Request for Waiver of Indebtedness

An employee requested reconsideration of a Claims Division decision wherein his request for waiver of an overpayment was denied. The overpayment resulted from an agency's failure to make proper deductions from the employee's pay for optional life insrance coverage. The employee signed a form by which he elected optional life insurance coverage in addition to regular life insurance and authorized payroll deductions to be made for the optional insurance. Due to administrative error, payroll deductions were not made for the optional insurance for a period of 9 years. Nevertheless, the optional life insurance remained in effect and the employee received the benefit of that insurance in that if he had died his widow would have received payment. In his request that the indebtedness be waived, the employee stated that he did not recall his decision to choose optional coverage and his leave and earnings statements did not reflect deductions for the insurance. He contended that since his wife had not become a widow, no benefit was received. Legislation provides that collection may be waived if it would be against equity and good conscience and not in the best interests of the United States unless an indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee exists. Fault is considered to exist if it is determined that the employee should have known that an error existed but failed to take action to have it corrected. In this case, GAO believed the employee to be on constructive notice that the agency failed to make the appropriate deductions when he found that his leave and earnings statements did not indicate the deductions were being made. GAO found that it was not inequitable to require payment of the debt since the employee had the benefit of the optional life insurance coverage throughout the period of overpayment. Accordingly, the previous decision was sustained.