(f) Recoupment of erroneous
payments.
(6) Recoupment procedures.
(i) Initial action.
When
an erroneous payment is discovered, the TRICARE contractor normally
will be required to take the initial action to effect recoupment.
Such actions will be in accordance with the provisions of this part
and the TRICARE contracts and will include a demand (or demands)
for refund or an offset against any other TRICARE payment(s) becoming
due the debtor. When the efforts of the TRICARE contractor to effect
recoupment are not successful within a reasonable time, recoupment
cases will be referred to the Office of General Counsel, TMA, for
further action in accordance with the provisions of paragraph (f)
of this section. All requests to debtors for refund or notices of
intent to offset shall be in writing.
(ii) Demand for payment.
Written
demand(s) for payment shall inform the debtor of the following:
(A) The basis for and
amount of the debt and the consequences of failing to cooperate
to resolve the debt;
(B) The right to inspect and copy TRICARE records
pertaining to the debt;
(C) The opportunity to request an administrative
review by the TRICARE contractor; and that such a request must be
received by the TRICARE contractor within 90 days from the date
of the initial demand letter;
(D) That payment of
the debt is due within 30 days from the date of the initial demand
notification;
(E) That interest will
be assessed on the debt at the Treasury Current Value of Funds rate,
pursuant to 31 U.S.C. 3717, and will begin to accrue on the date
of the initial demand letter; and that interest will be waived on
the debt, or any portion thereof, which is paid within 30 days from
the date of the initial demand notification letter;
(F) That
administrative costs and penalties will be charged pursuant to 31
CFR 901.9;
(G) That collection by offset against current or
subsequent claims or other amounts payable from the government may
be taken;
(H) The opportunity to enter into a written agreement
to repay the debt;
(I) The name, address, and phone number of a contact
person or office that the debtor may contact regarding the debt.
(iii) A minimum of
one demand letter is required. However, the specific content, timing
and number of demand letters may be tailored to the type and amount
of the debt, and the debtor’s response, if any. Contractors’ demand
letters must be mailed or hand-delivered on the same date they are
dated.
(iv) The initial or
subsequent demand letters may also inform the debtor of the requirement
to report delinquent debts to credit reporting agencies and to collection
agencies, the requirement to refer debts to the Treasury Offset
Program for offset from Federal income tax refunds and other amounts payable
by the Government, offset from state payments, the requirement to
refer debts to Treasury for collection and TRICARE policies concerning
the referral of delinquent debts to the Department of Justice for
enforced collection action. The initial or subsequent demand letter
may also inform the debtor of TRICARE policies concerning waiver.
When necessary to protect the Government’s interest (for example
to prevent the running of a statute of limitations), written demand
may be preceded by other appropriate actions under this regulation,
including referral to the Department of Justice for litigation.
There should be no undue delay in responding to any communication
received from the debtor. Responses to communications from debtors
should be made within 30 days of receipt whenever feasible. If prior
to the initiation of the demand process or at any time during or
after completion of the demand process, the Director, TMA, or a
designee, determines to pursue or is required to pursue offset,
the procedures applicable to administrative offset, found at paragraph (f)(6)(v)
of this section, must be followed. If it appears that initial collection
efforts are not productive or if immediate legal action on the claim
appears necessary, the claim shall be referred promptly by the contractor
to the Office of General Counsel, TMA.
(v) Collection by administrative offset.
Collections
by offset will be undertaken administratively in every instance
when feasible. Collections may be taken by administrative offset
under 31 U.S.C. 3716, the common law or other applicable statutory
authority. No collection by offset may be undertaken unless the
debtor has been sent a written demand for payment, including the
procedural safeguards described in paragraph (f)(6)(ii) of this
section, unless the failure to take the offset would substantially prejudice
the Government’s ability to collect the debt, and the time before
payment is to be made does not reasonably permit the time for sending
written notice. Such prior offset must be promptly followed by sending
a written notice and affording the debtor the opportunity for a
review by the TRICARE contractor. Examples of erroneous payments
include, but are not limited to, claims submitted by individuals
ineligible for TRICARE benefits, claims submitted for non-covered
services or supplies, claims for which payments by another insurance
or health plan reduce TRICARE liability, and from claims made from
participating providers in which payment was initially erroneously
made to the beneficiary. The resolution of recoupment claims rarely
involves issues of credibility or veracity and a review of the written
record is ordinarily an adequate means to correct prior mistakes.
