ML20062H400

Package of Documents Re Regulations to Implement Program Fraud Civil Remedies Act,Including NRC 900926 Press Release, Correction to 901005 Fr Notice & 900925 Notice of Proposed Rule

ML20062H400
Person / Time
Issue date:	11/28/1990
From:	NRC
To:
Shared Package
ML19330F972	List: ML20062H376 ML20062H400
References
FRN-55FR39158, RULE-PR-13 AD71-1-04, AD71-1-4, NUDOCS 9012040294
Download: ML20062H400 (118)

Text

{{#Wiki_filter:l Y f)WH-l 6' y '4 )_ 4 p% 1J D STATES NUCLEAR REG LATORY COMMISSION /1 5 Offlee of Govemmernal and Putdo Affaire i \\,.".. * *. Weehington, D.C. 30555 i No. 90-130 FOR IMMEDIATE RELEASE Tel. 301/492-0240 (Wednesday,. September 26,1990) l l NRC PROPOSES REGULATIONS TO IMPLEMENT PROGRAM FRAUD civil REMEDIES ACT The Nuclear Regulatory Comission is proposing regulat40s to implement the Prngram Fraud Civil Remedies Act (Public Law 99-509) which applies to false claims and statements, involving sums not exceeding $150,000, made by any person (employees as well as members of the public) to an agency covered by the Act. It authorizes a covered agency to impose civil penalties of up to $5,000 for each separate claim and assessments of up to double the amount falsely t claimed.. When the Act became law in 1986, it did not apply to the NRC but the inspector General Amendments Act of 1988 (Public Law 100-504) operated to add the NRC to the agencies covered by the former Act. The NRC's proposed implementing regulations essentially adopt a model set of regulations developed by an interagency task force under the sponsorship of the President's Council on Integrity and Efficiency. The proposed regulations require taking certain steps in agency action against any person suspected of being'11able under the Act. First, an investigation of an alleged false claim or statement must be conducted by an " investigating official", in the NRC's case, the Inspector General or that office's Assistant Director for Investigations. Second, before an administrative action can be taken, the investigation report must be reviewed by a " reviewing official"--the NRC's Deputy General Counsel for Licensing and Regulation or his designee--who determines if l there is adequate evidence to believe that a person is liable under the Act. L Third, upon an affirmative finding, the reviewing official would then refer the matter to the Attorney General with notice of intent to initiate edministrative proceedings against the subject. Such action can be taken ) only with the concurrence of the Attorney General or a designated Assistant Attorney General. l 50 PA, GC, CA, p R, 55 39 58 p SECY, Records. eg )

i .o. Fourth, any hearing would have to be conducted by an administrative law judge. Then, any person held liable could appeal to the "authorit/ head"--in the case of the NRC, the Commission itself--which could affirm, riduce, reverse, compromise, remand or settle any penalty or assessment determine ( by the Administrative Law Judge. However, at any time prior to issuanco of the Administrative Law Judge's decision on liability, the reviewing official ceuld settle the matter without the consent of the Administrative Law Judge. Fifth, the agency's decision would be subject to review in an appropriate United States District Court. Sixth, judicial enforcement of any civil penalty or enforcement order would be obtained through the Attorney General. Written comments on the addition of proposed Part 13 to the NRC's regulations should be received by November 24, 1990. They should be addressed to the Secretary of the Commission, Nuclear Regulatory Commission, Washington, D.C. 20555, Attention: Docketing and Service Branch. 6 i l i L

j;)4711 1 ?bd " Federal Regleter / Vel. 58, N3,186 / Fridey. Oct:bar 8, isso / Corrections 40007 docket une abodd read as set forth j ebove. emuss sans seeie a NUCLEAR REGULATORY 000Hel8800N 14 OPR part 18 ' Aslste>Apri Program Proud Civg RemesRes Aet,. Corrooda - ~ In proposed rule document so Saen beginning on page airtla la the leeue of Tuesday. September 26,18eo, under the ? " saves" peregraph," November 34, e. teso"should road " November as,19e0", ~ su mesees amese

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m'., /MR I Pr'oposed Rules red-i assia Vol. 65, No. tes Tuesday. Septamtser 25.1990 TNs aseton of the FEDE8%L REGISTER DC between the hours of h45 am and recommended by the pCIE.They conta6ns nobces to tne p@he of the 4:15 pm Federal workdays. incorporate, where appropriate, P'opoemd tsuance of runs and Pon Pustman sosponesAnoed coortAct: definitions to fit the Commission's "8" " D ' 8"'P8** **" "'* " John Cho. Office of the General Counsel, organlaation.They prescribe the ^ op,",,t Ipn U.S. Nucleat Regulatory Commission, procedure under which false claims and ve rule 4 meme pnor to wie adoption of we anal Washington DC 20555. Telephone: 301-statemente subject to the Act will be i rules. 492-1885. Investigated and reviewed, and the rules supposessertAny sosponesanose: under which any ensuing hearing will be NUCLEAR REGULAWf

Background

i CMS $60N in October 1986, Congress enacted the "T**** 10 CFP Part is Program Fraud Civil Remedies'Act, Pub, Under the Act, false claims and

1. No. 99-800 (codified 81 U.S.C. 3801 statements subject to its provisions are RIN 3100-A071 through 3812), to establish an to be investigated by an agency's administrative remedy against any investigating official The results of the Program Proud CivilRemedias Act, person who makes a false claim or investigation are then reviewed by an implementation written statement to any of certain agency reviewing official who Aottscy: Nuclear Regulatory Federal agencies. In brief, it requires the determines whether there is adequate affected Federal agencies to follow evidence to believe that the person certain procedures in recovering named in the report is liable under the i

Acnoes: Proposed rule. penalties (up(to $5000 per claim) and Act. Upon an affirmative finding of assessments up to double the amount adequate evidence, the reviewing sussesARY:The Nuclear Regulato alati falsely claimed) against persons who file official sends to the Attomey General a Commissi implemen engram F$aud il f alse claims or statements for which the written notice of the offlG e intent to Remedies Act of1986.The Act liability is 3150.000 or less. The Act refer the matter to e presiding officer for authorices certain Federal agencies' further requires each affected agency to an administrouve hearing.The agency including the Nuclear Regulato promulgate rules and regulations instil tes administrative roceedings Commission,toim ose,through necessery to implement its provisions, agains, the person only i the Attomey administrative adjudication, civil Followmg the Act's enactment, at the General or the Attomey General's penalties and assessments against any request of the President's Council on - designee agroves. Any penalty or I person who makes, submits, or presents Integrity and Efficiency (PCIE) en assessment mposed under the Act may a false, fictitious, or fraudulent claim or interagency task force was estabilshed be collected 1.v the Attemey General under the leadership of the Department through the filh.s of a civil action, or by written statement to the ogflabThese n of health and Human Services to offsetting amonts, other than tax proposed regulations estab e rocedures the Commission will follow develop model regulations for refunds, owN the particular party by n implementing the provisions of the implementation of the Act by all the Fedem govemment. Act and specifies the hearing and appeal effected agencies.This action was in Frpurposes of this Act,these I rights of persons subject to penalties keeping with the stated desire of the poposed regulations designate the and assessments und. er the A L -2(., Senate Governmental Affaire Commi%e Inspector General or the Assistant - that the regulations would be. Inspector General for investigations as S. DAfst:The comnlentte expires on substantially uniform throughout the the agency's investigating omclal.They November 24c1990. Comments received after this date will be considered if it isgovernment"(S. Rep.Nc a9-212,poth also dest nate the Deputy General practical to do so, but assurance of Cong.1st Sess 12 (1985). Upon their Counsel for Licensing and Regulation or completion, the PCIE recommended his or her designee as the reviewing consideration cannot be given except as adoption of the modelrules by all official. Any administrative adjudication to commente received on of before this affected agencies, under the Act will be presided over by date. At that time, the Act did not apply to an Administrative Law Judge and any l A00 masts 0: Send written comments to the Nuclear Regulatory Commission. appeals from the Administrative Law the Secretary of the Commission. U.S. However, that Act has since become judge's decision will be decided by the Nuclear Regulatory Commission, applicable to the Commission as a result Commission. Washington,DC20555, Attentiom of the enactment of the inspector A more detailed discussion of the Docketing and Service Branch. Generel Act Amendments Pub.1.100-model rules' provisions is found in the Comments may also be delivered to ib 504, Octot.er 18,1988. Those promulgations of several of the agencies. Office of the Secretary, U.S. Nuclear amendmeno, Inter alla, added the that adopted them earlier, including i RegulatoryCommission OneWh!te Nuclear Regdetory Commission as an those of the Departments of Justice (53 Flint North,11558 Rockville Pike, " establishment" under the inspector FR 4034: February 11,1988 and 83 FR Rockville, Maryland, between Les am General Act aid, by doing so, operated 11645: April 6,1988): Health and Human and 4:15 pm Federal workdays. Copies to bring the Cc mmisalon within the Services (52 FR 27423: July 21,1987 and cf any comments received may be rovisions of the Program Fraud Civil 83 FR 11666, April 8,1988); and examined and copied for a fee at the emedies Act. Trensportation (52 FR 38988: October 2. NRC Public Document Room 2120 L These proposed regulations are 1987 and 53 FR 880, January 14,1988). Street NW,ILower Level) Washington, essentially the Dame as the m,odel rules Anyone destring further explanation of C lu ~- -

7 1I/ Federal Register / Vd. 65. N3.13 / Tuesd:y, September 25, 1930 / WM Rules 39%e

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.the model rules is esferred to the cited does notimpow any obligations on an references. entitles including any regulated entities 18 88 Eiid'***-

3 EnvironmentalImpact

Colegorical that may fall within the definition of 1888 % ""L a

• small entitles ** as set forth in section u;3s pnWaring brWo.

C has determined that this hin the dYf 'f N "d

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^ oo e proposed rule is the t)pe of action businen" as found in Section 3 of the 13.40 Steys ordered by b Department of described in categorical eaclusion to Smaill Businew Act.18 U.S.C. est, or Jusuce. J CPR 81.22(c)(1). %wefore, neither en with!n the Small Business Sise u 41 Stay penoing appeat environmental impset statement nor en g environmental assessment has been Standards found in 13 CFR part 121. 13.42 ludicial review. prepared for this proposed rule. %en obligations would not be created 13.43 Collection of etvil penalties and until an order is issued, at which time summents. Faperwork Reduction Act Stolernest the person subject to the order would jg $8 ",dp,(njetmu n Bates. ' This proposed rule contains no have a right to a hearing in accordance 13.4a Compromise a settlement. Information collection requirements and with the regulations, u 47 Unitanons. thereIore is not subject to the BacLAt Analvels Authority: Pub.1. es-40s, secs. s101-s104. requirements of the Psperwork ne NRClin determined that the 100 stellate (at U.S.C. set-nu). Reduction Act o!19eo (44 U.S.C. 3501 et backfit rule,10 CFR 80.10s, does not 889 ), apply to this proposed rule, and 118A E8W sad purpme. Regulato Analysis therefore, that a backfit analysis is not (a) Bos/s>Th!s part implements the The Program Traud Civil Remedles required for this proposed rule, because - Program Fisud CivilRemedies Act of Act of ina6 (Pub. l 9S-500. 31 U.S.C. these amendments do not involve any 1986. PA s. No. 96-800, sections 6101-3n01-3812) enieblished an administretwe provisions which would impose backfits $1C4.100 Stat.1874 (October 21,1986) ee defined in to CFR 80.109(a)(1). (J1 U.S.C. 3801-3812). 31 U.S.C. Sa% tie tovNio e pencies, ' 8'th hesd de the Ust of Subjects in to CFR Partis ,'g ,j, ,e, g i e Act, anyone who knowingly submits a Claims, Freud, Organlaation and [nplement the provisions of that Act. solse, fictitious, or fraudulent clalm to , function (government agencies), any of these agencies is liable for up to a Penalties, (b)Pu e This part-(1)Est shes administrative 65.000 penalty and an assessment of

1. A new part 131s added to 10 CFR procedures for imposing civil penalties double damages. Each affected agency is chapterI to read as follows:

and assessments against persons who gover na einve'ettgation PART IS--PROGRAM FRAUD CIVIL make, submit, or present, or cause to be ul io of such claims and their adjudication by HEMEDIES made, submitted, or presented, false, the egency, Although the Act did not sm. , fictitious, or fraudulent claims or written apply to the NRC at tha time of its 13.1 Beels and purpose, statements to authorities or to thelt 13.3 Definiuone, spents, and enactment,its provisions became applicable to the NRC upon later (2) Specifies the hearing and appeal 1 } enactment of the Inspector General Act 13.4 invntissuon. rights of persons subject to allegations ,ee n Amendments, Pub 1.100-804, October 13.s Revlem by the reviewing official olliability for such penalties and 19.1988, if.6 prere ulottee for lesuing a comptient. assessments. [ The proposed rule carries out the 1F Com aint. requirements of that Act.lt essentially '3 s Service of completnt. l13J Definillana, I edorts the model rules pre.nated under

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II As usedin this part: the ewepices of the President's Council IQ pyj'M*",,"Q"- Al/ means an Administra'tive Law on Inugrity and Efficiency.This to in - Ireeping with the expectation of the. the Atl. Judge in the authority appointed 13.14 Nouco of hearing. pursuant to 8 U.S.C. 3105 or detalled to Senate Govemmental Affairs 13.13 Parties to the hearing. the authority pursuant to 8 U.S.C. 3344. ) Committee, expressed in its report on 13.14 Soperation of functions. the Act, that the agency regulations 13.16 rx perte contacts. Author /ty means the Nuclear throughout the Government would be - 13.16. Disqualification of reviewing official Rgulaw4 Co'"8"ini'"' substantively uniform, except La or At.l. Authorityheadmeans the =f necessary to meet the specific needs of, 13.17 Rights of parties. Commission of five members or s a particular agancy or progam. S. Rep. 13.1s Authority of the A11 quorum thereof sitting as a body, as No. 90-212,99th Cong.. ist Sess.12 13.18 preheering contwenon, provided by section401 of the Energy f (1985). 13.30 Disclosure of documents. Reorganlaation Act of1974 (as Stat. 13.21 Discovery. 1242). RegulatoryFlexibilit Certincellom 13.31 En of witneu lists, statements, l ~ / Benefit meana,in the context of As required by the Regulatory ' 13.23 Subpoenas for attendence at bearing. " statement", anything of value, Flexibility Act of 1900 (5 U.S.C. 805(b)), = 13.34 puotective order. including but not limited to any the Commission certifies that this rule,if 13.as Fen, advantage, preference, privilege, license,' adopted, will not have a significant 13.36 ~ Form. filing and service of papers, permit, favorable decision, ruling, status, economic impact on a substantial 18.37 Computeuon of time. or loan guarantee. i number of small entitles.The propowd 1s.as hoouone. . rule establishes the procedural la.as sanctions.- C/olm means any request, demand, or submiulon-mechanism for investiga d 13.ao We buring and burden of proof. 4 i adjudicating all*3etfone of la clatens 13.81 Detenntning the amount of penalties : (a) Made to the authority for property, and eseosoments servicea, or money (including money men made against affected 13.sa taceuen of he'utas.- representing grants, loana, insurance, or .l Proposed rule, by itself, 1s.ss witnesses. benefits):

103 Faderal Reglater / Vol. 55 N3, siis / **uesd:y, September 25, t990 / Proposed Rules (l') Made to a recipient of property, General Courval for Licensing and to the authority, recipient, or party when services, or money from the authority of Regulation of the Nuclear Regulatory such claim is actually made to an agent. to a party to a contract with the authorliy-Commission or his or her designee who fiscellntermediary, or other entity, is-(tl For property or senlees if the including any State of pohtical Umted States-(s) Not sub}cet to supervision by, or subdivision thereof, acting for er on required to report to, the investigating behalf on the authonty, recipient, or (1) provided such property or sen ices; official; (11)Provided any portion of the funds (b) Not employed in the organizational (4) Each claim for prope,rty, senices,

party, for the purchase of such property or unit of the authority in which the or money is sublect to a civil penalty services; or (iii) Will reimburse tuch recipient or investigating officialis employed; and regardless of whether such property, (c) Serving in a position for which the services, or money is actually delivered party for the purchase of such property rate of basic payis not less than the or paid, or services; or (2)For the psyment of money mlnlmum tate of basic pay for grade (5)lf the Government has made any CS.1ti unde' Meneral bcneuu lcans, ding money representing Frants.Statement means any representation, payment (including transferred property inclu insurance,or benefits)if the or provided services) on a claim, a United State *-

cerufication, affirmation, document, person subject to a civil penalty under recor<!, or accounting or bookkeeping paragraph (a)(1)of this section shall (i) Provided any portion of the money entry made-also be subject to an auessment of not tequested or demanded; or (ll) Will reimburse such recipient or ob(tain the approvalor payment of a more than twice the amount of such al With respect to a claim of to party for any portion of the money paid claim (includmg relaung to eligibility to determined to be in violation of claim or that portion thereof that is on such request or demand; or D)Made to the authority which has enake a claim); or paragraph (a)(1) of this section. Such the effect of decreasing an obligation to (b) With respect to (including relating assessment shall be in lieu of damages to aligibiht) for)- pay or account for property, services, or (1) A contract with, et a bid or such claim. sustained by the Government because of money, laint means the administrative proposalfor a contract with: or Comp complaint served by the reviewing (2) A grant, loan, or benefit from, the (b) Statements. (1) Except as provided official on the defendant under 8131, authority, of any State, political in paragraph (c) of this section, any Defendant means any person alleged subdivision of a State, or other party,if person who makes a written statement that-in a complaint under i133 to be liable the United States government prmides for a civil penalty or nuessment under any portion of the money or Property kn(o)w person knows or has reasonio 1 The 6 13.3. under such contract or for such grant, (A) Asserts a material fact which is Governmeot means the United States loan, or benefit, or if Government will Government. reimburse such State, political false, fictitious, or fraudulent; or subdivision, or party for any portion of (B) le false, I ctitious, or fraudulent f" $ci S 'en bt n ' the money or pro ty under such became it omits a material fact that the l n decision of the ALJ required by 513.10 e n rect or for suc grant, kan* person making the statement has a duty or $ 13.37, and includes a revised initia) benefit-to include in such statement; and (11)Contains or is accompanied by an decision issued following a remand or a i13.8 Basis for aMI penset se and express certification or alfirmation of motion for teconsideration, amassemente. the truthfulness and accuracy of the larestigoting officiolmeens the inspector Generalof the Nuclear (a) Claims. (1) Except as provided in contents of the statement, shallbe paragra$es(c) of this section, any person subject, in addition to any other remedy h Regulatory Commission or the Anistant who ma a claim that the person that may be prescribed by law, to a civil Inspector General for investigations, Office of the Inspector Canaral, knows or has reason to know-g.cnalty of not more than $5,000for each A' nows or Aos reason Jo know moons 11)l falsa, fictitious, or fraudulent; such statement. that a person.with respect to a claun or lii) includes or le supported by any (2) Each written representation, statement-written statement which asserts a certification, or affirmation constitutes a (a)lias actua) knowledge that the material fact which is false,lictitious, or separate staterment. fraudulent; (3) A statement shall be considered claim or statement is false, fictitious, or fraudulent; (iii) Includes oris supported by any made to the authority when auch (b) Acts in deliberateignorsace of the wntten statement that-statement is actually made to an agent. (A) Omits a materiel fact: fiscal intermediary, or other antity, truth or falsity of the claim or statement; (B)la false, fictitious, or fraudulent as including any State or political or (c) Acts in reckless disregard of15 a result of such omission: and subdivision thereof, acting ist or on (c)is a statementin which the person behalf of the authority, truth or falsity of the claim or st6tement, making such sistement has a duty to (c include the terms presents, submits, and include such materialfact:or defr)No proof of specificintent to AfoAes, wherever it appears, shall aud is required to establish liability causes to be made, presented,er (iv)is for payment for the previolon of under this section, submitted. As the context requires, property or servloes which the penon (d)in any case in which it is enoAing or snode shall likewise include has not provided as claimed,shall be determined that more than one person is dhe corrveponding fonns of such terms. subject, in addition to any other remedy liable for making a claim or statement that may be prescribed by isw, to a civil under this section, each such peson Penon means any individual, penalty of not more than 85,000 for each ma be held liable for a civil panelty partnership, corpora tion. a ssociation, or such claim. u e this seebon. private organization and includes the - plurat of that term, (2) Each toucher, invoice, claim form. (e)In any casein whichitis Roweeantative means any person or othat individual request or demand determined that more than one person is for property, services, or money liable for making a claim under this elesignated by a party in writtng. constitutes a separate claim. section on which the Government has Reviewing officolmeans the Deputy (3) A claim shall be considered made made payment (includag transfereed

Federal Register / Vol 55, Na,106 / Tuesday. September 25, 1990 / Proposed Rules 0^161 a } property or provided services), an (3) A description of the claims or. (:)The maximum amount of penalties auessment may be irnposed against any statements upon which the allegations and assessments for which the - such person or jointly and severally ofliability are bued: defendant may be held liable; agalnst any combination of such (4) An estimate of the amount of (3) Instructions for fillne an answer to

persons, money or the value of property, servlees, request a hearing. including a speelfic or other benefits requested or demanded statement of the defendant's right to l18.4 inwnugaHon.

in violst!on of 113.8 of this part: request a hearing by filing an enewer (a)If an investigating official (5) A statement of any exculpatory or and to be represen:od by a cur...udes that a subpoena pursuant to mitigating circumstances that may. relate representative; and the authority conferred by 31 U.S.C. to the claims or statements known by-(4)That failure to file an answer 3SO4(a)is warranted-the reviewing officialor the within 30 days of service of the (1lThe subpoena soissued shall - investigating omelal; and complaint win result in the imposition of rioti4y the person to whom it is (6) A statement that there is a the maximum amount of penalties and a ddressed of the authority under which lessonable prospect of collecting an assessments without right to appeal, as the subpoena is issued and shallidentify appropriate amount of penalties and provided in i 13.10. the records or documents sought; essessments. (c) At the same time the re' viewing (2)Theinvestigating officialmay design.S a person to act on his or her g,,,, g%, official serves the complaint, he or she sempiWnt. shall serve the defendaat with a copy of be allto receive the documents sought; (a) The reviewing official may issue a thew nguleMa. com laint under i 13J only if-l 13.0 Servloe et complaint, (1 The Department of justice (a) Service of a complaint must be s o naa 1 b req fr d ender to the investigating official or the person approves the issuance of a complaint in made by certified or registered mail or a wriuen staternenWne.rMn 31 - dos!gnated to receive the documents a by delivery in any manner authorised by certifit:stion that the documents sought U.S.C. Sa03(b)(1), en rule eld) of the Federal Rules of Civil '8 g have been produced, or that such lifIltty lndhr'l13 (s) "E " "$)g' hoof of service, statin claim, tWewing ma%pect to a L res Mnn. ' reasor t ere o, r a o ch atfd claim ou [nmed at the 'c*o"mp'laint was served'and the manner heuments, suitable identified, heve. d dd" f Ih' E " " *h

• th' been withheld based upon the assertion smup o sanw Ume uch claim is ubinlued(as and date of service, may be made by-of an identified priv!!ege' fficial ' '

