B-227214, JUN 11, 1987

B-227214, JUN 11, 1987

MISCELLANEOUS TOPICS - FEDERAL ADMINISTRATIVE/LEGISLATIVE MATTERS - ADMINISTRATIVE POLICIES - RECORDS DESTRUCTION - TIME RESTRICTIONS DIGEST: THIS OFFICE DOES NOT CONCUR IN PROPOSAL BY VA TO DISPOSE OF MICROFILM COPIES OF RECORDS RELATING TO CLAIMS AGAINST VETERANS 25 YEARS AFTER THE RECORDS' CREATION SINCE IT IS UNCLEAR TO US THAT THE PROPOSED RETENTION PERIOD IS ADEQUATE TO PROTECT THE LEGAL AND FINANCIAL INTEREST OF THE GOVERNMENT.

REQUEST FOR RECORDS DISPOSITION AUTHORITY; VETERANS ADMINISTRATION CENTRALIZED ACCOUNTS RECEIVABLE SYSTEM - B-227214-O.M.:

THIS IS IN RESPONSE TO YOUR MEMORANDUM DATED MAY 4, 1987, FORWARDING FOR OUR REVIEW AND COMMENT A REQUEST FOR RECORDS DISPOSITION AUTHORITY (SF- 115) SUBMITTED BY THE VETERANS ADMINISTRATION (VA) PROPOSING TO DISPOSE OF VARIOUS RECORDS RELATING TO THE INDEBTEDNESS OF VETERANS TO THE GOVERNMENT AFTER SPECIFIED PERIODS OF TIME. THE DEBTS ARISE IN SITUATIONS WHERE THE VETERANS RECEIVE BENEFITS OR SERVICES TO WHICH THEY ARE NOT ENTITLED OR FOR WHICH THEY BECOME OBLIGATED TO PAY BACK WHEN THEY FAIL TO COMPLY WITH REQUIREMENTS IMPOSED AS A CONDITION FOR RECEIVING THE BENEFIT. GENERALLY, THE SCHEDULE PROPOSES A SHORT RETENTION PERIOD FOR THE PAPER COPY (2 YEARS OR LESS FROM DATE OF CREATION), AND A LONGER RETENTION FOR THE MICROFILM COPY (25 YEARS FROM THE DATE OF CREATION), OF THE RECORDS INVOLVED.

A NUMBER OF FACTORS MAKE IT DIFFICULT TO ASSESS THE ADEQUACY OF THE PROPOSED 25 YEAR RETENTION PERIOD FOR MICROFILM COPIES OF THE CLAIMS RECORDS.

THE RECORDS ARE MAINTAINED FOR A PERIOD OF TIME COMMENCING WITH THEIR CREATION RATHER THAN WITH THE DATE THE RELATED CLAIM (THE ACCOUNT RECEIVABLE) AROSE. WE HAVE BEEN ADVISED INFORMALLY BY OFFICIALS AT VA THAT THESE RECORDS RELATE TO DEBTS FOR WHICH TRADITIONAL METHODS OF COLLECTION HAVE NOT RESULTED IN PAYMENT. WE ASSUME THAT THESE RELATE TO DEBTS THAT HAVE NOT BEEN COLLECTED THROUGH ADMINISTRATIVE ACTION (IRS OR SALARY OFFSET), CONTRACT DEBT COLLECTION SERVICES AND LITIGATION, AND THUS ARE ANALOGOUS TO CLAIMS FOR WHICH COLLECTION ACTION HAS BEEN SUSPENDED OR TERMINATED UNDER THE FEDERAL CLAIMS COLLECTION STANDARDS (STANDARDS) (4 C.F.R. PARTS 101-105). IT IS NOT CLEAR THE EXTENT TO WHICH THESE STANDARDS APPLY TO VA IN VIEW OF THE ENACTMENT OF VARIOUS STATUTES IN 1980 GIVING VA INDEPENDENT LITIGATIVE AND SETOFF AUTHORITY. 38 U.S.C. SECS. 3114, 3116. HOWEVER VA AND THE JUSTICE DEPARTMENT HAVE AGREED THAT VA WILL CONTINUE TO APPLY THE STANDARDS WHEN COLLECTING DEBTS UNDER AUTHORITY OF 38 U.S.C. SEC. 3116. IN ANY EVENT, WE REFER TO THE STANDARDS PRIMARILY TO POINT OUT THAT TIME PERIODS APPLICABLE TO RETENTION OF RECORDS UNDER THE STANDARDS ARE BASED UPON EITHER FINAL PAYMENT OF THE DEBT OR ANY SETTLEMENT THEREOF, OR SUSPENSION OR TERMINATION OF CLAIMS COLLECTION ACTION.

WHEN COLLECTION ACTION IS SUSPENDED OR TERMINATED UNDER THE STANDARDS, THE REASON FOR DOING SO PROVIDES A BASIS FOR ASSESSING THE VALUE OF RETAINING THE RECORDS FOR POSSIBLE FUTURE ADMINISTRATIVE ACTIONS. FOR EXAMPLE, WHERE CLAIMS COLLECTION IS TERMINATED BECAUSE THE CLAIM IS LEGALLY WITHOUT MERIT OR CANNOT BE SUBSTANTIATED BY THE EVIDENCE, THE WISDOM OF RETAINING THE RECORDS FOR FUTURE OFFSET IS DUBIOUS. SEE 4 C.F.R. SEC. 104.3(D) AND (E). HOWEVER, UNDER THE SCHEDULE PROPOSED BY VA, NO SUCH ANALYSIS SEEMS TO BE REQUIRED.

