45 CFR Parts 160 & 164 (CFR Annual Edition) head or supervisor having first-hand knowledge of the services performed on each research agreement. Estimates must show the alloca- tion of effort between organized research and all other hospital activities in terms of the percentage of total effort devoted to each of the broad functional categories referred to in (2) above. The estimate of effort spent on a research agreement may include a reason- able amount of time spent in activities con- tributing and intimately related to work under the agreement, such as preparing and delivering special lectures about specific as- pects of the ongoing research, writing re- search reports and articles, participating in appropriate research seminars, consulting with colleagues with respect to related re- search, and attending appropriate scientific meetings and conferences. The term ‘‘all other hospital activities’’ would include de- partmental research, administration, com- mittee work, and public services undertaken on behalf of the hospital. (5) Application of Budget Estimates Estimates determined before the perform- ance of services, such as budget estimates on a monthly, quarterly, or yearly basis do not qualify as estimates of effort s (5) Application of Budget Estimates Estimates determined before the perform- ance of services, such as budget estimates on a monthly, quarterly, or yearly basis do not qualify as estimates of effort spent. (6) Non-Hospital Professional Activities the A hospital must not alter or waive hos- pital-wide policies and practices dealing with the permissible extent of professional serv- ices over and above those traditionally per- formed without extra hospital compensation, unless such arrangements are specifically authorized by the sponsoring agency. Where hospital-wide policies do not adequately de- fine of permissible consultantships or other non-hospital activi- ties undertaken for extra pay, the Govern- ment may require that the effort of profes- sional staff working under research agree- ments be allocated as between (i) hospital activities, and (ii) non-hospital professional activities. If the sponsoring agency should consider the extent of non-hospital profes- sional effort excessive, appropriate arrange- ments governing compensation will be nego- tiated on a case by case basis. extent (7) Salary Rates for Part-Time Appointments Charges for work performed on government research by appropriate arrange- ments governing compensation will be nego- tiated on a case by case basis. extent (7) Salary Rates for Part-Time Appointments Charges for work performed on government research by staff members having only part- time appointments will be determined at a rate not in excess of that for which he is reg- ularly paid for his part-time staff assign- ment. h. Contingency provisions. Contributions to a contingency reserve or any similar provisions made for events the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening, are unallow- able. i. Depreciation and use allowances. (1) Hospitals may be compensated for the use of buildings, capital improvements and usable equipment on hand through deprecia- tion or use allowances. Depreciation is a charge to current operations which distrib- utes the cost of a tangible capital asset, less estimated residual value, over the estimated useful life of the asset in a systematic and logical manner. It does not involve a process of valuation. Useful life has reference to the prospective period of economic usefulness in the particular hospital’s operations as dis- tinguish atic and logical manner. It does not involve a process of valuation. Useful life has reference to the prospective period of economic usefulness in the particular hospital’s operations as dis- tinguished from physical life. Use allowances are the means of allowing compensation when depreciation or other equivalent costs are not considered. (2) Due consideration will be given to gov- ernment-furnished research facilities uti- lized by the institution when computing use allowances and/or depreciation if the govern- ment-furnished research facilities are mate- rial in amount. Computation of the use al- lowance and/or depreciation will exclude both the cost or any portion of the cost of grounds, buildings and equipment borne by or donated by the Federal Government, irre- spective of where title was originally vested or where it presently resides, and secondly, the cost of grounds. Capital expenditures for land improvements (paved areas, fences, streets, sidewalks, utility conduits, and similar improvements not already included in the cost of buildings) are allowable pro- vided the systematic amortization of such capital expenditures has been provided in the institution’s books of accoun lar improvements not already included in the cost of buildings) are allowable pro- vided the systematic amortization of such capital expenditures has been provided in the institution’s books of accounts, based on rea- sonable determinations of the probable use- ful lives of the individual items involved, and the share allocated to organized research is developed from the amount thus amortized for the base period involved. (3) Normal depreciation on a hospital’s plant, equipment, and other capital facili- ties, except as excluded by (4) below, is an al- lowable element of research cost provided that the amount thereof is computed: i. Upon the property cost basis used by the hospital for Federal Income Tax purposes (See section 167 of the Internal Revenue Code of 1954); or ii. In the case of non-profit or tax exempt organizations, upon a property cost basis which could have been used by the hospital for Federal Income Tax purposes, had such hospital been subject to the payment of in- come tax; and in either case iii. By the consistent application to the as- sets concerned of any generally accepted ac- counting method, and subject to the limita- tions of the Internal Revenue Code of 1 e tax; and in either case iii. By the consistent application to the as- sets concerned of any generally accepted ac- counting method, and subject to the limita- tions of the Internal Revenue Code of 1954 as amended, including— (a) The straight line method; (b) The declining balance method, using a rate not exceeding twice the rate which 395 Pt. 75, App. IX 45 CFR Subtitle A (10–1–24 Edition) would have been used had the annual allow- ance been computed under the method de- scribed in (a) above; (c) The sum of the years-digits method; and (d) Any other consistent method produc- tive of an annual allowance which, when added to all allowances for the period com- mencing with the use of the property and in- cluding the current year, does not during the first two-thirds of the useful life of the prop- erty exceed the total of such allowances which would have been used had such allow- ances been computed under the method de- scribed in (b) above. (4) Where the depreciation method is fol- lowed, adequate property records must be maintained. The period of useful service (service life) established in each case for usa- ble capital assets must be determined on a realistic basis which takes i ed, adequate property records must be maintained. The period of useful service (service life) established in each case for usa- ble capital assets must be determined on a realistic basis which takes into consider- ation such factors as type of construction, nature of the equipment used, technological developments in the particular research area, and the renewal and replacement poli- cies followed for the individual items or classes of assets involved. Where the depre- ciation method is introduced for application to assets acquired in prior years, the annual charges therefrom must not exceed the amounts that would have resulted had the depreciation method been in effect from the date of acquisition of such assets. (5) Depreciation on idle or excess facilities shall not be allowed except on such facilities as are reasonably necessary for standby pur- poses. (6) Where an institution elects to go on a depreciation basis for a particular class of assets, no depreciation, rental or use charge may be allowed on any such assets that would be viewed as fully depreciated; pro- vided, however, that reasonable use charges may be negotiated for any such assets if war- ranted after taking into c e may be allowed on any such assets that would be viewed as fully depreciated; pro- vided, however, that reasonable use charges may be negotiated for any such assets if war- ranted after taking into consideration the cost of the facility or item involved, the esti- mated useful life remaining at time of nego- tiation, the actual replacement policy fol- lowed in the light of service lives used for calculating depreciation, the effect of any increased maintenance charges or decreased efficiency due to age, and any other factors pertinent to the utilization of the facility or item for the purpose contemplated. (7) Hospitals which choose a depreciation allowance for assets purchased prior to 1966 based on a percentage of operating costs in lieu of normal depreciation for purposes of reimbursement under Pub. L. 89–97 (Medi- care) shall utilize that method for deter- mining depreciation applicable to organized research. The operating costs to be used are the lower of the hospital’s 1965 operating costs or the hospital’s current year’s allowable costs. The percent to be applied is 5 percent start- ing with the year 1966–67, with such percent- age being uniformity reduced by one-half perce ating costs or the hospital’s current year’s allowable costs. The percent to be applied is 5 percent start- ing with the year 1966–67, with such percent- age being uniformity reduced by one-half percent each succeeding year. The allowance based on operating costs is in addition to regular depreciation on assets acquired after 1965. However, the combined amount of such allowance on pre-1966 assets and the allow- ance for actual depreciation on assets ac- quired after 1965 may not exceed 6 percent of the hospital’s allowable cost for the current year. After total depreciation has been com- puted, allocation methods are used to deter- mine the share attributable to organized re- search. For purposes of this section, Operating Costs means the total costs incurred by the hospital in operating the institution, and in- cludes patient care, research, and other ac- tivities. Allowable Costs means operating costs less unallowable costs as defined in these principles; by the application of alloca- tion methods to the total amount of such al- lowable costs, the share attributable to Fed- erally-sponsored research is determined. A hospital which elects to use this proce- dure under Pub. L. 89–9 - tion methods to the total amount of such al- lowable costs, the share attributable to Fed- erally-sponsored research is determined. A hospital which elects to use this proce- dure under Pub. L. 89–97 and subsequently changes to an actual depreciation basis on pre-1966 assets in accordance with the option afforded under the Medicare program shall simultaneously change to an actual depre- ciation basis for organized research. Where the hospital desires to change to ac- tual depreciation but either has no historical cost records or has incomplete records, the determination of historical cost could be made through appropriate means involving expert consultation with the determination being subject to review and approval by the Department of Health and Human Services. (8) Where the use allowance method is fol- lowed, the use allowance for buildings and improvements will be computed at an annual rate not exceeding two percent of acquisition cost. The use allowance for equipment will be computed at an annual rate not exceeding six and two-thirds percent of acquisition cost of usable equipment in those cases where the institution maintains current records with respect to such equipment o puted at an annual rate not exceeding six and two-thirds percent of acquisition cost of usable equipment in those cases where the institution maintains current records with respect to such equipment on hand. Where the institution’s records reflect only the cost (actual or estimated) of the original com- plement of equipment, the use allowance will be computed at an annual rate not exceeding ten percent of such cost. Original com- plement for this purpose means the com- plement of equipment initially placed in buildings to perform the functions currently being performed in such buildings; however, where a permanent change in the function of a building takes place, a redetermination of the original complement of equipment may be made at that time to establish a new original complement. In those cases where no equipment records are maintained, the in- stitution will justify a reasonable estimate of the acquisition cost of usable equipment 396 Dept. of Health and Human Services Pt. 75, App. IX which may be used to compute the use allow- ance at an annual rate not exceeding six and two-thirds percent of such estimate. (9) Depreciation and/or use charges should usually be allocated to re . IX which may be used to compute the use allow- ance at an annual rate not exceeding six and two-thirds percent of such estimate. (9) Depreciation and/or use charges should usually be allocated to research and other activities as an indirect cost. j. Employee morale, health, and welfare costs and credits. The costs of house publications, health or first-aid benefits, recreational activities, em- ployees’ counseling services, and other ex- penses incurred in accordance with the hos- pital’s established practice or custom for the improvement of working conditions, em- ployer-employee relations, employee morale, and employee performance, are allowable. Such costs will be equitably apportioned to all activities of the hospital. Income gen- erated from any of these activities will be credited to the cost thereof unless such in- come has been irrevocably set over to em- ployee welfare organizations. k. Entertainment costs. Except as pertains to j. above, costs in- curred for amusement, social activities, en- tertainment, and any items relating thereto, such as meals, lodging, rentals, transpor- tation, and gratuities are unallowable. l. Equipment and other facilities. The cost of equipm al activities, en- tertainment, and any items relating thereto, such as meals, lodging, rentals, transpor- tation, and gratuities are unallowable. l. Equipment and other facilities. The cost of equipment or other facilities are allowable on a direct charge basis where such purchases are approved by the spon- soring agency concerned or provided for by the terms of the research agreement. m. Fines and penalties. Costs resulting from violations of, or fail- ure of the institution to comply with federal, state and local laws and regulations are un- allowable except when incurred as a result of compliance with specific provisions of the re- search agreement, or instructions in writing from the awarding agency. n. Insurance and indemnification. (1) Costs of insurance required or approved and maintained pursuant to the research agreement are allowable. (2) Costs of other insurance maintained by the hospital in connection with the general conduct of its activities are allowable sub- ject to the following limitations: (i) Types and extent and cost of coverage must be in accordance with sound institutional prac- tice; (ii) costs of insurance or of any con- tributions to any reserve covering e following limitations: (i) Types and extent and cost of coverage must be in accordance with sound institutional prac- tice; (ii) costs of insurance or of any con- tributions to any reserve covering the risk of loss of or damage to government owned prop- erty are unallowable except to the extent that the Government has specifically re- quired or approved such costs; and (iii) costs of insurance on the lives of officers or trust- ees are unallowable except where such insur- ance is part of an employee plan which is not unduly restricted. (3) Contributions to a reserve for an ap- proved self-insurance program are allowable to the extent that the types of coverage, ex- tent of coverage, and the rates and premiums would have been allowed had insurance been purchased to cover the risks. Such contribu- tions are subject to prior approval of the Government. (4) Actual losses which could have been covered by permissible insurance (through an approved self-insurance program or other- wise) are unallowable unless expressly pro- vided for in the research agreement, except that costs incurred because of losses not cov- ered under nominal deductible insurance coverage provided in keeping with unallowable unless expressly pro- vided for in the research agreement, except that costs incurred because of losses not cov- ered under nominal deductible insurance coverage provided in keeping with sound management practice as well as minor losses not covered by insurance such as spoilage, breakage and disappearance of small hand tools which occur in the ordinary course of operations are allowable. o. Interest, fund raising and investment man- agement costs. (1) Costs incurred for interest on borrowed capital or temporary use of endowment funds, however represented, are unallowable. (2) Costs of organized fund raising, includ- ing financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred solely to raise capital or obtain contributions are not allowable. (3) Costs of investment counsel and staff and similar expenses incurred solely to en- hance income from investments are not al- lowable. (4) Costs related to the physical custody and control of monies and securities are al- lowable. p. Labor relations costs. Costs incurred in maintaining satisfactory relations between the hospital and its em- ployees, including costs of labor manage- rol of monies and securities are al- lowable. p. Labor relations costs. Costs incurred in maintaining satisfactory relations between the hospital and its em- ployees, including costs of labor manage- ment committees, employees’ publications, and other related activities are allowable. q. Losses on research agreements or contracts. Any excess of costs over income under any agreement or contract of any nature is unal- lowable. This includes, but is not limited to, the hospital’s contributed portion by reason of cost-sharing agreements, under-recoveries through negotiation of flat amounts for overhead, or legal or administrative limita- tions. r. Maintenance and repair costs. (1) Costs necessary for the upkeep of prop- erty (including government property unless otherwise provided for), which neither add to the permanent value of the property nor ap- preciably prolong its intended life, but keep it in an efficient operating condition, are to be treated as follows: i. Normal maintenance and repair costs are allowable; ii. Extraordinary maintenance and repair costs are allowable, provided they are allo- cated to the periods to which applicable for purposes of determining research costs. repair costs are allowable; ii. Extraordinary maintenance and repair costs are allowable, provided they are allo- cated to the periods to which applicable for purposes of determining research costs. (2) Expenditures for plant and equipment, including rehabilitation thereof, which ac- cording to generally accepted accounting principles as applied under the hospital’s es- tablished policy, should be capitalized and 397 Pt. 75, App. IX 45 CFR Subtitle A (10–1–24 Edition) subjected to depreciation, are allowable only on a depreciation basis. s. Material costs. Costs incurred for purchased materials, supplies and fabricated parts directly or in- directly related to the research agreement, are allowable. Purchases made specifically for the research agreement should be charged thereto at their actual prices after deducting all cash discounts, trade dis- counts, rebates, and allowances received by the institution. Withdrawals from general stores or stockrooms should be charged at their cost under any recognized method of pricing stores withdrawals conforming to sound accounting practices consistently fol- lowed by the hospital. Incoming transpor- tation charges are a proper part of materi nder any recognized method of pricing stores withdrawals conforming to sound accounting practices consistently fol- lowed by the hospital. Incoming transpor- tation charges are a proper part of material cost. Direct material cost should include only the materials and supplies actually used for the performance of the research agreement, and due credit should be given for any excess materials retained or returned to vendors. Due credit should be given for all proceeds or value received for any scrap re- sulting from work under the research agree- ment. Where government donated or fur- nished material is used in performing the re- search agreement, such material will be used without charge. t. Memberships, subscriptions and profes- sional activity costs. (1) Costs of the hospital’s membership in civic, business, technical and professional or- ganizations are allowable. (2) Costs of the hospital’s subscriptions to civic, business, professional and technical periodicals are allowable. (3) Costs of meetings and conferences, when the primary purpose is the dissemina- tion of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, and other osts of meetings and conferences, when the primary purpose is the dissemina- tion of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, and other items inci- dental to such meetings or conferences. u. Organization costs. Expenditures such as incorporation fees, attorneys’ fees, accountants’ fees, brokers’ fees, fees to promoters and organizers in con- nection with (1) organization or reorganiza- tion of a hospital, or (2) raising capital, are unallowable. v. Other business expenses. Included in this item are such recurring expenses as registry and transfer charges re- sulting from changes in ownership of securi- ties issued by the hospital, cost of share- holders meetings preparation and publica- tion of reports to shareholders, preparation and submission of required reports and forms to taxing and other regulatory bodies, and incidental costs of directors and committee meetings. The above and similar costs are al- lowable when allocated on an equitable basis. w. Patient care. The cost of routine and ancillary or special services to research patients is an allowable direct cost of research agreements. (1) Routine services shall ocated on an equitable basis. w. Patient care. The cost of routine and ancillary or special services to research patients is an allowable direct cost of research agreements. (1) Routine services shall include the costs of the regular room, dietary and nursing services, minor medical and surgical supplies and the use of equipment and facilities for which a separate charge is not customarily made. (2) Ancillary or special services are the services for which charges are customarily made in addition to routine services, such as operating rooms, anesthesia, laboratory, BMR–EKG, etc. (3) Patient care, whether expressed as a rate or an amount, shall be computed in a manner consistent with the procedures used to determine reimbursable costs under Pub. L. 89–97 (Medicare Program) as defined under the ‘‘Principles of Reimbursement For Pro- vider Costs’’ published by the Social Secu- rity Administration of the Department of Health and Human Services. The allow- ability of specific categories of cost shall be in accordance with those principles rather than the principles for research contained herein. In the absence of participation in the Medicare program by a hospital, all ref- erences to th ost shall be in accordance with those principles rather than the principles for research contained herein. In the absence of participation in the Medicare program by a hospital, all ref- erences to the Medicare program in these principles shall be construed as meaning the Medicaid program. i. Once costs have been recognized as al- lowable, the indirect costs or general service center’s cost shall be allocated (stepped- down) to special service centers, and all pa- tient and nonpatient costs centers based upon actual services received or benefiting these centers. ii. After allocation, routine and ancillary costs shall be apportioned to scatter-bed re- search patients on the same basis as is used to apportion costs to Medicare patients, i.e. using either the departmental method or the combination method, as those methods are defined by the Social Security Administra- tion; except that final settlement shall be on a grant-by-grant basis. However, to the ex- tent that the Social Security Administration has recognized any other method of cost ap- portionment, that method generally shall also be recognized as applicable to the deter- mination of research patient care costs. iii. A cost c dministration has recognized any other method of cost ap- portionment, that method generally shall also be recognized as applicable to the deter- mination of research patient care costs. iii. A cost center must be established on Medicare reimbursement forms for each dis- crete-bed unit grant award received by a hos- pital. Routine costs should be stepped-down to this line item(s) in the normal course of stepping-down costs under Medicare/Med- icaid requirements. However, in stepping- down routine costs, consideration must be given to preventing a step-down of those costs to discrete-bed unit line items that have already been paid for directly by the grant, such as bedside nursing costs. Ancil- lary costs allocable to research discrete-bed units shall be determined and proposed in ac- cordance with paragraph w.