B-151129, JUN. 25, 1963

B-151129, JUN. 25, 1963

TO CHIEF WARRANT OFFICER JESSE E. HILL, USN, RET.:

BY SETTLEMENT VOUCHER DATED DECEMBER 17, 1962, ISSUED BY OUR CLAIMS DIVISION, YOU WERE ALLOWED AN ADJUSTMENT IN RETIRED PAY IN THE AMOUNT OF $1,263.94, COVERING THE PERIOD APRIL 1, 1955, TO SEPTEMBER 30, 1963. YOU WERE ADVISED IN THAT SETTLEMENT THAT PRIOR TO APRIL 1, 1955, THE "SAVED PAY" WHICH YOU RECEIVED WAS GREATER THAN PAY COMPUTED ON THE BASIS OF THE DECISION IN THE CASE OF SELIGA V. UNITED STATES, 137 CT.CL. 710.

UPON REVIEW OF YOUR CASE, IT HAS BEEN DETERMINED THAT THE SETTLEMENT WAS ISSUED IN ERROR.

THE RECORD BEFORE US SHOWS THAT YOU WERE TRANSFERRED FROM THE FLEET RESERVE TO THE RETIRED LIST OF THE NAVY FOR PHYSICAL DISABILITY ON JULY 1, 1941, AND THAT YOU ELECTED (METHOD C ON THE FORM USED BY YOU) UNDER SECTION 411 OF THE CAREER COMPENSATION ACT OF 1949, APPROVED OCTOBER 12, 1949, CH. 681, 63 STAT. 823, TO CONTINUE RECEIVING RETIRED PAY COMPUTED IN ACCORDANCE WITH THE LAWS IN EFFECT BEFORE OCTOBER 1, 1949. THE METHOD OF COMPUTATION ELECTED WAS THAT PROVIDED IN SECTION 511 (A) OF THE ACT AND RESULTED IN A RATE WHICH WAS GREATER THAN THAT COMPUTED UNDER EITHER OF THE TWO METHODS PROVIDED IN SECTION 402 (D) FOR MEMBERS RETIRED FOR PHYSICAL DISABILITY.

ON SEPTEMBER 29, 1959, YOU AND ANOTHER RETIRED FLEET RESERVIST, ARLIE MARVIN HAMRICK, BY YOUR ATTORNEYS FILED IN THE COURT OF CLAIMS PETITION NO. 411-59, WHEREIN YOU SOUGHT TO RECOVER ADDITIONAL RETIRED PAY COMPUTED UNDER SECTION 402 (D) OF THE ACT BASED ON CREDITING ALL OF YOUR SERVICE, INCLUDING INACTIVE TIME IN THE FLEET RESERVE AND ON THE RETIRED LIST, FOR BASIC PAY PURPOSES. A SIMILAR ADJUSTMENT HAD BEEN ALLOWED BY THE COURT IN THE EARLIER CASE OF SELIGA V. UNITED STATES, SUPRA. APPARENTLY BASED ON A LETTER TO YOU DATED NOVEMBER 23, 1960, FROM OUR CLAIMS DIVISION, YOU, UNDER DATE OF JULY 2, 1962, PURPORTED TO RESCIND THE ELECTION WHICH YOU HAD PREVIOUSLY FILED UNDER SECTION 411 AND FURTHER PURPORTED TO ELECT TO RECEIVE DISABILITY RETIRED PAY UNDER SECTION 402 (D) COMPUTED ON THE YEARS OF ACTIVE SERVICE FORMULA. ACCORDINGLY, THE SETTLEMENT CITED ABOVE WAS ISSUED IN YOUR FAVOR ON THE BASIS OF THE SELIGA RULE. FOLLOWING THAT SETTLEMENT, YOUR PETITION IN THE COURT OF CLAIMS, NO. 411-59, WAS DISMISSED WITH PREJUDICE.

IT HAS BEEN HELD THAT AN ELECTION UNDER SECTION 411 IS NOT BINDING IF IT WAS BASED UPON ERRONEOUS INFORMATION FURNISHED TO THE INDIVIDUAL BY THE ADMINISTRATIVE DEPARTMENT. HOWEVER, IT DOES NOT APPEAR THAT YOU ELECTED TO COME UNDER SECTION 511 (A) BY REASON OF ANY ERRONEOUS INFORMATION FURNISHED TO YOU. THE ELECTION FORM WHICH YOU SIGNED ON JULY 6, 1954, SHOWS THAT THE ALTERNATIVES OFFERED TO YOU AT THAT TIME WERE AS FOLLOWS:

TABLE

METHOD A $128.04 (OPTION 1 OF SECTION 402 (D) (TAX EXEMPT

METHOD B $192.06 (OPTION 2 OF SECTION 402 (D) ( WITH $64.02

TAXABLE

METHOD C $207.90 (SAVED PAY UNDER SECTION 511 (A) ( TAX EXEMPT

UNDER THE ACT OF MAY 19, 1952, CH. 310, 66 STAT. 79, THE ABOVE ALTERNATIVES WERE INCREASED AS FOLLOWS:

TABLE

METHOD A $133.16 TAX EXEMPT

METHOD B $199.74 WITH $66.58 TAXABLE

METHOD C $216.22 TAX EXEMPT

INCLUSION OF CREDIT FOR INACTIVE TIME IN THE FLEET RESERVE AND WHILE ON THE RETIRED LIST IN ACCORDANCE WITH THE RULING IN THE SELIGA DECISION WOULD INCREASE THE RATE SHOWN UNDER METHOD B TO $200.70 (WITH $66.93 TAXABLE), EFFECTIVE OCTOBER 1, 1949, AND $208.82 (WITH $69.60 TAXABLE), EFFECTIVE MAY 1, 1952. HENCE, IT APPEARS THAT EVEN IF YOU HAD BEEN ADVISED BEFORE MAKING YOUR ORIGINAL ELECTION OR AT ANY TIME PRIOR TO OCTOBER 1, 1954, OF THE CORRECT RATES OF RETIRED PAY TO WHICH YOU WOULD BE ENTITLED UNDER THE SELIGA DECISION, YOU WOULD HAVE FOUND THAT THE RATES UNDER METHOD C, SAVED PAY, GAVE YOU THE GREATEST ADVANTAGE. THERE IS NO REASON TO BELIEVE, THEREFORE, THAT THE INFORMATION FURNISHED YOU BY THE NAVY INDUCED YOU TO MAKE AN ERRONEOUS ELECTION DURING THE FIVE-YEAR PERIOD PRESCRIBED IN THE ACT.

EFFECTIVE APRIL 1, 1955, THE APPLICABLE RATE COMPUTED UNDER THE SELIGA FORMULA IS $242.76, OF WHICH $81.12 IS TAXABLE, WHEREAS THE RATE OF SAVED PAY IS $229.19. SINCE THE FIVE-YEAR PERIOD FOR MAKING ELECTIONS HAD EXPIRED PRIOR TO THAT DATE, YOU WERE PRECLUDED FROM CHANGING YOUR ELECTION FROM SECTION 511 TO SECTION 402 IN ORDER TO RECEIVE THE HIGHER GROSS RATE OF RETIRED PAY, EFFECTIVE APRIL 1, 1955. THE SETTLEMENT VOUCHER, THEREFORE, WAS ERRONEOUS AND FURNISHES NO BASIS FOR FUTURE ADJUSTMENTS OF RETIRED PAY.

IT WILL BE NOTED THAT ON THE BASIS OF THE PAY RATES EFFECTIVE APRIL 1, 1955, YOUR RETIRED PAY COMPUTED UNDER SECTION 511 (B), THE YEARS OF ACTIVE SERVICE FORMULA (2 1/2 PERCENT OF $389 TIMES 24, $233.40), EXCEEDS THE RATE WHICH OTHERWISE WOULD BE DUE UNDER SECTION 511 (A), SAVED PAY $229.19). THE COURT OF CLAIMS IN THE CASE OF FAGAN ET AL. (GOVER) V. UNITED STATES, CT.CL. NO. 535-57, DECIDED MAY 4, 1960, HELD THAT THE CAREER INCENTIVE ACT OF 1955, APPROVED MARCH 31, 1955, CH. 20, 69 STAT. 18, DID NOT TERMINATE THE RIGHT TO CHANGE THE METHOD OF COMPUTING RETIRED PAY UNDER SECTION 511 SO AS TO RECEIVE THE ADVANTAGE OF THE MOST FAVORABLE OF THE TWO METHODS PRESCRIBED THEREIN. WE ARE FOLLOWING THAT DECISION. SEE 40 COMP. GEN. 222.

ACCORDINGLY, THE NAVY FINANCE CENTER, CLEVELAND, OHIO, IS BEING ADVISED THAT FOR PERIODS AFTER SEPTEMBER 30, 1962, YOUR RETIRED PAY SHOULD BE PAID AT THE RATE OF $247.40 PER MONTH ($233.40 INCREASED BY 6 PERCENT AS PROVIDED BY SECTION 4 (A) OF THE ACT OF MAY 20, 1958, PUB.L. 85-422, 72 STAT. 128) REPRESENTING THE AMOUNT DUE UNDER SECTION 511 (B). THAT OFFICE IS BEING ADVISED ALSO THAT, IN VIEW OF THE DISMISSAL OF YOUR PETITION IN THE COURT OF CLAIMS, NO ACTION TO COLLECT THE AMOUNT COVERED BY THE SETTLEMENT NEED BE TAKEN AT THIS TIME.