B-171206, JUN 17, 1971

B-171206: Jun 17, 1971

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SUCH PAYMENTS MAY BE WAIVED WHEN THE ERRONEOUS PAYMENT OCCURRED THROUGH ADMINISTRATIVE ERROR AND THERE IS NO INDICATION OF FRAUD. SUCH DENIAL WAS IN ERROR AND WAIVER SHOULD BE GRANTED. KUNZIG: REFERENCE IS MADE TO LETTER OF NOVEMBER 2. EACH OF WHICH IS IN AN AMOUNT AGGREGATING LESS THAN $500. ALSO FORWARDED WAS A COPY OF GSA ORDER OAD 1270.1 AND THE ATTACHMENT THERETO. THERE WAS ALSO INCLUDED WITH THE ENCLOSURES A LEGISLATIVE HISTORY NOTE ON PUBLIC LAW 90-616. THE NAMES OF THE EMPLOYEES AND THE AMOUNTS THEY WERE OVERPAID ARE AS FOLLOWS: 1. JR. $248.00 IT WAS REQUESTED THAT WE REVIEW THE FILES FOR THE 15 CASES ON WHICH GSA DENIED WAIVER UNDER 5 U.S.C. 5584 AND TWO REMAINING CASES ON WHICH FINAL ACTION IS BEING WITHHELD.

B-171206, JUN 17, 1971

CIVILIAN EMPLOYEE - ERRONEOUS PAYMENTS OF PAY - WAIVER IN CONNECTION WITH ERRONEOUS PAYMENTS OF PAY MADE TO SEVENTEEN EMPLOYEES OF THE GENERAL SERVICE ADMINISTRATION UNDER REGULATIONS PROMULGATED BY THE COMP. GEN. UNDER AUTHORITY GRANTED BY 5 U.S.C. 5584, SUCH PAYMENTS MAY BE WAIVED WHEN THE ERRONEOUS PAYMENT OCCURRED THROUGH ADMINISTRATIVE ERROR AND THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION FAULT OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE. ANY SIGNIFICANT UNEXPLAINED INCREASE IN AN EMPLOYEE'S PAY WHICH WOULD REQUIRE A REASONABLE MAN TO MAKE INQUIRY CONCERNING THE CORRECTNESS OF HIS PAY ORDINARILY WOULD PRECLUDE A WAIVER WHEN THE EMPLOYEE FAILS TO BRING THE MATTER TO THE ATTENTION OF APPROPRIATE OFFICIALS. WHERE THE GSA CONSIDERED AND DENIED WAIVER ON THE BASIS OF THE ABSENCE OF HARDSHIP FACTORS, SUCH DENIAL WAS IN ERROR AND WAIVER SHOULD BE GRANTED.

TO MR. KUNZIG:

REFERENCE IS MADE TO LETTER OF NOVEMBER 2, 1970, FROM MR. HART T. MANKIN, GENERAL COUNSEL, FORWARDING DOUBTFUL CLAIMS OF THE UNITED STATES AGAINST 17 PRESENT AND FORMER EMPLOYEES OF THE GENERAL SERVICES ADMINISTRATION (GSA) ARISING OUT OF ERRONEOUS PAYMENTS OF PAY, EACH OF WHICH IS IN AN AMOUNT AGGREGATING LESS THAN $500. ALSO FORWARDED WAS A COPY OF GSA ORDER OAD 1270.1 AND THE ATTACHMENT THERETO, PROCEDURES AND GUIDELINES RELATING TO WAIVER OF OVERPAYMENTS OF PAY, WHICH IMPLEMENT THE STANDARDS FOR WAIVER OF ERRONEOUS PAYMENTS OF PAY ISSUED BY OUR OFFICE PURSUANT TO 5 U.S.C. 5584, AS ADDED BY PUBLIC LAW 90-616, APPROVED OCTOBER 21, 1968, 82 STAT. 1212, AND PUBLISHED IN 4 CFR 91 93. THERE WAS ALSO INCLUDED WITH THE ENCLOSURES A LEGISLATIVE HISTORY NOTE ON PUBLIC LAW 90-616.

THE NAMES OF THE EMPLOYEES AND THE AMOUNTS THEY WERE OVERPAID ARE AS FOLLOWS:

