Matter of: John J. Williams - Waiver of Underdeduction of Health Insurance Premiums File: B-251667 Date: April 2, 1993

B-251667: Apr 2, 1993

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CIVILIAN PERSONNEL Compensation Payroll deductions Health insurance Insurance premiums Underdeductions Where an employee's pay records were transferred to a different payroll department and he complained to the agency about errors and confusion with his records. He is found not to be at fault initially for not recognizing that the amounts being deducted from his pay for health insurance were incorrect. Partial waiver of his resulting debt is granted. At that time he should have noticed the discrepancy and brought it to the attention of the agency. Williams was transferred from the Army Military District of Washington to the Walter Reed Army Medical Center on January 31. His payroll department was also transferred to Walter Reed.

Matter of: John J. Williams - Waiver of Underdeduction of Health Insurance Premiums File: B-251667 Date: April 2, 1993

CIVILIAN PERSONNEL Compensation Payroll deductions Health insurance Insurance premiums Underdeductions Where an employee's pay records were transferred to a different payroll department and he complained to the agency about errors and confusion with his records, he is found not to be at fault initially for not recognizing that the amounts being deducted from his pay for health insurance were incorrect. Therefore, partial waiver of his resulting debt is granted. However, the amount of the debt accruing after the next open season may not be waived since he received booklets showing the premium for each insurance plan, and his leave and earning statements showed a lesser amount being deducted for the health plan he had selected. At that time he should have noticed the discrepancy and brought it to the attention of the agency, which he did not do.

DECISION Mr. John J. Williams, an employee of the Department of the Army, has appealed our Claims Group's settlement[1] which denied his request to waive his debt for overpayments of pay he received due to the underdeduction of health insurance premiums from his pay during the period of November 12, 1983, to January 12, 1991.

BACKGROUND

The record shows that in 1978 Mr. Williams enrolled in the Blue Cross/Blue Shield, high option, health benefits plan. When Mr. Williams was transferred from the Army Military District of Washington to the Walter Reed Army Medical Center on January 31, 1982, his payroll department was also transferred to Walter Reed, and it erroneously changed the enrollment code for his existing health benefits plan to an enrollment code for a different, less expensive plan. This coding error was carried over when Mr. Williams was transferred back to the Military District effective November 12, 1983. Although Mr. Williams remained covered by the Blue Cross/Blue Shield plan, the payroll coding error caused underdeductions from his biweekly pay because the amounts deducted were based on the lower premiums for the less expensive plan. The Army calculated the underdeductions to total $6,357.80 for the nearly 8-year period beginning November 12, 1983, until the Army discovered the error in January 1991 when Mr. Williams changed his health plan coverage from high option to standard option.[2]

The Army indicates that the incorrect enrollment coding was due to administrative error by the Army and that Mr. Williams indicated that he was unaware of the error until the Army notified him in 1991. However, the Army states that each year during open season for the health plans it furnishes employees an information letter and the comparison booklet showing the exact charges per pay period to be deducted from salary for each plan. It also states that employees are notified in advance of any increases or decreases in health benefit premiums and that Mr. Williams was furnished leave and earning statements each pay period that reflected the amount being deducted from his pay for health benefits premiums. The Army concludes that since Mr. Williams was furnished information, including his leave and earnings statements and the premium amounts shown in the comparison booklets, which would have indicated that insufficient amounts were being deducted from his pay, he had an obligation to bring the discrepancy to the attention of government officials. Because he did not do so, the Army found him to be partially at fault in the matter and therefore precluded from having his debt waived. Our Claims Group agreed.

With his appeal Mr. Williams furnished documents showing the coding errors. He also furnished a copy of a memorandum dated February 17, 1984, which he appears to have directed to the Army Inspector General's office. In that memorandum he complains about various errors that were made in his records incident to the transfer of records from Walter Reed Army Medical Center in late 1983 referred to above. In the memorandum he also refers to a previous letter he had written, dated January 30, 1984, referring to records which were "scrambled and overheld by the previous agency W.R.A.M.C."

