A significant ruling recently delivered by the Tel Aviv Regional Labor Court addresses the issue of old debt collection by the National Insurance Institute (NII). In legal proceedings, the court was asked to resolve a dispute between a citizen and the NII, after the latter offset funds from the plaintiff's unemployment and disability benefits, citing the existence of old debts. Reportedly, the plaintiff lived abroad for approximately twenty years, and upon returning to Israel, was surprised to discover demands for payment of old debts.
The offsets were actually carried out by the Institute during 2024, despite the last recognized collection action occurring in 2011. This issue presented the court with the question of the validity of debts after such a long period during which no active collection procedures were taken by the Institute. The court examined the NII's internal procedures, which state that if more than seven years pass without orderly collection activity, the debt must be cancelled.
In the ruling, the NII's allegations against the plaintiff's conduct were rejected, with the court finding that the Institute failed to prove bad faith on her part. Furthermore, it was noted that it is unreasonable to expect a citizen to reconstruct and prove a history of debts after so many years, especially when the Institute itself did not act according to its professional procedures throughout the period. Consequently, the citizen's claim was accepted in full.
The court ordered the NII to return all sums actually offset from her benefits, including unemployment and disability payments. It was also determined that the NII must cancel charges created under debt repayment arrangements and completely wipe out the remaining debts discussed in the legal proceedings. This ruling underscores the obligation of public bodies to operate according to their own established procedures, and specifically the importance of statutes of limitations in administrative collection proceedings, which protect citizens from claims for debts that accumulated many years ago without any collection attempts by the authority.