B-132415, OCTOBER 3, 1957, 37 COMP. GEN. 218

B-132415: Oct 3, 1957

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MILITARY PERSONNEL - COMMERCIAL INSURANCE POLICIES - VOLUNTARY PAY ALLOTMENTS - DISCONTINUANCE COMMERCIAL INSURANCE PREMIUMS INADVERTENTLY PAID BY THE GOVERNMENT AFTER SERVICEMAN REQUESTED DISCONTINUANCE OF VOLUNTARY ALLOTMENT FROM HIS PAY FOR AN INSURANCE POLICY WHICH WAS NOT IN FORCE LONG ENOUGH TO HAVE A CASH SURRENDER VALUE MAY NOT BE REGARDED AS AN OBLIGATION OF THE SERVICEMAN WHEN HE HAS TAKEN ALL THE STEPS REQUIRED TO ACCOMPLISH DISCONTINUANCE OF THE ALLOTMENT. STATED TO HAVE BEEN CLEARED BY THE MILITARY PAY AND ALLOWANCE COMMITTEE. FLYNN'S CORRESPONDENCE IS ADMITTEDLY INCOMPLETE AS A SUBMISSION FROM A DISBURSING OFFICER. KING STATES THAT HE REQUESTED THAT THE ALLOTMENT BE STOPPED AND THAT HE HAD NO KNOWLEDGE THAT THE PAYMENTS WERE NOT DISCONTINUED AS REQUESTED.

B-132415, OCTOBER 3, 1957, 37 COMP. GEN. 218

MILITARY PERSONNEL - COMMERCIAL INSURANCE POLICIES - VOLUNTARY PAY ALLOTMENTS - DISCONTINUANCE COMMERCIAL INSURANCE PREMIUMS INADVERTENTLY PAID BY THE GOVERNMENT AFTER SERVICEMAN REQUESTED DISCONTINUANCE OF VOLUNTARY ALLOTMENT FROM HIS PAY FOR AN INSURANCE POLICY WHICH WAS NOT IN FORCE LONG ENOUGH TO HAVE A CASH SURRENDER VALUE MAY NOT BE REGARDED AS AN OBLIGATION OF THE SERVICEMAN WHEN HE HAS TAKEN ALL THE STEPS REQUIRED TO ACCOMPLISH DISCONTINUANCE OF THE ALLOTMENT.

TO THE SECRETARY OF THE NAVY, OCTOBER 3, 1957:

BY LETTER DATED JUNE 27, 1957, THE ASSISTANT SECRETARY OF THE NAVY ( FINANCIAL MANAGEMENT) REQUESTED THAT WE ANSWER A QUESTION PRESENTED IN A LETTER DATED AUGUST 11, 1956, BY MR. P. W. FLYNN, DISBURSING OFFICER, U.S.S. WINSTON (AKA-94). THE QUESTION, STATED TO HAVE BEEN CLEARED BY THE MILITARY PAY AND ALLOWANCE COMMITTEE, DEPARTMENT OF DEFENSE, AS SUBMISSION NO. 270, PERTAINS TO THE COLLECTION OF ERRONEOUS PAYMENTS OF A VOLUNTARY INSURANCE ALLOTMENT. WHILE MR. FLYNN'S CORRESPONDENCE IS ADMITTEDLY INCOMPLETE AS A SUBMISSION FROM A DISBURSING OFFICER, IT HAS BEEN SUGGESTED THAT A DECISION BE RENDERED FOR FUTURE GUIDANCE IN THESE MATTERS.

