B-180545, DEC 17, 1974, 54 COMP GEN 493

B-180545: Dec 17, 1974

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IS THE DATE ON WHICH THE REQUIREMENTS OF THE LAW ARE MET OR THE EFFECTIVE DATE OF THE LAW. WHICHEVER IS LATER. REGULATIONS TO THE CONTRARY ARE INCONSISTENT WITH THE LAW AND INVALID. UNPAID AT THE BENEFICIARY'S DEATH EITHER BECAUSE ANNUITY CHECKS WERE NOT NEGOTIATED OR BECAUSE PAYMENTS HAD NOT BEEN ESTABLISHED. 1974: THIS ACTION IS IN RESPONSE TO LETTER DATED NOVEMBER 28. THE FIRST QUESTION PRESENTED IN THE COMMITTEE ACTION IS AS FOLLOWS: 1. THE DATE INITIAL CORRESPONDENCE WAS RECEIVED FROM THE WIDOW OR FROM ANOTHER PARTY ON HER BEHALF. THE DATE AN OFFICIAL APPLICATION IS RECEIVED FROM HER OR ON HER BEHALF. THE FIRST DAY OF THE MONTH FOLLOWING THAT IN WHICH THE DOCUMENT REFERRED TO IN "A" OR "B" ABOVE IS RECEIVED.

B-180545, DEC 17, 1974, 54 COMP GEN 493

PAY - RETIRED - SURVIVOR BENEFIT PLAN - EFFECTIVE DATE THE EFFECTIVE DATE OF ENTITLEMENT TO AN ANNUITY UNDER SECTION 4, PUBLIC LAW 92-425, IS THE DATE ON WHICH THE REQUIREMENTS OF THE LAW ARE MET OR THE EFFECTIVE DATE OF THE LAW, WHICHEVER IS LATER. REGULATIONS TO THE CONTRARY ARE INCONSISTENT WITH THE LAW AND INVALID. PAY - RETIRED - SURVIVOR BENEFIT PLAN - BENEFICIARY PAYMENTS - DECREASED BENEFICIARY'S ESTATE AMOUNTS OF ANNUITY PAYMENTS DUE A BENEFICIARY UNDER SECTION 4, PUBLIC LAW 92-425, BUT UNPAID AT THE BENEFICIARY'S DEATH EITHER BECAUSE ANNUITY CHECKS WERE NOT NEGOTIATED OR BECAUSE PAYMENTS HAD NOT BEEN ESTABLISHED, MAY BE PAID TO THE ESTATE OF THE DECEASED BENEFICIARY. DEBT COLLECTIONS - MILITARY PERSONNEL - RETIRED - SURVIVOR BENEFIT PLAN - CONTRIBUTION INDEBTEDNESS DEBTS OF A DECEASED MEMBER, NOT THE RESPONSIBILITY OF HIS WIDOW, IN VIEW OF 10 U.S.C. 1450(I) MAY NOT BE OFFSET AGAINST AN ANNUITY PAYABLE TO SUCH WIDOW UNDER 10 U.S.C. 1450, THE SURVIVOR BENEFIT PLAN. HOWEVER, SUCH REASONING DOES NOT APPLY TO REDUCTION OF ANNUITIES DUE TO INSUFFICIENT DEDUCTIONS HAVING BEEN MADE FROM MEMBER'S RETIRED PAY TO COVER COST OF SUCH ANNUITIES.

IN THE MATTER OF SURVIVOR BENEFIT PLAN ANNUITIES, DECEMBER 17, 1974:

THIS ACTION IS IN RESPONSE TO LETTER DATED NOVEMBER 28, 1973, FROM THE PRINCIPAL DEPUTY ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) REQUESTING DECISION ON THREE QUESTIONS PRESENTED IN DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE ACTION NO. 498, ENCLOSED WITH THE LETTER, CONCERNING THE SURVIVOR BENEFIT PLAN (PUBLIC LAW 92 425, APPROVED SEPTEMBER 21, 1972, 86 STAT. 706, AS AMENDED, 10 U.S.C. 1447-1455 (SUPP. II, 1972)).

