67108 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

List of Subjects in 16 CFR Part 423

Care labeling of textile wearing

apparel and certain piece goods; Trade

Practices.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 95–31411 Filed 12–27–95; 8:45 am]

BILLING CODE 6750–01–M

RAILROAD RETIREMENT BOARD

20 CFR Part 255

RIN 3220–AA44

Recovery of Overpayments

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

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.

DATES: Comments must be received by

January 29, 1996.

ADDRESSES: Secretary to the Board,

Railroad Retirement Board, 844 Rush

Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT:

Thomas W. Sadler, Assistant General

Counsel, 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U.S.C. 228i, superseded), internal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 proosals. Because the

proposed rule would make extensive

changes in the existing regulation, a

section-by-section analysis is provided

below.

The title of part 255 is proposed to be

revised to ‘‘Recovery of Overpayments’’.

The current title, ‘‘Recovery of

Erroneous Payments’’, mistakenly

implied 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 would replace the

present § 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 the current § 255.2 to define

‘‘erroneous payments’’.

Section 255.3 states the general rule

that overpayments shall be recovered in

all cases except where recovery is

waived under § 255.10 or administrative

relief from recovery is granted under

§ 255.17 or where collection is

suspended or terminated under these

regulations or the Federal Claims

Collection Standards.

Section 255.4 would replace the

current § 255.4, which simply states 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.

Section 255.5–255.8 set out the

methods by which an overpayment of

benefits may be recovered. These

methods include recovery by cash

payment (§ 255.5), recovery by setoff

from any subsequent payment

determined to be payable on the basis of

the same record of compensation

(§ 255.6), recovery by deduction in the

computation of a residual lump-sum

death benefit payable under the

Railroad Retirement Act (§ 255.7), and

recovery by actuarial adjustment of an

annuity (§ 255.8). These sections are

substantially similar to the current

§§ 255.5–255.8. However, § 255.8,

unlike the current section, 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 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 §§ 255.10 and 255.11.

Section 255.11, as currently in effect,

would be removed because it is

redundant. The new section 255.11

would define ‘‘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. Each of these

sections is new and together they

expand on the present § 255.12.

Sections 255.14, 255.15, and 255.16

are new sections which describe special

situations where waiver of recovery of

an overpayment is not available.

Specifically, § 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

waiver is not available to the estate of

an individual.

Section 225.16 would provide that

recovery of a small overpayment of less

than $500 will never be considered

contrary to the purpose of the Railroad

Retirement Act or against equity or good

conscience. Under this rule, waiver of

recovery would not be applicable for

debts under $500. This proposed rule is

similar to the rule contained in

§ 340.10(e)(2) of the Board’s regulations

with respect to recovery of

overpayments under the Railroad

Unemployment Insurance Act (20 CFR

340.10(e)(2)).

Section 255.17 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. The regulations do not

currently contain such a provision.

Section 255.18 is new and explains

how an overpayment is recovered when

that overpayment was made to a

representative payee under part 266 of

this chapter.
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules 67109

Sections 255.19 and 255.20, which

deal with compromise, suspension, or

termination of the collection of

overpayments are substantively

identical to the current §§ 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 previously published as

a proposed rule on September 19, 1991

(56 FR 47426). Because the Board has

substantially revised the rule as

originally published, it has been

determined to republish the rule as a

proposed rule and to seek further public

comment.

The Labor Member of the Board

dissented from the action of the majority

of the Board in approving this proposed

rule. The Labor Member’s reasons from

dissenting from this action are set out

below.

Views of the Labor Member of the Board

The Labor Member finds it to be a

document seriously lacking in fairness

and in grant need of a balanced

approach to sensible debt collection.

• Section 255.12 includes non-liquid

assets in the list of resources to be

considered when determining whether

recovery of an overpayment will be

contrary to the purpose of the Railroad

Retirement Act. The Labor Member

thinks it would be unconscionable to

expect anyone to liquidate personal

property, for the purpose of repaying an

overpayment for which he or she was

not at fault, and accordingly feels this

has no place in any waiver

consideration.

• Example (1) in this same section is

meant to illustrate when recovery would

not be contrary to the purpose of the

Act, but, in fact, the Labor Member

considers it to be a one-sided attempt to

construct as narrow a definition of

financial hardship as possible, with the

intention to leave the individual with as

little as possible in the recovery process.

He takes issue with the majority’s

failure to consider imminent financial

obligations when making financial

hardship determinations, as well.

