(a) Preliminary report. If after examining the facts the deputy commissioner or designee responsible for the program area affected by the violation concludes that the claim is false, the deputy commissioner or designee issues a preliminary report. The report includes the facts upon which the recommendation to assess a penalty were based and the amount of the recommended penalty.
(b) Notice of intent to assess a penalty.
  (1) DHS must give the person charged with submitting a false claim a written notice of the preliminary report and DHS' intent to assess a civil monetary penalty. The notice must include the following information:
    (A) a brief summary of the facts;
    (B) the amount of the recommended penalty; and
    (C) a statement of the person's right to an informal review of the false claim charge or penalty amount or both.
  (2) Within 10 days of receiving the notice, the person may send the DHS office designated in the notice either:
    (A) a written consent to the report and the recommended penalty; or
    (B) a written request for an informal DHS review. The person must specify whether he is contesting the false claim charge or the penalty amount. He must present all information and documentation to support his position.
(c) Informal review process. If the person requests a review within the 10-day period, DHS conducts the review and sends the person a written notice. The notice includes:
  (1) the results of the review;
  (2) the procedures to request a hearing according to Subchapter Q of this chapter (relating to Contract Appeals).
(d) Contract hearing.
  (1) The person may request a hearing by writing to DHS' Hearing Division. The Hearing Division must receive the request within 15 days after the person receives the notice specified in subsection (c) of this section.
  (2) The hearing is conducted according to Subchapter Q of this chapter (relating to Contract Appeals).
(e) Notice of assessment of a civil monetary penalty. DHS assesses a penalty by sending the person written notice of the assessment in the following circumstances:
  (1) after DHS receives the person's written consent to the preliminary report and recommended penalty as specified in subsections (a) and (b) of this section;
  (2) if the person does not request an informal review as specified in subsection (b)(2) of this section;
  (3) if the person does not request a contract hearing as specified in subsection (d)(1) of this section after receiving the results of the informal review and the statement of the recommended penalty; or
  (4) if the administrative law judge at the contract hearing orders the assessment of a civil monetary penalty against the person.

Source Note: The provisions of this §357.646 adopted to be effective May 16, 1988, 13 TexReg 1869; transferred effective September 1, 2004, as published in the Texas Register September 17, 2004, 29 TexReg 9013