THE FIRST QUESTION PRESENTED IN THE COMMITTEE ACTION IS AS FOLLOWS:

1. WOULD THE EFFECTIVE DATE OF ENTITLEMENT TO AN ANNUITY UNDER SECTION 4, PL 92-425 BE -

A. THE DATE INITIAL CORRESPONDENCE WAS RECEIVED FROM THE WIDOW OR FROM ANOTHER PARTY ON HER BEHALF;

B. THE DATE AN OFFICIAL APPLICATION IS RECEIVED FROM HER OR ON HER BEHALF;

C. THE FIRST DAY OF THE MONTH FOLLOWING THAT IN WHICH THE DOCUMENT REFERRED TO IN "A" OR "B" ABOVE IS RECEIVED; OR

D. THE DATE ON WHICH THE REQUIREMENTS OF THE LAW ARE MET OR THE EFFECTIVE DATE OF THE LAW, WHICHEVER IS LATER?

IN REGARD TO SUCH QUESTION, THE COMMITTEE ACTION STATES THAT THE ANNUITY AUTHORIZED BY SECTION 4 OF PUBLIC LAW 92-425 IS PAYABLE TO A QUALIFIED PERSON WHO, ON THE EFFECTIVE DATE THAT LAW IS, OR WITHIN 1 CALENDAR YEAR AFTER THAT DATE BECOMES, A WIDOW OF A PERSON WHO WAS ENTITLED TO RETIRED OR RETAINER PAY WHEN HE DIED. FOR ADMINISTRATIVE REASONS AN APPLICATION FORM (DD FORM 1885 - SURVIVOR BENEFIT PLAN - MINIMUM INCOME CLAIM) WAS ISSUED FOR USE BY THE SEVERAL SERVICES TO OBTAIN THE INFORMATION NECESSARY TO DETERMINE ENTITLEMENT TO AN ANNUITY UNDER THIS SECTION.

THE COMMITTEE ACTION POINTS OUT THAT THE STATUTE CONTAINS NO REQUIREMENT FOR SUBMISSION OF A CLAIM FOR SUCH BENEFIT NOR A "CUT-OFF DATE" FOR SUBMITTING A CLAIM. HOWEVER, INTERIM DEPARTMENT OF DEFENSE INSTRUCTIONS PROVIDE THAT THE EFFECTIVE DATE OF AN ANNUITY UNDER SECTION 4 OF PUBLIC LAW 92-425 IS "THE FIRST DAY OF THE MONTH FOLLOWING RECEIPT BY THE SECRETARY CONCERNED OF A VALID APPLICATION FOR THIS TYPE OF ANNUITY." SEE SECTION 601D OF DEPARTMENT OF DEFENSE DIRECTIVE 1332.27, JANUARY 4, 1974.

THE COMMITTEE ACTION STATES THAT WHILE THE APPLICATION IS NECESSARY, IT CAN BE ARGUED THAT THE EFFECTIVE DATE OF ENTITLEMENT IS THAT DATE ON WHICH THE REQUIREMENTS OF THE LAW ARE MET OR THE EFFECTIVE DATE OF THE LAW, RATHER THAN THE FIRST DAY OF THE MONTH FOLLOWING THE DATE THE SECRETARY RECEIVES THE APPLICATION FORM. FURTHER, THAT THERE IS NOTHING IN THE LEGISLATIVE HISTORY OF PUBLIC LAW 92-425 OR THE LANGUAGE OF THE STATUTE WHICH CAN BE CONSTRUED AS AUTHORITY TO BAR PAYMENT RETROACTIVELY MERELY BECAUSE THE ADMINISTRATIVE ACTION NECESSARY TO CAUSE PAYMENT IS INITIATED AT A LATER DATE.

SECTION 4 OF PUBLIC LAW 92-425 PROVIDES AS FOLLOWS:

SEC. 4. (A) A PERSON -

(1) WHO, ON THE EFFECTIVE DATE OF THIS ACT IS, OR WITHIN ONE CALENDAR YEAR AFTER THAT DATE BECOMES, A WIDOW OF A PERSON WHO WAS ENTITLED TO RETIRED OR RETAINER PAY WHEN HE DIED;

(2) WHO IS ELIGIBLE FOR A PENSION UNDER SUBCHAPTER III OF CHAPTER 15 OF TITLE 38, UNITED STATES CODE, OR SECTION 9(B) OF THE VETERANS' PENSION ACT OF 1959 (73 STAT. 436); AND

(3) WHOSE ANNUAL INCOME, AS DETERMINED IN ESTABLISHING THAT ELIGIBILITY, IS LESS THAN $1,400;

