6-6 - CIVIL PENALTIES – ELECTRONIC PRODUCT RADIATION CONTROL

6-6-1 - Purpose

This section provides procedures and instructions for recommendations of civil penalties for violations of Subchapter C - Electronic Product Radiation Control (formerly the Radiation Control for Health and Safety Act of 1968) of Chapter V of the Federal Food, Drug, and Cosmetic Act (Act).

1. General Statement
   Please be alerted to the fact that the provisions for penalties for electronic products under Section 539 of the Act are such that they can not be correlated with penalties for devices under Section 303 of the Act. (See the Penalties Section.)

   Any references simply to manufacturer that appear in this chapter include the words assembler and importer, since those words are included by definition in Section 531(3) [21 U.S.C. 360hh(3)] of the Act in the word manufacturer.

   Any references to products in this chapter refer to an electronic product as that term is defined in Section 531(2) [21 U.S.C. 360hh(2)] of the Act.

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6-6-2 - Scope

These procedures are provided primarily for guidance in recommending a civil penalty action; however, instructions for incorporating injunction recommendations in the civil penalty recommendations are included. (See the Injunctions Section.)

Injunction considerations are included because there is precedent where the recommended, approved, and executed action was a joint civil penalty and injunction action. (See Exhibit 6-31)

Documents attached as exhibits represent only some of the regulatory considerations under the Act. These procedures are designed to provide guidance in recommending an action involving any violation committed under the Act.

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6-6-3 - Legal Authority

Civil penalties are provided for in Section 539 [21 U.S.C. 360pp] of the Act. Action under this section may be brought in any district court of the United States in which any act or omission or transaction constituting the violation occurred, or in any such court where the defendant is found or transacts business. Process in such cases may be served in any district of which the defendant is an inhabitant, or wherever the defendant may be found.

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6-6-4 - Criteria For Recommending Civil Penalties

The basic criteria for recommending a civil penalty are as follows:

1. A Violation Of The Act Has Been Established And Documented.
   
   NOTE: It is not necessary to show a health hazard to initiate action; such hazards were recognized and implied in the enactment of the Act by Congress.
   
   
   1. Section 538(A)(1) [21 U.S.C. 360oo(A)(1)] Introduction Or Delivery For Introduction Into Commerce Or Importation Into The United States Of A Non-Compliant Product
      1. This prohibited act only applies to a manufacturer, excluding diagnostic x-ray assemblers, of an electronic product.
      2. A non-compliant product must have been delivered for introduction or introduced into interstate commerce.
      3. Penalty for committing a violation under this section does not require the manufacturer’s prior knowledge of the noncompliant state of the product. Nevertheless, a penalties action is not usually initiated unless a violation has continued after notice/warning to the defendant.
      4. An exception may be made in the case of manufacturers, where violations are a significant radiation hazard. (If the defendant(s) continue the violative practice(s) after notice/warning has been given, the instances of similar violation occurring prior to the notice/warning then become subject to inclusion as "counts" in the civil penalty action.)
      5. Each violation is based on evidence that the product did not comply with an applicable standard when introduced or delivered for introduction into commerce by the manufacturer. Defects, as defined by 21 CFR 1003.2, are not subject to this charge, unless they constitute non-compliance with a standard.
   2. Section 538(a)(2) [21 U.S.C. 360oo(a)(2)] Failure To Give Notification Or Take Corrective Action
      1. The product must be shown to be noncompliant or defective as a result of its design, production or assembly by the alleged violative manufacturer. Significant radiation hazards may be considered for civil penalties without prior notice/warning. In all other circumstances, the manufacturer must have been given a reasonable period of time within which to refute any allegations that the product is noncompliant or defective.
      2. The agency should be in a position to demonstrate that the manufacturer was aware of the noncompliant or defective product either through the Food and Drug Administration’s (FDA’s) notification or otherwise if that question is raised.
      3. The manufacturer should be given a reasonable period of time within which to demonstrate that the noncompliant or defective product does not present a significant risk of injury to any person and apply for an exemption from notification and repair under 21 CFR 1003.30 and Section 535(a)(2) of the Act. An exception may be made in the case of manufacturers, where violations are a significant radiation hazard. In these cases civil penalty without prior notice/warning will be considered.
      4. The agency must be able to demonstrate that at least one of the following violations has been committed:
         
