B-206242.OM, MAR 16, 1982

B-206242.OM, MAR 16, 1982

SUBJECT: REQUEST FOR WAIVER BY RICHARD SANTOS - B-206242-O.M.(1) DIGEST: SERVICE MEMBER MAY BE GRANTED WAIVER OF ERRONEOUS PAYMENTS OF PAY AND ALLOWANCES MADE ON DISCHARGE, SINCE HE RECEIVED INACCURATE BUT CONVINCING INFORMATION FROM HIS DISBURSING OFFICER THAT HE WAS NOT LIABLE TO REFUND EARLIER ERRONEOUS PAYMENTS OF SEPARATE RATIONS. CONSEQUENTLY, HE HAD A REASONABLE BELIEF THAT HE WAS BEING PAID CORRECTLY THEREAFTER AND IN THE FINAL SETTLEMENT OF HIS PAY ACCOUNTS UPON DISCHARGE, AND HE WAS THEREFORE NOT AT FAULT IN ACCEPTING THE OVERPAYMENTS TENDERED TO HIM AT THAT TIME. 10 U.S.C. 2774.

ASSOCIATE DIRECTOR, AFMD - CLAIMS GROUP (ROOM 5858):

CLAIM FILE Z-2803703 IS RETURNED. MR. RICHARD SANTOS REQUESTS RECONSIDERATION OF THE CLAIMS DIVISION'S SEPTEMBER 20, 1979 DENIAL OF HIS APPLICATION FOR WAIVER OF HIS DEBT TO THE UNITED STATES IN THE AMOUNT OF $974.07. THE DEBT AROSE FROM ERRONEOUS PAYMENTS OF SEPARATE RATIONS (BASIC ALLOWANCE FOR SUBSISTENCE) MADE TO HIM WHEN HE WAS IN THE UNITED STATES NAVY DURING THE PERIOD APRIL 20, 1976, TO APRIL 30, 1977. WE HAVE CONCLUDED THAT WAIVER SHOULD BE GRANTED IN THE AMOUNT OF $953.97, THE TOTAL AMOUNT OVERPAID TO HIM AT THE TIME OF HIS DISCHARGE FROM THE NAVY ON JULY 11, 1979. WE HAVE REACHED THIS CONCLUSION EVEN THOUGH IT IS OUR VIEW THAT THE PREVIOUS DENIAL OF WAIVER IN SEPTEMBER 1979 WAS CORRECT ON THE BASIS OF THE EVIDENCE OF RECORD THEN PRESENTED.

WHILE SERVING AS AN ENLISTED MEMBER IN THE NAVY, MR. SANTOS WAS AUTHORIZED SEPARATE RATIONS BY HIS COMMAND ON APRIL 20, 1976. THIS AUTHORIZATION WAS ERRONEOUS SINCE HE HAD BEEN ISSUED A MEAL PASS UPON REPORTING TO THAT COMMAND ON APRIL 16, 1976. HE WAS PAID BASIC ALLOWANCE FOR SUBSISTENCE UNTIL APRIL 30, 1977, WHEN A VERIFICATION OF HIS RECORDS SHOWED HE WAS NOT ENTITLED TO SEPARATE RATIONS BECAUSE HE HAD NOT BEEN GRANTED PERMISSION TO MESS SEPARATELY AND A GOVERNMENT MESS WAS AVAILABLE TO HIM. 37 U.S.C. 402 (1976).

MR. SANTOS, IN HIS ORIGINAL JUNE 1977 REQUEST FOR WAIVER, CONTENDED THAT HE DESERVED RELIEF BECAUSE HE HAD NOT CAUSED THE ERROR AND HAD NOT KNOWN HE WAS BEING OVERPAID. HE SAID THAT WHEN HE REPORTED FOR DUTY ON APRIL 16, 1976, HE WAS ISSUED A MEAL PASS, AND THAT ON APRIL 20, 1976, HE WAS AUTHORIZED SEPARATE RATIONS WITHOUT HIS KNOWLEDGE, CONSENT, OR REQUEST. IN SEPTEMBER 1979 THE CLAIMS DIVISION NEVERTHELESS DENIED WAIVER FOR THE REASON THAT, AFTER RECEIVING AN UNEXPLAINED INCREASE IN HIS PAY, MR. SANTOS SHOULD HAVE KNOWN THAT HE WAS BEING OVERPAID AND A FAILURE TO QUESTION THIS INCREASE WHEN IT OCCURRED WAS FAULT ON HIS PART.

