[Federal Register Volume 71, Number 230 (Thursday, November 30, 2006)]
[Rules and Regulations]
[Pages 69403-69409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19901]



[[Page 69403]]

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DEPARTMENT OF DEFENSE

Department of the Army

32 CFR Part 537

[Docket No. USA-2006-0023]
RIN 0702-AA55


Claims on Behalf of the United States

AGENCY: Department of the Army, DoD.

ACTION: Final rule.

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SUMMARY: The Department of the Army is publishing as a final rule an 
amendment to its regulation to reflect a substantial revision of AR 27-
20, an Army publication which governs the processing of claims 
worldwide. The purpose of this revision is to make AR 27-20 clearer and 
easier to use, after years of piecemeal amendments. This rewrite also 
ensures that AR 27-20 is in keeping with current statutes, legal 
opinions and Department of Justice guidance pertaining to claims 
processing. This updated rule will expedite payment of meritorious 
claims throughout the world. AR 27-20 includes rules for processing 
affirmative claims, i.e., recovery actions on behalf of the United 
States.

DATES: Effective date: January 2, 2007.

ADDRESSES: U.S. Army Claims Service, ATTN: JACS-TCO, 4411 Llewellyn 
Avenue, Fort Meade, MD 20755-5360.

FOR FURTHER INFORMATION CONTACT: George Westerbeke, (301) 677-7009, 
x220.

SUPPLEMENTARY INFORMATION:

A. Background

    This rule was published as a proposed rule in the August 9, 2006 
issue of the Federal Register (71 FR 45475). The Army received no 
responses to the proposed rule.
    Rules for processing affirmative claims are found mostly in Chapter 
14 of AR 27-20; however, rules for processing maritime affirmative 
claims are contained in Chapter 8. For purposes of this Federal 
Register publication and its corresponding codification in the Code of 
Federal Regulations, all rules for affirmative claims processing have 
been incorporated into 32 CFR Part 537. AR 27-20 and its companion DA 
Pam 27-162 will be available on the Web site of the U.S. Army 
Publications Directorate, http://www.apd.army.mil, within a few months 
of the date of this Federal Register publication of 32 CFR Part 537. 
Users are encouraged to consult the online versions, whose structure 
and paragraph numbering are comparable.

B. Regulatory Flexibility Act

    The Department of the Army has determined that the Regulatory 
Flexibility Act does not apply because the rule does not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612.

C. Unfunded Mandates Reform Act

    The Department of the Army has determined that the Unfunded 
Mandates Reform Act does not apply because the rule does not include a 
mandate that may result in estimated costs to State, local or tribal 
governments in the aggregate, or the private sector, of $100 million or 
more.

D. National Environmental Policy Act

    The Department of the Army has determined that the National 
Environmental Policy Act does not apply because the rule does not have 
an adverse impact on the environment.

E. Paperwork Reduction Act

    The Department of the Army has determined that the Paperwork 
Reduction Act does not apply because the rule does not involve 
collection of information from the public.

F. Executive Order 12630 (Government Actions and Interference With 
Constitutionally Protected Property Rights)

    The Department of the Army has determined that Executive Order 
12630 does not apply because the rule does not impair private property 
rights.

G. Executive Order 12866 (Regulatory Planning and Review)

    The Department of the Army has determined that according to the 
criteria defined in Executive Order 12866 this rule is not a 
significant regulatory action. As such, the rule is not subject to 
Office of Management and Budget review under section 6(a)(3) of the 
Executive Order.

H. Executive Order 13045 (Protection of Children From Environmental 
Health Risk and Safety Risks)

    The Department of the Army has determined that according to the 
criteria defined in Executive Order 13045 this rule does not apply.

I. Executive Order 13132 (Federalism)

    The Department of the Army has determined that according to the 
criteria defined in Executive Order 13132 this rule does not apply 
because it will not have a substantial effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Colonel Jill M. Grant,
Commander, United States Army Claims Service.

List of Subjects in 32 CFR 537

    Claims, Government employees, Health care, Military personnel.


0
For reasons stated in the preamble the Department of the Army revises 
32 CFR Part 537 to read as follows:

PART 537--CLAIMS ON BEHALF OF THE UNITED STATES

Sec.
537.1 Statutory authority for non-maritime claims.
537.2 Scope of non-maritime affirmative claims statutes.
537.3 Claims collectible.
537.4 Claims not collectible.
537.5 Applicable law.
537.6 Identification of recovery incidents.
537.7 Notice to USARCS.
537.8 Investigation.
537.9 Assertion.
537.10 Recovery procedures.
537.11 Litigation.
537.12 Settlement authority.
537.13 Enforcement of assertions.
537.14 Depositing of collections.
537.15 Statutory authority for maritime claims and claims involving 
civil works of a maritime nature.
537.16 Scope for maritime claims.
537.17 Scope for civil works claims of maritime nature.
537.18 Settlement authority for maritime claims.
537.19 Demands arising from maritime claims.
537.20 Certification to Congress.

    Authority: 31 U.S.C. 3711-3720E; 42 U.S.C. 2651-2653; 10 U.S.C. 
1095; 10 U.S.C. 4803-4804; 33 U.S.C. 408.

PART 537--CLAIMS ON BEHALF OF THE UNITED STATES


Sec.  537.1  Statutory authority for non-maritime claims.

    (a) The Federal Claims Collection Act. The Federal Claims 
Collection Act (FCCA), is set forth at 31 U.S.C. 3711-3720E, as amended 
by the Debt Collection Act of 1982, Public Law 97-365, 96 Stat. 1749 
(October 1982), Public Law 101-552, 104 Stat. 2746 (November 1990).

