1101 Overview

This chapter provides Department of Veteran Affairs’ financial policies related to the waiver or compromise, as allowed, of Veteran medical and benefit debt, employee, and ex-employee debt owed to the Department of Veterans Affairs (VA).

COWC activities are governed by 38 C.F.R. § 1.955-1.970.

Key items presented in this chapter discuss how VA, in the performance of its debt management duties, will:

• Adhere to all laws, regulations, authorities, and guidance governing VA debt management activities and Committees on Waivers and Compromises (COWC);
• Assign administrative control of each COWC;
• Assign committee jurisdiction for different types of debt and dollar amounts under COWC authority; and
• Divide the COWC workload between various offices and give those offices jurisdiction over their assigned workload. A chart for jurisdiction reference is available in Appendix B.

1102 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Appendix B	Edited language regarding Pension Management Centers (PMC) and the handling of VA employee debts.	OFP (047G)	VBA requested St. Paul COWC and Milwaukee COWC both handle all VA employee debts, based on the respective states.	February 2023

1103 Definitions

Compromise – Governed by 31 U.S.C. § 3711, a compromise is an offer and acceptance of a partial payment in settlement and full satisfaction of the offeror’s indebtedness as it exists at the time the offer is made. It is a final settlement, bindingon the parties to the compromise, unless procured by fraud, misrepresentation of a material fact or mutual mistake of fact.

Debt – Money or property owed to VA.

Fraud – A knowing misrepresentation of the truth or concealment of it to induce another to act to his/her detriment, a criminal act of corruption, attempt to cheat the Government, and/or to corrupt the Government’s agents.

Jurisdiction – an assignment via regulation or delegation that gives an entity the authority to make decisions regarding the waiver or compromise of debt.

Notice of Disagreement/Reconsideration – A statement in writing from a debtorletting VA know they disagree with the decision made by the COWC.

Third-Party Debt – An individual or entity (i.e., insurance company, workers’ compensation carrier, or employer) that is involved in a debt but is not one of the principles and has a lesser interest. For example, the cost of treating a Veteran for a condition when the third-party is obligated to provide or pay the expenses of such treatment.

Waiver – A decision that conditions exist which should result in cancellation, forgiveness, or non-recovery of a debt owed, including interest and other late payment charges assessed on such debts under the applicable statutes and implementing regulations 38 C.F.R. § 1.955, through 38 C.F.R. § 1.969, and 38 C.F.R. § 17.105.

1104 Roles and Responsibilities

Administrative Control Function is the Fiscal Officer in a station hosting a COWC, who has the responsibility for overseeing the operational aspects of the COWC. The term Fiscal Officer in this case also refers to the Executive Director of the Debt Management Center (DMC). However, the station Director has the authority to reassign the administrative control function to another station activity, rather than the Fiscal Officer (38 C.F.R. § 1.955(c)). The term “administrative control function” will be used throughout Volume XII to describe either the Finance Office or other station activity assigned the administrative control of the station Committee.

Chief of the Local Finance Activity is responsible for ensuring compliance with the policies and appropriate procedures which provide guidance for administration of VA’s debt collection activities. Any reference to Chief of the Local Financial Activity can also refer to: Executive Director of the Debt Management Center, Director of the Financial Services Center where appropriate, as well as Chief Fiscal Officers in VA Medical Centers, Chief Finance Officers in Regional Offices, and Chief Fiscal Officers in the Consolidated Patient Account Centers (CPAC).

Directors of VA Medical and Regional Office Centers hosting a COWC will appoint a Committee chairperson, members and alternates in accordance with 38 C.F.R. § 1.955(b).

Board of Veterans’ Appeals (BVA) reviews benefits claim determinations made by local VA offices and issues decisions on appeals of those determinations. For more information on BVA, refer to 38 U.S.C. § 7103-7104.

Committee on Waivers and Compromises (COWC) is the decision-making panel composed of one or more members, making decisions on a request for a waiver or compromise. The Committee is under the direction of and has authority vested in the Director of the office of jurisdiction. The Committee will have independent decision- making authority.

