[Code of Federal Regulations]
[Title 32, Volume 2]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR199.11]

[Page 243-254]
 
                       TITLE 32--NATIONAL DEFENSE
 
        CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE (CONTINUED)
 
PART 199_CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED SERVICES 
 
Sec. 199.11  Overpayments recovery.

    (a) General. Actions to recover overpayments arise when the 
government has a right to recover money or property from an individual, 
partnership, association, corporation, governmental body or other legal 
entity, foreign or domestic, except an instrumentality of the United 
States because of an erroneous payment of benefits under the Civilian 
Health and Medical Program of the Uniformed Services (CHAMPUS). A claim 
against several joint debtors arising from a single incident or 
transaction is considered to be one claim. 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 benefits payments arising out 
of administration of CHAMPUS.
    (b) Authority--(1) Federal statutory authority. The Federal Claims 
Collection Act provides the basic authority under which claims may be 
asserted pursuant to this section. It is implemented by joint 
regulations issued by the Department of Justice and the General 
Accounting Office, 4 CFR parts 101-105. Thereunder, the heads of federal 
agencies or their designees are required to attempt collection of all 
claims of the United States for money or property arising out of the 
activities of their respective agencies. These officials may, with 
respect to claims that do not exceed $20,000, exclusive of interest, and 
in conformity with the standards promulgated in the joint regulations, 
compromise, suspend, or terminate collection action on such claims. 
Section 743 of the National Defense Authorization Act for Fiscal Year 
1996 (Public Law 104-106) authorizes the waiver (see paragraph (g)(3) of 
this section) of collection of overpayments otherwise due from a person 
after the termination of

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the person's CHAMPUS eligibility, because the person became eligible for 
Medicare Part A by reason of disability or end-stage renal disease.
    (2) Other authority. Occasionally, federal claims may arise which 
are grounded, at least in part, in authority other than the federal 
statute referenced above. These include, but are not limited to, claims 
arising under:
    (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 governmental policy of avoiding unnecessary 
litigation in the collection of claims by the United States for money or 
property necessitates aggressive agency collection action. The Director, 
OCHAMPUS, or a designee, will insure that CHAMPUS claims asserting 
personnel are adequately supported to take timely and effective action. 
Claims arising out of any incident which has or probably will generate a 
claim in favor of the government will not be compromised nor will 
collection action be terminated by any person not authorized to take 
final action on the government's claim. By the Act of July 18, 1966 (28 
U.S.C. 2415-2418), Congress established a statute of limitation 
applicable to the government in areas where previously neither 
limitations nor laches were available as a defense. Claims falling 
within the provisions of this statute will be processed expeditiously to 
the Department of Justice or the General Accounting Office, as 
appropriate, 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 the CHAMPUS. 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 may affect 
the processing of federal claims arising under this section. Those 
appeal procedures afford a CHAMPUS beneficiary or participating provider 
an opportunity for administrative appellate review in cases in which 
benefits have been denied and in which there is a significant factual 
dispute. For example, a fiscal intermediary may erroneously make payment 
for services which are excluded as CHAMPUS benefits because they are 
determined to be not medically necessary. In that event recoupment 
action will be initiated by the fiscal intermediary at the same time the 
fiscal intermediary 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. Obviously, if the appeal is resolved 
entirely in favor of the appealing party, that 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, compromise 
or to suspend or terminate collection action on claims arising under the 
Federal Claims Collection Act has been delegated to the Director, 
OCHAMPUS, or a designee.
    (f) Recoupment of erroneous payments--(1) Erroneous payments. 
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 the CHAMPUS include mathematical errors, 
payment for care provided to an ineligible person, payment for care 
which is not an authorized benefit, payment for duplicate claims, 
inaccurate 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 CHAMPUS claims 
or other fraud fall under the direct cognizance