ADMINISTRATIVE OFFSET AUTHORIZED BY 31 U.S.C. SEC. 3716, AS IMPLEMENTED BY THE STANDARDS, MAY BE EMPLOYED TO COLLECT A DEBT WITHIN 10 YEARS FROM THE DATE THE DEBT AROSE. HOWEVER THE VA IS AUTHORIZED TO COLLECT DEBTS OWED TO THE GOVERNMENT BY VIRTUE OF THE PERSON'S PARTICIPATION IN A BENEFITS PROGRAM ADMINISTERED BY THE VA FROM FUTURE PAYMENTS TO BE MADE TO SUCH PERSON UNDER ANY LAW ADMINISTERED BY THE VA WITHOUT REGARD TO LIMITATIONS APPLICABLE TO BRINGING CIVIL ACTIONS OR FOR COMMENCING ADMINISTRATIVE PROCEEDINGS, 38 U.S.C. SEC. 3114(A) AND (C). THUS THERE IS NO LEGALLY IMPOSED TIME-LIMITATION ON THE GOVERNMENT'S RIGHT TO COLLECT THE DEBT BY WAY OF OFFSET AGAINST ASSETS IN THE HANDS OF THE GOVERNMENT WITHIN THE SCOPE OF 38 U.S.C. SEC. 3114; ANY TIME LIMITATION THE VA WISHES TO RECOGNIZE IN THESE CASES WOULD BE BASED ON PRACTICAL CONSIDERATIONS.

HOWEVER, IT IS UNCLEAR WHETHER RETAINING THE RECORDS FOR 25 YEARS FROM THEIR CREATION IS, AS A PRACTICAL MATTER, SUFFICIENT. IF IT IS TRUE, AS WE HAVE INFORMALLY BEEN ADVISED BY OFFICIALS OF THE VA, THAT MOST CLAIMS ARISE WHEN A VETERAN IS IN HIS OR HER 20'S, THEN THE PROPOSED RETENTION PERIOD ASSUMES (1) THAT THERE WILL BE LITTLE OR NO OPPORTUNITY TO COLLECT THE DEBT BY OFFSET AGAINST A VETERAN'S BENEFITS AFTER HE OR SHE HAS REACHED THEIR LATE 40'S OR EARLY 50'S, OR (2) THAT IT WOULD NOT BE COST EFFECTIVE TO STORE THE MICROFILM RECORDS BEYOND THAT POINT IN TIME. WHILE WE ARE NOT IN A POSITION TO DISPUTE THESE ASSUMPTIONS, WE DO NOTE THAT MANY PEOPLE TODAY ARE BUYING HOMES LATER IN LIFE AND IT IS POSSIBLE THAT VETERANS SEEKING VA-GUARANTEED LOANS MAY SEEK THEM IN THEIR LATE 40'S OR EARLY 50'S. ALSO, SINCE THE UNLIMITED TIME PERIOD FOR ADMINISTRATIVE OFFSET IS OF RECENT ORIGIN (1980), IT IS UNLIKELY THAT INFORMATION REGARDING THE COST EFFECTIVENESS OF THE PROPOSED RETENTION PERIOD EXISTS.

IN ADDITION, IT DOES NOT APPEAR THAT THE INDIVIDUAL CLAIMS AGAINST PERSONS ARE SEGREGATED INTO IDENTIFIABLE FILES WITH ALL DOCUMENTS RELEVANT TO THE CLAIM COLLECTED ON SEPARATE MICROFILMS. INSTEAD, IT APPEARS THAT EACH MICROFILM CONTAINS DOCUMENTS RELEVANT TO CLAIMS AGAINST SEVERAL INDIVIDUALS. THUS IT IS UNCLEAR HOW THE POTENTIALLY DIFFERENT STATUS AMONG CLAIMS, OR A CHANGE IN A CLAIM'S STATUS AFTER IT IS MICROFILMED, VIS -A-VIS ITS POTENTIAL COLLECTIBILITY, WILL AFFECT THE RETENTION PERIOD APPLICABLE TO INDIVIDUAL MICROFILMS CONTAINING RECORDS RELEVANT TO THAT CLAIM. HOPEFULLY, THEY WILL BE IDENTIFIED FOR FURTHER RETENTION IF WARRANTED.

WHILE THE PROPOSED RETENTION PERIOD FOR MICROFILM MAY IN FACT BE APPROPRIATE, THE INFORMATION PROVIDED DOES NOT CLEARLY DEMONSTRATE THIS. FURTHERMORE, RETAINING RECORDS FROM THE DATE OF CREATION RATHER THAN SOME POINT UNDER CRITERIA SIMILAR TO THE STANDARDS FOR SUSPENDING OR TERMINATING COLLECTION ACTION (WHICH INDICATE THAT THEY WILL BE RETAINED BASED UPON AN ANALYSIS OF THEIR POTENTIAL USEFULNESS) FURTHER DETRACTS FROM THE PROPOSAL. CONSEQUENTLY, WE CANNOT CONCUR IN THE PROPOSED RETENTION SCHEDULE SINCE IT IS NOT CLEAR THAT THE LEGAL AND FINANCIAL INTERESTS OF THE GOVERNMENT WILL BE ADEQUATELY PROTECTED.