(3).ii. 398 Dept. of Health and Human Services Pt. 75, App. IX (4) Where federally sponsored research pro- grams provide specifically for the direct re- imbursement of nursing, dietary, and other services, appropriate adjustment must be made to patient care costs to preclude dupli- cation and/or misallocation of costs. x. Patent costs. Costs of preparing disclosures, reports a etary, and other services, appropriate adjustment must be made to patient care costs to preclude dupli- cation and/or misallocation of costs. x. Patent costs. Costs of preparing disclosures, reports and other documents required by the research agreement and of searching the art to the ex- tent necessary to make such invention dis- closures are allowable. In accordance with the clauses of the research agreement relat- ing to patents, costs of preparing documents and any other patent costs, in connection with the filing of a patent application where title is conveyed to the Government, are al- lowable. (See also paragraph I.2.jj.) y. Pension plan costs. Costs of the hospital’s pension plan which are incurred in accordance with the estab- lished policies of the institution are allow- able, provided such policies meet the test of reasonableness and the methods of cost allo- cation are not discriminatory, and provided appropriate adjustments are made for credits or gains arising out of normal and abnormal employee turnover or any other contin- gencies that can result in forfeitures by em- ployees which inure to the benefit of the hos- pital. z. Plan security costs. Necessary expenses in al and abnormal employee turnover or any other contin- gencies that can result in forfeitures by em- ployees which inure to the benefit of the hos- pital. z. Plan security costs. Necessary expenses incurred to comply with government security requirements in- cluding wages, uniforms and equipment of personnel engaged in plant protection are al- lowable. aa. Pre-research agreement costs. Costs incurred prior to the effective date of the research agreement, whether or not they would have been allowable thereunder if in- curred after such date, are unallowable un- less specifically set forth and identified in the research agreement. bb. Professional services costs. (1) Costs of professional services rendered by the members of a particular profession who are not employees of the hospital are al- lowable subject to (2) and (3) below when rea- sonable in relation to the services rendered and when not contingent upon recovery of the costs from the Government. Retainer fees to be allowable must be reasonably sup- ported by evidence of services rendered. (2) Factors to be considered in determining the allowability of costs in a particular case include (i) the past pattern of such costs, part be reasonably sup- ported by evidence of services rendered. (2) Factors to be considered in determining the allowability of costs in a particular case include (i) the past pattern of such costs, particularly in the years prior to the award of government research agreements on the institution’s total activity; (ii) the nature and scope of managerial services expected of the institution’s own organizations; and (iii) whether the proportion of government work to the hospital’s total activity is such as to influence the institution in favor of incur- ring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under gov- ernment research agreements. (3) Costs of legal, accounting and con- sulting services, and related costs incurred in connection with organization and reorga- nization or the prosecution of claims against the Government are unallowable. Costs of legal, accounting and consulting services, and related costs incurred in connection with patent infringement litigation are unal- lowable unless otherwise provided for in the research agreement. cc. Profits and losses on disposition of plant equipment, or other asse red in connection with patent infringement litigation are unal- lowable unless otherwise provided for in the research agreement. cc. Profits and losses on disposition of plant equipment, or other assets. Profits or losses of any nature arising from the sale or exchange of plant, equipment, or other capital assets, including sales or ex- change of either short- or long-term invest- ments, shall be excluded in computing re- search agreement costs. dd. Proposal costs. Proposal costs are the costs of preparing bids or proposals on potential government and non-government research agreements or projects, including the development of tech- nical data and cost data necessary to support the institution’s bids or proposals. Proposal costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as indi- rect costs and allocated currently to all ac- tivities of the institution, and no proposal costs of past accounting periods will be allo- cable in the current period to the govern- ment research agreement. However, the in- stitution’s established practices may be to treat proposal costs by some other recog- nized method. Regardless of cable in the current period to the govern- ment research agreement. However, the in- stitution’s established practices may be to treat proposal costs by some other recog- nized method. Regardless of the methods used, the results obtained may be accepted only if found to be reasonable and equitable. ee. Public information services costs. Costs of news releases pertaining to spe- cific research or scientific accomplishment are unallowable unless specifically author- ized by the sponsoring agency. ff. Rearrangement and alteration costs. Costs incurred for ordinary or normal rear- rangement and alteration of facilities are al- lowable. Special rearrangement and alter- ation costs incurred specifically for a project are allowable only as a direct charge when such work has been approved in advance by the sponsoring agency concerned. gg. Reconversion costs. Costs incurred in the restoration or reha- bilitation of the institution’s facilities to ap- proximately the same condition existing im- mediately prior to commencement of govern- ment research agreement work, fair wear and tear excepted, are allowable. hh. Recruiting costs. (1) Subject to (2), (3), and (4) below, and provided that th mediately prior to commencement of govern- ment research agreement work, fair wear and tear excepted, are allowable. hh. Recruiting costs. (1) Subject to (2), (3), and (4) below, and provided that the size of the staff recruited and maintained is in keeping with workload requirements, costs of ‘‘help wanted’’ adver- tising, operating costs of an employment of- fice necessary to secure and maintain an 399 Pt. 75, App. IX 45 CFR Subtitle A (10–1–24 Edition) adequate staff, costs of operating an aptitude and educational testing program, travel costs of employees while engaged in recruit- ing personnel, travel costs of applicants for interviews for prospective employment, and relocation costs incurred incident to recruit- ment of new employees are allowable to the extent that such costs are incurred pursuant to a well-managed recruitment program. Where an institution uses employment agen- cies, costs not in excess of standard commer- cial rates for such services are allowable. (2) In publications, costs of help wanted ad- vertising that includes color, includes adver- tising material for other than recruitment purposes, or is excessive in size (taking into consideration for which inte ications, costs of help wanted ad- vertising that includes color, includes adver- tising material for other than recruitment purposes, or is excessive in size (taking into consideration for which intended and normal institutional practices in this respect) are unallowable. recruitment purposes (3) Costs of help wanted advertising, spe- cial emoluments; fringe benefits, and salary allowances incurred to attract professional personnel from other institutions that do not meet the test of reasonableness or do not conform with the established practices of the institution are unallowable. (4) Where relocation costs incurred inci- dent to recruitment of a new employee have been allowed either as an allocable direct or indirect cost, and the newly hired employee resigns for reasons within his control within twelve months after hire, the institution will be required to refund or credit such reloca- tions costs as were charged to the Govern- ment. ii. Rental costs (including sale and lease-back of facilities). (1) Rental costs of land, building, and equipment and other personal property are allowable if the rates are reasonable in light of such factors as rental costs of comparable facilitie of facilities). (1) Rental costs of land, building, and equipment and other personal property are allowable if the rates are reasonable in light of such factors as rental costs of comparable facilities and market conditions in the area, the type, life expectancy, condition, and value of the facilities leased, options avail- able, and other provisions of the rental agreement. Application of these factors, in situations where rentals are extensively used, may involve among other consider- ations comparison of rental costs with the amount which the hospital would have re- ceived had it owned the facilities. (2) Charges in the nature of rent between organizations having a legal or other affili- ation or arrangement such as hospitals, med- ical schools, foundations, etc., are allowable to the extent such charges do not exceed the normal costs of ownership such as deprecia- tion, taxes, insurance, and maintenance, pro- vided that no part of such costs shall dupli- cate any other allowed costs. (3) Unless otherwise specifically provided in the agreement, rental costs specified in sale and lease-back agreements incurred by hospitals through selling plant facilities to investment organizati s. (3) Unless otherwise specifically provided in the agreement, rental costs specified in sale and lease-back agreements incurred by hospitals through selling plant facilities to investment organizations such as insurance companies or to private investors, and con- currently leasing back the same facilities are allowable only to the extent that such rentals do not exceed the amount which the hospital would have received had it retained legal title to the facilities. jj. Royalties and other costs for use of pat- ents. Royalties on a patent or amortization of the cost of acquiring a patent or invention or rights thereto necessary for the proper per- formance of the research agreement and ap- plicable to tasks or processes thereunder are allowable unless the Government has a li- cense or the right to free use of the patent, the patent has been adjudicated to be in- valid, or has been administratively deter- mined to be invalid, the patent is considered to be unenforceable, or the patent has ex- pired. kk. Severance pay. (1) Severance pay is compensation in addi- tion to regular salaries and wages which is paid by a hospital to employees whose serv- ices are being terminated. Costs of as ex- pired. kk. Severance pay. (1) Severance pay is compensation in addi- tion to regular salaries and wages which is paid by a hospital to employees whose serv- ices are being terminated. Costs of severance pay are allowable only to the extent that such payments are required by law, by em- ployer-employee agreement, by established policy that constitutes in effect an implied agreement on the institution’s part, or by circumstances of the particular employment. (2) Severance payments that are due to normal, recurring turnover, and which other- wise meet the conditions of (a) above may be allowed provided the actual costs of such severance payments are regarded as expenses applicable to the current fiscal year and are equitably distributed among the institu- tion’s activities during that period. (3) Severance payments that are due to ab- normal or mass terminations are of such conjectural nature that allowability must be determined on a case-by-case basis. However, the Government recognizes its obligation to participate to the extent of its fair share in any specific payment. ll. Specialized service facilities operated by a hospital. (1) The costs of institutional services in- vol gnizes its obligation to participate to the extent of its fair share in any specific payment. ll. Specialized service facilities operated by a hospital. (1) The costs of institutional services in- volving the use of highly complex and spe- cialized facilities such as electronic com- puters and reactors are allowable provided the charges therefor meet the conditions of (2) or (3) below, and otherwise take into ac- count any items of income or federal financ- ing that qualify as applicable credits under paragraph C.5. (2) The costs of such hospital services nor- mally will be charged directly to applicable research agreements based on actual usage or occupancy of the facilities at rates that (i) are designed to recover only actual costs of providing such services, and (ii) are applied on a nondiscriminatory basis as between or- ganized research and other work of the hos- pital including commercial or accommoda- tion sales and usage by the hospital for in- ternal purposes. This would include use of such facilities as radiology, laboratories, 400 Dept. of Health and Human Services Pt. 75, App. IX maintenance men used for a special purpose, medical art, photography, etc. (3) In the abse ude use of such facilities as radiology, laboratories, 400 Dept. of Health and Human Services Pt. 75, App. IX maintenance men used for a special purpose, medical art, photography, etc. (3) In the absence of an acceptable arrange- ment for direct costing as provided in (2) above, the costs incurred for such institu- tional services may be assigned to research agreements as indirect costs, provided the methods used achieve substantially the same results. Such arrangements should be worked out in coordination with all govern- ment users of the facilities in order to assure equitable distribution of the indirect costs. mm. Special administrative costs. Costs incurred for general public relations activities, catalogs, alumni activities, and similar services are unallowable. nn. Staff and/or employee benefits. (1) Staff and/or employee benefits in the form of regular compensation paid to em- ployees during periods of authorized ab- sences from the job such as for annual leave, sick leave, military leave and the like are al- lowable provided such costs are absorbed by all hospital activities including organized re- search in proportion to the relative amount of time or effort actually dev litary leave and the like are al- lowable provided such costs are absorbed by all hospital activities including organized re- search in proportion to the relative amount of time or effort actually devoted to each. (2) Staff benefits in the form of employer contributions or expenses for Social Security taxes, employee insurance, Workmen’s Com- pensation insurance, the Pension Plan (see paragraph I.2.y.), hospital costs or remission of hospital charges to the extent of costs for individual employees or their families, and the like are allowable provided such benefits are granted in accordance with established hospital policies, and provided such con- tributions and other expenses whether treat- ed as indirect costs or an increment of direct labor costs are distributed to particular re- search agreements and other activities in a manner consistent with the pattern of bene- fits accruing to the individuals or groups of employees whose salaries and wages are chargeable to such research agreements and other activities. oo. Taxes. (1) In general, taxes which the hospital is required to pay and which are paid or ac- crued in accordance with generally accepted accounting principles, and pay ements and other activities. oo. Taxes. (1) In general, taxes which the hospital is required to pay and which are paid or ac- crued in accordance with generally accepted accounting principles, and payments made to local governments in lieu of taxes which are commensurate with the local government services received are allowable except for (i) taxes from which exemptions are available to the hospital directly or which are avail- able to the hospital based on an exemption afforded the Government and in the latter case when the sponsoring agency makes available the necessary exemption certifi- cates, (ii) special assessments on land which represent capital improvements, and (iii) Federal Income Taxes. (2) Any refund of taxes, interest, or pen- alties, and any payment to the hospital of interest thereon attributable to taxes, inter- est or penalties, which were allowed as re- search agreement costs will be credited or paid to the Government in the manner di- rected by the Government provided any in- terest actually paid or credited to a hospital incident to a refund of tax, interest, and pen- alty will be paid or credited to the Govern- ment only to the extent that such interest accrue ed any in- terest actually paid or credited to a hospital incident to a refund of tax, interest, and pen- alty will be paid or credited to the Govern- ment only to the extent that such interest accrued over the period during which the hospital had been reimbursed by the Govern- ment for the taxes, interest, and penalties. pp. Transportation costs. Costs incurred for inbound freight, express, cartage, postage and other transportation services relating either to goods purchased, in process, or delivered are allowable. When such costs can readily be identified with the items involved, they may be charged directly as transportation costs or added to the cost of such items. Where identification with the material received cannot readily be made, inbound transportation costs may be charged to the appropriate indirect cost accounts if the institution follows a consistent equitable procedure in this respect. Outbound freight, if reimbursable under the terms of the re- search agreement, should be treated as a di- rect cost. qq. Travel costs. (1) Travel costs are the expenses for trans- portation, lodging, subsistence, and related items incurred by employees who are in trav- el status on offi e treated as a di- rect cost. qq. Travel costs. (1) Travel costs are the expenses for trans- portation, lodging, subsistence, and related items incurred by employees who are in trav- el status on official business of the hospital. Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two provided the method used is ap- plied to an entire trip and not to selected days of the trip, and results in charges con- sistent with those normally allowed by the institution in its regular operations. (2) Travel costs are allowable subject to (3) and (4) below when they are directly attrib- utable to specific work under a research agreement or when they are incurred in the normal course of administration of the hos- pital or a department or research program thereof. (3) The difference in cost between first class air accommodations and less than first class air accommodations is unallowable ex- cept when less than first class air accom- modations are not reasonably available to meet necessary mission requirements such as where less than first class accommoda- tions would (i) require circuitous routing, (ii) requir st class air accom- modations are not reasonably available to meet necessary mission requirements such as where less than first class accommoda- tions would (i) require circuitous routing, (ii) require travel during unreasonable hours, (iii) greatly increase the duration of the flight, (iv) result in additional costs which would offset the transportation savings, or (v) offer accommodations which are not rea- sonably adequate for the medical needs of the traveler. (4) Costs of personnel movements of a spe- cial or mass nature are allowable only when authorized or approved in writing by the sponsoring agency or its authorized rep- resentative. rr. Termination costs applicable to contracts. 