This subpart implements the Program Fraud Civil Remedies Act of 1986, PublicLaw 99-509, 6101-6104, 100 Stat. 1874 (October 21, 1986), to becodified at 31 U.S.C. 3801-3812. 31 U.S.C. 3809 of the statute requireseach authority head to promulgate regulations necessary to implement theprovisions of the statute. The subpart establishes administrative procedures forimposing civil penalties and assessments against persons who make, submit, orpresent, or cause to be made, submitted, or presented, false, fictitious, orfraudulent claims or written statements to authorities or to their agents, andspecifies the hearing and appeal rights of persons subject to allegations ofliability for such penalties and assessments.

ALJ means an Administrative Law Judge in the authorityappointed pursuant to 5 U.S.C. 3105 or detailed to the authority pursuant to 5U.S.C. 3344.

Authority means the United States Department of Justice,including all offices, boards, divisions and bureaus.

Authority head means the Attorney General or his designee. Forpurposes of these regulations, the Deputy Attorney General is designated to acton behalf of the Attorney General.

Benefit means in the context of statement,anything of value, including but not limited to any advantage, preference,privilege, license, permit, favorable decision, ruling, status or loanguarantee.

Claim means any request, demand, or submission—

(a) Made to the authority for property, services, or money (including moneyrepresenting grants, loans or insurance);

(b) Made to a recipient of property, services, or money from the authority orto a party to a contract with the authority—

(1) For property or services if the United States:

(i) Provided such property or services;

(ii) Provided any portion of the funds for the purchase of such property orservices; or

(iii) Will reimburse such recipient or party for the purchase of suchproperty or services; or

(2) For the payment of money (including 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 paidon such request or demand; or

(c) Made to the authority which has the effect of decreasing an obligation topay or account for property, services, or money.

Complaint means the administrative complaint served by therviewing official on the defendant under § 71.7.

Defendant means any person alleged in a complaint under§ 71.7 to be liable for a civil penalty or assessment under§ 71.3.

Government means the United States Government.

Individual means a natural person.

Initial decision means the written decision of the ALJ requiredby § 71.10 or § 71.37, and includes a revised initialdecision issued following a remand or a motion for reconsideration.

Investigating Official means the Inspector General.

Knows or has reason to know means that a person, with respectto a claim or statement:

(a) Has actual knowledge that the claim or statement is false, fictitious, orfraudulent;

(b) Acts in deliberate ignorance of the truth or falsity of the claim orstatement; or

(c) Acts in reckless disregard of the truth or falsity of the claim orstatement.

Makes shall include the terms presents, submits, and causes tobe made, presented, or submitted. As the context requires, makingor made, shall likewise include the corresponding forms of suchterms.

Person means any individual, partnership, corporation,association, or private organization, and includes the plural of that term.

Representative means an attorney who is in good standing of thebar of any State, Territory, or possession of the United States or of theDistrict of Columbia or the Commonwealth of Puerto Rico.

Reviewing Official means the Assistant Attorney General forAdministration. For purposes of § 71.5 of these rules, the AssistantAttorney General for Administration, personally or through his immediate staff,shall perform the functions of the reviewing official provided that such personis serving in a position for which the rate of basic pay is not less than theminimum rate of basic pay for grade GS-16 under the General Schedule. Allother functions of the reviewing official, including administrative prosecutionunder these rules, shall be performed with respect to the components listedbelow by the individuals listed below acting on behalf of the Assistant AttorneyGeneral for Administration:

(a) For the offices, boards, divisions and any other components not coveredbelow, the General Counsel, Justice Management Division;

(b) For the Bureau of Prisons (BOP), the General Counsel, BOP;

(c) For the Drug Enforcement Administration (DEA), the Chief Counsel, DEA;

(d) For the Federal Bureau of Investigation (FBI), the Assistant Director,Legal Counsel Division;

(e) For the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), theChief Counsel, ATF;

(f) For the Immigration and Naturalization Service (INS), the GeneralCounsel, INS; and

(g) For the United States Marshals Service (USMS), the Associate Director forAdministration.

Statement means any representation, certification, affirmation,document, record, or accounting or bookkeeping entry made:

(a) With respect to a claim or to obtain the approval or payment of a claim(including relating to eligibility to make a claim); or

(b) With respect to (including relating to eligibility for):

(1) A contract with, or a bid or proposal for a contract with; or

(2) A grant, loan, or benefit from, the authority, or any State, politicalsubdivision of a State, or other party, if the United States Government providesany portion of the money or property under such contract or for such grant,loan, or benefit, or if the Government will reimburse such State, politicalsubdivision, or party for any portion of the money or property under suchcontract or for such grant, loan, or benefit.

(a) Any person shall be subject, in addition to any other remedy that may beprescribed by law, to a civil penalty of not more than $5,000 for each claimlisted in paragraphs (a)(1) through (a)(4) of this section made before September29, 1999, and not more than $5,500 for each such claim made on or afterSeptember 29, 1999, if that person makes a claim that the person knows or hasreason to know:

(1) Is false, fictitious, or fraudulent;

(2) Includes, or is supported by, any written statement which asserts amaterial fact which is false, fictitious or fraudulent;

(3) Includes or is supported by, any written statement that

(i) Omits a material fact;

(ii) Is false, fictitious, or fraudulent as a result of such omission; and

(iii) Is a statement in which the person making such a statement has a dutyto include such material fact; or

(4) Is for payment for the provision of property or services which the personhas not provided as claimed.

