federal transportation officer training program: basic ... · basic (level 1) session 9: claims...

Federal Transportation Officer Training Program:Basic (Level 1)

Freight, Cargo, and Household Goods

Session 9: Claims

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http://transbasic.knowledgeportal.us/session9/

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Basic (Level 1) Session 9: Claims

What You Will Learn

This session focuses on 3 distinct areas associated with claims:

First area will introduce agencyclaims against transportationservice providers (TSPs) forshipment loss and damage

Second area will address TSPtransportation claims against thegovernment, and

Third area will cover the appealprocedures for prepayment andpostpayment audits.

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http://transbasic.knowledgeportal.us/session9/p1/

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Session 9 Outline

Why Are Claims Important?

How Does My Agency HandleClaims Against TSPs for Lossor Damage?

How Does My Agency HandlePayment Claims TSPs May FileAgainst It?

What Are the TSP and AgencyAppeal Procedures?

Glossary of Terms

Knowledge Review

Where to Go for More Information

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Why Are Claims Important?

Government claims against the TSP are important for several reasons:

First, they hold the TSP accountablefor property that has beenentrusted to them, and

Second, claims frequency and theextent of damages are metrics forassessing TSP performance.

Claims brought by the TSP against the government are important because they may:

Result in significant additional costto the government, and

Indicate procedural problems within government operations that needcorrection.

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How Does My Agency Handle Claims Against TSPs for Loss or Damage?

Your agency would handle claims against a transportation service provide (TSP) for loss and damage in accordance with:

Title 49: Transportation, Code ofFederal Regulations (CFR), Part370, and

Agency policies and procedures.

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When would my agency initiate a claim action against a TSP?

Your agency would submit a claim action against a TSP:

All damaged cargo that is the basis for an agency claim against a TSP and its packaging must be held by the agency

for inspection by the TSP in its investigation of responsibility.

For lost shipments. Follow the guidelines of the TSP tender, tariff, orcontract that specifies tracing and tracking timelines to locate lost shipments.

For obvious damage detected upon delivery. The claim can be initiated assoon as all required documentation is assembled.

For concealed damage noted after unpacking the shipment. The receiver orconsignee must immediately report the concealed damages to the appropriateTSP point of contact, asking for immediate inspection by the TSP. The initialnotification must be followed up in writing by fax or e-mail.

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How do I review deliveries for obvious damage?

When sending or receiving shipments, you should:

Observe the doorway area of the vehicle and specifically look for damaged goods,product shifting or movement, or broken or displaced blocking and bracingdevices

Look in the nose of trailers or the ends of the rail cars for voids and/or productmovement

Report any exceptions immediately to the carrier and properly note the deliveryreceipt

When any of these exceptions exist, very carefully inspect the bill of lading toensure a prompt and adequate damage identification process, and

Take photographs of any exceptions noted, because photographs provide the bestform of evidence in a damage claim.

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How should I document damaged items?

It is vital to review shipments and document their condition. Through careful observation, you will want to:

1. Identify any damaged cargo andensure you have captured alldamaged items

2. Identify where each item is locatedwithin the load, because that mayprovide clues as to when and whythe damage occurred

3. Identify what each item is incontact with, for example, otherlading or floor, wall, etc.

4. Take photographs, as necessary, to document condition, and

5. Provide a copy of the damaged product report to the truck driver andreceive a signature for receipt. Make sure the damaged product reportincludes the notation of damage, the date, your name and signature, andthe driver's name and signature.

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What rules govern the filing of claims?

The rules governing the filing of claims are found in law. Claims are also governed by government regulations, where intrastate or interstate commerce is involved. If an international shipment is involved, the claim may also be governed by international treaties. Court decisions interpret these regulations, laws, and tariffs, and determine the rights and obligations of the parties.

Claims rules will be found either in the carrier's tariffs or on their bills of lading, or both.

If a shipment with a claim was handled by a contract, the terms of the contract will govern the carrier's liability for loss or damage.

In addition to law, you may also want to refer to FMR §102-117 and FMR §102-118 for guidance.

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What are the requirements for submitting a timely written loss or damage claim?

49 CFR, §370.3(b) of the Code of Federal Regulations, defines a claim as a written communication filed with the proper carrier, usually the originating or delivering carrier, within the time limits of the specified bill of lading or that time specified by 49 United States Code (U.S.C.) §14706(e) (usually 9 months from delivery). The claim must contain facts sufficient to identify the shipment, an assertion of the carrier's liability for loss and damage, and make a claim for the payment of a specified or determinable amount of money.

