B-225873.2, Mar 28, 1991

B-225873.2: Mar 28, 1991

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Recoupment of Allotments Erroneously Paid after Death of Allotter: This is in response to a request from the Marine Corps Finance Center that we reconsider our decision B-225873. We affirm our decision that allotments erroneously paid after the death of an allotter are not subject to recoupment. Whether he was on active duty or retired. An allotment paid from pay and allowances of a member for the period he is entitled to pay and allowances under section 552 of this title a member on active duty or performing inactive duty for training may not be collected from the allottee as an overpayment when it was caused by delay in receiving evidence of death. Which was caused by delay in receiving evidence of death.

B-225873.2, Mar 28, 1991

MILITARY PERSONNEL - Pays - Overpayments - Error detection - Debt collection - Waiver DIGEST: Allotments erroneously paid from the retired pay of retired service members may not be recouped or charged against the pay of the deceased members, except allotments for unearned insurance premiums.

Recoupment of Allotments Erroneously Paid after Death of Allotter:

This is in response to a request from the Marine Corps Finance Center that we reconsider our decision B-225873, September 25, 1987, with respect to the recoupment of allotments erroneously paid after the death of a military retiree. /1/ For the reasons presented below, we affirm our decision that allotments erroneously paid after the death of an allotter are not subject to recoupment, whether he was on active duty or retired.

Our 1987 decision addressed two anti-recoupment statutes, 37 U.S.C. Sec.556(f) and 31 U.S.C. Sec.3727(e)(2). The first provides:

"(f)Except an allotment for an unearned insurance premium, an allotment paid from pay and allowances of a member for the period he is entitled to pay and allowances under section 552 of this title a member on active duty or performing inactive duty for training may not be collected from the allottee as an overpayment when it was caused by delay in receiving evidence of death. An allotment payment for a period after the end of entitlement to pay and allowances under this chapter, or otherwise, which was caused by delay in receiving evidence of death, may not be collected from the allottee or charged against the pay of the deceased member."

Section 3727(e)(2) of title 31 provides:

"(2) The Government may not collect or reclaim money paid to a person receiving an amount under an assignment or allotment of pay or allowances authorized by law when liability may exist because of the death of the person making the assignment or allotment."

In our 1987 decision we answered a series of questions regarding the recoupment of allotments, and discussed the statutes' wording and legislative histories in detail. We noted that the purpose of 37 U.S.C. Sec.556(f) was to ensure that, with the exception of unearned life insurance premiums, allotment payments made after a member's death would not be collectible from the allottee or charged against the pay of the allotter if the allotment were continued due to a delay in the receipt of notification of death. The legislative history of 31 U.S.C. Sec.3727(e)(2) indicates that its purpose was to ensure that allottees would be able to cash their checks without delay; thus, banks were not to be held responsible if they cashed checks. We concluded that, with the exception of unearned life insurance premiums, recoupment is not proper for any type of allotment available to an active duty member, or to a retiree. /2/ The Finance Center argues that the statutes, enacted during World War II, were intended to protect members who were separated from their dependents and in danger. The Center contends that because retirees are generally not separated from their families and are not subject to the exigencies of military service, the anti recoupment statutes should not apply to them. The Center cites a situation where a delay in receipt of a notice of death caused two allotments to be paid for several months after a retired member's death, and the Center suggests that a failure to recoup in that type of circumstance reflects poor financial management.

We see no legal basis on which to change our view. While 37 U.S.C. Sec.556(f) does not apply to retired members, the prohibition in 31 U.S.C. Sec.3727(e)(2) is general in nature in that it addresses allotments made by any persons. As noted above and as further explained in our prior decision, the purpose of 31 U.S.C. Sec.3727(e)(2) was to provide for the orderly processing of allotment checks through financial institutions by eliminating risk to the institution if the allotter had died by the time the allotment check was written. In light of the statute's purpose, the status of the allotter would not matter. Moreover, 31 U.S.C. Sec.3727(e)(2) specifically addresses the type of delay situation related by the Finance Center, reflecting a statutory acknowledgment that the government's interest nevertheless is best served by prohibiting recoupment

In sum, we affirm our 1987 decision with respect to retirees.

/1/ The Department of Defense Military Pay and Allowance Committee has assigned control number DO-MC-1500 to the request.

/2/ Unearned life insurance premiums are specifically excluded from the anti-recoupment provisions because an insurance company has no right to premiums after the death of the insured.