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of the Department of Justice. Consequently, the procedures in this 
section apply to such claims only when specifically authorized or 
directed by the Department of Justice. (See 32 CFR 101.3.)
    (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, beneficiary, provider, physician or other supplier of 
services under the CHAMPUS. These provisions are adopted pursuant to the 
Federal Claims Collection Act (31 U.S.C. 3701 et seq., as amended by the 
Debt Collection Act of 1982, Pub. L. 97-365), which requires each agency 
of the U.S. Government (pursuant to regulations jointly promulgated by 
the Attorney General and the Comptroller General) to attempt collection 
of federal claims in favor of the United States arising out of the 
activities of the agency, and 5 U.S.C. 5514, which provides for 
installment deduction for indebtedness to the United States, implemented 
by regulations issued by the Office of Personnel Management, 5 CFR part 
550, and the Department of Defense, 32 CFR part 90. Paragraph (f) of 
this section also includes government-wide collections by salary offset 
under 5 U.S.C. 5514.
    (ii) Debtor defined. As used herein, ``debtor'' means a sponsor, 
beneficiary, provider, physician, other supplier of services or 
supplies, or any other person who has for any reason been erroneously 
paid under the CHAMPUS. It includes an individual, partnership, 
corporation, professional corporation or association, estate, trust or 
any other legal entity.
    (iii) Delinquency defined. As used herein, a debt is considered 
``delinquent'' if it has not been paid by the date specified in the 
initial demand for payment (that is, the initial written notification) 
or applicable contractual agreement, unless other satisfactory payment 
arrangements have been made by that date. A debt is also 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 
CHAMPUS payments in situations where the beneficiary has entitlement to 
insurance, medical service, health and medical plan, 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 
under one of the following procedures:
    (i) Where the other health insurance plan has not already made 
benefit payments to the beneficiary or provider, a claim for direct 
reimbursement will be asserted against the plan, pursuant to the fiscal 
intermediary's coordination of benefit procedures.
    (ii) If the other health insurance plan has made its benefit payment 
prior to receiving the CHAMPUS request for reimbursement, the recoupment 
procedures set forth in paragraph (f) of this section will be followed.
    (4) Claims 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 System (DEERS), is responsible 
for establishing and maintaining a file listing persons eligible to 
receive benefits under CHAMPUS. However, it is the responsibility of the 
Uniformed Services to provide eligible CHAMPUS beneficiaries with 
accurate and appropriate means of identification. When sources of 
civilian medical care exercise reasonable care and precaution in 
identifying persons claiming to be eligible CHAMPUS beneficiaries and 
furnish otherwise covered services and supplies to such persons in good 
faith, CHAMPUS benefits may be paid subject to prior approval by the 
Director,

