Returned and Canceled Checks

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AG51

Returned and Canceled Checks

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) has amended its

regulations concerning returned and canceled checks. The amendment will

assure that the regulations clearly reflect the requirements of the

governing statutes as interpreted in a precedent opinion of VA's

General Counsel. The intended effect of the amendment is to ensure that

the amount represented by a benefit check received but unnegotiated

prior to a beneficiary's death is properly distributed.

EFFECTIVE DATE: This amendment is effective June 15, 1994.

FOR FURTHER INFORMATION CONTACT:

Steven Thornberry, Consultant, Regulations Staff, Compensation and

Pension Service, Veterans Benefits Administration, 810 Vermont Avenue,

NW., Washington, DC 20420, telephone (202) 233-3005.

SUPPLEMENTARY INFORMATION: VA published a proposal to amend 38 CFR

3.1003 in the Federal Register of September 3, 1993 (58 FR 46920-21).

Interested persons were invited to submit written comments on or before

October 4, 1993. No comments were received, and the amendments are

adopted as proposed with the exception of the following technical

amendment. Section 3.1003(a), as here amended, will provide that the

amount represented by a returned and canceled check will be payable to

the living person or persons in the order of precedence listed in

Sec. 3.1000(a)(1)-(4), which deals with accrued benefits. Section

3.1000(a)(4) provides, in effect, that, where there is no living person

in the classes identified in Sec. 3.1000(a)(1)-(3), the amount of

accrued benefits payable is limited to the amount necessary to

reimburse the person who bore the expense of last sickness or burial.

We are adding to Sec. 3.1003(a), as originally proposed, a similar

statement to ensure that there is no confusion on the amount of a

returned and canceled check that may be paid in such a situation.

The Secretary hereby certifies that these regulatory amendments

will not have a significant economic impact on a substantial number of

small entities as they are defined in the Regulatory Flexibility Act

(RFA), 5 U.S.C. 601-612. The reason for this certification is that

these amendments would not directly affect any small entities. Only VA

beneficiaries could be directly affected. Therefore, pursuant to 5

U.S.C. 605(b), these amendments are exempt from the initial and final

regulatory flexibility analysis requirements of sections 603 and 604.

There is no affected Catalog of Federal Domestic Assistance program

number.

List of Subjects in 38 CFR Part 3

Administrative practice and procedure, Claims, Handicapped, Health

care, Pensions, Veterans.

Approved: January 31, 1994.

Jesse Brown,

Secretary of Veterans Affairs.

For the reasons set forth in the preamble, 38 CFR Part 3 is amended

to read as follows:

PART 3--ADJUDICATION

Subpart A--Pension, Compensation, Dependency and Indemnity

Compensation

1. The authority citation for part 3, subpart A continues to read

as follows:

Authority: 38 U.S.C. 501(a), unless otherwise noted.

2. Section 3.1003 is revised to read as follows:

Sec. 3.1003 Returned and canceled checks.

Where the payee of a check for benefits has died prior to

negotiating the check, the check shall be returned to the issuing

office and canceled.

(a) The amount represented by the returned check, or any amount

recovered following improper negotiation of the check, shall be payable

to the living person or persons in the order of precedence listed in

Sec. 3.1000(a)(1) through (4), except that the total amount payable

shall not include any payment for the month in which the payee died

(see Sec. 3.500(g)), and payments to persons described in

Sec. 3.1000(a)(4) shall be limited to the amount necessary to reimburse

such persons for the expenses of last sickness and/or burial.

(1) There is no limit on the retroactive period for which payment

of the amount represented by the check may be made, and no time limit

for filing a claim to obtain the proceeds of the check or for

furnishing evidence to perfect a claim.

(2) Nothing in this section will preclude payment to an otherwise

entitled claimant having a lower order of precedence under

Sec. 3.1000(a)(1) through (4), if it is shown that the person or

persons having a higher order of precedence are deceased at the time

the claim is adjudicated.

(b) Subject to the limitations in Sec. 3.500(g) of this part, any

amount not paid in the manner provided in paragraph (a) of this section

shall be paid upon settlement by the General Accounting Office to the

estate of the deceased payee, provided that the estate, including the

amount paid under this paragraph, will not escheat.

(c) The provisions of this section do not apply to checks for lump

sums representing amounts withheld under Sec. 3.551(b) or Sec. 3.557.

These amounts are subject to the provisions of Sec. 3.1001 and

Sec. 3.1007, as applicable.

(Authority: 38 U.S.C. 501(a), 5122)

[FR Doc. 94-11761 Filed 5-13-94; 8:45 am]

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