Sec.

Subpart D-Termination or Suspension of Collection Action

30.31 Termination rule.

30.32 Exceptions.

Subpart E-Referrals to the Department of Justice or GAO

30.33 Litigation.

30.34 Claims over $20,000. 30.35 GAO exceptions.

AUTHORITY: Subchapter II of Chapter 37 of Title 31, United States Code, 5 U.S.C. 5514 and 5 U.S.C. 552a as amended by Pub. L. 97-365, 96 Stat. 1749.

SOURCE: 52 FR 264, Jan. 5, 1987, unless otherwise noted.

Subpart A-General

§ 30.1 Purpose and scope.

(a) This regulation prescribes standards and procedures for the officers and employees of the Department, including officers and employees of the various Operating Divisions and regional offices of the Department, charged with collection and disposition of debts owed to the United States.

(b) These standards and procedures will be applied where a statute, regulation or contract does not prescribe different standards or procedures. The authority for the regulation lies in the Federal Claims Collection Act of 1966, as amended, 31 U.S.C. 3711 and 37163718; the Federal Claims Collection Standards, at 4 CFR Parts 101-105; related statutes (5 U.S.C. 5512 and 5514, 5 U.S.C. 552a) and regulations (5 CFR Part 550); and the common law. The covered activities include collecting claims in any amount; compromising claims, or suspending or terminating collection of claims that do not exceed $20,000, exclusive of interest and charges; and referring debts that cannot be disposed of by the Department to the Department of Justice or to the General Accounting Office for further administrative action or litigation. Further guidance may be found in the Departmental General Administration Manual, Personnel Manual, Accounting Manual and Grants Administration Manual, and any other manuals which may be issued by each Operating Division, office, or program.

In this part, unless the context otherwise requires

-"amounts payable under the Social Security Act" means payments by the Department to beneficiaries, providers, intermediaries, physicians, suppliers, carriers, States, or other contractors or grantees under a Social Security Act program, including: Title I (Grants to States for Old-Age Assistance and Medical Assistance for the Aged); Title II (Federal Old-Age Survivors, and Disability Insurance Benefits); Title III (Grants to States for Unemployment Compensation Administration); Title IV (Grants to States for Aid and Services to Needy Families with Children and for Child-Welfare Services); Title V (Maternal and Child Health and Crippled Children's Services); Title IX (Unemployment Compensation Program); Title X (Grants to States for Aid to the Blind); Title XI, Part B (Peer Review of the Utilization and Quality of Health Care Services); Title XII (Advances to State Unemployment Funds); Title XIV (Grants to States for Aid to Permanently and Totally Disabled); Title XVI (Supplemental Security Income for the Aged, Blind, and Disabled); Title XVII (Grants to States to Fight Mental Retardation); Title XVIII (Medicare); Title XIX (Medicaid); and Title XX (Block Grants to States for Social Services). Federal employee salaries and other payments made by the Department in the course of administering the provisions of the Social Security Act are not deemed to be "payable under" the Social Security Act for purposes of this regulation.

-"claim" or "debt" means an amount of money or other property owed to the United States. Debts include, but are not limited to amounts owed on account of loans made, insured or guaranteed by the United States; salary overpayments to employees; overpayments to program beneficiaries; overpayments to contractors and grantees, including overpayments arising from audit disallowances; excessive cash advances to employees, grantees and contractors; civil penalties and assessments; theft or

loss of money or property; and damages.

-"debtor" means an individual, organization, association, partnership, corporation, or a State or local government or subdivision indebted to the Department; or the person or entity with legal responsibility for assuming the debtor's obligation.

-"debts arising under the Social Security Act" are overpayments to, or contributions, penalties or assessments owed by, beneficiaries, providers, intermediaries, physicians, suppliers, carriers, States or other contractors or grantees under Titles I, II, III, IV, V, IX, X, XI (Part B), XII, XIV, XVI, XVII, XVIII, XIX and XX of the Social Security Act. Salary overpayments and other debts that result from the administration of the provisions of the Social Security Act are not deemed to "arise under” the Social Security Act for purposes of this regulation.

