B-206589, B-206579, B-201286, DECEMBER 16, 1982, 62 COMP.GEN. 91

B-201286,B-206589,B-206579: Dec 16, 1982

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TREASURY ISSUES REPLACEMENT PAYEE NEGOTIATES BOTH CHECKS) OCCURS WHEN SECOND CHECK IS PAID. IN GENERAL GENERAL ACCOUNTING OFFICE (GAO) THINKS 31 U.S.C. 156 (NOW SEC. 3333) IS MORE APPROPRIATE THAN 31 U.S.C. 82A-2 (NOW SECS. 3527(C) AND (D)) TO DEAL WITH DUPLICATE CHECK LOSSES. GAO WILL MAINTAIN STATUS QUO FOR REASONABLE TIME AND WILL HANDLE CASES UNDER EITHER STATUTE AS THEY ARE SUBMITTED. 3-YEAR STATUTE OF LIMITATIONS CONTAINED IN 31 U.S.C. 92I (NOW SEC. 3526) BEGINS TO RUN WHEN LOSS IS REFLECTED IN DISBURSING OFFICER'S STATEMENT OF ACCOUNTABILITY FOLLOWING RECEIPT OF TREASURY DEPARTMENT'S DEBIT VOUCHER. NOT WHEN REPLACEMENT CHECK WAS ISSUED. A SINGLE LETTER TO DEBTOR IS NOT ENOUGH. RELIEF IS GRANTED IN THREE OF THE CASES AND IS NO LONGER NECESSARY IN THE FOURTH.

B-206589, B-206579, B-201286, DECEMBER 16, 1982, 62 COMP.GEN. 91

TREASURY DEPARTMENT - TREASURER OF UNITED STATES - RELIEF - DUPLICATE CHECK LOSSES - APPROPRIATION ADJUSTMENT - STATUTORY AUTHORITY STATUS LOSS IN DUPLICATE CHECK CASE (PAYEE ALLEGES NON-RECEIPT OF ORIGINAL CHECK, TREASURY ISSUES REPLACEMENT PAYEE NEGOTIATES BOTH CHECKS) OCCURS WHEN SECOND CHECK IS PAID. IN GENERAL GENERAL ACCOUNTING OFFICE (GAO) THINKS 31 U.S.C. 156 (NOW SEC. 3333) IS MORE APPROPRIATE THAN 31 U.S.C. 82A-2 (NOW SECS. 3527(C) AND (D)) TO DEAL WITH DUPLICATE CHECK LOSSES. HOWEVER, IN VIEW OF CONCLUSIONS AND RECOMMENDATIONS IN 1981 REPORT TO CONGRESS (AFMD-81-68), GAO THINKS PROBLEM WARRANTS, CONGRESSIONAL ATTENTION. THEREFORE, TO GIVE CONGRESS AND TREASURY ADEQUATE TIME TO DEVELOP SOLUTIONS, GAO WILL MAINTAIN STATUS QUO FOR REASONABLE TIME AND WILL HANDLE CASES UNDER EITHER STATUTE AS THEY ARE SUBMITTED. ACCOUNTABLE OFFICERS - ACCOUNTS - SETTLEMENT - STATUTES OF LIMITATION - DUPLICATE CHECK LOSSES IN DUPLICATE CHECK CASE (LOSS RESULTING FROM IMPROPER NEGOTIATION OF BOTH ORIGINAL AND REPLACEMENT CHECKS), 3-YEAR STATUTE OF LIMITATIONS CONTAINED IN 31 U.S.C. 92I (NOW SEC. 3526) BEGINS TO RUN WHEN LOSS IS REFLECTED IN DISBURSING OFFICER'S STATEMENT OF ACCOUNTABILITY FOLLOWING RECEIPT OF TREASURY DEPARTMENT'S DEBIT VOUCHER, NOT WHEN REPLACEMENT CHECK WAS ISSUED. ACCOUNTABLE OFFICERS - RELIEF - DEBT COLLECTION - DILIGENCE IN PURSUING GRANTING OF RELIEF UNDER 31 U.S.C. 82A-2 (NOW SECS. 3527(C) AND (D)) DOES NOT RELIEVE AGENCY FROM DUTY TO PURSUE COLLECTION ACTION AGAINST RECIPIENT OF IMPROPER PAYMENT, AND GAO MAY DENY RELIEF IF AGENCY HAS FAILED TO DILIGENTLY PURSUE COLLECTION ACTION. EXACTLY WHAT CONSTITUTES DILIGENT COLLECTION ACTION MAY VARY ACCORDING TO FACTS AND CIRCUMSTANCES OF PARTICULAR CASE, BUT AS GENERAL PROPOSITION, A SINGLE LETTER TO DEBTOR IS NOT ENOUGH.

TO THE U.S. ARMY FINANCE AND ACCOUNTING CENTER, DEPARTMENT OF THE ARMY, DECEMBER 16, 1982:

THIS RESPONDS TO FOUR SEPARATE REQUESTS FOR THE RELIEF OF VARIOUS ARMY FINANCE AND ACCOUNTING OFFICERS UNDER 31 U.S.C. 82A-2 (1976). /1/ FOR THE REASONS STATED BELOW, RELIEF IS GRANTED IN THREE OF THE CASES AND IS NO LONGER NECESSARY IN THE FOURTH. THE CASES ARE ALL "DUPLICATE CHECK" CASES IN WHICH A PAYEE HAS NEGOTIATED BOTH AN ORIGINAL CHECK AND A REPLACEMENT CHECK. IN THE TYPICAL SITUATION (THE FACTS OF THE FOUR SPECIFIC CASES WILL BE DISCUSSED LATER), A CHECK IS ISSUED IN PAYMENT OF SOME VALID OBLIGATION. THE PAYEE ALLEGES NON-RECEIPT AND IS ISSUED A REPLACEMENT CHECK. SUBSEQUENTLY, THE PAYEE NEGOTIATES BOTH CHECKS, RESULTING IN A LOSS TO THE GOVERNMENT.

