B-204680, FEB 23, 1982

B-204680: Feb 23, 1982

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EMPLOYEE IS NOT HELD AT FAULT FOR OVERPAYMENTS WHERE SHE RECEIVED INITIAL APPOINTMENT TO FEDERAL SERVICE ON APRIL 22. WAS ADVISED AT THAT TIME THAT OPTIONAL PREMIUMS WERE MINIMAL. EARNINGS STATEMENTS WERE NOT PROVIDED UNTIL 8 MONTHS LATER AND DID NOT PROVIDE ITEMIZATION OF DEDUCTIONS TO SHOW SEPARATE AMOUNTS FOR REGULAR AND OPTIONAL LIFE INSURANCE COSTS. EMPLOYEE DID NOT RECEIVE ANY OTHER FORMS THAT WOULD SERVE TO NOTIFY HER THAT DEDUCTIONS WERE NOT BEING MADE. ENTIRE AMOUNT OF OVERPAYMENTS OF OPTIONAL LIFE INSURANCE PREMIUMS IS WAIVED. STROM WAS APPOINTED TO THE ECONOMICS. THESE FORMS WERE FILED WITHOUT ACTION AND. OPTIONAL LIFE INSURANCE PREMIUMS WERE NOT DEDUCTED FROM HER PAY FOR THE PERIOD MAY 30.

B-204680, FEB 23, 1982

DIGEST: EMPLOYEE RECEIVED OVERPAYMENTS RESULTING FROM AGENCY'S FAILURE TO MAKE DEDUCTIONS FOR OPTIONAL LIFE INSURANCE. EMPLOYEE IS NOT HELD AT FAULT FOR OVERPAYMENTS WHERE SHE RECEIVED INITIAL APPOINTMENT TO FEDERAL SERVICE ON APRIL 22, 1979, AND WAS ADVISED AT THAT TIME THAT OPTIONAL PREMIUMS WERE MINIMAL. EARNINGS STATEMENTS WERE NOT PROVIDED UNTIL 8 MONTHS LATER AND DID NOT PROVIDE ITEMIZATION OF DEDUCTIONS TO SHOW SEPARATE AMOUNTS FOR REGULAR AND OPTIONAL LIFE INSURANCE COSTS. FURTHER, EMPLOYEE DID NOT RECEIVE ANY OTHER FORMS THAT WOULD SERVE TO NOTIFY HER THAT DEDUCTIONS WERE NOT BEING MADE. ENTIRE AMOUNT OF OVERPAYMENTS OF OPTIONAL LIFE INSURANCE PREMIUMS IS WAIVED.

ANNIE E. STROM - WAIVER OF OPTIONAL LIFE INSURANCE PREMIUMS:

ANNIE E. STROM, AN EMPLOYEE OF THE UNITED STATES DEPARTMENT OF AGRICULTURE, FOOD AND NUTRITION SERVICE, PORTLAND, OREGON, APPEALS THAT PORTION OF OUR CLAIMS GROUP SETTLEMENT WHICH DENIED HER REQUEST FOR WAIVER OF OVERPAYMENTS WHICH RESULTED FROM HER AGENCY'S FAILURE TO WITHHOLD THE APPROPRIATE DEDUCTIONS FROM HER PAY FOR OPTIONAL LIFE INSURANCE. FOR THE REASONS THAT FOLLOW, WE CONCLUDE THAT WAIVER OF THE OVERPAYMENTS FOR OPTIONAL LIFE INSURANCE SHOULD BE GRANTED.

MS. STROM WAS APPOINTED TO THE ECONOMICS, STATISTICS AND COOPERATIVES SERVICE (ESCS), UNITED STATES DEPARTMENT OF AGRICULTURE, EFFECTIVE APRIL 22, 1979. ON MAY 4, 1979, SHE SIGNED AND SUBMITTED FORMS ELECTING HEALTH BENEFITS COVERAGE AND BOTH REGULAR AND OPTIONAL LIFE INSURANCE. THESE FORMS WERE FILED WITHOUT ACTION AND, AS A RESULT, OPTIONAL LIFE INSURANCE PREMIUMS WERE NOT DEDUCTED FROM HER PAY FOR THE PERIOD MAY 30, 1979, UNTIL MAY 3, 1980, FOR AN INDEBTEDNESS OF $180. IN ADDITION, HEALTH BENEFITS CONTRIBUTIONS WERE NOT DEDUCTED FROM HER PAY FOR THE PERIOD MAY 20, 1979, UNTIL JUNE 28, 1980, RESULTING IN AN INDEBTEDNESS OF $370.92.