[m neyor t e a ct,lon), (1) Affidavit of the individual serving t (b)If the investigst!ng o he a nt 9 the complaint by delivery; car.cludes that an action under the .I d ded Program Fraud CivilRemedies Act may u e! d n ol ion o 15.3(a) does - N A U" 8'#" '"I" be warranted, the investigating official lot exceed $150.0n0, return receipt card acknowledging shall submit a report containing the (b) For the p 6es of this section, a "#PI; " f;ndings and conclusions of such related gro of laims submitted et the (3 Written acknbwledgment of receipt by tfe defendant or his or her intestigation to the reviewing official. same time s allinclude only those (c) fJothing in this section shall claims arising from the same transaction Nprwentative. p eclude or limit an investigating (e.g., grant, loan, application, or ' l13.9 Answer, official's discretion to refer allegations enntract) that are submitted directly to the Department ollustice for su altaneously as part of a single hearing by filing an answer with the " " "'I"9"" " s..it under the False Claims Act or other civil relief, or to defer or postpone a c)ht dthin Ie section o all be - d bmissi "I' service o the complaint. Service of an rrport or referral to the reviewing construed to limit the reviewing,le =. answer shah W made h dehg a offidal to avoid interference with a official's authority to join in a sing criminal investigation or pmsecution complaint spinst a person claims that c py to the reviewing official or by (d)Nothing in this section modifies am uarelated or were not submitted, placing a copy n n edSa a, t any responsibility of an investigating simultaneonly, regardless of the ' 'g',"$"pmg n 8p }, An answer shall be official to report violations of criminal amount of mone, or the value of d d lo a et f he ti law to the Attorney General.. Troperty or serv ces, demanded or L th i 13.5 Review ley the reviewing oNieleL 9 ""d* (1)Shall admit or deny each of the lnv(a)If, based on the report of the l13J Complaint, allegations of liability'made in the estigatin official under l 13.4(b), the (a) On or after the date the complaint:- reviewing o[nicial determines that thereDyertment of Justice approves the (2)Shall state any defense on which is adequate evidence to believe that a issuance of a complaint in accordance = the defendant intends to rely-person is liable under i 13.3 of this part, with 31 U.S.C. 3803(b)(1), the reviewing (3) May state any reasons why the the reviewing official shall transmit to official may serve a complaint on the defendant contends that the penalties . the Attorney General a written notice of defendant, as provided in l13.3, and assessments should be less than the the reviewing official ~s intention to issue (b) The complaint shall state - statutory maximum; and .e complaint under i13J. (1) The allegations of liability against. - (4) Shall state the name, address, and (b) Such notice shallinclude-the defendant, including the statutory - telephone nurcher of the person - (1) A statement of the reviewing - basis for liability, an identification of - authorteed by the defendantto act u official's reasons for issuing a complaint: the claims or statements that are the. defendant's representative,if any, c (2) A statement specifying the - basis for the alleged liability, and the (c)If the defendant is unable to file an evidence that supports the allegations of. reasons why liability allegedly arises answer meeting the requirementa of . Jiability; from such claims or statements: paragraph (b) of this section within the < o 4 m

[ $9182 Federal Register / Vol. H. M. O / Tuesday. September 25. 1990 / Proposed Rules time provided, the defendant may. days after the Ay denies the motion. agent of the authority who takes part in before the capitation of 30 days from The timely fding of a nouce of appeal investigating. preparing, or presenting a service of the complaint, file with the shall stay the initial decision until the particular case may not,in such case or l reviewing official a general answer authority head decides the issue. a factually related case-denying hability and requesting a (ij lf the defendant files a time) - (1) participate in the hearing as the hearing. and a request for an extenslun notice of appeal with the authorl head. At4 of time widdn which to file an ansaer the Ay shall forward the record f the (2) participate or advise in the initial l meeting the requirernents of paragraph proceeding to the authority head. decision or the review of the initial (b)of this section.The reviewing otheial (j)The authority head shell decide shall file promptly with the Ay the expeditiously whether extraordinary dedslon by the authority head.except complaint, the general answer denying circumstances excuse the defendant's as a witness or representative in pubhc liability, and the request for an failure to file a timely answer based proceedings: or l extenslon of time as provided in i 13.11. solely on the record before the A4 (3) Make the collection of penalties i for good cause shown, the Ay may (L)If the authority head deciales that and assessments under 81 U.S.C. 3 FEE i grant the defendant up to 30 additional extraordinary circumstances excused (b)The AM shall not be responsible days within which to file an answer the defendant's failure to file a timely to, or subject to the supervision or meetmg the requirements of paragraph answer. the authority head shall remand direction of, the investigating official or (b)of this section. the case to the Ay with instructions to the reviewinI olhenal. $ 13.10 Default upon fatture to fe6e an. grant the defendant an opportunity to (c) theept as provided in ptrtsgraph (c) of this section, the representutwe for answer. (llif the authorit the Gomnment ma e employed (a)If the defendant does no* file an the defende nre falfuhead decides that anyw hen in de out iority, including in re to file a tienely answer within the time prescriped in answer is not excused, the authority the offices of either the investigating i 13 9(a), the reviewing official may head shall reinstate the initial decision official or the miewing Aclah refer the complutni to the AM. of the Ay, which shall becorne fmal and (b) Upon the referral of the complaint. binding upon the parties 30 d i 13.15 Es parte contactn. the AQ shall promptly serve on the authority head issues s,.ays after No party or person (except employees defendant in the manner prescribed in the Ay e office) shall communicate in i 13.8 a notice that an initial decision i 13.11 pteferrat of comple' 4.no.uwer .,ny way with the All on any matter at will be issued under this section. to the ALJ. issue in a casa, unless on notice and (c)The AM shall assume the facts Upon receipt of an answer, the opportunity for all parties to participate. alleged in the complaint to be true, and, reviewing ofhcial sheti file the This provision does not prohibit a if such facts establish liabihty under complaint and answer with the Ay person or party from inquiring about the i13.3.the AM shallissue aninitial decision imposing the maximum amount i 13M teouce W hearing. status of a case or asking routine questions concerning administrative of penalties and assessments allowed (a) When the AM receives the functions or procedures. under the statute'herwise provided in complaint and answer, the AM shall (d) F.xcept as ot promptly serve a notire of hearing upon I D usancanon W reswing ',1,3j6 this section, by failing to file a timely the defendant in the munner rescribed I answct, tht defendant waives any right by i 13.B. At the same time, t e Ay (a) A reviewing official or Ay in a to further review of the penalties and shall send a copy of such notice to the particular case may disqualify himself asser,sments imposed under paragraph representative of the authority. or herself at any time. (c) of this section and the initial decision (b) Such notice shsllinclude-- (b) A party may file with the AQ a shall become final and bNdmg upon the (t) The tentative time and place, and motion for disqualification of a partirs 30 days after it is issued. the nature of the hearmg: reviewing official or an AM. Such l I (e)lf, before such an initial decision (2) The leghi authority and jurisdiction motion shall be accompanied by an becomes fmal. the defendant files a under which the hearing is to be held; affidavit alleging personal bias or other motion with the Ay seeking to reopen (3) The matters of fact and law to be reason for disqualification. on the grounds that extraordinary asserted; (c) Such motion and affidavit shall be circumstances prevented the defendant (4) A description of the procedures for filed promptly upon the party's from fihng an answer, the initial the conduct of the hearing: discovery of reasons requiring decision shall be stayed pen &rg the (5) The name, address, and telephone .Ay's decision on the motion. numberof the apresentative f the disquahfication, or auch objections shall be c.eemed waived. (f)If, on such rootion. the defendant authority and of the defendant,if anyi (d) Such affidavit shall atale specific and ( can demonstrate extraordir.ary facts that support the party's belief that i circumstances excusing the failure to file (0) Such other matters as the A4 personal bias or other reason for. I a timely answer, the Ay shall withdraw deems appropriate, disqualification exists and the time and the initial decision in paragraph (c) of i 13.13 Parttaa to the hearing. circurnstances of the prty's discovery this section if such a decision has been (a)The arties to the bearing shall be of such facts. It shall be accompanied by issued, and shall grant the defendant an the deien mi and the anthority, a certificate of the representative of opportunity to an: wet the complaint. (b) Pursuant to 31 USC. 8730(c)(5). a rec rd that it is made in good faith. (g) A decision of the Ay denying a private plaintiff under theJalse Claims (c) Up n the Illing of Such a anotion defendant's motion under paragraph (e) Act ma participate in these and affidavit, the Ay shall proaaed no i cf this section is not subject to procee ings to the extent authorized by further in the case until he or she reconsideratJon under i 13.38. the provisions d that Act. resolm the maner WsquaMcedon in (h)The defendant may appeal to the accordance with paragraph (f) of this cuthority head the decision denying a I 13 14 S*Paration of tunctions. section. motion to teopen by filing a notice of (a) The investigating official, the jf)(1)If the Ay determines that a - cppeal with the authority head within 15 reviewing oIlicial, and ariyeugployee or reviewing officialis disqualified, the Ay

Federal Register / Vtl. 86, No.1C3 / Tuesday, Sept:mber 26,1900 / Proposed Rules (D183 shall dismies the complaint without (13) Conduct any conference, reviewing official or investigating ry* prejudice, argument, or hearing on motions in official relating to the allegatione la the 2 If the Ay disqualibe him elf or person or by telephone: and concplalnt tven if it is contained in a p he(rs) elf,the one shaU be nessigned (14) Exercise such other authority as document that would otherwise be .i promptly to anothet Ay, le necessary to carry out the privileged. lf the document would 3 (3)If the Ay denlee a motion to responelbilities of the Ay under this otherwise be privileged,only that disqualify, the authority head may part. portion containina exculpetory determine the matter only as part of us (c h ALJ does not han the auth)ority to find Federal statutes orInformation math disclosed. review of the initialdecision upon (c)The notice sent to the Attorney ? appeal,if any, regulations invalid. General from the reviewing official as i18.17 mehie of gerese. W Preheartnewafenne. d ud ny stances. Except se otherwise limited by this (a)b Ay mey schedule prehearing part, all parties may-. conferences as appropriate, (d)ne defendant may file a motion to (a) Be accompanied, represented, and (b) Upon the motion of any party,19 e compel disclosure of the documents subject to the pro isions of this section. advised by a represent 6tive: . A1.(shnu schedule atleast one pn eating conference at a runonable Such a motion may only be filed with by(b) participate in any conference held theAQ: - time in advance of the hearing. the Ay following the filing of an answer (c) Conduct discovery; (c h Ay may use pmhearing pursuant to $ 13.9. (d) Astee to stipulation of fact or law, mnce to seens the loupwing: I18M r which alau be made part of the noord; bf O 1 Simp ication of theleaves: (e)prwent evidence relevant to the (2J W necnetty or desirebuity of (a)W following types of discovery are authorlud: lesues at the hearing: amendments to the pleadings, including DR 94 fw prodede of

• jons t f I docu)ments for inspection and copying:

(f)present and cross examine ; th w tnmn, 3 p lons d (g)Present oral ersumente at the or as to the contents and authenticity of (2) Requate for adminions of the hearing as permitted by the AQ: and d t. authenticity of any relevant document or (h)Bubmit written briefs and ( hettier the parties can agree to - of b truth of any nievent fact; proposed findings of fact and submisalon of the case on a stipulated - (3) Written Interrogatories; and conclusions of la w after the hearing. record: (4) Depoeltions. (5)Whether a party chooses to waive (b) For the purpose of this section and I18.1e Authertty of the AIJ. ePpearances at an oral hearing and to ll13.22 and 13.23, the term (a)De AQ shallconduct a fair and submit only documentary evidence

• documente" includes information, impartial hearing, avoid delay, maintaln (subject to the ob}ection of other partim) documents, reports, answas, records, order, and usure that a record of the and written argument; accounts, papero, and other data and proceeding le made.

(6) Limitation of the number of documentary evidence.Nothing (b) N Ay has the authority to-- witnemn; contained herein shall be interpreted to plac)e of the hearing upon reasonableD Set and change the date, time, and of w)itners hats and of proposed (7 Scheduling dates for the exchange require the ereotion of a document. notice to the partin; exhibits; (c)Unine mutually agreed to by the parties, dicoovery is available only se (a renunue or recen the hearingin (8) Discovwyl ordered by the AQ.& AQ aball 19 who e or in part for a reasonable period and)N time and place for the hearing; regulate the timing of discovery, of time; (d) Mot /onefor discovery. (1) A party (3) Hold conferences toidentify or 00)Such o&w maum as may tad to seeking discovwy may file a motion i simplify the issues, or to consider other wPede se fair and just $sposition of with the Ay,Such a motion shall be mattere that may aid in the expeditious b rocw&ngs, I I

• AI mayleeue an order accompended by a copy of the requested disposition of the proceeding:

(4) Adelaiste oathe and affirmettons; mtalning admaum agrwd upa by discovery, or in the ones of deponttions, the parties or ordered b a summary of the scope of the proposed prehearing confmace y b AQ at a deposition. (5) Issue subpoenas requiring the attendance of witneous and the . (2) Withis tan days of service, a party production of documents at depositione $18.30 DIsoleeure of doeumansa. ma file an opposition to the motion ( or at hearings: (8) Rule on motions and other-(e) Upon written te vest to the an Ma muonImprotecWwordeas procedural matters; reviewing official, the defendant may provided in $ 18.84. 1 (7) Regulate the scope and timing of review any relevant and material (3)N Ay may grenh muon fw documente, transcripts, records, and discovery only if he or she finds that the discomy: other materials that relate to the discovery sought-- (8) Regulate the course of b hearing allegations set out in the complaint and. (1)isneos for the apoditious, and the conduct of representatives and parties: upon which the findings and conclusions fat, and reasma e considention of the (9) Examlu witnespe: of theinvestiga orricial under issues; 613.4 f

00) Receive, rule on, exclude, or limit docum(b) are be unless such

. bu(t}1 is not unduly costly or 1 ents are sub evidence; under Federallaw, ject to a privilege cec =a Upon payment of -(111)Willnot undidy delay the 1 } (11) Upon motion of a party, take fees for duplication, the defendant may - - Proceeding; and officialnotice of facts; obtain copies of such documents. ) (12)Upon motion of e , decide - (b) Upon irritten requwt to the - Iv) Does not seek privileged - ormation j cases,in whole orin part, by summary reviewing official, the defendant also (4)N burden of showing that dgment where therele no disputed may obtain a copy of all exculpatory discovery abould be allowedle on the i ue of material fact; - information in the possession of the party seeking dicoovery, 4 b

l $9164 Federal Register / Vol. 55. N2.1D / Tu;sday, Stptember 25, 1990 / Proposid Rules (5)The AL) may grant discovery individual to produce documents at the investigation not be disclosed or be subject to a protective order under hearing. disclosed only in a designated way; or $ 13 24. (c) A party seeking a subpoena shall (0) That the parties simultaneously file (e) Depositions. (1)If a motion for file a written request therefor not less specified documents or Information deposition is granted, the ALJ shallissue than 15 days before the date fixed for enclosed in sealed envelopen to be a subpoena for the deponent, which rnay the hearing unless otherwise allowed by opened as directed by the ALJ require the deponent to produce the AL) for good cause shown. Such documents. The subpoena shall specify request shall specify any documents to I 13 88 P #'- the time and place at which the be produced and shall designate the The party requesting a subpoena shall L deposition will be held, witnesses and describe the address and pay the cost of the fees and mileage of (M The party seeking to depose shall location thereof with sufficient any witness subpoenaed in the amounts serve the subpoena in the manner particularit t>e found, y to permit such witnesses to that would be payable to a witness in a i prescribed in $ 13.8. proceeding in United States District (3)The deponent may file with the (d)The subpoena shall specify the Court. A check for witness fees and AL) a motion to quash the subpoena or a time and place at which the witness is to mileage shall accompany the subpoena motion for a protective order within ten appear and an days of service, is to produce. y documents the witness when served, except that when a subpoena is issued on behalf of the (4)The party seeking to depose shall sh(all serve it in the manner prescribed e)The party seeking the subpoena authority, a check for witness fees and provide for the taking of a verbatim mileage need not accompany the transcript of the deposition, which it in 113.0. A subpoena on e party or upon

subpoena, i

shall make available to all other parties an individua: under the control of a for inspection and copying, party inay be served by first class mall. ,,,,,,,,,,,,nn,,,,,,,,,,,,,,,,,,,, (f) Each party shall bear its own costs (f) A party or the individual to whom (n) form. (1) Documents filed with the of discovery, the subpoena is directed may file with ALJ shallinclude an original and two the ALJ e motion to quash the subpoena copies. $ 13.12 tschenge of witnote bett, within ten days after service or on or (2) Every pleading and paper filed in statements, and exhibits. before the time specified in the the proceeding shall contain a caption (a) At least 15 days before the hearing subpoens for compliance ifit is less setting forth the title of the action, the j or at such other times as may be ordered than ten days after service. case number assigned by the All, and a by the AL), the partics shall exchange designation of the I. quash subpoena). paper is g, motion to witness lists, copies of prior statements l 13.24 Protecho order, of proposed witnesses, and copies of (a) A party or a prospective witness or (3) Every pleading and paper shall be i proposed hearing exhibits, including deponent rnay file a motion for a signed bi, and shall contain the address copies of any written statements that protective order with respect to and telephone number of the party or the party intends to offer in lieu of live discovery sought by an opposing party the person on whose behalf the paper testimony in accordance with $ 13.33(b). or with respect to the hearing, seeking to At the time the above documents are limit the availability or disclosure of was filed, or his or her representative. exchanged, any party that intends to

evidence, (4) papers are considered filed when they are mailed. Date of mailing may be rely on the transcript of deposition (b) in issuing a protective order, the established by a certificate from the testimony in lieu of live testimony at the ALJ may make any order which justice party or its representative or by proof l

hearing,if permitted by the ALl. shall requires to protect a party or person that the document was sent by certified - provide each party with a copy of the from annoyance, embarrassment. specific pages of the transcri or registered mail. to introduce into evidence. pt it intends opprewslon, or undue burden or expense.(b)Eenice. A party filing a document i including one or more of the following: (b)lf a party objects, the Ab) shall not (1)That the discovery not be had: with the ALI shall at the time of fihng. admit into evidence the testimony of (2)That the discovery may be had serve a copy of such document on every any witness whose name does not otaly on specified terms and conditions, other party. Semce upon any party of appear on the witness list or any exhibit including a designation of the time or any document other than those required to be served as prescribed in i 13.8 shall not provided to the opposing party as place: be made by delivering a copy or by provided above unless the AL] finds (3) That the discovery may be had placing e copy of the document in the good cause for the failure or that there is only through a method of discovery United States mail, postage prepaid and no prejudice to the objecting party, other than that requested; addressed, to the party's last known (c) Unless another party objects (4) That certain matters not be address. When a party is represented by within the time set by the AL). Inquired into, or that the scope of a representative, service shall be made documents exchanged in accordance discovery be limited to certain matters; upon such representative in lieu of the i I with paragraph (a) of this section hall (5)That discovery be conducted with actual party, be deemed to be authentic for th. no one present except persons (c) Proof of service. A certificate of purpose of admissibility at the t,aring. designated by the AL]; the individual serving the document by. l $ 13.23 Subpoenas for attendanee at (6)That the contents of discovery or personal delivery or by mall, setting l h**"*8-evidence be sealed, forth the manner of senice, shall be 3 (7)That a deposition after being proof of service. (a) A party wishing to procure the sealed by opened only be order of the appearance and testimony of any ALl: $ 13.27 ComputeHon of Hme. individual at the hearing may request (8) That a trade secret or other (a)In computing any period of time that the AL) issue a subpoena, confidential research. development, under this part or in an order issued i (b) A subpoena requiring the commerciallaformation. or facts thereunder. the time begins with the day attendance and testimony of an 9ertaining to any criminal investigation, following the act, event, or default, and individual may also require the 'piec*eding. or other administrative includes the last day of the period, 1 I i

s i !

Federal Register / Vol. 55, Ne,186 / Tuisday, Septernber 25, 1990 / Proposed Rules 89185 J unless it is a Saturday, Sunday, or legal (2)In the case of requests for (1) The number of false, fictitious, or r' holiday observed by the Fede al admission, deem each matter of which fraudulent claims or statements: govemment, in which event it includes an nomission is requested to be (2) The time period over which such the next business day, admitted; claims or statements were made: p',. (b) When the period of time allovced is (3) Prohibit the party falling to comply (3)The degree of the defendar,t's less than seven days, intermediate with such order from introducing culpability with respect to the ( Saturdays, Sundsys, and legal holidays evidence conceming, or otherwise misconduct '77 observed b) the Federal govemment relying upon testimony relating to the shall be excluded from the computetion, information sought; and (4)%e amount of money or the value (c) Where a doument has been (4) Strike any part of the pleadings or of the property, services, or beneht -j served or issued b placing it in the other submissions of the party falling t falsely claimed; j mail, en additiona five days will be comply with such request. (5) The value of the Govemment's 4 added to the time permitted for any td)If a party falls to pmsecute or actualloss as a result of the misconduct. ir.luding foreseeable consequential enced y e a tice of damages and the costs of investigation: I13.28 Geotions-hearing, the ALl may dismiss the action (6)The relationship of the amount (a) Any application to the AL) for an or may 'ssue an initial decision imposing imposed as civil penalties to the amount order or ruling shall be by motion, penalties and assessments, of the Govemment s loss: Motions shall state the relief sought, the (e) ne ALJ may refuse to consider (7) The potential or actualimpact of authority relied upon, and the facts any motion, request, response, brief or the misconduct upon national defense. alleged, and shall be filed with the AL) other document which is not filed in a public health or safety, or public and served on all other parties. timely fashion. confidence in the management of (b) Except for motions made during a Govemment programs and operations, i 13.30 The neartng and burden of proot. locluding particularly the impact on the prehearing conference or at the hearing, all motions shall be in writing. The AL) (a)ne AL) shall conduct a hearing or Mtended beneficiaries of such programs; may required that oral motions be the record in order to determine whethe- 's) Whether the defendant has reduced to writing. the defendant is liable for a civil nalty engaged le a pattern of the same or (c) Within 15 days after a written or assessment under $ 13.3 and,i so, similar misaonduct 'I motion is served, or such other time as the a propriate amount of any such civil 1 may be fixed by the AL], any party may Pena ty or assessment consideriqi any (9) Whether the defendant atempted file a response to such motion, aggravating or mitiga in factors. to conceal the misconduct - 1 (d) The AL) may not grant a written ( u pm" (10)he degree to which the def defendant has involved others in the motion before the time for filing responses thereto has expired, except aggr att fac o e by a preponderance misconduct or in concealing it of the evidence' dant shall prove any (11) Where the misconduct of upon consent of the parties or following (c)The defen empl ees or agents is imputad to the a tearing on the motion, but may overrule or deny such motion without affirmative defenses and any mitigating defen nt, the extent to which the awaiting a response, factors by a preponderance of the defendant's practices fostered or (c) The ALJ shall make a reasonable evidence attempted to preclude such misconduct; (d)he hearing shall be open to the (12) Whether the defendant n po o e g the public unless otherwise ordered by the cooperated in or obstructed an I hearing' AL)irg d cause shown. Investigation of the misconduct: (13) Whether the defendant assisted $ 13.29 Sanctions. gg , g, g penslues and aamamente, in identifying and prosecuting other (a)The AL) may sanction a person, (a)In determining an appropriate """8 including any party or representative for-amount of civil penalties and (14) The complexity of the program or (1) Mg to comply with an order, assessments, the AL] and the authority transaction, and the degree of the rule,, pocedure governing the head, upon appeal, should evaluate any defendant's 8ophistication with respect circumstances that mitigate or aggravate to it, including the extent of the proceecing: the violation and should articulate in defendans prior participation in the (2) Falling to prosecute or defend an action: or their opinions the reasons that support pmgram or in similar transactions: the penalties and assessments they (15) Whether the defendant has been 3 (3) Engest in other misconduct that it pose. Because of the intangible costs found, in any criminal, civil, or I interferes wi the speedy, orderly, or g fair conduct o the hearing. of fraud, the expense ofinvesti ng administrative proceeding to have such conduct, and the need to ter engaged in similar misconduct or to (b) Any such sanction, including but not limited to those listed in paragraphs others who mi ht be similarly tempted, have dealt dishonestly with the ordinarily do le damages and a Govemment of the United States or of a (c). (d), and (e) of this section, whall significant civil penalty should be State, directly of indirectly: and reasonably relate to the severity and imposed. (16) %e n< ed to deter the defendant h nature of the failure or misconduct. (b) Although not exhaustive, the and others from engaging in the same or (c) When a party falls to comply with following factors are among those that similar misconduct. an order 8ncluding an order for taking a may influence that ALJ and the (c) Nothing in this section shull be depositma, the production of evidence within the party's control, or a request authority head in determining the construed to limit the ALJ or the amount of penalues and assesaments to authority head from considering any for admission, the ALl may-impose with respect to the misconduct other factors that in any given case may (1) Draw an inference in favor of the (/.e., the false, fictitious, or fraudulent mitigate or aggravate the offense for [ requesting party with regard to the claims or statements) r.harged in the which penalties and assessments are 'l information sought; complaint:

