TABLE OF CONTENTS

 

 

Paragraph and Subject                        Date   Trans. No.

 

Chapter 3-0800 Overpayment Process

 

Table of Contents. . . . . . . . . . .  09/16     16-11

1     Purpose and Scope. . . . . . . . . . .  09/16     16-11

2  Legislative Authority and Directives .  09/16     16-11

  3  Definition of Overpayment. . . . . . .  09/16     16-11

  4  Notification of EEOICPA Payment. . . .  09/16     16-11

  5  Recovery of Funds by District Office .  09/16     16-11

  6  Referral to National Office  . . . . .  09/16     16-11

  7  Identifying Overpayments . . . . . . .  09/16     16-11

  8  Review and Initial Notification. . . .  09/16     16-11

  9  Telephone Conferences. . . . . . . . .  09/16     16-11

 10  Consideration of Overpayment Waiver. .  09/16     16-11

 11 Overpayment Decisions. . . . . . . . .   09/16     16-11

 12  Overpayment Database . . . . . . . . .  09/16     16-11

 13  Treasury Report on Receivables and

       Debt Collection Activities (TROR). .  09/16     16-11

 

Exhibits

 

1   Sample Initial Overpayment

      Notification Letter - Without Fault .    09/16     16-11

 2   Sample Initial Overpayment

       Notification Letter - At Fault. . . .    09/16     16-11

 3   Sample Memorandum to File for

       Administrative Write-Off of Debt

       Equal to or Less Than $2,500  . . . .    09/16     16-11

 4   Sample Pre-Conference Call Checklist  .    09/16     16-11

 5   Sample Memorandum of Conference . . . .    09/16     16-11

 6   Sample Cover Letter to Memorandum

       of Conference . . . . . . . . . . . .    09/16     16-11

 7   Sample Overpayment Final Decision -

  Preliminary at Fault Determination

  Correct . . . . . . . . . . . . . . .    09/16     16-11

 8   Sample Overpayment Final Decision -

  Without Fault - Waiver Denied . . . .    09/16     16-11

 9   Sample Overpayment Final Decision -

  Waiver Granted Based on Defeat

  Purpose of EEOICPA  . . . . . . . . .    09/16     16-11

10   Sample Overpayment Final Decision -

  Waiver Granted (Full or Partial)

  Based on Violate Equity and Good

  Conscience  . . . . . . . . . . . . .    09/16     16-11

11   Sample Letter to Non-Claimant

       Regarding Federal Debt  . . . . . . .    09/16     16-11

 

 


1.   Purpose and Scope.  This chapter describes how the Office of Workers’ Compensation Programs (OWCP), through the Division of Energy Employees Occupational Illness Compensation (DEEOIC), identifies, evaluates, provides notification of, waives, issues final decisions regarding, and recovers overpayments under both Parts B and E of the Energy Employees Occupational Illness Compensation Program Act (EEOICPA).

 

2.   Legislative Authority and Directives.  The instructions in this part of the procedure manual derive from the following regulations and authority:

 

a.The EEOICPA at 42 U.S.C. 7385j-2 authorizes the Secretary of Labor to recover overpayments because of an error of fact or law, except when an incorrect payment has been made to an individual who is without fault and the adjustment or recovery would defeat the purpose of the EEOICPA or would be against equity and good conscience.  With respect to recovery, the EEOICPA authorizes DEEOIC (as designee of the Secretary of Labor) to recover the overpayment pursuant to regulations prescribed by the Secretary.

 

b.Public Law 89-508 (Federal Claims Collection Act of 1966 (80 Stat. 308), amended by Public Law 900-904 (2000)), assigns the Secretary responsibility for the collection of debts arising from the activities of the Department of Labor.  It also provides the authority to compromise, terminate, or suspend collection action on debts not in excess of $100,000 (exclusive of interest, penalties, and administrative costs and after partial payments have been deducted).  In such cases, there must be no indication of fraud, and it must appear that:

 

(1) The debtor is unable to pay the full amount within a reasonable period of time, as verified through credit reports or other financial information;

 

(2) The Government is unable to collect the debt in full within a reasonable time by enforced collection proceedings;

 

(3) The cost of collecting the debt does not justify the enforced collection of the full amount; or

 

(4) There is significant doubt concerning the Government’s ability to prove its case in court.