    (b) Federal Medical Care Recovery Act. The Federal Medical Care 
Recovery Act (FMCRA) is set forth at 42 U.S.C. 2651-53, as amended by 
the National Defense Authorization Act for Fiscal Year 1997, Public Law 
104-202, section 1075, 110 Stat. 2422.


[[Page 69404]]


    (c) Title 10 United States Code Section 1095. 10 U.S.C. 1095, 
Public Law 101-510, section 713, 107 Stat. 1547, 1689 (1993), as 
amended by Public Law 103-160, 104 Stat. 1485 (November 1990).


    Note to Sec.  537.1: All of these statutes may be viewed on the 
USARCS Web site, https://www.jagcnet.army.mil/85256F33005C2B92/
(JAGCNETDocID)/HOME?OPENDOCUMENT. Select the link ``Claims 
Resources.''

Sec.  537.2  Scope of non-maritime affirmative claims statutes.

    (a) Recovery for government property loss or damage. The FCCA, 
originally passed in 1966, gives federal agencies the authority to 
collect a claim of the United States government for money or property 
arising out of the activities of the agency in question. However, the 
broad authority is limited for purposes of this regulation to claims 
for loss of or damage to property, as the FMCRA takes precedence for 
medical care recoveries.
    (b) Recovery for medical expenses and lost military pay. (1) The 
FMCRA, passed in 1962, authorizes recovery from a third person of the 
expenses for medical care the United States furnishes to a person who 
is injured or suffers a disease when such care is authorized or 
required by law. Likewise the United States is authorized to recover 
the cost of pay for members of the uniformed services unable to perform 
duties. Recovery normally arises out of a third-party tort under local 
law as to which the United States has an independent cause of action.
    (2) Under 10 U.S.C. 1095 the United States is also deemed a third-
party beneficiary or subrogee under an alternative system of 
computations such as workers' compensation; hospital lien laws; 
contract rights under the terms of insurance policies including medical 
payment coverage; uninsured, underinsured and no-fault coverage; and 
no-fault laws.
    (c) Recovery of health insurance. 10 U.S.C. 1095 permits recovery 
of health insurance for medical care furnished at military medical 
treatment facilities (MTFs), including supplemental policies. This 
third-party collection program has been delegated to the Surgeon 
General of the Army by the Judge Advocate General (TJAG).
    (d) Worldwide applicability. The foregoing authorities are 
worldwide in application, except for intergovernmental claims waived by 
treaty, for example, North Atlantic Treaty Association Status of Forces 
Agreement (NATO SOFA), Article VIII, paragraph 1.


Sec.  537.3  Claims collectible.

    (a) Claims for medical expenses. Claims for the value of medical 
care furnished to active or retired members of the uniformed services, 
family members of either category, employees of the Department of the 
Army (DA) or Department of Defense (DOD), or other persons to whom care 
was furnished because authorized or required by law and resulting in 
injury, death or disease, including those:
    (1) Arising out of a tort under local law,
    (2) Arising out of an on-the-job injury compensable under workers' 
compensation law except for Federal Employees Compensation Act (FECA) 
recoveries,
    (3) Based on the United States being a third-party beneficiary of 
the insurance contract of the injured party to include medical payment 
coverage, lost wages, as well as uninsured, underinsured, and no-fault 
coverage.
    (b) Claims for lost military pay. Claims for the value of lost pay 
of active members of the uniformed services arising out of a tort under 
local law resulting in injury, death or disease.
    (c) Claims for property loss. Claims arising out of a tort under 
local law for the value of lost or missing DA or DOD property, 
including non-appropriated fund instrumentality (NAFI) property, or for 
the cost of repairs of such property, including damage to assigned 
quarters, are not collectable under 10 U.S.C. 2775. (See Sec.  537.4).


Sec.  537.4  Claims not collectible.

    (a) Where the tortfeasor is a department, agency or instrumentality 
of the United States. (See Sec.  536.27(g) of this chapter).
    (b) Where the tortfeasor is a member of the uniformed services or 
an employee of the DA or DOD, acting within the scope of employment, 
who damages or loses property. See AR 735-5, chapter 13.
    (c) Where the damage or loss of property falls under a contractor 
bill of lading and recovery is pursued by the contracting agency, e.g., 
Surface Deployment and Distribution Command (SDDC), formerly the 
Military Traffic Management Command (MTMC), for lost or destroyed 
shipments.
    (d) Where damage to assigned quarters, or equipment or furnishings 
therein, is collectible from a member of the uniformed services under 
10 U.S.C. 2775.
    (e) Where the medical care is furnished by a Department of Veterans 
Affairs facility to other than active duty members of the uniformed 
services for service-connected disabilities.


Sec.  537.5  Applicable law.

