B-208454, OCT 4, 1982

B-208454: Oct 4, 1982

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DIGEST: FORMER ENLISTED MEMBER WHO CONTINUED TO RECEIVE RETIRED PAY AFTER HE RECEIVED ORDERS INFORMING HIM OF HIS REMOVAL FROM THE TEMPORARY DISABILITY RETIRED LIST AND OF HIS DISCHARGE FROM THE ARMY SHOULD HAVE BEEN AWARE THAT HE WAS RECEIVING ERRONEOUS PAYMENTS. CONFLICTING INFORMATION HE RECEIVED FROM THE VETERANS ADMINISTRATION SHOULD NOT HAVE BEEN SUFFICIENT TO JUSTIFY HIS FAILURE TO INQUIRE CONCERNING HIS MILITARY PAY STATUS. HE IS NOT WITHOUT FAULT IN THE MATTER OF HIS OVERPAYMENT AND WAIVER OF HIS RESULTING DEBT UNDER 10 U.S.C. SEC. 2774 IS NOT AUTHORIZED. PACE: THIS ACTION IS TAKEN UPON THE APPEAL THROUGH COUNSEL BY MR. PACE WAS RELEASED FROM ACTIVE DUTY AND PLACED ON THE TEMPORARY DISABILITY RETIRED LIST WITH A 30 PERCENT DISABILITY RATING.

B-208454, OCT 4, 1982

DIGEST: FORMER ENLISTED MEMBER WHO CONTINUED TO RECEIVE RETIRED PAY AFTER HE RECEIVED ORDERS INFORMING HIM OF HIS REMOVAL FROM THE TEMPORARY DISABILITY RETIRED LIST AND OF HIS DISCHARGE FROM THE ARMY SHOULD HAVE BEEN AWARE THAT HE WAS RECEIVING ERRONEOUS PAYMENTS. CONFLICTING INFORMATION HE RECEIVED FROM THE VETERANS ADMINISTRATION SHOULD NOT HAVE BEEN SUFFICIENT TO JUSTIFY HIS FAILURE TO INQUIRE CONCERNING HIS MILITARY PAY STATUS. SINCE HE DID NOT QUESTION THE CONTINUED PAYMENTS AND MADE NO EFFORT TO OBTAIN A PROPER DETERMINATION CONCERNING HIS ENTITLEMENTS, HE IS NOT WITHOUT FAULT IN THE MATTER OF HIS OVERPAYMENT AND WAIVER OF HIS RESULTING DEBT UNDER 10 U.S.C. SEC. 2774 IS NOT AUTHORIZED.

MARION G. PACE:

THIS ACTION IS TAKEN UPON THE APPEAL THROUGH COUNSEL BY MR. MARION G. PACE, A FORMER ARMY ENLISTED MEMBER, OF THE ACTION OF OUR CLAIMS GROUP WHICH DENIED HIS REQUEST FOR WAIVER OF THE CLAIM OF THE UNITED STATES AGAINST HIM IN THE AMOUNT OF $3,603.65. THE CLAIM AROSE AS A RESULT OF ERRONEOUS PAYMENTS OF TEMPORARY DISABILITY RETIRED PAY TO MR. PACE FROM AUGUST 1, 1976, UNTIL DECEMBER 31, 1979. WE FIND THAT UNDER THE CIRCUMSTANCES OF THIS CASE THE DENIAL OF WAIVER MUST BE SUSTAINED.

IN DECEMBER 1974 MR. PACE WAS RELEASED FROM ACTIVE DUTY AND PLACED ON THE TEMPORARY DISABILITY RETIRED LIST WITH A 30 PERCENT DISABILITY RATING. MR. PACE STATES THAT WHILE IN THIS STATUS HE REQUESTED DISABILITY PAY FROM THE VETERANS ADMINISTRATION AND RECEIVED A 20 PERCENT DISABILITY RATING.