-"Department" means the United States Department of Health and Human Services and each of its Operating Divisions and regional offices.

-"liquidated or certain in amount" refers to a debt of an amount already fixed and determined by the Secretary, or which may be readily fixed and determined from the information available in the debt file, irrespective of any dispute by the debtor.

—“local government” means a political subdivision, instrumentality, or authority of any State; the District of Columbia; the Commonwealth of Puerto Rico; a territory or possession of the United States; or an Indian tribe, band or nation.

"Operating Division" means each separate component within the Department of Health and Human Services, and includes the Office of the Secretary, the Office of Human Development Services, the Family Support Administration, the Health Care Financing Administration, the Public Health Service and the Social Security Administration.

"overdue" refers to a debt not paid by the payment due date specified in the notice of the debt to the debtor (see § 30.13(a)) and not the subject of a repayment agreement approved by the Secretary. Also, a debt

subject to repayment agreement is considered overdue if the debtor fails to satisfy his or her obligations under that agreement. "Overdue" and "delinquent" have the same meaning. See 4 CFR 101.2(b).

"Secretary" means the Secretary of Health and Human Services or the Secretary's designee within any Operating Division or Regional Office.

§ 30.3 Interagency claims.

This regulation does not apply to debts owed by other Federal agencies. These debts will be resolved by negotiation or referral to the General Accounting Office.

§ 30.4 Other administrative proceedings.

This regulation does not supersede or require omission or duplication of administrative proceedings required under contract, statute, regulation or other agency procedures. Examples: Resolution of audit findings under grants or contracts, Chapter 1-105, Grants Administration Manual (GAM); informal grant appeals, 45 CFR Part 75 (Departmental), 42 CFR 50.401 et seq. (Public Health Service); formal appeals to the Departmental Grant Appeals Board, 45 CFR Part 16; and review under a procurement contract Disputes Clause and the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.), 48 CFR Part 33.

§ 30.5 Other remedies.

The remedies and sanctions available to the Department under this regulation when collecting debts are not intended to be exclusive. The Secretary may impose other appropriate sanctions upon a debtor for inexcusable, prolonged or repeated failure to pay a debt. For example, the Secretary may stop doing business with a grantee, contractor, borrower or lender; convert the method of payment under a grant from an advance to a reimbursement method; or revoke a grantee's letter-of-credit.

§ 30.6 Property claims.

Any person who converts, or negligently loses or destroys personal property belonging, entrusted or loaned to the Department is liable for the

return of the property or payment of its fair market value. A person who damages such property is liable for the cost of repairs or its fair market value, whichever is less. Collection of these debts means the recovery of the property, its fair market value, or the cost of repairs. Demand for payment of these claims means a demand for the return of the property or for payment of its fair market value or the cost of repairs.

§ 30.7 Claims involving criminal activity or misconduct.

(a) A debtor whose indebtedness involves criminal activity is subject to punishment by fine or imprisonment as well as to a civil claim by the United States for compensation for the misappropriated funds or property. Examples of such activity are fraud, embezzlement and theft or misuse of Government money or property. See 18 U.S.C. 641, 643. The Secretary will refer cases of suspected criminal activity or misconduct to the Office of Inspector General. That office will investigate such cases, refer them to the Department of Justice for criminal prosecution and/or return them to the Secretary for collection, application of administrative sanctions or other disposition.

(b) Debts involving anti-trust violations, fraud, false claims or misrepresentation

(1) Shall be referred by the Secretary to the Office of Inspector General for review. The Office of Inspector General shall refer the claim back to the Secretary for collection or other disposition to the extent authorized by the Department of Justice.

(2) Shall not be compromised, terminated, suspended or otherwise disposed of by the Secretary under these regulations. Only the Department of Justice is authorized to compromise, terminate, suspend or otherwise dispose of such debts.

§ 30.8 Claims arising from GAO exceptions.