For this reason, the pre-offset oral hearing requirements of the
Federal Claims Collection Standards, 31 CFR 901.3(e) do not apply
to the recoupment of erroneous TRICARE payments. However, in instances
where an oral hearing is not required, the debtor will be afforded
an administrative review if the TRICARE contractor receives a written
request for an administrative review within 90 days from the date
of the initial demand letter. The appeals procedures described in
Sec. 199.10 of this part, afford a TRICARE beneficiary or participating
provider an opportunity for an administrative appellate review,
including under certain circumstances, the right to an oral hearing
before a hearing officer when an appealable issue exists. TRICARE
contractors may take administrative action to offset erroneous payments
against other current TRICARE payments owing a debtor. Payments
on the claims of a debtor pending at or filed subsequent to the
time collection action is initiated should be suspended pending
the outcome of the collection action so that these funds will be
available for offset. All or part of a debt may be offset depending
on the amount available for offset. Any requests for offset received
from other agencies and garnishment orders issued by courts of competent
jurisdiction will be forwarded to the Office of General Counsel,
TMA. Unless otherwise provided by law, administrative offset of
payments under the authority of 31 U.S.C. 3716 may not be conducted
more than 10 years after the Government’s right to collect the debt
first accrued, unless facts material to the Government’s right to
collect the debt were not known and could not reasonably have been
known by the TRICARE official or officials charged with the responsibility
to discover and collect such debts. This limitation does not apply
to debts reduced to judgment. This section does not apply to debts
arising under the Social Security Act, except as provided in 42
U.S.C. 404, payments made under the Social Security Act, except
as provided for in 31 U.S.C. 3716(c), debts arising under, or payments
made under, the Internal Revenue Code, except for offset of tax
refunds or tariff laws of the United States; offsets against Federal
salaries to the extent these standards are inconsistent with regulations
published to implement such offsets under 5 U.S.C. 5514 and 31 U.S.C.
3716; offsets under 31 U.S.C. 3728 against a judgment obtained by
a debtor against the United States; offset or recoupment under common
law, state law, or federal statutes specifically prohibiting offset
or recoupment of particular types of debts or offsets in the course
of judicial proceedings, including bankruptcy.
(A) Referral for
centralized administrative offset.
When cost-effective, legally enforceable
non-tax debts delinquent over 180 days that are eligible for collection
through administrative offset shall be referred to Treasury for
administrative offset, unless otherwise exempted from referral.
Referrals shall include certification that the debt is past due
and legally enforceable and that TMA has complied with all due process
requirements of the statute-authorizing offset. Administrative offset,
including administrative offset against tax refunds due debtors
under 26 U.S.C. 6402, in accordance with 31 U.S.C. 3720A, shall
be effected through referral for centralized administrative offset,
after debtors have been afforded at least sixty (60) days notice
required in paragraph (f)(6) of this section. Salary offsets shall
be effected through referral for centralized administrative offset,
after debtors have been afforded due process required by 5 U.S.C.
5514, in accordance with 31 CFR 285.7. Referrals for salary offset
shall include certification that the debts are past due, legally
enforceable debts and that TMA has complied with all due process
requirements under 5 U.S.C. 5514 and applicable agency regulations.
The Treasury, Financial Management Service (FMS) may waive the salary
offset certification requirement set forth in 31 CFR 285.7, as a
prerequisite to submitting the debt to FMS for offset from other
payment types. If FMS waives the certification requirement, before
an offset occurs, TMA will provide the employee with the notice
and opportunity for a hearing as required by 5 U.S.C. 5514 and applicable
regulations, and will certify to FMS that the requirements of 5
U.S.C. 5514 and applicable agency regulations have been met. TMA
is not required to duplicate notice and administrative review or
salary offset hearing opportunities before referring debts for centralized
administrative offset when the debtor has been previously given
them.