imposed, s

39 m - Federal Regial:t / Vcl. 55, Nw 186 / Tuesday, September 25, 1990 / Proposed Rulzs $ 18.82 Location of haanne. LI) A party who h an ladividual;.. w (a) The hearing may be held-W In the case of a puty that is not an AL) shall fix the time for filing such s! (1)ln any judicial district of the individual, an officer or employee of the briefs, not to exceed 60 days from the '3 -) United States in which the defendant party appearing for the entity pro se or date the parties receive the transcript of resides or transacts business: designated by the party's representative; stipulated record. Such briefs may be the hearing or,if applicable, the (2)In any judicialdistrict of the or E United States in which the claim or accompanied by proposed findings of sh(ow) n by a party to be esssential to the 3 Anindividualwhosepresenceis fact and conclusions oflaw.The AL statement in lasue was made; or may permit the parties to file reply ] (3)ln such other place as may be presentation ofits case including an ' briefs. agreed upon by the defendant and the individual employed by the Government ~ AL. l ( )Each party shall have the engaged in assisting the representative i13.37 initialdecision. for the Government. opportunity to present at ument with (a)The ALJ shallissue an inillal respect to the location of he hearing, t 13.34 Evidence, decision based only on the record, plac)e and at the time ordered by the(c The hearing shall be held at the (a)The ALishall determine the which shall contain findings of fact, admissibility of evidence, conclusions oflaw, and the amount of any penalties and assessments imposed. 018 33.Witneseos A sh I not be b nd t l'ede al (b) The findings of fact shallinclude a (a) Except as provided in paragraph Ru es of Evidence. However, the AL) finding on each of the following issues: (b) of this section, testimony at the may apply the Federal Rules of (1) Whether the claims or statements hearing shall be given orally by Evidence where appropriate, e.g., to identified in the coniplaint, or any witnesses under oath or affirmation. exclude unreliable evidence, portions thereof, violate i 13.3: and (b) At the discretion of the ALJ, (c)The AL) shallexcludeirrelevant testimony may be admitted in the form and immaterial evidence, (2)lf the person is liable for penalties or assessments, the appropriate amount of a written statement or deposition. be(d) Although relevant, evidence mayof any such penalties or assessments Any such written statement must be excluded ifits probative value is provided to an other parties along with substantiauy outweighed by the danger considering any mitigating or the last known address of such witness, of unfair prejudice, confusion of the aggrevating factors that he or she finds in a manner which allom ufficient time issues, or by considerations of undue in the case, such as those described tr. l i 13.31. delay or needless presentation of for other parties to subp r,h witness for cross examin@auen at the cumulative evidence < (c)The AL) shan romptly serve the initlai decielon on I parties within 90 be e)xcluded if it is privileged under(e Although relevant, evidence may days after the time for submission of hearing. Prior written statements of witnesses proposed to testify at the hearin and deposition transcripts shall Federallaw, post. hearing briefs and reply briefs (if be ex anged as rovided in i 13.22 a), (f) Evidence concerning offers of permitted) has expired. The AL] shall at (c)The ALI sh I exercise reasona le compromise or settlement shall be the same time serve au parties with a control over :se mode and order of inadmissible to the extent provided in statement describing the right of any interrogatir.g witnesses and presenting Rule 408 of the Federal Rules of defendant determined to be liable for a

Evidence, civil penalty or assessment to file a evidence so as to:

(1) Make the interrogation and (g) The / L} shall permit the parties to motion for reconsidere' ion with the AL] presentation effective for the -introduce <ebuttal witnesses and or a notice of ap eal with the authority ascertainment of the truth: evidence.. head.lf the AL) alls to meet the (2) Avoid needless consumption of (b) A 1 documents and other evidence deadline contained in this para raph, he time: and offered or taken for the record shall be or she shallnotif the parties o the reason for the d ay and shall set e new opm to examination b all parties, deadline (,r u due n b trasem n dess therwise orde d by the All (d) The ALJ shall permit the parties to pursuant to i 13.24. (d) Unless the initial decision of the AL is timely appealed to the authority conduct such cross-examination as may 913.35 The record. he d, or a motion for reconsideration of be required for a full and true disclosure of the facts, (a)The hearing willbe recorded and ; the initial decision is timely filed, the (e) At the discretion of the All, a transcribed.Transcri to may be initial decision shall constitute the final witness may be cross examined on obtained following t hearing from the decision of the authority head and shall matters relevant to the proceeding AL] at a cost not to exceed the actual be final and binding on th parties 30 without regard to the scope of his or her cost of duplication. days afterit is issued by ALJ. direct examination.To the extent (b)The transcr'pt of testimony. . permitted by the ALJ. cross-examination exhibits and other evidence admitted at 513.3s Reconsideration of tWtlaldecleton. on matters outside the scope of direct the hearing, and all papers and ra eats M#N " ded W b examination shall be conducted hi the filed in the roceeding constitute - (d) of this section any party may a manner of direct examination and ma record for t e decision by the ALJ and modon for reconsideradon oh Mal the authority head decision within 20 days of receipt of the proceed by leading questions only if e' witness is a hostile witness, an adverse (c)The record may be inspected and initial decielon. lf service was made by ~. p rty, or a witness identified with an copled (upon payment of a reasonable mall, receipt will be presumed to be five fee)b one, unless otherwise days from the date of mailin a verse party, ordered $y the ALJ pursuant to i 13.24. absence of contrary proof. g in the (f) Upon motion of any arty, the ALJ shall order witnesses exc uded so that $ 13.36 poet +earms triefs. (b) Every such motion must set forth the matters claimed to have been they cannot hear the testimony of other. The AL) may require the parties to file, erroneously decided and the nature of witnesses. This rule does not authorize post. hearing briefs.In any event, any < the alleged errors. Such motion shall be exclusion'of-party may file a post. bearing brief. The accorupanied by a supporting brief. 1 .c h

['{ q o Federal Register / W1. 55, Ns.186 / Tuesday, September 25, 1990 / Prep: sed Rules 39167 5i (c) Responses to such motions shall be.of receiving the notice of appeal and. (b) No administrative stay is available ] ~ allowed only upon request of the ALJ. accompanying brief, following a final decision of the r! (d) No party may file a motion for. . (f) There is no right to appear autht.dty head. l; reconsideration of an initial decision personally before the authority head. g 3,,4, jgg,g,,,,,,,, . that has been revised in response to a - (g) There is no right to appeal any '[ previous motion for reconsideration, interlocutory ruling by the AL], Section 3805 of title 31, United States 'e (e)The ALJ may dispose of a motion (b) In reviewing the initial decision Code, spm Wal Wew h an t by the authority head shall not consider' ,Qi "fn o t el a te se ini lal cis ssu nf the AL] denies a motion l'or h"e# 'j

• imposing penalties or assessments I

u 1 3 (f)I emon trs ni ma . [g reconsideration the initial decision 6 hall constitute the final decison of the of extraordinary circumstances causing under this part and specifies the authority head and shall be final and the failure to raise the objection. pmce urn or oc m m binding on th t parties 30 days after the (1)If any pa t demonstrates to the I 13.43 ConocUon of civu penalties and satisfaction of t e authority head that assesenwnts. decis on a timely pha" led o t e additional evidence not presented at Section 3806'and 3806(b) of title 31, authority head in accordance with each hearing is material and that there United States Code, authorize actions j were reasonable grounds for the failure for collectar. of civil penalties and ~ i1319' he Allissues a revised initial (g)If t t present such evidence at such assessments imposed under this part decision, that decision shall constitute hearing. the authority head shall remand - - ano specify the procedures for such the final decision of the authority head the matter to the ALJ for consideratum actions. and shall be final and binding on the of such additional evidence. parties 30 days af ter it is issued, unless (J) The authority head may af!irm, it is timely appealed to the authority . reduce, reverse, compromne. romand, or The amount of any penalty or head in accordance with 413.39. settle any penalty or assessment, , assessment whicb has becomo final, or. determined by the AL] in any initial for which a judgment has been entered i 13.30 Appeal to amority head, decision. Under i 13.42 or i 13.43, or any amount (a) Any defendant who has filed a (k) The authority head shall prorrgdy agreed upon in a compromise or timely answer and who is determined in serve each party to the appeal with a. settlement under i 13.46, may be en initial decision to be liable for a civil copy of the decision of the authority collected by administrative offset under penalty or assesan ent may appeal such head and a statement describing the 31 U.S.C 3716, except that an decision to the authority head by fihng a t ght of any person determined to be administrative offset may not be made i notice of appeal with the authority head. llable for a penalty or assessment to under this subsection against a tefund of in accordance with this section. seek judicial review, an overpayment of I'ederal taxes, then 3 (b)(t) A notice of appest may be filed (1) Unless a petition for review is filed or later owing by the United States to et any time within 30 days after the ALI as provided in 31 U.S.C. 3805 after a. the defendant. issues aninillaldecision.Iloweser,if - defendant hae exhausted all i13.46 Deposit in Treasury of Unitoo -another party files a motion for administrative remedies under this part states. reennsideration under i 13.38, and within 60 days after the date on consideration of the appeal shall be which the authority head serves the All amounts collected pursuant to this sta) ed automatically pending resolution : defendant with a copy of the authority part shall be deposited as miscellaneous of the motion for reconsideration. head's decision a determination that a receipts in the Treasury of the United (2)If a motion for reconsideration is defendant is liable under i 13.3 is final States, except as provided in 31 U.S.C. timely filed, a notice of appeal may be and is not subject to judicial review. 3806(g). Ided within 30 days af ter tae AL) denies the motion or issues a revised initial i 13.40 Stays ordered by the Department i13.44 compromise or settlement. decision, whichever applies, of Justice. - (a) Parties may make offers of (3)The authority head may extend the if at any tim'e :he Attorney General or C mpmmise or setdement at any ume. initial 30 day period for an additional 30 an Assistant Attorney General-(b)The reviewing official has the days if the defendant flies With the -designated by the Attorney General: exclusive authority to compromise or authonty head a request for an - transmits to the authority head a written - settle a case under this part at any time extension within the initial 30 day finding that continuation of the. after the date on which the reviewing I period and shows good cause. administrative process described in this officialis permitted to issue a complaint (c)lf the defendant files a timely . part with res ect to a claim or statement and before the date on hich the ALJ j notice of appeal with the authority head may adverse y affect any pending or issues an initial decisi ) and the time for filing motions for

potential criminal or civil action related (c) The audiority head has exclusive reconsideration under $ 13.38 has to such claim or statement, the authority authority to compromise or settle a case expired, the AL] shall forward the L head shall stay the process immediately, ~ under this part at any time after the date record of the proceeding to the authority, The authority head may order the

. on which the AL] issues an initial (

Lead, process resumed only upon receipt of decision, except during the pendency of '

(d) A notice of appeal shall be the written authorization of the Attorney.-any review under i 13.42 or during the accompanied by a written brief Generah , specifying exceptions to the initial - ' pendency of any action to collect penalties and assessments under-decision and reasons supporting the $ 18.41 Stay pending appeal. g23,43, ' Exceptions. (e)'llie representative for the (a) An initial decia!on is stayed ' - (d)The Attorney General has Government may ille a brief in ' [, automatically pending disposition of a - exclusive authority to compromise or motion for reconsideration or of an settle a case under this part during the opposition to exceptions within 30 days ' appes) to the authority head. pendency of any review under i 13.42 or s 1

39188 Tederal Register / Vol. 55, No.186 / Tuesday, September 25. 1990 / Proposed Rules s 'of any action to recover penalties and consideredio compliance with the the Office notes that banks maintain i 's assessments under 31 U.S C 3900. revised regulation, f fidelly leond coverage under Standard (e) The investigating official may DATES: Comments must be ceived on Form No. 24. In view of the provisions of recommend settlement terms 10 the reviewing official, the authorityhead, or. cr before October 25,1990 12 U.S.C.yB28le). and because the Office I the Attomey Generst, as oppropriate. ADDRESSES: Comments my be sees nu cotopelling reason why thrifts i i The reviewing official may recommend submitted to: Director, Information should Dot be placed in a position of settlement terms to the authority heud, Services Division. Office of parity with banks in this regard, the or the Attomey General, as appropriate. Communications,1700 C Street NW.. O! Ace proposes to amend 12 CPR i 503.190 to delete the requirement that (f) Any compromise or settlement Washington. DC 20552. Cqmments will savings associ tions must obtain muni be in writing, be evallable for public ins 3ection at coverage unde Standard Form No.22 .1735 i Street NW., Ninth F oor, $ 13.47 t. imitations. and to substitut the requirement that (a) The notice of hearing with respect ~ POR FURTHER INFORMATiog CONTACT: savings associa 'ons obtain bond to a claim or statement must be served William W.Templeton, StATI Attorney, coverage under tandard Form No. 24. in Ine manner specified in i 13.8 within Corporate and Securities Division. (202) Savings associat ons that currently hold 6 years after the date on which such 906-7354. julie L. Williams.! Deputy Chief fidellty bonds tten on Standard Form , claim or statement is made. Counsel for Sec,rities and Corporate No. 22 will be deemed to comply with (b If the defendant falls to serve a Structure, (202) 906-8549, Corporate and the amended regdjation.' tim y answer, service of a notice under - Securities Division: Linda Matthias, While implemeqting the Standard i 13.10(b) shall be deemed a notice of Polley Analyst. (202) 906-5(47. Edward Form No. 24 coverpse requirement, the Charity, Jr., policy Analyst /(202) 906-proposed amendmpnt removes from the Ic heat u e bimi to a aI,. 7933, Supervision policy Office of Thrift regulation the scnadule of the required i 1 extended by agreement of the parties' Supervision'1700 G Street minimum amountspf coverage. In the Dated at Rockville. Maryland, this 19th day Washington DC20552. Office's view, the appropriate levels of of September 1990. SUPPL.EMENTARY INFORMAyl0N:The coverage are best determined by the For the Nuclear Reguletory Commission. Office is proposing to amend its management of each savings Samuell.Chilk, regulations pertaining to fidelity bond association.This position is shared by Secretoryofthe Comodssion. coverage. This action is taken in order other bank regulatoy agencies. It is the [FR Doc,90-22077 Filed N4-em 845 eml to address the disparity hstween the - duty of the savings association's 4 fidelity bond insurance requirements of-management to ideniify, analyze and savings associations and those of treat the risk exposup created by its p commercial banks and in recognitlen of operations hianagempnt, working together with a reliable insurance the limitations of product availability in g, y g the insurance bond marketplace, professional,can anal re the need for coverage and control t e exposure to Office of Thr!ft Supevision The Office recognizes that the loss bychoosing the appropriate levels insurance bond marketplace has ' of coverage and, when 4ppropriate, 12 CFR parts 663 aniU1 undergone changes sitice 1968 when the purchasing endorsemen(s or riders to (No. 90-1494] Federal Home Loan Bank Board adopted the standard form that b oaden the t the regulatory requirement that all scope of coverage. Management should RIN 1550-AA05 FSLIC-insured savings associations assess this fidelity loss riyk by means of obtain and analntain fidelity bond a thorough review of allaspects of the Bonds for Directors, Officers,. Insurance under the form known as association's present andprospective Employees, and Agonts; Form and Standard Form No. 22.That form of opeestions.This comprehensive review Amount of Bonde coverage has not been widely available of tnternal controls mayel reveal the to the thrift industri since 1986. In its need k, take additional p edoral steps AGE 86CY: Office of Thift Supervlaton, place, fidelity bond l underwriters are in order M limit a particu risk. Of

Treasury, offering to savings associations the course, exe.*ninaa review a analysis of ACTioac Notice of proposed rulemaking, same form of fidelify bond coverage thet the adequacy,f the savingsj is available to commercial banks.The association's inscance program is

SUMMARY

The Office ofThrift bond form known is the Financial The amended regulation al(go require Supervision (" Office) is proposing to Institution Bond, Standard Form No, M necessary.

amend its regulationspertaining to is the form of fidellty bond maintained the board of directors to formally fidelity bond coverago in order to by commercial ba6ks in accordance approve the savings asso6iatiyn's bond address the disparity aetween the with the provisi ' of 12 U.S.C.'ts28(e).* - coverage,to monitor the ongoing fidelity bond insuranc e requirements of operations and to assess the need for savmgs associations and those of 8 Section 1[e)o commercial banks em to tecognize the Aci n,d,,, gotio,',: Federal Depoeu lnsurance additional coverage periodically, The limitations of product ivallabilityin the The corporee on my newn ontinea=d Office expects that this amendrnent, insarance bond marketplace.The Office deposiinry4.uest aspoproeide proi.eemo.ed together with regulatory bulletjns to be is proposing to substit ste the dadsmany esm bestery, der.icason and othe' issued subsequently, will provide ',$i,["7f,',$,',I,",[,gy,7,',',',"fy$,juch management with clear guidanbe on the requirement that savirlgs associations [' obtain coverage understandard Form , proper course to set for meetinit the aquinment. the .uom m y contreet rar su.h savings association's fidelity bend No. 22 viith the requirement that they protection ndind nity and add the co.i th wot ' ~ obtein bond coverage $nder Stendard to th' *******'at berwi.e p.y bie br ausht,.nk. coverage needs. Any deviationn from Form No.34. Savings aQsociations pj,Q8s e jtgaa eggedg - Currently holding bonde,writton en

• Throushout thi. pr..mhie.-tidetitt bond Standard Fonn No.12 will be Entorcement Act etless. Pub.1 Noden-7s.1 En.

coverag. refers te the cowrage prodded esser m stat. ;ss tiessy steadard Fora No. M. l i d ~

h9I')l a_

f b) r-gg.;

&k 1 l MODEL REGULATIONS IMPLEMENTING THE c f PROGRAM FRAUD CIVIL' REMEDIES;ACT'Orm1986 r L INDEX' I

SECTION.

PAGE I o

1. ; Basis and. purpose 1

2: = Definitions-=. 1-

3.

Basis _for civil. penalties ~and -assessments i 11: 4.. Investigation j 17

5.. _ Review by reviewing official'

-j

18 l

6. -- Prerequisites. forlissuing: a1 complaint 19 7.: Complaint,

-20"

8,1 Serviceiof. complaint 9.,

Answer'

22-22 10.

Default'upon1 failure to'ffle an answer. ~23 -lle l Referral:of complaintLand: answer to 'the ALJ 1 25: 112.- l Notice of hearing' r 26 13=. Parties'to the' hearing) 1 26 (14. c ' Separation of-functions: a '27 15., Ex partencontacts. 27-

• 1 16. -. Disqualification offreviewing. official t

.orHALJ -l 117. Rightsiof. parties _ 28 l 3

18. ' Authority of the ALJ 29

}

19.,Prehearing conferences.

30' 20.1 Disclosure-of-documents 31 .j t {.~ L21[LDiscoveryx 33' -34 i 22 Exchangetof witness. lists,' statements, 'and1 exhibits ~ 1 36-. 23.; Subpoenas'for attendance-at: hearing? ~37: '24. Protectiveforder-138' -j l 2 5 '. Fees-. 39- '26.- Form, : filing :and' service of _ papers { 427.- Computation of time 40, 1 "2 8.. Motions: 41'

j 29.

Sanctions.

42 l

E3 0. = TheLhearing.and burden of. proof. ' 43 i z 44 31. Determining the amount oof penalties: .and? assessments? '32. LLocationiof' hearing. ~ 45' j 5K

33. - Witnesses 47-

]; -- 3 4. :. Evidence t. 48 + 4 3 5.,- The1 record 50 t - 51 1 ~l

)

o, .p'

. h,

}

j '2 u?

1 o i . f.

j -

F, t-r l 1 MODEL.REGULATIO!!S IMPLEMEllTING THE PROGRAM.FPAUD CIVIL _ REMEDIES ACT OF_1986 'INDEX -i SECTION PAGE l l 36. Post-hearing! briefs 52-l 37.? Initial decision-52-l 38. Reconsideration =of-initial decision-53' 39. Appeal to authority head-54 l . 4 0. - Stays. ordered. by: the Department of-i

Justice

-57

41. ' Stay pending' appeal:

58 i 42~. -Judicial: review 58

• 3.

'Collectienoor civil penalties 4and assessments: 58'

44. -Right to1 administrative' offset 58

~4 5. - Deposit in: Treasury of' United. States .59 46. Settlement 59 i 47; Limitations 60 i j d 4 i l i c y a -l). i v 3

d +f?. ] C 1 1 MODEL.REGULATIOllS -IMPLEME!1TIl10 THE j PROGRAM FRAUD CIVIL ~ REMEDIES ACT'OP.1986 1.- Basis and purpose. -(a) Basis. This part, implements.the Program 1 Fraud ~ Civil' RemediesiAct ofL1986,.. Pub. L'..No.E 99-509', '55.6101-6104,1100 l Stat. 1874 (October 21, 1986)',- to be codified'at 31 U.S.C. ?! SS-3801-3812. 31':U.S.C.JS 3809 of,the statute requires.'each-authoritys. head to promulgate-regulations necessary to-implement-the. provisions'of the< statute. 1 i . ( b )- Purpose..This partL(1); establishes administrative.' i procedures for imposing civil:penaltiesiand assessments-f againstpersons'who,make,2 submit,cor[present,oricause.tobe ..l .made,1 submitted, Lor presented,..c f alse', fictitious ; :or.? f raudu-4 lent claims or' written: statements:,to authorities or.to;their 3 agents,Tand.(2) specifies the hearingiandiappeal'. rights ofL T

persons subject to-allegations.--of111 ability;for such pen-Talties.and' assessments.'