SHALL BE PAID AN ANNUITY BY THE SECRETARY CONCERNED UNLESS SHE IS ELIGIBLE TO RECEIVE AN ANNUITY UNDER THE SURVIVOR BENEFIT PLAN ESTABLISHED PURSUANT TO CLAUSE (3) OF THE FIRST SECTION OF THIS ACT. HOWEVER, SUCH A PERSON WHO IS THE WIDOW OF A RETIRED OFFICER OF THE PUBLIC HEALTH SERVICE OR THE NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, AND WHO WOULD OTHERWISE BE ELIGIBLE FOR AN ANNUITY UNDER THIS SECTION EXCEPT THAT SHE DOES NOT QUALIFY FOR THE PENSION DESCRIBED IN CLAUSE (2) OF THIS SUBSECTION BECAUSE THE SERVICE OF HER DECEASED SPOUSE IS NOT CONSIDERED ACTIVE DUTY UNDER SECTION 101(21) OF TITLE 38, U.S.C. IS ENTITLED TO AN ANNUITY UNDER THIS SECTION.

(B) THE ANNUITY UNDER SUBSECTION (A) OF THIS SECTION SHALL BE IN AN AMOUNT WHICH WHEN ADDED TO THE WIDOW'S INCOME DETERMINED UNDER SUBSECTION (A)(3) OF THIS SECTION, PLUS THE AMOUNT OF ANY ANNUITY BEING RECEIVED UNDER SECTIONS 1431-1436 OF TITLE 10, U.S.C. BUT EXCLUSIVE OF A PENSION DESCRIBED IN SUBSECTION (A)(2) OF THIS SECTION, EQUALS $1,400 A YEAR. ADDITION, THE SECRETARY CONCERNED SHALL PAY TO THE WIDOW, DESCRIBED IN THE LAST SENTENCE OF SUBSECTION (A) OF THIS SECTION, AN AMOUNT EQUAL TO THE PENSION SHE WOULD OTHERWISE HAVE BEEN ELIGIBLE TO RECEIVE UNDER SUBCHAPTER III OF CHAPTER 15 OF TITLE 38, U.S.C. IF THE SERVICE OF HER DECEASED SPOUSE WAS CONSIDERED ACTIVE DUTY UNDER SECTION 101(21) OF THAT TITLE.

AS THE COMMITTEE ACTION INDICATES, THERE IS NOTHING IN THE LANGUAGE OF THE STATUTE OR ITS LEGISLATIVE HISTORY WHICH WOULD SUPPORT THE PROPOSITION THAT THE EFFECTIVE DATE OF AN ANNUITY AUTHORIZED THEREBY IS TO BE BASED ON THE DATE OF RECEIPT BY THE SECRETARY OF AN APPLICATION THEREFOR. INSTEAD, IT SEEMS CLEAR FROM THE LANGUAGE OF THE STATUTE THAT A PERSON WHO MEETS THE REQUIREMENTS OF THE STATUTE "SHALL BE PAID AN ANNUITY." WHILE THE APPLICATION FORM MAY BE USED TO DETERMINE ENTITLEMENT TO SUCH AN ANNUITY, THE REGULATION ESTABLISHING THE DATE OF ENTITLEMENT TO SUCH AN ANNUITY AS BEING THE DATE OF RECEIPT OF SUCH APPLICATION DOES NOT APPEAR TO BE CONSISTENT WITH THE LAW AND, THEREFORE, IS INVALID. COMPARE SEAGRAVE V. UNITED STATES, 131 CT. CL 790 (1955) AND 53 COMP. GEN. 921 (1974).

ACCORDINGLY, IN ANSWER TO QUESTION 1, THE EFFECTIVE DATE OF ENTITLEMENT TO AN ANNUITY UNDER SECTION 4 OF PUBLIC LAW 92-425 IS THE DATE ON WHICH THE REQUIREMENTS OF THE LAW ARE MET OR THE EFFECTIVE DATE OF THE LAW, WHICHEVER IS LATER.

THE SECOND QUESTION PRESENTED BY THE COMMITTEE ACTION IS AS FOLLOWS:

2. A WIDOW OF A MEMBER RETIRED PRIOR TO 21 SEPTEMBER 1972 WHO HAS APPLIED AND IS QUALIFIED FOR AN ANNUITY UNDER THE PROVISIONS OF SECTION 4, PL 92-425 DIES BEFORE PAYMENTS WERE ESTABLISHED OR PRIOR TO NEGOTIATING AN ANNUITY CHECK. ARE THE PAYMENTS PAYABLE TO ANYONE ELSE TO INCLUDE THE ESTATE?

