Threshold for Reporting VA Debts to Consumer Reporting Agencies, 5693-5696 [2022-01496]
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Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Rules and Regulations
original final rule was issued without
notice and comment. This rule is also
exempt from the requirement in 5 U.S.C.
553(d) that the effective date of a
regulation must be at least 30 days after
publication in the Federal Register.
Executive Order 12866
This final rule rescinds internal rules
of agency procedure only. OMB has
determined that the rule is not a
significant regulatory action within the
meaning of Executive Order 12866.
List of Subjects in 36 CFR Part 1155
Administrative practice and
procedure.
For the reasons discussed in the
preamble, and under the authority of 29
U.S.C. 792, the Access Board amends 36
CFR chapter XI as follows:
PART 1155—[REMOVE AND
RESERVE]
Congressional Review Act
■
This final rule is not a major rule
within the meaning of the Congressional
Review Act. See 5 U.S.C. 801, et seq.
Sachin Pavithran,
Executive Director.
Regulatory Flexibility Act
The Access Board has analyzed this
direct final rule in accordance with the
principles and criteria set forth in
Executive Order 13132. The Board has
determined that this action will not
have a substantial direct effect on the
States, or the relationship between the
Federal Government and the States, or
on the distribution of power and
responsibilities among the various
levels of government, and, therefore,
does not have Federalism implications.
Paperwork Reduction Act
This final rule does not specify any
new collections of information or
recordkeeping requirements that require
OMB approval under the Paperwork
Reduction Act. See 44 U.S.C. 3501 et
seq.
Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act
of 1995 (codified at 2 U.S.C. 1531 et
seq.) (‘‘UMRA’’) generally requires that
Federal agencies assess the effects of
their discretionary regulatory actions
that may result in the expenditure of
$100 million (adjusted for inflation) or
more in any one year by the private
sector, or by State, local, and tribal
governments in the aggregate. Because
this direct final rule is being issued
under the good cause exception in the
Administrative Procedure Act section
553(b)(B), UMRA’s analytical
16:37 Feb 01, 2022
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DEPARTMENT OF VETERANS
AFFAIRS
38 CFR Part 1
RIN 2900–AR20
Threshold for Reporting VA Debts to
Consumer Reporting Agencies
Department of Veterans Affairs.
Final rule.
AGENCY:
Federalism (Executive Order 13132)
VerDate Sep<11>2014
1. Remove and reserve part 1155.
BILLING CODE 8150–01–P
The Regulatory Flexibility Act (RFA)
requires Federal agencies to analyze
regulatory options that may assist in
minimizing any significant impact of a
rule on small businesses and small
governmental jurisdictions. See 5 U.S.C.
604, 605(b). Because this final rule
relates solely to the recission of agency
internal procedures and, moreover, is
not subject to notice-and-comment
rulemaking, the RFA is inapplicable.
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requirements are inapplicable. See 2
U.S.C. 1532(a).
ACTION:
The Department of Veterans
Affairs (VA) amends its regulations
around the conditions by which VA
benefits debts or medical debts are
reported to consumer reporting agencies
(CRA). The Johnny Isakson and David P.
Roe, M.D. Veterans Health Care and
Benefits Improvement Act of 2020
provides the Secretary authority to
prescribe regulations that establish the
minimum amount of a benefits or
medical debt that the Secretary will
report to the CRA. This change will
establish the methodology for
determining a minimum threshold for
debts reported to CRA.
DATES: This rule is effective March 4,
2022.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Jason Hoge, Director of Operations, Debt
Management Center, Office of
Management, 189, 1 Federal Drive, Suite
4500, Fort Snelling, MN 55111, (612)
725–4337. (This is not a toll-free
telephone number.)
SUPPLEMENTARY INFORMATION: On July
23, 2021 (86 FR 38958), VA published
a proposed rule in the Federal Register
that would significantly reduce the
amount of VA debts referred to the CRA.
VA provided a 60-day comment period,
which ended on September 21, 2021.
VA received nine comments on the
proposed rule.
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Summary of Regulatory Changes
This final rule amends VA’s
regulation that governs reporting of
delinquent debts to CRA. This
rulemaking would update the regulation
to comply with section 2007 of Public
Law 116–315, the Johnny Isakson and
David P. Roe, M.D. Veterans Health Care
and Benefits Improvement Act of 2020.
Section 2007 amends chapter 53 of title
38, United States Code by adding
section 5320 as follows: ‘‘The Secretary
shall prescribe regulations that establish
the minimum amount of a claim or debt,
arising from a benefit administered by
the Under Secretary for Benefits or
Under Secretary for Health, that the
Secretary will report to a consumer
reporting agency under section 3711 of
title 31.’’
This amendment will establish the
methodology for determining the
minimum threshold for reporting
certain VA debts to CRA. It will also
exclude from the minimum threshold
those debts in which there is an
indication of fraud, misrepresentation,
or bad faith on the part of the debtor.
Background on Governing Statutes
The Debt Collection Improvement Act
of 1996 (DCIA), in part, mandated
agencies to report delinquent debts to
CRA. 31 U.S.C. 3711(e); Sec. 31001(k),
Public Law 104–134, 110 Stat. 1321.
