[Federal Register Volume 73, Number 228 (Tuesday, November 25, 2008)]
[Rules and Regulations]
[Pages 71545-71554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-27959]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DOD-2007-HA-0010; RIN 0720-AB09]


TRICARE Program; Overpayments Recovery

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This rule amends the CHAMPUS and TRICARE program

[[Page 71546]]

regulation that governs the recoupment of erroneous payments. 
Specifically, the rule implements changes required by the Debt 
Collection Improvement Act (DCIA) of 1996 and the revised Federal 
Claims Collection Standards (FCCS). This final rule is necessary to 
comply with the DCIA of 1996 and the revised FCCS.

DATES: Effective Date: This rule is effective December 26, 2008.

FOR FURTHER INFORMATION CONTACT: Gail L. Jones, Medical Benefits and 
Reimbursement Systems, TRICARE Management Activity, telephone (303) 
676-3401.

SUPPLEMENTARY INFORMATION:

Background and Purpose

    On December 23, 1985, the Office of the Secretary of Defense 
published a final rule in the Federal Register (50 FR 52315), 
clarifying specific procedures and criteria in the assertion, 
collection or compromise of federal claims and the suspension or 
termination of collection action on such claims arising under the 
operation of the Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS). Section 199.11, ``Overpayments Recovery,'' 
addresses claims in favor of the United States arising under the 
Federal Claims Collection Act (recoupment claims).
    On April 26, 1996, the Debt Collection Act of 1982, as amended by 
the Debt Collection Improvement Act, Public Law 104-134 (110 Stat. 
1321-358 et seq.) was enacted into law (as part of the Omnibus 
Consolidated Rescissions and Appropriations Act of 1996) mainly to 
increase the collection of non-tax debts owed to the Federal 
Government. This law centralized the administrative collection of most 
delinquent non-tax debt at Department of the Treasury (Treasury) 
Financial Management Service, to increase the efficiency of collection 
efforts. Government departments and agencies are now required to refer 
debts to Treasury for centralized administrative offset under the 
Treasury Offset Program (TOP), and transfer debts to Treasury for 
collection on the agencies' behalf--a process known as cross servicing.
    This final rule implements statutory provisions of the DCIA of 1996 
and the revised FCCS, which were jointly issued by Treasury and the 
Department of Justice (DOJ). The effect of this final rule would avoid 
the expense of court proceedings for both the government and the 
debtor, as well as reduce administrative handling, provide greater 
flexibility to recovery efforts, and promote timely settlements of 
outstanding federal claims.

Public Comments

    On December 20, 2007 (72 FR 72307), the Office of the Secretary of 
Defense provided the public the opportunity to comment on implementing 
changes required by the DCIA of 1996 and the revised FCCS. Throughout 
the 60-day comment period, which closed on February 19, 2008, the 
Department of Defense (DoD) did not receive any public comments. 
Therefore, within this final rule, the DoD set forth the proposed 
provisions contained in the December 20, 2007, proposed rule. The 
proposed rule is adopted without change, as a final rule.

Section-By-Section Analysis

     Paragraph (a) provides that it applies to the TRICARE 
program and CHAMPUS.
     Paragraph (b)(1) adds the DCIA and the revised FCCS, 31 
CFR parts 900-904, as authority for collection, as well as Treasury 
regulations, found at 31 CFR part 285, subpart A, implementing the DCIA 
and related statutes governing the offset of Federal salaries (5 U.S.C. 
5514, 5 CFR part 550, subpart K), administrative offset (31 U.S.C. 
3716), administrative offset of tax refunds (31 U.S.C. 3720A) and 
regulations implementing the offset of military pay under Title 37 
U.S.C. 1007(c). The reference to waiver of collection authorized by 
Section 743 of the National Defense Authorization Act for Fiscal Year 
1996 has been deleted. The legislation-authorizing waiver has expired.
     Paragraph (c) reflects that the Director, TRICARE 
Management Activity (TMA), or a designee, is responsible for ensuring 
that timely collection action is pursued. The Office of CHAMPUS 
(OCHAMPUS) has been disestablished. The functions of OCHAMPUS are now 
being performed by the TMA. The current regulation reflects that agency 
authority to compromise, suspend, or terminate collection action was 
limited to claims that did not exceed $20,000. The rule increases this 
amount to $100,000 at paragraph (g), the amount authorized by 31 U.S.C. 
3711(a)(2).
     Paragraph (e) delegates the authority to assert, settle, 
compromise or to suspend or terminate collection on claims arising 
under the Federal Claims Collection Act to the Director, TMA.
     Paragraph (f)(1) adds a provision that recoupment 
procedures may be modified or adapted to conform to network agreements 
and that the recoupment provisions of the rule apply if recoupment 
under the network agreements is not successful.
     Paragraph (f)(3) requires the TRICARE contractor to first 
attempt to recover an erroneous payment from another health insurance 
plan through the contractor's coordination of benefits procedures. If 
the overpayment cannot be recovered from the other plan, or if the 
other plan has made payment, the erroneous payment will be recovered 
from the party that received the erroneous payment from TRICARE.
     Paragraph (f)(6)(iii) specifies that a minimum of one 
demand letter is required and states that the specific content, timing 
and number of demand letters may be tailored to the type and amount of 
debt and the debtor's response, if any.
     Paragraph (f)(6)(ii) of the current regulation states that 
normally a total of three progressively stronger written demands for 
payment be made to a debtor at approximately 30-day intervals and that 
the demands for payment will be made by CHAMPUS fiscal intermediary and 
OCHAMPUS. This final rule amends this language to reflect that normally 
the TRICARE contractor will initiate initial collection action to 
effect recoupment.
     Paragraph (f)(6)(iv) states that the initial or subsequent 
demand letter(s) may notify debtors of the mandatory requirement to 
report delinquent debts to credit reporting agencies and to refer 
delinquent debts to collection agencies, the TOP for collection by 
administrative offset from Federal tax refunds and other amounts 
payable by the Government, offset from state payments as well as the 
requirement that delinquent debts be transferred to Treasury for 
collection. It also provides that letters may include TMA policies for 
referring delinquent debts to the DOJ.
     Paragraph (f)(6)(v) deleted language found at Paragraph 
(f)(6)(iii) of the current regulation, which stated that offset under 
the provisions of 31 U.S.C. 3716 was not to be used with respect to 
debts owed by any state or local government. The collection of debts 
owed by state and local governments through administrative offset is no 
longer prohibited.
     Paragraph (f)(6)(v)(A) requires eligible non-tax debts 
delinquent over 180 days be referred to Treasury for centralized 
administrative offset, unless otherwise exempted from referral. Debts 
that were formerly referred directly to the Internal Revenue Service 
for Tax Refund Offset will be referred for centralized administrative 
offset. It also provides that salary offsets under 5 U.S.C. 5514 that 
were formerly effected through referral to an employee's paying agency, 
pursuant to Paragraph (f)(6)(vi)