Chairperson of the COWC is responsible for executing or certifying any documents pertaining to Committee proceedings. He/she is responsible for maintaining needed records of the transactions of the Committee and preparation of any administrative or other reports required. The Chairperson normally represents the Committee in dealing with other divisions and top management.

Committee Member is an individual who participates on the panel to review waiver requests and compromise offers. The individual will have special competence and familiarity with one or more of the debts claim areas.

Debt Management Center (DMC) is a franchise fund (fee-for-service) organization at VA. DMC offers a wide range of debt management services including debt resolution activities, as well as waivers and compromises under their jurisdiction, with the authority to refer compromise offers.

Under Secretary for Benefits may assume original jurisdiction of any matter the Committee has authority to consider, but for which it has not rendered a decision on the issue involved, in accordance with 38 C.F.R. § 1.956(b). The Under Secretary for Benefits will establish an ad hoc Board to determine the issue. It is contemplated such authority will be used sparingly, only in circumstances that involve a unique case.

1105 Policies

110501 General Policies

1. COWC actions and processes are guided by regulations contained in 38 C.F.R. § 1.955-1.970.
2. VA’s Committees on Waivers and Compromises will comply with statutes, regulations, and standards set forth in the following:
   • 38 U.S.C. § 5302;
   • 5 U.S.C. § 5584, and of travel, transportation and relocation expenses and allowances, as set forth in 38 C.F.R. § 1.963;
   • 5 U.S.C. § 5584, 38 C.F.R. § 17.105, 38 U.S.C. § 1722a, and 38 U.S.C. § 5302; and
   • 38 U.S.C. § 3720(a), and 31 U.S.C. § 3711.
3. In accordance with 38 C.F.R. § 1.910, VA will take active collection action on a timely basis, with effective follow-up, to collect all claims for money or property arising from its activities. If facts and circumstances in a case indicate a need for reasonableness and moderation in the exercise of the Government’s rights, the “Equity and Good Conscience” standard will be applied. See Volume XII, Chapter 11C, Appendix A for more information on the “Equity and Good Conscience” standard.
4. The duties, delegations of authority, and all actions required of COWC are accomplished under the direction of, and authority vested in, the Director of the station responsible for the operation of the Committee with jurisdiction. See Appendix B for jurisdiction information.
5. Debts approved for waiver by the COWC or BVA will be written-off within 90 days of the waiver being approved.
6. For more information regarding time limitations for submitting waiver requests, see Appendix C.

110502 Waiver and Compromise Jurisdiction

1. The C.F.R delegates authority (i.e., grants jurisdiction) to make decisions on the acceptance of requests for waivers and compromises to the various entities within VA. Specifically, authority is delegated based upon the type and amount of debt to either Chiefs of the Local Finance Activity, COWC’s, or Staff Offices. In some instances, this authority has been further delegated via Delegation of Authority, Service Level Agreement (SLA), or policy. See Appendix A for a list of entities and the workloads that they are responsible for processing. See Appendix B for a chart of jurisdictions.
2. VA cannot waive vendor or third-party debts.
3. Requests for compromise greater than $100,000 will be referred to Department of Justice (DOJ). VA may make a recommendation to DOJ on the disposition of the debt but, only DOJ has the authority to compromise. SeeAppendix A and B for further information on jurisdiction and authorities.
4. Breach of Contract employee debt waiver requests or compromise offers will comply with related provisions in the Continuing Service Agreement (CSA) applicable policy and may be referred to Office of General Counsel (OGC) for guidance.
5. DMC Benefit Waiver or Compromise Process Overview.
   1. A request for waiver on an account under DMC’s jurisdiction should be forwarded to DMC for processing.
   2. When DMC receives a request for waiver or compromise, DMC will forward the request to the owning Regional Office/Regional Processing Office (RO/RPO). Information on which RO/RPO has jurisdiction can be found in Appendix B.
   3. The COWC at the owning RO/RPO will notify the debtor of the decision of the committee and any possible appeals that are available.
   4. A compromise offer or an untimely waiver request on a DMC account may be considered by a special Committee panel located at DMC.