The purpose of the DCIA includes
maximizing collection of delinquent
debts by ensuring quick action to
recover debts, use of appropriate
collection tools, and minimizing the
costs of debt collection. Sec. 31001(b),
Public Law 104–134.
Section 5320 of title 38, United States
Code, authorizes VA to ‘‘establish the
minimum amount of a claim or debt,
arising from a benefit administered by
the Under Secretary for Benefits or
Under Secretary for Health, that the
Secretary will report to a consumer
reporting agency under section 3711 of
title 31.’’ The intent of section 5320 is
to lessen negative impact of CRA reports
on Veterans.
Introduction to Regulatory Changes
As explained in more detail below,
we amend 38 CFR 1.916 to comply with
38 U.S.C. 5320, to establish a minimum
threshold for reporting debts to CRA.
In accordance with 31 U.S.C. 3711(e),
the VA Debt Management Center (DMC)
is responsible for reporting delinquent
debts to CRA. Prior to January 5, 2021,
DMC reported an average of 5,000
delinquent Veteran accounts monthly.
DMC regularly receives complaints from
Veterans whose accounts have been
reported to CRA. Common complaints
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from Veterans include loss of security
clearance, inability to obtain approval
for home loans or home refinancing, and
difficulty securing rental housing. This
amendment recognizes that the debts
described in 38 U.S.C. 5320 are
fundamentally different from consumer
debt. Debts arising from a benefit
administered by the Under Secretary for
Benefits or the Under Secretary for
Health may result from a variety of
scenarios, including overpayments that
are not the fault of the Veteran.
Section 5320 authorizes the Secretary
to establish a minimum threshold that
will ultimately reduce the number of
debts that will be reported to CRA. This
will, in turn, decrease the number of
Veterans negatively impacted by these
reports. The VA’s mission is to ‘‘fulfill
President Lincoln’s promise ‘To care for
him who shall have borne the battle,
and for his widow, and his orphan’ by
serving and honoring the men and
women who are America’s Veterans.’’
Negative credit reports may cause
housing insecurity or job loss, and this
result is inconsistent with VA’s mission.
38 CFR 1.916 Disclosure of Debt
Information to Consumer Reporting
Agencies (CRA)
We amend 38 CFR 1.916, which sets
forth the requirements for reporting
delinquent debts to CRA, by inserting
paragraphs (c)(1) through (3) to provide
the methodology used by the Secretary
to establish the minimum threshold.
This section would also clarify that the
minimum threshold applies only to a
debt of an individual that arises from a
benefit administered by the Under
Secretary for Benefits or Under
Secretary for Health.
We add paragraphs (c)(1) through (3)
to provide that:
• The Secretary has established a
minimum threshold for a debt, arising
from a benefit administered by the
Under Secretary for Benefits or Under
Secretary for Health, that the Secretary
will report to a consumer reporting
agency under section 3711 of title 31.
• VA will only report those debts that
meet the following standards:
Æ The debt is classified as currently
not collectible. For purposes of this
paragraph, the debt is currently not
collectible if VA has exhausted available
collection efforts, including, as
appropriate, referrals for administrative
offset and enforced collection;
Æ The debt is not owed by an
individual who is determined by VA to
be catastrophically disabled or has
reported to VA a gross household
income below the applicable
geographically adjusted income limits
that would entitle a VA beneficiary to
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cost-free health care, medications and/
or beneficiary travel; and
Æ The outstanding debt amount is
over $25, or such higher amount VA
may from time to time prescribe, in
accordance with § 1.921 of the part.
• The minimum threshold set forth in
the paragraph will not apply if there is
an indication of fraud,
misrepresentation, or bad faith on the
part of the individual in connection
with the debt.
Positive Comments
Most commenters were in support of
the proposed rule. One commenter
stated that the rule will make life easier
for Veterans, particularly those who
have experienced conditions that
require them to receive financial
assistance from VA. Another commenter
stated the rule demonstrates that VA
recognizes these debts are not like
consumer debts and result from many
sources, including some that are of no
fault of the Veteran. The commenter
added the proposed rule makes it clear
that VA understands that fraudulent and
misrepresented claims should not be
tolerated, and these are exempt from the
proposed rule, as they should be. An
additional commenter similarly
mentioned that these debts should be
recognized differently from consumer
debts as many times it is not the fault
of the Veteran, and we should be
protecting those who serve us.
VA thanks the commenters for their
support of the rule. We are not making
any changes based on these comments.
Comments on Referral of Medical Debts
One commenter stated there should
never be a time Veteran medical debts
should be reported to a credit reporting
agency. The commenter added that
reporting Veterans for non-payment or
delinquent status of a medical debt can
further add to the mental and emotional
turmoil most are already dealing with.
Another commenter suggested
expanding reporting restrictions to
Veterans in priority groups one through
seven. The commenter states the
proposed criteria would effectively
exclude Veterans in VA health care
priority groups four and five but leave
several categories of Veterans
unprotected. The commenter added
Veterans should be as insulated as
possible from the negative consequences
of having medical debt included in their
credit reports and urged the VA to
exclude all delinquent debts held by
Veterans in priority groups one through
seven.