 

The Department of Labor Manual Series (DLMS) 6, Chapter 1100, Debt Management, provides that Department of Labor Agency Heads are delegated the authority to compromise, suspend or terminate collection action on debts stemming from program activities not in excess of $100,000, and that Agency Heads may re-delegate this authority to officials in their agencies with approval of the Chief Financial Officer. DLMS6-1111b (1),c (2).

 

c.Public Law 97-365 (Debt Collection Act of 1982) amended several statutes, including the Federal Claims Collection Act of 1966.  The Debt Collection Act authorizes Federal agencies to collect certain charges on outstanding debts, to use salary offset or administrative offset to collect claims and to use the services of private collection agencies. (Note: The Federal Claims Collection Act of 1966 as amended by the Debt Collection Act of 1982 has been codified as 31 USC 900-904.)

 

d.Public Law 104-134 (Debt Collection Improvement Act of 1996) also amended several statutes, including the Debt Collection Act of 1982.  The Debt Collection Improvement Act provides that any non-tax debt or claim owed to the United States that has been delinquent for a period of 180 days be turned over to the Secretary of the Treasury, who will determine whether to collect or terminate collection actions on the debt or claim.

 

e.31 CFR Parts 900-904 (Federal Claims Collection Standards) describes standards for the collection and compromise of debts, termination of agency collection, and referral of civil claims to the Department of Justice (DOJ).  In particular, 31 CFR 902.1(b) and 903.1(b) provide that the DOJ has the exclusive authority to compromise, suspend or terminate claims in excess of $100,000, exclusive of interest, penalties and administrative costs. Consequently, even if DEEOIC believes that compromise, suspension or termination of recovery of such a debt is appropriate, the matter must be referred to the DOJ for determination.

 

f.31 CFR Part 285 includes the provisions for transferring delinquent debts to the Department of the Treasury (Treasury) for collection.

 

g.In a case involving fraud on the part of the debtor or any other party having an interest in the claim, 31 CFR 900.3(a) provides that only DOJ has authority to compromise, suspend, or terminate collection action on such claims.

 

h.In cases that have been referred to the Office of the Inspector General (OIG) or the U.S. Attorney for reasons other than collection of the debt, the Policy Analyst (PA) will advise OIG before collection action is initiated in order to evaluate whether collection action would jeopardize an ongoing investigation or a legal action in progress.

 

3.   Definition of Overpayment.  An overpayment is any amount of compensation paid under 42 U.S.C. §§ 7384s, 7384t, 7384u, 7385s-2 or 7385s-3 to a recipient that, at the time of payment, is paid where no amount is payable or where payment exceeds the correct amount of compensation determined by DEEOIC.

 

4.   Notification of EEOICPA Payment.  Upon publication of a Final Decision by the Final Adjudication Branch (FAB) that awards lump sum compensation, designated payees receive notification of the allotted compensation payable.  The FAB provides reference to payable amounts in the Final Decision, along with sending Form EN-20 Acceptance of Payment to each payee specifying the amount of payable lump sum compensation.  To process the allocated lump sum compensation for payment, a payee must provide necessary information on the EN-20, including bank routing and account numbers, to permit DEEOIC to process a payment. Payee signs and dates the form.  Payments processed by DEEOIC direct money to a payee’s designated checking or savings account via Electronic Funds Transfer (EFT), or in some unique situations with issuance of a paper check.  With EFT or paper check, the deposit of payable funds into an account or negotiation of a paper check, is considered due notice of payment absent affirmative evidence to the contrary.  In the case of any improper payment received by either a claimant or other party, including survivors of deceased payees, estates, or joint-account holders, the party in receipt of the funds is to notify DEEOIC immediately.

 

When the FAB issues a FD accepting a medical condition, it also awards the payment of medical bills for that condition.  The FAB may also issue a FD that awards only the payment of medical bills for an accepted condition.

 

5.  Recovery of Funds.  Upon receipt of information that suggests a payment processed by DEEOIC is in error or some other circumstances where the paid claimant is no longer entitled to the funds, district office (DO) or FAB staff is to bring the matter to the attention of the DO fiscal officer.  This includes, but is not limited to, the incorrect amount paid; death of the employee prior to time of payment; or a person who has a joint bank account with a deceased claimant and withdraws EEOICPA funds prior to recovery of the funds.  The EEOICPA Procedure Manual, Chapter 3-0600 states that the DO fiscal officer will attempt recovery of the improperly paid funds.  The DO fiscal officer will attempt recovery of the funds as follows:    

 

a. Recoupment of EFT payment.