IN 1976 FOLLOWING A REVIEW BY THE PHYSICAL EVALUATION BOARD, THE ARMY NOTIFIED MR. PACE BY LETTER ORDER, DATED JULY 27, 1976, THAT HE WOULD BE REMOVED FROM THE TEMPORARY DISABILITY RETIRED LIST AND DISCHARGED ON JULY 31, 1976, HIS DISABILITY HAVING BEEN RATED AT 10 PERCENT.

DUE TO AN ADMINISTRATIVE ERROR, MR. PACE'S NAME WAS NOT REMOVED FROM THE TEMPORARY DISABILITY RETIRED LIST AS SCHEDULED. THUS, HE CONTINUED TO RECEIVE RETIRED PAY UNTIL THE ERROR WAS DISCOVERED IN DECEMBER 1979. FEBRUARY 1980, THE ARMY NOTIFIED HIM OF HIS INDEBTEDNESS ON ACCOUNT OF THE ERRONEOUS PAYMENTS.

MR. PACE REQUESTED WAIVER OF THE DEBT, CONTENDING THAT HE DID NOT KNOW HE WAS RECEIVING PAYMENTS TO WHICH HE WAS NOT ENTITLED. HE BASES HIS CONTENTION ON INFORMATION HE RECEIVED FROM THE VETERANS ADMINISTRATION DURING THE PERIOD HIS DISCHARGE WAS BEING PROCESSED. BY LETTER DATED AUGUST 11, 1976, ADDRESSED TO THE ARMY RETIRED PAY DIVISION, A COPY OF WHICH WAS DIRECTED TO MR. PACE, THE VETERANS ADMINISTRATION ACKNOWLEDGED NOTIFICATION OF HIS REMOVAL FROM THE TEMPORARY DISABILITY RETIRED LIST AND REQUESTED INFORMATION AS TO THE AMOUNT OF SEVERANCE PAY HE HAD BEEN PAID. THE LETTER FURTHER STATED:

"*** THIS INFORMATION IS NEEDED SINCE NO FURTHER COMPENSATION BENEFITS ARE PAYABLE TO THE VETERAN UNTIL THE ENTIRE AMOUNT OF SEVERANCE PAY HAS BEEN RECOUPED."

AFTERWARDS, BY LETTER DATED AUGUST 26, 1976, THE VETERANS ADMINISTRATION NOTIFIED MR. PACE THAT:

"WE HAVE BEEN INFORMED BY THE ARMY RETIRED PAY DIVISION THAT YOU HAVE BEEN TRANSFERRED TO THE PERMANENT DISABILITY RETIRED LIST AND THAT YOU HAVE NOT RECEIVED ANY SEVERANCE PAY. THEREFORE, WE HAVE RESUMED YOUR COMPENSATION AWARD AT THE PRIOR RATE."

THUS, MR. PACE STATED INITIALLY THAT HE BELIEVED HE WAS ENTITLED TO THE MONTHLY PAYMENTS HE RECEIVED FROM THE ARMY BECAUSE THE VETERANS ADMINISTRATION INFORMED HIM THAT HE WAS BEING TRANSFERRED TO THE PERMANENT DISABILITY RETIRED LIST.

THE ARMY AND OUR CLAIMS GROUP DENIED WAIVER, STATING THAT ANY UNCERTAINTY ON HIS PART RESULTING FROM THE INFORMATION HE RECEIVED SHOULD HAVE PROMPTED HIM TO INQUIRE AS TO WHETHER THE PAYMENTS HE WAS RECEIVING WERE PROPER.

ON APPEAL, MR. PACE CLAIMS THAT BECAUSE HE HAD REQUESTED THAT HIS SEVERANCE PAY BE ISSUED ON A MONTHLY BASIS, HE THOUGHT THE TEMPORARY DISABILITY RETIREMENT PAYMENTS HE CONTINUED TO RECEIVE FROM THE ARMY FOLLOWING HIS DISCHARGE CONSTITUTED THE MONTHLY SEVERANCE PAYCHECKS.

UNDER 10 U.S.C. SEC. 2774 THE COMPTROLLER GENERAL MAY WAIVE DEBTS ARISING OUT OF ERRONEOUS PAYMENTS TO SERVICE MEMBERS WHEN COLLECTION WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES. HOWEVER, WAIVER IS PRECLUDED 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 ***." 10 U.S.C. SEC. 2774(B)(1).

