SECTION 213.5. Compliance with Contractor Responsibilities, Rewards and Sanctions

(a) Background. To the extent feasible, and subject to the availability of funds and other resources, the Department will give rewards to those area agencies on aging which the Department finds have demonstrated exceptional performance. When a contractor has failed to comply with the terms of a contract which governs the use of monies appropriated under that contract, the Texas Department on Aging may take actions, described in this section, as may be legally available and appropriate to the circumstance. It is the intent of this rule to outline the rewards available for compliance with a contract and the sanctions available for non-compliance with contract terms and conditions.

(b) Definitions. Definitions for the terms used in this section are located in §254.1 of this title (relating to the Operation of the Texas Department on Aging) and the definitions for words and terms specific to this chapter shall have the following meanings, unless the context clearly indicates otherwise.

(1) Level One Sanction - The sanction that the Texas Department on Aging may impose as a response to a contractual breach and/or failure to comply with agency rules and specific state and federal requirements.

(2) Level Two Sanction - The sanction that the Texas Department on Aging may impose as a response to a severe problem and the potential negative impact such a problem may have on a Contractor's region or the state.

(3) Level Three Sanction - The sanction that the Texas Department on Aging may impose where a severe and/or continued failure to comply with contractual requirements, agency rules, and/or state and/or federal laws may affect service delivery and/or Contractor financial stability.

(4) Level Four Sanction - The sanction that the Texas Department on Aging may impose where a severe and/or continued failure to comply with contractual requirements, agency rules, and/or state and/or federal laws continues to go uncorrected.

(5) Acceptable corrective action plan - Identification of actions to be taken, including a time line, that are acceptable to the Department to correct an identified issue of contractual or legal non- compliance.

(6) Administrative payments - Payments for general administration of an Area Agency on Aging, including any indirect costs recovery.

(7) Certified - When used in conjunction with performance measure testing it describes having obtained acceptable results, within tolerances allowed by the State Auditor's Office, for data tested.

(8) Discretionary funds - Any funds issued by the Department that are not awarded based on a general funding formula or not awarded to all Area Agencies on Aging by action of the Texas Board on Aging.

(9) Extension - An approved request, which is submitted to the Department on or before the original due date, to submit required reports or other required information later than the established original due date. No more than 2 extensions shall be granted in any one federal fiscal year.

(c) Preventive Maintenance. Preventive maintenance measures, developed to ensure program outcome and provide fiscal accountability, include technical assistance, Program Instructions, timely and effective program and fiscal monitoring, performance measure testing, and quality initiative reviews.

(1) Technical assistance is performance-driven and outcome-based, stressing the sharing of information and best practice models. Assistance is provided for both fiscal and program issues.

(2) Program Instructions provide clarification and interpretation of rule and are performance- driven and outcome-based. Program Instructions may be provided for both fiscal and program issues.

(3) Program and Fiscal Monitoring assistance may include site visits, desk reviews, and analysis of both financial and program outcomes to help identify potential weaknesses before such weaknesses result in sub-standard performance or questioned costs. Monitoring may result in recommendations that provide practical solutions that can be used to take immediate corrective action.

(4) Performance measure testing is conducted to determine the accuracy of data submitted to the Department and to assess the quality of the controls in place to ensure the consistency of accurate and well-documented data. Certification of performance measure testing should be by design of the controls in place within the system.

(5) Quality Initiative assistance includes routine evaluation of essential quality indicators and certification systems and will be enhanced with timely and relevant professional training and technical assistance to help develop and maintain the knowledge, skills, and abilities required across program lines.

(d) Contractor Responsibilities. A contractor is responsible for compliance with the terms of the contract and shall:

(1) comply, as applicable, with all governing documents set forth in §254.3 of this title (relating to Governing Documents);

(2) comply with the requirements of approved contracts or plans;

(3) meet the administrative and service requirements as published by the Department, including, but no limited to, all budget documents and required reporting in a timely, complete, and accurate manner, consistent with §260.1 of this title (relating to Area Agency on Aging Administrative Requirements), and §260.2 of this title (relating to Area Agency on Aging Fiscal Responsibilities);

(4) respond to requests by the Department for specific correction as a result of:

(A) the area plan or area plan amendment review;

(B) program and fiscal reviews, monitoring and assessments;

(C) investigation and response to complaints; or

(D) erroneous or incomplete information on program performance or financial reports.

(e) Rewards. Rewards for exceptional performance will be determined by the Department based on the results of annual monitoring of an Area Agency on Aging by the Department. Actual rewards are not limited to, but may include, any one or a combination of: notification of outstanding performance to the public in the Area Agency's region and the Board on Aging; funding awards for conferences or leadership workshops including in-state travel; funding awards for the purchase of computer equipment; and decreased frequency of monitoring and other review processes.

(f) Level One Sanctions. Level one sanctions may result in one or more of the following actions:

(1) require the development, submission, and implementation of an acceptable corrective action plan to address identified weaknesses and/or non-compliance;

(2) submission of additional and/or more detailed financial and/or performance reports;

(3) designation as a high-risk contractor requiring additional monitoring visits; and

(4) repayment of disallowed costs.

