[Federal Register Volume 62, Number 233 (Thursday, December 4, 1997)]
[Rules and Regulations]
[Pages 64161-64167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31726]


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RAILROAD RETIREMENT BOARD

20 CFR Part 255

RIN 3220-AA44


Recovery of Overpayments

AGENCY: Railroad Retirement Board.


[[Page 64162]]


ACTION: Final rule.

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SUMMARY: The Railroad Retirement Board (Board) revises part 255 of its 
regulations, currently entitled ``Recovery of Erroneous Payments'', to 
clarify and update its regulations with respect to recovery of 
overpayments. The revisions more clearly identify the individuals from 
whom recovery may be sought and under what circumstances recovery of an 
overpayment of benefits will be made. The revisions also cover the 
circumstances under which such recovery may be waived, and the 
circumstances under which such recovery may be terminated or suspended 
under the Board's authority concerning administrative relief from 
recovery.

DATE: Effective December 4, 1997.

ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 Rush 
Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT: Thomas W. Sadler, Senior Attorney 
Railroad Retirement Board, 844 Rush Street, Chicago, Illinois 60611, 
(312) 751-4513, TDD (312) 751-4701.

SUPPLEMENTARY INFORMATION: Part 255 of the Board's regulations has not 
been revised since 1967. Although section 10 of the Railroad Retirement 
Act of 1974 (45 U.S.C. 231i) includes provisions for recovery and 
waiver of overpayments of benefits which are substantially the same 
provisions included in the Railroad Retirement Act of 1937 (45 U.S.C. 
228i, superseded), internal procedures dealing with overpayments of 
benefits have been developed which should properly be included in the 
regulations of the Board. In addition, in the Board's view, waiver 
should not be available with respect to certain types of overpayments 
and this proposed rule reflects those proposals.
    The title of part 255 is revised to ``Recovery of Overpayments''. 
The title, ``Recovery of Erroneous Payments'', mistakenly implies that 
all such payments were caused by ``fault''. Overpayments can and do 
occur through no fault of the recipients of such payments. The purpose 
of part 255 is to set out regulations to govern those instances where 
more than the correct amount of benefits has been paid, regardless of 
whether or not ``fault'' exists.
    Section 255.1 replaces previous Sec. 255.1, which sets out 
statutory provisions, with an introductory statement to summarize what 
is included in part 255.
    Section 255.2 defines ``overpayment'' using essentially the same 
language that is used in previous Sec. 255.2 which defined ``erroneous 
payments''.
    Section 255.3 states the general rule that overpayments shall be 
recovered in all cases except where recovery is waived under 
Sec. 255.10 or administrative relief from recovery is granted under 
Sec. 255.16 or where collection is suspended or terminated under these 
regulations or the Federal Claims Collection Standards.
    Section 255.4 replaces previous Sec. 255.4, which simply stated in 
a summary manner the methods by which erroneous payments may be 
recovered, with a detailed description of those individuals from whom 
overpayments may be recovered.
    Sections 255.5-255.8 set out the methods by which an overpayment of 
benefits may be recovered. These methods include recovery by cash 
payment (Sec. 255.5), recovery by setoff from any subsequent payment 
determined to be payable on the basis of the same record of 
compensation (Sec. 255.6), recovery by deduction in the computation of 
a residual lump-sum death benefit payable under the Railroad Retirement 
Act (Sec. 255.7), and recovery by actuarial adjustment of an annuity 
(Sec. 255.8). These sections are substantially similar to previous 
Secs. 255.5-255.8. However, Sec. 255.8, unlike its predecessor, 
provides that an actuarial adjustment is not effective until the 
overpaid annuitant negotiates the first check which reflects the 
actuarially adjusted rate.
    Section 255.9 provides that where recovery of an overpayment is by 
setoff which can be effected within 5 months and the individual from 
whom recovery is sought is an enrollee under Medicare Part B, the 
individual's monthly Medicare premium will be paid and the balance of 
the annuity amount will be applied toward recovery of the overpayment. 
This section is new and is intended both to save the agency the 
administrative costs of billing an annuitant for his or her Part B 
Medicare premium where his or her annuity would be offset in its 
entirety to recover an overpayment and also to avoid a lapse of 
Medicare coverage.
    Section 255.10 sets out the general requirements for waiver of 
recovery of an overpayment as set forth in the Railroad Retirement Act 
and replaces the present Secs. 255.10 and 255.11.
    Section 255.11 defines ``fault'' and gives examples of when an 
individual is or is not at fault based upon past agency decisions. 
Section 255.12 defines when recovery is contrary to the purpose of the 
Railroad Retirement Act, based upon past agency decisions. Section 
255.13 defines when recovery is against equity or good conscience.
    Sections 255.14 and 255.15 are new sections which describe special 
situations where waiver of recovery of an overpayment is not available 
or is limited. Specifically, Sec. 255.14 provides that waiver is not 
available under certain circumstances when recovery can be made from an 
accrual of social security benefits. Section 255.15 provides that when 
considering waiver to an estate of an individual, recovery will never 
be found to be contrary to the purpose of the Railroad Retirement Act.
    Section 255.16 sets out internal Board policy governing those 
situations where recovery of an overpayment may not be waived under 
section 10(c) of the Railroad Retirement Act, thus extinguishing the 
debt, but where recovery will not be sought for equitable reasons.
    Section 255.17 is new and explains how an overpayment is recovered 
when that overpayment was made to a representative payee under part 266 
of this chapter.
    Sections 255.18 and 255.19, which deal with compromise, suspension, 
or termination of the collection of overpayments are substantively 
identical to previous Secs. 255.14 and 255.15 with the exception that 
references to the Federal Claims Collection Standards (4 CFR Chapter 2) 
have been added.
    This rule was published as a proposed rule on December 28, 1995, 
(60 FR 67108). The Labor Member of the Board dissented from publication 
of the proposed rule. His reasons for doing so were published in the 
supplementary information section of the proposed rule (60 FR 67109). 
Comments on the proposed rule were invited by January 29, 1996.
    Four comments were received; one from an individual, two from 
individuals representing railway labor organizations and one from an 
association of retired railroad workers. All of the commenters 
expressed agreement with the views of the Labor Member set forth in the 
proposed rule. (60 FR 67109). In addition, the Board received the joint 
comments of rail labor and rail management.
    Two commenters requested that the Board adopt the Labor Member's 
suggestion to include in the regulation a rule under which an 
individual who is overpaid because of an incorrect annuity rate caused 
by Board error and where the rate continues for at least 5 months after 
the Board has been put on notice of the error, would be presumed to be 
without fault for any payments after the fifth month.

