B-107870, MAY 17, 1965

B-107870, MAY 17, 1965

TO MR. FRED W. SHIELDS:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 30, 1964, CONCERNING THE RETIRED PAY STATUS OF MR. WALTER W. REYNOLDS, A RETIRED ENLISTED MEMBER OF THE UNITED STATES NAVY.

IN YOUR LETTER OF AUGUST 18, 1964, YOU SUBMITTED A CLAIM TO THIS OFFICE ON BEHALF OF MR. REYNOLDS FOR INCREASED RETIRED PAY UNDER THE RULE OF THE FAGAN CASE, 149 CT.CL. 716 (1960). IN PERTINENT PART THAT LETTER READS AS FOLLOWS:

"THE CLAIMANT WAS TRANSFERRED TO THE FLEET RESERVE ON 20 AUGUST 1937 IN CLASS F4C. HE WAS RECALLED TO ACTIVE DUTY ON 17 JUNE 1940 AND SERVED ON ACTIVE DUTY UNTIL 9 SEPTEMBER 1945 WHEN HE WAS RELEASED FROM FURTHER ACTIVE DUTY. WHILE SERVING ON ACTIVE DUTY, HE, ON 1 JUNE 1944, WAS TRANSFERRED TO THE RETIRED LIST ON ACCOUNT OF PHYSICAL DISABILITY BUT REMAINED ON ACTIVE DUTY. IT IS UNDERSTOOD THAT AFTER THE ENACTMENT OF THE CAREER COMPENSATION ACT, THE BUREAU OF MEDICINE AND SURGERY EVALUATED HIS DISABILITY AT ZERO PERCENT.

"IT IS BELIEVED THAT UNDER THE DECISION OF THE COURT OF CLAIMS IN THE FAGAN CASE, SUPRA, THE CLAIMANT IS ENTITLED TO A RECOMPUTATION OF HIS RETIRED PAY UNDER THE FORMULA IN SECTION 511 OF THE CAREER COMPENSATION ACT OF 1949, 63 STAT. 802, AS AMENDED, WHICH GIVES HIM THE GREATEST AMOUNT OF RETIRED PAY.'

ON OCTOBER 22, 1964, THE CLAIMS DIVISION OF THIS OFFICE CERTIFIED THE AMOUNT OF $539.70 AS DUE MR. REYNOLDS UNDER THE RULE OF THE FAGAN CASE, THAT IS, INCREASED RETIRED PAY COMPUTED UNDER METHOD (B), SECTION 511, OF THE CAREER COMPENSATION ACT OF 1949, CH. 681, 63 STAT. 829, FOR THE PERIOD JULY 13, 1957, TO SEPTEMBER 30, 1964, INCLUSIVE. THAT PART OF THE CLAIM COVERING THE PERIOD PROCEDING JULY 13, 1957, WAS DENIED ON THE BASIS THAT IT WAS BARRED BY RES JUDICATA. 139 CT.CL. 748 (1957).

IT APPEARS THAT MR. REYNOLDS HAS NOW CONCLUDED THAT HE DOES NOT WANT INCREASED RETIRED PAY COMPUTED UNDER THE RULE OF THE FAGAN CASE AND IN HIS LETTER OF NOVEMBER 27, 1964, ADDRESSED TO THE NAVY FINANCE CENTER, CLEVELAND, OHIO, HE REQUESTS THAT HE BE RESTORED TO HIS PRIOR RETIRED PAY STATUS. THE NAVY FINANCE CENTER, IN TRANSMITTING THE MATTER TO THIS OFFICE FOR OUR CONSIDERATION, STATES THAT THE CHECK IN THE AMOUNT OF $539.70 RECEIVED IN THAT OFFICE WITH MR. REYNOLDS' LETTER OF NOVEMBER 27, 1964, WILL BE HELD THERE PENDING OUR INSTRUCTIONS IN THE MATTER. IN YOUR LETTER OF NOVEMBER 30, 1964, YOU ALSO REQUEST THAT MR. REYNOLDS BE RESTORED TO HIS PRIOR RETIRED PAY STATUS, ADDING THAT YOU WERE MISINFORMED (NOTWITHSTANDING THE STATEMENTS QUOTED ABOVE FROM YOUR LETTER OF AUGUST 18, 1964) AS TO MR. REYNOLDS'"DISABILITY" RETIRED PAY STATUS AT THE TIME YOU SUBMITTED THE FAGAN-TYPE CLAIM.

