B-152421, MARCH 10, 1969 48 COMP. GEN. 580

B-152421, MARCH 10, 1969 48 COMP. GEN. 580

MILITARY PERSONNEL--RECORD CORRECTION--PAYMENT BASIS--INTERIM CIVILIAN EARNINGS WHEN THE MILITARY OR NAVAL RECORDS OF MEMBERS OR FORMER MEMBERS OF THE UNIFORMED SERVICES ARE CORRECTED PURSUANT TO 10 U.S.C. 1552, DEDUCTION OF THE INTERIM EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT SHOULD BE MADE FROM THE BACK PAY AND ALLOWANCES GRANTED. THE CORRECTION OF RECORDS LAW IS NOT INTENDED TO PLACE MEMBERS OR FORMER MEMBERS WHOSE RECORDS ARE CORRECTED IN A MORE ADVANTAGEOUS POSITION THAN MEMBERS WHO REMAINED IN THE SERVICE AND RECEIVED LIKE PAY AND ALLOWANCES, BUT NO ADDITIONAL CIVILIAN EARNINGS. THE ISSUANCE OF REGULATIONS TO REQUIRE THE DEDUCTION OF INTERIM CIVILIAN EARNINGS FROM THE PAYMENT OF BACK PAY AND ALLOWANCES WILL PROVIDE UNIFORM TREATMENT OF MILITARY AND CIVILIAN PERSONNEL IN MAKING ADJUSTMENTS FOR LOSS OF COMPENSATION ARISING OUT OF AN ERRONEOUS OR ILLEGAL SEPARATION OR SUSPENSION FROM THE SERVICE.

TO THE SECRETARY OF DEFENSE, MARCH 10, 1969:

REFERENCE IS MADE TO LETTER OF FEBRUARY 18, 1969, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), REQUESTING AN EXPRESSION OF OUR VIEWS ON THE PROPRIETY OF DEDUCTING EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT IN EFFECTING SETTLEMENT OF BACK PAY AND ALLOWANCES FOUND DUE A MEMBER OR FORMER MEMBER OF THE UNIFORMED SERVICES BY REASON OF THE CORRECTION OF HIS MILITARY OR NAVAL RECORDS IN CERTAIN CASES, PURSUANT TO THE PROVISIONS OF 10 U.S.C. 1552.

THE ASSISTANT SECRETARY STATES THAT IN A RECENT CASE BEFORE THE AIR FORCE BOARD FOR CORRECTION OF MILITARY RECORDS THE DEPARTMENT OF DEFENSE PRACTICE OF NOT DEDUCTING THE MEMBER'S OR FORMER MEMBER'S INTERIM NET EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT FROM BACK PAY AND ALLOWANCES GRANTED IN CORRECTION BOARD CASES HAS BEEN QUESTIONED. HE FURTHER STATES THAT THE BASIC PROBLEM STEMS FROM THOSE CASES IN WHICH THE RECORDS ARE CORRECTED TO SHOW THAT THE DISCHARGED MEMBER WAS NOT IN FACT DISCHARGED BUT REMAINED ON EXTENDED ACTIVE DUTY AND THAT IN SUCH CASES THE APPLICANT RECEIVES BACK PAY AND ALLOWANCES WITH NO DEDUCTION OF INTERIM NET NON- GOVERNMENTAL EARNINGS.

ACCORDING TO THE ASSISTANT SECRETARY, AN ANOMALOUS SITUATION EXISTS IN THIS CLASS OF CASES SINCE, IF THE INDIVIDUAL HAD SUED IN THE COURT OF CLAIMS AND WON, THE INTERIM NET EARNINGS WOULD HAVE BEEN DEDUCTED IN DETERMINING THE AMOUNT OF THE JUDGEMENT AWARDED TO HIM.

