TO 

FROM 

SUBJECT 

UNITED ST A TES GOVERNMENT 

MEMORANDUM 

Janet Hallman 

FORM G-115f(1-92) 

RAILROAD RETIREMENT BOARD 

June 17, 2016 

L-2016-23 

Director of Program Evaluation and Management Services 

Karl T. Blank / u-L.-~ 

General Couns'1: 

Underpayment Classification for RUIA Improper Payment 

Reporting 

This is in response to your April 7, 2016 request for a legal opinion, regarding the 

classification of underpayments under the Railroad Unemployment Insurance Act 

(RUIA)(45 U.S.C. §351 et seq.) as proper or improper underpayments, and the 

reporting requirements for these underpayments. You indicated the RRB Office of 

the Inspector General is currently conducting its 2015 audit under the Improper 

Payments Elimination and Recovery Act of 2010, Pub. L. No. 111-204, 124 Stat. 

2224 (IPERA) and does not agree with the Office of Programs' classifications of 

eight classes of RUIA underpayments as proper underpayments. These classes of 

underpayments are as follows: 

■ Claim redeterminations m re-exhaustion cases when new or corrected 

information is provided; 

■ Claim redeterminations when an increase in base wages is recorded based on 

new or corrected information; 

■ Claim redeterminations allowing previously denied days of sickness or 

unemployment to be paid based on new medical or employment information; 

■ Reconsideration of filing date when the claimant gave no initial reason for a 

late-filed application; 

■ Reconsideration of filing date when the claimant was initially unaware of the 

filing deadline or gave an insufficient explanation for late filing; 

■ Reconsideration of benefit amount when earnings test is applied and new or 

corrected earnings information is supplied; 

■ Reconsideration of benefit amount when application for sickness or 

unemployment insurance is filed late and new or corrected information is 

supplied;and 

■ Reconsideration of stopped benefits when new or corrected information 

related to the stop is supplied. 

The statutory definition of an 'improper payment' is found in section 2(£) of the 

Improper Payments Information Act of 2002, Pub. L. No. 107-300, 116 Stat. 2350, 
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as amended by IPERA, and includes "any payment that should not have been made 

or that was made in an incorrect amount (including overpayments and 

underpayments) under statutory, contractual, administrative, or other legally 

applicable requirements." Our office previously considered the classification of 

several categories of post-adjudication underpayments under the Railroad 

Retirement Act in Legal Opinion L-2015-54, issued November 20, 2015. As 

identified in that opinion, the standard for whether an underpayment is improper 

under IPERA must focus on whether the underpayment was avoidable based on 

information known or available to the Board at the time the underpayment was 

made. 

For each of the classes of RUIA underpayments at issue here, it is my opinion that 

underpayments have been correctly categorized as proper underpayments when the 

amount of the initial payment, or the initial denial of payment, was correct based on 

the information in the Board's possession at the time the initial decision was made. 

For example, if a claimant fails to provide a signed statement of sickness with the 

initial application as provided for in section 12(i) of the RUIA (45 U.S.C. §362(i)) 

and Board regulations 335.2 and 335.3 (20 CFR §§335.2 and 335.3), such failure 

would correctly result in a denial of the claimant's application for sickness benefits 

and payment of zero benefits. If the claimant then requested reconsideration and 

provided the required statement of sickness at the reconsideration stage, an 

approval based on new information at the reconsideration stage does not create an 

improper underpayment at the initial stage because the information required for 

correct payment was not known or available to the Board at the time the 

underpayment was made. 

As you noted in your request for legal opm10n, the Office of Management and 

Budget (0MB) issued memorandum M-15-02 on October 20, 2014, which amended 

0MB Circular A-123, Appendix C to require reporting of improper payments in 

thirteen new categories, rather than the three categories used previously. You 

indicated the Office of Inspector General believes the change in reporting required 

by the amended Circular A-123, Appendix C also expanded the definition of 

improper payments and now requires additional types of payments to be reported as 

improper payments. As noted above, the definition of "improper payment" is 

statutory and is not subject to modification or expansion by 0MB guidance. 

Moreover, the introductory material for M-15-02 explains that the amended 

Appendix C "[e]stablishes new categories for reporting improper payments that will 

provide more granularity on improper payment estimates - thus leading to more 

effective corrective actions at the pr ogram level and more focused strategies for 

reducing improper payments at the government-wide level". This purpose 

statement indicates that Circular A-123, Appendix C is aimed at obtaining more 

detailed information on the existing field of improper payments, not expanding the 

definition of what an improper payment is or the types of payments that are subject 

to the improper payment reporting requirement. 

In Legal Opinion L-2015-54, this office noted that the Improper Payments 

Elimination and Recovery Improvement Act of 2012, Pub. L. No. 112-248, 126 Stat. 

2390 (!PERIA) codified many of the requirements initially established by Executive 

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Order 13520, Reducing Improper Payments (74 Fed. Reg. 62,201 (Nov. 25, 2009)). 

According to Circular A-123, Appendix C, Part III.AA, the purpose of Executive 

Order 13520 (and by extension, !PERIA), is: 

"to reduce improper payments while continuing to ensure that Federal 

programs serve and provide access to their intended beneficiaries. 

Because the Executive Order targets waste, fraud, and abuse, efforts to 

reduce improper payments must protect access to Federal programs by 

their intended beneficiaries. Therefore, efforts to reduce improper 

payments in high-priority programs should not deter eligible 

beneficiaries from seeking and receiving benefits. Furthermore, eligible 

beneficiaries who are receiving benefits should not be improperly 

denied or removed from program benefits as a result of agency efforts 

to reduce improper payments." 

Requiring reporting of underpayments as improper when the amount of payment 

was correctly determined at the time of award, and only determined to be incorrect 

in amount when new or corrective information is provided from outside the Board's 

control, is not consistent with this purpose. Accordingly, in my opinion for IPERA 

purposes the Office of Programs has correctly categorized as proper payments the 

underpayments resulting from redeterminations based on new or corrective 

information provided after an initial RUIA benefit determination in the eight 

identified classifications. 

cc: Chief Financial Officer 

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