PART 537—CLAIMS ON BEHALF OF THE UNITED STATES Authority: 31 U.S.C. 3711-3720E; 42 U.S.C. 2651-2653; 10 U.S.C. 1095; 10 U.S.C. 4803-4804; 33 U.S.C. 408. Source: 71 FR 69403, Nov. 30, 2006, unless otherwise noted. § 537.1 Statutory authority for non-maritime claims. (a) The Federal Claims Collection Act. (b) Federal Medical Care Recovery Act. (c) Title 10 United States Code Section 1095. Note to § 537.1: All of these statutes may be viewed on the USARCS Web site, https://www.jagcnet.army.mil/85256F33005C2B92/(JAGCNETDocID)/HOME?OPENDOCUMENT. § 537.2 Scope of non-maritime affirmative claims statutes. (a) Recovery for government property loss or damage. (b) Recovery for medical expenses and lost military pay. (2) Under 10 U.S.C. 1095 the United States is also deemed a third-party beneficiary or subrogee under an alternative system of computations such as workers' compensation; hospital lien laws; contract rights under the terms of insurance policies including medical payment coverage; uninsured, underinsured and no-fault coverage; and no-fault laws. (c) Recovery of health insurance. (d) Worldwide applicability. § 537.3 Claims collectible. (a) Claims for medical expenses. (1) Arising out of a tort under local law, (2) Arising out of an on-the-job injury compensable under workers' compensation law except for Federal Employees Compensation Act (FECA) recoveries, (3) Based on the United States being a third-party beneficiary of the insurance contract of the injured party to include medical payment coverage, lost wages, as well as uninsured, underinsured, and no-fault coverage. (b) Claims for lost military pay. (c) Claims for property loss. § 537.4 Claims not collectible. (a) Where the tortfeasor is a department, agency or instrumentality of the United States. (See § 536.27(g) of this chapter). (b) Where the tortfeasor is a member of the uniformed services or an employee of the DA or DOD, acting within the scope of employment, who damages or loses property. See AR 735-5, chapter 13. (c) Where the damage or loss of property falls under a contractor bill of lading and recovery is pursued by the contracting agency, e.g., Surface Deployment and Distribution Command (SDDC), formerly the Military Traffic Management Command (MTMC), for lost or destroyed shipments. (d) Where damage to assigned quarters, or equipment or furnishings therein, is collectible from a member of the uniformed services under 10 U.S.C. 2775. (e) Where the medical care is furnished by a Department of Veterans Affairs facility to other than active duty members of the uniformed services for service-connected disabilities. § 537.5 Applicable law. (a) Basis for recovery. (2) Recovery assertions based on the United States being a third-party beneficiary or subrogee are not based on tort, but on the right to recover under local law, for example, the right of a third party to recover workers' compensation benefits is based on local law. However, the right of a third-party beneficiary to recover under an insurance contract may turn on whether an exclusionary clause is valid under the law of the jurisdiction where the contract was made. (b) Statute of limitations. (2) Recovery assertions based on an implied-in-law contract against a no-fault or personal-injury-protection insured must be brought no later than six years from the date of accrual, 28 U.S.C. 2415(a), United States Limbs, (3) Actions asserted on a third-party beneficiary basis against an insurer or workers compensation fund must comply with the state notice requirement, which varies from one to six years, or the insurer's notice requirement set forth in the policy. United States Hartford Acci. & Indem. Co., (4) The statute of limitations is tolled or does not start running until the responsible federal official is notified of the existence of a recoverable loss, Jankowitz United States, United States Golden Acres, Inc., § 537.6 Identification of recovery incidents. (a) Responsibilities. (b) Screening procedures. (2) The MTF commander will ensure that the claims office is notified of instances in which the MTF provides, or is billed by a civilian facility for, inpatient or outpatient care resulting from injuries (such as broken bones or burns arising from automobile accidents, gas explosions, falls, civilian malpractice, and similar incidents) that do not involve collections from a health benefits or Medicare supplemental insurer. Claims personnel will coordinate with MTF personnel to ensure that inpatient and outpatient records and emergency room and clinic logs are properly screened to identify potential cases. The RJA or recovery attorney will screen the MTF comptroller records database and division records as well as ambulance logs to identify potential medical care recovery cases. The RJA or recovery attorney will also coordinate with Navy and Air Force claims offices and MTFs to ensure they identify potential claims involving treatment provided to Army personnel. (3) The MTF commander will also ensure that the MTF does not release billings or