WITH RESPECT TO THIS PROBLEM, THE ASSISTANT SECRETARY SAYS THAT IN DECISION B-152421, OCTOBER 7, 1964, A FORMER COMPTROLLER GENERAL AGREED WITH THE VIEWS EXPRESSED IN LETTER FROM THE DEPARTMENT OF DEFENSE DATED AUGUST 11, 1964, THAT THE CONTROLLING STATUTE, 10 U.S.C. 1552, DOES NOT REQUIRE DEDUCTION OF INTERIM NET EARNINGS AND, THEREFORE, THE ADMINISTRATIVE PRACTICE OF NOT DEDUCTING INTERIM EARNINGS IN MAKING SETTLEMENTS IN RECORD CORRECTION CASES IS NOT SO CLEARLY ERRONEOUS AS TO REQUIRE THIS OFFICE TO OBJECT TO THE PAYMENT OF BACK PAY AND ALLOWANCES TO MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES UPON THE CORRECTION OF THEIR MILITARY OR NAVAL RECORDS WITHOUT A DEDUCTION OF INTERIM EARNINGS.

THE LETTER OF AUGUST 11, 1964, WAS IN REPLY TO OUR LETTER OF FEBRUARY 18, 1964, ASKING THE THEN SECRETARY OF DEFENSE FOR AN EXPRESSION OF HIS VIEWS ON A PROPOSAL THAT THE DEPARTMENT OF DEFENSE TAKE APPROPRIATE STEPS IN CASES IN WHICH RETROACTIVE PAYMENTS OF ACTIVE DUTY PAY AND ALLOWANCES BECOME DUE AS A RESULT OF CORRECTION BOARD ACTION TO DEDUCT FROM THE AMOUNT DUE THE INTERIM EARNINGS RECEIVED BY THE MEMBER OR FORMER MEMBER DURING THE PERIOD COVERED BY THE MILITARY PAY AND ALLOWANCES FOUND PAYABLE TO HIM.

DUE TO THE SECRETARY'S POSITION IN THE MATTER, AS STATED IN THE LETTER OF AUGUST 11, 1964, WE RECOMMENDED TO CONGRESS THAT THE PROVISIONS OF 10 U.S.C. 1552 BE APPROPRIATELY AMENDED TO PROVIDE SPECIFIC STATUTORY AUTHORITY FOR SUCH DEDUCTIONS SO AS TO PROVIDE UNIFORM TREATMENT OF MILITARY AND CIVILIAN PERSONNEL IN MAKING ADJUSTMENTS FOR LOSS OF COMPENSATION ARISING OUT OF AN ERRONEOUS OR ILLEGAL SEPARATION OR SUSPENSION FROM THE SERVICE. THIS WOULD HAVE MADE SUCH DEDUCTIONS MANDATORY. A BILL TO IMPLEMENT OUR RECOMMENDATION WAS INTRODUCED IN CONGRESS. HOWEVER, NO ACTION WAS TAKEN ON SUCH BILL.

THE ASSISTANT SECRETARY EXPRESSES THE VIEW THAT WHILE THE STATUTE DOES NOT REQUIRE SUCH DEDUCTIONS, NEITHER DOES IT PROHIBIT SUCH DEDUCTIONS. ADDS THAT SINCE THE PRIMARY PURPOSE OF THE STATUTE WAS TO PERMIT THE SECRETARY CONCERNED TO CORRECT ANY ERROR "OR REMOVE AN INJUSTICE," IT MIGHT BE ARGUED THAT THE STATUTE IS SUFFICIENTLY BROAD TO PERMIT DEDUCTIONS OF INTERIM EARNINGS WHEN THE SECRETARY CONCERNED BELIEVES THAT FAILURE TO DO SO RESULTS IN AN UNWARRANTED WINDFALL WHICH WOULD NOT HAVE RESULTED HAD THE PERSON ACTUALLY SERVED ON ACTIVE DUTY. WHILE CONCEDING THAT THE MATTER IS NOT FREE FROM DOUBT, HE SUGGESTS THAT SUCH DOUBT MAY BE RESOLVED BY ADMINISTRATIVELY ADOPTING THE PRACTICE FOLLOWED BY THE COURT OF CLAIMS IN COMPARABLE CASES. THIS SUGGESTION IS IN LINE WITH THE PROPOSAL MADE IN THE LETTER OF FEBRUARY 18, 1964.

