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Robert J. Duda

Director of Retirement and Survivor Programs 

Through: B. V. Ferguson

Director of Programs

Catherine C. Cook r r r

General Counsel

Agency Liability Under the Provisions of Public Law 100-86 

(Limited Payability)

This is in response to your memorandum dated December 28, 1995 in which you 

inquired as to the Board's liability for replacement checks when the original has 

been paid over a forged signature, but Treasury will not certify because the 18- 

month statute of limitations for reclamation has passed. In your memo you cite 

two pending RRB claims and you ask how the Comptroller General's decision of 

August 31, 1993 should affect the outcome of those and similar claims; and you 

further request information about the extent of the RRB's obligation to pay such 

claims, and under what circumstances. These issues are currently a source of 

controversy between the General Accounting Office and the Treasury Department 

and are likely to be resolved only with Congressional action.

Because of the uncertain state of the law, we are requesting a decision from the 

Comptroller General as to whether the agency may issue replacement checks from 

its own appropriations under these circumstances. In the interim, the government's 

underlying obligation remains, but the agency is prohibited from issuing 

replacement checks from its own appropriations until further notice from the 

General Accounting office or Congressional appropriation for that purpose.

Effect of Public Law 100-86 on Forged Checks

Public Law 100-86 amended 31 U.S.C. § 3328 to shorten the statute of 

limitations for claims against Treasury checks (31 U.S.C. § 3328(a)(1 )-(2)), while 

reaffirming the government's underlying obligation to pay the claim. 31 U.S.C. § 

3328 (a)(3); 31 U.S.C. § 3702(c):
2

Robert J. Duda

Director of Retirement and Survivor Programs 

Through: B. V. Ferguson

Director of Programs

31 U.S.C.S. § 3328 Paying checks and drafts

(a)(3) Nothing in this subsection shall be construed

to affect the underlying obligation of the 

United States, or any agency thereof, for 

which a Treasury check was issued.

31 U.S.C.S. § 3702(c) Authority of the Comptroller General to settle claims

(c)(1) Any claim on account of a Treasury check

shall be barred unless it is presented to the 

agency that authorized the issuance of the 

check within 1 year after the date of 

issuance of the check or the effective date 

of this subsection, whichever is later.

(2) Nothing in this subsection affects the

underlying obligation of the United States, or 

any agency thereof, for which a Treasury 

check was issued.

Public Law 100-86 also authorized Treasury to promulgate regulations in 

compliance with the Act, ". . . including the recertification of Treasury checks 

which have been canceled or for which a claim has been barred." Aug. 10, 1987, 

P.L. 100-86, Title X, § 1005, 101 Stat. 659. Subsequently, Treasury has 

promulgated regulations to provide that agencies may recertify checks in cases 

where Treasury can no longer reclaim funds under the statute of limitations:

20 C.F.R. 5 245.1 Introduction

This part governs the issuance of replacement checks drawn on the

United States Treasury, when. . .

(b) the original check has been negotiated and 

paid on a forged or unauthorized 

endorsement. . .
3

Robert J. Duda

Director of Retirement and Survivor Programs 

Through: B. V. Ferguson

Director of Programs

20 C.F.R. § 245.5 Recertification of payment

Upon receipt of a claim concerning the nonreceipt, loss, destruction, 

mutilation or defacement of a check, or the cancellation of a check 

pursuant to § 240.4 of this chapter, the certifying agency may certify 

a new payment [emphasis added].

Effect of the Comptroller General's Decision of August 31. 1993

The Comptroller General's decision of August 31, 1993 (B-242666) specifically 

takes issue with Treasury's claim that agencies may recertify replacement checks 

for forged originals

There is also nothing in the Act [Public Law 100-86] that indicates 

that the provision giving Treasury rule making authority with regard to 

check recertifications was meant to shift the responsibility for forged 

checks payments to program agencies.1

FMS assertions notwithstanding, we have not authorized 

agencies to recertify payments in cases of nonreceipt 

involving forgery.2

Naturally, Treasury can ask Congress. . . to authorize 

agencies to recertify forged check claims from their own 

appropriations.3

Similarly, the Board is authorized under the Railroad Retirement Act at 45 U.S.C. 

§231 (b)(4) only to certify annuity payments directly to Treasury for payment:

1 72 Comp. Gen. 295, 298 (August 31, 1993).

1 Id., at note 3.

3 14, at 299.
4

Robert J. Duda

Director of Retirement and Survivor Programs 

Through: B. V. Ferguson

Director of Programs

45 U.S.C. § 231 (f)(b) Railroad Retirement Board - Powers and Duties

(4) The Board shall from time to time certify to 

the Secretary of the Treasury the name and 

address of each individual entitled to receive 

a payment, the amount of such payment, 

and the time at which it should be made, 

and the Secretary of the Treasury, through 

the Division of Disbursements of the 

Treasury Department, and prior to audit by 

the General Accounting Office, shall make 

payment in accordance with the certification 

by the Board.

The Comptroller General directed Treasury to reopen the Check Forgery Insurance 

Fund (CFIF, closed in 1992) and to seek additional appropriations from Congress. 

Treasury has reopened the account but has been unsuccessful in obtaining 

additional appropriations. A legislative package approved by OMB was passed by 

the Senate but has remained unreviewed by the House. Our contacts at both 

Treasury and GAO say it is unlikely that the House will take up the matter in the 

foreseeable future.

Even if the CFIF were to receive new appropriations from Congress, it would no 

longer be available for replacement checks certified by agencies beyond the 18- 

month reclamation period. The United States Court of Federal Claims recently held 

that the 18 month statute of limitations created by Public Law 100-86, 31 U.S.C.

§ 3702(c) also applies to the CFIF. American Fuii Seal. Inc. v. The United States. 

34 Fed. Cl. 274 (1995). The time for appeal in that case has expired, and although 

the General Accounting Office vigorously disagrees with the decision, it represents 

the state of the law and is likely to remain the law for some time.
Robert J. Duda

Director of Retirement and Survivor Programs 

Through: B. V. Ferguson

5

Director of Programs

Guidelines for Recertification of Replacement Checks

Based on the above discussion, where Treasury will not pay a claim under 

authority of Public Law 100-86, and where there is no possibility of recovery from 

the Check Forgery Insurance Fund, the agency is not authorized to certify 

replacement checks for forged checks out of its own appropriations. We will 

advise further when the Comptroller General renders his decision on the matter.

ALChaney:alc:cmw 

AGENCY.AC