[Code of Federal Regulations]

[Title 45, Volume 1]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 45CFR30.15]



[Page 88-94]

 

                        TITLE 45--PUBLIC WELFARE

 

                    SUBTITLE A--DEPARTMENT OF HEALTH

                           AND HUMAN SERVICES

 

PART 30_CLAIMS COLLECTION--Table of Contents

 

                     Subpart B_Collection of Claims

 

Sec.  30.15  Administrative offset.



    (a) Rule. The Secretary will collect debts owed to the Department by 

administrative offset if--

    (1) The debt is liquidated or certain in amount;

    (2) Offset is not expressly or implicitly prohibited by statute or 

regulation;

    (3) Offset is cost-effective or has significant deterrent value;

    (4) Offset does not substantially impair or defeat program 

objectives; and

    (5) Overall, offset is best suited to further and protect the 

Government's interest.



The Secretary may consider financial impact of the proposed offset on 

the debtor in determining the method and amount of the offset.

    (b) Definitions. (1) ``Administrative Offset'' means satisfying a 

debt by withholding money payable by the Department to, or held by the 

Department for a debtor. Amounts available for offset include, for 

example, benefit payments to a program beneficiary overpaid under the 

same or a different program, amounts due a defaulting or overpaid 

contractor or grantee under the same or a different agreement, salaries 

of Federal employees, Federal income tax refunds and judgments held by 

the debtor against the United States. (Offset against judgments will be 

effected through the Comptroller General pursuant to 31 U.S.C. 3728.)

    (2) ``Hearing'' means either a review of the record or an oral 

hearing. A review of the record means a review of the documentary 

evidence by a designated hearing officer. An oral hearing means an 

informal conference before a designated hearing officer.

    (3) ``Hearing officer'' is an individual appointed by the Secretary 

to review



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and issue a final decision on an employee's dispute of a debt. In the 

case of an employee debt subject to 5 U.S.C. 5514, the hearing officer 

may not be an individual under the supervision of the Secretary; will 

normally be an independent contractor of the Department or an employee 

of another Federal agency, see 4 CFR 102.1 and 5 CFR 550.1107; and may 

be an administrative law judge if appointment of an independent 

contractor or an employee of another Federal agency is not feasible.

    (4) ``Pay'' means basic pay, special pay, incentive pay, retired 

pay, retainer pay, or, in case of an employee not entitled to basic pay, 

other authorized pay.

    (5) ``Disposable pay'' means the amount that remains from an 

employee's Federal pay after withholding of all deductions listed in 5 

CFR 581.105(b) and any other deductions required by law (including, but 

not limited to, Federal, State, and local income taxes; Social Security 

taxes, including Medicare taxes; and Federal retirement programs).

    (c) Scope. This section satisfies the standards in 4 CFR 102.3 and 

102.4 and 5 CFR Part 550, for offset under the common law, 31 U.S.C. 

3716, 5 U.S.C. 5514 and any other statute under which standards and 

procedures for offset have not otherwise been promulgated, including:

    (1) Offset of debts owed or to amounts payable, under a grant or 

contract; except that paragraphs (j)-(p) of this section do not apply. 

See Sec.  30.4.

    (2) Offset of debts owed by former employees from final salary and 

lump sum payments; and from the Civil Service Retirement and Disability 

Fund (which also requires compliance with 5 CFR Part 831, Subpart R);

    (3) Offset of salary overpayments and other debts under statutes 

such as 5 U.S.C. 5514 (or 31 U.S.C. 3716 in the case of commissioned 

officers), travel advances under 5 U.S.C. 5705, training expenses under 

5 U.S.C. 4108, debts of employees removed for cause under 5 U.S.C. 5511 

and amounts owed by accountable officers under 5 U.S.C. 5512, from the 

current pay of Federal employees, including employees of the Social 

Security Administration and other offices administering a Social 

Security Act program;

    (4) Offset of debts owed by state or local governments;

    (5) Offset of debts arising, or from amounts payable, under the 

Social Security Act, except that unless specifically authorized by 

statute, regulation, or written agreement, or unless the debts arise 

from, or involve, fraud or criminal activity, administrative offset will 

not be applied to recover debts arising from, or to withhold, payments 

to beneficiaries under Titles II, XVI, and XVIII of the Social Security 

Act with the exception of debts arising from section 1862(b) of the Act 

for Medicare payments for which a beneficiary has been reimbursed by a 

liable third party.