THE FACTS OF THE PRESENT CASE INVOLVED ROBERT E. KING, RD3, 443 25 78, U.S. NAVY, WHO AUTHORIZED AN ALLOTMENT OF HIS PAY IN THE AMOUNT OF $18.80 A MONTH FOR THE PURPOSE OF MAKING PREMIUM PAYMENTS DIRECTLY TO A COMMERCIAL LIFE INSURANCE COMPANY. ON OR ABOUT NOVEMBER 15, 1954, AFTER THE ALLOTMENT HAD CONTINUED FOR 3 MONTHS, KING STATES THAT HE REQUESTED THAT THE ALLOTMENT BE STOPPED AND THAT HE HAD NO KNOWLEDGE THAT THE PAYMENTS WERE NOT DISCONTINUED AS REQUESTED. THIS IS SUPPORTED BY A NOTATION ON HIS PAY RECORD FOR THE PERIOD JULY 1 TO DECEMBER 31, 1954, SIGNED BY THE DISBURSING OFFICER THEN CARRYING HIS ACCOUNTS, AS FOLLOWS: " I-A LOT $18.80 STOPPED LP LL/54.' WHILE MONTHLY ALLOTMENT DEDUCTIONS FROM THE MEMBER'S PAY WERE DISCONTINUED AFTER NOVEMBER 1954, PAYMENTS TO THE INSURANCE COMPANY WERE NOT DISCONTINUED UNTIL AFTER AUGUST 1955 WHEN AN AUDIT REVEALED THE ERRONEOUS PAYMENTS. KING'S PAY WAS THEN CHECKED FOR $169.20, REPRESENTING THE AMOUNT OF THE OVERPAYMENTS FOR THE 9-MONTH PERIOD. THE INSURANCE COMPANY STATES THAT THE ALLOTMENT PAYMENT FOR SEPTEMBER 1955 (PRESUMABLY THE AUGUST 1955 ALLOTMENT PAYMENT) WAS REFUNDED TO KING AFTER RECEIPT OF NOTICE THE PRECEDING MONTH TO CANCEL THE POLICY. MR. FLYNN HAS STATED THAT KING HAD ACTED ACCORDING TO REGULATIONS IN STOPPING HIS ALLOTMENT. FROM A REVIEW OF CHAPTER 4, PART IV OF THE NAVY COMPTROLLER MANUAL, ESPECIALLY SECTIONS 1044400 AND 1044402, IT APPEARS THAT KING DID EVERYTHING REQUIRED OF HIM TO STOP THE ALLOTMENT. THUS, THE QUESTION PRESENTED IS WHETHER THE AMOUNT OF SUCH ERRONEOUS PAYMENTS MAY BE COLLECTED FROM A MEMBER WHO WAS UNAWARE THAT THE ERRONEOUS PAYMENTS HAD CONTINUED TO A COMMERCIAL INSURANCE COMPANY AFTER THE MEMBER HAD PERFORMED EVERY ACT REQUIRED OF HIM TO HAVE THE VOLUNTARY ALLOTMENT DISCONTINUED.

IN A DECISION TO A DISBURSING OFFICER, ROUTED THROUGH THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY, ON MARCH 27, 1950, B-92033, WE DECIDED THAT AN ENLISTED MAN WAS ENTITLED TO A REFUND OF AMOUNTS DEDUCTED FROM HIS PAY ON ACCOUNT OF ERRONEOUS PAYMENTS TO A COMMERCIAL INSURANCE COMPANY. THOSE OVERPAYMENTS HAD BEEN MADE WITHOUT THE MEMBER'S KNOWLEDGE OR FAULT. WE THERE SAID THAT---

THE GOVERNMENT, EVEN THROUGH INADVERTENCE, CANNOT THRUST UPON THE ENLISTED MAN THE BURDEN OF CONTINUING HIS INSURANCE BY PAYING THE ALLOTMENT TO THE INSURANCE COMPANY AFTER THE ENLISTED MAN HAS TAKEN ALL STEPS REQUIRED OF HIM TO ACCOMPLISH DISCONTINUANCE OF THE ALLOTMENT AND THEN, AS A VOLUNTEER OR INADVERTENT CREDITOR, HOLD HIM LIABLE.

WE ALSO INDICATED IN THE DECISION OF MARCH 27, 1950, THAT THE MEMBER WAS NOT ENTITLED TO THE REFUND IF HE HAD IN FACT TAKEN SOME AFFIRMATIVE ACTION TO RATIFY THE OVERPAYMENTS BY ACCEPTING A BENEFIT ARISING THEREFROM. COPY OF THAT DECISION IS ENCLOSED.

WHILE THE RECORD IS INCOMPLETE AS TO WHAT INSURANCE BENEFITS, IF ANY, KING HAS RECEIVED, THE INSURANCE COMPANY INVOLVED HAS STATED IN A LETTER TO THE NAVY FINANCE CENTER THAT KING'S INSURANCE POLICY WAS NOT IN FORCE SUFFICIENT TIME TO HAVE CASH VALUE AND, HENCE, NO ADJUSTMENT CAN BE MADE. IT WOULD APPEAR, THEREFORE, THAT THE RULE OF OUR DECISION OF MARCH 27, 1950, B-92033, IS FOR APPLICATION TO THE INSTANT CASE. HENCE, THE SUM OF $169.20 CHECKED IN KING'S ACCOUNT, LESS $18.80 WHICH WAS RETURNED TO HIM BY THE INSURANCE COMPANY, SHOULD BE REFUNDED IF OTHERWISE CORRECT.