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B-222234, DEC 9, 1986, OFFICE OF THE GENERAL COUNSEL

B-222234 Dec 09, 1986
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CIVILIAN PERSONNEL - TRAVEL - GIFTS/DONATIONS - LIFE INSURANCE - ACCEPTANCE - PROPRIETY DIGEST: GENERAL SERVICES ADMINISTRATION QUESTIONS WHETHER IT IS PROPER TO ACCEPT LIFE INSURANCE COVERAGE FOR FEDERAL EMPLOYEES UNDER CONTRACTS WITH TRAVEL AGENTS OR FOR CONTRACTOR-ISSUES CREDIT CARDS. WE CONCLUDE THAT SUCH LIFE INSURANCE COVERAGE IS PERMISSIBLE SINCE (1) THERE ARE NO STATUTORY PROHIBITION. GENERAL SERVICES ADMINISTRATION: THIS IS IN RESPONSE TO A REQUEST FROM YOUR OFFICE FOR AN ADVISORY OPINION CONCERNING THE ACCEPTANCE OF CERTAIN LIFE INSURANCE BENEFITS BY FEDERAL EMPLOYEES. LIFE INSURANCE COVERAGE IS OFFERED AT NO ADDITIONAL COST TO THE GOVERNMENT FOR FEDERAL EMPLOYEES TRAVELING ON OFFICIAL BUSINESS WHEN THE TICKETS ARE PURCHASED THROUGH THE TRAVEL MANAGEMENT AGENT.

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B-222234, DEC 9, 1986, OFFICE OF THE GENERAL COUNSEL

CIVILIAN PERSONNEL - TRAVEL - GIFTS/DONATIONS - LIFE INSURANCE - ACCEPTANCE - PROPRIETY DIGEST: GENERAL SERVICES ADMINISTRATION QUESTIONS WHETHER IT IS PROPER TO ACCEPT LIFE INSURANCE COVERAGE FOR FEDERAL EMPLOYEES UNDER CONTRACTS WITH TRAVEL AGENTS OR FOR CONTRACTOR-ISSUES CREDIT CARDS. WE CONCLUDE THAT SUCH LIFE INSURANCE COVERAGE IS PERMISSIBLE SINCE (1) THERE ARE NO STATUTORY PROHIBITION, (2) THE BENEFITS WOULD NOT CONFLICT WITH PAYMENTS UNDER THE FEDERAL EMPLOYEES' COMPENSATION ACT, AND (3) THE BENEFITS WOULD NOT CONFLICT WITH THE REGULATIONS OR OUR DECISIONS CONCERNING THE ACCEPTANCE OF GIFTS OR PROMOTIONAL MATERIALS.

MR. CLYDE C. PEARCE, GENERAL COUNSEL, GENERAL SERVICES ADMINISTRATION:

THIS IS IN RESPONSE TO A REQUEST FROM YOUR OFFICE FOR AN ADVISORY OPINION CONCERNING THE ACCEPTANCE OF CERTAIN LIFE INSURANCE BENEFITS BY FEDERAL EMPLOYEES. SPECIFICALLY, THE REQUEST STATES THAT IN CONNECTION WITH CONTRACTS NEGOTIATED BY THE GENERAL SERVICES ADMINISTRATION (GSA) FOR TRAVEL MANAGEMENT SERVICES OR FOR CONTRACTOR-ISSUED CREDIT CARDS, LIFE INSURANCE COVERAGE IS OFFERED AT NO ADDITIONAL COST TO THE GOVERNMENT FOR FEDERAL EMPLOYEES TRAVELING ON OFFICIAL BUSINESS WHEN THE TICKETS ARE PURCHASED THROUGH THE TRAVEL MANAGEMENT AGENT, OR WHEN PAYMENT FOR THE AIRLINE TICKETS IS MADE BY MEANS OF THE CONTRACTOR'S CREDIT CARD.