I 1. -Definitions. ALJ means,an AdministrativefLaw Judge in the' authority appointed-pursuant to15 U.S.c. i.3105 or..detaildd:to the authority pursuant to-5 U.S.C.: 5J3344.; L Y, } a= .+ J.-L.- s,.- e e

/' 2 1 'e [IlOTE: These'regulationsfuse the termfALJ,t'hroughout because it applies'to most' agencies. If your agency is not -I subject-to~ subchapter II of chapter 15 of title 5, U.S.C., -you should, include a definition for " presiding officer" (see R 1 below) and substitute-that term-fotALJ' wherever the latter, tern appears'in the body ofithese regulations.] Authority means .-{Name yourfagency if'it fit? oneoof the. definitions below:]= i '(a) san executive department;- I (b) a military department: I .(c) an establishment (as.-suchEterm is* defined in section 11(2) of the. Inspector General Act od.1978) which:is not.an J executive departmenir or. (d) the United States"PostallService. l I '[ hor HHS ] the Department of:Hecith'and Huma'n Services. Authotity.' head means i 1( Adaptif rom.~among-i the ff oll'owing for your -agency:'] 1 1 i(a ) - the headLof your authority;7or-- 9V r .+

f_f 3. (b)- an: official or. employee oflyour; authority designated,.. i & regulations promulgated by the head of the authority, to r L -act on behalf of the head of the authority;. 1 P [For HilS:) r l the Secretary'or' the Under Secretary of:the Department of ~ Health"and Human-Services. Benefits'means,:exce,;e as!the' context otherwise requires,- anything of value, including but.not. limited to any: ~ . advantage,' preference', privilege,;. license, permit',. favorable i . decision, ruling;l status, or loan guarantee. s L claim ~means:any request,Edemandi or:-s'ubmission--- . t (a) made-to-the-authority for-property,yservices, or money -i (including-: money-representing grants,-loans,. insurance, or.

benefits);.

'i l .(b)~made t61a recipient of property, services,..or money'from i .the authority--~or-toLa party.to a_ contract with the au - IE thority-. '(1); for property or services if :the United. States-- (ill provided such. property or services; "{ i <i g i I s f e e-,- e e s<- e==-wa--,- u.

3 Y 4 -- r-i t i g (ii')fprovided any= portion of the funds for the, purchase of such property or services or (iii): willJreimburse such recipient or' party.for' 1the purchase of such property or services; or [ (2) i 'fotithe payment of money (including money repre-senting grants,-loans, insutance, nt-benefits) 1f ~ the1 United' States-- (i) pro',ided?any portion: of the. money-requested' o'.< demanded; orl (11). will. reimburse such recipient;or-part" for- ~ any portion of the! money paid on.such' request or demands or i i (c) made to the authority which~has the-effectrof decreasing-an obligation to' pay or accountifor p'r'operty, servicesi;or. i .1 money (,]!.) r 1' (Applicable to;the. Department of the Treasury:] I -[exceptLthat"such' term'does not'. include:anyLclaim1made in- . any return'of taxfimposed-by tha I-tarnal' Revenue Code ~of. t 1954.le t 3.. complaint means'the administrative l complaint served by the i Treviewing official on the defendant underc517. q' j s l} i ) j' s s t -- ~ 4..

' a[' S i 5. .O n Def endant' means.- any person _ alleged in ;a complaint under S. 7 to be. liable forjaJcivil penalty.or assessment under[S 3. .[ Depart' ment-means the Department'of Health'and. Human r 1 l Services.) l 1, . Government means the United States Government.- 1 ? j Individual' means a-natural person.: c -i ~ Initial = decision means the'-written decision-ofitbe ALJ I required by 5-10 or.S'37,.andfincludes-a-revise'd initial decision issued followingJa remand.or a. motion for-reconsid ' ,i l eration. i ~ Investigatina~ official means i i [llame 'the' office that : fits the' applicable definition-below, ~ generally, the Inspector 1 General-of'your' authority:] ? 1 An individhalJwho-- -(a)(1) in the case'of~an authority;in which an:-Office i of. Inspector General;is-established by-the Inspectot General Act'of11978,orfby'any other Federal law,-the-i = Inspector GLneral'of that authority or an officer st l .i 7 employee'.of such office designated by?the' Inspector;- General; I L e i i. I 1 .e 5. a;

y 7 6' 'a (2) in'theLease pf'an authority in.which an' Office of Inspector General is not established by the; Inspector General Act'of 1978 Dor byiany other Federal law, an officerior employee of the authority designated by the. authority head.to conduct-investigations.under j 1 S:4 of this;part; or (3).in1the. case of-a' military department, the Inspector. General of the Department of Defense,or1-an officer.or-j Lemployee ofjthe Office of Inspector: General of the Department of Defense who: is designated by: the i Inspector General;.and

(b) who, if'a member of,the-Armed: Forces of-the-United i

Statesion active duty, i.s servin.g in grade 0-7 or-above or,- ~ 'if.a? civilian employee, is serving in' a position for which: ~ ' the rate:of basic pay _is not less than the minimum rate of~ basic pay for graf.e.GS-16 under theiGeneralcSchedule.- i I L -(For HHS:] } 4 the. Inspector General of.the Department 1of Health and: Human i services or-an officer or* employee of the Office of the . Inspectop.LGeneral designate'd 'b'y-the; Inspector General and, ~ servingninta: position for:whichothe rate (of basic paycisunot Elessithan the:minimumLrate'of basic! pay 7 orygrade GS-16 f under'the;Generalaschedule. L

• O or 4

q' ':lV .. -= . ~.

- n l l .., ]

,s ?

7 38.. b i Knows orL as reason to know,Empens that a person, with h respect to.. a claim or statement--- (a).has actual knowledge that the claim or. statement-is false, fictitious, or fraudulent; (b). actsfin deliberate ignorance,of the truthLor falsity-of . t q the' claim or. statements or-t (c ): Jactssin reckless disregard'of.the-truth or-fLisity of ' the claimi or: statement. Makes, wherever. itu appears, shelliinclude the rarms -1 presents, submits, and causes/to:b'e:mnde,1presanted, or- -submitted.. As the:contextLrequires, making-lorsmade, shall ~ 'likewise inc1ude 'the : corresponding forms of such terms. i 1

Person meanssany individual,' partnership, corporation, 1

association,' -private organization,; state, political subdivi-sion:of a State, municipality, county,-district,iand" Indian-I, tribe, and'includesi the' plural of y that ' term., .i [ Presiding' of ficer meansf (ifithe authority is: notisubject to - the; provisions ofisubchapter II-of chapter.5 of title 5', U.S.C.'):an' officer or employae of -the authority who-- d i .y l i .-L.._.---.__.__l.

---

E_

..w. -- =- u,' i 8-i -I (a' is' selected under chaptet 33 of t'.le 5 pursuant-to;the ll .ompetitive examinat' ion process applicable to administrative. law-- judges; "> ) is appointed by the' authority headito conduct hearings q under this part; a .(c) - is assigned to cases:.-in' rotation so far-;as practicable;- (d)' may:not perform-duties' inconsistent with the duties and responsibilitiesEof~a presiding officer; - (e) is entitled to pay'prescribedLby.the office of Personnel Management independently oferatingsJand; recommendationsemadeLby-the auth'orityoand in-accordance with> chapter:51 of suchttitle andLaubchapter,III of chapt'er-53oof-such title'; (f) is'not subject'to-performance. appraisal pursuant 1to - chapter 43 of such' title; and- \\- (g) may be-removed,0 suspended, furloughed, or' reduced in . grade-ot,,payLonly for good cause established and'det' ermined n 1 IThe statute 1 provides "is : appointed 'by the : authority : headito< conduct--hearings under:Sc3803 of such-title,= referringLevidently to'thisctitle',-as,there is'no S 3803-in title 5, U.S.C. l 4 .g dl s J

, - 91 =.. l A by the.MeritLSystems ProtectionLBoard'on'tne record after i opportunity for hearing by-such' Board.~) . Representative-means art attorneyE(and if your: agency elects. j l to permit non-attorney representatives'to. appear in proceed-i ingsf under this: part, you may add: "or,otherfrepresentative 2 meeting! the' qual-ifications of'a non-atterney representative. found'at (and"here list yourl agency's reculations~, not-g

internal auidelines, for allowing non-att'orney representa-i tives;to'appearLbefore yourtagencylin, administrative

{ l ' hearings) and ' designated ~ by.a: party: in writing.'ll q b, Reviewing' official means -[ Designate an officer or employee offyour. authority 1who Emeets the;following-criteria"o'rsdefine the reviewing-i i officiallas-fol' lows:) j y i An officer =or employee of the authority- - p -(a) who is designated byithe1 authority head to.'make/the i

determinationcrequired underoS15 oflthis parts

.[ .c i (b) whof-ifja member:of the. Armed Forces of the! United i States'on active duty, isiservingiin; grade 0-7 ortabove or, 1 ,1fia civilian employee, is serving 71n aHposition'for'which i the--rate of: basic pay is not,lesstthan1the minimum rate-of-basic pay for: grade;GS-16'under the General: Schedule; and i { t ' .g l I L FY 7, ) m e, .f,..d...--., a 4 + 4

e '.

.10 - (c).!who is-- i (1).not subject to supervision by,;or required to report-to, thecinvestigating official and 3 (2); not: employed lin the organizational unit of the i . authority in'which the investigating' official is employed. (For HHS:] e - the, General. counsel >of the Department or his designee'who ' is-- (1) 'not.-subject;to supervision by, or required to ~ report to,rtheLinvestigating official;;and i (2) not: employed :in the organizational ~ unit of.the ~ authority.in whichithe investigating official:is-i t employed. I i Statement means.any representation,; certification, affirea-d - tion, document,, record, orLaccounting or b6okkeeping; entry made-- .x (a) twitherespect to a claim or to obtainithe: approval-o'r paymenthoffa claim (including tel'ating-.to eligibility' to -t make a-claim).or-I ' (b)Lwith1 respect to-(including relating to eligibility' .for)- k NP' ,). ?. j T:f, 7

,t 11 (1)- a contract with, oria bid or proposalLfor a-contract with; or (2) a grant,cloan', or benefit from, the authority, or any State, political. subdivision of a t (' state, or: other: party,, j f the ~ UnitedL States Government f provides)any portion of:the money or property under such contractHor foresuch grant, loan, or benefit,~or if the 4 Government!will reimburse'such: State, political subdivision, I orepar ty forl any -portion 1of:'the money, orJ property? under; such. j contract 1or for such' grant, loan, or benefit (.)(,)' (Applicable to-the Departmeni of:.the Troasury:'] (except that such/termLdoes notcinclude any atatement'made-1 'inc any return of f ax. imposed, byLthe. Internal Revenue Code l of - i t l 1954.1 I i 3. Basis ~for-civil penalties ~and ass'essments. (a) Claims. .(1) Except'as.providedLin:(c) below,.anyLperson~who makes a 1 claim that*thh person knows'orthas, reason to know-- -(i); isifalse, fictitious,?or.frauEulent 111);., includes-orissupportedby-anywritten ( n ~ statement.uhich asserts a material fact'which Le i .t false, fictitious,a or fraudulent;. l ~ -(iii) cincludesLor is supported,by;any! written 4 statement;that-- n 3 f k i ,f h, s. j 4

1 g

asg1;,'

12 1 \\ (A) omitsLa material fact-i + (B) is false, fictitious, or fraudulant as a result'of;such omission; and I i (C)' is a1 statement _in which1the person-making such statement has aJduty to include such-4 y material facts'or. (iv) is for payment _for the_ provision of property or' l servicesfwhich theiperson has not provided as i

claimed, L

I shall-bel subject, inl addition"to any other remedyithat may' be: prescribed by law,Lt'o a civi1~ penalty oftnottno're1than - i. S5,000 for each suchLclaim;- i i '9 i(2)~ Each voucher, inv61ce, claim: form, or'other individuali q requestfor demand 1for. property,3 services,.or money consti-I tutes a separate claim.. -I b A cla' m shall: be: considered made to-ancauth'ority,. (3)- i s recipient, or party when such< claim:is-actually:madeto an. agent',.fisca1' intermediary, or-lother: entity, includingyany_ .i State'or:pblitical; subdivision-thereof, acting;for..or on' l behalf.ofLsuch: authority,. rec'ipient, or party.. c. (4) :Each claim foriproperty',Hservices,=or money is subject- _toca; civil penalty,regardless of:whether such property, services,-or money'is actually delivered or paid. .j E -m pa. t 4 i e { 6 +:r' if ,:);, m,, 4~ +- ~' 4 1 ' * ' ' ' ' F

'l 7. 7 l13-h 4 -= (5). If the. Government.has=made any payment (including. j ~ l h transferred property or provided services) on.a claim, a person subject to a civil penalty under paragraph (1) shall also be, subject to an assessment 1of.not more thanLtwice the amount-of _such-claim or : that portion: thereof that' is de-termined to be;in violation of paragraph'(1). 'Such assess- ~ u . ment-shall'be inclieu of damages sustained by the' Government. because of such claim. 1 (b) Statements.. 1(1)' Except-as provided in:(c)l.below,-any person 1who makes e written' statement that-- 4 (1). the; person'knows or has' reason to know- - 1 -(A) asserts a'materialifact which is false,; l. L fictitious,:or fraudul'ent; otF t ~. (D) is' false,1 fictitious or' fraudulent:becauseL m i . it= omits a-material fact that:theKperson-i making the statement (has aiduty.to includeDin- - such: statement;-and-i .(ii)' contains or is accompanied _byJan express j certification or affirmation-of4 the'thuthfulness q r .and-accuracy /of the contentsiof thoistatement, shall'bg.pubject, in additionfto any otherLremedy that may! b'e prescribed by law, to a'civilspenalty of not more than

$5~,000ffor eachsauch statement.

d P fi -i l O i ~l /. , b.

i i 'a -24 . = (2)- Each written-representat' ion,' certification, or'affirma- [ tion constitutes a separate statement. 1 t (3). A statement shall be considered made tonan authority [ when such statementLis.actually made~to'an-agent,; fiscal intermediary, or other entity, including:-any StateLor i political subdivision thereof, acting-for or on behalf'of i such authority-L r l (NOTE:' Subsectiono(c),should be~ included in your,agen'cy's 7 ,q regulations 'only of f your agency ' administers 1one of 'th~e l ' benefit programs listed in' paragraph (c)(2) below;) i 4 l 1 .(c)(1)' In thez case of'any: claim or statement.madeLby any j individual ~ relating to?anyJof'the benefits listedLin: para. graphL(2) received by:such individual,j.such:individu'alfmay. 1 be held liable.for penalties-and assessmentsiunder this section only if such claim'or' statement is madegbyysuch individual in making, application ~for such' benefits?with . j l . respect to-such individual's'eligib'ility to;rece'ive such. ] benefits..' L (2) :forLpurposes;of.this1 paragraph,.the term 'benefitt" a means-- 1 (List lthose.among the'following, any1 benefits ~that are-1 - administered' by your authority::] sv 4 1 s ,n'.. .+.,, p y y

f '.C ~15' $(i)- benefits under theLfood stamp program _(as defined ~ in S 3(h) of the FoodLStamp Act'of 1977);s (ii')- benefits under chaptersE11, 13, 15, 17,-and 21 of a title 38 (iii)~ benefits under'th'e-Black Lung Benefits: Acts: (iv).;any annuity.or'other benefit-under the-Railroad vi ' Retirement Act of 1974;. I -(v) benefits.under'the National Schoo1~LunchfAct; -h n (vi)- benefits-.under?any housingLassistance' program for. .i lower' income families:or elderly or handicapped

)

persons'whic'fis administsred by the. Secretary of, h Housing and Urban: Development'or thenSecretary of . Agriculture; or (vii) ; benefits,under}the sp cial supplementalifood- { program for; women,. infants,Iand:childrencestab- ~11shed1under.S'17 of the Child Nutrition /Act of -1966;-or' (viii) ; benefits,under part A,of:the Energy Conservation q in ' Existing Bui'1 dings. Act i of ? 19 76,. ' whichnarenintended'for the-personal'use of'the1 individual ~ ' who receivesithe benefits'or.for a member"of'the-individual's. family. j .y.. .[For HHS:]: f 3 4 a l '(1) benefitsounder'the supplemental 1 security income.

g..

programtunder' title XVI:of'the Social Security 'I l 7 a i ' ', '^u i i ? c: ..{. t y w'.

y.- 16 s g .i - Acts. (ii) old age, survivors, and disability insurance - benefits under: title II of.the Social: Security Act; l-L (iii)- benefits-under' title.XVIII of theosocial1 Security hj Act; l

(iv) aid to families with dependent 1childrencunder:a' 1

l - St' ate plan approved under?S1402(a) offthe-Social l Security-Act;- (v)' - medical assistance under.a State'p'lan; approved underiS.1902(a):of the Social Security Act: J y b i 4 L (vi);' benefits under title'XX'of;the' Social' Security., } L

Act t

(vii) benefitsLunder Sl336 of the 01derLAmericans Act l l -(viii)' benefits-under'the Low-Income Home: Energy. L J Assistance Act of11981,. i which are intended for-the'personalyuse ofithe' individual; who'receivesiche benefits or forEa memberLof the= individual's family. i \\ ~ ~(d) No proof;of spec'ific.-intent-to defraud is-required to-establish,11 ability'under-this.section. 5

• *{ 9
• i

( e' ) In--any case in which it isLdetermined that nore than ~ 4 1 one personris liable 1for1 making a; claim oristatement undet a

this.section,.eachisuch person;may be held-liable for a-i t

civil penalty;under'this section. -i pr 1 s p m. z l. r i r t

.,I p 4 l (f) In any case in which it is-determined that more than j one person is liable for-making a-claim.under this section ~ 1 -en-which the Government has made payment (including trans-' ferred property or provided services), an1 assessment may be imposed against anysuch person or jointly and severally i .g us, v against any combinatDo W.f such forsons.: 3 4. .'I n v e s t i q' a t i o n. (a). If'an: investigating official' concludes:that;a:cubpoena pursuant'.to the authorityiconferred by'31 U.S.C. 5-3804(a) is warranted-- f '(1)- The subpoena sol ssued4 shall notify the peraon :to i 4

whom it is

addressed of the, authority under which the= subpoena:is11ssued andLsh'all identify the records-or documents-soughti; (2)

P.e or she may; designate a person'to act on:his.. bahalf:to receive the: documents soughti and (3). The' person receiving.such subpoena shallJbel required to. tender to the. investigating official 1 t or ^ the person designated to : receive the documents ~ a certification.that the documents sought'have ' been produced, or-ithatisuch documents are not: v available:and the reasons' therefor,?or,that such documents,isuitably identified, have been withheld based upon'the assertion ~of:an. identified privilege. ~ \\ A

R7 E.. = I I p (b) HIf the-investigating offic'ial concludes that an action under.the: Program. Fraud Civil Remedies Act may be. warranted, the investigating official shall submitDa report'containing the findings-and conclusions-of'such investigation to the reviewing' official.. i 4 -(c) Nothing'i'):this section shall preclude or limit-an

invenLi;ating of ficial's' discretion to refer' allegations '

directly to th e Department of ' Justice for l suit under: the False Clains Act or othericivil' relief, or to preclude 1-or Ilimit.such~ official's discretion,to' defer'orLpostpone a- . report or :ref erral to avoid interference :with a criminal investigation or-prosecution.- i '(d)L : 110 thing -in this section modifies any responsibility of l i an' investigating official to1 report'_ violations of. criminal i law to the Attorney General.. j . 1 l S. Review by the-reviewing-official.. a (a) If, based on thv report'of.$he-invest'igating1 official under SU4(b), the reviewing-official determines-~that there iis adequate 1 evidence to believe(that'a-personcia" liable 1 F iunder;Sel of'this part,m the'reviewinquofficialishall transmitttorthe Attorney' General a< written notice of the -rav'tewina official's intention to' issue:a1 complaint under, S ' t7 ; l t u

.~

s v

19 i (b)' such notice shall' include- - 0 (1) -A statement of the reviewing official's reasons y .for issuing a' complaint; u ( 2 ); ' A statementi specifying ' the evidence. that supports .the allegationsfof liability;' L! .(3)'-A description of-the.claimsior..s'tatements upon 1 whichithe' allegations of.' liability-are based; (4)- An estimate;of..the-amountiof; money.or the. \\ value;ofrproperty, services ~, or-other benefits: ( a. > requested or= demanded in? violation of 5 3;of'this part;- ~' l (5) A' statement of any'exculpatory or. mitigating i s

circumstances:that may relate to;the; claims or-1 i

statements'known3by:the reviewingsofficial;cr the . investigating (officiE1'; and f .(6) <ALatatementF that there :is a reasonable i prospect ofLcollectingLanLappropriat'e amount'of. 1 4 penalties;andcassessments.- Such a; statement-may be basedcupon?information then:known orEaniabsence ( of.'any-information-indicating-that the' person;may- . be: unable'to pay'suchfan amount.t I y. n ( G. Prerequisites for:issuino a< complaint. j 1 7' (a) The reviewing; official'may issue:a complaint.under:S: u only if- - L 1 .)-i' '.L. $g, by* il 3- ) g + - -, ~..