(g) Level Two Sanctions. Level two sanctions may result in one or more of the following actions:

(1) imposition of one or more level one sanctions;

(2) restrictions on ability to draw down contractor/Area Agency on Aging administrative funds with notice of such action to the Area Agency on Aging Director, the Area Agency on Aging Director's superior, and the contractor's Chairman of the Board or comparable agency official;

(3) prohibit participation in discretionary funds application or carryover pool redistribution; and

(4) provision of appropriate technical assistance.

(h) Level Three Sanctions. Level three sanctions may result in one or more of the following actions:

(1) imposition of one or more level one sanctions;

(2) imposition of one or more level two sanctions;

(3) prohibit or limit provision of direct services by contractor/Area Agency on Aging;

(4) prohibit or limit the use of specific service providers/vendors; and

(5) imposition of the requirement that reimbursement payments made to contractor/Area Agency on Aging for the remainder of the fiscal year shall be made only following submission of bills paid or other documentation to show that bills for which reimbursement is sought have been paid.

(i) Level Four Sanctions. Level four sanctions may result in one or more of the following actions:

(1) imposition of one or more level one sanctions;

(2) imposition of one or more level two sanctions;

(3) imposition of one or more level three sanctions;

(4) require directed amendment to current area plan; and

(5) recommend dedesignation and/or cancellation of the contract of the Area Agency on Aging to the Texas Board on Aging.

(j) Administrative Violations. Administrative violations shall result in disciplinary actions as specified in this section, unless the violation was due to an act of God or action by the Department. Violations will be documented and greater levels of administrative sanctions will be applied for non-compliance issues deemed most serious and for continued non-compliance of less serious offenses.

(k) Violations Subject to Level One Sanctions. Violations which may result in the imposition of level one sanctions include the following:

(1) failure to submit a required report by the due date or approved extension. For purposes of this violation, a Form 269 and CIS/MIS submission for a single month shall be considered one report submission;

(2) failure to submit required reports accurately and completely, if identified by the Department (not to exceed two instances in one fiscal year), and not corrected within five workdays following notification;

(3) failure, on the third occurrence, to submit required reports accurately and completely, if identified by the Department, whether or not a violation notice was previously issued;

(4) failure to submit timely an acceptable corrective action plan for findings of program and fiscal monitoring within 45 days;

(5) failure to conduct an appropriate audit review process for required provider audits;

(6) failure to resolve deficiencies noted in an audit review within timeframes established by contract;

(7) failure to comply with the Department's requirements related to the Agreement Between the State of Texas and the Secretary of the Treasury, the United States Department of the Treasury in Accordance With the Cash Management Improvement Act of 1990 (CMIA), and its attendant regulations as set forth in 31 Code of Federal Regulations (CFR), Part 205, for the first time within a budget period; and

(l) Violations Subject to Level Two Sanctions. Violations which may result in the imposition of level two sanctions include the following:

(1) failure to rectify any level one sanction within the timeframe established for corrective action;

(2) failure to timely complete corrective actions provided in any corrective action plan;

(3) failure to timely submit a Single Audit, in accordance with OMB Circular A-133, to the Department;

(4) failure to be certified as having had accurate data following performance measure testing;

(5) commits a second violation, within a budget period, of the Department's requirements related to the Agreement Between the State of Texas and the Secretary of the Treasury, the United States Department of the Treasury in Accordance With the Cash Management Improvement Act of 1990 (CMIA), and its attendant regulations as set forth in 31 Code of Federal Regulations (CFR), Part 205;

(6) failure to conduct on-site monitoring of providers as required;

(7) failure to issue letter of findings within 30 days following on-site monitoring or quality assurance review (QAR) of service providers; and

(8) failure to assure contractor's resolution of deficiencies found during service provider's monitoring/quality assurance review within the timeframes established in the corrective action plan.

(m) Violations Subject to Level Three Sanctions. Violations which may result in the imposition of level three sanctions include the following:

(1) failure to rectify any level 1 sanction within 90 days following the timeframe established for corrective action;

(2) failure to rectify any level 2 sanction within the timeframe established for corrective action;

(3) failure to appropriately act upon reported or identified threats to the health and safety of program participants within 72 hours of notice/identification;

(4) failure to appropriately report and respond to allegations of abuse, neglect, and/or exploitation, and/or allegations of fraud or ethics code violations;

(5) failure to have tested data certified as accurate 2 times out of any 4 consecutive performance measure tests; and

(6) commits four or more level one violations or three or more level two violations within the same fiscal year.

(n) Violations Subject to Level Four Sanctions. Violations which may result in the imposition of level four sanctions include the following:

(1) failure to rectify any level 1 sanction within 180 days following the timeframe established for corrective action;

(2) failure to rectify any level 2 sanction within 90 days following the timeframe established for corrective action; and

(3) failure to rectify any level 3 sanction within the timeframe established for corrective action.