THE REQUEST SEEKS OUR OPINION WHETHER THE GOVERNMENT MAY ENTER INTO CONTRACTS WHICH PROVIDE THESE INCIDENTAL LIFE INSURANCE BENEFITS AND WHETHER THE EMPLOYEES MAY PARTICIPATE IN THESE PROGRAMS. FOR THE REASONS SET FORTH BELOW, WE SEE NO LEGAL OBJECTION TO THE GOVERNMENT ENTERING INTO SUCH CONTRACTS OR TO EMPLOYEE'S ACCEPTING BENEFITS UNDER THESE PROGRAMS.

BACKGROUND

THE REQUEST FROM YOUR OFFICE STATES THAT IN CONNECTION WITH A CONTRACT FOR TRAVEL MANAGEMENT SERVICES, A CONTRACTOR-TRAVEL AGENT OFFERED AIRLINE FLIGHT INSURANCE AT NO ADDITIONAL COST TO THE GOVERNMENT FOR FEDERAL EMPLOYEES WHEN THE AIRLINE TICKETS ARE PURCHASED THROUGH THE TRAVEL AGENT. THE GSA LETTER PRESUMES THAT THE PROCEEDS OF THE INSURANCE POLICIES WOULD PASS TO THE EMPLOYEE'S ESTATE OR NAMED BENEFICIARY IN THE EVENT OF DEATH DURING OFFICIAL TRAVEL. IN ADDITION TO THE INSURANCE COVERAGE PROVIDED BY TRAVEL AGENCIES, SIMILAR COVERAGE IS OFFERED BY DINER'S CLUB FOR EMPLOYEES ON OFFICIAL TRAVEL WHERE PAYMENT FOR THE TRAVEL IS MADE BY MEANS OF THAT COMPANY'S CREDIT CARDS, AND BY GENERAL MOTORS CORPORATION (GMC) FOR OCCUPANTS OF GMC VEHICLES WHO ARE FATALLY INJURED WHILE WEARING SEAT BELTS.

WE ASSUME THAT THERE WOULD BE NO DISCOUNTS OR REBATES FROM THESE CONTRACTORS IF THE GOVERNMENT DECLINED THIS INSURANCE COVERAGE. THUS, THERE WOULD BE NO FINANCIAL INCENTIVE TO THE GOVERNMENT TO DECLINE THIS INSURANCE COVERAGE. FURTHERMORE, WE ASSUME THAT GSA WOULD BE UNABLE TO NEGOTIATE THESE CONTRACTS TO MAKE THE LIFE INSURANCE BENEFITS PAYABLE TO THE GOVERNMENT. BASED ON THESE ASSUMPTIONS, WE WILL CONSIDER THE SEVERAL QUESTIONS RAISED BY GSA CONCERNING (1) THE AUTHORITY OF THE GOVERNMENT TO ENTER INTO CONTRACTS WHICH CONTAIN SUCH INCIDENTAL LIFE INSURANCE COVERAGE AND (2) THE PROPRIETY OF FEDERAL EMPLOYEES ACCEPTING SUCH OFFERS OF INSURANCE COVERAGE.

DISCUSSION

STATUTORY PROHIBITIONS

AS THE LETTER FROM GSA POINTS OUT, THERE APPEARS TO BE NO SPECIFIC STATUTORY PROHIBITION WHICH WOULD PREVENT THE GOVERNMENT FROM ENTERING INTO A CONTRACT WHICH INCIDENTALLY PROVIDES INSURANCE COVERAGE FOR FEDERAL EMPLOYEES ON OFFICIAL TRAVEL. WE BELIEVE THAT TWO STATUTES WHICH MIGHT BE INTERPRETED TO PRECLUDE SUCH COVERAGE ARE DISTINGUISHABLE.

