E8-21113. Testimony by Employees and the Production of Documents in Proceedings Where the United States Is Not a Party

AGENCY:

Department of Health and Human Services.

ACTION:

Final rule.

SUMMARY:

This rule amends Part 2 of Title 45 of the Code of Federal Regulations, which provides that employees and former employees of the Department of Health and Human Services (HHS or Department) may not provide testimony as part of their official duties in litigation where the United States or a federal agency is not a party, without the approval of the head of the agency. The purpose of these amendments is to modify the definition of “employee” contained in 45 CFR part 2. Under these amendments, the definition of employee will be revised to reflect changes in Medicare contracting, including changes brought about by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). In addition, the definition of employee will be modified to include employees of a state agency performing survey, certification, or enforcement functions under Title XVIII of the Social Security Act or Section 353 of the Public Health Service Act. Further, the definition of employee with respect to employees of entities covered by the Federally Supported Health Centers Assistance Act, as amended, 42 U.S.C. 233(g)-(n) (FSHCAA), will be limited to testimony requested in medical malpractice tort litigation which relates to medical functions performed at a time when the center was covered under FSHCAA.

DATES:

Effective Date: October 15, 2008.

FOR FURTHER INFORMATION CONTACT:

Jeffrey S. Davis, Associate General Counsel, General Law Division, Office of the General Counsel, Department of Health and Human Services, 330 Independence Ave., SW., Room 4760 Cohen Bldg., Washington, DC 20201, Telephone Number 202-619-0150.

SUPPLEMENTARY INFORMATION:

In 1987, the Department of Health and Human Services published regulations addressing the issue of the increasing number of requests for the testimony of Department employees in litigation involving only private parties and not the United States. The regulations generally prohibit an employee or former employee of the Department from giving testimony concerning information acquired in the course of performing official duties or because of such person's official capacity, except where the relevant agency head determines that the appearance would promote the objectives of the Department.

These amendments are designed to address changes in Medicare contracting, including changes brought about by the MMA. The amendments also address involvement of the Department in matters in which parties request testimony or documents from employees of state survey agencies or contractors that carry out survey, certification, or enforcement activities for the Medicare and CLIA programs. Finally, these amendments address the involvement of the Department in cases other than medical malpractice matters where parties request testimony from any current or former employee or contractor of an entity covered by the FSHCAA.

Section 911 of the MMA added section 1874A to the Social Security Act (SSA) and took the separate authorities under which the Centers for Medicare & Medicaid Services (CMS) contracted with intermediaries and carriers and consolidated them into a single authority for a new type of contractor, the Medicare Administrative Contractor (MAC). See MMA section 911. Under section 911, the Secretary may enter into contracts with any eligible entity to serve as a MAC with respect to the performance of the core Medicare administrative functions listed at SSA section 1874A(a)(4). Thus, in the contracting environment created by the MMA, MACs perform functions once performed solely by intermediaries and carriers. Currently, CMS has agreements with intermediaries, carriers and MACs to make Medicare payments for health care items and services. Furthermore, under section 911(e) of the MMA, any reference to a carrier or intermediary under title XI or XVIII of the Social Security Act (or any regulation, manual instruction, interpretative rule, statement of policy, or guideline issued to carry out these titles) shall be deemed a reference to a MAC.

Furthermore, historically, carriers and intermediaries also carried out all Medicare program integrity activities, such as cost report audits and medical, utilization, and fraud reviews. However, CMS has begun contracting with Program Safeguard Contractors (PSCs) and Recovery Audit Contractors (RACs) to perform program integrity activities, see SSA section 1893, although intermediaries and carriers continue to carry out many program integrity functions. There is substantial functional overlap between the functions that are performed by PSCs and RACs and the program integrity activities that are now, or were once, carried out by carriers and intermediaries.

Accordingly, we are amending the definition of “employee” in these regulations to include the employees of contractors that perform the core Medicare administrative functions listed at SSA sections 1874A(a)(4) and 1893. Under such definition, these regulations cover intermediaries, carriers, MACs, PSCs and RACs, and any successor entities that perform the functions listed in the amended definition. Not only does this definition reflect the more flexible contracting procedures created by the MMA, but a functional definition of “employee” also limits the need to amend these regulations again in the event Congress further modifies the Medicare contracting nomenclature through future legislation.

