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.
