B-203383.OM, APR 2, 1982

B-203383.OM: Apr 2, 1982

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VIP OVERPAYMENTS GIVEN TO A PHS OFFICER IN THAT SITUATION WERE WAIVED UNDER 10 U.S.C. WHERE HE RECEIVED MISLEADING INFORMATION FROM COLLEAGUES ABOUT HIS RIGHTS AND OBLIGATIONS AND WAS UNAWARE HE WAS BEING OVERPAID. AFMD - CLAIMS GROUP (ROOM 5858): RETURNED IS CLAIM FILE Z-2820205 PERTAINING TO THE CLAIM OF CLARENCE D. WE ARE DISALLOWING HIS CLAIM. WE ARE ALSO WAIVING COLLECTION OF OVERPAYMENTS OF INCENTIVE PAY ERRONEOUSLY MADE TO HIM AT THAT RATE. WASHINGTON WAS CALLED TO ACTIVE DUTY IN THE COMMISSIONED CORPS OF THE SERVICE IN NOVEMBER OF 1970 AND BEGAN AN INTRAMURAL RESIDENCY TRAINING PROGRAM IN INTERNAL MEDICINE IN JULY 1973 AT THE SERVICE HOSPITAL IN BALTIMORE. HE WAS TRANSFERRED UPON HIS APPLICATION TO THE SERVICE HOSPITAL IN SEATTLE.

B-203383.OM, APR 2, 1982

SUBJECT: CLARENCE D. WASHINGTON, M.D. - B-203383-O.M. DIGEST: UNDER 42 U.S.C. SEC. 218A AND IMPLEMENTING PUBLIC HEALTH SERVICE (PHS) REGULATIONS, A PHS OFFICER MAY PROPERLY INCUR AN ACTIVE DUTY OBLIGATION ON ACCOUNT OF TUITION-FREE TRAINING RECEIVED FROM A PHS AFFILIATED HOSPITAL. UNDER 37 U.S.C. SEC. 313 AND IMPLEMENTING REGULATIONS, THE OFFICER'S ENTITLEMENT TO SPECIAL VARIABLE INCENTIVE PAY (VIP) MAY PROPERLY BE RESTRICTED DURING THE PERIOD OF OBLIGATED SERVICE. HOWEVER, VIP OVERPAYMENTS GIVEN TO A PHS OFFICER IN THAT SITUATION WERE WAIVED UNDER 10 U.S.C. SEC. 2774, WHERE HE RECEIVED MISLEADING INFORMATION FROM COLLEAGUES ABOUT HIS RIGHTS AND OBLIGATIONS AND WAS UNAWARE HE WAS BEING OVERPAID.

ASSOCIATE DIRECTOR, AFMD - CLAIMS GROUP (ROOM 5858):

RETURNED IS CLAIM FILE Z-2820205 PERTAINING TO THE CLAIM OF CLARENCE D. WASHINGTON, M.D., FOR VARIABLE INCENTIVE PAY AT THE FULL RATE FOR HIS PAY GRADE DURING THE 2 YEARS FOLLOWING HIS COMPLETION OF A SECOND INTRAMURAL RESIDENCY PROGRAM IN THE PUBLIC HEALTH SERVICE (SERVICE). WE ARE DISALLOWING HIS CLAIM, BUT WE ARE ALSO WAIVING COLLECTION OF OVERPAYMENTS OF INCENTIVE PAY ERRONEOUSLY MADE TO HIM AT THAT RATE.

DR. WASHINGTON WAS CALLED TO ACTIVE DUTY IN THE COMMISSIONED CORPS OF THE SERVICE IN NOVEMBER OF 1970 AND BEGAN AN INTRAMURAL RESIDENCY TRAINING PROGRAM IN INTERNAL MEDICINE IN JULY 1973 AT THE SERVICE HOSPITAL IN BALTIMORE, MARYLAND. AFTER HE COMPLETED THAT RESIDENCY PROGRAM IN JUNE 1975, HE WAS TRANSFERRED UPON HIS APPLICATION TO THE SERVICE HOSPITAL IN SEATTLE, WASHINGTON, TO PARTICIPATE IN A 3-YEAR INTRAMURAL RESIDENCY TRAINING PROGRAM IN NEUROLOGY.

