B-236756, Feb 5, 1990, 69 Comp.Gen. 226

B-236756: Feb 5, 1990

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MILITARY PERSONNEL - Pay - Retirement pay - Overpayments - Debt collection - Waiver A retired member of the Coast Guard was informed that he was being paid erroneously and he repaid the amounts due to the Coast Guard. The member is not without fault since he should have expected the monthly payments to change and he should have made inquiries of the proper officials when the payments were not reduced. Is appropriate where legislation amending 37 U.S.C. Sec. 1007(c) was enacted subsequent to legislation amending 5 U.S.C. In the alternative he requests that the amount deducted from his retired pay for repayment of the debt be reduced if waiver is not granted. Lieutenant Francis was placed on the Temporary Disability Retired List (TDRL) under 10 U.S.C.

B-236756, Feb 5, 1990, 69 Comp.Gen. 226

MILITARY PERSONNEL - Pay - Retirement pay - Overpayments - Debt collection - Waiver A retired member of the Coast Guard was informed that he was being paid erroneously and he repaid the amounts due to the Coast Guard; however, the erroneous payments continued following the notification and repayment. The member is not without fault since he should have expected the monthly payments to change and he should have made inquiries of the proper officials when the payments were not reduced. In such circumstances waiver of his debt may not be granted under 10 U.S.C. Sec. 2774. MILITARY PERSONNEL - Pay - Retirement pay - Overpayments - Debt collection - Set- off Collection of a debt under 37 U.S.C. Sec. 1007(c), which provides that two thirds of monthly pay may be deducted from members of the uniformed service to repay a debt, rather than 5 U.S.C. Sec. 5514 which limits collection to 15 percent, is appropriate where legislation amending 37 U.S.C. Sec. 1007(c) was enacted subsequent to legislation amending 5 U.S.C. Sec. 5514.

Lieutenant (JG) Garry L. Francis, USCG, Retired:

Lieutenant (JG) Garry L. Francis, USCG, retired, appeals our Claims Group denial of his request for waiver under 10 U.S.C. Sec. 2774 of an indebtedness to the United States in the amount of $35,888. In the alternative he requests that the amount deducted from his retired pay for repayment of the debt be reduced if waiver is not granted. The debt arose as a result of administrative error in the computation of his retired pay. For the following reasons we sustain the action of our Claims Group denying his request for waiver and the deductions from his retired pay should be made in accordance with this decision.

Lieutenant Francis was placed on the Temporary Disability Retired List (TDRL) under 10 U.S.C. Sec. 1202 on April 1, 1977, by reason of a 30 percent disability. His retired pay was computed under 10 U.S.C. Sec. 1401 which provides in part that retired pay will be based on the monthly basic pay the member was receiving at the time he was placed on the TDRL multiplied by the percentage of disability with an amount added to increase the amount of retired pay to equal at least 50 percent of his monthly basic pay. He was permanently retired with a disability rating of 30 percent on June 12, 1981. His retired pay should have been recomputed in accordance with 10 U.S.C. Sec. 1401. This recomputation would have required that his retired pay be based on 30 percent of the monthly basic pay he was receiving at the time of permanent retirement. This was not done in Lieutenant Francis's case and as a result he was overpaid from the time he was permanently retired, June 12, 1981.

On September 21, 1981, the Coast Guard notified Lieutenant Francis that his retired pay must be computed on the basis of the 30 percent disability rating effective June 12, 1981. They also informed him that he had been overpaid in the amount $959.53 and that his retired pay would be reduced from $910.98 per month to $546.60. Lieutenant Francis repaid the $959.53. The reduction which should have been made in his retired pay, however, was not made and he continued to receive monthly retired pay of $910.98. This amount was subsequently increased by cost of living adjustments and the erroneous payments continued from September 1, 1981, to October 31, 1988, and caused an indebtedness of $35,888.75.

Lieutenant Francis contends that he did not know he was being overpaid. He indicates that when he repaid the $959.53 in initial overpayments that he assumed the matter had been resolved. He also states the prompt repayment in September 1981 is evidence of his good faith in the matter. He requests waiver on this basis and the fact that repayment at this time would cause extreme financial hardship for him and his family. In the alternative, Lieutenant Francis requests that the amount being withheld from his monthly retired pay to repay the indebtedness, $424.08, be reduced to 15 percent of his disposable retired pay as required by 5 U.S.C. Sec. 5514 and that amounts in excess of this deducted since February 1989 be refunded to him.

