[Federal Register Volume 60, Number 245 (Thursday, December 21, 1995)]
[Proposed Rules]
[Pages 66203-66205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31059]



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RAILROAD RETIREMENT BOARD

20 CFR Part 261

RIN 3220-AB15


Finality of Decisions Regarding Railroad Retirement Annuities

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

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SUMMARY: The Railroad Retirement Board (Board) hereby proposes to adopt 
regulations pertaining to the finality of decisions under the Railroad 
Retirement Act of 1974 (Act).

DATES: Comments must be received on or before February 20, 1996.

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

FOR FURTHER INFORMATION CONTACT:
Michael C. Litt, General Attorney, Railroad Retirement Board, 844 North 
Rush Street, Chicago, Illinois 60611, telephone (312) 751-4929, TDD 
(312) 751-4701.

SUPPLEMENTARY INFORMATION: The Board's rules and procedures regarding 
the finality of decisions are presently contained in Board Orders, 
which are not readily available to the public. The Board Order 
regarding finality of decisions provides that finality of certain 
decisions is based on a number of factors; adjudication based on these 
factors is difficult to administer. Also the Board Order does not 
contain any time limits on reopening.
    The proposed regulation addresses the finality of benefit 
decisions. This proposed rule is similar to the regulation of the 
Social Security Administration (SSA) entitled ``Reopening and Revising 
Determinations and Decisions'' (20 CFR 404.987-404.996).
    Proposed Sec. 261.1 describes who may open a final decision issued 
by the agency. Proposed Sec. 261.2 describes when a final decision may 
be reopened. All final decisions, except decisions awarding separation 
allowance lump sum payments, may be reopened within 12 months of the 
date of notice of such decision; within 3 years of the date of notice 
if new and material evidence is furnished or if there was an 
adjudicative error not consistent with the evidence of record at the 
time of adjudication; or at any time under the conditions set forth in 
proposed Sec. 261.2(c).
    Proposed Sec. 261.3 provides that a change of legal interpretation 
or administrative ruling upon which a decision was based is not a basis 
for reopening.
    Proposed Sec. 261.4 provides that the annuity beginning date will 
not be changed if the annuitant was later found to be engaged in 
compensated service for an employer, as defined in part 202 of the 
Board's regulations, and the annuitant had no basis for knowing that he 
was engaged in such service. This section also provides that the award 
of an annuity would not be withdrawn if based upon incorrect records of 
service where the erroneously credited service months do not exceed 6 
months and the annuitant was not at fault in causing the error.
    Proposed Sec. 261.5 provides that a decision may be reopened after 
the 1 year and 3 year time limits set forth in Sec. 261.2 of this part 
if the Board had begun an investigation within those time limits. 
However, if the Board does not diligently pursue the investigation it 
will not reopen the decision if the decision was favorable to the 
annuitant.
    Proposed Secs. 261.6-261.8 are procedural and provide that if a 
decision is reopened, the annuitant will be given notice and will have 
a right to reconsideration and/or a hearing. Any hearing shall be 
conducted in accordance with part 260 of the Board's regulations (20 
CFR part 260).
    Proposed Sec. 261.9 provides that if a decision on a claim is 
reopened it may also cause a reopening of a decision on a previous 
claim based upon the same compensation record, even though the time 
limits for reopening a decision on the first claim have passed.
    Proposed Sec. 261.10 provides that where new evidence shows that 
the date of birth used in the initial decision was incorrect or where 
the record of compensation has been changed a decision may be revised 
even beyond the time limits of Sec. 261.2 of this part if such 
reopening is favorable to the annuitant, but any increase in benefits 
payable as the result of the reopening shall be paid prospectively 
only.
    Finally, proposed Sec. 261.11 provides that the three-member Board 
has the discretion to reopen or not to reopen any decision under these 
regulations.
    The Labor Member of the Board dissented from the action of the 
majority of the Board approving this proposed rule. The Labor Member's 
reasons for dissenting from this action are set out below.