    (d) Exceptions. (1) So long as the conditions listed in paragraphs 

(a) (2)-(5) and (e) are met, offset may be effected with the debtor's 

consent without regard to the other provisions in this section.

    (2) This section does not apply to debts reduced to judgment, debts 

already subject to a written repayment or settlement agreement, or debts 

with respect to which the specified procedures have already been 

otherwise afforded. Debts reduced to judgment may be offset from the 

current pay of a Federal employee under Federal Personnel Manual 

Supplement 552-1.

    (3) This section does not apply to any adjustment to a Federal 

employee's pay arising out of the employee's request for, or change in, 

coverage under a Federal benefits program such as health or life 

insurance, which requires periodic deductions from pay, if the amount to 

be recovered was accumulated over four pay periods or less. Employees 

consent to deductions from pay whenever they elect or change coverage. 

Affected employees will receive a notice informing them of these 

retroactive adjustments to pay and the office to contact if the employee 

disputes the amount of the adjustment.

    (e) Advance payments. Under many programs, the Department advances 

funds to pay for a recipient's anticipated costs. Before offsetting such 

an advance payment in order to collect a debt, the Secretary may request 

an assurance that the recipient will incur



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additional allowable costs whose Federal share is at least equal to the 

amount of the offset plus the amount of funds actually advanced. If the 

Secretary believes that the recipient will not incur sufficient costs, 

the advance will not be offset. In such case, the Secretary may request 

cash payment or convert the method of paying the recipient from an 

advance to a reimbursement basis and collect the debt by offsetting 

payments for costs already incurred.

    (f) Multiple debts. Amounts available for offset will be applied to 

multiple debts in accordance with the best interests of the Department 

and the Government as determined on a case-by-case basis. Other factors 

being equal, recovery will be equally apportioned, except that debts 

owed to the Department will be satisfied before debts owed to other 

Federal agencies.

    (g) Statutory bar to offset. (1) Administrative offset will not be 

initiated 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 officer responsible for discovering or collecting the debt. For 

this purpose, a debt accrues when it is administratively determined to 

exist, when it is affirmed by an administrative appeals board or a court 

having jurisdiction, or when a debtor defaults on a repayment agreement, 

whichever is later. Offset is initiated when the notice of the proposed 

offset is mailed to the debtor under paragraph (i) of this section or 

under other agency procedures, when money payable to the debtor is first 

withheld, or when the Department requests offset from money held by 

another agency, whichever is first.

    (2) The 10 year statutory bar does not apply to offset of a debt 

arising out of the Social Security Act. However, offset against such 

debts will generally not be initiated more than 10 years after the debt 

accrued unless the Secretary did not previously have the necessary 

information or the means by which to collect the debt by administrative 

offset.

    (h) Offset against assigned claims. The Assignment of Claims Act of 

1940, 31 U.S.C. 3727, 41 U.S.C. 15, strictly limits the conditions under 

which a contractor or any other person or entity entitled to receive 

payments from the United States may assign his or her rights to the 

payments to a third party. The Federal Acquisition Regulations implement 

at 48 CFR Part 32, Subpart 32.8, the statutory conditions to assignment 

of a contractor's right to be paid by the United States for performance 

under a Federal procurement contract. A contractor may assign his or her 

right to payment by the United States only to a bank, trust company, or 

other financing institution, as security for a loan to the contrator.

