Md. Code Regs. 17.01.01.04

Current through Register Vol. 51, No. 22, November 1, 2024

Section 17.01.01.04 - Agency Responsibility

A. Aggressive Collection Action. The agency head or his designee shall take aggressive action, on a timely basis with effective follow-up, to collect all claims of the State for money or property resulting from the activities of (or referred to) his agency in accordance with the standards set forth in this regulation.

B. Demand for Payment.

(1) Appropriate written demands shall be made upon a debtor in the form of invoices, letters, or other written communication, properly addressed and delivered to the debtor. The first demand may be made before the date the claim is due and payable or within a reasonable time after that. This demand shall inform the debtor of the amount and reason for the indebtedness and the date when payment is due. Information about a discount offered to the debtor as an incentive to early payment as well as information about interest or other charges which may be assessed as a penalty for late payment shall be included in the first demand for payment.

(2) Written demands for past due amounts (reminder letters, for example) should also include a statement informing the debtor of the consequences (that is, declaration of account delinquency and transfer to CCU for possible enforced collection action) of failure to respond to the demand in a positive manner.

(3) Three written demands, at 30 day intervals, will normally be made before an account is declared delinquent. However, an agency should declare an account delinquent and transfer it to CCU immediately, without awaiting the expiration of a time period, whenever:

(a) The debtor's response to an appropriate demand indicates that further demand would be futile (for example, debtor's expressed refusal to pay);

(b) The debtor fails to respond in a positive way within 75 days of the original written demand;

(c) Prompt suit or attachment is required in anticipation of:

(i) The debtor's departure from the jurisdiction,

(ii) The debtor's removal or transfer of assets,

(iii) Imminent expiration of any applicable statute of limitations.

(4) There should be no undue delay in responding to a communication received from the debtor.

(5) A claim against a deceased non-delinquent debtor shall be filed promptly by the agency concerned and the account deemed delinquent only if the personal representative of the estate refuses payment. If an estate has not been opened within 180 days of the date of death, the account shall be deemed delinquent and referred to the Central Collection Unit for collection.

C. Personal Interview with Debtor. Agencies will undertake personal interviews and telephone contacts with their debtors when this is feasible, having due regard for the amounts involved and the proximity of the agency representatives to these debtors.

D. Collection from Third-Party Payors. Whenever the debtor may be eligible for benefits or financial assistance from a third party, such as veteran benefits, Medicaid, or Medicare, to help satisfy the debtor's obligation to the State, the agency shall render any assistance that it may deem reasonable and proper to assist the debtor in making claim on the third party, including billing the third party on behalf of the debtor. Collections from these third parties shall be used to reduce the debtor's obligation to the State to the extent permitted by law. In determining account delinquency, a debtor's refusal to apply for or make a claim for benefits from a third-party payor shall have the same effect as a refusal of benefits to the debtor by the third-party payor.

E. Collection by Offset. Collection by offset shall be undertaken administratively to the extent permitted by law.

F. Liquidation of Collateral.

(1) If the debtor fails to pay a debt within a reasonable time after demand, an agency holding security or collateral which may be liquidated should do so through the exercise of a power of sale in the security instrument or a nonjudicial foreclosure by procedures in accordance with applicable law, and apply the proceeds to debts due it, unless the cost of disposing of the collateral will be disproportionate to its value or special circumstances require judicial foreclosure.

(2) Collection from other sources, including liquidation of security or collateral, is not a prerequisite to requiring payment by a surety, insurance company, or other third-party payor unless this action is expressly required by statute or contract.

G. Collection in Installments. Claims should be collected in full in one lump sum whenever this is possible. However, if the debtor is financially unable to pay the indebtedness in one lump sum, payment may be accepted in regular installments. The size and frequency of these installment payments should bear a reasonable relation to the size of the debt and the debtor's ability to pay. If liquidation by installment payments should require more than 3 years, then the claim should be transferred as a delinquent account to CCU. An agency holding an unsecured claim for administrative collection may attempt to obtain an executed confessed judgement note. The form and content of these notes shall be as prescribed by the legal counsel of the agency concerned. Security for deferred payments, other than a confessed judgement note, may be accepted in appropriate cases. An agency may accept installment payments notwithstanding the refusal of a debtor to execute a confessed judgement note or to give other security, at the agency's option.

H. Exploration of Compromise or Abatement. Agencies shall neither abate nor compromise claims. If there is reason to believe that the debtor's financial ability will not permit payment of the claim in full, the claim shall be referred immediately to CCU for exploration of possible compromise or abatement.

I. Suspension or Revocation of License or Eligibility. Agencies seeking the collection of statutory penalties, forfeitures, or debts provided for as an enforcement aid or for compelling compliance shall give serious consideration to the suspension or revocation of licenses or other privileges, to the extent permitted by law, for inexcusable, prolonged, or repeated failure of a debtor to pay this claim and shall so advise the debtor.

J. Documentation of Collection Efforts.

(1) The agency shall document the collection efforts it has expended before declaring an account delinquent. As a minimum, this documentation shall consist of:

(a) An itemized list of charges to the account which have not been paid at the time the account is declared delinquent;

(b) Copies of invoices and originals of signed contracts or agreements to pay or promissory notes signed by the debtor or co-signer or other evidence to substantiate the existence and amount of the debt;

(c) Copies of follow-up letters sent to debtors;

(d) Copies of all correspondence and memoranda indicative of agency efforts to obtain payment from the debtor or those responsible for paying the debtor's bills (for example, parent, guardian, cosigner, estate executor, etc.);

(e) Copies of forms, correspondence, and memoranda recording the data used to determine the debtor's willingness or ability to satisfy his obligation to the State.

(2) Original copies of items documenting the agency's collection effort shall be furnished to CCU as specified in Regulation .05 of this chapter for use in preparing a legal prosecution of the State's claim. Photocopies of this documentation shall be made and retained by the transferring agency.

Md. Code Regs. 17.01.01.04

Regulation .04B, D, and F amended effective December 28, 1987 (14:26 Md. R. 2748)