[[Page 71547]]

of 32 CFR 199.11 will be effected through referral for centralized 
administrative offset.
     Paragraph (f)(6)(vi) implements a mandatory requirement of 
the DCIA that eligible non-tax debts delinquent over 180 days be 
transferred to Treasury or a Treasury-Designated Collection Center for 
collection through cross-servicing, unless otherwise exempted from 
referral.
     Paragraph (f)(6)(ix) increases the minimum amount of 
installment payment that may be accepted to $75.00 per month unless the 
debtor demonstrates financial hardship. Paragraph (f)(6)(iv) of the 
current regulation provides that the minimum amount is $50.00.
     Paragraph (f)(6)(xi) requires TMA to use government-wide 
collection contracts to obtain debt collection services through private 
contractors as provided in 31 CFR 901.5(b). The current regulation 
provides for TMA to contract for such services.
     Paragraph (f)(6)(xii) specifies that Treasury will report 
debts transferred to it for collection to credit reporting agencies on 
behalf of TMA.
     Paragraph (g)(1) authorizes the Director, TMA to 
compromise, suspend or terminate collection action of debts that do not 
exceed $100,000 (exclusive of interest, penalties and administrative 
costs) or less, or such other amount as the Attorney General shall 
authorize, as provided in 31 CFR 902.1(a). Paragraph (b) of the current 
regulation limits this authority to $20,000. Paragraph (g)(3) of the 
current regulation has been deleted, because the legislation 
authorizing the waiver has expired.
     Paragraph (h) increases the threshold for referral of 
cases to the DOJ from $600 to $2,500 or such other amount as the 
Attorney General shall prescribe, as provided in 31 CFR 904.4(a).

Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review''

    Executive Order 12866 requires that a comprehensive regulatory 
impact analysis be performed on any economically significant regulatory 
action, defined as one that would result in an annual effect of $100 
million or more on the national economy or which would have other 
substantial impacts. It has been certified that this final rule is not 
an economically significant rule; however, it is a regulatory action 
which has been reviewed by the Office of Management and Budget as 
required under the provision of E.O. 12866.

Unfunded Mandates Reform Act (Sec. 202, Pub. L. 104-4)

    It has been certified that this rule does not contain a Federal 
mandate that may result in the expenditure by State, local and tribal 
governments, in aggregate, or by the private sector, of $100 million or 
more in any one year.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    It has been certified that this rule is not subject to the 
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities. This rule, although not economically significant 
under E.O. 12866, has been designated as significant and has been 
reviewed by the Office of Management and Budget as required under the 
provisions of E.O. 12866. This final rule sets forth changes to conform 
to the Debt Collection Improvement Act of 1996 (Pub. L. 104-134, 110 
Stat. 1321, 1358), as implemented by the Federal Claims Collection 
Standards, joint regulations issued by the Department of the Treasury 
and the Department of Justice, 31 CFR parts 900-904.

Public Law 96-511, ``Paperwork Reduction Act of 1995'' (44 U.S.C. 3501 
et seq.)

    It has been certified that this rule does not impose reporting or 
recordkeeping requirements under the Paperwork Reduction Act of 1995.

Executive Order 13132, Federalism

    It has been certified that this rule does not have federalism 
implications, as set forth in Executive Order 13132. This rule does not 
have substantial direct effects on:
    (1) The States;
    (2) The relationship between the National Government and the 
States; or
    (3) The distribution of power and responsibilities among the 
various levels of Government.

List of Subjects in 32 CFR Part 199

    Claims, Dental health, Health care, Health insurance, Individuals 
with disabilities, and Military personnel.

0
Accordingly, 32 CFR Part 199 is amended as follows:

PART 199--[AMENDED]

0
1. The authority citation for part 199 continues to read as follows:

    Authority: 5 U.S.C. 301; 10 U.S.C. chapter 55.


0
2. Section 199.11 is revised to read as follows:


Sec.  199.11  Overpayments recovery.

    (a) General. Actions to recover overpayments arise when the 
government has a right to recover money, funds or property from any 
person, partnership, association, corporation, governmental body or 
other legal entity, foreign or domestic, except another Federal agency, 
because of an erroneous payment of benefits under both CHAMPUS and the 
TRICARE program under Sec.  199.17 of this part. The term ``Civilian 
Health and Medical Program of the Uniformed Services'' (CHAMPUS) is 
defined in 10 U.S.C. 1072(4), and referred to under Sec.  199.17 as the 
basic CHAMPUS program, otherwise known as TRICARE Standard. The term 
``TRICARE program'' is defined in 10 U.S.C. 1072(7) and is referred to 
under Sec.  199.17 as the triple-option benefit of TRICARE Prime, 
TRICARE Extra, and TRICARE Standard. It is the purpose of this section 
to prescribe procedures for investigation, determination, assertion, 
collection, compromise, waiver and termination of claims in favor of 
the United States for erroneous benefit payments arising out of the 
administration of CHAMPUS and the TRICARE program. For the purpose of 
this section, references herein to TRICARE beneficiaries, claims, 
benefits, payments, or appeals shall include CHAMPUS beneficiaries, 
claims, benefits, payments, or appeals. A claim against several joint 
debtors arising from a single incident or transaction is considered one 
claim. The Director, TRICARE Management Activity (TMA), or a designee, 
may pursue collection against all joint debtors and is not required to 
allocate the burden of payment between debtors.
    (b) Authority. (1) Federal statutory authority. The Federal Claims 
Collection Act, 31 U.S.C. 3701, et seq., as amended by the Debt 
Collection Act of 1982 and the Debt Collection Improvement Act of 1996 
(DCIA), provides the basic authority under which claims may be asserted 
pursuant to this section. The DCIA is implemented by the Federal Claims 
Collection Standards, joint regulations issued by the Department of the 
Treasury (Treasury) and the Department of Justice (DOJ) (31 CFR Parts 
900-904), that prescribe government-wide standards for administrative 
collection, offset, compromise, suspension, or termination of agency 
collection action, disclosure of debt information to credit reporting 
agencies, referral of debts to private collection contractors for 
resolution, and referral to the Department of Justice for litigation to

