00-32722. Federal Benefit Payments Under Certain District of Columbia Retirement Plans

AGENCY:

Departmental Offices, Department of the Treasury.

ACTION:

Interim rule with request for comments.

SUMMARY:

The Department of the Treasury, Departmental Offices, is issuing interim regulations and requesting comments on these regulations to implement the provisions of the Balanced Budget Act of 1997, as amended (Act). The Act assigns the Secretary of the Treasury responsibility for payment of benefits under the District of Columbia (District) retirement plans for police and firefighters, and teachers for benefits based on credit for service accrued as of June 30, 1997, and under the District retirement plan for judges. The interim regulations establish general rules for claiming Federal Benefit Payments and for appeals of administrative decisions affecting Federal Benefit Payments.

DATES:

Interim rules effective January 22, 2001, except for § 29.102(a)(3) which will become effective March 31, 2001; comments must be received on or before February 20, 2001.

ADDRESSES:

Send comments to Ronald A. Glaser, Director, Office of Personnel Policy, Department of the Treasury, Metropolitan Square Building, Room 6075, 1500 Pennsylvania Avenue, NW, Washington, DC 20220. Comments may also be submitted by electronic mail to [e-mail].

FOR FURTHER INFORMATION CONTACT:

Harold L. Siegelman, [phone], Department of the Treasury, Metropolitan Square Building, Room 6033, 1500 Pennsylvania Avenue, NW, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Title XI of the Balanced Budget Act of 1997, Public Law 105-33, 111 Stat. 251, 712-731, 756-759, enacted August 5, 1997, as amended by the Omnibus Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999, Public Law 105-277, 112 Stat. 2681, 2681-530 through 538, 2681-552, transferred certain unfunded pension liabilities from the District government to the Federal Government. The Act requires the Federal Government to assume responsibility for payment of certain benefits that accrued on or before June 30, 1997, under the retirement plans for District teachers (Teachers Plan), police and firefighters (Police and Firefighters Plan), and for past and future benefits under the retirement plan for judges (Judges Plan). The Act also required the District government to establish replacement retirement plans that will provide retirement benefits for service after June 30, 1997, for current and future teachers, police, and firefighters.

1. Requirement To Establish Processes for Benefit Determinations and Appeals

(a) Claims for Federal Benefit Payments

The interim regulations implement sections 11021(1) and (2) of the Act and section 11-1570(c)(2)(A) of the D.C. Code, as amended by section 11251 of the Act. These statutes provide for, among other things, the determination of eligibility for and the amount and form of Federal Benefit Payments.

(b) Appeals of Benefit Denials

The interim regulations also implement section 11022 of the Act, which provides for the right to appeal denials of Federal Benefit Payments, in whole or in part, under the Teachers Plan and the Police and Firefighters Plan. No parallel provision in the Act or the D.C. Code exists with respect to appeal rights under the Judges Plan. To ensure uniform treatment of participants in the three plans, and in accordance with principles of fundamental fairness, the interim regulations with respect to appeal procedures shall also apply to the Judges Plan.

The interim regulations are based on the Office of Personnel Management (OPM) regulations for Civil Service Retirement with respect to similar functions. See 5 CFR 831.109-831.110. In general, the Treasury Department intends these regulations to have the same general effect as the corresponding OPM regulations.

Minor changes from the OPM regulations were necessary because of differences in the programs being administered. Under sections 8347(d) and 8461(e) of title 5 of the United States Code, OPM's retirement decisions are subject to administrative review by the Merit Systems Protection Board and the judicial review process begins in the United States Court of Appeals. Under section 11022 of the Act, a claimant whose claim for a Federal Benefit Payment has been denied (in whole or part) shall have a reasonable opportunity for a full and fair review of the decision denying such claim. The Act also vests the United States District Court for the District of Columbia with exclusive jurisdiction and venue for civil actions brought by participants or beneficiaries pursuant to the Act.

2. Contracting for Administrative Services

The Act provides in sections 11035(a) and (b) for the selection of a Trustee to administer the Department's responsibilities for the District retirement programs under the Act, including determining eligibility for and amount of Federal Benefit Payments. Subsection (c) of section 11035 authorizes the Trustee to subcontract with the District government or any person to provide services to the Trustee in connection with the Trustee's performance of its contract with the Department. Subsection (d) of section 11035 authorizes the Secretary to perform any function of the Trustee if the Secretary determines that, in the interest of economy and efficiency, the Secretary rather than the Trustee should perform such function. Until such time as the Secretary notifies the District that the Trustee has been directed to carry out the duties and responsibilities required under the contract or determines that the Department shall carry out those functions, section 11041(a) of the Act requires the District to continue to discharge its duties with respect to making Federal Benefit Payments. Because the District is currently making Federal Benefit determinations under section 11041(a) of the Act, and it is likely that such determinations will be made in the future by the Trustee, a subcontractor of the Trustee, or another agent of the Department, the regulations use the term “Benefits Administrator” throughout this subpart to denote the entity making Federal Benefit determinations. It should be noted, however, that the Department potentially may be the “Benefits Administrator” for the purpose of this subpart.