THESE SPECIFIC CASES HAVE SERVED TO FOCUS OUR ATTENTION ON A DIFFICULT AND COMPLEX QUESTION CONCERNING THE PROPER WAY TO HANDLE "DUPLICATE CHECK" CASES IN GENERAL, AND IT IS NECESSARY TO ADDRESS THIS ISSUE IN SOME DETAIL BEFORE RESOLVING THE SPECIFIC CASES AT HAND. PERTINENT STATUTORY RELIEF PROVISIONS

BEFORE REACHING THE MERITS OF ANY PARTICULAR CASE, THE THRESHOLD QUESTION IS THE PROPER STATUTORY AUTHORITY UNDER WHICH TO ACCOUNT FOR DUPLICATE CHECK LOSSES. THE FOUR SUBJECT CASES WERE SUBMITTED UNDER 31 U.S.C. 82A-2 (1976). THIS STATUTE AUTHORIZES THE GENERAL ACCOUNTING OFFICE TO RELIEVE DISBURSING OFFICERS FROM LIABILITY FOR ILLEGAL, IMPROPER, OR INCORRECT PAYMENTS UPON FINDING, EITHER INDEPENDENTLY OR IN CONCURRENCE WITH WRITTEN DETERMINATIONS BY THE AGENCY CONCERNED, THAT THE PAYMENT WAS NOT THE RESULT OF BAD FAITH OR LACK OF DUE CARE ON THE PART OF THE DISBURSING OFFICER. THE GRANTING OF RELIEF DOES NOT AFFECT THE LIABILITY OF THE RECIPIENT OF THE PAYMENT, AND GAO MAY DENY RELIEF IF IT DETERMINES THAT THE AGENCY HAS NOT DILIGENTLY PURSUED COLLECTION ACTION TO RECOVER THE IMPROPER PAYMENT.

THE QUESTION ARISES BY VIRTUE OF THE EXISTENCE OF ANOTHER STATUTE, 31 U.S.C. 156, UNDER WHICH GAO RELIEVES THE TREASURER OF THE UNITED STATES FOR LOSSES RESULTING WHEN CHECKS DRAWN ON THE TREASURY ARE "PAID IN DUE COURSE AND WITHOUT NEGLIGENCE BY OR ON BEHALF OF THE TREASURER OF THE UNITED STATES."

REQUESTS FOR RELIEF UNDER 31 U.S.C. 82A-2 ARE MADE INDIVIDUALLY BY THE AGENCY WHOSE DISBURSING OFFICER IS ACCOUNTABLE FOR THE LOSS. REQUESTS UNDER 31 U.S.C. 156 ARE MADE BY THE TREASURY DEPARTMENT. TREASURY'S PRACTICE HAS BEEN TO ACCUMULATE THE CASES AND TO SUBMIT THEM IN LARGE GROUPS. SEE, E.G., B-115388, OCTOBER 12, 1976. THE TREASURER OF THE UNITED STATES IS NOT A "DISBURSING OFFICER" FOR PURPOSES OF 31 U.S.C. 82A- 2. B-141329, FEBRUARY 26, 1960.

UNDER 31 U.S.C. 82A-2, GAO IS AUTHORIZED TO RESTORE THE ACCOUNTABLE OFFICER'S ACCOUNT BY CHARGING THE LOSS TO THE AGENCY'S OPERATING APPROPRIATIONS AVAILABLE AT THE TIME THE ADJUSTMENT IS MADE. 31 U.S.C. 156 CONTAINS NO SIMILAR AUTHORITY.

ON THE SURFACE, EITHER STATUTE APPEARS AVAILABLE, AT LEAST IN THEORY, TO HANDLE DUPLICATE CHECK LOSSES. THE ISSUE HERE THUS BECOMES WHICH ONE IS PROPER AND UNDER WHAT CIRCUMSTANCES. THE DUPLICATE CHECK PROBLEM: ANALYSIS AND OBSERVATIONS

ACCOUNTING FOR DUPLICATE CHECK LOSSES HAS CAUSED PERPLEXING PROBLEMS FOR MANY YEARS. IN A 1981 REPORT TO THE CONGRESS ENTITLED "MILLIONS PAID OUT IN DUPLICATE AND FORGED GOVERNMENT CHECKS," AFMD-81-68, OCTOBER 1, 1981, WE DISCUSSED THE PROBLEMS IN DETAIL. SOME OF THE PROBLEM AREAS WE NOTED WHICH ARE RELEVANT TO THIS DISCUSSION ARE AS FOLLOWS:

(1) THERE ARE AT PRESENT NO APPROPRIATIONS AGAINST WHICH TO CHARGE DUPLICATE CHECK LOSSES THAT ARE HANDLED UNDER 31 U.S.C. 156. THE TREASURY DEPARTMENT HAS NOT REQUESTED APPROPRIATIONS TO COVER THE EXPENDITURES AND, AS NOTED ABOVE, THE STATUTE DOES NOT AUTHORIZE CHARGING THE LOSSES TO CURRENT OPERATING APPROPRIATIONS. TREASURY HAS THUS BEEN CARRYING THE LOSSES INDEFINITELY AS "ACCOUNTS RECEIVABLE."