[[Page 71548]]

collect debts owed the Federal government. The regulations under this 
part are also issued under Treasury regulations implementing the DCIA 
(31 CFR part 285) and related statutes and regulations governing the 
offset of Federal salaries (5 U.S.C. 5514; 5 CFR part 550, subpart K), 
administrative offset (31 U.S.C. 3716; 31 CFR part 285, subpart A); 
administrative offset of tax refunds (31 U.S.C. 3720A) and offset of 
military pay (37 U.S.C. 1007(c); Volume 7A, Chapter 50 and Volume 7B, 
Chapter 28 of the Department of Defense Financial Management 
Regulation, DOD 7000.14-R \1\ (DoDFMR)).
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    \1\ Copies may be obtained at http://www.dtic.mil/whs/directives/.
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    (2) Other authority. Federal claims may arise under authorities 
other than the federal statutes, referenced above. These include, but 
are not limited to:
    (i) State worker's compensation laws.
    (ii) State hospital lien laws.
    (iii) State no-fault automobile statutes.
    (iv) Contract rights under terms of insurance policies.
    (c) Policy. The Director, TMA, or a designee, shall aggressively 
collect all debts arising out of its activities. Claims arising out of 
any incident, which has or probably will generate a claim in favor of 
the government, will not be compromised, except as otherwise provided 
in this section, nor will any person not authorized to take final 
action on the government's claim, compromise or terminate collection 
action. Title 28 U.S.C. 2415-2416 establishes a statute of limitation 
applicable to the government where previously neither limitations nor 
latches were available as a defense. Claims falling within the 
provisions of this statute will be referred to the Department of 
Justice without attempting administrative collection action, if such 
action cannot be accomplished in sufficient time to preclude the 
running of the statute of limitations.
    (d) Appealability. This section describes the procedures to be 
followed in the recovery and collection of federal claims in favor of 
the United States arising from the operation of TRICARE. Actions taken 
under this section are not initial determinations for the purpose of 
the appeal procedures of Sec.  199.10 of this part. However, the proper 
exercise of the right to appeal benefit or provider status 
determinations under the procedures set forth in Sec.  199.10 of this 
part may affect the processing of federal claims arising under this 
section. Those appeal procedures afford a TRICARE beneficiary or 
participating provider an opportunity for administrative appellate 
review in cases in which benefits have been denied and in which there 
is an appealable issue. For example, a TRICARE contractor may 
erroneously make payment for services, which are excluded as TRICARE 
benefits because they are determined to be not medically necessary. In 
that event, the contractor will initiate recoupment action, and at the 
same time, the contractor will offer an administrative appeal as 
provided in Sec.  199.10 of this part on the medical necessity issue 
raised by the adverse benefit determination. The recoupment action and 
the administrative appeal are separate actions. However, in an 
appropriate case, the pendency of the appeal may provide a basis for 
the suspension of collection in the recoupment case. If an appeal were 
resolved entirely in favor of the appealing party, it would provide a 
basis for the termination of collection action in the recoupment case.
    (e) Delegation. Subject to the limitations imposed by law or 
contained in this section, the authority to assert, settle, and 
compromise or to suspend or terminate collection action arising on 
claims under the Federal Claims Collection Act has been delegated to 
the Director, TMA, or a designee.
    (f) Recoupment of erroneous payments. (1) Erroneous payments are 
expenditures of government funds, which are not authorized by law or 
this part. Examples which are sometimes encountered in the 
administration of TRICARE include mathematical errors, payment for care 
provided to an ineligible person, payment for care which is not an 
authorized benefit, payment for duplicate claims, incorrect application 
of the deductible or co-payment or payment for services which were not 
medically necessary. Claims in favor of the government arising as the 
result of the filing of false TRICARE claims or other fraud fall under 
the cognizance of the Department of Justice. Consequently, procedures 
in this section apply to such claims only when specifically authorized 
or directed by the Department of Justice. (See 31 CFR 900.3.) Due to 
the nature of contractual agreements between network providers and 
TRICARE prime contractors, recoupment procedures may be modified or 
adapted to conform to network agreements. The provisions of Sec.  
199.11 shall apply if recoupment under the network agreements is not 
successful.
    (2) Scope. (i) General. Paragraph (f) of this section and the 
paragraphs following contain requirements and procedures for the 
assertion, collection or compromise of, and the suspension or 
termination of collection action on claims for erroneous payments 
against a sponsor, patient, beneficiary, provider, physician or other 
supplier of products or services under TRICARE.
    (ii) Debtor defined. As used herein, ``debtor'' means a sponsor, 
beneficiary, provider, physician, other supplier of services or 
supplies, or any other person who for any reason has been erroneously 
paid under TRICARE. It includes an individual, partnership, 
corporation, professional corporation or association, estate, trust or 
any other legal entity.
    (iii) Delinquency defined. A debt is ``delinquent'' if it has not 
been paid by the date specified in the initial written demand for 
payment (that is, the initial written notification) or other applicable 
contractual agreement, unless other satisfactory payment arrangements 
have been made by the date specified in the initial written demand for 
payment. A debt is considered delinquent if at any time after entering 
into a repayment agreement, the debtor fails to satisfy any obligations 
under that agreement.
    (3) Other health insurance claims. Claims arising from erroneous 
TRICARE payments in situations where the beneficiary has entitlement to 
an insurance, medical service, health and medical plan, including any 
plan offered by a third party payer as defined in 10 U.S.C. 1095(h)(1) 
or other government program, except in the case of a plan administered 
under Title XIX of the Social Security Act (42 U.S.C. 1396, et seq.), 
through employment, by law, through membership in an organization, or 
as a student, or through the purchase of a private insurance or health 
plan, shall be recouped following the procedures in paragraph (f) of 
this section. If the other plan has not made payment to the beneficiary 
or provider, the contractor shall first attempt to recover the 
overpayment from the other plan through the contractor's coordination 
of benefits procedures. If the overpayment cannot be recovered from the 
other plan, or if the other plan has made payment, the overpayment will 
be recovered from the party that received the erroneous payment from 
TRICARE.
    (4) Claim denials due to clarification or change. In those 
instances where claim review results in the denial of benefits 
previously provided, but now denied due to a change, clarification or 
interpretation of the public law or this part, no recoupment action 
need be taken to recover funds expended prior to the effective date of 
such change, clarification or interpretation.
    (5) Good faith payment. (i) The Department of Defense, through the 
Defense Enrollment Eligibility Reporting

[[Page 71549]]

