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B-197117, AUG 21, 1980

B-197117 Aug 21, 1980
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DIGEST: A NAVY MEMBER WHO RECEIVED BOTH VETERANS ADMINISTRATION (VA) COMPENSATION AND NAVY RETIRED PAY DUE TO AN ADMINISTRATIVE ERROR SHOULD HAVE KNOWN THE PAYMENTS WERE ERRONEOUS AND IS CONSIDERED TO BE AT FAULT FOR NOT REPORTING THE ERROR TO THE APPROPRIATE OFFICIAL. UNDER 10 U.S.C. 2774(B)(1) WHERE THERE IS A SHOWING OF "FAULT" ON THE MEMBER'S PART. WAIVER IS PRECLUDED. RETIRED: THIS ACTION IS IN RESPONSE TO A LETTER DATED OCTOBER 22. SINCE THE MEMBER IS PARTIALLY AT FAULT. AS A RESULT A WAIVER OF SO MUCH OF HIS RETIRED PAY AS WAS EQUAL TO THE VA AWARD WAS REQUIRED. SINCE THE VA COMPENSATION TO WHICH HE WAS ENTITLED EXCEEDED HIS RETIRED PAY. HE WAS INFORMED THAT AN ERROR IN THE AWARD HAD BEEN MADE AND THAT THE VA COMPENSATION WAS $180 NOT $18.

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B-197117, AUG 21, 1980

DIGEST: A NAVY MEMBER WHO RECEIVED BOTH VETERANS ADMINISTRATION (VA) COMPENSATION AND NAVY RETIRED PAY DUE TO AN ADMINISTRATIVE ERROR SHOULD HAVE KNOWN THE PAYMENTS WERE ERRONEOUS AND IS CONSIDERED TO BE AT FAULT FOR NOT REPORTING THE ERROR TO THE APPROPRIATE OFFICIAL. UNDER 10 U.S.C. 2774(B)(1) WHERE THERE IS A SHOWING OF "FAULT" ON THE MEMBER'S PART, WAIVER IS PRECLUDED.

PETTY OFFICER DOUGLAS S. FEISLER, USN, RETIRED:

THIS ACTION IS IN RESPONSE TO A LETTER DATED OCTOBER 22, 1979, FROM PETTY OFFICER DOUGLAS S. FEISLER, UNITED STATES NAVY (RETIRED), XXX-XX-XXXX, APPEALING THE CLAIMS DIVISION'S DETERMINATION ON JULY 27, 1979, DENYING WAIVER OF HIS DEBT. SINCE THE MEMBER IS PARTIALLY AT FAULT, WE MUST SUSTAIN THE ACTION OF THE CLAIMS DIVISION.

ON OCTOBER 10, 1968, MR. FEISLER, THEN AN ACTIVE MEMBER OF THE UNITED STATES NAVY, RETIRED FROM THE NAVY, AND BECAME ENTITLED TO RETIRED PAY. HOWEVER, HE ELECTED TO RECEIVE VETERANS ADMINISTRATION (VA) COMPENSATION. AS A RESULT A WAIVER OF SO MUCH OF HIS RETIRED PAY AS WAS EQUAL TO THE VA AWARD WAS REQUIRED. SEE 38 U.S.C. 3105 (1976). SINCE THE VA COMPENSATION TO WHICH HE WAS ENTITLED EXCEEDED HIS RETIRED PAY, HE DID NOT RECEIVE RETIRED PAY FROM THE NAVY.

IN OCTOBER OF 1970, MR. FEISLER RECEIVED A LETTER FROM THE VA STATING THAT HIS COMPENSATION WOULD BE REDUCED TO $18 PER MONTH. HE BELIEVED AN ERROR HAD BEEN MADE BECAUSE OF THE SUBSTANTIAL REDUCTION OF HIS VA COMPENSATION. UPON CONTACTING THE VA, HE WAS INFORMED THAT AN ERROR IN THE AWARD HAD BEEN MADE AND THAT THE VA COMPENSATION WAS $180 NOT $18.