Claims should be forwarded via a delivery method that provides some type of confirmation of the TSP's receipt and a guarantee as to the length of time for delivery. These include registered or certified mail, return receipt requested; express mail; express courier service, etc.

The date the claim is received by the carrier determines whether the claim is timely.

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What documents do not constitute a proper claim?

49 CFR, §370.3(c) describes what documents:

Do not constitute a proper claim, and

Are not sufficient to comply with theminimum claim filing requirements.

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What documents should be submitted to support my agency's loss or damage claim?

In accordance with 49 CFR, §370.7, your agency's claims must be supported by:

1. The original bill of lading, provingthe shipment was tendered to thecarrier the claim is filed against

2. A copy of the paid freight bill toprove that the freight charges werepaid to the carrier—you cannotwithhold payment and still submit aclaim

3. Proof of the value of thecommodities lost or damaged

4. A copy of the carrier's inspection report documenting damage or loss, orthe carrier's written waiver of inspection

5. Notification of loss, and

6. Special documents and supporting evidence when appropriate, such as

a. Photographs

b. Temperature reports (in cases of spoilage)

c. Packaging certifications

d. Weight certificates

e. Etc.

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What are the TSP's obligations in processing a loss or damage claim?

In processing loss or damage claims a TSP must:

Assign its claim number andacknowledge it has received theclaim within 30 days (49 CFR,§370.5)

Pay, decline, or make acompromise settlement offer within120 days of receiving the claim,and

If the TSP cannot resolve the claimwithin 120 days, at the 120 daypoint and every 60 days thereafter,advise the claimant in writing ofthe claim status and the reason fordelay in making a final disposition (49 CFR, §370.9).

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Can my agency file a lawsuit against the TSP for a denied loss or damage claim?

If a TSP denies liability for a loss for which the claimant (agency) believes the TSP to be lawfully liable, the claimant has a right to file a lawsuit.

Statutory time limits vary depending on the mode and the service involved and may involve freight charges. The following table lists time limits on actions taken by the federal government against TSPs for loss or damage (41 CFR §102-118.460). Data and records pertaining to claims should be kept for at least this duration.

Mode Loss and Damage

Rail 6 years

Motor 6 years

Freighth Forwarders 6 years

Water 1 years

Domestic air 6 years

International air 2 years

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How Does My Agency Handle Payment Claims TSPs May File Against It?

Your agency would handle TSP payment claims against it in accordance with Title 41, CFR, Part §102-118, Transportation Auditand Payment.

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When might a TSP file a transportation claim against my agency?

A TSP may file a transportation claim against your agency under 31 U.S.C. §3726 for any one of the following:

Amounts owed but notincluded in the original billing

Amounts deducted or set offby an agency that are disputedby the TSP

Requests by a TSP foramounts previously refundedin error by that TSP, and/or

Unpaid original bills requiringdirect settlement by the U.S. General Services Administration (GSA),including those subject to doubt about the suitability of payment (mainlybankruptcy or fraud) (41 CFR §102-118.450).

A TSP must bill for charges claimed on a Standard Form (SF) 1113, Public Voucher for Transportation Charges, in the manner prescribed in the "U.S. Government Freight Transportation-Handbook" (41 CFR §102-118.560).

The transportation officer is required to assist in settling these claims.

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What is the time limit for a TSP to file a transportation claim against my agency? (41 CFR §102-118.455)

Time limits on a TSP transportation claim against an agency differ by mode.

Interest penalties under the Prompt Payment Act (31 U.S.C. section §3901, et seq.) are not

required when a payment is delayed because of a dispute between an agency and a TSP.

Mode Freight Charges

Domestic air 6 years

International air 6 years

Freighth Forwarders 3 years

Motor 3 years

Rail 3 years

Water 3 years

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How does my agency settle payment disputes with a TSP?

As part of the prepayment audit program, your agency must have a plan to resolve disputes with a TSP. This program must allow a TSP to appeal payment decisions made by your agency (41 CFR §102-118.480).

Your agency must issue aruling on a disputed claimwithin 30 days of receipt ofthe claim (41 CFR §102-118.485).