._ -~.-- [;.. j 20' (1) The: Department of Justice approves the issuance of a complaint in a written statement-qescribed in 31 U.S.C..SL3803(b)(1), and-i (2) In the case of1 allegations,of liability under-S 3(a) with respect:to a: claim,-the. reviewing. l. t I official determines'that, with respecc to su:h. -claim or.a group of'related claims submitted at l :~ } the same time such claim is submitted;(as-defined o 4 .in-(b))', the; amount of. money or the:value of-property or services" demanded 'r requested in ] o j violation of S 3(a) does not exce=c S150,000.. -i '(b)- For the purposes' of this saction,,e.related group of' j i claims! submitted ~ at the same':timeRshal1~ 'includef only! those' q S L claims; arising from-the samestransaction -(e.g.,fgrant,41oan',- L application, or' contract) that are: submitted simultaneously 1' as part of a single request,' demand,nordsubmission. J i 1 l (c). tiothing in this section shallL be' construed to$ limit the reviewing. of ficial's' authority.to. join inl aLaingle Leomplaint Lagainst afp~erson claims that are' unrelated?orzwere not = submitted simultaneous 1y'.regardless'of! thetamount of: monev J,s or:the vilue'ofLproperty;or-services ~ demanded.or:requestsd. j .I l .7 ~. . Complaint.: - ( a )1-.Ont or af ter - theTdate tthe: Department:;ofJJustice approves' L the ' issuance of: a comp)ainttin;accordance withz 31 U.S.C. i I l I J ~ V e

. S A. t 4 c i ? 5 3803(b)(1), the reviewing Lof ficial may's'erve a' complaint: I on the-defendant, as.provided-'in1S-8, 1 1 \\ t i (b). The complaint shall state--~ (1) .The allegations,of liability against:the ~! defendant,rincluding the statutory basis for-i e liability,Lan' identification of the: claims or= s J statements that are-the basis:for the a11 aged l' t liability,Eand'the. reasons whyfliability allegedly; 'i iarises from suchJelaimst.or: statements; 4 1 (2).- The: maximum' amounti of f penalties and; assessments ' e for.w'hich the~ defendant may be_ held liabler. (3). Instructions.forlfiling an answer No-request.a: ' hearing,.includinglaispecific statement ofLthe i a ' defendant.'s ~ right to.reques't; a lhearingJby; filiq. i n 'an answer.:and'to be'~ represented hv'a i u, representative;1and-(4). That-failure'to:fileTan answer within730' days of? I .' service of,the complaint-wil'11 result-inythe e imposition of 7 the maximum amounti ofi penaltiles and. l ' assessments withoutLrightLto appeal.. 4 ( (c) At 4he.same: time = the reviewing 4of ficial-serves the' \\ - compl a i n t ~, hetor she:shall. serve theldefendant with a. copy

of.

these regulations..

o 5 k l .i r ' k 'r s t y.. ...,4

, p,. -22= s o a E l 8. -Service'of complaint. (a). Service:of a complaint must be made by certified or b registered-mail o'r by delivery-in any' manner authori:ed by 3 ~ Rule 4(d) of'the Federal Rules,of. Civil Procedure. b Proof'of service., stating the'name-and address'of thel. t (b) E .personjon whom the complaint;was served, and the manner and l date of service, may-bermade;by- - [ l l i 5 (1). Affidavit of the individual making servicer (2) An acknowledged ~UnitedLStatesoPostal Service f return ~ receipt cards or s i (3).' Written-acknowledgment of-the defendant or his f L representative. 1 1 9. Answer. [ (a): The.~ defendant mayjrequest a: hearing =by=fil'ing?an answer 4 l -with the1 reviewing 'of ficial= within 30cdays.of service of: the 't complaint. An answer shall be deemed-toEbe a're_,. 6c for; 1 hearing.. i

(b) In ' the' answer, Lthe - def endant--:

j F (1)- Shall admittor deny 1each of'the allecati~ons of: a ~ v.= liability made-intthe; complaint; .( 2 )1 Shal1Jstateianycdefense on1which the. defendant j 'ntendsLto; rely;- i .) h 'j ? 1.j 4 I b m 'e 4~ . c2

o L 33 I (3) May state any reasons why the defendant contends that the penalties and assessments should be less than the statutory maximums and (4) Shall state the name, address, and telephone number of the person. authorized by the defendant to act an defendant's representative, if any. '10. pefault upon failure to file an answer. (a) If the defendant'does not file an answer within the b time prescribed in S 9(a),Lthe reviewing official may' refer = i the complaint to the ALJ. 4 (b) Upon the referral of the' complaint, the ALJ shall a promptly serve on defendant in the' manner prescribed in S 6, i a' notice that an-initial decision wil11be issued under this section. (c) If the defendant fails'to answer, the-ALJ shall assume the facts alleged in.the complaint;to.be~true and,.if such facts establish liability under S 3,Jthe ALJ nha11 issue an ~ i initial de'ision. imposing the maximum amount of penaltien c ,and assessments allowed under the statute. i .. y (d)' Except as'otherwise provided in this.section',.by- 'failing-to file's timely answer, the defendant waives any-right.toLfurther review of the penalties.and assessments imposed;under (c),Jand=the initial decision:shall become i

• k j fi w

1 .e . o 24 o. ) final and binding upon the parties 30 days aftet it is issued. 1 (e) If, before such an initial decision becomes final, the defendant files a motion with the ALJ seeking to reopen on j the grounds that extraordinary circumstances prevented the defendant from filing an answer, the initial decision tha11 be stayed pending the ALJ's decision on the motion. i (f). If.on such motion,'the defendant can demonstrate extraordinary circumstances excusing the failure to file a' timely answer, the ALJ shall withdraw the initial decision in1(c),'if such a decision has been issued, and shall grant the defendant an opportunity to answer the' complaint. 6 (g) A decision of the ALJ denying a defendant'afmotion under' paragraph (e) is not subject:to reconsideration under E 5 38. L (h) -Theidefendant may appeal to the authority. head the decision d' tying a motion to reopen by filing a notice.of e appeal with tb3 authority' head within 15 days after-the ALJ i denies-the motion. - The timely filing of a notice of appeal .shall stay the initial decision until the authority head i ~ decides the issue. ur O s..

d 35 'l (1) If the defendant files a timely notice of appeal with ~ ~ * ) the authority head, the ALJ shall forward the record of the l proceeding to the authority head. I i ($) The authority head shall. decide' expeditiously whether { extraordinary' circumstances excuse the defendant's failute [ to file a' timely answer based solely on the record-before l the ALJ. (k) If the authority head decides that extraordinary' circumstances excused the-defendant's failute to file e timely answer e the authority head,sha11' remand the case to the ALJ with instructions:to grant'the defendant an opportunity-to answer. 1 (1) If the' authority head decides that ths defendant's failure to file a-timely answer-is nottexcused, the [ t authority head shall reinstate theLinitial-decision;of the d ALJ, which shall become final and binding'upon the parties 30 days after the authority head issues such decision. i ' Referral of. complain't and answer to the ALJ. '11. 1 L Upon rec,eipt of.an answer,=the reviewing official'shall file. I u the complaint and answer'with tho' ALJ'. ,o r 16 2 I --.m. ~. 4 .m.,

86 1 12. Notica of heating, (a) When the.ALJ receives the complaint and answer, the ALJ - shall promptly serve a notice of hearing upon.the defendant in the manner prescribed by S 8. At the same time, the ALJ shall send a copy of 'och notice to the representative for the Government. (b). Such nc?icefahall include-- ,1) The tentative time and place, and the nature-of tho' hearings (2) The legal authority and + indiction undet which* I the hearing is to be. hela; (3) The matters of' fact-and law to-be asserted; (4) A' description of the' procedures for the conduct of-the hearings { -(5) The name, address, and telephone number of the roptesentative of the Government and of the. defendant,'if any; and-(6) Such other matters as the ALJ deems' appropriate. 13. Parties to the hesring. (a) The parties'to the hearing shall be the defendant and the-authority, ] (b) Pursuant to 31 U.S.C. S 3730(c)(5), a private: plaint'itt { under the(False Claims.Act may participate in these proceed-ings_to.the extent authorized by'the provinions of=that Ac'. 1

• di

J

-i% 7-g 4 4 5

37 .t o o 14. , Separation of functions. 9 (a) The investigating official, the revieutng official. and any employee or agent of the authority who takes part in j investigating, preparing, or presenting a particular case may not, in such case or a factually related case-- (1) Participate in the hearing as the ALJs (2) Participate or advise in.the initial decision or the review of the initial decision by the authority head, except as a witness or a i .t representative in public, proceedings; or (3) Make the collection of penalties and assessments - under 31 U.S.C. S'3806. (b) The ALJ shall not be responsible to, or-subject to the supervision or direction of the investigating official,ot the reviewing official. p (c) Except as provided in (a), the representative for the 3 Government ~may be employed anywhere in the authority, including in the offices of!either2the investigating official o'r the reviewing official, a

15.. Ex-parte contacts.

No party'or person (except' employees of the ALJ's office)- a [ .shal,L communicate in any way with the ALJ on'any matter at j ..7 issue in a case, unless:on. notice and opportunity for all i partiet to particspate.. This ptovision does not prohibit'e' f s i e

86 person or party from inquirine about the status of a case et asking routine questions concerning administrative functions. or procedures. 16. Disqualification of-reviewing official or ALJ. (a) A reviewing official or ALJ in a-particular case may disqualify himself or herself at any time. (b)' A party may file'with the ALJ a motion for ~ disqualification of a reviewing official or an ALJ. Such j motion shall be accompanied by an affidavit alleging personal bias or other reason for. disqualification. (c). Such motion and affidavit.shall be' filed promptly upon the party's discoveryLof reasons requ' iring disqualification, or such ob$ections shall be deemed waived. (d)' Such affidavit shall state specific facts that-cupport the party's belief that personal bias or.other reason for disqualification. exists and the time and circumstances of j the partys' discovery of such-facts. -It:shall-be i accompanied by a:ccrtificate of the representatit4 of record that it/ sis made';in' good faith. l (e) Upon~theLfiling'of such a motion and affidavit', the'A;J !aha11' proceed;no further in the case until he or she f 4 i e Y .~ p-J 1 q 'i.., _ _ _ _ _ _. _ _ - _ - * - - ~ - - - - - - ~ - ^ ' ^ ^

89 resolves the matter of disqualification in eccordance with paragraph (f). (f)(1) If the ALJ-determines-that a reviewing official is disqualified, the ALJ_shall dismiss the~ complaint I without prejudice. (2) If the ALJ_ disqualifies himself or herself, the case shall be reassigned promptly to another ALJ.. (3) If the ALJ denies a motion to disqualify, the i authority head may determine the matter _only a's part of his or her review.of.the initial decision upon appeal, if any. 17. Rights of parties. Except as.otherwise limited by this part, all parties may-- (a) Be accompanied, represented, and advised by a representative; (b)- Participate in'any conference held by the ALJ (c) Conduct discovery; (d) Agree to stipulations of. fact or law, which shall be i made part of=the recordt. (e) Present-evidence relevant to the issues at the hearing;1 l l 97 1 J

1 30 o (f) Present and cross-examine witnesses; t (g) Present oral arguments at the hearing as permitted by the ALJ: and J (h) Submit written briefs and proposed findings of fact and i 4 conclusions of law after the hearing.~ t 10. ' Authority of the ALJ. (a) -The ALJ shall conduct a' fair and impartial hearing, -avoid delay, maintain order, and assure-that a record of the proceeding is made. (b) The ALJ has-the authority to-- P (1)' Set and change'the date,. time, and place of the hearing upon reasonable notice to'the parties; (2) Continue or recess the' hearing in whole or in.part for'a reasonable period of times-(3) Hold conferences to identify or simplify the issues, or to consider.other matters-that may aid fin the expeditious. disposition of the proceeding ~ ( 4 )- Administer oaths and' affirmations; t . (5) Issue subpoenas requiring-the : attendance. of witnesses and the production of documents at depositions or at hearings; i L (6) Rule'on' motions and other procedural matters (7).. Regulate the scope and timing offdiscoveryt- ,g ? 1 1 k -- 4 f. t - iI ' 3 .1- , -.. - +,

• " ' * * " " ' ^ * " ~

31 o i (6) Regulate the course of the hearing and the conduct i of representatives and parties i \\ L9) Examine witnessest (ll) Receive, rule on, exclude, or limit tvidences ~ (lli. Upon motion of a party, take officia.' notica of i facts: -i (12). Upon motion of a party, decxde' cases, in whole or in part, by summary judgment where.there~ is no-disputed issue of material fact;- (13). conduct any conference, argument, or hearing on - motions-in person or by telephones,and ' (14)L Exercise such other authority as is necessary to i carry out the-responsibilities of the ALJ under I this part. (c)- The:ALJ does not.have the authority to decide upon the-validity of-Federal statutes or regulations ~. 19. Prehearing conferences. (a) The ALJ may schedule prehearing conferences <as appro- .priate. (b)- Upon the cotion of any party, the ALJ shall schedula at .least'one prehearing conference at a reasonable time in Ladvance of the hearing. t .4 4 L i i. .E'. e .p -,%p. %+ _g 94 ~

_ _ _ _ _ ~ 37. (c) The ALJ may use prehearing conferences to discuss the following: (1) Simplification of the issues; f (2) The necessity or desirability of amendments to the pleadings, including the need for a more definite statement; E (3) Stipulations, admissions of fact or as to the e contents'and authenticity of documents; ) 4). Whether the parties can agree to submission of the case on a stipulated record; (5) Whether a party chooses to waive appearance at a n' l oral hearing and.to submit only documentary evidence (subject to the objection of othet parties) and written argument; (6) Limitation of the number of witnesses;. (7) Scheduling: dates for the exchange of witness lists and of proposed exhibits;. (8) Discovery; (9) The time and place for the, hearing; and (10) such other matters as may tend to expedite the 4 fair and.just dispositionJof the proceedings. (d )' The ALJ may issue an order containing'all matters agreed upon by the parties or ordered by the'ALJ at a L-prehearing-conference. 1 i ( i 5 ' 0 ~ t. 't~ r ( y 4

c .i 33 20. Disclosure of documents. (a) Upon written request to'the reviewing official, the defendant may review any relevant and material documents, -transcripts, records, and other matertain that relate to the allegations set out in the' complaint and upon which the 1 findings and conclusions of the investigating official.under S'4(b) are based unless such documents are subject to a privilege under Federal law. Upon paymentlof fees for r ' duplication, the defendant may obtain copies.of such docu-me7ts. -(b)= Upon written request to the. reviewing' official, the l ~ defendant also may obtain a copy;of all'exculpatory informa-tion in the possession of the revtowing official or inves-t tigating official telating'to the allegations.in.the-i i complaint, even if it is. contained in a document that would otherwise be privileged. If the_ document would otherwise be priviletied, only that portion conteining exculpatory.infor-mation must be disclosed. . (c ). The. notice sent to the Attorney. Genera 1Lfrom the 7s reviewing official as described in 5 5 is not discoverable under any circumstances. (d) The defendant may file a motion:t'o compel. disclosure of the documents subject to the provisions of this section. a w, 'N s -. ~. ~...

'I 4 34 Such a motion may only be filed with the ALJ following the ' filing of an answer pursuant to S 9. I i i 21. Discovery, t (a) The following. types of discovery are authori.~ed: (1) Requests for production of documents for inspection and copyingt. ~ (2)~ Requests for admissions of the' authenticity of any relevant document ot of the truth of;any relevant ' facts (3) WrittenLinterrogatories and (4) Depositions.. r (b) For the purpose of this section/and'$$ 22 and:23, the l 0 term ' documents

• includes information, documents, reports, answers, records, accounts,~ papers,.and other data'and

- documentary evidence. Nothing' contained herein shall be interpreted to require'the creation of a' document. L (c) Unless mutually. agreed.to by the parties, discovery is l-available only as otdered-by the ALJ. The;ALJ-shall. tegulate the timing of discovery. .t ~ ..y (d).-Mot' ions for discovery, a (1)- A: party seeking' discovery may file:a motion,with the ALJ.-.Such a motion.shall be accompanied by a copy of;the requested discovery-, or in the case of m 4 .: l { o. I ? s ... ~.

35 e depositions, a summary of the scope of the proposed deposition. (2) Within ten days of service, a party r.ay file an. opposition to the motion and/or a motion _for protective order as provided'in-5 24. (3) The'ALJ may grant a motion lfor discovery only if i l he finds that the discovery sought-- (1). Is necessary for the expeditious, fair, and reasonable consideration'of;the' issues: (11) Is not< unduly costly.or burdensome; (iii)- Will not unduly delay the proceeding; and i (iv) Does not sees privileged information, j (4) The burden of showing that discovery should be allowed is on the party seeking discovery. + (5) The ALJ may grant discovery subject'to;a; protective order under 5 24.' (e) Depositions. (1) If a motion'for: deposition is-granted, the ALJ shali. issue a subpoena for the, deponent, which may r'equire the deponent to' produce documents. -The -subpoena shall specify the. time and-place at which r the deposition will.be held. y (2)- The' party seeking toudepose sha11' serve the subpoena in the manner prescribed in S 0. J a -R b [ i fy J ji.. .---.m

36 j (3) The deponent may file with the ALJ a motion to quash'the subpoena or a motion for a protective order within ten days of service. (4) The. party seeking to depose shall provide for the I taking of a verbatim cranscript of the deposition, which it shall:make available to all other parties for inspection-and copying, i J (f) Each-party shall bear its own costs of discovery. 22. Exchange:of witness lists, statements and exhibits. { (a) At least 15 days before the hearing or-at such other time as may be ordered by'the ALJ,,the patties.shall exchange witness lists, copies:of prior statements of t proposed witnesses, and copies-of ptcposed hearing exhibits, l ~; including copies of.any written statements ~that the party intends--to offer in lieu of live testimony-in accordance with S33(b). At the time the.above documents are: exchanged,,any party that intends to< rely on the' transcript-l of deposition testimony in lieu of live tectimony at the j hearing, if permitted by:the ALJ, shallsprovide each party [ u - with:a copycof the' specific pages of?the transcript it 'intendseto introduce into. evidence. [ K (b) Ifca party objecte,. the ALJ;shall not' admit into i ) evidence:the testimony.of any. witness whose name does:not p i appear on:the witnews list or any' exhibit not provided to l a .y 5 i o r ~

~ 37-the opposing party as provided above ur.less the ALJ finds . good cause for the failure or that there.is no prejudice to 1 the objecting party.. 4 t' ) (c) Unless another partyt objects within the time set by the ALJ, documents' exchanged in accordance with paragraph (a) I shall be deemed to be authentic for the purpose.of admis-i sibility st'the hearing. t i h 23. Subpoenas for attendance at hearing. i (a)~ A party' wishing to procure.the appearance and testimony of any individual.at the hearing may request that the ALJ l tasue a subpoena.- -i i (b) A subpoena requiring the, attendance and testimony of an t individual may also require the individual to produce i - documents at the hearing. (c) A. party' seeking a subpoena'shall file a written. request ~ therefor not less thant15 days before.'the date. fixed for the i hearing!un'less otherwise allowed by the ALJ for geod cause shown. Such request shall specify any documents to tur

produce & and shall. designate the witnesses and-describe the t

address :and location thereof Lwith sufficient particularitv l s I .to permit such witnessesfto be found.. c W i a' E a..

38 l o (d) The subpoena shall specify the time and place at which f the witness is to appear and any documents the witness is to produce. l (e) The party seeking the subpoena shall serve it in the manner prescribed in 5 8. A subpoena on a party or upon an individual under the control of a. party may be served by first class mail. 9 (f) A par'ty or the individual to whom the subpoena is' directed may file with.the ALJ a motion to quash the ~ subpoen within ten days.after service or on or before the J time specified in the subpoena for compliance if it is less than ten days after service. 24. Protective order. f l (a) A party or a prospective witness or deponent may file a L motion for a protective order'with1 respect to discovery sought by an opposing party or with respect to-the hearing, seeking to limit the. availability or disclosure of evidence. (b) In issuing a protective order,Lthe.ALJ.may make.any order which justice requires to protect _a party or-person from annoyance, embarrassment,; oppression, or undue burden cr-expense, including,one or more of_the;following:- (ll. That the discovery not be hadr

• M I

L I' i a .=

l 39 f l (2) That the discovery may be had only on specified terms and conditions, including a designation of I time or places (3) That the discovery may be had only through a f i . method of discovery other than that requested; (4) That certain matters not be inquired into, or thht t i I the scope of discovery be limited ~to certain . matters. (5) That discovery be conducted with no one present 4 except persons designated by the ALJ (6) That the contents of discovery or evidence be sealed (7) That a deposition after being sealed be opened only by order of' tho' ALJ; (8) That a trade secret or other~ confidential research, development,-commercial information, or facts pertaining to'any criminal investigation, proceeding, or other: administrative investigation not be' disclosed or be disclosedEonly in a des-t ignatedLways:or m (9) That'the parties simultaneously file.specified documents or informati~on enclosed in< sealed I .c -v envelopes to be opened as directed by the ALJ. 25. F e e s '. -- i <The party--regoesting a subpoena shall. pay the cost of: the fees and mileage of any witness subpoenaed in.theLamounts x + r; ^ 1.- f i i

j ] 40 ) that would be payable to a witness in a proceeding in United f States District Court. A check for witness fees and mileage shall accompan/ the subpoena when served, except that when a I subpoena is issued on behalf of the authority, a chech for f witness fees and mileage need not accompany the subpoena. I r 26. Form, filing and service of papets, f (al' Form.. (1) Documents. filed with the ALJ shall include an ' original and two copies. (2) Every pleading and paper-filed in the proceeding

• shall contain a. caption setting forth the title of

.the action, the case number assigned by the ALJ, and a designation of the. paper-(e.g., motion to ? quash ~ subpoena).- (3) Every-pleading'and paper shall tHe signed by, and i shall contain the address and telephone number of-the party or the person on whose behalf;the paper i o was filed, or hisLor her representative. L L (4) Papera are considered filed when they are. mailed. l- ' ate of mailing'may be established by a.certift-i D E n cate from the party or its representative'or by l + L v+- proof that the document was sent by certified og l ' registered mail, l (b) Service.: A party filing a document;withlthe ALJ shall, r c at the time of, filing, serve a copy of such document'on 1'J + 4 i m. x..

41 I every other party. Service upon any pgrty of any document other than the complaint or notice of hearing shall be made by delivering or mailing a copy.to the party's last known address. When a party is represented by a representative, service shall be made upon such representative in lieu of the actual party. a (c) Proof of service. A certificate of the individual-serving the document by personal delivery or by mail, setting forth the manner of service, shall be proof of service. 27. Computation of time. (a). In1 computing any period of time under this part or in an order issued thereunder, the time begins with the day. i following the act, event, or default, and includes the laat day of the period, unless it is a Saturday, Sunday,,or legal holiday observed by the Federal government,' in which event it' includes'the next business day. I When 'heLperiod of time allowed is-less than seven (b) t days, intermediate Saturdays, Sundays, and legal holidays L observed <.by the Federal government-shall be' excluded from a the computation. b h op' C i 4 i ,y

__ ___. _ _ ~. _ _ _ _. 42' 'C' -O (c) Where 'a document has been served or issued by mail, ar l additional five days will be added.to the time permitted for any response. 20. Motions. I (a) Any application to the ALJ for an order or ruling shall i be by motion. Motions shall-state the relief sought, the [ authority relied upon, and the facts alleged, and shall be filed with the ALJ and served on.all othAt parties. (b)- Except for motions made during a preheering conference or'at the hearing, all motions shall be in writing. The'ALJ I may require that oral' motions be reduced to writing. I .I (c) Within 15 days after a uritten motion is served, or t such-other time as may be fixed'by the ALJ, any party.may file a response to such motion.- 1 1 (d) The ALJ may not grant a written motion before the time' { for filing responses thereto has'expited, except upon consent of'the parties or.following aLhearing on the morton, I but may. overrule or'denyJsuch motion =without awaiting'a 1 - responses. 1 (e) The'ALJ shall make a reasonable effort to dispose of- [ L ' all outstanding motions prior-to the beginning of the ~ heating.. . -[ i 9) i i f c= y w-e s +-~e, +

43 l 29,. Sanctions. , _ '(a) The ALJ may sanction a person, including any party or representative for-- (1) railing to comply with an order, rule, or procedure governing.the proceedings (2) railing to prosecute or defend an actions or (3) Engaging in'other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing. - (b) Any such sanction, including but not limited to those' listed in paragraphs (c), (d), and (c), shall-reasonably relate-to the severity and nature ~of the failure or miscon-duct. (c) When a party fails to comply with an order, including- ~ an order for taking a deposition, the production of evidenet within the party's. control,'or a request'for admission, the ALJ may--- (1) Draw an inference.in favor of the requesting. party with regardL to the:information soug'A; (2).In the case of requests for admission, deem each-9

v. matter'of which an admission is requested to be i

L -admittedt f (3) prohibit the party failing to comply with such order from introducing evidence concerning, or I i .y 1 i s ij,, s 6 ~

4 44 \\ otherwise relying upon tectimony relating to the I j information sought; and (4) 3trike any part of the pleadings or-other sub-l missions of the party failing to comply with such i

request, f

i 'd) If a party fails to prosecute.ot defendLan action undet' 1 this part commenced by service.of-a notice of hearing, the i ALJ may dismisn' the action or ma'j issue an' initial decision imposing. penalties and assessments. (e) The ALJ may refuse to consider any motion, request, response,.brief or other document which is not f;1ed in a i timely fashion.

30. -The hearing anc'_ burden of proof..

(a) The ALJ shall conduct a hearing on the record in order to-determine whether the defendant is liable for a civil penalty or assessment under'$ 3.and, if so,;the appropriate t amount of any such' civil _ penalty or assessment considering c .any aggravating or miticatingLfactors. I t Thevauthority'sha11 prove defendant's liability and any= (b) aggravating factors by a preponderance of th'a evidence. - (c) The~ defendant'shall prove any affirmative defenses and any nitigating factors by a. preponderance of-the evidence.

