B-144851, MAY 11, 1961

B-144851: May 11, 1961

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THE REQUEST WAS ASSIGNED SUBMISSION NO. THE FACTS STATED BELOW ARE THOSE FURNISHED IN YOUR LETTER. LIEUTENANT COMMANDER HILDING WAS RETIRED IN THE RANK OF ENSIGN. HE WAS RECALLED TO ACTIVE DUTY ON MARCH 21. WAS RELEASED THEREFROM ON OCTOBER 3. HIS TOTAL ACTIVE SERVICE ON DATE OF RELEASE TO INACTIVE DUTY WAS 7 YEARS. HE WAS ADVANCED ON THE RETIRED LIST TO THE RANK OF LIEUTENANT COMMANDER EFFECTIVE DECEMBER 30. LIEUTENANT COMMANDER HILDING'S DISABILITY WAS RATED AT 100 PERCENT. HE WAS FURNISHED A FORM IN SEPTEMBER 1951 FOR HIS USE IN ELECTING THE METHOD BY WHICH HE WISHED HIS RETIRED PAY COMPUTED. A COPY OF THE ELECTION FORM WAS NOT FURNISHED OUR OFFICE. A ROUGH DRAFT FROM WHICH THE ELECTION FORM WAS TYPED INDICATES THAT HE WAS INFORMED THAT IF HE WISHED TO CONTINUE RECEIVING PAY AT THE GROSS MONTHLY RATE OF $336.88.

B-144851, MAY 11, 1961

TO MR. E. C. DODD, DISBURSING OFFICER, DEPARTMENT OF THE NAVY:

BY SECOND ENDORSEMENT DATED JANUARY 17, 1961, THE COMPTROLLER OF THE NAVY FORWARDED YOUR LETTER OF OCTOBER 11, 1960 (XO:HA:RS 7220/57065), REQUESTING AN ADVANCE DECISION AS TO WHETHER THE COST OF AN ANNUITY ELECTED BY LIEUTENANT COMMANDER GEORGE D. HILDING, USN, RETIRED, 57065, SHOULD BE ADJUSTED RETROACTIVELY TO APRIL 1, 1954. THE REQUEST WAS ASSIGNED SUBMISSION NO. DO-N-554 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

THE FACTS STATED BELOW ARE THOSE FURNISHED IN YOUR LETTER. ON SEPTEMBER 5, 1923, LIEUTENANT COMMANDER HILDING WAS RETIRED IN THE RANK OF ENSIGN, BY REASON OF PHYSICAL DISABILITY, PURSUANT TO SECTION 1453, REVISED STATUTES. ON THE DATE OF RETIREMENT HE HAD COMPLETED 2 YEARS, 3 MONTHS AND 3 DAYS ACTIVE SERVICE. HE WAS RECALLED TO ACTIVE DUTY ON MARCH 21, 1942, AND WAS RELEASED THEREFROM ON OCTOBER 3, 1947. HIS TOTAL ACTIVE SERVICE ON DATE OF RELEASE TO INACTIVE DUTY WAS 7 YEARS, 9 MONTHS AND 16 DAYS. HE WAS ADVANCED ON THE RETIRED LIST TO THE RANK OF LIEUTENANT COMMANDER EFFECTIVE DECEMBER 30, 1947, UNDER 34 U.S.C. 350G (C).

IN ACCORDANCE WITH SECTION 411 OF THE CAREER COMPENSATION ACT OF 1949, 37 U.S.C. 281, LIEUTENANT COMMANDER HILDING'S DISABILITY WAS RATED AT 100 PERCENT. HE WAS FURNISHED A FORM IN SEPTEMBER 1951 FOR HIS USE IN ELECTING THE METHOD BY WHICH HE WISHED HIS RETIRED PAY COMPUTED. A COPY OF THE ELECTION FORM WAS NOT FURNISHED OUR OFFICE. HOWEVER, A ROUGH DRAFT FROM WHICH THE ELECTION FORM WAS TYPED INDICATES THAT HE WAS INFORMED THAT IF HE WISHED TO CONTINUE RECEIVING PAY AT THE GROSS MONTHLY RATE OF $336.88, BASED ON LAWS IN EFFECT ON SEPTEMBER 30, 1949, NO ACTION WAS REQUIRED ON HIS PART. IT IS ASSUMED THAT HE DID NOT EXECUTE THE ELECTION FORM IN ORDER THAT HE COULD CONTINUE TO RECEIVE THE HIGHEST RATE OF PAY AFFORDED HIM.

LIEUTENANT COMMANDER HILDING MADE AN ELECTION UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, 67 STAT. 501, 503, OF OPTIONS 1- 4, AT ONE-HALF REDUCED RETIRED PAY. SINCE THE ELECTION WAS POSTMARKED APRIL 26, 1954, IT BECAME EFFECTIVE APRIL 1, 1954. SEE SECTION 402 (A) OF REGULATIONS FOR THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, NOVEMBER 1, 1953. DEDUCTIONS OF $55.08 PER MONTH TO COVER THE COST OF THE ANNUITY HAVE BEEN MADE FROM HIS RETIRED PAY SINCE APRIL 1, 1954. THE COST WAS BASED ON THE MEMBER'S GROSS MONTHLY RETIRED PAY OF $350.36 ($336.88 INCREASED BY 4 PERCENT UNDER THE ACT OF MAY 19, 1952, 66 STAT. 79) AND THE REDUCTION FACTOR .1572.