401 Pt. 75, App. X 45 CFR Subtitle A (10–1–24 Edition) (1) Contract terminations generally give rise to the incurrence of costs or to the need for special treatment of costs which would not have arisen had the contract not been terminated. Items peculiar to termination are set forth below. They are to be used in conjunction with all other provisions of these principles in the case of contract ter- mination. (2) The cost of common items of material reasonably usable on the hospital’s other work wil be used in conjunction with all other provisions of these principles in the case of contract ter- mination. (2) The cost of common items of material reasonably usable on the hospital’s other work will not be allowable unless the hos- pital submits evidence that it could not re- tain such items at cost without sustaining a loss. In deciding whether such items are rea- sonably usable on other work of the institu- tion, consideration should be given to the hospital’s plans for current scheduled work or activities including other research agree- ments. Contemporaneous purchases of com- mon items by the hospital will be regarded as evidence that such items are reasonably usable on the hospital’s other work. Any ac- ceptance of common items as allowable to the terminated portion of the contract should be limited to the extent that the quantities of such items on hand, in transit, and on order are in excess of the reasonable quantitative requirement of other work. (3) If in a particular case, despite all rea- sonable efforts by the hospital, certain costs cannot be discontinued immediately after the effective date of termination, such costs are generally allowable within the limita- tion , despite all rea- sonable efforts by the hospital, certain costs cannot be discontinued immediately after the effective date of termination, such costs are generally allowable within the limita- tions set forth in these principles, except that any such costs continuing after termi- nation due to the negligent or willful failure of the hospital to discontinue such costs will be considered unacceptable. (4) Loss of useful value of special tooling and special machinery and equipment is gen- erally allowable, provided (i) such special tooling, machinery or equipment is not rea- sonably capable of use in the other work of the hospital; (ii) the interest of the Govern- ment is protected by transfer of title or by other means deemed appropriate by the con- tracting officer; and (iii) the loss of useful value as to any one terminated contract is limited to that portion of the acquisition cost which bears the same ratio to the total acquisition cost as the terminated portion of the contract bears to the entire terminated contract and other government contracts for which the special tooling, special machinery or equipment was acquired. (5) Rental costs under unexpired leases are generally a ars to the entire terminated contract and other government contracts for which the special tooling, special machinery or equipment was acquired. (5) Rental costs under unexpired leases are generally allowable where clearly shown to have been reasonably necessary for the per- formance of the terminated contract, less the residual value of such leases, if (i) the amount of such rental claimed does not ex- ceed the reasonable use value of the property leased for the period of the contract and such further period as may be reasonable; and (ii) the hospital makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease. There also may be in- cluded the cost of alterations of such leased property, provided such alterations were nec- essary for the performance of the contract and of reasonable restoration required by the provisions of the lease. (6) Settlement expenses including the fol- lowing are generally allowable: (i) Account- ing, legal, clerical, and similar costs reason- ably necessary for the preparation and pres- entation to contracting officers of settle- ment claims and supporting data with re- spect to the terminated portion of the con- and similar costs reason- ably necessary for the preparation and pres- entation to contracting officers of settle- ment claims and supporting data with re- spect to the terminated portion of the con- tract and the termination and settlement of subcontracts; and (ii) reasonable costs for the storage, transportation, protection, and disposition of property provided by the Gov- ernment or acquired or produced by the in- stitution for the contract. (7) Subcontractor claims including the al- locable portion of claims which are common to the contract and to other work of the con- tractor are generally allowable. ss. Voluntary services. The value of voluntary services provided by sisters or other members of religious or- ders is allowable provided that amounts do not exceed that paid other employees for similar work. Such amounts must be identi- fiable in the records of the hospital as a legal obligation of the hospital. This may be re- flected by an agreement between the reli- gious order and the hospital supported by evidence of payments to the order. APPENDIX X TO PART 75—DATA COLLECTION FORM (SF–SAC) The Data Collection Form SF–SAC is available on the FAC Web site. [79 FR 75889, Dec. d the hospital supported by evidence of payments to the order. APPENDIX X TO PART 75—DATA COLLECTION FORM (SF–SAC) The Data Collection Form SF–SAC is available on the FAC Web site. [79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016] APPENDIX XI TO PART 75—COMPLIANCE SUPPLEMENT The compliance supplement is available on the OMB Web site: (e.g., for 2013 here: http:// www.whitehouse.gov/omb/circulars/) [79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016] APPENDIX XII TO PART 75—AWARD TERM AND CONDITIONS FOR RECIPIENT IN- TEGRITY AND PERFORMANCE MAT- TERS A. REPORTING OF MATTERS RELATED TO RECIPIENT INTEGRITY AND PERFORMANCE 1. General Reporting Requirement If the total value of your currently active grants, cooperative agreements, and procure- ment contracts from all Federal awarding agencies exceeds $10,000,000 for any period of time during the period of performance of this 402 Dept. of Health and Human Services Pt. 77 Federal award, then you as the recipient dur- ing that period of time must maintain the currency of information reported to the Sys- tem for Award Management (SAM) that is made available in the designated integrity and performance sys ipient dur- ing that period of time must maintain the currency of information reported to the Sys- tem for Award Management (SAM) that is made available in the designated integrity and performance system (currently the Fed- eral Awardee Performance and Integrity In- formation System (FAPIIS)) about civil, criminal, or administrative proceedings de- scribed in paragraph 2 of this award term and condition. This is a statutory require- ment under section 872 of Public Law 110–417, as amended (41 U.S.C. 2313). As required by section 3010 of Public Law 111–212, all infor- mation posted in the designated integrity and performance system on or after April 15, 2011, except past performance reviews re- quired for Federal procurement contracts, will be publicly available. 2. Proceedings About Which You Must Report to do so under Federal procurement con- tracts that you were awarded. 4. Reporting Frequency During any period of time when you are subject to this requirement in paragraph 1 of this award term and condition, you must re- port proceedings information through SAM for the most recent five year period, either to report new information about any pro- ceeding(s) that you have not report ward term and condition, you must re- port proceedings information through SAM for the most recent five year period, either to report new information about any pro- ceeding(s) that you have not reported pre- viously or affirm that there is no new infor- mation to report. Recipients that have Fed- eral contract, grant, and cooperative agree- ment awards with a cumulative total value greater than $10,000,000 must disclose semi- annually any information about the crimi- nal, civil, and administrative proceedings. 5. Definitions For purposes of this award term and condi- Submit the information required about tion: each proceeding that: a. Is in connection with the award or per- formance of a grant, cooperative agreement, or procurement contract from the Federal Government; b. Reached its final disposition during the most recent five year period; and c. If one of the following: (1) A criminal proceeding that resulted in a conviction, as defined in paragraph 5 of this award term and condition; (2) A civil proceeding that resulted in a finding of fault and liability and payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more; (3) An administrative pro n; (2) A civil proceeding that resulted in a finding of fault and liability and payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more; (3) An administrative proceeding, as de- fined in paragraph 5 of this award term and condition, that resulted in a finding of fault and liability and your payment of either a monetary fine or penalty of $5,000 or more or reimbursement, restitution, or damages in excess of $100,000; or (4) Any other criminal, civil, or adminis- trative proceeding if: (i) It could have led to an outcome de- scribed in paragraph 2.c.(1), (2), or (3) of this award term and condition; (ii) It had a different disposition arrived at by consent or compromise with an acknowl- edgement of fault on your part; and (iii) The requirement in this award term and condition to disclose information about the proceeding does not conflict with appli- cable laws and regulations. 3. Reporting Procedures Enter in the SAM Entity Management area the information that SAM requires about each proceeding described in paragraph 2 of this award term and condition. You do not need to submit the information a second time under assistance awards that you re- ce ation that SAM requires about each proceeding described in paragraph 2 of this award term and condition. You do not need to submit the information a second time under assistance awards that you re- ceived if you already provided the informa- tion through SAM because you were required a. Administrative proceeding means a non- judicial process that is adjudicatory in na- ture in order to make a determination of fault or liability (e.g., Securities and Ex- change Commission Administrative pro- ceedings, Civilian Board of Contract Appeals proceedings, and Armed Services Board of Contract Appeals proceedings). This includes proceedings at the Federal and State level but only in connection with performance of a Federal contract or grant. It does not in- clude audits, site visits, corrective plans, or inspection of deliverables. b. Conviction, for purposes of this award term and condition, means a judgment or conviction of a criminal offense by any court of competent jurisdiction, whether entered upon a verdict or a plea, and includes a con- viction entered upon a plea of nolo contendere. c. Total value of currently active grants, cooperative agreements, and procurement contracts includes ered upon a verdict or a plea, and includes a con- viction entered upon a plea of nolo contendere. c. Total value of currently active grants, cooperative agreements, and procurement contracts includes— (1) Only the Federal share of the funding under any Federal award with a recipient cost share or match; and (2) The value of all expected funding incre- ments under a Federal award and options, even if not yet exercised B. [Reserved] [81 FR 3019, Jan. 20, 2016] PART 77—REMEDIAL ACTIONS AP- PLICABLE TO LETTER OF CREDIT ADMINISTRATION Sec. 77.1 Purpose. 77.2 Scope. 77.3 Conditions that may give rise to reme- dial actions. 77.4 Remedial actions. 77.5 Remedial action procedures. 403 § 77.1 45 CFR Subtitle A (10–1–24 Edition) 77.6 Emergency procedures. AUTHORITY: 5 U.S.C. 301. SOURCE: 50 FR 781, Jan. 7, 1985, unless oth- erwise noted. § 77.1 Purpose. Letters of credit with the United States Treasury, issued by the Depart- ment to States or other grantees and contractors, are a convenient means for disbursing Federal funds to recipi- ents of grant awards or contracts (re- cipient organizations) under the pro- grams of this and other Executive De- partments. The sound and efficient op- erat s for disbursing Federal funds to recipi- ents of grant awards or contracts (re- cipient organizations) under the pro- grams of this and other Executive De- partments. The sound and efficient op- eration of the letter-of-credit system is dependent in large part upon the hon- esty, good faith, and responsible finan- cial management of recipient organiza- tions that receive funds pursuant to letters of credit. This part sets forth conditions that may prompt the De- partment to seek remedial action against a recipient organization oper- ating under a letter of credit and the procedures that will be used to reach a final decision regarding the taking of remedial actions against a recipient or- ganization. § 77.2 Scope. The regulations in this part apply to all recipient organizations under any program administered by the Depart- ment through which the organization receives Federal funds under a letter of credit. § 77.3 Conditions that may give rise to remedial actions. If the Department determines that any of the following conditions is present in a recipient organization’s administration of a letter of credit, it may take remedial actions against the organization: (a) A recipient orga termines that any of the following conditions is present in a recipient organization’s administration of a letter of credit, it may take remedial actions against the organization: (a) A recipient organization draws Federal funds through its letter of credit in excess of the aggregate grant award or contract authority currently available to it. (b) A recipient organization draws Federal funds for a particular program in excess of currently available grant award or contract authority for that program, even though the organization may not have exceeded its aggregate grant award or contract authority. (c) A recipient organization fails to file timely all reports and other data required by the Department in connec- tion with its grant awards, contracts, or letter of credit. (d) A recipient organization accumu- lates, through its letter of credit or otherwise, excess amounts of Federal funds relative to its actual and imme- diate disbursement requirements. (e) A recipient organization’s cash management system fails to comply with generally accepted accounting principles or Departmental regulations or demonstrates irregularities, mis- representations, fraud, or abuse in its operation. § 7 management system fails to comply with generally accepted accounting principles or Departmental regulations or demonstrates irregularities, mis- representations, fraud, or abuse in its operation. § 77.4 Remedial actions. If, after the conclusion of the proce- dures set forth in § 77.5 or § 77.6 the De- partment finds that one or more of the conditions set forth in § 77.3 is or has been present, the Department may take the following remedial actions against a recipient organization’s use of its letter of credit: (a) The Department may place spe- cial limits, restrictions, or controls upon the recipient organization’s use of its letter of credit. (b) The Department may require more frequent or more detailed finan- cial reporting from the recipient orga- nization. (c) The Department may suspend, re- duce, or terminate the recipient orga- nization’s use of its letter of credit. § 77.5 Remedial action procedures. Except as provided in § 77.6, the De- partment will use the following proce- dures whenever it seeks the remedial action specified in § 77.4. (a) Notice. Prior to taking remedial action, the Department will provide the recipient organization written no- tice of its intended ac dures whenever it seeks the remedial action specified in § 77.4. (a) Notice. Prior to taking remedial action, the Department will provide the recipient organization written no- tice of its intended action setting forth both the legal and factual reasons therefor. Notice may be provided by certified or express mail, TWX, tele- gram, delivery, or similar means. (b) Opportunity to respond. (1) The re- cipient organization has 30 days after 404 Dept. of Health and Human Services § 78.1 receipt of the notice in which to sub- mit to the Department a written state- ment setting forth any legal and fac- tual reasons why it believes the pro- posed remedial action would be inap- propriate. If no response is received by the Department within the 30-day pe- riod, the Department may make the proposed remedial action effective im- mediately. If a response opposing the taking of remedial action is received from the recipient organization within the 30-day period, no remedial action will be taken until a final decision has been reached under paragraph (c) of this section. (2) The Department may prepare a written reply to the recipient such organization’s reply will be forwarded to the deciding off l a final decision has been reached under paragraph (c) of this section. (2) The Department may prepare a written reply to the recipient such organization’s reply will be forwarded to the deciding official together with the notice sent to the recipient organization and the organization’s response, and a copy of the reply will be served on the recipi- ent organization. response. Any (c) Departmental decision. The Depart- ment’s decision to take remedial ac- tion under this part will be made by an official of the Department who had no involvement with the initial deter- mination to seek remedial action. The deciding official may affirm, reverse, or modify the initial determination. In making the decision, the official will consider only the notice provided by the Department, the recipient organi- zation’s statement, the Department’s reply, together with any other docu- ments attached to them, and state- ments at any informal conference held pursuant to paragraph (d) of this sec- tion. The official’s decision will be pro- vided to the recipient organization in writing and will constitute the Depart- ment’s final administrative action on the matter. (d) Informal conference. If, in the e official’s decision will be pro- vided to the recipient organization in writing and will constitute the Depart- ment’s final administrative action on the matter. (d) Informal conference. If, in the judg- ment of the official designated to make a final decision, it would materially enhance his ability to resolve the mat- ters in dispute, he may convene an in- formal conference to question or hear an oral presentation by the parties. If an informal conference is convened it will be transcribed. (e) Effect of decision. The decision in a proceeding under this section affects only the recipient organization’s obli- gations related to its letter of credit and does not determine the organiza- tion’s ultimate liability with respect to improperly spent funds or other mis- conduct. § 77.6 Emergency procedures. (a) Should the Department determine that it cannot adequately protect as- sets of the Federal government avail- able to a recipient organization under its letter of credit without taking re- medial action prior to the procedures specified in § 77.5, it may immediately take remedial action subject to the subsequent completion of those proce- dures. (b) Where the Department has taken r re- medial action prior to the procedures specified in § 77.5, it may immediately take remedial action subject to the subsequent completion of those proce- dures. (b) Where the Department has taken remedial action as described in para- graph (a) of this section, it will notify the recipient organization orally of the remedial action within one business day of its imposition and in writing within seven business days of its impo- sition. The written notice will conform to that described in § 77.5(a). (c) After receipt of the written no- tice, the recipient organization will have the same opportunity to respond as described in § 77.5(b)(1). (d) The Department will issue a final decision in writing no later than twen- ty days following receipt of any re- sponse submitted by the recipient orga- nization. PART 78—CONDITIONS FOR WAIV- ER OF DENIAL OF FEDERAL BENE- FITS Sec. 78.1 Applicability. 78.2 Definitions. 78.3 Benefits not denied to rehabilitated of- fenders. AUTHORITY: Section 5301 of Pub. L. 100–690, the Anti-Drug Abuse Act of 1988, 102 Stat. 4310, 21 U.S.C. 853a. SOURCE: 56 FR 29592, June 28, 1991, unless otherwise noted. § 78.1 Applicability. This part is applicable to any deci Pub. L. 100–690, the Anti-Drug Abuse Act of 1988, 102 Stat. 4310, 21 U.S.C. 853a. SOURCE: 56 FR 29592, June 28, 1991, unless otherwise noted. § 78.1 Applicability. This part is applicable to any deci- sion to deny Federal benefits, under authority of 21 U.S.C. 853a, to an indi- vidual convicted of a Federal or State offense involving distribution or pos- session of a controlled substance as de- fined by the Controlled Substances Act, 21 U.S.C. 802. 405 § 78.2 § 78.2 Definitions. For the purposes of denying Federal benefits under 21 U.S.C. 853a: (a) Deemed to be rehabilitated means that an individual has abstained from the illicit use of a controlled substance for the period of at least 180 days im- mediately prior to and including the date of sentencing provided that such abstinence is documented by the re- sults of periodic urine drug testing con- ducted during that period; and provided further that such drug testing is con- ducted using an immunoassay test ap- proved by the Food and Drug Adminis- tration for commercial distribution or, in the case of a State offense, either using an immunoassay test approved by the Food and Drug Administration for commercial distribution or purs Drug Adminis- tration for commercial distribution or, in the case of a State offense, either using an immunoassay test approved by the Food and Drug Administration for commercial distribution or pursu- ant to standards approved by the State. (b) Long-term treatment program or long-term drug treatment program means any drug abuse treatment program of 180 days or more where the provider has been accredited by the Joint Com- mission on Accreditation of Health Or- ganizations, the Commission on Ac- creditation of Rehabilitation Facili- ties, or the Council on Accreditation of Services for Families and Children, or licensed or otherwise approved by the State to provide drug abuse treatment. § 78.3 Benefits not denied to rehabili- tated offenders. (a) No individual convicted of any Federal or State offense involving the distribution of controlled substances shall be denied Federal benefits relat- ing to long-term drug treatment pro- grams for addiction under 21 U.S.C. 853a(a)(2) if: (1) The individual declares himself or herself to be an addict and submits to a long-term treatment program for ad- diction as defined by § 78.2(b), provided that in the determination of the sen- tencing cou individual declares himself or herself to be an addict and submits to a long-term treatment program for ad- diction as defined by § 78.2(b), provided that in the determination of the sen- tencing court there is a reasonable body of evidence to substantiate the in- dividual’s declaration that such indi- vidual is an addict; or (2) The individual is, in the deter- mination of the sentencing court, deemed to be rehabilitated as defined by § 78.2(a). (b) No individual convicted of any Federal or State offense involving the 45 CFR Subtitle A (10–1–24 Edition) possession of controlled substances shall be denied any Federal benefit, or otherwise subject to penalties and con- ditions, under 21 U.S.C. 853a(b)(2) if: (1) The individual declares himself or herself to be an addict and submits to a long-term treatment program for ad- diction as defined by § 78.2(b), provided that in the determination of the sen- tencing court there is a reasonable body of evidence to substantiate the in- dividual’s declaration that such indi- vidual is an addict; or (2) The individual is, in the deter- mination of the sentencing court, deemed to be rehabilitated as defined by § 78.2(a). PART 79—PROGRAM FRAUD C s declaration that such indi- vidual is an addict; or (2) The individual is, in the deter- mination of the sentencing court, deemed to be rehabilitated as defined by § 78.2(a). PART 79—PROGRAM FRAUD CIVIL REMEDIES Sec. 79.1 Basis and purpose. 79.2 Definitions. 79.3 Basis for civil penalties and assess- ments. 79.4 Investigation. 79.5 Review by the reviewing official. 79.6 Prerequisites for issuing a complaint. 79.7 Complaint. 79.8 Service of complaint. 79.9 Answer. 79.10 Default upon failure to file an answer. 79.11 Referral of complaint and answer to the ALJ. 79.12 Notice of hearing. 79.13 Parties to the hearing. 79.14 Separation of functions. 79.15 Ex parte contacts. 79.16 Disqualification of reviewing official or ALJ. 79.17 Rights of parties. 79.18 Authority of the ALJ. 79.19 Prehearing conferences. 79.20 Disclosure of documents. 79.21 Discovery. 79.22 Exchange of witness lists, statements and exhibits. 79.23 Subpoenas for attendance at hearing. 79.24 Protective order. 79.25 Fees. 79.26 Form, filing and service of papers. 79.27 Computation of time. 79.28 Motions. 79.29 Sanctions. 79.30 The hearing and burden of proof. 79.31 Determining the amount of penalties and assessments. 79 9.26 Form, filing and service of papers. 79.27 Computation of time. 79.28 Motions. 79.29 Sanctions. 79.30 The hearing and burden of proof. 79.31 Determining the amount of penalties and assessments. 79.32 Location of hearing. 79.33 Witnesses. 79.34 Evidence. 79.35 The record. 79.36 Post-hearing briefs. 79.37 Initial decision. 406 Dept. of Health and Human Services § 79.2 79.38 Reconsideration of initial decision. 79.39 Appeal to authority head. 79.40 Stays ordered by the Department of Justice. 79.41 Stay pending appeal. 79.42 Judicial review. 79.43 Collection of civil penalties and as- sessments. 79.44 Right to administrative offset. 79.45 Deposit in Treasury of United States. 79.46 Compromise or settlement. 