The Secretary may not compromise but will collect, suspend or terminate collection of debts due on account of illegal, improper or incorrect payments shown in General Accounting

Office notices of exception issued to certifying or disbursing officers. Only the General Accounting Office has the authority to compromise such debts.

§ 30.9 Subdivision of claims.

Debts may not be subdivided to avoid the monetary ceilings imposed by 31 U.S.C. 3711(a) (2) and (3) on the Secretary's authority to compromise, suspend or terminate collection of debts. A debtor's liability arising from a particular incident or transaction will be considered a single debt in determining whether the claim exceeds $20,000 for purposes of compromising, suspending or terminating collection efforts.

§ 30.10 Omissions not a defense.

Failure by the Secretary to comply with any provision of this regulation may not serve as a defense to any debtor.

Subpart B-Collection of Claims

§ 30.11 Collection rule.

(a) Aggressive agency action. The Secretary will take aggressive action to collect debts and reduce delinquencies. Collection efforts shall, at a minimum, normally include sending to the debtor's last known address a total of three progressively stronger written demands for payment at not more than 30-day intervals unless amounts are available for offset under section 30.15, or a response to the first or second demand indicates that further demand would be futile and the debtor's response does not require rebuttal.

(b) Immediate action. When necessary to protect the Government's interest, written demand may be preceded by other appropriate action, such as withholding of amounts payable to the debtor or immediate referral of the debt for litigation or filing of a claim in bankruptcy court or against a decedent's estate.

(c) Finding debtors. The Secretary will exhaust every reasonable effort to locate debtors, using such sources as telephone directories, city directories, postmasters, driving license records, automobile title and license records in State and local government agencies,

the Internal Revenue Service, credit reporting agencies and skip locator services. Referral of a confess-judgment note to the appropriate United States Attorney's Office for entry of judgment will not be delayed because the debtor cannot be located.

(d) Joint and several liability. Collection of the full amount of the debt will be pursued from each debtor jointly and severally liable.

(e) Debtor disputes. A debtor who disputes a debt must promptly provide available supporting evidence.

(f) Debt files. The Secretary will maintain an administrative file for each debt or debtor, documenting the debt(s), all administrative collection action, including communications to and from the debtor, and disposition of the debt(s). Information from a debt file relating to an individual may be disclosed only for purposes consistent with this regulation, the Privacy Act of 1974 (5 U.S.C. 552a), and any other applicable law.

§ 30.12 Notice to debtor.

(a) Required notice. The first written demand for payment must inform the debtor of—

(1) The amount and nature of the debt;

(2) The date payment is due, which will generally be 30 days from the date the notice was mailed; and

(3) The assessment under § 30.13 of interest from the date the notice was mailed, and full administrative costs if payment is not received within the 30 days.

(b) Other notice. Where applicable, the Secretary must inform the debtor in writing of-(1) His or her right to dispute the debt or request a waiver of the debt, citing the applicable review or waiver authority, the conditions for review or waiver, and the effect of the review or waiver request on collection of the debt, interest, charges and late payment penalties (see § 30.14);

(2) The office, address and telephone number that the debtor should contact to discuss repayment, reconsideration or waiver of the debt;

(3) The proposed sanctions if the debt is overdue, including assessment of late payment penalties under 30.13 (if the debt is more than 90 days over

due) or referral of the debt to a credit reporting agency under § 30.17, or to a collection agency under § 30.18. (See also § 30.5).

(c) Exception. This section does not require duplication of any notice already contained in a written agreement, letter or other document signed by, or provided to the debtor.

§ 30.13 Interest, administrative costs and late payment penalties.

(a) Interest. (1) Interest will accrue on all debts from the date notice of the debt and the interest requirement is first mailed to the last known address or hand-delivered to the debtor if the debt is not paid within 30 days from the date of mailing of the notice. Except as provided in paragraph (a)(2) of this section, or unless the Secretary determines a higher rate is necessary to protect the Government's interests, the Secretary shall charge an annual rate of interest as fixed by the Secretary of the Treasury after taking into consideration private consumer rates of interest prevailing on the date that the Department becomes entitled to recovery. This rate may be revised quarterly by the Secretary of the Treasury and shall be published by the HHS Assistant Secretary for Management and Budget quarterly in the FEDERAL REGISTER. Debtors who were not paying interest, or were paying interest at a different rate prior to October 25, 1982, may be charged interest at the above-stated rate in effect on the date that notice of the new interest requirement is mailed after 1982. The Secretary may use the advance billing procedure and include the interest notification prior to the debt being owed. Bills sent before a debt is due will include notification of the interest requirement. In these cases, interest will begin to accrue on the day after the due date.

