assignment of third party recovery

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Firms open close, lawyers open close, in-house open close, knowledge centre open close, events open close, about us open close, assignment of claims: are there any constraints to assigning claims or seeking cost guarantees.

June 18, 2019 > > Litigation & Dispute Resolution

IR Global | View firm profile

The following article discusses session three in the IR Global Virtual Series on 'Litigation Funding: Handling commercial and financial disputes

Germany – FW The assignment of claims to a third party for the purpose of their recovery is allowed without further ado, if the assignee bears the full financial risk of recovering the claims and acts for his own account (e.g. factoring).

If an assignee collects debts for the account of the assignor and if the debt collection is conducted as a stand-alone business, this is considered a collection service (Inkassodienstleistung) under the Legal Services Act (Rechtsdienstleistungsgesetz).

Pursuant to the latter, persons who provide such collection services (collection service providers) have to seek the permission of competent authorities and have to be registered with the Legal Services Register (Rechtsdienstleistungsregister). The assignment of claims to a collection service provider which is not registered is null and void; the unauthorised collection service provider lacks the capacity to sue.

With regard to certain types of litigation, e.g. consumer actions, the assignment of claims (to registered collection service providers) is common. In general, such assignments appear reasonable to pool small claims in order to benefit from synergy effects and to create a certain ‘balance of power’ vis-à-vis more financially powerful counter-parties. With regard to bigger claims, however, litigation funding will usually be the better, or even only, option to get financial support from third parties.

Spain – DJ The situation is similar in Spain, because the Spanish civil courts were inspired by the Napoleonic French Code. A lot of opportunistic funds arrived in Spain following the economic crisis, to buy bad credits and assets from banks. This has led to a lot of assignments of claims and the courts have established that they are valid and enforceable.

France – MCC Contractual assignment of claims is valid under French law with a condition and a limit. As a condition, the claim has to be fundamentally legitimate and conform to the public order. The debtor’s consent is not required unless the right was provided to be non-assignable.

Unless the debtor has already agreed to it, the assignment may be set up against him only if it was previously served to him by a Bailiff, or he has acknowledged it. The debtor may set up against the assignee defences inherent to the debt itself, such as nullity, the defence of non-performance, termination or the right to set off related debts.

He may also set up defences which arose from the relations with the assignor before the assignment became enforceable against him, such as the grant of a deferral, the release of a debt, or the set-off of debts which are not related. The assignor and the assignee are jointly and severally liable for any additional costs arising from the assignment which the debtor did not have to advance. Subject to any contractual term to the contrary, the burden of these costs lies on the assignee.

As a limit, if the claim subject to assignment is litigious, the debtor may obtain a release from the assignee by reimbursing him the actual price paid for the assignment, plus costs and reasonable expenses, plus interest calculated from the date on which the assignee paid the price of the assignment made to him. The claim then disappears.

Because of this rule called ‘retrait litigieux’, assignees have to be very careful and research what happened before the assignment.

US – ES There is no prohibition in the US against assigning a claim, or part of a claim, to a third party, but, of course, any third party taking an assignment of all or part of the claim is subject to all potential offsets and defences that exist against the primary holder of the claim.

Assigning claims is done fairly often, mostly in the intellectual property patent world. Patent trolls are big in the US, buying up patent claims and aggressively litigating and pursuing those claims.

Sweden – DE Almost any claim can be assigned in Sweden, the main rule is that the original claimant must have initiated a lawful claim, then it can be assigned. Claims based on unlawful contracts (Pactum Turpe) can neither be enforced by the first holder of the claim, nor its successor. Apart from that, there are no restrictions of any kind, or any constraints to assigned claims.

As far as cost guarantees are concerned, we have the same situation as any other European country in that EU citizens or companies founded in another country within the EU cannot be forced to provide a guarantee for legal costs in litigation proceedings in Sweden.

The same applies for claimants in a country that has entered into an international agreement with Sweden, such as The Hague Convention.

Austria – KO If you are representing a client from outside the EU, the opponent may ask the court to order a cost deposit covering all the procedural costs of the defendant.

US – ES Is there a limit on that?

Austria – KO No, if you have a multi million-dollar dispute, your client pays the court fees of 1.2 per cent, plus also the estimated court-related fees including legal fees for the defendant. The policy is clear – if someone is suing us from somewhere in the world and we, as a defendant in Austria, end up winning the case, we might not be able to enforce our cost award against this claimant. As a result, there is an interest of security deposit which has to be paid upon request by a claimant outside the EU.

US – ES Do you find that a successful application by a defendant to require a large security deposit will often end a case?

Austria – KO Yes, it’s one of the best strategies to fend off a claimant or to make them reduce the claim, and a common strategy for the defendant’s lawyer to ask for a huge security deposit. It’s at the discretion of the judge, but overall you will have to deposit a huge amount of money to get the case going. There is discussion going on about legislation to reduce that, but there are two interests to be weighed against each other.

It’s another argument for why third-party funding can be crucial to get cases going.

As to assignments, one single action containing several claims is permitted if the claims get assigned to another legal entity; such legal entity acts as the sole claimant if the claims rely on the same or similar legal and factual basis. The concept has been approved by the Supreme Court.

Hong Kong – NG An order for security for costs in litigation offers protection to a party from the risk of their opponent not being able to pay the party’s litigation costs if ordered to do so.

Applications for security for costs are a common feature of civil litigation before the first-instance courts in Hong Kong. Sometimes liability for security for costs and the amount can be agreed between the parties. As for the form of the security for costs, the most common method to give security is to make a payment into court. Other methods included an undertaking to pay, a bond, a bank guarantee or a charge.

Despite their abolition in some other common law jurisdictions, the crimes and torts of maintenance and champerty are still part of Hong Kong law. Third party funding is considered to infringe the doctrines of champerty and maintenance, so it is not generally permitted for litigation in the Hong Kong courts (except for specific cases).

Litigation funding is allowed in some insolvency cases, because debtors often siphon away assets when insolvent, yet liquidators or trustees in bankruptcy often find themselves without sufficient funds to recover assets or pursue other legitimate claims in the name of the debtor.

In light of this, the Hong Kong law has accepted litigation funding arrangements as a legitimate practice in liquidation proceedings. Such arrangements may include the sale and assignment by a liquidator or trustee in bankruptcy, of an action commenced in the bankruptcy, to a purchaser for value.

As far as arbitration is concerned, the Arbitration Ordinance or AO (Cap. 609) has recently been amended, such that the common law tort and offence of champerty and maintenance no longer apply to third party funding of arbitration and mediation.

Under the AO, a Code of Practice sets out the standards with which third party funders are ordinarily expected to comply in connection with arbitration funding. It states the requirements for funding agreements, the minimum amount of capital a third-party funder is required to have, the procedure for addressing conflicts of interest and whether third party funders will be liable to funded parties for adverse costs.