[[Page 64163]]

    In response to these comments and suggestions from rail labor and 
management the Board has added a new paragraph (3) to Sec. 255.11(e) 
which provides that an individual shall not be considered at fault with 
respect to an overpayment caused by the agency's failure to reduce his 
or her annuity after he or she has put the Board on notice of an event 
which, had the Board acted, would have triggered the reduction.
    Another commenter criticized section 255.12(c)(2), which permits 
the Board to consider non-liquid assets in determining whether an 
overpaid individual has the financial ability to repay the overpayment. 
The commenter stated that one should not have to sell his or her 
tangible personal property or real estate to repay an overpayment. The 
Board believes that it is not unreasonable to require an individual who 
has received an overpayment of benefits and who has substantial equity 
in real estate or significant holdings in tangible personal property 
such as precious metals, antiques, or art work to liquidate or borrow 
against such holdings to repay the overpayment he or she received where 
such repayment would not affect his or her ability to meet ordinary and 
necessary living expenses. However, the Board has revised 
Sec. 255.12(c)(2) to provide that an individual does not have to sell 
his or her principal residence in order to repay the debt.
    A commenter also objected to Example 1 under section 255.12. In the 
commenter's view, the example indicated that future medical expenses 
could not be taken into consideration when determining whether an 
individual is financially able to repay the overpayment. In response to 
this comment and the suggestions of rail labor and rail management this 
example has been revised to better explain how medical expenses will be 
considered in determining whether waiver is appropriate.
    Another comment was directed toward section 255.15 which provides 
that waiver is not available to an estate. The commenter argues that 
waiver should be available to an estate where recovery of the 
overpayment would be against equity or good conscience. Based on this 
comment and the suggestions of rail labor and rail management, the 
Board has modified the wording of section 255.15 to provide that 
recovery from an estate will never be contrary to the purpose of the 
Railroad Retirement Act, but could be against equity and good 
conscience.
    Finally, another commenter criticized proposed section 255.16 which 
provides that de minimis overpayments (overpayments under $500) shall 
not be waived. The commenter argued that many of these overpayments are 
the result of Board computational error and that the administrative 
costs of pursuing such small amounts--not to mention the ill will 
caused--would suggest that overpayments this small should automatically 
be waived. Based on this comment and the views of rail labor and 
management, the Board has removed this section.
    In addition to the comments discussed above, two persons requested 
the Board to delay final action on this regulation to allow railroad 
labor and railroad management to reach agreement on the substance of 
the rule. The Board notes that the promulgation of regulations is the 
sole province of the Board, and although, any agreement resulting from 
negotiations between the parties is not controlling with respect to the 
Board's actions, the Board has considered and adopted various 
suggestions made by rail labor and management in adopting this rule.
    The Office of Management and Budget determined that this is a 
significant regulatory action for purposes of Executive Order 12866. 
There are no information collections associated with this rule.