medical records, or respond to requests for assistance with workers' compensation forms, without coordinating with the RJA or recovery attorney. (4) The TRICARE fiscal intermediary is required to identify and mail certain information promptly to the claims office designated as the state point of contact. The fiscal intermediary must mail the TRICARE Explanation of Benefits, showing the amount TRICARE paid on the claim along with what diagnostic codes were used, and DD Form 2527, Statement of Personal Injury. A sample Statement of Personal Injury (DD Form 2527) is posted on the USARCS Web site; for the address see the Note to § 537.1. (5) The RJA or recovery attorney will also coordinate with Navy and Air Force claims offices and MTFs to ensure they identify potential claims involving treatment provided to Army personnel, AR 40-400, paragraph 13-5. (c) When to open a recovery file. (2) Army responsibility for affirmative claims is as follows: (i) Damage to or loss of real or personal property of the DOD or the Army even if located at installations or activities under the jurisdiction of other uniformed services. (ii) Personal injury to persons whose primary care for an accident-related injury is furnished at an Army MTF, regardless of the uniformed services affiliation of the person or sponsor, but not to those treated at another uniformed service's MTF even if the person is an active duty Army member. (iii) Personal injury to an active duty or retired Army member or a family member of either category treated under TRICARE. (iv) A lead agency will be established whenever: (A) Property damaged or lost belonging to more than one service is involved in the same incident. (B) Personal injury victims are treated at MTFs of more than one service. (C) Personal injury victims with affiliations to more than one service are treated under TRICARE. (D) Lead agencies may be established locally for claims valued at $50,000 or less. For claims greater than $50,000 USARCS will be notified and will deal with the other service at headquarters level. (See § 536.32 of this chapter.) § 537.7 Notice to USARCS. Upon receipt of notice of a claim involving either actual or potential amounts within USARCS' monetary jurisdiction, that is, where final action will be taken by USARCS or the Department of Justice, immediate notice will be given to USARCS. Forwarding a copy of the serious incident report, discussed in § 536.22(c) of this chapter, to USARCS, will meet this requirement. Thereafter, mirror file copies will be furnished to USARCS in accordance with AR 27-20, paragraph 2-12. This allows for continuous monitoring and discussion between the ACO and the USARCS area action officer (AAO). § 537.8 Investigation. (a) Claims over $50,000. (b) Claims of $50,000 or less. (c) Claims of $5,000 or less. (d) Relations with injured party. (2) When the injured party is represented, a Health Insurance Portability and Accountability Act (HIPAA) medical release form (sample posted at the USARCS Web site; see § 537 (b)(4)) permitting USARCS to send out the medical records of the injured party for claims purposes, will be sent to the injured party's lawyer for completion and return. (3) When the injured party or his or her lawyer refuses to furnish necessary information, it can usually be obtained by other means, for example, from an accident report or investigation. A notice will be furnished to all parties that the government has been assigned the right to bring a claim for the value of medical care furnished, lost pay or value of property lost or destroyed, and that the United States has the right to bring an independent cause of action. In absence of timely and appropriate response, discuss with the AAO to determine what action should be taken. § 537.9 Assertion. (a) Asserting demands. (1) The fact that the medical expenses have been assigned to the United States and as a result the United States has a cause of action in federal or state court. All parties will be notified that if the insurer pays the amount to another party, the United States has the right to collect from the insurer. (2) Demands for third-party torts are under the authority of the FMCRA; demands where there is no tortfeasor are under the authority of 10 U.S.C. 1095; demands for property loss or damage are under the authority of the FCCA. (b) Documentation of damages. (1) TRICARE bills are obtained from the fiscal intermediary servicing the ACO. The amounts are based on the amount TRICARE pays and not the amount the patient is billed by the provider. TRICARE bills must be screened to insure that the care is incident or accident related as the demand is limited to that amount. (2) MTF bills, both outpatient and inpatient, are obtained from either the MTF co-located with the ACO or if another MTF is involved, from that MTF, regardless of uniformed service affiliation. Outpatient bills include not only the cost of the visit but also the cost of each procedure, such as x-rays or laboratory tests. Inpatient billing is not based on