 

b. Stop payment of paper check.

 

c. Request the person in receipt of the funds to return the money.

 

If the DO fiscal officer is unsuccessful in recouping the funds, the DO will refer the claim to the National Office (NO.)

 

6.   Referral to NO.  When a potential overpayment or debt is identified and the district office cannot recover the funds, the matter is referred to the DO Chief of Operations (COP) or FAB Manager for review.  If the COP or FAB manager agrees that a potential overpayment or debt exists, he or she is to have a memorandum prepared to the attention of the Branch Chief for the Policy Branch describing the circumstances of the matter, including a description of any information relating to the overpayment or debt that may be helpful in recovery of the funds.  Important details to include in the memorandum are the name of the individuals associated with the overpaid funds, any efforts taken to recover funds, descriptions of related communications or phone calls, or any other information as to the status of the overpayment or debt.  Authority to issue overpayment decisions rests solely with the Policy Branch. 

 

7.   Identifying Overpayments.  Overpayments occur whenever a payee or other party is in receipt of lump sum compensation or payment of medical bills exceeding that for which they are entitled, and Treasury or DEEOIC could not recoup the overpaid funds through recovery effort as outlined in paragraph 5.  Overpayment liability is the responsibility of anyone who is in receipt of funds to which they are not entitled under the EEOICPA.

 

a.   Establishment of an overpayment.  Overpayments can occur for a variety of reasons.  Once FAB issues a final decision and a named payee receives lump sum compensation for a claim, evidence may later arise that requires action to vacate the decision through the issuance of a Director’s Order.  This can occur to correct a deficiency or to respond to new evidence.  Once claim adjudication results in the publication of a new final decision for the same claim, and the new payable lump sum compensation is less then what was previously paid to the payee, DEEOIC has to find that an overpayment exists.  DEEOIC cannot establish an overpayment until the new final decision concluding the correct entitlement to a payee is issued.  The most frequent reasons for overpayments include the following:

 

(1) A claimant was paid compensation in error.  This might result when the FAB issues a final decision based on inaccurate or incomplete factual evidence.  For example, a claimant received compensation, but the DEEOIC later discovered that the employee worked at a different location than previously established.

 

(2) The required tort offset or coordination with state workers’ compensation (SWC) benefits was either improperly applied or never applied.  For example, a claimant does not notify the DO that he or she received SWC or money from a tort settlement.  The DEEOIC then awards the claimant compensation without coordinating (offsetting) lump sum compensation properly. 

 

(3) A lump sum award requires adjustment because additional eligible survivors emerge after payment of compensation.  This results in an overpayment to the original eligible payee(s).  For example, an eligible child of a deceased employee is awarded survivor benefits.  The DO was not aware of additional survivors and awards the survivor the full amount of benefits available.  Thereafter, another eligible child of the employee files a claim.  The compensation must now be shared, and the original claimant is overpaid.   

 

(4)  A claimant dies after FAB awards compensation, but before receipt of the funds.  For example, a survivor receives a final decision, and DEEOIC issues a payment to the survivor’s account.  However, several days after the deposit, DEEOIC receives information showing that the survivor passed away before the payment was processed.  As a payee is required by law to be alive at time of payment, the paid funds are now considered not due and must be returned to DEEOIC.

 

8.   Review and Initial Notification.  The PA reviews the overpayment memorandum from the DO or FAB, and all available evidence to verify the existence of an overpayment.  The PA then calculates the exact amount of the overpayment. 

 

a.      Administrative Write-Off.  If the amount of the overpaid funds is equal to or less than $2,500, the PA does not prepare an initial notice to the claimant.  Rather, the PA recommends administrative write-off, regardless of the claimant’s fault, since the cost of recovery action will exceed the expected recovery amount.  The PA prepares a brief memorandum to the Unit Chief describing the reasons for the write-off.

