October 24, 2021

Volume XI, Number 297

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October 22, 2021

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HHS Increases Civil Monetary Penalties and 299 Other Fines

Health care providers, life sciences companies and other entities subject to regulation by the Food and Drug Administration (“FDA”) or the Centers for Medicare & Medicaid Services (“CMS”) should be aware that the U.S. Department of Health and Human Services (“HHS”) is increasing the maximum civil monetary penalty amounts that may be assessed by the agency.

The new maximum adjusted penalty amounts may have a significant impact on entities that violate or fail to meet mandatory reporting requirements set by FDA or CMS. Of the 299 enumerated increased fines, 137 fines (45.8%) have increased by over 75%, 100 fines (33.4%) increased by over 97%, and 64 fines (21.4%) have doubled or more.  These increased fines affect a wide variety of activities and providers illustrated by the following examples:

Fine

Previous Penalty

New, Increased Penalty

Fines for failure to report drug samples required by 21 U.S.C. § 353(d)(3)(E)

$100,000 per instance

$197,869 per instance

Fines for participating in prohibited conduct under 21 U.S.C. § 331 (misbranding, unapproved alteration, use of counterfeits, and other conduct related to the use of drugs or devices)

$1,000,000

$1,781,560

Fines for any related series of violations of requirements relating to electronic products under 21 U.S.C. § 360pp(b)(1)

$375,000

$937,500

Improper billing fines for Hospitals, critical access hospitals, or skilled nursing facilities under 42 U.S.C. § 1395cc(g)

$2,000

$5,000

Fines for certain biological product recall violations under 42 U.S.C. § 262(d)

$100,000

$215,628

Fines to Medicaid MCOs that improperly expel or refuse to reenroll a beneficiary under 42 U.S.C. § 1396b(m)(5)(B)(i)

$100,000

$197,869

Fines for failure to report medical malpractice claims, or breaching confidentiality of information within such a claim, to the National Practitioner Data Bank under 42 U.S.C. § 11131(b)(2)-(c)

$10,000

$21,563

Skilled Nursing Facility fines for noncompliance under 42 U.S.C. § 1395i-3(h)(2)(B)(ii)(l)

$10,000

$20,628

Fines for failure to promptly provide appropriate diagnosis codes to CMS under 42 U.S.C. § 1395u(p)(3)(A)

$2,000

$3,957

Daily fines for failure by a home health agency to be in compliance with statutory requirements per 42 U.S.C. § 1395bbb(f)(2)(A)(i)

$10,000

$19,787

The adjusted civil monetary penalty amounts became effective on September 6, 2016, and are applicable only to HHS civil penalties assessed after August 1, 2016 for violations that occurred after November 2, 2015.  Pursuant to the Bipartisan Budget Act of 2015 (“2015 Act”) and the Administrative Procedures Act (5 U.S.C. 553(b)(3)(B)), HHS finalized the interim rule without prior notice or comment period.  As the 2015 Act provided a straight forward formula to calculate future civil monetary penalty adjustments, HHS determined that there was good cause for immediate implementation without a notice and comment period.

While penalties that more than double their previous amounts may be alarming, a penalty increase is not surprising considering some penalties have remained unchanged since 1968.[1]  These increases represent only the initial “catch up” adjustments required by the 2015 Act.  Similar to the U.S. Department of Justice and U.S. Railroad Retirement Board penalty increase adjustments for the False Claims Act discussed previously, HHS must also make subsequent annual civil monetary penalty adjustments for inflation by January 15 each  year. These increased penalties, along with the anticipated yearly inflation adjustments, provide companies with additional incentives to increase their compliance efforts in the hope of limiting their exposure to additional penalties.


[1] For example, 21 U.S.C. 360pp(b)(1) increased the penalty for any person who violated requirements for electronic products 150% from its pre-inflation penalty, from $1,100 per unlawful act or omission pre-adjustment to $2,750 per act or omission post-adjustment.

©2021 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume VI, Number 274
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About this Author

Bradley Davidsen, Epstein Becker Law Firm, Health Care Attorney
Associate

Mr. Davidsen is an Associate in the Health Care and Life Sciences practice, in the Chicago office of Epstein Becker Green.

Mr. Davidsen:

  • Advises clients on the research, development, and approval of pharmaceuticals, biologics, and medical devices

  • Develops clinical trial agreements, vendor agreements, informed consent documents, and related materials for clinical research sponsors, and negotiates agreements with clinical research institutions and...

312-499-1467
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