    (a) Basis for recovery. (1) Most recovery assertions are based on 
the negligence or wrongful acts or omissions of the person or entity 
that caused the loss. These actions or omissions must constitute a tort 
as determined by the law of place of occurrence, except in no-fault 
jurisdictions where the no-fault law permits recovery. Where the tort 
is not complete within the jurisdiction where it originally occurred, 
the law of the original jurisdiction is nevertheless applicable. For 
example, if a plane crashes in Virginia due to the negligence of a 
Federal Aviation Administration controller in Maryland, Maryland law 
determines the extent and nature of the tort. However, as to what law 
of damages is applicable, Maryland or Virginia depecage (choice of law) 
theory may apply. For example, if the flight originated in Indiana and 
the destination was Virginia, the conflict law of both Maryland and 
Virginia must be applied. See DA Pam 27-162, paragraph 2-35.
    (2) Recovery assertions based on the United States being a third-
party beneficiary or subrogee are not based on tort, but on the right 
to recover under local law, for example, the right of a third party to 
recover workers' compensation benefits is based on local law. However, 
the right of a third-party beneficiary to recover under an insurance 
contract may turn on whether an exclusionary clause is valid under the 
law of the jurisdiction where the contract was made.
    (b) Statute of limitations. (1) Federal law determines when a 
recovery assertion must be made. Assertions for the value of medical 
expenses, lost military pay or property loss or damage based on a tort 
must be made not later than three years from the date of accrual, 28 
U.S.C. 2415(b). The date of accrual is usually the date of the 
occurrence giving rise to the recovery, for example, the date of injury 
or death for medical expenses and lost military pay or the date of 
damage or loss for a government property assertion. There are 
exceptions. For example, the loss of property in rightful possession of 
another accrues when that person claims ownership or converts the 
property to his own use.
    (2) Recovery assertions based on an implied-in-law contract against 
a no-fault or personal-injury-protection insured must be brought no 
later than six years from the date of accrual, 28 U.S.C. 2415(a), 
United States v. Limbs, 524 F.2d 799 (9th Cir. 1975). The date of 
accrual is usually the date of occurrence.

[[Page 69405]]

    (3) Actions asserted on a third-party beneficiary basis against an 
insurer or workers compensation fund must comply with the state notice 
requirement, which varies from one to six years, or the insurer's 
notice requirement set forth in the policy. United States v. Hartford 
Acci. & Indem. Co., 460 F.2d 17 (9th Cir. 1972), cert. den. 409 U.S. 
979 (1972).
    (4) The statute of limitations is tolled or does not start running 
until the responsible federal official is notified of the existence of 
a recoverable loss, Jankowitz v. United States, 533 F.2d 538 (D.C. Cir. 
1976), United States v. Golden Acres, Inc., 684 F. Supp. 96 (D. Del. 
1986). The responsible federal official can be the area claims office 
(ACO), the claims processing office (CPO), a command claims service or 
USARCS, depending on who receives the notice under this regulation. 
However, because of the responsibility to notify the MTF or TRICARE 
fiscal intermediary, and by regulation the notice must be expeditious, 
delayed notification could start the statute of limitations running. 
Additionally, when an ACO or CPO discovers the existence of an 
assertion, the statute of limitations will begin to run regardless of 
when the MTF or the TRICARE intermediary sends a notice. The date of 
receipt of a notice must be entered into the affirmative claims 
management program/database (ACMP) and the notice must be date-stamped 
and initialed.


Sec.  537.6  Identification of recovery incidents.

    (a) Responsibilities. Each command claims service and ACO will 
develop means to identify recovery incidents arising in its geographic 
area of responsibility. See Sec. Sec.  536.10 and 536.11 of this 
chapter and paragraph 2-2 of DA Pam 27-162. This requires publication 
of a claims directive to all DOD and Army installations, units and 
activities in its area, emphasizing the importance of reporting serious 
incidents to recovery judge advocates (RJAs) or civilian recovery 
attorneys.
    (b) Screening procedures. (1) Establish a point of contact in each 
unit and activity in the area of responsibility and screen their 
sources periodically, including motor pools, family housing, 
departments of public works, safety offices, provost marshals, and 
criminal investigation divisions. Review civilian news and police 
reports, military police blotters and reports, court proceedings, line 
of duty and AR 15-6 investigations and similar sources to identify 
potential medical care recovery claims.
    (2) The MTF commander will ensure that the claims office is 
notified of instances in which the MTF provides, or is billed by a 
civilian facility for, inpatient or outpatient care resulting from 
injuries (such as broken bones or burns arising from automobile 
accidents, gas explosions, falls, civilian malpractice, and similar 
incidents) that do not involve collections from a health benefits or 
Medicare supplemental insurer. Claims personnel will coordinate with 
MTF personnel to ensure that inpatient and outpatient records and 
emergency room and clinic logs are properly screened to identify 
potential cases. The RJA or recovery attorney will screen the MTF 
comptroller records database and division records as well as ambulance 
logs to identify potential medical care recovery cases. The RJA or 
recovery attorney will also coordinate with Navy and Air Force claims 
offices and MTFs to ensure they identify potential claims involving 
treatment provided to Army personnel.
    (3) The MTF commander will also ensure that the MTF does not 
release billings or medical records, or respond to requests for 
assistance with workers' compensation forms, without coordinating with 
the RJA or recovery attorney.
    (4) The TRICARE fiscal intermediary is required to identify and 
mail certain information promptly to the claims office designated as 
the state point of contact. The fiscal intermediary must mail the 
TRICARE Explanation of Benefits, showing the amount TRICARE paid on the 
claim along with what diagnostic codes were used, and DD Form 2527, 
Statement of Personal Injury. A sample Statement of Personal Injury (DD 
Form 2527) is posted on the USARCS Web site; for the address see the 
Note to Sec.  537.1.
    (5) The RJA or recovery attorney will also coordinate with Navy and 
Air Force claims offices and MTFs to ensure they identify potential 
claims involving treatment provided to Army personnel, AR 40-400, 
paragraph 13-5.
    (c) When to open a recovery file. (1) Upon identification of a 
potential recovery incident or upon receipt of a billing from a TRICARE 
Fiscal Intermediary or an MTF, a file will be opened and entered into 
the ACMP by the first ACO or CPO that learns of the event even if 
liability has not been established. Incidents under Navy, Air Force or 
Coast Guard jurisdiction will not be so entered but referred to the 
responsible service. Complete listings of claims/recovery offices 
worldwide are posted on the USARCS Web site; for the address see the 
Note to Sec.  537.1. At the site, select the link ``Claims Resources.'' 
At the next screen, click on ``Tables Listing Claims Offices 
Worldwide.'').
    (2) Army responsibility for affirmative claims is as follows:
    (i) Damage to or loss of real or personal property of the DOD or 
the Army even if located at installations or activities under the 
jurisdiction of other uniformed services.
    (ii) Personal injury to persons whose primary care for an accident-
related injury is furnished at an Army MTF, regardless of the uniformed 
services affiliation of the person or sponsor, but not to those treated 
at another uniformed service's MTF even if the person is an active duty 
Army member.
    (iii) Personal injury to an active duty or retired Army member or a 
family member of either category treated under TRICARE.
    (iv) A lead agency will be established whenever:
    (A) Property damaged or lost belonging to more than one service is 
involved in the same incident.
    (B) Personal injury victims are treated at MTFs of more than one 
service.
    (C) Personal injury victims with affiliations to more than one 
service are treated under TRICARE.
    (D) Lead agencies may be established locally for claims valued at 
$50,000 or less. For claims greater than $50,000 USARCS will be 
notified and will deal with the other service at headquarters level. 
(See Sec.  536.32 of this chapter.)