(2) TREASURY HAS "CHARGE-BACK" AGREEMENTS WITH SOME AGENCIES, UNDER WHICH TREASURY TRANSFERS THE COLLECTION AND ACCOUNTING RESPONSIBILITY BACK TO THE AGENCIES. SOME AGENCIES CHARGE THE LOSSES TO APPROPRIATIONS BUT OTHERS APPARENTLY DO NOT. ALSO, THERE ARE MANY AGENCIES WITH WHICH TREASURY HAS NO SUCH AGREEMENTS.

WE CONCLUDED THAT THE PROBLEMS RESULTING FROM DUPLICATE CHECK PAYMENTS ARE COMPLEX AND WARRANT CONGRESSIONAL INVOLVEMENT. WE MADE A NUMBER OF RECOMMENDATIONS BOTH TO THE CONGRESS FOR LEGISLATIVE REVISIONS AND TO THE TREASURY DEPARTMENT FOR ADMINISTRATIVE ACTION. PENDING ACTION ON THESE RECOMMENDATIONS, WE ALSO CONCLUDED THAT IT WOULD BE INAPPROPRIATE FOR US TO DISTURB EXISTING PRACTICE. WE SAID ON PAGE 14 OF THE REPORT THAT "WE DO NOT OBJECT TO THE CONTINUED ISSUANCE OF THE CHECKS, PROVIDED THE PROBLEMS WE CITED ARE RESOLVED WITHIN A REASONABLE TIME."

AGAINST THIS BACKGROUND, WE NOW PROCEED TO MAKE SEVERAL OBSERVATIONS ABOUT THE VARIOUS STATUTES. AS WILL BE SEEN, NO SOLUTION WE CAN DEVISE AT THIS TIME IS WHOLLY SATISFACTORY.

ONE APPROACH WOULD BE TO HOLD SIMPLY THAT 31 U.S.C. 82A-2 IS THE PROPER VEHICLE FOR HANDLING DUPLICATE CHECK LOSSES. THIS WOULD HAVE TWO ADVANTAGES: FIRST, IT WOULD PERMIT LOSSES TO BE CHARGED AGAINST CURRENT APPROPRIATIONS, AND SECOND, IT WOULD PLACE PRIMARY COLLECTION, RESPONSIBILITY WITH THE AGENCIES, WHO ARE IN A BETTER POSITION TO TAKE EFFECTIVE COLLECTION ACTION.

HOWEVER, WE ARE INCLINED TO VIEW 31 U.S.C. 82A-2 AS INAPPROPRIATE FOR DEALING WITH DUPLICATE CHECK LOSSES. THE RESPONSIBILITY FOR ISSUING REPLACEMENT CHECKS LIES PRIMARILY WITH THE TREASURY DEPARTMENT. 31 U.S.C. 528. FOR THE MOST PART, THE AGENCY DISBURSING OFFICER ACTS AS LITTLE MORE THAN A "MIDDLE-MAN" TO TRANSMIT THE PAYEE'S REQUEST TO TREASURY. ALSO, AS WE STATED IN B-71585, AUGUST 15, 1956:

THE SHORTAGE IN THE ACCOUNT OF THE TREASURER HERE INVOLVED AROSE NOT FROM THE ISSUANCE OF THE SUBSTITUTE CHECKS, WHICH ISSUANCE WAS PROPER AND AUTHORIZED BY LAW, BUT RATHER FROM THE PAYMENT BY THE TREASURER OF BOTH THE ORIGINAL AND SUBSTITUTE CHECKS IN DUE COURSE AND WITHOUT NEGLIGENCE. * * * ACCORDINGLY, THE PROVISIONS OF (31 U.S.C. 82A-2) ARE NOT APPLICABLE HERE.

THUS, THE LOSS IN A DUPLICATE CHECK CASE OCCURS WHEN THE SECOND CHECK IS WRONGFULLY PRESENTED AND PAID. (THE ACTUAL SEQUENCE IN WHICH THE PAYEE NEGOTIATES THE ORIGINAL CHECK AND THE REPLACEMENT CHECK IS IMMATERIAL.) THIS HAPPENS BECAUSE TREASURY, CONTRARY TO 31 U.S.C. 156, HONORS THE SECOND CHECK EVEN WHERE THE FIRST CHECK HAS ALREADY BEEN PAID. ALTHOUGH AN IMPROPER PAYMENT HAS CLEARLY OCCURRED, IT IS TOTALLY BEYOND THE RESPONSIBILITY AND CONTROL OF THE AGENCY DISBURSING OFFICER AND IS SOMETHING FOR WHICH HE SHOULD INCUR NO LIABILITY. ALSO, TREATING THESE AS "SEC. 82A-2 CASES" WOULD HAVE THE EFFECT OF RENDERING 31 U.S.C. 156 LARGELY MEANINGLESS, AND WE MUST ASSUME THAT CONGRESS ENACTED SEC. 156 TO SERVE A PURPOSE.