Contributors

Klaus Oblin (KO) Oblin Melichar – Austria www.irglobal.com/advisor/dr-klaus-oblin

Marie-Christine Cimadevilla (MCC) Cimadevilla Avocats – France www.irglobal.com/advisor/marie-christine-cimadevilla

Daniel Jimenez (DJ) SLJ Abogados – Spain www.irglobal.com/advisor/daniel-jimenez

Erwin Shustak (ES) Shustak Reynolds & Partners – US – California www.irglobal.com/advisor/erwin-shustak

Nick Gall (NG) Gall Solicitors – Hong Kong www.irglobal.com/advisor/nick-gall

Dan Engström (DE) Advokatfirman Nova AB – Sweden www.irglobal.com/advisor/dan-engstrom

Florian Wettner (FW) METIS Rechtsanwälte – Germany www.irglobal.com/advisor/florian-wettner

More from IR Global

The Online Resource for Massachusetts Poverty Law Advocates

Fyi: third party recoveries (tafdc, eaedc).

When Assigning the Right to Pursue Relief, Always Remember to Assign Title to, Or Ownership in, The Claim

• Posted on: Oct 4 2016

Whether a party has standing to bring a lawsuit is often considered through the constitutional lens of justiciability – that is, whether there is a “case or controversy” between the plaintiff and the defendant “within the meaning of Art. III.” Warth v. Seldin, 422 U.S. 490, 498 (1975). To have Article III standing, “the plaintiff [must have] ‘alleged such a personal stake in the outcome of the controversy’ as to warrant [its] invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on [its] behalf.” Id. at 498–99 (quoting Baker v. Carr , 369 U.S. 186, 204 (1962)).

To show a personal stake in the litigation, the plaintiff must establish three things: First, he/she has sustained an “injury in fact” that is both “concrete and particularized” and “actual or imminent.” Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992) (internal quotation marks omitted). Second, the injury has to be caused in some way by the defendant’s action or omission. Id . Finally, a favorable resolution of the case is “likely” to redress the injury. Id . at 561.

When a person or entity receives an assignment of claims, the question becomes whether he/she can show a personal stake in the outcome of the litigation, i.e. , a case and controversy “of the sort traditionally amenable to, and resolved by, the judicial process.’” Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008) (quoting Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 777–78 (2000)).

To assign a claim effectively, the claim’s owner “must manifest an intention to make the assignee the owner of the claim.” Advanced Magnetics, Inc. v. Bayfront Partners, Inc. , 106 F.3d 11, 17 (2d Cir. 1997) (internal quotation marks and brackets omitted). A would-be assignor need not use any particular language to validly assign its claim “so long as the language manifests [the assignor’s] intention to transfer at least title or ownership , i.e., to accomplish ‘a completed transfer of the entire interest of the assignor in the particular subject of assignment.’” Id. (emphasis added) (citations omitted). An assignor’s grant of, for example, “‘the power to commence and prosecute to final consummation or compromise any suits, actions or proceedings,’” id. at 18 (quoting agreements that were the subject of that appeal), may validly create a power of attorney, but that language would not validly assign a claim, because it does “not purport to transfer title or ownership” of one. Id.

On September 15, 2016, the New York Appellate Division, First Department, issued a decision addressing the foregoing principles holding that one of the plaintiffs lacked standing to assert claims because the assignment of the right to pursue remedies did not constitute the assignment of claims.  Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l. , 2016 NY Slip Op. 06051.

BACKGROUND :

Cortlandt involved four related actions in which the plaintiffs – Cortlandt Street Recovery Corp. (“Cortlandt”), an assignee for collection, and Wilmington Trust Co. (“WTC”), an indenture trustee – sought payment of the principal and interest on notes issued in public offerings. Each action alleged that Hellas Telecommunications, S.a.r.l. and its affiliated entities, the issuer and guarantor of the notes, transferred the proceeds of the notes by means of fraudulent conveyances to two private equity firms, Apax Partners, LLP/TPG Capital, L.P. – the other defendants named in the actions.

The defendants moved to dismiss the actions on numerous grounds, including that Cortlandt, as the assignee for collection, lacked standing to pursue the actions. To cure the claimed standing defect, Cortlandt and WTC moved to amend the complaints to add SPQR Capital (Cayman) Ltd. (“SPQR”), the assignor of note interests to Cortlandt, as a plaintiff. The plaintiffs alleged that, inter alia , SPQR entered into an addendum to the assignment with Cortlandt pursuant to which Cortlandt received “all right, title, and interest” in the notes.

The Motion Court granted the motions to dismiss, holding that, among other things, Cortlandt lacked standing to maintain the actions and that, although the standing defect was not jurisdictional and could be cured, the plaintiffs failed to cure the defect in the proposed amended complaint. Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l. , 47 Misc. 3d 544 (Sup. Ct., N.Y. Cnty. 2014).

The Motion Court’s Ruling

As an initial matter, the Motion Court cited to the reasoning of the court in Cortlandt Street Recovery Corp. v. Deutsche Bank AG, London Branch , No. 12 Civ. 9351 (JPO), 2013 WL 3762882, 2013 US Dist. LEXIS 100741 (S.D.N.Y. July 18, 2013) (the “SDNY Action”), a related action that was dismissed on standing grounds.  The complaint in the SDNY Action, like the complaints before the Motion Court, alleged that Cortlandt was the assignee of the notes with a “right to collect” the principal and interest due on the notes. As evidence of these rights, Cortlandt produced an assignment, similar to the ones in the New York Supreme Court actions, which provided that as the assignee with the right to collect, Cortlandt could collect the principal and interest due on the notes and pursue all remedies with respect thereto. In dismissing the SDNY Action, Judge Oetken found that the complaint did not allege, and the assignment did not provide, that “title to or ownership of the claims has been assigned to Cortlandt.” 2013 WL 3762882, at *2, 2013 US Dist. LEXIS 100741, at *7. The court also found that the grant of a power of attorney (that is, the power to sue on and collect on a claim) was “not the equivalent of an assignment of ownership” of a claim. 2013 WL 3762882 at *1, 2013 US Dist. LEXIS 100741 at *5. Consequently, because the assignment did not transfer title or ownership of the claim to Cortlandt, there was no case or controversy for the court to decide ( i.e. , Cortlandt could not prove that it had an interest in the outcome of the litigation).

The Motion Court “concur[red] with” Judge Oeken’s decision, holding that “the assignments to Cortlandt … were assignments of a right of collection, not of title to the claims, and are accordingly insufficient as a matter of law to confer standing upon Cortlandt.”  In so holding, the Motion Court observed that although New York does not have an analogue to Article III, it is nevertheless analogous in its requirement that a plaintiff have a stake in the outcome of the litigation:

New York does not have an analogue to article III. However, the New York standards for standing are analogous, as New York requires “[t]he existence of an injury in fact—an actual legal stake in the matter being adjudicated.”

Under long-standing New York law, an assignee is the “real party in interest” where the “title to the specific claim” is passed to the assignee, even if the assignee may ultimately be liable to another for the amounts collected.

Citations omitted.

Based upon the foregoing, the Motion Court found that Cortlandt lacked standing to pursue the actions.

Cortlandt appealed the dismissal. With regard to the Motion Court’s dismissal of Cortlandt on standing grounds, the First Department affirmed the Motion Court’s ruling, holding:

The [IAS] court correctly found that plaintiff Cortlandt Street Recovery Corp. lacks standing to bring the claims in Index Nos. 651693/10 and 653357/11 because, while the assignments to Cortlandt for the PIK notes granted it “full rights to collect amounts of principal and interest due on the Notes, and to pursue all remedies,” they did not transfer “title or ownership” of the claims.