(B) Referral for non-centralized administrative
offset.
Unless
otherwise prohibited by law, when centralized administrative offset
is not available or appropriate, past due legally enforceable non-tax-delinquent
debts that are eligible for referral may be collected through non-centralized
administrative offset through a request directly to the payment-authorizing
agency. Referrals shall include certification that the debts are
past due and that the agency has complied with due process requirements
under 31 U.S.C. 3716(a) or other applicable authority and applicable
agency regulations concerning administrative offset. Generally,
non-centralized administrative offsets will be made on an ad hoc
case-by-case basis, in cooperation with the agency certifying or
authorizing payments to the debtor.
(vi) Collection by
transfer of debts to Treasury or a Treasury-designated debt collection
center for collection through cross servicing.
(A) The
Director, TMA or a designee, is required to transfer legally enforceable
non-tax debts that are delinquent 180 days or more to Treasury for
collection through cross-servicing (31 U.S.C. 3711(g); 31 CFR 285.12.)
Debts referred or transferred to Treasury or Treasury-designated
debt collection centers shall be serviced, collected, or compromised,
or the collection action will be suspended or terminated, in accordance
with the statutory requirements and authorities applicable to the
collection of such debts. Agencies operating Treasury-designated
debt collection centers are authorized to charge a fee for services
rendered regarding referred or transferred debts. This fee may be
paid out of amounts collected and may be added to the debt as an
administrative cost. Referrals will include certification that the
debts transferred are valid, legally enforceable debts, that there
are no legal bars to collection and that the agency has complied
with all prerequisites to a particular collection action under the
applicable laws, regulations or policies, unless the agency and Treasury
agree that Treasury will do so on behalf of the agency.
(B) The
requirement of paragraph (f)(1) of this section does not apply to
any debt that:
(1) Is in litigation or foreclosure.
(2) Will be disposed of under an approved
asset sale program.
(3) Has been referred to a private collection
contractor for a period of time acceptable to Treasury.
(4) Will be collected under internal offset
procedures within 3 years after the debt first became delinquent.
(5) Is exempt
from this requirement based on a determination by the Secretary
of the Treasury that exemption for a certain class of debt is in
the best interest of the United States.
(vii) Collection
by salary offset.
When
a debtor is a member of the military service or a retired member and
collection by offset against other TRICARE payments due the debtor
cannot be accomplished, and there have been no positive responses
to a demand for payment, the Director, TMA, or a designee, may refer
the debt for offset from the debtor’s pay account pursuant to 37
U.S.C. 1007(c), as implemented by Volume 7A, Chapter 50 and Volume
7B, Chapter 28 of the DoDFMR. Collection from a Federal employee may
be effected through salary offset under 5 U.S.C. 5514.
(A) For
collections by salary offset the Director, TMA, or designee, will
issue written notification, as required by 5 CFR 550.1104(d) at
least 30 days before any offsets are taken. In addition, the notification will
advise the employee that if he or she retires, resigns or his or
her employment ends before collection of the debt is completed,
collection may be made from subsequent payments of any nature due
from the United States (e.g., final salary payment, lump-sum leave
under 31 U.S.C. 3716 due the employee as of date of separation.)
A debtor’s involuntary payment of all or part of a debt being collected
will not be construed as a waiver of any rights the debtor may have
under 5 U.S.C. 5514 or any other provision of contract or law, unless
there are statutory or contractual provisions to the contrary or the
employee’s paying agency is directed by an administrative or judicial
order to refund amounts deducted from his or her current pay. No
interest will be paid on amounts waived or determined not to be
owed unless there are statutory or contractual provisions to the
contrary.
(B) Petition for
hearing.
