Request for Waiver of Overpayment

A former employee of the Department of Health, Education, and Welfare (HEW) appealed a settlement certificate issued by the Claims Division. The Certificate denied the employee's request for waiver of a claim of the United States against her arising out of an erroneous payment for 80 hours rather than 8 hours of salary. A letter included with the erroneous paycheck stated that the check was in error, the employee should accept the check, the incorret amount might be deducted from accrued benefits due her, and that recovery action would be instituted. The employee was told to contact the agency with any questions she might have concerning the matter. When she later received her lump-sum leave payment in a much smaller amount than she had anticipated, she assumed that the overpayment had been deducted. HEW failed to respond to her numerous telephone inquiries and did not give her a leave and earnings statement for the leave payment until 14 months later. The Claims Division concluded that, inasmuch as the employee was aware of the erroneous payment at the time it was made to her, she had a duty to ascertain that repayment had been made from her lump-sum leave payment or to make provision for repayment upon request from HEW. Legislation authorizing the waiver of claims of the United States against employees arising out of overpayments of pay permits such waivers only when the collection would be against equity and good conscience and not in the best interest of the United States. GAO has held that, when an employee is aware of an overpayment of pay when it occurs and accepts such an overpayment, he cannot reasonably expect to retain it and should make provision for its repayment. However, the facts and circumstances in this case did not all fit within the awareness rule. GAO did not believe that the employee was at fault or lacked good faith. It concluded that HEW made a series of errors, including failure to take corrective action for almost 14 months. GAO held that, in the absence of any demand for repayment, the employee was justified in assuming that the overpayment had been corrected and that it would be against equity and good conscience to require the employee to pay the debt owed to the Government. The settlement certificate issued by the Claims Division was overruled, and waiver of collection of the erroneous payment was granted.