IN THE LETTER DATED FEBRUARY 18, 1964, IT WAS SAID, IN SUPPORT OF THE PROPOSAL MADE THEREIN, THAT---

THE CONGRESS ENACTED THE CORRECTION OF RECORDS LAW TO AUTHORIZE THE DEPARTMENTS "TO CORRECT AN ERROR OR REMOVE AN INJUSTICE" AND NOT TO PLACE MEMBERS OR FORMER MEMBERS IN A MORE ADVANTAGEOUS POSITION WHEN THEIR MILITARY OR NAVAL RECORDS ARE CORRECTED THAN MEMBERS WHO REMAINED IN THE SERVICE AND RECEIVED LIKE PAY AND ALLOWANCES, BUT NO ADDITIONAL CIVILIAN EARNINGS. TO PERMIT THE SUCCESSFUL MEMBER OR FORMER MEMBER IN A RECORD CORRECTION CASE TO HAVE RETROACTIVE PAYMENTS FROM THE GOVERNMENT AND RETAIN EARNINGS FROM CIVILIAN EMPLOYMENT FOR THE RETROACTIVE PERIOD INVOLVED WOULD IN EFFECT SERVE TO UNDULY ENRICH HIM AND THUS WOULD TEND TO DEFEAT THE TRUE PURPOSE OF THE LAW. HAD SUCH MEMBER NOT BEEN DISCHARGED FROM THE SERVICE OR RELEASED FROM ACTIVE DUTY, HE GENERALLY WOULD NOT HAVE HAD AN OPPORTUNITY TO ENGAGE IN CIVILIAN EMPLOYMENT AND RECEIVE AN INCOME THEREFROM. IT IS CLEAR THAT THE PURPOSE OF A CORRECTION OF RECORDS IS TO RESTORE THE MEMBER OR FORMER MEMBER TO THE SAME POSITION THAT HE WOULD HAVE HAD IF HE HAD NOT BEEN SEPARATED FROM THE MILITARY SERVICE.

ALSO, IN SUPPORT OF THE PROPOSAL SUBMITTED TO THE THEN SECRETARY OF DEFENSE, REFERENCE WAS MADE TO THE PRACTICE FOLLOWED BY THE COURT OF CLAIMS TO REQUIRE THE DEDUCTION OF THE PLAINTIFF'S NET EARNINGS THROUGH INTERIM CIVILIAN EMPLOYMENT FOR THE CORRESPONDING PERIOD FROM THE AMOUNT OF THE MILITARY PAY AND ALLOWANCES IT AWARDED TO HIM.

AS THE ASSISTANT SECRETARY INDICATES, THE STATUTE IS SILENT WITH RESPECT TO THIS MATTER AND WE DO NOT VIEW THE FAILURE OF CONGRESS TO TAKE ANY LEGISLATIVE ACTION TO MAKE MANDATORY THE DEDUCTION OF INTERIM CIVILIAN EARNINGS AS A LIMITATION ON THE SECRETARY'S AUTHORITY TO EFFECT A PROPER SETTLEMENT OF AMOUNTS DUE INCIDENT TO A CORRECTION OF RECORDS. CONSONANCE WITH THE VIEWS EXPRESSED IN THE LETTER OF FEBRUARY 18, 1964, WE BELIEVE THAT IF THE EQUITABLE PURPOSES OF THE STATUTE ARE TO BE MAINTAINED, INTERIM CIVILIAN EARNINGS PROPERLY SHOULD BE TAKEN INTO CONSIDERATION BY THE MILITARY DEPARTMENTS IN EFFECTING SETTLEMENTS OF BACK PAY AND ALLOWANCES FOUND DUE AS A CONSEQUENCE OF THE CORRECTION OF MILITARY RECORDS.

ACCORDINGLY, SHOULD REGULATIONS BE ISSUED REQUIRING A DEDUCTION OF INTERIM CIVILIAN EARNINGS, WHERE APPROPRIATE, IN THOSE CASES, OUR OFFICE WOULD APPLY THE REGULATIONS IN THE AUDIT OF DISBURSING OFFICERS' ACCOUNTS AND IN THE SETTLEMENT OF CLAIMS WHICH MAY COME BEFORE US IN SUCH CASES.