VA acknowledges and understands
the concern with reporting medical
debts to CRA. However, the proposed
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rule states VA will only report debts
that are considered currently not
collectible, the debt is not owed by an
individual who is determined
catastrophically disabled or has a gross
household income below the applicable
geographically adjusted income limit,
and the outstanding debt amount is over
$25. When considering VA medical
debts that fall under these conditions,
VA is obligated by the Debt Collection
Improvement Act (DCIA) to report
delinquent debts to the CRA. Through
VA’s analysis and determination of the
referral conditions, the current rule is
projected to result in a significant
reduction in referred debts while
continuing to comply with DCIA.
Therefore, VA is not making changes
based on these comments.
Comment on Minimum Threshold
Amount
Several commenters voiced concern
over the $25 minimum threshold
amount. One commenter suggested the
$25 threshold be increased to $1,000
since this would more likely represent
a common loan borrowed on the regular
marketplace. The commenter also stated
a significant amount of Veterans face
housing and job insecurity, even with
benefits extended to them, so the
proposed threshold requirement should
be higher.
Another commenter stated by setting
a low monetary threshold of $25, it is
hard to imagine there will be a
significant reduction in debt reporting.
The same commenter suggested the VA
set the minimum threshold at the 10
percent rating monthly rate.
One commenter suggested to
substantially increase the proposed
dollar amount from $25 to a higher
threshold that would follow various
characteristics about Veterans’
delinquent debt, such as the median
medical collections tradeline provided
by Consumer Financial Protection
Bureau (CFPB). The commenter further
explains the CFPB reports that the
addition of any paid or unpaid
collections tradeline can significantly
reduce a credit score and may even
preclude individuals from accessing the
credit market altogether.
VA considered several different
threshold amounts and after thorough
analysis came to the threshold as
proposed in the rule which includes
four criteria: (1) The debt is classified as
currently not collectible; (2) The debt is
not owed by an individual who is
determined by VA to be catastrophically
disabled or has reported to VA a gross
household income below the applicable
geographically adjusted income limits;
(3) The outstanding debt amount is over
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$25.00; and (4) There is no indication of
fraud, misrepresentation, or bad faith on
the part of the individual in connection
with the debt. Based on the
comprehensive impact of the criteria in
addition to the dollar amount, VA is not
making changes based on these
comments.
Comments on Definition of
Catastrophically Disabled Veteran
One commenter suggested expanding
its exemptions to all totally and
permanently disabled Veterans as an
additional way to lessen the impact of
CRA reporting. Another commenter
stated VA should align the
‘‘catastrophically disabled’’ rule to meet
the Department of Education’s Total and
Permanent Disability Discharge
program. The commenter states VA’s
use of ‘‘catastrophically disabled’’ in the
proposed rule places a significantly
higher standard even though a rating of
100% or a finding of total disability
makes it just as unreasonable to expect
the Veteran to be able to repay the debt.
One commenter made a similar
suggestion that VA should consider
expanding its exemptions to all totally
and permanently disabled Veterans as
an additional way to lessen the impact
of CRA reporting.
As stated in the proposed rule, VA
will only report debts to CRA if the debt
is not owed by an individual who is
determined to be catastrophically
disabled or has reported to VA a gross
household income below the applicable
geographically adjusted income limits.
Due to the requirements of the DCIA
and the Johnny Isakson and David P.
Roe, M.D. Veterans Health Care and
Benefits Improvement Act of 2020, VA
is not making changes based on these
comments.
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Comments on Veteran Benefits
One commenter stated benefits or
entitlements for Veterans should not
end once they are no longer in the
service due to medical issues or
disabilities caused by their time in the
military. It was also suggested that all
Veterans should have a counselor of
some sort to inform them of their
financial responsibilities in connection
with receiving services. Another
commenter stated Veterans need more
support and access to benefits than what
is currently available, and the benefits
that are available should not be allowed
to negatively impact Veterans on the
housing and job market.
VA acknowledges the concerns
addressed in these comments; however,
the comments do not directly correlate
with the proposed rulemaking so VA
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will not be making any changes based
on these comments.
Comment on Referral of Education
Debts
One commenter stated the proposed
rule should be revised to exempt, or at
a minimum, specifically restrict the
reporting of educational overpayment
debts to a CRA since most of these debts
are caused by error or delay by VA or
an institution.
Effective January 5, 2021, Public Law
116–315 section 1019 was enacted,
making the school, instead of the
student, financially liable for payments
such as tuition, fees, and Yellow Ribbon
paid directly to a school. Therefore, any
educational overpayment debt owed to
the VA would be a books and supplies
or housing debt. Students currently
enrolled in school would have their
debts offset by their VA benefits so there
should be very few debts classified as
currently not collectible in this category.
Due to the fact that reporting
educational overpayment debts to CRA
is a rare occurrence, VA is not making
changes based on this comment.
