B-232544, Jul 20, 1990

B-232544: Jul 20, 1990

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When a Maryland court refused to recognize his Nevada divorce from his first wife the Army determined that the wife named on the SBP form was not his legal wife and then mistakenly discontinued withholding SBP premiums from the member's retired pay. Sec. 2774 (1982) because the member was not at fault for the mistake and could not reasonably have been expected to know that his first wife was covered under the Plan and that. Army (Retired): The question presented is whether Master Sergeant (MSG) Phillip F. Army (Retired) is liable for retroactive Survivor Benefit Plan (SBP) costs and. If he is. We conclude that MSG Weldon is liable for the retroactive costs but that repayment of those costs may be waived.

B-232544, Jul 20, 1990

MILITARY PERSONNEL - Pay - Survivor benefits - Overpayments - Debt collection - Waiver DIGEST: A retired member of the Army named his second wife as his beneficiary on his Survivor Benefit Plan (SBP) form. When a Maryland court refused to recognize his Nevada divorce from his first wife the Army determined that the wife named on the SBP form was not his legal wife and then mistakenly discontinued withholding SBP premiums from the member's retired pay, resulting in a debt of $8,214.04 accumulated over 11-1/2 years. That debt should be waived under 10 U.S.C. Sec. 2774 (1982) because the member was not at fault for the mistake and could not reasonably have been expected to know that his first wife was covered under the Plan and that, therefore, his participation had not been discontinued.

Master Sergeant Phillip F. Weldon, U.S. Army (Retired):

The question presented is whether Master Sergeant (MSG) Phillip F. Weldon, U.S. Army (Retired) is liable for retroactive Survivor Benefit Plan (SBP) costs and, if he is, whether that liability may be waived under 10 U.S.C. Sec. 2774 (1982). For the reasons set forth below, we conclude that MSG Weldon is liable for the retroactive costs but that repayment of those costs may be waived.

Master Sergeant Weldon married Katharina Weldon on October 1, 1948. Apparently, he was granted a divorce from Katharina by a Nevada court in November 1971. However, the United States District Court for Maryland concluded that the Nevada divorce was invalid in a judgment that was final on December 23, 1977.

In the meantime, MSG Weldon had married Sebasli Baroutsi, and listed her as his legal spouse on his Survivor Benefit Plan form at the time of his retirement on November 30, 1975. The administrative report is unclear as to what transpired at the time of his retirement. However, it appears questions were raised concerning the proper beneficiary in view of the court order. In any event the Army never deducted the cost of SBP coverage from MSG Weldon's retired pay, with the result that he received a total of $8,214.04 in retired pay for the period December 1, 1975 through May 1987 that he would not have received had the Army made deductions for the SBP. Additionally, it appears that MSG Weldon was either told or assumed that no coverage was being provided for Ms. Baroutsi and that he had no SBP coverage. The Army now is attempting to collect that amount from him.

Since it appears that the court was a competent court to resolve the issue of marital status, we will abide by its final determination that there never was a valid divorce. See Petty Officer First Class Bennie B. Paradise, USN (Retired) (Deceased), B-204367, Aug. 1, 1986. The Army therefore properly determined that MSG Weldon never legally divorced Katharina Weldon and that she was the legally entitled beneficiary.

We have held previously that when a member does not list the correct spouse's name on an SBP form, the member is not removed from coverage under the plan nor is the correct spouse's right to an annuity affected. Listing the spouse's name on the form is primarily for administrative convenience. Chief Petty Officer Robert W. McEachern (Retired) (Deceased), B-229157, Jan. 11, 1988; Staff Sergeant Roger A. Cline, USA (Retired) (Deceased), 57 Comp.Gen. 426 (1978). Katharina Weldon was always legally entitled to the annuity benefit had MSG Weldon died, and it was clearly improper for the Army not to make SBP deductions.

While MSG Weldon is legally liable for this debt, we believe he is entitled to have the debt waived under 10 U.S.C. Sec. 2774. That section authorizes the Comptroller General to waive a claim for the recovery of an erroneous payment of pay or allowances made to a member of the uniformed services if collection of the debt would be against equity and good conscience and not in the best interests of the United States. A claim may not be waived, though, if there is "an indication of fraud, misrepresentation, fault, or lack of good faith" on the part of the member. 10 U.S.C. Sec. 2774(b).

The only issue here is whether any fault for the overpayment should be attributed to MSG Weldon. The general standard we employ is whether a reasonable person should have been aware of the existence of an overpayment. Dennis A. Redding, B-223385, Jan. 16, 1987.

There is no evidence in the record that MSG Weldon was aware of the law concerning SBP. Nor do we think that MSG Weldon could reasonably have been expected to know that he was receiving an overpayment of his retired pay. The $8,214.04 that is the total amount of his debt to the government accumulated over 11-1/2 years at approximately $14 per week. Given the Army's uncertainty about the proper SBP coverage, we think it understandable that MSG Weldon did not realize he was being overpaid.

In our view, the debt owed by MSG Weldon to the government is the result of an error by the Army for which MSG Weldon shares no responsibility, he was not at fault in any way and could not reasonably have known that he should have been paying the SBP premiums each pay period. For those reasons, the $8,214.04 debt should be waived.

/1/ Our decision reported the amount of Mr. Kane's liability to be $15,232.49. The amount was corrected and our decision was modified by our letter, B-217114.3, February 10, 1987.

/2/ Letters from Mr. Kane and his successor to the Civilian Payroll Office requested that "any check due Mr. Schmid" be forwarded to the Buffalo District.