B-243536 September 7, 1993

B-243536: Sep 7, 1993

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Derville: This is in response to your letter requesting our opinion on several issues that have arisen as a result of the implementation of the Competitive Equality Banking Act of 1987 (the Act). "[a]ny claim on account of a Treasury check shall be barred unless it is presented to the agency that authorized the issuance of such a check within one year after the date of issuance of the check or the effective date of the subsection. Whichever is later." 31 U.S.C. For which a Treasury check was issued." 31 U.S.C. Not later than 18 months after the effective date of the Act that have not been presented within the 12 month period provided in section 3328 of the Act. 31 U.S.C. Treasury was to apply the proceeds of the canceled checks to eliminate balances in certain Treasury accounts. 31 U.S.C.

B-243536 September 7, 1993

Frank D. Derville Deputy Assistant Secretary for Financial Management Department of Veterans Affairs

Dear Mr. Derville:

This is in response to your letter requesting our opinion on several issues that have arisen as a result of the implementation of the Competitive Equality Banking Act of 1987 (the Act), Public Law 100-86, 101 Stat. 659.

In your letter you explain that the Treasury has returned a number of non-receipt, erroneous payment, stale check and forged check claims to your department for settlement. As you know, the Act established new time limits on the payability of Government checks. Thus, "[a]ny claim on account of a Treasury check shall be barred unless it is presented to the agency that authorized the issuance of such a check within one year after the date of issuance of the check or the effective date of the subsection, whichever is later." 31 U.S.C. Sec. 3702(c); see also 31 U.S.C. Sec. 3328(a). However, the Act also states:

"[N]othing in this subsection affects the underlying obligation of the United States, or agency thereof, for which a Treasury check was issued." 31 U.S.C. Sec. 3702(c)(2).

The Act requires that Treasury cancel checks issued before October 1, 1989, not later than 18 months after the effective date of the Act that have not been presented within the 12 month period provided in section 3328 of the Act. 31 U.S.C. Sec. 3334(b) (1). Treasury was to apply the proceeds of the canceled checks to eliminate balances in certain Treasury accounts. 31 U.S.C. Sec. 3334(b)(2).

In relation to these statutes you asked several questions. First, how can DVA fund claims on pre-effective date checks that have been presented beyond the negotiability period set out in the Act?

Our Office has concluded that, although the specific moneys backing the canceled checks are, by law, diverted to another use, the underlying obligations for which the checks were issued clearly remain valid under 31 U.S.C. Sec. 3334(c). B-239249.1, Apr. 15, 1991. Thus, for claims submitted under such obligations, we concluded that the original appropriations charged can be used to support reissued checks, to the extent funds are available under 31 U.S.C. Sec.(s) 1551-1557. (account closing statute). We also advised that for accounts closed under 31 U.S.C. Sec. 1551, the statute allows current appropriations made for the same general purpose to be charged for such claims subject to the one percent limitation specified in the statute. For specific details see B-239249, Apr. 15, 1991; OMB Cir. No. A-34, Part XI, as added by OMB Bulletin No. 91-07, Jan. 17, 1991. However, we have consistently pointed out that although an underlying claim is preserved by the statute, the provision does not "resurrect claims that are otherwise unenforceable." B-239249, Apr. 15, 1991 (note 2); B-244431, Oct. 8, 1991. Under 31 U.S.C. Sec. 3702(b), a claim against the government which is not presented to the GAO, or the agency whose activities gave rise to the claim, within six years after the claim accrues is explicitly barred and "otherwise unenforceable". B-244431, Oct. 8, 1991; B-250212, Apr. 15, 1993. For a claimant whose claim is barred by the provisions of 31 U.S.C. Sec. 3702(b), the only way to attain payment would be to seek private relief legislation from the Congress.

Second, you asked whether, regardless of when a claim is received, Treasury or DVA is responsible for determining the validity of forged check claims as well as any associated records search costs. Further, who is responsible for the underlying obligation in forged check claims? Checks issued to replace checks paid over a forged Endorsement must be issued by the Treasury and charged against the Check Forgery Insurance Fund and cannot be charged against an agency's appropriation. B-242666, Aug. 31, 1993 (copy enclosed). Although the Treasury's Financial Management Service has argued that the Act impliedly repealed the Fund, we found nothing in either the text or legislative history of the Act that indicated that Congress intended to eliminate the Fund or change the established process for issuing settlement checks. Id. Although Treasury closed the Fund's account under the authority of 31 U.S.C. Sec. 1555, we concluded that the purposes for which the Fund, the appropriation, was created continue to exist and, therefore, the Fund was improperly closed. We recommended that the Treasury restore the $1.8 million in canceled budget authority to the Fund. [1] Id.

Lastly, you asked whether there should be a statute of limitations for claims on pre-effective date or forged check claims presented after the expiration of the negotiability and claim period set forth in the Act. As pointed out above, although a claim is preserved by the provision of the Act stating that the underlying obligation of the United States remains unaffected, the provision does not "resurrect claims that are otherwise unenforceable." Id; B-239249.1, Apr. 15, 1991 (note 2). Thus, a claim against the government on the obligation underlying a pre-effective date check presented to the GAO or the agency whose activities gave rise to the claim more than six years after the claim accrues is explicitly barred. B-244431, Oct. 8, 1991. We conclude that the same result applies to claims on fraudulently endorsed checks.

I trust the foregoing answers your questions.

Sincerely yours,

Gary L. Kepplinger Associate General Counsel

Enclosure

1. You also asked if we agreed with Treasury that program agencies have to make determinations on fraud claims, would claimants have a right to appeal adverse agency decisions? Since we have held that such determinations are in Treasury's sphere of responsibility, we need not address this question.