B-193363, AUG 8, 1979

B-193363: Aug 8, 1979

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A SERVICE MEMBER WHO RECEIVED OVERPAYMENTS OF PAY DUE TO THE FAILURE OF DISBURSING PERSONNEL TO DEDUCT DEPENDENTS ALLOTMENT SHOULD HAVE KNOWN THAT THE PAYMENTS WERE ERRONEOUS. IS NOT WITHOUT FAULT IN THE MATTER SO AS TO PERMIT WAIVER OF HIS DEBT. RESULTING FROM COLLECTION IS NOT SUFFICIENT REASON FOR A MEMBER TO RETAIN THE PAYMENTS THAT HE SHOULD HAVE KNOWN DID NOT BELONG TO HIM. THE DENIAL OF HIS REQUEST FOR WAIVER IS SUSTAINED SINCE HE KNEW OR SUSPECTED HE WAS BEING OVERPAID WHEN THE ERRORS OCCURRED. SHOULD HAVE SET ASIDE SUCH EXCESS PAYMENTS FOR EVENTUAL RETURN AT THE TIME THE ERROR WAS CORRECTED. DEDUCTIONS FROM HIS PAY WERE MADE PROPERLY FOR THE MONTHS OF SEPTEMBER AND OCTOBER 1975. DEDUCTIONS FOR THE DEPENDENTS ALLOTMENT WERE STOPPED IN HIS PAY ACCOUNT AFTER OCTOBER 1975.

B-193363, AUG 8, 1979

DIGEST: CONSIDERING HIS RANK, YEARS OF SERVICE, AND THE AMOUNT OF THE ERRONEOUS PAYMENTS, A SERVICE MEMBER WHO RECEIVED OVERPAYMENTS OF PAY DUE TO THE FAILURE OF DISBURSING PERSONNEL TO DEDUCT DEPENDENTS ALLOTMENT SHOULD HAVE KNOWN THAT THE PAYMENTS WERE ERRONEOUS, AND THAT HE WOULD BE REQUIRED TO REFUND THEM, IS NOT WITHOUT FAULT IN THE MATTER SO AS TO PERMIT WAIVER OF HIS DEBT. FURTHER, FINANCIAL HARDSHIP, ALONE, RESULTING FROM COLLECTION IS NOT SUFFICIENT REASON FOR A MEMBER TO RETAIN THE PAYMENTS THAT HE SHOULD HAVE KNOWN DID NOT BELONG TO HIM.

CHIEF PETTY OFFICER JOHN W. HAYHURST, USN:

CHIEF PETTY OFFICER JOHN W. HAYHURST REQUESTS RECONSIDERATION OF OUR CLAIMS DIVISION'S JULY 20, 1978 DENIAL OF HIS APPLICATION FOR WAIVER OF HIS DEBT TO THE UNITED STATES IN THE TOTAL AMOUNT OF $900. THE DEBT AROSE FROM EXCESSIVE PAYMENT OF PAY AND ALLOWANCES DUE TO FAILURE TO DEDUCT MONTHLY AN ALLOTMENT OF $150 DURING THE PERIOD NOVEMBER 1975 THROUGH APRIL 1976. THE DENIAL OF HIS REQUEST FOR WAIVER IS SUSTAINED SINCE HE KNEW OR SUSPECTED HE WAS BEING OVERPAID WHEN THE ERRORS OCCURRED, AND SHOULD HAVE SET ASIDE SUCH EXCESS PAYMENTS FOR EVENTUAL RETURN AT THE TIME THE ERROR WAS CORRECTED.

CHIEF PETTY OFFICER HAYHURST ESTABLISHED A MONTHLY DEPENDENTS ALLOTMENT OF $150 PAYABLE TO HIS WIFE, MARILYN K. HAYHURST, EFFECTIVE SEPTEMBER 1975. DEDUCTIONS FROM HIS PAY WERE MADE PROPERLY FOR THE MONTHS OF SEPTEMBER AND OCTOBER 1975. HE FURTHER ESTABLISHED A SAVINGS ALLOTMENT OF $160, EFFECTIVE NOVEMBER 1975. DUE TO DISBURSING ERROR, DEDUCTIONS FOR THE DEPENDENTS ALLOTMENT WERE STOPPED IN HIS PAY ACCOUNT AFTER OCTOBER 1975, EVEN THOUGH PAYMENTS CONTINUED THROUGH APRIL 1976 WHEN THE ALLOTMENT WAS DISCONTINUED.

THE MEMBER, IN HIS ORIGINAL REQUEST FOR WAIVER CONTENDED THAT WHEN THE FIRST OVERPAYMENT WAS MADE HE SUSPECTED AN ERROR HAD BEEN MADE IN HIS ACCOUNT BUT HE THOUGHT THE DISBURSING OFFICE WOULD CATCH IT. HOWEVER, WHEN THE EXTRA PAY CONTINUED, HE INDICATES, HE INFORMED HIS DISBURSING OFFICE OF A POSSIBLE ERROR ON FEBRUARY 15, 1976. AFTER EXAMINING HIS LEAVE AND EARNINGS STATEMENTS (LES'S) AND FINDING HIS ALLOTMENTS CORRECT, AND BEING TOLD BY SOMEONE IN THE DISBURSING OFFICE THAT HIS PAY WAS CORRECT, HE CONTINUED TO ACCEPT PAYMENTS MADE THROUGH APRIL 1976, WHEN HE LEARNED THAT THROUGH ERROR ALLOTMENTS TO HIS WIFE HAD NOT BEEN INCLUDED BY DISBURSING PERSONNEL WHEN MAKING OUT A NEW PAY RECORD FOR HIM. HE INDICATES THAT REPAYMENT WOULD CAUSE HIM GREAT HARDSHIP. IN RESPONSE, DENIAL OF WAIVER WAS BASED ON A FINDING THAT AFTER AUTHORIZING A SAVINGS ALLOTMENT, HE SHOULD HAVE EXPECTED A SIGNIFICANT DECREASE IN HIS PAY AFTER DEDUCTIONS AND THAT HIS FAILURE TO QUESTION NO SUCH DECREASE CREATED AT LEAST PARTIAL FAULT ON HIS PART WHICH PRECLUDES WAIVER.