IN HIS APPEAL, MR. SANTOS NOTES THAT IN JUNE 1977 HIS COMMANDING OFFICER RECOMMENDED HIS APPLICATION FOR WAIVER BE APPROVED. HE ALSO NOTES THAT IN 1978 HE AGREED TO HAVE SCHEDULED DEDUCTIONS TAKEN FROM HIS PAY FOR THE PURPOSE OF REFUNDING THE OVERPAYMENTS, BUT THE DEDUCTIONS WERE STOPPED AFTER 2 MONTHS AND ALL DEDUCTED MONEY RETURNED TO HIM. HE INDICATES THAT HE DID NOT TERMINATE THE REPAYMENT SCHEDULE AND THAT THE DEBT WOULD HAVE BEEN REPAID IF ALLOTMENTS FOR THIS PURPOSE HAD BEEN CONTINUED. HE STATES THAT UPON INQUIRY TO HIS DISBURSING OFFICER CONCERNING THE REASON FOR THE TERMINATION OF THE ALLOTMENT, HE WAS INFORMED THAT HIS WAIVER APPLICATION HAD BEEN APPROVED. HE DID NOT KNOW DIFFERENTLY UNTIL NOTIFIED AFTER SEPARATION FROM SERVICE THAT THE APPLICATION HAD NOT BEEN APPROVED AND THAT THE ORIGINAL DEBT HAD CREATED AN OVERPAYMENT OF $953.97 AT DISCHARGE. HE SUGGESTS THAT IN THESE CIRCUMSTANCES IT WOULD BE UNFAIR TO COLLECT THE OVERPAYMENT HE RECEIVED AT THE TIME OF HIS DISCHARGE.

SECTION 2774 OF TITLE 10, U.S.C. (1976), PROVIDES OUR AUTHORITY TO WAIVE CERTAIN DEBTS OF CURRENT AND FORMER SERVICE MEMBERS WHEN COLLECTION WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES. HOWEVER, SECTION 2774 PRECLUDES WAIVER IF THE MEMBER OR FORMER MEMBER WAS AT FAULT IN THE MATTER. 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, WE CONSIDER FAULT 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 ENTITLEMENT. SEE DECISIONS B-201814, SEPTEMBER 18, 1981; AND 56 COMP.GEN. 943 (1977).

IN THE PRESENT SITUATION, THE RECORDS OF THE NAVY FINANCE CENTER CONFIRM THAT THE INDEBTEDNESS OF $974.07 WAS POSTED TO MR. SANTOS' ACCOUNT AND A LIQUIDATION REPAYMENT SCHEDULE OF $60.88 EACH MONTH WAS ESTABLISHED ON APRIL 23, 1978. COLLECTION WAS MADE FROM HIS PAY IN BIMONTHLY AMOUNTS OF $30.44 ON MARCH 15, MARCH 30, APRIL 15, AND APRIL 30, 1978, FOR A TOTAL OF $121.76. COLLECTION WAS SUSPENDED ON MAY 15, 1978, EFFECTIVE APRIL 30, 1978, PENDING WAIVER DETERMINATION, AND HIS DISBURSING OFFICER PAID BACK THE $121.76 COLLECTED. ALTHOUGH HIS APPLICATION FOR WAIVER WAS DENIED ON SEPTEMBER 20, 1979, HE WAS NOT NOTIFIED UNTIL HE RECEIVED A LETTER DATED OCTOBER 10, 1980, WHICH ALSO INFORMED HIM THAT AS A RESULT HE HAD RECEIVED AN OVERPAYMENT OF $953.97 AT DISCHARGE.

IN THESE PARTICULAR CIRCUMSTANCES, OUR VIEW IS THAT WHILE MR. SANTOS WAS PARTIALLY AT FAULT INITIALLY IN 1977 IN NOT QUESTIONING THE UNEXPECTED INCREASE IN HIS PAY ATTRIBUTABLE TO RECEIPT OF ERRONEOUS PAYMENTS FOR SEPARATE RATIONS, HE SHOWED GOOD FAITH IN ATTEMPTING TO REPAY THE ORIGINAL INDEBTEDNESS. AFTER COLLECTION WAS SUSPENDED, HIS PRIOR PAYMENTS WERE RETURNED, AND HE RECEIVED REASONABLY PERSUASIVE INFORMATION FROM HIS DISBURSING OFFICER THAT INDICATED HIS WAIVER HAD BEEN GRANTED, HE WAS NOT AT FAULT IN ACCEPTING SUBSEQUENT PAY AND ALLOWANCES, INCLUDING HIS FINAL PAYMENT. COMPARE B-197034-O.M., APRIL 28, 1980; AND B-195707, FEBRUARY 14, 1980. WE THEREFORE WAIVE THE CLAIM OF THE UNITED STATES AGAINST HIM IN THE AMOUNT OF $953.97, THE TOTAL AMOUNT OVERPAID AT DISCHARGE. ACTION SHOULD BE TAKEN TO NOTIFY THE NAVY FINANCE CENTER AND MR. SANTOS OF THIS GRANT OF WAIVER.

WE ARE ALSO ATTACHING A COPY OF OUR LETTER OF TODAY'S DATE TO REPRESENTATIVE GERRY E. STUDDS, WHO EXPRESSED AN INTEREST IN THE MATTER.