The second amendment concerns requests for testimony and documents of employees of contractors, subcontractors, and state survey agencies that carry out many of the Department's survey, certification, and enforcement activities. Section 1864 of the Social Security Act provides that the Secretary shall enter into agreements with states under which appropriate state or local survey agencies determine whether providers meet Medicare conditions of participation, suppliers meet Medicare conditions of coverage, and rural health clinics meet Medicare conditions of certification. Furthermore, under section 353(o) of the Public Health Service Act, the Secretary is permitted to use the services of state agencies to carry out his responsibilities under the Clinical Laboratory Improvement Act Amendments of 1988 (CLIA). Thus, employees of state survey agencies carry out federal functions for both the Medicare and CLIA programs. In addition, contractors of the Department under certain circumstances survey and certify providers and suppliers. Contractors of the Department also perform validation surveys to ensure that state survey agencies and deeming authorities satisfactorily perform their survey, certification, and enforcement responsibilities.

Parties in private litigation frequently request testimony and documents from employees of contractors, subcontractors, and state survey agencies that perform survey, certification, and enforcement functions under the Medicare and CLIA programs. These requests are especially prevalent in medical malpractice litigation. Although any specific request for testimony or documents may not be unduly burdensome, the requests divert employees from their federal survey, certification, and enforcement responsibilities. The cumulative effect of these requests can impede these activities. Moreover, we believe that information gathered during these federal activities is federal information and may be protected by governmental privileges. Therefore, we are amending the definition of “employee” in these regulations to include employees of contractors, subcontractors, and state survey agencies that perform survey, certification, or enforcement activities under the Medicare and CLIA programs.

We recognize that employees of state survey agencies may have dual roles. These employees perform activities for the Medicare and CLIA programs, but also have survey, certification, and enforcement responsibilities with respect to state requirements. For example, it is our understanding that state survey agencies commonly survey skilled nursing facilities for compliance with both federal and state requirements during a single visit. Under 45 CFR 2.1(a), the Department's regulations apply only to information acquired in the course of performing official duties or because of the employee's official capacity with the Department. Therefore, these regulations will apply to requests for testimony or documents from an employee of a contractor, subcontractor, or state agency only to the extent the information was acquired in the course of performing survey, certification, or enforcement functions under Title XVIII of the Social Security Act or section 353 of the Public Health Service Act and regardless of whether documents are also relevant to the state's activities.

The third amendment addresses the increasing frequency of requests to the Department in cases other than medical malpractice matters for employees and qualified contractors of entities covered under the FSHCAA to provide testimony. The FSHCAA provides that, for the purposes of the Federal Tort Claims Act (FTCA), employees and certain qualified health care practitioner contractors acting within the scope of their employment with an entity covered under the FSHCAA are deemed to be employees of the Public Health Service. 42 U.S.C. 233(g)(1)(A). As such, these employees or qualified contractors are deemed to be employees solely for the purpose of securing coverage under the FTCA in medical malpractice cases brought against them. The current definition of “employee” in the Department's regulations includes employees and contractors of a covered entity when the requested testimony relates to their performance of medical, surgical, dental or related functions which were performed at a time when HHS deemed the entity to be covered by the FSHCAA, even in matters that do not relate to medical malpractice litigation.

The interests of the United States are implicated in state court actions that may impact upon liability under the FTCA. By amending the definition to require application of these regulations in medical malpractice cases only, the number of requests to the Department for testimony of federally supported health center employees and qualified contractors will be significantly reduced. Thus, the burden on the Department to respond to these time-consuming requests will be lessened.

Further, the current definition of “employee” under subpart (3) of section 2.2 refers to “the requested testimony or information.” Because FSHCAA entities and records are normally subject to state law and are beyond the control of the Department, we have only applied the Department's regulations in matters involving the FSHCAA to requests for testimony in FTCA matters, not to record requests. Therefore, we have limited this subpart to requests for testimony.

