B-199395 L/M, NOV 12, 1980

B-199395 L/M, NOV 12, 1980

PRECIS-UNAVAILABLE

ALICE DANIEL, U. S. DEPARTMENT OF JUSTICE:

THIS RESPONDS TO YOUR LETTER OF JUNE 25, 1980, SUGGESTING CONSIDERATION OF POSSIBLE CHANGES TO THE GENERAL ACCOUNTING OFFICE - DEPARTMENT OF JUSTICE REGULATIONS AT 4 C.F.R. SEC. 101.1 ET SEQ. PROMULGATED UNDER SEC. 3 OF THE FEDERAL CLAIMS COLLECTION ACT OF 1966 (31 U.S.C. SEC. 952). YOUR SUGGESTION IS PROMPTED BY THE PENDING CASE OF JOANNE B. RHINEHART, ET AL. V. MARTIN SENECA, ET. AL., D.D.C., CIVIL ACTION NO. 78-2472, AND THE POSSIBILITY THAT THE COURT MAY ULTIMATELY ORDER AMENDMENTS TO EXPAND THE PROCEDURAL DUE PROCESS PROVISIONS OF THOSE REGULATIONS. MR. ALAN FERBER OF YOUR OFFICE HAS SUGGESTED THAT THE IMPACT OF SUCH AN ORDER COULD BE MITIGATED BY PREPARING FOR THE COURT'S ADVANCE APPROVAL, EXPANDED RECONSIDERATION AND HEARING REQUIREMENTS CONCERNING THE SETOFF OF DEBTS AGAINST THE RETIREMENT ACCOUNTS OF FORMER GOVERNMENT EMPLOYEES WHO ARE CHARGED WITH DEBTS OWING TO THE UNITED STATES. BECAUSE CURRENT PROCEDURES PROVIDE AN OPPORTUNITY TO INDIVIDUALS INDEBTED TO THE GOVERNMENT TO CONTEST THE VALIDITY OF THE DEBT PRIOR TO SETOFF, WE WOULD PREFER TO DELAY ANY MODIFICATION OF THE FEDERAL CLAIMS COLLECTION STANDARDS UNTIL THE RHINEHART CASE IS DISPOSED OF.

IN THIS REGARD, THE CURRENT STANDARDS SPECIFY THAT THEY ARE NOT INTENDED "TO REQUIRE AN AGENCY TO OMIT OR FORECLOSE ADMINISTRATIVE PROCEEDINGS REQUIRED BY CONTRACT OR LAW." 4 C.F.R. SEC. 101.7. THEY REQUIRE THE COLLECTING AGENCY TO SEND THREE DEMAND LETTERS TO THE DEBTOR, TO RESPOND TO ANY COMMUNICATIONS FROM HIM AND TO PROVIDE AN OPPORTUNITY FOR THE DEBTOR TO CONTEST THE DEBT. 4 C.F.R. SEC. 102.2. FURTHER, GOVERNMENT AGENCIES MUST CONDUCT PERSONAL INTERVIEWS WITH THEIR DEBTORS WHENEVER FEASIBLE. 4 C.F.R. SEC. 102.5. MOREOVER, UNDER FEDERAL PERSONNEL MANUAL LETTER 831-51, JULY 24, 1978, SETOFF IN AN INDIVIDUAL'S ANNUITY OR LUMP- SUM REFUND BECAUSE OF A DEBT DUE THE UNITED STATES MAY BE MADE ONLY IF THE CREDITOR AGENCY CERTIFIES TO THE OFFICE OF PERSONNEL MANAGEMENT (OPM) THAT THE EMPLOYEE HAS HAD AN OPPORTUNITY TO REQUEST RECONSIDERATION OF THE COLLECTION, INCLUDING WAIVER AND/OR COMPROMISE, AS APPLICABLE. ACCORDINGLY, THE PRESENT STANDARDS AND OPM PROCEDURES PROVIDE DUE PROCESS SAFEGUARDS. WHETHER SUCH SAFEGUARDS WILL BE DETERMINED BY THE COURT TO BE DEFICIENT UNDER CONSTITUTIONAL OR STATUTORY STANDARDS IS, IN OUR VIEW, UNCERTAIN. THEREFORE, WE THINK IT WOULD BE PREMATURE TO EXPAND RECONSIDERATION AND HEARING REQUIREMENTS FOR DEBT COLLECTION SETOFF AGAINST RETIREMENT FUNDS IN THE ABSENCE OF A JUDICIAL MANDATE FOR SUCH EXPANSION.

