B-223704, NOV 25, 1986

B-223704: Nov 25, 1986

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MILITARY PERSONNEL - PAY - PAYROLL DEDUCTIONS - UNDERDEDUCTIONS - WAIVER - DEADLINES DIGEST: A COAST GUARD MEMBER INCURRED A DEBT TO THE UNITED STATES WHEN PAYROLL DEDUCTIONS WERE NOT MADE BETWEEN 1975 AND 1977 FOR BONDS HE RECEIVED THROUGH A SAVINGS BOND PROGRAM. THIS DISCREPANCY WAS DISCOVERED IN 1977 AND PARTIALLY CORRECTED WITH HIS CONSENT IN AN INSTALLMENT REPAYMENT PLAN. THE DEBT WAS NOT COMPLETELY PAID UNDER THIS PLAN AT THE TIME OF HIS DISCHARGE FROM THE COAST GUARD IN 1978. IS PRECLUDED FROM CONSIDERATION UNDER THE PROVISIONS OF THE WAIVER STATUTE. APPEALS THE DETERMINATION BY OUR CLAIMS GROUP THAT HIS APPLICATION FOR WAIVER OF INDEBTEDNESS DUE TO OVERPAYMENTS OF MILITARY PAY MAY NOT BE CONSIDERED BECAUSE THE DATE OF DISCOVERY OF THE OVERPAYMENTS WAS MORE THAN 3 YEARS BEFORE THE RECEIPT OF HIS APPLICATION FOR WAIVER OF THE OVERPAYMENTS.

B-223704, NOV 25, 1986

MILITARY PERSONNEL - PAY - PAYROLL DEDUCTIONS - UNDERDEDUCTIONS - WAIVER - DEADLINES DIGEST: A COAST GUARD MEMBER INCURRED A DEBT TO THE UNITED STATES WHEN PAYROLL DEDUCTIONS WERE NOT MADE BETWEEN 1975 AND 1977 FOR BONDS HE RECEIVED THROUGH A SAVINGS BOND PROGRAM. THIS DISCREPANCY WAS DISCOVERED IN 1977 AND PARTIALLY CORRECTED WITH HIS CONSENT IN AN INSTALLMENT REPAYMENT PLAN, BUT THE DEBT WAS NOT COMPLETELY PAID UNDER THIS PLAN AT THE TIME OF HIS DISCHARGE FROM THE COAST GUARD IN 1978. AFTER HIS DISCHARGE HE MADE NO FURTHER PAYMENTS TOWARD THE SATISFACTION OF HIS DEBT. HIS APPLICATION FOR WAIVER OF THE REMAINING INDEBTEDNESS, FIRST SUBMITTED TO THE COAST GUARD IN 1984, IS PRECLUDED FROM CONSIDERATION UNDER THE PROVISIONS OF THE WAIVER STATUTE, 10 U.S.C. SEC. 2774, SINCE THE DATE OF DISCOVERY OF THE OVERPAYMENT OCCURRED MORE THAN 3 YEARS BEFORE THE RECEIPT OF THE APPLICATION FOR WAIVER.

JOHN W. ACREE:

MR. JOHN W. ACREE, A FORMER MEMBER OF THE COAST GUARD, APPEALS THE DETERMINATION BY OUR CLAIMS GROUP THAT HIS APPLICATION FOR WAIVER OF INDEBTEDNESS DUE TO OVERPAYMENTS OF MILITARY PAY MAY NOT BE CONSIDERED BECAUSE THE DATE OF DISCOVERY OF THE OVERPAYMENTS WAS MORE THAN 3 YEARS BEFORE THE RECEIPT OF HIS APPLICATION FOR WAIVER OF THE OVERPAYMENTS. AFFIRM THE CLAIMS GROUP'S DETERMINATION.