Public Participation: This rule is published as a final rule. It is exempt from public comment, pursuant to 5 U.S.C. 553(b)(A), as a rule of “agency organization, procedure, or practice.”

Paperwork Reduction Act: This regulation is not subject to the Paperwork Reduction Act because it deals solely with the Department's internal rules of organization, procedure or practice.

Cost/Regulatory Analysis: We have examined the impact of this rule as required by Executive Order (EO) 12866 (Regulatory Planning and Review), as amended, the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.); the Unfunded Mandated Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.); and EO 13132 (Federalism). EO 12866, as amended, directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize the benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in 1 year). We have determined that the rule is consistent with the principals set forth in the EO, and we find that the rule would not have an effect on the economy that exceeds $100 million in any one year. Under the RFA, if a rule has a significant impact on a substantial number of small entities, an agency must analyze regulatory options that would minimize any significant impact of the rule on small entities and determine it will not have any effect. The agency has considered the effect that this rule would have on small entities. I hereby certify, under 5 U.S.C. 605(b), that the rule will not have a significant economic impact on a substantial number of small entities, including small businesses, small organizations and small local governments. Therefore, a regulatory flexibility analysis is not required. The UMRA also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any one year by State, local, or tribunal governments, in the aggregate, or by the private sector of $100 million. As noted above, we find that the rule would not have an effect of this magnitude on the economy. Therefore, no further analysis is required under the UMRA. EO 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. We have reviewed the rule under the threshold criteria of EO 13132 and have determined that this rule would not have substantial direct impact on States, or on the distribution of power and responsibilities among the various levels of government. As there are no federalism implications, a federalism impact statement is not required.

List of Subjects in 45 CFR Part 2

• Administrative practice and procedure
• Freedom of Information
• Government employees

Accordingly, for the reasons set forth in the preamble, 45 CFR part 2 is amended as follows:

PART 2—[AMENDED]

1. The authority citation for part 2 continues to read as follows:

Authority: 5 U.S.C. 301, 5 U.S.C. 552.

2. The definition of “Employee” in 45 CFR 2.2 is amended by revising the introductory text and paragraphs (2) and (3), adding paragraph (4), and placing the definition in alphabetical order to read as follows:

§ 2.2

Definitions.

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Employee of the Department includes current and former:

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(2) Employees of intermediaries, carriers, Medicare Administrative Contractors, Program Safeguard Contractors, and Recovery Audit Contractors, and any successor entities, that perform one or more of the following functions described in section 1874A or 1893 of the Social Security Act relating to the administration of the Medicare program:

(i) Determination of payment amounts; making payments; beneficiary education and assistance; providing consultative services; communication with providers; or, provider education and technical assistance; or,

(ii) Other such functions as are necessary to carry out the Medicare program, including any of the following program integrity functions under section 1893 of the Social Security Act:

(A) Review of activities of providers or suppliers, including medical and utilization review and fraud review;

(B) Auditing of cost reports;

(C) Determinations as to whether payment should not be, or should not have been, made because Medicare is the secondary payer, and recovery of payments that should not have been made;

(D) Education of providers, beneficiaries, and other persons with respect to payment integrity and benefit quality assurance issues; or,

(E) Developing (and periodically updating) a list of items of durable medical equipment which are subject to prior authorization.

(3) Employees of a contractor, subcontractor, or state agency performing survey, certification, or enforcement functions under title XVIII of the Social Security Act or Section 353 of the Public Health Service Act but only to the extent the requested information was acquired in the course of performing those functions and regardless of whether documents are also relevant to the state's activities.

(4) Employees and qualified contractors of an entity covered under the Federally Supported Health Centers Assistance Act of 1992, as amended, 42 U.S.C. 233(g)-(n), (FSHCAA), provided that the testimony is requested in medical malpractice tort litigation and relates to the performance of medical, surgical, dental or related functions which were performed by the entity, its employees and qualified contractors at a time when the DHHS deemed the entity and its employees and qualified contractors to be covered by the FSHCAA.

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Dated: August 28, 2008.

Michael O. Leavitt,

Secretary.