    (1) The Secretary normally may not collect a debt owed by a 

contractor by offset from payments due the contractor if the contractor 

has properly assigned his or her rights to such payments to a financing 

institution, the assigned payments are due under a contract with a ``no 

setoff'' provision, and--

    (i) The contractor's debt to the United States arose independently 

of the contract; or

    (ii) The debt arose under the contract because of renegotiation, 

fines, penalties (other than penalties for noncompliance with the terms 

of the contract), taxes or social security contributions, or withholding 

or nonwithholding of taxes or social security contributions. 

Notwithstanding the satisfaction of all the conditions of this 

paragraph, offset may be appropriate under certain circumstances, for 

example: If the financing institution has made neither a loan nor a firm 

commitment to make a loan under the assignment; or to the extent that 

the amount due on the contract exceeds the amount of any loans made or 

expected to be made under a firm commitment.

    (2) The Secretary may not offset a debt from payments due any debtor 

if the debtor has properly assigned his or her right to such payments 

and the debt arose after the effective date of the assignment.

    (3) The Secretary may not attempt to satisfy the assignor's 

indebtedness by recovering payments already made to the assignee.



[[Page 91]]



    (i) Amount of offset. Whenever feasible debts will be offset in one 

lump sum, except that deductions from an employee's current pay pursuant 

to 5 U.S.C. 5514 may not exceed 15 percent of the employee's disposable 

pay for any pay period, unless the employee agrees in writing to a 

larger deduction. However, if the employee retires, resigns, or is 

discharged, or if his or her employment or active duty otherwise ends, 

an amount necessary to satisfy the debt may be offset immediately from 

payments of any nature due the individual.

    (j) Pre-offset requirements. Before effecting offset, the Secretary 

will send the debtor written notice of the following--

    (1) The nature and amount of the debt;

    (2) The agency intention to collect the debt by offsetting the lump 

sum or installments (stating the amount, frequency, proposed beginning 

date and duration of the installments) unless the debtor pays the debt 

or responds within 30 days from the date the notice was mailed to the 

debtor;

    (3) The interest, administrative cost charges and penalties that 

will or may be assessed under Sec. Sec.  30.13 and 30.14 if the debt is 

not paid, or the debtor has not consented to a lump sum offset, within 

30 days from the date the notice was mailed to the debtor;

    (4) The debtor's right, if a previous opportunity was not provided, 

to request within 15 days (unless otherwise provided by statute or 

regulation) from the date of mailing of the notice--

    (i) Copies of agency records pertaining to the debt;

    (ii) An alternative repayment schedule; or

    (iii) A hearing if the debtor contends no debt is owed, the debt is 

for a different amount, or the proposed offset does not comply with this 

section;

    (5) The debtor's right, if any, to request waiver of the debt, 

interest or changes, citing the applicable statutory authority, request 

procedures and waiver conditions and the effect of the waiver request on 

collection of the debt, interest and charges by offset;

    (6) The office, address and telephone number of whom the debtor 

should address any inquiries or requests;

    (7) The requirement that the hearing officer issue a decision at the 

earliest practical date; except that under 5 U.S.C. 5514, the decision 

may be issued no later than 60 days after the request for the hearing 

was filed unless the employee requested and was granted an extension;

    (8) That any knowingly false or frivolous statements, 

representations or evidence may subject the debtor to criminal or civil 

penalties under 18 U.S.C. 286, 287, 1001 and 1002 or 31 U.S.C. 3729-

3731; or also disciplinary action under 5 CFR Part 752 or any other 

applicable authority if the debtor is an employee;

    (9) Any other rights and remedies available to the debtor under the 

statutes or regulations governing the program under which the debt is 

being collected; and

    (10) That, unless otherwise provided by statute or contract, amounts 

collected and later waived or found not owed will be promptly refunded.

    (k) Alternative repayment proposal. A debtor may propose a different 

offset schedule or repayment by cash installments pursuant to Sec.  

30.19.