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OCHAMPUS, 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 as 
the result of its own careless identification procedures.
    (ii) When it is determined that a person was not a CHAMPUS 
beneficiary, the CHAMPUS fiscal intermediary and the civilian source of 
medical care are expected to make all reasonable efforts to obtain 
payment or recoup the amount of the good faith payment from the person 
who erroneously claimed to be a CHAMPUS beneficiary. Recoupments of good 
faith payments initiated by the CHAMPUS fiscal intermediary 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 CHAMPUS fiscal intermediary normally will be 
required to take the initial action to effect recoupment. Such action 
will be in accordance with the provisions of this part and the fiscal 
intermediary's CHAMPUS contract and will include demands for refund or 
an offset against any other CHAMPUS payment becoming due the debtor. 
When the efforts of the CHAMPUS fiscal intermediary to effect recoupment 
are not successful within a reasonable time, recoupment cases will be 
referred to the General Counsel, OCHAMPUS, 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. The CHAMPUS fiscal intermediary and 
OCHAMPUS normally shall make a total of at least three progressively 
stronger written demands upon the debtor in terms which inform the 
debtor of the consequences of his or her failure to cooperate. The 
initial written demand shall inform the debtor of the basis for and the 
amount of the indebtedness. The initial written demand shall also inform 
the debtor of the following: The debtor's right to inspect and copy all 
records pertaining to the debt; his or her right to request an 
administrative review by the fiscal intermediary; that interest on the 
debt at the current rate as determined by the Director, OCHAMPUS, or a 
designee, will begin to accrue on the date of the initial demand 
notification; that such interest shall be waived on the debt, or any 
portion thereof, which is paid within 30 days of the date of the initial 
demand notification; that payment of the indebtedness is due within 30 
days of the date of the initial demand notification; and that 
administrative costs and penalties will be charged pursuant to 4 CFR 
102.13. The debtor also shall be informed that collection by offset 
against current or subsequent claims may be taken. All debtors will be 
offered an opportunity to enter into a written agreement to repay the 
indebtedness. The fiscal intermediary demand letters must be dated the 
same day as they are mailed. Two written demands, at 30-day intervals, 
normally will be made by the CHAMPUS fiscal intermediary unless a 
response to the first demand indicates that further demand would be 
futile or unless prompt suit or attachment is required in anticipation 
of the departure of the debtor, of his removal or transfer of assets, or 
the running of the statute of limitations. There should be no undue time 
lag in responding to any communication received from the debtor. 
Responses should be made within 30 days whenever feasible. If these 
initial efforts at collection are not productive or if immediate legal 
action on the claim appears necessary, the claim either will be referred 
promptly by the CHAMPUS fiscal intermediary to the General Counsel, 
OCHAMPUS, or the CHAMPUS fiscal intermediary will prepare a final notice 
informing the debtor that the debt is to be offset in whole or in part. 
When a case is referred to OCHAMPUS, the Office of General Counsel will 
normally prepare a third written demand unless from the record such 
demand appears futile or otherwise inappropriate.
    (iii) Collection by administrative offset. Collections by offset 
will be undertaken administratively on claims which are liquidated or 
certain in amount in every instance in which this is feasible. No 
collection by offset may be undertaken unless a demand for

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payment containing all of the procedural safeguards described in 
paragraph (f)(6)(ii) of this section, has been sent to the debtor. The 
determinations of indebtedness made for recoupment of erroneous CHAMPUS 
payments rarely involve issues of credibility of veracity. Erroneous 
CHAMPUS payments most frequently arise from claims submitted by 
individuals ineligible for CHAMPUS benefits; from claims submitted for 
services or supplies not covered by CHAMPUS; from claims in which there 
have been other insurance payments which reduce the CHAMPUS liability 
and from claims from participating providers in which payment is 
initially erroneously made to the beneficiary. While these recoupment 
claims normally involve the resolution of factual questions, these 
resolution nearly always require only reference to the documentary 
evidence compiled in the investigation and processing of the claim. The 
appeals system described in Sec. 199.10 of this part affords a CHAMPUS 
beneficiary or participating provider an opportunity for an 
administrative appellate review, including, under certain circumstances, 
the right to oral hearing before a hearing officer. Further, there is no 
statutory provision for the waiver of indebtedness arising from 
erroneous CHAMPUS payments, other than the provisions of the Federal 
Claims Collection Act which allow for the compromise of claims or the 
termination of collection action under certain circumstances specified 
in paragraph (g) of this section. Consequently, the pre-offset oral 
hearing requirements of the Federal Claims Collection Standards (4 CFR 
102.3) do not apply to the recoupment of erroneous CHAMPUS payments. 
CHAMPUS fiscal intermediaries may take administrative action to offset 
erroneous payments against other current CHAMPUS 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 any part of a debt may be 
offset depending upon the amount available for offset. Only the case in 
which no possibility of offset arises within 60 days of the initiation 
of collection action and on which other collection efforts have been 
unsuccessful or in which the debtor seeks relief from the indebtedness 
will be referred to the General Counsel, OCHAMPUS, by the CHAMPUS fiscal 
intermediary. Offset, under the provisions of 31 U.S.C. 3716, is not to 
be used with respect to debts owed by any state or local government. Any 
requests for offset that are received from other agencies shall be 
forwarded to the General Counsel, OCHAMPUS, for processing, as will 
orders for garnishment issued by courts of competent jurisdiction.
    (iv) Collection of installments. CHAMPUS recoupment claims should be 
collected in one lump sum whenever possible. However, if the debtor is 
financially unable to pay the debt in one lump sum, payment may be 
accepted in regular installments by the CHAMPUS fiscal intermediary or 
the General Counsel, OCHAMPUS. Installment payments normally will be 
required on at least a monthly basis and their size will bear a 
reasonable relation to the size of the debt and the debtor's ability to 
pay. A CHAMPUS fiscal intermediary should not enter into installment 
agreements which extend beyond 24 months. OCHAMPUS installment 
agreements normally should liquidate the government's claim within 3 
years. Installment payments of less than $50 per month normally will be 
accepted only if justifiable on grounds of financial hardship or some 
other reasonable cause. Any installment agreement with a debtor in which 
the total amount of the deferred installments will exceed $750 should 
normally include an executed promissory note.
    (v) Interest, penalties, and administrative costs. Interest shall be 
charged on CHAMPUS recoupment debts and debts collected in installments 
in accordance with 4 CFR 102.13 and instructions issued by the Director, 
OCHAMPUS, or a designee. Interest shall accrue from the date on which 
the initial demand 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 (that is, the Treasury tax and loan account rate). The 
rate of