1. JAMES HARADON $140.80

2. DELBERT J. HARKER$19.20

3. HARRY J. HIGGINSON $19.20

4. CLARK W. MILSOM $19.20

5. BENJAMIN S. LOPEZ $137.60

6. JOSEPH J. O'GARA $108.00

7. JOE E. PANIAGUA $59.20

8. MUREL W. PETET $89.75

9. EMMET W. SARFF $166.40

10. HARVEY C. WILLARDSON $28.80

11. FLORENE B. YOUNG $145.60

12. NORMA S. MILLER $187.20

13. NELLO S. ISOARDI $208.00

14. LORENE C. PARRACK $437.09

15. STEPHEN S. LEWIS $135.86

16. LAWRENCE R. PITTS $91.02

17. ROBERT PORTER, JR. $248.00

IT WAS REQUESTED THAT WE REVIEW THE FILES FOR THE 15 CASES ON WHICH GSA DENIED WAIVER UNDER 5 U.S.C. 5584 AND TWO REMAINING CASES ON WHICH FINAL ACTION IS BEING WITHHELD. THE DOUBT AS TO THE PROPRIETY OF THE ACTIONS IN DENYING WAIVER IN THESE 15 CASES ARISES SINCE THE BASIS FOR THE DETERMINATIONS INCLUDED CONSIDERATION OF FINANCIAL HARDSHIP ON THE EMPLOYEES. THIS FACTOR IS INCLUDED IN GSA IMPLEMENTING REGULATIONS UNDER PARAGRAPH 4A(14)(A)(BI, TO BE APPLIED IN CONNECTION WITH THE TERM "EQUITY" WHEN CONSIDERING WHETHER COLLECTION ACTION UNDER A CLAIM WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES, AND READS AS FOLLOWS:

"HARDSHIP. IF PERSONAL FINANCIAL HARDSHIP IS ALLEGED BY THE APPLICANT SEEKING A WAIVER, FACTORS THAT MUST BE CONSIDERED IN ITS DETERMINATION INCLUDE GRADE, MARITAL STATUS, NUMBER OF DEPENDENTS, PERSONAL DEBTS, SAVINGS, STANDARDS OF LIVING, ETC. SUFFICIENT SUPPORTING INFORMATION OF A QUANTITATIVE OR QUALITATIVE NATURE MUST BE SHOWN, BUT SHOULD MINIMIZE ANY IMPACT ON PRIVACY."

THE PROVISION FOR CONSIDERATION OF THE FINANCIAL CIRCUMSTANCES OF AN EMPLOYEE WAS APPARENTLY PROMPTED BY STATEMENTS MADE BY OFFICIALS OF CERTAIN FEDERAL EMPLOYEE ORGANIZATIONS WHO TESTIFIED BEFORE THE SUBCOMMITTEE ON COMPENSATION OF THE HOUSE POST OFFICE AND CIVIL SERVICE COMMITTEE DURING ITS HEARINGS ON H. R. 17954 WHEN IT WAS CONSIDERING AN AMENDMENT TO THE BILL TO ADD "EQUITY" AS AN ADDITIONAL REQUIREMENT FOR WAIVER. HOWEVER, ONLY ONE OF THE OFFICIALS RECOMMENDED THAT THE PRINCIPLE OF EQUITY INCLUDE CONSIDERATION OF THE FINANCIAL HARDSHIP IMPOSED ON THE EMPLOYEE BY REQUIRING REFUND OF THE AMOUNT OVERPAID. THE STATEMENT BY A REPRESENTATIVE OF OUR OFFICE CONCERNING THE HARDSHIP FACTOR, REFERRED TO IN THE ATTACHMENT TO YOUR GENERAL COUNSEL'S LETTER, WAS MADE IN CONNECTION WITH PREVIOUSLY CONSIDERED WAIVER LEGISLATION WHEREIN THAT FACTOR WAS CONTEMPLATED AS ONE OF THE CRITERIA. THEREFORE, THAT STATEMENT IS NOT DEEMED PERTINENT TO THE MATTER.

THE BILL SUBSEQUENTLY INTRODUCED IN THE SENATE, S. 4120, AND WHICH PROVIDED THE SAME REQUIREMENTS FOR WAIVER OF PAY AS H. R. 17954, INCLUDING THE REQUIREMENT THAT COLLECTION OF THE CLAIM WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES, BECAME PUBLIC LAW 90-616. HOWEVER, NOWHERE IN THE ACT OR THE LEGISLATIVE HISTORY THEREOF IS THERE ANY INDICATION CONGRESS INTENDED THAT THE ABILITY OR INABILITY OF AN EMPLOYEE TO REFUND THE AMOUNT HE WAS OVERPAID SHOULD BE A FACTOR IN DETERMINING WHETHER THE CLAIM AGAINST HIM SHOULD BE WAIVED. THE USE OF SUCH FACTOR WOULD APPEAR TO BE INCONSISTENT WITH 5 U.S.C. 5584(C) WHICH AUTHORIZES REFUNDS OF AMOUNTS REPAID BY EMPLOYEES. MERE REPAYMENT OF THE DEBT BY THE EMPLOYEE WOULD INDICATE ABILITY TO PAY AND THUS DEFEAT THE PURPOSE TO BE ACCOMPLISHED BY SAID SUBSECTION 5584(C). FURTHER, PUBLIC LAW 90-616 PROVIDES THAT CONSIDERATION FOR WAIVER BE IN ACCORDANCE WITH STANDARDS WHICH THE COMPTROLLER GENERAL SHALL PRESCRIBE. SECTION 91.5 OF THE STANDARDS FOR WAIVER OF CLAIMS FOR ERRONEOUS PAYMENTS OF PAY, ISSUED PURSUANT THERETO, READS IN PERTINENT PART AS FOLLOWS:

"CLAIMS OF THE UNITED STATES ARISING OUT OF AN ERRONEOUS PAYMENT OF PAY MAY BE WAIVED IN WHOLE OR IN PART IN ACCORDANCE WITH THE PROVISIONS OF SEC 91.4 WHENEVER:

"(A) THE CLAIM ARISES OUT OF AN ERRONEOUS PAYMENT OF PAY MADE TO AN EMPLOYEE OF AN EXECUTIVE AGENCY ON OR AFTER JULY 1, 1960 *** .

"(B) COLLECTION ACTION UNDER THE CLAIM WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES. GENERALLY THESE CRITERIA WILL BE MET BY A FINDING THAT THE ERRONEOUS PAYMENT OF PAY OCCURRED THROUGH ADMINISTRATIVE ERROR AND THAT THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION, FAULT OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE *** . ANY SIGNIFICANT UNEXPLAINED INCREASE IN AN EMPLOYEE'S PAY WHICH WOULD REQUIRE A REASONABLE MAN TO MAKE INQUIRY CONCERNING THE CORRECTNESS OF HIS PAY ORDINARILY WOULD PRECLUDE A WAIVER WHEN THE EMPLOYEE FAILS TO BRING THE MATTER TO THE ATTENTION OF APPROPRIATE OFFICIALS. WAIVER OF OVERPAYMENT OF PAY UNDER THIS STANDARD NECESSARILY MUST DEPEND UPON THE FACTS EXISTING IN THE PARTICULAR CASE. *** "

IN VIEW OF THE ABOVE, IT IS OUR OPINION THAT HARDSHIP FACTORS SHOULD NOT BE CONSIDERED IN ARRIVING AT A DETERMINATION AS TO WHETHER A WAIVER SHOULD OR SHOULD NOT BE GRANTED. ON THAT BASIS, WE HAVE MADE THE FOLLOWING DETERMINATIONS WITH RESPECT TO THE SUBMITTED CLAIMS:

ITEMS 1 THROUGH 11

WAIVERS WERE ADMINISTRATIVELY DENIED PRINCIPALLY BECAUSE THERE WAS NO EVIDENCE IN THE REPORTS OF INVESTIGATION TO INDICATE THAT REPAYMENT WOULD CREATE FINANCIAL HARDSHIP ON THE EMPLOYEES. HOWEVER, THE CIRCUMSTANCES OF THE OVERPAYMENT IN EACH CASE WERE SUCH THAT THE EMPLOYEES COULD NOT REASONABLY HAVE BEEN EXPECTED TO BE AWARE THEY WERE BEING OVERPAID.

ITEM 12 (APPEAL)

WAIVER IN THIS CASE WAS ALSO ADMINISTRATIVELY DENIED ON THE BASIS THAT REPAYMENT WOULD NOT CREATE A FINANCIAL HARDSHIP ON THE EMPLOYEE. THE INVESTIGATION, WHICH INCLUDED A RECOMMENDATION OF WAIVER, DISCLOSED THAT THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE OR ANY OTHER PERSON HAVING AN INTEREST IN OBTAINING A WAIVER OF THE CLAIM.

IN HER APPEAL THE EMPLOYEE STATED THAT SHE CONTACTED THE ADMINISTRATIVE ASSISTANT AND QUESTIONED THE INCREASE AS SHE "REALLY DIDN'T KNOW FOR SURE THAT IT (WITHIN-GRADE INCREASE) WAS NOT DUE THEN." SHE WAS ADVISED THAT THE INCREASE WAS "INITIALED AND APPROVED" AND THERE WAS NO CAUSE FOR HER TO WORRY. ON THE ASSUMPTION THAT THE PAYROLL OFFICE HAD HER CORRECT RECORD, SHE DID NOT PURSUE THE MATTER FURTHER. APPARENTLY, SHE WAS CONVINCED THAT THE ACTION WAS PROPER.