(2) The interest rate established in paragraph (a) of this section shall be no lower than the current value of funds rate, as set by the Secretary of the Treasury pursuant to 31 U.S.C. 3717, except that in the case of installment under agreements payment § 30.19, such rate shall be no lower than the applicable rate determined

40-165 0-91--4

from the U.S. Treasury "Schedule of Certified Interest Rates with Range of Maturities."

(3) The Secretary may, at his or her discretion, extend the 30 day interestfree period an additional 30 days if the Secretary determines that such action is in the best interests of the Government, or otherwise warranted by equity and good conscience.

(4) The rate of interest, as initially assessed, will remain fixed for the duration of the indebtedness; except that if a debtor defaults on a repayment agreement, interest may be set at the Treasury rate in effect on the date a new agreement is executed.

(5) Interest will not be charged on interest, administrative costs or late payment penalties required by this section. However, if the debtor defaults on a previous repayment agreement, unpaid accrued interest, charges and late payment penalties under the defaulted agreement may be added to the principal to be paid under a new repayment agreement.

(b) Administrative costs of collecting overdue debts. Delinquent debtors will be assessed the administrative costs incurred by the Department as a result of handling and collecting the overdue debts, based on either actual or average costs incurred. These costs will include direct (personnel, supplies, etc.) and indirect costs of collecting inhouse and contracting with collection agencies and may include the costs of providing hearings or any other form of review requested by debtors. See § 30.14. These charges will be assessed monthly, or per payment period, throughout the period that the debt is overdue. Such costs may also be additive to other administrative costs if collection is being made for another Federal agency or unit.

(c) Late payment penalties. A penalty charge of 6 percent a year will be assessed on a debt, a payment, or any portion thereof that is more than 90 days overdue. Late payment penalty charges will accrue from the date the debt, or portion thereof, became overdue until the overdue amount is paid. These charges will be assessed monthly, or per payment period. See also § 30.14.

(d) Social Security Act debts. (1) Unless specifically authorized by statute, regulations or written agreement, or unless the debts arise from, or involve, fraud or criminal activity, the Secretary will not charge interest on debts arising from payments to beneficiaries under Titles II, XVI and XVIII of Social Security Act. The charging of interest is appropriate on debts arising from section 1862(b) of the Act for Medicare payments for which a beneficiary has been reimbursed by a liable third party, in which case the charging of interest would be appropriate.

(2) The Secretary will charge administrative costs or late payment penalties on debts arising under the Social Security Act where authorized by statute, regulations, or written agreement. (e) Other debts not covered by 31 U.S.C. 3717. The Secretary will charge administrative costs or late payment penalties on debts arising under a contract executed prior to, and in effect on October 25, 1982, or debts owed by State or local governments where authorized by statute, regulation, written agreement.

or

(f) Allocation of payments. Partial or installment payments will be applied first to outstanding administrative cost charges and late payment penalties, second to accrued interest and third to outstanding principal.

(g) Inactive claims. Interest, but not administrative cost charges or late payment penalties, will continue to accrue when collection of a debt is suspended under § 30.33(a).

(h) Waivers. The Secretary may waive collecting all or part of interest, administrative costs or late payment penalties, if—

(1) The debt or the charges resulted from the agency's error, action or inaction (other than normal processing delays), and without fault on the part of the debtors; or

(2) Collection in any manner authorized under this regulation would defeat the overall objectives of a Departmental program.

§ 30.14 Interest and charges pending waiver or review.

(a) Rule. A debtor may either pay the debt, or be liable for interest on