MR. REYNOLDS WAS PLACED ON THE RETIRED LIST OF THE NAVY EFFECTIVE JUNE 1, 1944, BY REASON OF A PHYSICAL DISABILITY INCURRED ON ACTIVE DUTY SUBSEQUENTLY EVALUATED AT ZERO PERCENT FOR PURPOSES OF SECTION 411 OF THE CAREER COMPENSATION ACT OF 1949, 63 STAT. 823. AS A MEMBER OF THE UNIFORMED SERVICES THERETOFORE RETIRED BY REASON OF PHYSICAL DISABILITY, MR. REYNOLDS' DISABILITY RETIRED PAY STATUS ON OCTOBER 1, 1949, EFFECTIVE DATE OF THE CAREER COMPENSATION ACT OF 1949, CAME SQUARELY WITHIN THE SCOPE OF SECTION 411 OF THAT ACT. AS A CONSEQUENCE, HE WAS ENTITLED TO ELECT TO RECEIVE RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, UNDER EITHER OPTION (A) OR OPTION (B) OF SECTION 411 AND, IN THE EVENT THAT HE DID NOT EXERCISE SUCH AN ELECTION HE WAS ENTITLED TO CONTINUE TO RECEIVE RETIRED PAY IN THE AMOUNT HE WAS RECEIVING ON SEPTEMBER 30, 1949. SEE SECTION 3, EXECUTIVE ORDER NO. 10124, APRIL 25, 1950, 15 F.R. 2375.

UNDER AN ELECTION OF OPTION (A) IN SECTION 411 A MEMBER OF THE UNIFORMED SERVICES BECAME ENTITLED, IF OTHERWISE QUALIFIED, TO RECEIVE DISABILITY RETIRED PAY AS PRESCRIBED IN TITLE IV OF THE 1949 LAW. UNDER AN ELECTION OF OPTION (B) SUCH MEMBER WAS ENTITLED TO RECEIVE RETIRED PAY EFFECTIVE FROM OCTOBER 1, 1949, COMPUTED BY ONE OF THE TWO METHODS PRESCRIBED IN SECTION 511 OF THE ACT. SECTION 511 PROVIDED THAT A RETIRED MEMBER WITHIN ITS PROVISIONS:

"* * * SHALL BE ENTITLED TO RECEIVE RETIRED PAY * * * IN THE AMOUNT WHICHEVER IS THE GREATER, COMPUTED BY ONE OF THE FOLLOWING METHODS: (A) THE MONTHLY RETIRED PAY * * * IN THE AMOUNT AUTHORIZED * * * BY PROVISIONS OF LAW IN EFFECT ON THE DAY IMMEDIATELY PRECEDING THE DATE OF ENACTMENT OF THIS ACT (OCTOBER 11, 1949), OR (B) MONTHLY RETIRED PAY * * * EQUAL TO 2 1/2 PERCENTUM OF THE MONTHLY BASIC PAY OF THE HIGHEST FEDERALLY RECOGNIZED * * * RATING, WHETHER UNDER A PERMANENT OR TEMPORARY APPOINTMENT, SATISFACTORILY HELD, BY SUCH MEMBER * * * AS DETERMINED BY THE SECRETARY CONCERNED, AND WHICH SUCH MEMBER * * * WOULD BE ENTITLED TO RECEIVE IF SERVING ON ACTIVE DUTY IN SUCH * * * RATING, MULTIPLIED BY THE NUMBER OF YEARS OF ACTIVE SERVICE CREDITABLE TO HIM.'

IN DECISION OF APRIL 13, 1950, 29 COMP. GEN. 404, IT WAS STATED AT PAGES 407 AND 408 THAT:

"WHILE THE MATTER IS NOT ENTIRELY FREE FROM DOUBT, IT DOES NOT APPEAR THAT THE PURPOSE AND INTENT OF OPTION (B) IN SECTION 411 WAS TO REQUIRE A DISABLED RETIRED MEMBER WHO ELECTED THAT OPTION TO FURTHER IRREVOCABLY ELECT ONE OR THE OTHER OF THE TWO METHODS CONTAINED IN SECTION 511, BUT RATHER THAT IT WAS INTENDED TO GIVE SUCH MEMBERS THE RIGHT TO HAVE THEIR RETIRED PAY COMPUTED UNDER THE PROVISIONS OF THE LATTER SECTION; I.E., TO RECEIVE RETIRED PAY, IN THE AMOUNT WHICHEVER IS GREATER FROM TIME TO TIME, COMPUTED BY EITHER METHOD (A) OR METHOD (B) PRESCRIBED IN THAT SECTION, THE SAME AS NON-DISABLED RETIRED MEMBERS UNDER SUCH SECTION.'