UPON HIS ARRIVAL IN SEATTLE IN JULY 1975, DR. WASHINGTON EXECUTED A VARIABLE INCENTIVE PAY SERVICE AGREEMENT BY WHICH HE AGREED TO SERVE ON ACTIVE DUTY IN THE COMMISSIONED CORPS OF THE SERVICE FOR 4 YEARS. SINCE HIS PAY GRADE WAS THEN 0-4, THE AGREEMENT ENTITLED HIM TO INCENTIVE PAY AT THE RATE OF $13,500. SEE COMMISSIONED CORPS PERSONNEL MANUAL, CC42.2, PERSONNEL INSTRUCTION 1, SECTION D, PARAGRAPH 6, AS THEN IN EFFECT, WHICH PRESCRIBES A SCHEDULE OF ANNUAL PAYMENTS OF INCENTIVE PAY ACCORDING TO AN OFFICER'S PAY GRADE AND THE LENGTH OF AGREED SERVICE, BUT WHICH ALSO DIRECTS THAT INCENTIVE PAY BE LIMITED TO $9,000 PER YEAR FOR AN OFFICER WHO HAS INCURRED A PERIOD OF OBLIGATED SERVICE AS A RESULT OF TRAINING.

DURING THE 3 YEARS OF HIS TRAINING IN THE INTRAMURAL NEUROLOGY RESIDENCY PROGRAM IN SEATTLE, DR. WASHINGTON RECEIVED INCENTIVE PAY AT THE RATE OF $13,500 PER YEAR. AFTER COMPLETION OF HIS TRAINING IN JUNE 1978, HE WAS PAID INCENTIVE PAY IN THE AMOUNT OF $13,500 FOR 1978-79, THE LAST YEAR OF HIS 4-YEAR AGREEMENT. IN APRIL 1979, HE EXECUTED ANOTHER VARIABLE INCENTIVE PAY SERVICE AGREEMENT, EFFECTIVE JULY 1, 1979, FOR AN ADDITIONAL 2 YEARS OF ACTIVE DUTY IN THE PUBLIC HEALTH SERVICE. HIS PAY GRADE AT THAT TIME, 0-5, WOULD HAVE ENTITLED HIM TO INCENTIVE PAY AT THE RATE OF $12,000 UNDER A 2-YEAR AGREEMENT, PROVIDED THAT HE DID NOT OTHERWISE HAVE AN OBLIGATION TO REMAIN ON ACTIVE DUTY AS THE RESULT OF TRAINING RECEIVED.

IN JUNE 1979 DR. WASHINGTON WAS INFORMED THAT BECAUSE 30 MONTHS OF HIS NEUROLOGY TRAINING IN SEATTLE WAS PERFORMED OUTSIDE THE SERVICE HOSPITAL AND WAS THEREFORE "EXTRAMURAL," HE HAD INCURRED 2 YEARS OF OBLIGATED ACTIVE DUTY. HE WAS INFORMED THAT WHILE SERVING THAT OBLIGATION, HE WAS ONLY ENTITLED TO INCENTIVE PAY AT THE RATE OF $9,000 PER YEAR. HE WAS ALSO INFORMED THAT SINCE HIS 2-YEAR TRAINING OBLIGATION COMMENCED ON JULY 1, 1978, THE DAY FOLLOWING HIS COMPLETION OF NEUROLOGY TRAINING, THE AUTHORIZATION IN JUNE 1978 FOR INCENTIVE PAY AT $13,500 HAD BEEN ERRONEOUS SINCE HE WAS ONLY ENTITLED TO $9,000. THEREFORE, HIS INCENTIVE PAY FOR 1979-80 WAS REDUCED FROM $12,000 TO $9,000, AND FROM THAT $9,000 WAS DEDUCTED $4,500, THE AMOUNT BY WHICH THE SERVICE DETERMINED HE WAS OVERPAID FOR THE YEAR 1978-79.

DR. WASHINGTON QUESTIONS WHETHER THE SEATTLE TRAINING PROGRAMS ARE INTRAMURAL OR EXTRAMURAL AND WHETHER THE SERVICE WAS CORRECT IN DETERMINING THAT HE HAD INCURRED A 2-YEAR ACTIVE DUTY OBLIGATION AS A RESULT OF HIS PARTICIPATION IN THE RESIDENCY PROGRAM IN NEUROLOGY THERE. IT WAS HIS UNDERSTANDING, BASED ON INFORMATION HE RECEIVED FROM HIS SERVICE COLLEAGUES, THAT THE SEATTLE PROGRAMS WERE INTRAMURAL AND, AS SUCH, COULD NOT GIVE RISE TO AN ACTIVE DUTY OBLIGATION FOR PARTICIPANTS. HE SUGGESTS THAT THE SERVICE'S CONTRARY DETERMINATION WAS WRONG, AND HE THEREFORE CLAIMS AMOUNTS WITHHELD FROM HIM BECAUSE OF THE REDUCTION OF HIS VARIABLE INCENTIVE PAY BASED ON THAT DETERMINATION.