[[Page 66204]]


Views of the Labor Member of the Board

    Proposed Sec. 261.2 would allow unlimited retroactivity for 
reopening where an overpayment resulted from the Board's failure to 
apply a proper reduction to the tier I component of an annuity. This 
same section would allow unlimited retroactivity in cases where an 
incorrect decision results in entitlement to an annuity where if the 
decision were correct there would be no entitlement.
    The Labor Member contends that failure to consider these cases 
final after a reasonable period of time clearly defeats the purpose of 
developing an administrative finality policy. He agrees that, where an 
individual through fraudulent or similar means causes an incorrect 
benefit to be paid, the Board should promptly take steps to correct the 
payment and collect the overpayment. However, in cases where an 
overpayment has been made due to an error on the part of the Board or 
the beneficiary and there was no intent at deception, he feels that a 
reasonable ``statute of limitations'' should be set. He feels a more 
reasonable approach would be to borrow a policy from the Social 
Security Administration and allow unlimited retroactivity for reopening 
decision that were unfavorable to a party, but only to correct clerical 
error or error that appears on the face of the evidence that was 
considered when the determination or decision was originally made. In 
most other cases, reopening should be limited.
    The Labor Member points out that in November 1985 the Board 
published a proposed rule in the Federal Register dealing with 
administrative finality (50 FR 48602, November 26, 1985). Several 
months later, the Office of Management and Budget submitted a letter to 
the then Chairman of the Board expressing dissatisfaction with the 
proposed rule comparing it unfavorably with SSA's.
    The Labor Member interprets this as a clear message that the Board 
should tailor its administrative finality policy to that of SSA's to 
the extent possible.
    The Labor Member wants our beneficiaries to have the security of 
knowing that benefits that they have come to rely on will not be 
suddenly taken away and argues that conforming our administrative 
finality regulations to those of SSA's where appropriate, lends itself 
to a true administrative finality, while still maintaining the 
integrity of the railroad retirement system. He thinks the proposed 
rule approved by the majority of the Board fails to do this, and for 
this reason he cannot endorse it.
    The Board, with the concurrence of the Office of Management and 
Budget, has determined that this is not a significant regulatory action 
under Executive Order 12866; therefore, no regulatory impact analysis 
is required. There are no information collections associated with this 
rule.

List of Subjects in 20 CFR Part 261

    Pensions, Railroad employees, Railroad retirement.

    For the reasons set out in the preamble, chapter II of title 20 of 
the Code of Federal Regulations is proposed to amended as follows:
    1. Part 261, Administrative Finality, is added to read as follows:

PART 261--ADMINISTRATIVE FINALITY

Sec.
261.1 Reopening and revising decisions.
261.2 Conditions for reopening.
261.3 Change of legal interpretation or administrative ruling.
261.4 Decisions which shall not be reopened.
261.5 Late completion of timely investigation.
261.6 Notice of revised decision.
261.7 Effect of revised decision.
261.8 Time and place to request review of a revised decision.
261.9 Finality of findings when later claim is filed on same 
earnings record.
261.10 Increase in future benefits where time period for reopening 
has expired.
261.11 Discretion of the three-member Board to reopen or not to 
reopen a final decision.

    Authority: 45 U.S.C. 231f.


Sec. 261.1  Reopening and revising decisions.

    (a) This part sets forth the Board's rules governing finality of 
decisions. After the expiration of the time limits for review as set 
forth in part 260 of this chapter, decisions of the agency may be 
reopened and revised under the conditions described in this part, by 
the bureau, office, or entity that made the earlier decision or by a 
bureau, office, or other entity at a higher level, which has the claim 
properly before it.
    (b) A final decision as that term is used in this part means any 
decision of the type listed in Sec. 260.1 of this chapter where the 
time limits for review as set forth in part 260 of this chapter or in 
the Railroad Retirement Act have expired.
    (c) Reopening a final decision under this part means a conscious 
determination on the part of the agency to reconsider an otherwise 
final decision for purposes of revising that decision.
    (d) New and material evidence as that phrase is used in this part 
means evidence that may reasonably be expected to affect a final 
decision, which was unavailable to the agency at the time the decision 
was made, and which the claimant could not reasonably have been 
expected to have submitted at that time.