IN DECISION OF JULY 17, 1957, 37 COMP. GEN. 31, IT WAS POINTED OUT ON PAGE 34 THAT:

"SECTION 511 * * * DOES NOT PROVIDE FOR AN ELECTION WITH RESPECT TO RETIRED PAY. TWO METHODS OF COMPUTING RETIRED PAY ARE THERE PROVIDED AND RETIRED MEMBERS WHOSE RIGHTS ARE GOVERNED BY SUCH PROVISIONS OF LAW ARE ENTITLED TO HAVE THEIR RETIRED PAY COMPUTED BY THE METHOD WHICH PRODUCES THE GREATER AMOUNT OF RETIRED PAY. AFTER RECEIVING RETIRED PAY COMPUTED BY ONE METHOD, IF CONDITIONS CHANGE IN SUCH A MANNER THAT A RETIRED MEMBER'S PAY WOULD INCREASE BY COMPUTING HIS RETIRED PAY UNDER THE OTHER METHOD, SUCH RECOMPUTATION WAS AUTHORIZED AND REQUIRED UNDER SECTION 511 WITHOUT ANY ELECTION ON HIS PART.'

IN OTHER WORDS, A RETIRED MEMBER WHOSE RETIRED PAY STATUS LIES WITHIN THE PURVIEW OF SECTION 511 HAS NO CHOICE BETWEEN RECEIVING RETIRED PAY COMPUTED UNDER METHOD (A) OR METHOD (B/--- THE LAW EXPLICITLY PROVIDES THAT THE RETIRED MEMBER SHALL BE ENTITLED TO RECEIVE RETIRED PAY "IN THE AMOUNT WHICHEVER IS THE GREATER.'

THE CONCLUSION REACHED IN THE DECISION OF JULY 17, 1957 (THAT SECTIONS 5 AND 6 OF THE CAREER INCENTIVE ACT OF 1955, CH. 20, 69 STAT. 22-23 "PRECLUDE (D) FURTHER RECOMPUTATIONS OF RETIRED PAY UNDER SECTION 511 OF THE 1949 ACT" FROM AND AFTER APRIL 1, 1955, THE EFFECTIVE DATE OF THE 1955 LAW) IS CONTRARY TO THE DECISION OF THE COURT OF CLAIMS IN THE FAGAN DECISION OF MAY 4, 1960. IN THAT DECISION THE COURT EXPRESSED THE OPINION, HOWEVER,"THAT THE COMPTROLLER GENERAL WAS CORRECT IN HIS INTERPRETATION OF SECTION 511" REFERRING IN THAT COMMENT TO "THE COMPTROLLER GENERAL'S INTERPRETATION OF SECTION 511 AND THE LONG ADMINISTRATIVE PRACTICE OF THE MILITARY SERVICES REGARDING AUTOMATIC RECOMPUTATIONS UNDER SECTION 511 METHODS (A) AND (B).' SUBSEQUENTLY, IN DECISION OF OCTOBER 20, 1960, 40 COMP. GEN. 222, THE CONCLUSION REACHED IN 37 COMP. GEN. 31 AS TO THE EFFECT OF THE 1955 ACT IN SECTION 511 CASES WAS MODIFIED TO CONFORM TO THE FAGAN DECISION.

THE RECORD BEFORE US CONTAINS A COPY OF THE SECTION 411 ELECTION EXECUTED BY MR. REYNOLDS ON SEPTEMBER 26, 1953. THIS WAS A VALID ELECTION EXERCISED WITHIN THE 5-YEAR PERIOD PRESCRIBED IN THAT SECTION TO RECEIVE MONTHLY GROSS RETIRED PAY IN THE AMOUNT OF $140.25, THAT IS,"DISABILITY" RETIRED PAY COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF LAW THAT WERE IN EFFECT ON SEPTEMBER 30, 1949. THE SECTION 411 ELECTION FORM CLEARLY AND CONSPICUOUSLY STATES THEREON THAT "PAY UNDER THIS METHOD IS TAX EXEMPT.' WHILE MR. REYNOLDS MAY NOT HAVE ENTIRELY GRASPED THE TRUE SIGNIFICANCE OF THIS SECTION 411 ELECTION IN 1953, IT IS APPARENT THAT THE CLAIM WHICH YOU SUBMITTED HERE ON HIS BEHALF IN AUGUST 1964 IS BASED ON THE PREMISE THAT HIS 1953 ELECTION HAD BEEN AN ELECTION OF OPTION (B) UNDER SECTION 411, THEREBY BRINGING HIM WITHIN THE PURVIEW OF THE FAGAN DECISION SO AS TO ENTITLE HIM TO COMPUTE AND RECOMPUTE HIS RETIRED PAY UNDER METHOD (A) OR METHOD (B) OF SECTION 511, WHICHEVER PAY WAS THE GREATER.