Sec.  537.7  Notice to USARCS.

    Upon receipt of notice of a claim involving either actual or 
potential amounts within USARCS' monetary jurisdiction, that is, where 
final action will be taken by USARCS or the Department of Justice, 
immediate notice will be given to USARCS. Forwarding a copy of the 
serious incident report, discussed in Sec.  536.22(c) of this chapter, 
to USARCS, will meet this requirement. Thereafter, mirror file copies 
will be furnished to USARCS in accordance with AR 27-20, paragraph 2-
12. This allows for continuous monitoring and discussion between the 
ACO and the USARCS area action officer (AAO).


Sec.  537.8  Investigation.

    (a) Claims over $50,000. Hands-on investigation will be conducted 
by claims personnel as set forth in DA Pam 27-162, Chapter 2, Section 
IV, regardless of the amount of insurance coverage immediately 
available, with a view to discovery of other sources of recovery, for 
example, vehicle defects or improper maintenance, road design and 
absence of warning signs, products liability, medical malpractice in 
civilian treatment facilities. Where the

[[Page 69406]]

employment of experts is indicated follow the procedures in Sec.  
536.39 of this chapter. No attorney representation agreement will be 
sent to the injured party's representative without USARCS approval.
    (b) Claims of $50,000 or less. The amount of hands-on investigative 
effort is directly related to the amount of insurance coverage that the 
tortfeasor possesses and the amount of coverage that the injured party 
has. Where the injured party is represented, request information from 
his lawyer or insurer, in addition to the documents obtained in initial 
screening. The ACO should be able to form an independent opinion as to 
liability based on the investigation of the government and not solely 
on that of the injured party's attorney.
    (c) Claims of $5,000 or less. Small claims procedures are 
applicable to the extent feasible. See Sec.  536.33 of this chapter. 
Investigation, assertion and settlement by e-mail, phone or fax is 
encouraged. The investigation and action should be recorded. DA Form 
1668, Small Claims Certificate, may be used as a model, modifying it as 
needed. A sample completed Small Claims Certificate is posted at USARCS 
Web site for the address see the Note to Sec.  537.1.
    (d) Relations with injured party. (1) When the injured party 
becomes known and an interview can be conducted locally, all relevant 
facts will be obtained unless the injured party is represented by a 
lawyer. In this latter event, basic information as set forth on DD Form 
2527, Statement of Personal Injury (a completed sample is posted at the 
USARCS Web site; for the address see the Note to Sec.  537.1) can be 
obtained without violating lawyer-client privilege. If the injured 
party is not immediately available, the information can be obtained by 
requesting assistance from another ACO, a unit claims officer, a 
reservist or Army National Guard (ANG) member, another federal agency, 
or another means.
    (2) When the injured party is represented, a Health Insurance 
Portability and Accountability Act (HIPAA) medical release form (sample 
posted at the USARCS Web site; see Sec.  537 (b)(4)) permitting USARCS 
to send out the medical records of the injured party for claims 
purposes, will be sent to the injured party's lawyer for completion and 
return.
    (3) When the injured party or his or her lawyer refuses to furnish 
necessary information, it can usually be obtained by other means, for 
example, from an accident report or investigation. A notice will be 
furnished to all parties that the government has been assigned the 
right to bring a claim for the value of medical care furnished, lost 
pay or value of property lost or destroyed, and that the United States 
has the right to bring an independent cause of action. In absence of 
timely and appropriate response, discuss with the AAO to determine what 
action should be taken.


Sec.  537.9  Assertion.