DISCUSSION

Our authority to waive claims for debts arising out of overpayments of salary is found in 5 U.S.C. Sec. 5584 and the implementing standards in 4 C.F.R. parts 91 and 92. Waiver under those provisions, however, is precluded if the actions of the employee indicate he was at "fault" in some degree regarding the overpayment. 5 U.S.C. Sec. 5584(b)(1). Fault, as used in section 5584, is considered to exist if it is determined that an employee exercising reasonable diligence should have known that an error existed, but failed to take corrective action. The standard to be employed is whether a reasonable person should have been aware that he was receiving payment in excess of his proper entitlement. 4 C.F.R. Sec. 91.5(b). If an employee has records which, if reviewed by him, would indicate an overpayment and the employee fails to review those documents and fails to take corrective action, he is not without fault and waiver will be denied. Daniel J. Rendon, 68 Comp.Gen. 573 (1989); George M. Dold, B-202795, Dec. 1, 1981.

In Mr. Williams's case we agree with our Claims Group and the Army that Mr. Williams's leave and earnings statements and health benefits comparison booklets were sufficient documents to have alerted him that he was receiving overpayments and that he should have brought the matter to the attention of the appropriate officials so that it could be corrected.

Mr. Williams does not dispute that he was undercharged for his health insurance coverage, or that he regularly received health benefits plan booklets and leave and earnings statements which in combination would have shown the error. Instead, the basis for his request for waiver appears to be that the agency made various errors in coding which resulted in the erroneous payments and thus the agency, not he, is at fault in the matter. As noted above, however, while we and the agency agree that it was the agency's administrative error which initiated the underdeductions from Mr. Williams's pay, he had the responsibility to review the documents furnished him which would have shown the error, and bring it to the agency's attention.

As noted above, with his appeal he furnished a memorandum indicating that in early 1984, shortly after the transfer of the payroll department from Walter Reed in November 1983, he did complain to the Inspector General about various problems and confusion apparently associated with the records. Also, there does appear to have been some confusion between the personnel offices and payroll offices handling Mr. Williams's records during the 1981-1983 period when his payroll records were transferred twice and the coding errors were made. Therefore, in view of this confusion, and considering that Mr. Williams did bring to the attention of the agency the fact that errors apparently had been made in his records, we can understand why he may not initially have realized that underdeductions were being made for health insurance premiums, and may have relied on the agency to correct any errors as a result of his complaints to the Inspector General. Considering these circumstances, we now do not think he should be held responsible for the initial overpayments beginning in November 1983 and extending through the last pay period of 1984, which we calculate total $404.31. Accordingly, that amount is hereby waived.

However, during the health benefits open season in late 1984, when booklets and other informational material as to types of coverage and rates were distributed, Mr. Williams should have reviewed the type and costs of his coverage. If he had done so, he would have been aware from his leave and earnings statements that beginning with the first full pay period in 1985 at the latest, when new rates took effect, the correct premiums were not being deducted from his pay. He had an obligation to review those documents and bring the obvious discrepancy to the attention of appropriate agency officials, which he did not do. Therefore, he is considered at least partially at fault for allowing the overpayments to continue until the error was discovered by the agency in 1991. Accordingly, the denial of waiver of the remainder of his debt is sustained.

We do note that the agency's computation of the debt appears to contain minor errors for the pay period beginning January 25, 1986, and running through December 13, 1986. Payroll registers show deductions for Mr. Williams's health insurance of $17.37 each pay period and the agency's report of its computation of the debt shows deductions of only $15.93 during this period. This amounts to an overstatement of his debt in the total amount of $34.56.[3] His debt should be reduced by that amount.

In summary, we have waived $404.31 of Mr. Williams's debt and reduced it by $34.56 due to the error in computation. Therefore, the remaining amount of the original $6,357.80 debt stated against Mr. Williams, and for which he remains liable to the agency, is $5,918.93.

1. Z-2916575-056, Nov. 4, 1992.

2. Although Mr. Williams's health plan also was erroneously coded by the Walter Reed payroll department from January 31, 1982, through November 11, 1983, it is not clear whether this caused underdeductions during this period, and the Army asserts no debt for this period.

3. Difference of $1.44 per pay period for 24 pay periods.