What is a claim compromise?

Compromising a claim consists of accepting a partial payment as full satisfaction of a claim on the condition that the payment is received promptly. Provider claims may NOT be compromised.

What claims can be compromised?

This policy applies to all FAMILY claims when the overpayment did not occur due to fraud and the initial notification of overpayment was issued through MEC2.

The text of all MEC2 family overpayment notices include language that advises the debtor of:

Timelines for compromise

The time limit for a debtor to make the compromise payment is 90 days from the initial notification of the claim. If the initial overpayment notice is sent by 1st class mail, the 90-day period begins with the date the notice is issued. If the initial notice is returned to the local agency by the postal service, the right to an overpayment notice and compromise is renewed. If the initial overpayment notice is sent by certified mail and accepted by the household, the 90-day period begins with the date a household member signs for receipt of the notice.

Fraud claims cannot be compromised

The right to compromise does NOT apply to family claims when the overpayment occurred due to fraud, which means that an Intentional Program Violation (IPV) has been established. See Chapter 13.6 (Disqualification for wrongfully obtaining assistance – Families). In fraud situations, the agency should suppress the MEC2 overpayment notice and mail their own overpayment notice without the compromise language. If an overpayment notice precedes the determination of fraud and a timely compromise payment is received, the local agency is bound by the compromise. Consequently, a local agency that pursues criminal action would not be able to seek monetary restitution for the full amount of a previously compromised claim. This does not, however, prevent a local agency from charging the full amount of a compromised claim or from requesting additional fines, penalties, interest, or non-monetary restitution in the sentencing phase of the criminal proceeding.

Compromising after recoupment has started

If the family chooses to compromise the debt after recoupment has begun but before the 90-day time limit, the amount of the overpayment already collected through recoupment would be returned to the family through a manual payment once the compromise payment has been received. The manual payment would be issued to the provider, who would be responsible for refunding that amount to the parent, unless the child care was provided in the child’s home.

How much can claims be compromised?

Claims may be compromised by 25% if the remaining 75% is repaid within the 90-day time limit. Compromise amounts must be in the form of direct voluntary payment by a debtor. Recovery received by tax offset, recoupment, or restored benefits cannot be applied toward a compromise.

How must CCAP agencies handle funds collected through compromise?

A compromise payment is considered a collection. The CCAP agency deposits the money they collect then reports the full 75% in MEC². DHS bills the CCAP agency for 75% of the amount collected. The CCAP agency can retain 25% of the compromise payment amount.

Legal authority

Statutes 16D.15