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[Conflict of Interest Allegations]

B-207109 Nov 29, 1982
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Highlights

GAO responded to a request from the Veterans Administration (VA) for a decision concerning the liability of two dentists to refund fees which they received from VA for treating veterans while serving on active duty as dental officers in the Air force. The two Air Force dental officers maintained a part-time private practice and while doing so accepted fees from VA for treating veterans who were frequently referred from their military dental clinic. This arrangement was improper since it produced a direct financial conflict of interest and interfered with the officers' actual and potential military obligations. Without specific statutory authority, any agreement by a member of the Armed Forces for the rendition of services to the Government in a civilian capacity is legally incompatible with the member's military duties. Laws which permit Government employees to participate in part-time Reserve programs for pay without a reduction in civilian pay do not provide these officers the authority to undertake their concurrent civilian work with VA. Since the officers had been notified of the dual compensation rules and signed statements acknowledging their full understanding of the policies, and since their acceptance of fees specifically violated regulations, they could not be allowed to keep the fees. Persons receiving public funds erroneously paid by a Government agency acquire no right to those funds and are liable to make restitution in the full amount, not just the net profits they figure they might have gained in the arrangement. GAO held that VA may properly withhold the amounts currently payable to the dentists and apply those amounts toward the settlement of its claim against them for a refund of fees it erroneously paid them. It can also properly withhold amounts due one of the dentist's professional service corporation and apply the amounts withheld toward the settlement of his personal debts, notwithstanding his contention that he was merely an employee of the corporation. In light of the facts presented, the two dental officers were liable to refund the fees in question.

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