services rendered but on a diagnostic group. Charges for professional inpatient services will be itemized the same as outpatient care. Charges for prescription services will be included. Screening to ensure that only incident or accident related care is claimed is essential. The cost of ambulance services, ground or air, will be calculated with MTF assistance and demanded. Burial expenses are obtained from the local mortuary affairs office on DD Form 2063, but will be demanded only when the insurance coverage includes such expenses. (3) Lost pay will be obtained from the leave or earnings statement or the active duty pay chart for the year or years in question and will include special and incentive pay unless the injured service member did not receive either due to the length of time off assigned duty. The time off duty will be based on the time service members are unable to perform duties for which they have been trained (their military occupational specialty). It will not be limited to inpatient time. Time in a medical holding or convalescent leave will be lost time. (4) The amount recoverable for personal property losses is limited to its value at the time of loss. Depreciation charts may be used to determine the reduction from the value at purchase. Replacement value will not be used. Both real and personal property damage will be on the value of labor and cost of material including the use of heavy equipment. When the cost of repairs is greater than $50,000, 10% overhead will be added. This can be substantiated using case law and by seeking documentation from the repair facility. (c) Double collections prohibited. § 537.10 Recovery procedures. (a) Recovery personnel have three means of enforcing recovery following initial assertion. (1) Referral to litigation pursuant to § 537.11; (2) The head of an ACO should request Chief, Litigation Division, OTJAG to have the RJA appointed as a Special Assistant United States Attorney when the following criteria are met: (i) Filing suit is a frequent necessity, e.g., insurance companies are refusing payment on small claims either by raising issues well settled or by regularly reducing the amount of medical care as not fair and reasonable; (ii) The local U.S. Attorney's office is in favor of such appointment due to his previous experience with the RJA and the additional burden of affirmative claims litigation on his staff; (iii) The RJA has at least two years experience and is likely to continue in the RJA assignment for at least one year; and (iv) Commander USARCS concurs in the appointment and is willing to furnish support. (3) The RJA may request that the attorney representing the injured party include the amount asserted by the United States as part of special damages. The injured party's attorney may not represent the United States nor may the United States pay attorney fees as this would be in violation of 5 U.S.C. 3106. Where indicated, this arrangement should be reduced to writing. Be mindful that the attorney's duty to the injured party is in conflict with the interests of the United States where the amount potentially recoverable is small in comparison to the amount asserted by the United States. In this event the RJA should pursue recovery independently. (b) Careful monitoring of all assertions is required to insure timely follow-up resulting in collection or suit where indicated. Installation of a suspense system to avoid the expiration of the statute of limitations is essential. Recommendations to file suit should be forwarded by the RJA well prior to the expiration of the statute of limitations. Within six months prior to the running of the statute of limitations, USARCS must be notified of the status of the claim or potential claim. Follow-up demands should precede filing suit to create a written record of efforts to avoid suit. Personal contact with all parties is encouraged. When represented, contact the representative. (c) Sources other than vehicle liability coverage should be exhausted in cases where the amount of the potential recovery exceeds $50,000 and the coverage is small. Coordination with USARCS is required. USARCS can obtain expert witnesses for medical malpractice cases, product liability cases, or other cases in which another tortfeasor may be involved. § 537.11 Litigation. (a) If a tortfeasor or insurer refuses to settle, or if an injured party's attorney improperly withholds funds, the RJA or recovery attorney must consider litigation to protect the interests of the United States. Litigation is particularly appropriate if a particular insurer consistently refuses to settle claims, or if the government's interests are not adequately represented on a claim over $25,000. (b) RJAs or recovery attorneys must maintain close contact with local U.S. Attorney's Offices to ensure these offices are willing to initiate litigation on cases. (c) In order to directly initiate or intervene in litigation, an RJA or recovery attorney must prepare a litigation report and formally refer the case through the