    (l) Request for hearing. A debtor may submit to the address 

specified in the notice letter a written request for a hearing to 

dispute the administrative determination of the existence or amount of 

the debt, or whether the proposed offset schedule complies with this 

section, before the initiation of collection by offset. The request must 

be postmarked no later than 15 days (unless otherwise provided by 

statute or regulation) from the date the notice was mailed to the 

debtor. The debtor must sign the request and briefly state each agency 

conclusion being disputed and the reasons for the dispute. Supporting 

facts, witnesses, and documents must be identified in the request. The 

request, with supporting documents, must, on its face, sufficiently 

raise a genuine issue of fact or law. Receipt of the request will be 

acknowledged. The Secretary may grant an extension or excuse a delay if 

the debtor shows good cause for late filing of a request for a hearing. 

A reasonable extension will be granted only if the debtor shows that the 

delay was caused by circumstances beyond the debtor's



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control or because the debtor did not receive notice, and was not 

otherwise aware of the time limit. A debtor who fails to meet the filing 

deadline or to request an extension waives the right to a hearing and 

will be immediately subject to offset.

    (m) Denial of request. The Secretary will summarily deny a request 

for an oral hearing pursuant to a written finding that the request 

raises no genuine issue of fact or law, or is otherwise spurious or 

frivolous. In addition, if the Secretary finds that the request raises 

issues which may properly constitute grounds for waiver of the debt 

under 5 U.S.C. 5584 or any other statute, the request will be deemed to 

be a request for a waiver and will be so handled with notification to 

the debtor.

    (n) Hearings--(1) Type of hearing. The hearing will normally be a 

review of the record, unless the hearing officer determines that a 

decision cannot be made without resolving an issue of credibility or 

veracity, in which case the hearing officer will provide for an oral 

hearing.

    (2) Date and place of oral hearing. The oral hearing will normally 

be held no later than 30 days from the date of receipt by the agency of 

the request for a hearing. The hearing officer will give the debtor and 

the Secretary at least 10 days prior notice of the hearing date, time, 

place, procedures and issues. The hearing officer, for good cause, may 

grant the parties each one request to change the hearing date and 

reschedule the hearing for the earliest practical date. To the extent 

feasible the hearing will be held at a location convenient to the 

debtor, and will be open to the public.

    (3) Oral hearing procedures. The hearing officer will:

    (i) Make a summary record of the hearing;

    (ii) Decide the order of hearing the evidence;

    (iii) Allow the debtor and the agency to introduce relevant evidence 

not previously submitted and informally call and cross examine 

witnesses;

    (iv) Question parties and witnesses as appropriate;

    (v) Allow the debtor and the agency to be represented by counsel; 

and

    (vi) Limit review of the case to the particulars of the agency 

determination challenged by the debtor.

    (o) Decision of hearing officer. The hearing officer will issue a 

written decision at the earliest practical date; but not later than 60 

days after a request for a hearing or extension is filed under 5 U.S.C. 

5514. The decision will, at a minimum, state the relevant facts, include 

the hearing officer's analysis, findings and conclusions based on the 

issues and, if unfavorable to the debtor, inform the debtor of any 

available rights or remedies.

    (p) Employee waiver requests. Requests for waiver of overpayments of 

pay under 5 U.S.C. 5584 will continue to be handled under 4 CFR parts 

91-93 and Chapter 4-40 of the HHS General Administration Manual, except 

that a waiver request made simultaneously with, or during the pendency 

of a request for review under this section may be referred for a 

decision under the waiver standards to the hearing officer reviewing the 

debt under this section.

    (q) Deductions. Unless an alternative repayment arrangement has been 

accepted, the Secretary may initiate offset 30 days after the date that 

notice of the proposed action was mailed to the debtor if no review or 

hearing is pending, or as soon as practical after a hearing officer's 

decision affirming the debt.

    (r) Protection of the Government's interest. Notwithstanding the 

provisions of paragraphs (j) through (q) of this section, the Secretary 

may take immediate action to delay a lump sum or final payment to the 

debtor whenever such action is necessary to protect the Government's 

ability to recover the debt by offset. The amount withheld may not 

exceed the amount of the debt plus any accrued or anticipated interest, 

administrative cost charges and penalties. The Secretary shall promptly 

send the debtor the notice specified in paragraph (j) of this section. 