List of Subjects in 20 CFR Part 255

    Railroad employees, Railroad retirement.

    1. For the reasons set out in the preamble, title 20, chapter II, 
part 255 of the Code of Federal Regulations is revised as follows:

PART 255--RECOVERY OF OVERPAYMENTS

Sec.
255.1  Introduction.
255.2  Overpayments.
255.3  When overpayments are to be recovered.
255.4  Persons from whom overpayments may be recovered.
255.5  Recovery by cash payment.
255.6  Recovery by setoff.
255.7  Recovery by deduction in computation of death benefit.
255.8  Recovery by adjustment in connection with subsequent 
payments.
255.9  Individual enrolled under supplementary medical insurance 
plan.
255.10  Waiver of recovery.
255.11  Fault.
255.12  When recovery is contrary to the purpose of the Railroad 
Retirement Act.
255.13  When recovery is against equity or good conscience.
255.14  Waiver not available when recovery can be made from accrual 
of social security benefits.
255.15  Waiver to an estate.
255.16  Administrative relief from recovery.
255.17  Recovery of overpayments from a representative payee.
255.18  Compromise of overpayments.
255.19  Suspension or termination of the collection of overpayments.

    Authority: 45 U.S.C. 231f(b)(5); 45 U.S.C. 231i.


Sec. 255.1  Introduction.

    Section 10 of the Railroad Retirement Act provides for the recovery 
of an overpayment of benefits to an individual. This part explains when 
an overpayment must be recovered, from whom an overpayment may be 
recovered, and when recovery of the overpayment may be waived or 
administrative relief from recovery granted, and circumstances under 
which the overpayment may be compromised, or circumstances under which 
recovery of the overpayment may be suspended or terminated.


Sec. 255.2  Overpayments.

    An overpayment, within the meaning of this part, is made in any 
case in which an individual receives a payment under the Railroad 
Retirement Act, all or part of which payment he or she is not entitled 
to receive.


Sec. 255.3  When overpayments are to be recovered.

    Overpayments shall be recovered in all cases except those in which 
recovery is waived under Sec. 255.10 of this part or administrative 
relief from recovery is granted under Sec. 255.16 of this part, or 
where the overpayment is compromised or recovery is terminated or 
suspended under Secs. 255.18 or 255.19 of this part.


Sec. 255.4  Persons from whom overpayments may be recovered.

    (a) Overpaid individual. The Board may recover an overpayment from 
the individual to whom the overpayment has been made by any method 
permitted by this part, or by the Federal Claims Collection Standards 
(4 CFR chapter 2) (Example 1 of this section). If the overpaid 
individual dies before recovery is completed, then recovery may be 
effected by recovery from the estate or the heirs of such individual.
    (b) Other than overpaid individual. The Board may recover an 
overpayment from a person other than the overpaid individual if such 
person is receiving benefits based upon the same record of compensation 
as the overpaid individual under a statute administered by the Board. 
In such a case, the Board will ordinarily recover the overpayment by 
setoff against such benefits as are provided for in Sec. 255.6 of this 
part (Example 2 of this section). However, the Board may ask for a cash 
refund of the overpayment.

