B-135984, SEP 22, 1971, 51 COMP GEN 180

B-135984, SEP 22, 1971, 51 COMP GEN 180

TORTS - CLAIMS UNDER FEDERAL TORT CLAIMS ACT - SETTLEMENT - CLAIMANT'S INDEBTEDNESS TO GOVERNMENT WHERE AN AGREEMENT WITH THE PERSON WHOSE LEG WAS NEGLIGENTLY FRACTURED WHEN STRUCK BY A FOOD CART WHILE VISITING A VETERANS ADMINISTRATION (VA) HOSPITAL PROVIDED FOR SETTLEMENT OF THE TORT CLAIM IN THE AMOUNT OF $25,000, PLUS $5,857, THE COST OF FURNISHING EMERGENCY AND FOLLOWUP CARE AT THE HOSPITAL PURSUANT TO 38 U.S.C. 611(B) - A TOTAL AWARD OF $30,857 - THE VOUCHER ISSUED IN SETTLEMENT OF THE AWARD SHOULD SET OFF THE CLAIMANT'S INDEBTEDNESS FOR THE HOSPITALIZATION AGAINST THE TOTAL AWARD, SPECIFYING CREDIT OF THE SETOFF TO THE VA, MEDICAL CARE APPROPRIATION. HOWEVER, WHERE A TORT SUIT FILED IN A FEDERAL DISTRICT COURT IS COMPROMISED BY THE ATTORNEY GENERAL UNDER 28 U.S.C. 2677, SUCH AN AGREEMENT IS A NET SETTLEMENT, AS IS A JUDGMENT THAT PROVIDES FOR THE DEDUCTION OF AN INDEBTEDNESS, AND IN EACH CASE THE DEBT FOR THE EMERGENCY HOSPITALIZATION IS EXTINGUISHED NOTWITHSTANDING THE APPROPRIATION INVOLVED WILL NOT BE REIMBURSED.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, SEPTEMBER 22, 1971:

REFERENCE IS MADE TO YOUR LETTER OF MAY 17, 1971, WHICH RAISES SEVERAL QUESTIONS REGARDING THE PROCEDURE TO BE FOLLOWED IN SETTLING TORT CLAIMS WHERE THE CLAIMANT ALSO HAS AN OUTSTANDING DEBT DUE THE GOVERNMENT.

AN EXAMPLE OF A SITUATION GIVING RISE TO YOUR QUESTIONS CONCERNED AN INCIDENT THAT OCCURRED IN A VA HOSPITAL IN WHICH A NONVETERAN FEMALE VISITOR WAS NEGLIGENTLY STRUCK BY A FOOD CART FRACTURING HER LEG. PURSUANT TO THE AUTHORITY CONTAINED IN 38 U.S.C. 611(B), THE VISITOR WAS FURNISHED EMERGENCY AND FOLLOWUP CARE WHICH, UNDER THE RATE SCHEDULE ESTABLISHED PURSUANT TO THIS STATUTORY PROVISION, AMOUNTED TO $5,857. THIS INDIVIDUAL SUBSEQUENTLY FILED A TORT CLAIM AGAINST THE GOVERNMENT AND AN AGREEMENT WAS REACHED TO SETTLE THE CLAIM FOR $25,000, IN ADDITION TO THE CARE RECEIVED BY HER FOR WHICH SHE HAD BEEN BILLED BUT HAD NOT PAID.