 

Once the Unit Chief approves an administrative write-off, the PA prepares a memorandum to file.  Exhibit 3 is a sample memorandum to file for this process.  The PA writes off the overpaid amount without giving notice of the overpaid funds to that claimant.  Because an overpayment decision is not issued, it is not an official overpayment.  Therefore, the PA does not enter it into the overpayment database or report it on the Treasury Report on Receivables (TROR).  The PA enters the details of the administrative write-off into the administrative write-off spreadsheet located in the Policies and Procedures / Overpayments folder in the shared directory. 

 

b.      Determination of Fault.   Once an overpayment is established, the PA determines whether the claimant bears any fault in the creation of the overpayment.  The determination of fault depends on the circumstances surrounding the overpayment.  The claimant must show good faith, and exercise a high degree of care in reporting events which may affect entitlement to or the amount of benefits.  The degree of care may vary with the complexity of circumstances and a claimant’s capacity to realize an overpayment has occurred.  While this is not an exhaustive list, the following can be construed as fault in creating an overpayment:

 

(1)  Claimant made an incorrect statement as to a material fact he or she knew or should have known to be incorrect.

 

(2)  Claimant failed to provide information he or she knew or should have known to be material in nature.

 

(3)  Claimant accepted payment that he or she knew or should have known to be incorrect.

 

c.   Initial Notification.  Initial notification to the overpaid claimant is required before DEEOIC can take any final action to recover an overpayment or adjust benefits.  The PA prepares and signs a letter informing the claimant of the overpayment and the preliminary findings.  The Unit Chief reviews the letter prior to its release.  The initial notification includes the Response to Initial Overpayment Notice form and the Overpayment Recovery Questionnaire (Form OWCP-20).  Form OWCP-20 is available online or via the DEEOIC shared directory.

 

The notification letter serves to:

 

(1)  Notify the claimant that an overpayment exists and the exact amount of the overpayment.

 

(2)  Provide the result of the preliminary finding of fault.  If the PA makes a preliminary finding that the claimant was at fault in causing the overpayment, the initial notification letter will advise the claimant that DEEOIC cannot grant an overpayment waiver if that finding becomes final.

 

(3)  Advise the claimant of his or her rights. The claimant has 30 days following the date of the overpayment notification letter to invoke rights to:

 

(a)  Request a telephone conference.

 

(b)  Challenge any finding of fault.

 

(c)    Request waiver of recovery of the overpayment.

 

(d)  Present written evidence challenging the existence or amount of the overpayment.

 

The filing date of the claimant’s challenge to the overpayment is determined by the postmark date, or the date the request is received in the office or Resource Center, whichever is the earliest determinable date.  This includes the date that the Central Mail Room (CMR) receives a document via the Electronic Document Portal.

 

Attached as Exhibit 1 is a sample initial overpayment notification letter used when the claimant is without fault in causing the overpayment.  Exhibit 2 is a sample initial overpayment notification letter used when the claimant is at fault in causing the overpayment.  If a delinquent debt was referred to Treasury, and Treasury obtains a current address upon receipt of a dispute by the claimant, DEEOIC may recall the debt from Treasury.  The PA will then resend the overpayment notification to the claimant.

 

d. Notification of Federal Debt After Claimant’s Death.   In the event that a payment is processed and DEEOIC receives notification that the payee died prior to receipt of payment, it is the responsibility of the DO FO, in conjunction with the assigned CE, to attempt recovery of the payment.  The DO will attempt recovery of the funds as outlined in paragraph 5 above.  If a non-claimant is in receipt of EEOICPA compensation and fails to return the money, it is a federal debt and not an overpayment.  That person must return the money.  An example, this situation can occur when compensation is deposited into a joint bank account after a claimant has died, and the joint account holder withdraws the money.  If the DO’s attempts to recover the funds are not successful, and the evidence of record identifies the joint account holder’s name and address, the DO will transfer the case to the NO for further recovery attempts.  The PA will send a demand letter (without appeal rights) to the person requesting the return of the funds.  If the person does not respond after 30 days, the PA will send a second and then a third demand letter in 30 day intervals.  If the person does not respond within 30 days after the third demand letter, the PA will refer the debt to Treasury for collection.  Exhibit 11 is a sample demand letter to a non-claimant.    

 

9.   Telephone Conferences.  When requested by the claimant, the PA holds a telephone conference within 30 days of the date of the request for the conference.  The PA also holds telephone conferences in cases where the financial data in the file is not clear or sufficient to make a decision about waiver or repayment.

