Hearings and Appeals for Civil Monetary Penalty Cases

Federal RegisterJul 31, 1996

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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 498

RIN 0960-AE41

Hearings and Appeals for Civil Monetary Penalty Cases

AGENCY: Social Security Administration (SSA).

ACTION: Proposed rule.

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SUMMARY: We propose to add new rules that would establish hearing

procedures for the Social Security Administration's civil monetary

penalty cases. These proposed rules would implement the provisions of

section 1129 and section 1140 of the Social Security Act which require

an opportunity to be heard on the record before a determination to

impose penalties or assessments becomes final.

DATES: To be sure that your comments are considered, we must receive

them no later than September 30, 1996.

ADDRESSES: Comments should be submitted in writing to the Social

Security Administration, c/o Commissioner of Social Security, P.O. Box

1585, Baltimore, MD 21235, sent by telefax to (410) 966-2830, sent by

E-mail to ``[email protected]'' or delivered to 3-B-1 Operations

Building, 6401 Security Boulevard, Baltimore, MD 21235, between 8:00

a.m. and 4:30 p.m. on regular business days.

The electronic file of this document is available on the Federal

Bulletin Board (FBB) at 9 a.m. on the date of publication in the

Federal Register. To download the file, modem dial (202) 512-1387. The

FBB instructions will explain how to download the file and the fee.

This file is in WordPerfect and will remain on the FBB during the

comment period.

FOR FURTHER INFORMATION CONTACT: Regarding this Federal Register

document--Henry D. Lerner, Legal Assistant, Division of Regulations and

Rulings, Social Security Administration, 6401 Security Boulevard,

Baltimore, MD 21235, (410) 965-1762; regarding eligibility or filing

for benefits--our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION:

Background

The Social Security Administration (SSA) was established as an

independent agency effective March 31, 1995, under Public Law 103-296,

the Social Security Independence and Program Improvements Act of 1994

(SSIPIA). The SSIPIA also created an independent Office of the

Inspector General (OIG), to which the Commissioner of Social Security

(Commissioner) delegated certain authority under the civil monetary

penalty (CMP) provisions on June 28, 1995. However, the Commissioner

retained the authority to conduct initial hearings and review initial

hearing decisions related to the imposition of CMPs and assessments.

On November 27, 1995, the OIG published a final rule at 60 FR 58225

establishing a new part 498 in title 20 of the Code of Federal

Regulations. This new part serves as a repository for the SSA's

existing CMP regulations which implemented section 1140 of the Social

Security Act (the Act). These regulations were previously located at 42

CFR part 1003.

In addition, the OIG published a final rule on April 24, 1996, at

61 FR 18078 to implement SSA's new CMP authority provided under section

206(b) of the SSIPIA, which added section 1129 to the Act, effective

October 1, 1994. This authority allows for the imposition of penalties

and assessments against any individual, organization, agency, or other

entity that makes or causes to be made a false or misleading statement

or representation of a material fact for use in determining initial or

continuing rights to Old-Age, Survivors, and Disability Insurance or

supplemental security income benefit payments if the person knew or

should have known that such statement or representation is false,

misleading, or omits a material fact.

When published in final form, these proposed hearing regulations

will complete the final phase of the implementation process for the

provisions of section 1129 and section 1140 of the Act which require

that a person be given an opportunity to be

[[Page 39922]]

heard on the record prior to a final determination to impose penalties

or assessments.

Hearing Process

The Commissioner has decided to retain the Departmental Appeals

Board (DAB) of the Department of Health and Human Services (HHS) on an

interim basis to conduct hearings and appeals, and to issue recommended

decisions in SSA's CMP cases. SSA intends to enter into a reimbursable

agreement with the DAB under the Economy Act, 31 U.S.C. 1535(a).

The Commissioner's decision was based on a number of criteria,

including the DAB's expertise in handling CMP cases and its reputation

for rendering decisions in an efficient and timely manner. Moreover, in

light of the fact that the authority under section 1129 is new, this

will give SSA the opportunity to assess the volume of CMP cases and

projected resource requirements prior to establishing its own internal

hearing mechanism.