         • The manufacturer has not notified the agency of a defect or noncompliance
         • The manufacturer has not notified the known purchasers of the defect or noncompliance.
         • The failure of the manufacturer to repair, replace or refund the cost of noncompliant or defective products. This may involve either failure to submit a corrective action plan or failure to implement a plan approved by the agency.
         • Charging of purchasers by the manufacturer for the repair, replacement or refund of a noncompliant or defective product, including charges for any portion of an approved corrective action plan.
         • This section applies to dealers and distributors of electronic products for which there is an applicable performance standard in that it is a prohibited act for these individuals to fail to furnish the manufacturer with such information as may be necessary to identify and locate for purposes of Section 535, the first purchasers of noncompliant products.
   3. Section 538(a)(3) [21 U.S.C. 360oo(a)(3)] Failure To Maintain Records Or Permit Inspection
      1. The manufacturer must maintain records of the locations of the first purchasers if the product is subject to the distribution recordkeeping requirement as specified in Table 1 of 21 CFR 1002.1. The manufacturer must also maintain records of the locations of any subsequent purchasers which have been provided to the manufacturer by dealers and distributors. However, the manufacturer is not responsible for the location of records of subsequent purchasers which are not provided to it by dealers and distributors. The agency may require the manufacturer to request dealers and distributors to provide this information to it in a corrective action plan in accordance with 21 CFR 1002.41(a)(1) and Section 537(f) of the Act.
      2. The manufacturer is required to maintain records which demonstrate the adequacy of its manufacturing practices to ensure the agency that its safeguards against hazardous radiation are adequate and that its products comply with an applicable performance standard.
      3. Dealers and distributors of electronic products subject to the distribution recordkeeping requirement as specified in Table 1 of 21 CFR 1002.1 must maintain records which identify the product and the location of all first purchasers and make these records available for inspection or copying by the agency. Failure to fulfill either of these two requirements would be considered a violation under this section. Dealers or distributors are not, however, required to obtain or maintain this information for subsequent purchasers.
      4. The manufacturer and dealer or distributors, after having been given reasonable notice, are required to make all required records available for inspection by the agency. The agency is not required to show cause for this request and failure to comply by the responsible person or company is a violation under this section.
      5. The agency can require a manufacturer to permit the inspection of its facilities as well as its required records if good cause is established. Grounds for establishing good cause include:
         
         • introduction of noncompliant or defective electronic products into commerce by the manufacturer;
         • disapproval of the manufacturer’s testing program of products for which there is an applicable standard; or,
         • nonsubmission of assurance by the manufacturer in the form of a report of the adequacy of the product safeguards against hazardous electronic product radiation. Failure to permit inspection when good cause is shown is a violation under this section.
         Dealers and distributors, other than those who are also considered to be manufacturers, are only required to permit inspection of records described in paragraph iii above.
   4. Section 538(a)(4) [21 U.S.C. 360oo(a)(4)] Reporting
      1. It is a prohibited act for applicable manufacturers to fail to provide the agency with product, supplemental, abbreviated, and annual reports in accordance with 21CFR 1002.10, 1002.11, 1002.12, and 1002.13. Normally regulatory action should be pursued where the products have an applicable performance standard or, in the case of flagrant violations, where no standard has been issued for the product.
      2. It is a prohibited act for a manufacturer to fail to provide a report in conformance with guides or instructions which have been prescribed under 21 CFR 1002.7(b).
      3. It is a prohibited act for any manufacturer of electronic products to fail to report an accidental radiation occurrence with its product in accordance with 21 CFR 1002.20.
      4. It is a prohibited act for any assembler of diagnostic x-ray equipment to fail to provide the agency with a report of its assembly of an x-ray system or component in accordance with 21 CFR 1020.30(d) (1). This assembler’s report is required in lieu of the reports cited in paragraph (b)(i) above.
      5. It is a prohibited act for dealers or distributors of electronic products for which there is an applicable performance standard to fail to report the information required by 21 CFR 1002.40(b) to the manufacturer of the product in accordance with 21 CFR 1002.41(a)(1) when required for purposes of Section 535 of the Act and when it has been requested by either the manufacturer or the Director of the Center for Devices and Radiological Health (CDRH).
      6. It is a prohibited act for a manufacturer or assembler to fail to report a defect or noncompliance in an electronic product, in accordance with 21 CFR 1003.20.
   5. Section 538(a)(5) [21 U.S.C. 360oo(a)(5)] Product Certification
      1. It is a prohibited act under Section 538 (a)(5)(A) for a manufacturer to fail to certify that its product is in compliance with an applicable performance standard. The manufacturer must furnish the certification in the form of a label or tag, as prescribed by 21 CFR 1010.2.
      2. It is a prohibited act under Section 538(a)(5)(B) for any manufacturer or importer to affix a certification label to a product which is not in compliance with an applicable performance standard or for which the testing program has been disapproved in accordance with Section 534(h) of the Act. The agency must be able to demonstrate that the manufacturer would have known, if it exercised due care, that such certification was materially false or misleading.
2. Prior notice/warning should have been given to the responsible individuals.
   Prior notice may have been by Warning Letter, Notice of Noncompliance Letter, Program Disapproval Letter, or by any other method in accordance with Chapter 10 of the Regulatory Procedures Manual (RPM).