The Takeaway

Cortlandt limits the ability of an assignee to pursue a lawsuit when the assignee has no direct interest in the outcome of the litigation. By requiring an assignee to have legal title to, or an ownership interest in, the claim, the Court made clear that only a valid assignment of a claim will suffice to fulfill the injury-in-fact requirement. Cortlandt also makes clear that a power of attorney permitting another to conduct litigation on behalf of others as their attorney-in-fact is not a valid assignment and does not confer a legal title to the claims it brings. Therefore, as the title of this article warns: when assigning the right to pursue relief, always remember to assign title to, or ownership in, the claim.

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Debt Assignment: How They Work, Considerations and Benefits

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Ryan Oakley

What Is Debt Assignment?

The term debt assignment refers to a transfer of debt , and all the associated rights and obligations, from a creditor to a third party. The assignment is a legal transfer to the other party, who then becomes the owner of the debt. In most cases, a debt assignment is issued to a debt collector who then assumes responsibility to collect the debt.

Key Takeaways

• Debt assignment is a transfer of debt, and all the associated rights and obligations, from a creditor to a third party (often a debt collector).
• The company assigning the debt may do so to improve its liquidity and/or to reduce its risk exposure.
• The debtor must be notified when a debt is assigned so they know who to make payments to and where to send them.
• Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA), a federal law overseen by the Federal Trade Commission (FTC).

How Debt Assignments Work

When a creditor lends an individual or business money, it does so with the confidence that the capital it lends out—as well as the interest payments charged for the privilege—is repaid in a timely fashion. The lender , or the extender of credit , will wait to recoup all the money owed according to the conditions and timeframe laid out in the contract.

In certain circumstances, the lender may decide it no longer wants to be responsible for servicing the loan and opt to sell the debt to a third party instead. Should that happen, a Notice of Assignment (NOA) is sent out to the debtor , the recipient of the loan, informing them that somebody else is now responsible for collecting any outstanding amount. This is referred to as a debt assignment.

The debtor must be notified when a debt is assigned to a third party so that they know who to make payments to and where to send them. If the debtor sends payments to the old creditor after the debt has been assigned, it is likely that the payments will not be accepted. This could cause the debtor to unintentionally default.

When a debtor receives such a notice, it's also generally a good idea for them to verify that the new creditor has recorded the correct total balance and monthly payment for the debt owed. In some cases, the new owner of the debt might even want to propose changes to the original terms of the loan. Should this path be pursued, the creditor is obligated to immediately notify the debtor and give them adequate time to respond.

The debtor still maintains the same legal rights and protections held with the original creditor after a debt assignment.

Special Considerations

Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA). The FDCPA, a federal law overseen by the Federal Trade Commission (FTC), restricts the means and methods by which third-party debt collectors can contact debtors, the time of day they can make contact, and the number of times they are allowed to call debtors.

If the FDCPA is violated, a debtor may be able to file suit against the debt collection company and the individual debt collector for damages and attorney fees within one year. The terms of the FDCPA are available for review on the FTC's website .

Benefits of Debt Assignment

There are several reasons why a creditor may decide to assign its debt to someone else. This option is often exercised to improve liquidity  and/or to reduce risk exposure. A lender may be urgently in need of a quick injection of capital. Alternatively, it might have accumulated lots of high-risk loans and be wary that many of them could default . In cases like these, creditors may be willing to get rid of them swiftly for pennies on the dollar if it means improving their financial outlook and appeasing worried investors. At other times, the creditor may decide the debt is too old to waste its resources on collections, or selling or assigning it to a third party to pick up the collection activity. In these instances, a company would not assign their debt to a third party.

Criticism of Debt Assignment

The process of assigning debt has drawn a fair bit of criticism, especially over the past few decades. Debt buyers have been accused of engaging in all kinds of unethical practices to get paid, including issuing threats and regularly harassing debtors. In some cases, they have also been charged with chasing up debts that have already been settled.

Federal Trade Commission. " Fair Debt Collection Practices Act ." Accessed June 29, 2021.

Federal Trade Commission. " Debt Collection FAQs ." Accessed June 29, 2021.

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Coordination of Benefits & Third Party Liability

Related resources.

• Claims Under the Camp Lejeune Justice Act (CLJA)
• Medicaid Medical Support Requirements and Implementation Strategies Slide Deck
• Summary of Federal Statutory Requirements
• Summary of Federal Regulatory Requirements
• CFR Subpart D, Third Party Liability  
• Guide to Effective State Agency Practices 2014
• Guide to Effective State Agency Practices 2015
• Frequently Asked Questions
• 2020 COB/TPL Handbook

It is possible for Medicaid beneficiaries to have one or more additional sources of coverage for health care services. Third Party Liability (TPL) refers to the legal obligation of third parties (for example, certain individuals, entities, insurers, or programs) to pay part or all of the expenditures for medical assistance furnished under a Medicaid state plan. By law, all other available third party resources must meet their legal obligation to pay claims before the Medicaid program pays for the care of an individual eligible for Medicaid. States are required to take all reasonable measures to ascertain the legal liability of third parties to pay for care and services that are available under the Medicaid state plan. The Deficit Reduction Act of 2005 included several additional provisions related to TPL and coordination of benefits for Medicaid beneficiaries. For more information on Medicaid TPL and COB, see our  Frequently Asked Questions . For detailed information about COB/TPL policies, see our  2020 COB/TPL Handbook .

Coordination of Benefits

Coordination of Benefits (COB) refers to the activities involved in determining Medicaid benefits when an enrollee has coverage through an individual, entity, insurance, or program that is liable to pay for health care services. Individuals eligible for Medicaid assign their rights to third party payments to the State Medicaid Agency.

Examples of third parties which may be liable to pay for services:

• Group health plans
• Self-insured plans
• Managed care organizations
• Pharmacy benefit managers
• Court-ordered health coverage
• Settlements from a liability insurer
• Workers' compensation
• Long-term care insurance
• Other state or Federal coverage programs (unless specifically excluded by law)

Identification of Third Parties

States gather information regarding potentially liable third parties, including information about other sources of health coverage, when individuals apply for medical assistance. This information is periodically updated whenever a Medicaid enrollee's eligibility is renewed.    

Data Matching

States conduct data matches to identify third party resources. States must have laws in place that require health insurers to provide their plan eligibility and coverage information to Medicaid programs. For example, states conduct data matches with public entities, such as the Department of Defense, to identify Medicaid enrollees and/or their dependents that have coverage through the Military Health Services system and the TRICARE program. States also match with workers' compensation and state motor vehicle accident files. These matches can identify Medicaid enrollees that have sustained injuries which may be covered through workers' compensation or through an automobile insurance policy. State child support agencies are required to notify the Medicaid agency whenever a parent has acquired health coverage for child as a result of a court order.  

State Medicaid Programs and Use of Contractors for Data Matching

State Medicaid programs may enter into data matching agreements directly with third parties or may obtain the services of a contractor to complete the required matches. When the state Medicaid program chooses to use a contractor to complete data matches, the program delegates its authority to obtain information from third parties to the contractor.