 

a.   Pre-conference Call. The PA holds a pre-conference call to give the claimant a clear explanation of the purpose and process of the conference and the obligations of all parties, and to schedule a time for the call.  During the call, the PA:

 

(1)  Explains the issues that the PA will address during the conference call (i.e., income, expenses, assets, transfer of assets, and liabilities).  If a preliminary finding of "at fault" was issued, the PA explains how the decision was made and its implications, and invites the claimant to provide any information that could affect the preliminary determination;

 

(2)  Describes the criteria used to make key decisions in the case (i.e., at fault finding, criteria for waiver, interest charges);

 

(3)  Describes the evidence the claimant needs to collect in preparation for the conference call;

 

(4)  Gives the claimant a chance to ask questions;

 

(5)  Determines the best time for the conference; and

 

(6)  Prepares the pre-conference checklist that verifies that the conference agenda items were discussed.  (Exhibit 4)

 

b.   During the Conference Call.  The PA:

 

          (1)  Identifies him or herself;

 

          (2)  References the pre-conference call;

 

          (3)  States the purpose of the call;

 

(4)  Advises the claimant that he or she will be taking notes and for that reason there will be periodic pauses while he or she is writing;

 

          (5)  Describes the specific focus of the call;

 

(6)  Obtains the claimant’s acknowledgement that he or she understands what the conference issues are and what the conference is about;

 

(7)    Listens carefully to what is being said;

 

(8)    Probes responses that are too general or not credible, or which conflict exists with other statements given or the evidence of file;

 

(9)    Takes notes complete enough to capture the necessary information; and

 

(10) Confirms the accuracy of the statements recorded by reading them back to the participant(s) for confirmation.

 

     c.   After the Conference.  The PA:

 

(1)    Prepares a neutral Memorandum of Conference without findings, describing what transpired during the conference.  (See Exhibit 5 for a sample Memorandum of Conference.)  The language of the memorandum must be clear and non-technical.  A sound Memorandum of Conference should:

 

(a)  Identify and describe the issues that were discussed during the conference;

 

(b)  Identify the PA who conducted the conference and who participated in the conference;

 

(c)  Describe the position of DEEOIC and the claimant coming into the conference;

 

(d)  Describe the explanation provided in the conference that is relevant to the issue;

 

(e)  Describe what was said in the conference that is relevant to the issue;

 

(f)  Describe the method used to confirm the accuracy of the information collected during the conference that is recorded in the Memorandum of Conference; and

 

(g)  Describe any agreements reached in the conference.

 

(2)  Sends the Memorandum of Conference to the conference participant(s) for review and comments.  Exhibit 6 is a sample memorandum cover letter to the claimant. The PA allows fifteen (15) days from the date of the letter and memorandum for the claimant to provide comments.  After the 15 day period, the PA makes findings on the issues for resolution and documents these findings in the final overpayment decision.

 

10.  Consideration of Overpayment Waiver.  When the claimant is not at fault in causing the overpayment, DEEOIC may waive recovery of all or part of an overpayment based on whether the claimant meets the financial criteria as stated in 10.a or 10.b.  For further explanation of a partial waiver, see paragraph 10.b(2)(b) Example 2.  A determination to waive recovery of an overpayment is based on the PA’s review of a fully completed Form OWCP-20 and supporting documentation, and additional documentation or argument submitted by the claimant.  Form OWCP-20 is designed to obtain extensive financial information, including income, expenses, and assets. 

 

The burden of proof rests with the claimant to prove the conditions necessary to grant a waiver.  The claimant must submit the supporting documentation within the required 30-day time period as stated in the initial overpayment notice or cover letter to the Memorandum of Conference.  However, the claimant may request an extension of time when it is necessary to obtain the required documents.  If the claimant does not submit the information within the allotted time, the PA will prepare an overpayment final decision denying the waiver.  DEEOIC will not grant a waiver once the PA issues an overpayment final decision, unless the claimant no longer lives at the address in the DEEOIC record, and did not receive the notification of the overpayment. 

 

There are two types of overpayment waivers under the EEOICPA.   The DEEOIC may grant a waiver of recovery of the overpayment if the claimant meets the criteria under “recovery would defeat the purpose of the EEOICPA” or “recovery would violate equity and good conscience.”  If the claimant does not meet either criterion, DEEOIC will pursue a return of the funds regardless of the fault finding.