These proposed rules will require adherence to various deadlines to

ensure the expeditious conduct of proceedings and prompt resolution of

CMP cases. In accordance with Sec. 498.109, these proposed hearing

regulations will provide a person, upon whom the OIG seeks to impose

penalties and assessments, as applicable, the right to request an

initial hearing within 60 days of notification by the OIG. As described

in Sec. 498.202 of these proposed rules, the person's request for a

hearing must be in writing and contain a statement of the specific

issues and conclusions of law with which the person disagrees. These

proposed rules also provide that a hearing request must be dismissed if

not filed in a timely manner unless, upon a showing of good cause, an

extension is granted to the respondent.

Initial hearings in CMP cases will be conducted by an

administrative law judge. At the hearing, a person will be entitled to

be represented by counsel, to present witnesses, and to cross-examine

witnesses.

These proposed hearing regulations have been modeled on the HHS's

hearing regulations which govern CMP cases for which the DAB also

conducts hearings and appeals on behalf of the Secretary of the HHS. As

indicated in the final rule published on April 24, 1996, we have

reserved the issue of recommended exclusions of physicians and medical

providers from the Medicare program at this time.

Regulatory Procedures

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and have determined that these rules do not meet the criteria for a

significant regulatory action under Executive Order 12866. Thus, they

are not subject to OMB review.

Paperwork Reduction Act

These proposed regulations impose no new reporting or recordkeeping

requirements requiring OMB clearance.

Regulatory Flexibility Act

We have determined that no regulatory impact analysis is required

for these proposed regulations. Based on our determination, the

Commissioner certifies that these proposed regulations would not have a

significant economic impact on a number of small business entities.

Therefore, we have not prepared a regulatory flexibility analysis.

Effect of NPRM on Pending Actions

Until the promulgation of final regulations, the Commissioner

intends that these proposed regulations shall provide guidance with

respect to the hearing and appeals process to be used in CMP cases.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social

Security--Disability Insurance; 96.002, Social Security--Retirement

Insurance; 96.004, Social Security--Survivors Insurance; 96.006,

Supplemental Security Income Program)

List of Subjects in 20 CFR Part 498

Administrative practice and procedure, Fraud, Penalties.

Approved: July 8, 1996.

Shirley S. Chater,

Commissioner of Social Security.

For reasons set forth in the preamble, part 498 of chapter III of

the Code of Federal Regulations would be amended by adding

Secs. 498.201 through 498.223 to read as follows.

PART 498--HEARINGS AND APPEALS FOR CIVIL MONETARY PENALTY CASES

Sec.

498.201 Definitions.

498.202 Hearing before an administrative law judge.

498.203 Rights of parties.

498.204 Authority of the administrative law judge.

498.205 Ex parte contacts.

498.206 Prehearing conferences.

498.207 Discovery.

498.208 Exchange of witness lists, witness statements and exhibits.

498.209 Subpoenas for attendance at hearing.

498.210 Fees.

498.211 Form, filing and service of papers.

498.212 Computation of time.

498.213 Motions.

498.214 Sanctions.

498.215 The hearing and burden of proof.

498.216 Witnesses.

498.217 Evidence.

498.218 The record.

498.219 Post-hearing briefs.

498.220 Initial decision.

498.221 Appeal to DAB.

498.222 Final decision of the Commissioner.

498.223 Stay of initial decision.

498.224 Harmless error.

Authority: Secs. 205(a), 205(b), 702(a)(5), 1129, and 1140 of

the Social Security Act (42 U.S.C. 405(a), 405(b), 902(a)(5), 1320a-

8, and 1320b-10).

Sec. 498.201 Definitions.

As used in this part--

ALJ refers to an Administrative Law Judge of the Departmental

Appeals Board.

Civil monetary penalty cases refer to all proceedings arising under

any of the statutory bases for which the Inspector General, Social

Security Administration has been delegated authority to impose civil

monetary penalties.

DAB refers to the Departmental Appeals Board of the U.S. Department

of Health and Human Services.

Sec. 498.202 Hearing before an administrative law judge.

(a) A party under any criteria specified in Secs. 498.100 through

498.132 may request a hearing before an ALJ.

(b) In civil monetary penalty cases, the parties to a hearing will

consist of the respondent and the Inspector General.

(1) In writing and signed by the respondent or by the respondent's

attorney; and

(2) Filed within 60 days after the notice is received by the

respondent or upon a showing of good cause, the time permitted by an

ALJ as provided in accordance with Sec. 498.109.

(d) The request for a hearing shall contain a statement as to the:

(1) Specific issues or findings of fact and conclusions of law in

the notice letter with which the respondent disagrees; and

(2) Basis for the respondent's contention that the specific issues

or findings and conclusions were incorrect.