(b) Each voucher, invoice, claim form, or other individual request or demandfor property, services, or money constitutes a separate claim.

(c) A claim shall be considered made to the authority, recipient, or partywhen such claim is actually made to an agent, fiscal intermediary, or otherentity, including any State or political subdivision thereof, acting for or onbehalf of the authority, recipient, or party.

(d) Each claim for property, services, or money is subject to a civil penaltyregardless of whether such property, services, or money is actually delivered orpaid.

(e) If the Government has made any payment (including transferred property orprovided services) on a claim, a person subject to a civil penalty underparagraph (a)(1) of this section shall also be subject to an assessment of notmore than twice the amount of such claim or that portion thereof that isdetermined to be in violation of paragraph (a)(1) of this section. Suchassessment shall be in lieu of damages sustained by the Government because ofsuch claim.

(f) Any person shall be subject, in addition to any other remedy that may beprescribed by law, to a civil penalty of not more than $5,000 for each statementlisted in paragraphs (f)(1) and (f)(2) of this section made before September 29,1999, and not more than $5,500 for each such statement made on or afterSeptember 29, 1999, if that person makes a written statement that:

(1) The person knows or has reason to know

(i) Asserts a material fact which is false ficticious, or fraudulent; or

(ii) Is false, fictitious, or fraudulent because it omits a material factthat the person making the statement has a duty to include in such statement;and

(2) Contains, or is accompanied by, an express certification or affirmationof the truthfulness and accuracy of the contents of the statement.

(g) Each written representation, certification, or affirmation constitutes aseparate statement.

(h) A statement shall be considered made to the authority when such statementis actually made to an agent, fiscal intermediary, or other entity, includingany State or political subdivision thereof, acting for or on behalf of theauthority.

(i) No proof of specific intent to defraud is required to establish liabilityunder this section.

(j) In any case in which it is determined that more than one person is liablefor making a claim or statement under this section, each such person may be heldliable for a civil penalty under this section.

(k) In any case in which it is determined that more than one person is liablefor making a claim under this section on which the Government has made payment(including transferred property or provided services), an assessment may beimposed against any such person or jointly and severally against any combinationof such persons.

(a) If an investigating official concludes that a subpoena pursuant to theauthority conferred by 31 U.S.C. 3804(a) is warranted, he may issue a subpoena.

(1) The subpoena so issued shall notify the person to whom it is addressed ofthe authority under which the subpoena is issued and shall identify the recordsor documents sought;

(2) The investigating official may designate a person to act on his or herbehalf to receive the documents sought; and

(3) The person receiving such subpoena shall be required to tender to theinvestigating official, or the person designated to receive the documents, acertification that

(i) The documents sought have been produced;

(ii) Such documents are not available and the reasons therefor; or

(iii) Such documents, suitably identified, have been withheld based upon theassertion of an identified privilege.

(b) If the investigating official concludes that an action under the ProgramFraud Civil Remedies Act may be warranted, the investigating official shallsubmit a report containing the findings and conclusions of such investigation tothe reviewing official.

(c) Nothing in this section shall preclude or limit an investigatingofficial's discretion to refer allegations within the Department of Justice forsuit under the False Claims Act or other civil relief, or to defer or postpone areport or referral to the reviewing official to avoid interference with acriminal investigation or prosecution.

(d) Nothing in this section modifies any responsibility of an investigatingofficial to report violations of criminal law to the appropriate component ofthe Department.

(a) If, based on the report of the investigating official under§ 71.4(b), the reviewing official determines that there is adequateevidence to believe that a person is liable under § 71.3, thereviewing official shall transmit to the Assistant Attorney General, CivilDivision, a written notice of the reviewing official's intention to have acomplaint issued under § 71.7. Such notice shall include

(1) A statement of the reviewing official's reasons for issuing a complaint;

(2) A statement specifying the evidence that support the allegations ofliability;

(3) A description of the claims or statements upon which the allegations ofliability are based;

(4) An estimate of the amount of money, or the value of property, services,or other benefits, requested or demanded in violation of § 71.3 ofthis part;

(5) A statement of any exculpatory or mitigating circumstances that mayrelate to the claims or statements known by the reviewing official or theinvestigating official; and

(6) A statement that there is a reasonable prospect of collecting anappropriate amount of penalties and assessments.

(a) The reviewing official may issue a complaint under § 71.7 onlyif

(1) The Assistant Attorney General, Civil Division, approves the issuance ofa complaint in a written statement described in 31 U.S.C. 3803(b)(1), and

(2) In the case of allegations of liability under § 71.3(a) withrespect to a claim, the reviewing official determines that, with respect to suchclaim or a group of related claims submitted at the same time such claim issubmitted (as defined in paragraph (b) of this section), the amount of money, orthe value of property or services, demanded or requested in violation of§ 71.3(a) does not exceed $150,000.

(b) For the purposes of this section, a related group of claims submitted atthe same time shall include only those claims arising from the same transaction(e.g., grant, loan, application, or contract) that are submitted simultaneouslyas part of a single request, demand, or submission.

(c) Nothing in this section shall be construed to limit the reviewingofficial's authority to join in a single complaint against a person claims thatare unrelated or were not submitted simultaneously, regardless of the amount ofmoney, or the value of property or services, demanded or requested.

(a) On or after the date the Assistant Attorney General, Civil Division,approves the issuance of a complaint in accordance with 31 U.S.C. 3803(b)(1),the reviewing official may serve a complaint on the defendant, as provided in§ 71.8.

