Research · 10 min read
What Happens When FDA Seeks a Civil Money Penalty
A penalty is not a letter, and it is not a lawsuit. It is an administrative case with a complaint, a 30-day answer window, a judge who cannot invalidate a regulation, and an appeal that has to be exhausted before a court will look at it.
Key takeaways
- A civil money penalty action begins with a complaint signed by a Center's Chief Counsel attorney and served on the respondent, with a presiding officer assigned on filing.
- The complaint must state the allegations and their statutory basis, the amount sought, how to answer, and that failing to answer within 30 days results in imposition of the proposed amount.
- Allegations not specifically denied in the answer are deemed admitted.
- On default, the alleged facts are assumed true and the amount imposed is the smaller of the statutory maximum or the amount requested.
- The presiding officer is an administrative law judge who may subpoena witnesses and evidence but has no authority to find federal statutes or regulations invalid.
- Discovery is limited to document requests, plus depositions only on a showing that the information cannot be obtained another way.
- The agency must prove liability and the appropriateness of the penalty by a preponderance of the evidence; the respondent carries that burden for defenses and mitigation.
- A settlement is filed in the docket, is effective on filing, and needs no ratification by the presiding officer or the Commissioner — so a closed matter is not necessarily a finding.
- An appeal to the designated entity must be exhausted before a court will review, and filing for judicial review does not stay the decision.
Answer first: it is a case, and it starts with a complaint
The regulation opens by saying exactly what it is for. It sets forth practices and procedures for hearings concerning the administrative imposition of civil money penalties by FDA.
The action begins in one specific way. The Center with principal jurisdiction over the matter begins all administrative civil money penalty actions by serving a complaint on the respondent. That complaint is signed by the Office of the Chief Counsel attorney for that Center, and a copy is filed with the agency's dockets staff.
A judge is attached immediately. The presiding officer is assigned to the case upon the filing of the complaint.
So this is not correspondence and it is not an inspection finding. It is a contested proceeding with two parties, a record, and a decision that can be appealed.
What the complaint has to say
Four contents are required, and the fourth is the one that decides most cases.
The complaint states the allegations of liability, including the statutory basis, the identification of the violations that are the basis for the alleged liability, and the reasons the respondent is responsible for them.
It states the amount of penalties and assessments the Center is seeking.
It gives instructions for filing an answer to request a hearing, including a specific statement of the respondent's right to request a hearing by filing an answer and to retain counsel.
And it states that failure to file an answer within 30 days of service will result in the imposition of the proposed amount.
Service is defined too. It may be made by certified or registered mail, or similar delivery with a return receipt reflecting receipt. It may also be made by delivery in person to an individual respondent, or to an officer or managing or general agent of a business.
The answer, and the clock that runs against silence
The response window is short and the default is severe.
The respondent may request a hearing by filing an answer within 30 days of service of the complaint. Unless stated otherwise, an answer is deemed to be a request for a hearing.
The answer must admit or deny each allegation, and allegations not specifically denied are deemed admitted. It must state all defenses relied on, all reasons the penalties should be less than requested, and counsel's contact details.
An extension exists but has to be asked for in time. A request for more time must be filed before the 30 days expire, and the presiding officer may for good cause grant up to 30 additional days.
If no answer arrives and service was properly effected, the presiding officer assumes the facts alleged in the complaint to be true. If those facts establish liability, an initial decision issues within 30 days of the date the answer was due.
The amount in that situation is the smaller of two numbers: the maximum provided by law for the violations alleged, or the amount asked for in the complaint.
There is one way back. Before the decision becomes final, a respondent may move to reopen on the grounds that extraordinary circumstances prevented a timely answer, and the decision is stayed while that motion is decided.
Who the judge is, and what that judge cannot do
The regulation defines the decision-maker in one line and then limits the office in another.
Presiding officer means an administrative law judge qualified under the federal statute that governs those appointments.
The powers listed run to nineteen items. They include issuing subpoenas requiring the attendance and testimony of witnesses and the production of evidence, ruling on motions, regulating the scope and timing of discovery, examining witnesses, and taking official notice of facts.
One of them is unusual enough to notice. The presiding officer may waive, suspend or modify any rule in the part on making three determinations. That no party will be prejudiced, that the ends of justice will be served, and that the action is in accordance with law.