• f s

4

e 4t (d) The hearing shall be open to the public unlecs other-vise ordered by the ALJ for good cause shown. 31. Determining the amount of penalties and assessments. (a) In determining an appropriate' amount of civi1Lpenalties and assessmente, the ALJ and the authority head, upon R appeal, should evaluate any circumstances that mitigate or l aggravate the violation and should articulateLin their opinions the.rsasons~that support the penalties and assess-monts they impose. Because of the intangible costs of' fraud, the expense of investigating such conduct, and the need to deter others'who might be similarly tempted, ordinarily double damages and a significant civil penalty should be. imposed. j (b) Although not exhaustive, the following factors are 1 among those.that may influence the ALJ,and the authority head in determining the amount of penalties:and assessments i to impose with respect to the misconduct (i.e., the false. fictitious, or. fraudulent claims or statements) charged in the complaints' (1) The number of false, fictitious, or-fraudulent " claims or 'statementar '(2) The time period over which such claims or i statements.were.made's (3) lThe degree of the. defendant's culpability with 1 respect to the misconduct i h; t i I.

~ _ _. 46 0 e .(4) The amount of money or the value of the propetty, [ services, et benefit falsely claimed; (5) The value of the' Government's actual loss as a ? i tesult of the. misconduct, including foreseeable i e consequential damages and the costs of investigation; (6)- The relationship of the amount imposed as~ civil' penalties to the-amount of the Government's loss (7) The potential or actual impact of_the misconduct upon national defense,: public health or safe'ty, or. public confidence in the management of Government' programs and operations, including particular1y' the impact'on the intended beneficiaries of such. i. programs; (8) Whether the defendant _has. engaged'in a(pattern of the same or similar misconduct -(9) Whether the defendant attempted to. conceal'the misconduct; \\ (10)1The degree to which the' defendant'has involved others in the misconduct or in concealing.its (11)$Wherethe-misconductofemployaesorlagents11s ' imputed to the defendant, the extent? to which=the defendant's practices fostered;or attempted to' e . preclude such misconduct: R r (12) Whether1the defendant cooperated:in:or obstructed 1 aniinvestigation of the-misconducts: i'! i Of i u.

.- ~~. i 47 (13) Whether the defendant assisted in identifying and I prosecuting other wrongdoets; (14) the complexity of the program or transaction, and the' degree of the defendant's sophistication with I respect tolit, including the extent of the defendant's prior participation in the progran er + in similat~ transactions: (15) Whether.th. defendant has been found, in any s criminal, civil, or administrative proceeding to 'have engaged in similar misconduct or to have dealt dishonestly with the Government of the United States or of'a State, directly or indirect-ly -and (16) The need to deter the defendant &nd others from engaging in the same or similar misconduct. 1 v '(c) Hothing in this section shall be construed to-limit the 'l ALJ or the authority head from considering any other factors that in any given' case may mitigate or aggravate'the-offence for which' penalties and assessments are imposed. 32. Location of hearing. (a) The hearing may be held-- (1) In any judicial district of'the United States in which the defendant. resides:or transacts business; - ( 2 )1 In..any judicial district of the United States in ) .g "F

~ - i 4 - 40. O j which the claim or statement in issue was made; or (3) In such other place as nay be agreed upon by the defendant and the ALJ. (b) rach party shall have the opportunity to present argument with respect to-the location of the hearing. l (c) The hearing shall be held at the place and at the time 1 L ordered by the ALJ. l

33. Witnesses.

l (a) Except as provided in-paragraph (b), testimony at the hearing shall be given orally by witnesses under oath or affirmation.. (b) At the discretion of the ALJ, testimony may be admitted 1 in the form of14 written statement or deposition.- Any such written statement must-be provided to all other parties 1 along~Vith the last known address ofEsuch witness, in a manner which allows aufficientLtime'for other: parties to subpoena such1 witness ~for cross-examination ~at"the hearing, i Prior written statements of witnesses proposed'to testify ct 'I the hearing and deposition transcripts shall be exchanged.as-provided'in 5 22(a)'. (c) The ALJ shall' exercise reasonable-conbrol-over the mocc: and order of interrogating witnesses.=and presenting evidenca- -a' 4 -(

49 o l so as to (1) make the interroaation and presentation effec- { l tive for the. ascertainment of the truth, (2) avoid needless consumption of time, and-(3) protect witnesses from harass-m nt or undue embarrassment. 1 (d) The ALJ shall permit tho' parties to conduct such cross-i examination as may be required for a' full and-true disclosure of the' facts. I i (e) At'the discretion of the ALJ, a, Witness may be cfoss-examinedlon matters relevant to the proceeding without - regard to the scope of his or.her: direct: examination. To the extent permitted by the ALJ, cross-examination on .matteis outside the scope:of direct' examination shall be 1 i conducted in the-manner of direct examination and may ~ proceed-by leading ~ questions only-if;the witnecs is a hostile witness, an adverse party, orLa witness identified i with an adverse party. \\ * (f) Upon motion of any party,'the ALJ shall(order witnesses = 1 excluded so that theyLcannot. hear the' testimony-of'other. witnesses. This rule does not authorize' exclusion of-- i (17". A; party; who is ~ an. individual; { (2)~ InL thescase"of aLparty that is not an individual, aniofficer or. employee of.the party designated'by

the party's representative's;or (3)? An individua1Lwhose presenceLisfshbwn by a patty.

+ l 'l

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t 50 1 to be essential to the ptesentation of its case, including an individual employed by the Government-engaged in assisting the reptesentative for the Government. l 34. Evidence. L I ~ (a) The ALJ shall determine the admissibility of' evidence. (b) Except as provided herein,'the ALJ shall not.be bound i by the Federal Rules of Evidence. However, the ALJ ma'y apply the Federal Rules of Evidence where appropriate, e.g.', l to exclude unreliable evidence, (c) The ALJ shall exclude. irrelevant and immaterial i evidence. i (d) Although relevant, evidence may be excluded if its 1 probative: value is substantially outweighed by the danger of L 1 unfair prejudice, confusion of the: issues, or by consid-erations of undue. delay-or; needless presentation of'cumula-l tive evidence. . (e) _ Although relevant, evidence may be excluded' if it-is L privileged under Federal' law. l e . 5 r '~ ,,__,,,J.. ....r y.

3,; ~ q v . ;.m ,y e - -. : m.

e..

> :: \\ q i. -;g '(f) Evidence 1concerning~offerefof compromise or settlement >{ 1 , - shall be inadmissible,to.the. extent provided.in B.e 408 of

l c

7 the' Federal \\ Rules of Evidence. I o (g)) The ALJ.shall'permi( the parties'to. introduce rebuttal'- . itnessesiand evidence.4 l w n m, Ei (h) All, documents-andLother evidenceLoffered or;takenifor-1l -1 y 1 thefrecord shall belopen toLev. amination by all parties,. t# unle'as'otherwise ordered'byfthelALJ pursuant;tofS7 24. Ti 1 \\ 35. The record. '~e i !('a ) - The hearing wil'1 be recorded anditransciibed.: < Tr an -- 1 1 > scripts-may be obtained ;f o'1 lowing: thihearing! f bom (the : AL'J E at, a ' cost : not - to ! exceed ; the,Eactual feost.fof(duplica t ion, q WM in l g o 1o m ( b') - The?transcri,pt of testimon.y,:exhibitsTandoother 1 3 4 m,W M evidence-admitted at the hearing',fandiall papers and' } ~ y~ w3 g . tequests file 6:in thes proc'eeding7constitutie!the irecord for. 1 1 I' W the' decisio- [byf thef ALJ cand1the Ca.uth'orit, y ahead. - ~ .n m :< h'. q.

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(c)L f The record ;mayy; be inspecte '.aand, copied {(upon t payment / of' j

~ p' A '; . : reasonable, f ee ) byj anyone, utigess l otheryise.%rdered ' by ' the-l ~ a ~;, w y iALJipursuant to $<24.- y 3 j+ .: 2-> , ; :c I f, )N n w}}' ~ .i + j[},!j

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y J J. t in 52s . 'i . 3 6 *.. Post-he,c'~* y briefs. The -' ALJ may require the parties : tot file. post-hearing briefs. - In'any_ event,-any party may file a post-hearing brief.- Th'e! l 'ALJ shall fix the time for-filing such briefs, not Lto exceed 60 days from;the.date,the parties receive th'e1 transcript of j the hearing or', if applicable,tthe. stipulated re' cord.. Such briefs may,be: accompanied by, proposed findings of: fact.and: 4 conclusions ~of' law. The1ALJ may permit theEparties to file I ~,, 0 . reply briefs.' t i ( .-3 7.. In'itial decision'.; a n ( .\\ . a)l L The' ALJ,shall.isatef an initial ~ decision based dnly :on the srecord,L whichisha11D contain lindings ofL f act, conclusionsq of law, and; be amounti of anyLpeW hes Land . I i massessmenu Limposed. t 3, ~ s '(b) = .The findings of factishall? include 'aHfinding:onteach,of F cthe;following issues: .t (1);.Wh' ether the claims or,statementsridentified.in the 7 . complaint, o'r.any' portions thereof,;v'iolatelSi3;-

,.n,4 (2)m If1the

person-isL11ab'leL for; penalties or

,,n' II 0 assessments, thehappropriate amount ofiany1such- .%[, j/: penalties or assess'mentslconsiderinq>any!mitigat-- s y Ling,or-aggravating factors that h'e or,she finds lin' n_ y 4 e J, n -t -the case,-such;as;those2 described in;S 31'. 71 r -i k wx> 4', b ' t ;, 4 (7, ,f;, ,N i s y g, a 'Mj JD Ji ej. e fj ht" Y> g!, Ty4 7., t 9 c~.1))f. l e '@& :,,i } {\\f ';l \\ ~.,1 p y_ [_ ' ?.ij } d[.\\/ t !', i 7. Vf< b..

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- a T WY 33 ;, -1 (c) The-ALJ shallfpromptly7 serve'theDinitialTdecision on i .) all parties within 90 days-after the time;for' submission-of. l post-hearing briefs and; reply: briefs (ifipermitted) has . expired. The'ALJ shal'1:atcthe;same time' serve all' Ldefendants with a. statement describing;the rightlof cny. g defendant' determined lto be'liableffot,a. civil penalty or' e sssessment;tolfileTa! motion / fore'econsideratio'n'with'thi ALJ t ~ -e j or; a lnotice' of ; appeal with the 'authorityf head.- IfLtheALJ. l ~, e... ifails to meet the deadline containedLin'thiscpar'agraph, he - i .or = she 'shs11Lnotify; the ;partiesjof Jthe. reasonEf ore, the ' delay ;

3..

and shall: set a newc deadline' ; (d)- lUn1'ess-the initial' decision?ofJ the!ALJ is' time (y 1 ! appealed to.the authority he'ad, o'r a' motion forireconsid- .eration of the.ihit'alJdec'isionfia: timely [f11'ed,;thelinitial.

l i

~ decision shall constitute 7the final decision'o'f! the-7 authority head'andLah'al'1$be; fin'al an'd%bindingLon the partiss i [7 30 days.after it is' issued by~th'e AbJ'. 4 y 4 U,, .3 8. -, Reconsideration: of Minitia10 decision ;- u L* L, , (a)J Exceptias.providedy:iniparagraphi(d)h.any? party lmayefile caimotion: forf reconsid tationiofithe,Liriitialfde,cisionswithin .wi 7 J m. Il' i ?20fdays ofh eceipt'of-theLinitlah: decision.- Ifl service.was-: fM u ~ j> (made by mai'1?. receipt' wil'1fbe. presumed:to beJfive dayssfIon F a cth fdateMofimailinglinLthecabsence o'fjcontiary proof.- i e t li i l l :', k n . s

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, c., 54 o k L -.. j n. EveryLsuch. motion mustLset!forth the matters claimed to .(b) have been erroneously decided;and the nature of the alleged -{ w

ertors, such' motion shall'be accompanied by.'a supporting brief.

1 1 J I (c) Responses to such motions {s'ha111be allowed.only upon'- a 1 request of the:ALJ. I l s 1 ? (d).No party'may fil_e a motionWfor' reconstGeration'of an' initialldecision~that has been revised in! response 1tofa' i previous motion for reconsideration;- . ;(e)- The AL4 may dispose:of a motionjforLreconsiderationjby-'

de'nying it or-~by issuingfa'revisedfinitialzdecision'.'

. { 1 q .s h l( f ): -Wh'en' a~ motion) for: reconsideration 'is; made, E.the time 1 Lperiods forJappeal.to.the'authorityiheadLcontainedlin15$38, (and'forufinality of the.initihl decisiontinj5i36(d)f,1shall' 3 begin onJ the date the ALJ-issues'the denidi, of? the' motion; s j J o'rireconsideration or:airevised;-initial decision,fas f q y c'4 -. m m '? sappropriate'.w J p + ~ ^ ,s x. m t.. w d, t,h N

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{ d;;%,- '4 Ma'){Anydefendantwho2hasifileda'simelyanswer.~an'ddwho;is-q Q' ,//MNENhminedin.anninitialidecisioCto.bE(liableforacivili d x n ;7 y~ a M,a 1penaltylorsassessment;mayiappealTsuch/ decision to"the-u l[I; # l]'(' { j. s s t .E' '\\ J. 'i st s 3 s o m t)' 5 t y -(( i.$ 4

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-( 55 authority! head'byEfiling_a notice'ofLappeal'with the author-4 'ity.headIin accordancet with?this section. c (b).(1) tio= notice of'appealLmay be filed'until the time. .Inlj _ period for? filing'a' motion for reconsideration q under'5 38.has expired.- 1 9 1 E !.(2) If'a motion 'forireconsideration is timely' filed, a j L .noticeiofLappeal mustibe filed within-30 days l .+ +2 lafterithe-ALJ? denies <the:motioniorgissuesya-m frevisedinitial7 decision,1 whicheve r! applies ~,: q 1('3)! 'Ifl:noimotion forb reconsideration..ik c amely.f11Ed,' E. .q fa notice of;appealimust belfiled withinp3' days e af tier Lthe-ALJjissues thelinitialLdecision.- 6 6 l(4)i The auth'ority: head!may'extendIth' dnitia.1 30hday e' 1.. m . t ' period for an.. addit.ionalf30:daysJifS hesdefendant. ..q t L filesLwithitheTauthorityihead/arrequestjfor an; r y N ? ext ens) on t. withinf thef. init.ial f 30 / day [pe r iod J and, 1 ~ l e -shows good;cause. j u 3 4 4 -(c)cVIf(thedefendantOfiles,ahtimelyjnotice;;of? appeal 1with l .;.. - s.~ 4', the:? authorityf headL the.6ALJ Eshall forward Lthef record..of, the y ' proceeding-to.the authority. head.- 1 o x q q p 5:q y 7 l 1

(d)iTALnoticeLofiappeal/shallEbel accompanied byfal written-

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) ~\\ 4 e, *,. ?= e . 56: a q c -.i) (e)- The~ representative for.the Government may.~ file-a brief I in opposition to'exceg ions within 30' days of receiving the o notice of. appeal-~and accompanying brief. (f) There is no.right to, appear' personally'before the cauthority head. (g)..There is noiright:to.appeairany interlocutory ruling by. i the ALJ.-. 1 m y

(h)

Inlreviewing the-init2al: decision, thefauthority head.' shall-not consider any. objection that was:not raised before c + ..the'ALJ=unless.a demonstration',.inlmade:of extraordinary i circumstances causing-the fai' lure to. raise;the objection, .1 l (i) If:any party _demonstratesvto-the satistaction;of the -author'ity head't' hat'additionalyevidence:not; presented at-suchEhearingfis ma'terialLandithaththereiwere'reasonablei grounds'for the; failure to present such evidenceInt such i . hearing, thelauthority head)sh.all remand theimatter.to the .ALJ fer!coitsideration' ich additionalievidhnce.'q f ,. (j)'Thevaut.horityhe.ad'maylaffirmhreduce, reverse,enmpro-M, misei" remand, or settleiany. penalty orFassessment,, ,.determinud'byLtherALJ in any41nitia11 decision. 1 [' i

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57

. g 3 _ N f The. atithor"ityT head :shall' promptly serve each party to '(k ). the appealiwithia copy of the: decision of-the' authority-x head. At the same time the' authority head,:shall serve:the + ' defendant with a' statement' describing the 'd'efendant 'si ight r to seek judicial review.- i I l Q) Un~1essna: petition.for:reviewzis/ filed.asiprovided;in"310 .i g M U;S.C. 5 3805 afteria defendant ham': exhausted;all l 1 'administratiive remedies under:lthis._ partlan'd! withinf60idays < JafterthedateonLwhich-the<authohityl head;seives;the's " defendant witMaf: copy of the/ authority heaksTdecisionha

• m l

determinationthata' defer.dantisbliab1hunder'S:3isfkna,1: ~ .'and' is inot' subject tof.judibial rev'iew.. t I }; i 14 140 '. ; ' Stays ordered by thefDepartment-of Justi'ce.l ( m m. 1 q T If atiany time!theLAttorney;Generalior'aniAssistant: Attorney ~- Gener'al designated by;the AttorneyiGeneralittansmitsito;the' ^ {i Lauthority head a' written. finding 7that continuation of;the + administrative process describe'd[inFthisipart.wiihirespect' ato;a1claimJor' statement'may adversely (affectianydpendingbor -l g l. 'potenti'alL criminal or civil action: related to such claim or i s n @t estatement, theLauthority1headEsha11lstayithejprocesstimmedi-h', J.Lately. 2 v 5he' authority head mayJorderithe.processlresumed 7,< ionlyLjupon" receipt'ofEthe written authorizationiof:the' w s-I 'M

Astorney(General.~

f h '1

ns:

-l %l: ' 'h3 ,,4 l g g, I m,kC(l. ~ ' 1 , [xI)!l - g v . tji 4 F. ' l-4 i m-f .1 *y f. ] + di$3h,'Y, 2 t 3 .g , i, . g fi. 4 -q'J i

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.58 ..; a.. 'l' 41'.. Stay-pending appeal. l' 'k (a) An initial decision is stayed automatically pending-l disposition.offa motion forireconsideration'.or.of an, appeal } ,\\ i~ ..to the? authority head. I i t 1 (b): 11o administrative >st'af isavailableLfo11owing a final d .n de'cisionsof the; authority head. ') + .\\? 5 P .. ~ ' 4 2.,FJudicial< review y .? ~.Sectiotr 3805 of. titic; 31,1 United States Code,;authorizesi y 6judIcia1h reviekby}.an; appropriatbUnite'dt. States i istirict ~ D l - L' Coubtiof?a! final decidion of[the authority headiimposing. l s,.. penalties orJassessments!under this part and'specifles the - procedures lf or: suchI review. t

(

4 r '. k I lf

43i Col'1'ection of civil penalties ?and ? ass' saments. -

d p e 4 0 ' S'ections:'3806 an'd? 3808 (b)(of, : title 31,r 'Un'ited ?St ates Code,.- i ~. . o W ' authorize. actions L fort collectioniof cisi'1: penalties and U 4 , assessments: impo..d un,. der.this part and specif'y the proce-4 1i / 1) 4J i. duresifor(such. actions.: o 7 '?. s c 3 n: 1 $4'4blRichtt'oNdminisirativelof' sets. h f ic !The'"a'osnt?ob.any, pena $ykbriassessmentwhichhasbecome %t', m ,,, gy m n i I ' final / orsfor/whichin[ judgment has been. entered under-5 42 = t . i (oriS.l43b vi,o r e anylamount Pl agree.. ) f. dcupon.inla compromise' orc > n.c,, , s e t t lhmerit.: unde r [S 46 h mhbei collec ted by: a dminis t ra t i ve - i D 's .e 'L 'u t o ' # A in ' Loffset?under: 31 v.s'C.gs13716,7excepetthat an administrativ.- a G<o ,q'- ,+ r f ng% p ,3 i

0;' $ i' S,'j l

['!I i sf ll-lh., q, ' l. _QO ') :., a l ij Ul t ?.if's O % % ' N: l:af, ~;;]:.jh t'

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+ s x &s k.h hm g'li?lb i' "g; m. 1;wa xj, ' i ~ %9 J 1 ~ bY di . 'ie 'q^ q: D eL = x,

y...* -1 . 59: a l i : l: k, offsetmayinot4bemade.underLkh,is;sub'section'againsta ~ refund.of an overpayment of Pederal' taxes,ethen or later owing/by the United States to the': defendant... v l% 'r.. II, ] 45 Deposit in Treasury of United States.' L; 1 A11l amounts'co11ected pursuant:to this/partishal1 be depos-I ~ ' ited as miscellaneous receipts in the Treasury 2cf-the. United .o L . States, except as!provided in'31 3.S.C. S'3806(g).- 4 I lt: ;, m m w ~ 146'.; Compr'omise or=settisment., r y s

(a)-- Pa r i..ies-ma Loffer+

compromise:or)cettlementLat' s l N u e any time, g, b' ip (b). The' reviewing official has(thelexclusiveha'ushority to'+ l' t L compromiseTor settle <a case under"thistparti;atiany:timei after the dateton'which the reviewingfofficial iscpermitted i n E .a L.i .s -= . 4 to issue a complain't and'before the datelon"..,whichJthe ALJ

,; 4 ;&

s [.h, l issues an initial decision.'. q p i H e [ l(c ): The author'ity head has/ exclusive authority >toi i l .i g m by; < compromise orusettle aLease'underdthis.partLatiany[timeJ j 1 Mi. ~ , e, / '. ' MS c the -datei on - which ; the '. ALJ L issues 0aniinitial'- decision.,;. ':\\* s. ,\\',' +i,, ex,cepth during ;the' pe, ndencyloff.anyn review, 'under ' SF42 'or 4: 1 i ' f.= -- g l3h idur'ingithe pendencyTof/any action?to collect penaltiesjand p. + Jl, !

assessments,under S 43.

m, 3,~. w a j.,( i9'. f 6? (( J u t g l 1 f - ; s &; 'ei y. .ij; 'l v i a

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- ~ _ _ _ _ - - - _ _ - u. < , r-0: % (N - 6 01 O dw/n 'j The-Att'otney General;has, exclusive authority to compro - '(d )E mise or settle'a' care under.this'part'.during the pendency of. 1 any review under c5 42 or of anyj. action to;tecover penalties / i .and' assessments!under 31 U.S.C.'S 3806 i 1 (e) Thefin'vestigating, official"may recommend settlement: termat to= the re'vieying of ficial,- the ' author'ity ' head,: or the 5 Attorney General,/as' appropriate'.- The' revi'ewingl official' Y 3. may" recommend. settlement: terms /to the authority head,.orJth# j ' Attorney General',;as appropriate.: -T ^ y 1,: '(f)! 'Any compromise f or se'ttlement; must...bs :in Lwriting. I --(.,. .:i

47.. Limitations.

(a) The= notice'.,of chearing with(res' pect to: a claim ore s l 1 statement!must beLaervedlin the"mannergspecified in S 8 within16:yearsiaftersthe'dste'on'hichlauch claim or cq w l I! lg s t at emen t Di s.: made.- 1 E r i i

(b).

IfJthe,defendantTfailsDto; file;a: timely answerpservice' -{ ' 6f Jarnotice cun. der S 1'0(b)i shalli be deemSd ~.a': notice of L 4 s .1 t thcaring for; purposes.o,f-thistsection, + ~ n.

