B-224779, MAY 21, 1987

B-224779: May 21, 1987

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A RETIRED AIR FORCE SERGEANT WHO WAS EMPLOYED IN A CIVILIAN CAPACITY FOR 15 YEARS BY THE POSTAL SERVICE FOLLOWING HIS MILITARY RETIREMENT. WHO THEN WAIVED HIS MILITARY RETIRED PAY IN ORDER TO HAVE HIS MILITARY SERVICE TIME ADDED TO HIS CIVILIAN SERVICE FOR CIVIL SERVICE RETIREMENT PURPOSES. IS NO LONGER ELIGIBLE FOR MILITARY SURVIVOR BENEFIT PLAN (SBP) COVERAGE FOR HIS WIFE. SINCE UNDER THE APPLICABLE STATUTES HIS ELECTION TO HAVE CIVIL SERVICE SURVIVOR ANNUITY COVERAGE FOR HER BASED ON HIS COMBINED FEDERAL MILITARY AND CIVILIAN SERVICE OPERATED TO PRECLUDE CONTINUED SBP COVERAGE. A RETIRED AIR FORCE SERGEANT PROVIDED SURVIVOR BENEFIT PLAN (SBP) COVERAGE FOR HIS WIFE WHILE HE WAS IN RECEIPT OF MILITARY RETIRED PAY.

B-224779, MAY 21, 1987

MILITARY PERSONNEL - PAY - SURVIVOR BENEFITS - ELIGIBILITY DIGEST: 1. A RETIRED AIR FORCE SERGEANT WHO WAS EMPLOYED IN A CIVILIAN CAPACITY FOR 15 YEARS BY THE POSTAL SERVICE FOLLOWING HIS MILITARY RETIREMENT, AND WHO THEN WAIVED HIS MILITARY RETIRED PAY IN ORDER TO HAVE HIS MILITARY SERVICE TIME ADDED TO HIS CIVILIAN SERVICE FOR CIVIL SERVICE RETIREMENT PURPOSES, IS NO LONGER ELIGIBLE FOR MILITARY SURVIVOR BENEFIT PLAN (SBP) COVERAGE FOR HIS WIFE, SINCE UNDER THE APPLICABLE STATUTES HIS ELECTION TO HAVE CIVIL SERVICE SURVIVOR ANNUITY COVERAGE FOR HER BASED ON HIS COMBINED FEDERAL MILITARY AND CIVILIAN SERVICE OPERATED TO PRECLUDE CONTINUED SBP COVERAGE. MILITARY PERSONNEL - PAY - PAYROLL DEDUCTIONS - SURVIVOR BENEFITS - REFUNDS 2. A RETIRED AIR FORCE SERGEANT PROVIDED SURVIVOR BENEFIT PLAN (SBP) COVERAGE FOR HIS WIFE WHILE HE WAS IN RECEIPT OF MILITARY RETIRED PAY. LATER WAIVED HIS MILITARY RETIRED PAY AND RELINQUISHED THE SBP COVERAGE WHEN HE ELECTED TO APPLY HIS MILITARY SERVICE TOWARD A CIVIL SERVICE RETIREMENT. HE IS NOT ENTITLED TO A REFUND OF AMOUNTS DEDUCTED FROM HIS RETIRED PAY TO COVER SBP COSTS DURING THE PERIOD HE HAS SBP COVERAGE. DURING THAT PERIOD HE HAD THE PROTECTION OF SBP COVERAGE FOR HIS WIFE AND HE PAID THE APPROPRIATE COSTS. HIS LATER ELECTION TO COMBINE HIS MILITARY AND CIVILIAN SERVICE FOR CIVIL SERVICE RETIREMENT PURPOSES, AND HIS RESULTING CONVERSION OF SBP COVERAGE TO CIVIL SERVICE SURVIVOR ANNUITY COVERAGE FOR HIS WIFE, MAY NOT SERVE AS A BASIS FOR A REFUND OF THE SBP COSTS.