Then comes the limit, and it is a single sentence. The presiding officer does not have the authority to find federal statutes or regulations invalid.
That sentence explains a lot about what these hearings are about. A respondent can argue it did not do the thing, or that the penalty is too high. Arguing that the rule itself is unlawful is an argument for a different forum.
Contact outside the record is barred. No party or person may communicate with the presiding officer on any matter at issue unless on notice and opportunity for all parties to participate, though asking about case status or routine procedure is allowed.
Discovery is deliberately narrow
Anyone expecting civil-litigation discovery will find something much smaller.
No later than 60 days before the hearing, a party may request production, inspection and copying of documents relevant to the issues, and documents must be provided no later than 30 days after the request.
Then the closing sentence. Requests for admissions, written interrogatories, depositions and any other forms of discovery are not authorized, apart from the two the section itself permits.
Depositions on oral questions are ordered only on a two-part showing. That the information cannot be obtained by alternative methods, and that there is substantial reason to believe relevant and probative evidence may otherwise not be preserved.
A protective order can shut a request down. The presiding officer may grant one if the discovery sought is unduly costly or burdensome, will unduly delay the proceeding, or seeks privileged information.
The burdens are split and stated. The party seeking a protective order carries the burden of showing it is necessary, and the party seeking documents carries the burden of showing they should be produced.
The hearing, the burden, and whether the public can watch
Three facts here answer most of what people want to know about one of these cases.
The hearing is on the record, and it decides two questions: whether the respondent is liable, and if so the appropriate amount considering any aggravating or mitigating factors.
The burden sits with the agency on the main question. To prevail, the Center must prove the respondent's liability and the appropriateness of the penalty under the applicable statute by a preponderance of the evidence.
The burden flips for the respondent's own claims. The respondent must prove any affirmative defenses and any mitigating factors by a preponderance of the evidence.
And the default is open. The hearing is open to the public unless otherwise ordered. Closure is available only to protect trade secrets or confidential commercial information, information whose disclosure would be a clearly unwarranted invasion of personal privacy, or other material withheld under the agency's public information rules.
The parties are limited to the respondent and the Center or Centers with jurisdiction. No other person may participate.
Settlement, and why a case can end without a finding
One short provision explains why many of these matters produce no decision at all.
The parties may at any time before a final appeal decision agree to a settlement of all or part of the matter.
The mechanics are lighter than most people assume. The settlement agreement is filed in the docket, constitutes complete or partial resolution as the agreement designates, is effective upon filing, and need not be ratified by the presiding officer or by the Commissioner.
So a docket can close with an agreement rather than a ruling. A resolved matter is not the same as a finding against anybody, and reading one as the other misstates what happened.
How the amount gets set
The regulation does not print a formula. It prints a method.
When determining an appropriate amount, the presiding officer and the entity deciding any appeal evaluate any circumstances that mitigate or aggravate the violation, and must articulate in their opinions the reasons supporting what they impose.
They refer to the factors identified in the statute under which the penalty is assessed. Different statutes carry different factors, so the analysis depends on which authority the complaint invoked.
Nothing limits them to those factors either. The regulation says nothing in the section limits consideration of any other factors that in a given case may mitigate or aggravate the offense.
The ceiling lives somewhere else entirely. The maximum amounts associated with the authorizing statutes are found in a separate table in another title of the regulations, which is not reproduced here and no figure from it is stated anywhere above.
The initial decision, the appeal, and the door to court
There are two more layers, and the second one is a gate.
The presiding officer issues an initial decision based only on the administrative record, containing findings of fact, conclusions of law, and the amount of any penalties and assessments imposed.
It has to make findings on three specific issues. Whether the complaint's allegations are true and whether the identified actions violated the law. Whether any affirmative defenses are meritorious. And the appropriate amount if there is liability.
The decision is served within 90 days after the time for posthearing briefs expires. If it is not timely appealed, it becomes the final decision of the agency and is final and binding 30 days after issuance.
An appeal goes to the Commissioner or a designated entity, currently the Departmental Appeals Board, and a notice of appeal may be filed within 30 days. It must identify specific exceptions, support each with citations to the record, and explain the basis for each.
Two features of that appeal are worth knowing. There is no right to appear personally before the deciding entity. And it will consider only issues raised before the presiding officer, except that the party defending the decision may make any argument based on the record.