ANOTHER APPROACH WOULD BE TO HOLD THAT 31 U.S.C. 156 IS THE PROPER VEHICLE FOR HANDLING DUPLICATE CHECK LOSSES. THIS ALSO HAS SEVERAL ADVANTAGES: IT GIVES MEANING TO BOTH STATUTES; IT PROTECTS AGENCY DISBURSING OFFICERS AGAINST POTENTIAL LIABILITY FOR A LOSS OVER WHICH THEY HAVE ABSOLUTELY NO CONTROL; AND IT IS LOGICAL SINCE IT IS TREASURY THAT PAYS THE REPLACEMENT CHECK AND IT IS TREASURY THAT HAS THE OPPORTUNITY TO AVOID THE IMPROPER PAYMENT. HOWEVER, THIS APPROACH WOULD EXACERBATE THE APPROPRIATION PROBLEM NOTED ABOVE AND WOULD HAVE THE EFFECT OF NEGATING TREASURY'S CHARGE-BACK AGREEMENTS.

UNDERLYING EITHER APPROACH IS THE BASIC QUESTION OF WHETHER AN AGENCY'S APPROPRIATIONS ARE AVAILABLE TO PAY BOTH CHECKS. WHATEVER THE ANSWER TO THIS QUESTION MAY BE, WE THINK IT SHOULD APPLY EQUALLY TO ALL AGENCIES AND SHOULD NOT VARY DEPENDING ON WHETHER A GIVEN AGENCY HAS VOLUNTARILY ENTERED INTO, OR REFUSED TO ENTER INTO, A CHARGE-BACK AGREEMENT WITH TREASURY.

IN TWO EARLIER DECISIONS, ONE BEFORE AND ONE AFTER THE ENACTMENT OF 31 U.S.C. 82A-2, WE HELD THAT DUPLICATE CHECK LOSSES COULD BE CHARGED TO THE APPROPRIATIONS AGAINST WHICH THE ORIGINAL CHECKS WERE DRAWN, EVEN THOUGH RELIEF HAD BEEN GRANTED TO THE TREASURER UNDER 31 U.S.C. 156. B-71585, AUGUST 15, 1956; B-109397, NOVEMBER 24, 1952. (BOTH CASES INVOLVED TRUST FUNDS.) WHILE THIS COMBINATION OF CONCEPTS-- RELIEF UNDER SEC. 156 AND A CHARGE TO AGENCY APPROPRIATIONS-- MAY WELL FORM THE NUCLEUS OF THE ULTIMATE RESOLUTION OF THE PROBLEM, OUR REVIEW OF THE CASES NOW SUGGESTS THAT THE PREMISE UPON WHICH THEY WERE BASED MAY HAVE BEEN INCORRECT. THE BASIS FOR OUR HOLDINGS IN B-71585 AND B-109397 WAS THE CLAUSE IN 31 U.S.C. 528(A) AUTHORIZING TREASURY TO ISSUE REPLACEMENT CHECKS "AGAINST FUNDS AVAILABLE FOR THE PAYMENT OF THE ORIGINAL CHECK." HOWEVER, ON REFLECTION, THIS CLAUSE SEEMS TO CONTEMPLATE THAT, SINCE THE ORIGINAL CHECK WAS PRESUMABLY LOST OR DESTROYED, ONLY ONE CHECK AND NOT TWO WOULD BE PAID. THIS VIEW IS REINFORCED BY ANOTHER PORTION OF 31 U.S.C. 528(A) WHICH PROHIBITS PAYMENT OF THE REPLACEMENT CHECK IF THE ORIGINAL CHECK HAS ALREADY BEEN PAID. WE DOUBT THAT THE QUOTED CLAUSE WAS INTENDED TO AUTHORIZE CHARGING BOTH CHECKS TO AGENCY APPROPRIATIONS.

TAKING ALL OF THESE FACTORS INTO CONSIDERATION, WE ARE ON THE ONE HAND RELUCTANT TO HOLD THAT 31 U.S.C. 82A-2 IS THE PROPER STATUTE SINCE THIS RESULT WOULD IGNORE 31 U.S.C. 156, A STATUTE APPARENTLY DESIGNED TO DEAL WITH PRECISELY THIS TYPE OF SITUATION. YET ON THE OTHER HAND, WE ARE EQUALLY RELUCTANT TO NEGATE TREASURY'S CHARGE-BACK AGREEMENTS BY HOLDING THAT 31 U.S.C. 156 IS THE PROPER STATUTE, AT LEAST WITHOUT MORE EXTENSIVE DISCUSSIONS WITH TREASURY AND THE OTHER AGENCIES INVOLVED.

IN SUM, WE CONTINUE TO THINK, AS WE SAID IN OUR 1981 REPORT TO THE CONGRESS, THAT THE DUPLICATE CHECK PROBLEM IS ONE THAT WARRANTS CONGRESSIONAL ATTENTION AND THAT WE SHOULD NOT OBJECT TO CURRENT PRACTICE FOR A "REASONABLE TIME." THEREFORE, WHILE THIS IS ADMITTEDLY AN IMPERFECT SOLUTION, AND WITHOUT ATTEMPTING TO DEFINE WHAT THAT "REASONABLE TIME" MAY BE, WE WILL CONTINUE TO OBSERVE THE STATUS QUO, AT LEAST FOR THE PRESENT, IN ORDER TO GIVE CONGRESS AND THE TREASURY DEPARTMENT ADEQUATE TIME TO DEVELOP PERMANENT SOLUTIONS. THUS, IF AN AGENCY SUBMITS A DUPLICATE CHECK CASE TO US UNDER 31 U.S.C. 82A-2, PRESUMABLY PURSUANT TO A CHARGE-BACK AGREEMENT WITH TREASURY, WE WILL CONTINUE TO TREAT IT UNDER THAT STATUTE. WE WILL ALSO CONTINUE TO APPLY 31 U.S.C. 156 TO THOSE CASES SUBMITTED BY TREASURY.