(b) The complaint shall state the following:

(1) The allegations of liability against the defendant, including thestatutory basis for liability, an identification of the claims or statementsthat are the basis for the alleged liability, and the reasons why liabilityallegedly arises from such claims or statements;

(2) The maximum amount of penalties and assessments for which the defendantmay be held liable;

(3) Instructions for filing an answer to request a hearing, including aspecific statement of the defendant's right to request a hearing by filing ananswer and to be represented by a representative; and

(4) The fact that failure to file an answer within 30 days of service of thecomplaint will result in the imposition of the maximum amount of penalties andassessments without right to appeal, as provided in § 71.10.

(c) At the same time the reviewing official serves the complaint, he or sheshall serve the defendant with a copy of these regulations.

(a) Service of a complaint must be made by certified or registered mail or bydelivery in any manner authorized by Rule 4(d) of the Federal Rules of CivilProcedure. Service is complete upon receipt.

(b) Proof of service, stating the name and address of the person on whom thecomplaint 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 return receipt card acknowledging receipt;or

(3) Written acknowledgment of receipt by the defendant or his or herrepresentative.

(a) The defendant may request a hearing by filing an answer with thereviewing official within 30 days of service of the complaint. An answer shallbe 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 thecomplaint;

(2) Shall state any defense on which the defendant intends to rely;

(3) May state any reasons why the defendant contends that the penalties andassessments should be less than the statutory maximum; and

(4) Shall state the name, address, and telephone number of the personauthorized by the defendant to act as defendant's representative, if any.

(c) If the defendant is unable to file an answer meeting the requirements ofparagraph (b) of this section within the time provided, the defendant may,before the expiration of 30 days from service of the complaint, file with thereviewing official a general answer denying liability and requesting a hearing,and a request for an extension of time within which to file an answer meetingthe requirements of paragraph (b) of this section. The reviewing official shallfile promptly with the ALJ the complaint, the general answer denying liability,and the request for an extension of time as provided in § 71.11. Forgood cause shown, the ALJ may grant the defendant up to 30 additional dayswithin which to file an answer meeting the requirements of paragraph (b) of thissection.

(a) If the defendant does not file an answer within the time prescribed in§ 71.9(a), the reviewing official may refer the complaint to the ALJ.

(b) Upon the referral of the complaint, the ALJ shall promptly serve on thedefendant in the manner prescribed in § 71.8, a notice that aninitial decision will be issued under this section.

(c) The ALJ shall assume the facts alleged in the complaint to be true and,if such facts establish liability under § 71.3, the ALJ shall issuean initial decision imposing the maximum amount of penalties and assessmentsallowed under the statute.

(d) Except as otherwise provided in this section, by failing to file a timelyanswer the defendant waives any right to further review of the penalties andassessments imposed under paragraph (c) of this section and the initial decisionshall 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 amotion with the ALJ seeking to reopen on the grounds that extraordinarycircumstances prevented the defendant from filing an answer, the initialdecision shall be stayed pending the ALJ's decision on the motion.

(f) If, on such motion, the defendant can demonstrate extraordinarycircumstances excusing the failure to file a timely answer, the ALJ shallwithdraw the initial decision in paragraph (c) of this section, if such adecision has been issued, and shall grant the defendant an opportunity to answerthe complaint.

(g) A decision of the ALJ denying a defendant's motion under paragraph (e) ofthis section is not subject to reconsideration under § 71.38.

(h) The defendant may appeal to the authority head the decision denying amotion to reopen by filing a notice of appeal with the authority head within 15days after the ALJ denies the motion. The timely filing of a notice of appealshall stay the initial decision until the authority head decides the issue.

(i) If the defendant files a timely notice 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 extraordinarycircumstances excuse the defendant's failure to file a timely answer basedsolely on the record before the ALJ.

(k) If the authority head decides that extraordinary circumstances excusedthe defendant's failure to file a timely answer, the authority head shall remandthe case to the ALJ with instructions to grant the defendant an opportunity toanswer.

(l) If the authority head decides that the defendant's failure to file atimely answer is not excused, the authority head shall reinstate the initialdecision of the ALJ, which shall become final and binding upon the parties 30days after the authority head issues such decision.

Upon receipt of an answer, the reviewing official shall file the complaintand answer with the ALJ.

(a) When the ALJ receives the complaint and answer, the ALJ shall promptlyserve a notice of hearing upon the defendant in the manner prescribed by§ 71.8. At the same time, the ALJ shall send a copy of such notice tothe reviewing official or his designee.

(b) Such notice shall include

(1) The tentative time and place, and the nature of the hearing;

(2) The legal authority and jurisdiction under which the hearing is to beheld;

(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 theGovernment and of the defendant, if any; and

(6) Such other matters as the ALJ deems appropriate.

(a) The parties 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 FalseClaims Act may participate in these proceedings to the extent authorized by theprovisions of that Act.

(a) The investigating official, the reviewing official, and any employee oragent of the authority who takes part in investigating, preparing, or presentinga 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 theinitial decision by the authority head, except as a witness or a representativein public proceedings; or

(3) Make the collection of penalties and assessments under 31 U.S.C. 3806.

(b) The ALJ shall not be responsible to or subject to the supervision ordirection of the investigating official or the reviewing official.