If your agency fails to settle a dispute within 30 days of receipt of theclaim, the TSP may appeal to the GSA Transportation Audits Division toadjudicate the claim (41 CFR §102-118.490).

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Are there statutory time limits for a TSP to file an administrative claim with the GSA Transportation Audits Division? (41 CFR §102-118.470)

An administrative claim must be received by the GSA Transportation Audits Division or its designee (the agency where the claim arose) within 3 years beginning the day after the latest of the following dates (except in time of war):

1. Accrual of the cause ofaction

2. Payment of charges for thetransportation involved

3. Subsequent refund for overpayment of those charges, or

4. Deductions made to a TSP claim by the government under 31 U.S.C.§3726.

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What documentation is required when a TSP files an administrative claim? (41 CFR §102-118.565)

Administrative claim documentation includes:

The transportation document

The payment record

Reports and information available toGSA and/or to the agency involved,and

Written and documentary recordssubmitted by the TSP.

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What must my agency do if it receives a voluntary refund from a TSP? (41 CFR §102-118.500)

An agency must report all voluntary refunds to the GSA Audit Division so that Notice of Overcharge or financial offsets do not occur.

Once a Notice of Overcharge is issued, then any refund is no longer considered voluntary and the agency must forward it to the GSA Transportation Audits Division.

Funds recovered by the GSA Transportation Audits Division are returned to the U.S. Department of Treasury.

Source: www.gsa.gov/transaudits.

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What are my agency's responsibilities to verify the correct amount of transportation charges? (41 CFR §102-118.525)

The transportation officer is responsible for diligently verifying the correct amount of transportation charges before payment.

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What are common billing errors to avoid?

Some common billing errors that can lead to delays and rejections include:

1. Using the wrong ActivityAddress Code: this six-digitnumber identifies a unit,activity, or organization thathas the authority torequisition and/or receivematerial

2. Submitting vouchers out of numerical sequence

3. Billing indirect costs based on provisional billing rates that have not hadprior approval

4. Using outdated billing rates (i.e., applying last year's rates to this year'scosts)

5. Failing to submit a request, along with supporting documentation, for newinterim billing rates or for temporary adjustment rates

6. Mathematical errors

7. Billing costs in excess of the funded amount of the contract

8. Billing fee in excess of contractual limitations, and

9. Submitting incomplete, incorrect, or inadequate detail to support a publicvoucher.

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What Are the TSP and Agency Appeal Procedures?

A TSP may appeal if your agency denies its challenge to the Statement of Difference issued as a result of a prepayment audit.

The TSP must appeal to a higher level within your agency (41 CFR §102-118.570). The TSP canappeal your agency's final full or partial denial of a claim to the GSA Transportation Audits Division (41 CFR §102-118.575).

The TSP may appeal a decision made by the GSA Transportation Audits Divisionto the Civilian Board of Contract Appeals (CBCA). The CBCA must receive the appeal in writing within 6 months (not including time of war) from the date the settlement action was taken or within the period of limitation specified in 31 U.S.C. §3726, as amended, whichever is later (41 CFR §102-118.580).

A decision by the CBCA is administratively final for both the TSP and your agency. A TSP may still pursue a legal remedy through the courts (41 CFR §102-118.585).

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Can a TSP appeal the results of a postpayment audit?

Yes, a TSP may also appeal the results of a postpayment audit.

A TSP that disagrees with a Notice of Overcharge resulting from a postpayment audit may submit a written request for reconsideration to the GSA Transportation Audits Division. A TSP that disagrees with an ordinary debt, as shown on the Notice of Indebtedness, may seek administrative review of the claim decision by the GSA Transportation Audits Division.

The GSA Transportation Audits Division will acknowledge each payable claim. It will also inform the TSP if it internally offset a payment. A TSP desiring a reconsideration of a settlement action may request a review by the Administrator of General Services (Federal Management Regulations FMRs §102-118.610 and §102-118.620).

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Can a TSP appeal further?

Yes, a TSP desiring a review of a settlement action taken by the Administrator of General Services may request a review by the CBCA or file a claim with the United States Court of Claims (28 U.S.C. §1491). The TSP's request forreview must be received by the CBCA in writing within 6 months (not including time of war) from the date the settlement action was taken or within the periods of limitation specified in 31 U.S.C. §3726, as amended, whichever is later.

A decision by the CBCA is administratively final for both the TSP and your agency. A TSP may still pursue a legal remedy through the courts.