• Section 255.13(b) states that an

individual’s ability to repay an

overpayment is relevant with respect to

the credibility of the claim that the

individual detrimentally relied on the

incorrect payment, but the Labor

Member believes that, consistent with

the Social Security Administration’s

regulations, a person’s financial

circumstances are not material in this

regard.

• Section 255.15 does not allow

waiver when recovery is sought from

the estate of an overpaid individual.

However, the Labor Member submits

that a literal reading of section 10(c) of

the Act directs waiver consideration for

estates, as well as individuals, when

qualifying criteria is met. He feels that

if the Act limited waiver to situations

where there was no fault, and recovery

would be ‘‘contrary to the purpose of

the Act,’’ then this restrictive

interpretation presented by the majority

would possibly have merit. But, since

the Act also allows for waiver when

recovery would be ‘‘against equity or

good conscience,’’ it should also be

granted to the estate in situations where

it would have been granted while the

individual was alive. He sees the

proposed regulation as being at odds

with the statute on this point.

• Proposed Section 255.16 states that

where the amount of an overpayment is

less than $500 it may not be waived.

The majority compares this proposal to

the rule contained in section

340.10(e)(2) of the Board’s regulations

with respect to recovery of

overpayments under the Railroad

Unemployment Insurance Act (RUIA).

The Labor Member does not see this as

a valid comparison. He suggests that

overpayments under the RUIA often

involve working individuals whose

income from employment is only

temporarily halted, which is in direct

contrast to the situations at hand

involving elderly or disabled

individuals on fixed incomes. Moreover,

waiver requests for both RUIA and

Railroad Retirement Act overpayments

usually include a request to reconsider

the amount of the overpayment. Small

RUIA overpayments are usually less

complex, thus less costly to recompute,

providing more of an incentive to

complete the recovery process.

Conversely, Railroad Retirement Act

overpayments can involve various

issues and complexities adding to the

cost of adjudication. He recommends as

a more reasonable and fair approach the

allowance of a blanket relief from

recovery in these small overpayment

situations. From a business standpoint,

he believes that the cost to the agency

in trying to collect small overpayments

will outweigh the benefits. Furthermore,

he argues that past experience has

shown that overpayments under $500

because of their complexities routinely

result from computational errors by the

Board where the beneficiary would have

no knowledge than an incorrect

payment was made. As a government

agency with a responsibility to pay

benefits accurately, we, not the

beneficiary, should be held accountable

when we fail to do so.

• The Labor Member also points out

that, on the issue of ‘‘fault,’’ if an

individual received an incorrect annuity

rate for a period of more than 5 months

after the Board has received information

which should have caused it to reduce

the benefits, it has been a long-standing

agency policy to consider the individual

not at fault for any payment after the

fifth month. This is provided that the

continued issuance of the payments at

the incorrect rate led the beneficiary to

believe in good faith the he or she was

entitled to the amount represented by

the payment. The majority has refused

to include such a provision in this

proposed rule. Rather, it believes that

the fault determination should be

decided on a case-by-case basis. The

Labor Member, on the other hand,

believes that given the advanced

technology available to the Board, the

five-month rule should be incorporated

into the proposed rule and, in fact, be

reduced even further. He notes that the

Social Security Administration has a

provision similar to the one that he

favors.

• The Labor Member also takes

exception to the majority’s decision not

to include a provision which would

allow blanket relief from overpayment

recovery clearly resulting from the fault

of the agency, contending that the Board

must accept full responsibility for its

own errors.

• In conclusion, he finds the

proposed rule to be insensitive in tone

and content and completely slanted

against the overpaid individual. He

notes that the Social Security

Administration takes a far more sensible

approach to handling overpayments

than is presented in the proposal. He is

of the opinion that his colleagues view

the Board more as a collection agency

than one whose primary mission is the

payment of benefits,and would like to

see as much attention paid to preventing

overpayments as there is to collecting

them.

The agency has determined that this

is not a significant regulatory action for

purposes of 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 255

Railroad employees, Railroad

retirement.

1. For the reasons set out in the

preamble, part 255 of title 20, chapter II

of the Code of Federal Regulations is

proposed to be revised to read as

follows:
67110 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

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 not available to an estate.

255.16 Waiver not available for small

overpayments.

255.17 Administrative relief from recovery.

255.18 Recovery of overpayments from a

representative payee.

255.19 Compromise of overpayments.

255.20 Suspension or termination of the

collection of overpayments.

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

§ 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 for

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.

§ 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.

§ 255.3 When overpayments are to be

recovered.