79.47 Limitations. AUTHORITY: 31 U.S.C. 3801–3812. SOURCE: 53 FR 11659, Apr. 8, 1988, unless otherwise noted. § 79.1 Basis and purpose. (a) Basis. This part implements the Program Fraud Civil Remedies Act of 1986, Pub. L. 99–509, §§ 6101–6104, 100 Stat. 1874 (October 21, 1986), to be codi- fied at 31 U.S.C. 3801–3812, 31 U.S.C. 3809 of the statute requires each authority head to promulgate regulations nec- essary to implement the provisions of the statute. (b) Purpose. This part e codi- fied at 31 U.S.C. 3801–3812, 31 U.S.C. 3809 of the statute requires each authority head to promulgate regulations nec- essary to implement the provisions of the statute. (b) Purpose. This part (1) establishes administrative procedures for imposing civil penalties and assessments against persons who make, submit, or present, or cause to be made, submitted, or pre- sented, false, fictitious, or fraudulent claims or written statements to au- thorities or to their agents, and (2) specifies the hearing and appeal rights of persons subject to allegations of li- ability for such penalties and assess- ments. § 79.2 Definitions. ALJ means an Administrative Law Judge in the authority appointed pur- suant to 5 U.S.C. 3105 or detailed to the authority pursuant to 5 U.S.C. 3344. Authority means the Department of Health and Human Services. Authority head means the Depart- mental Grant Appeals Board of the De- partment of Health and Human Serv- ices. Benefit means, in the context of state- ment, anything of value, including but not limited to any advantage, pref- erence, privilege, license, permit, fa- vorable decision, ruling, status, or loan guarantee. Claim means any request, demand, o nt, anything of value, including but not limited to any advantage, pref- erence, privilege, license, permit, fa- vorable decision, ruling, status, or loan guarantee. Claim means any request, demand, or submission— (a) Made to the authority for prop- erty, services, or money (including money representing grants, loans, in- surance, or benefits); (b) Made to a recipient of property, services, or money from the authority or to a party to a contract with the au- thority— (1) For property or services if the United States— (i) Provided such property or serv- ices; (ii) Provided any portion of the funds for the purchase of such property or services; or (iii) Will reimburse such recipient or party for the purchase of such property or services; or (2) For the payment of money (in- cluding money representing grants, loans, insurance, or benefits) if the United States— (i) Provided any portion of the money requested or demanded; or (ii) Will reimburse such recipient or party for any portion of the money paid on such request or demand: or (c) Made to the authority which has the effect of decreasing an obligation to pay or account for property, serv- ices, or money. Complaint means the administ e money paid on such request or demand: or (c) Made to the authority which has the effect of decreasing an obligation to pay or account for property, serv- ices, or money. Complaint means the administrative complaint served by the reviewing offi- cial on the defendant under § 79.7. Defendant means any person alleged in a complaint under § 79.7 to be liable for a civil penalty or assessment under § 79.3. Department means the Department of Health and Human Services. Government means the United States Government. Individual means a natural person. Initial decision means the written de- cision of the ALJ required by § 79.10 or § 79.37, and includes a revised initial de- cision issued following a remand or a motion for reconsideration. Investigating official means the In- spector General of the Department of Health and Human Services or an offi- cer or employee of the Office of the In- spector General designated by the In- spector General and serving in a posi- tion for which the rate of basic pay is not less than the minimum rate of basic pay for grade GS–16 under the General Schedule. Knows or has reason to know, means that a person, with respect to a claim or statement— 407 § 79.3 45 sic pay is not less than the minimum rate of basic pay for grade GS–16 under the General Schedule. Knows or has reason to know, means that a person, with respect to a claim or statement— 407 § 79.3 45 CFR Subtitle A (10–1–24 Edition) (a) Has actual knowledge that the claim or statement is false, fictitious, or fraudulent; (b) Acts in deliberate ignorance of the truth or falsity of the claim or statement; or (c) Acts in reckless disregard of the truth or falsity of the claim or state- ment. Makes, wherever it appears, shall in- clude the terms presents, submits, and causes to be made, presented, or sub- mitted. As the context requires, making or made, shall likewise include the cor- responding forms of such terms. Person means any individual, part- nership, corporation, association or private organization, and includes the plural of that term. Representative means an attorney who is a member in good standing of the bar of any State, Territory, or possession of the United States or of the District of Columbia or the Commonwealth of Puerto Rico. Reviewing official means the General Counsel of the Department or his or her designee who is— (a) Not subject to supervision by, or required e District of Columbia or the Commonwealth of Puerto Rico. Reviewing official means the General Counsel of the Department or his or her designee who is— (a) Not subject to supervision by, or required to report to, the investigating official; (b) Not employed in the organiza- tional unit of the authority in which the investigating official is employed; and (c) Serving in a position for which the rate of basic pay is not less than the minimum rate of basic pay for grade GS–16 under the General Sched- ule. Statement means any representation, certification, affirmation, document, record, or accounting or bookkeeping entry made— (a) With respect to a claim or to ob- tain the approval or payment of a claim (including relating to eligibility to make a claim); or (b) With respect to (including relat- ing to eligibility for)— (1) A contract with, or a bid or pro- posal for a contract with; or (2) A grant, loan, or benefit from, the authority, or any State, political sub- division of a State, or other party, if the United States Government provides any portion of the money or property under such contract or for such grant, loan, or benefit, or if the Government will reimburse such State, pol other party, if the United States Government provides any portion of the money or property under such contract or for such grant, loan, or benefit, or if the Government will reimburse such State, political subdivision, or party for any portion of the money or property under such con- tract or for such grant, loan, or ben- efit, § 79.3 Basis for civil penalties and as- sessments. (a) Claims. (1) Except as provided in paragraph (c) of this section, any per- son who makes a claim that the person knows or has reason to know— (i) Is false, fictitious, or fraudulent; (ii) Includes, or is supported by, any written statement which asserts a ma- terial fact which is false, fictitious, or fraudulent; (iii) Includes, or is supported by, any written statement that— (A) Omits a material fact; (B) Is false, fictitious, or fraudulent as a result of such omission; and (C) Is a statement in which the per- son making such statement has a duty to include such material fact; or (iv) Is for payment for the provision of property or services which the per- son has not provided as claimed, shall be subject, in addition to any other remedy that may be prescribed by law, to a civil penalty of not more than e provision of property or services which the per- son has not provided as claimed, shall be subject, in addition to any other remedy that may be prescribed by law, to a civil penalty of not more than $5,500 1 for each such claim. (2) Each voucher, invoice, claim form, or other individual request or de- mand for property, services, or money constitutes a separate claim. (3) A claim shall be considered made to the authority, recipient, or party when such claim is actually made to an agent, fiscal intermediary, or other en- tity, including any State or political subdivision thereof, acting for or on be- half of the authority, recipient, or party. (4) Each claim for property, services, or money is subject to a civil penalty regardless of whether such property, services, or money is actually delivered or paid. 1 The amounts specified in this section are updated annually, as adjusted in accordance with the Federal Civil Monetary Penalty In- flation Adjustment Act of 1990 (Pub. L. 101– 140), as amended by the Federal Civil Pen- alties Inflation Adjustment Act Improve- ments Act of 2015 (section 701 of Pub. L. 114– 74). Annually adjusted amounts are pub- lished at 45 CFR part 102. 408 Dep as amended by the Federal Civil Pen- alties Inflation Adjustment Act Improve- ments Act of 2015 (section 701 of Pub. L. 114– 74). Annually adjusted amounts are pub- lished at 45 CFR part 102. 408 Dept. of Health and Human Services § 79.4 (5) If the Government has made any payment (including transferred prop- erty or provided services) on a claim, a person subject to a civil penalty under paragraph (a)(1) of this section shall also be subject to an assessment of not more than twice the amount of such claim or that portion thereof that is determined to be in violation of para- graph (a)(1). Such assessment shall be in lieu of damages sustained by the Government because of such claim. (b) Statements. (1) Except as provided in paragraph (c) of this section, any person who makes a written statement that— (i) The person knows or has reason to know— (A) Asserts a material fact which is false, factitious, or fraudulent; or (B) Is false, factitious, or fraudulent because it omits a material fact that the person making the statement has a duty to include in such statement; and (ii) Contains, or is accompanied by, an express certification or affirmation of the truthfulness and accuracy of th ct that the person making the statement has a duty to include in such statement; and (ii) Contains, or is accompanied by, an express certification or affirmation of the truthfulness and accuracy of the contents of the statement, shall be sub- ject, in addition to any other remedy that may be prescribed by law, to a civil penalty of not more than $5,500 2 for each such statement. (2) Each representation, certifi- cation, or affirmation constitutes a separate statement. (3) A statement shall be considered made to the authority when such state- ment is actually made to an agent, fis- cal intermediary, or other entity, in- cluding any State or political subdivi- sion thereof, acting for or on behalf of the authority. (c) Applications for certain benefits. (1) In the case of any claim or statement made by any individual relating to any of the benefits listed in paragraph (c)(2) of this section received by such indi- vidual, such individual may be held lia- ble for penalties and assessments under this section only if such claim or state- 2 The amounts specified in this section are updated annually, as adjusted in accordance with the Federal Civil Monetary Penalty In- flation Adjustment A under this section only if such claim or state- 2 The amounts specified in this section are updated annually, as adjusted in accordance with the Federal Civil Monetary Penalty In- flation Adjustment Act of 1990 (Pub. L. 101– 140), as amended by the Federal Civil Pen- alties Inflation Adjustment Act Improve- ments Act of 2015 (section 701 of Pub. L. 114– 74). Annually adjusted amounts are pub- lished at 45 CFR part 102. ment is made by such individual in making application for such benefits with respect to such individual’s eligi- bility to receive such benefits. (2) For purposes of paragraph (c) of this section, the term benefits means— (i) Benefits under the supplemental security income program under title XVI of the Social Security Act; (ii) Old age, survivors, and disability insurance benefits under title II of the Social Security Act; (iii) Benefits under title XVIII of the Social Security Act; (iv) Aid to families with dependent children under a State plan approved under section 402(a) of the Social Secu- rity Act; (v) Medical assistance under a State plan approved under section 1902(a) of the Social Security Act; (vi) Benefits under title XX of the So- cial Security Act; (vii 02(a) of the Social Secu- rity Act; (v) Medical assistance under a State plan approved under section 1902(a) of the Social Security Act; (vi) Benefits under title XX of the So- cial Security Act; (vii) Benefits under section 336 of the Older Americans Act; or, (viii) Benefits under the Low-Income Home Energy Assistance Act of 1981, which are intended for the personal use of the individual who receives the ben- efits or for a member of the individ- ual’s family. (d) No proof of specific intent to de- fraud is required to establish liability under this section. (e) In any case in which it is deter- mined that more than one person is lia- ble for making a claim or statement under this section, each such person may be held liable for a civil penalty. (f) In any case in which it is deter- mined that more than one person is lia- ble for making a claim under this sec- tion on which the Government has made payment (including transferred property or provided services), an as- sessment may be imposed against any such person or jointly and severally against any combination of such per- sons. [53 FR 11659, Apr. 8, 1988, as amended at 61 FR 52301, Oct. 7, 1996; 81 FR 61565, Sept. 6, 2016] § 79. posed against any such person or jointly and severally against any combination of such per- sons. [53 FR 11659, Apr. 8, 1988, as amended at 61 FR 52301, Oct. 7, 1996; 81 FR 61565, Sept. 6, 2016] § 79.4 Investigation. (a) If an investigating official con- cludes that a subpoena pursuant to the authority conferred by 31 U.S.C. 3804(a) is warranted— 409 § 79.5 45 CFR Subtitle A (10–1–24 Edition) (1) The subpoena so issued shall no- tify the person to whom it is addressed of the authority under which the sub- poena is issued and shall identify the records or documents sought; (2) The investigating official may designate a person to act on his or her behalf the documents to sought; and receive (3) The person receiving such sub- poena shall be required to tender to the investigating official, or the person designated to receive the documents, a certification that— (i) The documents sought have been produced; (ii) Such documents are not available and the reasons therefor; or (iii) Such documents suitably identi- fied, have been withheld based upon the assertion of an identified privilege. (b) If the investigating official con- cludes that an action under the Pro- gram Fraud Civil Remedies nts suitably identi- fied, have been withheld based upon the assertion of an identified privilege. (b) If the investigating official con- cludes that an action under the Pro- gram Fraud Civil Remedies Act may be warranted, the investigating official shall submit a report containing the findings and conclusions of such inves- tigation to the reviewing official. (c) Nothing in this section shall pre- clude or limit an investigating offi- cial’s discretion to refer allegations di- rectly to the Department of Justice for suit under the False Claims Act or other civil relief, or to defer or post- pone a report or referral to the review- ing official to avoid interference with a criminal investigation or prosecution. (d) Nothing in this section modifies any responsibility of an investigating official to report violations of criminal law to the Attorney General. § 79.5 Review by the reviewing official. (a) If, based on the report of the in- vestigating official under § 79.4(b), the reviewing official determines that there is adequate evidence to believe that a person is liable under § 79.3, the reviewing official shall transmit to the Attorney General a written notice of the reviewing off official determines that there is adequate evidence to believe that a person is liable under § 79.3, the reviewing official shall transmit to the Attorney General a written notice of the reviewing official’s attention to issue a complaint under § 79.7. (b) Such notice shall include— (1) A statement of the reviewing offi- cial’s reasons for issuing a complaint; (2) A statement specifying the evi- dence that supports the allegations of liability; (3) A description of the claims or statements upon which the allegations of liability are based; (4) An estimate of the amount of money, or the value of property, serv- ices, or other benefits, requested or de- manded in violation of § 79.3 of this part; (5) A statement of any exculpatory or mitigating circumstances that may re- late to the claims or statements known by the reviewing official or the inves- tigating official; and (6) A statement that there is a rea- sonable prospect of collecting an ap- propriate amount of penalties and as- sessments. § 79.6 Prerequisites for issuing a com- plaint. (a) The reviewing official may issue a complaint under § 79.7 only if— (1) The Department of Justice ap- proves the issuance of a complaint in a w ents. § 79.6 Prerequisites for issuing a com- plaint. (a) The reviewing official may issue a complaint under § 79.7 only if— (1) The Department of Justice ap- proves the issuance of a complaint in a written statement described in 31 U.S.C. 3803(b)(1), and (2) In the case of allegations of liabil- ity under § 79.3(a) with respect to a claim, the reviewing official deter- mines that, with respect to such claim or a group of related claims submitted at the same time such claim is sub- mitted (as defined in paragraph (b) of this section), the amount of money, or the value of property or services, de- manded or requested in violation of § 79.3(a) does not exceed $150,000. (b) For the purposes of this section, a related group of claims submitted at the same time shall include only those claims arising from the same trans- action (e.g., grant, loan, application, or contract) that are submitted simulta- neously as part of a single request, de- mand, or submission. (c) Nothing in this section shall be construed to limit the reviewing offi- cial’s authority to join in a single com- plaint against a person claims that are unrelated or were not submitted simul- taneously, regardless of the amo hall be construed to limit the reviewing offi- cial’s authority to join in a single com- plaint against a person claims that are unrelated or were not submitted simul- taneously, regardless of the amount of money, or the value of property or services, demanded or requested. § 79.7 Complaint. (a) On or after the date the Depart- ment of Justice approves the issuance of a complaint in accordance with 31 U.S.C. 3803(b)(1), the reviewing official 410 Dept. of Health and Human Services § 79.10 may serve a complaint on the defend- ant, as provided in § 79.8. (b) The complaint shall state— (1) The allegations of liability against the defendant, including the statutory basis for liability, an identi- fication of the claims or statements that are the basis for the alleged liabil- ity, and the reasons why liability alleg- edly arises from such claims or state- ments; (2) The maximum amount of pen- alties and assessments for which the defendant may be held liable; (3) Instructions for filing an answer to request a hearing, including a spe- cific statement of the defendant’s right to request a hearing by filing an an- swer and to be represented by a rep- resentative; and (4) That failure to fi nswer to request a hearing, including a spe- cific statement of the defendant’s right to request a hearing by filing an an- swer and to be represented by a rep- resentative; and (4) That failure to file an answer as set forth in § 79.9 will result in the im- position of the maximum amount of penalties and assessments without right to appeal, as provided in § 79.10. (c) At the same time the reviewing official serves the complaint, he or she shall serve the defendant with a copy of these regulations. § 79.8 Service of complaint. (a) Service of a complaint must be made by certified or registered mail or by delivery in any manner authorized by Rule 4(d) of the Federal Rules of Civil Procedure. Service is complete upon receipt. (b) Proof of service, stating the name and address of the person on whom the complaint was served, and the manner and date of service, may be made by— (1) Affidavit of the individual serving the complaint by delivery; (2) A United States Postal Service re- turn receipt card acknowledging re- ceipt; or (3) Written acknowledgment of re- ceipt by the defendant or his or her representative. § 79.9 Answer. (a) The defendant may request a hearing by filing an answer wi pt card acknowledging re- ceipt; or (3) Written acknowledgment of re- ceipt by the defendant or his or her representative. § 79.9 Answer. (a) The defendant may request a hearing by filing an answer with the reviewing official within 30 days of service of the complaint. An answer shall be deemed to be a request for hearing. (b) In the answer, the defendant— (1) Shall admit or deny each of the allegations of liability made in the complaint; (2) Shall state any defense on which the defendant intends to rely; (3) May state any reasons why the de- fendant contends that the penalties and assessments should be less than the statutory maximum; and (4) Shall state the name, address, and telephone number of the person author- ized by the defendant to act as defend- ant’s representative, if any. (c) If the defendant is unable to file an answer meeting the requirements of paragraph (b) of this section within the time provided, the defendant, before that time expires, may file with the re- viewing official a general answer deny- ing liability and requesting a hearing, and a request for an extension of time within which to file an answer meeting the requirements of paragraph (b) of this section. official a general answer deny- ing liability and requesting a hearing, and a request for an extension of time within which to file an answer meeting the requirements of paragraph (b) of this section. As provided in § 79.11, the reviewing official shall file promptly with the ALJ the complaint, the gen- eral answer denying liability, and the request for an extension of time. For good cause shown, the ALJ may grant the defendant up to 30 additional days within which to file an answer meeting the requirements of paragraph (b) of this section. § 79.10 Default upon failure to file an answer. (a) If the defendant does not file an answer within the time prescribed in § 79.9(a), the reviewing official may refer the complaint to the ALJ. (b) Upon the referral of the com- plaint, the ALJ shall promptly serve on the defendant in the manner pre- scribed in § 79.8, a notice that an initial decision will be issued under this sec- tion. (c) The ALJ shall assume the facts alleged in the complaint to be true and, if such facts establish liability under § 79.3, the ALJ shall issue an initial de- cision imposing the maximum amount of penalties and assessments allowed under the statute. (d) Except as be true and, if such facts establish liability under § 79.3, the ALJ shall issue an initial de- cision imposing the maximum amount of penalties 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 paragraph 411 § 79.11 45 CFR Subtitle A (10–1–24 Edition) (c) of this section, and the initial deci- sion shall become final and binding upon the parties 30 days after it is issued. (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 cir- cumstances prevented the defendant from filing an answer, the initial deci- sion shall be stayed pending the ALJ’s decision on the motion. (f) If, on such motion, the defendant can demonstrate extraordinary cir- cumstances excusing the failure to file a timely answer, the ALJ shall with- draw the initial decision in paragraph (c) of this section, if such a decision has been issued, and shall grant the de- fendant an opportunity to answer the complaint. (g) A decision of the ALJ denying a de he initial decision in paragraph (c) of this section, if such a decision has been issued, and shall grant the de- fendant an opportunity to answer the complaint. (g) A decision of the ALJ denying a defendant’s motion under paragraph (e) of this section is not subject to recon- sideration under § 79.38. (h) The defendant may appeal to the authority head the decision denying a motion to reopen by filing a notice of appeal with the authority head within 15 days after the ALJ denies the mo- tion. The timely filing of a notice of appeal shall stay the initial decision until the authority head decides the issue. (i) If the defendant files a timely no- tice of appeal with the authority head, the ALJ shall forward the record of the proceeding to the authority head. (j) The authority head shall decide expeditiously whether extraordinary circumstances excuse the defendant’s failure to file a timely answer based solely on the record before the ALJ. (k) If the authority head decides that extraordinary circumstances excuse the defendant’s failure to file a timely answer, the authority head shall re- mand the case to the ALJ with instruc- tions to grant the defendant an oppor- tunity to answer. nary circumstances excuse the defendant’s failure to file a timely answer, the authority head shall re- mand the case to the ALJ with instruc- tions to grant the defendant an oppor- tunity to answer. (l) If the authority head decides that the defendant’s failure to file a timely answer is not excused, the authority head shall reinstate the initial decision of the ALJ, which shall become final and binding upon the parties 30 days after the authority head issues such de- cision. § 79.11 Referral of complaint and an- swer to the ALJ. Upon receipt of an answer, the re- viewing official shall file the complaint and answer with the ALJ. § 79.12 Notice of hearing. (a) When the ALJ receives the com- plaint and answer, the ALJ shall promptly serve a notice of hearing upon the defendant in the manner pre- scribed by § 79.8. At the same time, the ALJ shall send a copy of such notice to the representative for the Government. (b) Such notice shall include— (1) The tentative time and place, and the nature of the hearing; (2) The legal authority and jurisdic- tion under which the hearing is to be held; (3) The matters of fact and law to be asserted; (4) A description of the procedures for the con nature of the hearing; (2) The legal authority and jurisdic- tion under which the hearing is to be held; (3) The matters of fact and law to be asserted; (4) A description of the procedures for the conduct of the hearing; (5) The name, address, and telephone number of the representative of the Government and of the defendant, if any; and (6) Such other matters as the ALJ deems appropriate. § 79.13 Parties to the hearing. (a) The parities to the hearing shall be the defendant and the authority. (b) Pursuant to 31 U.S.C. 3730(c)(5), a private plaintiff under the False Claims Act may participate in these proceedings to the extent authorized by the provisions of that Act. § 79.14 Separation of functions. (a) The investigating official, the re- viewing official, and any employee or agent of the authority who takes part in investigating, preparing, or pre- senting 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 de- cision by the authority head, except as a witness or a representative in public proceedings; or (3) Make the collection of penalties an advise in the initial decision or the review of the initial de- cision by the authority head, except as a witness or a representative in public proceedings; or (3) Make the collection of penalties and assessments under 31 U.S.C. 3806. 