The notice
of the proposed offset will advise the debtor of his or her right
to petition for a hearing. The petition for hearing must be signed
by the debtor or his or her representative and must state whether
he or she is contesting debt validity, debt amount and/or the terms
of the proposed offset schedule. It must explain with reasonable
specificity all the facts, evidence and witnesses, if any (in the
case of an oral hearing and a summary of their anticipated testimony),
which the debtor believes support his or her position, and include
any supporting documentation. If contesting the terms of the proposed
offset schedule, the debtor must provide financial information including
a completed Department of Justice Financial Statement of Debtor
form (OBD-500 or other form prescribed by DOJ), including specific
details concerning income and expenses of the employee, his or her
spouse and dependents for 1-year period preceding the debt notification
and projected income and expenses for the proposed offset period
and a statement of the reason why the debtor believes the salary
offset schedule will impose extreme financial hardship. Upon receipt
of the petition for hearing, the Director, TMA, or a designee, will
complete reconsideration. If the Director, TMA, or a designee determines
that the debt amount is not owed, that a less amount is owed, or
that the terms of the employee’s proposed offset schedule are acceptable,
it will advise the debtor and request that the employee accept the
results of the reconsideration in lieu of a hearing. If the employee
declines to accept the results of reconsideration in lieu of a hearing,
the debtor will be afforded a hearing. Ordinarily, a petition for
hearing and required submissions that are not timely filed, shall
be accepted after expiration of the deadline provided in the notice
of the proposed offset, only when the debtor can demonstrate to
the Director, TMA, or a designee, that the timely filing of the
request was not feasible due to extraordinary circumstances over
which the appealing party had no practical control or because of
failure to receive notice of the time limit (unless he or she was
otherwise aware of it). Each request for an exception to the timely
filing requirement will be considered on its own merits. The decision
of the Director, TMA, or a designee, on a request for an exception
to the timely filing requirement shall be final.
(C) Extreme financial
hardship.
The maximum
authorized amount that may be collected through involuntary salary
offset is the lesser of 15 percent of the employee’s disposable
pay or the full amount of the debt. An employee who has petitioned
for a hearing may assert that the maximum allowable rate of involuntary
offset produces extreme financial hardship. An offset produces an
extreme financial hardship if the offset prevents the employee from
meeting the costs necessarily incurred for the essential expenses
of the employee, employee’s spouse and dependents. These essential
expenses include costs incurred for food, housing, necessary public
utilities, clothing, transportation and medical care. In determining
whether the offset would prevent the employee from meeting the essential expenses
identified above, the following shall be considered:
(1) Income from
all sources of the employee, the employee’s spouse, and dependents;
(2) The extent
to which assets of the employee, employee’s spouse and dependents
are available to meet the offset and essential subsistence expenses;
(3) Whether these
essential subsistence expenses have been minimized to the greatest
extent possible;
(4) The extent to which the employee or the
employee’s spouse can borrow money to meet the offset and other
essential expenses; and
(5) The extent to which the employee and the
employee’s spouse and dependents have other exceptional expenses
that should be taken into account and whether these expenses have
been minimized.
(D) Form and content of hearings.
The resolution
of recoupment claims rarely involves issues of credibility or veracity
and a review of the written record is ordinarily an adequate means
to determine the validity or amount of the debt and/or the terms
of a proposed offset schedule. The Director, TMA, or a designee,
will determine whether an oral hearing is required. A debtor who
has petitioned for a hearing, but who is not entitled to an oral
hearing will be given an administrative hearing, based on the written
documentation submitted by the debtor and the Director, TMA, or
a designee. If the Director, TMA, or a designee, determines that
the debtor should be afforded the opportunity for an oral hearing, the
debtor may elect to have a hearing based on the written record in
lieu of an oral hearing. The Director, TMA, or a designee, will
provide the debtor (or his representative) notification of the time,
date and location of the oral hearing to be held if the debtor has
been afforded an oral hearing. Copies of records documenting the
debt will be provided to the debtor or his representative (if they
have not been previously provided), at least 3 calendar days prior
to the date of the oral hearing. At oral hearings, the only evidence
permitted, except oral testimony, will be that which was previously
submitted as pre-hearing submissions. At oral hearings, the debtor
may not raise any issues not previously raised with TMA. In the
absence of good cause shown, a debtor who fails to appear at an
oral hearing will be deemed to have waived the right to a hearing
and salary offset may be initiated.
(E) Costs for attendance
at oral hearings.