[[Page 64164]]

    (c) Individual not in the same household. Recovery under paragraph 
(b) of this section may be made from an individual who was not living 
in the same household, as defined in part 216 of this chapter, as the 
overpaid individual at the time of the overpayment, if the individual 
from whom recovery is to be made either was aware that benefits were 
being paid incorrectly or benefitted from the overpayment. (Example 3 
of this section).
    (d) Examples. This section may be illustrated by the following 
examples:

    Example (1). An employee receiving a disability annuity returns 
to work without notifying the Board. The Board discovers that the 
employee is working and determines that the employee has recovered 
from his disability and has been overpaid. The Board requests that 
the employee repay the overpayment by cash refund either in one lump 
sum or in installment payments. If the employee refuses, the Board 
may refer the debt to a collection agency or the Department of 
Justice for civil suit or may collect the debt in any other manner 
permitted by law.
    Example (2). The employee in Example 1 agrees to refund the 
overpayment by cash installment payments. However, the employee dies 
before repaying the total amount of the overpayment. At his death 
the employee's widow, who was living with the employee at the time 
the overpayment was incurred, becomes entitled to a widow's annuity. 
The Board may recover the remainder of the overpayment from any 
benefits due the widow.
    Example (3). C, a child of a deceased employee by his first 
marriage, is receiving a disability annuity on the employee's record 
of compensation. W, the employee's second wife, is receiving a 
widow's annuity on the employee's record of compensation. C lives 
with his mother, the employee's first wife. C marries without 
notifying the Board. Marriage terminates a child's annuity. W is not 
aware of C's marriage. Upon discovery of C's marriage, the Board 
demands that C refund the overpaid annuities; C refuses. Even though 
W is receiving an annuity based upon the same record of compensation 
as that of C, the Board will not recover the overpayment from W 
because she is not in the same household as C, was not aware of the 
incorrect benefits paid, and did not benefit from them.


Sec. 255.5  Recovery by cash payment.

    The Board shall have the right to require that an overpayment to an 
individual be immediately and fully repaid in cash by that individual. 
However, if the Board determines that the individual is financially 
unable to pay the amount of the indebtedness in a lump sum, payment may 
be accepted in regular installments in accordance with the Federal 
Claims Collection Standards, found in 4 CFR chapter 2. These standards 
provide that whenever possible installment payments should be 
sufficient in amounts and frequency to liquidate the debt in not more 
than 3 years.


Sec. 255.6  Recovery by setoff.

    An overpayment may be recovered by setoff from any subsequent 
payment determined to be payable under any statute administered by the 
Board to the individual who received the overpayment. An overpayment 
may be recovered from someone other than the overpaid individual by 
setoff from a subsequent payment determined to be payable to that other 
individual on the basis of the same record of compensation as that of 
the overpaid individual.


Sec. 255.7  Recovery by deduction in computation of death benefit.

    In computing the residual lump sum provided for in part 234, 
subpart D, of this chapter, the Board shall include in the benefits to 
be deducted from the applicable percentages of the aggregate 
compensation provided for in that part all overpayments, whether waived 
under Sec. 255.10 of this part or otherwise not recovered, that were 
paid to the employee or to his or her spouse or to his or her survivors 
with respect to the employee's employment.


Sec. 255.8  Recovery by adjustment in connection with subsequent 
payments.

    Recovery of an overpayment may be made by permanently reducing the 
amount of any annuity payable to the individual or individuals from 
whom recovery is sought. This method of recovery is called an actuarial 
adjustment of the annuity. The Board cannot require any individual to 
take an actuarial adjustment in order to recover an overpayment nor is 
an actuarial adjustment available as a matter of right. An actuarial 
adjustment does not become effective until the overpaid individual 
negotiates the first annuity check which reflects the annuity rate 
after actuarial adjustment.

    Example. An annuitant agrees to recovery of a $5,000 overpayment 
by actuarial adjustment. However, the annuitant dies before 
negotiating the first annuity check reflecting the actuarially-
reduced rate. The $5,000 is not considered recovered. If the 
annuitant had negotiated the check before he died, the $5,000 would 
be considered fully recovered.


Sec. 255.9  Individual enrolled under supplementary medical insurance 
plan.

    Where recovery of the overpayment is by setoff as provided for in 
Sec. 255.6 of this part, and where recovery of the overpayment by such 
means will be accomplished within a period of 5 months, and the 
individual from whom recovery is sought is an enrollee under Part B of 
Title XVIII of the Social Security Act (Supplementary Medical Insurance 
Benefits for the Aged and Disabled), an amount of such individual's 
monthly benefit which is equal to his or her obligation for 
supplementary medical insurance premiums will be applied toward payment 
of such premiums, and the balance of the monthly benefit will be 
applied toward recovery of the overpayment.