110503 Special Considerations for Pay Related Waiver and Compromise Requests

1. The General Accounting Office Act of 1996 (GAO Act of 1996), Public Law 104-316, provided for the transfer of the Comptroller General’s authority under 5 U.S.C. § 5584, to prescribe standards and waive collection of Government claims against Federal employees arising out of the erroneous payments (see also 38 C.F.R. § 1.963a(b)).
   • Public Law 99-224 (December 28, 1985) amended 5 U.S.C. § 5584.
   • Congress delegated the Comptroller General’s authority to the Director of OMB.
   • On December 17, 1996, the Director of OMB delegated the authority to waive collection of erroneous payments made to civilian employees under 5 U.S.C. § 5584 by expanding waiver authority to the Executive Branch agency that made the erroneous payment.
     If the Committee denies such a request for waiver, the Chief of the Fiscal Office at the station responsible for collection of the debt will provide the employee with notice of the right to appeal the denial of the waiver request.
     The Assistant Secretary for Human Resources and Administration has jurisdiction over waiver and compromise requests arising out of a breach of contract, as well as recruitment and relocation incentive service agreements.
     For additional information on recruitment and relocation incentive repayment requirement, see VA Handbook 5007, Part VI, Chapter 2.
2. All requests for waiver of the erroneous payment of pay or allowances, travel, transportation, and relocation expenses will be submitted to the Committee, except for waiver requests for debt due to breach of contract which follows the provisions of CSA. The committee will consider and then grant or deny requests for waiver of erroneous payments of pay and allowances and of travel, transportation, and relocation expenses for up to $100,000 of indebtedness.
3. In the interest of fairness and to ensure the utmost objectivity in considering a VA employee’s request for waiver or compromise, a Committee will not render a decision on requests made by an employee of the same station where the Committee is located.
4. Waivers for drill pay debt should not be granted under 10 U.S.C. § 12316, and 38 U.S.C. § 5304(c).

110504 COWC Composition and Workflow

1. Each Committee will consist of a Chairperson and alternate Chairperson and as many Committee members and alternate members as the Director of the station where the Committee is located may appoint.
2. Members and alternates will be selected in each of the debt claim areas (i.e., compensation, pension, education, insurance, loan guaranty, etc.).
3. When a claim is properly referred to the Committee for either waiver consideration or the consideration of a compromise offer, the Chairperson will designate a panel from the available Committee members to consider the waiver request or compromise offer.
4. When the debt for which the waiver request or compromise offer is made is $20,000 or less (exclusive of interest and administrative costs), the Chairperson will assign only one Committee member. This one Committee member will have experience in the program area where the debt is located. The single panel member’s decision will stand as the decision of the Committee.
   Except in cases involving a Home Loan Program debt, the Committee conducting a hearing in conjunction with a debtor’s request for waiver, up to $20,000, will render the decision on that request.
5. When the debt for which the waiver request or compromise offer made is more than $20,000 (exclusive of interest and administrative costs), the Chairperson will assign two Committee members. One of the two members will be knowledgeable in the program area where the debt arose. If the two-member panel cannot reach a unanimous decision, the Chairperson shall assign a third member of the committee to the panel, or assign the case to three new members, and the majority shall determine the Committee decision.
6. When the debtor disagrees with a COWC decision they can file a Notice of Disagreement/Reconsideration or appeal the decision.
   1. When a Notice of Disagreement is filed, a new one or two-member panel will be assigned, and a second review will be conducted in accordance with 38 C.F.R. § 1.969. A disagreement is filed when the debtor feels that the Committee made an error by not properly considering certain evidence, or the debtor has new evidence they can submit they feel should change the Committee’s decision. By assigning a different one or two-member panel, the COWC is ensuring an impartial decision will be made. If a debtor disagrees with the final decision issued by the COWC, the debtor may appeal to BVA, and/or a Federal Court of Appeals which may overrule a COWC, and a BVA, decision.
   2. Debtors have the right to appeal a waiver denial or partial denial. They can also appeal the refusal of a COWC to consider a waiver request because the request was not received within the applicable statutory time limit. Refer to Volume XII, Chapter 11E Appeals – COWC for additional details.
   3. The debtor has the right to appeal a COWC decision after a COWC reconsideration to BVA or a Federal Court.