UNDER OUR DECISIONS, "FAULT" AS USED IN THIS STATUTE EXISTS IF IT IS DETERMINED THAT UNDER THE CIRCUMSTANCES OF THE CASE THE MEMBER SHOULD HAVE KNOWN THAT AN ERROR EXISTED AND TAKEN ACTION TO HAVE IT CORRECTED. THE STANDARD WE APPLY IN MAKING THIS DETERMINATION IS WHETHER A REASONABLE PERSON SHOULD HAVE BEEN AWARE THAT HE WAS RECEIVING PAYMENT IN EXCESS OF HIS PROPER ENTITLEMENT. SEE MATTER OF FROME, B-199808, MARCH 23, 1981, AND MATTER OF FEISLER, B-197117, AUGUST 21, 1980.

ON THE BASIS OF THE RECORD BEFORE US, WE AGREE WITH THE PREVIOUS DETERMINATIONS THAT WHEN MR. PACE RECEIVED THE LETTER ORDER FROM THE ARMY INFORMING HIM OF HIS REMOVAL FROM THE TEMPORARY DISABILITY RETIRED LIST AND OF HIS DISCHARGE FROM THE ARMY, HE SHOULD HAVE INQUIRED AS TO WHETHER HE WAS STILL ENTITLED TO THE PAYMENTS HE CONTINUED TO RECEIVE. SEE MATTER OF PRITCHARD, B-197633, APRIL 25, 1980. THE LETTER FROM THE VETERANS ADMINISTRATION, INCONSISTENT WITH THE LETTER ORDER, STATING THAT HE WAS TRANSFERRED TO THE PERMANENT DISABILITY RETIRED LIST SHOULD NOT HAVE BEEN SUFFICIENT TO ASSURE HIM THAT THE CONTINUED PAYMENTS HE WAS RECEIVING FROM THE ARMY WERE CORRECT. IT IS OUR VIEW THAT IF A REASONABLE PERSON IN MR. PACE'S POSITION WERE CONFUSED BY CONFLICTING INFORMATION CONCERNING HIS MILITARY STATUS (A PERMANETLY DISABLED RETIREE OR A FORMER MEMBER WITH NO ENTITLEMENT TO RETIRED PAY) HE WOULD HAVE, IN GOOD FAITH, INQUIRED.

CONCERNING MR. PACE'S CONTENTION THAT HE MISTOOK THE TEMPORARY DISABILITY RETIRED PAY FOR SEVERANCE PAY, WE SEE NO MERIT IN THAT ARGUMENT SINCE THE LETTERS FROM THE VETERANS ADMINISTRATION SHOULD HAVE PUT HIM ON NOTICE THAT RECEIPT OF SEVERANCE PAY WOULD HAVE MADE HIM INELIGIBLE FOR FULL DISABILITY BENEFITS FROM THE VETERANS ADMINISTRATION.

UNDER THESE CIRCUMSTANCES, WE MUST CONCLUDE THAT MR. PACE IS PARTIALLY AT FAULT IN THIS MATTER SINCE HE APPARENTLY DID NOT QUESTION HIS CONTINUED RECEIPT OF RETIRED PAYCHECKS FROM THE ARMY AFTER THE ARMY HAD INFORMED HIM THAT HE WAS REMOVED FROM THE TEMPORARY DISABILITY RETIRED LIST.

IN REQUESTING WAIVER, MR. PACE STATES THAT RECOUPMENT OF THE ERRONEOUS PAYMENTS WOULD POSE AN UNDUE FINANCIAL HARDSHIP ON HIM. WHILE WE CAN APPRECIATE MR. PACE'S POSITION, WE CANNOT CONSIDER SUCH HARDSHIP IN DETERMINING WHETHER AN INDIVIDUAL IS WITHOUT FAULT FOR THE PURPOSE OF GRANTING WAIVER. MATTER OF GANNON, B-200919, MARCH 27, 1981.

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