Affirmative Claims Branch, USARCS, and the Litigation Division, OTJAG (as required by AR 27-40, chapter 5), to the U.S. Attorney. While the RJA or recovery attorney, in conjunction with the Litigation Division Torts Branch, should attempt to have the U.S. Attorney's Office initiate litigation at least six months before the expiration of the statute of limitations (SOL), the RJA or recovery attorney may contact USARCS telephonically if SOL problems necessitate quick action on a case. The RJA or recovery attorney should also contact USARCS if a U.S. Attorney is reluctant to pursue an important case. An injured party's attorney may represent the government's interest in litigation without any special coordination. § 537.12 Settlement authority. (a) Assertions for $50,000 or less Approval authority. (2) Final action authority. (ii) The foregoing authorities may waive a claim asserted for $50,000 or less where undue hardship exists. (iii) Determination of amount. The amount of $50,000 is determined totaling the amounts for medical care, lost military wages, lost earnings or government property damage arising from the same claims incident. (b) Assertions over $50,000. (c) Appeals Assertion for $50,000 or less. (2) Assertion over $50,000. (d) Compromise or waiver. (1) The cost to collect does not justify the cost of enforcement. (2) There is evidence of fraud or misrepresentation. (3) The U.S. cannot locate the tortfeasor. (4) Legal merit has not been substantiated. (5) The statute of limitations has run and the debtor refuses to pay. (6) Collection of all or part of the amount of funds demanded would create inequity. The following criteria apply: (i) Detailed information on what funds are available for recovery. (ii) Reasonable value of the injured party's claim for permanent injury, pain and suffering, decreased earning power, and any other special damages. (iii) Military, Department of Veterans Affairs, Social Security disability, and any other government benefits accruing to the injured party. (iv) Probability and amount of future medical expenses of the government and the injured party. (v) Present and prospective assets, income, and obligations of the injured party and those dependent on him or her. (vi) The financial condition of the debtor. (vii) The degree and nature of contributory negligence on the part of the injured party in causing his injury or death. (viii) The percentage of attorney's fees that his attorney is willing to reduce. (ix) The willingness of the tortfeasor to enter into an installment agreement. (e) Releases. § 537.13 Enforcement of assertions. Meritorious assertions that do not result in collections should be enforced as follows: (a) Where the debtor is a business or corporation otherwise financially capable the RJA or equivalent should forward a recommendation to bring suit or intervene in an existing suit regardless of the amount of the debt. As authorized by 28 U.S.C. 3011, the demand amount in the complaint shall include an additional 10% of the original claimed amount, to cover the administrative costs of processing and handling the enforcement of the debt. (b) Where the debtor is an individual rather than a business, an asset determination should be made both as to existing assets or prospective earnings. If the injured party's attorney has made an assets search which is reliable, review the search before requesting a new one. Such a search can be paid for out of existing collections. (1) If the debtor has assets refer to USARCS for transfer to a debt collection contractor or an agency debt collection center as determined by USARCS. (2) If the debtor has no assets, but prospective future earnings, RJA may seek a confession of judgment and maintain contact with the debtor for future collection where authorized by state law and filing of suit is not required. If the amount is less then $5,000, enter into an installment payment arrangement. § 537.14 Depositing of collections. (a) Depositing property damage recovery Machines, supplies, watercraft, aircraft, vehicles other than General Services Administration-owned. (2) Real property. (3) NAFI property. (4) Army Stock Fund or Defense Business Operations Fund property. (5) Government housing in cases of abuse or neglect by soldiers or families. (6) Government housing in cases of negligence by nonresidents. (b) Depositing recovery of pay provided to a soldier while incapacitated. (c) Depositing medical care recovery To a medical treatment facility account. (2) Deposits when TRICARE paid directly for treatment. (3) Apportionment of medical care recovery between accounts. (i) Apportioning money between accounts. (ii) Apportioning money between two or more medical treatment facility accounts. (d) Fiscal integrity. § 537.15 Statutory authority for maritime claims and claims involving civil works of a maritime nature. (a) The Army Maritime Claims Settlement Act. (b) The Rivers and Harbors Act. § 537.16 Scope for maritime claims. The Army Maritime Claims Settlement Act (10 U.S.C. 4803-4804) applies