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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. 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 began to accrue, shall be 
waived. The agency may extend this 30-day period, on a case-by-case 
basis, if it reasonably determines that such action is appropriate. 
Also, 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, 
OCHAMPUS, or a 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 of these charges would be against 
equity and good conscience or not in the best interests of the United 
States. Some situations in which such a waiver may be appropriate 
include:
    (A) Waiver of interest consistent with 4 CFR 104.2(c)(2) in 
connection with a suspension of collection action pending a CHAMPUS 
appeal 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 may be appropriate include: a debt 
arising when a CHAMPUS beneficiary, who is unaware of the loss of 
eligibility for CHAMPUS because he or she has become eligible for 
Medicare, continues to file and be paid for CHAMPUS claims, resulting in 
erroneous CHAMPUS payments; a debt arising when a CHAMPUS beneficiary in 
good faith files and is paid a CHAMPUS claim for medical services or 
supplies which are later determined not to be benefits of CHAMPUS; and a 
debt arising when a CHAMPUS beneficiary is overpaid as the result of a 
calculation error on the part of a fiscal intermediary or OCHAMPUS.
    (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 any portion of 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.
    (vi) Referral to other federal agencies for administrative offset. 
As appropriate and in accordance with 4 CFR part 1023, agencies will be 
requested to initiate administrative offset to collect CHAMPUS debts. 
When a debtor is employed by the U.S. Government, or is a member or 
retired member of the Uniformed Service, and collection by offset 
against other CHAMPUS payments due the debtor cannot be accomplished, 
and there have been no positive responses to a demand for payment within 
60 days, the Director, OCHAMPUS, or a designee, may contact the agency 
holding funds payable to the debtor for payment by allotment or 
otherwise by salary offset from current disposable pay in accordance 
with 37 U.S.C. 1007 or 5 U.S.C. 5514 as implemented by 32 CFR