    (a) Asserting demands. If a prima facie claim exists under state 
law, a written demand will be made against all the tortfeasors and 
insurers. This includes demands against the injured party's own 
insurance coverage, no-fault coverage and workers' compensation 
carrier. The earlier the demand the better. A demand will not be 
delayed until the exact amount of medical expenses or lost pay is 
determined. The demand letter will state that the amount will be 
furnished when known. A copy of the demand will be furnished to the 
injured party or, if represented, his lawyer. Two sample demand (or 
assertion) letters are posted at the USARCS Web site (for the address 
see the Note to Sec.  537.1). Demand letters are for initial contact 
with insurance companies. One of the posted samples is for a medical 
assertion for a soldier (that includes wages). The other is for a 
medical assertion for a civilian (that does not include wages). 
Remember the following points when asserting demands:
    (1) The fact that the medical expenses have been assigned to the 
United States and as a result the United States has a cause of action 
in federal or state court. All parties will be notified that if the 
insurer pays the amount to another party, the United States has the 
right to collect from the insurer.
    (2) Demands for third-party torts are under the authority of the 
FMCRA; demands where there is no tortfeasor are under the authority of 
10 U.S.C. 1095; demands for property loss or damage are under the 
authority of the FCCA.
    (b) Documentation of damages. MTFs are required by AR 40-400, 
Patient Administration, chapter 13 to furnish complete billing 
documents to RJAs.
    (1) TRICARE bills are obtained from the fiscal intermediary 
servicing the ACO. The amounts are based on the amount TRICARE pays and 
not the amount the patient is billed by the provider. TRICARE bills 
must be screened to insure that the care is incident or accident 
related as the demand is limited to that amount.
    (2) MTF bills, both outpatient and inpatient, are obtained from 
either the MTF co-located with the ACO or if another MTF is involved, 
from that MTF, regardless of uniformed service affiliation. Outpatient 
bills include not only the cost of the visit but also the cost of each 
procedure, such as x-rays or laboratory tests. Inpatient billing is not 
based on services rendered but on a diagnostic group. Charges for 
professional inpatient services will be itemized the same as outpatient 
care. Charges for prescription services will be included. Screening to 
ensure that only incident or accident related care is claimed is 
essential. The cost of ambulance services, ground or air, will be 
calculated with MTF assistance and demanded. Burial expenses are 
obtained from the local mortuary affairs office on DD Form 2063, but 
will be demanded only when the insurance coverage includes such 
expenses.
    (3) Lost pay will be obtained from the leave or earnings statement 
or the active duty pay chart for the year or years in question and will 
include special and incentive pay unless the injured service member did 
not receive either due to the length of time off assigned duty. The 
time off duty will be based on the time service members are unable to 
perform duties for which they have been trained (their military 
occupational specialty). It will not be limited to inpatient time. Time 
in a medical holding or convalescent leave will be lost time.
    (4) The amount recoverable for personal property losses is limited 
to its value at the time of loss. Depreciation charts may be used to 
determine the reduction from the value at purchase. Replacement value 
will not be used. Both real and personal property damage will be on the 
value of labor and cost of material including the use of heavy 
equipment. When the cost of repairs is greater than $50,000, 10% 
overhead will be added. This can be substantiated using case law and by 
seeking documentation from the repair facility.
    (c) Double collections prohibited. When the cost of medical care is 
recoverable by the MTF from medical care insurance, both primary and 
supplemental under 10 U.S.C. 1095, an assertion under FMCRA will be 
made, including a demand for lost pay not recoverable out of health 
insurance. While the United States is entitled to recover costs of 
medical care from both the injured parties' medical insurance and from 
the third-party tortfeasor, USARCS policy is not to collect twice. RJAs 
will carefully coordinate with the MTF to insure that double collection 
does not occur. Demand for lost pay should be enforced as it is not 
recoverable from medical care insurance.

[[Page 69407]]

Sec.  537.10  Recovery procedures.

    (a) Recovery personnel have three means of enforcing recovery 
following initial assertion.
    (1) Referral to litigation pursuant to Sec.  537.11;
    (2) The head of an ACO should request Chief, Litigation Division, 
OTJAG to have the RJA appointed as a Special Assistant United States 
Attorney when the following criteria are met:
    (i) Filing suit is a frequent necessity, e.g., insurance companies 
are refusing payment on small claims either by raising issues well 
settled or by regularly reducing the amount of medical care as not fair 
and reasonable;
    (ii) The local U.S. Attorney's office is in favor of such 
appointment due to his previous experience with the RJA and the 
additional burden of affirmative claims litigation on his staff;
    (iii) The RJA has at least two years experience and is likely to 
continue in the RJA assignment for at least one year; and
    (iv) Commander USARCS concurs in the appointment and is willing to 
furnish support.
    (3) The RJA may request that the attorney representing the injured 
party include the amount asserted by the United States as part of 
special damages. The injured party's attorney may not represent the 
United States nor may the United States pay attorney fees as this would 
be in violation of 5 U.S.C. 3106. Where indicated, this arrangement 
should be reduced to writing. Be mindful that the attorney's duty to 
the injured party is in conflict with the interests of the United 
States where the amount potentially recoverable is small in comparison 
to the amount asserted by the United States. In this event the RJA 
should pursue recovery independently.
    (b) Careful monitoring of all assertions is required to insure 
timely follow-up resulting in collection or suit where indicated. 
Installation of a suspense system to avoid the expiration of the 
statute of limitations is essential. Recommendations to file suit 
should be forwarded by the RJA well prior to the expiration of the 
statute of limitations. Within six months prior to the running of the 
statute of limitations, USARCS must be notified of the status of the 
claim or potential claim. Follow-up demands should precede filing suit 
to create a written record of efforts to avoid suit. Personal contact 
with all parties is encouraged. When represented, contact the 
representative.
    (c) Sources other than vehicle liability coverage should be 
exhausted in cases where the amount of the potential recovery exceeds 
$50,000 and the coverage is small. Coordination with USARCS is 
required. USARCS can obtain expert witnesses for medical malpractice 
cases, product liability cases, or other cases in which another 
tortfeasor may be involved.