WE EMPHASIZE THAT THE ABSENCE OF A CHARGE-BACK AGREEMENT DOES NOT RELIEVE AN AGENCY FROM ITS DUTY TO COOPERATE WITH THE TREASURY DEPARTMENT IN PURSUING AGGRESSIVE COLLECTION ACTION TO RECOVER THE DUPLICATIVE PAYMENT. DELEGATION OF AUTHORITY UNDER 31 U.S.C. 528

THE SECRETARY OF THE TREASURY IS FURTHER AUTHORIZED, BY 31 U.S.C. 528(H), TO DELEGATE THE AUTHORITY TO ISSUE REPLACEMENT CHECKS IN WHOLE OR IN PART TO THE HEAD OF ANY OTHER DEPARTMENT OR AGENCY.

THE SECRETARY OF THE TREASURY HAS DELEGATED THE AUTHORITY TO ISSUE REPLACEMENT CHECKS TO THE SECRETARY OF DEFENSE IN LIMITED CIRCUMSTANCES. 31 C.F.R. 245.8 (1981). PERTINENT RESPONSIBILITIES AND PROCEDURES AS THEY RELATE TO THE DEPARTMENT OF THE ARMY ARE CONTAINED IN ARMY REGULATION (AR) 37-103. ARMY FINANCE AND ACCOUNTING OFFICERS ARE AUTHORIZED TO ISSUE REPLACEMENT CHECKS IF THE REQUEST BY THE PAYEE IS MADE WITHIN 15 DAYS FROM THE ISSUE DATE OF THE ORIGINAL CHECK FOR CHECKS MAILED TO ADDRESSES IN THE CONTINENTAL UNITED STATES, AND WITHIN 30 DAYS FOR CHECKS MAILED TO OVERSEAS ADDRESSES, INCLUDING ALASKA AND HAWAII. AR 37-103, PARA. 4-164.

ALTHOUGH THIS DELEGATION INTRODUCES FACTUAL DISTINCTIONS INTO SOME OF THE CASES, WE DO NOT THINK IT MAKES A DIFFERENCE IN THE WAY THE LOSSES SHOULD BE TREATED. EVEN WHERE THE REPLACEMENT CHECK IS ISSUED BY THE ARMY, IT IS STILL PAID BY TREASURY. THE REPLACEMENT CHECK SITUATION IS DIFFERENT FROM OTHER TYPES OF "IMPROPER PAYMENTS" IN THAT 31 U.S.C. 528 REQUIRES TREASURY TO DETERMINE WHETHER THE FIRST CHECK HAS BEEN PAID , BEFORE PAYING THE SECOND CHECK. IT IS TREASURY'S FAILURE TO DO THIS, OR ITS PAYMENT ON THE SECOND CHECK NOTWITHSTANDING PRIOR PAYMENT OF THE FIRST CHECK, THAT RESULTS IN THE IMPROPER PAYMENT. ACCORDINGLY, OUR TREATMENT OF DUPLICATE CHECK CASES WILL BE THE SAME REGARDLESS OF WHICH AGENCY ACTUALLY ISSUES THE REPLACEMENT CHECK SINCE ISSUANCE OF THE REPLACEMENT CHECK IS AUTHORIZED IN EITHER EVENT.

HAVING MADE THE FOREGOING OBSERVATIONS, WE NOW PROCEED TO THE SPECIFIC CASES. AS DISCUSSED ABOVE, SINCE ARMY HAS ACCEPTED ACCOUNTABILITY FOR LOSSES OF THIS TYPE, WE WILL TREAT ALL OF THE CASES UNDER SEC. 82A-2. B-206589: RICHARD C. MERO

IN THE FIRST CASE, TO WHICH WE HAVE ASSIGNED FILE DESIGNATION B-206589, A CHECK IN THE AMOUNT OF $4,731.32 WAS ISSUED TO RICHARD C. MERO ON JUNE 16, 1980, REPRESENTING CIVILIAN PAY. MR. MERO WAS STATIONED IN WEST GERMANY. ON JULY 1, 1980, MR. MERO REPORTED THAT HE HAD NOT RECEIVED THE CHECK. REPLACEMENT CHECK WAS ISSUED ON JULY 17. SINCE MR. MERO REQUESTED THE REPLACEMENT CHECK WITHIN THE TIME LIMIT ESTABLISHED BY AR 37-103, THE REPLACEMENT CHECK WAS ISSUED BY THE ARMY. IN DECEMBER 1980, THE TREASURY DEPARTMENT NOTIFIED THE ARMY THAT MR. MERO HAD NEGOTIATED BOTH CHECKS. ARMY SOUGHT TO RECOUP FROM MR. MERO BUT ATTEMPTS TO LOCATE HIM WERE UNSUCCESSFUL. IT APPEARS THAT HE HAD BEEN REMOVED FROM GOVERNMENT SERVICE FOR A VARIETY OF OFFENSES SUCH AS FALSIFICATION OF TRAVEL VOUCHERS, SUBMISSION OF A FORGED TRAVEL VOUCHER, AND UNAUTHORIZED ABSENCE FROM DUTY, AND THAT THE CHECK IN QUESTION HAD BEEN HIS FINAL CHECK.