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part 90 and 5 CFR part 550. Where applicable, the request for recovery 
of erroneous CHAMPUS payments shall be submitted to the debtor's paying 
agency in accordance with 5 CFR 550.1106. Before contacting the paying 
agency, the Director, OCHAMPUS, or a designee, will provide the debtor 
written notification of the agency's intent to collect the debt by means 
of salary offset, authorized by 5 U.S.C. 5514. The notification will 
include, as a minimum:
    (A) The agency's determination that a debt is owed, including the 
origin, nature, and the amount of the debt;
    (B) The date by which payment is to be made, which will normally be 
30 days from the date the demand letter is mailed;
    (C) The amount, frequency, proposed beginning date and duration of 
the intended deductions, which will be determined in accordance with the 
provisions of 5 CFR 550.1104 or 32 CFR part 90, as appropriate. 
Ordinarily, the size of installment deductions must bear a reasonable 
relationship to the size of the debt and the employee's ability to pay 
(4 CFR 102.11). However, the amount deducted for any period must not 
exceed 15 percent of the disposable pay from which the deduction is made 
unless the debtor has agreed in writing to the deduction of a greater 
amount. Debts must be collected in one lump-sum whenever possible. 
However, if the employee is financially unable to pay in one lump-sum, 
or the amount of the debt exceeds 15 percent of current disposable pay 
for an officially established pay interval, collection must be made in 
installments. Such installment deductions must be made to effect 
collection within the period of anticipated active duty or employment. 
If the debtor retires or resigns or if his or her employment or period 
of active duty ends before collection of the debt is completed, offset 
from subsequent payments of any kind due the employee from the paying 
agency as of the date of separation shall be made to the extent 
necessary to liquidate the debt pursuant to 31 U.S.C. 3716 as 
implemented by 5 CFR part 550 and 32 CFR part 90. If possible, the 
installment payments should be sufficient in size and frequency to 
liquidate the government's claim in not more than 3 years. Installment 
payments of less than $50 per month should be accepted only with 
reasonable justification. An employee's involuntary payment of all or 
any portion of a debt being collected under 5 U.S.C. 5514 will not be 
construed as a waiver of any rights the debtor may have under that 
statute or any other provisions of contract or law, unless there are 
statutory or contractual provisions to the contrary.
    (D) An explanation of interest, penalties, and administrative costs, 
including a statement that such assessments must be made unless excused 
in accordance with the Federal Claims Collection Standards;
    (E) Advice that the debtor may inspect and copy government records 
relating to the debt or, if debtor or his or her representative cannot 
personally inspect the records, to request and receive a copy of such 
records. Requests for copies of the records relating to the debt shall 
be made no later than 10 days from the receipt by the debtor of the 
notice of indebtedness.
    (F) An opportunity for a review by the agency of its determination 
regarding the existence or the amount of the debt, or when a repayment 
schedule is established other than by written agreement, concerning the 
terms of the repayment schedule. The debtor shall be advised that a 
challenge to either the existence of the debt, the amount of the debt, 
or the repayment schedule, must be made within 30 days of the receipt by 
the debtor of the notice of indebtedness or within 45 days after receipt 
of the records relating to the debt, if such records are requested by 
the debtor. A request for waiver or reconsideration should be 
accompanied by supporting documents indicating why the debtor believes 
he is not so indebted, or by a financial affidavit supporting his 
request for an alternative repayment schedule;
    (G) Notice that the timely filing of a petition for review will stay 
the commencement of collection proceedings;
    (H) Notice that a final decision on the review (if one is requested) 
will be issued at the earliest practical date, but not later than 60 
days after the filing of the petition requesting the review unless the 
employee requests, and