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Glossary of Terms

The following terms are those frequently used in federal transportation; however, this is not an inclusive list of terms. You may want to refer to §102-117.25 and §102-118.35 for additional transportation definitions.

Agency claim means any demand by an agency upon a TSP for the payment of overcharges, ordinary debts, fines, penalties, administrative fees, special charges, and interest.

Offset means agency use of money owed by the agency to a TSP to cover a previous debt incurred to the agency by the TSP.

Ordinary debt means an amount that a TSP owes an agency other than for the repayment of an overcharge. Ordinary debts include, but are not limited to, payments for transportation services ordered and not provided (including unused transportation tickets), duplicate payments, and amounts for which a TSP is liablebecause of loss and/or damage to property it transported.

Overcharge means those charges for transportation that exceed those applicable under the contract for carriage. This also includes charges more than those applicable under rates, fares, and charges established pursuant to sections 13712and 10721 of the Revised Interstate Commerce Act, as amended (49 U.S.C. §13712 and §10721), or other equivalent contract, arrangement, or exemption from regulation.

Reparation means the payment involving a TSP to or from an agency of an improper transportation billing as determined by a postpayment audit. Improper routing, overcharges, or duplicate payments may cause such improper billing. This is different from payments to settle a claim for loss and damage to items shipped under those rates.

Notice of overcharge means a GSA Form 7925 issued when it is determined that a carrier has been paid a sum in excess of that proper for the services rendered. The notice, which states a debt owed to the United States, sets forth the amount paid, the basis for the proper charge for each government bill of lading, and cites applicable tariff references and other data relied upon to support the statement of difference. A separate notice of overcharge is stated for each government bill of lading and mailed to the billing carrier.

Notice of indebtedness is issued when it is determined that an ordinary debt is due the United States. This notice sets forth the basis for the debt, the debtor's rights, interest, penalty, and other consequences of nonpayment. The debt is due immediately. Interest accrues 30 calendar days after the mailing of the notice of indebtedness and is subject to interest charges, penalties, and administrative costs as prescribed by 31 U.S.C. §3717.

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Statement of difference means a statement issued by an agency or its designated audit contractor during a prepayment audit when it determines that a TSP has billed the agency for more than the proper amount for the services. This statement tells the TSP on the invoice the amount allowed and the basis for the proper charges. The statement also cites the applicable rate references and other data relied on for support. The agency issues a separate statement of difference for each transportation transaction.

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Knowledge Review

How long does my agency have to issue a decision on disputed claims? My agency must issue a ruling on a disputed claim within

30 days after receipt60 days after receipt120 days after receipt

Answer: 30 days after receipt

Yes, that's correct. If your agency fails to settle a dispute within 30 days of receipt of the claim, the TSP may appeal to the GSA Transportation Audits Division to adjudicate the claim. If the TSP disagrees with the administrative settlement by the GSA Transportation Audits Division, the TSP may appeal to the Civilian Board of Contract Appeals (CBCA). Decisions made by the CBCA may not be appealed (41 CFR §102-118.490).

Incorrect: Sorry, that's not correct. If your agency fails to settle a dispute within 30 days of receipt of the claim, the TSP may appeal to the GSA Transportation Audits Division to adjudicate the claim. If the TSP disagrees with the administrative settlement by the GSA Transportation Audits Division, the TSP may appeal to the Civilian Board of Contract Appeals (CBCA). Decisions made by the CBCA may not be appealed (41 CFR §102-118.490).

Basic

http://transbasic.knowledgeportal.us/session9/KCans

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Where to Go for More Information

In addition to the sites identified in this session, you can find more information from the following:

Title 41 Code of Federal Regulations: Public Contracts and PropertyManagement, Part 102-118, Transportation Payment and Audit, Subpart F,Claims and Appeal Procedures

Title 49 U.S. Code, Part 370, Principles and Practices for the Investigationand Voluntary Disposition of Loss and Damage Claims and ProcessingSalvage

Title 49 U.S. Code, §14706, Liability of Carriers Under Receipts and Bills ofLading (Carmack Amendment to the Interstate Commerce Act) and§11706, Liability of Rail Carriers Under Receipts and Bills of Lading

DoD 7000.14R, DoD Financial Management Regulation, Volume 10:Contract Payment Policy and Procedures, Chapter 13, CommercialTransportation Payments, section 1309

U.S. Government Freight Transportation Handbook

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