B-144070, NOV. 17, 1961

B-144070, NOV. 17, 1961

TO MR. CARL B. TODD:

THIS REFERS TO YOUR LETTER OF AUGUST 21, 1961, TO THE FINANCE AND ACCOUNTING OFFICE, MYRTLE BEACH AIR FORCE BASE, RETURNING THE CHECK ISSUED IN YOUR FAVOR FOR BACK PAY COVERING THE PERIOD OF ERRONEOUS REMOVAL AS AN EMPLOYEE OF THE DEPARTMENT OF THE AIR FORCE FOR THE PERIOD SEPTEMBER 9, 1959, THROUGH JULY 23, 1960. YOUR LETTER OF AUGUST 21 WAS FORWARDED TO OUR OFFICE FOR OUR CONSIDERATION.

YOU PROTEST DEDUCTIONS FROM YOUR INTERIM EARNINGS OF AMOUNTS CLAIMED ON ACCOUNT OF BUSINESS EXPENSES AND DEDUCTIONS FROM YOUR BACK PAY OF GROUP LIFE INSURANCE PREMIUMS. ALSO, YOU CLAIM INTEREST ON THE AMOUNT DUE YOU AS BACK PAY. IN COMPUTING BACK PAY INTERIM EARNINGS ARE REQUIRED TO BE DEDUCTED PURSUANT TO THE ACT OF JUNE 10, 1948, 5 U.S.C. 652. IT WAS EXPLAINED TO YOU IN OUR LETTER OF OCTOBER 10, 1960, SINCE THERE IS NO SPECIFIC LANGUAGE IN THE ACT OF JUNE 10, 1948, STATING WHAT EXPENSES MAY BE DEDUCTED FROM GROSS INTERIM EARNINGS, THE INTERNAL REVENUE LAWS AND REGULATIONS CONCERNING INCOME TAX DEDUCTIONS GENERALLY HAVE BEEN APPLIED IN ORDER TO DETERMINE WHAT EXPENSES MAY BE DEDUCTED FROM GROSS INTERIM EARNINGS. AFTER FURTHER CONSIDERATION OF THE MATTER, WE HAVE DETERMINED THAT THE EXPENSES CLAIMED AS BUSINESS DEDUCTIONS DO NOT APPEAR TO BE UNREASONABLE AND WILL ALLOW YOU CREDIT FOR SUCH DEDUCTIONS. THEREFORE, A SETTLEMENT WILL ISSUE, IN DUE COURSE, IN YOUR FAVOR, IN THE AMOUNT DEDUCTED FROM YOUR INTERIM EARNINGS REPRESENTING BUSINESS EXPENSES.

REGARDING DEDUCTIONS OF PREMIUMS UNDER THE FEDERAL EMPLOYEES' GROUP LIFE INSURANCE ACT OF 1954, 68 STAT. 736, DURING THE PERIOD OF YOUR SEPARATION, YOU CONTEND THAT YOU WERE NOT COVERED BY THE INSURANCE. UNDER THE TERMS OF SECTION 5 (A) OF THE ACT, 68 STAT. 738, AN EMPLOYEE COVERED UNDER THIS ACT WHO DESIRES TO TERMINATE HIS INSURANCE, IS REQUIRED TO GIVE WRITTEN NOTICE TO HIS EMPLOYING OFFICE AND HIS INSURANCE WILL CEASE EFFECTIVE WITH THE END OF THE PAY PERIOD DURING WHICH THE NOTICE IS RECEIVED BY THE EMPLOYING OFFICE. THERE IS NOTHING IN THE RECORD TO INDICATE THAT A WRITTEN NOTICE WAS RECEIVED BY THE EMPLOYING OFFICE FROM YOU REQUESTING TERMINATION OF YOUR INSURANCE. THEREFORE, YOU WERE COVERED BY THE INSURANCE STATUTE DURING THE PERIOD OF YOUR SEPARATION AND DEDUCTIONS MUST BE MADE FROM YOUR RETROACTIVE COMPENSATION. 36 COMP. GEN. 225, 228.

CONCERNING INTEREST ON BACK PAY DUE, IT IS WELL SETTLED THAT THE PAYMENT OF INTEREST BY THE GOVERNMENT ON ITS UNPAID ACCOUNTS OR CLAIMS MAY NOT BE MADE EXCEPT WHEN INTEREST IS STIPULATED FOR IN LEGAL AND PROPER CONTRACTS, OR WHEN ALLOWANCE OF INTEREST IS SPECIFICALLY DIRECTED BY STATUTE. ANGARICA V. BAYARD, 127 U.S. 251; UNITED STATES V. NORTH AMERICAN TRANSPORTATION AND TRADING CO., 253 U.S. 330; SEABOARD AIR LINE RY.CO. V. UNITED STATES, 261 U.S. 299; SMYTH V. UNITED STATES, 302 U.S. 329; UNITED STATES V. HOTEL CO., 329 U.S. 585. AT PAGE 260 OF THE ANGARICA CASE, THE UNITED STATES SUPREME COURT HELD THAT:

"* * * THE UNITED STATES ARE NOT LIABLE TO PAY INTEREST ON CLAIMS AGAINST THEM, IN THE ABSENCE OF EXPRESS STATUTORY PROVISION TO THAT EFFECT. HAS BEEN ESTABLISHED, AS A GENERAL RULE, IN THE PRACTICE OF THE GOVERNMENT, THAT INTEREST IS NOT ALLOWED ON CLAIMS AGAINST IT, WHETHER SUCH CLAIMS ORIGINATED IN CONTRACT OR IN TORT, AND WHETHER THEY ARISE IN THE ORDINARY BUSINESS OF ADMINISTRATION OR UNDER PRIVATE ACTS OF RELIEF, PASSED BY CONGRESS ON SPECIAL APPLICATION. THE ONLY RECOGNIZED EXCEPTIONS ARE, WHERE THE GOVERNMENT STIPULATES TO PAY INTEREST AND WHERE INTEREST IS GIVEN EXPRESSLY BY AN ACT OF CONGRESS, EITHER BY THE NAME OF INTEREST OR BY THAT OF DAMAGES.'

EXCEPT AS MODIFIED ABOVE OUR OFFICE SETTLEMENT OF JULY 6, 1961, IS CORRECT AND MUST BE SUSTAINED.

THE CHECK SAID TO HAVE BEEN RETURNED BY YOU TO THE DEPARTMENT OF THE AIR FORCE MAYBE NEGOTIATED BY YOU WITHOUT PREJUDICE TO THE SUPPLEMENTAL CLAIMS REFERRED TO ABOVE. THEREFORE, WE SUGGEST THAT YOU COMMUNICATE WITH THE DEPARTMENT OF THE AIR FORCE, ENCLOSING A COPY OF THIS LETTER AND ASK THAT THE CHECK BE RETURNED TO YOU.