BACKGROUND

SHORTLY AFTER ENTERING THE COAST GUARD IN 1974, MR. ACREE BEGAN TO PARTICIPATE IN A SAVINGS BOND PROGRAM IN WHICH HE ALLOTTED $75 OF HIS PAY EACH MONTH FOR SAVINGS BONDS. EARLY IN 1975 AN ADMINISTRATIVE ERROR DISCONTINUED THE MONTHLY DEDUCTIONS OF $75 FROM HIS PAY, BUT HE CONTINUED TO RECEIVE THE SAVINGS BONDS. WHEN THE OVERPAYMENTS BEGAN IN 1975, MR. ACREE'S MONTHLY MILITARY BASIC PAY ENTITLEMENT WAS $383.40. ALTHOUGH THE OVERPAYMENT WAS THUS SIGNIFICANT IN RELATION TO HIS PAY ENTITLEMENTS, THERE IS NO INDICATION THAT HE MADE ANY INQUIRY OR TOOK ANY OTHER CORRECTIVE ACTION. THE ERROR WAS EVENTUALLY DISCOVERED BY COAST GUARD DISBURSING OFFICIALS IN MARCH 1977, AND THE RESULTING DEBT WAS DETERMINED TO BE $1,725. MR. ACREE DID NOT APPLY FOR A WAIVER OF HIS DEBT AT THAT TIME, NOR DID HE REFUND THE AMOUNT HE OWED IN A LUMP SUM PAYMENT. INSTEAD HE AGREED TO BEGIN AN INSTALLMENT REPAYMENT PROGRAM TO LIQUIDATE THE DEBT, WHICH CONTINUED UNTIL HE WAS DISCHARGED IN 1978.

UPON DISCHARGE $801.71 REMAINED TO BE COLLECTED OF THE DEBT, BUT MR. ACREE STATES THAT HE WAS NOT NOTIFIED OF THIS, AND THE DEBT WAS NOT COLLECTED AT THAT TIME. HOWEVER, ABOUT 6 MONTHS LATER IN 1979, THE COAST GUARD BEGAN CORRESPONDING WITH HIM ABOUT THE $801.71 DEBT. MR. ACREE ADMITS THAT HE RECEIVED THE LETTERS BUT STATES THAT WHEN HE TELEPHONED TO STRAIGHTEN THE MATTER OUT, HE WAS TOLD THAT HIS CASE HAD ALREADY BEEN SETTLED AND WOULD BE CLOSED. THE COAST GUARD DID NOTHING FURTHER FROM 1979 UNTIL 1984, WHEN IT AGAIN BEGAN CORRESPONDING WITH MR. ACREE TO COLLECT THE DEBT. IN JUNE 1984 MR. ACREE APPLIED FOR A WAIVER OF THE DEBT UNDER 10 U.S.C. SEC. 2774. THE COAST GUARD DENIED THE REQUEST FOR WAIVER AND TRANSMITTED IT TO OUR CLAIMS GROUP, WHICH ALSO DENIED IT.

MR. ACREE OBJECTS TO THE DENIAL OF HIS WAIVER APPLICATION BECAUSE "*** THE GOVERNMENT AGREED THAT ANY INDEBTEDNESS WOULD BE EXTINGUISHED UPON DISCHARGE." HE FURTHER OBJECTS THAT AFTER HIS DISCHARGE A GOVERNMENT REPRESENTATIVE TOLD HIM ON THE TELEPHONE THAT HIS DEBT HAD INDEED BEEN SETTLED AND THAT HIS DELAY IN APPLYING FOR WAIVER WAS SIMPLY DUE TO HIS IMPRESSION FROM GOVERNMENT INACTIVITY AFTER THE TELEPHONE CALL IN 1979 THAT THE MATTER HAD BEEN SETTLED.

ANALYSIS AND CONCLUSION

ALTHOUGH 10 U.S.C. SEC. 2774 AUTHORIZES THE WAIVER OF A CLAIM OF THE UNITED STATES DUE TO AN OVERPAYMENT OF MILITARY PAY UNDER CERTAIN CONDITIONS, SEC. 2774(B)(2) PROVIDES THAT THE COMPTROLLER GENERAL MAY NOT EXERCISE HIS AUTHORITY UNDER SEC. 2774 TO WAIVE ANY CLAIM "*** IF APPLICATION FOR WAIVER IS RECEIVED IN HIS OFFICE AFTER THE EXPIRATION OF THREE YEARS IMMEDIATELY FOLLOWING THE DATE ON WHICH THE ERRONEOUS PAYMENT WAS DISCOVERED."