System (DEERS), is responsible for establishing and maintaining a file 
listing of persons eligible to receive benefits under TRICARE. However, 
it is the responsibility of the Uniformed Services to provide eligible 
TRICARE beneficiaries with accurate and appropriate means of 
identification. When sources of civilian medical care exercise 
reasonable care and precaution identifying persons claiming to be 
eligible TRICARE beneficiaries, and furnish otherwise covered services 
and supplies to such persons in good faith, TRICARE benefits may be 
paid subject to prior approval by the Director, TMA, or a designee, 
notwithstanding the fact that the person receiving the services and 
supplies is subsequently determined to be ineligible for benefits. Good 
faith payments will not be authorized for services and supplies 
provided by a civilian source of medical care because of its own 
careless identification procedures.
    (ii) When it is determined that a person was not a TRICARE 
beneficiary, the TRICARE contractor and the civilian source of medical 
care are expected to make all reasonable efforts to obtain payment or 
to recoup the amount of the good faith payment from the person who 
erroneously claimed to be the TRICARE beneficiary. Recoupment of good 
faith payments initiated by the TRICARE contractor will be processed 
pursuant to the provisions of paragraph (f) of this section.
    (6) Recoupment procedures. (i) Initial action. When an erroneous 
payment is discovered, the TRICARE contractor normally will be required 
to take the initial action to effect recoupment. Such actions will be 
in accordance with the provisions of this part and the TRICARE 
contracts and will include a demand (or demands) for refund or an 
offset against any other TRICARE payment(s) becoming due the debtor. 
When the efforts of the TRICARE contractor to effect recoupment are not 
successful within a reasonable time, recoupment cases will be referred 
to the Office of General Counsel, TMA, for further action in accordance 
with the provisions of paragraph (f) of this section. All requests to 
debtors for refund or notices of intent to offset shall be in writing.
    (ii) Demand for payment. Written demand(s) for payment shall inform 
the debtor of the following:
    (A) The basis for and amount of the debt and the consequences of 
failing to cooperate to resolve the debt;
    (B) The right to inspect and copy TRICARE records pertaining to the 
debt;
    (C) The opportunity to request an administrative review by the 
TRICARE contractor; and that such a request must be received by the 
TRICARE contractor within 90 days from the date of the initial demand 
letter;
    (D) That payment of the debt is due within 30 days from the date of 
the initial demand notification;
    (E) That interest will be assessed on the debt at the Treasury 
Current Value of Funds rate, pursuant to 31 U.S.C. 3717, and will begin 
to accrue on the date of the initial demand letter; and that interest 
will be waived on the debt, or any portion thereof, which is paid 
within 30 days from the date of the initial demand notification letter;
    (F) That administrative costs and penalties will be charged 
pursuant to 31 CFR 901.9;
    (G) That collection by offset against current or subsequent claims 
or other amounts payable from the government may be taken;
    (H) The opportunity to enter into a written agreement to repay the 
debt;
    (I) The name, address, and phone number of a contact person or 
office that the debtor may contact regarding the debt.
    (iii) A minimum of one demand letter is required. However, the 
specific content, timing and number of demand letters may be tailored 
to the type and amount of the debt, and the debtor's response, if any. 
Contractors' demand letters must be mailed or hand-delivered on the 
same date they are dated.
    (iv) The initial or subsequent demand letters may also inform the 
debtor of the requirement to report delinquent debts to credit 
reporting agencies and to collection agencies, the requirement to refer 
debts to the Treasury Offset Program for offset from Federal income tax 
refunds and other amounts payable by the Government, offset from state 
payments, the requirement to refer debts to Treasury for collection and 
TRICARE policies concerning the referral of delinquent debts to the 
Department of Justice for enforced collection action. The initial or 
subsequent demand letter may also inform the debtor of TRICARE policies 
concerning waiver. When necessary to protect the Government's interest 
(for example to prevent the running of a statute of limitations), 
written demand may be preceded by other appropriate actions under this 
regulation, including referral to the Department of Justice for 
litigation. There should be no undue delay in responding to any 
communication received from the debtor. Responses to communications 
from debtors should be made within 30 days of receipt whenever 
feasible. If prior to the initiation of the demand process or at any 
time during or after completion of the demand process, the Director, 
TMA, or a designee, determines to pursue or is required to pursue 
offset, the procedures applicable to administrative offset, found at 
paragraph (f)(6)(v) of this section, must be followed. If it appears 
that initial collection efforts are not productive or if immediate 
legal action on the claim appears necessary, the claim shall be 
referred promptly by the contractor to the Office of General Counsel, 
TMA.
    (v) Collection by administrative offset. Collections by offset will 
be undertaken administratively in every instance when feasible. 
Collections may be taken by administrative offset under 31 U.S.C. 3716, 
the common law or other applicable statutory authority. No collection 
by offset may be undertaken unless the debtor has been sent a written 
demand for payment, including the procedural safeguards described in 
paragraph (f)(6)(ii) of this section, unless the failure to take the 
offset would substantially prejudice the Government's ability to 
collect the debt, and the time before payment is to be made does not 
reasonably permit the time for sending written notice. Such prior 
offset must be promptly followed by sending a written notice and 
affording the debtor the opportunity for a review by the TRICARE 
contractor. Examples of erroneous payments include, but are not limited 
to, claims submitted by individuals ineligible for TRICARE benefits, 
claims submitted for non-covered services or supplies, claims for which 
payments by another insurance or health plan reduce TRICARE liability, 
and from claims made from participating providers in which payment was 
initially erroneously made to the beneficiary. The resolution of 
recoupment claims rarely involves issues of credibility or veracity and 
a review of the written record is ordinarily an adequate means to 
correct prior mistakes. For this reason, the pre-offset oral hearing 
requirements of the Federal Claims Collection Standards, 31 CFR 
901.3(e) do not apply to the recoupment of erroneous TRICARE payments. 
However, in instances where an oral hearing is not required, the debtor 
will be afforded an administrative review if the TRICARE contractor 
receives a written request for an administrative review within 90 days 
from the date of the initial demand letter. The appeals procedures 
described in Sec.  199.10 of this part, afford a TRICARE beneficiary or 
participating provider an opportunity for an administrative appellate 
review, including under certain circumstances, the right to an oral 
hearing before a

[[Page 71550]]

