B-183113, MAR 31, 1975

B-183113, MAR 31, 1975

FEDERAL EMPLOYEE ELECTED OPTIONAL LIFE INSURANCE COVERAGE UNDER FEDERAL EMPLOYEES GROUP LIFE INSURANCE PROGRAM ON FEBRUARY 14, 1968. DUE TO GOVERNMENT'S ADMINISTRATIVE ERROR, APPROPRIATE DEDUCTIONS WERE NOT MADE FROM HIS PAY BEGINNING MARCH 4, 1968. EMPLOYEE'S REQUEST FOR WAIVER IS DENIED SINCE HE HAD CONSTRUCTIVE, IF NOT ACTUAL, KNOWLEDGE OF THE OVERPAYMENTS; ALSO, IT WOULD NOT BE INEQUITABLE TO REQUIRE PAYMENT BECAUSE EMPLOYEE WOULD HAVE BEEN COVERED BY OPTIONAL LIFE INSURANCE HAD HE DIED DURING PERIOD OF OVERPAYMENTS. B-180137, DECEMBER 28, 1973, DISTINGUISHED.

MARVIN G. ADAMS - REQUEST FOR WAIVER OF OVERPAYMENT OF PAY:

REFERENCE IS MADE TO A LETTER OF OCTOBER 3, 1974, FROM MR. RICHARD G. REMMES, GENERAL COUNSEL OF THE NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES, APPEALING OUR TRANSPORTATION AND CLAIMS DIVISION'S JANUARY 16, 1973, DENIAL OF A REQUEST FOR WAIVER OF THE GOVERNMENT'S CLAIM AGAINST MR. MARVIN G. ADAMS FOR OVERPAYMENT OF PAY IN THE GROSS AMOUNT OF $515.40, ON THE BASIS OF DECISION B-180137, DECEMBER 28, 1973.

THE RECORD DISCLOSES THAT ON FEBRUARY 14, 1968, MR. ADAMS ELECTED OPTIONAL LIFE INSURANCE COVERAGE UNDER THE FEDERAL EMPLOYEES GROUP LIFE INSURANCE PROGRAM. IT APPEARS THAT MR. ADAMS WAS ALREADY PARTICIPATING IN THE REGULAR FEDERAL EMPLOYEES GROUP LIFE INSURANCE PROGRAM AT THE TIME THAT HE MADE HIS OPTIONAL LIFE INSURANCE ELECTION. DUE TO AN ADMINISTRATIVE ERROR, DEDUCTIONS FOR MR. ADAMS' OPTIONAL LIFE INSURANCE PREMIUMS WERE NOT MADE FROM MARCH 4, 1968, THROUGH JUNE 24, 1972. MR. ADAMS WAS OVERPAID IN THE GROSS AMOUNT OF $515.40 DURING THIS PERIOD.

THE STANDARDS FOR WAIVER OF CLAIMS ARISING OUT OF AN ERRONEOUS PAYMENT OF PAY ARE FOUND IN 4 CODE OF FEDERAL REGULATIONS 91-93, WHICH IMPLEMENT PUBLIC LAW 90-616, AS AMENDED, 5 U.S.C. SEC. 5584 (SUPP. III, 1973). SECTION 91.5(C) PROVIDES FOR WAIVER WHERE:

"(C) COLLECTION ACTION UNDER THE CLAIM WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES. GENERALLY THESE CRITERIA WILL BE MET BY A FINDING THAT THE ERRONEOUS PAYMENT OF PAY OR ALLOWANCES OCCURRED THROUGH ADMINISTRATIVE ERROR AND THAT THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION, FAULT OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE OR MEMBER OR ANY OTHER PERSON HAVING AN INTEREST IN OBTAINING A WAIVER OF THE CLAIM. *** WAIVER OF OVERPAYMENTS OF PAY AND ALLOWANCES UNDER THIS STANDARD NECESSARILY MUST DEPEND UPON THE FACTS EXITSING IN THE PARTICULAR CASE. ***"

WE HAVE CONSISTENTLY HELD THAT WHERE AN EMPLOYEE KNOWS THAT HE IS BEING OVERPAID, HE IS PRECLUDED FROM WAIVER UNDER THESE STANDARDS BECAUSE IT CANNOT BE SAID THAT THE EMPLOYEE IS WITHOUT FAULT IN CONTINUING TO ACCEPT THE ERRONEOUS PAYMENTS. SEE B-174059, OCTOBER 8, 1971; B-173386, OCTOBER 8, 1971; B-171944, MARCH 23, 1971. THE SAME CONCLUSION IS REQUIRED WHEN AN EMPLOYEE IS FOUND TO HAVE CONSTRUCTIVE KNOWLEDGE OF AN OVERPAYMENT. SEE B-168922, MAY 5, 1970; B-172117, MAY 12, 1971; B-168823, FEBRUARY 17, 1970.