YOU STATE THAT THIS AGREEMENT GIVES RISE TO THE QUESTION WHETHER THE VOUCHER IN SETTLEMENT OF THE CLAIM WHICH WOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR PROCESSING AND SUBSEQUENTLY TO THE TREASURY DEPARTMENT FOR PAYMENT, SHOULD BE MADE OUT IN THE AMOUNT OF $30,857 OR IN THE AMOUNT OF $25,000. IT IS EXPLAINED THAT UNDER THE FIRST ALTERNATIVE, THE CLAIMANT WOULD HAVE BEEN REQUIRED TO SUBMIT HER PERSONAL CHECK IN THE AMOUNT OF $5,857 TO SATISFY THE INDEBTEDNESS INCURRED DUE TO THE HOSPITALIZATION FURNISHED HER. THE PROCEEDS FROM THE CHECK THEN WOULD BE USED TO REIMBURSE THE MEDICAL CARE APPROPRIATION PURSUANT TO THE ADMINISTRATIVE PROVISION SET FORTH IN THE LAST SENTENCE OF THE VETERANS ADMINISTRATION SECTION OF THE INDEPENDENT OFFICES AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT APPROPRIATION ACT. 1971, APPROVED DECEMBER 17, 1970, 84 STAT. 1454, WHICH READS AS FOLLOWS:

NO PART OF THE FOREGOING APPROPRIATIONS SHALL BE AVAILABLE FOR HOSPITALIZATION OR EXAMINATION OF ANY PERSONS EXCEPT BENEFICIARIES ENTITLED UNDER THE LAWS BESTOWING SUCH BENEFITS TO VETERANS, UNLESS REIMBURSEMENT OF COST IS MADE TO THE APPROPRIATION AT SUCH RATES AS MAY BE FIXED BY THE ADMINISTRATOR OF VETERANS AFFAIRS.

BY FOLLOWING THE PROCEDURE OUTLINED ABOVE, COMPLIANCE WOULD BE HAD WITH THE ABOVE-QUOTED PROVISION OF LAW IN THAT THE APPROPRIATION WOULD HAVE BEEN REIMBURSED. HOWEVER, YOU STATE THE PRACTICAL EFFECT OF SUCH A PROCEDURE WOULD BE THAT THE AMOUNT OF THE REIMBURSEMENT WOULD ACTUALLY BE OBTAINED FROM THE TREASURY DEPARTMENT FUNDS (THE INDEFINITE APPROPRIATION ESTABLISHED PURSUANT TO 31 U.S.C. 724(A)) AND COULD CONCEIVABLY BE CONSTRUED AS SUPPLEMENTATION OF ONE APPROPRIATION FROM ANOTHER.

THE SECOND ALTERNATIVE IS DESCRIBED IN YOUR LETTER AS FOLLOWS:

THE ALTERNATIVE TO THE ABOVE PROCEDURE WOULD BE TO PREPARE THE VOUCHER TO BE TRANSMITTED TO GAO AND ULTIMATELY THE TREASURY DEPARTMENT, TO COVER ONLY THE $25,000 CASH BENEFIT, AND THEN TERMINATE, BY APPROPRIATE ADMINISTRATIVE ACTION, ANY FURTHER ATTEMPTS TO COLLECT THE $5,857 RELATING TO MEDICAL SERVICES RENDERED. WHILE THIS ALTERNATIVE PROCEDURE WOULD SEEM TO BE WITHIN THE BROAD PERIMETER OF AUTHORITY GRANTED AGENCY HEADS TO TAKE "REASONABLY NECESSARY" ACTION TO PROPERLY CONSIDER, COMPROMISE AND SETTLE FEDERAL TORT CLAIMS (SEE 29 C.G. 111), IT ALSO RAISES QUESTIONS AS TO THE FISCAL PROCEDURE WHICH MUST BE FOLLOWED TO ACCOMPLISH IT. FOR EXAMPLE, WHILE THE FEDERAL CLAIMS COLLECTION ACT OF 1966 (PL 89-508) AUTHORIZES THE HEAD OF FEDERAL AGENCIES, OR THEIR DESIGNEE, TO COMPROMISE OR TERMINATE COLLECTION ACTION ON CLAIMS DUE THE UNITED STATES NOT EXCEEDING $20,000, THE REGULATIONS IMPLEMENTING THIS ACT, AS PROMULGATED BY THE COMPTROLLER GENERAL (TITLE 4, CFR, CHAPTER 11) AND FOLLOWED BY THE VETERANS ADMINISTRATION (TITLE 38, CFR, SECTION 1.900 ET SEQ.), MAY NOT PERMIT THE TERMINATION OF COLLECTION ACTION WHERE THE DEBTOR IS OBTAINING A SETTLEMENT FROM THE GOVERNMENT UNDER THE FEDERAL TORT CLAIMS ACT. FURTHERMORE, UNLESS ACTUAL REIMBURSEMENT IS MADE TO THE VETERANS ADMINISTRATION MEDICAL CARE APPROPRIATION, THE RESTRICTIVE LANGUAGE OF THE VA APPROPRIATIONS ACT, CITED ABOVE, AGAINST THE EXPENDITURE OF FUNDS TO PROVIDE HOSPITALIZATION OF NON-VETERANS ADMINISTRATION BENEFICIARIES UNLESS REIMBURSEMENT IS MADE, MIGHT BE VIOLATED.