hearing officer when an appealable issue exists. TRICARE contractors 
may take administrative action to offset erroneous payments against 
other current TRICARE payments owing a debtor. Payments on the claims 
of a debtor pending at or filed subsequent to the time collection 
action is initiated should be suspended pending the outcome of the 
collection action so that these funds will be available for offset. All 
or part of a debt may be offset depending on the amount available for 
offset. Any requests for offset received from other agencies and 
garnishment orders issued by courts of competent jurisdiction will be 
forwarded to the Office of General Counsel, TMA. Unless otherwise 
provided by law, administrative offset of payments under the authority 
of 31 U.S.C. 3716 may not be conducted more than 10 years after the 
Government's right to collect the debt first accrued, unless facts 
material to the Government's right to collect the debt were not known 
and could not reasonably have been known by the TRICARE official or 
officials charged with the responsibility to discover and collect such 
debts. This limitation does not apply to debts reduced to judgment. 
This section does not apply to debts arising under the Social Security 
Act, except as provided in 42 U.S.C. 404, payments made under the 
Social Security Act, except as provided for in 31 U.S.C. 3716(c), debts 
arising under, or payments made under, the Internal Revenue Code, 
except for offset of tax refunds or tariff laws of the United States; 
offsets against Federal salaries to the extent these standards are 
inconsistent with regulations published to implement such offsets under 
5 U.S.C. 5514 and 31 U.S.C. 3716; offsets under 31 U.S.C. 3728 against 
a judgment obtained by a debtor against the United States; offset or 
recoupment under common law, state law, or federal statutes 
specifically prohibiting offset or recoupment of particular types of 
debts or offsets in the course of judicial proceedings, including 
bankruptcy.
    (A) Referral for centralized administrative offset. When cost-
effective, legally enforceable non-tax debts delinquent over 180 days 
that are eligible for collection through administrative offset shall be 
referred to Treasury for administrative offset, unless otherwise 
exempted from referral. Referrals shall include certification that the 
debt is past due and legally enforceable and that TMA has complied with 
all due process requirements of the statute-authorizing offset. 
Administrative offset, including administrative offset against tax 
refunds due debtors under 26 U.S.C. 6402, in accordance with 31 U.S.C. 
3720A, shall be effected through referral for centralized 
administrative offset, after debtors have been afforded at least sixty 
(60) days notice required in paragraph (f)(6) of this section. Salary 
offsets shall be effected through referral for centralized 
administrative offset, after debtors have been afforded due process 
required by 5 U.S.C. 5514, in accordance with 31 CFR 285.7. Referrals 
for salary offset shall include certification that the debts are past 
due, legally enforceable debts and that TMA has complied with all due 
process requirements under 5 U.S.C. 5514 and applicable agency 
regulations. The Treasury, Financial Management Service (FMS) may waive 
the salary offset certification requirement set forth in 31 CFR 285.7, 
as a prerequisite to submitting the debt to FMS for offset from other 
payment types. If FMS waives the certification requirement, before an 
offset occurs, TMA will provide the employee with the notice and 
opportunity for a hearing as required by 5 U.S.C. 5514 and applicable 
regulations, and will certify to FMS that the requirements of 5 U.S.C. 
5514 and applicable agency regulations have been met. TMA is not 
required to duplicate notice and administrative review or salary offset 
hearing opportunities before referring debts for centralized 
administrative offset when the debtor has been previously given them.
    (B) Referral for non-centralized administrative offset. Unless 
otherwise prohibited by law, when centralized administrative offset is 
not available or appropriate, past due legally enforceable non-tax-
delinquent debts that are eligible for referral may be collected 
through non-centralized administrative offset through a request 
directly to the payment-authorizing agency. Referrals shall include 
certification that the debts are past due and that the agency has 
complied with due process requirements under 31 U.S.C. 3716(a) or other 
applicable authority and applicable agency regulations concerning 
administrative offset. Generally, non-centralized administrative 
offsets will be made on an ad hoc case-by-case basis, in cooperation 
with the agency certifying or authorizing payments to the debtor.
    (vi) Collection by transfer of debts to Treasury or a Treasury-
designated debt collection center for collection through cross 
servicing. (A) The Director, TMA or a designee, is required to transfer 
legally enforceable non-tax debts that are delinquent 180 days or more 
to Treasury for collection through cross-servicing (31 U.S.C. 3711(g); 
31 CFR 285.12.) Debts referred or transferred to Treasury or Treasury-
designated debt collection centers shall be serviced, collected, or 
compromised, or the collection action will be suspended or terminated, 
in accordance with the statutory requirements and authorities 
applicable to the collection of such debts. Agencies operating 
Treasury-designated debt collection centers are authorized to charge a 
fee for services rendered regarding referred or transferred debts. This 
fee may be paid out of amounts collected and may be added to the debt 
as an administrative cost. Referrals will include certification that 
the debts transferred are valid, legally enforceable debts, that there 
are no legal bars to collection and that the agency has complied with 
all prerequisites to a particular collection action under the 
applicable laws, regulations or policies, unless the agency and 
Treasury agree that Treasury will do so on behalf of the agency.
    (B) The requirement of paragraph (f)(1) of this section does not 
apply to any debt that:
    (1) Is in litigation or foreclosure.
    (2) Will be disposed of under an approved asset sale program.
    (3) Has been referred to a private collection contractor for a 
period of time acceptable to Treasury.
    (4) Will be collected under internal offset procedures within 3 
years after the debt first became delinquent.
    (5) Is exempt from this requirement based on a determination by the 
Secretary of the Treasury that exemption for a certain class of debt is 
in the best interest of the United States.
    (vii) Collection by salary offset. When a debtor is a member of the 
military service or a retired member and collection by offset against 
other TRICARE payments due the debtor cannot be accomplished, and there 
have been no positive responses to a demand for payment, the Director, 
TMA, or a designee, may refer the debt for offset from the debtor's pay 
account pursuant to 37 U.S.C. 1007(c), as implemented by Volume 7A, 
Chapter 50 and Volume 7B, Chapter 28 of the DoDFMR. Collection from a 
Federal employee may be effected through salary offset under 5 U.S.C. 
5514.
    (A) For collections by salary offset the Director, TMA, or 
designee, will issue written notification, as required by 5 CFR 
550.1104(d) at least 30 days before any offsets are taken. In addition, 
the notification will advise the employee that if he or she retires, 
resigns or his or her employment ends before collection of the debt is 
completed, collection may be made from

[[Page 71551]]

