B-149364, AUGUST 9, 1962, 42 COMP. GEN. 98

B-149364: Aug 9, 1962

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PAY - RETIRED - ANNUITY ELECTIONS FOR DEPENDENTS - OVERPAYMENTS - RECOVERY A WIDOW OF A DECEASED MEMBER OF THE UNIFORMED SERVICES WHO OBTAINED A CORRECTION OF RECORDS FOR ENTITLEMENT TO ADDITIONAL SURVIVORSHIP ANNUITY BENEFITS UNDER A SECOND ELECTION WHICH WAS CANCELLED WHEN THE ORIGINAL ELECTION ON BEHALF OF THE WIDOW AND THE CHILD WAS ADMINISTRATIVELY REINSTATED MAY NOT HAVE THE GENERAL RULE WHICH PRECLUDES IMPAIRMENT OF VESTED RIGHTS APPLIED SO AS TO RETAIN THE BENEFITS OF THE ORIGINAL ELECTION AND ALSO HAVE THE RECORDS CORRECTED TO OBTAIN THE BENEFITS OF THE SECOND ELECTION. LIQUIDATION OF THE DEBT IS REQUIRED. 1962: REFERENCE IS MADE TO LETTER OF JUNE 28. THE MEMBER WAS INFORMED THAT IT WAS CONSIDERED THAT HE HAD NOT MADE AN ELECTION.

B-149364, AUGUST 9, 1962, 42 COMP. GEN. 98

PAY - RETIRED - ANNUITY ELECTIONS FOR DEPENDENTS - OVERPAYMENTS - RECOVERY A WIDOW OF A DECEASED MEMBER OF THE UNIFORMED SERVICES WHO OBTAINED A CORRECTION OF RECORDS FOR ENTITLEMENT TO ADDITIONAL SURVIVORSHIP ANNUITY BENEFITS UNDER A SECOND ELECTION WHICH WAS CANCELLED WHEN THE ORIGINAL ELECTION ON BEHALF OF THE WIDOW AND THE CHILD WAS ADMINISTRATIVELY REINSTATED MAY NOT HAVE THE GENERAL RULE WHICH PRECLUDES IMPAIRMENT OF VESTED RIGHTS APPLIED SO AS TO RETAIN THE BENEFITS OF THE ORIGINAL ELECTION AND ALSO HAVE THE RECORDS CORRECTED TO OBTAIN THE BENEFITS OF THE SECOND ELECTION; THEREFORE, RECOVERY OF ANNUITY OVERPAYMENTS, RESULTING FROM THE RECORDS CORRECTION MAY NOT BE WAIVED UNDER 10 U.S.C. 1442, AND LIQUIDATION OF THE DEBT IS REQUIRED.

TO THE SECRETARY OF THE NAVY, AUGUST 9, 1962:

REFERENCE IS MADE TO LETTER OF JUNE 28, 1962, FROM THE ASSISTANT SECRETARY OF THE NAVY, REQUESTING CONSIDERATION OF THE REQUEST FOR WAIVER OF RECOVERY OF CERTAIN ANNUITY OVERPAYMENTS MADE TO MRS. CECILIA R. BOCHNIK, WIDOW OF LOUIS FRANK BOCHNIK, 206 96 96, BMGC, USN, RETIRED (DECEASED), IN THE AMOUNT OF $56.68.