FIRST, WE NOTE THAT 5 U.S.C. SEC. 5536 PRECLUDES EMPLOYEES WHOSE PAY IS FIXED BY STATUTE OR REGULATION FROM RECEIVING ADDITIONAL PAY OR ALLOWANCES UNLESS SPECIFICALLY AUTHORIZED BY LAW. HOWEVER, AS THE GSA POINTS OUT, ANY BENEFITS FROM INSURANCE COVERAGE WOULD NOT APPEAR TO BE CONSIDERED PAY OR ALLOWANCES SUBJECT TO THE STATUTORY PROHIBITION IN SECTION 5536. THE EMPLOYING AGENCY INCURS NO ADDITIONAL OBLIGATION IN THE EVENT OF THE EMPLOYEE'S DEATH BY VIRTUE OF THESE CONTRACTUAL ARRANGEMENTS FOR INSURANCE COVERAGE. FURTHER, THE INSURANCE PROCEEDS ARE OUTSIDE OF ANY PAY, ALLOWANCES, OR BENEFITS WHICH WOULD ACCRUE UPON THE EMPLOYEE'S DEATH. COMPARE PUBLIC HEALTH SERVICE OFFICER, B-214919, MARCH 22, 1985, 64 COMP.GEN. 395 (1985), APPLYING SECTION 5536 TO A COMMISSIONED OFFICER WHO ACCEPTED COMPENSATION FOR PERSONAL SERVICES PERFORMED FOR ANOTHER FEDERAL AGENCY.

NEXT, WE NOTE THAT 18 U.S.C. SEC. 209 (1982) PROHIBITS A FEDERAL EMPLOYEE FROM RECEIVING ANY SALARY OR COMPENSATION FOR SERVICES AS AN EMPLOYEE OF THE GOVERNMENT FROM ANY SOURCE OTHER THAN THE GOVERNMENT. HOWEVER, WE WOULD DISTINGUISH INSURANCE PROCEEDS UNDER THESE CIRCUMSTANCES AS BEING INCIDENTAL TO THE EMPLOYEE'S TRAVEL AND WOULD NOT CONSIDER SUCH BENEFITS AS BEING PAID FOR THE PERFORMANCE OF SERVICES AS CONTEMPLATED BY SECTION 209.

WORKER'S COMPENSATION

THE GSA REQUEST NEXT TAKES NOTICE OF TWO POTENTIAL CONFLICTS WITH THE FEDERAL EMPLOYEES COMPETITION ACT (FECA), 5 U.S.C. SECS. 8101-8151 (1982), WHICH PROVIDES COMPENSATION AND BENEFITS FOR A FEDERAL EMPLOYEE'S WORK- RELATED INJURY OR DEATH. SECTION 8116 PROHIBITS EMPLOYEES OR INDIVIDUALS ENTITLED TO BENEFITS FOR A WORK-RELATED INJURY OR DEATH UNDER THE SUBCHAPTER FROM RECEIVING COMPENSATION OR OTHER PAYMENTS FROM THE UNITED STATES, EXCEPT UNDER CERTAIN SPECIFIED CONDITIONS. HOWEVER, AS THE GSA LETTER POINTS OUT, INCIDENTAL INSURANCE BENEFITS UNDER THE CIRCUMSTANCES DESCRIBED ABOVE WOULD NOT BE CONSIDERED PAY OR REMUNERATION FROM THE UNITED STATES AS CONTEMPLATED BY SUBSECTION 8116(A). FURTHERMORE, THE LIMITATION CONTAINED IN SUBSECTION 8116(B) CONCERNING PAYMENTS TO INDIVIDUALS (NOT EMPLOYEES) BECAUSE OF THE EMPLOYEE'S INJURY OR DEATH SPECIFICALLY EXCLUDES PROCEEDS OF AN INSURANCE POLICY. THEREFORE, WE BELIEVE THERE WOULD BE NO CONFLICT BETWEEN RECEIPT OF THE INSURANCE PROCEEDS DESCRIBED ABOVE AND SECTION 8116.

