B-215380, ET AL., JUL 23, 1984, OFFICE OF GENERAL COUNSEL

B-215380, ET AL., JUL 23, 1984, OFFICE OF GENERAL COUNSEL

DISBURSING OFFICERS - RELIEF - ELIGIBILITY DETERMINATION DIGEST: IN DUPLICATE CHECK CASES WHERE ARMY FINANCE AND ACCOUNTING OFFICIAL ISSUES ORIGINAL CHECK, TREASURY ISSUES DUPLICATE CHECK, AND THE PAYEE CASHES BOTH ORIGINAL AND DUPLICATE CHECK, THE ARMY OFFICIAL IS NOT A DISBURSING OFFICER ELIGIBLE FOR RELIEF UNDER 31 U.S.C. 3527(C). INSTEAD, HIS OFFICIAL ROLE IS THAT OF CERTIFYING OFFICIAL, AND MAY BE RELIEVED UNDER 31 U.S.C. 3528, IF STATUTORY CRITERIA ARE MET. SEE COMP.GEN. DECS. CITED. ACCOUNTABLE OFFICERS - RELIEF - DUPLICATE CHECKS ISSUED - IMPROPER PAYMENT IN 26 INSTANCES, ARMY FINANCE AND ACCOUNTING OFFICIALS WHO CERTIFIED REPLACEMENT CHECKS ISSUED BY TREASURY ARE GRANTED RELIEF AS CERTIFYING OFFICIALS UNDER 31 U.S.C. 3528(B) FROM LIABILITY RESULTING WHEN PAYEES CASHED BOTH ORIGINAL AND SUBSTITUTE CHECKS. SEE COMP.GEN. DECS. CITED. DISBURSING OFFICERS - RELIEF - ELIGIBILITY DETERMINATION EXCLUSION IN 31 U.S.C. 3528(D) OF OFFICIALS IN THE ARMED SERVICES APPLIES ONLY WHEN OFFICIAL IS PERFORMING A DISBURSING FUNCTION.

MR. CLYDE E. JEFFCOAT, PRINCIPAL DEPUTY COMMANDER, U.S. ARMY FINANCE AND ACCOUNTING CENTER, INDIANAPOLIS, INDIANA 46249

DEAR MR. JEFFCOAT:

THIS RESPONDS TO 26 SEPARATE REQUESTS THAT WE RELIEVE VARIOUS ARMY FINANCE AND ACCOUNTING OFFICERS UNDER 31 U.S.C. SEC. 3527(C) FROM LIABILITY FOR IMPROPER PAYMENTS CHARGED TO THEIR ACCOUNTS (SEE APPENDIX FOR LIST OF CASES). WE HAVE CONSOLIDATED THESE CASES BECAUSE THEY EACH INVOLVE A SUBSTANTIALLY IDENTICAL FACT SITUTATION-- THE NEGOTIATION BY A PAYEE OF BOTH AN ORIGINAL ARMY-ISSUED CHECK AND A TREASURY-ISSUED SUBSTITUTE OR REPLACEMENT CHECK. FOR THE REASONS DISCUSSED BELOW, RELIEF IS GRANTED UNDER 31 U.S.C. SEC. 3528; WE HAVE CONLUDED THAT 31 U.S.C. SEC. 3527(C) IS NOT APPLICABLE TO THESE CASES BECAUSE THE ROLE OF THE ARMY OFFICIAL WAS THAT OF CERTIFYING OFFICER RATHER THAN DISBURSING OFFICER.

FACTS

EACH OF THE IMPROPER PAYMENTS AROSE IN A SUBSTANTIALLY SIMILAR FACT SITUATION. IN EACH CASE, AN ARMY FINANCE AND ACCOUNTING OFFICIAL ISSUED A U.S. TREASURY PAY CHECK TO AN ARMY MEMBER OR TO A CIVILIAN EMPLOYEE. LATER THE PAYEE CLAIMED THAT HE OR SHE DID NOT RECEIVE THE CHECK. THE TREASURY WAS ASKED TO STOP PAYMENT ON THE ORIGINAL CHECK, AND AFTER CERTIFICATION BY THE ARMY, A NEW CHECK WAS ISSUED BY THE TREASURY.