TECHNICAL SERGEANT JAMES A. LYLES:

THIS DECISION IS IN RESPONSE TO AN APPEAL SUBMITTED BY TECHNICAL SERGEANT JAMES A. LYLES, USAF (RETIRED), FOR RECONSIDERATION OF OUR CLAIMS GROUP'S DISALLOWANCE OF HIS CLAIM FOR A REFUND OF THE AMOUNTS HE PAID FOR SURVIVOR BENEFIT PLAN (SBP) COVERAGE DURING THE PERIOD 1972 1985. WE CONCLUDE THAT HIS CLAIM WAS PROPERLY DISALLOWED.

BACKGROUND

SERGEANT LYLES RETIRED FROM ACTIVE MILITARY DUTY AFTER MORE THAN 20 YEARS' SERVICE IN THE AIR FORCE ON NOVEMBER 1, 1970. ON DECEMBER 28, 1972, HE ELECTED SURVIVOR ANNUITY COVERAGE UNDER THE SBP, DESIGNATING HIS WIFE AS HIS BENEFICIARY. HE THUS ELECTED TO RECEIVE MILITARY RETIRED PAY AT A REDUCED RATE, TO PAY FOR THE COSTS OF THE SBP COVERAGE, IN ORDER TO PROVIDE AN ANNUITY FOR HIS WIFE IN THE EVENT SHE SURVIVED HIM.

SERGEANT LYLES BECAME EMPLOYED IN A CIVILIAN CAPACITY WITH THE U.S. POSTAL SERVICE AFTER HE WAS SEPARATED FROM MILITARY DUTY IN 1970. LATER RETIRED FROM THE POSTAL SERVICE ON AUGUST 2, 1985, WHEN HE REACHED AGE 55. HE WAIVED HIS MILITARY RETIRED PAY IN ORDER TO ADD HIS MILITARY SERVICE TO HIS CIVILIAN SERVICE FOR CIVIL SERVICE RETIREMENT PURPOSES, SO THAT HE COULD QUALIFY FOR A CIVIL SERVICE RETIREMENT ANNUITY AT AGE 55 ON THE BASIS OF MORE THAT 30 YEARS' TOTAL FEDERAL SERVICE. AS A RESULT, HE CEASED RECEIVING MILITARY RETIRED PAY AND INSTEAD BEGAN TO RECEIVE A CIVIL SERVICE RETIREMENT ANNUITY COMPUTED ON THE BASIS OF HIS COMBINED TOTAL YEARS OF FEDERAL MILITARY AND CIVILIAN SERVICE. HE ALSO RECEIVED CIVIL SERVICE SURVIVOR ANNUITY COVERAGE FOR HIS WIFE, WITH THAT SURVIVOR ANNUITY TO BE COMPUTED ON THE BASIS OF HIS COMBINED MILITARY AND CIVILIAN SERVICE.

THE AIR FORCE ACCOUNTING AND FINANCE CENTER THEN ADVISED SERGEANT LYLES THAT HIS SBP COVERAGE AND COSTS WERE SUSPENDED. SERGEANT LYLES CLAIMED A REFUND OF THE SBP COVERAGE COSTS HE HAD PAID BETWEEN DECEMBER 1972 AND AUGUST 1985, CONTENDING THE REFUND SHOULD BE PAID BECAUSE HE HAD NEVER BEEN INFORMED AND DID NOT UNDERSTAND THAT HE WOULD LOSE SBP COVERAGE IF HE ELECTED TO WAIVE HIS MILITARY RETIRED PAY IN ORDER TO RECEIVE CREDIT FOR HIS MILITARY CAREER FOR CIVIL SERVICE RETIREMENT AND SURVIVOR ANNUITY PURPOSES. THE AIR FORCE AND OUR CLAIMS GROUP DENIED HIS CLAIM, AND HE HAS REQUESTED OUR FURTHER REVIEW.

