[Request for Waiver of Indebtedness for Former Army Employee]

B-238243: Jul 20, 1990

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An Army employee requested waiver of his indebtedness for an erroneous lump-sum leave payment he received upon involuntary separation, contending that the Army improperly calculated his indebtedness after he was retroactively reinstated. GAO held that the claimant was not at fault for, and reasonably might not be aware of, the Army's erroneous payment. Accordingly, waiver was granted.

B-238243, Jul 20, 1990

CIVILIAN PERSONNEL - Leaves Of Absence - Lump-sum payments - Eligibility DIGEST: 1. An employee, who was removed from his position with the Yuma Proving Ground, was employed by the Corps of Engineers while his appeal of the separation action was pending. His appeal was successful, and he was reinstated retroactively to his position with the Yuma Proving Ground. The Corps of Engineers should not have paid him for his accrued annual leave since he was not separated from federal service under 5 U.S.C. Sec. 5551 (1988). CIVILIAN PERSONNEL - Leaves Of Absence - Annual leave - Lump-sum payments - Waiver - Reinstatement 2. In computing an employee's backpay entitlement, the agency deducted his interim earnings and his lump-sum leave payment, resulting in a net indebtedness which was subject to waiver. The agency should also have deducted the erroneous lump-sum leave payment from the employee's interim employment, thereby increasing his net indebtedness. We hold that this second lump-sum leave payment is waived.

Richard B. Pilgren - Waiver of Lump-Sum Leave Payment:

This decision is in response to an appeal by Mr. Richard B. Pilgren requesting waiver of an erroneous lump-sum leave payment in the amount of $945.60. Our Claims Group denied waiver /1/, but, for the following reasons, we grant the waiver.

BACKGROUND

Mr. Pilgren was involuntarily separated from his position with the Army Yuma Proving Ground on May 9, 1986, and he received lump-sum payment for 272 hours of annual leave. He appealed the Army's separation action to the Merit Systems Protection Board, and he was retroactively reinstated to his position effective August 25, 1986.

During this period from May to August, Mr. Pilgren was employed by the Army Corps of Engineers. When he left this position with the Corps to return to his position at the Yuma Proving Ground, he received a lump-sum payment from the Corps of Engineers for 48 hours of annual leave. It is this second lump-sum payment that is the subject of this decision.

After Mr. Pilgren was reinstated to his former position at the Yuma Proving Ground, the Army computed his backpay entitlement and deducted from his backpay award of $11,892 his outside earnings $8,118.84 and his first lump-sum leave payment $5,391.04, which resulted in a net indebtedness in the amount of $1,617.88. However, the Army failed to consider the second lump-sum payment from the Corps of Engineers position. When our Claims Group considered the net indebtedness for waiver, the Claims Group granted waiver of repayment of the net indebtedness $1,617.88 but denied waiver for the second lump-sum payment $945.60 since the 48 hours of leave were restored to his leave account.

OPINION

When Mr. Pilgren left his position with the Army Corps of Engineers in order to be reinstated to his former position with the Yuma Proving Ground, he was not separated from the service and should not have received a lump-sum payment for accrued annual leave under the provisions of 5 U.S.C. Sec. 5551 (1988). Therefore, this second lump sum payment was also an erroneous payment which would be subject to waiver under the provisions of 5 U.S.C. Sec. 5584 (1988).

In our decisions involving employees who are improperly separated and who receive a lump-sum leave payment, we have held that upon restoration and the award of backpay, the lump-sum leave payment may be considered for waiver only to the extent that there remains a net indebtedness after deductions are made from the backpay award. Victor Crichton, 66 Comp.Gen. 570 (1987); Jeffrey Kassel, 65 Comp.Gen. 865 (1986); Angel F. Rivera, 64 Comp.Gen. 86 (1984).

While it may be argued that waiver is not appropriate in cases involving the repayment of lump-sum leave payments since the employee is recredited with the annual leave covered by the lump-sum payment, we stated in Rivera, supra, that the purpose of the waiver provisions found in 5 U.S.C. Sec. 5584 (1988) is to validate a payment or benefit to which an employee is not legally entitled. If an employee is not recredited with annual leave covered by the lump-sum payment, but repayment of the lump sum is "waived," the employee is in the same position as he was prior to the "waiver." Likewise, an employee receives no benefit if he is recredited with leave and required to repay the lump-sum payment. Only when waiver of the repayment is granted and leave recredited has the employee received the additional, equitable benefit intended by the waiver statute. Angel F. Rivera, 64 Comp.Gen. 86 at 92 (1984).

Thus, we do not concur with our Claims Group's determination in this case. It is our view that there were two erroneous lump-sum payments which the Army should have deducted from Mr. Pilgren's backpay award, thereby increasing his net indebtedness. While it might be argued that Mr. Pilgren should have known his second lump-sum payment was erroneous, it is equally plausible that he assumed a lump-sum payment was appropriate upon separation from each appointment. Moreover, this is not a case where the agency promptly recognized the mistake and shortly thereafter sought recovery of the overpayment. See Seymour Zirin, B-204974, June 24, 1982. Rather, in this case the agency did not recognize or attempt to recover this erroneous overpayment for over 2 years after the erroneous payment.

Accordingly, we overturn our Claims Group and grant waiver to Mr. Pilgren for repayment of the second lump-sum leave payment by the Army Corps of Engineers in the amount of $945.60.

/1/ Z-2880879, February 28, 1989.