412 Dept. of Health and Human Services § 79.18 (b) The ALJ shall not be responsible to, or subject to the supervision or di- rection of, the investigating official or the reviewing official. (c) Except as provided in paragraph (a) of this section, the representative for the Government may be employed anywhere in the authority, including in the offices of either the inves- tigating official or the reviewing offi- cial. § 79.15 Ex parte contacts. No party or person (except employees of the ALJ’s office) shall communciate in any way with the ALJ on any mat- ter at issue in a case, unless on notice and opportunity for all parties to par- ticipate. This provision does not pro- hibit a person or party from inquiring about the status of a case or asking routine questions concerning adminis- trative functions or procedures. § 79.16 Disqualification of reviewing official or ALJ. (a) A reviewing official or ALJ in a particular case may disqualify himself or he questions concerning adminis- trative functions or procedures. § 79.16 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 review- ing official or an ALJ. Such 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 dis- covery of reasons requiring disquali- fication, or such objections shall be deemed waived. (d) Such affidavit shall state specific facts that support the party’s belief that personal bias or other reason for disqualification exists and the time and circumstances of the party’s dis- covery of such facts. It shall be accom- panied by a certificate of the rep- resentative of record that it is made in good faith. (e) Upon the filing of such a motion and affidavit, the ALJ shall proceed no further in the case until he or she re- solves the matter of disqualification in accordance with paragraph (f) of this section. (f)(1) If the ALJ determines that a re- viewing official is disqualified, th her in the case until he or she re- solves the matter of disqualification in accordance with paragraph (f) of this section. (f)(1) If the ALJ determines that a re- viewing official is disqualified, the ALJ shall 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 dis- qualify, the authority head may deter- mine the matter only as part of his or her review of the initial decision upon appeal, if any. § 79.17 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 made part of the record; (e) Present evidence relevant to the issues at the hearing; (f) Present and cross-examine wit- nesses; (g) Present oral arguments at the hearing as permitted by the ALJ; and (h) Submit written briefs and pro- posed findings of fact and conclusions of law after the hearing. § 79.18 Authority of the ALJ. (a) The ALJ shall conduct a fair and impartial hearing, avoi ALJ; and (h) Submit written briefs and pro- posed findings of fact and conclusions of law after the hearing. § 79.18 Authority of the ALJ. (a) The ALJ shall conduct a fair and impartial hearing, avoid delay, main- tain 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 reason- able 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 ex- peditious disposition of the proceeding; (4) Administer oaths and affirma- tions; (5) Issue subpoenas requiring the at- tendance of witnesses and the produc- tion of documents at depositions or at hearings; (6) Rule on motions and other proce- dural matters; (7) Regulate the scope and timing of discovery; (8) Regulate the course of the hearing and the conduct of representatives and parties; 413 § 79.19 45 CFR Subtitle A (10–1–24 Edition) (9) Examine witnesses; (10) Receive, rule on, exclude, or limit evidence; (11) Upon motion of a party, take of- ficial notice of facts; (12) Upon ties; 413 § 79.19 45 CFR Subtitle A (10–1–24 Edition) (9) Examine witnesses; (10) Receive, rule on, exclude, or limit evidence; (11) Upon motion of a party, take of- ficial 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; (13) Conduct any conference, argu- ment, or hearing on motions in person or by telephone; and (14) Exercise such other authority as is necessary to carry out the respon- sibilities of the ALJ under this part. (c) The ALJ does not have the au- thority to find Federal statutes or reg- ulations invalid. § 79.19 Prehearing conferences. (a) The ALJ may schedule prehearing conferences as appropriate. (b) Upon the motion of any party, the ALJ shall schedule at least one pre- hearing conference at a reasonable time in advance of the hearing. (c) The ALJ may use prehearing con- ferences to discuss the following: (1) Simplication of the issues; (2) The necessity or desirability of amendments to the pleadings, includ- ing the need for a more definite state- ment; (3) Stipulations and admissions of fact__, or as to the contents and au- thenticity of documents; (4) Whether th y of amendments to the pleadings, includ- ing the need for a more definite state- ment; (3) Stipulations and admissions of fact__, or as to the contents and au- thenticity 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 an oral hearing and to submit only documentary evidence (subject to the objection of other par- ties) and written argument; (6) Limitation of the number of wit- nesses; (7) Scheduling dates for the exchange of witness lists and of proposed exhib- its; (8) Discovery; (9) The time and place for the hear- ing; 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 con- taining all matters agreed upon by the parties or ordered by the ALJ at a pre- hearing conference. § 79.20 Disclosure of documents. (a) Upon written request to the re- viewing official, the defendant may re- view any relevant and material docu- ments, 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 § terial docu- ments, 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 § 79.4(b) are based, unless such documents are subject to a privilege under Federal law. Upon payment of fees for duplica- tion, the defendant may obtain copies of such documents. (b) Upon written request to the re- viewing official, the defendant also may obtain a copy of all exculpatory information in the possession of the re- viewing official or investigating offi- cial relating to the allegations in the complaint, even if it is contained in a document that would otherwise be privileged. If the document would oth- erwise be privileged, only that portion containing exculpatory information must be disclosed. (c) The notice sent to the Attorney General from the reviewing official as described in § 79.5 is not discoverable under any circumstances. (d) The defendant may file a motion to compel disclosure of the documents subject to the provisions of this sec- tion. Such a motion may only be filed with the ALJ following the filing of an answer pursuant to § 79.9. § 79.21 Discovery. (a) The disclosure of the documents subject to the provisions of this sec- tion. Such a motion may only be filed with the ALJ following the filing of an answer pursuant to § 79.9. § 79.21 Discovery. (a) The following types of discovery are authorized: (1) Requests for production of docu- ments for inspection and copying; (2) Requests for admission of the con- tents or authenticity of any relevant document or of the truth of any revelant fact; (3) Written interrogatories; and (4) Depositions. (b) For the purpose of this section and §§ 79.22 and 79.23, the term docu- ments includes information, documents, reports, answers, records, accounts, pa- pers, and other data and documentary evidence. Nothing contained herein shall be interpreted to require the cre- ation of a document. (c) Unless mutually agreed to by the parties, discovery is available only as 414 Dept. of Health and Human Services § 79.23 ordered by the ALJ. The ALJ shall reg- ulate the timing of discovery. (d) Motions for discovery. (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 depositions, a summary of the scope of the prop (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 depositions, a summary of the scope of the proposed deposition. (2) Within ten days of service, a party may file an opposition to the motion and/or a motion for protective order as provided in § 79.24. (3) The ALJ may grant a motion for discovery only if he or she finds that the discovery sought— (i) Is necessary for the expeditious, fair, and reasonable consideration of the issues; (ii) Is not unduly costly or burden- some; (iii) Will not unduly delay the pro- ceeding; and (iv) Does not seek privileged informa- tion. (4) The burden of showing that dis- covery should be allowed is on the party seeking discovery. (5) The ALJ may grant discovery sub- ject to a protective order under § 79.24. (e) Depositions. (1) If a motion for dep- osition is granted, the ALJ shall issue a subpoena for the deponent, which may require the deponent to produce documents. The subpoena shall specify the time and place at which the deposi- tion will be held. (2) The party seeking to depose shall serve the subpoena in the manner pre- scribed in § 79.8. (3) duce documents. The subpoena shall specify the time and place at which the deposi- tion will be held. (2) The party seeking to depose shall serve the subpoena in the manner pre- scribed in § 79.8. (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 taking of a verbatim transcript of the deposition, which it shall make available to all other par- ties for inspection and copying. (f) Each party shall bear its own costs of discovery. § 79.22 Exchange of witness lists, state- ments and exhibits. (a) At least 15 days before the hear- ing or at such other time as may be or- dered by the ALJ, the parties shall ex- change witness lists, copies of prior statements of proposed witnesses, and copies of proposed hearing exhibits, in- cluding copies of any written state- ments that the party intends to offer in lieu of live testimony in accordance with § 79.33(b). At the time the above documents are exchanged, any party that intends to rely on the transcript of deposition testimony in lieu of live testimony at the hearing, if permitted by the ALJ, shall provide t the time the above documents are exchanged, any party that intends to rely on the transcript of deposition testimony in lieu of live testimony at the hearing, if permitted by the ALJ, shall provide each party with a copy of the specific pages of the transcript it intends to introduce into evidence. (b) If a party objects, the ALJ shall not admit into evidence the testimony of any witness whose name does not ap- pear on the witness list or any exhibit not provided to 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, docu- ments exchanged in accordance with paragraph (a) of this section shall be deemed to be authentic for the purpose of admissibility at the hearing. § 79.23 Subpoenas for attendance at hearing. (a) A party wishing to procure the appearance and testimony of any indi- vidual at the hearing may request that the ALJ issue a subpoena. (b) A subpoena requiring the attend- ance 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 wr a subpoena. (b) A subpoena requiring the attend- ance 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 unless otherwise allowed by the ALJ for good cause shown. Such request shall specify any documents to be produced and shall designate the witnesses and describe the address and location thereof with sufficient par- ticularity to permit such witnesses to be found. (d) The subpoena shall specify the time and place at which the witness is to appear and any documents the wit- ness is to produce. (e) The party seeking the subpoena shall serve it in the manner prescribed in § 79.8, except that a subpoena on a party or upon an individual under the control of a party may be served as prescribed in § 79.26(b). 415 § 79.24 45 CFR Subtitle A (10–1–24 Edition) (f) A party or the individual to whom the subpoena is directed may file with the ALJ a motion to quash the sub- poena within ten days after service or on or before the time specified in the subpoena for compliance if it is less than ten days after service. Sta ed may file with the ALJ a motion to quash the sub- poena within ten days after service or on or before the time specified in the subpoena for compliance if it is less than ten days after service. States District Court. A check for wit- ness fees and mileage shall accompany the subpoena when served, except that when a subpoena is issued on behalf of the authority, a check for witness fees and mileage need not accompany the subpoena. § 79.24 Protective order. § 79.26 Form, filing and service of pa- (a) A party or a prospective witness or deponent may file a motion for a protective order with respect to dis- covery 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, the ALJ may make any order which justice requires to protect a party or person from annoyance, embarrassment, op- pression, or undue burden or expense, including one or more of the following: (1) That the discovery not be had; (2) That the discovery may be had only on specified terms and conditions, including a designation of the time or place; (3) That the discovery may be had only through a method of discovery other t ad; (2) That the discovery may be had only on specified terms and conditions, including a designation of the time or place; (3) That the discovery may be had only through a method of discovery other than that requested: (4) That certain matters not be in- quired into, or that the scope of dis- covery be limited to certain matters; (5) That discovery be conducted with no one present except persons des- ignated 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 the ALJ; (8) That a trade secret or other con- fidential research, development, com- mercial information, or facts per- taining to any criminal investigation, proceeding, or other administrative in- vestigation not be disclosed or be dis- closed only in a designated way; or (9) That the parties simultaneously file specified documents or information enclosed in sealed envelopes to be opened as directed by the ALJ. § 79.25 Fees. The party requesting a subpoena shall pay the cost of the fees and mile- age of any witness subpoenaed in the amounts that would be payable to a witness in a proceeding in United pers. (a) Form. (1) Documents filed wit ng a subpoena shall pay the cost of the fees and mile- age of any witness subpoenaed in the amounts that would be payable to a witness in a proceeding in United pers. (a) 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 be signed by, and shall contain the ad- dress and telephone number of, the party or the person on whose behalf the paper was filed, or his or her represent- ative. (4) Papers are considered filed when they are mailed. Date of mailing may be established by a certificate from the party or its representative or by proof that the document was sent by cer- tified or registered mail. (b) Service. A party filing a document with the ALJ shall, at the time of fil- ing, serve a copy of such document on every other party. Service upon any party of any document other than those required to be served as pre- scribed in § 79.8 shall be made by deliv- ering a copy or by placing a copy of the document on every other party. Service upon any party of any document other than those required to be served as pre- scribed in § 79.8 shall be made by deliv- ering a copy or by placing a copy of the document in the United States mail, postage prepaid, and addressed to the party’s last known address. When a party is represented by a representa- tive, service shall 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 or by mail, setting forth the manner of service, shall be proof of service. § 79.27 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 includes the last day of the period, unless it is a Saturday, Sunday, or 416 Dept. of Health and Human Services § 79.30 legal holiday observed by the Federal government, in which event it includes the next business day. (b) Except as provided in paragraph (c) of this section, when the period of time allowed is less than seven days, intermediate Saturdays, Sundays, and legal holidays observed by the Federal government s ) Except as provided in paragraph (c) of this section, when the period of time allowed is less than seven days, intermediate Saturdays, Sundays, and legal holidays observed by the Federal government shall be excluded from the computation. (c) Where a document has been served or issued by placing it in the mail, an additional five calendar days will be added to the time permitted for any re- sponse. § 79.28 Motions. (a) Any application to the ALJ for an order or ruling shall be by motion. Mo- tions shall state the relief sought, the authority relied upon, and the facts al- leged, and shall be filed with the ALJ and served on all other parties. (b) Except for motions made during a prehearing conference or at the hear- ing, all motions shall be in writing. The ALJ may require that oral mo- tions be reduced to writing. (c) Within 15 days after a written mo- tion is served, or such other time as may be fixed by the ALJ, any party may file a response to such motion. (d) The ALJ may not grant a written motion before the time for filing re- sponses thereto has expired, except upon consent of the parties or fol- lowing a hearing on the motion, but may overrule or deny such motion without aw a written motion before the time for filing re- sponses thereto has expired, except upon consent of the parties or fol- lowing a hearing on the motion, but may overrule or deny such motion without awaiting a response. (e) The ALJ shall make a reasonable effort to dispose of all outstanding mo- tions prior to the beginning of the hearing. § 79.29 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 pro- ceeding; (2) Failing to prosecute or defend an action; or (3) Engaging in other misconduct that interferes with the speedy, or- derly, or fair conduct of the hearing. (b) Any such sanction, including but not limited to those listed in para- graphs (c), (d), and (e) of this section, shall reasonably relate to the severity and nature of the failure or mis- conduct. (c) When a party fails to comply with an order, including an order for taking a deposition, the production of evi- dence within the party’s control, or a request for admission, the ALJ may— (1) Draw an inference in favor of the requesting party with regard to the in- formation sought; (2) In the case of requests for ad within the party’s control, or a request for admission, the ALJ may— (1) Draw an inference in favor of the requesting party with regard to the in- formation sought; (2) In the case of requests for admis- sion, deem each matter of which an ad- mission is requested to be admitted; (3) Prohibit the party failing to com- ply with such order from introducing evidence concerning, or otherwise rely- ing upon, testimony relating to the in- formation sought; and (4) Strike any part of the pleadings or other submissions of the party fail- ing to comply with such request. (d) If a party fails to prosecute or de- fend an action under this part com- menced by service of a notice of hear- ing, the ALJ may dismiss the action or may 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 filed in a timely fashion. § 79.30 The hearing and 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 § 79.3 and, if so, the appropriate amount of any such civil penalty or assessment considering a the record in order to determine whether the defendant is liable for a civil penalty or assessment under § 79.3 and, if so, the appropriate amount of any such civil penalty or assessment considering any aggravating or miti- gating factors. (b) The authority shall prove defend- ant’s liability and any aggravating fac- tors by a preponderance of the evi- dence. (c) The defendant shall prove any af- firmative defenses and any mitigating factors by a preponderance of the evi- dence. (d) The hearing shall be open to the public unless otherwise ordered by the ALJ for good cause shown. 