No party or person (except employees of the ALJ's office) shall communicatein any way with the ALJ on any matter at issue in a case, unless on notice andopportunity for all parties to participate. This provision does not prohibit aperson or party from inquiring about the status of a case or asking routinequestions concerning administrative functions or procedures.

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 therecord;

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

(f) Present and cross-examine witnesses;

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

(h) Submit written briefs and proposed findings of fact and conclusions oflaw after the hearing.

(a) The ALJ shall conduct a fair and impartial hearing, avoid delay, maintainorder, 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 reasonablenotice to the parties;

(2) Continue or recess the hearing in whole or in part for a reasonableperiod of time;

(3) Hold conferences to identify or simplify the issues, or to consider othermatters that may aid in the expeditious disposition of the proceeding;

(4) Administer oaths and affirmations;

(5) Issue subpoenas requiring the attendance of witnesses and the productionof documents at depositions or at hearings;

(6) Rule on motions and other procedural matters;

(7) Regulate the scope and timing of discovery;

(8) Regulate the course of the hearing and the conduct of representatives andparties;

(9) Examine witnesses;

(10) Receive, rule on, exclude, or limit evidence;

(11) Upon motion of a party, take official notice of facts;

(12) Upon motion of a party, decide cases, in whole or in part, by summaryjudgment where there is no disputed issue of material fact;

(13) Conduct any conference, argument, or hearing on motions in person or bytelephone; and

(14) Exercise such other authority as is necessary to carry out theresponsibilities of the ALJ under this part.

(c) The ALJ does not have the authority to find Federal statutes orregulations invalid.

(a) The ALJ may schedule prehearing conferences as appropriate.

(b) Upon the motion of any party, the ALJ shall schedule at least oneprehearing conference at a reasonable time in advance of the hearing.

(c) The ALJ may use prehearing conferences to discuss the following:

(1) Simplification of the issues;

(2) The necessity or desirability of amendments to the pleadings, includingthe need for a more definite statement;

(3) Stipulations and admissions of fact or as to the contents andauthenticity of documents;

(4) Whether the parties can agree to submission of the case on a stipulatedrecord;

(5) Whether a party chooses to waive appearance at an oral hearing and tosubmit only documentary evidence (subject to the objection of other parties) andwritten argument;

(6) Limitation of the number of witnesses;

(7) Scheduling dates for the exchange of witness lists and of proposedexhibits;

(8) Discovery;

(9) The time and place for the hearing; and

(10) Such other matters as may tend to expedite the fair and just dispositionof the proceedings.

(d) The ALJ may issue an order containing all matters agreed upon by theparties or ordered by the ALJ at a prehearing conference.

(a) Upon written request to the reviewing official, the defendant may reviewany relevant and material documents, transcripts, records, and other materialsthat relate to the allegations set out in the complaint and upon which thefindings and conclusions of the investigating official under§ 71.4(b) are based, unless such documents are subject to a privilegeunder Federal law. Upon payment of fees for duplication, the defendant mayobtain copies of such documents.

(b) Upon written request to the reviewing official, the defendant also mayobtain a copy of all exculpatory information in the possession of the reviewingofficial or investigating official relating to the allegations in the complaint,even if it is contained in a document that would otherwise be privileged. If thedocument would otherwise be privileged, only that portion containing exculpatoryinformation must be disclosed.

(c) The notice sent to the Assistant Attorney General, Civil Division, fromthe reviewing official as described in § 71.5 is not discoverableunder any circumstances.

(d) The defendant may file a motion to compel disclosure of the documentssubject to the provisions of this section. Such a motion may only be filed withthe ALJ following the filing of an answer pursuant to § 71.9.

(a) The following types of discovery are authorized:

(1) Requests for production of documents for inspection and copying;

(2) Requests for admissions of the authenticity of any relevant document orof the truth of any relevant fact;

(3) Written interrogatories; and

(4) Depositions.

(b) For the purpose of this section and §§ 71.22 and 71.23,the term “documents” includes information, documents, reports,answers, records, accounts, papers, and other data and documentary evidence.Nothing contained herein shall be interpreted to require the creation of adocument.

(c) Unless mutually agreed to by the parties, discovery is available only asordered by the ALJ. The ALJ shall regulate the timing of discovery.

(d) Motions for discovery are to be handled according to the followingprocedures:

(1) A party seeking discovery may file a motion with the ALJ. Such a motionshall be accompanied by a copy of the requested discovery, or in the case ofdepositions, a summary of the scope of the proposed deposition.

(2) Within ten days of service, a party may file an opposition to the motionand/or a motion for protective order as provided in § 71.24.

(3) The ALJ may grant a motion for discovery only if he or she finds that thediscovery sought

(i) Is necessary for the expeditious, fair, and reasonable consideration ofthe issues;

(ii) Is not unduly costly or burdensome;

(iii) Will not unduly delay the proceeding; and

(iv) Does not seek privileged information.

(4) The burden of showing that discovery should be allowed is on the partyseeking discovery.

(5) The ALJ may grant discovery subject to a protective order under§ 71.24.

(e) Depositions are to be handled in the following manner:

(1) If a motion for deposition is granted, the ALJ shall issue a subpoena forthe deponent, which may require the deponent to produce documents. The subpoenashall specify the time and place at which the deposition will be held.

(2) The party seeking to depose shall serve the subpoena in the mannerprescribed in § 71.8.

(3) The deponent may file with the ALJ within ten days of service a motion toquash the subpoena or a motion for a protective order.