MS. STROM DID NOT RECEIVE HER FIRST EARNINGS STATEMENT UNTIL DECEMBER 1979. SHE STATES THAT UPON EXAMINING THIS STATEMENT, SHE DISCOVERED THAT NO DEDUCTION WAS BEING MADE FOR HEALTH BENEFITS. SHE IMMEDIATELY CHECKED WITH ESCS OFFICIALS WHO ADVISED HER THAT HER FILE DID NOT CONTAIN A HEALTH BENEFITS APPLICATION. ON FEBRUARY 5, 1980, SHE COMPLETED A NEW APPLICATION FORM. SOME TIME THEREAFTER, HER ORIGINAL APPLICATION WAS DISCOVERED.

ON FEBRUARY 25, 1980, MS. STROM TRANSFERRED TO THE FOOD AND NUTRITION SERVICE (FNS). THE FOOD AND NUTRITION SERVICE WAS ADVISED OF THE FAILURE OF ESCS TO DEDUCT FOR HEALTH BENEFITS COVERAGE. IN ITS ATTEMPT TO CORRECT THAT PROBLEM, FNS OBTAINED HER FILE FROM WASHINGTON, D. C., AND DISCOVERED, NEAR THE END OF APRIL 1980, THE FORMS MS. STROM SIGNED ON MAY 4, 1979. AT THIS POINT THEY ALSO DISCOVERED THAT PREMIUMS HAD NOT BEEN WITHHELD FOR OPTIONAL LIFE INSURANCE. IN ITS ADMINISTRATIVE REPORT ACCOMPANYING MS. STROM'S REQUEST FOR WAIVER, THE FNS RECOMMENDED THAT WAIVER BE GRANTED FOR BOTH ITEMS.

OUR CLAIMS GROUP WAIVED $183.60 OF THE INDEBTEDNESS, REPRESENTING THE HEALTH BENEFITS CONTRIBUTIONS FROM MAY THROUGH DECEMBER 1979. THE RATIONALE FOR GRANTING WAIVER WAS THAT SHE WAS NOT ON NOTICE OF THE OVERPAYMENT SINCE SHE HAD NOT RECEIVED ANY LEAVE AND EARNINGS STATEMENTS UNTIL DECEMBER 1979. WAIVER WAS DENIED FOR THE REMAINING BALANCE OF HEALTH BENEFITS CONTRIBUTIONS BECAUSE ONCE MS. STROM WAS AWARE OF THE OVERPAYMENT SHE SHOULD HAVE SET ASIDE WITH EACH PAY CHECK AN AMOUNT TO COVER THE DEDUCTIONS. WAIVER WAS DENIED FOR THE FULL AMOUNT OF THE OPTIONAL LIFE INSURANCE PREMIUMS ON THE BASIS THAT AFTER HER APPOINTMENT SHE RECEIVED A STANDARD FORM 50 INDICATING THAT ONLY REGULAR LIFE INSURANCE HAD BEEN ELECTED. THE CLAIMS GROUP REASONED THAT SINCE SHE HAD JUST ELECTED OPTIONAL LIFE INSURANCE, SHE SHOULD HAVE DISCOVERED THE ERROR AT THAT TIME AND REPORTED IT.

MS. STROM HAS NOT APPEALED THE PARTIAL DENIAL OF WAIVER OF HEALTH BENEFITS CONTRIBUTIONS AND WE WILL NOT REVIEW THAT DENIAL. AS TO THE OPTIONAL LIFE INSURANCE PREMIUMS, THE FNS FULLY SUPPORTS HER REQUEST FOR RECONSIDERATION.

IN HER APPEAL MS. STROM STATES THAT AT THE TIME OF HER APPOINTMENT SHE ASKED ABOUT THE COST OF OPTIONAL LIFE INSURANCE AND WAS INFORMED BY ESCS PERSONNEL THAT THEY DID NOT KNOW, BUT BELIEVED IT WAS MINIMAL. WHEN THE ERROR WAS DISCOVERED AND SHE WAS INFORMED OF THE COST, SHE IMMEDIATELY COMPLETED A NEW FORM CANCELLING THE OPTIONAL LIFE INSURANCE. SHE ALSO NOTES THAT THE EARNINGS STATEMENTS THAT SHE RECEIVED DO NOT SHOW A SEPARATE ENTRY FOR OPTIONAL LIFE INSURANCE. INSTEAD, A TOTAL FOR BOTH ITEMS IS SHOWN UNDER THE HEADING "FEGLI." SHE STATES THAT SHE ASSUMED THE PROPER AMOUNT WAS BEING DEDUCTED AND NEVER SUSPECTED OTHERWISE UNTIL THE OVERPAYMENT WAS DISCOVERED IN MAY 1980.

