A-19110, AUGUST 25, 1927, 7 COMP. GEN. 146

A-19110: Aug 25, 1927

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RETIREMENT - ERRORS IN COMPUTING ANNUITIES - REINSTATEMENT WHERE ADMINISTRATIVE ERRORS ARE DISCOVERED IN REPORTING THE PERIODS OF SERVICE HAD BY ANNUITANTS UPON WHICH THEIR ANNUITIES WERE BASED. WAS GRANTED AN ANNUITY AND THEREAFTER IT WAS DISCOVERED THERE WERE ERRORS IN THE SERVICE REPORTED AND THAT HE HAD NOT SUFFICIENT SERVICE TO ENTITLE HIM TO AN ANNUITY. THERE IS NO AUTHORITY TO REINSTATE SUCH EMPLOYEE IN THE GOVERNMENT SERVICE. IN CALLING FOR NEW REPORTS FROM THE SEVERAL DEPARTMENTS IN RESPECT TO LEAVES OF ABSENCE AS BASIS FOR RECOMPUTATION OF PRIOR ANNUITIES IN ACCORDANCE WITH THE NEW ACT CERTAIN DISCREPANCIES WERE DEVELOPED RESULTING IN A SHORTER PERIOD OF SERVICE SUBJECT TO CREDIT EVEN WHEN COMPUTED UNDER THE TERMS OF THE OLD LAW.

A-19110, AUGUST 25, 1927, 7 COMP. GEN. 146

RETIREMENT - ERRORS IN COMPUTING ANNUITIES - REINSTATEMENT WHERE ADMINISTRATIVE ERRORS ARE DISCOVERED IN REPORTING THE PERIODS OF SERVICE HAD BY ANNUITANTS UPON WHICH THEIR ANNUITIES WERE BASED, SECTION 8 OF THE ACT OF JULY 3, 1926, 44 STAT. 904, DOES NOT PRECLUDE THE REDUCTION OR CORRECTION OF THE ANNUITY TO AGREE WITH THE SERVICE ACTUALLY HAD AND CORRECTLY COMPUTED, AND PROPER STEPS SHOULD BE TAKEN TO COLLECT THE OVERPAYMENT OR ERROENOUS PAYMENT, MAKING ADJUSTMENT THROUGH INSTALLMENTS IN CONNECTION WITH SUBSEQUENT ANNUITY PAYMENTS UNLESS THE EMPLOYEE OTHERWISE LIQUIDATES. WHERE AN EMPLOYEE RETIRED FOR AGE UNDER THE ACT OF MAY 22, 1920, 41 STAT. 614, WAS GRANTED AN ANNUITY AND THEREAFTER IT WAS DISCOVERED THERE WERE ERRORS IN THE SERVICE REPORTED AND THAT HE HAD NOT SUFFICIENT SERVICE TO ENTITLE HIM TO AN ANNUITY, THERE IS NO AUTHORITY TO REINSTATE SUCH EMPLOYEE IN THE GOVERNMENT SERVICE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, AUGUST 25, 1927:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 5, 1927, AS FOLLOWS:

THE AMENDATORY RETIREMENT ACT OF JULY 3, 1926 (44 STAT. 904), PROVIDED A NEW METHOD FOR COMPUTING ANNUITIES AND CHANGED SLIGHTLY THE PROVISION OF THE PRIOR LAW FOR CREDITING LEAVE OF ABSENCE. SECTION 8 OF THE NEW ACT PROVIDES THAT ANNUITIES GRANTED UNDER THE PRIOR LAW SHALL BE COMPUTED, ADJUSTED, AND PAID UNDER THE PROVISIONS OF THE AMENDATORY ACT, WITH THE EXPRESS CONDITION, HOWEVER, THAT THE NEW ACT SHALL NOT BE SO CONSTRUED AS TO REDUCE THE ANNUITY OF ANY PERSON RETIRED BEFORE ITS EFFECTIVE DATE.

IN CALLING FOR NEW REPORTS FROM THE SEVERAL DEPARTMENTS IN RESPECT TO LEAVES OF ABSENCE AS BASIS FOR RECOMPUTATION OF PRIOR ANNUITIES IN ACCORDANCE WITH THE NEW ACT CERTAIN DISCREPANCIES WERE DEVELOPED RESULTING IN A SHORTER PERIOD OF SERVICE SUBJECT TO CREDIT EVEN WHEN COMPUTED UNDER THE TERMS OF THE OLD LAW. IN SUCH CASE IT SEEMS PROPER TO REGARD THE ERROR AS ONE OF FACT, CONSISTING OF AN ERRONEOUS REPORT OF THE RECORD SERVICE USED AS BASIS FOR THE COMPUTATION OF THE ANNUITY UNDER THE PRIOR LAW. THE QUESTIONS PRESENTED UNDER SUCH CIRCUMSTANCES MAY BE STATED AS FOLLOWS:

1. MAY LENGTH OF SERVICE, AS COMPUTED ON THE FORMER ERRONEOUS REPORT AND CREDITED IN THE ADJUDICATION OF THE OLD ANNUITY, BE REDUCED SO AS TO AFFECT THE ANNUITY RECEIVED PRIOR TO JULY 1, 1926, WHEN THE NEW LAW WENT INTO EFFECT; AND UPON THUS FINDING THAT THE ANNUITY PAID WAS GREATER THAN THE PARTY WAS REALLY ENTITLED TO RECEIVE, MAY HE BE REQUIRED TO REFUND THE EXCESS?

