B-165665, JAN. 29, 1969

B-165665, JAN. 29, 1969

TO LIEUTENANT COMMANDER J. R. WEBB:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 7, 1968, REFERRED HERE BY SECOND ENDORSEMENT OF THE COMPTROLLER OF THE NAVY DATED NOVEMBER 20, 1968, REQUESTING REVIEW OF THE ACTION TAKEN BY OUR CLAIMS DIVISION ON MAY 22, 1968, RECOMMENDING COLLECTION ACTION AGAINST PETTY OFFICER ROBERT GEORGE PAPPAS, USNFR, 285 94 98, UNDER THE PROVISIONS OF THE ACT OF JULY 15, 1954, PUBLIC LAW 497, 68 STAT. 482, IN CONNECTION WITH AN OVERPAYMENT OF INSURANCE ALLOTMENT FOLLOWING TERMINATION OF THE ALLOTMENT BY THE MEMBER.

YOU SAY THAT AN ALLOTMENT OF $24.84 WAS ESTABLISHED EFFECTIVE JUNE 1963 FOR PAYMENT OF MONTHLY PREMIUMS ON BEHALF OF PAPPAS TO THE GOVERNMENT PERSONNEL MUTUAL LIFE INSURANCE COMPANY. SUBSEQUENTLY, HE REQUESTED THAT HIS ALLOTMENT BE STOPPED BECAUSE HE WAS CANCELLING HIS POLICY. DEDUCTIONS TERMINATED IN HIS PAY ACCOUNT AFTER OCTOBER 1964. HOWEVER, NO AUTHORIZATION WAS SUBMITTED TO THE ALLOTMENT OFFICE TO DISCONTINUE THE ALLOTMENT AND PAYMENTS WERE MADE TO THE INSURANCE COMPANY THROUGH MARCH 1965, RESULTING IN A TOTAL OVERPAYMENT OF $124.20. COLLECTION ACTION INSTITUTED BY THE DEPARTMENT OF THE NAVY WAS UNSUCCESSFUL AND THE MATTER WAS REFERRED TO THIS OFFICE UNDER DATE OF JUNE 24, 1965, AS AN UNCOLLECTIBLE INDEBTEDNESS.

COLLECTION ACTION TAKEN BY THIS OFFICE WAS ALSO UNSUCCESSFUL AND BY LETTER DATED SEPTEMBER 6, 1966, THE SECRETARY OF THE NAVY WAS REQUESTED TO ASSIST IN MAKING COLLECTION FROM PAPPAS. AN AUTHORIZATION WAS ISSUED DIRECTING CHECK AGE FOR THE AMOUNT OF THE OVERPAYMENT AND THE TOTAL AMOUNT OF $124.20 WAS WITHHELD FROM HIS PAY. ON OCTOBER 18, 1966, HE PROTESTED THE CHECK AGE OF HIS ACCOUNT AND BY LETTERS DATED MAY 22, 1968, OUR CLAIMS DIVISION ADVISED HIM AND THE SECRETARY OF THE NAVY THAT SINCE THE INSURANCE POLICY WAS MAINTAINED IN FORCE TO MAY 1, 1965, BY THE ERRONEOUS PAYMENT OF THE ALLOTMENT BY THE GOVERNMENT AND THE INSURER CARRIED THE ENTIRE RISK THROUGH THE PERIOD COVERED BY ERRONEOUS PAYMENTS OF PREMIUMS, PAPPAS HAD INSURANCE PROTECTION. IT WAS CONCLUDED, IN EFFECT, THAT COLLECTION OF THE OVERPAYMENT FROM HIM WAS PROPER ON THE BASIS THAT HE RECEIVED A BENEFIT FROM THE ALLOTMENT PAYMENTS.

ON THE BASIS OF THE RECORD NOW BEFORE US, IT SEEMS CLEAR THAT PAPPAS DID ALL THAT WAS REQUIRED OF HIM BY THE REGULATIONS TO STOP HIS ALLOTMENT. THUS, HIS CASE IS WITHIN THE RULE OF OUR DECISION OF OCTOBER 3, 1957, B- 132415, 37 COMP. GEN. 218, TO THE EFFECT THAT COMMERCIAL INSURANCE PREMIUMS INADVERTENTLY PAID BY THE GOVERNMENT AFTER THE SERVICEMAN REQUESTED DISCONTINUANCE OF A VOLUNTARY ALLOTMENT FROM HIS PAY FOR THAT PURPOSE, MAY NOT BE REGARDED AS HIS OBLIGATION, UNLESS HE HAS, IN FACT, TAKEN SOME AFFIRMATIVE ACTION TO RATIFY THE OVERPAYMENTS BY ACCEPTING A BENEFIT THEREFROM.

WHILE THE RECORD INDICATES THAT PAPPAS DID ACCEPT $11 FROM THE INSURANCE COMPANY, REPRESENTING THE CASH SURRENDER OF THE POLICY, WE DO NOT VIEW THAT ACCEPTANCE AS A RATIFICATION OF THE ERRONEOUS PAYMENTS MADE TO THE COMPANY. ASSUMING, HOWEVER, THAT SUCH CASH SURRENDER VALUE WAS CREATED BY THE ERRONEOUS PAYMENTS, HE MAY NOT RETAIN IT AT THE EXPENSE OF THE GOVERNMENT. ACCORDINGLY, THE AMOUNT CHECKED AGAINST PAPPAS' PAY ACCOUNT, $124.20, LESS THE CASH SURRENDER VALUE OF THE POLICY RECEIVED BY HIM, $11, OR A BALANCE OF $113.20, MAY BE REFUNDED TO HIM, IF OTHERWISE CORRECT.