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the agency grants, a delay in the proceedings;
    (I) The opportunity, if it has not been previously provided, to 
enter into a written agreement to establish a schedule for repayment of 
the debt in lieu of offset. The agreement will be signed by both the 
debtor and the agency's representative and will be kept in the agency's 
files;
    (J) Notice that any knowingly false or frivolous statements, 
representations, or evidence may subject the debtor to:
    (1) Disciplinary procedures appropriate under chapter 75 of Title 5 
U.S. Code, 5 CFR part 752, or any other applicable statutes or 
regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable authority, or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001 and 1002, or 
any other applicable authority;
    (K) Where applicable, notice of the debtor's right to appeal, under 
Sec. 199.10 of this part;
    (L) That amounts paid on or deducted for the debt which are later 
waived or found not owed to the United States will promptly be refunded 
to the debtor. Refunds do not bear interest unless required or permitted 
by law or contract;
    (M) The specific address to which all correspondence regarding the 
debt shall be directed. Unless otherwise prohibited by law, moneys which 
are due and payable to a debtor from the Civil Service Retirement and 
Disability Fund may be administratively offset in reasonable amounts in 
order to collect in one full payment or a minimal number of payments 
debts owed to the United States by the debtor. The General Counsel, 
OCHAMPUS, may forward requests for offset of debts arising from the 
operation of CHAMPUS to the appropriate officials of the Office of 
Personnel Management. These requests shall comply with the provisions of 
4 CFR 102.4 and 5 CFR part 550.
    (vii) Referral to debt collection agencies. Pursuant to the 
provisions of the Federal Claims Collection Standards (4 CFR 102.6), the 
Director, OCHAMPUS, or a designee, is authorized to enter into contracts 
for collection services, including contracts with private collection 
agencies for the purpose of supplementing and strengthening the 
collection efforts of the Department of Defense in recouping erroneous 
CHAMPUS payments. Such contracts will supplement but not replace the 
basic collection program described herein. The authority to resolve 
disputes, compromise claims, terminate collection action and initiate 
legal action may not be delegated in such contracts but will be retained 
by the Director, OCHAMPUS, or a designee. Individuals or firms that 
enter into contracts for collection services pursuant to this paragraph 
are subject to the Privacy Act of 1974, as amended, 5 U.S.C. 552a, 
federal and state laws and regulations pertaining to debt collection 
practices, including the Fair Debt Collection Practices Act, 15 U.S.C. 
1692. Debt collection contractors shall be required to account strictly 
for all amounts collected and must agree to provide any data contained 
in their files relating to 4 CFR 105.2(a) (1), (2) and (3). Contracts 
for commercial collection services must comply with 32 CFR part 90.
    (viii) Referrals to consumer reporting agencies. The Director, 
OCHAMPUS, or a designee, is authorized to provide for the reporting of 
delinquent debts to consumer reporting agencies. Delinquent debts are 
those which are not paid or for which satisfactory payment arrangements 
are not made by the due date specified in the initial notification of 
indebtedness, or those for which the debtor has entered into a written 
payment agreement and installment payments are past due 30 days or 
longer. These referrals may be made only after publication of a 
``routine use'' for the disclosures involved as required by the Privacy 
Act of 1974, as amended, 5 U.S.C. 552a. Procedures developed for such 
referrals must also insure that an accounting of the disclosures is kept 
which is available to the debtor; that the consumer reporting agencies 
are provided with corrections and annotations of disagreements by the 
debtor; and that reasonable efforts

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are made to assure that the information to be reported is accurate, 
complete, timely and relevant. When requested by a consumer reporting 
agency, verification of information disclosed will promptly be provided. 
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 60 days, disclosure of the claim shall be made to a 
consumer reporting agency unless 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 consumer 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. Reasonable action will be taken to locate 
an individual for whom a current address is not available.
    (ix) Use and disclosure of mailing addresses. In attempting to 
locate a debtor in the collection of a debt under this section, the 
Director, OCHAMPUS, 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. These requests 
will comply with the provisions of 26 U.S.C. 6103(p)(4) and applicable 
regulations of the Internal Revenue Service. Disclosure of a mailing 
address so obtained may be made pursuant to 4 CFR 102.18(b) and 31 
U.S.C. 3711.
    (g) Compromise, waiver, 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 the CHAMPUS 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(a)(2) as implemented by the Federal Claims Collection 
Standards, 4 CFR parts 101 through 105.
    (2) Authority. CHAMPUS fiscal intermediaries are not authorized to 
compromise or to suspend or terminate collection action on federal 
CHAMPUS claims. Only the Director, OCHAMPUS, or a designee, and 
Uniformed Service claims officers acting under the provisions of their 
own regulations, are so authorized.
    (3) Waiver of collection of erroneous payments due from certain 
persons unaware of loss of CHAMPUS eligibility. (i) The Director, 
OCHAMPUS may waive collection of payments otherwise due from certain 
persons as a result of health benefits received under this part after 
the termination of the person's eligibility for such benefits. Waiver 
may be granted if collection of such payments would be against equity 
and good conscience and not in the best interest of the United States. 
These criteria are met by a finding that there is no indication of 
fraud, misrepresentation, fault, or lack of good faith on the part of 
the person who received the erroneous payment or any other person having 
an interest in obtaining such waiver.
    (ii) Persons eligible for waiver. The following persons are eligible 
for waiver:
    (A) A person who:
    (1) Is entitled to Medicare Part A by reason of disability or end 
stage renal disease;
    (2) In the absence of such entitlement, would have been eligible for 
CHAMPUS under 10 U.S.C. 1086; and
    (3) At the time of the receipt of such benefits, was under age 65.
    (B) Any participating provider of care who received direct payment 
for care provided to a person described in paragraph (g)(ii)(A) of this 
section pursuant to an assignment of benefits from such person.
    (iii) The authority to waive collection of payments under this 
section shall apply with regard to health benefits provided during the 
period beginning January 1, 1967, and ending on the later of: the 
termination date of any special enrollment period for Medicare Part B 
provided specifically for such persons; or July 1, 1996.