WAIVER OF CLAIMS FOR OVERPAYMENTS TO FEDERAL EMPLOYEES OF PAY AND ALLOWANCES IS AUTHORIZED BY 5 U.S.C. SEC. 5584 (1976). THAT SECTION PROVIDES THAT WHERE COLLECTION OF SUCH A CLAIM WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES, IT MAY BE WAIVED IN WHOLE OR PART UNLESS THERE IS AN INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE. SINCE THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE IN THIS CASE, WAIVER HINGES ON WHETHER MS. STROM IS FOUND TO BE AT FAULT.

FAULT, AS USED IN THE STATUTE AUTHORIZING WAIVER, IS CONSIDERED TO EXIST IF IT IS DETERMINED THAT THE CONCERNED INDIVIDUAL SHOULD HAVE KNOWN THAT AN ERROR EXISTED BUT FAILED TO TAKE ACTION TO HAVE IT CORRECTED. SEE 4 C.F.R. SEC. 91.5 (1981), AND 56 COMP.GEN. 943 (1977). IF AN EMPLOYEE HAS RECORDS WHICH, IF REVIEWED, WOULD INDICATE AN OVERPAYMENT, AND THE EMPLOYEE FAILS TO REVIEW THOSE DOCUMENTS FOR ACCURACY OR OTHERWISE FAILS TO TAKE CORRECTIVE ACTION HE IS NOT WITHOUT FAULT AND WAIVER WILL NOT BE GRANTED. JACK A. SHEPHERD, B-193831, JULY 20, 1979. THUS, IF AN EMPLOYEE IS GIVEN A STANDARD FORM 50 SHOWING SHE HAS FEGLI COVERAGE BUT HER REGULAR EARNINGS STATEMENTS SHOW THAT THE NECESSARY INSURANCE PREMIUM DEDUCTIONS ARE NOT BEING MADE, THE EMPLOYEE HAS NOTICE OF AN ERROR AND IS ORDINARILY CONSIDERED TO BE AT LEAST PARTIALLY AT FAULT IF SHE FAILS TO TAKE CORRECTIVE ACTION. ROSALIE L. WONG, B-199262, MARCH 10, 1981.

WE DO NOT BELIEVE THAT FAULT MAY BE IMPUTED TO MS. STROM IN THIS CASE. MS. STROM'S APPOINTMENT WITH THE ESCS ON APRIL 22, 1979, WAS HER INITIAL APPOINTMENT WITH THE FEDERAL GOVERNMENT. WHILE IT IS TRUE THAT SHE ELECTED OPTIONAL LIFE INSURANCE, THERE WAS NOTHING TO REMIND HER OF THAT ELECTION. THE NOTIFICATION OF PERSONNEL ACTION THAT SHE RECEIVED AFTER HER APPOINTMENT, SHOWED ONLY AN ELECTION FOR REGULAR LIFE INSURANCE AND WAS DATED APRIL 13, 1979, 9 DAYS BEFORE THE EFFECTIVE DATE OF HER APPOINTMENT. IT WAS OBVIOUSLY PREPARED BEFORE MAY 4, 1979, THE DATE ON WHICH SHE ELECTED OPTIONAL LIFE INSURANCE. FURTHERMORE, THE EARNINGS STATEMENTS THAT SHE LATER RECEIVED INDICATE ONLY A DEDUCTION FOR "FEGLI." THERE WAS NO BREAKDOWN OF THE TOTAL AMOUNT INTO TWO SEPARATE AMOUNTS, THAT IS, ONE FOR REGULAR LIFE INSURANCE AND ONE FOR OPTIONAL LIFE INSURANCE. AS STATED ABOVE, MRS. STROM HAD BEEN TOLD THAT THE PREMIUM FOR OPTIONAL LIFE INSURANCE WAS MINIMAL, AND SHE ASSUMED THAT THE FIGURE ON HER EARNINGS STATEMENT REFLECTED DEDUCTIONS FOR BOTH AMOUNTS. THE ERROR WAS NOT DISCOVERED UNTIL THE FOOD AND NUTRITION SERVICE RECEIVED HER FILE NEAR THE END OF APRIL 1980. IT WAS NOT UNTIL THAT TIME THAT MRS. STROM HAD ANY OPPORTUNITY OF DISCOVERING THE ERROR. WHEN THE ERROR WAS BROUGHT TO HER ATTENTION AND SHE WAS TOLD OF THE ACTUAL COST FOR OPTIONAL LIFE INSURANCE, SHE IMMEDIATELY EXECUTED A FORM CANCELLING IT. WE BELIEVE THAT THE ABOVE FACTS CLEARLY SUPPORT A FINDING THAT MRS. STROM HAD NO OPPORTUNITY TO KNOW OF THE OVERPAYMENT AND WAS NOT AT FAULT. SEE RUTHIE M. WHITE, B-203037, AUGUST 4, 1981.

ACCORDINGLY, THE AMOUNT OF $180 REPRESENTING THE DEDUCTIONS FOR OPTIONAL LIFE INSURANCE IS HEREBY WAIVED.