B-124204, B-134067, SEPTEMBER 25, 1958, 38 COMP. GEN. 243

B-124204,B-134067: Sep 25, 1958

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WAS CONSIDERED AS ONE OF THE ALLOWANCES OF CIVILIAN EMPLOYMENT NAVAL RESERVE MEMBERS WERE ENTITLED TO RECEIVE UNDER SECTION 4 OF THE NAVAL RESERVE ACT OF 1938. IN WHICH RETAINER PAY WAS CONSIDERED PAYMENT FOR SERVICES ACTUALLY PERFORMED BY A FLEET RESERVIST WITHIN THE EXCEPTION TO THE DUAL PAYMENT PROHIBITION IN SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT. CONCURRENT PAYMENT OF DISABILITY COMPENSATION AND RETIRED PAY IS PROHIBITED. 1958: REFERENCE IS MADE TO LETTER OF AUGUST 19. TWO CASES NOW PENDING IN THE DEPARTMENT OF THE NAVY ARE CITED AS INVOLVING THE QUESTIONS PRESENTED. THE FIRST IS THE CASE OF ROY J. WHO WAS TRANSFERRED TO THE FLEET RESERVE AND RELEASED TO INACTIVE DUTY ON SEPTEMBER 1.

B-124204, B-134067, SEPTEMBER 25, 1958, 38 COMP. GEN. 243

MILITARY PERSONNEL - RETIRED NAVAL RESERVE MEMBERS - CONCURRENT RETAINER PAY AND DISABILITY COMPENSATION - MULHOLLAND CASE THE HOLDING IN MULHOLLAND V. UNITED STATES, C.1CLS. NO. 172-55, DECIDED JULY 12, 1957, IN WHICH DISABILITY COMPENSATION UNDER THE FEDERAL EMPLOYEES' COMPENSATION ACT, 5 U.S.C. 751, WAS CONSIDERED AS ONE OF THE ALLOWANCES OF CIVILIAN EMPLOYMENT NAVAL RESERVE MEMBERS WERE ENTITLED TO RECEIVE UNDER SECTION 4 OF THE NAVAL RESERVE ACT OF 1938, AND IN WHICH RETAINER PAY WAS CONSIDERED PAYMENT FOR SERVICES ACTUALLY PERFORMED BY A FLEET RESERVIST WITHIN THE EXCEPTION TO THE DUAL PAYMENT PROHIBITION IN SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT, 5 U.S.C. 757 (A), MAY BE FOLLOWED AS PRECEDENT FOR CONCURRENT PAYMENT OF RETAINER PAY AND DISABILITY COMPENSATION FOR PERIODS PRIOR TO DECEMBER 31, 1952--- EFFECTIVE DATE OF THE REPEAL OF SECTION 4 OF THE NAVAL RESERVE ACT OF 1938 AND THE DATE THE FLEET RESERVE CEASED TO BE A PART OF THE NAVAL RESERVE. RETIRED PAY RECEIVED BY A MEMBER OF THE REGULAR NAVY WHILE ON THE RETIRED LIST MAY NOT BE REGARDED AS A PENSION NOR AS PAY FOR SERVICES ACTUALLY PERFORMED WITHIN THE EXCEPTION TO THE DUAL PAYMENT PROHIBITION IN SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT, 5 U.S.C. 757 (A), AND, THEREFORE, CONCURRENT PAYMENT OF DISABILITY COMPENSATION AND RETIRED PAY IS PROHIBITED.