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i } 'i. r } s s P (HHS. Copy 1of.- Ameridments 7tdi l 4 'Model': Regulations Implementing 4 c Program,FraudLCiviliRemedies-Act: .r ' l .) .k ) I, ii '.t 't i g, - (.. i i i -g ' t, p i 1 4 )_' i i i , i. f b

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/ (b) an: official or: employee ~of your.fauthority; designated, ~ -in regulations promulgated by the head of the authority, to g .act on-behalf,of-the-head offthe authority;' L [For HilS:)- q d .the' secretary"or the Under Secretary oflthe Department.'of- } i Health 1and Human Services. 1 Benefits means, except.asJthe context:otherwiset requires, .anything ofUvalue,j. including.but;notilimited to(any, T s y, advantage, pref' erence,. privilege, il' icense, perm'it,L f avorabl'e; t ,) a' r i

decision,-ruling, status', oriloan-guarantee, h

1 1 1 t i B Claim ~means any. request',:. demand, orssubmiasion--1 a h (a)..]made' to.' the authority for property,qservices',;or, mon, ey - 1, ' J(includingymoney. representing grants,sloans Jinsurance, Lori N o: . benefits) -- 'o l +

w

(- J, q -(b):made t6 a' recipient:oftproperty,1sorvices,Jor',moneyVfron. f, -is ') E t 3 L ',,

theLauthority or to alpartysto..a contractiwithhtherau--

4, thor i tyi...: m. [, (1)L for property;or. services ifithe-United < 4 i wt L . States--: / L .t di) provided such property'or: services;( u g

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l4_ l'; h' .gm ). u~ JU, g($ ' ipr:! c. L. [/fh/, i iN^ .~ i j [j( f.MQ,l,1 - ..g 4 yw,; l ,s I'. _f. l r * ^ ' N'N E o. 2 \\ ?I ~Ii N \\' hl; r .: 1 4 'g e., c Lbb f ' ' \\ n !L, $@,, g ;,),f:.,.j n. , g. ; > ,. t;. I ','Iti 1,( 4,3ff n ,. A. 5.9&...wc. _ a,,.; / g.. m ,4

'{ !s -7 .- E Knows or-hasircason to know,-.meens thatLa-person,.with ~ . respect to a claimLor stat'ement-- ,(a ) = hasfactual-knowledge that?the claim or statement is f a lse,'. fict iticut,x :or fraudulent; (b): acts'in deliberate l ignorance of the truth or falsity of 7 the. claim oristatementi;or: o .a .(c') acts $ n reckless [ disregard lSf the truth or falsity.of. !theiclaim1or1 statement. L.Make's,fwherever it-appearsi shall include:the terms 4 w presentsjesubmits,iandEcausesl(to'be made, presented, or-submitted',' : As: hhercontext' requires,[ making'.ork made,J shall- .likewis'e includ's the :correspondin' g[ forms - offsuch te'rms. - -Person'meansfany individ'ual,Jpartnership,: corporation, association,aprivste. organization, state, political subdivi-

sionsof'a State,'munic.ipality,c county,(district,'and2 Indian 1

tribe,1 and'in.cludes'the;plutal of that term. s dPresiding' officer _means ;(if the aut[horityt s;notLsubjEct' to i r - .n.+ cthe;prov.isions.of/subclapterJIIE;of chapter 5 of. title 5, I 'U.S.C.)Ianiofficerior"employeelofLt'aeLauthority who-- ~ 'I_ l l' ' i ' e, t i 7 Y

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1 ~ 9 ( C.. rrj 9 by thelMerit' Systems Protection;Boarcl on the. record after ~ l ~ opportunity for.'. hearing by such Board.). Representative means'an, attorney'(a'nd if vour agency elects. o i to permit non-attorney representatives'to appear in; proceed-- o 4 ings-under this;part,-:you~mayLadd:- *or.other'representativei [ meeting.the qualifications of a non-atto'rney representative found.at:(andlhere111st;your agency'slregulations, not- ' internal'quidelin'es,lfor.'allowinginon-attorney representa-tivasLt'oappearibefcirefyouragency,knadministrative

hearings)fandLdesignated by:a partyfiniwriting.".)

i ,gfiewing affscial mean's: -[besignate an ' of ficerf or employeet of "youri. authority !who-meets'the following. criteria 7oridefineithe reviewing: I . of f,1c i al ' a s : f ollows :.)- p' ( i o 1 1 r t p Ancofficer or employee of:thetauthority-- i b '( a )' who is designated by the-authority headito make the r ~ det'ermination required under SE5:ofithib part; x + ~ e (b): who,,jifLa' member of the?ArmediForces of the' United j N' Statesonactive. duty,Lis(servingjinNrade~0-7orfabSvefor,- @s. '. L; + f T , lifiaLcivilian: employee,7 s servingeinraspos. tion lfor which' i 1 f p Qu cthe rate of basic pay)is not.:less?thanLtbV minimum rate.ofi j u basic; pay for, grade GS-16 underSthe GeneralnSchedule; and,. ..o g;# l 3 5 _l,'_:<-J,' .q u b~ s -g t ) g _ m v yp, :, 'g ~ ' ); y;j,' i Ohh y. W Ci -~ - .s'., . t?.--- " - " " " ~ % C& - ,:_s. / .3, ' ' d i k ~ 's. -- w,-- - - ~ ~

+ v 1g . gn. ,JI s 1

(c)'.who'is---

a (1)' not subject; to supervision -by, ~ or - required to / ' report to, the investigatingfofficial; and b ( 2 ): not employed in.tse organizational unit of the authority in which~the'linvestigating official ~ is y employed.- s i r- [For HHS:) 7 i a ~ the. General Counsel.of. the Department'or1 his ' designee -.'who - r lis-- a m (1): not subject to supervision' by',;or: required:.to- ^ report'to, the investigating. official; Land: 6 ( 2 ), notremployed in th'elorganizationalLunit of?the: ,4,. ' authority. fin'which the investigating off101a11is l ~ l employed.. i p., g-i 6', ' !,i. s U Statement;means.any representation,fcertification,2:affirma-l r t tion,. document,: record,'or1 accounting;or.b6ok, keeping entry L + Emade-- t pp' (a)J?with'respecttoyclaim~orpoTobtaintheapprovallor. L m payment,ipf?a^ claim (including < relating to eligibility'to +- m Jmake,a claim);por 1 l a

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(b)?with'respectLtoL(including

relating to eligibility

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4 [ 'gy 1 1 I ti. ( 1 ).: a contract'with,;oria bid or proposal.for a contract withs or (2) a-grant,iloan,Jor. benefit from, the authority, or any; State, political-subdivision of a 1 - 1 State, oriother party, if the' United States Government! j provides any portion oflthe:moneyfor property under_such .1 contractLor;fe*j such. grant," loan, or' benefit, or.if-the. ~ c ~ i

Government will reimburse such State,' political) subdivision, e

~ or, party forsany, portion of the money or, property-'under such i t contract or for_such grant',;1oan,:orfbenefit(.il,)

[ Applicable-to the. Department'of;th'e Treasury:)

a-i lexcept-thatLsuch" term dnes nottinclude any. statement made -I ~ I L in;any return of-l tax imposed by the InternaliRevenue' Code of t e _19 5 4.') l .) n j l3. Basis for civil < penalties and" assessments. i 7. (. a) - Claimst e' I J(1)i Except as provided'in (c)lbelow,-any personf'who;trakes a '( i claim that;thejperson;knows?or has reasoncto know--- 1 a-a 1 _s --( i') 1-is Lf alse, L fictitious',f or ; f ra.udulent s : 1 3 B ',. (ii).;,. includesfoc _ ist supportedly4 any written ,/( /' statement' which asserts a 'materi,al"i f act which is-H*u fal,se Ffictitious,1orffraudulkit;, ~ d o , c, .c l, _c_ 2. ,. b, "(iii')- 11ncludes or'is'l supported by/anyJwritten L: 3 q g qt t,- ~ ? m, ' statement (that- ' ll u m q gy Nl ,.-a,, w_ f ; ? - i elr m i dj i' k L 1 ' .j [4 e,; ? f.' ' s ,,,r J yp; m,, wv &e: "; y + l I~ f'kl / 0 ? m i fl 5; W - \\ ( 'f l 'j ' ' ;' ~, f, ; t ' ..,,2. N ,u- - ~ -

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+ lt p .(A) omits.a? material fact;. o* (B). i's false, fictitious, or fraudulantjas a result ~of'such; omissions;and! (C) is'a statement in which the;! person making- ) l" 'such statement.has a' duty tofinclude.such-i a .mnerial fact; or-l ^ m h' ,(iv);is'for payment for the provisiont;of property.or?. s. m r s 4 Jservices,which the - pe'r' son $ h'as; not; provided as.- [ y . claimed, shall.be' subject, in addition toi.anylothercreme.dytthat'mayf s s il t. ~ ~be prescribed'byllaw,c:to a civi1% penalty!ofinotinore:than-'-

p

$5,0000for each:such claim.' F. '(2)liEachJvoucher,invdice,. l claim (form kor)otherfindividual J L requestiorideman'd forSpropertye services,jor mofney-consti-L L tuties a -: separate claim.- ' oa o. i-k In D (3) 1A claim shall be consideredimadectbfanLauthority,. ( L

recipient,'or: party when such dlaim is facthally(madebto an (age'nt,ifiscaliintiermediary, or otder -entity); including; any-4

^Ln,, LState!orip'oliticalfsubdivision,thereof,Racting[for!or on-m;o o w. ~ Lof such1auth6tity,'. recipient,for? party.s o ..,.i beha l f J: p 7;; J m v. o' a i m l6i n i .o 5 EacN claim ; f or' proper'ty,[ services',f or;, money ' is :: subject 1 i W ( 4 )'

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. m Q% m. fto?a: civil; penalty.regardlesstof whethe'risuchiproperty,' m g 7L ~

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services,1orbmoney is-actuallyldelivere'dcoripaid..

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- _ l ll --[ ? I i rg j l13 1 g e x d (5) If the covernment has made any payment-(including-ttansferred-property.or provided-services) on a claim, a person subjectLto;a civil penalty under: paragraph (1) shall ~ i i also.:be subject.to an assessment of notimore than tyice the. amount of such claim or-that portion thereof that is_de-J =t termined to be in violation of paragraph.(1). 'Such assess-ment'shall be inilieu of damagesisustained byzthe Government because,of such claim. 'I .a. (b) Statements., -( 1 ) ' Exc_ept as provided:in.(c) below,.anyi-person who makes e ' written-statement.that--

1

'(i); th'e~perso'n knows'or hasireason;to'know-- J ( A') :assertsLaimaterial fact which-is-faise, -fictitious, orJfraudul'ent; or (D) is: false, fictitious, or fraudulentsbecause: '1 ii; m it'omitsua materialifact that.the person-makingthestatementJhasasd'utyltoMel'udefin. I i such statements.and ...f. .+ r (ii ) ' contains orzis' accompanied byLan(express; t:ertification:or: affirmation.of'the tiuthfulness ) an'd accuracy of the.contentstoflthe statement,. '1 i gif shall bggsubject,H.in: addition'to any'othercremedy thatJmay. x. l g t g c r ibed ' b' y' 3' law, to a?civilipenaltylof not more than< . _be pres. o D S5',000 for.each suchistatementi. a:4 m m

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E l, 5 l. S J w -s u". 1 14- -(2). Each written representationi certification, or affirma-l 5 p - tion constitutes!:a separate statement. 4 \\ (3) A statement: shallf be considered = made to an authority b .when such statement isLactuallylmade1to an agent,7 fiscal 'l intermediary,.'or other enti y, inclu' ding an.y' State or s politicalisubdivision thereof, actir.g;for-orfon behalf of,. u.o 7 .,1 1

such : autho' rity.1 y

J l. .(NOTE:i Subsection-(E);shouldibe: included in your agencyjsi regulations *only(if~you( agency administers oneLof the- - t . n ( benefit programsvlistedjin: paragraph-(c)(2) below.) -d' a 1 -(c)(1):.In the case offanyiela b orbstatementimade:by'.any. _ f 1 Lindividval relating'to"any.of<thekben,efits? listed,;in para-N 1. .n graph 912) received ;by, such. individual',fsuch.indiv.idual.~may '^ i 2 V' ~ be'heldf:liableJfor; penalties;andiass~essmentsfundernthis: g + r sectientonly if ~such clairn or....statementc;is;ma,..,de:.byfsuch .w individual: inM making ; applica tion 9for fs uchMenefibs Jwith" t respect to.'suchs.individuaO s ? eligib'ili ty.f toir eceive:Esuch 'ibenefits.; I L .i. ,+ + 1~, va, . + lii .q. b L(2):o;for purposes'o,ffthis(paragraph ( theiterm:' benefits'i o 5, 9: i W means-, p' 'l/ er (- '/l j: ', l4 s s U;.' .q J.. .1 .o, D. ...[Listithose3amon_githe following,Jany benefit'sithat N.! $ are t $1 7 adtdinistered byfy6ur,a'uthorityil' g.o, r s j ? .I + y ?>J, M,8 - , i; i - ',I g' l, ) 9 v ',.,' Q",(llj f:.,'? b,,)\\, .y p, wlT: p \\ i u - {@ r,, ,, j ; i 71. ' y if,gd% ,. 4 j, iU ~6 9 a: - s o h1 l, Nih00!U L ' ' ' ~ ' ' ' ' 'El J ' ' ~ ~ '. ~ ~~ ' *" i

f t a 17' '~ s (f) In"any caseLinlwhich it-is. determined that more'than' i . one person is' liable'for' making a' claim under:this section 4 en.which the Government has made' payment (including trans-ferred property or provided services'),..an; assessment may-be. 1 imposed against any such person or jointly and severally 1 'l against any: combination of such persons... i f4. Investigation.- t (a) If an investigating official concludes'that:a cubpoena; t p a (: pursuant'tolthe; authority conferred by 31 U.S.C.15 3604(a)= .a t .is warranted-- 1 y i(1) The subpoena lsoEissued.shall'. notify the?pernon to whomiitisaddressedof1theiauthorityunder'whichl 4

the. subpoena isLissuedEandLahall identify the.

records-orsdocuments sought';; s ( [

(2) 1Hecor she may designate at personfto.act?onLhis' a>

f ' behalf-to rece'ive the documen.ts sought; and 1 y

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'requiredfto;tenderi.to therinvestigating(official- ' .orgtheLperson! designatedtto receiveither'documentsi "IC' La certif'ication; thatf theLdocumen,.ts' sought'have. s e ia.... -. v x .beeniped uced, gor: that such documents are:.not y , o .;.g elavailable'and-thecreasons therefor', orithat such w.- 8 w t. 1 a. n, ,9 documents,.suitablyfidentified,,h' ave'been withheldi, j e, "J " y T 0,,

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i u j l (b)-'If the investigating official concludes that an action. [ under the Program Fraud. Civil, Remedies;Act may-be'werranted, l 4 i, ) ..the investigating-official-shall." submit-.a report containing, ( z the findings'and conclusions of such investigation;to the 1 reviewing official. l ' x ~(c) Nothing?in thisisection shall preclude or'. limit an. 4 1 i i cinvestigatingl official's discretion to refer allegations: i directlyftoJthe; Department'of'Ju'stice;for suit under the t False, Clailns Acti or other civil relief,4 or to. preclude' ore 4 ~1imit~such' officialsLdiscretion"toidefer orEpostpone a-I. report;orireferrall to. avoid linterfetence;with a. criminal f Ji'nvestigation.or~prosdcution.- n 'l + ' h*' l(d) .Hothing:iin;; this ' section : modifiesj anyj respons ibility? ofi 4 . + .an investigatinglofficialitoireportiviolations of criminal, 4.. c 2 law to:the'Atu,rney General.- ' 1 4 1

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1 ' j i. s .g ll' s .(b) Such notice shall include-- -(1) A statement:of the' reviewing official's. reasons 4 fors' issuing a complaEnt; (2) A statement specifyingithe' evidence that supports lthe allegations'of liability; (3) A' description-of thel claims :or statements upon which the allegations of liability-are' based . (4)'LAn.esti. mate of the-amount;.of: money or.the Lvalue'of property,Leervices, or other benefits freguestef orhdemanded iniviolationiof $l3 of'.this 3 a part;; .(5)' A statementLofianycexculpatory:or. mitigating 1 i circumstances thatsmay telate(to the : claims or D statements known;bydthe revieNingLofficial:or the .'investigat'in'g-? of ficis1 s ' ann: (6i A statement-that there:;is aireasonable' L y prospect of collectingLanJ,appropriateLamount of penaltiesLandsassessments. SuchiacstatementJmay '3 .be' based upon[ihformationfthenJknownfor an absence s 1 q y 'ofLanysinformationiinddcatingLthatgthe"personmay l 4, . be;cunable. to ? pay l.such; an0 amount. : 'us, a ' D/2 ' s i s 4 j{ i s l Q' i G ;' Prerequisites for'issuinera4 complaint.- pt 7. f,,

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(1) The Department ofl Justice. approves-the" issuance,of a complaint in a written 'statementidescribed in 31. - U.S.C. 5.3803(b)'(1),:and C (2) In.the: case.of' allegations of liability under-S 3(a) with respect _tola claim, the. reviewing Lofficial determines 1that, with respect to suchi o i claim or;a-group ofjrelated claims submitted at x ~ y a the sameLtime suchLcla'im'isusubmitted:(as, defined-o 'inL(b)),--the amount o'f. money or the value ofe i propertyor[servicesdemandedorrequestedin) v'iolationlof: 5-3(a) does. notlexceed S150jo00.' I a 3 f (b) FoO the purposes. of this'section, s a related-group of: q, Vclaimslsubmittedrat!the,same: time shall.-include only thonel clabnsLarisihgfrom'the.sametrans' action..(e'.g., grant,[ loan, 4 application,nor contract).that areJaubmitted simultaneously .:v a . + t ias:part of~a single request, demand, or submission'. o m [ '((c)j illothing?inethis section shallibelconstrued toilimit' the v" ,m , reu ewing official'sJauthority:to< join'in'a singletcomplaint o a .i U;# againstaa pers.on claims that are. unrelated"or w'eregnot J 2 Lt n. m ()0 lsubmitted simultaneously, regardless'.of'the amount of monev y. 3 >. nQVe orfthesvaluelof, property-orservices;demandedfor!requestad. g o; ', W g' y& M f_

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p 6 J o r. fMW hy#d%% j(A)f M oriafter?the date the Department ofidusticefappr6ves: e c m J C.i*y%< ' thelissuance of af comp 3aint in accordance witL31iU. Sic. .m i %%by R l ~ e um' k,. (5 n; P y 0, f {. $[ 'N y qp p i l

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T i ~^ r 4- ,f -0 3y [-- J... m v 5.3803(b)(1), theLreviewinglofficial mayj. serve atcomplaint J on'the. defendant,1as.provided in S '. 8 ',. 1-g u. d, (b) The: complaint shall state--.- i v l4 (1); The allegations =.c 1iability against the Jdefendant,Tincludi..ithestatutory[basisfor 7 . liability, j an identification (of -t te ' claims or statements { th'at: are; the LbasisforL the alleged: 1 h liability,lan~dlthereason's;why? liability.allWgedly 4 Q-arises. from?s.uch', claims ot h.. o u s tatementa s: 4 t 1 .(2)! The maximumlamounttof'penaltiesland. assessments-- m e s 5, i-. i, Ofor :which the defendant '.may be: held; liable;< e.. t '(3) Instructions 1for,' filing anianswer to? request a hsaring,.includingianspecificastatement;of the! L j u l defendant's0righti.tonrequest la : hearing by-filing- ] an an'swer and;to-beLrepresented by aL g . s . representa;tive rc and! } 1 (4)- That: failure t'offile anF answer within.30' days of

service ofgha 3omplaint wil'1L result in the a

' imposition;of the maximum amount;of; penalties and ~ L 'assessments (without righti, to appeal.- w p i C m 'I y Atl.,the "same 'f l(c) time,?the reviewing. official: serves:the' complaint Vhe: ora.she'sha'11Jserve;the: defendant with a copy ii 4 L cof(thesetregulations. t i 'n y ' ~ L ,l y m. .g w,w s a 3 ^$' 1

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p, v, r w n. .J k. ~ i ,ii i.. 'N_t j 8.i service'of; complaint.- l 1. ~. p Af(a)i= Service offa,' complaint must'be.made.by certified or' .l .) y .registiered mai1 or? by. delivery ;iniany manner au'thori::ed by ' j ~ w ., Rule 4(d).of-.the~ Federal-Rules of CivillProcedure, 1 u y r 't

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a; ,j' i - t r (b),iProof of< service,: stating the namefand' address of-the-j (", n. [Q., personlon.whom thes. complaint was: served,uand the nanner-and- ~ t ., ~ / .. J,, ' datefof ~ ser vi..ce, may;beimadeLby-- a 4 y: .(1)(cAffidavit of the'individuallmakingLservice 5 4 %l ' A )-.cAn acknowledged United (States:Posta1EService. m. ~ steturn receipthcards'or'c ^ )' c 1 .w ~n m. g' (3)' 'WrittenLacknowledgment of!the defendantiorihis x representative. l 1 m' ' 9.. !Answar.