(e) For purposes of this section, the date of receipt of the notice

letter will be presumed to be five days after the date of such notice,

unless there is a reasonable showing to the contrary.

[[Page 39923]]

(f) The ALJ shall dismiss a hearing request where:

(1) The respondent's hearing request is not filed in a timely

manner and the respondent fails to demonstrate good cause for such

failure;

(2) The respondent withdraws or abandons respondent's request for a

hearing; or

(3) The respondent's hearing request fails to raise any issue which

may properly be addressed in a hearing.

Sec. 498.203 Rights of parties.

(a) Except as otherwise limited by this part, all parties may:

(1) Be accompanied, represented, and advised by an attorney;

(2) Participate in any conference held by the ALJ;

(3) Conduct discovery of documents as permitted by this part;

(4) Agree to stipulations of fact or law which will be made part of

the record;

(5) Present evidence relevant to the issues at the hearing;

(6) Present and cross-examine witnesses;

(7) Present oral arguments at the hearing as permitted by the ALJ;

and

(8) Submit written briefs and proposed findings of fact and

conclusions of law after the hearing.

(b) Fees for any services performed on behalf of a party by an

attorney are not subject to the provisions of section 206 of title II

of the Social Security Act, which authorizes the Commissioner to

specify or limit these fees.

Sec. 498.204 Authority of the administrative law judge.

(a) The ALJ will 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:

(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 time;

(3) Hold conferences to identify or simplify the issues, or to

consider other matters that may aid in the expeditious disposition of

the proceeding;

(4) Administer oaths and affirmations;

(5) Issue subpoenas requiring the attendance of witnesses at

hearings and the production of documents at or in relation to hearings;

(6) Rule on motions and other procedural matters;

(7) Regulate the scope and timing of documentary discovery as

permitted by this part;

(8) Regulate the course of the hearing and the conduct of

representatives, parties, and witnesses;

(9) Examine witnesses;

(10) Receive, exclude, or limit evidence;

(11) Take official notice of facts;

(12) Upon motion of a party, decide cases, in whole or in part, by

summary judgment where there is no disputed issue of material fact; and

(13) Conduct any conference or argument in person, or by telephone

upon agreement of the parties.

(1) Find invalid or refuse to follow Federal statutes or

regulations, or delegations of authority from the Commissioner;

(2) Enter an order in the nature of a directed verdict;

(3) Compel settlement negotiations;

(4) Enjoin any act of the Commissioner or the Inspector General; or

(5) Review the exercise of discretion by the Office of the

Inspector General to seek to impose a civil monetary penalty or

assessment under Secs. 498.100 through 498.132.

Sec. 498.205 Ex parte contacts.

No party or person (except employees of the ALJ's office) will

communicate in any way with the ALJ on any matter at issue in a case,

unless on notice and opportunity for all parties to participate. This

provision does not prohibit a person or party from inquiring about the

status of a case or asking routine questions concerning administrative

functions or procedures.

Sec. 498.206 Prehearing conferences.

(a) The ALJ will schedule at least one prehearing conference, and

may schedule additional prehearing conferences as appropriate, upon

reasonable notice to the parties.

(b) The ALJ may use prehearing conferences to address 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 and admissions of fact as to the contents and

authenticity of documents and deadlines for challenges, if any, to the

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 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) The time and place for the hearing and dates for the exchange

of witness lists and of proposed exhibits;

(8) Discovery of documents as permitted by this part;

(9) Such other matters as may tend to encourage the fair, just, and

expeditious disposition of the proceedings; and

(10) Potential settlement of the case.

by the parties or ordered by the ALJ at a prehearing conference.

Sec. 498.207 Discovery.

(a) For the purpose of inspection and copying, a party may make a

request to another party for production of documents which are relevant

and material to the issues before the ALJ.

(b) Any other form of discovery, such as requests for admissions,

written interrogatories and depositions, is not authorized.

information, reports, answers, records, accounts, papers, memos, notes

and other data and documentary evidence. Nothing contained in this

section will be interpreted to require the creation of a document,

except that requested data stored in an electronic data storage system

will be produced in a form accessible to the requesting party.

(d)(1) A party who has been served with a request for production of

documents may file a motion for a protective order. The motion for

protective order shall describe the document or class of documents to

be protected, specify which of the grounds in Sec. 498.207(d)(2) are

being asserted, and explain how those grounds apply.