TO THE SECRETARY OF THE NAVY, SEPTEMBER 25, 1958:

REFERENCE IS MADE TO LETTER OF AUGUST 19, 1958, FROM THE ASSISTANT SECRETARY OF THE NAVY ( FINANCIAL MANAGEMENT), REQUESTING A DECISION IN CONNECTION WITH THE APPLICABILITY OF THE PRINCIPLES OF THE DECISION OF THE COURT OF CLAIMS IN THE CASE OF MULHOLLAND V. UNITED STATES, C.1CLS. NO. 172-55, DECIDED JULY 12, 1957, TO CERTAIN ACCOUNTS IN THE SPECIAL PAYMENTS DEPARTMENT, U.S. NAVY FINANCE CENTER. THE REQUEST HAS BEEN APPROVED BY THE DEPARTMENT OF DEFENSE, MILITARY PAY AND ALLOWANCE COMMITTEE, AND ASSIGNED SUBMISSION NO. 367.

TWO CASES NOW PENDING IN THE DEPARTMENT OF THE NAVY ARE CITED AS INVOLVING THE QUESTIONS PRESENTED. THE FIRST IS THE CASE OF ROY J. EPPS, 346 43 33, DCC, U.S. NAVY ( RETIRED), WHO WAS TRANSFERRED TO THE FLEET RESERVE AND RELEASED TO INACTIVE DUTY ON SEPTEMBER 1, 1949. IT IS REPORTED THAT HE HAS BEEN IN RECEIPT OF "RETAINER PAY" CONTINUOUSLY SINCE THAT DATE EXCEPT FOR THE PERIOD APRIL 1, 1954, THROUGH MAY 16, 1954, DURING WHICH PERIOD HE RECEIVED EMPLOYEES' COMPENSATION UNDER THE FEDERAL EMPLOYEES' COMPENSATION ACT OF SEPTEMBER 7, 1916, 39 STAT. 742, AS AMENDED, 5 U.S.C. 751.

THE SECOND CASE IS THAT OF JOHN R. WITT, 294 95 86, BMGC, U.S. NAVY ( RETIRED), WHO WAS TRANSFERRED TO THE FLEET RESERVE ON AUGUST 23, 1944, AND WAS RETAINED ON ACTIVE DUTY THROUGH SEPTEMBER 24, 1945. EFFECTIVE NOVEMBER 1, 1953, HE WAS PLACED ON THE RETIRED LIST OF THE U.S. NAVY BY REASON OF COMPLETION OF 30 YEARS' SERVICE. THE BUREAU OF EMPLOYEES' COMPENSATION PAID MR. WITT EMPLOYEES' COMPENSATION FOR THE PERIOD JULY 1, 1953, THROUGH JULY 19, 1956. HOWEVER, THE NAVY FINANCE CENTER WAS NOT TIMELY NOTIFIED OF THE COMPENSATION PAYMENTS FOR THE PERIOD NOVEMBER 23, 1954, THROUGH JULY 19, 1956. ACCORDINGLY, AN OVERPAYMENT OF $3,343.51 WAS ENTERED IN HIS RETIRED PAY ACCOUNT. SUCH OVERPAYMENT IS BEING LIQUIDATED BY MONTHLY INSTALLMENTS FROM HIS RETIRED PAY.

A CIVILIAN GOVERNMENT EMPLOYEE'S RIGHT TO DISABILITY COMPENSATION ON ACCOUNT OF AN INJURY SUFFERED IN LINE OF DUTY, TOGETHER WITH OTHER PAYMENTS FROM THE UNITED STATES, IS LIMITED BY THE PROHIBITION CONTAINED IN SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT OF SEPTEMBER 7, 1916, 39 STAT. 743, AS AMENDED, 5 U.S.C. 757 (A), WHICH PROVIDES IN PART AS FOLLOWS:

AS LONG AS THE EMPLOYEE IS IN RECEIPT OF COMPENSATION UNDER SECTIONS 751- 756, 757-791, AND 793 OF THIS TITLE, OR, IF HE HAS BEEN PAID A LUMP SUM IN COMMUTATION OF INSTALLMENT PAYMENTS, UNTIL THE EXPIRATION OF THE PERIOD DURING WHICH SUCH INSTALLMENT PAYMENTS WOULD HAVE CONTINUED, HE SHALL NOT RECEIVE FROM THE UNITED STATES ANY SALARY, PAY, OR REMUNERATION WHATSOEVER EXCEPT IN RETURN FOR SERVICES ACTUALLY PERFORMED, AND EXCEPT PENSIONS FOR SERVICE IN THE ARMY OR NAVY OF THE UNITED STATES: * * *