THEREAFTER ON JANUARY 28, 1971, MR. FEISLER RECEIVED NOTICE FROM THE NAVY FINANCE CENTER (NFC) STATING THAT SINCE HIS VA COMPENSATION HAD BEEN REDUCED TO $18 HE WAS NOW ENTITLED TO RETIRED PAY. SUBSEQUENTLY, HE RECEIVED BOTH RETIRED PAY AND VA COMPENSATION CAUSING AN OVERPAYMENT OF RETIRED PAY. THIS SITUATION PERSISTED UNTIL OCTOBER 1, 1977, WHEN THE NFC DISCOVERED THAT MEMBER WAS IN RECEIPT OF VA COMPENSATION AND THAT HIS RETIRED PAY WAS NOT BEING REDUCED IN ACCORDANCE WITH 38 U.S.C. 3105. SUBSEQUENTLY, HIS RETIRED PAY FROM THE NAVY WAS SUSPENDED BY THE NFC SINCE HE WAS RECEIVING VA COMPENSATION. BY REASON OF THE FOREGOING MR. FEISLER BECAME INDEBTED TO THE UNITED STATES FOR OVERPAYMENTS TOTALING $17,571, WHICH IS BEING COLLECTED FROM HIS RETIRED PAY AT THE PRESENT TIME, AT THE RATE OF $112.49 PER MONTH. HE WAS INFORMED OF THESE ACTIONS BY LETTER OF JUNE 7, 1978, FROM THE NFC.

THE OVERPAYMENTS WERE THE RESULT OF ADMINISTRATIVE ERROR AND THE RECORD INDICATES THAT THERE WAS NO FRAUD OR MISREPRESENTATION ON THE MEMBER'S PART. MR. FEISLER IN HIS LETTER EXPRESSED THE BELIEF THAT HE THOUGH THE PAYMENTS WERE PROPER SINCE THE VA COMPENSATION AND THE NAVY RETIRED PAY HE WAS RECEIVING WERE LESS THAN HIS PREVIOUS VA COMPENSATION AWARD. ALSO, CLAIMANT STATES THAT REPAYMENT OF THE DEBT IS CAUSING HIM GREAT HARDSHIP.

THE WAIVER OF CLAIMS BY THE UNITED STATES ARISING OUT OF ERRONEOUS PAYMENTS OF PAY AND ALLOWANCES TO OR ON BEHALF OF MEMBERS OF THE UNIFORMED SERVICES IS AUTHORIZED BY 10 U.S.C. 2774 (1976). THAT PROVISION AUTHORIZES THE COMPTROLLER GENERAL TO WAIVE SUCH CLAIMS IF COLLECTION WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES. HOWEVER, SUBSECTION 2774(B)(1) PROHIBITS THE EXERCISE OF THAT AUTHORITY IF THERE IS "AN INDICATION OF *** FAULT *** ON THE PART OF THE MEMBER OR ANY OTHER PERSON HAVING AN INTEREST IN OBTAINING WAIVER OF THE CLAIM."

WE INTERPRET THE WORD "FAULT," AS USED IN 10 U.S.C. 2774, AS INCLUDING SOMETHING MORE THAN A PROVEN OVERT ACT OR OMISSION BY THE MEMBER. THUS, FAULT IS CONSIDERED TO EXIST IF IN LIGHT OF ALL THE FACTS IT IS DETERMINED THAT THE MEMBER SHOULD HAVE KNOWN THAT 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 PAYMENT IN EXCESS OF HIS PROPER ENTITLEMENTS. PETTY OFFICER KLAUS D. R. MUELLER, USN, B-193450, FEBRUARY 26, 1979.

THE RECORD INDICATES THAT MR. FEISLER HAD KNOWLEDGE OF AN ERROR COMMITTED IN HIS VA COMPENSATION AWARD. THEREFORE, HE HAD THE DUTY TO INFORM THE APPROPRIATE OFFICIALS OF THE ERROR WHEN HE RECEIVED NOTICE THAT RETIRED PAY WAS BEING RESUMED BASED ON A VA COMPENSATION AWARD OF $18. EVEN THOUGH HE BELIEVED HE WAS RECEIVING PROPER PAYMENT, THE ERROR RESULTED IN SUCH A LARGE OVERPAYMENT A REASONABLE PERSON WOULD HAVE RECOGNIZED THE ERROR. CONSEQUENTLY, HE MUST BE CONSIDERED PARTIALLY AT FAULT IN THIS MATTER.

FURTHER, WHILE RECOUPMENT OF THE OVERPAYMENTS MAY CAUSE PERSONAL HARDSHIP, IT IS NOT A FACTOR THAT WE MAY PROPERLY CONSIDER IN DETERMINING WHETHER AN INDIVIDUAL IS WITHOUT "FAULT" AND ELIGIBLE FOR WAIVER UNDER 10 U.S.C. 2774. SEE B-198170, JUNE 25, 1980, AND B-192380, NOVEMBER 8, 1978.

ACCORDINGLY, WE SUSTAIN THE SETTLEMENT OF THE CLAIMS DIVISION WHICH DENIED MR. FEISLER'S REQUEST FOR WAIVER.

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