If an error in payments already made to a member or beneficiary
is discovered, arrangements shall be made to correct the error, either through
recovery of overpayments from the member or beneficiary or through additional
compensation paid to the member or beneficiary to adjust for underpayments.
Schedules referenced in this rule shall commence only after presentation to and
approval by the board of trustees.
(1)
As soon as practical after being discovered, underpayments shall be corrected
through a lump-sum payment to the member or beneficiary in an amount equal to
the total amount of underpayments to date and an amount of interest such that
the total lump-sum payment is actuarially equivalent to the total amount of
underpayments. The member or beneficiary may request a method of repayment
other than a lump-sum payment, in which case a repayment schedule may be
mutually agreed upon between the board and the member or beneficiary.
(2) Overpayments other than those which
resulted from fraudulent acts on the part of the member or beneficiary
receiving the payments shall be recovered from the member or beneficiary. The
preferred method of recovery, if the member or beneficiary is continuing to
receive payments from the system, shall be withholding monthly an amount
equivalent to the monthly average of the amount of overpayments during the
period in which the overpayments were made, until total repayments equal a sum
actuarially equivalent to the total amount of overpayment. If the member or
beneficiary is not receiving payments from the system, the board may seek
repayment in a lump sum including the amount of overpayments and interest in an
amount such that the total repayment is actuarially equivalent to the total
amount of overpayments, although the member or beneficiary may request a
repayment schedule be established and the board may agree to do so.
(3) An overpayment which resulted in whole or
in part from a fraudulent act or acts on the part of the member or beneficiary
receiving the payments shall be repaid to the system in an amount which is
actuarially equivalent to the amount of the overpayment plus a reasonable
assessment of the administrative costs to the system and the department to
recover the overpayment. The preferred method of repayment is a lump-sum
payment collected as soon as practical after the overpayment and the fraudulent
act are discovered, although the board shall accept a repayment schedule
established by a court which orders restitution in relation to a conviction
stemming from the fraudulent act or acts. The board may agree to an alternative
payment schedule at the request of the member or beneficiary if there is no
applicable order of restitution.
The board may find, on the basis of clear and convincing
evidence, that an overpayment resulted from a fraudulent act or acts on the
part of a member or beneficiary. A conviction based upon a fraudulent act or
acts committed in relation to the receipt of benefits from the system shall be
prima facie evidence of fraud for purposes of this subrule.