Sec. 255.10  Waiver of recovery.

    There shall be no recovery from any person in any case where more 
than the correct amount of annuities or other benefits has been paid to 
an individual or where payment has been made to an individual not 
entitled thereto if in the judgment of the Board:
    (a) The overpaid individual is without fault, and
    (b) Recovery would be contrary to the purpose of the Railroad 
Retirement Act or would be against equity or good conscience.


Sec. 255.11  Fault.

    (a) Before recovery of an overpayment may be waived, it must be 
determined that the overpaid individual was without fault in causing 
the overpayment. If recovery is sought from other than the overpaid 
individual but the overpaid individual was not without fault, then 
waiver is not available. However, see Sec. 255.16 of this part for 
provisions as to when administrative relief from recovery may be 
granted in such circumstances.
    (b) Fault means a defect of judgment or conduct arising from 
inattention or bad faith. Judgment or conduct is defective when it 
deviates from a standard of reasonable care taken to comply with the 
entitlement provisions of this chapter. Conduct includes both action 
and inaction. Unlike fraud, fault does not require a deliberate intent 
to deceive.
    (c) Whether an individual is at fault in causing an overpayment 
generally depends on all circumstances surrounding the overpayment. 
Among the factors the Board will consider are: the ability of the 
overpaid individual to understand the reporting requirements of the 
Railroad Retirement Act or to realize that he or she is being overpaid 
(e.g., age, education, comprehension, physical and mental condition); 
the particular cause of non-entitlement to benefits; and the number of 
instances in which the individual may have made erroneous statements.

[[Page 64165]]

    (d)(1) Circumstances in which the Board will find an individual at 
fault include but are not limited to:
    (i) Failure to furnish to the Railroad Retirement Board information 
which the individual knew or should have known to be material;
    (ii) An incorrect statement made by the individual which he or she 
knew or should have known was incorrect (including furnishing an 
opinion or conclusion when asked for facts); and
    (iii) Failure to return a payment which the individual knew or 
should have known was incorrect.
    (2) Where any of the circumstances listed in paragraph (d)(1) are 
found to have occurred, the individual shall be presumed to be not 
without fault. This presumption may be rebutted, but the burden of 
presenting evidence to rebut the presumption is on the individual.
    (3) For purposes of paragraph (d)(1)(i), furnishing information to 
the Social Security Administration or any other agency shall not be 
considered to constitute furnishing information to the Railroad 
Retirement Board.
    (4) For purposes of this section, an error on the part of the 
agency shall not extinguish fault on the part of the individual.
    (e) Circumstances in which the Board will find an individual not at 
fault include but are not limited to:
    (1) The overpayment is the result of Board error of which the 
overpaid individual was not aware and could not reasonably have been 
expected to be aware (Example 1 of this section).
    (2) The overpayment is the result of an adjustment to the overpaid 
individual's annuity because of entitlement of another individual to an 
annuity on the same record of compensation as that of the overpaid 
individual (Example 2 of this section).
    (3) The overpayment is the result of the Board's continuing to pay 
an individual after he or she has notified the Board of an event which 
caused or should have caused a reduction in his or her benefit; 
provided that continued payment of the unreduced benefit led the 
individual to believe in good faith that he or she was entitled to the 
payments subsequently received.
    (f) The application of this section may be illustrated by the 
following examples:

    Example (1). The Board makes a mathematical error in the 
computation of an employee's annuity, thus giving the employee a 
higher rate than he or she is entitled to but which is sufficiently 
close to the estimated rate given the employee at the time he or she 
applied for the annuity that the employee believed, in good faith, 
that the amount was correct. The employee is not at fault in causing 
the overpayment in this case. The overpayment may be waived if the 
requirements of Sec. 255.12 or Sec. 255.13 of this part are met.
    Example (2). The widow and four minor children of a railroad 
employee are receiving benefits from the Board under the family 
maximum. Another minor child not living in the same household as the 
above individuals is also determined to be the child of the deceased 
employee. The widow was not aware of the existence of this child. An 
award of benefits to this child causes a reduction in benefits to 
the other individuals under the family maximum benefit provision of 
the Social Security Act. Because of normal administrative delay this 
reduction does not take place for a period of 2 months after its 
effective date. The widow and her children are without fault with 
respect to this overpayment. The overpayment may be waived if the 
requirements of Sec. 255.12 or Sec. 255.13 of this part are met.