Sec.  261.2  Conditions for reopening.

    A final decision may be reopened:
    (a) Within 12 months of the date or the notice of such decision, 
for any reason;
    (b) Within three years of the date of the notice of such decision, 
if there is new and material evidence or there was adjudicative error 
not consistent with the evidence of record at the time of adjudication; 
or
    (c) At any time if:
    (1) The decision was obtained by fraud or similar fault;
    (2) Another person files a claim on the same record of compensation 
and allowance of the claim adversely affects the first claim;
    (3) A person previously determined to be dead on whose earnings 
record a survivor annuity is based is found to be alive;
    (4) A claim was denied because of the absence of proof of death of 
the employee, and the death is later established:
    (i) By reason of an unexplained absence from his or her residence 
for a period of 7 years; or
    (ii) By location or identification of his or her body;
    (5) The Social Security Administration has awarded duplicate 
benefits on the same record of compensation;
    (6) The decision was that the claimant did not have an insured 
status, and compensation has been credited to the employee's record of 
compensation in accordance with part 211 of this chapter:
    (i) To enter items transferred by the Social Security 
Administration which were credited under the Social Security 
Administration which were credited under the Social Security Act when 
they should have been credited to the employee's railroad retirement 
compensation record; or
    (ii) To correct an error made in the allocation of earnings to an 
individual which, if properly allocated, would have given him or her an 
insured status at the time of the decision and the evidence of these 
earnings was in the possession of the Railroad Retirement Board or the 
Social Security Administration at the time of the decision;
    (7) The decision found the claimant entitled to an annuity or to a 
lump sum payment based on the earnings record of 

[[Page 66205]]
a deceased person, and it is later established that:
    (i) the claimant was convicted of a felony or an act in the nature 
of a felony for intentionally causing that person's death; or
    (ii) If the claimant was subject to the juvenile justice system, he 
or she was found by a court of competent jurisdiction to have 
intentionally caused that person's death by committing an act which, if 
committed by an adult, would have been considered a felony or an act in 
the nature of a felony;
    (8) The claimant shows that it is to his or her advantage to select 
a later annuity beginning date and refunds, by cash payment or setoff, 
past payments applying to the period prior to the later beginning date, 
subject, however, to the provisions of subpart D of part 217 and Sec.  
218.9 of this chapter;
    (9) The decision is incorrect because of a failure to apply a 
reduction, or the proper reduction, to the tier I component of an 
annuity;
    (10) Except as is provided in Sec.  261.4 of this part, the 
decision is incorrect for any reason and results in entitlement to an 
annuity in a case where if the decision were correct there would be no 
entitlement.
    (d) Revision of the amount or payment of a separation allowance 
lump sum amount pursuant to section 6(e) of the Railroad Retirement Act 
is limited to 60 days from the date of notification of the award of the 
separation allowance lump sum payment.


Sec.  261.3  Change of legal interpretation or administrative ruling.

    A change of legal interpretation or administrative ruling upon 
which a decision is based does not render a decision erroneous and does 
not provide a basis for reopening.


Sec.  261.4  Decisions which shall not be reopened.

    The following decisions shall not be reopened:
    (a) An award of an annuity beginning date to an applicant later 
found to have been in compensated service to an employer under part 202 
of this chapter on that annuity beginning date and who is found not to 
be at fault in causing the erroneous award; provided, however, that 
this exception shall not operate to permit payment of benefits for any 
month in which the claimant is found to be engaged in compensated 
service.
    (b) An award of an annuity based on a subsequently discovered 
erroneous crediting of months of service and compensation to a claimant 
where:
    (1) The loss of such months of service and compensation will cause 
the applicant to lose his or her eligibility for an annuity previously 
awarded;
    (2) The erroneously credited months of service do not exceed six 
months; and
    (3) The annuitant is found not to be at fault in causing the 
erroneous crediting.
    (c) An erroneous award of an annuity where the error is no greater 
than one dollar per month per annuity affected.
    (d) An erroneous award of a lump sum or accrued annuity payment 
where the error is no greater than $25.00.