Comment on Referral of Debts Under
Dispute by a Veteran
One commenter suggested the VA
should prohibit reporting of any debt to
a CRA that is being disputed until an
individual’s dispute or appeal is
resolved. The commenter states if the
dispute is found in favor of the Veteran,
the inaccurate negative credit report
may have caused irreversible financial
harm, such as the loss of a security
clearance, inability to obtain credit for
the purchase of a home or vehicle, and
inability to secure rental housing.
When an individual timely disputes
or appeals his or her VA debt, VA
pauses collection on the debt, and the
debt would not be referred to CRA until
the dispute or appeal has been resolved.
The determination of currently not
collectible would come well after any
resolution of a dispute. VA is not
making changes based on this comment.
Based on the rationale set forth in the
SUPPLEMENTARY INFORMATION to the
proposed rule and in this final rule, VA
is adopting the proposed rule with no
changes.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess the costs and
benefits of available regulatory
alternatives and, when regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, and other advantages;
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5695
distributive impacts; and equity).
Executive Order 13563 (Improving
Regulation and Regulatory Review)
emphasizes the importance of
quantifying both costs and benefits,
reducing costs, harmonizing rules, and
promoting flexibility. The Office of
Information and Regulatory Affairs has
determined that this rule is not a
significant regulatory action under
Executive Order 12866. The Regulatory
Impact Analysis associated with this
rulemaking can be found as a
supporting document at
www.regulations.gov.
Regulatory Flexibility Act
The Secretary hereby certifies that
this rule will not have a significant
economic impact on a substantial
number of small entities as they are
defined in the Regulatory Flexibility Act
(5 U.S.C. 601–612). The regulations
established by this rulemaking do not
impose burdens or otherwise regulate
the activities of any small entities
outside of VA. Therefore, pursuant to 5
U.S.C. 605(b), the initial and final
regulatory flexibility analysis
requirements of 5 U.S.C. 603 and 604 do
not apply.
Paperwork Reduction Act
This rule contains no provisions
constituting a collection of information
under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3521).
Unfunded Mandates
The Unfunded Mandates Reform Act
of 1995 requires, at 2 U.S.C. 1532, that
agencies prepare an assessment of
anticipated costs and benefits before
issuing any rule that may result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
(adjusted annually for inflation) in any
one year. This final rule will have no
such effect on State, local, and tribal
governments, or on the private sector.
Congressional Review Act
Pursuant to Subtitle E of the Small
Business Regulatory Enforcement
Fairness Act of 1996 (known as the
Congressional Review Act) (5 U.S.C. 801
et seq.), the Office of Information and
Regulatory Affairs designated this rule
as not a major rule, as defined by 5
U.S.C. 804(2).
List of Subjects in 38 CFR Part 1
Administrative practice and
procedure, Archives and records,
Cemeteries, Claims, Courts, Crime,
Flags, Freedom of information,
Government contracts, Government
employees, Government property,
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Infants and children, Inventions and
patents, Parking, Penalties, Postal
Service, Privacy, Reporting and
recordkeeping requirements, Seals and
insignia, Security measures, Wages.
Signing Authority
Denis McDonough, Secretary of
Veterans Affairs, approved this
document on December 2, 2021, and
authorized the undersigned to sign and
submit the document to the Office of the
Federal Register for publication
electronically as an official document of
the Department of Veterans Affairs.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy
& Management, Office of General Counsel,
Department of Veterans Affairs.
For the reasons stated in the
preamble, the Department of Veterans
Affairs amends 38 CFR part 1 as set
forth below:
PART 1—GENERAL PROVISIONS
not collectible if VA has exhausted
available collection efforts, including, as
appropriate, referrals for administrative
offset and enforced collection;
(ii) The debt is not owed by an
individual who is determined by VA to
be catastrophically disabled or has
reported to VA a gross household
income below the applicable
geographically adjusted income limits
that would entitle a VA beneficiary to
cost-free health care, medications and/
or beneficiary travel; and
(iii) The outstanding debt amount is
over $25, or such higher amount VA
may from time to time prescribe, in
accordance with § 1.921.
(3) The minimum threshold set forth
in this paragraph (c) will not apply if
there is an indication of fraud,
misrepresentation, or bad faith on the
part of the individual in connection
with the debt.
*
*
*
*
*
[FR Doc. 2022–01496 Filed 2–1–22; 8:45 am]
BILLING CODE 8320–01–P
1. The authority citation for part 1 is
revised to read as follows:
■
Authority: 31 U.S.C. 3711(e); 38 U.S.C.
501, 5701(g) and (i); 38 U.S.C. 5320.
ENVIRONMENTAL PROTECTION
AGENCY
2. Amend § 1.916 by revising
paragraph (c) to read as follows:
40 CFR Part 80
§ 1.916 Disclosure of debt information to
consumer reporting agencies (CRA).
[EPA–HQ–OAR–2021–0793; FRL–8521.1–
01–OAR]
*
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■
*
*
*
*
(c) Subject to the conditions set forth
in this paragraph (c) and paragraph (d)
of this section, information concerning
individuals may be disclosed to
consumer reporting agencies for
inclusion in consumer reports
pertaining to the individual, or for the
purpose of locating the individual.