Sec. 255.12  When recovery is contrary to the purpose of the Railroad 
Retirement Act.

    (a) The purpose of the Railroad Retirement Act is to pay retirement 
and survivor annuities and other benefits to eligible beneficiaries. It 
is contrary to the purpose of the Act for an overpayment to be 
recovered from income and resources which the individual requires to 
meet ordinary and necessary living expenses. If either income or 
resources, or a combination thereof, are sufficient to meet such 
expenses, recovery of an overpayment is not contrary to the purpose of 
the Act.
    (b) For purposes of this section, income includes any funds which 
may reasonably be considered available for the individual's use, 
regardless of source, including inheritance prospects. Income to the 
individual's spouse or dependents is available to the individual if the 
spouse or dependent lived with the individual at the time waiver is 
considered. Types of income include but are not limited to:
    (1) Government benefits, such as Black Lung, Social Security, 
Workers' Compensation, and Unemployment Compensation benefits;
    (2) Wages and self-employment income;
    (3) Regular incoming payments, such as rent or pensions; and
    (4) Investment income.
    (c) For purposes of this section, resources may include:
    (1) Liquid assets, such as cash on hand, the value of stocks, 
bonds, savings accounts, mutual funds and the like;
    (2) Non-liquid assets (except an individual's primary residence) at 
their fair market value; and
    (3) Accumulated, unpaid Federal benefits.
    (4) For purposes of paragraphs (c)(1) and (2) of this section, 
assets concealed or improperly transferred on and after the date of 
notification of the overpayment, other than cash expended to meet 
ordinary and necessary living expenses, shall be included.
    (d) Whether an individual has sufficient income and resources to 
meet ordinary and necessary living expenses depends not only on the 
amount of his or her income and resources, but also on whether the 
expenses are ordinary and necessary. While the level of expenses which 
is ordinary and necessary may vary among individuals, it must be held 
at a level reasonable for an individual who is living on a fixed 
income. The Board will consider the discretionary nature of an expense 
in determining whether it is reasonable. Ordinary and necessary living 
expenses include:
    (1) Fixed living expenses such as food and clothing, rent, mortgage 
payments, utilities, maintenance, insurance (e.g., life, accident, and 
health insurance), taxes, installment payments, etc.;
    (2) Medical, hospital, and other similar expenses;
    (3) Expenses for the support of others for whom the individual is 
legally responsible; and
    (4) Miscellaneous expenses (e.g., newspapers, haircuts).
    (e) Where recovery of the full amount of an overpayment would be 
made from income and resources required to meet ordinary and necessary 
living expenses, but recovery of a lesser amount would leave income or 
resources sufficient to meet such expenses, recovery of the lesser 
amount is not contrary to the purpose of the Act.
    (f) This section may be illustrated by the following examples:

    Example (1). A remarried widow, W, is overpaid $6000 due to 
receipt of benefits on the wage records of both her late husbands. 
It has been determined that she is without fault. Her financial 
disclosure statement reveals monthly income greater than monthly 
expenses, and assets of $12,000, $10,000 of which is in cash. She 
claims to be saving these funds for future medical expenses, because 
she has a progressive disease. While it is not necessarily contrary 
to the purposes of the Act to recover the overpayment in these 
circumstances, the legitimate medical expenses associated with the 
disease must be considered.
    Example (2). A disability annuitant, D, is overpaid $33,000 
because of simultaneous entitlement to workers' compensation 
payments. He is determined to be without fault. He claims he has 
assumed financial responsibility for his adult child and her 
children. A claimed expense for which the annuitant has no legal 
obligation to pay does not make recovery contrary to the purposes of 
the Act.

[[Page 64166]]

Sec. 255.13  When recovery is against equity or good conscience.