THE SECRETARY OF THE TREASURY HAS DELEGATED TO THE SECRETARY OF DEFENSE THE AUTHORITY UNDER CERTAIN CIRCUMSTANCES TO PROVIDE BY REGULATIONS FOR THE ISSUANCE OF SUBSTITUTE CHECKS. /1/ 31 C.F.R. SEC. 245.8 (1983); SEE GENERALLY ARMY REGULATIONS 37-103, PARAS. 4-160-167 (1981). FOR VARIOUS REASONS, EACH OF THESE CASES IS BEYOND THE SCOPE OF THE ARMY REGULATIONS CONCERNING THE ISSUANCE OF SUBSTITUTE CHECKS. IN EACH CASE, THE DEPARTMENT OF THE TREASURY, BUREAU OF FINANCIAL OPERATIONS, DIVISION OF CHECK CLAIMS ISSUED THE SUBSTITUTE OR REPLACEMENT CHECK. FOR TREASURY REGULATIONS GENERALLY, SEE 31 C.F.R. PART 245, 1 TREASURY FISCAL REQUIREMENTS MANUAL (TFRM) 4-7055. IT WAS SUBSEQUENTLY DISCOVERED IN EACH CASE THAT BOTH CHECKS WERE ENDORSED BY THE PAYEE AND PAID BY THE TREASURY.

DISCUSSION

IN MANY OF OUR RECENT DECISIONS, WE HAVE RELIEVED ARMY DISBURSING OFFICERS FROM LIABILITY FOR LOSSES FROM PAYMENT OF DUPLICATE CHECKS UNDER 31 U.S.C. SEC. 3527(C) (1982). SEE, E.G., 62 COMP.GEN. 476 (1983). IN THOSE CASES, THE ARMY DISBURSING OFFICIAL ISSUED THE SUBSTITUTE CHECK UNDER ARMY REGULATIONS. ID. SEE ALSO, AR 37-103, PARAS. 4-160-167. THE PRESENT CASES, HOWEVER, THE SECOND CHECK WAS DISBURSED BY THE TREASURY.

IN 62 COMP.GEN. 92, 94 (1982), WE SAID THAT IN DUPLICATE CHECK CASES, THE LOSS RESULTS WHEN THE SECOND CHECK IS PRESENTED AND PAID. WE DISCUSSED THE SECRETARY OF THE TREASURY'S DELEGATION TO THE SECRETARY OF DEFENSE OF THE AUTHORITY TO ISSUE REPLACEMENT CHECKS IN LIMITED CIRCUMSTANCES. ID. AT 96. WE THEN CONCLUDED THAT THE DELEGATION DID NOT MAKE ANY DIFFERENCE IN THE WAY LOSSES ARE TREATED AND THAT "OUR TREATMENT OF DUPLICATE CHECK CASES WILL BE THE SAME REGARDLESS OF WHICH AGENCY ACTUALLY ISSUES THE REPLACEMENT CHECK SINCE ISSUANCE IS AUTHORIZED IN EITHER EVENT." ID.

WE STILL BELIEVE THAT ISSUANCE OF THE SECOND CHECK IS AUTHORIZED IN BOTH CASES AND THAT THE LOSS OCCURS WHEN THE SECOND CHECK IS PAID BY THE TREASURY, REGARDLESS OF THE ISSUING AGENCY. HOWEVER, THE FACTUAL DIFFERENCE BETWEEN SITUATIONS WHERE THE ARMY ISSUES BOTH THE ORIGINAL AND THE REPLACEMENT CHECK, AND WHERE THE TREASURY ISSUES THE REPLACEMENT CHECK DOES MAKE A DIFFERENCE IN THE PROPER STATUTORY AUTHORITY TO CITE WHEN SEEKING RELIEF IN SUCH SITUATIONS.

A GOVERNMENT OFFICIAL WHO ISSUES A UNITED STATES TREASURY CHECK IS A DISBURSING OFFICER. WHEN AN ARMED FORCES OFFICIAL ISSUES A SUBSTITUTE CHECK, HE IS PERFORMING A DISBURSING FUNCTION, AND 31 U.S.C. SEC. 3527(C) IS AVAILABLE TO PROVIDE RELIEF TO DISBURSING OFFICIALS FOR AN "ILLEGAL, IMPROPER, OR INCORRECT PAYMENT," INCLUDING THE ISSUANCE OF A DUPLICATE CHECK. WHEN THE TREASURY ISSUES THE DUPLICATE CHECK, THE TREASURY OFFICIAL WHO SIGNS THE SECOND CHECK IS THE DISBURSING OFFICIAL. THERE IS NO ARMY MEMBER OR EMPLOYEE RESPONSIBLE FOR THE LOSS AS A DISBURSING OFFICIAL. SINCE 31 U.S.C. SEC. 3527(C) PROVIDES RELIEF ONLY FOR DISBURSING OFFICERS, IT CANNOT BE APPLIED TO RELIEVE THE ARMY OFFICIALS IN THESE CASES. HOWEVER, ARMY OFFICIALS ARE CERTIFYING OFFICERS FOR THE TREASURY DISBURSEMENTS. WE NOTE THAT STANDARD FORM (SF) 1180 CONTAINS A "CERTIFICATION" WHICH STATES:

"I CERTIFY THAT THE ABOVE CHECK DESCRIPTION THE ORIGINAL CHECK IS CORRECT AND THAT NOTHING IN MY RECORDS INDICATES THAT THE PAYEE IS NOT ENTITLED TO ITS PROCEEDS UNLESS OTHERWISE STATED UNDER 'REMARKS.'"

A CERTIFYING OFFICIAL IS HELD RESPONSIBLE FOR A PAYMENT WHICH IS:

"(A) ILLEGAL, IMPROPER, OR INCORRECT BECAUSE OF AN INACCURATE OR MISLEADING CERTIFICATE;

"(B) PROHIBITED BY LAW; OR

"(C) THAT DOES NOT REPRESENT A LEGAL OBLIGATION UNDER THE APPROPRIATION OR FUND INVOLVED." 31 U.S.C. SEC. 3528(A)(4).

HOWEVER, THIS OFFICE IS AUTHORIZED TO GRANT RELIEF, AS FOLLOWS:

"(B) THE COMPTROLLER GENERAL MAY RELIEVE A CERTIFYING OFFICIAL FROM LIABILITY WHEN THE COMPTROLLER GENERAL DECIDES THAT--

(1) THE CERTIFICATION WAS BASED ON OFFICIAL RECORDS AND THE OFFICIAL DID NOT KNOW, AND BY REASONABLE DILIGENCE AND INQUIRY COULD NOT HAVE DISCOVERED, THE CORRECT INFORMATION ***." 31 U.S.C. SEC. 3528(B)(1).

SINCE WE CONCLUDED IN 62 COMP.GEN. 92, 94-95 THAT THE SECOND CHECK RESULTS, UPON ITS PAYMENT, IN AN ERRONEOUS DISBURSEMENT FOR WHICH THERE IS NO AVAILABLE APPROPRIATION, CERTIFICATION OF THE SECOND CHECK WILL RESULT IN LIABILITY OF THE CERTIFYING OFFICIAL IN THE FIRST INSTANCE UNDER 31 U.S.C. SEC. 3528. AS WE NOTED IN THAT DECISION, THE OFFICIALS INVOLVED IN THE SECOND PAYMENT IN MOST CASES WILL HAVE EXERCISED DUE CARE SINCE THEY ARE REQUIRED TO ISSUE THE SECOND CHECK ON THE BASIS OF THE REPRESENTATION OF NON-RECEIPT. THE LOSS IS BEYOND THEIR CONTROL. HOWEVER, 31 U.S.C. SEC. 3528 ALSO ESTABLISHES THE CRITERIA BY WHICH THIS OFFICE MAY GRANT RELIEF FROM LIABILITY AND WE THINK THAT THESE CRITERIA HAVE BEEN MET. FAR AS THE ARMY CERTIFYING OFFICIALS ARE CONCERNED IN THIS CASES, THEY "DID NOT KNOW, AND BY REASONABLE DILIGENCE AND INQUIRY COULD NOT HAVE DISCOVERED, THE CORRECT INFORMATION ***."; THAT IS, THAT THE PAYEE HAD ACTUALLY RECEIVED THE ORIGINAL CHECK WHICH HE REPORTED MISSING AND HAD-- OR PLANNED TO-- CASH BOTH CHECKS. ACCORDINGLY, WE GRANT RELIEF TO THE OFFICIALS ON THE ENCLOSED LIST UNDER 31 U.S.C. SEC. 3528. WE NOTE THAT 31 U.S.C. SEC. 3528(D) DOES NOT LIMIT OUR AUTHORITY TO RELIEVE MILITARY CERTIFYING OFFICERS BECAUSE THE DISBURSEMENTS IN THESE CASES WERE MADE BY THE DEPARTMENT OF THE TREASURY (B-24356, MARCH 18, 1948), AND THE EXCLUSION IN THAT SUBSECTION APPLIES ONLY TO MILITARY OFFICIALS PERFORMING A DISBURSING FUNCTION.