(4) The party seeking to depose shall provide for the taking of a verbatimtranscript of the deposition, which it shall make available to all other partiesfor inspection and copying.

(f) Each party shall bear its own costs of discovery.

(a) At least 15 days before the hearing or at such other time as may beordered by the ALJ, the parties shall exchange witness lists, copies of priorstatements of proposed witnesses, and copies of proposed hearing exhibits,including copies of any written statements that the party intends to offer inlieu of live testimony in accordance with § 71.33(b). At the time theabove documents are exchanged, any party that intends to rely on the transcriptof deposition testimony in lieu of live testimony at the hearing, if permittedby the ALJ, shall provide each party with a copy of the specific pages of thetranscript it intends to introduce into evidence.

(b) If a party objects, the ALJ may not admit into evidence the testimony ofany witness whose name does not appear on the witness list or any exhibit notprovided to the opposing party as provided above unless the ALJ finds good causefor the failure or that there is no prejudice to the objecting party.

(c) Unless another party objects within the time set by the ALJ, documentsexchanged in accordance with paragraph (a) of this section shall be deemed to beauthentic for the purpose of admissibility at the hearing.

(a) A party wishing to procure the appearance and testimony of any individualat the hearing may request that the ALJ issue a subpoena.

(b) A subpoena requiring the attendance and testimony of an individual mayalso require the individual to produce documents at the hearing.

(c) A party seeking a subpoena shall file a written request therefor not lessthan 15 days before the date fixed for the hearing unless otherwise allowed bythe ALJ upon a showing of good cause. Such request shall specify any documentsto be produced and shall designate the witnesses and describe the address andlocation thereof with sufficient particularity to permit such witnesses to befound.

(d) The subpoena shall specify the time and place at which the witness is toappear and any documents the witness is to produce.

(e) The party seeking the subpoena shall serve it in the manner prescribed in§ 71.8. A subpoena on a party or upon an individual under the controlof a party may be served by first class mail.

(f) A party or the individual to whom the subpoena is directed may file withthe ALJ a motion to quash the subpoena within ten days after service or on orbefore the time specified in the subpoena for compliance if it is less than tendays after service.

(a) A party or a prospective witness or deponent may file a motion for aprotective order with respect to discovery sought by an opposing party or withrespect to the hearing, seeking to limit the availability or disclosure ofevidence.

(b) In issuing a protective order, the ALJ may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression,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 otherthan that requested;

(4) That certain matters not be the subject of inquiry, or that the scope ofdiscovery be limited to certain matters;

(5) That discovery be conducted with no one present except persons designatedby the ALJ;

(6) That the contents of discovery or evidence be sealed;

(7) That a sealed deposition be opened only by order of the ALJ;

(8) That a trade secret or other confidential research, development,commercial information, or facts pertaining to any criminal investigation,proceeding, or other administrative investigation not be disclosed or bedisclosed only in a designated way; or

(9) That the parties simultaneously file specified documents or informationenclosed in sealed envelopes to be opened as directed by the ALJ.

The party requesting a subpoena shall pay the cost of the fees and mileage ofany witness subpoenaed in the amounts that would be payable to a witness in aproceeding in United States District Court. A check for witness fees and mileageshall accompany the subpoena when served, except that when a subpoena is issuedon behalf of the authority, a check for witness fees and mileage need notaccompany the subpoena.

(a) Form. Documents filed with the ALJ shall include anoriginal and two copies. Every pleading and paper filed in the proceeding shallcontain a caption setting forth the title of the action, the case numberassigned by the ALJ, and a designation of the paper (e.g., motion to quashsubpoena). Every pleading and paper shall be signed by, and shall contain theaddress and telephone number of the party or the person on whose behalf thepaper was filed, or his or her representative.

(b) Filing. Papers are considered filed when they are mailed.Date of mailing may be established by a certificate from the party or itsrepresentative or by proof that the document was sent by certified or registeredmail.

(c) Service. A party filing a document with the ALJ shall, atthe time of filing, serve a copy of such document on every other party. Serviceupon any party of any document other than those required to be served asprescribed in § 71.8 shall be made by delivering a copy or by placinga 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 arepresentative, service shall be made upon such representative in lieu of theactual party.

(d) Proof of service. A certificate of the individual servingthe document by personal delivery or by mail, setting forth the manner ofservice, shall be proof of service.

(a) In computing any period of time under this part or in an order issuedthereunder, 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, orlegal holiday observed by the Federal government, in which event it includes thenext business day.

(b) When the period of time allowed is less than seven days, intermediateSaturdays, Sundays, and legal holidays observed by the Federal government shallbe excluded from the computation.

(c) Where a document has been served or issued by placing it in the mail, anadditional five days will be added to the time permitted for any response.

(a) Any application to the ALJ for an order or ruling shall be by motion.Motions shall state the relief sought, the authority relied upon, and the factsalleged, 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 hearing,all motions shall be in writing. The ALJ may require that oral motions bereduced to writing.

(c) Within 15 days after a written motion is served, or such other time asmay 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 filingresponses thereto has expired, except upon consent of the parties or following ahearing on the motion, but may overrule or deny such motion without awaiting aresponse.

(e) The ALJ shall make a reasonable effort to dispose of all outstandingmotions prior to the beginning of the hearing.

(a) The ALJ may sanction a person, including any party or representative, forthe following reasons:

(1) Failure to comply with an order, rule, or procedure governing theproceeding;

(2) Failure to prosecute or defend an action; or

(3) Engaging in other misconduct that interferes with the speedy, orderly, orfair conduct of the proceeding.