AS ABOVE POINTED OUT, THE COURT OF CLAIMS IN THE FAGAN DECISION APPROVED THE INTERPRETATION PLACED BY THIS OFFICE ON SECTION 511 RETIRED PAY--- AUTOMATIC RECOMPUTATION AND NO ELECTION REQUIRED OR PERMITTED BETWEEN METHODS (A) AND (B) THEREUNDER. CONSEQUENTLY, WHEN THE AMOUNT OF RETIRED PAY DUE MR. REYNOLDS BECAME GREATER WHEN COMPUTED UNDER METHOD (B) OF SECTION 511 THAN THE AMOUNT OF HIS DISABILITY RETIRED PAY COMPUTED UNDER METHOD (A), HE BECAME ENTITLED TO THE FORMER AND LOST HIS RIGHT TO THE LATTER.

MOREOVER, SHOULD IT BE CONTENDED THAT MR. REYNOLDS' SECTION 411 ELECTION IN SEPTEMBER 1953 DID NOT HAVE THE EFFECT OF PLACING HIM WITHIN THE PURVIEW OF SECTION 511, SEE THE DECISION RENDERED BY THE COURT OF CLAIMS JULY 17, 1964, IN THE CASE OF CLIFFORD MAURICE SHATTUCK, PLAINTIFF NO. 8 IN BENSON, ET AL. V. UNITED STATES, CT.CL. NO. 372-59. IN THAT CASE, THE PLAINTIFF SHATTUCK, A SECTION 411 DISABILITY RETIREE (LIKE REYNOLDS), DID NOT MAKE ANY SECTION 411 ELECTION BUT NEVERTHELESS SOUGHT THE BENEFITS OF SECTION 511, METHOD (B) RETIRED PAY UNDER THE RULE OF THE FAGAN DECISION. IN THAT CONNECTION, THE COURT STATED:

"THE ONLY ISSUE WHICH WE REACH IS WHETHER SECTION 411 IS APPLICABLE AT ALL TO PERSONS WHOSE RETIREMENT WAS OCCASIONED BY DISABILITIES WHICH WERE NOT SERVICE-INCURRED. WE HOLD THAT IT IS NOT. THIS PLAINTIFF (SHATTUCK) WAS THUS REQUIRED TO MAKE NO ELECTION. HE WAS ENTITLED, JUST AS ANY LONGEVITY RETIREE WOULD HAVE BEEN, TO THE AUTOMATIC RECOMPUTATION WHICH HE SEEKS.'

THE RECORD BEFORE US IS SILENT AS TO WHETHER MR. REYNOLDS' DISABILITY WAS OR WAS NOT ,SERVICE-INCURRED.' HOWEVER, EVEN IF IT SHOULD BE ASSUMED THAT MR. REYNOLDS' SITUATION (ZERO PERCENT DISABILITY RATING) COMES WITHIN THE RULE OF THE SHATTUCK DECISION, WE DO NOT FIND ANYTHING IN THE SHATTUCK DECISIONS WHICH SUGGESTS THAT AN INDIVIDUAL IN SUCH CIRCUMSTANCES HAS ANY RIGHT OF ELECTION BETWEEN METHODS (A) AND (B) OF SECTION 511.

SINCE THE ACTION TAKEN BY THE GENERAL ACCOUNTING OFFICE IN THE CERTIFICATION OF OCTOBER 22, 1964, PURSUANT TO THE SPECIFIC CLAIM YOU PRESENTED HERE IS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF LAW AS CONSTRUED BY THE COURT OF CLAIMS IN THE FAGAN AND SHATTUCK DECISIONS, NO PROPER BASIS IS PERCEIVED TO ALTER OR CANCEL SUCH ACTION.

A COPY OF THIS LETTER IS BEING SENT TO THE RETIRED PAY DEPARTMENT, NAVY FINANCE CENTER, CLEVELAND, OHIO, WITH THE REQUEST THAT SUCH COPY BE FORWARDED TO MR. REYNOLDS WITH THE RETURN BY THAT OFFICE OF THE $539.70 CHECK TO HIM.