3. Development of These Procedures.

Subpart D establishes procedures for claims processing and appeals. All claims for Federal Benefit Payments must be filed in writing with the Benefits Administrator. The Benefits Administrator will be responsible for processing claims through the reconsideration-decision stage. The Department will decide appeals of the Benefits Administrator's reconsideration decisions if it receives a timely request to do so. Judicial review of the Department's final decision is available in the United States District Court for the District of Columbia, which has exclusive jurisdiction and venue over such appeals under section 11072 of the Act.

Pursuant to section 553(b)(3)(B) of title 5, United States Code, it has been determined that good cause exists for waiving a general notice of proposed rulemaking for this rule. Overpayments of Federal Benefit Payments must be corrected expeditiously to protect and maintain the integrity of the Trust Funds from which Federal Benefit Payments are made. Delaying implementation of these regulations could forestall efforts to correct overpayments promptly. Moreover, beneficiaries whose Federal Benefit Payments have been denied or reduced need the clear procedures provided in this rule for seeking review of such decisions. Delaying implementation of these provisions would be contrary to the public interest.

E.O. 12866, Regulatory Review

Because this interim rule is not a significant regulatory action for purposes E.O. 12866, a regulatory assessment is not required.

Regulatory Flexibility Act

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply. Moreover, the regulation will only affect the determination of the Federal portion of retirement benefits to certain former employees of the District of Columbia.

List of Subjects in 31 CFR Part 29

• Administrative practice and procedure
• Claims
• Disability benefits
• Firefighters
• Government employees
• Intergovernmental relations
• Law enforcement officers
• Pensions
• Retirement
• Teachers

Department of the Treasury.

Lisa G. Ross,

Acting Assistant Secretary of the Treasury.

Accordingly, the Department of the Treasury is amending part 29 of Title 31 of the Code of Federal Regulations, as follows:

PART 29—FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS

1. The authority citation for part 29 is revised to read as follows:

Authority: Sections 11083 and 11251(a) of Pub. L. 105-33, 111 Stat. 730 and 756, as amended by Pub. L. 105-277, 112 Stat. 2681-530 through 538; subpart D also issued under section 11022 of Pub. L. 105-33, 111 Stat. 730 and 756, as amended by Pub. L. 105-277, 112 Stat. 2681-530 through 538.

2. In § 29.102, paragraph (a) is revised as follows:

§ 29.102

Related regulations.

(a) This part contains the following subparts:

(1) General Provisions (Subpart A);

(2) Coordination With the District Government (Subpart B);

(3) Split Benefits (Subpart C); and

(4) Claims and Appeals Procedures (Subpart D).

* * * * *

3. In § 29.203, paragraph (b) is revised to read as follows:

§ 29.203

Service of Process.

* * * * *

(b) All other process regarding Federal Benefit Payments (including requests for judicial review under § 29.406) must be served upon the United States in accordance with applicable law.

* * * * *

4. Subpart D is added to read as follows:

Subpart D—Claims and Appeals Procedures

29.401

Purpose.

29.402

Definitions.

29.403

Applications filed with the Benefits Administrator.

29.404

Initial benefit determinations and reconsideration by the Benefits Administrator.

29.405

Appeals to the Department.

29.406

Judicial review.

29.407

Competing claimants.

§ 29.401

Purpose.

(a) This subpart explains—

(1) The procedures that participants and beneficiaries in the Judges Plan, Police and Firefighters Plan, and the Teachers Plan must follow in applying for Federal Benefit Payments;

(2) The procedures for determining an individual's eligibility for a Federal Benefit Payment and the amount and form of an individual's Federal Benefit Payment as required by section 11021 of the Act and section 11-1570 of the D.C. Code;

(3) The appeal rights available under section 11022(a) of the Act to claimants whose claim for Federal Benefit Payments is denied in whole or in part; and

(4) The special rules for processing competing claimant cases.

(b) This subpart does not apply to processing collection of debts due to the United States.

§ 29.402

Definitions.

In this subpart—

Act means the Balanced Budget Act of 1997, Public Law 105-33, 111 Stat. 251, 712-731, 756-759, enacted August 5, 1997, as amended by the Omnibus Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999, Public Law 105-277, 112 Stat. 2681, 2681-530 through 538, 2681-552.

Beneficiary means an individual designated by a participant, or by the terms of the Judges Plan, Police and Firefighters Plan, or Teachers Plan, who is or may become entitled to a benefit under those plans.

Benefits Administrator means:

(1) During the interim administration period under section 11041 of the Act, the District of Columbia government, or

(2) After the Secretary notifies the District that the Trustee has been directed to carry out the duties and responsibilities required under the contract or determines that the Department shall carry out those functions, the Department, the Trustee selected by the Department under section 11035 of the Act, or any other agent of the Department designated to make initial benefit determinations under the Act.

Claimant means any person seeking a benefit for themselves or another under the Judges Plan, Police and Firefighters Plan, or Teachers Plan.

