B-243002, Jul 11, 1991

B-243002: Jul 11, 1991

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Since member should have been aware of the overpayment and should have taken action to have the matter corrected. He is not without "fault" in the matter and waiver must be denied under 10 U.S.C. Waiver of an additional overpayment resulting from erroneous estimates of monthly deduction required to comply with the pay cap (for a different period) is granted. Retired: This action is in response to a request from Colonel Frederick F.Y. An insufficient amount was deducted from his retired pay pursuant to these restrictions. No action was taken by the finance center to make the required deductions in his military retired pay. When documentation was received from his employing office. A letter was sent to Colonel Pang explaining how the reduction in retired pay would be computed and advising him that the delay in processing from January to March had resulted in an overpayment of $4.

B-243002, Jul 11, 1991

MILITARY PERSONNEL - Pay - Retirement pay - Overpayments - Debt collection - Waiver DIGEST: Member of the uniformed services, employed in a civilian capacity by the government and thereby subject to 5 U.S.C. Sec. 5532, which requires a reduction in military retired pay, received substantial increases in his retired pay due to the failure of the finance center to make appropriate pay cap deductions. Since member should have been aware of the overpayment and should have taken action to have the matter corrected, he is not without "fault" in the matter and waiver must be denied under 10 U.S.C. Sec. 2774. Waiver of an additional overpayment resulting from erroneous estimates of monthly deduction required to comply with the pay cap (for a different period) is granted.

Colonel Frederick F.Y. Pang, USAF, Retired:

This action is in response to a request from Colonel Frederick F.Y. Pang, USAF, Retired, for waiver of an erroneous payments of retired pay. Colonel Pang, a retired member of the Air Force, accepted federal employment in January 1987 at which time he became subject to the dual compensation restrictions imposed by 5 U.S.C. Sec. 5532. Due to a series of administrative errors, an insufficient amount was deducted from his retired pay pursuant to these restrictions, resulting in a total debt of $26,846.03. He seeks waiver of his obligation to repay this overpayment. For the reasons set out below we conclude that $1,333.34 of the total of indebtedness of $26,846.03 may be waived.

At the outset of his employment in January 1987 Colonel Pang advised the finance center of his employment. No action was taken by the finance center to make the required deductions in his military retired pay, however, until March of 1987, when documentation was received from his employing office. At that time, a letter was sent to Colonel Pang explaining how the reduction in retired pay would be computed and advising him that the delay in processing from January to March had resulted in an overpayment of $4,931.64. In that letter the finance center set out the amounts which he could expect to have deducted from his retired pay. Colonel Pang repaid the overpayment of $4,931.64. This amount is not questioned and he has not asked for waiver of this amount.

The debt in question arose later, primarily because of the failure of the Air Force on two separate occasions to deduct the appropriate amount from Colonel Pang's retired pay in order to comply with the pay cap limitation. As a result, the appropriate calculations were not made or entered into the pay system for the period November 1987 through June 1988 and again for the period December 1988 through July 1989.

As a result of the finance center's failure to deduct the appropriate amount from Colonel Pang's retired pay he received a substantial increase in monthly pay for the period November l987 through June l988. His total monthly retired pay increased from $287.70 for the month of October 1987 to $1,494.28 in November 1987 and increased to $1,560.01 in December 1987. (The December increase apparently was due to a cost of living increase.) He continued to receive the unreduced retired pay through June 1988 at which time he was formally notified by the Air Force of the resulting debt of $13,207.02. At that point, the Air Force resumed pay cap deductions for the remainder of the year (June 1988 through December 1988). The total amount deducted during that period was $6,991.50.

The Air Force also indicated to Colonel Pang that his account would be adjusted again in December 1988 and that pay cap deductions would continue thereafter. However, due to another administrative error, no pay cap deductions were made from January 1989 to July 1989 and Colonel Pang continued to receive his retired pay without a pay cap deduction resulting in an additional debt of $12,305.67. Thus, after 6 months of receiving the correct amount of retired pay, once again Colonel Pang's retired pay increased substantially without explanation. (During this period his pay went from $630.86 one month to $1,622.42 the next.)

Finally, there was a further indebtedness of $1,333.34 that occurred because the deductions for the period July 1988 through December 1988 had been insufficient to cover the amount by which salary exceeded the pay cap during that period. Thus, the total amount of the overpayment to Colonel Pang and the resulting debt is $26,846.03: $13,207.02 for the period from November 1987 to June 1988, $12,305.67 for the period from January 1989 to July 1989 and $1,333.34 for the period July 1988 to December 1988.

Colonel Pang asserts that his case is meritorious and the debt should be waived. He states that due to the confused state of his pay account he was forced to assume that the leave and earnings statements he received were correct. He states that he was assured by the Air Force that no additional errors would be made with regard to his retired pay account and that he took reasonable steps to preclude the erroneous overpayments. cites our decision Admiral James D. Watkins, USN (Retired), B-235501, June 23, 1989, as a basis for waiver of his debt.

Under the provisions of 10 U.S.C. Sec. 2774, the Comptroller General may waive collection of erroneous payments of pay and allowances resulting from erroneous payments where collection would be against equity and good conscience and not in the best interest of the United States, if there is no indication of fraud, misrepresentation, fault or lack of good faith on the part of the member. This office has long interpreted "fault" as used in the statute as including something more than a proven overt act or omission by the member. Thus we consider "fault" to exist if in the light of all the facts it is determined that the debtor should have known or suspected 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.

In the present case, the major portion of the debt arose when the Air Force failed on two occasions to make the proper deduction from Colonel Pang's retired pay. On the first occasion, the amount of his retired pay increased from less than $300 one month to almost $1,500 the next, with no apparent reason for the increase other than that there was no pay cap reduction made. On the second occasion the increase in his retired pay went from approximately $630 per month to over $1,600 without explanation.

Under circumstances where a member has received an unexplained increase in pay or entitlements, we have long held that a reasonable person would make inquiries regarding the increase and take action to have the matter corrected. See, for example, Petty Officer First Class Shelby W. Miller, USN, B-203213, Dec. 21, 1981 and Brian P. Happy, B-214932, May 29, 1984, where members failed to properly question the accuracy of their pay when they received unexplained significant increases in their pay and waiver was denied.

When the member fails to take such action, he is not without "fault" in the matter and waiver may not be allowed. As pointed out by the Air Force, although Colonel Pang's pay account may have been confusing, he should have been aware of his entitlements and clearly was aware that his retired pay was affected by the dual compensation pay cap restrictions. When the substantial increase in his retired pay occurred, he should have immediately taken action to have the error corrected. Thus, we cannot say that he was without "fault" in the matter. The portion of the debt which arose from failure to make pay cap deductions, therefore may not be waived.

With regard to the overpayment of $1,333.34 we note Colonel Pang's complaint about the confused state of his pay account. In our opinion, given this confusion, there was no clear indication that he was being overpaid some $250 per month for the 6-month period covered by the overpayment. The $1,333.34 overpayment therefore may be waived.

However, in our opinion, Colonel Pang should have taken steps to correct the obvious overpayments resulting from the failure of the finance center to make pay cap deductions.

While we can appreciate the frustration suffered by Colonel Pang as a result of the errors committed by the finance center, he should have been aware that he was being overpaid when he received a substantial increase in his retired pay and when there were no pay cap deductions made after he had been told they would continue to be made. His situation is therefore different from that involved in Watkins, supra. Since he knew or should have known of the overpayment and failed to take action, he is not without "fault" in the matter. Accordingly, waiver of amounts in excess of $1,333.34 may not be allowed.