(2) The ALJ may grant a motion for a protective order if he or she

finds that the discovery sought:

(i) Is unduly costly or burdensome;

(ii) Will unduly delay the proceeding; or

(iii) Seeks privileged information.

(3) The burden of showing that discovery should be allowed is on

the party seeking discovery.

Sec. 498.208 Exchange of witness lists, witness statements and

exhibits.

(a) At least 15 days before the hearing, the parties shall

exchange:

(1) Witness lists;

(2) Copies of prior written statements of proposed witnesses; and

(3) Copies of proposed hearing exhibits, including copies of any

written statements that the party intends to offer in lieu of live

testimony in accordance with Sec. 498.216.

(b)(1) Failure to comply with the requirements of paragraph (a) of

this

[[Page 39924]]

section may result in the exclusion of evidence or testimony upon the

objection of the opposing party.

(2) When an objection is entered, the ALJ shall determine whether

good cause justified the failure to timely exchange the information

listed under paragraph (a) of this section. If good cause is not found,

the ALJ shall exclude from the party's case-in-chief:

(i) The testimony of any witness whose name does not appear on the

witness list, and

(ii) Any exhibit not provided to the opposing party as specified in

paragraph (a) of this section.

(3) If the ALJ finds that good cause exists, the ALJ shall

determine whether the admission of such evidence would cause

substantial prejudice to the objecting party due to the failure to

comply with paragraph (a) of this section. If the ALJ finds no

substantial prejudice, the evidence may be admitted.

(4) If the ALJ finds substantial prejudice, the ALJ may exclude the

evidence, or at his or her discretion, may postpone the hearing for

such time as is necessary for the objecting party to prepare and

respond to the evidence.

prehearing order pursuant to Sec. 498.206 (b)(3) and (c), documents

exchanged in accordance with paragraph (a) of this section will be

deemed authentic for the purpose of admissibility at the hearing.

Sec. 498.209 Subpoenas for attendance at hearing.

(a) A party wishing to procure the appearance and testimony of any

individual, whose appearance and testimony are relevant and material to

the presentation of a party's case at a hearing, may make a motion

requesting the ALJ to issue a subpoena.

(b) A subpoena requiring the attendance of an individual may also

require the individual to produce evidence at the hearing in accordance

with Sec. 498.207.

than 30 days before the date fixed for the hearing, unless otherwise

allowed by the ALJ for good cause shown. Such request will:

(1) Specify any evidence to be produced;

(2) Designate the witness(es); and

(3) Describe the address and location with sufficient particularity

to permit such witness(es) to be found.

(d) Within 20 days after the written motion requesting issuance of

a subpoena is served, any party may file an opposition or other

response.

(e) If the motion requesting issuance of a subpoena is granted, the

party seeking the subpoena will serve the subpoena by delivery to the

individual named, or by certified mail addressed to such individual at

his or her last dwelling place or principal place of business.

(f) The subpoena will specify the time and place at which the

witness is to appear and any evidence the witness is to produce.

(g) The individual to whom the subpoena is directed may file with

the ALJ a motion to quash the subpoena within 10 days after service.

(h) When a subpoena is served by a respondent on a particular

individual or particular office of the Office of the Inspector General,

the OIG may comply by designating any of its representatives to appear

and testify.

(i) In the case of contumacy by, or refusal to obey a subpoena duly

served upon any person, the exclusive remedy is specified in section

205(e) of the Social Security Act (42 U.S.C. 405(e)).

Sec. 498.210 Fees.

The party requesting a subpoena will pay the cost of the fees and

mileage of any witness subpoenaed in the amounts that would be payable

to a witness in a proceeding in United States District Court. A check

for witness fees and mileage will accompany the subpoena when served,

except that when a subpoena is issued on behalf of the Inspector

General, a check for witness fees and mileage need not accompany the

subpoena.

Sec. 498.211 Form, filing and service of papers.

(a) Form. (1) Unless the ALJ directs the parties to do otherwise,

documents filed with the ALJ will include an original and two copies.

(2) Every document filed in the proceeding will contain a caption

setting forth the title of the action, the case number, and a

designation of the pleading or paper.

(3) Every document will be signed by, and will contain the address

and telephone number of the party or the person on whose behalf the

document was filed, or his or her representative.

(4) Documents are considered filed when they are mailed.