Sec.  537.11  Litigation.

    (a) If a tortfeasor or insurer refuses to settle, or if an injured 
party's attorney improperly withholds funds, the RJA or recovery 
attorney must consider litigation to protect the interests of the 
United States. Litigation is particularly appropriate if a particular 
insurer consistently refuses to settle claims, or if the government's 
interests are not adequately represented on a claim over $25,000.
    (b) RJAs or recovery attorneys must maintain close contact with 
local U.S. Attorney's Offices to ensure these offices are willing to 
initiate litigation on cases.
    (c) In order to directly initiate or intervene in litigation, an 
RJA or recovery attorney must prepare a litigation report and formally 
refer the case through the Affirmative Claims Branch, USARCS, and the 
Litigation Division, OTJAG (as required by AR 27-40, chapter 5), to the 
U.S. Attorney. While the RJA or recovery attorney, in conjunction with 
the Litigation Division Torts Branch, should attempt to have the U.S. 
Attorney's Office initiate litigation at least six months before the 
expiration of the statute of limitations (SOL), the RJA or recovery 
attorney may contact USARCS telephonically if SOL problems necessitate 
quick action on a case. The RJA or recovery attorney should also 
contact USARCS if a U.S. Attorney is reluctant to pursue an important 
case. An injured party's attorney may represent the government's 
interest in litigation without any special coordination.


Sec.  537.12  Settlement authority.

    (a) Assertions for $50,000 or less--(1) Approval authority. An RJA 
or civilian recovery attorney, if delegated authority by his or her ACO 
or CPO, may compromise a collection on a claim asserted for $50,000 or 
less, unless recovery action is reserved by a command claims service.
    (2) Final action authority. (i) An ACO, or CPO if delegated 
authority by its ACO, may terminate collection action on a claim 
asserted for $50,000 or less, unless action is reserved by a command 
claims service.
    (ii) The foregoing authorities may waive a claim asserted for 
$50,000 or less where undue hardship exists.
    (iii) Determination of amount. The amount of $50,000 is determined 
totaling the amounts for medical care, lost military wages, lost 
earnings or government property damage arising from the same claims 
incident.
    (b) Assertions over $50,000. USARCS retains final authority over 
assertions over $50,000. By use of the mirror file system and through a 
dialogue between USARCS and the field during the course of the 
assertion, USARCS will decide whether it or the RJA or civilian 
recovery attorney will conduct the negotiations. To help it decide, the 
RJA or civilian recovery attorney will forward a memorandum for either 
medical or property recovery approval, in the format of the samples 
posted at the USARCS Web site (for the address see the Note to Sec.  
537.1). USARCS may waive the requirement to submit a memorandum.
    (c) Appeals--(1) Assertion for $50,000 or less. Where the assertion 
is made by an RJA or civilian recovery attorney, the appeal will be 
determined by the SJA, the medical center judge advocate, or head of 
the ACO or CPO. Otherwise, the appeal will be determined by the 
Commander USARCS.
    (2) Assertion over $50,000. Where the assertion is made by a Claims 
Judge Advocate or claims attorney, the appeal will be determined by the 
Commander USARCS.
    (d) Compromise or waiver. Any assertion may be compromised, waived 
or terminated in whole or in part, if for example:
    (1) The cost to collect does not justify the cost of enforcement.
    (2) There is evidence of fraud or misrepresentation.
    (3) The U.S. cannot locate the tortfeasor.
    (4) Legal merit has not been substantiated.
    (5) The statute of limitations has run and the debtor refuses to 
pay.
    (6) Collection of all or part of the amount of funds demanded would 
create inequity. The following criteria apply:
    (i) Detailed information on what funds are available for recovery.
    (ii) Reasonable value of the injured party's claim for permanent 
injury, pain and suffering, decreased earning power, and any other 
special damages.
    (iii) Military, Department of Veterans Affairs, Social Security 
disability, and any other government benefits accruing to the injured 
party.
    (iv) Probability and amount of future medical expenses of the 
government and the injured party.
    (v) Present and prospective assets, income, and obligations of the 
injured party and those dependent on him or her.
    (vi) The financial condition of the debtor.

[[Page 69408]]

    (vii) The degree and nature of contributory negligence on the part 
of the injured party in causing his injury or death.
    (viii) The percentage of attorney's fees that his attorney is 
willing to reduce.
    (ix) The willingness of the tortfeasor to enter into an installment 
agreement.
    (e) Releases. The RJA or recovery attorney may execute a release 
for affirmative claims in the pre-litigation stage acknowledging that 
the government has received payment in full of the amount asserted or 
the compromised amount agreed upon, or the final installment payment. 
The format of the release should be similar to the sample posted at the 
USARCS Web site (for the address see the Note to Sec.  537.1). However, 
the RJA or recovery attorney may not execute either an indemnity 
agreement or a release which prejudices the government's right to 
recover on other claims arising out of the same incident without the 
approval of USARCS. In addition, the RJA or recovery attorney may not 
execute a release that purports to release any claim that the injured 
party may have other than for medical care furnished or to be furnished 
by the United States. The RJA or recovery attorney will not execute a 
release if the government's claim is waived or terminated.


Sec.  537.13  Enforcement of assertions.