THE ACCOUNTABLE OFFICERS ARE LT. COL. A. T. HOLDER, FORMER FINANCE AND ACCOUNTING OFFICER, U.S. ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA, AND HIS SUCCESSOR, LT. COL. G. D. MILLER.

BASED ON OUR REVIEW OF THE RECORD, WE FIND THAT ARMY PERSONNEL FOLLOWED APPLICABLE REGULATIONS, MADE REASONABLE COLLECTION EFFORTS UNDER THE CIRCUMSTANCES, AND THAT THERE IS NO INDICATION OF BAD FAITH OR LACK OF DUE CARE ON THE PART OF ANY ARMY DISBURSING OFFICER. ACCORDINGLY, RELIEF IS GRANTED. REASONABLE COLLECTION EFFORTS, OF COURSE, SHOULD CONTINUE. B-206579: DANIEL MARTINEZ

IN THE SECOND CASE, A CHECK IN THE AMOUNT OF $645.88, REPRESENTING MILITARY PAY, WAS ISSUED TO DANIEL MARTINEZ ON MARCH 26, 1980. MR. MARTINEZ ALLEGED NON-RECEIPT AND A REPLACEMENT CHECK WAS ISSUED ON MAY 2 (BY TREASURY). MR. MARTINEZ SUBSEQUENTLY NEGOTIATED BOTH CHECKS AND THE ARMY HAS BEEN UNABLE TO LOCATE HIM TO OBTAIN RECOUPMENT. THE ACCOUNTABLE OFFICERS ARE LT. COL. D. I. WALTER, FORMER FINANCE AND ACCOUNTING OFFICER, 4TH INFANTRY DIVISION AND FORT CARSON, FORT CARSON, COLORADO, AND HIS SUCCESSOR, LT. COL. D. H. PARRISH.

AS WITH THE MERO CASE, OUR REVIEW OF THE RECORD INDICATES THAT ARMY PERSONNEL FOLLOWED APPLICABLE REGULATIONS AND DISCLOSES NO EVIDENCE OF BAD FAITH OR LACK OF DUE CARE. WHILE IT APPEARS THAT THE ARMY COULD HAVE DONE MORE TO ATTEMPT TO LOCATE MR. MARTINEZ (SEE, E.G., 4 C.F.R. 104.2), IN VIEW OF THE RELATIVELY SMALL AMOUNT OF THE SHORTAGE, AND SINCE FURTHER DELAY IN SUBMITTING THE RELIEF REQUEST WOULD HAVE BEEN UNDESIRABLE IN VIEW OF THE 3-YEAR STATUTE OF LIMITATIONS (31 U.S.C. 82I), WE GRANT RELIEF HERE ALSO. AS MENTIONED ABOVE, THE GRANTING OF RELIEF DOES NOT ELIMINATE THE AGENCY'S RESPONSIBILITY TO CONTINUE REASONABLE COLLECTION EFFORTS. B-201286: DAVID L. THATCHER

IN THIS CASE, A CHECK IN THE AMOUNT OF $773, REPRESENTING MILITARY PAY, WAS ISSUED TO DAVID L. THATCHER ON APRIL 29, 1977. MR. THATCHER CLAIMED NON-RECEIPT AND ARMY ISSUED A REPLACEMENT CHECK ON MAY 2, 1977. MR. THATCHER, NEGOTIATED BOTH CHECKS. ALLEGING INABILITY TO LOCATE MR. THATCHER, ARMY REQUESTED RELIEF FOR LT. COL. P. G. DAVIES, FORMER FINANCE AND ACCOUNTING OFFICER, 9TH INFANTRY DIVISION AND FORT LEWIS, FORT LEWIS, WASHINGTON, AND HIS SUCCESSOR, LT. COL. J. E. RUSK.

THE TIME PERIOD INVOLVED IN THIS CASE RAISES THE ISSUE OF THE APPLICABILITY OF THE 3-YEAR STATUTE OF LIMITATIONS FOUND IN 31 U.S.C. 82I. AS NOTED, BOTH CHECKS WERE ISSUED IN 1977. HOWEVER, THE 3-YEAR PERIOD DID NOT BEGIN TO RUN UNTIL LATER. TREASURY FORWARDED ITS DEBIT VOUCHER TO THE ARMY ON NOVEMBER 1, 1978, AND THE SHORTAGE WAS REFLECTED IN THE DISBURSING OFFICER'S STATEMENT OF ACCOUNTABILITY FOR NOVEMBER 1978. (SEE GENERALLY AR 37-103, CHAPTER 18.) AS WE HAVE OFTEN POINTED OUT, WE CONSIDER THE DATE OF RECEIPT BY THE AGENCY OF SUBSTANTIALLY COMPLETE ACCOUNTS AS THE POINT FROM WHICH THE 3-YEAR PERIOD BEGINS TO RUN. E.G., B-198451.2, SEPTEMBER 15, 1982. THUS, THE 3-YEAR PERIOD BEGAN TO RUN WHEN THE ARMY FINANCE AND ACCOUNTING CENTER RECEIVED THE DISBURSING OFFICER'S STATEMENT OF ACCOUNTABILITY IN NOVEMBER 1978. (ARMY WOULD HAVE NO WAY OF KNOWING THAT THERE WAS A LOSS FOR WHICH ANYONE MIGHT BE ACCOUNTABLE UNTIL IT RECEIVED TREASURY'S DEBIT VOUCHER, THE EVENT WHICH TRIGGERS INCLUSION ON THE STATEMENT OF ACCOUNTABILITY.) NEVERTHELESS, ALTHOUGH ARMY SUBMITTED A TIMELY RELIEF REQUEST, THE 3-YEAR PERIOD HAS NOW ELAPSED, THE ACCOUNTS IN QUESTION MUST NOW BE REGARDED AS SETTLED, AND THERE IS NO LONGER A NEED FOR US TO GRANT RELIEF. B-199542, NOVEMBER 7, 1980.