2. WHERE ON ACCOUNT OF ERROR OF FACT AS TO THE LENGTH OF SERVICE SUBJECT TO CREDIT UNDER THE OLD LAW AN EMPLOYEE WAS RETIRED ON ANNUITY BASED ON SERVICE REPORTED AND CREDITED AS AMOUNTING TO THE MINIMUM PERIOD OF 15 YEARS, BUT, AS SUBSEQUENTLY DISCLOSED, HE WAS NOT IN FACT ENTITLED TO CREDIT FOR AS MUCH AS 15 YEARS, SHOULD THE ANNUITY IN SUCH CASE BE CANCELED?

UNDER THE CIRCUMSTANCES MENTIONED IN QUESTION 2 THIS DEPARTMENT IS RELUCTANT TO CANCEL THE ANNUITY. WHILE SUCH CANCELLATION WOULD INVOLVE ONLY THE APPLICATION OF THE TERMS OF THE OLD LAW, AND THEREFORE NOT INHIBITED BY THE LETTER OF SECTION 8 OF THE NEW ACT, YET A BROAD VIEW OF THAT SECTION MIGHT POSSIBLY JUSTIFY THE CONCLUSION THAT CONGRESS INTENDED THEREBY TO PROHIBIT REOPENING OF AN ADJUDICATED ANNUITY EXCEPT FOR THE PURPOSE OF GRANTING A GREATER BENEFIT UNDER THE MORE LIBERAL TERMS OF THE NEW ACT. ON THE OTHER HAND, IT SEEMS UNLIKELY THAT IT WAS INTENDED TO PREVENT THE CORRECTION OF SUCH MISTAKES AS MIGHT HAVE BEEN CORRECTED INDEPENDENTLY OF THE NEW LAW.

BUT SHOULD SUCH ADJUDICATION BE REOPENED FOR THE CORRECTION OF MISTAKES MADE BY THE GOVERNMENT OFFICIALS THROUGH OVERSIGHT AND NOT RESULTING FROM ANY MISREPRESENTATION OR FAULT ON THE PART OF THE EMPLOYEE? IN SUCH CASE THERE IS NO COMPENSATING REMEDY THAT CAN BE ACCORDED THE ANNUITANT. HE IS OUT OF THE SERVICE AND CAN NOT BE REINSTATED WHERE HE HAS PASSED THE AGE FOR RETIREMENT. HE WAS RETIRED ON THE BASIS OF THE RECOGNIZED PERFORMANCE OF AT LEAST 15 YEARS OF SERVICE, AND USUALLY HE WOULD NOT HAVE BEEN RETIRED EXCEPT IN THE BELIEF THAT HE WAS ENTITLED TO ANNUITY. WHILE THE OLD LAW, UNLIKE THE AMENDED ACT, PERMITTED RETIREMENT UPON REACHING RETIREMENT AGE REGARDLESS OF THE LENGTH OF SERVICE, YET IN PRACTICE WHERE AN EMPLOYEE LACKED ONLY A LITTLE OF THE MINIMUM OF 15 YEARS NECESSARY AS A BASIS FOR ANNUITY, HE WAS GENERALLY CONTINUED, AS PERMITTED BY THE LAW, FOR A PERIOD SUFFICIENT TO MAKE UP THE REQUIRED TIME. UNDER THE NEW ACT SUCH PREMATURE SEPARATION COULD BE CORRECTED, BECAUSE IT WOULD BE IN CONTRAVENTION OF THE EXPRESS TERMS OF THE ACT TO INVOKE THE SAME FOR SEPARATION WHERE THE REQUIRED MINIMUM PERIOD OF SERVICE HAS NOT BEEN PERFORMED. 6 COMP. GEN. 366.

FOR ILLUSTRATION OF THE FIRST QUESTION I AM INCLOSING COPY OF DECISION BY THIS DEPARTMENT DATED MAY 25, 1927, IN THE CASE OF EDWARD HENRY FOSTER, WHEREBY HE WAS REQUIRED TO REPAY NEARLY $400 BECAUSE HIS ORIGINAL ANNUITY, COMPUTED ON AN ERRONEOUS REPORT OF HIS SERVICE, WAS IN EXCESS OF THE AMOUNT TO WHICH HE WAS ENTITLED AS SHOWN BY A LATER REPORT. THAT DECISION HAS NOT AS YET BECOME FINAL.