Third parties should treat a request from the contractor as a request from the state Medicaid agency. Third parties may request verification from the State Medicaid agency that the contractor is working on behalf of the agency and the scope of the delegated work.

COB/TPL Guidance

• Guidance to State Medicaid Agencies on Dually Eligible Beneficiaries Receiving Medicare Part B Marriage and Family Therapist Services, Mental Health Counselor Services, and Intensive Outpatient Services Effective January 1, 2024 December 2023
• Third-Party Liability in Medicaid: State Compliance with Changes Required in Law and Court Ruling s April 2023
• Third Party Liability in Medicaid: State Compliance with Changes Required in Bipartisan Budget Act of 2018 and Medicaid Services Investment and Accountability Act of 2019 August 2021
• Notice of Proposed Rulemaking: Value-based Purchasing (VBP) and Drug Utilization Review (DUR) Proposed Regulation CMS-2482-P  June 2020
• CIB: Guidance for State Medicaid Agencies on Dually Eligible Beneficiaries Receiving Medicare Opioid Treatment Services December 2019
• Guidance to Medicaid Bipartisan Budget Act (BBA) of 2018 and changes to Medicaid Provisions Passed in April 2019 – Third Party Liability in Medicaid and CHIP  November 2019

Managed Care and Third Party Liability

The contract language between the State Medicaid agency and the Managed Care Organization (MCO) dictates the terms and conditions under which the MCO assumes TPL responsibility. Generally, TPL administration and performance activities that are the responsibility of the MCO will be set by the state and should be accompanied by state oversight.

There are four basic approaches to carrying out TPL functions in a managed care environment.  

• Enrollees with any other insurance coverage are excluded from enrollment in managed care
• Enrollees with other insurance coverage are enrolled in managed care and the state retains TPL responsibilities
• Enrollees with other insurance coverage are enrolled in managed care and TPL responsibilities are delegated to the MCO with an appropriate adjustment of the MCO capitation payments
• Enrollees and/or their dependents with commercial managed care coverage are excluded from enrollment in Medicaid MCOs, while TPL for other enrollees with private health insurance or Medicare coverage is delegated to the MCO with the state retaining responsibility only for tort and estate recoveries

MCOs and Data Matching

State Medicaid programs may contract with MCOs to provide health care to Medicaid beneficiaries, and may delegate responsibility and authority to the MCOs to perform third party discovery and recovery activities. The Medicaid program may authorize the MCO to use a contractor to complete these activities.

When TPL responsibilities are delegated to an MCO, third parties are required to treat the MCO as if it were the State Medicaid agency, including:

• Providing access to third party eligibility and claims data to identify individuals with third party coverage
• Adhering to the assignment of rights from the state to the MCO of a Medicaid beneficiary’s right to payment by such insurers for health care items or services
• Refraining from denying payment of claims submitted by the MCO for procedural reasons

Third parties may request verification from the state Medicaid agency that the MCO or its contractor is working on behalf of the agency and the scope of the delegated work.

32 CFR § 199.12 - Third party recoveries.

• Table of Popular Names

(a) General. This section deals with the right of the United States to recover from third-parties the costs of medical care furnished to or paid on behalf of TRICARE beneficiaries. These third-parties may be individuals or entities that are liable for tort damages to the injured TRICARE beneficiary or a liability insurance carrier covering the individual or entity . These third-parties may also include other entities who are primarily responsible to pay for the medical care provided to the injured beneficiary by reason of an insurance policy, workers' compensation program or other source of primary payment.

Authority —(1) Third-party payers. This part implements the provisions of 10 U.S.C. 1095b which, in general, allow the Secretary of Defense to authorize certain TRICARE claims to be paid, even though a third-party payer may be primary payer , with authority to collect from the third-party payer the TRICARE costs incurred on behalf of the beneficiary . (See § 199.2 for definition of “third-party payer.”) Therefore, 10 U.S.C. 1095b establishes the statutory obligation of third-party payers to reimburse the United States the costs incurred on behalf of TRICARE beneficiaries who are also covered by the third-party payer 's plan.

(2) Federal Medical Care Recovery Act —(i) In general. In many cases covered by this section, the United States has a right to collect under both 10 U.S.C. 1095b and the Federal Medical Care Recovery Act (FMCRA), Public Law 87-693 ( 42 U.S.C. 2651 et. seq. ). In such cases, the authority is concurrent and the United States may pursue collection under both statutory authorities.

(ii) Cases involving tort liability. In cases in which the right of the United States to collect from an automobile liability insurance carrier is premised on establishing some tort liability on some third person, matters regarding the determination of such tort liability shall be governed by the same substantive standards as would be applied under the FMCRA including reliance on state law for determinations regarding tort liability. In addition, the provisions of 28 CFR part 43 ( Department of Justice regulations pertaining to the FMCRA) shall apply to claims made under the concurrent authority of the FMCRA and 10 U.S.C. 1095b . All other matters and procedures concerning the right of the United States to collect shall, if a claim is made under the concurrent authority of the FMCRA and this section, be governed by 10 U.S.C. 1095b and this part.

(c) Appealability. This section describes the procedures to be followed in the assertion and collection of third-party recovery claims in favor of the United States arising from the operation of TRICARE. Actions taken under this section are not initial determinations for the purpose of the appeal procedures of § 199.10 of this part. However, the proper exercise of the right to appeal benefit or provider status determinations under the procedures set forth in § 199.10 may affect the processing of federal claims arising under this section. Those appeal procedures afford a TRICARE beneficiary or participating provider an opportunity for administrative appellate review in cases in which benefits have been denied and in which there is a significant factual dispute. For example, a TRICARE contractor may deny payment for services that are determined to be excluded as TRICARE benefits because they are found to be not medically necessary. In that event the TRICARE contractor will offer an administrative appeal as provided in § 199.10 of this part on the medical necessity issue raised by the adverse benefit determination. If the care in question results from an accidental injury and if the appeal results in a reversal of the initial determination to deny the benefit, a third-party recovery claim may arise as a result of the appeal decision to pay the benefit. However, in no case is the decision to initiate such a claim itself appealable under § 199.10.

(d) Statutory obligation of third-party payer to pay —(1) Basic Rule. Pursuant to 10 U.S.C. 1095b , when the Secretary of Defense authorizes certain TRICARE claims to be paid, even though a third-party payer may be primary payer (as specified under § 199.8(c)(2)), the right to collect from a third-party payer the TRICARE costs incurred on behalf of the beneficiary is the same as exists for the United States to collect from third-party payers the cost of care provided by a facility of the uniformed services under 10 U.S.C. 1095 and part 220 of this title. Therefore the obligation of a third-party payer to pay is to the same extent that the beneficiary would be eligible to receive reimbursement or indemnification from the third-party payer if the beneficiary were to incur the costs on the beneficiary 's own behalf.

(2) Application of cost shares. If the third-party payer 's plan includes a requirement for a deductible or copayment by the beneficiary of the plan, then the amount the United States may collect from the third-party payer is the cost of care incurred on behalf of the beneficiary less the appropriate deductible or copayment amount.

(3) Claim from the United States exclusive. The only way for a third-party payer to satisfy its obligation under 10 U.S.C. 1095b is to pay the United States or authorized representative of the United States. Payment by a third-party payer to the beneficiary does not satisfy 10 U.S.C. 1095b .

