Chapter 01. Standards for Administrative Collection of Claims

In this chapter, the following terms have the meanings indicated.

Terms Defined.

Aggressive Collection Action. The agency head or his designee shall take aggressive action, on a timely basis with effective follow-up, to collect all claims of the State for money or property resulting from the activities of (or referred to) his agency in accordance with the standards set forth in this regulation.

Demand for Payment.

Personal Interview with Debtor. Agencies will undertake personal interviews and telephone contacts with their debtors when this is feasible, having due regard for the amounts involved and the proximity of the agency representatives to these debtors.

Collection from Third-Party Payors. Whenever the debtor may be eligible for benefits or financial assistance from a third party, such as veteran benefits, Medicaid, or Medicare, to help satisfy the debtor's obligation to the State, the agency shall render any assistance that it may deem reasonable and proper to assist the debtor in making claim on the third party, including billing the third party on behalf of the debtor. Collections from these third parties shall be used to reduce the debtor's obligation to the State to the extent permitted by law. In determining account delinquency, a debtor's refusal to apply for or make a claim for benefits from a third-party payor shall have the same effect as a refusal of benefits to the debtor by the third-party payor.

Collection by Offset. Collection by offset shall be undertaken administratively to the extent permitted by law.

Liquidation of Collateral.

Collection in Installments. Claims should be collected in full in one lump sum whenever this is possible. However, if the debtor is financially unable to pay the indebtedness in one lump sum, payment may be accepted in regular installments. The size and frequency of these installment payments should bear a reasonable relation to the size of the debt and the debtor's ability to pay. If liquidation by installment payments should require more than 3 years, then the claim should be transferred as a delinquent account to CCU. An agency holding an unsecured claim for administrative collection may attempt to obtain an executed confessed judgement note. The form and content of these notes shall be as prescribed by the legal counsel of the agency concerned. Security for deferred payments, other than a confessed judgement note, may be accepted in appropriate cases. An agency may accept installment payments notwithstanding the refusal of a debtor to execute a confessed judgement note or to give other security, at the agency's option.

Exploration of Compromise or Abatement. Agencies shall neither abate nor compromise claims. If there is reason to believe that the debtor's financial ability will not permit payment of the claim in full, the claim shall be referred immediately to CCU for exploration of possible compromise or abatement.

Suspension or Revocation of License or Eligibility. Agencies seeking the collection of statutory penalties, forfeitures, or debts provided for as an enforcement aid or for compelling compliance shall give serious consideration to the suspension or revocation of licenses or other privileges, to the extent permitted by law, for inexcusable, prolonged, or repeated failure of a debtor to pay this claim and shall so advise the debtor.

Documentation of Collection Efforts.

All delinquent accounts shall be transferred to CCU for collection or abatement. Transfer shall take place within 15 days after the account is declared delinquent.

Agencies shall notify CCU of all disputed claims over $5,000 that are not resolved within 180 days after notice of the claim to the debtor.

Agencies shall report to CCU semiannually the status of all accounts or claims over $5,000 that have open audit findings.

Agency records of accounts transferred to CCU shall be maintained in accordance with generally accepted accounting principles and practices specified by the Comptroller of the Treasury.

On those accounts with a value of less than $30, the agency should, monthly, prepare a list of these accounts showing name, amount, and reason for noncollection, and forward two copies of the list to the Central Collection Unit requesting Abatement Committee approval to write off these accounts. When the Committee approves the write-off, it shall return a copy of the transmittal letter authorizing the agency to close the account.

Accounts with a value of $30 or more may be transferred manually or by computer tape.

Accounts Transferred Manually.

Accounts Transferred by Computer Tape.

The Central Collection Unit shall accept all delinquent accounts submitted in accordance with Regulation .05 of this chapter and shall initial and return one copy of the transmittal letter to the transferring agency.

The Central Collection Unit shall initiate collection procedures.

The Central Collection Unit monthly shall notify the agency of collections or abatements on its accounts by transmitting a copy of the cash and journal voucher report showing all monetary changes to the agency's accounts being collected by the Central Collection Unit. The Comptroller shall be notified of these collections, less any applicable charges, by STARS 120 Report from the Central Collection Unit.

The Central Collection Unit, whenever possible, shall collect attorney fees, collection fees, interest penalties, and other costs over and above the principal debt allowed by law, the original note, contract, or other documents.

The Central Collection Unit shall charge the debtor a collection fee of 17 percent on all accounts referred for collections, except on accounts referred to the Unit solely for collection under the tax refund intercept program.

For all collections resulting from the Central Collection Unit's efforts:

The charges in §§A and B of this regulation may be waived or reduced at the discretion of the Central Collection Unit.

On an account forwarded by the Central Collection Unit to an out-of-State attorney or to a commercial collection agency, the fee paid to the attorney or collection agency, plus court costs, witness fees, and other expenses, shall be deducted from any proceeds. Under these circumstances, a fee may not be charged for the Central Collection Unit's efforts.