(b) Any such sanction, including but not limited to those listed inparagraphs (c), (d), and (e) of this section, shall reasonably relate to theseverity and nature of the failure or misconduct.

(c) When a party fails to comply with an order, including an order for takinga deposition, the production of evidence within the party's control, or arequest for admission, the ALJ may

(1) Draw an inference in favor of the requesting party with regard to theinformation sought;

(2) In the case of requests for admission, deem each matter of which anadmission is requested to be admitted;

(3) Prohibit the party failing to comply with such order from introducingevidence concerning, or otherwise relying upon, testimony relating to theinformation sought; and

(4) Strike any part of the pleadings or other submissions of the partyfailing to comply with such request.

(d) If a party fails to prosecute or defend an action under this partcommenced by service of a notice of hearing, the ALJ may dismiss the action ormay issue an initial decision imposing penalties and assessments.

(e) The ALJ may refuse to consider any motion, request, response, brief orother document which is not filed in a timely fashion.

(a) The ALJ shall conduct a hearing on the record in order to determinewhether the defendant is liable for a civil penalty or assessment under§ 71.3 and, if so, the appropriate amount of any such civil penaltyor assessment considering any aggravating or mitigating factors.

(b) The authority shall prove defendant's liability and any aggravatingfactors by a preponderance of the evidence.

(c) The defendant shall prove any affirmative defenses and any mitigatingfactors by a preponderance of the evidence.

(d) The hearing shall be open to the public unless otherwise closed by theALJ for good cause shown.

(a) In determining an appropriate amount of civil penalties and assessments,the ALJ and the authority head, upon appeal, should evaluate any circumstancesthat mitigate or aggravate the violation and should articulate in their opinionsthe reasons that support the penalties and assessments they impose. Because ofthe intangible costs of fraud, the expense of investigating such conduct, andthe need to deter others who might be similarly tempted, double damages and asignificant civil penalty ordinarily should be imposed.

(b) Although not exhaustive, the following factors are among those that mayinfluence the ALJ and the authority head in determining the amount of penaltiesand assessments to impose with respect to the misconduct (i.e., the false,fictitious, or fraudulent claims or statements) charged in the complaint:

(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 culpability with respect to the misconduct;

(4) The amount of money or the value of the property, services, or benefitfalsely claimed;

(5) The value of the Government's actual loss as a result of the misconduct,including foreseeable consequential damages and the costs of investigation;

(6) The relationship of the amount imposed as civil penalties to the amountof the Government's loss;

(7) The potential or actual impact of the misconduct upon public confidencein the management of Government programs and operations;

(8) Whether the defendant has engaged in a pattern of the same or similarmisconduct;

(9) Whether the defendant attempted to conceal the misconduct;

(10) The degree to which the defendant has involved others in the misconductor in concealing it;

(11) Where the misconduct of employees or agents is imputed to the defendant,the extent to which the defendant's practices fostered or attempted to precludesuch misconduct;

(12) Whether the defendant cooperated in or obstructed an investigation ofthe misconduct;

(13) Whether the defendant assisted in identifying and prosecuting otherwrongdoers;

(14) The complexity of the program or transaction, and the degree of thedefendant's sophistication with respect to it, including the extent of thedefendant's prior participation in the program or in similar transactions;

(15) Whether the defendant has been found, in any criminal, civil, oradministrative proceeding to have engaged in similar misconduct or to have dealtdishonestly with the Government of the United States or of a State, directly orindirectly; and

(16) The need to deter the defendant and others from engaging in the same orsimilar misconduct.

(c) Nothing in this section shall be construed to limit the ALJ or theauthority head from considering any other factors that in any given case maymitigate or aggravate the offense for which penalties and assessments areimposed.

(a) The hearing may be held:

(1) In any judicial district of the United States in which the defendantresides or transacts business;

(2) In any judicial district of the United States in which the claim orstatement 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 opportunity to present argument with respect tothe location of the hearing.

(c) The hearing shall be held at the place and at the time ordered by theALJ.

(a) Except as provided in paragraph (b) of this section, testimony at thehearing shall be given orally by witnesses under oath or affirmation.

(b) At the discretion of the ALJ, testimony may be admitted in the form of awrittten statement or deposition. Any such written statement must be provided toall other parties along with the last known address of such witness, in a mannerwhich allows sufficient time for other parties to subpoena such witness forcross-examination at the hearing. Prior written statements of witnesses proposedto testify at the hearing and deposition transcripts shall be exchanged asprovided in § 71.22(a).

(c) The ALJ shall exercise reasonable control over the mode and order ofinterrogating witnesses and presenting evidence so as to—

(1) Make the interrogation and presentation effective for the ascertainmentof the truth,

(2) Avoid needless consumption of time, and

(3) Protect witnesses from harassment or undue embarrassment.

(d) The ALJ shall permit the parties to conduct such cross-examination as maybe required for a full and true disclosure of the facts.

(e) At the discretion of the ALJ, a witness may be cross-examined on mattersrelevant to the proceeding without regard to the scope of his or her directexamination. To the extent permitted by the ALJ, cross-examination on mattersoutside the scope of direct examination shall be conducted in the manner ofdirect examination and may proceed by leading questions only if the witness is ahostile witness, an adverse party, or a witness identified with an adverseparty.

