(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.