AS THE LETTER FROM GSA ALSO POINTS OUT, 5 U.S.C. SEC. 8131 PERMITS THE SECRETARY OF LABOR TO BE SUBSTITUTED FOR THE BENEFICIARY IN A CAUSE OF ACTION TO ESTABLISH THE LEGAL LIABILITY OF A THIRD PERSON TO PAY DAMAGES FOR THE EMPLOYEE'S INJURY OR DEATH. THIS RIGHT OF SUBROGATION WOULD NOT BE AFFECT BY THE PAYMENT OF INSURANCE PROCEEDS SINCE SECTION 8131 REFERS TO THE LEGAL LIABILITY OF A THIRD PARTY FOR DAMAGES, NOT INSURANCE BENEFITS WHICH ARE A BENEFIT DERIVED BY CONTRACT. WE NOTE THAT ACCORDING TO THE GSA LETTER, OFFICIALS AT THE DEPARTMENT OF LABOR WHO ADMINISTER THIS WORKER'S COMPENSATION STATUTE ALSO AGREE WITH THIS INTERPRETATION.

FINALLY, SECTION 8132 SETS FORTH THE CIRCUMSTANCES FOR A REFUND OF COMPENSATION PAID BY THE UNITED STATES WHEN THE BENEFICIARY RECEIVES MONEY OR PROPERTY FROM A THIRD PARTY. THE STATUTE REFERS TO PAYMENTS RECEIVED IN SATISFACTION OF THE LEGAL LIABILITY OF A THIRD PARTY AS A RESULT OF A LAWSUIT OR SETTLEMENT. ON ITS FACE, IT APPEARS THAT SECTION 8132 WOULD NOT BE APPLICABLE TO INSURANCE PAYMENTS FOR THE SAME REASONS AS DISCUSSED WITH REGARD TO SECTION 8131; INSURANCE PROCEEDS ARE DISTINGUISHABLE FROM DAMAGES.

HOWEVER, THE LETTER FROM GSA CITES A RECENT SUPREME COURT DECISION WHICH ARGUABLY MIGHT REQUIRE A DIFFERENT RESULT. IN UNITED STATES V. LORENZETTI, 467 U.S. 167 (1984), THE COURT CONSIDERED WHETHER THE UNITED STATES MAY RECOVER FECA PAYMENTS FOR MEDICAL EXPENSES AND LOST WAGES FROM AN EMPLOYEE WHOSE THIRD-PARTY DAMAGE AWARD OR SETTLEMENT COMPENSATED HIM FOR NONECONOMIC LOSSES SUCH AS PAIN AND SUFFERING. THE COURT RULED IN LORENZETTI THAT THE UNITED STATES COULD RECOVER FROM A DAMAGE AWARD OR SETTLEMENT OF THIRD-PARTY LIABILITY REGARDLESS OF WHETHER THE AWARD WAS FOR LOSSES OTHER THAN MEDICAL EXPENSES AND LOST WAGES (EXPENSES PAYABLE UNDER THE FECA). AGAIN, WE BELIEVE INSURANCE PROCEEDS WHICH ARE PAYABLE WITHOUT REGARD TO ANY FINDING OF LEGAL LIABILITY BY A THIRD PARTY ARE DISTINGUISHABLE FROM THE DAMAGES DESCRIBED BY SECTION 8132 AND WOULD NOT BE SUBJECT TO ADJUSTMENT BY THE UNITED STATES. HOWEVER, IN VIEW OF THE AUTHORITY OF THE DEPARTMENT OF LABOR TO ADMINISTER THE FECA, WE SUGGEST THAT ANY FURTHER QUESTIONS ON THESE ISSUES BE ADDRESSED TO THAT AGENCY. SEE 5 U.S.C. SEC. 8149.