Debtors and their witnesses will bear
their own costs for attendance at oral hearings.
(F) Hearing official's
decision.
The Hearing
Official’s decision will be in writing and will identify the documentation
reviewed. It will indicate the amount of debt that he or she determined
is valid and shall state the amount of the offset and the estimated
duration of the offset. The determination of a hearing official
designated under this section is considered an official certification
regarding the existence and amount of the debt and/or the terms
of the proposed offset schedule for the purposes of executing salary
offset under 5 U.S.C. 5514. The Hearing Official’s decision must
be issued at the earliest practical date, but not later than 60
days from the date the petition for hearing is received by the Office of
General Counsel, TMA, unless the debtor requests, and the Hearing
Official grants a delay in the proceedings. If a hearing official
determines that the debt may not be collected by salary offset,
but the Director, TMA, or a designee, finds the debt is still valid,
the Director, TMA or a designee, may seek collection through other
means, including but not limited to, offset from other payments
due from the United States.
(viii) [Reserved]
(ix) Collection of
installments.
Debts,
including interest, penalty and administrative costs shall be collected
in one lump sum whenever possible. However, when the debtor is financially
unable to pay the debt in one lump sum, the TRICARE contractor or
the Director, TMA, or designee, may accept payment in installments.
Debtors claiming that lump sum payment will create financial hardship
may be required to complete a Department of Justice Financial Statement
of Debtor form or provide other financial information that will
permit TMA to verify such representations. TMA may also obtain credit reports
to assess installment requests. Normally, debtors will make installment
payments on a monthly basis. Installment payment shall bear a reasonable
relationship to the size of the debt and the debtor’s ability to
pay. Except when a debtor can demonstrate financial hardship or
another reasonable cause exists, installment payments should be
sufficient in size and frequency to liquidate the debt in 3 years or
less. (31 CFR 901.8(b)). Normally, installment payments of $75 or
less will not be accepted unless the debtor demonstrates financial
hardship. Any installment agreement with a debtor in which the total amount
of deferred installments will exceed $750, should normally include
an executed promissory agreement. Copies of installment agreements
will be retained in the contractor’s or TMA, Office of General Counsel’s
files.
(x) Interest, penalties, and administrative costs.
Title
31 U.S.C. 3717 and the Federal Claims Collection Standards, 31 CFR
901.9, require the assessment of interest, penalty and administrative
costs on delinquent debts. Interest shall accrue from the date the
initial debt notification is mailed to the debtor. The rate of interest
assessed shall be the rate of the current value of funds to the
United States Treasury (the Treasury tax and loan account rate).
The collection of interest on the debt or any portion of the debt,
which is paid within 30 days after the date on which interest begins
to accrue, shall be waived. The Director, TMA, or designee, may
extend this 30-day period on a case-by-case basis, if it reasonably determines
that such action is appropriate. The rate of interest as initially
assessed shall remain fixed for the duration of the indebtedness;
except that where the debtor has defaulted on a repayment agreement
and seeks to enter into a new agreement, a new interest rate may
be set which reflects the current value of funds to the Treasury
at the time the new agreement is executed. Interest shall not be compounded;
that is, interest shall not be charged on interest, penalties, or
administrative costs required by this section. However, if a debtor
defaults on a previous repayment agreement, charges that accrued
but were not collected under the defaulted agreement, shall be added
to the principal under the new repayment agreement. The collection
of interest, penalties and administrative costs may be waived in
whole or in part as a part of the compromise of a debt as provided
in paragraph (g) of this section. In addition, the Director, TMA,
or designee may waive in whole or in part, the collection of interest,
penalties, or administrative costs assessed herein if he or she
determines that collection would be against equity and good conscience
and not in the best interest of the United States. Some situations
in which a waiver may be appropriate include:
(A) Waiver of interest
consistent with 31 CFR 903.2(c)(2) in connection with a suspension
of collection when a TRICARE appeal is pending under Sec. 199.10
of this part where there is a substantial issue of fact in dispute.