IT APPEARS THAT ON DECEMBER 8, 1953, THE MEMBER EXECUTED AN ELECTION UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, 67 STAT. 510, 37 U.S.C. 373 (1952 ED., SUPP. II), ELECTING OPTIONS (1) AND (2) IN COMBINATION WITH OPTION (4) TO PROVIDE ANNUITIES FOR HIS WIDOW AND CHILD. IN THE SPACE PROVIDED THEREFOR, HE CHECKED THE ONE-HALF RATE UNDER OPTIONS (1) AND (2). SINCE THE COMBINED TOTAL OF THE ELECTED OPTIONS EXCEEDED 50 PERCENT OF THE MEMBER'S REDUCED RETIRED PAY, THE MEMBER WAS INFORMED THAT IT WAS CONSIDERED THAT HE HAD NOT MADE AN ELECTION. ON JANUARY 24, 1954, THE MEMBER EXECUTED A CORRECTED ELECTION IN WHICH HE ELECTED OPTIONS (1) AND (4) AT ONE-HALF REDUCED RETIRED PAY. THE DEDUCTIONS FROM HIS RETIRED PAY WERE BASED ON THE SECOND ELECTION. SHORTLY BEFORE THE MEMBER'S DEATH ON JANUARY 12, 1960, IT WAS DETERMINED THAT ON THE BASIS OF OUR DECISION OF SEPTEMBER 18, 1957, B-132215, THE FIRST ELECTION WAS A VALID ELECTION AND THAT, IN DETERMINING THE AMOUNT TO BE DEDUCTED FROM HIS RETIRED PAY FOR COVERAGE UNDER THE CONTINGENCY OPTION ACT, THE NEXT LOWER FRACTION ( 1/4 ( SHOULD HAVE BEEN USED. THE MONTHLY DEDUCTIONS WERE ADJUSTED RETROACTIVELY TO DECEMBER 1, 1953, AND THE EXCESS DEDUCTIONS WERE CREDITED IN THE FINAL SETTLEMENT OF THE MEMBER'S PAY ACCOUNT IN THE SUM OF $636.56.

ANNUITY PAYMENTS WERE ESTABLISHED IN THIS CASE EFFECTIVE JANUARY 1, 1960, UNDER THE ORIGINAL ELECTION. ON THAT BASIS, THE MEMBER'S WIDOW AND HER CHILD WERE EACH ENTITLED TO AN ANNUITY PAYMENT OF $38.62 A MONTH OR TO A TOTAL AMOUNT OF $77.24. WHEN THE CHILD REACHES THE AGE OF 18 IN SEPTEMBER 1964, HOWEVER, THE PAYMENT FOR HER WOULD CEASE AND THE WIDOW WOULD CONTINUE UNTIL HER REMARRIAGE OR DEATH TO BE ENTITLED TO AN ANNUITY PAYMENT IN THE AMOUNT OF ONLY $38.62 PER MONTH. ON THE OTHER HAND, ON THE BASIS OF THE MEMBER'S SECOND ELECTION, THE WIDOW WOULD HAVE BEEN ENTITLED TO A MONTHLY ANNUITY PAYMENT OF $72.88 IN HER OWN RIGHT.

IN THE LIGHT OF THE ABOVE CIRCUMSTANCES, THE WIDOW APPLIED TO THE BOARD FOR CORRECTION OF NAVAL RECORDS TO CORRECT THE MEMBER'S RECORDS TO SHOW THAT HE HAD MADE A VALID ELECTION OF OPTIONS (1) AND (4) AT ONE-HALF REDUCED RETIRED PAY. THE RECORDS WERE SO CORRECTED AND AS A RESULT THE WIDOW BECAME ENTITLED TO ANNUITY PAYMENTS AT THE RATE OF $72.88 A MONTH IN HER OWN RIGHT. THE MONTHLY DEDUCTIONS FROM THE MEMBER'S RETIRED PAY WERE RETROACTIVELY INCREASED, THE WIDOW MAKING A PAYMENT IN THE AMOUNT OF $636.56. THE OVERPAYMENT OF ANNUITY PAYMENTS INVOLVED--- RESULTING FROM THE CORRECTION OF RECORDS--- AMOUNTS TO $56.68, REPRESENTING THE COMBINED PAYMENTS MADE IN THE AMOUNT OF $77.24 A MONTH LESS THE AMOUNT OF THE PAYMENT DUE THE WIDOW IN HER OWN RIGHT, $72.88 A MONTH, FOR THE PERIOD FROM JANUARY 1, 1960, THROUGH JANUARY 31, 1961. THE WIDOW REQUESTED THAT THE RECOVERY OF THE AMOUNT OF THE OVERPAYMENTS BE WAIVED.