ANALYSIS AND CONCLUSION

THE SURVIVOR BENEFIT PLAN, 10 U.S.C. SECS. 1447-1455, IS AN INCOME MAINTENANCE PROGRAM FOR THE SURVIVING DEPENDENTS OF RETIRED SERVICE MEMBERS. THE PLAN WAS ESTABLISHED ON SEPTEMBER 21, 1972, WITH THE ENACTMENT OF PUBLIC LAW 92-425, 86 STAT. 706. ALTHOUGH THE LEGISLATION WAS DESIGNED PRIMARILY TO BENEFIT THE FAMILIES OF SERVICE MEMBERS WHO BECAME ELIGIBLE FOR RETIREMENT AFTER SEPTEMBER 21, 1972, SUBSECTION 3(B) OF PUBLIC LAW 92-425 GAVE SERVICE MEMBERS LIKE SERGEANT LYLES WHO HAD RETIRED PRIOR TO THAT DATE AN OPORTUNITY WITHIN SPECIFIED TIME LIMITS TO PARTICIPATE IN THE PLAN ALSO. ELECTIONS TO PARTICIPATE IN THE PLAN BY RETIREES, INCLUDING THOSE WHO RETIRED PRIOR TO SEPTEMBER 21, 1972, ARE BINDING AND IRREVOCABLE. SEE 55 COMP.GEN. 158 (1975), AND 53 COMP.GEN. 470, 474 (1973).

UNDER 10 U.S.C. SEC. 1450(D), A RETIRED SERVICE MEMBER WHO ELECTS SBP COVERAGE FOR HIS SPOUSE AND LATER WAIVES HIS RETIRED PAY FOR THE PURPOSE OF INCLUDING HIS MILITARY SERVICE TIME IN THE COMPUTATION OF A CIVIL SERVICE SURVIVOR AND SURVIVOR ANNUITY IS ENTITLED TO CIVIL SERVICE SURVIVOR ANNUITY COVERAGE ONLY. THE RETIREE, WHO OTHERWISE MAY NOT VOLUNTARILY WITHDRAW FROM THE SBP, MUST WITHDRAW FROM THE PLAN ONCE HE WAIVES HIS RETIRED PAY AND ELECTS THE CIVIL SERVICE SURVIVOR ANNUITY. UNDER 10 U.S.C. SEC. 1452(E) HE IS NO LONGER REQUIRED TO MAKE PAYMENTS TO THE PLAN AS LONG AS HIS WAIVER IS IN EFFECT. IN ADDITION, HOWEVER, 10 U.S.C. SEC. 1452(F) PROHIBITS REFUNDS OF AMOUNTS PREVIOUSLY DEDUCTED FORM MILITARY RETIRED PAY FOR THE COSTS OF SBP COVERAGE, UNLESS THE AMOUNTS WERE DEDUCTED THROUGH "ADMINISTRATIVE ERROR" OR, UPON THE DEATH OF THE RETIREE, NO ANNUITY IS PAYABLE TO THE BENEFICIARY OF THE SBP BECAUSE OF THE BENEFICIARY'S RECEIPT OF DEPENDENCY AND INDEMNITY COMPENSATION FROM THE VETERANS ADMINISTRATION. SEE 55 COMP.GEN. 684 (1976).

THESE FEATURES WERE INCLUDED IN THE ORGINAL 1972 SBP LEGISLATION. THE LEGISLATIVE HISTORY OF THE ENACTMENT PROVIDES THIS EXPLANATION:

"MILITARY RETIREES WHO, AFTER RETIREMENT, WORK IN THE FEDERAL CIVIL SERVICE AND SUBSEQUENTLY BECOME ELIGIBLE TO RETIRE FROM THE CIVIL SERVICE MAY WAIVE THEIR MILITARY RETIRED PAY AND USE THEIR MILITARY YEARS OF SERVICE TO INCREASE THEIR CIVIL SERVICE BENEFITS. S. 3905 WOULD NOT ALLOW A DEDUCTION OF SURVIVOR BENEFITS BASED ON THE SAME YEARS OF SERVICE. *** WHEN A MILITARY RETIREE WAIVES HIS MILITARY RETIRED PAY TO INCREASE CIVIL SERVICE RETIREMENT BENEFITS AND ELECTS TO JOIN THE CIVIL SERVICE RETIREES SURVIVOR BENEFIT PLAN, HE WOULD CEASE TO CONTRIBUTE TO THE MILITARY PLAN DURING THE TIME HIS WAIVER IS IN EFFECT.