(4) Assignment of benefits not necessary. The obligation of the third-party to pay is not dependent upon the beneficiary executing an assignment of benefits to the United States.

(e) Exclusions impermissible —(1) Statutory requirement. With the same right to collect from third-party payers as exists under 10 U.S.C. 1095(b) , no provision of any third-party payer 's plan having the effect of excluding from coverage or limiting payment for certain care if that care is provided or paid by the United States shall operate to prevent collection by the United States .

(2) Regulatory application. No provision of any third-party payer 's plan or program purporting to have the effect of excluding or limiting payment for certain care that would not be given such effect under the standards established in part 220 of this title to implement 10 U.S.C. 1095 shall operate to exclude or limit payment under 10 U.S.C. 1095b or this section.

(f) Records available. When requested, TRICARE contractors or other representatives of the United States shall make available to representatives of any third-party payer from which the United States seeks payment under 10 U.S.C. 1095b , for inspection and review, appropriate health care records (or copies of such records) of individuals for whose care payment is sought. Appropriate records which will be made available are records which document that the TRICARE costs incurred on behalf of beneficiaries which are the subject of the claims for payment under 10 U.S.C. 1095b were incurred as claimed and the health care service were provided in a manner consistent with permissible terms and conditions of the third-party payer 's plan. This is the sole purpose for which patient care records will be made available. Records not needed for this purpose will not be made available.

(g) Remedies. Pursuant to 10 U.S.C. 1095b , when the Director , TRICARE Management Activity , or a designee, authorizes certain TRICARE claims to be paid, even though a third-party payer may be primary payer , the right to collect from a third-party payer the TRICARE costs incurred on behalf of the beneficiary is the same as exists for the United States to collect from third-party payers the cost of care provided by a facility of the uniformed services under 10 U.S.C. 1095 .

(1) This includes the authority under 10 U.S.C. 1095(e)(1) for the United States to institute and prosecute legal proceedings against a third-party payer to enforce a right of the United States under 10 U.S.C. 1095b and this section.

(2) This also includes the authority under 10 U.S.C. 1095(e)(2) for an authorized representative of the United States to compromise, settle or waive a claim of the United States under 10 U.S.C. 1095b and this section.

(3) The authorities provided by the Federal Claims Collection Act of 1966 , as amended ( 31 U.S.C. 3701 et. seq. ) and any implementing regulations (including § 199.11 ) regarding collection of indebtedness due the United States shall also be available to effect collections pursuant to 10 U.S.C. 1095b and this section.

(h) Obligations of beneficiaries. To insure the expeditious and efficient processing of third-party payer claims, any person furnished care and treatment under TRICARE, his or her guardian, personal representative , counsel, estate, dependents or survivors shall be required:

(1) To provide information regarding coverage by a third-party payer plan and/or the circumstances surrounding an injury to the patient as a conditional precedent of the processing of a TRICARE claim involving possible third-party payer coverage.

(2) To furnish such additional information as may be requested concerning the circumstances giving rise to the injury or disease for which care and treatment are being given and concerning any action instituted or to be instituted by or against a third person; and,

(3) To cooperate in the prosecution of all claims and actions by the United States against such third person.

(i) Responsibility for recovery. The Director , TRICARE Management Activity , or a designee, is responsible for insuring that TRICARE claims arising under 10 U.S.C. 1095b and this section (including claims involving the FMCRA) are properly referred to and coordinated with designated claims authorities of the uniformed services who shall assert and recover TRICARE costs incurred on behalf of beneficiaries. Generally, claims arising under this section will be processed as follows:

(1) Identification and referral. In most cases where civilian providers provide medical care and payment for such care has been by a TRICARE contractor, initial identification of potential third-party payers will be by the TRICARE contractor. In such cases, the TRICARE contractor is responsible for conducting a preliminary investigation and referring the case to designated appropriate claims authorities of the Uniformed Services .

(2) Processing TRICARE claims. When the TRICARE contractor initially identifies a claim as involving a potential third-party payer , it shall request additional information concerning the circumstances of the injury or disease and/or the identify of any potential third-party payer from the beneficiary or other responsible party unless adequate information is submitted with the claim. The TRICARE claim will be suspended and no payment issued pending receipt of the requested information. If the requested information is not received, the claim will be denied. A TRICARE beneficiary may expedite the processing of his or her TRICARE claim by submitting appropriate information with the first claim for treatment of an accidental injury . Third-party payer information normally is required only once concerning any single accidental injury on episode of care. Once the third-party payer information pertaining to a single incident or episode of care is received, subsequent claims associated with the same incident or episode of care may be processed to payment in the usual manner. If, however, the requested third-party payer information is not received, subsequent claims involving the same incident or episode of care will be suspended or denied as stated above.

(3) Ascertaining total potential liability. It is essential that the appropriate claims responsible for asserting the claim against the third-party payer receive from the TRICARE contractor a report of all amounts expended by the United States for care resulting from the incident upon which potential liability in the third party is based (including amounts paid by TRICARE for both inpatient and outpatient care). Prior to assertion and final settlement of a claim, it will be necessary for the responsible claims authority to secure from the TRICARE contractor updated information to insure that all amounts expended under TRICARE are included in the government's claim. It is equally important that information on future medical payments be obtained through the investigative process and included as a part of the government's claim. No TRICARE-related claim will be settled, compromised or waived without full consideration being given to the possible future medical payment aspects of the individual case.

(j) Reporting requirements. Pursuant to 10 U.S.C. 1079a , all refunds and other amounts collected in the administration of TRICARE shall be credited to the appropriation available for that program for the fiscal year in which the refund or amount is collected. Therefore, the Department of Defense requires an annual report stating the number and dollar amount of claims asserted against, and the number and dollar amount of recoveries from third-party payers (including FMCRA recoveries) arising from the operation of the TRICARE. To facilitate the preparation of this report and to maintain program integrity, the following reporting requirements are established:

(1) TRICARE contractors. Each TRICARE contractor shall submit on or before January 31 of each year an annual report to the Director , TRICARE Management Activity , or a designee, covering the 12 months of the previous calendar year. This report shall contain, as a minimum, the number and total dollar of cases of potential third-party payer/FMCRA liability referred to uniformed services claims authorities for further investigation and collection. These figures are to be itemized by the states and uniformed services to which the cases are referred.

(2) Uniformed Services. Each uniformed service will submit to the Director , TRICARE Management Activity , or designee, an annual report covering the 12 calendar months of the previous year, setting forth, as a minimum, the number and total dollar amount of cases involving TRICARE payments received from TRICARE contractors, the number and dollar amount of cases involving TRICARE payments received from other sources, and the number and dollar amount of claims actually asserted against, and the dollar amount of recoveries from, third-payment payers or under the FMCRA. The report, itemized by state and foreign claims jurisdictions, shall be provided no later than February 28 of each year.

(3) Implementation of the reporting requirements. The Director , TRICARE Management Activity , or a designee shall issue guidance for implementation of the reporting requirements prescribed by this section.

• Federal Medical Care Recovery Act
• Federal Claims Collection Act of 1966

547 Third Party Liability

547.1 purpose.

