B-201819, JUL 24, 1981

B-201819, JUL 24, 1981

DIGEST: EMPLOYEE RESIGNED FROM ENVIRONMENTAL PROTECTION AGENCY AND AFTER A BREAK IN SERVICE ACCEPTED JOB AT MINE SAFETY AND HEALTH ADMINISTRATION (MSHA) AND WAS PAID AT ERRONEOUS RATE FOR FOUR PAY PERIODS AFTER APPOINTMENT WITH MSHA. AGENCY AND CLAIMS GROUP DENIED WAIVER UNDER 5 U.S.C. SEC. 5584 AND EMPLOYEE APPEALS. DENIAL IS SUSTAINED. ALTHOUGH EMPLOYEE NOTIFIED SUPERVISOR THAT HE WAS RECEIVING PAY AT HIGHER RATE THAN HE EXPECTED, SUPERVISOR DID NOT ASSURE EMPLOYEE THAT HE WAS BEING PAID CORRECTLY. ABSENCE OF OFFICIAL NOTICE THAT PAYMENTS ARE NOT IN ERROR, AN EMPLOYEE CANNOT REASONABLY EXPECT TO RETAIN EXCESS PAYMENTS WITHOUT BEING OBLIGATED TO MAKE REFUND WHEN ERROR IS CORRECTED.

JOHN J. KAFKA - WAIVER OF OVERPAYMENT OF SALARY:

THIS DECISION IS IN RESPONSE TO THE APPEAL OF MR. JOHN J. KAFKA FROM THE DETERMINATION OF OUR CLAIMS GROUP, DATED OCTOBER 20, 1980, DENYING HIS CLAIM FOR WAIVER OF ERRONEOUS PAYMENTS OF COMPENSATION UNDER 5 U.S.C. SEC. 5584. (CLAIM NO. 2824154-121).

MR. KAFKA, FORMERLY AN EMPLOYEE OF THE ENVIRONMENTAL PROTECTION AGENCY (EPA), JOINED THE MINE SAFETY AND HEALTH ADMINISTRATION (MSHA), U. S. DEPARTMENT OF LABOR, EFFECTIVE FEBRUARY 12, 1979. WHEN MR. KAFKA RESIGNED FROM EPA HE WAS A GS-8, STEP 4, EARNING $15,854. HE WAS HIRED AT MSHA AS A GS-7, STEP 8, EARNING $16,052. HOWEVER, FOR FOUR PAY PERIODS MR. KAFKA WAS PAID A SPECIAL RATE FOR PROFESSIONAL ENGINEERS ESTABLISHED PURSUANT TO 5 U.S.C. SEC. 5303 (1976). THAT RATE WAS SET AT $19,958 BY FEDERAL PERSONNEL MANUAL LETTER NO. 530-212, OCTOBER 30, 1978. THIS ERROR RESULTED IN OVERPAYMENT IN THE AMOUNT OF $601.60.

WHEN MR. KAFKA RECEIVED HIS FIRST EARNINGS STATEMENT HE NOTICED THAT THE ANNUAL SALARY WAS LISTED AS $19,958 BUT THAT THE BIWEEKLY GROSS AMOUNT DID NOT CORRESPOND TO THE ANNUAL AMOUNT. MR. KAFKA BROUGHT THIS TO THE ATTENTION OF HIS SUPERVISOR WHO HYPOTHESIZED THAT MR. KAFKA MIGHT HAVE BEEN HIRED AT A HIGHER STEP SINCE HE HAD LEFT THE EPA ONLY A FEW DAYS BEFORE HE WAS ELIGIBLE FOR A STEP INCREASE. HE FURTHER ADVISED MR. KAFKA THAT THE PAYMENT HAD BEEN MADE MANUALLY DUE TO DELAYS IN COMPLETING FORMS AND THAT THE ACTUAL AMOUNT OF PAY COULD EASILY HAVE BEEN AN ERROR. WHEN THE NEXT FOUR PAYMENTS WERE HIGHER MR. KAFKA STATES THAT HE ASSUMED THEY REFLECTED THE CORRECT PAYMENT AND ALSO INCLUDED AN AMOUNT TO MAKE UP FOR THE LOWER FIRST PAYMENT.

OUR CLAIMS GROUP DENIED MR. KAFKA'S CLAIM STATING THAT:

"*** ALTHOUGH MR. KAFKA REASONABLY COULD HAVE BELIEVED THAT HE WOULD BE ENTITLED TO A STEP INCREASE PRIOR TO LEAVING THE EPA AND THEREFORE, HIS SALARY WITH YOUR AGENCY WOULD BE COMPUTED ON THE BASIS OF HIS PRIOR ENTITLEMENT TO A GS-8, STEP 5 SALARY, WE BELIEVE THAT AN EMPLOYEE OF MR. KAFKA'S EXPERIENCE SHOULD HAVE KNOWN THAT THE STEP INCREASE COULD NOT INCREASE HIS BASE SALARY TO $19,958 PER YEAR. THEREFORE, WE BELIEVE THAT MR. KAFKA SHOULD HAVE PURSUED THE MATTER FURTHER WHEN HE BEGAN RECEIVING EARNINGS STATEMENTS INDICATING THAT HIS PAY WAS BASED ON A YEARLY GROSS SALARY OF $19,958. FURTHERMORE, UNTIL HE RECEIVED REASONABLE EXPLANATIONS, HE HAD A DUTY TO RETAIN THE EXCESS AMOUNTS FOR SUBSEQUENT REFUND TO THE GOVERNMENT. SINCE HE DID NOT DO SO, HE IS AT LEAST PARTIALLY AT FAULT IN THIS MATTER, WHICH STATUTORILY PRECLUDES WAIVER OF THE CLAIM."