WHILE THE ABOVE EXAMPLE INVOLVES SETTLEMENT AUTHORITY OF THE VETERANS ADMINISTRATION, IT IS STATED THAT SIMILAR DIFFICULTIES HAVE BEEN ENCOUNTERED IN TERMINATING COLLECTION ACTION ON A DEBT ESTABLISHED AS A RESULT OF EMERGENCY HOSPITALIZATION OF A NONBENEFICIARY WHERE A SUIT FILED IN A FEDERAL DISTRICT COURT HAS BEEN SETTLED BY THE ATTORNEY GENERAL PURSUANT TO THE COMPROMISE AUTHORITY CONTAINED IN 28 U.S.C. 2677. IN THAT CASE THE UNITED STATES ATTORNEY COMPROMISED THE ACTION AGAINST THE UNITED STATES FOR $4,000 AND NOTIFIED YOUR AGENCY TO TERMINATE COLLECTION ACTION ON A BILL FOR EMERGENCY HOSPITALIZATION WHICH AMOUNTED TO $2,948.

A THIRD EXAMPLE IS CITED IN YOUR LETTER BUT IT APPEARS, EXCEPT FOR THE PARTICULAR APPROPRIATION INVOLVED, TO BE SO LITTLE DIFFERENT FROM THE FIRST EXAMPLE CITED ABOVE AS NOT TO REQUIRE REPEATING IT HERE.

YOU ASK TO BE ADVISED -

*** WHETHER THE AUTHORITY GRANTED BY THE FEDERAL TORT CLAIMS ACT IS BROAD ENOUGH TO AUTHORIZE THE AGENCY TO TERMINATE OR WAIVE COLLECTION OF A DEBT DUE THE GOVERNMENT BY THE CLAIMANT AS PART OF THE OVERALL SETTLEMENT OF A TORT CLAIM (A PROCEDURE WHICH IS ADMINISTRATIVELY DESIRABLE), OR WHETHER WE MUST TREAT THE COLLECTION OF DEBTS DUE THE GOVERNMENT AS ENTIRELY SEPARATE ACTIONS, EVEN THOUGH THE MONEY WHICH MAY ULTIMATELY BE COLLECTED ON SUCH DEBT IS DERIVED FROM THE TORT CLAIM SETTLEMENT, AND IS THUS INDIRECTLY PAID BY THE TREASURY DEPARTMENT.

FOR ALL PRACTICAL PURPOSES THE NET EFFECT OF EITHER PROCEDURE PROPOSED WITH RESPECT TO THE FIRST EXAMPLE DESCRIBED ABOVE IS THAT THE INDEBTEDNESS IS SET OFF AGAINST THE AMOUNT OF THE TORT CLAIM AWARD. IF THE AMOUNT OF THE TORT CLAIM AWARD IS GREATER THAN THE DEBT, THE DEBT IS EXTINGUISHED BY SETOFF AGAINST THE AWARD AND THE CLAIMANT IS PAID THE BALANCE. IF THE AMOUNT OF THE AWARD IS LESS THAN THE INDEBTEDNESS THE INDEBTEDNESS SHOULD BE REDUCED BY THE AMOUNT OF THE AWARD.