HAVING SAID THIS, TWO POINTS MERIT FURTHER COMMENT. FIRST, WE NOTE THAT ARMY ISSUED THE REPLACEMENT CHECK ONLY 3 DAYS AFTER THE DATE OF THE ORIGINAL CHECK. WHILE WE UNDERSTAND THE ARMY'S DESIRE TO ACCOMMODATE ITS PERSONNEL, THIS IN OUR VIEW IS NOT SUFFICIENT TIME TO JUSTIFY A DETERMINATION THAT THE ORIGINAL CHECK WAS LOST, STOLEN, OR DESTROYED, WHEN THE SOLE BASIS FOR THE DETERMINATION IS THE PAYEE'S ALLEGATION OF NON- RECEIPT.

SECOND, ACCORDING TO THE RECORD, THE SOLE ATTEMPT TO RECOVER FROM MR. THATCHER SEEMS TO HAVE BEEN ONE LETTER THAT WAS RETURNED UNCLAIMED. THIS IN OUR VIEW DOES NOT CONSTITUTE DILIGENT COLLECTION ACTION. HAD THE STATUTE OF LIMITATIONS NOT EXPIRED, WE MIGHT BE INCLINED TO DENY RELIEF ON THESE GROUNDS. IN ANY EVENT, 31 U.S.C. 82A 2(B) PROVIDES THAT THE GRANTING OF RELIEF DOES NOT RELIEVE THE DEPARTMENT OR AGENCY FROM ITS RESPONSIBILITY TO PURSUE COLLECTION ACTION AGAINST THE PAYEE. ACCORDINGLY, WE SUGGEST THAT THE ARMY RESUME EFFORTS, WITHIN REASON, TO LOCATE MR. THATCHER. THE ARMY MIGHT WISH TO PURSUE SOME OF THE DEVICES SPECIFIED IN 4 C.F.R. 104.2 AND 102.6, MANY OF WHICH ENTAIL MINIMAL ADMINISTRATIVE BURDEN AND EXPENSE. B-201286: JOHN M. YARBROUGH

THE FOURTH CASE, WHICH WE HAVE INCLUDED UNDER FILE DESIGNATION B-201286, IS SIMILAR TO THE OTHERS. ON NOVEMBER 30, 1975, THE ARMY ISSUED A CHECK IN THE AMOUNT OF $724.45 TO JOHN M. YARBROUGH IN PAYMENT OF RETIRED PAY. MR. YARBROUGH ALLEGED NON-RECEIPT, AND A REPLACEMENT CHECK WAS ISSUED ON JANUARY 23, 1976. BOTH CHECKS WERE NEGOTIATED. MR. YARBROUGH DIED ON SEPTEMBER 14, 1976. THE ACCOUNTABLE OFFICERS ARE LT. COL. R. J. WITHINGTON, FORMER FINANCE AND ACCOUNTING OFFICER, RETIRED PAY OPERATIONS, ARMY FINANCE AND ACCOUNTING CENTER, INDIANAPOLIS, INDIANA, AND HIS SUCCESSOR, LT. COL. R. J. HINTON. (THE REPLACEMENT CHECK HERE WAS ISSUED BY TREASURY BECAUSE IT WAS NOT WITHIN THE ARMY'S DELEGATED AUTHORITY. THE CHECK REPRESENTED RETIRED PAY, WHICH IS SPECIFICALLY EXEMPTED FROM THE DELEGATION. AR 37-103, PARA. 4 163C.)

AGAIN, THE PASSAGE OF TIME RAISES A QUESTION UNDER 31 U.S.C. 82I, THE STATUTE OF LIMITATIONS. ALTHOUGH THE REPLACEMENT CHECK WAS ISSUED IN JANUARY 1976, ARMY DID NOT RECEIVE TREASURY'S DEBIT VOUCHER UNTIL JANUARY 1980, AND THE LOSS WAS REFLECTED IN THE DISBURSING OFFICER'S STATEMENT OF ACCOUNTABILITY FOR MARCH 1980. THUS, WE ARE WELL WITHIN THE 3-YEAR PERIOD (SEE DISCUSSION OF THATCHER CASE ABOVE) AND MAY PROCEED TO THE MERITS.

AS WITH THE OTHER CASES, WE HAVE NO INDICATION OF BAD FAITH OR LACK OF DUE CARE AND IT APPEARS THAT ARMY PERSONNEL FOLLOWED APPLICABLE REGULATIONS. THUS, RELIEF IS PROPER UNLESS WE CONCLUDE THAT ARMY FAILED TO DILIGENTLY PURSUE COLLECTION ACTION.