 

a.   Recovery Would Defeat the Purpose of the EEOICPA.  The DEEOIC will not seek recovery of overpaid funds if that recovery would defeat the purpose of the EEOICPA.  To defeat the purpose of the EEOICPA, the PA must find that the claimant requires substantially all current income to meet current ordinary and necessary living expenses and that the claimant’s assets do not exceed a specified amount as determined by DEEOIC from data furnished by the Bureau of Labor Statistics (BLS). 

 

When a claimant exceeds the limit for either disposable current income or assets, a basis exists for establishing a reasonable repayment schedule over a reasonable, specified period.  It is the claimant’s burden to show otherwise by submitting evidence that recovery of the overpayment would cause hardship of a nature sufficient to justify waiver.

 

(1)  The PA determines the claimant’s income based upon documents submitted.  An individual's total income includes any funds which may reasonably be considered available for his or her use, regardless of the source.  A spouse's income will not be considered available to the claimant unless the spouse was living in the household both at the time the overpayment was incurred and at the time waiver is considered.  Income to be considered includes, but is not limited to:

 

(a) Wages and self-employment income.

 

(b) Government benefits.

 

(c) Regular payments (rent or pension).

 

(d) Investment income and alimony or child support payments.

 

(2)  The PA reviews claimed ordinary living expenses. It is the claimant’s burden to show that such expenses are reasonable and necessary. An individual is deemed to need substantially all of his or her current income to meet current ordinary and necessary living expenses if monthly income does not exceed monthly expenses by more than $200. The following can be considered as ordinary and necessary living expenses:

 

(a) Food, clothing, household and personal hygiene supplies, rent, mortgage payments, property taxes, utilities (e.g., electricity, gas, fuel, telephone, water), insurance (e.g., auto, life, accident, and health), vehicle — one or two allowable, expenses for one or two vehicles (e.g., loan payments with the date each will be paid off, gas, oil, maintenance), transportation expenses not included under vehicle expenses, and creditor payments (e.g., credit card debt or other debt made in monthly installments).

 

(b) Medical, hospitalization and similar expenses not reimbursed by insurance or other sources.

 

(c) Church and charitable contributions made on a regular basis.  This does not include large one-time gifts made after receipt of the preliminary notice of the overpayment.

 

(d) Miscellaneous expenses (e.g., haircuts, newspapers) not to exceed $200 per month.

 

If the PA makes a finding that a type of expense is ordinary and necessary, it does not necessarily mean that the amount is ordinary and necessary.  The burden is on the claimant to show that the expenses are reasonable and needed for a legitimate purpose.

 

If the PA determines that the amount of certain expenses is not ordinary and necessary, particularly regarding significant expenses for food, clothing, and vehicles, the PA must state in writing the reasons for the finding.  The finding must be supported by rationale, which may include reference to recognized research data (such as current statistics from BLS) that show that the claimant’s expenses exceed the average or range of expenses for the general population relevant to the claimant’s circumstances.

 

The PA evaluates only the minimum periodic payment as determined by a creditor.  Copies of the claimant’s monthly billing for consumer debt will verify the minimum amount.

 

(3)  An individual’s assets should not exceed the resource base of $5,500 for an individual or $9,200 for an individual with a spouse or one dependent, plus $1,100 for each additional dependent, based on information from BLS.  A spouse's assets will not be considered available to the claimant unless the spouse was living in the household both at the time the overpayment was incurred and at the time waiver is considered. 

    

(a)  Liquid assets may include (but are not limited to) cash, the value of stocks, bonds, savings accounts, mutual funds, and certificates of deposit.

 

(b)  Non-liquid assets may include (but are not limited to) the fair market value of an owner’s equity in property such as a camper, boat, second home and furnishing/supplies, vehicle(s) (i.e., any vehicles above the two allowed per immediate family), and jewelry.

 

Assets do not include the value of household furniture (primary residence), clothing, one or two vehicles, a home which the person maintains as the principal family domicile, or income-producing property, if the income from such property has been included in income.

