B-207339.OM., MAY 23, 1983

B-207339.OM., MAY 23, 1983

SUBJECT: LEON ZUCK AND GERALDINE WALSH - Z-2839715; Z-2839716 - REQUESTS FOR WAIVER OF UNCOLLECTED LIFE INSURANCE DEDUCTIONS - B-207339-O.M.

ASSOCIATE DIRECTOR, AFMD - CLAIMS GROUP (ROOM 5858):

THIS RESPONDS TO YOUR REQUEST FOR OUR RECOMMENDATIONS CONCERNING APPLICATIONS FILED BY LEON ZUCK AND GERALDINE WALSH, EMPLOYEES OF THE ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS, FOR WAIVER OF UNCOLLECTED LIFE INSURANCE DEDUCTIONS IN THE AMOUNTS OF $783.50 AND $715.78, RESPECTIVELY. FOR THE REASONS THAT FOLLOW, WE RECOMMEND THAT THE WAIVER REQUESTS BE RETURNED TO THE ADMINISTRATIVE OFFICE FOR ITS CONSIDERATION UNDER THE PROVISIONS OF 5 U.S.C. SEC. 8707(D) (SUPP. IV 1980).

MR. ZUCK, A COURT REPORTER FOR THE SOUTHERN DISTRICT OF NEW YORK, ELECTED REGULAR AND OPTIONAL LIFE INSURANCE COVERAGE ON JANUARY 6, 1975. BECAUSE OF AN ADMINISTRATIVE ERROR, DEDUCTIONS FOR OPTIONAL LIFE INSURANCE WERE NOT WITHHELD UNTIL THE ERROR WAS DISCOVERED IN JUNE 1981.

MS. WALSH, A DEPUTY CLERK OF THE BANKRUPTCY COURT IN LOS ANGELES, CALIFORNIA, ELECTED REGULAR LIFE INSURANCE COVERAGE ON FEBRUARY 7, 1968. DEDUCTIONS FOR LIFE INSURANCE WERE WITHHELD FROM THAT TIME THROUGH THE PAY PERIOD BEGINNING JULY 5, 1981; IN SUBSEQUENT PAY PERIODS, THE ADMINISTRATIVE OFFICE FAILED TO WITHHOLD INSURANCE DEDUCTIONS.

YOUR PRINCIPAL QUESTION IS WHETHER GAO HAS AUTHORITY TO CONSIDER THE WAIVER REQUESTS UNDER 5 U.S.C. SEC. 5584 (1976). YOU NOTE THAT THE PROVISIONS OF 5 U.S.C. SEC. 8707(D), ADDED BY THE FEDERAL EMPLOYEES' GROUP LIFE INSURANCE ACT OF 1980, PUBLIC LAW 96-427, 94 STAT. 1833, APPEAR TO ACCORD AGENCIES INDEPENDENT AUTHORITY TO WAIVE UNCOLLECTED LIFE INSURANCE DEDUCTIONS REGARDLESS OF THE AMOUNT INVOLVED. NEVERTHELESS, CITING A SERIES OF MEMORANDA ISSUED WITHIN THE OFFICE OF THE GENERAL COUNSEL, YOU QUESTION WHETHER AN AGENCY'S WAIVER AUTHORITY UNDER SECTION 8707(D) IS LIMITED BY INTERIM REGULATIONS IMPLEMENTING THAT STATUTE, NOW CODIFIED IN 5 C.F.R. SEC. 870.401(H)(2) (1982). SPECIFICALLY, YOU POINT OUT THAT 5 C.F.R. SEC. 870.401(H)(2) REQUIRES AN AGENCY TO MAKE ITS WAIVER DETERMINATION IN ACCORDANCE WITH 5 U.S.C. SEC. 5584, AS IMPLEMENTED BY 4 C.F.R. CHAPTER 1, SUBCHAPTER G (1982). THE STATUTE AND REGULATIONS INCORPORATED BY REFERENCE IN 5 C.F.R. SEC. 870.401(H)(2), PROVIDE IN PART THAT COLLECTION OF CLAIMS NOT EXCEEDING $500 MAY BE WAIVED BY THE EMPLOYING AGENCY; CLAIMS IN EXCESS OF $500 MAY ONLY BE WAIVED BY GAO.

ALSO, YOU ASK WHETHER MR. ZUCK'S INDEBTEDNESS FOR UNCOLLECTED LIFE INSURANCE DEDUCTIONS IS SUBJECT TO WAIVER UNDER 5 U.S.C. SEC. 8707(D), SINCE THE ADMINISTRATIVE OFFICE'S FAILURE TO WITHHOLD THE DEDUCTIONS OCCURRED BEFORE, BUT WAS NOT DISCOVERED UNTIL AFTER, DECEMBER 9, 1980, THE EFFECTIVE DATE OF THE INTERIM REGULATIONS IMPLEMENTING SECTION 8707(D).

