[Code of Federal Regulations]
[Title 45, Volume 1]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR160.410]

[Page 708-709]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 160_GENERAL ADMINISTRATIVE REQUIREMENTS--Table of Contents
 
              Subpart D_Imposition of Civil Money Penalties
 
Sec. 160.410  Affirmative defenses.

    (a) As used in this section, the following terms have the following 
meanings:
    Reasonable cause means circumstances that would make it unreasonable 
for the covered entity, despite the exercise of ordinary business care 
and prudence, to comply with the administrative simplification provision 
violated.
    Reasonable diligence means the business care and prudence expected 
from a person seeking to satisfy a legal requirement under similar 
circumstances.
    Willful neglect means conscious, intentional failure or reckless 
indifference to the obligation to comply with the administrative 
simplification provision violated.
    (b) The Secretary may not impose a civil money penalty on a covered 
entity for a violation if the covered entity establishes that an 
affirmative defense exists with respect to the violation, including the 
following:
    (1) The violation is an act punishable under 42 U.S.C. 1320d-6;
    (2) The covered entity establishes, to the satisfaction of the 
Secretary, that it did not have knowledge of the violation, determined 
in accordance with the federal common law of agency, and, by exercising 
reasonable diligence, would not have known that the violation occurred; 
or
    (3) The violation is--
    (i) Due to reasonable cause and not willful neglect; and
    (ii) Corrected during either:
    (A) The 30-day period beginning on the date the covered entity 
liable for

[[Page 709]]

the penalty knew, or by exercising reasonable diligence would have 
known, that the violation occurred; or
    (B) Such additional period as the Secretary determines to be 
appropriate based on the nature and extent of the failure to comply.