PROMOTIONAL MATERIALS

FINALLY, THE GSA LETTER POINTS OUT THAT RECEIPT OF LIFE INSURANCE PROCEEDS MIGHT CONFLICT WITH PERTINENT DECISIONS AND REGULATIONS GOVERNING THE RECEIPT OF GIFTS OR PROMOTIONAL MATERIALS BY FEDERAL EMPLOYEES DURING THE COURSE OF OFFICIAL TRAVEL SUCH AS BENEFITS RECEIVED THROUGH AIRLINE FREQUENT-FLYER PROGRAMS. SEE DISCOUNT COUPONS, 63 COMP.GEN. 229 (1984); B-199656, JULY 15, 1981; AND 41 C.F.R. SEC. 101-25.103-2 (1985). HOWEVER, THE GSA REQUEST DISTINGUISHES THE LIFE INSURANCE COVERAGE FROM OTHER PROMOTIONAL BENEFITS WHICH MUST BE TURNED OVER TO THE GOVERNMENT FOR SEVERAL REASONS, INCLUDING THE FACT THAT (1) THE INSURANCE COVERAGE IS PROVIDED AT NO COST TO THE GOVERNMENT, (2) THE BENEFITS ARE OFFERED TO THE GENERAL PUBLIC, AND (3) THERE IS NO FINANCIAL LOSS TO THE GOVERNMENT.

ALTHOUGH WE HAVE NOT PREVIOUSLY CONSIDERED LIFE INSURANCE COVERAGE IN OUR DECISIONS CONCERNING GIFTS AND PROMOTIONAL BENEFITS RECEIVED IN THE COURSE OF OFFICIAL TRAVEL, WE AGREE WITH GSA'S ARGUMENT THAT LIFE INSURANCE COVERAGE IS DISTINGUISHABLE AND MAY BE RETAINED BY THE EMPLOYEE.

OUR DECISIONS HAVE HELD THAT A FEDERAL EMPLOYEE MUST ACCOUNT FOR ANY GIFT, GRATUITY, OR BENEFIT RECEIVED FROM PRIVATE SOURCES INCIDENT TO THE PERFORMANCE OF OFFICIAL DUTY AND THAT ANY PAYMENTS TENDERED TO THE EMPLOYEE ARE VIEWED AS HAVING BEEN RECEIVED ON BEHALF OF THE GOVERNMENT. JOHN B. CURRIER, 59 COMP.GEN. 95 (1979); AND B-148879, JULY 20 AND AUGUST 28, 1970. THESE DECISIONS DEALT WITH FEDERAL EMPLOYEES WHO RECEIVED DENIED BOARDING COMPENSATION WHEN "BUMPED" FROM AN OVERBOOKED AIRLINE FLIGHT.

THE RATIONALE OF THOSE DECISIONS WAS ALSO USED IN CONSIDERING CASES WHERE EMPLOYEES RECEIVED BONUS OR GIFT COUPONS OR PROMOTIONAL MATERIALS IN CONNECTION WITH THE PURCHASE OF AN AIRLINE TICKET TO BE USED FOR OFFICIAL TRAVEL. IN B-199656, JULY 15, 1981, WE HELD THAT A FEDERAL EMPLOYEE COULD NOT RETAIN A "HALF-FARE COUPON," "BONUS POINT," OR OTHER ITEMS OF VALUE SINCE AN EMPLOYEE MUST ACCOUNT FOR ANY GRATUITY RECEIVED FROM PRIVATE SOURCES INCIDENT TO PERFORMING OFFICIAL TRAVEL AND PREVENT DOUBLE REIMBURSEMENT OF THE EMPLOYEE FOR THE SAME TRAVEL.

FINALLY, WE CONSIDERED THE QUESTION OF PARTICIPATION IN FREQUENT FLYER PROGRAMS WHERE A TRAVELER ACCUMULATES MILEAGE OR BONUS POINTS AND IN RETURN RECEIVES FREE OR REDUCED-PRICE TICKETS OR OTHER PROMOTIONAL BENEFITS. WE HELD THAT THE BENEFITS OF SUCH PROMOTIONAL PROGRAMS EARNED THROUGH OFFICIAL TRAVEL WERE THE PROPERTY OF THE GOVERNMENT AND MAY NOT BE RETAINED BY THE EMPLOYEE. DISCOUNT COUPONS, 63 COMP.GEN. 229, SUPRA. AGAIN, THE RATIONALE FOR THIS HOLDING WAS TO PREVENT DOUBLE REIMBURSEMENT TO THE EMPLOYEE FOR OFFICIAL TRAVEL AND TO AVOID A CONFLICT OF INTEREST.