AT THE OUTSET, OUR OFFICE DOES NOT HAVE AUTHORITY TO CONSIDER THE WAIVER REQUESTS FILED BY MR. ZUCK AND MS. WALSH. SECTION 5584 OF TITLE 5, U.S.C., WHICH PROVIDES OUR AUTHORITY TO WAIVE CERTAIN DEBTS, DOES NOT ALLOW US TO ACT UPON WAIVER APPLICATIONS SUBMITTED BY EMPLOYEES OF THE JUDICIAL BRANCH. 5 U.S.C. SEC. 5584(G). FURTHER, THE PROVISIONS OF 4 C.F.R. PART 91, IMPLEMENTING 5 U.S.C. SEC. 5584, SPECIFICALLY EXCLUDE EMPLOYEES OF THE ADMINISTRATIVE OFFICE FROM COVERAGE OF THE WAIVER STANDARDS SET FORTH THEREIN. 4 C.F.R. SEC. 91.3(C).

THE ADMINISTRATIVE OFFICE, HOWEVER, HAS AUTHORITY UNDER 5 U.S.C. SEC. 8707(D) TO CONSIDER REQUESTS FOR WAIVER OF UNCOLLECTED LIFE INSURANCE DEDUCTIONS, REGARDLESS OF THE DOLLAR AMOUNT INVOLVED. SECTION 8707(D) ALLOWS AN "AGENCY" WHICH ERRONEOUSLY FAILS TO WITHHOLD THE PROPER AMOUNT OF LIFE INSURANCE DEDUCTIONS FROM AN EMPLOYEE'S PAY, ANNUITY, OR COMPENSATION, TO WAIVE COLLECTION OF THE FULL AMOUNT DUE IF IT DETERMINES THAT THE EMPLOYEE IS WITHOUT FAULT AND RECOVERY WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE; THE AGENCY MUST THEN SUBMIT THE FULL AMOUNT OF UNCOLLECTED DEDUCTIONS AND AGENCY CONTRIBUTIONS TO THE EMPLOYEES' LIFE INSURANCE FUND. SEE GENERALLY, FEDERAL PERSONNEL MANUAL (FPM) LETTER 870- 26, DECEMBER 23, 1980, ATTACHMENT. ALTHOUGH THE TERM "AGENCY" IS NOT DEFINED IN 5 U.S.C. CHAPTER 87, INSTRUCTIONS CONTAINED IN SUBCHAPTER S1- 7A(2) OF FPM SUPPLEMENT 870-1 (MARCH 1982) DEFINE THE TERM "AGENCY" AS INCLUDING THE ADMINISTRATIVE OFFICE, AS WELL AS OTHER INDEPENDENT ESTABLISHMENTS AND DEPARTMENTS WITHIN THE JUDICIAL BRANCH.

DESPITE THE APPARENTLY UNLIMITED GRANT OF WAIVER AUTHORITY CONTAINED IN 5 U.S.C. SEC. 8707(D), YOU QUESTION WHETHER THE ADMINISTRATIVE OFFICE IS AUTHORIZED TO WAIVE UNCOLLECTED LIFE INSURANCE DEDUCTIONS TOTALING MORE THAN $500. IN THIS REGARD, YOU CITE REGULATIONS IMPLEMENTING SECTION 8707(D), SET FORTH IN 5 C.F.R. SEC. 870.401(H)(2), THE INTERIM PROVISIONS OF WHICH WERE THE SUBJECT OF A SERIES OF MEMORANDA ISSUED WITHIN THE OFFICE OF GENERAL COUNSEL. SECTION 870.401(H)(2) PROVIDES THAT:

"IF, UNDER SECTION 8707(D) OF TITLE 5, U.S.C. AN AGENCY WAIVES THE COLLECTION OF UNPAID INSURANCE DEDUCTIONS FROM AN INDIVIDUAL'S PAY, ANNUITY OR COMPENSATION, THE AGENCY SHALL SUBMIT AN AMOUNT EQUAL TO THE SUM OF THE UNCOLLECTED DEDUCTIONS AND ANY APPLICABLE AGENCY CONTRIBUTIONS REQUIRED UNDER SECTION 8708 OF TITLE 5, UNITED STATES CODE, TO OPM FOR DEPOSIT TO THE EMPLOYEES' LIFE INSURANCE FUND. AN AGENCY WILL MAKE ITS DETERMINATION ON THE WAIVER OF COLLECTION OF AN OVERPAYMENT OF PAY IN ACCORDANCE WITH 5 U.S.C. 5584 AS IMPLEMENTED BY 4 CFR CHAPTER 1, SUBCHAPTER G."