IN VIEW OF THAT PROHIBITION, IT CONSISTENTLY HAD BEEN HELD BY THIS OFFICE THAT DISABILITY COMPENSATION PAYMENTS UNDER THE ACT MAY NOT BE MADE TO A PERSON CONCURRENTLY WITH THE PAYMENT OF RETAINER OR RETIRED PAY ON ACCOUNT OF MILITARY SERVICE, RETAINER OR RETIRED PAY IN SUCH CASES NOT BEING PAID "IN RETURN FOR SERVICES ACTUALLY PERFORMED.' THAT VIEW IS SUPPORTED BY THE FACT THAT IF IT WERE HELD THAT RETAINER PAY OR RETIRED PAY IS IN THE NATURE OF A MILITARY PENSION, SO AS TO BRING SUCH PAYMENTS WITHIN THE EXCEPTION TO THE PROHIBITION STATED IN SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT, THEREBY AUTHORIZING DUAL PAYMENTS OF DISABILITY COMPENSATION AND RETAINER OR RETIRED PAY GENERALLY TO THE SAME PERSON FOR THE SAME PERIOD OF TIME, THERE WOULD APPEAR TO BE NO AMOUNTS WITH RESPECT TO WHICH THE PROHIBITORY PROVISIONS OF THE STATUTE COULD APPLY. CF. 18 COMP. GEN. 747; 35 ID. 646, 648.

IN THE MULHOLLAND CASE IT WAS HELD THAT THE PLAINTIFF WAS ENTITLED TO RECOVER FOR THE REASON THAT THE RECEIPT OF BENEFITS UNDER THE FEDERAL EMPLOYEES' COMPENSATION ACT WAS ONE OF THE ALLOWANCES OF HIS CIVILIAN EMPLOYMENT TO WHICH THE PLAINTIFF WAS ENTITLED UNDER THE PROVISIONS OF SECTION 4 OF THE NAVAL RESERVE ACT OF 1938, 52 STAT. 1176, 34 U.S.C. 853B (1946 USED.), WHICH, IN PERTINENT PART, PROVIDED AS FOLLOWS:

THAT NO EXISTING LAW SHALL BE CONSTRUED TO PREVENT ANY MEMBER OF THE NAVAL RESERVE * * * FROM RECEIVING THE PAY AND ALLOWANCES INCIDENT TO SUCH EMPLOYMENT IN ADDITION TO ANY PAY AND ALLOWANCES TO WHICH HE MAY BE ENTITLED UNDER THE PROVISIONS OF THIS ACT. * * *

THE COURT ALSO IN EFFECT HELD THAT RETAINER PAY IS PAID TO A MEMBER OF THE RESERVE PARTLY IN RETURN FOR HIS HOLDING HIMSELF IN READINESS TO RENDER SERVICE IN TIME OF NEED FOR AS MUCH AS TWO MONTHS OUT OF EVERY YEAR IN PEACETIME, AND FOR UNLIMITED SERVICE IN NATIONAL EMERGENCY AND THAT WHILE IT IS TRUE RETAINER PAY IS BASED IN PART ON SERVICES PREVIOUSLY RENDERED IT IS PAID IN PART IN RETURN FOR THE MEMBER'S HOLDING HIMSELF IN READINESS TO RENDER SERVICE WHEN CALLED UPON AND, TO THAT EXTENT, IT IS PAID "IN RETURN FOR SERVICES ACTUALLY PERFORMED," AND, AS SUCH, IT DOES NOT COME WITHIN THE PROHIBITION OF SECTION 7 OF THE FEDERAL EMPLOYEES' COMPENSATION ACT, 5 U.S.C. 757.