IT APPEARS THAT BEFORE FEBRUARY 14, 1968, PREMIUMS FOR MR. ADAMS' REGULAR FEDERAL EMPLOYEES GROUP LIFE INSURANCE WERE PROPERLY BEING DEDUCTED FROM HIS PAYCHECKS. MR. ADAMS ELECTED THE OPTIONAL LIFE INSURANCE ON FEBRUARY 14, 1968, IN ADDITION TO HIS REGULAR LIFE INSURANCE, AND OBVIOUSLY LARGER PREMIUMS SHOULD HAVE BEEN DEDUCTED FROM HIS PAY BEGINNING WITH THE FIRST PAY PERIOD AFTER THAT DATE. NEVERTHELESS MR. ADAMS' EARNINGS AND LEAVE STATEMENTS CONTINUED TO INDICATE THE SAME PREMIUM DEDUCTIONS AS HAD BEEN MADE PREVIOUSLY. MR. ADAMS ARGUES THAT BECAUSE HE DID NOT READ HIS EARNINGS AND WAGE STATEMENTS HE WAS NOT AWARE THAT HIS PREMIUM DEDUCTIONS REMAINED IDENTICAL TO EARLIER DEDUCTIONS. HOWEVER, THE EARNINGS AND LEAVE STATEMENTS ARE DISTRIBUTED TO GOVERNMENT EMPLOYEES PRECISELY SO THAT THEY MAY CHECK FOR THIS TYPE OF ADMINISTRATIVE ERROR ON THE PART OF THE GOVERNMENT. IN THIS CONNECTION WE POINT OUT THAT DECISION B-180137, DECEMBER 28, 1973, IS TO BE DISTINGUISHED ON THE FACTS FROM THIS CASE. THE DECISION CITED, THE INCREASED DEDUCTIONS INVOLVED WERE NOT TO BEGIN UNTIL 3 YEARS AFTER THE OPTIONAL INSURANCE WAS ELECTED AND IT WAS QUITE POSSIBLE FOR AN EMPLOYEE NOT TO NOTICE THE NON-DEDUCTIONS AFTER SUCH A LONG PERIOD OF TIME. HOWEVER, IN THIS CASE THE DEDUCTIONS WERE TO BEGIN WITHIN A MONTH. UNDER SUCH CIRCUMSTANCES WE BELIEVE MR. ADAMS SHOULD HAVE NOTICED THE NON-DEDUCTIONS.

EVEN IF MR. ADAMS DID NOT IN FACT READ HIS EARNINGS AND WAGE STATEMENTS, HE MUST BE HELD TO HAVE CONSTRUCTIVE KNOWLEDGE OF THE GOVERNMENT'S ERROR. WHEN NO ADDITIONAL LIFE INSURANCE PREMIUMS WERE DEDUCTED FROM MR. ADAMS' PAYCHECK, HE SHOULD HAVE INQUIRED WHETHER APPROPRIATE DEDUCTIONS WERE BEING MADE. THE FACT THAT MR. ADAMS DID NOT SO INQUIRE IS AN INDICATION OF FAULT ON HIS PART. WE STATED IN B 165663, JUNE 11, 1969, WITH REGARD TO THE REQUIREMENT THAT THERE BE NO INDICATION OF FAULT ON THE PART OF THE EMPLOYEE, THAT:

"WHETHER AN EMPLOYEE WHO RECEIVES AN ERRONEOUS PAYMENT IS FREE FROM FAULT IN THE MATTER CAN ONLY BE DETERMINED BY A CAREFUL ANALYSIS OF ALL PERTINENT FACTS, NOT ONLY THOSE GIVING RISE TO THE OVERPAYMENT BUT THOSE INDICATING WHETHER THE EMPLOYEE REASONABLY COULD HAVE BEEN EXPECTED TO HAVE BEEN AWARE THAT AN ERROR HAD BEEN MADE. IF IT IS ADMINISTRATIVELY DETERMINED THAT A REASONABLE MAN, UNDER THE CIRCUMSTANCES INVOLVED, WOULD HAVE MADE INQUIRY AS TO THE CORRECTNESS OF THE PAYMENT AND THE EMPLOYEE INVOLVED DID NOT, THEN, IN OUR OPINION, THE EMPLOYEE COULD NOT BE SAID TO BE FREE FROM FAULT IN THE MATTER AND THE CLAIM AGAINST HIM SHOULD NOT BE WAIVED."

BECAUSE MR. ADAMS WAS AT FAULT IN FAILING TO NOTIFY THE APPROPRIATE OFFICIALS OF THE FACT THAT HIS PREMIUM DEDUCTIONS DID NOT INCREASE AFTER HE ELECTED ADDITIONAL LIFE INSURANCE, THE CLAIMANT'S APPLICATION FOR WAIVER OF OVERPAYMENT IS DENIED.

IT SHOULD ALSO BE NOTED THAT THE STANDARDS FOR WAIVER OF OVERPAYMENTS, IN ADDITION TO INDICATING THAT WAIVER SHOULD BE DENIED UNDER CIRCUMSTANCES WHICH REVEAL SOME FAULT BY THE INDIVIDUAL REQUESTING WAIVER, ALSO INDICATE THAT WAIVER SHOULD BE DENIED WHEN, "COLLECTION ACTION UNDER THE CLAIM WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES." IN THIS CASE THE BENEFICIARY OF MR. ADAMS WOULD HAVE RECOVERED HIS OPTIONAL INSURANCE HAD HE DIED DURING THE PERIOD AFTER HE HAD ELECTED THAT INSURANCE ALTHOUGH NO PREMIUM PAYMENTS WERE DEDUCTED DUE TO THE ADMINISTRATIVE ERROR BY THE GOVERNMENT. FOR THAT REASON WE DO NOT BELIEVE IT IS UNFAIR TO REQUIRE MR. ADAMS TO PAY FOR THE INSURANCE PROTECTION PROVIDED FROM MARCH 4, 1968, UNTIL JUNE 24, 1972.

ACCORDINGLY, WE MUST SUSTAIN THE DENIAL OF THE REQUESTED WAIVER.