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    (4) Basis for compromise. 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 debtor refuses to pay the claim in full and the government 
is unable to enforce collection of the full amount within a reasonable 
time by enforced collection proceedings;
    (iii) There is real doubt concerning the government's ability to 
prove its case in court for the full amount claimed either because of 
the legal issues involved or a bona fide dispute as to the facts; or
    (iv) The cost of collecting the claim does not justify enforced 
collection of the full amount.
    (5) Basis for suspension. Collection action may be suspended for 
either of the following reasons if future collection action may be 
sufficiently productive to justify periodic review and action on the 
claim giving consideration to its size and the amount which may be 
realized thereon:
    (i) The debtor cannot be located; or
    (ii) 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 collection action can be effected by offset, 
notwithstanding the statute of limitations with due regard to the 10-
year limitation prescribed by 31 U.S.C. 3716(c)(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 to fully 
pay the principal amount of the debt with interest at a later date.
    (iii) Consideration may be given by the Director, OCHAMPUS, or a 
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 CHAMPUS 
claim or claims directly involved in the government's claim against the 
debtor. Suspension under this paragraph will be based upon appropriate 
consideration, 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.
    (6) Basis for termination. Collection action may be terminated for 
one or more of the following reasons:
    (i) The United States cannot collect or enforce collection of any 
significant sum from the debtor having due regard to 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:
    (A) There is no security remaining to be liquidated, or
    (B) The applicable statute of limitations has run and the prospects 
of collecting by offset, notwithstanding the bar of the statute of 
limitations, are too remote to justify retention of the claim;
    (iii) The cost of further collection action is likely to exceed any 
recovery;
    (iv) It is determined that the claim is legally without merit; or
    (v) Evidence necessary to prove the claim cannot be produced or the 
necessary witnesses are unavailable and efforts to induce voluntary 
payment are unavailing.
    (7) Factors considered. In determining whether a claim will be 
compromised, or collection action terminated or suspended, the 
responsible CHAMPUS collection authority will consider the following 
factors:
    (i) Age and health of the debtor, present and potential income, 
inheritance prospects, possible concealment or improper transfer of 
assets and the availability of assets or income which