IN HIS APPEAL, THE MEMBER CONTENDS IN ESSENCE THAT SINCE HIS PAY RECORDS WERE APPARENTLY CORRECT UNTIL JANUARY 1976, HE COULD ASSUME THAT EXCESS AMOUNTS RECEIVED IN JANUARY AROSE THROUGH CLEARING HIS PAY RECORDS, THAT HE CONTINUED TO QUESTION HIS PAYMENTS UNTIL THE ERROR IN HIS PAY RECORDS WAS DISCOVERED, THAT HE WAS NOT AT FAULT, AND THAT REPAYMENT WOULD CAUSE UNDUE HARDSHIP ON HIM AND HIS FAMILY.

SECTION 2774 OF TITLE 10, U.S.C. (1976), PROVIDES OUR AUTHORITY TO WAIVE CERTAIN DEBTS WHEN COLLECTION WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES. HOWEVER, SUBSECTION 2774(B) PRECLUDES WAIVER IF, IN THE OPINION OF THE COMPTROLLER GENERAL-

"*** THERE EXISTS, IN CONNECTION WITH THE CLAIM, AN INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE MEMBER

WE INTERPRET THE WORD "FAULT", AS USED IN 10 U.S.C. 2774, AS INCLUDING SOMETHING MORE THAN A PROVEN OVERT ACT OR OMISSION BY THE MEMBER. THUS, WE CONSIDER FAULT TO EXIST IF IN LIGHT OF ALL OF THE FACTS IT IS DETERMINED THAT THE MEMBER SHOULD HAVE KNOWN THAT AN ERROR EXISTED AND TAKEN ACTION TO HAVE IT CORRECTED. THE STANDARD WE EMPLOY IS TO DETERMINE WHETHER A REASONABLE PERSON SHOULD HAVE BEEN AWARE THAT HE WAS RECEIVING PAYMENT IN EXCESS OF HIS PROPER ENTITLEMENT. SEE DECISIONS B-184514, SEPTEMBER 10, 1975, AND B-185127, MARCH 8, 1976.

IN THE PRESENT SITUATION, CONSIDERING THE AMOUNT OF THE OVERPAYMENTS AND HIS RANK AND YEARS OF SERVICE, CHIEF PETTY OFFICER HAYHURST SHOULD HAVE BEEN AWARE FROM THE BEGINNING THAT HE WAS BEING OVERPAID. ALTHOUGH HE STATES THAT HE WAS AWARE OF THE POSSIBILITY OF ERROR AND HE QUESTIONED THE ACCURACY OF HIS PAY, IT APPEARS THAT HE KNEW OR SHOULD HAVE KNOWN THAT HE WAS CONTINUING TO BE OVERPAID AND WOULD EVENTUALLY BE REQUIRED TO REPAY THE ERRONEOUS AMOUNTS. ALTHOUGH HE APPARENTLY ACTED IN GOOD FAITH IN INFORMING DISBURSING PERSONNEL OF A POSSIBLE ERROR, THE CORRECTNESS OF THE PAYMENTS RECEIVED WAS SO DOUBTFUL THAT HE SHOULD HAVE, AT A MINIMUM, SET ASIDE THESE EXCESSIVE AMOUNTS UNTIL A DEFINITE DETERMINATION AND STATEMENT HAD BEEN MADE TO HIM FULLY EXPLAINING HIS ENTITLEMENT.

THE FACT THAT THE OVERPAYMENTS WERE MADE THROUGH ADMINISTRATIVE ERROR DOES NOT RELIEVE AN INDIVIDUAL OF RESPONSIBILITY TO DETERMINE THE TRUE STATE OF AFFAIRS IN CONNECTION WITH OVERPAYMENTS. IT IS FUNDAMENTAL THAT PERSONS RECEIVING MONEY ERRONEOUSLY PAID BY A GOVERNMENT AGENCY OR OFFICIAL ACQUIRE NO RIGHT TO THE MONEY; SUCH PERSONS ARE BOUND IN EQUITY AND GOOD CONSCIENCE TO MAKE RESTITUTION. SEE B-188595, JUNE 3, 1977, B-124770, SEPTEMBER 16, 1955, AND CASES CITED THEREIN.

FINANCIAL HARDSHIP RESULTING FROM COLLECTION IS NOT A SUFFICIENT REASON TO RETAIN THE PAYMENTS HE SHOULD HAVE KNOWN DID NOT BELONG TO HIM. B-183460, MAY 28, 1975; B-192380, NOVEMBER 8, 1978. THEREFORE, SINCE CHIEF PETTY OFFICER HAYHURST HAD A DUTY AND LEGAL OBLIGATION TO RETURN THE EXCESS SUMS OR SET ASIDE THIS AMOUNT FOR REFUND AT SUCH TIME AS THE ADMINISTRATIVE ERROR WAS CORRECTED, WE ARE UNABLE TO CONCLUDE THAT HE IS FREE FROM FAULT, AND COLLECTION ACTION IS NOT AGAINST EQUITY AND GOOD CONSCIENCE NOR CONTRARY TO THE BEST INTERESTS OF THE UNITED STATES.

ACCORDINGLY, THE ACTION OF OUR CLAIMS DIVISION DENYING WAIVER IS SUSTAINED.