(o) Notice.

(1) The date of notice shall be the date the notice is sent to the contractor via facsimile transmission (FAX), if transmitted or recorded as delivered by 12:00 Noon on a regular business day. If transmitted after 12:00 Noon, the next business day will be considered the date of notice.

(2) All notices of violations will be sent by the following methods:

(A) facsimile (FAX) transmission for all notices; and

(B) letter by regular mail for violations subject to a level one and level two sanction or, for violations subject to a level three and level four sanction, by regular mail, return receipt requested.

(3) All notices will be addressed to:

(A) the contractor's Executive Director or designated representative;

(B) the Director of the Area Agency on Aging; and

(C) the contractor's Chairman of the Board or comparable agency official.

(p) Fraud. All allegations of fraud will be investigated by the Department. Complaints will be referred to the appropriate agency for action. Since payments to contractors are made from both State and Federal funds, submission of false or fraudulent claims, statements, documents, or the concealment of a material fact may be prosecuted as a felony in either Federal or State Court.

(1) The Department will inform the contractor of the exact nature of the complaint and may require the contractor to conduct its own internal investigation.

(2) The Department will document its investigation's findings and conclusions and inform the contractor and the complainant of the results. If an investigation indicates there is a substantiated situation in which there is a question of fraud, the Department will require the contractor to take corrective action and/or refer the complaint to the Texas Attorney General's Office, the United States Attorney General's Office and other appropriate law enforcement agencies.

(q) Ethics Code Violations. Violations of the Ethics Code requirements, Texas Government Code 572, related to ethics, as specified in the contract, will be investigated by the Department and referred by the Department to the appropriate law enforcement agency. Ethics violations may result in criminal prosecution and may be pursued based on the provisions of the Texas Government Code, the Election Code, the Penal Code, or other pertinent laws and regulations.

(1) The Department will inform the contractor of the exact nature of the complaint and may require the contractor to conduct its own internal investigation.

(2) The Department will document its investigation's findings and conclusions and inform the contractor and the complainant of the results. If an investigation indicates there is a substantiated situation in which there is a question of ethics code violations, the Department will require the contractor to take corrective action and/or refer the complaint to appropriate law enforcement agencies.

(r) Abuse, Neglect, and Exploitation. Abuse, neglect, exploitation and other violations of client rights will be reported by the Department to the appropriate authorities.

(s) Other Remedies. The Department may take and/or impose other remedies that are legally available based on the circumstances involved.

(t) Procedures for the Withdrawal of Area Agency on Aging Designation.

(1) If the Department proceeds to withdraw Area Agency on Aging designation, action shall be taken to assure that appropriate individuals and agencies are informed in advance of the reasons which make it necessary. Correspondence shall be prepared summarizing the basis for the action. This correspondence shall be mailed by certified mail, return receipt requested, to the contractor and other interested parties, including subcontractors or vendors for the contract involved. Such notification will be sent at least ten working days prior to the effective date of the dedesignation as an area agency on aging. Such notification shall explain the right of the contractor to appeal such decisions as outlined in 254.15 of this title (relating to Appeal Procedures for Area Agencies on Aging Contractors).

(2) Procedures following withdrawal of designation. If the Department withdraws an area agency's designation, the Department shall take the following action:

(A) Notify Appropriate Entities. The Department shall notify by certified mail, return receipt requested, the Assistant Secretary on Aging, Department of Health and Human Services, and those individuals and agencies specified in paragraph (1) of this subsection;

(B) Continue Services. The Department shall provide a plan for the continuity of services in the affected planning and service area and will:

(i) discontinue reimbursement to the contractors concerned;

(ii) notify service providers to submit requests for reimbursement directly to the Texas Department on Aging or to the designated contractor;

(C) place a notice in local and regional newspapers advising that claims against the contractor related to Older Americans Act programs shall be referred to the Texas Department on Aging; and

(D) designate an interim or new area agency in the planning and service area within 180 calendar days, or extension of time approved by the Administration on Aging.

(3) Administration by the Department. If necessary to ensure continuity of services in a PSA, the Department may, for a period of up to 180 calendar days after withdrawing designation of an area agency:

(A) perform the area agency responsibilities;

(B) assign the responsibilities of the area agency to another agency in the planning and service area;

(C) assign the responsibility to an area agency on aging in a contiguous planning and service area; or

(D) if necessary, may request an extension of the 180 day limit from the Assistant Secretary. The Assistant Secretary may extend the period an additional 180 calendar days if the need for the extension is demonstrated.

(u) Appeals. Appeals will be provided as specified in §254.15 of this title (relating to Appeal Procedures for Area Agency on Aging Contractors).

Source Note: The provisions of this §213.5 adopted to be effective March 10, 1999, 24 TexReg 1638; transferred effective September 1, 2004, as published in the Texas Register September 10, 2004, 29 TexReg 8842; transferred effective June 15, 2021, as published in the May 28, 2021 issue of the Texas Register, 46 TexReg 3421