Finality of Decisions Regarding Railroad Retirement Annuities

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]

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