417 § 79.31 45 CFR Subtitle A (10–1–24 Edition) § 79.31 Determining the amount of penalties and assessments. (a) In determining an appropriate amount of civil penalties and assess- ments, the ALJ and the authority head, upon appeal, should evaluate any circumstances that mitigate or aggra- vate the violation and should articu- late in their opinions the reasons that support the penalties and assessments they impose. Because of the intangible costs of fraud, the expense of inves- tigating such conduct, and the need to deter others who might be similarly tempted, ordinarily double damages and a significant ci pose. Because of the intangible costs of fraud, the expense of inves- tigating such conduct, and the need to deter others who might be similarly tempted, ordinarily double damages and a significant civil penalty should be imposed. (b) Although not exhaustive, the fol- lowing factors are among those that may influence the ALJ and the author- ity head in determining the amount of penalties and assessments to impose with respect to the misconduct (i.e., the fraudulent fictitious, or claims or statements) charged in the complaint: false, (1) The number of false, fictitious, or fraudulent claims or statements; (2) The time period over which such claims or statements were made; (3) The degree of the defendant’s cul- pability with respect to the mis- conduct; (4) The amount of money or the value of the property, services, or benefit falsely claimed; (5) The value of the Government’s ac- tual loss as a result of the misconduct, foreseeable consequential including 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 healt tigation; (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 safety, or public con- fidence in the management of Govern- ment programs and operations, includ- ing particularly the impact on the in- tended beneficiaries of such programs; (8) Whether the defendant has en- gaged in a pattern of the same or simi- lar misconduct; (9) Whether the defendant attempted to conceal the misconduct; (10) The degree to which the defend- ant has involved others in the mis- conduct or in concealing it; (11) Where the misconduct of employ- ees or agents is imputed to the defend- ant, the extent to which the defend- ant’s practices fostered or attempted to preclude such misconduct; (12) Whether the defendant cooper- ated in or obstructed an investigation of the misconduct; (13) Whether the defendant assisted in identifying and prosecuting other wrongdoers; (14) The complexity of the program or transaction, and the degree of the defendant’s sophistication with respect to it, including the extent of the de- fendant’s prior participation in the program or in si The complexity of the program or transaction, and the degree of the defendant’s sophistication with respect to it, including the extent of the de- fendant’s prior participation in the program or in similar transactions; (15) Whether the defendant has been found, in any criminal, civil, or admin- istrative proceeding, to have engaged in similar misconduct or to have dealt dishonestly with the Government of the United States or of a State, di- rectly or indirectly; and (16) The need to deter the defendant and others from engaging in the same or similar misconduct. (c) Nothing in this section shall be construed to limit the ALJ or the au- thority head from considering any other factors that in any given case may mitigate or aggravate the offense for which penalties and assessments are imposed. § 79.32 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) In any judicial district of the United States in which the claim or statement in issue was made; or (3) In such other place as may be agreed upon by the defendant and the ALJ. (b) Each party shall have the oppor- tunity to present a United States in which the claim or statement in issue was made; or (3) In such other place as may be agreed upon by the defendant and the ALJ. (b) Each party shall have the oppor- tunity to present argument with re- spect to the location of the hearing. (c) The hearing shall be held at the place and at the time ordered by the ALJ. § 79.33 Witnesses. (a) Except as provided in paragraph (b) of this section, testimony at the hearing shall be given orally by wit- nesses under oath or affirmation. 418 Dept. of Health and Human Services § 79.36 (b) At the discretion of the ALJ, tes- timony may be admitted in the form of a written statement or deposition. Any such written statement must be pro- vided to all other parties along with the last known address of such witness, in a manner which 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 and deposition transcripts shall be exchanged as provided in § 79.22(a). (c) The ALJ shall exercise reasonable control over the mode and order of in- terrogating witnesses and presenting evidence so as to (1) make the interro- ga all be exchanged as provided in § 79.22(a). (c) The ALJ shall exercise reasonable control over the mode and order of in- terrogating witnesses and presenting evidence so as to (1) make the interro- gation and presentation effective for the ascertainment of the truth, (2) avoid needless consumption of time, and (3) protect witnesses from harass- ment or undue embarrassment. (d) The ALJ shall permit the parties to conduct such cross-examination as may be required for a full and true dis- closure of the facts. (e) At the discretion of the ALJ, a witness may be cross-examined on mat- ters 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 mat- ters outside the scope of direct exam- ination shall be conducted in the man- ner of direct examination and may pro- ceed by leading questions only if the witness is a hostile witness, an adverse party, or a witness identified with an adverse party. (f) Upon motion of any party, the ALJ shall order witnesses excluded so that they cannot hear the testimony of other witnesses. This rule does not au- thorize exclusion of— (1) A party who is an individual; n motion of any party, the ALJ shall order witnesses excluded so that they cannot hear the testimony of other witnesses. This rule does not au- thorize 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 by the party’s rep- resentative; or (3) An individual whose presence is shown by a party to be essential to the presentation of its case, including an individual employed by the Govern- ment engaged in assisting the rep- resentative for the Government. § 79.34 Evidence. (a) The ALJ shall determine the ad- missibility of evidence. (b) Except as provided in this part, the ALJ shall not be bound by the Fed- eral Rules of Evidence. However, the ALJ may apply the Federal Rules of Evidence where appropriate, e.g., to ex- clude unreliable evidence. (c) The ALJ shall exclude irrelevant and immaterial evidence. (d) Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or by considerations of undue delay or needless presentation of cumu- lative evidence. (e) Alth probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or by considerations of undue delay or needless presentation of cumu- lative evidence. (e) Although relevant, evidence may be excluded if it is privileged under Federal law. (f) Evidence concerning offers of com- promise or settlement shall be inad- missible to the extent provided in Rule 408 of the Federal Rules of Evidence. (g) The ALJ shall permit the parties to introduce rebuttal witnesses and evidence. (h) All documents and other evidence offered or taken for the record shall be open to examination by all parties, un- less otherwise ordered by the ALJ pur- suant to § 79.24. § 79.35 The record. (a) The hearing will be recorded and transcribed. Transcripts may be ob- tained following the hearing from the ALJ at a cost not to exceed the actual cost of duplication. (b) The transcript of testimony, ex- hibits and other evidence admitted at the hearing, and all papers and re- quests filed in the proceeding con- stitute the record for the decision by the ALJ and the authority head. (c) The record may be inspected and copied (upon payment of a reasonable fee) by anyone, unless othe filed in the proceeding con- stitute the record for the decision by the ALJ and the authority head. (c) The record may be inspected and copied (upon payment of a reasonable fee) by anyone, unless otherwise or- dered by the ALJ pursuant to § 79.24. § 79.36 Post-hearing briefs. The ALJ may require the parties to file post-hearing briefs. In any event, any party may file a post-hearing brief. The ALJ shall fix the time for filing such briefs, not to exceed 60 days from the date the party receives the tran- script of the hearing or, if applicable, 419 § 79.37 45 CFR Subtitle A (10–1–24 Edition) the stipulated record. Such briefs may be accompanied by proposed findings of fact and conclusions of law. The ALJ may permit the parties to file reply briefs. § 79.37 Initial decision. (a) The ALJ shall issue an initial de- cision based only on the record, which shall contain findings of fact, conclu- sions of law, and the amount of any penalties and assessments imposed. (b) The findings of fact shall include a finding on each of the following issues: (1) Whether the claims or statements identified in the complaint, or any por- tions thereof, violate § 79.3; the assessments, (2) If the person i all include a finding on each of the following issues: (1) Whether the claims or statements identified in the complaint, or any por- tions thereof, violate § 79.3; the assessments, (2) If the person is liable for penalties or appropriate amount of any such penalties or assess- ments considering any mitigating or aggravating factors that he or she finds in the case, such as those described in § 79.31. (c) The ALJ shall promptly serve the initial decision on all parties within 90 days after the time for submission of post-hearing briefs and reply briefs (if permitted) has expired. The ALJ shall at the same time serve all parties with a statement describing the right of any defendant determined to be liable for a civil penalty or assessment to file a motion for reconsideration with the ALJ or a notice of appeal with the au- thority head. If the ALJ fails to meet the deadline contained in this para- graph, he or she shall notify the parties of the reason for the delay and shall set a new deadline. (d) Unless the initial decision of the ALJ is timely appealed to the author- ity head, or a motion for reconsider- ation of the initial decision is timely filed, the initial decision shall co eadline. (d) Unless the initial decision of the ALJ is timely appealed to the author- ity head, or a motion for reconsider- ation of the initial decision is timely filed, the initial decision shall con- stitute the final decision of the author- ity head and shall be final and binding on the parties 30 days after it is issued by the ALJ. § 79.38 Reconsideration of initial deci- sion. (a) Except as provided in paragraph (d) of this section, any party may file a motion for reconsideration of the ini- tial decision within 20 days of receipt of the initial decision. If service was made by mail, receipt will be presumed to be five days from the date of mailing in the absence of contrary proof. (b) Every such motion must set forth the matters claimed to have been erro- neously decided and the nature of the alleged errors. Such motion shall be accompanied by a supporting brief. (c) Responses to such motions shall be allowed only upon request of the ALJ. (d) No party may file a motion for re- consideration of an initial decision that has been revised in response to a previous motion for reconsideration. (e) The ALJ may dispose of a motion for reconsideration by denying it or by issuing a re onsideration of an initial decision that has been revised in response to a previous motion for reconsideration. (e) The ALJ may dispose of a motion for reconsideration by denying it or by issuing a revised initial decision. (f) If the ALJ denies a motion for re- consideration, the initial decision shall constitute the final decision of the au- thority head and shall be final and binding on the parties 30 days after the ALJ denies the motion, unless the ini- tial decision is timely appealed to the authority head in accordance with § 79.39. (g) If the ALJ issues a revised initial decision, that decision shall constitute the final decision of the authority head and shall be final and binding on the parties 30 days after it is issued, unless it is timely appealed to the authority head in accordance with § 79.39. § 79.39 Appeal to authority head. (a) Any defendant who has filed a timely answer and who is determined in an initial decision to be liable for a civil penalty or assessment may appeal such decision to the authority head by filing a notice of appeal with the au- thority head in accordance with this section. (b)(1) A notice of appeal may be filed at any time within 30 days after peal such decision to the authority head by filing a notice of appeal with the au- thority head in accordance with this section. (b)(1) A notice of appeal may be filed at any time within 30 days after the ALJ issues an initial decision. How- ever, if another party files a motion for reconsideration under § 79.38, consider- ation of the appeal shall be stayed automatically pending resolution of the motion for reconsideration. (2) If a motion for reconsideration is timely filed, a notice of appeal must be filed within 30 days after the ALJ de- nies the motion or issues a revised ini- tial decision, whichever applies. (3) If no motion for reconsideration is timely filed, a notice of appeal must be 420 Dept. of Health and Human Services § 79.44 filed within 30 days after the ALJ issues the initial decision. (4) The authority head may extend the initial 30-day period for an addi- tional 30-days if the defendant files with the authority head a request for an extension within the initial 30 day period and shows good cause. (c) If the defendant files a timely no- tice of appeal with the authority head, and the time for filing motions for re- consideration under § 79.38 has expired, the ALJ ay period and shows good cause. (c) If the defendant files a timely no- tice of appeal with the authority head, and the time for filing motions for re- consideration under § 79.38 has expired, the ALJ shall forward the record of the proceeding to the authority head. (d) A notice of appeal shall be accom- panied by a written brief specifying ex- ceptions to the initial decision and rea- sons supporting the exceptions. (e) The representative for the Gov- ernment may file a brief in opposition to exceptions within 30 days of receiv- ing the notice of appeal and accom- panying brief. (f) There is no right to appear person- ally before the authority head. (g) There is no right to appeal any in- terlocutory ruling by the ALJ. (h) In reviewing the initial decision, the authority head shall not consider any objection that was not raised be- fore the ALJ unless a demonstration is made of extraordinary circumstances causing the failure to raise the objec- tion. (i) If any party demonstrates to the satisfaction of the authority head that additional evidence not presented at such hearing is material and that there were reasonable grounds for the failure to present such evidence at such hear- i he satisfaction of the authority head that additional evidence not presented at such hearing is material and that there were reasonable grounds for the failure to present such evidence at such hear- ing, the authority head shall remand the matter to the ALJ for consider- ation of such additional evidence. (j) The authority head may affirm, reduce, reverse, compromise, remand, or settle any penalty or assessment de- termined by the ALJ in any initial de- cision. (k) The authority head shall prompt- ly serve each party to the appeal with a copy of the decision of the authority head and a statement describing the right of any person determined to be liable for a penalty or assessment to seek judicial review. (l) Unless a petition for review is filed as provided in 31 U.S.C. 3805 after a defendant has exhausted all adminis- trative remedies under this part and within 60 days after the date on which the authority head serves the defend- ant with a copy of the authority head’s decision, a determination that a de- fendant is liable under § 79.3 is final and is not subject to judicial review. § 79.40 Stays ordered by the Depart- ment of Justice. If at any time the Attorney General or an As termination that a de- fendant is liable under § 79.3 is final and is not subject to judicial review. § 79.40 Stays ordered by the Depart- ment of Justice. If at any time the Attorney General or an Assistant Attorney General des- ignated by the Attorney General trans- mits to the authority head a written finding that continuation of the admin- istrative process described in this part with respect to a claim or statement may adversely affect any pending or potential criminal or civil action re- lated to such claim or statement, the authority head shall stay the process immediately. The authority head may order the process resumed only upon receipt of the written authorization of the Attorney General. § 79.41 Stay pending appeal. (a) An initial decision is stayed auto- matically pending disposition of a mo- tion for reconsideration or of an appeal to the authority head. (b) No administrative stay is avail- able following a final decision of the authority head. § 79.42 Judicial review. Section 3805 of title 31, United States Code, authorizes judicial review by an appropriate United States District Court of a final decision of the author- ity head imposing penalties or assess- ments un ction 3805 of title 31, United States Code, authorizes judicial review by an appropriate United States District Court of a final decision of the author- ity head imposing penalties or assess- ments under this part and specifies the procedures for such review. § 79.43 Collection of civil penalties and assessments. Sections 3806 and 3808(b) of title 31, United States Code, authorize actions for collection of civil penalties and as- sessments imposed under this part and specify the procedures for such actions. § 79.44 Right to administrative offset. The amount of any penalty or assess- ment which has become final, or for which a judgment has been entered under § 79.42 or § 79.43, or any amount agreed upon in a compromise or settle- ment under § 79.46, may be collected by administrative offset under 31 U.S.C. 421 § 79.45 45 CFR Subtitle A (10–1–24 Edition) 3716, except that an administrative off- set may not be made under this sub- section against a refund of an overpay- ment of Federal taxes, then or later owing by the United States to the de- fendant. § 79.45 Deposit in Treasury of United States. All amounts collected pursuant to this part shall be deposited as miscella- neous receip xes, then or later owing by the United States to the de- fendant. § 79.45 Deposit in Treasury of United States. All amounts collected pursuant to this part shall be deposited as miscella- neous receipts in the Treasury of the United States, except as provided in 31 U.S.C. 3806(g). § 79.46 Compromise or settlement. (a) Parties may make offers of com- promise or settlement at any time. (b) The reviewing official has the ex- clusive authority to compromise or settle a case under this part at any time after the date on which the re- viewing official is permitted to issue a complaint and before the date on which the ALJ issues an initial decision. (c) The authority head has exclusive authority to compromise or settle a case under this part at any time after the date on which the ALJ issues an initial decision, except during the pendency of any review under § 79.42 or during the pendency of any action to collect penalties and assessments under § 79.43. (d) The Attorney General has exclu- sive authority to compromise or settle a case under this part during the pend- ency of any review under § 79.42 or of any action to recover penalties and as- sessments under 31 U.S.C. 3806. (e) The inves e authority to compromise or settle a case under this part during the pend- ency of any review under § 79.42 or of any action to recover penalties and as- sessments under 31 U.S.C. 3806. (e) The investigating official may recommend settlement terms to the re- viewing official, the authority head, or the Attorney General, as appropriate. The reviewing official may recommend settlement terms to the authority head, or the Attorney General, as ap- propriate. (f) Any compromise or settlement must be in writing. § 79.47 Limitations. (a) The notice of hearing with respect to a claim or statement must be served in the manner specified in § 79.8 within 6 years after the date on which such claim or statement is made. (b) If the defendant fails to file a timely answer, service of a notice under § 79.10(b) shall be deemed a notice of hearing for purposes of this section. (c) The statute of limitations may be extended by agreement of the parties. PART 80—NONDISCRIMINATION UNDER PROGRAMS RECEIVING FEDERAL ASSISTANCE THROUGH THE DEPARTMENT OF HEALTH AND HUMAN SERVICES EFFEC- TUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964 Sec. 80.1 Purpose. 80.2 Application of this regulation. 80.3 Discrimina EDERAL ASSISTANCE THROUGH THE DEPARTMENT OF HEALTH AND HUMAN SERVICES EFFEC- TUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964 Sec. 80.1 Purpose. 80.2 Application of this regulation. 80.3 Discrimination prohibited. 80.4 Assurances required. 80.5 Illustrative application. 80.6 Compliance information. 80.7 Conduct of investigations. 80.8 Procedure for effecting compliance. 80.9 Hearings. 80.10 Decisions and notices. 80.11 Judicial review. 80.12 Effect on other regulations; forms and instructions. 80.13 Definitions. APPENDIX A TO PART 80—FEDERAL FINANCIAL ASSISTANCE TO WHICH THESE REGULA- TIONS APPLY APPENDIX B TO PART 80—GUIDELINES FOR ELIMINATING DISCRIMINATION AND DENIAL OF SERVICES ON THE BASIS OF RACE, COLOR, NATIONAL ORIGIN, SEX, AND HAND- ICAP IN VOCATIONAL EDUCATION PROGRAMS AUTHORITY: Sec. 602, 78 Stat. 252; 42 U.S.C. 2000d–1. § 80.1 Purpose. The purpose of this part is to effec- tuate the provisions of title VI of the Civil Rights Act of 1964 (hereafter re- ferred to as the ‘‘Act’’) to the end that no person in the United States shall; on the ground of race, color, or na- tional origin, be excluded from partici- pation in, be denied the benefits of, or be otherwise subject Act’’) to the end that no person in the United States shall; on the ground of race, color, or na- tional origin, be excluded from partici- pation in, be denied the benefits of, or be otherwise subjected to discrimina- tion under any program or activity re- ceiving Federal financial assistance from the Department of Health and Human Services. (Sec. 601, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d)) [29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17982, July 5, 1973] 422 Dept. of Health and Human Services § 80.3 § 80.2 Application of this regulation. This regulation applies to any pro- gram to which Federal financial assist- ance is authorized to be extended to a recipient under a law administered by the Department, including the Federal financial assistance listed in appendix A to this part. It applies to money paid, property transferred, or other Federal financial assistance extended after the effective date of the regula- tion pursuant to an application ap- proved prior to such effective date. This regulation does not apply to (a) any Federal financial assistance by way of insurance or guaranty con- tracts, (b) money paid, property trans- ferred, or other assistance ex such effective date. This regulation does not apply to (a) any Federal financial assistance by way of insurance or guaranty con- tracts, (b) money paid, property trans- ferred, or other assistance extended be- fore the effective date of this regula- tion, (c) the use of any assistance by any individual who is the ultimate ben- eficiary under any such program, or (d) any employment practice, under any such program, or any employer, em- ployment agency, or labor organiza- tion, except to the extent described in § 80.3. The fact that a type of Federal assistance is not listed in appendix A to this part shall not mean, if title VI of the Act is otherwise applicable, that a program is not covered. Federal fi- nancial assistance under statutes now in force or hereinafter enacted may be added to this list by notice published in the FEDERAL REGISTER. (Secs. 602, 604, Civil Rights Act of 1964, 78 Stat. 252, 253 (42 U.S.C. 2000d–1, 2000d–3)) [38 FR 17979, July 5, 1973, as amended at 70 FR 24318, May 9, 2005] § 80.3 Discrimination prohibited. (a) General. No person in the United States shall, on the ground of race, color, or national origin be excluded from participation in, be denied the be , May 9, 2005] § 80.3 Discrimination prohibited. (a) General. No person in the United States shall, on the ground of race, color, or national origin be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program to which this part applies. (b) Specific discriminatory actions pro- hibited. (1) A recipient under any pro- gram to which this part applies may not, directly or through contractual or other arrangements, on ground of race, color, or national origin: (i) Deny an individual any service, fi- nancial aid, or other benefit provided under the program; (ii) Provide any service, financial aid, or other benefit to an individual which is different, or is provided in a different manner, from that provided to others under the program; (iii) Subject an individual to segrega- tion or separate treatment in any mat- ter related to his receipt of any service, financial aid, or other benefit under the program; (iv) Restrict an individual in any way in the enjoyment of any advantage or privilege enjoyed by others receiving any service, financial aid, or other ben- efit under the program; (v) Treat an individual differently from oth ual in any way in the enjoyment of any advantage or privilege enjoyed by others receiving any service, financial aid, or other ben- efit under the program; (v) Treat an individual differently from others in determining whether he satisfies any admission, enrollment, quota, eligibility, membership or other requirement or condition which indi- viduals must meet in order to be pro- vided any service, financial aid, or other benefit provided under the pro- gram; (vi) Deny an individual an oppor- tunity to participate in the program through the provision of services or otherwise or afford him an opportunity to do so which is different from that af- forded others under the program (in- cluding the opportunity to participate in the program as an employee but only to the extent set forth in para- graph (c) of this section). (vii) Deny a person the opportunity to participate as a member of a plan- ning or advisory body which is an inte- gral part of the program. (2) A recipient, in determining the types of services, financial aid, or other benefits, or facilities which will be pro- vided under any such program, or the class of individuals to whom, or the sit- uations in which, such services the types of services, financial aid, or other benefits, or facilities which will be pro- vided under any such program, or the class of individuals to whom, or the sit- uations in which, such services, finan- cial aid, other benefits, or facilities will be provided under any such pro- gram, or the class of individuals to be afforded an opportunity to participate in any such program, may not, directly or through contractual or other ar- rangements, utilize criteria or methods of administration which have the effect of subjecting individuals to discrimina- tion because of their race, color, or na- tional origin, or have the effect of de- feating or substantially impairing ac- complishment of the objectives of the program as respect individuals of a par- ticular race, color, or national origin. 