A REVISED ELECTION FORM INCLUDING PAY UNDER LAWS IN EFFECT ON SEPTEMBER 30, 1949 (METHOD C) AS A METHOD OF PAY TO BE ELECTED WAS MAILED TO LIEUTENANT COMMANDER HILDING ON JUNE 12, 1954. THIS FORM, WHICH THE OFFICER COMPLETED ON JUNE 21, 1954, TO SHOW HIS ELECTION TO METHOD C, WAS RECEIVED AT THE NAVY FINANCE CENTER ON JUNE 24, 1954.

IN OUR SETTLEMENT OF NOVEMBER 19, 1959, THE CLAIM OF LIEUTENANT COMMANDER HILDING FOR ADDITIONAL RETIRED PAY, WAS CERTIFIED TO BE PAYABLE IN THE AMOUNT OF $7,250.55 IN ACCORDANCE WITH THE DECISION OF THE COURT OF CLAIMS IN THE CASE OF PHELAN V. UNITED STATES, CT.CL.NO. 50-57, DECIDED JUNE 3, 1959. THE AMOUNT PAID REPRESENTED THE DIFFERENCE BETWEEN THE MEMBER'S RETIRED PAY UNDER THE LAWS IN EFFECT PRIOR TO OCTOBER 1, 1949, AND SUCH PAY BASED ON THE PERCENTAGE OF DISABILITY UNDER METHOD (2) OF SECTION 402 (D) OF THE CAREER COMPENSATION ACT OF 1949, 37 U.S.C. 272 (D), FROM OCTOBER 1, 1949, TO SEPTEMBER 30, 1959. SINCE THE ADMINISTRATIVE REPORT FURNISHED AT THAT TIME CONTAINED NO INFORMATION REGARDING THE MEMBER'S ELECTION UNDER THE CONTINGENCY OPTION ACT, SUCH COST WAS NOT TAKEN INTO CONSIDERATION IN THE SETTLEMENT.

IN YOUR LETTER, YOU RELATE THAT LIEUTENANT COMMANDER HILDING'S FAILURE TO EXECUTE THE PAY ELECTION FORM FURNISHED HIM IN SEPTEMBER 1951 INDICATED TO THE NAVY FINANCE CENTER HIS DESIRE TO RECEIVE THE HIGHEST RATE OF PAY SHOWN ON THE FORM, WHICH WAS PAY COMPUTED UNDER LAWS IN EFFECT PRIOR TO SEPTEMBER 30, 1949; THAT, THEREFORE, IT SEEMS APPROPRIATE TO ASSUME THAT HAD THE ELECTION FORM PROPERLY INCLUDED PAY UNDER LAWS IN EFFECT ON SEPTEMBER 30, 1949, AS A METHOD OF PAY TO BE ELECTED, HE WOULD HAVE SO ELECTED AND RETURNED THE FORM PROMPTLY. YOU EXPRESS THE BELIEF THAT IF THE NAVY FINANCE CENTER HAD BEEN IN A POSITION TO HAVE REFLECTED THE CORRECT RATE OF METHOD A ON THE FORM, HE WOULD HAVE ELECTED THAT METHOD, WHICH ACTUALLY WAS THE MOST ADVANTAGEOUS FOR HIM; THAT IT SHOULD BE CONSIDERED THAT HE INDICATED HIS DESIRE WITH RESPECT TO HIS PAY COMPUTATION IN THE ONLY MANNER WHICH WAS AFFORDED HIM; AND THAT IT SHOULD BE CONSIDERED THAT SUCH INTENT WAS EVIDENT, ON THE BASIS OF ALL THE FACTS, PRIOR TO THE DATE HE COMPLETED HIS ANNUITY ELECTION FORM SO AS TO REQUIRE THAT THE COST OF THE ANNUITY IN HIS CASE BE ADJUSTED RETROACTIVELY TO APRIL 1, 1954.

IT IS REPORTED THAT LIEUTENANT COMMANDER HILDING'S RETIRED PAY HAS BEEN INCREASED TO THE GROSS MONTHLY RATE OF $471.28 EFFECTIVE MARCH 1, 1960, AND THAT HIS ANNUITY COST, AT THE INCREASED RATE OF $62.90, BASED ON HIS GROSS MONTHLY RETIRED PAY OF $400.14 (THE ADJUSTED RATE OF RETIRED PAY TO WHICH HE WAS ENTITLED ON APRIL 1, 1954) HAS BEEN ENTERED IN HIS RETIRED PAY ACCOUNT BEGINNING MARCH 1, 1960. IT IS FURTHER REPORTED THAT THE CREDIT FOR THE DIFFERENCE BETWEEN $471.28 AND $393.66 PER MONTH FROM OCTOBER 1, 1959, THE DAY FOLLOWING THE DATE THROUGH WHICH SETTLEMENT WAS MADE FOR ADJUSTED RETIRED PAY BY OUR OFFICE, THROUGH FEBRUARY 28, 1960, AS WELL AS ADJUSTMENT OF THE ANNUITY COST FOR THE PERIOD APRIL 1, 1954, THROUGH FEBRUARY 28, 1960, IS BEING HELD IN ABEYANCE PENDING RECEIPT OF THE DECISION REQUESTED IN YOUR LETTER OF OCTOBER 11, 1960.