 

b.   Recovery Would Violate Equity and Good Conscience.  If the claimant is not entitled to waiver under the “defeat the purpose of the EEOICPA” clause, the PA considers the “against equity and good conscience” clause.  Even if the claimant does not raise the “equity and good conscience” reason in the claim for waiver, the PA applies it in his or her analysis nonetheless. 

 

The PA reviews all pertinent financial information to determine if recovery of the overpayment will violate the concept of “equity and good conscience.”  This clause is divided into two parts, financial hardship and relinquishing a valuable right.  To demonstrate such a violation it must be established that either:

 

(1) Recovery will cause the claimant to experience severe financial hardship.  The PA evaluates financial records and compares income with expenses similar to the review conducted under paragraph 10.a to determine if repayment will cause severe financial hardship.

 

Recovery will be found to be “against equity and good conscience” when an individual who was not entitled to benefits would experience severe financial hardship in attempting to repay the debt.  The criteria to be applied in making this determination are the same as those stated above in paragraph 10.a.

 

(2) The claimant has relinquished a valuable right or changed position for the worse.  The PA must review pertinent financial and other evidence to determine either of the following:

 

(a) Based chiefly or solely on notification of payment, the claimant relinquished a verifiably valuable right and such right cannot be regained (e.g., left a job that cannot be regained, sold a business, retired, or other major life-changing financial decisions).  When a claimant gives up a valuable right, his or her current ability to repay is not taken into consideration, as the forfeiture of the right is in itself the grounds for waiver.

 

For example, after being advised of entitlement to compensation, the claimant resigned his job and withdrew his contributions to his retirement fund, under the assumption that he was entitled to a lump sum award of $150,000.  Three years later, it was discovered that his award was erroneous.  The claimant had lost his retention rights, was unable to get his old job back, and could not secure other employment.  Recovery of any of the overpayment would be “against equity and good conscience” in this situation because the individual gave up a valuable right.

 

(b)  A decision was made resulting in a loss that verifiably worsened the claimant’s condition, and such decision would not have been made but for the receipt of benefits. The claimant must show that if required to repay the overpayment, he or she would be in a worse position after repayment than would have been the case if the benefits had never been received in the first place.

 

Converting the overpayment into a different form, such as food, consumer goods, real estate, etc., from which the claimant derived some benefit, is not considered a loss. Converting the overpayment into a different form for the benefit of another person, such as a child or relative, may be considered as a loss if the claimant retains no ownership interest in the proceeds and has no ability to reclaim the proceeds.

 

Example 1:  A claimant received a lump sum award.  Later the entire award is declared to be an overpayment.  The claimant contends that he has changed his position for the worse, as he used the entire award to make a down payment on a larger home.  The claimant has not met his burden in showing that he changed his position for the worse, since he has not established that he suffered any loss.  He has simply converted the money into a different form.  Conversion of a liquid asset into real or tangible property does not constitute a loss.

 

Example 2:  A claimant is notified that he is entitled to $30,000.  Upon receipt of the money, the claimant signs an application to rent a larger apartment and pays a $2,000 non-refundable deposit.  He places the remainder of the award in a savings account.  Before the claimant moves in, he is notified that the entire award is an overpayment.  As a result, the claimant does not move into the new apartment and forfeits the deposit.

 

Since the claimant would not have signed an application to rent the apartment without the receipt of benefits, it would be inequitable to recoup the entire $30,000 overpayment.  The claimant clearly suffered a $2,000 loss and repayment would put him in a worse position than if he had not received the initial award.

 

Given that the claimant suffered a $2,000 loss, and not a $30,000 loss, a partial waiver is a legitimate action is this case.  The claimant does not have the money to rent a larger apartment and had no intention of doing so until he received his award.  Thus, the claimant relied on DEEOIC’s action and it would be inequitable to recover that part of the overpayment.  It would not be inequitable to recover that part of the overpayment that the claimant deposited in the bank.  However, if the claimant were faced with additional expenditures arising out of the intent to move, those expenses would also be deducted from the overpayment.

 

Example 3:  Suppose a claimant receives a $150,000 award and loaned a relative $25,000 to buy a house before he received notice of an overpayment.  Since the claimant has not suffered a loss, equity and good conscience do not require waiving of this $25,000.