Disclosure of the fact of indebtedness
will be made if the individual fails to
respond in accordance with written
demands for repayment, or refuses to
repay a debt to the United States. In
making any disclosure under this
section, VA will provide consumer
reporting agencies with sufficient
information to identify the individual,
including the individual’s name,
address, if known, date of birth, VA file
number, and Social Security number.
(1) The Secretary has established a
minimum threshold for a debt, arising
from a benefit administered by the
Under Secretary for Benefits or Under
Secretary for Health, that the Secretary
will report to a consumer reporting
agency under 31 U.S.C. 3711.
(2) VA will only report those debts
that meet the following standards:
(i) The debt is classified as currently
not collectible. For purposes of this
paragraph (c)(2)(i), the debt is currently
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Renewable Fuel Standard (RFS)
Program: Extension of Compliance
and Attest Engagement Reporting
Deadlines
Environmental Protection
Agency (EPA).
ACTION: Final rule.
AGENCY:
The Environmental Protection
Agency (EPA) is finalizing
modifications of certain compliance
dates under the Renewable Fuel
Standard (RFS) program. First, EPA is
extending the RFS compliance reporting
deadline and the associated attest
engagement reporting deadline for the
2019 compliance year for small
refineries only. Second, EPA is
extending the RFS compliance reporting
deadline and the associated attest
engagement reporting deadline for the
2020, 2021, and 2022 compliance years
for all obligated parties. Finally, EPA is
changing the way in which future RFS
compliance and attest engagement
reporting deadlines are determined.
DATES:
Effective date: The amendatory
instructions in this final rule are
effective on January 31, 2022.
SUMMARY:
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Operational dates: For operational
purposes under the Clean Air Act
(CAA), this final rule is effective as of
January 27, 2022.
ADDRESSES: EPA has established a
docket for this action under Docket ID
No. EPA–HQ–OAR–2021–0793. All
documents in the docket are listed on
the https://www.regulations.gov
website. Although listed in the index,
some information is not publicly
available, e.g., confidential business
information (CBI) or other information
whose disclosure is restricted by statute.
Certain other material is not available
on the internet and will be publicly
available only in hard copy form.
Publicly available docket materials are
available electronically through https://
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: For
questions regarding this action, contact
Karen Nelson, Office of Transportation
and Air Quality, Compliance Division,
Environmental Protection Agency, 2000
Traverwood Drive, Ann Arbor, MI
48105; telephone number: (734) 214–
4657; email address: nelson.karen@
epa.gov.
SUPPLEMENTARY INFORMATION:
Dates
Section 553(d) of the Administrative
Procedure Act (APA), 5 U.S.C. chapter
5, generally provides that rules may not
take effect until 30 days after they are
published in the Federal Register. EPA
is issuing this final rule under CAA
section 307(d), which states, ‘‘The
provisions of section 553 through 557
. . . of Title 5 shall not, except as
expressly provided in this section,
apply to actions to which this
subsection applies.’’ Thus, section
553(d) of the APA does not apply to this
rule. EPA is nevertheless acting
consistently with the policies
underlying APA section 553(d) in
making this final rule effective upon
signature. The purpose of this APA
provision is to ‘‘give affected parties a
reasonable time to adjust their behavior
before the final rule takes effect.’’
Omnipoint Corp. v. Fed. Commc’n
Comm’n, 78 F.3d 620, 630 (D.C. Cir.
1996); see also United States v.
Gavrilovic, 551 F.2d 1099, 1104 (8th Cir.
1977) (quoting legislative history).
However, when an agency grants or
recognizes an exemption or relieves a
restriction, affected parties do not need
a reasonable time to adjust because the
effect is not adverse. Thus, APA section
553(d) allows an effective date less than
30 days after publication for any rule
that ‘‘grants or recognizes an exemption
or relieves a restriction’’ (see 5 U.S.C.
553(d)(1)). An accelerated effective date
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]]>Agencies
[Federal Register Volume 87, Number 22 (Wednesday, February 2, 2022)]
[Rules and Regulations]
[Pages 5693-5696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01496]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 1
RIN 2900-AR20
Threshold for Reporting VA Debts to Consumer Reporting Agencies
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Veterans Affairs (VA) amends its regulations
around the conditions by which VA benefits debts or medical debts are
reported to consumer reporting agencies (CRA). The Johnny Isakson and
David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of
2020 provides the Secretary authority to prescribe regulations that
establish the minimum amount of a benefits or medical debt that the
Secretary will report to the CRA. This change will establish the
methodology for determining a minimum threshold for debts reported to
CRA.
DATES: This rule is effective March 4, 2022.
FOR FURTHER INFORMATION CONTACT: Jason Hoge, Director of Operations,
Debt Management Center, Office of Management, 189, 1 Federal Drive,
Suite 4500, Fort Snelling, MN 55111, (612) 725-4337. (This is not a
toll-free telephone number.)
SUPPLEMENTARY INFORMATION: On July 23, 2021 (86 FR 38958), VA published
a proposed rule in the Federal Register that would significantly reduce
the amount of VA debts referred to the CRA. VA provided a 60-day
comment period, which ended on September 21, 2021. VA received nine
comments on the proposed rule.
