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Settlement and Judgment Processing Guidelines

FPP E.041

Processing Instructions for the Payment of Settlements and Judgments – Pre-Litigation Settlements

A paying agency’s legal counsel may settle a dispute before a lawsuit is filed; this is known as pre-litigation. All statutory or GAA references apply to these claims with the exception that they do not require attorney general review or the governor’s signature. The following steps are required for pre-litigation claims:

Step Action
1 Pre-litigation claims can be paid with comptroller object 7221 and do not require settlement by the OAG or the governor’s signature. Pre-litigation claims are settlements for which a lawsuit has not been filed in any court.
2

The paying agency enters the payment in USAS using Document Type 9 (or Document Type 5 for payroll):

  • Use comptroller object 7221 for all pre-litigation settlements.
  • Enter N (not confidential), S (some confidential) or Y (confidential) in the CONFIDENTIAL INDICATOR (CONF) field. If this field is left blank, it will default to an N (not confidential).
  • Enter R in the PAYMENT DISTRIBUTION TYPE (PDT) field to generate a paper warrant. If a PDT other than R is entered in this field, USAS will override the entry and force an R.
  • Enter 225 (Purchase) or 874, 875, 876, 877 (Payroll) — some of the payroll T-codes may not apply to every payroll settlement/judgment.
  • When payment is for attorney fees and payable to the attorney of record, enter A in the 1099 field to generate a 1099-MISC with the payment in box 14.
  • Balance and release the batch.
  • The paying agency employee entering the payment in USAS lists his or her name and phone number on the purchase voucher.

Note: Agencies are responsible for determining how the payment will be reported to the IRS.
3 The paying agency submits the following to the Comptroller’s office after an agreement has been reached:

When a pre-litigation settlement includes compensation that is wage-related (i.e. back wages, etc.), the agency must process a payroll document and complete the Settlement and Judgment Payroll Processing form (74-232). The deductions should also be entered in the Amount field on the purchase voucher.
4

The Comptroller’s office reviews submitted documentation. If approved, the Comptroller’s office enters action code 550 (Approved by Audit) into USAS for payment.

The paying agency can review the USAS Document Tracking (S037) screen to verify when the document was approved.
5

Warrants are available for pickup by the paying agency at the Comptroller’s office the next business day following the day of the Comptroller’s office approval.
6

The purchase voucher and settlement documents are filed with the Comptroller’s office until the required retention period expires.