The standards are stated plainly. On a disputed issue of fact the question is whether the initial decision is supported by substantial evidence on the whole record. On a disputed issue of law the question is whether the initial decision is erroneous.
Then the gate. Exhaustion of an appeal to the deciding entity is a jurisdictional prerequisite to judicial review, and filing a petition for judicial review does not stay the decision.
What this tells you when you read a headline
Three practical readings come out of the procedure.
A penalty proceeding is a formal accusation that has not yet been decided. A complaint states allegations of liability, and the regulation gives the respondent a right to answer, defend and appeal before anything is final.
A default is not the same as a contested loss. If nobody answers within 30 days, the alleged facts are assumed true and a decision issues, which means an unopposed outcome can look identical to a fully litigated one in a summary.
And a settlement is not a finding. It is filed in the docket, takes effect on filing, and does not require anyone to ratify it.
A warning letter is a different instrument altogether and sits outside this part. The large majority of those concern how a product was promoted or presented, and a letter discloses something rather than deciding anything.
What this page does not tell you
Two boundaries, stated where you can see them.
Everything above is procedure drawn from the federal regulation governing these hearings. No proceeding is described, no company is named, and nothing here reports that any seller has been the subject of one of these actions.
No dollar amount appears anywhere above. The regulation points to a maximum-penalty table in a different title of the Code of Federal Regulations, that table was not read, and no figure from it is stated or approximated.
Sources
- 21 CFR Part 17 — Civil Money Penalties HearingsSection 17.1 for the scope sentence that the part sets forth practices and procedures for hearings concerning the administrative imposition of civil money penalties by FDA. Section 17.2 for maximum amounts being located at 45 CFR part 102 and the table at 45 CFR 102.3 — that table was not fetched and no amount from it appears here. Section 17.3(c) for presiding officer meaning an administrative law judge qualified under 5 U.S.C. 3105. Section 17.5(a) for the Center with principal jurisdiction beginning all administrative civil money penalty actions by serving a complaint signed by the Office of the Chief Counsel attorney and filing a copy with the Dockets Management Staff; 17.5(b)(1) through (4) for the four required contents, including the statement that failure to file an answer within 30 days of service will result in imposition of the proposed amount; 17.5(d) for the presiding officer being assigned upon filing of the complaint. Section 17.7(a) for service by certified or registered mail or similar delivery with a return receipt reflecting receipt, or delivery in person to an individual respondent or to an officer or managing or general agent of a corporation or unincorporated business. Section 17.9(a) for requesting a hearing by filing an answer within 30 days and an answer being deemed a request for hearing; 17.9(b) for admitting or denying each allegation, allegations not specifically denied being deemed admitted, stating all defenses, stating all reasons the penalties should be less, and naming counsel; 17.9(c) for the extension request having to be filed before the 30 days expire and the presiding officer being able to grant up to 30 additional days for good cause. Section 17.11(a) for assuming the alleged facts true on default and issuing an initial decision within 30 days of the date the answer was due, imposing the smaller of the statutory maximum or the amount asked for; 17.11(c) for the stay pending a motion to reopen on extraordinary circumstances. Section 17.15(a) for the parties being the respondent and the Center or Centers with jurisdiction and no other person participating; 17.15(b) for settlement at any time before a final appeal decision, filing in the docket, effectiveness upon filing, and no need for ratification by the presiding officer or the Commissioner. Section 17.19(b) for the enumerated authorities including subpoenas for attendance and testimony of witnesses and production of evidence, ruling on motions, regulating discovery, examining witnesses, taking official notice, and waiving, suspending or modifying any rule in the part where no party will be prejudiced, the ends of justice will be served and the action is in accordance with law; 17.19(c) for the presiding officer not having authority to find federal statutes or regulations invalid. Section 17.20 for the bar on communicating with the presiding officer on any matter at issue except on notice and opportunity for all parties, with the carve-out for case status and routine administrative questions. Section 17.23(a) for the 60-day request window and 30-day production window; 17.23(c) for requests for admissions, written interrogatories, depositions and other forms of discovery not being authorized; 17.23(d)(2) for the three protective-order grounds and (d)(3) and (d)(4) for the two burdens; 17.23(e) for the two-part showing required before depositions on oral questions are ordered. Section 17.33(a) for the hearing on the record deciding