Sec. 261.5  Late completion of timely investigation.

    (a) A decision may be revised after the applicable time period in 
Sec. 261.2(a) or Sec. 261.2(b) of this part expires if the Railroad 
Retirement Board begins an investigation into whether to revise the 
decision before the applicable time period expires and the agency 
diligently pursues the investigation to the conclusion. The 
investigation may be based on a request by a claimant or on action by 
the Railroad Retirement Board.
    (b) Diligently pursued for purposes of this section means that in 
view of the facts and circumstances of a particular case, the necessary 
action was undertaken and carried out as promptly as the circumstances 
permitted. Diligent pursuit will be presumed to have been met if the 
investigation is concluded and, if necessary, the decision is revised 
within 6 months from the date the investigation began.
    (c) If the investigation is not diligently pursued to its 
conclusion, the decision will be revised if a revision is applicable 
and if it is favorable to the claimant. It will not be revised if it 
would be unfavorable to the claimant.


Sec. 261.6  Notice of revised decision.

    (a) When a decision is revised, notice of the revision will be 
mailed to the parties to the decision at their last known address. The 
notice will state the basis for the revised decision and the effect of 
the revision. The notice will also inform the parties of the right to 
further review.
    (b) If a hearings officer or the three-member Board proposes to 
revise a decision, and the revision would be based only on evidence 
included in the record on which the prior decision was based, all 
parties will be notified in writing of the proposed action. If a 
revised decision is issued by a hearings officer, any party may request 
that it be reviewed by the three-member Board, or the three-member 
Board may review the decision on its own initiative.


Sec. 261.7  Effect of revised decision.

    A revised decision is binding unless:
    (a) The revised decision is reconsidered or appealed in accord with 
part 260 of this chapter;
    (b) The three-member Board reviews the revised decision; or
    (c) The revised decision is further revised consistent with this 
part.


Sec. 261.8  Time and place to request review of a revised decision.

    A party to a revised decision may request, as appropriate, further 
review of the decision in accordance with the rules set forth in part 
260 of this chapter.


Sec. 261.9  Finality of findings when later claim is filed on same 
earnings record.

    If two claims for benefits are filed on the same record of 
compensation, findings of fact made in a decision in the first claim 
may be revised in determining or deciding the second claim, even though 
the time limit for revising the findings made in the fist claim has 
passed. However, a finding in connection with a claim that a person was 
fully or currently insured at the time of filing an application, at the 
time of death, or any other pertinent time, may be revised only under 
the conditions stated in Sec. 261.2 of this part.


Sec. 261.10  Increase in future benefits where time period for 
reopening has expired.

    If, after the time period for reopening under Sec. 261.2(b) of this 
part has expired, new evidence is furnished showing a different date of 
birth or new evidence is furnished which would cause a correction in a 
record of compensation as provided for in part 211 of this chapter and, 
as a result of the new evidence, increased benefits would be payable, 
the Board will pay increased benefits, but only for the months 
following the month the new evidence is received.


Sec. 261.11  Discretion of the three-member Board to reopen or not to 
reopen a final decision.

    In any case in which the three-member Board may deem proper, the 
Board may direct that any decision, which is otherwise subject to 
reopening under this part, shall not be reopened or direct that any 
decision, which is otherwise not subject to reopening under this part, 
shall be reopened.

    Dated: December 14, 1995.

    By authority of the Board.

    For the Board
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 95-31059 Filed 12-20-95; 8:45 am]
BILLING CODE 7905-01-M