MATTERS FOR CONSIDERATION

WE RECOGNIZE THAT, TAKEN INDIVIDUALLY OR AS A GROUP, THESE CASES DO NOT ADD UP TO A LARGE SUM OF MONEY. THE VOLUME OF SIMILAR CASES SUBMITTED TO THIS OFFICE, HOWEVER, SUGGESTS TO US THAT THERE MAY BE A PROBLEM IN THE WAY DUPLICATE CHECKS ARE HANDLED BY THE ARMY AND THE TREASURY.

OFTEN THE FIRST CHECK APPEARS TO HAVE BEEN NEGOTIATED MANY MONTHS BEFORE THE ISSUANCE OF THE SECOND CHECK. WE RECOGNIZE THAT WHERE A PAYEE NEGOTIATES THE FIRST CHECK NEAR THE TIME HE OR SHE CLAIMS NON RECEIPT, TREASURY RECORDS PROBABLY WILL NOT SHOW PAYMENT, BUT IT IS DIFFICULT TO SEE WHY, IN CASES WHERE CHECKS WERE ALMOST IMMEDIATELY NEGOTIATED AND SEVERAL MONTHS PASS BEFORE THE SECOND CHECKS ARE ISSUED, THE TREASURY IS UNABLE TO FIND THIS OUT BEFORE ISSUING A SECOND CHECK. SEE, E.G., B-215519. YOU MAY WISH, TOGETHER WITH THE TREASURY, TO CONSIDER WAYS THAT MIGHT BETTER CONTROL THE ISSUANCE OF DUPLICATE CHECKS AND IMPROVE THE CHANCES OF COLLECTION IN THOSE CASES WHERE BOTH CHECKS ARE CASHED.

AMONG THE OTHER AREAS WHERE IMPROVEMENT WOULD APPEAR TO US TO BE POSSIBLE ARE THE FOLLOWING:

1. TREASURY SHOULD NOTIFY THE ARMY SOONER WHEN DUPLICATE CHECKS ARE CASHED. ON A NUMBER OF OCCASIONS, THE DEBIT VOUCHER FROM THE TREASURY WAS SENT TO THE ARMY 5 OR 6 MONTHS AFTER THE SECOND CHECK WAS CASHED. B-215513, THE DEBIT VOUCHER IS DATED OVER 2 YEARS AFTER THE SECOND CHECK WAS CASHED. AS A RESULT, IT IS DIFFICULT FOR ARMY TO TAKE EFFECTIVE COLLECTION ACTION BECAUSE THE TRAIL IS SO COLD.

2. ARMY SHOULD TAKE MORE IMMEDIATE COLLECTION ACTION WHEN IT DOES RECEIVE NOTICE OF THE DUPLICATE PAYMENT. WE NOTE THAT IN SOME CASES, PAYEES WERE STILL IN A PAY STATUS WHEN NOTICE OF DUPLICATE PAYMENT WAS RECEIVED, BUT THE PAYEES LEFT SERVICE OR EMPLOYMENT BEFORE COLLECTION ACTION WAS BEGUN. SEE, E.G., B-214906.

3. THE ARMY'S COLLECTION ACTION IS SOME OF THESE CASES COULD HARDLY BE TERMED AGGRESSIVE, AS REQUIRED BY THE DEBT COLLECTION ACT AND THE IMPLEMENTING REGULATIONS. PERHAPS THE MAJOR REASON FOR THESE RELIEF REQUESTS IS THE INABILITY OF THE ARMY TO COLLECT FROM PAYEES WHO ARE NO LONGER IN A PAY STATUS WITH THE ARMY. AS NOTED ABOVE, ON OCCASION ARMY PERSONNEL HAVE BEEN ALLOWED TO LEAVE THE SERVICE WITHOUT TAKING WITHHOLDING ACTION ON THEIR FINAL PAY CHECKS. MOREOVER, EVEN WHEN THE ARMY HAS NOT RECEIVED NOTICE THAT BOTH CHECKS HAVE BEEN CASHED, IF A DUPLICATE CHECK IS STILL OUTSTANDING, COULD THERE NOT BE SOME SYSTEM OF DELAY IN MAKING THE FINAL PAYMENT OR AT LEAST IN ISSUING THE FINAL DISCHARGE CERTIFICATE FOR PERSONS WHO HAVE RECEIVED DUPLICATE CHECKS? THIS WOULD BE SIMILAR TO ADMINISTRATIVE CLEARANCES REQUIRED IN MOST CIVILIAN AGENCIES TODAY.