Summary of Regulatory Changes
This final rule amends VA's regulation that governs reporting of
delinquent debts to CRA. This rulemaking would update the regulation to
comply with section 2007 of Public Law 116-315, the Johnny Isakson and
David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of
2020. Section 2007 amends chapter 53 of title 38, United States Code by
adding section 5320 as follows: ``The Secretary shall prescribe
regulations that establish the minimum amount of a claim or debt,
arising from a benefit administered by the Under Secretary for Benefits
or Under Secretary for Health, that the Secretary will report to a
consumer reporting agency under section 3711 of title 31.''
This amendment will establish the methodology for determining the
minimum threshold for reporting certain VA debts to CRA. It will also
exclude from the minimum threshold those debts in which there is an
indication of fraud, misrepresentation, or bad faith on the part of the
debtor.
Background on Governing Statutes
The Debt Collection Improvement Act of 1996 (DCIA), in part,
mandated agencies to report delinquent debts to CRA. 31 U.S.C. 3711(e);
Sec. 31001(k), Public Law 104-134, 110 Stat. 1321. The purpose of the
DCIA includes maximizing collection of delinquent debts by ensuring
quick action to recover debts, use of appropriate collection tools, and
minimizing the costs of debt collection. Sec. 31001(b), Public Law 104-
134.
Section 5320 of title 38, United States Code, authorizes VA to
``establish the minimum amount of a claim or debt, arising from a
benefit administered by the Under Secretary for Benefits or Under
Secretary for Health, that the Secretary will report to a consumer
reporting agency under section 3711 of title 31.'' The intent of
section 5320 is to lessen negative impact of CRA reports on Veterans.
Introduction to Regulatory Changes
As explained in more detail below, we amend 38 CFR 1.916 to comply
with 38 U.S.C. 5320, to establish a minimum threshold for reporting
debts to CRA.
In accordance with 31 U.S.C. 3711(e), the VA Debt Management Center
(DMC) is responsible for reporting delinquent debts to CRA. Prior to
January 5, 2021, DMC reported an average of 5,000 delinquent Veteran
accounts monthly. DMC regularly receives complaints from Veterans whose
accounts have been reported to CRA. Common complaints
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from Veterans include loss of security clearance, inability to obtain
approval for home loans or home refinancing, and difficulty securing
rental housing. This amendment recognizes that the debts described in
38 U.S.C. 5320 are fundamentally different from consumer debt. Debts
arising from a benefit administered by the Under Secretary for Benefits
or the Under Secretary for Health may result from a variety of
scenarios, including overpayments that are not the fault of the
Veteran.
Section 5320 authorizes the Secretary to establish a minimum
threshold that will ultimately reduce the number of debts that will be
reported to CRA. This will, in turn, decrease the number of Veterans
negatively impacted by these reports. The VA's mission is to ``fulfill
President Lincoln's promise `To care for him who shall have borne the
battle, and for his widow, and his orphan' by serving and honoring the
men and women who are America's Veterans.'' Negative credit reports may
cause housing insecurity or job loss, and this result is inconsistent
with VA's mission.
38 CFR 1.916 Disclosure of Debt Information to Consumer Reporting
Agencies (CRA)
We amend 38 CFR 1.916, which sets forth the requirements for
reporting delinquent debts to CRA, by inserting paragraphs (c)(1)
through (3) to provide the methodology used by the Secretary to
establish the minimum threshold. This section would also clarify that
the minimum threshold applies only to a debt of an individual that
arises from a benefit administered by the Under Secretary for Benefits
or Under Secretary for Health.
We add paragraphs (c)(1) through (3) to provide that:
The Secretary has established a minimum threshold for a
debt, arising from a benefit administered by the Under Secretary for
Benefits or Under Secretary for Health, that the Secretary will report
to a consumer reporting agency under section 3711 of title 31.
VA will only report those debts that meet the following
standards:
[cir] The debt is classified as currently not collectible. For
purposes of this paragraph, the debt is currently not collectible if VA
has exhausted available collection efforts, including, as appropriate,
referrals for administrative offset and enforced collection;
[cir] The debt is not owed by an individual who is determined by VA
to be catastrophically disabled or has reported to VA a gross household
income below the applicable geographically adjusted income limits that
would entitle a VA beneficiary to cost-free health care, medications
and/or beneficiary travel; and
[cir] The outstanding debt amount is over $25, or such higher
amount VA may from time to time prescribe, in accordance with Sec.
1.921 of the part.
The minimum threshold set forth in the paragraph will not
apply if there is an indication of fraud, misrepresentation, or bad
faith on the part of the individual in connection with the debt.
Positive Comments
Most commenters were in support of the proposed rule. One commenter
stated that the rule will make life easier for Veterans, particularly
those who have experienced conditions that require them to receive
financial assistance from VA. Another commenter stated the rule
demonstrates that VA recognizes these debts are not like consumer debts
and result from many sources, including some that are of no fault of
the Veteran. The commenter added the proposed rule makes it clear that
VA understands that fraudulent and misrepresented claims should not be
tolerated, and these are exempt from the proposed rule, as they should
be. An additional commenter similarly mentioned that these debts should
be recognized differently from consumer debts as many times it is not
the fault of the Veteran, and we should be protecting those who serve
us.