(f) Upon motion of any party, the ALJ shall order witnesses excluded so thatthey cannot hear the testimony of other witnesses. This rule does not authorizeexclusion of the following:

(1) A party who is an individual;

(2) In the case of a party that is not an individual, an officer or employeeof the party designated by the party's representative; or

(3) An individual whose presence is shown by a party to be essential to thepresentation of its case, including an individual employed by the Governmentengaged in assisting the representative for the Government.

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

(b) Except as provided in this part, the ALJ shall not be bound by theFederal Rules of Evidence. However, the ALJ may apply the Federal Rules ofEvidence where appropriate, e.g., to exclude unreliable evidence.

(c) The ALJ shall exclude irrelevant and immaterial evidence.

(d) Although relevant, evidence may be excluded if its probative value issubstantially outweighed by the danger of unfair prejudice, confusion of theissues, or by considerations of undue delay or needless presentation ofcumulative evidence.

(e) Although relevant, evidence may be excluded if it is privileged underFederal law.

(f) Evidence concerning offers of compromise or settlement shall beinadmissible to the extent provided in Rule 408 of the Federal Rules ofEvidence.

(g) The ALJ shall permit the parties to introduce rebuttal witnesses andevidence.

(h) All documents and other evidence offered or taken for the record shall beopen to examination by all parties, unless otherwise ordered by the ALJ pursuantto § 71.24.

(a) The hearing will be recorded and transcribed. Transcripts may be obtainedfollowing the hearing from the ALJ at a cost not to exceed the actual cost ofduplication.

(b) The transcript of testimony, exhibits and other evidence admitted at thehearing, and all papers and requests filed in the proceeding constitute therecord 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 ordered by the ALJ pursuant to § 71.24.

ALJ may require the parties to file post-hearing briefs. In any event, anyparty may file a post-hearing brief. The ALJ shall fix the time for filing suchbriefs, not to exceed 60 days from the date the parties receive the transcriptof the hearing or, if applicable, the stipulated record. Such briefs may beaccompanied by proposed findings of fact and conclusions of law. The ALJ maypermit the parties to file reply briefs.

(a) The ALJ shall issue an initial decision based only on the record, whichshall contain findings of fact, conclusions of law, and the amount of anypenalties and assessments imposed.

(b) The findings of fact shall include a finding on each of the followingissues:

(1) Whether the claims or statements identified in the complaint, or anyportions thereof, violate § 71.3; and

(2) If the person is liable for penalties or assessments, the appropriateamount of any such penalties or assessments considering any mitigating oraggravating factors that he or she finds in the case, such as those described in§ 71.31.

(c) The ALJ shall promptly serve the initial decision on all parties within90 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 partieswith a statement describing the right of any defendant determined to be liablefor a civil penalty or assessment to file a motion for reconsideration with theALJ or a notice of appeal with the authority head. If the ALJ fails to meet thedeadline contained in this paragraph, he or she shall notify the parties of thereason for the delay and shall set a new deadline.

(d) Unless the initial decision of the ALJ is timely appealed to theauthority head, or a motion for reconsideration of the initial decision istimely filed, the initial decision shall constitute the final decision of theauthority head and shall be final and binding on the parties 30 days after it isissued by the ALJ.

(a) Except as provided in paragraph (d) of this section, any party may file amotion for reconsideration of the initial decision within 20 days of receipt ofthe initial decision. If service was made by mail, receipt will be presumed tobe 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 beenerroneously decided and the nature of the alleged errors. Such motion shall beaccompanied 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 reconsideration of an initial decisionthat 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 byissuing a revised initial decision.

(f) If the ALJ denies a motion for reconsideration, the initial decisionshall constitute the final decision of the authority head and shall be final andbinding on all parties 30 days after the ALJ denies the motion, unless theinitial decision is timely appealed to the authority head in accordance with§ 71.39.

(g) If the ALJ issues a revised initial decision, that decision shallconstitute the final decision of the authority head and shall be final andbinding on the parties 30 days after it is issued, unless it is timely appealedto the authority head in accordance with § 71.39.

(a) Any defendant who has filed a timely answer and who is determined in aninitial decision to be liable for a civil penalty or assessment may appeal suchdecision to the authority head by filing a notice of appeal with the authorityhead in accordance with this section.

(1) A notice of appeal may be filed at any time within 30 days after the ALJissues an initial decision. However, if another party files a motion forreconsideration under § 71.38, consideration of the appeal shall bestayed automatically pending resolution of the motion for reconsideration.

(2) If a motion for reconsideration is timely filed, a notice of appeal maybe filed within 30 days after the ALJ denies the motion or issues a revisedinitial decision, whichever applies.

(3) The authority head may extend the initial 30 day period for an additional30 days if the defendant files with the authority head a request for anextension within the initial 30 day period and shows good cause.

(b) If the defendant files a timely notice of appeal with the authority headand the time for filing motions for reconsideration under § 71.38 hasexpired, the ALJ shall forward the record of the proceeding to the authorityhead.

(c) A notice of appeal shall be accompanied by a written brief specifyingexceptions to the initial decision and reasons supporting the exceptions.

(d) The representative for the Government may file a brief in opposition toexceptions within 30 days of receiving the notice of appeal and accompanyingbrief.

(e) There is no right to appear personally before the authority head.

(f) There is no right to appeal any interlocutory ruling by the ALJ.

(g) In reviewing the initial decision, the authority head shall not consider any objection that was not raised before the ALJ unless the objecting party candemonstrate extraordinary circumstances causing the failure to raise theobjection.