 

However, it would be inequitable to tell the claimant to recall the loan at once (further, the terms may not allow such action), and it would be inequitable to count the $25,000 as currently available assets.  The interest the claimant receives on the loan as well as any sum he may receive on the principal should be considered income when determining the claimant’s ability to repay the overpayment.

 

11.  Overpayment Decisions.  After weighing all the evidence and considering all the circumstances surrounding the overpayment, the PA prepares an overpayment decision.  The decision outlines his or her findings, and how recovery of the overpayment is to be pursued, as outlined in this chapter and PM 3-0900.  If the decision does not waive the overpayment, the PA signs the decision.  Before releasing the decision, the PA sends it to the Unit Chief for review and certification for publication.  For overpayment decisions that waive any part of the overpayment, the Unit Chief signs the overpayment decision. 

 

a.   First Demand Letter.  Where the PA finds that an overpayment debt exists following the initial notification to the claimant, the overpayment decision serves as the first demand letter.  The overpayment decision outlines the facts surrounding the overpayment, provides a rationale as to why the overpayment is recoverable, and informs the claimant of the exact amount owed and the collection strategy to be used (i.e., payment in full, monthly payments, or collection from future entitlement).

 

The decision includes information advising the claimant that he or she has 30 days from the date of issuance of the overpayment decision to resolve the debt.  The decision communicates to the claimant that if he or she does not take the necessary steps to resolve the debt within the 30 days, it will become a delinquent debt, and that DEEOIC will refer delinquent debts to Treasury or DOJ for collection.  The decision must include the due process requirements outlined by Treasury.  Exhibits 7 and 8 are samples of final decision first demand letters.

 

b.   Waiver Approved.  If the PA determines that a waiver is warranted under the “defeat the purpose of the EEOICPA” clause, the overpayment decision definitively waives the full amount of the overpayment.  (See Exhibit 9.)  No further action is required on the part of the overpaid claimant.  The PA will upload the decision in the case file and update the overpayment database.  If the PA determines that the claimant meets the criteria under the “violate equity and good conscience” clause, the overpayment decision will advise the claimant regarding whether a full or partial waiver is granted.  If a partial waiver is granted, the PA will advise the claimant of the collection steps and rights outlined in 11.a.  (See Exhibit 10.)

 

12.   Overpayment Database.  When the PA makes a determination that an overpayment exists and sends an initial notice to the claimant, the PA enters the claimant information into the overpayment database.  The information in the database includes the employee and claimant identifying information, overpaid amount, dates of notices, status of the debt, and balance of debt.  The database is updated whenever the PA completes any action on the debt, records payments received and interest added, or refers the debt to Treasury for collection.  The PA does not add interest on the debt once it has been referred to Treasury.  The overpayment database is available to PA staff on the DEEOIC shared directory.

 

13.   Treasury Report on Receivables and Debt Collection Activities (TROR).  DEEOIC collects data on overpayments beginning with when the PA issues an initial notice to the overpaid claimant.  The assigned PA enters overpayment data into the overpayment database.  One of the functions of the database is assembling overpayment data for preparation of the TROR.  The TROR is prepared quarterly and is based on the fiscal year (October 1 to September 30.)  DEEOIC submits the quarterly TROR to OWCP by the seventh day of the month following the end of the fiscal year quarter.  OWCP collects the data from all OWCP divisions, and sends the report to Treasury.  Treasury has published an instruction booklet on how to prepare the TROR, which is available online.

 

 

Exhibit 1: Sample Initial Overpayment Notification Letter (Without Fault)

Exhibit 2: Sample Initial Overpayment Notification Letter (With Fault)

Exhibit 3: Sample Memorandum to File for Administrative Write-Off of Debt Equal To or Less Than $2500

Exhibit 4: Sample Pre-Conference Call Checklist

Exhibit 5: Sample Memorandum of Conference

Exhibit 6: Sample Cover Letter to Memorandum of Conference

Exhibit 7: Sample Overpayment Final Decision – Preliminary at Fault Determination Correct

Exhibit 8: Sample Overpayment Final Decision – Without Fault – Waiver Denied

Exhibit 9: Sample Overpayment Final Decision – Waiver Granted Based on Defeat Purpose of EEOICPA

Exhibit 10: Sample Overpayment Final Decision - Waiver Granted Based on Violate Equity and Good Conscience

Exhibit 11: Sample Letter to Non-Claimant Regarding Federal Debt