Under the provisions of 10 U.S.C. Sec. 2774, the Comptroller General may waive collection of certain debts when collection would be against equity and good conscience and not in the best interests of the United States except where in the opinion of the Comptroller General:

"... there exists, in connection with the claim, an indication of fraud, misrepresentation, fault, or lack of good faith on the part of the member. ...."

We have interpreted "fault" as used in 10 U.S.C. Sec. 2774 as including something more than a proven overt act or omission by the military member. Thus, we consider fault to exist if in the light of all of the facts it is determined that the debtor should have known that an error existed and taken action to have it corrected. The standard we employ is to determine whether a reasonable person should have been aware that he was receiving a payment in excess of his proper entitlement. 56 Comp.Gen. 943 (1977).

In our view Lieutenant Francis should have been aware that he was being overpaid. In September 1981 he was informed that he had been overpaid since June 12, 1981, in the amount of $959.53. A breakdown of the erroneous payment was provided indicating that while he had been receiving $910.98, he was only entitled to $546.60. After he repaid the amount he had been overpaid in September 1981 he continued to receive the same payment of $910.98. We think that there was an obvious administrative error, and that Lieutenant Francis should have questioned the payments when they did not change. In these circumstances we cannot conclude that Lieutenant Francis is without fault and his request for waiver must be denied.

Lieutenant Francis believes that the deductions from his retired pay to repay the overpayment are excessive and that 5 U.S.C. Sec. 5514, limiting collections to 15 percent of his retired pay is applicable in his case. The Coast Guard maintains that the provisions of 37 U.S.C. Sec. 1007(c) are applicable in this case and authorize deductions not to exceed two thirds of his retired pay to repay the erroneous payments. We conclude that 37 U.S.C. Sec. 1007(c) may be applied to recover the erroneous payments here involved.

Section 5 of the Debt Collection Act of 1982, Pub.L. No. 97-365, 96 Stat. 1749, 1751-1752 (1982), amended 5 U.S.C. Sec. 5514 to include offsets from pay for any debt owed to the United States. It also provided protection for the individuals involved by specifying that hearings on the issue be held and limited the amount of the offset to 15 percent of disposable pay. This provision specifically refers to retired pay. However, we have held that this act was not intended to repeal existing or override subsequent statutes which provide for offset. See 64 Comp.Gen. 142 (1984) and 5 U.S.C. Sec. 5514(c).

Section 1007(c) of title 37, United States Code provides in part as follows:

"Under regulations prescribed by the Secretary concerned, an amount that a member of the uniformed services is administratively determined to owe the United States or any of its instrumentalities may be deducted from his pay in monthly installments. However, ... the deduction authorized by this section may not reduce the pay actually received for any month to less than one third of his pay for that month."

Prior to 1984, 37 U.S.C. Sec. 1007(c) applied only to enlisted members of the Army and the Air Force. However, section 1305 of the Department of Defense Authorization Act, 1985, Pub.L. No. 98-525, 98 Stat. 2492, 2613 (1984), expanded the government's debt collection authority in 37 U.S.C. Sec. 1007(c) to apply to any member, officer or enlisted, of the armed forces. Subsequently, section 684 of the Department of Defense Authorization Act, 1986, Pub.L. No. 99-145, 99 Stat. 583, 666 (1985), further amended 37 U.S.C. Sec. 1007(c) to include all members of the uniformed services. In considering Pub.L. No. 99-145, the House Armed Services Committee stated that the expansion of section 1007(c) to include members of the uniformed services was accomplished to "... ensure equal treatment of all members of the uniformed services, officers and enlisted, active and retired in matters of debt collection." H.R. Rep. No. 99-81, 99th Cong., 1st Sess., 257-258 (1985) (emphasis added).

Therefore, it seems clear that Congress intended 37 U.S.C. Sec. 1007(c) to apply to overpayments to any member of the uniformed services either on active duty or in a retired status, and may be used by the Coast Guard as the basis for determining the rate of repayment in this case notwithstanding 5 U.S.C. Sec. 5514.

Lieutenant Francis's request for waiver of his indebtedness is denied and recovery of the debt may be accomplished under 37 U.S.C. Sec. 1007(c). is not entitled to a refund of amounts withheld. With respect to the repayment rate, however, we have been informally advised by the Coast Guard that Lieutenant Francis's monthly repayment amount has been substantially reduced since his request was submitted here.