ITEM 13 (NO FINAL ACTION TAKEN - DOUBT)

THE RECORD SHOWS THAT EFFECTIVE APRIL 12, 1964, THE EMPLOYEE WAS PROMOTED FROM A WAGE BOARD POSITION IN GRADE WB-8, STEP 3, TO A CLASSIFICATION ACT POSITION IN GRADE GS-7, STEP 7, WITH A SALARY INCREASE OF $288.20. NOTWITHSTANDING THE FACT THE PROMOTION REPRESENTED AN EQUIVALENT INCREASE AND BEGAN A NEW WAITING PERIOD (156 WEEKS) FOR ADVANCEMENT TO STEP 8, THE EMPLOYEE WAS GRANTED AN INCREASE (AFTER 104 WEEKS) TO STEP 8 ON APRIL 10, 1966. AS A RESULT HE WAS OVERPAID THROUGH APRIL 8, 1967, IN THE GROSS AMOUNT OF $208. THE INVESTIGATION DISCLOSED THAT THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE OR ANY OTHER PERSON HAVING AN INTEREST IN OBTAINING A WAIVER OF THE CLAIM. WAIVER WAS RECOMMENDED.

UNDER THE CIRCUMSTANCES RELATED, WE HEREBY WAIVE THE GROSS AMOUNTS OF THE CLAIMS OF THE UNITED STATES AGAINST THE ABOVE EMPLOYEES, ITEMS 1 THROUGH 13. YOUR OFFICE SHOULD ADVISE THE EMPLOYEES OF THE WAIVERS AND REFUND THE AMOUNTS COLLECTED FROM THOSE WHO HAVE FILED AN APPLICATION FOR REFUND. THOSE EMPLOYEES WHO HAD REPAID ALL OR PART OF THE CLAIM AGAINST THEM, BUT HAVE NOT FILED AN APPLICATION FOR REFUND WITH YOUR AGENCY, SHOULD BE ADVISED THAT THEY MAY DO SO WITHIN 2 YEARS FROM THE DATE OF THIS LETTER. ANY NECESSARY ADJUSTMENTS IN THEIR RETIREMENT AND INSURANCE ACCOUNTS SHOULD ALSO BE MADE.

ITEM 14 (NO FINAL ACTION TAKEN - DOUBT)

THE RECORD SHOWS THAT THE EMPLOYEE MADE APPLICATION FOR CHANGE IN HEALTH BENEFITS COVERAGE FROM SINGLE PLAN TO FAMILY PLAN EFFECTIVE AUGUST 29, 1965. THROUGH ADMINISTRATIVE FAILURE TO PROCESS THE APPLICATION CORRECTLY THE INCREASED COST WAS NOT DEDUCTED FROM THE EMPLOYEE'S PAY. AS A RESULT SHE WAS OVERPAID THROUGH NOVEMBER 2, 1968, IN THE AMOUNT OF $437.09. EMPLOYEE'S DAUGHTER RECEIVED BENEFITS UNDER THE FAMILY PLAN AND, THEREFORE, AN IDENTIFICATION CARD UNDER SUCH PLAN HAD BEEN DULY ISSUED. THUS EMPLOYEE SHOULD HAVE EXPECTED AN IMMEDIATE INCREASE IN HEALTH BENEFITS DEDUCTIONS AND A DECREASE IN NET PAY. FURTHER, EMPLOYEE WAS FURNISHED A STATEMENT OF EARNINGS, DEDUCTIONS AND LEAVE WITH EACH BIWEEKLY PAYCHECK WHICH DID NOT SHOW INCREASED DEDUCTIONS FOR HEALTH BENEFITS AND A CORRESPONDING DECREASE IN NET PAY. ONE OF THE PURPOSES FOR ISSUING SUCH STATEMENTS IS TO GIVE EMPLOYEES THE OPPORTUNITY TO VERIFY THE CORRECTNESS OF ALL ITEMS LISTED AND TO BRING TO THE ATTENTION OF THE PROPER AUTHORITIES ANY OMISSIONS AND/OR ERRORS. THEREFORE, SHE WAS AT LEAST PARTIALLY AT FAULT FOR FAILING TO IMMEDIATELY INQUIRE AS TO THE REASON WHY THERE WAS NO INCREASE IN HEALTH BENEFITS DEDUCTIONS FROM HER PAY.

SINCE PUBLIC LAW 90-616 PRECLUDES WAIVER OF A CLAIM FOR ERRONEOUS PAYMENT OF PAY WHEN THERE IS AN INDICATION OF FAULT ON THE PART OF THE EMPLOYEE, WE HEREBY DENY WAIVER OF THE CLAIM OF THE UNITED STATES AGAINST MRS. LORENE C. PARRACK IN THE AMOUNT OF $437.09. THE EMPLOYEE SHOULD BE SO ADVISED.

ITEMS 15 THROUGH 17 (WAIVER DENIED)

THE RECORDS CLEARLY ESTABLISH THAT THE DEBTORS' ABILITY TO PAY WAS NOT A FACTOR IN YOUR AGENCY'S DETERMINATION. FURTHER, YOUR ACTION IN DENYING WAIVERS WAS IN ACCORDANCE WITH THE STATUTE AND THE IMPLEMENTING STANDARDS FOR WAIVER. THE ADMINISTRATIVE ACTIONS ARE THEREFORE SUSTAINED.