(a) When the Secretary determines that the performance of a grantee under these regulations involves (1) the violation of the rights or endangerment of the health, safety, or welfare of any persons, or (2) gross negligence or the mismanagement in the handling or use of funds under the grant, the Secretary will, in writing, notify the grantee of such determination and will request that the grantee take such corrective action, within such period of time, as the Secretary may prescribe.

(b) When the Secretary determines that a grantee has not taken corrective action (as prescribed by him under paragraph (a) of this section) to his satisfaction, he may, after providing the grantee an opportunity for a hearing in accordance with paragraph (c) of this section, rescind the grant in whole or in part and if he deems it appropriate, assume or resume control or operation of the program, activity, or service involved.

(c) When the Secretary has made a determination described in paragraph (b) of this section, he shall in writing notify the grantee of such determination and of the grantee's right to request a review of such determination (and of the determination described in paragraph (a) of this section) under the Public Health Service Grant Appeals Procedure (42 CFR part 50, subpart D). Such notification by the Secretary shall set forth the reasons for the determination in sufficient detail to enable the grantee to respond and shall inform the grantee of its opportunity for review under such subpart D. If the review held under subpart D results in a response adverse to the grantee's position, the grantee shall be informed of its right to have a hearing before the Department Grant Appeals Board, pursuant to 45 CFR part 16.

(d) Where the Secretary determines that a grantee's performance under a grant awarded under this subpart poses an immediate threat to the safety of any person, he may immediately rescind the grant in whole or in part and if he deems it appropriate, assume or resume control or operation of the program, activity, or service involved. Upon such recission he will immediately notify the grantee of such action and the basis or reasons therefor; and offer the grantee an opportunity for a hearing to be held within 10 days of such action. If the grantee requests such a hearing, the Secretary will designate three officers or employees of the Department to serve as a hearing panel. No officer or employee from the immediate office of the official who made the decision to rescind the grant under this paragraph may be designated to serve on the hearing panel.

(1) The hearing shall be commenced within 10 days after the recission of the grant, shall be held on the record and shall afford the grantee the right:

(i) To notice of the issues to be considered;

(ii) To be represented by counsel;

(iii) To present witnesses on grantee's behalf; and

(iv) To cross-examine other witnesses either orally or through written interrogatories.

(2) The hearing panel shall, within 25 days after the conclusion of the hearing, notify all parties in writing of its decision.

(3) Such decision shall not be subject to further hearing under 42 CFR part 50, subpart D or 45 CFR part 16.

(e) In any case where the Secretary has rescinded a grant under paragraph (b) or (d) of this section, he may decline to enter into a new grant agreement with the grantee until such time as he is satisfied that the basis for the recission has been corrected. Nothing in this section shall be construed as contravening the Occupational Safety and Health Act of 1970 (84 Stat. 1590), as amended (29 U.S.C. 651).

(f) In any case where the Secretary has rescinded a grant for the delivery of health services under this subpart, the grantee shall, upon the request of the Secretary, transfer to the Secretary all medical records compiled in the operation of the supported project.

[40 FR 53143, Nov. 14, 1975, as amended at 50 FR 1855, Jan. 14, 1985; 81 FR 3010, Jan. 20, 2016]