(B) Waiver of interest
where the original debt arose through no fault or lack of good faith
on the part of the debtor and the collection of interest would impose
a financial hardship or burden on the debtor. Some examples in which
such a waiver would be appropriate include: A debt arising when
a TRICARE beneficiary in good faith files and is paid for a claim
for medical services or supplies, which are later determined not
to be covered benefits, or a debt arising when a TRICARE beneficiary
is overpaid as the result of a calculation error on the part of
the TRICARE contractor or TMA.
(C) Waiver
of interest where there has been an agreement to repay a debt in
installments, there is no indication of fault or lack of good faith
on the part of the debtor, and the amount of interest is so large in
relation to the size of the installments that the debtor can reasonably
afford to pay, that it is likely the debt will never be repaid in
full. When a debt is paid in installments, the installment payments
first will be applied to the payment of outstanding penalty and
administrative cost charges, second, to accrued interest and then
to principal. Administrative costs incurred as the result of a debt
becoming delinquent (as defined in paragraph (f)(2)(iii) of this
section) shall be assessed against a debtor. These administrative
costs represent the additional costs incurred in processing and
handling the debt because it became delinquent. The calculation
of administrative costs should be based upon cost analysis establishing
an average of actual additional costs incurred in processing and
handling claims against other debtors in similar stages of delinquency.
A penalty charge, not exceeding six percent a year, shall be assessed
on the amount due on a debt that is delinquent for more than 90
days. This charge, which need not be calculated until the 91st day
of delinquency, shall accrue from the date that the debt became
delinquent.
(xi) Referral to
private collection agencies.
TMA shall use government-wide debt
collection contracts to obtain debt collection services provided
by private contractors in accordance with 31 CFR 901.5(b).
(xii) Reporting delinquent
debts to credit reporting agencies.
Delinquent consumer debts shall
be reported to credit reporting agencies. Delinquent debts are debts
which are not paid or for which satisfactory payment arrangements
are not made by the due date specified in the initial debt notification
letter, or those for which the debtor has entered into a written
payment agreement and installment payments are past due 30 days
or longer. Such referrals shall comply with the Bankruptcy Code
and the Privacy Act of 1974, 5 U.S.C. 552a, as amended. The provisions
of the Privacy Act do not apply to credit bureaus (31 CFR 901.4(1)).
There is no requirement to duplicate the notice and review opportunities
before referring debts to credit bureaus. Debtors will be advised
of the specific information to be transmitted (i.e., name, address,
and taxpayer identification number, information about the debt).
Procedures developed for such referrals must ensure that an accounting
of the disclosures shall be kept which is available to the debtor;
that the credit reporting agencies are provided with corrections
and annotations of disagreements of the debtor; and that reasonable
efforts are made to ensure that the information to be reported is
accurate, complete, timely and relevant. When requested by a credit-reporting
agency, verification of the information disclosed will be provided promptly.
Once a claim has been reviewed and determined to be valid, a complete
explanation of the claim will be given the debtor. When the claim
is overdue, the individual will be notified in writing that payment
is overdue; that within not less than 60 days, disclosure of the
claim shall be made to a consumer reporting agency unless satisfactory
payment arrangements are made, or unless the debtor requests an
administrative review and demonstrates some basis on which the debt
is legitimately disputed; and of the specific information to be
disclosed to the consumer reporting agency. The information to be
disclosed to the credit reporting agency will be limited to information
necessary to establish the identity of the debtor, including name,
address and taxpayer identification number; the amount, status and
history of the claim; and the agency or program under which the
claim arose. Reason able action will be taken to locate an individual
for whom a current address is not available. The requirements of
this section do not apply to commercial debts, although commercial
debts shall be reported to commercial credit bureaus. Treasury will
report debts transferred to it for collection to credit reporting
agencies on behalf of the Director, TMA, or a designee.
(xiii) Use and disclosure
of mailing addresses.
In
attempting to locate a debtor in order to collect or compromise
a debt under this section, the Director, TMA, or a designee, may
send a written request to the Secretary of the Treasury, or a designee,
for current address information from records of the Internal Revenue
Service. TMA may disclose mailing addresses obtained under this
authority to other agencies and to collection agencies for collection
purposes.