Overpayments shall be recovered in

all cases except those in which recovery

is waived under § 255.10 or

administrative relief from recovery is

granted under § 255.17, or where the

overpayment is compromised or

recovery is terminated or suspended

under §§ 255.19 or 255.20.

§ 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). 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 under a statute administered by

the Board based upon the same record

of compensation as the overpaid

individual. In such a case, the Board

will ordinarily recover the overpayment

by setoff against such benefits as are

provided for in § 255.6 (Example 2).

However, the Board may ask for a cash

refund of the overpayment.

(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 paid

incorrectly or benefited from the

overpayment. (Example 3).

(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.

§ 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.

§ 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.

§ 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 § 255.10 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.

§ 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
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules 67111

actuarial adjustment in order to recover

an overpayment not 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 $5000 would be considered fully

recovered.

§ 255.9 Individual enrolled under

supplementary medical insurance plan.

Where recovery of the overpayment is

by setoff as provided for in § 255.6, 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.

§ 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.

§ 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 § 255.17 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.

(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) of this section

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)

of this section, 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).

(2) The overpayment is the result of

an adjustment tot 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).

(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 § 255.12 or § 255.13 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 § 255.12 or

§ 255.13 are met.

§ 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. 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

wavier 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.
67112 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

(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 at their fair

market value; and

(3) Accumulated, unpaid Federal

benefits; and

(d) For purposes of paragraphs (c) (1)

and (2) of this section, assets disposed

of on and after the date of notification

of the overpayment, other than cash

expended to meet ordinary and

necessary living expenses, shall be

included.

(e) 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).

(f) 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.

(g) 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 asset 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. It is

not contrary to the purposes of the Act to

recover the overpayment. The desire, on the

part of the beneficiary, to retain her assets to

satisfy some potential future obligation, does

not change the determination.

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.

§ 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) or changed his or her position to his

or her substantial detriment (Example

2).

(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, and 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 overpayments 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.

§ 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.

§ 255.15 Waiver not available to an estate.

There shall be no waiver when

recovery is sought from the estate of an

overpaid individual.

§ 255.16 Waiver not available for small

overpayments.

Where the amount of the overpayment

is less than $500, it shall not be

considered contrary to the purpose of

the Railroad Retirement Act or against

equity or good conscience to recover the

overpayment. Consequently, recovery

may not be waived.

§ 255.17 Administrative relief from

recovery.

(a) Where the Board seeks to recover

an overpayment from someone other

than the overpaid individual, as

provided for in § 255.4 of this part, and

where waiver of recovery, as provided

for in § 255.10 of this part, is not

available because the overpaid

individual was at fault as defined in

§ 255.11, 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 § 255.12.

(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
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules 67113

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 § 255.12. 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 § 255.18) 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

§ 255.12, then the Board may forego recovery

of the overpayment from the child’s annuity

under this section.

§ 255.18 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 recovery 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 § 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 § 255.10 (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 § 255.17.

(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. Wavier 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

he or she may be entitled to administrative

relief from recovery under § 255.17.

§ 255.19 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.

§ 255.20 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: December 20, 1995.

By Authority of the Board.

For the Board.

Beatrice Ezerski,

Secretary of the Board.

[FR Doc. 95–31311 Filed 12–27–95; 8:45 am]

BILLING CODE 7905–01–M

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 15

Federal Acquisition Regulation;

Contracting by Negotiations; FAR Part

15 Rewrite

AGENCIES: Department of Defense,

General Services Administration, and

National Aeronautics and Space

Administration.

ACTION: Advance notice of proposed

rulemaking.

SUMMARY: Comments are solicited from

both government and industry

personnel on how FAR Part 15 can be

rewritten to better support contracting

by negotiation. The Director of Defense

Procurement, in concert with the

Federal Acquisition Regulatory Council,

is sponsoring an initiative to rewrite

Federal Acquisition Regulation (FAR)

Part 15, Contracting by Negotiation. The

goal is to make Part 15 easier to

understand and to eliminate policies,

procedures, or requirements that impose

unnecessary burdens on contractors or

contracting officers. Regulatory

requirements that are not required by

statute, required to ensure adequately

standardized government business

practices, or required to protect the

public interest will be considered for

elimination. Innovative means of

simplifying the procurement process

and enhancing its efficiency will be

considered for incorporation into the

regulation.

Comments may be submitted in two

formats: (1) By letter to the address

below, or (2) by electronic response on

the Acquisition Reform Network’s FAR

Part 15 Rewrite Forum located on the