DR. WASHINGTON ALSO REQUESTS A WAIVER OF THE REDUCTION OF HIS VARIABLE INCENTIVE PAY BY $4,500 IN 1978 AND $3,000 IN 1979 IN THE EVENT HIS CLAIM IS DENIED. IN ADDITION, SINCE HE CONTEMPLATED INCENTIVE PAY AT THE RATE OF $12,000 WHEN HE EXECUTED THE APRIL 1979 2 YEAR AGREEMENT, HE REQUESTS THAT HIS AGREEMENT BE RENEGOTIATED AND REDUCED TO A 1-YEAR COMMITMENT.

THE QUESTION PRESENTED CONCERNING PUBLIC HEALTH SERVICE RESIDENCY TRAINING PROGRAMS IN SEATTLE WAS CONSIDERED IN MATTER OF TOBEY, B-200975, JULY 20, 1981. THE SERVICE HOSPITAL IN SEATTLE IS ONE OF THE FIVE MAJOR HOSPITALS IN THE UNIVERSITY OF WASHINGTON'S INTEGRATED TEACHING HOSPITAL SYSTEM. SERVICE OFFICERS WISHING TO PURSUE MEDICAL RESIDENCY PROGRAMS THERE MUST BE ACCEPTED AS STUDENTS BY THE UNIVERSITY, AND THEY ARE GENERALLY REQUIRED TO ROTATE AMONG THE TEACHING HOSPITALS IN THE COURSE OF THEIR TRAINING. THE OTHER HOSPITALS ARE AFFILIATED WITH THE SERVICE HOSPITAL, AND THE SERVICE IS NOT REQUIRED TO PAY ANY TUITION OR FEES ON ACCOUNT OF THE TRAINING THEY PROVIDE TO SERVICE OFFICERS. THE SEATTLE MEDICAL RESIDENCY PROGRAMS ARE DEFINED AS "INTRAMURAL" UNDER SERVICE REGULATIONS, SINCE THEY ARE OFFERED BY THE SERVICE AND INVOLVE TRAINING WITHIN A SERVICE HOSPITAL, EVEN THOUGH THE PROGRAMS INCLUDE TRAINING ASSIGNMENTS TO OTHER HOSPITALS. HOWEVER, A SERVICE OFFICER MAY INCUR AN ACTIVE DUTY OBLIGATION THROUGH PARTICIPATION IN AN INTRAMURAL RESIDENCY PROGRAM UNDER COMMISSIONED CORPS PERSONNEL MANUAL CC25.2, INSTRUCTION 3, SECTION D, PARAGRAPH 3, WHICH PROVIDES THAT:

"3. WHEN AN INTRAMURAL TRAINING PROGRAM INCLUDES ONE OR MORE PERIODS OF EXTRAMURAL TRAINING (I.E., TRAINING RECEIVED IN A NON-PHS FACILITY), THEN THE OFFICER WILL BE OBLIGATED TO REMAIN ON ACTIVE DUTY FOR SIX MONTHS OR TWICE THE TOTAL PERIOD OF EXTRAMURAL TRAINING, WHICHEVER IS GREATER, SUBJECT TO THE FOLLOWING LIMITATIONS:

"B. FOR EXTRAMURAL TRAINING WHICH INVOLVED NO PAYMENT OF TUITION AND FEES - ONLY THE PERIOD OF SUCH TRAINING WHICH EXCEEDS ONE YEAR WILL BE INCLUDED IN THE COMPUTATION OF THE OFFICER'S ACTIVE DUTY SERVICE OBLIGATION."