110505 Correspondence

1. All waiver and compromise correspondence shall be in writing.
2. The station where the Committee is located is responsible for all correspondence to the debtor concerning Committee matters, except in cases involving waiver of erroneous payments of pay and allowances (see below for details).
3. In cases involving the erroneous payment of employee pay and allowances, the Chief of the Local Finance Activity at the station responsible for preparing the report of investigation and collection of the debt is also responsible for all correspondence to the debtor, including the initial notice of indebtedness (NOI), which contains information on the debtor’s right to request a waiver. The administrative control function where the Committee of jurisdiction is located is responsible for forwarding the Committee’s decision or recommendation on the request for waiver to the station responsible for collection of the debt.

110506 Fraud

1. A COWC may not issue a decision on a request for waiver or compromise if thereare any indications of fraud.
2. All indications of fraud will be referred to the Office of Inspector General.

1106 Authorities and References

• United States Code (U.S.C.)
  • 5 U.S.C. § 5584 Claims for Overpayment of Pay and Allowances of Travel,  Transportation, Relocation Expenses, and Allowances
  • 10 U.S.C. § 12316 Payment of certain Reserves while on duty
  • 31 U.S.C. § 3711 Collection and Compromise
  • 38 U.S.C. § 309 Chief Financial Officer
  • 38 U.S.C. § 1722a Copayment for Medications
  • 38 U.S.C. § 3720 Powers of Secretary
  • 38 U.S.C. § 5302 Waiver of Recovery of Claims by the United States
  • 38 U.S.C. § 5313B Prohibition on providing certain benefits with respect to persons who are fugitive felons
  • 38 U.S.C. § 7103 Reconsideration; Correction of Obvious Errors
  • 38 U.S.C. § 7104 Jurisdiction of the Board
• Code of Federal Regulations (C.F.R.)
  • 38 C.F.R. § 1.910 Aggressive collection action
  • 38 C.F.R. § 1.955-1.970 Regional Office Committees on Waivers and Compromises
  • 38 C.F.R. §§ 3.665-3.666
  • 38 C.F.R. § 17.102 Charges for Care and Service
  • 38 C.F.R. § 17.105 Waivers
• Public Law 104-316 October 19, 1996
• Public Law 99-224 To Provide an Equitable Waiver in the Compromise and Collection of Federal Claims
• VA Handbook 5007, Part VI, Chapter 2

1107 Rescissions

This chapter rescinds OFP Volume XI Chapter 1 General Policy – COWC.

1108 Policy Approval

This policy was approved by VA Chief Financial Officers’ Council on March 14, 2023.

Appendix A: Delegation of Authority Table

All dollar amounts of debt in this table apply without adding interest, administrative costs, and penalties.