VA thanks the commenters for their support of the rule. We are not
making any changes based on these comments.
Comments on Referral of Medical Debts
One commenter stated there should never be a time Veteran medical
debts should be reported to a credit reporting agency. The commenter
added that reporting Veterans for non-payment or delinquent status of a
medical debt can further add to the mental and emotional turmoil most
are already dealing with.
Another commenter suggested expanding reporting restrictions to
Veterans in priority groups one through seven. The commenter states the
proposed criteria would effectively exclude Veterans in VA health care
priority groups four and five but leave several categories of Veterans
unprotected. The commenter added Veterans should be as insulated as
possible from the negative consequences of having medical debt included
in their credit reports and urged the VA to exclude all delinquent
debts held by Veterans in priority groups one through seven.
VA acknowledges and understands the concern with reporting medical
debts to CRA. However, the proposed rule states VA will only report
debts that are considered currently not collectible, the debt is not
owed by an individual who is determined catastrophically disabled or
has a gross household income below the applicable geographically
adjusted income limit, and the outstanding debt amount is over $25.
When considering VA medical debts that fall under these conditions, VA
is obligated by the Debt Collection Improvement Act (DCIA) to report
delinquent debts to the CRA. Through VA's analysis and determination of
the referral conditions, the current rule is projected to result in a
significant reduction in referred debts while continuing to comply with
DCIA. Therefore, VA is not making changes based on these comments.
Comment on Minimum Threshold Amount
Several commenters voiced concern over the $25 minimum threshold
amount. One commenter suggested the $25 threshold be increased to
$1,000 since this would more likely represent a common loan borrowed on
the regular marketplace. The commenter also stated a significant amount
of Veterans face housing and job insecurity, even with benefits
extended to them, so the proposed threshold requirement should be
higher.
Another commenter stated by setting a low monetary threshold of
$25, it is hard to imagine there will be a significant reduction in
debt reporting. The same commenter suggested the VA set the minimum
threshold at the 10 percent rating monthly rate.
One commenter suggested to substantially increase the proposed
dollar amount from $25 to a higher threshold that would follow various
characteristics about Veterans' delinquent debt, such as the median
medical collections tradeline provided by Consumer Financial Protection
Bureau (CFPB). The commenter further explains the CFPB reports that the
addition of any paid or unpaid collections tradeline can significantly
reduce a credit score and may even preclude individuals from accessing
the credit market altogether.
VA considered several different threshold amounts and after
thorough analysis came to the threshold as proposed in the rule which
includes four criteria: (1) The debt is classified as currently not
collectible; (2) The debt is not owed by an individual who is
determined by VA to be catastrophically disabled or has reported to VA
a gross household income below the applicable geographically adjusted
income limits; (3) The outstanding debt amount is over
[[Page 5695]]
$25.00; and (4) There is no indication of fraud, misrepresentation, or
bad faith on the part of the individual in connection with the debt.
Based on the comprehensive impact of the criteria in addition to the
dollar amount, VA is not making changes based on these comments.
Comments on Definition of Catastrophically Disabled Veteran
One commenter suggested expanding its exemptions to all totally and
permanently disabled Veterans as an additional way to lessen the impact
of CRA reporting. Another commenter stated VA should align the
``catastrophically disabled'' rule to meet the Department of
Education's Total and Permanent Disability Discharge program. The
commenter states VA's use of ``catastrophically disabled'' in the
proposed rule places a significantly higher standard even though a
rating of 100% or a finding of total disability makes it just as
unreasonable to expect the Veteran to be able to repay the debt. One
commenter made a similar suggestion that VA should consider expanding
its exemptions to all totally and permanently disabled Veterans as an
additional way to lessen the impact of CRA reporting.
As stated in the proposed rule, VA will only report debts to CRA if
the debt is not owed by an individual who is determined to be
catastrophically disabled or has reported to VA a gross household
income below the applicable geographically adjusted income limits. Due
to the requirements of the DCIA and the Johnny Isakson and David P.
Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020, VA
is not making changes based on these comments.
Comments on Veteran Benefits
One commenter stated benefits or entitlements for Veterans should
not end once they are no longer in the service due to medical issues or
disabilities caused by their time in the military. It was also
suggested that all Veterans should have a counselor of some sort to
inform them of their financial responsibilities in connection with
receiving services. Another commenter stated Veterans need more support
and access to benefits than what is currently available, and the
benefits that are available should not be allowed to negatively impact
Veterans on the housing and job market.
VA acknowledges the concerns addressed in these comments; however,
the comments do not directly correlate with the proposed rulemaking so
VA will not be making any changes based on these comments.
Comment on Referral of Education Debts
One commenter stated the proposed rule should be revised to exempt,
or at a minimum, specifically restrict the reporting of educational
overpayment debts to a CRA since most of these debts are caused by
error or delay by VA or an institution.