THIS ACTIVE DUTY OBLIGATION IS SUBJECT TO A 2-YEAR MAXIMUM PRESCRIBED BY THE GOVERNING PROVISIONS OF STATUTORY LAW CONTAINED IN 42 U.S.C. SEC. 218A, AS THEN IN EFFECT. IN THE TOBEY DECISION WE CONCLUDED THAT THE ABOVE-QUOTED PARAGRAPH OF THE SERVICE REGULATIONS WAS CONSISTENT WITH THE STATUTE AND VALID. WE ALSO CONCLUDED THAT A SERVICE OFFICER, PARTICIPATING IN AN INTRAMURAL MEDICAL RESIDENCY PROGRAM IN SEATTLE WOULD INCUR AN ACTIVE DUTY OBLIGATION UNDER THAT PARAGRAPH IF THE OFFICER RECEIVED MORE THAN 12 MONTHS OF "EXTRAMURAL" TRAINING FROM THE AFFILIATED HOSPITALS DURING THE COURSE OF THE RESIDENCY PROGRAM. WE HELD THAT AN OFFICER WHO INCURRED AN ACTIVE DUTY OBLIGATION IN THOSE CIRCUMSTANCES WAS LIMITED TO VARIABLE INCENTIVE PAY AT THE RATE OF $9,000 PER YEAR, THE AMOUNT PRESCRIBED BY THE APPLICABLE REGULATION THEN IN EFFECT, DURING THE PERIOD OF THE OBLIGATED SERVICE.

THUS, ON THE BASIS OF THE HOLDING IN TOBEY, DR. WASHINGTON IS ENTITLED TO VARIABLE INCENTIVE PAY AT THE RATE OF ONLY $9,000 PER YEAR FOR THE 2 YEARS OF ACTIVE DUTY HE SERVED FOLLOWING THE COMPLETION OF HIS INTRAMURAL RESIDENCY TRAINING PROGRAM IN SEATTLE IN JUNE 1978. WE THEREFORE DISALLOW HIS CLAIM FOR ADDITIONAL AMOUNTS OF INCENTIVE PAY BELIEVED DUE FOR THOSE 2 YEARS.

DR. WASHINGTON HAS REQUESTED WAIVER OF THE REDUCTION OF HIS INCENTIVE PAY FOR THE SERVICE YEARS BEGINNING IN JULY 1978 AND JULY 1979. SINCE IN THE PARTICULAR CIRCUMSTANCES PRESENTED, IT APPEARS THAT HE COULD NOT REASONABLY HAVE KNOWN OF ANY ERROR OR IRREGULARITY IN HIS PAY PRIOR TO HIS RECEIPT OF ACTUAL NOTICE OF THE ERROR IN JUNE 1979, IN OUR VIEW IT WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE TO REQUIRE COLLECTION OF THE AMOUNT OF INCENTIVE PAYMENTS EXCEEDING $9,000 FOR THE 1978 SERVICE YEAR. THEREFORE, UNDER THE AUTHORITY OF 10 U.S.C. SEC. 2774 WE WAIVE THE CLAIM AGAINST HIM FOR $4,500 IN EXCESS PAYMENTS ISSUED TO HIM PRIOR TO THE TIME HE RECEIVED NOTIFICATION IN JUNE 1979 THAT HE HAD BEEN OVERPAID. HOWEVER, WE DO NOT WAIVE THE REDUCTION OF HIS INCENTIVE PAY FOR THE YEAR OF OBLIGATED ACTIVE DUTY THAT BEGAN IN JULY 1979, SINCE BY THAT TIME HE HAD BEEN NOTIFIED OF THE ERROR AND NO OVERPAYMENTS WERE ACTUALLY MADE TO HIM IN THAT YEAR. COMPARE 56 COMP.GEN. 943, 951 (1977).

SINCE THE LAST YEAR OF THE 2-YEAR SERVICE AGREEMENT WHICH DR. WASHINGTON EXECUTED IN APRIL 1979 HAS EXPIRED, THE FURTHER QUESTION HE RAISES CONCERNING THE RENEGOTIATION OF THAT AGREEMENT IS NOW MOOT. IF HE RESIGNED PRIOR TO COMPLETING THE TERM OF ACTIVE DUTY SPECIFIED IN THAT AGREEMENT, AND HE HAS REASON TO BELIEVE THE SERVICE IMPROPERLY WITHHELD AMOUNTS DUE TO HIM BECAUSE OF HIS RESIGNATION, HE MAY FILE CLAIM FOR THOSE AMOUNTS IN ACCORDANCE WITH THE PROCEDURES PRESCRIBED BY LAW AND REGULATION.

DR. WASHINGTON AND THE PUBLIC HEALTH SERVICE SHOULD BE ADVISED OF THIS ACTION. DR. WASHINGTON SHOULD ALSO BE ADVISED OF HIS RIGHT TO APPLY FOR A REFUND OF THE $4,500 PREVIOUSLY COLLECTED FROM HIM TO SATISFY THE WAIVED DEBT.