"AN EXAMPLE IS USEFUL IN EXPLAINING THE APPLICATION OF THE ABOVE RECOMMENDATION. ASSUME A MEMBER RETIRED FROM THE MILITARY WITH 20 YEARS OF SERVICE, SERVES 10 YEARS IN THE CIVIL SERVICE, AND RETIRED FROM THE CIVIL SERVICE. PRIOR TO RETIREMENT FROM THE CIVIL SERVICE, HE WOULD RECEIVE MILITARY RETIRED PAY AND PARTICIPATE IN THE MILITARY SURVIVOR BENEFIT PLAN BASED ON 20 YEARS OF SERVICE. WHEN HE RETIRES FROM THE CIVIL SERVICE, HE CAN WAIVE HIS MILITARY RETIRED PAY, RECEIVE CIVIL SERVICE RETIRED PAY BASED ON 30 YEARS OF SERVICE, PARTICIPATE IN THE CIVIL SERVICE RETIREE SURVIVOR BENEFIT PLAN BASED ON 30 YEARS OF SERVICE AND CEASE PARTICIPATION IN THE MILITARY SURVIVOR BENEFIT PLAN BASED ON 20 YEARS OF SERVICE." SEN. REP. NO. 1089, 92ND CONG., 2D SESS., REPRINTED IN 1972 U.S.C. CONG. & AD. NEWS 3288, 3301.

CONSISTENT WITH THE FOREGOING, WE HAVE EXPRESSED THE VIEW THAT SURVIVOR BENEFITS MAY NOT BE PAID TO AN INDIVIDUAL UNDER THE CIVIL SERVICE SURVIVOR ANNUITY PROGRAM AND SIMULTANEOUSLY UNDER THE SBP. 59 COMP.GEN. 225, 228 (1980).

IN THE PRESENT CASE, THEREFORE, IT APPEARS THAT SERGEANT LYLES PROPERLY ELECTED TO PARTICIPATE IN THE SBP IN 1972, AND THAT HE WAS PROPERLY ASSESSED COSTS FOR SBP COVERAGE FROM THAT TIME UNTIL THE TIME HE WAIVED HIS MILITARY RETIRED PAY FOR CIVIL SERVICE RETIREMENT PURPOSES IN 1985. HIS PARTICIPATION IN THE SBP AT THAT TIME WAS NOT A MATTER OF "ADMINISTRATIVE ERROR," AND IF HE HAD DIED AT ANY TIME DURING THAT PERIOD, HIS WIFE WOULD HAVE BECOME ENTITLED TO AN SBP ANNUITY.

IT FURTHER APPEARS THAT UNDER THE LAWS GOVERNING THE SBP PROGRAM, SERGEANT LYLES PROPERLY WITHDREW FROM THAT PROGRAM IN 1985 BY COMBINING HIS MILITARY SERVICE WITH HIS FEDERAL CIVILIAN SERVICE FOR CIVIL SERVICE RETIREMENT PURPOSES, THUS IN EFFECT CONVERTING FROM SBP TO CIVIL SERVICE SURVIVOR ANNUITY COVERAGE. AS INDICATED, HIS WIFE IS NOW ELIGIBLE TO RECEIVE A LARGER CIVIL SERVICE SURVIVOR ANNUITY BASED ON HIS TOTAL MILITARY AND CIVILIAN SERVICE, IF SHE SURVIVES HIM.

WE ARE UNABLE TO FIND A PROPER BASIS, HOWEVER, FOR ALLOWING SERGEANT LYLES' CLAIM FOR A REFUND OF HIS COSTS OF SBP COVERAGE BETWEEN 1972 AND 1985. DURING THOSE YEARS HE HAD THE PROTECTION OF SBP COVERAGE FOR HIS WIFE, AND HE PAID THE NECESSARY COSTS. WHILE IT IS FORTUNATE THAT HIS WIFE DID NOT HAVE THE OCCASION TO APPLY FOR AN SBP ANNUITY DURING THOSE YEARS, A REFUND OF THE COSTS MAY NOT BE ALLOWED ON THAT BASIS. FURTHERMORE, HE MAY NOT BE ALLOWED A REFUND ON THE BASIS OF HIS ELECTION TO CONVERT HIS SBP COVERAGE TO COVERAGE UNDER THE CIVIL SERVICE RETIREMENT SYSTEM, NOTWITHSTANDING THAT HE MAY NOT HAVE FULLY UNDERSTOOD THAT HIS SBP COVERAGE WOULD TERMINATE UPON THAT CONVERSION.

ACCORDINGLY, WE SUSTAIN THE DENIAL OF SERGEANT LYLES' CLAIM.