(a)

The) defendant :may. requestia' hearing;by: filingfan answer ,4 i q.!,

-with the" reviewing officia1.within 301 days of.servic'e.'of the j

n d p, + m complaint. tan, answer shallibe. deemed to becanrequestLfor' 1 4 (; ~. y, ~,,. hearing'.- l - t .m' i l(p" L(b)'In.theyanswer, the defendant-- o m "~. o q _ ym '~ (l')-<Shalladmit',,denyeach[ofLtheLal'leaatibnsof y II f H;r 1 % 11 ability made-in the complaints: .M v y

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j 03 l (3) May state any reasons why the defendant contends \\ that the penalties and assessments should be less j than the statutory maximum; and \\ (4) Shall state the name, address, and telephone l number of the person authorized by the defendant to act as defendant's representative, if any. 10. Default upon failure to file an answer. (a) If the defendant does not file an answer within the time prescrit ed in S 9(a), the reviewing official may refer the complain 2 to the ALJ. (b) Upor the referral of the complaint, the ALJ shall promptly serve on defendant in the manner prescribed in S 6, a notice that an initial decision wil1 be issued under this section. (c) If the defendant fails to answer, the ALJ shall assume the facts alleged in the complaint to be true and, if such facts establish liability under S 3, the ALJ shall issue an initial e eision imposing the maximum amount of penaltien and assessments allowed under the statute. (d)- Except as otherwise provided in this section, by failing to file a timely answer, the defendant waives any right to further review of the penalties and assessments imposed under (c), and the initial decision shall become .p-l

24 final and binding upon the parties 30 days after it is issued. i (e) If, before such an initial decision becomes final, the defendant files a motion with the ALJ seeking to reopen on the grounds that extraordinary circumstances prevented the j defendant from filing an answer, the initial decision shall be stayed pending the ALJ's decision en the motion. (f) If, on such motion, the defendant can demonstrate extraordinary circumstances excucing the failure to file a - timely answer, the ALJ shall withdraw the initial decision in (c), if such a decision has been issued, and shall grant the~ defendant an' opportunity to answer the complaint, (g) A decision of the ALJ denying a defendant's motion under paragraph (e) is not subject to reconsideration under S 38. i (h) The defendant may qpeal to the authority head the decision d' nying a : notion to reopen by filing a notice of e appeal with the authority head within 15 days after the ALJ denies the motion. The timely filing of a notice of appeal l-shall stay the initial decision until the authority head l decides the issue. l 1 i .p'

37 14. Separation of functions. (a) The investigating official, the revieuing official, and any employee or agent of the authority who takes part in investigating, preparing, or presenting a particular case may not, in such case or a factually related case-- (1) participate in the hearing as the ALJ; (2) participate or advise in the initial decision or the review of the initial decision by the authority head, except as a witness or a representative in public proceedings; or (3) Make the collection of penalties and assessnents - under 31 U.S.C. S 3806. (b) The ALJ shall not be responsible to, or subject to the supervision or direction of the investigating official or the reviewing official. (c) Except as provided in (a), the representative for the Government may be employed anywhere in the authority, including in the offices of either the investigating official n't the reviewing official. 15. Ex.. parte contacts. No party or person (except employees of the ALJ's office) shall communicate in any way with the ALJ on any matter ac issue in a case, unless on notice and opportunity for all I parties to participate. This provision does not prohibit t I w

d 39 resolves the matter of disqualification in accordance with 1 paragraph (f). (f)(1) If the AtJ determines that a reviewing official is disqualified, the ALJ ahall dismiss the complaint without prejudice. (2) If the ALJ disqualifies himself or herself, the case shall be reassigned promptly to another.ALJ. (3) If the ALJ denies a motion to disqualify, the authority head may determine the matter only as part of his or her review of the initial decision upon appeal, if any. 17. Riohts of parties. Except as otherwise limited by this part, eli parties may-- (a) Be accompanied, represented, and advised by a representative; i (b) Participate in any conference held by the ALJ: l-(c) conduct discovery; p (d) Agree to stipulations of fact or law, which shall be made part of the record; (e) Present evidence relevant to the issues at the hearing: 1 .i 1 I* ,_m ,-r-

31 (6) Regulate the course of the hearing and the conduct t of representatives and parties; (9) Examine witnesses; \\ i (10) Receive, rule on, exclude, or limit evidence; j (11) Upon motion of a party, take official notice of l facts; (12) Upon motion of a party, decide cases, in whole or in part, by suamary judgment where there is no. disputed issue of material fact; (13) Conduct any conference, argument, or hearing on motions in person or by telephone; and (14) Exercise such other authority as is necessary to carry out the responsibilities of the ALJ under this part. (c) The ALJ does not have the authority to decide upon the validity of Federal statutes or regulations. 19. Prehearing conferences. (a) The ALJ may schedule prehearing conferences as appro-priate. + (b) Upon the motion of any party, the ALJ shall schedula at least one prehearing conference at a reasonable time in advance of the hearing. .g

32 l (c) The ALJ may use prehearing conferences to discuss the following: (1) Simplification of the issues (2) The necessity or desirability of amendments to the pleadings, including the need for a more definite statement; (3) Stipulations, admissions of fact or as to the contents and authenticity of documentar (4) Whether the parties can agree to submission of the ' case on a stipulated record; (5) Whether a party chooses to waive appearance at a n' oral hearing and to submit only documentary evidence (subject to the objection of other parties) and written argument; (6) Limitation of the number of witnesses; (7) Scheduling dates for the exchange of witness lists and of proposed exhibits; (8) Discovery (9) The time and place for the hearings and (10) Such other matters as may tend'to expedite the " fair and just disposition of the proceedings. ' -(d) The ALJ may issue an order containing all matters agreed upon by the parties or ordered by the ALJ at a prehearing conference. ./

33 20. Disclosure of documents. (a) Upon written request to the reviewing official, the f defendant may review any relevant and material documents, transcripts, records, and other materials that relate to the allegations set out in the complaint and upon which the findings and conclusions of the investigating official under S*4(b) are based unless such documents are subject to a privilege under Federal law. Upon payment of fees for duplication, the defendant may obtain copies of such docu-ments. (b) Upon written request to the reviewing official, the ' defendant also may obtain a copy of all exculpatory informa-tion in the possession of the reviewing official or inves-tigating official relating to the allegations in the complaint, even if it is contained in a document that would otherwise be privileged. If the document would otherwise bc privileged, only that portion containing exculpatory infor-mation.must be disclosed. (c) The notice sent to the Attcrney General from the reviewing official as described ir S 5 is not discoverable under awr circumstances. (d) The defendant may file a motion to compel disclosure nf [ the documents subject to the provisions of this section. ~ .p'

37 the opposing party as provided above unless the ALJ finds good cause for the failure or that there is no prejudice to the-objecting _ party. (c). Unless another party objects within the time set by the ~ALJ, documents exchanged in accordance with paragraph (a) shall be deemed to be authentic for the purpose of admis-sibility at the hearing. 23. Subpoenas for attendance at hearing. (a) A party wishing to procure the appearance and testimony of any individual at the hearing may request that the ALJ issue a subpoena. (b) 'A subpoena requiring the attendance and testimony of an individual may also require the individual to produce documents at the hearing. (c) A party seeking a subpoena shall file a written request therefor not less than 15 days before the date fixed for the hearing un'less otherwise' allowed by the ALJ for good cause shown. Such request shall specify any documents to be produce & and shall designate the witnesses and describe the address and location thereof with sufficient particularitv-to pernit such witnesses to be found. -i

41 every other' party. Service _upon any pqrty of any document other than the complaint or notice of hearing chall be made by delivering or mailing a copy to the party's last known addtess. When a party is tepresented by a representative, service chall be made upon such representative in lieu of the actual party. (c) Proof of service. A certificate of the individual serving the document by personal delivery ot by mail, setting forth the manner of service, shall be proof of service. 27 Computation of time. (a). In computing any period of time under this part or in an order issued thereunder, the time begins with the day following the act, event, or default, and inclu0es the '.act day of the period, unless it is a Saturday, Sunday, or legal holiday observed by the Federal government, in which event it includes the next business day. When 'he period of time allowed is less than seven (b) t days, intermediate Saturdays, Sundays, and legal holidays L observede.by the Federal government shall be excluded from the computation. .g

4, j c (c) Where 'a document has been-served or issued by mail, ar additional five days will be added to the time permitt.ed for any response. 20. Motions. (a) Any application to the ALJ for an order or ruling shall be by motion. Motions shall state the relief sought, the authority relied upon, and the facts alleged, and shall be filed with the ALJ and served on all othat parties. (b) Except for motions made during a prehearing conference the hearing, all motions shall be in writing. The ALJ or at may require that oral motions be reduced to writing. (c) Within 15 days after a written motion is served, or such other time as may be fixed by the ALJ, any patty may file a response to such motion. l-(d) 'The ALJ may not grant a written motion before the time for filing responses thereto has expired, except upon of'the parties or following a hearina on the motion, consent but may overrule or deny such motion without awaiting a response.. (e) The ALJ shall maxe a reasonable effort to dispose of all outstanding motions prior to the beginning of the hearing. l

43 29,. Sanctions. (a) The ALJ may sanction a person, including any party or representative for-- (1) Failing to comply with an order, rule, or procedure governing the proceedings (2) Failing to prosecute or defend an action; or (3) Engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing. (b) Any such sa.iction, including but not limited to those* ' listed in parar,taphs (c), _ (d), and (e), shall rea_oonably relate to the severity and nature of the failute or miscon-duct. l (c) When a party fails to comply with an order, including i ( an order for taking a deposition, the production of evir:ence L within the party's control, or = request for admission, the 'ALJ may-- L (1) Draw an inference in favor of the requestine party i .with regard to the information sought; (2) In the case of requests for admission, deem each matter of which an admission is requested to be admitted; (3) prohibit the party failing to comply with such order from introducing evidence concerning, or -r

44 ] otherwise relying upon tectimony reJ:. ting to the information soLght; and (4) Strike any part of the plear.ings or other sub-missions of the party failing to comply with such request. (d) If a party fails to ptosecute or defend an action undet this part commenced by service of a notice of hearing, the ALJ may dismiss the action or may issue an initial decision imposing pe'ialties and ascessments. (e) The ALJ may refuse to consider any motion, request, response, brief or other document which is not filed in a timely fashion. 30. The hearing and burden of proof. (a) The AT.J shall conduct a hearing on the record in orde'. to determine whether the defendant is liable for a civil penalty or assessment under 5 3 and, if so, the appropriate amount of any such civil penalty or assessment considering any aggrava' ting or miticating factors. (b) The" authority shall prove defendant's lirbility and any aggravating factors by a preponderance of the evidence. (c) The defendant shall prove any affirmative defenses and any mitigating factors by a preponderance of the evidence. .y I

40 which the claim or statement in issue was made; or (3) In such other-place as nay be agreed upon by the defendant and the ALJ. (b) Each party shall have the opportunity to present argument with resp =ct to the location of the hearing. f (c) The hearing shall be held at the place and at the time .tdered by the ALJ.

33. Witnesses.

(a) Except as provided in paragraph (b), testimony at the . hearing-shall be given orally by witnesses under oath or affirmation. (b) At the discretion of the ALJ, testimony may be admitted in th5 and telephone

• • • E Inn isni.'=!. =-.

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Washington, D.C. 20036 %wm ll effett um M*....:" May 29, 1987

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suoco no. q' o...gi. ""'"""*l $$'N r. Clyde C. Pearce, Jr. M ,d{h,;% Ge teral CounselylygGeneral Services Administration .y -io,,.g ggggg18t.h & T Streets, N.W. o,,,,,,g). = W '. s h i n g t o n, D.C. e. L'"*:Cis Re: Implementation of the Program .ig. cc., kt ..,71.' hTij Fraud Civi1 Remedies Act of i986 ( d.U'.T!.','.! .ElL'N ici..JJ.'..' 2j This letter is written on behalf of the Section of '*" **'L'O P u b l i c C o n t r a c t Law of the American Bar Association pursuant to ,TA.**Mf!51 special authority extended by the Association's Board of no -.g.fff].Q $ Governors for comments on acquisition-related regulations. The "" D.g,..-. views expressed are those of the Section and have not been . **TS considered by the Association's Board of Governors or its House uu 7,.,,'g.,!M's o f De 1 eg a t e s. J]!. C.. Q';,":;: The principal purpose.of the Program Fraud Civil ..:,...i, at6'.fG Remedies Act of 1986.was to provide a simplified, expedited and .ii.c.,;;;;r*N"c less expensive method of adjudicating allegations of f alse Y ar "' claims against the Government in cases involving smaller dollar ~ " * ' " ' " Throughout the consideration of legislation, Congress 'o"o' '"i'Lfg'M amou nt s.3?Al.,0*Jcontended with the tension between protecting the rights to due

• • "'**"" process of law of persons accused of f raud, and the costs and

' ' '"'"!.f%'tS complexity which would ar ise f rom cr eating excessive, $ ddy'[; formalistic procedural rules. .044D 08 COvt esong t aiso <*-r *,tn;;l Congress resolved this conflict by mandating that d,'j,p"*,#c which are covered by the Administrative Procedure Ac ,l,7 proceedings under the Act conducted by agencies such as GSA %.In,c;;.i, shall be ("' conducted in accordance with that statute. 31 U.S.C. 7,',;Y! E ' 4 S 3 8 0 3 ( g ) ( 1 ) ( A ) ( 1 ). Only those agencies which may not be """ D "5 governed by the APA were directed to promulgate regulations 5mo ^tt,T.'^.;?l, e s t a b l i s h i ng c ompa r a b l e p r o ce d u r e s. "* "T! *; M a N"A The proposed GSA regulations disregard this distinction. Rather than simply incorporating the APA, the regulations would create an extensive and detailed list of F m

e Mr. Clyde C. Pearce, Jr. May 29, 1987 Page 2 procedural technicalities. Many of these requirements are unnecessary, and will lead only to delay and additional expense for both the Government and the defendants. One example is the provision in 5 105-70.036 for post-hearing briefs and proposed findings of fact and conclusions of law. The Section of Public contract Law has recently completed an extensive Report on Ways of Expediting Appeals Before the Boards of Contract Appeals. 16 Public Contract L.J. 161 (August 1986). One of the recommendations of that Report was the elimination of post-trial briefs as a " wasteful and unnecessary" process in a large percentage of cases before the Boards. Such excessive filings would be similarly wasteful in hearings under the Act. The recommendations in the Report provide excellent guidance in other respects as well for simplifying the procedures in Program Fraud cases. The formalistic procedural rules included in the proposed regulations ignore the broad range of cases which may be pursued under the Act. While formal processes and multiple written submissions may be acceptable or necessary in large cases against major corporations, they are inappropriate in the many small cases which will be brought against individuals and small businesses. Many of these defendants will proceed gr2 Eg, and should not be denied their rignt to a fair hearing before an impartial administrative law judge by reason of the inability to understand, or the excessive expense of complying with, a lengthy list of procedural technicalities. We recommend that the procedures set forth in the regulations be substantially rewritten to address this problem and propose two alternate approaches. The first approach would be to establish two sets of procedures -- a formal procedure based upon the Federal Rules of Civil Procedure and providing for formal pleadings, pretrial procedures, discovery, and t briefs; and a simplified, expedited procedure which would dispense with most written submissions but would provide-the defendant the " day in court" to which he is entitled under the I Act. The election between these procedures should rest solely I with the defendant, based upon the person's own assessment of the defense which he considers necessary or can afford. The second approach would be to replace many of the specific procedural rules included in the proposed regulations with more general guidelines, based upon the APA and the Act. This would leave to the parties and the administrative law judge the ability to tailor the proceedings to the facts and circumstances of the particular case.

t. I Mr. Clyde C. Pearce, Jr. May 29, 1987 Page 3 In addition to these general comments, we believe that the proposed regulations exceed the bounds of the Act and are seriously flawed in many other respects. We set forth these objections by section below. E 105-70.002 Definitions. Paragraph (d) attempts to define " benefit" to include "anything of value" including a license, permit, ruling, etc. As used in the Act, " benefit" is a subset of the term money And is plainly intended to include only monetary benefits. A request for a license, permit, decision, ruling etc. is not a " claim" and is not actionable under the Act. This attempt to expand the scope of the statute is not authorized and should be deleted. Paragraph (n) defines a representative only as an attorney. The result is that any corporation or entity other than an individual must be represented by an attorney. In the Boards of Contract Appeals, many small businesses choose to be represented by.an owner or officer. The regulations should be amended to provide the same opportunity in proceedings under the Act. Paragraph (o) defines the " Reviewing Official" as the General Counsel of GSA "or his designee." This provision does not comply with 5 3 sol (a)(8) of the Act which requires that the reviewing official be designated by the authority head. The Act does not permit the person sn designated to redelegate that responsibility. Moreover, the Act requires that the reviewing official be serving in a position for which the rate of basic pay is not less than grade GS-16. This requirement is omitged from the proposed regulations. Paragraph (p)(2)(ii) suggests that GSA could initiate a nroceeding under the Act on the basis of a false statement to a state or intermediary in a program administered by any agency of the United States. This provision should be clarified to state that the jurisdiction of GSA extends only to programs administered by GSA. K 105-70.003 Basis for civil cenalties and assessments. The Act and proposed regulations provide that to be actionable a false statement must contain or be accompanied by an express certification or affirmation of the truthfulness and accuracy of the statement. However, paragraph (b)(2) suggests

c w o i 4 Mr. Clyde C. Pearce, Jr. May 29, 1987 Page 4 that both the statement pad accompanying certification would be separate violations for s.tch the government could collect damages and assess penalties. This provision is contrary to the intent of the Act and should be clarified to provide that each written representation accompanied by a certification or affirmation constitutes a single statement. Paragraph (b)(3)(d) provides that each individual who is responsible for a false claim or statement may separately be assessed a civil penalty. There is no statutory basis for this provision, which is plainly contrary to the remedial nature of the Act and to over one hundred years of practice under the Talse Claims Act. Rather, as with assessments for false claims as set forth in paragra"5 (b)(3)(e), only a single penalty may be assessed for each false claim or statement, but such penalty may be imposed jointly and severally against all of the responsible persons. E 105-70.004 Investication. The regulations should reflect the limitations on the investigative subpoena authori'ty set forth in 5 3804(a) of the Act. Specifically, the regulations should stater (1) the subpoena may be issued only for materials "not otherwise reasonably available to GSA" and (2) may be issued only for the purpose of conducting an investigation under the Act. Paragraph (a){3) purports to require an individual who has received a subpoena to execute a certification of his compliance. This requirement is an attempt to compel testimony, but this power was specifically denied the Inspectors General in the consideration of the Act. A person's only responsibility is to produce all non-privileged materi' alt responsive to the subpoena. Paragraph (a)(3) is not authorized by any provision of law and should deleted. Paragraphs (b) and (c) seek to vest in the Inspector General the discretion to determine whether a violation of the Act has occurred. or to delay his obligation of reporting the results of his investigation. These provisions are contrary to S 3803(a)(1) of the Act which mandates that the investigating official shall report the findings and conclusions of his investigation to the reviewing official. The right to delay proceeding because of interference with a criminal investigation rests solely with the Attorney General or not with the Assistant Attorney General under 5 3803(b)(3) Inspector General. These provisions protect the defendant's

t *. i Mr. Clyde C. Pearce, Jr. l May 29, 1987 ] Page 5 i right to a prompt resolution of serious allegations of fraud and cannot be circumvenced by this proposed regulation. d i 105-70.005 Review by reviewine official. Section 3809(2) of the Act requires that the regulations include a requirement tsot the reviewing official determine that there is a reasonable prospect of collecting from the defendant the amount for which the person may be liable. Paragraph (b)(C) does not satisfy this obligation. The proposed regulation would permit the reviewing official to avoid this responsibility by simply stating that no information is available without conducting any inquiry or investigation. It would also permit a commencement of a proceeding if the reviewing official indicated that a nominal er token amount could be collected if he considered such amount to be an " appropriate" recovery. Paragraph (b)(6) should be amended to 1 conform to the Act. A 105-70.006 Prerecuisites for issuine a comelaint. Section 3803(c)(1) of the Act requires that in applying the $150,000 ceiling, all related claims submitted at the same time must.be aggregated. Paragraph (b) of the proposed regulatiens attempts to negate this limitation by defining "related" to mean only those claims arising "from the same transaction" which are submitted " simultaneously as part. of a single request, demand, or submission." There are many circumstances in which separate but related claims arising from different transactions-could be submitted at the same ti'.ne and must be aggregated pursuant to the Act. For example, a contractor could submit-a single monthly package of all invoices for office supplies ordered by the agency during the preceding month, or a snipper could submit all bills of lading to the agency on a weekly basis. Plainly, these claims must be aggregated under the Act although they arise from separate transactions and constitute multiple " requests, demands or submissions." As stated by the Senate Committee on Government Affairs in its Report on the Program Fraud Civil Remedies Act, S. Rep. 99-212, 99th Cong., 1st Sess., (1985) at 24-25: The Committee does not believe that a group of related false claims submitted together, possibly resulting in penalties of hundreds of thousands of dollars, should be adjudicated administrative 1y. If these related claims in the aggregate, exceed

4 t s' ( / a Mr. Clyde C. Pearce, Jr. May'29, 1987 Page 6 $100,000, they should be prosecuted together in court under the False Claims Act, not separately in an administrative proceeding under the Program Fraud bill. The regulations cannot circumvent this jurisdictional cei' ling by attempting to limit the statutory requirement that related claims be aggregated. Paragraph (b) of 5 105-70.006 should be deleted. KE 105-70.007 - 105-70.038 Hearina Procedures. For the reasons stated above, these provisions should be substantially revised. However, the following provisions raise particular concern. Section 105-70.008 purports to permit service of a notice-of proposed liability (called a " complaint" in the regulations) in any manner permitted under F.R. Civ. P. 4(d). Section 3803(d)(1) of the Act permits service galy by registered or certified mail or by delivery. Similarly, 5.105-70.009 states thet the defendant must request a hearing wti hin 30 days of " service" of the complaint..The Act, however,'provides in 5 3803(d)(2) that the 30-day period does not begin to.run until actual recelot by the defendant of the notice of proposed liability. Section 105-70.009 and 70.010 purport to require a defendant to file an " answer" specifically admitting or denying each allegation of the " complaint" or forfeit his right to a hearing. This-will present particular practical problems since in judicial proceedings defendants often need and obtain extensions of the time to answer, whereas the 30-day limitThe[n this statute may well not be susceptable to extension. defendant plainly has no obligation to file an " answer" under the Act, and is entitled by law under 5 3803(d)(2) to a hearing if he simply requests one. He is further entitled to present ' his defense through. oral or written evidence. 'The agency-cannot deny this hearing on the basis of.the defendant's failure or. refusal: to submit a formal pleading setting forth all of.his responses and defenses to the allegations, and there is no statutory basis for assessing a " default." sections. 105-70.000 and 70.010 should be deleted. Section 105-70.018(c) purports to limit the authority of the hearing examiner to decide questions involving the validity of statutes and regulations. The determination of such questions is an inherent part of the authority of an

e h Mr. Clyde C. Pearce, Jr. May 29, 1987 Page 7 administrative law judge, and there is no basis under the APA or the Act for this limitation. Section 105-70.020(c) purports to exempt from i disclosure the notice sent to the Attorney General from the reviewing official. This notice must state any exculpatory or mitigating circumstances, and to the extent exculpatory evidence is included, the notice must be disclosed to the defendant under S 3803(e)(2) of the Act. Section 105-70.031 would create a presumption that the maximum penalties and assessments should be imposed. The statute was intended to vest broad discretion in the hearing examiner to determine the appropriate penalty under the circumstances. As stated in the Senate Report at 18: The $10,000 penalty is intended to serve as a ceiling; it is expected that the hearing examiner will adjust and determine the ( assessment based on the circumstances of the case. The last sentence of 5 105-70.031 is inappropriate and should be deleted. Section 105-70.032 provides no guidance on selecting the location of the hearing. Particularly in cases involving ~ individuals and small businesses, the regulations should create a presumption that the hearing will be held where the defendant resides. While the Federal Rules of Evidence need not be strictly applied in administrative hearings, the seriousness of allegations of fraud and the extensive penalties which may be imposed in Program Fraud proceedings dictate that evidence should be limited to that generally admissible in court. In particular, we recommend that 5 105-70.034 of the regulations require the exclusion of hearsay evidence or at a minimum create a presumption against the use of hearsay evidence. It would be wholly inappropriate, for example, for the agency to base its case on testimony'by investigators of what they have been told by other persons without providing the defendant the right to confront those persons. Section 105-70.038 would afford the agency the right to seek " reconsideration" of an adverse decision by the hearing examiner. This provision is contrary to S 3803(1)(1) of the the Act which provides that unless appealed by the defendant,

I . - - g. 4-Mr. Clyde C. Pearie, Jr. May 29,-1987 Page 8 decision of the hearing examiner is final. Section 105-70.038 should be deleted. E 105-70.039 Acceal to authority head. Section 3803(1)(2)(A) of the Act states that at any time within 30 days after the hearing examiner issues his decision, the defendant may appeal the decision to the agency head. Section 105-70.034 would eliminate this right of appeal for 25 days or more, and require the defendant to file a legal brief in support of his appeal. The regulations cannot postpone the appeal right established by law, and the defendant is entitled to a prompt review by the agency head of the decision of the hearing examiner whether or not the defendant chooses to file a lengthy set of exceptions and legal brief. In many small cases, a brief letter from the defendant requesting a reversal.of the decision or a reduction of the penalty may be sufficient. These provisions of the proposed regulations conflict with the Act and should be deleted. EE 105-70.043 - 105-70.044 Collections and Offsets. Section.3809 of the Act requires that the agency regulations provide that investigating and reviewing officials are not responsible for making co.11ections. Section 105-70.043 should be amended to include these r,estrictions. Section 3805(2) provides that the decision of the agency head is final unless a eetition for iudicial review is timelv filed. Section 105-70.044 should clarify that a decision of the agency head which has been appealed in court, or:for which.the time for requesting judicial review has not expired, is not final and cannot form the basis for an administrative offset. The proposed regulations require substantial revision to conform to the Act and to effectuate the purpose of the statute. We urge that a revised proposed regulation be issued for additional comment before a final regulation becomes effective. Sincerely, rh g Paul G. DemblL.g Chairman l

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