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6-6-5 - Penalties

The Act provides that any person who violates any of the prohibited acts shall be subject to a civil penalty of not more than $1000 for each count, with a maximum of $300,000 for any person for any related series of violations. Where individual responsibility cannot be proven, civil penalty may be recommended for the firm only.

Counts - A count is based upon a violation with respect to each electronic product involved, or with respect to each act or omission made unlawful by Section 538. This means that the count is not determined by the product alone, but by the number of acts committed in conjunction with each product.

EXAMPLE:

An employee of XYZ Company installs certified components into a diagnostic x-ray system and fails to file a Report of Assembly (Form FDA 2579) in accordance with the implementing regulations (21 CFR 1020.30(d)). The prohibited act is Section 538(a)(4) of the Act for failure to make or provide a report required pursuant to Section 537(b). The required distribution of these reports is to (1) FDA, (2) the state agency for the installation site, (3) the owner/user of the system, and (4) either the component manufacturer or XYZ Company. The distribution of the forms is required within 15 days from the date of assembly. The responsibility of completing the forms falls on the individual (employee) who actually performs the installation and the supervisor or company president who is responsible for compliance with the standard. In addition the firm also has an obligation and responsibility in the filing and maintenance of required documents. Consequently, the following counts in this specific case could be charged:

Firm Violation of Section 538(a)(4) - 1 count

Employee A Violation of Section 538(a)(4) - 1 count

Manager/President Violation of Section 538(a)(4) - 1 count

Total = 3 counts

This specific example provides for a maximum civil penalty of $3000 for each occurrence of a failure to file the required report. The key to determining the number of counts is the "act or omission made unlawful by Section 538," (i.e. 3 violation instances (counts) are associated with the 1 product involved in the example cited above. Each additional product involved with the same violation would yield 3 additional counts for each occurrence.)

The assembler firm could also be charged under the same section of the Act (Section 538(a)(4)) when the reports continue to be filed in excess of the 15 day time frame. Reports that are more than 30 days late inhibit FDA’s ability to test newly installed systems for compliant assembly by the firm. The firm may be attempting to inhibit compliance testing of their systems. However, for each violative product, the charge must be either failure to file or filing the report late. The same installation cannot receive charges under both categories.

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6-6-6 - District Responsibilities

1. The district is responsible for deciding if the circumstances warrant recommendation of a civil penalty. Every effort should be made to determine that all necessary documentation has been obtained, all related samples are included, and the supporting Establishment Inspection Reports (EIRs) are complete.
2. The district should document as fully as possible who was responsible for the violations
3. The district is responsible for seeing that all violations are documented.
   1. Documentation for each violative product should consist of the following:
      1. Sample Collection Report
      2. Complete interstate documentation where Section 538(a)(1) of the Act is charged.
      3. Appropriate affidavits by dealers, purchasers, users, etc., where applicable
      4. Copies of appropriate records of proof of sale or installation of equipment, where applicable.
      5. Copies of appropriate labeling.
      6. Clear and distinct photographs of labels, and the equipment, where applicable
      7. Copies of all documents that can be considered prior notice or warning
   2. The recommendation packet should consist of the following:
      1. Memorandum of recommendation to CDRH explaining the details of the case. This memorandum should contain the reasons why you believe that civil penalty is the action of choice, and should address the size of the business and the gravity of the violation.
      2. A draft letter to the United States (U.S.) Attorney, which includes the background of the case, a statement of prior notice/warning, the reasons why we are pursuing this course of action, and the violations alleged.
      3. A Proposed Complaint for Civil Penalty. This complaint should specify the legal authority for the action recommended, each specific act committed, or, the manner in which the act was committed, when and by whom committed, and the section of the Act violated. The complaint must reflect the basis of each count for which we seek a civil penalty. Where possible, use a chart to reflect instances where more than one count is being charged under a specific prohibited act. The Complaint should also include the amount of civil penalty sought, and a brief description of how it was computed.
      4. Copies of appropriate sample records.
      5. Copies of EIRs reporting the violation.
      6. If an injunction is being sought in the same complaint, an affidavit, as referenced in the RPM subchapter for Injunctions, should be prepared and submitted.
4. The district shall notify CDRH’s Field Programs Branch (HFZ-306) that a recommendation is being submitted, and the recommendation shall be submitted by the most expeditious means. An electronic copy on a diskette should also be attached to the recommendation.
5. If the approved letter to the U.S. Attorney and the Complaint for Civil Penalty are returned to the district electronically for submission to the U.S. Attorney, it will be the responsibility of the district to see that they are delivered to the U.S. Attorney’s office. (If the Complaint includes an injunction, the documents should be delivered to the U.S. Attorney’s office by the most expeditious and practical means.)
6. The district shall be in direct contact with the U.S. Attorney’s office with regard to timeliness of filing of the complaint, and scheduling of any hearings, etc.
7. In the event of any hearings in the action, the district shall be responsible for arranging for the presence of any necessary witnesses, funding, and assuring that all necessary documents are available.