The Secretary may not take final action to effect offset of the debt 

from the withheld amount until the procedures required by paragraphs (j) 

through (l) of this section have been exhausted. The appropriate amount 

will be paid to the debtor as soon as practical after the



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debt, or a portion of the debt, is found not to be owed.

    (s) Interagency offsets. The Secretary may offset a debt owed to 

another Federal agency from amounts due or payable by the Department to 

the debtor; or request another Federal agency to offset a debt owed to 

the Department. Pursuant to 31 U.S.C. 3720a, Department of the Treasury 

regulations, 26 CFR part 301, and HHS' implementing regulations, 45 CFR 

part 31, the Secretary may seek to offset an overdue debt from a Federal 

income tax refund due the debtor where reasonable attempts to obtain 

payment from the debtor have failed.

    (1) In attempting to collect a debt from an employee of another 

Federal agency by deduction from the debtor's pay, the Secretary will 

follow the procedures set forth in this section. When those procedures 

are exhausted, a written request for offset will be submitted to the 

employing agency. The request will--

    (i) Certify that the debt is valid;

    (ii) Certify the amount and basis of the debt;

    (iii) Certify the date the Government's right to collect the debt 

first accrued;

    (iv) Certify that this section has been approved by OPM;

    (v) Either--

    (A) Certify that the procedures required by this section have been 

complied with;

    (B) Include the employee's written consent to the offset or 

acknowledgment of receipt of the required procedures; or

    (C) If the debt is reduced to judgment, include a copy of the court 

judgment; and

    (vi) Indicate whether collection is to be made in a lump sum or by 

installments and the number, amount and beginning date of the 

installments.

    (2)(i) The Secretary may deduct from an employee's pay a debt owed 

to another Federal agency in accordance with this section. The creditor 

agency must submit the properly certified claim form described in 

paragraph (s)(1) of this section. No deductions will be made until a 

properly completed claim form is received.

    (ii) Before initiating deductions, the Secretary must send the 

employee a letter:

    (A) Transmitting a copy of the creditor agency's request;

    (B) Notifying the employee of the proposed action;

    (C) Instructing the employee to contact the creditor agency 

regarding payment or any dispute of the debt, the certification or the 

proposed collection; and

    (D) Informing the employee of the date that deduction will begin 

(which should be at the next officially established pay interval) and 

that deductions will continue until the debt is paid unless the creditor 

agency directs otherwise.

    (iii) The creditor agency must resolve any disputes concerning the 

debt or the offset and promptly inform the Department of any 

circumstances affecting the collection by offset. The Department may not 

review the merits of the creditor agency's decisions.

    (iv) The Secretary may temporarily withhold lump sum or final leave 

payments to the employee who is in the process of separating or to a 

former employee for no more than 30 days beyond normal processing time 

periods pending certification.

    (v) If the employee subject to salary offset is in the process of 

separating, and is entitled to payment from the Civil Service Retirement 

and Disability Fund, the Secretary will send OPM a copy of the creditor 

agency's original offset request. If the employee transfers to another 

Federal agency, the Secretary will certify in writing the total amount 

collected on the debt and send one copy of the certification to the 

employee and another to the creditor agency, with notice of the 

transfer. A copy of the certification, along with the creditor agency's 

original offset request will be inserted in the employee's official 

personnel folder.

    (vi) When a new Department employee transfers from another Federal 

agency and the employee's official personnel folder contains a creditor 

agency's offset request to the former employing agency and the former 

employing agency's certification of the amount of the debt already 

collected,



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the Secretary will resume collection by offset. If either item is 

missing, the creditor agency must comply with paragraph (s)(1).

    (t) Non-waiver of debtor rights by payment. Unless a statute or 

contract provides otherwise, a debtor does not waive any rights under 

law or contract by paying all or part of a debt by offset or cash 

payment.



(Approved by the Office of Management and Budget under control number 

0990-0148)