subsequent payments of any nature due from the United States (e.g., 
final salary payment, lump-sum leave under 31 U.S.C. 3716 due the 
employee as of date of separation.) A debtor's involuntary payment of 
all or part of a debt being collected will not be construed as a waiver 
of any rights the debtor may have under 5 U.S.C. 5514 or any other 
provision of contract or law, unless there are statutory or contractual 
provisions to the contrary or the employee's paying agency is directed 
by an administrative or judicial order to refund amounts deducted from 
his or her current pay. No interest will be paid on amounts waived or 
determined not to be owed unless there are statutory or contractual 
provisions to the contrary.
    (B) Petition for hearing. The notice of the proposed offset will 
advise the debtor of his or her right to petition for a hearing. The 
petition for hearing must be signed by the debtor or his or her 
representative and must state whether he or she is contesting debt 
validity, debt amount and/or the terms of the proposed offset schedule. 
It must explain with reasonable specificity all the facts, evidence and 
witnesses, if any (in the case of an oral hearing and a summary of 
their anticipated testimony), which the debtor believes support his or 
her position, and include any supporting documentation. If contesting 
the terms of the proposed offset schedule, the debtor must provide 
financial information including a completed Department of Justice 
Financial Statement of Debtor form (OBD-500 or other form prescribed by 
DOJ), including specific details concerning income and expenses of the 
employee, his or her spouse and dependents for 1-year period preceding 
the debt notification and projected income and expenses for the 
proposed offset period and a statement of the reason why the debtor 
believes the salary offset schedule will impose extreme financial 
hardship. Upon receipt of the petition for hearing, the Director, TMA, 
or a designee, will complete reconsideration. If the Director, TMA, or 
a designee determines that the debt amount is not owed, that a less 
amount is owed, or that the terms of the employee's proposed offset 
schedule are acceptable, it will advise the debtor and request that the 
employee accept the results of the reconsideration in lieu of a 
hearing. If the employee declines to accept the results of 
reconsideration in lieu of a hearing, the debtor will be afforded a 
hearing. Ordinarily, a petition for hearing and required submissions 
that are not timely filed, shall be accepted after expiration of the 
deadline provided in the notice of the proposed offset, only when the 
debtor can demonstrate to the Director, TMA, or a designee, that the 
timely filing of the request was not feasible due to extraordinary 
circumstances over which the appealing party had no practical control 
or because of failure to receive notice of the time limit (unless he or 
she was otherwise aware of it). Each request for an exception to the 
timely filing requirement will be considered on its own merits. The 
decision of the Director, TMA, or a designee, on a request for an 
exception to the timely filing requirement shall be final.
    (C) Extreme financial hardship. The maximum authorized amount that 
may be collected through involuntary salary offset is the lesser of 15 
percent of the employee's disposable pay or the full amount of the 
debt. An employee who has petitioned for a hearing may assert that the 
maximum allowable rate of involuntary offset produces extreme financial 
hardship. An offset produces an extreme financial hardship if the 
offset prevents the employee from meeting the costs necessarily 
incurred for the essential expenses of the employee, employee's spouse 
and dependents. These essential expenses include costs incurred for 
food, housing, necessary public utilities, clothing, transportation and 
medical care. In determining whether the offset would prevent the 
employee from meeting the essential expenses identified above, the 
following shall be considered:
    (1) Income from all sources of the employee, the employee's spouse, 
and dependents;
    (2) The extent to which assets of the employee, employee's spouse 
and dependents are available to meet the offset and essential 
subsistence expenses;
    (3) Whether these essential subsistence expenses have been 
minimized to the greatest extent possible;
    (4) The extent to which the employee or the employee's spouse can 
borrow money to meet the offset and other essential expenses; and
    (5) The extent to which the employee and the employee's spouse and 
dependents have other exceptional expenses that should be taken into 
account and whether these expenses have been minimized.
    (D) Form and content of hearings. The resolution of recoupment 
claims rarely involves issues of credibility or veracity and a review 
of the written record is ordinarily an adequate means to determine the 
validity or amount of the debt and/or the terms of a proposed offset 
schedule. The Director, TMA, or a designee, will determine whether an 
oral hearing is required. A debtor who has petitioned for a hearing, 
but who is not entitled to an oral hearing will be given an 
administrative hearing, based on the written documentation submitted by 
the debtor and the Director, TMA, or a designee. If the Director, TMA, 
or a designee, determines that the debtor should be afforded the 
opportunity for an oral hearing, the debtor may elect to have a hearing 
based on the written record in lieu of an oral hearing. The Director, 
TMA, or a designee, will provide the debtor (or his representative) 
notification of the time, date and location of the oral hearing to be 
held if the debtor has been afforded an oral hearing. Copies of records 
documenting the debt will be provided to the debtor or his 
representative (if they have not been previously provided), at least 3 
calendar days prior to the date of the oral hearing. At oral hearings, 
the only evidence permitted, except oral testimony, will be that which 
was previously submitted as pre-hearing submissions. At oral hearings, 
the debtor may not raise any issues not previously raised with TMA. In 
the absence of good cause shown, a debtor who fails to appear at an 
oral hearing will be deemed to have waived the right to a hearing and 
salary offset may be initiated.
    (E) Costs for attendance at oral hearings. Debtors and their 
witnesses will bear their own costs for attendance at oral hearings.
    (F) Hearing official's decision. The Hearing Official's decision 
will be in writing and will identify the documentation reviewed. It 
will indicate the amount of debt that he or she determined is valid and 
shall state the amount of the offset and the estimated duration of the 
offset. The determination of a hearing official designated under this 
section is considered an official certification regarding the existence 
and amount of the debt and/or the terms of the proposed offset schedule 
for the purposes of executing salary offset under 5 U.S.C. 5514. The 
Hearing Official's decision must be issued at the earliest practical 
date, but not later than 60 days from the date the petition for hearing 
is received by the Office of General Counsel, TMA, unless the debtor 
requests, and the Hearing Official grants a delay in the proceedings. 
If a hearing official determines that the debt may not be collected by 
salary offset, but the Director, TMA, or a designee, finds the debt is 
still valid, the Director, TMA or a designee, may seek collection 
through other means, including but not

[[Page 71552]]

limited to, offset from other payments due from the United States.
    (viii) [Reserved]
    (ix) Collection of installments. Debts, including interest, penalty 
and administrative costs shall be collected in one lump sum whenever 
possible. However, when the debtor is financially unable to pay the 
debt in one lump sum, the TRICARE contractor or the Director, TMA, or 
designee, may accept payment in installments. Debtors claiming that 
lump sum payment will create financial hardship may be required to 
complete a Department of Justice Financial Statement of Debtor form or 
provide other financial information that will permit TMA to verify such 
representations. TMA may also obtain credit reports to assess 
installment requests. Normally, debtors will make installment payments 
on a monthly basis. Installment payment shall bear a reasonable 
relationship to the size of the debt and the debtor's ability to pay. 
Except when a debtor can demonstrate financial hardship or another 
reasonable cause exists, installment payments should be sufficient in 
size and frequency to liquidate the debt in 3 years or less. (31 CFR 
901.8(b)). Normally, installment payments of $75 or less will not be 
accepted unless the debtor demonstrates financial hardship. Any 
installment agreement with a debtor in which the total amount of 
deferred installments will exceed $750, should normally include an 
executed promissory agreement. Copies of installment agreements will be 
retained in the contractor's or TMA, Office of General Counsel's files.
    (x) Interest, penalties, and administrative costs. Title 31 U.S.C. 
3717 and the Federal Claims Collection Standards, 31 CFR 901.9, require 
the assessment of interest, penalty and administrative costs on 
delinquent debts. Interest shall accrue from the date the initial debt 
notification is mailed to the debtor. The rate of interest assessed 
shall be the rate of the current value of funds to the United States 
Treasury (the Treasury tax and loan account rate). The collection of 
interest on the debt or any portion of the debt, which is paid within 
30 days after the date on which interest begins to accrue, shall be 
waived. The Director, TMA, or designee, may extend this 30-day period 
on a case-by-case basis, if it reasonably determines that such action 
is appropriate. The rate of interest as initially assessed shall remain 
fixed for the duration of the indebtedness; except that where the 
debtor has defaulted on a repayment agreement and seeks to enter into a 
new agreement, a new interest rate may be set which reflects the 
current value of funds to the Treasury at the time the new agreement is 
executed. Interest shall not be compounded; that is, interest shall not 
be charged on interest, penalties, or administrative costs required by 
this section. However, if a debtor defaults on a previous repayment 
agreement, charges that accrued but were not collected under the 
defaulted agreement, shall be added to the principal under the new 
repayment agreement. The collection of interest, penalties and 
administrative costs may be waived in whole or in part as a part of the 
compromise of a debt as provided in paragraph (g) of this section. In 
addition, the Director, TMA, or designee may waive in whole or in part, 
the collection of interest, penalties, or administrative costs assessed 
herein if he or she determines that collection would be against equity 
and good conscience and not in the best interest of the United States. 
Some situations in which a waiver may be appropriate include:
    (A) Waiver of interest consistent with 31 CFR 903.2(c)(2) in 
connection with a suspension of collection when a TRICARE appeal is 
pending under Sec.  199.10 of this part where there is a substantial 
issue of fact in dispute.
    (B) Waiver of interest where the original debt arose through no 
fault or lack of good faith on the part of the debtor and the 
collection of interest would impose a financial hardship or burden on 
the debtor. Some examples in which such a waiver would be appropriate 
include: A debt arising when a TRICARE beneficiary in good faith files 
and is paid for a claim for medical services or supplies, which are 
later determined not to be covered benefits, or a debt arising when a 
TRICARE beneficiary is overpaid as the result of a calculation error on 
the part of the TRICARE contractor or TMA.
    (C) Waiver of interest where there has been an agreement to repay a 
debt in installments, there is no indication of fault or lack of good 
faith on the part of the debtor, and the amount of interest is so large 
in relation to the size of the installments that the debtor can 
reasonably afford to pay, that it is likely the debt will never be 
repaid in full. When a debt is paid in installments, the installment 
payments first will be applied to the payment of outstanding penalty 
and administrative cost charges, second, to accrued interest and then 
to principal. Administrative costs incurred as the result of a debt 
becoming delinquent (as defined in paragraph (f)(2)(iii) of this 
section) shall be assessed against a debtor. These administrative costs 
represent the additional costs incurred in processing and handling the 
debt because it became delinquent. The calculation of administrative 
costs should be based upon cost analysis establishing an average of 
actual additional costs incurred in processing and handling claims 
against other debtors in similar stages of delinquency. A penalty 
charge, not exceeding six percent a year, shall be assessed on the 
amount due on a debt that is delinquent for more than 90 days. This 
charge, which need not be calculated until the 91st day of delinquency, 
shall accrue from the date that the debt became delinquent.
    (xi) Referral to private collection agencies. TMA shall use 
government-wide debt collection contracts to obtain debt collection 
services provided by private contractors in accordance with 31 CFR 
901.5(b).
    (xii) Reporting delinquent debts to credit reporting agencies. 
Delinquent consumer debts shall be reported to credit reporting 
agencies. Delinquent debts are debts which are not paid or for which 
satisfactory payment arrangements are not made by the due date 
specified in the initial debt notification letter, or those for which 
the debtor has entered into a written payment agreement and installment 
payments are past due 30 days or longer. Such referrals shall comply 
with the Bankruptcy Code and the Privacy Act of 1974, 5 U.S.C. 552a, as 
amended. The provisions of the Privacy Act do not apply to credit 
bureaus (31 CFR 901.4(1)). There is no requirement to duplicate the 
notice and review opportunities before referring debts to credit 
bureaus. Debtors will be advised of the specific information to be 
transmitted (i.e., name, address, and taxpayer identification number, 
information about the debt). Procedures developed for such referrals 
must ensure that an accounting of the disclosures shall be kept which 
is available to the debtor; that the credit reporting agencies are 
provided with corrections and annotations of disagreements of the 
debtor; and that reasonable efforts are made to ensure that the 
information to be reported is accurate, complete, timely and relevant. 
When requested by a credit-reporting agency, verification of the 
information disclosed will be provided promptly. Once a claim has been 
reviewed and determined to be valid, a complete explanation of the 
claim will be given the debtor. When the claim is overdue, the 
individual will be notified in writing that payment is overdue; that 
within not less than 60 days, disclosure of the claim shall be made to 
a consumer reporting agency unless