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6-6-7 - CDRH Responsibilities

1. CDRH is responsible for a timely review of the recommendation and for assuring that all the evidence and supporting documentation are adequate. If additional information is needed, the district will provide the information, or may, if necessary, make a personal visit to CDRH.
   
   CDRH will forward a copy of the district’s original recommendation to the Office of Enforcement's Division of Compliance Management and Operations (DCMO), even though it may prepare an amended copy to include any deletions or additions of its own.
2. CDRH will prepare a memorandum to DCMO reflecting the issues considered by CDRH in reviewing the case and providing the scientific assurances which support the case. A copy of CDRH’s concurrence memorandum should be sent to the recommending district, at the time that it is forwarded to DCMO. In case of disapproval, CDRH shall state clearly the reason for such disapproval and include any guidance necessary for the district to present an acceptable case. If follow-up for additional information is indicated, CDRH shall be specific as to what is needed, and so advise the district. If a case is disapproved, a copy of the disapproval memorandum shall be sent to DCMO.
3. CDRH will identify a qualified expert(s) for any court cases.
4. CDRH will provide an affidavit from the CDRH/OC Records Manager for any notification and reporting charges under Sections 538(a)(2) and (a)(4).

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6-6-8 - DCMO Responsibilities

DCMO will be responsible for ensuring that the recommendation complies with agency policy. It will review the proposed letter to the U. S. Attorney and Complaint for Civil Penalty. If it finds that these documents, or any other required documents, are not satisfactory, it will be responsible for obtaining the necessary and proper document(s) and submitting them to the Office of the Chief Counsel (OCC).

DCMO will be responsible for determining that the necessary distribution is made of the final documents, as approved by OCC to the appropriate offices. Approved actions for submission to the U. S. Attorney shall be forwarded to the district by electronic transmission.

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6-6-9 - OCC Responsibilities

OCC will provide the final legal review of all the documents in the case, and will determine the legal sufficiency of the evidence. It will be responsible for any further changes in the Complaint, and/or letter to the U. S. Attorney, if any. Significant changes will be made in consultation with DCMO, CDRH and the district, as appropriate. OCC shall designate an attorney to be responsible for the case. This attorney will provide legal assistance to the U. S. Attorney’s office and the district in the disposition of the case.

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6-6-10 - Appeals

Appeals of any disapprovals will be handled as prescribed by the Appeal Process in Chapter 10 of the RPM.

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6-6-11 - Consent Decree Of Civil Penalty

The defendant may seek to negotiate a penalty below the maximum for each count. Such negotiated settlement should be in the form of a Consent Decree of Civil Penalty. All proposed settlements will be presented to OCC. All negotiations with the defendant’s lawyers will be conducted by the lawyer representing the agency, in consultation with DCMO, the district, and CDRH.

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6-6-12 - Case Termination

Upon notification by the Clerk of the Court that the penalty has been assessed by the Court and the defendants have paid the penalty, the case may be closed.

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6-6-13 - Injunction and Civil Penalties

Injunctions under this Act are provided for by Section 539(a).

An injunction recommendation should be included with the civil penalty recommendation if the circumstances warrant it. Criteria to be considered for injunctive relief include, but are not limited to, the following:

1. The manufacturer has repeatedly committed the same violation, or same type of violation.
2. The violative product could cause significant risk of injury to any person.
3. The manufacturer is continuing to commit the same violations (e.g., introduction of noncompliant products into commerce) after being advised of the agency’s finding and request to cease and desist.
4. The violator refuses to correct previously cited defective or noncompliant products.

Injunction may be recommended to prohibit certain actions such as the introduction of violative products into commerce, or to require the violator to stop violating the Act by taking positive action to correct the existing violations (e.g. correction of noncompliant or defective products, notification of purchasers, submission of reports and information, providing access for inspection, certification of products, etc.).

A recommendation memorandum to CDRH will contain the same information as the recommendation for a civil penalty, but will include a statement recommending an injunction, and giving the reasons for the recommendation.

The letter to the U. S. Attorney and the Complaint will contain the same background information, but will include the additional request for an injunction. The subject of the recommendation will address itself to both the civil penalty and the injunction; and the Complaint will be entitled "Complaint for Injunction and Civil Penalty."

Whenever the civil penalty recommendation includes an injunction request, the recommendation will contain the information requested by this chapter, but will be processed according to the RPM subchapter on "Injunctions." The counts involved in the action will be the same as described in this chapter.

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