Authority and 38 C.F.R. Ref.	$/Type of Debt	Action	Exceptions
Department of Justice (DOJ); §§ 1.953, 1.957(a)(2)(ii)(D) & 1.962(b)	Over $100,000 and suspected fraud in amounts generally not less than $2,500 that are not fully resolved to VA Inspector General (IG)	Waive / Compromise referral through the Office of General Counsel (OGC)	Employee, home loan, medical copayments, and pharmacy copayments
CPAC Fiscal Officer or designee; §§ 1.956(a)(2)(iv), 17.103(a), & 17.105©	VA medical copayment or pharmacy copayment	Waive / Compromise for amounts up to $1,000 exclusive of interest and other late payment charges	Fraud
COWC – St. Paul and Milwaukee Regional Offices; §§ 1.956(a), 1.957(a), 1.963a, & 1.964	Benefit debt including home loan debt, employee debt (Volume XII, Chapter 3 Employee Debt), and Veteran medical care or services erroneously furnished for a non-service- connected disability- 17.101(a)	Waiver	3rd party liable, refer to OGC
COWC – St. Paul and Milwaukee Regional Offices;§§ 1.956(a), 1.957(a), 1.963a, & 1.964	Benefit debt including home loan debt, employee debt (Volume XII, Chapter 3 Employee Debt), and Veteran medical care or services erroneously furnished for a non-service- connected disability-17.101(a)	Compromise up to $100,000 exclusive of interest and other late payment charges	Over $100,000 (except home loan) DOJ. 3rd party liable or fraud refer to OGC.
Chief of the Local Financial Activity or CPAC Fiscal Officer; § 1.957(b)	Benefit debt or medical debt, excluding third party debt, and including humanitarian or ineligible Veteran debt with principal balance up to $1,000	Compromise when offer is to pay 50% or more of principal balance	Home loan, employee, fraud
Special Committee (COWC) at DMC; §1.955(a)	Up to $100,000 exclusive of interest and other late payment charges / benefit debt within DMC’s jurisdiction as noted in Appendix B.	Compromise	Over $100,000, or fraud refer to OGC/DOJ
COWC at Education Regional Processing Office (Buffalo); §§ 1.956(a) & 1.957(a)	Up to $100,000 exclusive of interest and other late payment charges / Education	Compromise	Over $100,000 or fraud refer to OGC/DOJ
COWC at Buffalo; §§ 1.956(a) & 1.957(a), & 3.812	Up to $100,000 exclusive of interest and other late payment charges / Benefit debt under Education and Restored Entitlement Program for Survivors (REPS);	Compromise	Over $100,000 or fraud refer to OGC/DOJ
COWC at Buffalo; §§ 1.956(a) & 1.957(a), & 3.812	Benefit debt under Education and Restored Entitlement Program for Survivors (REPS);	Waiver	Fraud refer to OGC
COWC at Buffalo or Milwaukee Regional Office; §1.963a	St. Paul RO employee debt	Waiver / Compromise
VHA Facility COWC; §17.105(a),	Medical service charges as listed in 38C.F.R. § 17.102 primarily for non- Veteran recipients	Waiver	All other debt types
VHA Facility COWC; §17.103(c)	Medical service- related debt not otherwise directed to CPAC or OGC in amounts up to $10,000	Compromise

Appendix B: Jurisdiction of Waiver and Compromise Requests

A. Waiver Requests

TYPE	JURISDICTION
Compensation, Pension, Chapter 31 Veteran Readiness and Employment (VR&E), and Employee Erroneous Payments and Allowances**, Medical care furnished to ineligible Veterans   **Breach of recruitment or relocation incentive service agreement is under the jurisdiction of the Assistant Secretary for Human Resources and Administration.   Breach of Employee Incentive Scholarship Program (EISP) National Nursing Education Initiative (NNEI), or VA National Education for Employees Program (VANEEP)is under the jurisdiction of VHA’s Under Secretary for Heath.	The Pension Management Centers (PMCs) located at the Milwaukee and St. Paul ROs. For a breakdown of each VBA RO association with a specific PMC jurisdiction, refer to Section C of this Appendix. (St. Paul COWC and Milwaukee COWC both handle all VA employee debts, based on the respective states that they currently have jurisdiction under per part C of Appendix B.
Home Loans	St. Paul PMC/Regional Loan Center
Education	Education RPOs centralized at Buffalo
Restored Entitlement Program for Survivors	Buffalo RPO
Debts on all cases processed by the Manila Regional Office	Manila RO
Debt resulting from charges for care or services under 38 C.F.R. § 17.102 Charges for care or services	St. Paul and Milwaukee COWCs VBA station
Homeless Providers Grant and Per Diem Program	Waiver requests up to $100,000 will be processed by the DMC
Breach of Continuing Service Agreements with VA Acquisition Academy	Waiver requests up to $100,000 will be processed by the DMC

