Recovery of Overpayments

RAILROAD RETIREMENT BOARD

20 CFR Part 255

RIN 3220-AA44

Recovery of Overpayments

AGENCY: Railroad Retirement Board.

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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228i, superseded), internal procedures dealing with overpayments of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.

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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.

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(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.

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(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.

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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