[[Page 71553]]

satisfactory payment arrangements are made, or unless the debtor 
requests an administrative review and demonstrates some basis on which 
the debt is legitimately disputed; and of the specific information to 
be disclosed to the consumer reporting agency. The information to be 
disclosed to the credit reporting agency will be limited to information 
necessary to establish the identity of the debtor, including name, 
address and taxpayer identification number; the amount, status and 
history of the claim; and the agency or program under which the claim 
arose. Reason able action will be taken to locate an individual for 
whom a current address is not available. The requirements of this 
section do not apply to commercial debts, although commercial debts 
shall be reported to commercial credit bureaus. Treasury will report 
debts transferred to it for collection to credit reporting agencies on 
behalf of the Director, TMA, or a designee.
    (xiii) Use and disclosure of mailing addresses. In attempting to 
locate a debtor in order to collect or compromise a debt under this 
section, the Director, TMA, or a designee, may send a written request 
to the Secretary of the Treasury, or a designee, for current address 
information from records of the Internal Revenue Service. TMA may 
disclose mailing addresses obtained under this authority to other 
agencies and to collection agencies for collection purposes.
    (g) Compromise, suspension or termination of collection actions 
arising under the Federal Claims Collection Act. (1) Basic 
considerations. Federal claims against the debtor and in favor of the 
United States arising out of the administration of TRICARE may be 
compromised or collection action taken thereon may be suspended or 
terminated in compliance with the Federal Claims Collection Act, 31 
U.S.C. 3711, as implemented by the Federal Claims Collection Standards, 
31 CFR Parts 900-904. The provisions concerning compromise, suspension 
or termination of collection activity pursuant to 31 U.S.C. 3711 apply 
to debts, which do not exceed $100,000 or any higher amount authorized 
by the Attorney General, exclusive of interest, penalties, and 
administrative costs, after deducting the amount of partial payments or 
collections, if any. If, after deducting the amount of any partial 
payments or collections, the principal amount of a debt exceeds 
$100,000, or any higher amount authorized by the Attorney General, 
exclusive of interest, penalties and administrative costs, the 
authority to suspend or terminate rests solely with the DOJ.
    (2) Authority. TRICARE contractors are not authorized to compromise 
or to suspend or terminate collection action on TRICARE claims. Only 
the Director, TMA, or designee or Uniformed Services claims officers 
acting under the provisions of their own regulations are so authorized.
    (3) Basis for compromise. A compromise should be for an amount that 
bears a reasonable relation to the amount that can be recovered by 
enforced collection procedures, with regard to the exemptions available 
to the debtor and the time collection will take. A claim may be 
compromised hereunder if the government cannot collect the full amount 
if:
    (i) The debtor or the estate of a debtor does not have the present 
or prospective ability to pay the full amount within a reasonable time;
    (ii) The cost of collecting the claim does not justify enforced 
collection of the full amount; or
    (iii) The government is unable to enforce collection of the full 
amount within a reasonable time by enforced collection proceedings; or
    (iv) There is significant doubt concerning the Government's ability 
to prove its case in court for the full amount claimed; or
    (v) The cost of collecting the claim does not justify enforced 
collection of the full amount.
    (4) Basis for suspension. Collection action may be suspended for 
the following reasons if future collection action may be sufficiently 
productive to justify periodic review and action on the claim, 
considering its size and the amount, which may be realized thereon:
    (i) The debtor cannot be located; or
    (ii) The debtor's financial condition is expected to improve; or
    (iii) The debtor is unable to make payments on the government's 
claim or effect a compromise at the time, but the debtor's future 
prospects justify retention of the claim for periodic review and action 
and;
    (A) The applicable statute of limitations has been tolled or 
started running anew; or
    (B) Future collections can be effected by administrative offset, 
notwithstanding the expiration of the applicable statute of limitations 
for litigation of claims with due regard to the 10-year limitation for 
administrative offset under 31 U.S.C. 3716(e)(1); or
    (C) The debtor agrees to pay interest on the amount of the debt on 
which collection action will be temporarily suspended and such 
temporary suspension is likely to enhance the debtor's ability fully to 
pay the principal amount of the debt with interest at a later date.
    (iv) Consideration may be given by the Director, TMA, or designee 
to suspend collection action pending action on a request for a review 
of the government's claim against the debtor or pending an 
administrative review under Sec.  199.10 of this part of any TRICARE 
claim or claims directly involved in the government's claim against the 
debtor. Suspension under this paragraph will be made on a case-by-case 
basis as to whether:
    (A) There is a reasonable possibility that the debt (in whole or in 
part) will be found not owing from the debtor;
    (B) The government's interest would be protected if suspension were 
granted by reasonable assurance that the debt would be recovered if the 
debtor does not prevail; and
    (C) Collection of the debt will cause undue hardship.
    (5) Collection action may be terminated for one or more of the 
following reasons:
    (i) TMA cannot collect or enforce collection of any substantial 
amount through its own efforts or the efforts of others, including 
consideration of the judicial remedies available to the government, the 
debtor's future financial prospects, and the exemptions available to 
the debtor under state and federal law;
    (ii) The debtor cannot be located, and either;
    (iii) The costs of collection are anticipated to exceed the amount 
recoverable; or
    (iv) It is determined that the debt is legally without merit or 
enforcement of the debt is barred by any applicable statute of 
limitations; or
    (v) The debt cannot be substantiated; or
    (vi) The debt against the debtor has been discharged in bankruptcy. 
Collection activity may be continued subject to the provisions of the 
Bankruptcy Code, such as collection of any payments provided under a 
plan of reorganization or in cases when TMA did not receive notice of 
the bankruptcy proceedings.
    (6) In determining whether the debt should be compromised, 
suspended or terminated, the responsible TMA collection authority will 
consider the following factors:
    (i) Age and health of the debtor; present and potential income; 
inheritance prospects; the possibility that assets have been concealed 
or improperly transferred by the debtor; and the availability of assets 
or income