(h) If any party demonstrates to the satisfaction of the authority head thatadditional evidence not presented at such hearing is material and that there wasreasonable grounds for the failure to present such evidence at such hearing, theauthority head shall remand the matter to the ALJ for consideration of suchadditional evidence.

(i) The authority head may affirm, reduce, reverse, compromise, remand, orsettle any penalty or assessment, determined by the ALJ in any initial decision.

(j) The authority head shall promptly serve each party to the appeal with acopy of the decision of the authority head and a statement describing the rightof any person determined to be liable for a penalty or assessment to seekjudicial review.

(k) Unless a petition for review is filed as provided in 31 U.S.C. 3805 aftera defendant has exhausted all administrative remedies under this part and within60 days after the date on which the authority head serves the defendant with acopy of the authority head's decision, a determination that a defendant isliable under § 71.3 is final and not subject to judicial review.

If at any time an Assistant Attorney General designated by the AttorneyGeneral transmits to the authority head a written finding that continuation ofthe administrative process described in this part with respect to a claim orstatement may adversely affect any pending or potential criminal or civil actionrelated to such claim or statement, the authority head shall stay the processimmediately. The authority head may order the process resumed only upon receiptof the written authorization of the Assistant Attorney General who ordered thestay.

(a) An initial decision is stayed automatically pending disposition of amotion for reconsideration or of an appeal to the authority head.

(b) No administrative stay is available following a final decision of theauthority head.

Section 3805 of title 31, United States Code, authorizes judicial review byan appropriate United States District Court of a final decision of the authorityhead imposing penalties or assessments under this part and specifies theprocedures for such review.

Sections 3806 and 3808(b) of title 31, United States Code, authorize actionsfor collection of civil penalties and assessments imposed under this part andspecify the procedures for such actions.

The amount of any penalty or assessment which has become final, or for whicha judgment has been entered under § 71.42 or § 71.43, orany amount agreed upon in a compromise or settlement under § 71.46,may be collected by administrative offset under 31 U.S.C. 3716, except that anadministrative offset may not be made under this subsection against a refund ofan overpayment of Federal taxes, then or later owing by the United States to thedefendant.

All amounts collected pursuant to this part shall be deposited asmiscellaneous receipts in the Treasury of the United States, except as providedin 31 U.S.C. 3806(g).

(a) Parties may make offers of compromise or settlement at any time.

(b) The reviewing official has the exclusive authority to compromise orsettle a case under this part at any time after the date on which the reviewingofficial is permitted to issue a complaint and before the date on which the ALJissues an initial decision.

(c) The authority head has exclusive authority to compromise or settle a caseunder this part at any time after the date on which the ALJ issues an initialdecision, except during the pendency of any review under § 71.42 orduring the pendency of any action to collect penalties and assessments under§ 71.43.

(d) The Attorney General has exclusive authority to compromise or settle acase under this part during the pendency of any review under § 71.42or of any action to recover penalties and assessments under 31 U.S.C. 3806.

(e) The investigating official may recommend settlement terms to thereviewing official, the authority head, or the Attorney General, as appropriate.The reviewing official may recommend settlement terms to the authority head, orthe Attorney General, as appropriate.

(f) Any compromise or settlement must be in writing.

(a) The notice of hearing with respect to a claim or statement must be servedin the manner specified in § 71.8 within 6 years after the date onwhich such claim or statement is made.

(b) If the defendant fails to file a timely answer, service of a notice under§ 71.10(b) shall be deemed a notice of hearing for purposes of thissection.

(c) The statute of limitations may be extended by written agreement of theparties.

This subpart further implements the Program Fraud Civil Remedies Act of 1986.The Act authorizes the Attorney General, or certain officials whom the AttorneyGeneral may designate, to make determinations or otherwise act with respect toanother agency's exercise of the provisions of the Program Fraud Civil RemediesAct. See, e.g., 31 U.S.C. 3803(a)(2), 3803(b), 3805. This subpartdesignates officials within the Department of Justice who are authorized toexercise the authorities conferred upon the Attorney General by the ProgramFraud Civil Remedies Act with respect to cases brought or proposed to be broughtunder it.

(a) The Assistant Attorney General of the Civil Division is authorized to acton notices by an agency submitted to the Department of Justice pursuant to 31U.S.C. 3803(a)(2) and, pursuant to the provisions of section 3803(b), to approveor disapprove the referral to an agency's presiding officer of the allegationsof liability stated in such notice.

(b) The Assistant Attorney General of the Civil Division may

(1) Require additional information prior to acting as set forth above, inwhich case the 90 day period shall be extended by the time necessary to obtainsuch additional information; and

(2) Impose limitations and conditions upon such approval or disapproval asmay be warranted in his or her judgment.

With respect to matters assigned to their divisions, the Assistant AttorneysGeneral of the litigating divisions are authorized to determine that thecontinuation of any hearing under 31 U.S.C. 3803(b)(3) with respect to a claimor statement may adversely affect any pending or potential criminal or civilaction related to such claim or statement, and to so notify the authority headof this determination and thereafter to determine when such hearing may resume.

The Assistant Attorney General of the Civil Division is authorized toinitiate actions to collect assessments and civil penalties imposed under theProgram Fraud Civil Remedies Act of 1986, and, subsequent to the filing of apetition for judicial review pursuant to section 3805 of the Act, to defend suchactions and/or to approve settlements and compromises of such liability.