This section instructs control office or control point personnel on how to collect damages from a third party who is responsible for causing an injury to a postal employee who receives benefits under the FECA, 5 U.S.C. 8101–50, as a result of that injury.

547.2 Background

547.21 requirement to take action.

FECA provides that if the injury or death (which is compensable under the Act) is caused by a third party, the claimant can be required to take action against that third party. The Office of the Solicitor of Labor (SOL) is delegated authority to administer the subrogation aspects of certain FECA claims for OWCP. Either OWCP or SOL can require an employee receiving benefits under FECA to do one of the following:

• Assign to the United States any right of action he or she may have to force the third party to pay damages or assign any right the employee may have to share in money received in satisfaction of a liability claim.
• Prosecute the action in his or her own name.

547.22 Penalty for Refusal

Any employee who refuses to assign right of action to the United States or to prosecute an action in his or her own name when required to do so by the secretary of the Department of Labor (DOL) may be denied compensation by DOL.

547.23 Postal Service Administrative Pursuit

The agreement between the director of OWCP and the Postal Service provides that to more efficiently and effectively accomplish the stated purpose of FECA, OWCP agrees that the Postal Service may administratively pursue collection of damages from the third party who is responsible for the injury sustained by a Postal Service employee in all cases of traumatic injury except in any of the following cases:

• When the injury results in the death of the employee.
• When the injury occurs outside of the United States or Canada.
• When the third party is a common carrier.
• When malpractice or product liability is involved.
• When injuries are sustained by more than one employee in the same incident (group injuries).

547.3 Definitions and Use of Terms

The definitions in this section apply to 547 only and are not included under 541.2 . They do not change the terms of the Act, the regulations of the Department of Labor, or other sections of the ELM.

• Assignment — a written agreement whereby the employee or beneficiary transfers his or her right to recover damages from a third party to the Postal Service and such offer is accepted by the Postal Service.
• Legal liability — a determination that a third party is responsible for the payment of money damages to an injured employee.
• Negligence — the failure of a third party to act as an ordinary prudent person would act under the same or similar circumstances and such failure is the proximate cause of an injury to an employee.
• Prosecute — any action taken to recover damages from the third party.
• Serious injury — a personal injury that results in death, dismemberment, significant disfigurement, a fracture, or permanent loss of use of a body organ, member function, or system.
• Third party — a person or organization, other than the United States and its agencies, who is believed to be responsible for injury to a postal employee while in the performance of employment.
• Tort — a wrongful act committed by a third party that is done intentionally or negligently and that causes injury to an employee.

547.4 Responsibility

The Injury Compensation control office carries out the responsibilities outlined in these instructions. At installations that do not have an Injury Compensation control office, the Injury Compensation manager designates a qualified control point supervisor responsible for coordinating these instructions with the control office. The Injury Compensation manager must ensure that control point personnel are properly trained to carry out the responsibility of making third party recoveries.

547.5 Third Party Recovery Action

547.51 traumatic injury.

Upon receipt of Form CA–1, the control office or control point supervisor reviews the form to determine if a third party is involved in the injury to the employee and whether the third party could be responsible for the injury.

547.52 Occupational Illness or Disease

Third party cases for which a claim is filed on Form CA–2 must be identified and forwarded to OWCP. OWCP continues to be responsible for third party recoveries in these cases. The control office or control point supervisor monitors the progress of OWCP action and obtains periodic status reports until these cases are closed.

547.53 Potential Third Party Injuries

Although a third party recovery case can arise from many circumstances in which a third party’s act or failure to act results in the injury or death of an employee, the most common circumstances are, but are not limited to, these:

• Automobile accidents.
• Animal attacks.
• Conditions that cause tripping, slipping, and falling on sidewalks, steps, and other portions of nonfederal property.
• Defective machinery, automobiles, and equipment.
• Physical attacks and other assaults.
• Defects in leased postal premises.

547.54 Investigation

When a possible third party recovery case is identified, the control office or control point supervisor should coordinate an investigation of the incident and do the following:

• If possible, obtain a detailed, written statement from:
• The injured employee, if the Form CA–1 is not sufficient to determine third party liability or is otherwise inadequate.
• Any witness to the incident.
• Any other person who may be acquainted with the facts or is identified as having pertinent information.
• Obtain the name, address, and telephone number of the third party.
• Obtain a detailed description of the place where the incident occurred, and all the circumstances concerning the incident.
• If an investigation of the incident was previously made by the local police, Postal Service Vehicle Services, Postal Service safety personnel, Inspection Service, Office of Inspector General, or any other organization, obtain a copy of the reports and the investigative file.
• Consult Handbook PO–702, Accident Investigation — Tort Claims, for information and procedures regarding investigative techniques and guides.

547.55 Notification

In all cases when it appears that a third party recovery is a possibility, a completed PS Form 2562, Injury Compensation Program — Notice of Potential Third Party Claim ( Exhibit 547.55 ), should be obtained from the injured employee. If the claim has already been submitted to OWCP, a copy of the completed form should be forwarded to that office with the employee’s claim for benefits as soon as possible after it is received from the employee. (See 544 for submission of claims to OWCP.) Do not delay the submission of the claim to OWCP pending receipt of third party information. When OWCP is responsible for making the third party recovery (see 547.23 ), no action to recover should be taken by the control office.

Exhibit 547.55

PS Form 2562, Injury Compensation Program — Notice of Potential Third Party Claim

Exhibit 547.55 (p. 2)

547.56 OWCP Responsibility

In all cases in which OWCP is responsible for making a recovery, the control office or control point supervisor monitors the progress of OWCP’s action and obtains periodic status reports until the case is closed. Any such cases that are closed without a payment from the third party are referred to the area human resources analyst for injury compensation for review and appropriate action.

547.57 Postal Service Responsibility

When a third party collection responsibility has been assumed by the Postal Service, the control office or control point supervisor forwards copies of all letters issued together with other pertinent third party claim documents to OWCP district office. The control office or control point supervisor should then proceed as follows when the employee is represented by an attorney:

• If the answer to the question on PS Form 2562 “Does the employee or beneficiary(ies) intend to take action against the third party?” is Yes , and the PS Form 2562 or other information shows that the employee is represented by an attorney, forward the following to the employee’s attorney:
• Sample letter A, Notice to Attorney of Government’s Lien (see Exhibit 547.57a ), with the papers and forms referred to in that letter.
• Sample letter B, Request for Status and Transmittal of Information ( Exhibit 547.57b ).
• If a response to sample letter A is not received within 90 days after mailing, obtain a status report on the progress of the case by contacting directly the attorney who is representing the postal employee. Status reports from the postal employee’s attorney should be obtained as frequently as is considered necessary by the control office or control point supervisor. If no reply is received from the attorney within 90 days after any request for a status report has been made, send a follow–up letter to the attorney. If there is no response after 15 days, contact the employee regarding status of cases. If recovery still has not been made, do one of the following:
• Contact your area human resources analyst for injury compensation or field general council for further guidance.
• Monitor progress if the case is still in the process of recovery.
• Upon receipt of notification from the postal employee’s attorney that the case has been terminated, verify the nature of termination (i.e., with or without settlement).
• If the case is terminated without settlement, do one of the following:
• Attempt to obtain from the employee a voluntary assignment if the case has merit.
• If the attorney indicates that a suit for damages is unlikely to prevail, close the file and assist the employee in requesting release from his or her obligation to proceed. The request should be in writing and provide evidence of the attorney’s opinion.
• If the case is settled, obtain settlement sheet, PS Form 2556, Third Party Statement of Recovery (see Exhibit 547.57c ), and payment due the Postal Service. Verify the accuracy of PS Form 2556 and forward settlement sheet in accordance with 547.73 .