    Meritorious assertions that do not result in collections should be 
enforced as follows:
    (a) Where the debtor is a business or corporation otherwise 
financially capable the RJA or equivalent should forward a 
recommendation to bring suit or intervene in an existing suit 
regardless of the amount of the debt. As authorized by 28 U.S.C. 3011, 
the demand amount in the complaint shall include an additional 10% of 
the original claimed amount, to cover the administrative costs of 
processing and handling the enforcement of the debt.
    (b) Where the debtor is an individual rather than a business, an 
asset determination should be made both as to existing assets or 
prospective earnings. If the injured party's attorney has made an 
assets search which is reliable, review the search before requesting a 
new one. Such a search can be paid for out of existing collections.
    (1) If the debtor has assets refer to USARCS for transfer to a debt 
collection contractor or an agency debt collection center as determined 
by USARCS.
    (2) If the debtor has no assets, but prospective future earnings, 
RJA may seek a confession of judgment and maintain contact with the 
debtor for future collection where authorized by state law and filing 
of suit is not required. If the amount is less then $5,000, enter into 
an installment payment arrangement.


Sec.  537.14  Depositing of collections.

    (a) Depositing property damage recovery--(1) Machines, supplies, 
watercraft, aircraft, vehicles other than General Services 
Administration-owned. Recovered money must be deposited into the 
General Treasury Account 21R3019. This account remains the same every 
fiscal year. It was established in accordance with 31 U.S.C. 3302(b) 
and by Comptroller General decision B-205508, 64 Comp. Gen. 431.
    (2) Real property. Collection for damage to real property must be 
deposited into an escrow account on behalf of the installation or 
activity at which the loss occurred. This escrow account must be set up 
at the request of the command claims service, ACO or CPO with the local 
finance office or resource management office with responsibility for 
department of engineering and housing or department of public works 
funds. The escrow account must be set up and managed by the department 
of engineering and housing or the department of public works to (1) 
temporarily hold deposits, and (2) to ``roll over'' deposits each 
fiscal year in order to avoid reversion of these deposits to the 
General Treasury at the end of each fiscal year. If the escrow account 
is not set up and managed in this manner it is operating in violation 
of 10 U.S.C. 2782.
    (3) NAFI property. The Risk Management Program (RIMP) often 
reimburses local NAFIs for property loss or damage to facilitate return 
of equipment to daily use. When money is recovered from tortfeasors and 
their insurance carriers contact the NAFI involved for instructions on 
the current procedures as to where the recovered money is to be 
forwarded and deposited.
    (4) Army Stock Fund or Defense Business Operations Fund property. 
Monies recovered for damage to property belonging to one of these funds 
will be returned to that fund unless the fund has charged the cost of 
repair or replacement to an appropriated fund account. The Defense 
Business Operations Fund replaced the Army Industrial Fund.
    (5) Government housing in cases of abuse or neglect by soldiers or 
families. Monies recovered for damage to government housing caused by a 
soldier's abuse or negligence (or by a soldier's family member or guest 
of the soldier) will be deposited into that installation's family 
housing operations and maintenance (O&M) account.
    (6) Government housing in cases of negligence by nonresidents. 
Government housing caused by the negligence of a nonresident must be 
asserted against the nonresident directly or through his/her insurer. 
Settlement checks must be deposited into the real property escrow 
account in accordance with 10 U.S.C. 2782.
    (b) Depositing recovery of pay provided to a soldier while 
incapacitated. Monies recovered for the costs of pay provided to a 
soldier injured by the tortious acts of another shall be credited to 
the local O&M account that supports the command, activity, or other 
unit to which the soldier was assigned at the time of the injury.
    (c) Depositing medical care recovery--(1) To a medical treatment 
facility account. Continental U.S. (CONUS) and outside the continental 
U.S. (OCONUS) claims offices, and command claims services, will deposit 
money recovered from an automobile insurer for medical care provided, 
paid for by, in or through an MTF to the O&M account of the Army, Navy, 
or Air Force MTF that provided the care. CONUS and OCONUS claims 
offices, and command claims services, will deposit money recovered from 
any payor, under any provision of law, for medical care provided or 
paid for by, in or through an MTF into the MTF's O&M account.
    (2) Deposits when TRICARE paid directly for treatment. The account 
in which to deposit affirmative claims recoveries when TRICARE has paid 
directly for the medical treatment is a Defense Health Program (DHP) 
account for reallocation to the services. This replaces the general 
treasury miscellaneous receipts account published in AR 37-100 
(obsolete). Deposit to TRICARE using this new account for recoveries 
pending deposit, and recoveries for any claim settled on or after 
October 1, 2002. Retroactive claims depositing is not necessary.
    (3) Apportionment of medical care recovery between accounts. Claims 
offices will often have to apportion recovered money among different 
accounts.
    (i) Apportioning money between accounts. If care was provided by an 
MTF and paid for by or through the MTF and/or directly by TRICARE and/
or a unit account for military lost wages if any, and the amount 
recovered is less than the amount asserted, deposit a prorated amount 
of money into each TRICARE account.

[[Page 69409]]

    (ii) Apportioning money between two or more medical treatment 
facility accounts. If care was provided by two or more MTFs and the 
claims office recovers less than the amount asserted, the claims office 
should give each MTF a pro rata share of the money recovered. For 
example, if MTF one provided $2,000 worth of care and MTF two provided 
$1,000 worth of care, the claims office will deposit $800 of a $1,200 
recovery to MTF one's account and the remaining $400 to MTF two's 
account. Similarly, if the claims office recovers an amount less than 
that asserted for medical care expenses and costs of pay provided, the 
claims office should give a pro rata share of the money recovered to 
both the MTF and the appropriation account that supports the injured 
soldier's unit.
    (d) Fiscal Integrity. Field claims offices must reconcile the 
property damage and medical care recovery accounts with their servicing 
defense accounting office. Field claims offices must ensure that their 
deposits have been credited to the proper accounts and that these 
accounts have not been improperly charged. All accounts must be 
reconciled at the end of the fiscal year.