WE NOTE THAT IN 1978, THE CIVIL SERVICE COMMISSION REQUESTED THE JUSTICE DEPARTMENT AND GAO TO JOINTLY DRAFT AMENDMENTS TO THE CLAIMS COLLECTION STANDARDS TO INCLUDE THE DUE PROCESS PROCEDURES ORDERED IN SHANNON V. U. S. CIVIL SERVICE COMMISSION, 444 F.SUPP. 354 (N.D. CAL. 1977). HOWEVER, THE JUSTICE DEPARTMENT WAS THEN SEEKING CERTIORARI IN THE RELATED MATTER OF ELLIOTT V. WEINBERGER, 564 F.2D 1219 (1977), AND THE DEPARTMENT'S OFFICE OF LEGAL COUNSEL TOOK THE POSITION THAT UNTIL IT WAS DETERMINED WHETHER ANY REQUIRED HEARING WAS TO BE CONDUCTED BEFORE OR AFTER RECOUPMENT OF ERRONEOUS SOCIAL SECURITY PAYMENTS, THE COLLECTION STANDARDS COULD NOT BE MEANINGFULLY REVISED. AS IT TURNED OUT, THE SUPREME COURT AFFIRMED THE CIRCUIT COURT OF APPEALS DECISION THAT A PRE-RECOUPMENT ORAL HEARING IS REQUIRED ONLY WHEN A SOCIAL SECURITY RECIPIENT REQUESTS WAIVER OF THE GOVERNMENT'S RIGHT TO RECOUP OVERPAYMENTS UNDER SEC. 204(B) OF THE SOCIAL SECURITY ACT. CALIFANO V. YAMASAKI, 442 U.S. 682 (1979). THE COURT RULED, HOWEVER, THAT A PRE RECOUPMENT HEARING IS NOT REQUIRED WHERE A SOCIAL SECURITY RECIPIENT REQUESTS RECONSIDERATION OF THE DETERMINATION THAT HE WAS OVERPAID WITHOUT REQUESTING WAIVER.

THE QUESTION OF PRE-RECOUPMENT HEARINGS IN WAIVER CASES DOES NOT ARISE UNDER 31 U.S.C. SEC. 952 SINCE WAIVER DETERMINATIONS NECESSARILY WOULD HAVE TO BE MADE BEFORE A DETERMINATION TO SEEK REPAYMENT BY MEANS OF SETOFF. ACCORDINGLY, IT WAS NOT NECESSARY TO AMEND THE COLLECTION STANDARDS AS A RESULT OF THE SHANNON AND YAMASAKI DECISIONS.

IN ANY EVENT, WE BELIEVE THAT TO AMEND THE COLLECTIONS STANDARDS NOW WOULD REQUIRE US TO SPECULATE AS TO WHAT, IF ANY, CHANGES THE COURT IN RHINEHART MAY ULTIMATELY REQUIRE. CONSEQUENTLY, WE MIGHT HAVE TO REVIEW OUR PROCEDURES AGAIN AFTER FINAL JUDGMENT. FURTHER, BECAUSE MODIFICATION OF THE STANDARDS WOULD REQUIRE FEDERAL AGENCIES TO REVISE THEIR OPERATING PROCEDURES WHICH COULD THEREBY DELAY AND CONFUSE THEIR ATTEMPTS TO COLLECT PENDING CLAIMS, WE THINK IT INADVISABLE TO AMEND THE STANDARDS PIECEMEAL. FOR THESE REASONS WE ARE OF THE VIEW THAT REVISION OF THE FEDERAL CLAIMS COLLECTION STANDARDS WOULD BE PREMATURE AT THIS TIME.

SHOULD YOU HAVE ANY ADDITIONAL QUESTIONS, YOU MAY CONTACT MR. LYNN CAYLOR OF MY STAFF BY CALLING 275-5544.

DIGEST

PROPOSAL TO EXPAND PROCEDURAL DUE PROCESS PROVISIONS OF FEDERAL CLAIMS COLLECTION STANDARDS PROMULGATED UNDER SEC. 3 OF THE FEDERAL CLAIMS COLLECTION ACT OF 1966 (31 U.S.C. SEC. 952) IS PREMATURE SINCE SUIT CHALLENGING DUE PROCESS PROVISIONS FOR EFFECTUATING SETOFF OF DEBTS AGAINST RETIREMENT ACCOUNTS OF FORMER GOVERNMENT EMPLOYEES IS STILL PENDING AND DUE PROCESS PROCEDURES ORDERED IN SHANNON V. U. S. CIVIL SERVICE COMMISSION AND CALIFANO V. YAMASAKI DO NOT APPLY TO COLLECTION ACTIONS TAKEN PURSUANT TO FEDERAL CLAIMS COLLECTION ACT.