B. Compromise Requests

TYPE	JURISDICTION
Home Loans	The COWC at the St. Paul RO has unlimited authority to consider compromise offers on home loan program debts regardless of the amount of the debt (38 U.S.C. Chapter 37)
Compensation, Pension, Insurance and Chapter 31 Veteran Readiness and Employment (VR&E)	Compromise requests up to $100,000 will be processed by the DMC
Erroneous Pay and Allowances Medical care furnished to ineligible Veterans or emergency or humanitarian care provided to the public	A compromise offer request will be within the jurisdiction of the 2 centralized COWC ROs (St. Paul and Milwaukee) up to $100,000
Education Debt	Compromise actions will be processed by the DMC. Chapter 32 education debts are the responsibility of Education RPO in Buffalo
Restored Entitlement Program for Survivors	Buffalo RO
Station Debt	Compromise requests up to $100,000 will be processed by St. Paul RO
All Requests over $100,000	VBA will forward compromise offers for debts (other than a home loan program debt) greater than $100,000, exclusive of interest, administrative cost, penalties, or other charges, to DOJ
Debts up to $1,000 resulting from care or services furnished by VHA	Debtor will submit request to VHA Fiscal Office where the debt arose and then forward to the COWC
Homeless Providers Grant and Per Diem Program	Compromise requests up to $100,000 will be processed by the DMC
Breach of Continuing Service Agreements with VA Acquisition Academy	Compromise requests up to $100,000 will be processed by the DMC

C. As mentioned in section A above each VBA Regional Office is assigned to either the PMC at St. Paul or Milwaukee.

PMC St. Paul (335)				PMC Milwaukee (330)
Philadelphia	310	St. Paul	335	Milwaukee	330
Atlanta	316	Albuquerque	340	Chicago	328
Baltimore	313	Anchorage	463	Cleveland	325
Boston	301	Boise	347	Detroit	329
Buffalo	307	Denver	339	Indianapolis	326
Columbia	319	Des Moines	333	Jackson	323
Hartford	308	Fargo	437	Little Rock	350
Huntington	315	Ft. Harrison	436	Louisville	327
Manchester	373	Honolulu	459	Montgomery	322
Newark	309	Houston	362	Nashville	320
New York	306	Lincoln	334	New Orleans	321
Pittsburgh	311	Los Angeles	344	St. Louis	331
Providence	304	Muskogee	351
Roanoke	314	Oakland	343
St. Petersburg	317	Phoenix	345
Togus	402	Portland	348
White River Junction	405	Reno	354
Wilmington	460	Salt Lake City	341
Winston Salem	318	San Diego	377
Washington RO	372	Seattle	346
San Juan	355	Sioux Falls	438
All other foreign countries		Waco	349
		Wichita	452
		Mexico
		Central America
		South America
		Caribbean
Employee Debts: Milwaukee PMC (330)				Employee Debts: St. Paul PMC (335)
Manila RO processes Philippine cases

Appendix C: Waiver Request Time Limits

If a request for waiver is made within the statutory time limit set forth in 38 C.F.R.1.963 and1.964, the entire amount of the indebtedness will be considered for waiver even though all or a portion of the indebtedness may have already been recouped prior to the request. Benefits are not to be withheld until the debtor is given the opportunity to request, within 30days of the initial NOI, both a waiver and a hearing, as well as certain other administrative remedies. If a waiver request is received within 30 days of the NOI (90 days for Compensation and Pension debts), VA will suspend collection action until the waiver decision is made.

Under the Centralized Committee System, waiver requests may be forwarded to an inappropriate jurisdiction. If a request is received at a station other than the station where the Committee of Jurisdiction is located (e.g., a waiver request sent to the claims folder station on a loan guaranty indebtedness), the station receiving the request will not enter it into its elapsed time count because it does not have jurisdiction over the case. Only the station where the COWC of Jurisdiction is located will record the request into its elapsed time count upon receipt of the request.

TIMEFRAME FOR SUBMITTING WAIVER REQUESTS
Benefit debts	180 days from the date of notification of indebtedness.
Home loan debts	Must be received within 1 year after the date on which the debtor receives, by certified mail – return receipt requested, the written NOI. If the debtor was not notified by certified mail, there is no time limit for submitting a waiver request.
Employee debts	Must be received within 3 years following the date the erroneous payment was discovered.
Vendor and Third-Party debts	May not be waived; may only be compromised.
Cost of medical emergency or humanitarian services or where there is a statutory bar against payment	May not be waived; may only be compromised.