(b) Service. A party filing a document with the ALJ will, at the

time of filing, serve a copy of such document on every other party.

Service upon any party of any document will be made by delivering a

copy, or placing a copy of the document in the United States mail,

postage prepaid and addressed, or with a private delivery service, to

the party's last known address. When a party is represented by an

attorney, service will be made upon such attorney. Proof of service

should accompany any document filed with the ALJ.

document by personal delivery or by mail, setting forth the manner of

service, will be proof of service.

Sec. 498.212 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 includes the last 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.

(b) When the period of time allowed is less than 7 days,

intermediate Saturdays, Sundays and legal holidays observed by the

Federal Government will be excluded from the computation.

mail, an additional 5 days will be added to the time permitted for any

response. This paragraph does not apply to requests for hearing under

Sec. 498.202.

Sec. 498.213 Motions.

(a) An application to the ALJ for an order or ruling will be by

motion. Motions will:

(1) State the relief sought, the authority relied upon and the

facts alleged; and

(2) Be filed with the ALJ and served on all other parties.

(b) Except for motions made during a prehearing conference or at a

hearing, all motions will be in writing.

time as may be fixed by the ALJ, any party may file a response to such

motion.

(d) The ALJ may not grant or deny a written motion before the time

for filing responses has expired, except upon consent of the parties or

following a hearing on the motion.

(e) The ALJ will make a reasonable effort to dispose of all

outstanding motions prior to the beginning of the hearing.

(f) There is no right to appeal to the DAB any interlocutory ruling

by the ALJ.

Sec. 498.214 Sanctions.

(a) The ALJ may sanction a person, including any party or attorney,

for:

(1) Failing to comply with an order or procedure;

(2) Failing to defend an action; or

[[Page 39925]]

(3) Misconduct that interferes with the speedy, orderly or fair

conduct of the hearing.

(b) Such sanctions will reasonably relate to the severity and

nature of the failure or misconduct. Such sanction may include--

(1) In the case of refusal to provide or permit discovery under the

terms of this part, drawing negative factual inferences or treating

such refusal as an admission by deeming the matter, or certain facts,

to be established;

(2) Prohibiting a party from introducing certain evidence or

otherwise supporting a particular claim or defense;

(3) Striking pleadings, in whole or in part;

(4) Staying the proceedings;

(5) Dismissal of the action; or

(6) Entering a decision by default.

section, the ALJ may:

(1) Order the party or attorney to pay attorney's fees and other

costs caused by the failure or misconduct; or

(2) Refuse to consider any motion or other action that is not filed

in a timely manner.

(d) In civil monetary penalty cases commenced under section 1129 of

the Act, the ALJ may also order the party or attorney who has engaged

in any of the acts described in paragraph (a) of this section to pay

attorney's fees and other costs caused by the failure or misconduct.

Sec. 498.215 The hearing and burden of proof.

(a) The ALJ will conduct a hearing on the record in order to

determine whether the respondent should be found liable under this

part.

(b) In civil monetary penalty cases under Secs. 498.100 through

498.132:

(1) The respondent has the burden of going forward and the burden

of persuasion with respect to affirmative defenses and any mitigating

circumstances; and

(2) The Inspector General has the burden of going forward and the

burden of persuasion with respect to all other issues.

the evidence.

(d) The hearing will be open to the public unless otherwise ordered

by the ALJ for good cause.

(e)(1) A hearing under this part is not limited to specific items

and information set forth in the notice letter to the respondent.

Subject to the 15-day requirement under Sec. 498.208, additional items

or information may be introduced by either party during its case-in-

chief, unless such information or items are inadmissible under

Sec. 498.217.

(2) After both parties have presented their cases, evidence may be

admitted on rebuttal as to those issues presented in the case-in-chief,

even if not previously exchanged in accordance with Sec. 498.208.

Sec. 498.216 Witnesses.

(a) Except as provided in paragraph (b) of this section, testimony

at the hearing will be given orally by witnesses under oath or

affirmation.

(b) At the discretion of the ALJ, testimony (other than expert

testimony) may be admitted in the form of a written statement. Any such

written statement must be provided to all other parties along with the

last known address of such witness, in a manner that allows sufficient

time for other parties to subpoena such witness for cross-examination

at the hearing. Prior written statements of witnesses proposed to

testify at the hearing will be exchanged as provided in Sec. 498.208.

order of witness direct and cross examination and evidence presentation

so as to:

(1) Make the examination and presentation effective for the

ascertainment of the truth;

(2) Avoid repetition or needless waste of time; and

(3) Protect witnesses from harassment or undue embarrassment.