    (a) Recovery is considered to be against equity or good conscience 
if a person, in reliance on payments made to him or her or on notice 
that payment would be made, relinquished a significant and valuable 
right (Example 1 of this section) or changed his or her position to his 
or her substantial detriment (Example 2 of this section).
    (b) An individual's ability to repay an overpayment is not material 
to a finding that recovery would be against equity or good conscience 
but is relevant with respect to the credibility of a claim of 
detrimental reliance under paragraph (a) of this section.
    (c) This section may be illustrated by the following examples:

    Example (1). After being informed by the Board that he had been 
credited with sufficient years of railroad service to retire at age 
60, an employee quit his railroad job and applied for benefits under 
the Railroad Retirement Act. He receives benefits for six months 
when it is discovered that he had insufficient railroad service to 
retire at age 60 and was not entitled to the benefits he received. 
His annuity was terminated. Because the employee gave up his 
seniority rights when he quit his railroad job, he cannot get his 
job back. It is determined that the employee was not at fault in 
causing the overpayments. In this situation recovery of the 
overpayment would be against equity or good conscience because the 
overpaid individual gave up a valuable right.
    Example (2). A widow, having been awarded annuities for herself 
and her daughter, entered her daughter in a private school. The 
widow did not have substantial assets and her income, apart from the 
annuities she received in the amounts payable, would not have been 
sufficient for her to have undertaken the obligation to send her 
daughter to private school. In order to pay for the schooling she 
took out a loan and used the monthly annuities to pay interest and 
principal on the loan. After the widow and her daughter had received 
payments for almost a year, the deceased employee was found not to 
have been insured under the Railroad Retirement Act. Therefore, all 
payments to the widow and child were erroneous and the annuities 
were terminated. It is determined that the widow was not at fault in 
causing the overpayment. Having incurred a financial obligation (the 
school loan) toward which the benefits had been applied, the widow 
was in a worse position financially than if she and her daughter had 
never been entitled to benefits. In this situation, the recovery of 
the overpayment would be against equity or good conscience.


Sec. 255.14  Waiver not available when recovery can be made from 
accrual of social security benefits.

    Where the overpayment is the result of a reduction of benefits 
payable under the Railroad Retirement Act due to the overpaid 
individual's entitlement to social security benefits and recovery of 
such overpayment may be made by offset against an accrual of social 
security benefits, it shall not be considered to be against equity or 
good conscience or contrary to the purpose of the Railroad Retirement 
Act to recover the overpayment by offset against the accrual. 
Consequently, in such a case recovery of an overpayment is not subject 
to waiver consideration.


Sec. 255.15  Waiver to an estate.

    It shall never be considered contrary to the purpose of the 
Railroad Retirement Act to recover an overpayment from the estate of an 
overpaid individual.


Sec. 255.16  Administrative relief from recovery.

    (a) Where the Board seeks to recover an overpayment from someone 
other than the overpaid individual, as provided for in Sec. 255.4 of 
this part, and where waiver of recovery, as provided for in Sec. 255.10 
of this part, is not available because the overpaid individual was at 
fault as defined in Sec. 255.11 of this part, the Board may forego 
recovery of the overpayment where the individual from whom recovery is 
sought was not at fault in causing the overpayment and where recovery 
is contrary to the purpose of the Railroad Retirement Act as defined in 
Sec. 255.12 of this part.
    (b) Application of administrative relief from recovery with respect 
to a given person from whom recovery may be made shall have no effect 
on the authority of the Board to recover the overpayment from anyone 
else from whom recovery may be sought.
    (c) This section may be illustrated by the following examples:

    Example (1): An employee, through his own fault, causes an 
overpayment in his annuity. The employee dies before the overpayment 
can be recovered from him and he leaves no estate. A widow's annuity 
is payable on the employee's compensation record. The widow was not 
at fault in causing the overpayment. The Board may recover the 
remainder of the overpayment by setoff against the widow's annuity. 
However, it may forego recovery under this section if such recovery 
would be contrary to the purpose of the Railroad Retirement Act as 
defined in Sec. 255.12 of this part. Since this is not a waiver of 
the overpayment, the Board is free to recover the overpayment from 
the widow at a later date, for example, if an accrual of benefits 
should become payable, or if it determines that such recovery would 
not be against the purpose of the Railroad Retirement Act.
    Example (2): A representative payee for a retarded child, 
through her own fault, causes an overpayment in the child's annuity. 
The overpaid amounts were used for the benefit of the child. The 
representative payee dies before the overpayment can be recovered 
from her and she leaves no estate. The Board may not waive the 
remainder of the overpayment with respect to the child since for 
purposes of waiver the representative payee is considered the 
overpaid individual (see Sec. 255.17 of this part) and the overpaid 
individual was at fault. However, if the child was not at fault in 
causing the overpayment and recovery would be contrary to the 
purpose of the Railroad Retirement Act as defined in Sec. 255.12 of 
this part, then the Board may forego recovery of the overpayment 
from the child's annuity under this section.


