B-213216, MAR 1, 1984

B-213216, MAR 1, 1984

DIGEST: A FORMER NAVY PETTY OFFICER, WHO WAS MISTAKENLY OVERPAID $75 PER MONTH FOR 12 MONTHS, REQUESTS THAT THE ERRONEOUS PAYMENT OF $900 BE WAIVED UNDER 10 U.S.C. SEC. 2774. THE ERRONEOUS PAYMENT MAY NOT BE WAIVED BECAUSE THE MEMBER SHOULD HAVE RECOGNIZED THAT HE WAS BEING OVERPAID AND REPORTED IT. HIS FAILURE TO DO SO INDICATES FAULT ON HIS PART WHICH, UNDER SUBSECTION 2774(B) OF TITLE 10, UNITED STATES CODE, PRECLUDES WAIVER.

ARTHUR C. ORLOWE, JR.:

THIS ACTION IS IN RESPONSE TO A REQUEST FOR RECONSIDERATION OF OUR CLAIMS GROUP ACTION WHICH DENIED THE REQUEST OF ARTHUR C. ORLOWE THAT AN ERRONEOUS PAYMENT OF $900 MADE TO HIM BE WAIVED. THE DEBT WAS REDUCED TO $847.51 AT THE TIME OF HIS DISCHARGE. WE MUST AFFIRM THE ACTION OF THE CLAIMS GROUP AND DENY WAIVER OF MR. ORLOWE'S DEBT TO THE UNITED STATES.

PRIOR TO JULY 1975, MR. ORLOWE HAD $75 PER MONTH DEDUCTED FROM HIS PAY AND ALLOTTED TO HIS CREDIT UNION ACCOUNT. IN THAT MONTH, HE ARRANGED TO HAVE THE MONTHLY ALLOTMENT INCREASED TO $150 PER MONTH IN ORDER TO BUY A CAR. THE NAVY FINANCE CENTER MISTAKENLY CONTINUED TO DEDUCT ONLY $75 FROM MR. ORLOWE'S PAY WHILE, AT THE SAME TIME, IT CORRECTLY PAID $150 TO THE CREDIT UNION. THE ERROR CONTINUED FROM JULY 1975 THROUGH JUNE 1976, RESULTING IN AN OVERPAYMENT OF $900 TO MR. ORLOWE. MR. ORLOWE CLAIMS THAT HIS PAY DECREASED IN JULY 1975; HE ATTRIBUTED THE DECREASE TO THE INCREASED CREDIT UNION ALLOTMENT. HE ALSO REFERS TO VARIOUS OTHER EVENTS WHICH HE CLAIMS AFFECTED HIS PAY. WHILE CERTAIN EVENTS DID OCCUR PRIOR TO THE TIME THE ALLOTMENT WAS RAISED, THERE WAS NOT A SIGNIFICANT CHANGE IN HIS NET PAY AT THE TIME THE ALLOTMENT SHOULD HAVE COMMENCED. THE NAVY RECOMMENDED DENIAL OF WAIVER ON THIS BASIS AND OUR CLAIMS GROUP AGREED AND DENIED HIS REQUEST FOR WAIVER.

SUBSECTION 2774(A) OF TITLE 10, U.S.C. PROVIDES THAT THE COMPTROLLER GENERAL MAY WAIVE A DEBT ARISING OUT OF THE ERRONEOUS PAYMENT OF ANY PAY OR ALLOWANCE IF THE COLLECTION OF THAT DEBT WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTEREST OF THE UNITED STATES. SUBSECTION (B) LIMITS THE DISCRETION OF THE COMPTROLLER GENERAL BY PROHIBITING WAIVER WHERE THERE IS AN INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE MEMBER.

REGULATIONS PRESCRIBING STANDARDS FOR WAIVER OF CLAIMS UNDER THIS SECTION ARE EVEN MORE PRECISE. "ANY SIGNIFICANT UNEXPLAINED INCREASE IN PAY OR ALLOWANCE WHICH WOULD REQUIRE A REASONABLE PERSON TO MAKE INQUIRIES CONCERNING THE CORRECTNESS OF HIS PAY OR ALLOWANCES, ORDINARILY WOULD PRECLUDE A WAIVER WHEN THE EMPLOYEE OR MEMBER FAILS TO BRING THE MATTER TO THE ATTENTION OF APPROPRIATE OFFICIALS." 4 C.F.R. 91.5(C). IN SUCH CIRCUMSTANCES THE MEMBER IS CONSIDERED TO BE AT LEAST PARTIALLY AT FAULT. THE WORD "FAULT" HAS BEEN CONSTRUED AS INCLUDING SOMETHING MORE THAN A PROVEN OVERT ACT OR OMISSION BY A MEMBER. IT IS CONSIDERED TO EXIST IF IT IS CONCLUDED THAT THE MEMBER SHOULD HAVE KNOWN THAT AN ERROR HAD OCCURRED AND SHOULD HAVE ACTED TO HAVE IT CORRECTED. THE STANDARD USED IS WHETHER A REASONABLE PERSON SHOULD HAVE KNOWN HE WAS BEING OVERPAID. MATTER OF VETERINARY AND OPTOMETRY OFFICERS OF THE UNIFORMED SERVICES, 56 COMP.GEN. 943, 951 (1977). INSTANCES WHERE A DECREASE IN PAY SHOULD BE EXPECTED, BUT DOES NOT OCCUR, REQUIRE THE SAME FINDING OF AT LEAST PARTIAL FAULT IF NOT REPORTED BY THE MEMBER.

ALTHOUGH CERTAIN TRANSACTIONS AFFECTING MR. ORLOWE'S PAY DID OCCUR AT THE TIME OF THE ERROR HIS PAY DID NOT DECREASE AS WOULD BE EXPECTED AFTER INCREASING HIS ALLOTMENT BY $75. WE BELIEVE THE REASONABLE PERSON WOULD HAVE RECOGNIZED THAT FACT AND INQUIRED ABOUT THE ACCURACY OF HIS PAY. MR. ORLOWE'S FAILURE TO DO SO MUST BE CONSTRUED AS RENDERING HIM AT LEAST PARTIALLY AT FAULT IN THE MATTER, THEREBY PRECLUDING WAIVER IN ACCORDANCE WITH 10 U.S.C. SEC. 2774(B)(1).

ACCORDINGLY, HIS REQUEST FOR WAIVER IS DENIED AND THE ACTION OF OUR CLAIMS GROUP IS AFFIRMED.