THE COMMITTEE ACTION STATES THAT CLEARLY UNDER SECTION 4 OF PUBLIC LAW 92 -425 AND SECTION 601D OF DEPARTMENT OF DEFENSE DIRECTIVE 1332.27, SUPRA, THE WIDOW IN SUCH CIRCUMSTANCES IS ENTITLED TO THE ANNUITY AND, DESPITE THE FACT THAT THE WIDOW DID NOT RECEIVE THE MONEY WHICH ACCRUED, THE LEGAL ENTITLEMENT EXISTS. THE VIEW IS EXPRESSED IN THE COMMITTEE ACTION THAT IN THE ABSENCE OF ANY INDICATION TO THE CONTRARY, AND REGARDLESS OF THE COST- FREE NATURE OF THE ANNUITY, THE ANNUITY PAYMENTS SHOULD BE MADE IN ACCORDANCE WITH THE LAW APPLICABLE TO THE ESTATE OF THE DECEASED WIDOW.

IT IS WELL ESTABLISHED THAT A CHECK ISSUED IN PAYMENT OF A GOVERNMENT OBLIGATION PURSUANT TO STATUTE DOES NOT CONSTITUTE PAYMENT UNLESS AND UNTIL THE CHECK IS NEGOTIATED, EXCEPT WHEN THE STATUTE EXPRESSLY PROVIDES OTHERWISE. SEE 33 COMP. GEN. 99 (1953) AND 31 ID. 422 (1952). PUBLIC LAW 92-425 MAKES NO SUCH PROVISION. THEREFORE, A WIDOW SUCH AS DESCRIBED IN QUESTION 2 WHO DIES BEFORE ANNUITY PAYMENTS WERE ESTABLISHED OR A SIMILAR WIDOW WHOSE PAYMENTS WERE ESTABLISHED BUT WHO DIES BEFORE NEGOTIATING ONE OR MORE ANNUITY CHECKS PRESENTS THE SAME SITUATION. THAT IS, THEY DIED AFTER BECOMING ENTITLED TO SUCH AN ANNUITY BUT PRIOR TO RECEIVING SOME OR ALL OF IT.

PRESUMABLY QUESTION 2 ARISES BECAUSE THE ANNUITIES PAYABLE UNDER SECTION 4 OF PUBLIC LAW 92-425 ARE "COST FREE," THAT IS, NO CONTRIBUTION WAS MADE TO SUCH ANNUITY BY THE WIDOW'S DECEASED HUSBAND DURING HIS LIFETIME. THEREFORE, THE QUESTION ARISES AS TO WHETHER SUCH ANNUITIES ARE "GRATUITIES" THE RIGHT TO WHICH, IT HAS LONG BEEN HELD, IS PERSONAL TO THE PERSON TO WHOM IT IS TO BE PAID AND LAPSES AT THE DEATH OF SUCH PERSON AND DOES NOT BECOME A PART OF HIS ESTATE SO AS TO FORM THE BASIS OF A VALID CLAIM BY HIS HEIRS OR PERSONAL REPRESENTATIVE. SEE 24 COMP. GEN. 673 (1945) AND CASES CITED THEREIN.

THE ANNUITY PAYABLE UNDR SECTION 4 OF PUBLIC LAW 92-425, WHILE COST FREE, IS NOT A GRATUITY. IT IS A PAYMENT AUTHORIZED BY LAW TO BE PAID TO THE PERSON ENTITLED TO RECEIVE IT AND CONSTITUTES A CLAIM WHICH MAY BE ENFORCED BY SUCH PERSON. THUS, IT APPEARS TO BE A CLAIM WHICH IS NOT ABATED BY THE DEATH OF THE PERSON HAVING THE CLAIM BUT PASSES TO HIS LEGAL REPRESENTATIVE, WHO CAN PROSECUTE IT TO JUDGMENT. CF. CAMPBELL, ADMINISTRATOR V. UNITED STATES, 80 CT. CL. 836, 842 (1935) AND 22 COMP. GEN. 736 (1943). THEREFORE, QUESTION 2 IS ANSWERED BY SAYING A CLAIM FOR SUCH AMOUNTS WHICH ARE DUE AND UNPAID AT THE ANNUITANT'S DEATH MAY BE PAID TO THE ESTATE OF THE DECEASED. DOUBTFUL CASES SHOULD BE TRANSMITTED TO THE GENERAL ACCOUNTING OFFICE FOR DETERMINATION.