Department means the Secretary of the Treasury or a designee authorized to exercise the Secretary's authority with respect to Federal Benefit Payments under the Act.

Participant means an individual who is or may become eligible to receive a benefit under the Police and Firefighters Plan or the Teachers Plan based on credit for service accrued as of June 30, 1997, or under the Judges Plan, or whose beneficiaries may be eligible to receive any such benefit.

§ 29.403

Applications filed with the Benefits Administrator.

All claimants for Federal Benefit Payments must file applications for benefits (including applications for retirement, refunds of contributions, and death benefits) with the Benefits Administrator.

§ 29.404

Initial benefit determinations and reconsideration by the Benefits Administrator.

(a) Initial benefit determinations. The Benefits Administrator will process applications for Federal Benefit Payments and determine the eligibility for and the amount and form of Federal Benefit Payments. All initial benefit determination decisions which may reasonably be construed as a denial (in whole or part) of a claim for Federal Benefit Payments must be in writing, must advise claimants of their right to request reconsideration under paragraph (b), of this section and must state the time limits applicable to such a request.

(b) Claimant's right to reconsideration of benefit denials. (1) Except as provided in paragraph (b)(2) of this section, claimants who disagree with the amount or form of a Federal Benefit Payment determination and wish to contest the determination must first request the Benefits Administrator to reconsider its determination.

(2) A decision to collect a debt is not a denial of a benefit claim under this section.

(c) Form and timing of requests for reconsideration. (1) A request for reconsideration must be in writing, must include the claimant's name, address, date of birth and claim number, if applicable, and must state the basis for the request.

(2) A request for reconsideration must be received by the Benefits Administrator within 30 calendar days from the date of the written notice of the initial benefit determination.

(d) Reconsideration decisions. A reconsideration decision by the Benefits Administrator denying (in whole or part) a claim for a Federal Benefit Payment must—

(1) Be in writing;

(2) Provide adequate notice of such denial, setting forth the specific reason for the denial in a manner calculated to be understood by the average participant; and

(3) Provide notice of the right to appeal the Benefit Administrator's decision to the Department, the address to which such an appeal must be submitted, and the time limits applicable to such an appeal.

(e) Appeal of reconsideration decisions. The Department will review an appeal of a reconsideration decision under § 29.405.

§ 29.405

Appeals to the Department.

(a) Who may file. Any claimant whose claim for a Federal Benefit Payment has been denied (in whole or part) by the Benefits Administrator in a reconsideration decision under § 29.404(d) may appeal that decision to the Department.

(b) Form of appeal. An appeal must be in writing, must include the claimant's name, address, date of birth and claim number, if applicable, and must state the basis for the appeal.

(c) Time limits on Appeals. (1) An appeal must be received by the Department within 30 calendar days from the date of the reconsideration decision under § 29.404(d).

(2) The Department may extend the time limit for filing when the claimant shows that he or she was not notified of the time limit and was not otherwise aware of it, or that he or she was prevented by circumstances beyond his or her control from making the request within the time limit, or for other good and sufficient reason.

(d) Final decision. After consideration of the appeal, the Department will issue a final decision. The Department's decision must be in writing, must fully set forth the Department's findings and conclusions on the appeal, and must contain notice of the right to judicial review provided in § 29.406. Copies of the final decision must be sent to the claimant seeking appeal, to any competing claimants (see § 29.407) and to the Benefits Administrator.

§ 29.406

Judicial review.

An individual whose claim for a Federal Benefit Payment has been denied (in whole or part) in a final decision by the Department under § 29.405 may, within 180 days of the date of the final decision, file a civil action in the United States District Court for the District of Columbia. Any such civil action must be filed in accordance with the rules of that court.

§ 29.407

Competing claimants.

(a) Competing claimants are applicants for survivor benefits based on the service of a participant when—

(1) A benefit is payable based on the service of the participant;

(2) Two or more claimants have applied for benefits based on the service of the participant; and

(3) A decision in favor of one claimant will adversely affect another claimant(s).

(b)(1) When a competing claimant files a request for reconsideration under this section, the other competing claimants shall be notified of the request and given an opportunity to submit written substantiation of their claim.

(2) When the Benefits Administrator receives an application from a competing claimant(s) before any payments are made based upon the service of the participant, and an initial determination of benefits in favor of one claimant adversely affects another claimant, all known claimants concerned will be notified in writing of that decision and those adversely affected will be given an opportunity to request reconsideration under the procedures and time limitations set forth in § 29.404(c). The Benefits Administrator must not execute its decision until the time limit for filing a request for reconsideration has expired, or, if a reconsideration decision is made, until the time limit for filing an appeal to the Department has expired or the Department has issued a final decision on a timely appeal, whichever is later.

(3) When the Benefits Administrator does not receive an application from a competing claimant(s) until after another person has begun to receive payments based upon the service of the participant, the payments will continue until the time limit for filing a request for reconsideration has expired, or, if a reconsideration decision is made, until the time limit for filing an appeal to the Department has expired or the Department has issued a final decision on a timely appeal, whichever is later.