TN 14 (04-00)
GN 02406.002 Nonreceipt Processing and the Robinson/Reyf Class Action Suit
In January 1997, co-defendants SSA and the Department of the Treasury (DT) entered into a Settlement Agreement with the plaintiffs on a class action suit filed in the State of New York. The plaintiffs filed suit to challenge the procedures and practices used by SSA and DT to process reports and replace title II and title XVI checks for which nonreceipt allegations were filed. As a result, SSA and DT made specific changes in the nonreceipt procedures and practices which are highlighted below.
Prior to November 1997, SSA applied these basic principles to nonreceipt processing:
Report of a missing check for a current month recurring payment.
This was handled differently from one reported for a prior month and was replaced immediately if, during the previous 24 months, there was no double check negotiation (DCN) on the claimant's record.
If a DCN existed:
If SSA records reflected a DCN, SSA requested that DT determine the status of the original check before issuing a replacement check.
If nonreceipt was reported for a recurring payment issued for a previous month (late nonreceipt report):
Status of the check was always determined before a replacement check was issued.
Nonreceipt for other than a recurring payment (e.g., prior month accrual (PMA), underpayment, daily payment, or one-time payment (OTP) check):
DT determined the status of the check and issued the agency a cancellation credit (i.e., unavailable check cancellation [UCC] credit if the payment was outstanding, i.e., returned/not cashed).
In any cases where status was required first and it indicated the original check was cashed, a forgery determination and receipt of credit for the original check was needed before a replacement check could be issued. Effective 3/98, with passage of the Check Forgery Insurance Fund (CFIF), payment was made from the fund immediately upon determination of forgery.
A nonreceipt input was transmitted to DT which resulted in a trace being forwarded to the affected beneficiary's financial institution. This put the financial institution on notice concerning the complaint of a missing payment. If the problem was not resolved, a follow-up nonreceipt input was transmitted to DT. DT controlled the case for a response from the financial institution. It was assumed that the problem would be resolved between the beneficiary and the bank with no further assistance from SSA.
B. POLICY RESULTING FROM ROBINSON-REYF CASE
The Robinson settlement agreement results in significant changes in SSA's operating procedures. For purposes of a nonreceipt allegation or policy on check replacement, there is no longer a distinction between current month checks and prior month checks, or for recurring and nonrecurring payments. Checks to replace missing payments are issued immediately except when SSA makes a decision to delay the payment to obtain status of the original check before replacement. As a result of the Robinson-Reyf litigation, effective November 1997 SSA and DT agreed to the following:
1. Immediate Replacement
SSA will direct DT, by transmitting an A-stop (in mass loss situations) or a B-stop for a missing recurring check, to issue a courtesy disbursement check prior to investigating the status of the missing check if a nonreceipt report is made timely (i.e, within 12 months from the issue date of the check).
2. DCN Bar
SSA removed the DCN bar so that any allegation of nonreceipt that is transmitted as a B-stop will generate an immediate replacement in the form of a courtesy disbursement check for the missing check, regardless of prior double check negotiations. There are, however, two situations described in item 7 below where SSA may choose to have DT determine the status of the original check before issuing a replacement.
3. Status of the Original Check
DT will investigate the status of the original check after the courtesy disbursement check is issued. If the original has been cashed as well as the courtesy disbursement, SSA will treat this as an overpayment and will start recovery action (GN 02210.000 ff.) which will be subject to the SSA appeals process. See GN 02406.310 for additional information about appeals under Robinson.
4. Payment of AOTPs for title XVI
To meet the new “immediate payment” Robinson/Reyf policy, nonreceipt of nonrecurring checks could not be treated differently from missing recurring checks. Therefore, when nonreceipt is reported for a nonrecurring title XVI check (type 2, 4 and 9), an AOTP is issued for the full amount of the missing check, in conjunction with the input of an A-Stop which will report the status of the missing check (GN 02406.205 and GN 02406.207).
5. Appeals Process
An additional step in the appeals process is instituted by the Settlement. If the individual protests the overpayment and alleges forgery of one of the checks within 30 days of the overpayment letter, recovery efforts will be stopped until DT has rendered a forgery determination. The individual then has 30 additional days to return the forgery claim form to SSA or overpayment recovery is resumed (see GN 02406.310). SSA sends the completed forgery claim form to DT. DT will investigate the claim and issue a forgery determination. If the individual disagrees with DT's forgery determination, he or she may file an appeal with DT (see GN 02406.310E.). SSA will resume collection efforts if no appeal of DT's forgery determination is made within 60 days, or when the second DT appeal determination is rendered upholding a determination of no forgery.
6. DT's second consideration of the signature on the check:
If DT reverses itself and determines that a forgery occurred (i.e., the nonreceipt claimant did not endorse the check) then there is no overpayment. If DT affirms their original determination that there was no forgery (and an overpayment exists), the check payee may still request reconsideration, or waiver, or a different rate of recovery.
Upon completion of DT action on the claim for appeal, SSA will issue a reconsideration decision.
7. SSA may choose to direct DT to investigate the status of the original check before issuing a replacement check. This option can be exercised in two situations:
If SSA has reason to believe that an individual alleging nonreceipt is misusing SSA's policy of immediate replacement, SSA will request DT to determine status prior to replacing the payment. In order to do this, SSA records must establish that the individual has received a final denial on a forgery claim or has had a DCN which was not appealed (GN 02406.150A.3.) within the last 24 months. If SSA invokes this option, and the original check has not been presented for payment, DT will cancel the original check and issue a replacement check. If the original check has been cashed and the check payee denies cashing it, a forgery investigation must be completed before a settlement check will be paid; or
If an individual is unsure whether a benefit check that was issued in the past was received, SSA will input a C-stop so that DT will determine status of the original check in question before issuing a replacement.
8. Status Requests
SSA will make every effort to respond quickly to inquiries about the progress of forgery claims investigations. Refer to GN 02406.220 for additional information about this process.
9. EFT claims
If payment was sent to the wrong routing number (RTN), SSA will promptly replace the payment via the CPS for title II or by issuing an OTP for title XVI. GN 02406.010 contains instructions for handling of these EFT nonreceipt claims.
If SSA's direct deposit data is correct or if the RTN is correct but the depositor's account number (DAN) is incorrect, the FI will be contacted to determine if the payment can be located. Refer to GN 02406.010 for a description of the “trace” procedure.