547.58 Employee Not Represented by Attorney

The control office or control point supervisor should proceed as follows:

• If the answer to the question on the PS Form 2562 “Does the employee or beneficiaries intend to take action against the third party?” is Yes, and the PS Form 2562 or other information shows that the employee desires to pursue the recovery him– or herself and is not represented by an attorney, furnish the employee sample letter C, Notice to Employee of Government’s Lien (see Exhibit 547.58a ), and mail sample letter D, Notice to Third Party of Government’s Lien (see Exhibit 547.58b ), to the third party and/or insurer.
• At least every 60 days after the date sample letter C is given the employee, check with the employee to determine the status of the case.
• If a recovery has not been made within 6 months after the accident, or if prior to that time there is information that the action on the claim has been terminated, contact the employee for status of recovery action. If the employee has decided not to pursue or has been unsuccessful in the recovery attempt, proceed in accordance with 547.59 d .
• When a recovery statement (see PS Form 2557, Employee’s Third Party Recovery Statement , Exhibit 547.58c ) is received from the employee, review it for accuracy, take the necessary action to correct any errors, and forward the recovery statement together with the payment, in accordance with 547.73 .

Exhibit 547.57a

Sample Letter A, Notice to Attorney of Government’s Lien

Exhibit 547.57b

Sample Letter B, Request for Status and Transmittal of Information

Exhibit 547.57c

PS Form 2556, Third Party Statement of Recovery

Exhibit 547.57c (p. 2)

Exhibit 547.58a

Sample Letter C, Notice to Employee of Government’s Lien

Exhibit 547.58b

Sample Letter D, Notice to Third Party of Government’s Lien

Exhibit 547.58c

PS Form 2557, Employee’s Third Party Recovery Statement

547.59 Employee Not Pursuing Third Party Action

• If the answer to the question on Form 2562 “Does the employee or beneficiaries intend to take action against the third party?” is No, or the employee is undecided, or it is unclear what action the employee contemplates, furnish the employee with sample letter E, Request for Information From Employee and Notice of Government’s Lien ( Exhibit 547.59 a ), and PS Form 2559, Third Party Claim — Information Request ( Exhibit 547.59 b ).
• If PS Form 2559 is not received within 15 days, contact the employee directly or through the employee’s supervisor to determine what action the employee intends to take against the third party.
• If the employee advises that he or she will seek recovery against the third party, proceed in accordance with 547.57 or 547.58 , as appropriate.
• If the employee indicates that he or she will not seek recovery against the third party, or is unable to decide what action he or she will take, ask whether the employee will agree to assign his or her claim against the third party to the Postal Service by signing PS Form 2577, Assignment of Claim to the USPS ( Exhibit 547.59 c ). If the employee declines to make the assignment, refrain from saying or doing anything to the employee that could be regarded as pressuring or coercing the employee to agreeing to the assignment. Point out that the Postal Service is not ordering or directing the employee to either sue or assign the claim, but advise the employee of the following information:
• By assigning a claim to the Postal Service, the employee will enable the Postal Service to attempt to shift the financial liability for the employee’s injury from the Postal Service to the true wrongdoer, i.e., the third party.
• The ultimate recovery that the employee will realize for the injury cannot possibly be reduced by the employee’s agreement to the assignment. An employee is entitled to a minimum of 20 percent of the net recovery after the expense of the recovery (attorney’s fees, property damage, and court costs only) have been deducted. In addition, any surplus amount realized in the third party action that exceeds the amount of the employee’s compensation payments and the expense of realization or collection, will be paid to the employee.
• OWCP is authorized to require an assignment of the claim and to terminate an employee’s entitlement to past or future compensation payments if he or she refuses to pursue or assign what appears to be a valid third party claim.
• If the employee continues to refuse to pursue or assign his or her claim, then refer the file to the area human resources analyst for injury compensation. Use PS Form 2560, Referral of Third Party Material ( Exhibit 547.59 d ) to transmit the file. Take no further action to obtain an assignment after the file is referred.
• Upon receipt of an assignment of the employee’s claim on PS Form 2577 send sample letter F, Notice of Assignment of Postal Employee’s Claim and Request for Settlement ( Exhibit 547.59 e ), to the third party and to his or her insurer, if known.
• When a reply to sample letter F is received, attempt to negotiate a settlement of the government’s and the employee’s claim (see 547.7 , Settlement of Claims).
• Contact the Postal Service Field Counsel if it is felt that assistance is necessary.

Exhibit 547.59 a

Sample Letter E, Request for Information from Employee and Notice of Government’s Lien

Exhibit 547.59 b

PS Form 2559, Third Party Claim — Information Request

Exhibit 547.59 c

PS Form 2577, Assignment of Claim to the USPS

Exhibit 547.59 d

PS Form 2560, Referral of Third Party Material

Exhibit 547.59 e

Sample Letter F, Notice of Assignment of Postal Employee’s Claim and Request for Settlement

547.6 Release of Information

547.61 privacy act protection.

All records, medical and other reports, statements of witnesses, and other papers relating to the injury or death of an employee or other person entitled to compensation or benefits under the Act are sensitive in nature, and no employee of the Postal Service may disclose information from or pertaining to the records to any person except as directed in these instructions. Upon the employee’s death, records lose much of their sensitivity; i.e., the Privacy Act no longer applies to them. Release of records on deceased employees should be guided by the Postal Service release of information guidelines ( Administrative Support Manual (ASM) 352).

547.62 Release to Employee or Beneficiary

547.621 general.

If (a) an employee, or (b) in the case of death, an employee’s beneficiary, or (c) the authorized representative of an employee or beneficiary requests information from the Postal Service in connection with a third party recovery case, refer the request to the control office or control point supervisor, who permits the requester to examine the records of the case, except where release of the information is not in the best interest of the employee (see 547.622 ).

547.622 Release to Physician

When the control office or control point supervisor, based upon consultation with the postal physician or occupational health nurse administrator, determines that release of medical reports directly to the employee clearly is not in the best interest of the employee, the control office or control point supervisor should request authorization from the employee to release the information to the employee’s personal physician.

547.623 Limitation to Germane Information

In honoring requests, the control office or control point supervisor discloses only that information that is germane to the request and the third party action.

547.63 Release to Other Parties

Information requested for use in third party recovery cases by persons who are interested in third party action other than the employee or other legal representative may be released only upon written authorization of the employee or of the authorized representative. Direct all such requests to the control office or the control point supervisor.

547.64 Release to Court or Other Authority

Any employee of the Postal Service who is served with a demand by federal or state courts or other administrative bodies for records or information relating to third party recovery matters must promptly, and without awaiting appearance before the court or other authority, contact field counsel for instructions concerning the response to the demand.