THE LIFE INSURANCE COVERAGE OFFERED THROUGH A CONTRACT TRAVEL AGENT OR THROUGH USE OF A CONTRACTOR-ISSUED CREDIT CARD IS DISTINGUISHABLE FROM THE ABOVE-CITED DECISIONS IN SEVERAL RESPECTS. FIRST, THERE WOULD BE NO DOUBLE REIMBURSEMENT OF TRAVEL EXPENSES OCCASIONED BY THE PAYMENT OF LIFE INSURANCE BENEFITS TO THE EMPLOYEE'S BENEFICIARIES OR ESTATE SINCE THE STATUTES AND REGULATIONS GOVERNING TRAVEL REIMBURSEMENT DO NOT PROVIDE COMPENSATION IN THE EVENT OF AN EMPLOYEE'S DEATH EXCEPT AS SET FORTH IN CHAPTER 3 OF THE FEDERAL TRAVEL REGULATIONS, INCORP. BY REF., 41 C.F.R. SEC. 101-7.003 (1985), CONCERNING ALLOWANCES FOR PREPARATION AND TRANSPORTATION OF THE EMPLOYEE'S REMAINS. ANY NOTION OF DUAL COMPENSATION WOULD INVOLVE THE PAYMENT OF FECA BENEFITS WITH THESE INSURANCE PROCEEDS, AND WE HAVE DISTINGUISHED THESE INSURANCE PAYMENTS IN OUR DISCUSSION ABOVE ON WORKER'S COMPENSATION.

THE CONCEPT OF A POTENTIAL CONFLICT OF INTEREST IS A MORE DIFFICULT ISSUE, BUT WE BELIEVE THAT PAYMENT OF THESE LIFE INSURANCE PROCEEDS WOULD NOT POSE A CONFLICT OF INTEREST AS CONTEMPLATED BY OUR DECISIONS CITED ABOVE. FIRST, THE EMPLOYEE IS NOT ACCEPTING A GIFT OR GRATUITY FROM A PRIVATE PARTY UNDER THESE CIRCUMSTANCES; RATHER, THE BENEFITS ARE PAYABLE INCIDENT TO A GOVERNMENT CONTRACT FOR TRAVEL SERVICES TO AN AGENCY. ADDITION, ACCEPTANCE OF THESE INSURANCE PROCEEDS WOULD NOT APPEAR TO CONFLICT WITH THE PROSCRIBED ACTIONS SET FORTH IN 5 C.F.R. SEC. 735.201A (1986) GOVERNING ETHICAL CONDUCT FOR FEDERAL EMPLOYEES. SINCE ACCEPTANCE OF LIFE INSURANCE BENEFITS WOULD NOT REPRESENT A DOUBLE REIMBURSEMENT OR A POTENTIAL CONFLICT OF INTEREST, WE CONCLUDE THAT SUCH BENEFITS ARE DISTINGUISHABLE FROM THE TRAVEL PROMOTIONAL MATERIALS WHICH WERE THE SUBJECT OF OUR PRIOR DECISIONS.

FINALLY, WE NOTE THAT THE LANGUAGE OF THE PERTINENT GSA REGULATION (41 C.F.R. SEC. 101-25.103) MIGHT BE READ TO ENCOMPASS THE LIFE INSURANCE BENEFITS DESCRIBED ABOVE. WE WOULD RECOMMEND THAT YOUR OFFICE CONSIDER AMENDING THE REGULATION TO DISTINGUISH LIFE INSURANCE BENEFITS FROM OTHER PROMOTIONAL MATERIALS WHICH MUST BE TURNED OVER TO THE GOVERNMENT

WE TRUST THAT THE ABOVE ANALYSIS IS RESPONSIVE TO YOUR INQUIRY.

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