A CASE TYPICAL OF OTHERS ILLUSTRATIVE OF QUESTION 2 IS WHERE AN EMPLOYEE IN A NAVY YARD WAS RETIRED ON ANNUITY NOVEMBER 3, 1921, ON A REPORTED SERVICE OF 15 YEARS AND 20 DAYS. IN MAKING A SUPPLEMENTAL REPORT FOR PURPOSES OF ADJUDICATION AND ADJUSTMENT OF THE ANNUITY UNDER THE NEW ACT, THE NAVY DEPARTMENT FOUND THAT AN EXTENDED LEAVE PERIOD FOR MORE THAN ONE YEAR HAD NOT BEEN NOTICED IN MAKING THE ORIGINAL REPORT, AND THE SERVICE SUBJECT TO CREDIT IN ACCORDANCE WITH THE LAST REPORT AMOUNTED TO ONLY 14 YEARS 4 MONTHS AND 19 DAYS. FOR THAT REASON HIS NAME WAS DROPPED FROM THE ROLL OF ANNUITANTS BY THE COMMISSIONER OF PENSIONS. ON APPEAL FROM THAT ACTION THE CLAIMANT POINTS OUT THAT HIS SEPARATION FROM THE SERVICE WAS PREDICATED ON A CREDIT OF AT LEAST 15 YEARS OF SERVICE. HE SUGGESTS REINSTATEMENT IN THE SERVICE FOR THE PURPOSE OF CURING THE DEFECT, BUT HE IS NOW ABOUT 73 YEARS OF AGE. UNDER SUCH CIRCUMSTANCES THIS DEPARTMENT WOULD BE PLEASED TO HOLD THAT THE OLD ADJUDICATION SHOULD NOT BE DISTURBED.

AS IT APPEARS FROM YOUR SUBMISSION THAT THE DIFFICULTIES IN QUESTION ARE NOT DUE TO ANY CONSTRUCTION OF THE ACT OF JULY 3, 1926, 44 STAT. 904, BUT TO THE DISCOVERY OF ADMINISTRATIVE ERRORS IN REPORTING THE PERIODS OF SERVICE HAD BY ANNUITANTS, UPON WHICH THEIR ANNUITIES WERE BASED, SECTION 8 OF SAID ACT DOES NOT PRECLUDE THE REDUCTION OR THE CORRECTION OF THE ANNUITY TO AGREE WITH THE SERVICE ACTUALLY HAD AND CORRECTLY COMPUTED. WHERE, THEREFORE, IT COMES TO THE NOTICE OF YOUR DEPARTMENT THAT BY REASON OF ERROR IN THE COMPUTATION OF THE PERIOD OF SERVICE AN ANNUITANT HAS RECEIVED A GREATER AMOUNT THAN HE IS ENTITLED TO, THE ANNUITY SHOULD BE REDUCED TO THAT AUTHORIZED BY LAW AND PROPER STEPS SHOULD BE TAKEN TO COLLECT THE OVERPAYMENT OR ERRONEOUS PAYMENT, MAKING ADJUSTMENT THROUGH INSTALLMENTS IN CONNECTION WITH SUBSEQUENT ANNUITY PAYMENTS, UNLESS THE EMPLOYEE OTHERWISE LIQUIDATES.

WHERE AN EMPLOYEE WAS RETIRED FOR AGE, AS REQUIRED UNDER THE ACT OF MAY 22, 1920, SUPRA, AND ON THE SERVICE REPORTED WAS GRANTED AN ANNUITY, BUT THEREAFTER IT WAS DISCOVERED THERE WERE ERRORS IN THE SERVICE REPORTED AND THAT HE HAD NOT SUFFICIENT SERVICE TO ENTITLE HIM TO ANNUITY, IT DOES NOT AUTHORIZE HIS REINSTATEMENT IN THE GOVERNMENT SERVICE. 1 COMP. GEN. 279; 4 ID. 43; 27 COMP. DEC. 524; ID. 828. IT IS UNDERSTOOD THAT WHERE A SHORT PERIOD WAS LACKING OF 15 YEARS'SERVICE, THE PRACTICE HAS BEEN TO CONTINUE THE EMPLOYEE IN SERVICE, WHICH WOULD HAVE BEEN DONE IN THE INSTANT CASE BUT FOR THE ADMINISTRATIVE ERROR IN REPORTING THE SERVICE. I AM CONSTRAINED THAT AT THIS TIME THE STATUS OF THE EMPLOYEE SHOULD NOT BE DISTURBED, BUT IT SHOULD BE REPORTED BY YOU TO THE CONGRESS AT ITS NEXT SESSION, AND SHOULD IT NOT THEN LEGALIZE SUCH RETIREMENT WITH ANNUITY--- ALL SUCH ANNUITY PAYMENTS MUST FORTHWITH CEASE.