THE THIRD QUESTION PRESENTED BY THE COMMITTEE ACTION IS AS FOLLOWS:

3. THE RETIRED PAY OF A MEMBER IS IN SUSPENDED STATUS IN SATISFACTION OF A FEDERAL CIVIL EMPLOYMENT CHECK AGE, AN OVERPAYMENT OF MILITARY SEVERANCE PAY, AND AN INDEBTEDNESS TO THE VETERANS ADMINISTRATION. MAY THE BALANCE OF THESE OVERPAYMENTS BE OFFSET AGAINST THE SBP ANNUITY PAYABLE TO THE WIDOW?

THE COMMITTEE ACTION STATES THAT REGARDLESS OF THE FACT THAT THE MEMBER DID NOT PHYSICALLY RECEIVE HIS RETIREMENT PAY, 10 U.S.C. 1450(I) AND SECTION 301(F) OF DEPARTMENT OF DEFENSE DIRECTIVE 1332.27 BAR AN ANNUITY FROM EXECUTION, LEVY, ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS. IS ALSO INDICATED THAT THE WIDOW HAS LEGAL ENTITLEMENT TO THE ANNUITY UNDER 10 U.S.C. 1450(A), AND THERE IS NO AUTHORITY FOR OFFSETTING THE ANNUITY BY THE AMOUNT OF THE MEMBER'S INDEBTEDNESS.

PRESUMABLY QUESTION 3 REFERS TO AN ANNUITY PAYABLE UNDER 10 U.S.C. 1450, SUBSECTION (A) OF WHICH SETS FORTH THE CLASSES OF BENEFICIARIES OF SUCH ANNUITIES (INCLUDING THE ELIGIBLE WIDOW OR WIDOWER). SUBSECTION 1450(I) TO WHICH THE COMMITTEE ACTION REFERS PROVIDES AS FOLLOWS:

(I) AN ANNUITY UNDER THIS SECTION IS NOT ASSIGNABLE OR SUBJECT TO EXECUTION, LEVY, ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS.

CONCERNING A SIMILAR PROVISION (10 U.S.C. 1440) IN THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953 (LATER RENAMED THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN), THIS OFFICE HELD THAT NO PART OF AN ANNUITY PAYABLE TO A BENEFICIARY COULD BE INVOLUNTARILY WITHHELD TO PAY A GENERAL DEBT OWED BY THE BENEFICIARY'S HUSBAND AND FOR WHICH THE BENEFICIARY WAS NOT RESPONSIBLE. SEE B-139217, AUGUST 12, 1960, AND 41 COMP. GEN. 28 (1961). IT IS THE VIEW OF THIS OFFICE THAT SUCH REASONING WOULD ALSO APPLY TO 10 U.S.C. 1450. ACCORDINGLY, ASSUMING THAT THE DEBTS WHICH ARE THE SUBJECT OF QUESTION 3 ARE DEBTS OF THE MEMBER, QUESTION 3 IS ANSWERED IN THE NEGATIVE.

WHILE IT WAS NOT INCLUDED IN QUESTION 3, IT SHOULD BE NOTED, HOWEVER, THAT SUCH REASONING DOES NOT APPLY IN CASES IN WHICH NO DEDUCTIONS WERE MADE, OR INSUFFICIENT DEDUCTIONS WERE MADE, FROM MEMBERS' RETIRED PAY TO COVER THE COST OF ANNUITIES. IN SUCH CASES UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT AND THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN IT WAS HELD THAT, IN EFFECT, SINCE SUCH PLANS WERE INTENDED TO BE SELF- SUSTAINING, ANNUITIES COULD BE REDUCED OR WITHHELD TO MAKE UP THE COST OF SUCH ANNUITIES. SEE 35 COMP. GEN. 12 (1955), 41 ID. 28, SUPRA, AND 41 ID. 500 (1962). SUCH REASONING WOULD ALSO APPLY IN THE CASE OF ANNUITIES PAYABLE UNDER THE SURVIVOR BENEFIT PLAN.