liability and, if liable, the appropriate amount considering aggravating or mitigating factors; 17.33(b) for the Center's preponderance burden on liability and appropriateness of the penalty; 17.33(c) for the respondent's preponderance burden on affirmative defenses and mitigating factors; 17.33(d) for the hearing being open to the public unless otherwise ordered and the listed grounds for closure. Section 17.34(a) for evaluating mitigating and aggravating circumstances and articulating the supporting reasons; 17.34(b) for referring to the statutory factors; 17.34(c) for not being limited to those factors. Section 17.45(a) for the initial decision being based only on the administrative record and containing findings of fact, conclusions of law and the amount imposed; 17.45(b) for the three required findings; 17.45(c) for service within 90 days after the time for posthearing briefs expires; 17.45(d) for the decision becoming final and binding 30 days after issuance if not timely appealed. Section 17.47(a) for appeal to the Commissioner or designated entity, currently the Departmental Appeals Board; 17.47(b)(1) for the 30-day notice of appeal window; 17.47(c) for the brief having to identify specific exceptions with citations to the record and explain the basis for each; 17.47(f) for there being no right to appear personally; 17.47(g) for consideration only of issues raised before the presiding officer, with the appellee's exception; 17.47(k) for the substantial-evidence standard on fact and the erroneous standard on law. Section 17.51(a) for the final decision constituting final agency action and for a petition for judicial review not staying the decision; 17.51(c) for exhaustion being a jurisdictional prerequisite to judicial review.
Frequently asked questions
Is an FDA civil money penalty the same as a warning letter?
No. A warning letter is correspondence and sits outside this part entirely; the large majority concern how a product was promoted or presented. A civil money penalty action is a contested administrative case that begins when a Center serves a signed complaint on a respondent and files a copy with the agency's dockets staff. A presiding officer is assigned upon the filing of the complaint, and there is a hearing, a decision and an appeal.
How long does a company have to respond?
Thirty days from service of the complaint. The respondent requests a hearing by filing an answer, and unless stated otherwise an answer is deemed to be a request for a hearing. A request for more time has to be filed before the 30 days expire, and the presiding officer may grant up to 30 additional days for good cause.
What happens if a company just ignores it?
The presiding officer assumes the facts alleged in the complaint to be true, and if those facts establish liability, issues an initial decision within 30 days of the date the answer was due. The amount is whichever is smaller: the maximum provided by law for the alleged violations, or the amount asked for in the complaint. Before that becomes final, a respondent can move to reopen on the grounds that extraordinary circumstances prevented a timely answer.
Who decides, and can that person strike down the rule?
A presiding officer, defined as an administrative law judge qualified under the federal statute governing those appointments. The powers listed include issuing subpoenas, ruling on motions, regulating discovery, examining witnesses and taking official notice of facts. One sentence limits the office: the presiding officer does not have the authority to find federal statutes or regulations invalid.
Who has to prove what?
The Center must prove the respondent's liability and the appropriateness of the penalty under the applicable statute by a preponderance of the evidence. The respondent must prove any affirmative defenses and any mitigating factors by the same standard. The hearing decides both liability and, if there is liability, the appropriate amount considering aggravating and mitigating factors.
Can the public attend?
The default is yes. The hearing is open to the public unless the presiding officer orders otherwise. Closure is limited to protecting trade secrets or confidential commercial information, information whose disclosure would be a clearly unwarranted invasion of personal privacy, or other material withheld under the agency's public information rules. Only the respondent and the Center or Centers with jurisdiction are parties; no other person may participate.
How is the amount decided?
The presiding officer and the entity deciding any appeal evaluate circumstances that mitigate or aggravate the violation and must articulate the reasons supporting what they impose. They refer to the factors identified in the statute the penalty is assessed under, and nothing limits them from considering other factors in a given case. Maximum amounts sit in a separate table in a different title of the regulations, which is not reproduced here.
Can a company go straight to court?
No. Exhaustion of an appeal to the entity deciding the appeal is a jurisdictional prerequisite to judicial review. The initial decision becomes final and binding 30 days after issuance if it is not timely appealed, and an appeal must be filed within 30 days, identifying specific exceptions supported by citations to the record. Filing a petition for judicial review does not stay the decision.