Sec.  537.15  Statutory authority for maritime claims and claims 
involving civil works of a maritime nature.

    (a) The Army Maritime Claims Settlement Act. The sections pertinent 
to maritime affirmative claims are set out at 10 U.S.C. 4803-4804.
    (b) The Rivers and Harbors Act. The section of the Act pertinent to 
affirmative claims involving civil works of a maritime nature is set 
out at 33 U.S.C. 408.


Sec.  537.16  Scope for maritime claims.

    The Army Maritime Claims Settlement Act (10 U.S.C. 4803-4804) 
applies worldwide and includes claims that arise on high seas or within 
the territorial waters of a foreign country.
    (a) 10 U.S.C. 4803 provides for agency settlement or compromise of 
claims for damage to:
    (1) DA-accountable properties of a kind that are within the federal 
maritime jurisdiction.
    (2) Property under the DA's jurisdiction or DA property damaged by 
a vessel or floating object.
    (b) 10 U.S.C. 4804 provides for the settlement or compromise of 
claims in any amount for salvage services (including contract salvage 
and towage) performed by the DA. Claims for salvage services are based 
upon labor cost, per diem rates for the use of salvage vessels and 
other equipment, and repair or replacement costs for materials and 
equipment damaged or lost during the salvage operation. The sum claimed 
is usually intended to compensate the United States for operational 
costs only, reserving, however, the government's right to assert a 
claim on a salvage bonus basis in accordance with commercial practice.
    (c) The United States has three years from the date a maritime 
claim accrues under this section to file suit against the responsible 
party or parties.


Sec.  537.17  Scope for civil works claims of maritime nature.

    Under the River and Harbors Act (33 U.S.C. 408), the United States 
has the right to recover fines, penalties, forfeitures and other 
special remedies in addition to compensation for damage to civil works 
structures such as a lock or dam. However, claims arising under 10 
U.S.C. 4804 are limited to recovery of actual damage to Corps of 
Engineers (COE) civil works structures.


Sec.  537.18  Settlement authority for maritime claims.

    (a) The Secretary of the Army, the Army General Counsel as designee 
of the Secretary, or other designee of the Secretary may compromise an 
affirmative claim brought by the United States in any amount. A claim 
settled or compromised in a net amount exceeding $500,000 will be 
investigated and processed and, if approved by the Secretary of the 
Army or his or her designee, certified to Congress for final approval.
    (b) TJAG, TAJAG, the Commander USARCS, the Chief Counsel COE, or 
Division or District Counsel Offices may settle or compromise and 
receive payment on a claim by the United States under this part if the 
amount to be received does not exceed $100,000. These authorities may 
also terminate collection of claims for the convenience of the 
government in accordance with the standards specified by the DOJ.
    (c) An SJA or a chief of a command claims service and heads of ACOs 
may receive payment for the full amount of a claim not exceeding 
$100,000, or compromise any claim in which the amount to be recovered 
does not exceed $50,000 and the amount claimed does not exceed 
$100,000.
    (d) Any money collected under this authority shall be deposited 
into the U.S. General Treasury, except that money collected on civil 
works claims in favor of the United States pursuant to 33 U.S.C. 408 
``shall be placed to the credit of the appropriation for the 
improvement of the harbor or waterway in which the damage occurred * * 
*'' (33 U.S.C. 412; 33 U.S.C. 571).


Sec.  537.19  Demands arising from maritime claims.

    (a) It is essential that Army claims personnel demand payment, or 
notify the party involved of the Army's intention to make such demands, 
as soon as possible following receipt of information of damage to Army 
property where the party's legal liability to respond exists or might 
exist. Except as provided below pertaining to admiralty claims and 
claims for damage to civil works in favor of the United States pursuant 
to 33 U.S.C. 408, copies of the initial demand or written notice of 
intention to issue a demand letter, as well as copies of subsequent 
correspondence, will be provided promptly to the Commander USARCS, who 
will monitor the progress of such claims.
    (b) Subject to limitation of settlement authority, demands for 
admiralty claims and civil works damages in favor of the United States 
pursuant to 33 U.S.C. 408 may be asserted, regardless of amount, by the 
Chief Counsel COE, or his designees in COE Division or District Counsel 
offices.
    (c) Where, in response to any demand, a respondent denies 
liability, fails to respond within a reasonable period, or offers a 
compromise settlement, the file will be promptly forwarded to the 
Commander USARCS, except in those cases in which a proposed compromise 
settlement is deemed acceptable and the claim is otherwise within the 
authority delegated in Sec.  537.18 of this part. Files for admiralty 
claims and civil works claims in favor of the United States pursuant to 
33 U.S.C. 408 will be promptly forwarded to the United States 
Department of Justice.


Sec.  537.20  Certification to Congress.

    Admiralty claims, including claims for damage to civil works in 
favor of the United States pursuant to 33 U.S.C. 408, proposed for 
settlement or compromise in a net amount exceeding $100,000 will be 
submitted through the Commander USARCS to the Secretary of the Army for 
approval and if in excess of $500,000 for certification to Congress for 
final approval.

 [FR Doc. E6-19901 Filed 11-29-06; 8:45 am]
BILLING CODE 3710-08-P