THE ARMY'S REQUEST FOR RELIEF STATES THAT "NUMEROUS ATTEMPTS AT COLLECTION FROM MR. YARBROUGH AND ALSO FROM HIS ESTATE * * * HAVE PROVED UNSUCCESSFUL." THE ONLY COLLECTION ATTEMPT DOCUMENTED IN THE RECORD SUBMITTED TO US IS A SINGLE LETTER SENT TO MR. YARBROUGH'S SURVIVING SPOUSE ON DECEMBER 17, 1980, WHICH WAS RETURNED AS UNDELIVERABLE. ALSO, IF WE UNDERSTAND THE MATTER CORRECTLY, IT IS NOT CLEAR TO US HOW ARMY COULD HAVE ATTEMPTED COLLECTION FROM MR. YARBROUGH HIMSELF SINCE IT PRESUMABLY DID NOT KNOW ABOUT THE DUPLICATE PAYMENT UNTIL IT RECEIVED TREASURY'S DEBIT VOUCHER SEVERAL YEARS AFTER HE DIED.

WHILE WE AGAIN CAUTION THAT DILIGENT COLLECTION ACTION GENERALLY REQUIRES MORE THAN A SINGLE LETTER, THE CIRCUMSTANCES HERE DO NOT WARRANT DENYING RELIEF. (THE STATUTORY AUTHORITY FOR US TO DENY RELIEF BASED ON LACK OF DILIGENT COLLECTION ACTION IS DISCRETIONARY, NOT MANDATORY.) MR. YARBROUGH DIED IN SEPTEMBER 1976; ARMY RECEIVED TREASURY'S DEBIT VOUCHER IN EARLY 1980. IF MR. YARBROUGH LEFT AN ESTATE SUBJECT TO PROBATE, BARRING UNUSUAL CIRCUMSTANCES, THE PROBATE PROCEEDINGS WOULD MOST LIKELY HAVE BEEN TERMINATED BEFORE ARMY HAD THE OPPORTUNITY TO FILE A CLAIM AGAINST THE ESTATE. BY THE TIME ARMY LEARNED OF THE SHORTAGE, IT APPEARS THERE WAS LITTLE ARMY COULD HAVE DONE EXCEPT TO CONTINUE PURSUING THE WIDOW. CONSIDERING THESE CIRCUMSTANCES IN RELATION TO THE AMOUNT OF THE LOSS, WE WILL GRANT RELIEF. PROBLEM RESULTING FROM TITLE 31 RECODIFICATION

WE HAVE DISCOVERED ONE PROBLEM WITH THE RECODIFICATION OF TITLE 31 WHICH MERITS THE ATTENTION OF THE DEFENSE AND TREASURY DEPARTMENTS. THE FORMER 31 U.S.C. 528 HAS BECOME 31 U.S.C. 3331 IN THE RECODIFICATION (96 STAT. 955). SUBSECTION (H) OF THE FORMER SEC. 528, WHICH AUTHORIZED THE SECRETARY OF THE TREASURY TO DELEGATE THE AUTHORITY TO ISSUE REPLACEMENT CHECKS TO OTHER GOVERNMENT DEPARTMENTS OR AGENCIES OR TO FEDERAL RESERVE BANKS, IS NOT INCLUDED IN THE NEW 31 U.S.C. 3331. A SEARCH OF THE MASTER DISPOSITION TABLES IN THE REPORT ACCOMPANYING THE RECODIFICATION REVEALS THAT THE FORMER SUBSECTION (H) WAS OMITTED. THE REASON GIVEN IS THAT IT IS "SUPERSEDED BY SECTION 321 OF THE REVISED TITLE THAT PROVIDES THAT THE SECRETARY MAY DELEGATE DUTIES AND POWERS TO OFFICERS AND EMPLOYEES OF THE DEPARTMENT OF THE TREASURY." H.R. REP. NO. 97-651, TABLE 2A, PAGE 298 (1982).

THE NEW 31 U.S.C. 321, AS TABLE 2A INDICATES, AUTHORIZES THE SECRETARY OF THE TREASURY TO DELEGATE POWERS AND DUTIES TO OTHER TREASURY EMPLOYEES. IT DOES NOT AUTHORIZE DELEGATIONS TO OTHER AGENCIES. TABLE 2A IS THUS INCORRECT IN ASSUMING THAT THE NEW SEC. 321 INCLUDES THE FORMER SEC. 528(H). THEREFORE, WHILE THE RESULTS WOULD CERTAINLY SEEM TO HAVE BEEN UNINTENDED, THE BASIS FOR THE SECRETARY OF THE TREASURY'S DELEGATION TO THE SECRETARY OF DEFENSE (31 C.F.R. 245.8, DISCUSSED ABOVE) HAS BEEN DROPPED FROM THE STATUTE. WE HAVE INFORMALLY BROUGHT THIS TO THE ATTENTION OF THE OFFICE OF THE LAW REVISIONS COUNSEL, HOUSE OF REPRESENTATIVES, AND ARE BRINGING IT TO YOUR ATTENTION (AND WILL SEND A COPY OF THIS LETTER TO THE TREASURY DEPARTMENT) IN THE EVENT YOU WISH TO PURSUE THE MATTER FURTHER.

/1/ TITLE 31 OF THE U.S.C. WAS RECENTLY RECODIFIED BY PUB. L. NO. 97-258, ENACTED ON SEPTEMBER 13, 1982. SINCE THE NEW TITLE 31 HAS NOT YET BEEN WIDELY CIRCULATED, WE HAVE USED THE "OLD" 31 U.S.C. CITATIONS THROUGHOUT THE TEXT FOR CONVENIENCE. THE NEW CITATIONS FOR STATUTES CITED IN THE TEXT ARE AS FOLLOWS: SEC. 82A-2 IS NOW SEC. 3527(C) AND (D); SEC. 156 IS NOW SEC. 3333; SEC. 528 IS NOW SEC. 3331.