Effective January 5, 2021, Public Law 116-315 section 1019 was
enacted, making the school, instead of the student, financially liable
for payments such as tuition, fees, and Yellow Ribbon paid directly to
a school. Therefore, any educational overpayment debt owed to the VA
would be a books and supplies or housing debt. Students currently
enrolled in school would have their debts offset by their VA benefits
so there should be very few debts classified as currently not
collectible in this category. Due to the fact that reporting
educational overpayment debts to CRA is a rare occurrence, VA is not
making changes based on this comment.
Comment on Referral of Debts Under Dispute by a Veteran
One commenter suggested the VA should prohibit reporting of any
debt to a CRA that is being disputed until an individual's dispute or
appeal is resolved. The commenter states if the dispute is found in
favor of the Veteran, the inaccurate negative credit report may have
caused irreversible financial harm, such as the loss of a security
clearance, inability to obtain credit for the purchase of a home or
vehicle, and inability to secure rental housing.
When an individual timely disputes or appeals his or her VA debt,
VA pauses collection on the debt, and the debt would not be referred to
CRA until the dispute or appeal has been resolved. The determination of
currently not collectible would come well after any resolution of a
dispute. VA is not making changes based on this comment.
Based on the rationale set forth in the SUPPLEMENTARY INFORMATION
to the proposed rule and in this final rule, VA is adopting the
proposed rule with no changes.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, and other advantages; distributive impacts;
and equity). Executive Order 13563 (Improving Regulation and Regulatory
Review) emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
The Office of Information and Regulatory Affairs has determined that
this rule is not a significant regulatory action under Executive Order
12866. The Regulatory Impact Analysis associated with this rulemaking
can be found as a supporting document at www.regulations.gov.
Regulatory Flexibility Act
The Secretary hereby certifies that this rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The regulations established by this rulemaking do not impose
burdens or otherwise regulate the activities of any small entities
outside of VA. Therefore, pursuant to 5 U.S.C. 605(b), the initial and
final regulatory flexibility analysis requirements of 5 U.S.C. 603 and
604 do not apply.
Paperwork Reduction Act
This rule contains no provisions constituting a collection of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year. This final rule will have no such effect on
State, local, and tribal governments, or on the private sector.
Congressional Review Act
Pursuant to Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C.
801 et seq.), the Office of Information and Regulatory Affairs
designated this rule as not a major rule, as defined by 5 U.S.C.
804(2).
List of Subjects in 38 CFR Part 1
Administrative practice and procedure, Archives and records,
Cemeteries, Claims, Courts, Crime, Flags, Freedom of information,
Government contracts, Government employees, Government property,
[[Page 5696]]
Infants and children, Inventions and patents, Parking, Penalties,
Postal Service, Privacy, Reporting and recordkeeping requirements,
Seals and insignia, Security measures, Wages.
Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved this
document on December 2, 2021, and authorized the undersigned to sign
and submit the document to the Office of the Federal Register for
publication electronically as an official document of the Department of
Veterans Affairs.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of
General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 38 CFR part 1 as set forth below:
PART 1--GENERAL PROVISIONS
0
1. The authority citation for part 1 is revised to read as follows:
Authority: 31 U.S.C. 3711(e); 38 U.S.C. 501, 5701(g) and (i);
38 U.S.C. 5320.
0
2. Amend Sec. 1.916 by revising paragraph (c) to read as follows:
Sec. 1.916 Disclosure of debt information to consumer reporting
agencies (CRA).
* * * * *
(c) Subject to the conditions set forth in this paragraph (c) and
paragraph (d) of this section, information concerning individuals may
be disclosed to consumer reporting agencies for inclusion in consumer
reports pertaining to the individual, or for the purpose of locating
the individual. Disclosure of the fact of indebtedness will be made if
the individual fails to respond in accordance with written demands for
repayment, or refuses to repay a debt to the United States. In making
any disclosure under this section, VA will provide consumer reporting
agencies with sufficient information to identify the individual,
including the individual's name, address, if known, date of birth, VA
file number, and Social Security number.
(1) The Secretary has established a minimum threshold for a debt,
arising from a benefit administered by the Under Secretary for Benefits
or Under Secretary for Health, that the Secretary will report to a
consumer reporting agency under 31 U.S.C. 3711.
(2) VA will only report those debts that meet the following
standards:
(i) The debt is classified as currently not collectible. For
purposes of this paragraph (c)(2)(i), the debt is currently not
collectible if VA has exhausted available collection efforts,
including, as appropriate, referrals for administrative offset and
enforced collection;
(ii) The debt is not owed by an individual who is determined by VA
to be catastrophically disabled or has reported to VA a gross household
income below the applicable geographically adjusted income limits that
would entitle a VA beneficiary to cost-free health care, medications
and/or beneficiary travel; and
(iii) The outstanding debt amount is over $25, or such higher
amount VA may from time to time prescribe, in accordance with Sec.
1.921.
(3) The minimum threshold set forth in this paragraph (c) will not
apply if there is an indication of fraud, misrepresentation, or bad
faith on the part of the individual in connection with the debt.
* * * * *
[FR Doc. 2022-01496 Filed 2-1-22; 8:45 am]
BILLING CODE 8320-01-P