547.7 Settlement of Claims

547.71 employee pursuing collection of damages from third party.

The Postal Service, with certain adjustments, is entitled to collect from the proceeds paid to an employee by a third party the amount of compensation and medical and related expenses paid by OWCP on behalf of the employee. Therefore, when information is received that a third party recovery is imminent, the control office or control point supervisor contacts OWCP for an up-to-date statement of all disbursements made by OWCP and advises the employee or the employee’s attorney of those disbursements. If settlement has already been made, PS Form 2556 should be reviewed to see that the total disbursements made by OWCP have been accurately computed.

547.72 Employee Not Pursuing Third Party Recovery

When the postal employee has indicated that he or she does not wish to pursue a recovery from a third party and has been requested to and has signed PS Form 2577 the Postal Service, with certain adjustments, is entitled to recover from the third party or his or her insurer the compensation and medical and related expenses paid by OWCP on behalf of the employee. In addition, the Postal Service is entitled to collect on behalf of the employee those damages to which the employee may be entitled. Such damages may consist of payment for pain and suffering sustained by the employee, any damage to the employee’s personal property, and out-of-pocket expense not covered by FECA benefits. Upon recovery, the employee is to provided with a copy of PS Form 2556, which indicates the employee’s total entitlement. Further, the control office or the control point supervisor should ensure that OWCP district office is provided with copies of all documents pertaining to the recovery.

547.73 Disbursement of Recovered Third Party Funds

When a settlement is made, the control office or control point supervisor makes disbursement of the funds as follows:

• When the third party check includes OWCP payments only, send the check and PS Form 2556 or 2557, as applicable, directly to OWCP unless the check is made payable to the Postal Service. If this is the case, deposit the check and issue a Treasury check or no–fee money order to OWCP.
• When the third party check includes OWCP payments and the employee’s share, payments issued in installments, COP that has been collected in error, or checks made payable to the postmaster, the following procedures apply:
• Deposit the check or monies in the postmaster’s trust account.
• Request a receipt PS Form 3544, Post Office Receipt for Money. Include the employee’s name and OWCP claim number on the receipt.
• Forward a memorandum (see Exhibit 547.73 , Sample Letter G) to the accounting office advising them of the proper disbursement to be made along with PS Form 2556 or 2557, whichever is applicable.
• Have the accounting office issue a no–fee money order or Treasury check that includes the employee’s name and OWCP claim number to the appropriate parties, i.e., OWCP and postal employee.
• For installment payments made by the third party, disbursement should be issued at periodic intervals (3 or 6 months) to the postal employee until the total expected monies from the third party are collected.

547.74 Settlement Verification

The control office or control point supervisor furnishes the employee and OWCP a copy of the PS Form 2556 or PS Form 2557 on all recoveries made.

547.75 Control Point Supervisor Requirements

All efforts on the part of control point supervisors concerning these instructions, to include case closure, settlement, or assistance, must be coordinated with the assigned control office.

547.76 Recovery Assistance

When the control office desires any advice on matters relating to the settlement of a third party recovery case or other legal matters, the appropriate field counsel should be contacted.

547.77 Delegation of Authority

The following are authorized to accept voluntary assignment of an employee’s claim against a third party and sign a release on behalf of the Postal Service when requested by the third party or insurance carrier:

• Manager of Injury Compensation.
• Qualified control point supervisor.
• Field counsel.

Exhibit 547.73

Sample Letter G

547.8 Third Party Recovery Action — Court Action

547.81 general.

FECA provides that an employee who is required to appear as a party or witness in the prosecution of a third party court action is in an active duty status while so engaged (5 U.S.C. 8131(a)(2)). Therefore, when an employee assigns a third party claim to the Postal Service and appears in court as a witness, or when an employee prosecutes a third party claim in his or her own name and appears in court as a party, such an employee is compensated for the court appearance as provided in 547.82 .

547.82 Compensation for Court Appearances

The following provisions apply to compensation for court appearances:

• A postal employee who appears as a witness in a third party action that has been assigned to the Postal Service is in an official duty status for the time spent in court (see 516.41 ) and for the time spent traveling between the court and the employee’s work site. However, any time spent traveling between an employee’s residence and the court is considered commuting time and, therefore, is not compensable.
• An employee who prosecutes a third party action in his or her own name is not in an official duty status as that term is defined in 516.41 . However, in order to implement FECA provision requiring compensation of such an employee, the Postal Service compensates that employee as if the employee were in an official duty status . Accordingly, such an employee is compensated to the same extent as that explained in 547.82 a for the time spent in court and for the time spent traveling between the court and the employee’s worksite. Any time spent traveling between the employee’s residence and the court is considered commuting time and is not compensable.

547.83 Documentation of Court Appearances

An employee who is prosecuting a third party action in his or her own name and who appears in court must document the time required to appear in court on the memorandum, Third Party Court Appearance Sheet (see Exhibit 547.83 ). The employee is considered in an active duty status; therefore, a PS Form 3971, Request for Notification of Absence, is not required. Rather, the hours on the time card for third party appearances are recorded as work only — and not as court leave or any other type leave. The completed memorandum is to be returned to the control office or control point as appropriate.

547.84 Case Preparation

An employee who is prosecuting a third party action in his or her own name is not treated as if in an official duty status for the time spent developing the case. Any time used for this purpose within the employee’s regular work schedule is charged to annual leave or LWOP.

Exhibit 547.83

Third Party Court Appearance Sheet

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Call for Proposals: EmPower: Women for Climate Resilient Societies (PHASE- II) (This CFP is for National Organizations ONLY)

The overall assignment is for to engage a responsible party (national civil society organization) to support the implementation of third outcome i.e.: “National actors are more knowledgeable to implement and monitor gender-responsive and human rights-based climate change policies and plans” of the Empower project.

• Call for Proposal_UNW-AP-BGD-CFP-2024-001 (Word, 323kb)

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Table of Contents   for the handbook, Guide to Survivor Benefits: Memberships On or After 4/2/2012

• Introduction 
• Retirement Allowance 
• Options for Retirees 
• Cost of Living Adjustment 
• Social Security 
• Return of Accumulated Deductions 
• Option D 
• Accidental Death Benefits 
• Survivor Benefits for Accidental Disability Retirees 
• Pending Determination of Accidental Death Benefits for Both Retirees and Members-In-Service 
• Section 101 Allowances 
• Death of Firefighters, Police Officers, and Corrections Officers in the Line of Duty 
• Killed in the Line of Duty Lump Sum Benefit 
• Third Party Recovery 
• Appeals 
• Key Addresses and Phone Numbers 

Third Party Recovery

Table of contents.

Must Recoveries be Sought From “Third Parties” That Cause Disability or Death to Public Employees?

Members or their beneficiaries who are entitled to accidental disability or accidental death pension benefits must exercise their rights to recover lost wages from such third parties.  Amounts recovered on account of lost wages are offset against and therefore reduce pension benefits.

What Happens if a Member or Beneficiary Fails to Fully Prosecute Such Rights?

Boards shall prosecute such rights on a member’s behalf.  If a member or a beneficiary fails to cooperate with the board in its prosecution, the board may, during the period of such failure, suspend the member’s or the beneficiary’s rights to further payment.

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