcast or telecast.
(c) For purposes of paragraph (b) of this section, a violation is
defined as--
(1) In the case of a direct mailing solicitation or advertisement,
each separate piece of mail which contains one or more program words,
letters, symbols, or emblems related to a determination under
Sec. 498.102(b); and
(2) In the case of a broadcast or telecast, each airing of a single
commercial or solicitation related to a determination under
Sec. 498.102(b).
Sec. 498.104 [Reserved]
Sec. 498.105 [Reserved]
Sec. 498.106 Determinations regarding the amount or scope of
penalties.
(a) [Reserved]
(b) In determining the amount of any penalty in accordance with
Sec. 498.103(b), the Office of the Inspector General will take into
account--
(1) The nature and objective of the advertisement, solicitation, or
other communication, and the circumstances under which they were
presented;
(2) The frequency and scope of the violation, and whether a
specific segment of the population was targeted;
(3) The prior history of the individual, organization, or entity in
their willingness or refusal to comply with informal requests to
correct violations;
(4) The history of prior offenses of the individual, organization,
or entity in their misuse of program words, letters, symbols, and
emblems;
(5) The financial condition of the individual or entity; and
(6) Such other matters as justice may require.
(c) In cases brought under section 1140 of the Social Security Act,
the use of a disclaimer of affiliation with the United States
Government, the Social Security Administration or its programs will not
be considered as a mitigating factor in determining the amount of a
penalty in accordance with Sec. 498.106.
Sec. 498.107 [Reserved]
Sec. 498.108 Penalties not exclusive.
Penalties imposed under this part are in addition to any other
penalties prescribed by law.
Sec. 498.109 Notice of proposed determination.
(a) If the Office of the Inspector General seeks to impose a
penalty, 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;
(2) A description of the incident(s) with respect to which the
penalty is proposed;
(3) The amount of the proposed penalty;
(4) Any circumstances described in Sec. 498.106 that were
considered when determining the amount of the proposed penalty; 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 without right of appeal.
(b) Any person upon whom the Office of the Inspector General
intends the imposition of a penalty may request a hearing on such
proposed penalty.
(c) If the respondent fails to exercise the respondent's right to a
hearing, within the time permitted under this section, any penalty
becomes final.
Sec. 498.110 Failure to request a hearing.
If the respondent does not request a hearing within the time
prescribed by Sec. 498.109, the Office of the Inspector General may
seek the proposed penalty, or any less severe penalty. The Office of
the Inspector General will notify the respondent by certified mail,
return receipt requested, of any penalty that
[[Page 58228]]
has been imposed and of the means by which the respondent may satisfy
the amount owed.
Secs. 498.114-498.125 [Reserved]
Sec. 498.126 Settlement.
The Inspector General has exclusive authority to settle any issues
or case, without the consent of the administrative law judge or the
Commissioner, at any time prior to a final determination. Thereafter,
the Commissioner or his or her designee has such exclusive authority.
Sec. 498.127 Judicial review.
Section 1140 of the Social Security Act authorizes judicial review
of a penalty that has become final. Judicial review may be sought by a
respondent only in regard to a penalty with respect to which the
respondent requested a hearing under Sec. 498.200ff of this part,
unless the failure or neglect to urge such objection is excused by the
court because of extraordinary circumstances.
Sec. 498.128 Collection of penalty.
(a) Once a determination has become final, collection of any
penalty will be the responsibility of the Commissioner or his or her
designee.
(b) [Reserved]
(c) In cases brought under section 1140 of the Social Security Act,
a penalty 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, as determined by the Commissioner, the:
(1) Violation referred to in Sec. 498.102(b) occurred; or
(2) Respondent resides; or
(3) Respondent has its principal office; or
(4) Respondent may be found.
Sec. 498.129 [Reserved]
Sec. 498.132 Limitations.
The Office of the Inspector General may initiate a proceeding in
accordance with Sec. 498.109 of this part to determine whether to
impose a penalty within 6 years from the date on which the violation
was committed.
Sec. 498.200 [Reserved]
[FR Doc. 95-28308 Filed 11-24-95; 8:45 am]
BILLING CODE 4190-29-P