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may be realized upon 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 forced sale; or
    (iv) The probability of proving the claim in court, the probability 
of full or partial recovery, the availability of necessary evidence and 
related pragmatic considerations.
    (8) Amount of compromise. The amount acceptable in compromise will 
be reasonable in relation to the amount that can be recovered by 
enforced collection proceedings. Consideration shall be given to the 
following:
    (i) The exemptions available to the debtor under state and federal 
law;
    (ii) The time necessary to collect the debt;
    (iii) The litigative probabilities involved; and
    (iv) The administrative and litigative costs of collection where the 
cost of collecting the claim is a basis for compromise.
    (9) Payment of compromised claims. (i) Time and manner. Compromised 
claims are to be paid in one lump sum if possible. However, if payment 
of a compromise is necessary, a legally enforceable compromise agreement 
must be obtained. Payment of the amount that CHAMPUS has agreed to 
accept as a compromise in full settlement of a CHAMPUS claim must be 
made within the time and in the manner prescribed in the compromise 
agreement. Any such compromised claim is not settled until the full 
payment of the compromised amount has been made within the time and the 
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 the default.
    (10) Effect of compromise, waiver, suspension or termination of 
collection action. Pursuant to the Internal Revenue Code, 26 U.S.C. 
6041, compromises and terminations of undisputed debts not discharged in 
a Title 11 bankruptcy case and totaling $600 or more for the year will 
be reported to the Internal Revenue Service in the manner prescribed for 
inclusion 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 purposes 
of the appeal procedures Sec. 199.10.
    (h) Referrals for collection--(1) Prompt referral. Federal claims of 
$600 or more on which collection action has been taken in accordance 
with the provisions of this section and which cannot be collected or 
compromised or on which collection action cannot be suspended or 
terminated, as provided herein, will be promptly referred by the 
Director, OCHAMPUS, or a designee, to the Department of Justice for 
litigation in accordance with 4 CFR part 105. Such referrals will be 
made as early as possible consistent with aggressive collection action 
by CHAMPUS fiscal intermediaries and OCHAMPUS and well within the period 
for bringing a timely suit against the debtor. Ordinarily referrals will 
be made within one year of the OCHAMPUS final determination of the fact 
and the amount of the debt.
    (2) Report of prior collection actions. The Director, OCHAMPUS, or a 
designee, will prepare a Claims Collection Litigation Report (CCLR) for 
each case referred for collection under the provisions of this section. 
The CCLR shall also be used when a claim is referred to the Department 
of Justice in order to obtain approval of that Department with respect 
to compromise, suspension, or termination when such approval is required 
by 4 CFR 103.1(b) and 104.1(b). The CCLR will include, as a minimum, the 
following:
    (i) A checklist or brief summary of the actions previously taken to 
collect or compromise the claim. If any of the

[[Page 254]]

required administrative collection actions have been omitted, the reason 
for its omission must be provided.
    (ii) The current address or the debtor, or the same and address of 
the agent for a corporation upon whom service may be made. Reasonable 
and appropriate steps will be taken to locate missing parties in all 
cases. Referrals to the Department of Justice for the institution of 
foreclosure or other proceedings, in which the current address of any 
party is unknown, will be accompanied by a listing of the prior known 
addresses of such party and a statement of the steps taken to locate 
that party.
    (iii) Reasonably current credit data indicating that there is a 
reasonable prospect of effecting enforced collection from the debtor, 
having due regard for the exemptions available to the debtor under state 
and federal law and the judicial remedies available to the government. 
Such credit data may take the form of a commercial credit report; an 
agency investigative report showing the debtor's assets, liabilities, 
income, and expenses; the individual debtor's own financial statement 
executed under penalty of perjury reflecting the debtor's assets, 
liabilities, income, and expenses; or an audited balance sheet of a 
corporate debtor. Such credit data may be omitted if a surety bond is 
available in an amount sufficient to satisfy the claim in full; the 
forced sale value of any security available for application to the 
government's claim is sufficient to satisfy the claim in full; the 
debtor is in bankruptcy or receivership; the debtor's liability to the 
government is fully covered by insurance, in which case such information 
as can be developed concerning the identity and address of the insurer 
and the type and amount of insurance coverage will be furnished; or the 
nature of the debtor is such that credit data is not normally available 
or cannot reasonably be obtained, for example, a unit of state or local 
government.
    (3) Preservation of evidence. The Director, OCHAMPUS, 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 Indications of Fraud, Filing of False Claims or 
Misrepresentation.
    Any case in which there is an indication of fraud, filing of false 
claims or misrepresentation will be promptly referred to the Director, 
OCHAMPUS, or a designee, for processing. The Director, OCHAMPUS, or a 
designee, will investigate and evaluate the case and either refer the 
case to the appropriate investigative law enforcement agency or return 
the claim for other appropriate administrative action, including 
collection action under this section. Payment on all CHAMPUS beneficiary 
or provider claims in which fraud, filing false claims or 
misrepresentation is suspected will be suspended until payment or denial 
of the claim is authorized by the Director, OCHAMPUS, or a designee. 
Collection action on all federal 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, OCHAMPUS, or a designee. Only the Department of Justice has 
authority to compromise or terminate collection action on such claims.

[51 FR 24008, July 1, 1986, as amended at 62 FR 35097, June 30, 1997; 63 
FR 27678, May 20, 1998]