FINALLY, WHILE WE BELIEVE THAT RELIEF IN THESE AND SIMILAR DUPLICATE CHECK CASES IS WARRANTED IN MOST INSTANCES, WE CAN MORE READILY UNDERSTAND AND AGREE WITH YOUR RECOMMENDATION WHERE THERE ARE SUFFICIENT DETAILS PROVIDED AND THE COPIES OF DOCUMENTS SUBMITTED ARE LEGIBLE. ILLUSTRATION, THE REQUESTS FOR RELIEF OF COL. GASSIE ARE ALL VERY BRIEF AND CONTAIN MOSTLY SUMMARY OR CONCLUSORY STATEMENTS WITHOUT BACK-UP DOCUMENTATION. THE REQUEST FOR RELIEF FOR CAPTAIN TORRES, B-215442, BY CONTRAST, DOES CONTAIN RELEVANT BACK-UP DOCUMENTATION, SUCH AS THE STOP PAYMENT REQUEST FROM THE PAYEE AND INFORMATION ABOUT THE DATES EACH CHECK WAS CASHED BY THE PAYEE.

/1/ TREASURY HAS DEFINED A SUBSTITUTE CHECK AS ONE BEARING THE SAME CHECK SYMBOL AND SERIAL NUMBER AS THE ORIGINAL CHECK, WHICH WAS ISSUED UPON REQUEST OF THE ADMINISTRATIVE AGENCY BASED ON THE OUTSTANDING STATUS OF THE ORIGINAL CHECK. TREASURY FISCAL SERVICE BULLETIN 82-27, FEBRUARY 28, 1983.

APPENDIX GAO NO. ACCOUNTABLE OFFICER DUP. PAYEE AMOUNT OF LOSS B-215380 MAJ S.S. RIDGEWAY, JR. ROBERT A. MARTIN $764.05 B-215424 COL. H.H. GASSIE KEVIN D. MINOR 138.32 B-215439 COL. H.H. GASSIE DENNIS E. HINNANT 60.40 B-215440 COL. H.H. GASSIE JOE N. DAWDELL 851.43 B-215519 COL. H.H. GASSIE GARY L. BROOKS 81.32 B-215451 COL. H.H. GASSIE DOUGLAS SIMMONS 93.10 B-215428 COL. H.H. GASSIE CURTIS FOOTMAN 84.36 B-215429 COL. H.H. GASSIE DANNY E. SLATE 50.00 B-215423 COL. H.H. GASSIE DAVID B. WEBSTER 110.92 B-215425 COL. H.H. GASSIE EDWIN L. SPENCER 202.00 B-215430 COL. H.H. GASSIE JEFFREY T. WAMSER 66.84 B-215434 COL. H.H. GASSIE JEFFREY L. DANNA 52.92 B-215437 COL. H.H. GASSIE LOUIS CABRERA 59.10 B-215436 COL. H.H. GASSIE JESUS C. MORGA 175.08 B-215523 COL. H.H. GASSIE DEXTER A. WILLIAMS 56.34 B-215524 COL. H.H. GASSIE SHEILA A. BAKER 289.00 B-215517 COL. H.H. GASSIE ROBERT C. MURPHY 49.92 B-215520 COL. H.H. GASSIE JAMES G. HOOD, SR. 111.96 B-215521 COL. H.H. GASSIE BERNARD MURRAY 256.00 B-215514 COL. H.H. GASSIE DANIEL P. COLVIN 79.60 B-215513 COL. H.H. GASSIE KEVIN L. HENDEE 135.86 B-213971 COL. H.H. GASSIE CONNIE THOMPSON 150.00 B-214906 MAJ. M.H. FLEUMER JEFFREY S. PETERS 124.66 B-214906.2 MAJ. M.H. FLEUMER JEFFREY S. PETERS 24.72 B-214827 MAJ. P.T. SHINE HENRY STUCKEY, JR. 587.25 B-215442 CPT. A.L. TORRES ANTHONY D. KEENE 247.38

1LT NANCY J. POOR