423 § 80.3 45 CFR Subtitle A (10–1–24 Edition) (3) In determining the site or loca- tion of a facilities, an applicant or re- cipient may not make selections with the effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any programs to which this regu- lation applies, on the ground of race, color, or national origin; or with the purpose s from, denying them the benefits of, or subjecting them to discrimination under any programs to which this regu- lation applies, on the ground of race, color, or national origin; or with the purpose or effect of defeating or sub- stantially impairing the accomplish- ment of the objectives of the Act or this regulation. (4) As used in this section, the serv- ices, financial aid, or other benefits provided under a program receiving Federal financial assistance shall be deemed to include any service, finan- cial aid, or other benefits provided in or through a facility provided with the aid of Federal financial assistance. (5) The enumeration of specific forms of prohibited discrimination in this paragraph and paragraph (c) of this section does not limit the generality of the prohibition in paragraph (a) of this section. (6)(i) In administering a program re- garding which the recipient has pre- viously discriminated against persons on the ground of race, color, or na- tional origin, the recipient must take affirmative action to overcome the ef- fects of prior discrimination. (ii) Even in the absence of such prior discrimination, a recipient in admin- istering a program may take affirm ecipient must take affirmative action to overcome the ef- fects of prior discrimination. (ii) Even in the absence of such prior discrimination, a recipient in admin- istering a program may take affirma- tive action to overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, or national origin. (c) Employment practices. (1) Where a primary objective of the Federal finan- cial assistance to a program to which this regulation applies is to provide employment, a recipient may not (di- rectly or through contractual or other arrangements) subject an individual to discrimination on the ground of race, color, or national origin in its employ- ment practices under such program (in- cluding recruitment or recruitment ad- vertising, employment, layoff or termi- nation, upgrading, demotion, or trans- fer, rates of pay or other forms of com- pensation, and use of facilities), includ- ing programs where a primary objec- tive of the Federal financial assistance is (i) to reduce the employment of such individuals or to help them through employment to meet subsistence needs, (ii) to assist such individuals through employment to meet expense inancial assistance is (i) to reduce the employment of such individuals or to help them through employment to meet subsistence needs, (ii) to assist such individuals through employment to meet expenses incident to the commencement or continuation of their education or training, (iii) to provide work experience which contrib- utes to the education or training of such individuals, or (iv) to provide re- munerative activity to such individ- uals who because of handicaps cannot be readily absorbed in the competive labor market. The following, under ex- isting laws, have one of the above ob- jectives as a primary objective: (a) Projects under the Public Works Acceleration Act, Pub. L. 87–658, 42 U.S.C. 2641–2643. (b) Work-study under the Vocational Education Act of 1963, as amended, 20 U.S.C. 1371–1374. (c) Programs assisted under laws list- ed in appendix A to this part as re- spects employment opportunities pro- vided thereunder, or in facilities pro- vided thereunder, which are limited, or for which preference is given, to stu- dents, fellows, or other persons in training for the same or related em- ployments. (d) Assistance to rehabilitation fa- cilities under the Vocational Rehabil or for which preference is given, to stu- dents, fellows, or other persons in training for the same or related em- ployments. (d) Assistance to rehabilitation fa- cilities under the Vocational Rehabili- tation Act, 29 U.S.C. 32–34, 41a and 41b. (2) The requirements applicable to construction employment under any such program shall be those specified in or pursuant to Part III of Executive Order 11246 or any Executive order which supersedes it. (3) Where a primary objective of the Federal financial assistance is not to provide employment, but discrimina- tion on the ground of race, color, or na- tional origin in the employment prac- tices of the recipient or other persons subject to the regulation tends, on the ground of race, color, or national ori- gin, to exclude individuals from par- ticipation in, to deny them the benefits of, or to subject them to discrimina- tion under any program to which this regulation applies, the foregoing provi- sions of this paragraph (c) shall apply to the employment practices of the re- cipient or other persons subject to the regulation, to the extent necessary to assure equality of opportunity to, and nondiscriminatory treatment of, bene- ficiaries. e employment practices of the re- cipient or other persons subject to the regulation, to the extent necessary to assure equality of opportunity to, and nondiscriminatory treatment of, bene- ficiaries. 424 Dept. of Health and Human Services § 80.4 (d) Indian Health and Cuban Refugee Services. An individual shall not be deemed subjected to discrimination by reason of his exclusion from benefits limited by Federal law to individuals of a particular race, color, or national origin different from his. (e) Medical emergencies. Notwith- standing the foregoing provisions of this section, a recipient of Federal fi- nancial assistance shall not be deemed to have failed to comply with para- graph (a) of this section if immediate provision of a service or other benefit to an individual is necessary to prevent his death or serious impairment of his health, and such service or other ben- efit cannot be provided except by or through a medical institution which refuses or fails to comply with para- graph (a) of this section. (Secs. 601, 602, 604, Civil Rights Act of 1964, 78 Stat. 252, 253 (42 U.S.C. 2000d, 2000d–1, 2000d– 3)) [29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17979, 17982, July 5, 1 aph (a) of this section. (Secs. 601, 602, 604, Civil Rights Act of 1964, 78 Stat. 252, 253 (42 U.S.C. 2000d, 2000d–1, 2000d– 3)) [29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17979, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] § 80.4 Assurances required. (a) General. (1) Every application for Federal financial assistance to which this part applies, except an application to which paragraph (b) of this section applies, and every application for Fed- eral financial assistance to provide a facility shall, as a condition to its ap- proval and the extension of any Fed- eral financial assistance pursuant to the application, contain or be accom- panied by an assurance that the pro- gram will be conducted or the facility operated in compliance with all re- quirements imposed by or pursuant to this part. In the case of an application for Federal financial assistance to pro- vide real property or structures there- on, the assurance shall obligate the re- cipient, or, in the case of a subsequent transfer, the transferee, for the period during which the real property or structures are used for a purpose for which the Federal financial assistance is extended or for another purpose in- volvin nt transfer, the transferee, for the period during which the real property or structures are used for a purpose for which the Federal financial assistance is extended or for another purpose in- volving the provision of similar serv- ices or benefits. In the case of personal property the assurance shall obligate the recipient for the period during which he retains ownership or posses- sion of the property. In all other cases the assurance shall obligate the recipi- ent for the period during which Federal financial assistance is extended pursu- ant to the application. The responsible Department official shall specify the form of the foregoing assurances in the program, and the extent to which like assurances will be required of sub- grantees, contractors and subcontrac- tors, transferees, successors in inter- est, and other participants in the pro- gram. Any such assurance shall include provisions which give the United States a right to seek its judicial en- forcement. (2) Where Federal financial assist- ance is provided in the form of a trans- fer of real property or interest therein from the Federal Government the in- strument effecting or recording the transfer shall contain a cov financial assist- ance is provided in the form of a trans- fer of real property or interest therein from the Federal Government the in- strument effecting or recording the transfer shall contain a covenant run- ning with the land to assure non- discrimination for the period during which the real property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits. Where no transfer of property is involved but property is improved with Federal fi- nancial assistance, the recipient shall agree to include such a covenant to any subsequent transfer of the prop- erty. Where the property is obtained from the Federal Government, such covenant may also include a condition coupled with a right to be reserved by the Department to revert title to the property in the event of a breach of the covenant where, in the discretion of the responsible Department official, such a condition and right of reverter is appropriate to the statute under which the real property is obtained and to the nature of the grant and the grantee. In the event a transferee of real property proposes to mortgage or otherwise enc is appropriate to the statute under which the real property is obtained and to the nature of the grant and the grantee. In the event a transferee of real property proposes to mortgage or otherwise encumber the real property as security for financing construction of new, or improvement of existing, fa- cilities on such property for the pur- poses for which the property was trans- ferred, the responsible Department of- ficial may agree, upon request of the transferee and if necessary to accom- plish such financing, and upon such conditions as he deems appropriate, to forbear the exercise of such right to re- vert title for so long as the lien of such 425 § 80.5 45 CFR Subtitle A (10–1–24 Edition) mortgage or other encumbrance re- mains effective. (b) Continuing Federal financial assist- ance. Every application by a State or a State agency for continuing Federal fi- nancial assistance to which this regu- lation applies (including the Federal fi- nancial assistance listed in part 2 of appendix A to this part) shall as a con- dition to its approval and the extension of any Federal financial assistance pur- suant to the application (1) contain or be accompanied by a statement that the pr ndix A to this part) shall as a con- dition to its approval and the extension of any Federal financial assistance pur- suant to the application (1) contain or be accompanied by a statement that the program is (or, in the case of a new program, will be) conducted in compli- ance with all requirements imposed by or pursuant to this regulation, and (2) provide or be accompanied by provision for such methods of administration for the program as are found by the re- sponsible Department official to give reasonable assurance that the appli- cant and all recipients of Federal fi- nancial assistance under such program will comply with all requirements im- posed by or pursuant to this regula- tion. (c) Elementary and secondary schools. The requirements of paragraph (a) or (b) of this section with respect to any elementary or secondary school or school system shall be deemed to be satisfied if such school or school sys- tem (1) is subject to a final order of a court of the United States for the de- segregation of such school or school system, and provides an assurance that it will comply with such order, includ- ing any future modification of such order, or (2) submits a plan for the de- seg de- segregation of such school or school system, and provides an assurance that it will comply with such order, includ- ing any future modification of such order, or (2) submits a plan for the de- segregation of such school or school system which the responsible Depart- ment official determines is adequate to accomplish the purposes of the Act and this part, at the earliest practicable time, and provides reasonable assur- ance that it will carry out such plan; in any case of continuing Federal finan- cial assistance the responsible Depart- ment official may reserve the right to redetermine, after such period as may be specified by him, the adequacy of the plan to accomplish the purposes of the Act and the regulations in this part. In any case in which a final order of a court of the United States for the desegregation of such school or school system is entered after submission of such a plan, such plan shall be revised to conform to such final order, includ- ing any future modification of such order. (d) Assurance from institutions. (1) In the case of any application for Federal financial assistance to an institution of higher education (including assistance for construction, for r of such order. (d) Assurance from institutions. (1) In the case of any application for Federal financial assistance to an institution of higher education (including assistance for construction, for research, for spe- cial training project, for student loans or for any other purpose), the assur- ance required by this section shall ex- tend to admission practices and to all other practices relating to the treat- ment of students. (2) The assurance required with re- spect to an institution of higher edu- cation, hospital, or any other institu- tion, insofar as the assurance relates to the institution’s practices with respect to admission or other treatment of in- dividuals as students, patients, or cli- ents of the institution or to the oppor- tunity to participate in the provision of services or other benefits to such in- dividuals, shall be applicable to the en- tire institution. (Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d, 2000d–1); sec. 182, 80 Stat. 1209 (42 U.S.C. 2000d–5)) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 FR 17980, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] § 80.5 Illustrative application. The following e (42 U.S.C. 2000d–5)) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 FR 17980, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] § 80.5 Illustrative application. The following examples will illus- trate the programs aided by Federal fi- nancial assistance of the Department. (In all cases the discrimination prohib- ited is discrimination on the ground of race, color, or national origin prohib- ited by Title VI of the Act and this reg- ulation, as a condition of the receipt of Federal financial assistance). (a) In federally assisted programs for the provision of health or welfare serv- ices, discrimination in the selection or eligibility of individuals to receive the services, and segregation or other dis- criminatory practices in the manner of providing them, are prohibited. This prohibition extends to all facilities and services provided by the grantee or, if the grantee is a State, by a political subdivision of the State. It extends also to services purchased or otherwise obtained by the grantee (or political subdivision) from hospitals, nursing homes, schools, and similar institu- tions for beneficiaries of the program, 426 Dept. of Health and Human Service otherwise obtained by the grantee (or political subdivision) from hospitals, nursing homes, schools, and similar institu- tions for beneficiaries of the program, 426 Dept. of Health and Human Services § 80.5 and to the facilities in which such serv- ices are provided, subject, however, to the provisions of § 80.3(e). (b) In federally-affected area assist- ance (Pub. L. 815 and Pub. L. 874) for construction aid and for general sup- port of the operation of elementary or secondary schools, or in more limited support to such schools such as for the acquisition of equipment, the provision of vocational education, or the provi- sion of guidance and counseling serv- ices, discrimination by the recipient school district in any of its elementary or secondary schools in the admission of students, or in the treatment of its students in any aspect of the edu- cational process, is prohibited. In this and the following illustrations the pro- hibition of discrimination in the treat- ment of students or other trainees in- cludes the prohibition of discrimina- tion among the students or trainees in the availability or use of any aca- demic, dormitory, eating, recreational, or other facilities of s or other trainees in- cludes the prohibition of discrimina- tion among the students or trainees in the availability or use of any aca- demic, dormitory, eating, recreational, or other facilities of the grantee or other recipient. (c) In a research, training, dem- onstration, or other grant to a univer- sity for activities to be conducted in a graduate school, discrimination in the admission and treatment of students in the graduate school is prohibited, and the prohibition extends to the entire university. (d) In a training grant to a hospital or other nonacademic institution, dis- crimination is prohibited in the selec- tion of individuals to be trained and in their treatment by the grantee during their training. In a research or dem- onstration grant to such an institution discrimination is prohibited with re- spect to any educational activity and any provision of medical or other serv- ices and any financial aid to individ- uals incident to the program. (e) In grants to assist in the con- struction of facilities for the provision of health, educational or welfare serv- ices, assurances will be required that services will be provided without dis- crimination, to the same extent the con- struction of facilities for the provision of health, educational or welfare serv- ices, assurances will be required that services will be provided without dis- crimination, to the same extent that discrimination would be prohibited as a condition of Federal operating grants for the support of such services. Thus, as a condition of grants for the con- struction of academic, research, or other facilities at institutions of high- er education, assurances will be re- quired that there will be no discrimina- tion in the admission or treatment of students. In case of hospital construc- tion grants the assurance will apply to patients, to interns, residents, student nurses, and other trainees, and to the privilege of physicians, dentists, and other professionally qualified persons to practice in the hospital, and will apply to the entire facility for which, or for a part of which, the grant is made, and to facilities operated in con- nection therewith. (f) Upon transfers of real or personal surplus property for health or edu- cational uses, discrimination is prohib- ited to the same extent as in the case of grants for the construction of facili- ties or the provision of equipment ersonal surplus property for health or edu- cational uses, discrimination is prohib- ited to the same extent as in the case of grants for the construction of facili- ties or the provision of equipment for like purposes. (g) Each applicant for a grant for the construction of educational television facilities is required to provide an as- surance that it will, in its broadcast services, give due consideration to the interests of all significant racial or ethnic groups within the population to be served by the applicant. (h) A recipient may not take action that is calculated to bring about indi- rectly what this regulation forbids it to accomplish directly. Thus, a State, in selecting or approving projects or sites for the construction of public li- braries which will receive Federal fi- nancial assistance, may not base its se- lections or approvals on criteria which have the effect of defeating or of sub- stantially impairing accomplishments of the objectives of the Federal assist- ance as respects individuals of a par- ticular race, color or national origin. (i) In some situations, even though past discriminatory practices attrib- utable to a recipient or applicant have been abandon as respects individuals of a par- ticular race, color or national origin. (i) In some situations, even though past discriminatory practices attrib- utable to a recipient or applicant have been abandoned, the consequences of such practices continue to impede the full availability of a benefit. If the ef- forts required of the applicant or re- cipient under § 80.6(d), to provide infor- mation as to the availability of the program or activity and the rights of beneficiaries under this regulation, have failed to overcome these con- sequences, it will become necessary under the requirement stated in (i) of § 80.3(b) (6) for such applicant or recipi- ent to take additional steps to make 427 § 80.6 45 CFR Subtitle A (10–1–24 