[[Page 71554]]

which may be realized by enforced collection proceedings;
    (ii) Applicability of exemptions available to a debtor under state 
or federal law;
    (iii) Uncertainty as to the price which collateral or other 
property may bring at a forced sale;
    (iv) The probability of proving the claim in court because of legal 
issues involved or because of a bona fide dispute of the facts; the 
probability of full or partial recovery; the availability of necessary 
evidence and related pragmatic considerations. Debtors may be required 
to provide a completed Department of Justice Financial Statement of 
Debtor form (OBD-500 or such other form that DOJ shall prescribe) or 
other financial information that will permit TMA to verify debtors' 
representations. TMA may obtain credit reports or other financial 
information to enable it independently to verify debtors' 
representations.
    (7) Payment of compromised claims. (i) Time and manner. Compromised 
claims are to be paid in one lump sum whenever possible. However, if 
installment payments of a compromised claim are necessary, a legally 
enforceable compromise agreement must be obtained. Payment of the 
amount that TMA has agreed to accept as a compromise in full settlement 
of a TRICARE claim must be made within the time and in the manner 
prescribed in the compromise agreement. Any such compromised amount is 
not settled until full payment of the compromised amount has been made 
within the time and manner prescribed. Compromise agreements must 
provide for the reinstatement of the prior indebtedness, less sums paid 
thereon, and acceleration of the balance due upon default in the 
payment of any installment.
    (ii) Failure to pay the compromised amount. Failure of any debtor 
to make payment as provided in the compromise agreement will have the 
effect of reinstating the full amount of the original claim, less any 
amounts paid prior to default.
    (iii) Effect of compromise, waiver, suspension or termination of 
collection action. Pursuant to the Internal Revenue Code, 26 U.S.C. 
6050P, compromises and terminations of undisputed debts totaling $600 
or more for the year will be reported to the Internal Revenue Service 
in the manner prescribed. Amounts, other than those discharged in 
bankruptcy, will be included in the debtor's gross income for that 
year. Any action taken under paragraph (g) of this section regarding 
the compromise of a federal claim, or waiver or suspension or 
termination of collection action on a federal claim is not an initial 
determination for the purposes of the appeal procedures in Sec.  
199.10.
    (h) Referrals for collection. (1) Prompt referral. Federal claims 
of $2,500, exclusive of interest, penalties and administrative costs, 
or such other amount as the Attorney General shall from time to time 
prescribe on which collection action has been taken under the 
provisions of this section which cannot be collected or compromised or 
on which collection action cannot be suspended or terminated as 
provided herein, will be promptly referred to the Department of Justice 
for litigation in accordance with 31 CFR part 904. Such referrals shall 
be made as early as possible consistent with aggressive collection 
action made by TRICARE contractors and TMA. Referral will be made with 
sufficient time to bring timely suit against the debtor. Referral shall 
be made by submission of a completed Claims Collection Litigation 
Report (CCLR), accompanied by a signed Certificate of Indebtedness. 
Claims of less than the minimum amount shall not be referred unless 
litigation to collect such smaller claims is important to ensure 
compliance with TRICARE's policies or programs; the claim is being 
referred solely for the purpose of securing a judgment against the 
debtor, which will be filed as a lien against the debtor's property 
pursuant to 28 U.S.C. 3201 and returned to the referring office for 
enforcement; or the debtor has the clear ability to pay the claim and 
the Government effectively can enforce payment, with due regard for the 
exemptions available to the debtor under state and Federal law and 
judicial remedies available to the Government.
    (2) Preservation of evidence. The Director, TMA, or a designee will 
take such action as is necessary to ensure that all files, records and 
exhibits on claims referred, hereunder, are properly preserved.
    (i) Claims involving indication of fraud, filing of false claims or 
misrepresentation. Any case in which there is an indication of fraud, 
the filing of a false claim or misrepresentation on the part of the 
debtor or any party having an interest in the claim, shall be promptly 
referred to the Director, TMA, or designee. The Director, TMA, or a 
designee, will investigate and evaluate the case and either refer the 
case to an appropriate investigative law enforcement agency or return 
the claim for other appropriate administrative action, including 
collection action under this section. Payment on all TRICARE 
beneficiary or provider claims in which fraud, filing false claims or 
misrepresentation is suspected will be suspended until the Director, 
TMA, or designee, authorizes payment or denial of the claims. 
Collection action on all claims in which a suspicion of fraud, 
misrepresentation or filing false claims arises, will be suspended 
pending referral to the appropriate law enforcement agencies by the 
Director, TMA, or a designee. Only the Department of Justice has 
authority to compromise, suspend or terminate collection of such debts.
    (ii) [Reserved]

    November 18, 2008.
Patricia Toppings
OSD Federal Register Liaison Officer, Department of Defense.
 [FR Doc. E8-27959 Filed 11-24-08; 8:45 am]
BILLING CODE 5001-06-P