Sec. 255.17  Recovery of overpayments from a representative payee.

    (a) Joint liability. In general, if an overpayment is made to an 
individual receiving benefits as a representative payee (see part 266 
of this chapter) the Board may recover the overpayment from either the 
representative payee or the beneficiary, or both. If the beneficiary is 
currently receiving benefits, either in his or her own right or through 
a representative payee, the Board will generally propose to recover the 
overpayment by setoff against those benefits as provided for in 
Sec. 255.6 of this part. If the beneficiary is not currently receiving 
benefits but the representative payee is receiving benefits, then the 
Board will generally propose to recover the overpayment by setoff 
against those benefits.
    (b) Waiver of overpayments. For purposes of Sec. 255.10 of this 
part (Waiver of recovery), if it is determined that the representative 
payee was at fault in causing the overpayment there may be no waiver of 
the overpayment either as to the representative payee or the 
beneficiary. However, if the beneficiary was not at fault in causing 
the overpayment he or she may be eligible for administrative relief 
from recovery under Sec. 255.16 of this part.
    (c) This section may be illustrated by the following examples:

    Example (1). M is receiving a child's annuity as a 
representative payee for her disabled son, S. With M's knowledge S 
marries. Although both M and S know that marriage terminates the 
child's annuity, neither of them informs the Board of this event. 
Both M and S are liable for any overpayment caused. Waiver is not 
available since M would be considered at fault in causing the 
overpayment. Administrative relief from recovery is not available to 
S since he would also be considered at fault.
    Example (2). R is a representative payee for B, who resides in a 
skilled-care facility. R is found to be at fault in causing an 
overpayment of benefits to B. The Board may recover the overpayment 
from either R or B. Waiver is not available because R was at fault 
in causing the overpayment. However, if B was not at fault in 
causing the overpayment

[[Page 64167]]

he or she may be entitled to administrative relief from recovery 
under Sec. 255.16 of this part.


Sec. 255.18  Compromise of overpayments.

    (a) This section sets forth the principal standards which the Board 
applies in exercising its authority under 31 U.S.C. 3711 to compromise 
an overpayment. In addition, the Board may compromise an overpayment 
under the Federal Claims Collection Standards set forth in 4 CFR part 
103.
    (b) An overpayment may be compromised only if it is in the best 
interest of the agency. Circumstances and factors to be considered are:
    (1) The overpayment cannot be collected because of the overpaid 
individual's inability to pay the full amount of the overpayment within 
a reasonable time;
    (2) The overpaid individual refuses to pay the overpayment in full 
and it appears that enforced collection procedures will take an 
inordinate amount of time or that the cost of collecting does not 
justify the enforced collection of the full amount; or
    (3) There is doubt that the Board could prove its case in court for 
the full amount claimed because of a bona fide dispute as to the facts 
or because of the legal issues involved.


Sec. 255.19  Suspension or termination of the collection of 
overpayments.

    This section sets forth the principal standards which the Board 
applies in approving the suspension or termination of the collection of 
an overpayment. In addition the Board may suspend or terminate 
collection under the Federal Claims Collection Standards set forth in 4 
CFR part 104.
    (a) Collection action on a Board claim may be suspended temporarily 
when the debtor cannot be located and there is reason to believe future 
collection action may be productive or collection may be effected by 
offset in the near future.
    (b) Collection action may be terminated when:
    (1) The debtor is unable to make any substantial payment;
    (2) The debtor cannot be located and offset is too remote to 
justify retention of the claim;
    (3) The cost of collection action will exceed the amount 
recoverable; or
    (4) The claim is legally without merit or cannot be substantiated 
by the evidence.

    Dated: November 21, 1997.

By Authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 97-31726 Filed 12-03-97; 8:45 am]
BILLING CODE 7905-01-P