IT DOES NOT APPEAR THAT MR. EPPS' RIGHT, IF ANY, TO RETAINER PAY CURRENTLY WITH DISABILITY COMPENSATION BENEFITS CAN BE BASED ON SECTION 4 OF THE NAVAL RESERVE ACT OF 1938, 52 STAT. 1176, SINCE SECTION OF THE ARMED FORCES RESERVE ACT OF 1952, 66 STAT. 505, 34 U.S. 771, EXPRESSLY REPEALED THAT PROVISION OF THE 1938 ACT EFFECTIVE ON JANUARY 1, 1953, AND THEREAFTER THE FLEET RESERVE CEASED TO BE A PART OF THE UNITED STATES NAVAL RESERVE. IT IS CONSIDERED TO BE A COMPLETE ENTITY AND A COMPONENT OF THE REGULAR NAVY. SEE BUPERS INSTRUCTION 1823.2 DATED MARCH 20, 1953.

IT IS OUR VIEW THAT PAYMENT OF "RETAINER PAY" CONCURRENTLY WITH DISABILITY COMPENSATION FOR PERIODS PRIOR TO DECEMBER 31, 1952, IS AUTHORIZED UNDER THE DECISION IN THE MULHOLLAND CASE. HOWEVER, MR. EPPS CEASED TO BE A MEMBER OF THE NAVAL RESERVE EFFECTIVE JANUARY 1, 1953, AND ANY BENEFITS TO WHICH HE HAD BEEN ENTITLED BY REASON OF THAT STATUS CEASED TO EXIST. THIS CHANGE OF STATUS DOES NOT APPEAR TO HAVE BEEN CONSIDERED BY THE COURT IN THE MULHOLLAND CASE. IN VIEW THEREOF THE MULHOLLAND CASE SHOULD BE FOLLOWED AS A PRECEDENT IN THE ADJUSTMENT OF SIMILAR ACCOUNTS INSOFAR AS "RETAINER PAY" IS CONCERNED ONLY FOR PERIODS PRIOR TO JANUARY 1, 1953. THEREAFTER THE PROHIBITION CONTAINED IN SECTION 7 (A) OF THE EMPLOYEES' COMPENSATION ACT WOULD APPEAR TO BE APPLICABLE IN SUCH CASES.

MR. WITT'S CLAIM MAY BE DISTINGUISHED FROM THE MULHOLLAND CASE IN THAT HIS CLAIM IS FOR RETIRED PAY. THE MULHOLLAND CASE INVOLVED RETAINER PAY AND A STATUS IN THE FLEET RESERVE, WHEREAS MR. WITT'S CLAIM COVERS RETIRED PAY WHILE ON THE RETIRED LIST OF THE REGULAR NAVY. WE KNOW OF NO SERVICE ACTUALLY PERFORMED BY SUCH A PERSON AFTER RETIREMENT WHICH COULD BE CONSIDERED TO MEET THE CONDITIONS OF SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT SO FAR AS "SERVICES ACTUALLY PERFORMED" ARE CONCERNED.

INASMUCH AS THE RETIRED PAY TO WHICH MR. WITT OTHERWISE WOULD BE ENTITLED IS NOT "PENSION" AND IS NOT CONSIDERED TO BE PAYMENT "IN RETURN FOR SERVICES ACTUALLY PERFORMED," OUR VIEW IS THAT THE PAYMENT TO HIM OF DISABILITY COMPENSATION AND NAVY RETIRED PAY DURING THE SAME PERIOD IS PROHIBITED BY SECTION 7 (A) OF THE FEDERAL EMPLOYEES' COMPENSATION ACT AND HIS CLAIM FOR SUCH RETIRED PAY WAS DISALLOWED BY OUR CLAIMS DIVISION BY SETTLEMENT DATED JANUARY 24, 1958. IN THIS CONNECTION, SEE B-136321, JULY 9, 1958.