OUR DECISIONS HAVE INTERPRETED THE PHRASE "WAS DISCOVERED" TO HAVE BEEN USED IN ITS ORDINARY AND USUAL MEANING AND TO HAVE REFERRED TO AN APPROPRIATE OFFICIAL OF THE ADMINISTRATIVE OFFICE. 54 COMP.GEN. 133 (1974); LIEUTENANT BLISS E. NISONGER, USN, RETIRED, B-162975, OCTOBER 31, 1975. IN THIS CASE THERE IS NO QUESTION BUT THAT THE OVERPAYMENT WAS DISCOVERED IN 1977 WHEN MR. ACREE WAS NOTIFIED AND BEGAN REPAYMENT OF THE DEBT IN AN INSTALLMENT PROGRAM. WHEN HE WAS DISCHARGED IN OCTOBER OF 1978 OVER $800 OF THE ORIGINAL DEBT REMAINED TO BE PAID. CONSIDERATION OF MR. ACREE'S APPLICATION FOR WAIVER OF HIS REMAINING INDEBTEDNESS IS PRECLUDED BY SEC. 2774(B)(2). THE 3-YEAR TIME LIMITATION OF ITS FILING REQUIREMENT MAY NOT BE VOIDED OR MODIFIED. LIEUTENANT COMMANDER STEPHEN V. WILKINS, USN, B-182846, NOVEMBER 14, 1975.

THERE REMAINS TO BE CONSIDERED THE EFFECT OF MR. ACREE'S ALLEGATION THAT GOVERNMENT AGENTS DID NOT NOTIFY HIM THAT THE DEBT HAD NOT BEEN FULLY LIQUIDATED BY THE TIME OF HIS DISCHARGE. ALTHOUGH NORMAL PROCEDURES UPON A SERVICE MEMBER'S DISCHARGE ENVISION THE MEMBER BEING NOTIFIED OF ANY INDEBTEDNESS AND HIS FINAL PAY BEING ADJUSTED TO LIQUIDATE IT IF POSSIBLE, THOSE PROCEDURES, IF NOT ADHERED TO, HAVE NO EFFECT ON A FORMER SERVICE MEMBER'S OBLIGATION TO PAY THE DEBT AFTER THE DATE OF DISCHARGE. SEE MR. LARRY M. JETER, B-186869, FEBRUARY 8, 1977.

FURTHERMORE, THE WAIVER STATUTE, 10 U.S.C. SEC. 2774, AUTHORIZES THE WAIVER OF DEBTS RESULTING FROM OVERPAYMENTS OF MILITARY PAY AND ALLOWANCES ONLY IN LIMITED CIRCUMSTANCES, WHEN IT CAN BE DEMONSTRATED THAT THE SERVICE MEMBER HAD NO REASON TO KNOW OR SUSPECT THE EXISTENCE OF AN OVERPAYMENT AT THE TIME IT OCCURRED, AND IT IS OTHERWISE SHOWN THAT COLLECTION OF THE DEBT "WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTEREST OF THE UNITED STATES." SEE PRICE V. UNITED STATES, 621 F.2D 418 (1980); AND 56 COMP.GEN. 943 (1977). EVEN IF MR. ACREE HAD SUBMITTED A TIMELY WAIVER APPLICATION IN 1977, OUR VIEW IS THAT SUCH APPLICATION COULD NOT HAVE RECEIVED FAVORABLE CONSIDERATION UNDER THIS STANDARD BECAUSE THE MAGNITUDE OF THE INCREASE IN PAY THAT OCCURRED AT THE TIME OF THE ADMINISTRATIVE ERROR SHOULD HAVE PUT A REASONABLE PERSON ON NOTICE THAT HE WAS BEING OVERPAID AND SHOULD MAKE INQUIRIES ABOUT THE ACCURACY OF HIS PAY. MOREOVER, HIS DELAY SINCE 1977 IN REFUNDING THE OVERPAYMENT IN FULL HAS NOT OPERATED TO EXTINGUISH HIS DEBT. SEE 58 COMP.GEN. 501 (1979). HENCE, EVEN IF WE COULD GIVE ANY CONSIDERATION TO THE REQUEST HE HAS NOW PRESENTED, WE WOULD HAVE NO BASIS TO RELIEVE HIM OF HIS REMAINING REPAYMENT OBLIGATIONS IN THIS MATTER.

ACCORDINGLY, MR. ACREE'S REQUEST FOR WAIVER OF INDEBTEDNESS IS DENIED.