(d) The ALJ may order witnesses excluded so that they cannot hear

the testimony of other witnesses. This does not authorize exclusion of:

(1) A party who is an individual;

(2) In the case of a party that is not an individual, an officer or

employee of the party appearing for the entity pro se or designated as

the party's representative; or

(3) An individual whose presence is shown by a party to be

essential to the presentation of its case, including an individual

engaged in assisting the attorney for the Inspector General.

Sec. 498.217 Evidence.

(a) The ALJ will determine the admissibility of evidence.

(b) Except as provided in this part, the ALJ will not be bound by

the Federal Rules of Evidence, but may be guided by them in ruling on

the admissibility of evidence.

value is substantially outweighed by the danger of unfair prejudice,

confusion of the issues, or by considerations of undue delay or

needless presentation of cumulative evidence.

(d) Although relevant, evidence must be excluded if it is

privileged under Federal law, unless the privilege is waived by a

party.

(e) Evidence concerning offers of compromise or settlement made in

this action will be inadmissible to the extent provided in Rule 408 of

the Federal Rules of Evidence.

(f)(1) Evidence of crimes, wrongs or acts other than those at issue

in the instant case is admissible in order to show motive, opportunity,

intent, knowledge, preparation, identity, lack of mistake, or existence

of a scheme.

(2) Such evidence is admissible regardless of whether the crimes,

wrongs or acts occurred during the statute of limitations period

applicable to the acts which constitute the basis for liability in the

case, and regardless of whether they were referenced in the IG's notice

sent in accordance with Sec. 498.109.

(g) The ALJ will permit the parties to introduce rebuttal witnesses

and evidence as to those issues raised in the parties' case-in-chief.

(h) All documents and other evidence offered or taken for the

record will be open to examination by all parties, unless otherwise

ordered by the ALJ for good cause.

Sec. 498.218 The record.

(a) The hearing shall be recorded and transcribed. Transcripts may

be obtained following the hearing from the ALJ.

(b) The transcript of testimony, exhibits and other evidence

admitted at the hearing, and all papers and requests filed in the

proceeding constitute the record for the decision by the ALJ.

reasonable fee) by any person, unless otherwise ordered by the ALJ for

good cause.

Sec. 498.219 Post-hearing briefs.

(a) Any party may file a post-hearing brief.

(b) The ALJ may require the parties to file post-hearing briefs and

may permit the parties to file reply briefs.

exceed 60 days from the date the parties receive the transcript of the

hearing or, if applicable, the stipulated record.

(d) The parties' briefs may be accompanied by proposed findings of

fact and conclusions of law.

Sec. 498.220 Initial decision.

(a) The ALJ will issue an initial decision, based only on the

record, which will contain findings of fact and conclusions of law.

[[Page 39926]]

(b) The ALJ may affirm, deny, increase, or reduce the penalties or

assessments proposed by the Inspector General.

60 days after the time for submission of post-hearing briefs or reply

briefs, if permitted, has expired. The decision will be accompanied by

a statement describing the right of any party to file a notice of

appeal with the DAB and instructions for now to file such appeal. If

the ALJ cannot issue an initial decision within the 60 days, the ALJ

will notify the parties of the reason for the delay and will set a new

deadline.

(d) Unless an appeal or request for extension pursuant to

Sec. 498.221(a) is filed with the DAB, the initial decision of the ALJ

becomes final and binding on the parties 30 days after the ALJ serves

the parties with a copy of the decision. If service is by mail, the

date of service will be deemed to be five days from the date of

mailing.

Sec. 498.221 Appeal to DAB.

(a) Any party may appeal the decision of the ALJ to the DAB by

filing a notice of appeal with the DAB within 30 days of the date of

service of the initial decision. The DAB may extend the initial 30-day

period for a period of time not to exceed 30 days if a party files with

the DAB a request for an extension within the initial 30-day period and

shows good cause.

(b) If a party files a timely notice of appeal with the DAB, the

ALJ will forward the record of the proceeding to the DAB.

specifying exceptions to the initial decision and reasons supporting

the exceptions, and identifying which finding of fact and conclusions

of law the party is taking exception to. Any party may file a brief in

opposition to exceptions, which may raise any relevant issue not

addressed in the exceptions, within 30 days of receiving the notice of

appeal and accompanying brief. The DAB may permit the parties to file

reply briefs.