Edition) the benefits fully available to racial and nationality groups previously sub- ject to discrimination. This action might take the form, for example, of special arrangements for obtaining re- ferrals or making selections which will insure that groups previously subjected to discrimination are adequately served. (j) Even though an applicant or re- cipient has never used discriminatory policies, the services and benefits of the program or activity it administers jected to discrimination are adequately served. (j) Even though an applicant or re- cipient has never used discriminatory policies, the services and benefits of the program or activity it administers may not in fact be equally available to some racial or nationality groups. In such circumstances, an applicant or re- cipient may properly give special con- sideration to race, color, or national origin to make the benefits of its pro- gram more widely available to such groups, not then being adequately served. For example, where a univer- sity is not adequately serving members of a particular racial or nationality group, it may establish special recruit- ment policies to make its program bet- ter known and more readily available to such group, and take other steps to provide that group with more adequate service. (Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d, 2000d–1)) [29 FR 16298, Dec. 4, 1964; 29 FR 16988, Dec. 11, 1964, as amended at 38 FR 17980, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] § 80.6 Compliance information. (a) Cooperation and assistance. The re- sponsible Department official shall to the fullest extent practicable seek the cooperation of 5, 1973; 70 FR 24318, May 9, 2005] § 80.6 Compliance information. (a) Cooperation and assistance. The re- sponsible Department official shall to the fullest extent practicable seek the cooperation of recipients in obtaining compliance with this part and shall provide assistance and guidance to re- cipients to help them comply volun- tarily with this part. (b) Compliance reports. Each recipient shall keep such records and submit to the responsible Department official or his designee timely, complete and ac- curate compliance reports at such times, and in such form and containing such information, as the responsible Department official or his designee may determine to be necessary to en- able him to ascertain whether the re- cipient has complied or is complying with this part. For example, recipients should have available for the Depart- ment racial and ethnic data showing in the extent to which members of minor- ity groups are beneficiaries of and par- ticipants federally-assisted pro- grams. In the case in which a primary recipient extends Federal financial as- sistance to any other recipient, such other recipient shall also submit such compliance reports to the primary re- cipien grams. In the case in which a primary recipient extends Federal financial as- sistance to any other recipient, such other recipient shall also submit such compliance reports to the primary re- cipient as may be necessary to enable the primary recipient to carry out its obligations under this part. (c) Access to sources of information. Each recipient shall permit access by the responsible Department official or his designee during normal business hours to such of its books, records, ac- counts, and other sources of informa- tion, and its facilities as may be perti- nent to ascertain compliance with this part. Where any information required of a recipient is in the exclusive posses- sion of any other agency, institution or person and this agency, institution or person shall fail or refuse to furnish this information the recipient shall so certify in its report and shall set forth what efforts it has made to obtain the information. Asserted considerations of privacy or confidentiality may not op- erate to bar the Department from eval- uating or seeking to enforce compli- ance with this part. Information of a confidential nature obtained in connec- tion with compliance evaluation or e y not op- erate to bar the Department from eval- uating or seeking to enforce compli- ance with this part. Information of a confidential nature obtained in connec- tion with compliance evaluation or en- forcement shall not be disclosed except where necessary in formal enforcement proceedings or where otherwise re- quired by law. (d) Information to beneficiaries and participants. Each recipient shall make available to participants, beneficiaries, and other interested persons such in- formation regarding the provisions of this regulation and its applicability to the program for which the recipient re- ceives Federal financial assistance, and make such information available to them in such manner, as the respon- sible Department official finds nec- essary to apprise such persons of the protections against discrimination as- sured them by the Act and this regula- tion. (Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d, 2000d–1)) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] 428 Dept. of Health and Human Services § 80.8 § 80.7 Conduct of investigations. (a) Periodic compliance revi at 32 FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] 428 Dept. of Health and Human Services § 80.8 § 80.7 Conduct of investigations. (a) Periodic compliance reviews. The re- sponsible Department official or his designee shall from time to time re- view the practices of recipients to de- termine whether they are complying with this part. (b) Complaints. Any person who be- lieves himself or any specific class of individuals to be subjected to discrimi- nation prohibited by this part may by himself or by a representative file with the responsible Department official or his designee a written complaint. A complaint must be filed not later than 180 days from the date of the alleged discrimination, unless the time for fil- ing is extended by the responsible De- partment official or his designee. (c) Investigations. The responsible De- partment official or his designee will make a prompt investigation whenever a compliance review, report, com- plaint, or any other information indi- cates a possible failure to comply with this part. The investigation should in- clude, where appropriate, a review of the pertinent practices and policies of the recipient any other information indi- cates a possible failure to comply with this part. The investigation should in- clude, where appropriate, a review of the pertinent practices and policies of the recipient, the circumstances under which the possible noncompliance with this part occurred, and other factors relevant to a determination as to whether the recipient has failed to comply with this part. (d) Resolution of matters. (1) If an in- vestigation pursuant to paragraph (c) of this section indicates a failure to comply with this part, the responsible Department official or his designee will so inform the recipient and the matter will be resolved by informal means whenever possible. If it has been deter- mined that the matter cannot be re- solved by informal means, action will be taken as provided for in § 80.8. (2) If an investigation does not war- rant action pursuant to paragraph (d)(1) of this section the responsible Department official or his designee will so inform the recipient and the com- plainant, if any, in writing. (e) Intimidatory or retaliatory acts pro- hibited. No recipient or other person shall intimidate, threaten, coerce, or discriminate against any individual for the e com- plainant, if any, in writing. (e) Intimidatory or retaliatory acts pro- hibited. No recipient or other person shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege secured by section 601 of the Act or this part, or because he has made a complaint, testified, as- sisted, or participated in any manner in an investigation, proceeding or hear- ing under this part. The identity of complainants shall be kept confiden- tial except to the extent necessary to carry out the purposes of this part, in- cluding the conduct of any investiga- tion, hearing, or judicial proceeding arising thereunder. (Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d, 2000d–1)) [29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17981, 17982, July 5, 1973] § 80.8 Procedure for effecting compli- ance. (a) General. If there appears to be a failure or threatened failure to comply with this regulation, and if the non- compliance or threatened noncompli- ance cannot be corrected by informal means, compliance with this part may be effected by the suspension or termi- nation of or refusal to grant or to con- tinue Fed compliance or threatened noncompli- ance cannot be corrected by informal means, compliance with this part may be effected by the suspension or termi- nation of or refusal to grant or to con- tinue Federal financial assistance or by any other means authorized by law. Such other means may include, but are not limited to, (1) a reference to the Department of Justice with a rec- ommendation that appropriate pro- ceedings be brought to enforce any rights of the United States under any law of the United States (including other titles of the Act), or any assur- ance or other contractual undertaking, and (2) any applicable proceeding under State or local law. (b) Noncompliance with § 80.4. If an ap- plicant fails or refuses to furnish an as- surance required under § 80.4 or other- wise fails or refuses to comply with a requirement imposed by or pursuant to that section Federal financial assist- ance may be refused in accordance with the procedures of paragraph (c) of this section. The Department shall not be required to provide assistance in such a case during the pendency of the admin- istrative proceedings under such para- graph except that the Department shall continue assistance during nt shall not be required to provide assistance in such a case during the pendency of the admin- istrative proceedings under such para- graph except that the Department shall continue assistance during the pendency of such proceedings where such assistance is due and payable pur- suant to an application therefor ap- proved prior to the effective date of this part. (c) Termination of or refusal to grant or to continue Federal financial assistance. No order suspending, terminating or 429 § 80.9 45 CFR Subtitle A (10–1–24 Edition) refusing to grant or continue Federal financial assistance shall become effec- tive until (1) the responsible Depart- ment official has advised the applicant or recipient of his failure to comply and has determined that compliance cannot be secured by voluntary means, (2) there has been an express finding on the record, after opportunity for hear- ing, of a failure by the applicant or re- cipient to comply with a requirement imposed by or pursuant to this part, (3) the expiration of 30 days after the Sec- retary has filed with the committee of the House and the committee of the Senate having legislative jurisdiction over the program involved, a full writ- ten 3) the expiration of 30 days after the Sec- retary has filed with the committee of the House and the committee of the Senate having legislative jurisdiction over the program involved, a full writ- ten report of the circumstances and the grounds for such action. Any action to suspend or terminate or to refuse to grant or to continue Federal financial assistance shall be limited to the par- ticular political entity, or part thereof, or other applicant or recipient as to whom such a finding has been made and shall be limited in its effect to the particular program, or part thereof, in which such noncompliance has been so found. (d) Other means authorized by law. No action to effect compliance by any other means authorized by law shall be taken until (1) the responsible Depart- ment official has determined that com- pliance cannot be secured by voluntary means, (2) the recipient or other person has been notified of its failure to com- ply and of the action to be taken to ef- fect compliance, and (3) the expiration of at least 10 days from the mailing of such notice to the recipient or other person. During this period of at least 10 days additional efforts shall be made to persuade the e, and (3) the expiration of at least 10 days from the mailing of such notice to the recipient or other person. During this period of at least 10 days additional efforts shall be made to persuade the recipient or other person to comply with the regulation and to take such corrective action as may be appropriate. (Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d, 2000d–1; sec. 182, 80 Stat. 1209; (42 U.S.C. 2000d–5)) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14556, Oct. 19, 1967; 38 FR 17982, July 5, 1973] § 80.9 Hearings. (a) Opportunity for hearing. Whenever an opportunity for a hearing is re- quired by § 80.8(c), reasonable notice shall be given by registered or certified mail, return receipt requested, to the affected applicant or recipient. This notice shall advise the applicant or re- cipient of the action proposed to be taken, the specific provision under which the proposed action against it is to be taken, and the matters of fact or law asserted as the basis for this ac- tion, and either (1) fix a date not less than 20 days after the date of such no- tice within which the applicant or re- cipient may request of the responsible Department official he basis for this ac- tion, and either (1) fix a date not less than 20 days after the date of such no- tice within which the applicant or re- cipient may request of the responsible Department official that the matter be scheduled for hearing or (2) advise the applicant or recipient that the matter in question has been set down for hear- ing at a stated place and time. The time and place so fixed shall be reason- able and shall be subject to change for cause. The complainant, if any, shall be advised of the time and place of the hearing. An applicant or recipient may waive a hearing and submit written in- formation and argument for the record. The failure of an applicant or recipient to request a hearing for which a date has been set shall be deemed to be a waiver of the right to a hearing under section 602 of the Act and § 80.8(c) of this regulation and consent to the making of a decision on the basis of such information as may be filed as the record. (b) Time and place of hearing. Hear- ings shall be held at the offices of the Department in Washington, DC, at a time fixed by the responsible Depart- ment official unless he determines that the convenience of the applicant or re- cip r- ings shall be held at the offices of the Department in Washington, DC, at a time fixed by the responsible Depart- ment official unless he determines that the convenience of the applicant or re- cipient or of the Department requires that another place be selected. Hear- ings shall be held before a hearing ex- aminer designated in accordance with 5 U.S.C. 3105 and 3344 (section 11 of the Administrative Procedure Act). (c) Right to counsel. In all proceedings under this section, the applicant or re- cipient and the Department shall have the right to be represented by counsel. (d) Procedures, evidence, and record. (1) The hearing, decision, and any admin- istrative review thereof shall be con- ducted in conformity with sections 5–8 of the Administrative Procedure Act, and in accordance with such rules of procedure as are proper (and not incon- sistent with this section) relating to the conduct of the hearing, giving of notices subsequent to those provided 430 Dept. of Health and Human Services § 80.10 for in paragraph (a) of this section, taking of testimony, exhibits, argu- ments and briefs, requests for findings, and other related matters. Both the Department and the applicant or ervices § 80.10 for in paragraph (a) of this section, taking of testimony, exhibits, argu- ments and briefs, requests for findings, and other related matters. Both the Department and the applicant or re- cipient shall be entitled to introduce all relevant evidence on the issues as stated in the notice for hearing or as determined by the officer conducting the hearing at the outset of or during the hearing. Any person (other than a Government employee considered to be on official business) who, having been invited or requested to appear and tes- tify as a witness on the Government’s behalf, attends at a time and place scheduled for a hearing provided for by this part, may be reimbursed for his travel and actual expenses of attend- ance in an amount not to exceed the amount payable under the standardized travel regulations to a Government employee traveling on official business. (2) Technical rules of evidence shall not apply to hearings conducted pursu- ant to this part, but rules or principles designed to assure production of the most credible evidence available and to subject testimony to test by cross-ex- amination shall be applied where rea- sonably necessary by the officer con- inciples designed to assure production of the most credible evidence available and to subject testimony to test by cross-ex- amination shall be applied where rea- sonably necessary by the officer con- ducting the hearing. The hearing offi- cer may exclude irrelevant, immate- rial, or unduly repetitious evidence. All documents and other evidence offered or taken for the record shall be open to examination by the parties and oppor- tunity shall be given to refute facts and arguments advanced on either side of the issues. A transcript shall be made of the oral evidence except to the extent the substance thereof is stipu- lated for the record. All decisions shall be based upon the hearing record and written findings shall be made. (e) Consolidated or Joint Hearings. In cases in which the same or related facts are asserted to constitute non- compliance with this regulation with respect to two or more Federal stat- utes, authorities, or other means by which Federal financial assistance is extended, to which this part applies, or noncompliance with this part and the regulations of one or more other Fed- eral departments or agencies issued under Title VI of the Act, the respon- sible Depar tended, to which this part applies, or noncompliance with this part and the regulations of one or more other Fed- eral departments or agencies issued under Title VI of the Act, the respon- sible Department official may, by agreement with such other depart- ments or agencies where applicable, provide for the conduct of consolidated or joint hearings, and for the applica- tion to such hearings of rules of proce- dures not inconsistent with this part. Final decisions in such cases, insofar as this regulation is concerned, shall be made in accordance with § 80.10. (Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d–1)) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 FR 17981, 17982, July 5, 1973; 70 FR 24318, May 9, 2005] § 80.10 Decisions and notices. (a) Decisions by hearing examiners. After a hearing is held by a hearing ex- aminer such hearing examiner shall ei- ther make an initial decision, if so au- thorized, or certify the entire record including his recommended findings and proposed decision to the reviewing authority for a final decision, and a copy of such initial decision or certifi- cation shall be mailed to the applicant or recipien ding his recommended findings and proposed decision to the reviewing authority for a final decision, and a copy of such initial decision or certifi- cation shall be mailed to the applicant or recipient and to the complainant, if any. Where the initial decision referred to in this paragraph or in paragraph (c) of this section is made by the hearing examiner, the applicant or recipient or the counsel for the Department may, within the period provided for in the rules of procedure issued by the respon- sible Department official, file with the reviewing authority exceptions to the initial decision, with his reasons there- for. Upon the filing of such exceptions the reviewing authority shall review the initial decision and issue its own decision thereof including the reasons therefor. In the absence of exceptions the initial decision shall constitute the final decision, subject to the provisions of paragraph (e) of this section. (b) Decisions on record or review by the reviewing authority. Whenever a record is certified to the reviewing authority for decision or it reviews the decision of a hearing examiner pursuant to paragraph (a) or (c) of this section, the applicant or recipient sha Whenever a record is certified to the reviewing authority for decision or it reviews the decision of a hearing examiner pursuant to paragraph (a) or (c) of this section, the applicant or recipient shall be given reasonable opportunity to file with it briefs or other written statements of its contentions, and a copy of the final decision of the reviewing authority shall be given in writing to the appli- cant or recipient and to the complain- ant, if any. 431 § 80.10 45 CFR Subtitle A (10–1–24 Edition) (c) Decisions on record where a hearing is waived. Whenever a hearing is waived pursuant to § 80.9(a) the reviewing au- thority shall make its final decision on the record or refer the matter to a hearing examiner for an initial deci- sion to be made on the record. A copy of such decision shall be given in writ- ing to the applicant or recipient, and to the complainant, if any. (d) Rulings required. Each decision of a hearing examiner or reviewing au- thority shall set forth a ruling on each finding, conclusion, or exception pre- sented, and shall identify the require- ment or requirements imposed by or pursuant to this part with which it is found that the applicant or recipient has fa ch finding, conclusion, or exception pre- sented, and shall identify the require- ment or requirements imposed by or pursuant to this part with which it is found that the applicant or recipient has failed to comply. (e) Review in certain cases by the Sec- retary. If the Secretary has not person- ally made the final decision referred to in paragraph (a), (b), or (c) of this sec- tion, a recipient or applicant or the counsel for the Department may re- quest the Secretary to review a deci- sion of the Reviewing Authority in ac- cordance with rules of procedure issued by the responsible Department official. Such review is not a matter of right and shall be granted only where the Secretary determines there are special and important reasons therefor. The Secretary may grant or deny such re- quest, in whole or in part. He may also review such a decision upon his own motion in accordance with rules of pro- cedure issued by the responsible De- partment official. In the absence of a review under this paragraph, a final de- cision referred to in paragraphs (a), (b), and (c) of this section shall become the final decision of the Department when the Secretary transmits it as such to Congression this paragraph, a final de- cision referred to in paragraphs (a), (b), and (c) of this section shall become the final decision of the Department when the Secretary transmits it as such to Congressional committees with the re- port required under section 602 of the Act. Failure of an applicant or recipi- ent to file an exception with the Re- viewing Authority or to request review under this paragraph shall not be deemed a failure to exhaust adminis- trative remedies for the purpose of ob- taining judicial review. (f) Content of orders. The final deci- sion may provide for suspension or ter- mination of, or refusal to grant or con- tinue Federal financial assistance, in whole or in part, to which this regula- tion applies, and may contain such terms, conditions, and other provisions as are consistent with and will effec- tuate the purposes of the Act and this regulation, including provisions de- signed to assure that no Federal finan- cial assistance to which this regulation applies will thereafter be extended under such law or laws to the applicant or recipient determined by such deci- sion to be in default in its performance of an assurance given by it pursuant to this regulation,