IT HAS BEEN HELD THAT DEDUCTIONS UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953 ARE TO BE COMPUTED ON THE PROPER GROSS RATE OF RETIRED PAY IN EFFECT WHEN THE FIRST DEDUCTION BECOMES APPLICABLE EVEN THOUGH SUCH RATE WAS NOT DETERMINED UNTIL A SUBSEQUENT DATE. SEE 34 COMP. GEN. 151, AND B-139217, JUNE 29, 1959. ALSO, IT HAS BEEN HELD THAT WHEN A RIGHT TO RETROACTIVE RETIRED PAY HAS BEEN DETERMINED, SUBSEQUENT TO ELECTIONS UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT, THE PROPER RATE OF SUCH DEDUCTIONS MUST BE ESTABLISHED ON THE FACTORS IN EXISTENCE AT THE BEGINNING OF THE RETROACTIVE PERIOD OR ON NOVEMBER 1, 1953, WHICHEVER IS LATER. 38 COMP. GEN. 146, 154, ANSWER TO QUESTION 11. DESPITE THE PLAINTIFF'S OBJECTION IN THE CASE OF THORWALL V. UNITED STATES, CT.CL.NO. 15-56, THE AMOUNT OF THE JUDGMENT ENTERED JANUARY 13, 1961, AWARDING HIM RETROACTIVE RETIRED PAY WAS COMPUTED ON THAT BASIS.

WITH RESPECT TO THE LANGUAGE CONTAINED IN 35 COMP. GEN. 557, INDICATING THAT AN ELECTION UNDER SECTION 411 OF THE 1949 ACT MUST BE EXERCISED BEFORE OCTOBER 1, 1954, YOUR ATTENTION IS INVITED TO THE FACT THAT THERE WAS NOT INVOLVED IN THAT CASE A SITUATION WHERE THE OFFICER CONCERNED REFRAINED FROM MAKING AN ELECTION BECAUSE OF ERRONEOUS INFORMATION FURNISHED ADMINISTRATIVELY, TO THE EFFECT THAT SAVED PAY WAS GREATER THAN COULD BE SECURED UNDER A SECTION 411 ELECTION. A SITUATION SIMILAR TO THE LATTER WAS INVOLVED IN THE CASE OF COX V. UNITED STATES, CT.CL.NO. 167-57, ONE OF THE COMPANION CASES TO PHELAN V. UNITED STATES, CT.CL.NO. 50-57, AND THE COURT GRANTED THE PLAINTIFF THE BENEFITS OF A SECTION 411ELECTION IN ITS DECISION RENDERED JUNE 3, 1959, ALTHOUGH HE HAD MADE NO FORMAL ELECTION PRIOR TO FILING HIS PETITION IN THAT CASE.

THE MATTER OF PROPER COSTS OF LIEUTENANT COMMANDER HILDING'S ELECTION WAS NOT INVOLVED IN HIS CLAIM BEFORE US AND IS AFFECTED BY OUR SETTLEMENT ONLY TO THE EXTENT THAT SUCH SETTLEMENT FIXED THE NEW RATES OF HIS RETIRED PAY, THE RATE IN EFFECT ON APRIL 1, 1954, BEING $400.14. IN 39 COMP. GEN. 886, UNDER ANALOGOUS CIRCUMSTANCES, IT WAS RECOGNIZED THAT, ALTHOUGH A SETTLEMENT BY THE GENERAL ACCOUNTING OFFICE MAY NOT BE REVISED BY A DISBURSING OFFICER, SUCH SETTLEMENT DOES NOT PRECLUDE A DISBURSING OFFICER FROM CONSIDERING MATTERS EXTRANEOUS TO THE SETTLEMENT EVEN THOUGH SUCH CONSIDERATION INVOLVES A PART OR ALL OF THE PERIOD COVERED BY THE SETTLEMENT. IN THE CIRCUMSTANCES, THE ANNUITY COSTS OF LIEUTENANT COMMANDER HILDING'S ELECTION OF OPTIONS SHOULD BE ADJUSTED BY THE DEPARTMENT OF THE NAVY RETROACTIVELY TO APRIL 1, 1954, ON THE BASIS OF THE MEMBER'S PROPER RETIRED PAY IN EFFECT AT THE TIME, AS THOUGH HE ACTUALLY HAD BEEN RECEIVING SUCH RETIRED PAY WHEN HIS ELECTION WAS MADE.