(d) There is no right to appear personally before the DAB, or to

appeal to the DAB any interlocutory ruling by the ALJ.

(e) No party or person (except employees of the DAB) will

communicate in any way with members of the DAB on any matter at issue

in a case, unless on notice and opportunity for all parties to

participate. This provision does not prohibit a person or party from

inquiring about the status of a case or asking routine questions

concerning administrative functions or procedures.

(f) The DAB will not consider any issue not raised in the parties'

briefs, nor any issue in the briefs that could have been, but was not,

raised before the ALJ.

(g) If any party demonstrates to the satisfaction of the DAB that

additional evidence not presented at such hearing is relevant and

material and that there were reasonable grounds for the failure to

adduce such evidence at such hearing, the DAB may remand the matter to

the ALJ for consideration of such additional evidence.

(h) The DAB may remand a case to an ALJ for further proceedings, or

may issue a recommended decision to decline review or affirm, increase,

reduce, or reverse any penalty or assessment determined by the ALJ.

(i) When the DAB reviews a case, it will limit its review to

whether the ALJ's initial decision is supported by substantial evidence

on the whole record or contained error of law.

(j) Within 60 days after the time for submission of briefs or, if

permitted, reply briefs has expired, the DAB will issue to each party

to the appeal and to the Commissioner a copy of the DAB's recommended

decision and a statement describing the right of any respondent who is

found liable to seek judicial review upon a final determination.

Sec. 498.222 Final decision of the Commissioner.

(a) Except with respect to any penalty or assessment remanded to

the ALJ, the DAB's recommended decision, including a recommended

decision to decline review of the initial decision, shall become the

final decision of the Commissioner 60 days after the date on which the

DAB serves the parties to the appeal and the Commissioner with a copy

of the recommended decision, unless the Commissioner reverses or

modifies the DAB's recommended decision within that 60-day period. If

the Commissioner reverses or modifies the DAB's recommended decision,

the Commissioner's decision is final and binding on the parties. If

service is by mail, the date of service will be deemed to be five days

from the date of mailing.

(b) There shall be no right to personally appear before or submit

additional evidence, pleadings or briefs to the Commissioner.

(c)(1) Any petition for judicial review must be filed within 60

days after the parties are served with a copy of the final decision. If

service is by mail, the date of service will be deemed to be five days

from the date of mailing.

(2) In compliance with 28 U.S.C. 2112(a), a copy of any petition

for judicial review filed in any U.S. Court of Appeals challenging a

final action of the Commissioner will be sent by certified mail, return

receipt requested, to the SSA General Counsel. The petition copy will

be time-stamped by the clerk of the court when the original is filed

with the court.

(3) If the SSA General Counsel receives two or more petitions

within 10 days after the DAB issues its decision, the General Counsel

will notify the U.S. Judicial Panel on Multidistrict Litigation of any

petitions that were received within the 10-day period.

Sec. 498.223 Stay of initial decision.

(a) The filing of a respondent's request for review by the DAB will

automatically stay the effective date of the ALJ's decision.

(b)(1) After issuance of the final decision, the respondent may

file a request for stay of the effective date of any penalty or

assessment with the ALJ. The request must be accompanied by a copy of

the notice of appeal filed with the Federal court. The filing of such a

request will automatically act to stay the effective date of the

penalty or assessment until such time as the ALJ rules upon the

request.

(2) The ALJ may not grant a respondent's request for stay of any

penalty or assessment unless the respondent posts a bond or provides

other adequate security.

(3) The ALJ will rule upon a respondent's request for stay within

10 days of receipt.

Sec. 498.224 Harmless error.

No error in either the admission or the exclusion of evidence, and

no error or defect in any ruling or order or in any act done or omitted

by the ALJ or by any of the parties is ground for vacating, modifying

or otherwise disturbing an otherwise appropriate ruling or order or

act, unless refusal to take such action appears to the ALJ or the DAB

to be inconsistent with substantial justice. The ALJ and the DAB at

every stage of the proceeding will disregard any error or defect in the

proceeding that does not affect the substantial rights of the parties.

[FR Doc. 96-19425 Filed 7-30-96; 8:45 am]

BILLING CODE 4190-29-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.