worldwide and includes claims that arise on high seas or within the territorial waters of a foreign country. (a) 10 U.S.C. 4803 provides for agency settlement or compromise of claims for damage to: (1) DA-accountable properties of a kind that are within the federal maritime jurisdiction. (2) Property under the DA's jurisdiction or DA property damaged by a vessel or floating object. (b) 10 U.S.C. 4804 provides for the settlement or compromise of claims in any amount for salvage services (including contract salvage and towage) performed by the DA. Claims for salvage services are based upon labor cost, per diem rates for the use of salvage vessels and other equipment, and repair or replacement costs for materials and equipment damaged or lost during the salvage operation. The sum claimed is usually intended to compensate the United States for operational costs only, reserving, however, the government's right to assert a claim on a salvage bonus basis in accordance with commercial practice. (c) The United States has three years from the date a maritime claim accrues under this section to file suit against the responsible party or parties. § 537.17 Scope for civil works claims of maritime nature. Under the River and Harbors Act (33 U.S.C. 408), the United States has the right to recover fines, penalties, forfeitures and other special remedies in addition to compensation for damage to civil works structures such as a lock or dam. However, claims arising under 10 U.S.C. 4804 are limited to recovery of actual damage to Corps of Engineers (COE) civil works structures. § 537.18 Settlement authority for maritime claims. (a) The Secretary of the Army, the Army General Counsel as designee of the Secretary, or other designee of the Secretary may compromise an affirmative claim brought by the United States in any amount. A claim settled or compromised in a net amount exceeding $500,000 will be investigated and processed and, if approved by the Secretary of the Army or his or her designee, certified to Congress for final approval. (b) TJAG, TAJAG, the Commander USARCS, the Chief Counsel COE, or Division or District Counsel Offices may settle or compromise and receive payment on a claim by the United States under this part if the amount to be received does not exceed $100,000. These authorities may also terminate collection of claims for the convenience of the government in accordance with the standards specified by the DOJ. (c) An SJA or a chief of a command claims service and heads of ACOs may receive payment for the full amount of a claim not exceeding $100,000, or compromise any claim in which the amount to be recovered does not exceed $50,000 and the amount claimed does not exceed $100,000. (d) Any money collected under this authority shall be deposited into the U.S. General Treasury, except that money collected on civil works claims in favor of the United States pursuant to 33 U.S.C. 408 “shall be placed to the credit of the appropriation for the improvement of the harbor or waterway in which the damage occurred * * *” (33 U.S.C. 412; 33 U.S.C. 571). § 537.19 Demands arising from maritime claims. (a) It is essential that Army claims personnel demand payment, or notify the party involved of the Army's intention to make such demands, as soon as possible following receipt of information of damage to Army property where the party's legal liability to respond exists or might exist. Except as provided below pertaining to admiralty claims and claims for damage to civil works in favor of the United States pursuant to 33 U.S.C. 408, copies of the initial demand or written notice of intention to issue a demand letter, as well as copies of subsequent correspondence, will be provided promptly to the Commander USARCS, who will monitor the progress of such claims. (b) Subject to limitation of settlement authority, demands for admiralty claims and civil works damages in favor of the United States pursuant to 33 U.S.C. 408 may be asserted, regardless of amount, by the Chief Counsel COE, or his designees in COE Division or District Counsel offices. (c) Where, in response to any demand, a respondent denies liability, fails to respond within a reasonable period, or offers a compromise settlement, the file will be promptly forwarded to the Commander USARCS, except in those cases in which a proposed compromise settlement is deemed acceptable and the claim is otherwise within the authority delegated in § 537.18 of this part. Files for admiralty claims and civil works claims in favor of the United States pursuant to 33 U.S.C. 408 will be promptly forwarded to the United States Department of Justice. § 537.20 Certification to Congress. Admiralty claims, including claims for damage to civil works in favor of the United States pursuant to 33 U.S.C. 408, proposed for settlement or compromise in a net amount exceeding $100,000 will be submitted through the Commander USARCS to the Secretary of the Army for approval and if in excess of $500,000 for certification to Congress for final approval.