WE REACH THE SAME CONCLUSION AS OUR CLAIMS GROUP.

IT IS A FUNDAMENTAL AND LONG-ESTABLISHED RULE OF LAW THAT A PERSON RECEIVING MONEY ERRONEOUSLY PAID BY A GOVERNMENT AGENCY OR OFFICIAL ACQUIRES NO RIGHT TO THAT MONEY AND IS LIABLE TO MAKE RESTITUTION. RESTITUTION RESULTS IN NO LOSS TO THE RECIPIENT, SINCE HE MERELY RECEIVED SOMETHING WHICH HE WAS NEVER ENTITLED TO HAVE IN THE FIRST PLACE. SEE, E.G., BARNES, ET AL. V. DISTRICT OF COLUMBIA, 22 CT.CL. 366, 394 (1887); AND UNITED STATES V. SUTTON CHEMICAL CO., 11 F.2D 24 (4TH CIR. 1926).

HOWEVER, SUBSECTION 5584(A) OF TITLE 5, U.S.C. AUTHORIZES WAIVER IN WHOLE OR IN PART OF A CLAIM AGAINST A FEDERAL EMPLOYEE ARISING OUT OF AN ERRONEOUS PAYMENT OF PAY OR ALLOWANCES, "THE COLLECTION OF WHICH WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES ***." SUBSECTION 5584(B) SPECIFICALLY PROHIBITS WAIVER IF THERE IS "AN INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE ***."

IT HAS BEEN CONSISTENTLY HELD THAT WHEN AN EMPLOYEE IS OR SHOULD HAVE BEEN AWARE OF AN OVERPAYMENT OF SALARY WHEN IT OCCURS, HE IS NOT ENTITLED TO RELIEF UNDER THIS PROVISION OF LAW. IF HE ACCEPTS SUCH AN OVERPAYMENT HE SHOULD MAKE PROVISION FOR ITS REPAYMENT. SEE JAMES T. HARROD, B-195889, FEBRUARY 14, 1980.

IT IS CLEAR THAT MR. KAFKA KNEW HE WAS BEING PAID AT A HIGHER BASE SALARY THAN HE EXPECTED TO RECEIVE. HE SAYS THAT HE ASSUMED AND HIS SUPERVISOR ALSO SUGGESTED THAT THE LARGER AMOUNT WAS DUE TO A STEP INCREASE. OUR CLAIMS GROUP CORRECTLY NOTES THAT MR. KAFKA, WHO HAD BEEN A FEDERAL EMPLOYEE FOR AT LEAST 15 YEARS AT THE TIME OF THE ERRONEOUS PAYMENT, SHOULD HAVE KNOWN THAT A STEP INCREASE WOULD NOT INCREASE HIS BASE SALARY BY NEARLY $4,000, AND THAT HE SHOULD HAVE PURSUED THE MATTER FURTHER.

MR. KAFKA POINTS OUT THAT HE AND ALL OTHER MSHA EMPLOYEES WERE DIRECTED NOT TO CONTACT THE PERSONNEL OFFICE DIRECTLY BUT WERE TO GO THROUGH A CONTACT IN THEIR OFFICE. HE ARGUES THAT HAD HE BEEN ALLOWED TO PURSUE THIS MATTER PERSONALLY, HE COULD HAVE STOPPED THE ERRONEOUS PAYMENTS EARLIER. THE FACT THAT MR. KAFKA WAS NOT ABLE TO DEAL DIRECTLY WITH THE PERSONNEL OFFICE DOES NOT CHANGE OUR DETERMINATION. IN A STATEMENT PROVIDED TO THIS OFFICE, MR. KAFKA'S SUPERVISOR ACKNOWLEDGES THAT MR. KAFKA QUESTIONED THE ACCURACY OF HIS PAY. HOWEVER, THE SUPERVISOR REPORTS THAT HE ADVISED MR. KAFKA NOT TO DO ANYTHING UNTIL THE PERSONNEL OFFICE "STRAIGHTENED OUT THE TRANSITION" TO THE DEPARTMENT OF LABOR. IN SUMMARY, IT APPEARS THAT MR. KAFKA WAS ON NOTICE OF THE DISCREPANCY IN HIS PAY, THAT HE BROUGHT THIS DISCREPANCY TO THE ATTENTION OF HIS SUPERVISOR, AND THAT AT NO TIME DID HIS SUPERVISOR ASSURE HIM THAT HE WAS BEING PAID THE CORRECT AMOUNT.

WE HAVE HELD THAT EVEN THOUGH AN EMPLOYEE MAY BRING AN ERROR TO THE ATTENTION OF HIS AGENCY, IN THE ABSENCE OF OFFICIAL NOTICE THAT THE PAYMENTS WERE NOT IN ERROR, HE CANNOT REASONABLY EXPECT TO RETAIN EXCESS PAYMENTS WITHOUT BEING OBLIGATED TO REFUND THEM WHEN THE ERROR IS CORRECTED. SEE F. KEITH PORTER, B-198769, AUGUST 15, 1980. THAT THE MATTER WAS NOT CORRECTED AS SOON AS IT MIGHT HAVE BEEN DOES NOT AFFECT THAT RESULT.

IN LIGHT OF THE ABOVE AND BECAUSE COLLECTION OF THIS OVERPAYMENT FROM MR. KAFKA IS NOT AGAINST EQUITY, GOOD CONSCIENCE, OR THE BEST INTERESTS OF THE UNITED STATES, THE CLAIM AGAINST HIM MAY NOT BE WAIVED UNDER 5 U.S.C. SEC. 5584.