AS YOU HAVE INDICATED, WE PREVIOUSLY EXAMINED THE EFFECT OF THE ABOVE- QUOTED PROVISIONS ON AGENCY WAIVER AUTHORITY UNDER 5 U.S.C. SEC. 8707(D). SPECIFICALLY, WE NOTED THAT, SINCE THE REGULATIONS INCORPORATE IN FULL THE PROVISIONS OF 5 U.S.C. SEC. 5584 AND 4 C.F.R. CHAPTER 1, SUBCHAPTER G, IT IS ARGUABLE THAT AN AGENCY'S AUTHORITY UNDER 5 U.S.C. SEC. 8707(D) TO WAIVE UNCOLLECTED LIFE INSURANCE DEDUCTIONS IS LIMITED TO UNPAID AMOUNTS NOT EXCEEDING $500. THE OFFICE OF PERSONNEL MANAGEMENT'S (OPM) OFFICE OF PAY AND BENEFITS POLICY, HOWEVER, RECENTLY HAS ADVISED US THAT THE PURPOSE OF THE REGULATORY REFERENCE TO 5 U.S.C. SEC. 5584 AND 4 C.F.R. PART 91, SUBCHAPTER G, IS TO INCORPORATE THE WAIVER STANDARDS, AND NOT THE JURISDICTIONAL LIMITATIONS, DELINEATED IN THE REFERENCED PROVISIONS. HAVE CONSIDERED OPM'S VIEWS REGARDING THE PURPOSE OF 5 C.F.R. SEC. 870.401(H)(2) IN LIGHT OF THE UNLIMITED GRANT OF WAIVER AUTHORITY CONTAINED IN 5 U.S.C. SEC. 8707(D), AND, ON THIS BASIS, WE CONCUR WITH OPM'S INTERPRETATION OF THE IMPLEMENTING REGULATIONS. ACCORDINGLY, AN AGENCY PROPERLY MAY WAIVE UNCOLLECTED LIFE INSURANCE DEDUCTIONS REGARDLESS OF DOLLAR AMOUNT IF ITS DETERMINATION IS BASED ON THE APPROPRIATE STANDARDS, AND IF IT SUBMITS THE FULL AMOUNT OF UNCOLLECTED DEDUCTIONS AND AGENCY CONTRIBUTIONS TO THE EMPLOYEES' LIFE INSURANCE FUND.

YOU ALSO QUESTION WHETHER MR. ZUCK'S INDEBTEDNESS FOR UNPAID LIFE INSURANCE DEDUCTIONS IS SUBJECT TO WAIVER UNDER 5 U.S.C. SEC. 8707(D), SINCE THE AGENCY'S FAILURE TO WITHHOLD DEDUCTIONS OCCURRED BEFORE, BUT WAS NOT DISCOVERED UNTIL AFTER THE EFFECTIVE DATE OF INTERIM REGULATIONS IMPLEMENTING SECTION 8707(D). THE OPM'S OFFICE OF PAY AND BENEFITS POLICY HAS ADVISED US THAT AN AGENCY MAY EXERCISE ITS WAIVER AUTHORITY UNDER SECTION 8707(D) IF DISCOVERY OF THE UNDERPAYMENT FOR LIFE INSURANCE WAS MADE ON OR AFTER OCTOBER 10, 1980, THE EFFECTIVE DATE OF THE FEDERAL EMPLOYEES' GROUP LIFE INSURANCE ACT. AGAIN, WE HAVE CONSIDERED OPM'S INTERPRETATION OF 5 U.S.C. SEC. 8707(D) AND HAVE FOUND NO BASIS FOR DISPUTING THAT INTERPRETATION. ACCORDINGLY, SINCE THE ADMINISTRATIVE OFFICE DISCOVERED THAT IT HAD FAILED TO WITHHOLD LIFE INSURANCE DEDUCTIONS FROM MR. ZUCK'S PAY IN JUNE 1981, AFTER THE EFFECTIVE DATE OF THE ACT, IT MAY CONSIDER HIS REQUEST FOR WAIVER UNDER SECTION 8707(D).

IN SUM, ALTHOUGH OUR OFFICE HAS NO AUTHORITY UNDER 5 U.S.C. SEC. 5584 TO CONSIDER MR. ZUCK'S AND MS. WALSH'S REQUESTS FOR WAIVER OF UNCOLLECTED LIFE INSURANCE DEDUCTIONS, THE ADMINISTRATIVE OFFICE MAY CONSIDER THE REQUESTS INDEPENDENTLY UNDER 5 U.S.C. SEC. 8707(D). THEREFORE, THE EMPLOYEES' APPLICATIONS FOR WAIVER SHOULD BE RETURNED TO THE ADMINISTRATIVE OFFICE FOR ITS HANDLING.

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