SECTION 7 (B) OF THE CONTINGENCY OPTION ACT, AS AMENDED, 10 U.S.C. 1442, PROVIDES THAT THERE NEED BE NO RECOVERY OF SUCH OVERPAYMENTS WHEN, IN THE JUDGMENT OF THE SECRETARY CONCERNED AND THE COMPTROLLER GENERAL OF THE UNITED STATES,"THERE HAS BEEN NO FAULT BY THE PERSON TO WHOM THE AMOUNT WAS ERRONEOUSLY PAID AND RECOVERY WOULD BE CONTRARY TO THE PURPOSES OF THIS CHAPTER OR AGAINST EQUITY AND GOOD CONSCIENCE.'

THE COURTS HAVE HELD THAT THERE IS NO EQUITABLE RIGHT TO RETAIN MONEY ERRONEOUSLY PAID BY THE GOVERNMENT. SEE 35 COMP. GEN. 401 AND THE COURT CASES CITED IN THAT DECISION.

IN 31 COMP. GEN. 619 MENTION WAS MADE OF THE RULE THAT, GENERALLY, NEITHER THE FEDERAL GOVERNMENT NOR THE STATES MAY IMPAIR OR DIVEST VESTED RIGHTS EXCEPT IN THE LEGITIMATE EXERCISE OF THE POLICE POWER AND THAT RETROACTIVE ADMINISTRATIVE ACTION DISTURBING OR DESTROYING SUCH VESTED RIGHTS, OR CREATING NEW OBLIGATIONS WITH RESPECT TO PAST TRANSACTIONS, ARE INVALID. HOWEVER, THAT RULE IS NOT FOR APPLICATION WHERE, AS HERE, THE PERSON CONCERNED HAS SOUGHT AND OBTAINED A CORRECTION OF RECORDS SO AS TO BECOME ENTITLED TO ADDITIONAL PECUNIARY BENEFITS. WHEN MRS. BOCHNIK REQUESTED THAT THE MEMBER'S RECORDS BE CORRECTED, IT MUST HAVE BEEN APPARENT TO HER THAT SHE COULD NOT RETAIN THE BENEFITS OF THE ORIGINAL ELECTION AND ALSO HAVE THE RECORDS CORRECTED TO OBTAIN THE BENEFITS OF THE SECOND ELECTION. UPON CORRECTION OF RECORDS PURSUANT TO SECTION 207 OF THE LEGISLATIVE REORGANIZATION ACT OF 1946, AS AMENDED (NOW 10 U.S.C. 1552), A MEMBER'S STATUS BECOMES FIXED BY THE RECORDS AS CORRECTED AND HE AND HIS BENEFICIARIES BECOME ENTITLED TO BENEFITS PURSUANT TO THE APPLICABLE STATUTES WHEN APPLIED TO THE FACTS IN THE CASE AS THEY APPEAR FROM THE CORRECTED RECORDS. EXCEPT WHEN PROCURED BY FRAUD, A CORRECTION MADE UNDER SECTION 1552 IS FINAL AND CONCLUSIVE ON ALL OFFICERS OF THE UNITED STATES. CF. 34 COMP. GEN. 7.

UNDER THE CIRCUMSTANCES, IT IS BELIEVED THAT PERIODIC PAYMENTS OVER A REASONABLE TIME TO LIQUIDATE THE DEBT WOULD NOT CONSTITUTE A BURDEN CONTRARY TO THE PURPOSES OF THE LAW AND THAT, THEREFORE, THE RECORD DOES NOT WARRANT WAIVING RECOVERY OF THE OVERPAYMENTS IN THIS CASE.