IN OTHER WORDS, IT IS OUR VIEW THAT THE SETOFF ACTION IS ENTIRELY SEPARATE AND APART FROM ANY COMPROMISE OF THE INDEBTEDNESS AND SUCH ACTION WOULD BE PROPER WITHOUT REGARD TO THE FACT THAT THE AMOUNT OF THE INDEBTEDNESS MIGHT EXCEED $20,000 AND WITH OR WITHOUT THE ENACTMENT OF THE FEDERAL CLAIMS COLLECTION ACT OF 1966. THIS LATTER ACT NEITHER ENLARGED NOR RESTRICTED THE AUTHORITY OF A DEPARTMENT HEAD TO COMPROMISE AND SETTLE TORT CLAIMS AGAINST HIS DEPARTMENT OR TO SETOFF AGAINST ANY TORT CLAIM AWARD THE AMOUNT OF THE CLAIMANT'S INDEBTEDNESS TO THE GOVERNMENT.

CONSEQUENTLY, WITH RESPECT TO THE FIRST EXAMPLE, THE AMOUNT OF THE TORT CLAIM AWARD IS $30,857 AGAINST WHICH THERE SHOULD BE SETOFF THE AMOUNT OF THE CLAIMANT'S INDEBTEDNESS TO THE GOVERNMENT. ALSO, SINCE THE AMOUNT SETOFF PROPERLY IS FOR CREDIT TO AN APPROPRIATION ACCOUNT THE VOUCHER ISSUED IN SETTLEMENT OF THE CLAIM SHOULD SPECIFY THAT THE AMOUNT OF THE SETOFF BE DEPOSITED TO THE CREDIT OF THE DESIGNATED ACCOUNT AND THAT THE BALANCE OF THE AWARD BE PAID TO THE CLAIMANT.

WITH RESPECT TO THE SECOND EXAMPLE IT MAY BE NOTED THAT THE COURTS IN ENTERING JUDGMENTS USUALLY DEDUCT FROM THE AMOUNTS OTHERWISE DETERMINED TO BE DUE SUCCESSFUL LITIGANTS ANY AMOUNTS PROPERLY FOR SETOFF OR FOR ALLOWANCE UNDER A COUNTERCLAIM, AND JUDGMENTS THEN ARE ENTERED IN NET AMOUNTS. UNDER SUCH A NET JUDGMENT THE AMOUNT OF THE INDEBTEDNESS IS SATISFIED UPON ENTRY OF THAT JUDGMENT.

THE COMPROMISE ENTERED INTO BY THE UNITED STATES ATTORNEY IN THIS CASE APPEARS TO BE IN THE NATURE OF A NET SETTLEMENT, IT BEING ASSUMED THAT THE INDEBTEDNESS WAS PROPERLY BEFORE THE ATTORNEY GENERAL, AND THUS THE COMPROMISE AGREEMENT ALSO EXTINGUISHES THE DEBT FOR THE EMERGENCY HOSPITALIZATION. WHILE WE THINK A JUDGMENT OR COMPROMISE UNDER THE TORT CLAIMS ACT SHOULD BE IN THE GROSS AMOUNT WITH INSTRUCTIONS THEREIN TO SET OFF ANY INDEBTEDNESS INVOLVED, IT APPEARS THAT YOUR AGENCY HAS NO ALTERNATIVE IN THIS MATTER BUT TO COMPLY WITH THE TERMS OF A JUDGMENT OR COMPROMISE AGREEMENT BY TERMINATING THE INDEBTEDNESS, NOTWITHSTANDING THE FACT THAT THE APPROPRIATION INVOLVED WILL NOT BE REIMBURSED.