B-219005, JUN 17, 1986

B-219005, JUN 17, 1986

DEBT COLLECTIONS - WAIVER - CIVILIAN EMPLOYEES - COMPENSATION OVERPAYMENTS - COLLECTION NOT AGAINST EQUITY AND GOOD - CONSCIENCE, ETC. DIGEST: INCIDENT TO A PROMOTION, A BUREAU OF LAND MANAGEMENT EMPLOYEE WAS CONVERTED FROM A GENERAL SCHEDULE TO A WAGE GRADE STATUS. ALTHOUGH THE NOTICE OF PERSONNEL ACTION FOR THIS PROMOTION DID NOT INDICATE THAT HE WAS ENTITLED TO COST-OF-LIVING ALLOWANCE (COLA) PAYMENTS, SUCH PAYMENTS WERE CONTINUED DUE TO AN ADMINISTRATIVE ERROR. SINCE THE EMPLOYEE RECEIVED LEAVE AND EARNINGS STATEMENTS THROUGHOUT THE TIME IN QUESTION WHICH CLEARLY SHOWED COLA PAYMENTS, HIS FAILURE TO EXAMINE THE STATEMENTS AND TO NOTE THE ERROR MAKES HIM AT LEAST PARTIALLY AT FAULT, THEREBY PRECLUDING WAIVER UNDER 5 U.S.C. SEC. 5584.

JOHN A. DE HOYOS - WAIVER OF COLA OVERPAYMENTS:

THIS ACTION IS AN APPEAL FROM THE SETTLEMENT BY OUR CLAIMS GROUP DENYING WAIVER OF OVERPAYMENTS OF SALARY TO JOHN A. DE HOYOS, AN EMPLOYEE OF THE BUREAU OF LAND MANAGEMENT. MR. DE HOYOS WAS OVERPAID $1,119.59 BECAUSE A COST-OF-LIVING ALLOWANCE (COLA) WAS INCLUDED IN HIS PAY, DUE TO AN ADMINISTRATIVE ERROR, FOLLOWING A PROMOTION AND CONVERSION FROM A GENERAL SCHEDULE POSITION TO A WAGE GRADE POSITION. FOR THE REASONS SET FORTH BELOW, THE DENIAL OF WAIVER BY OUR CLAIMS GROUP IS SUSTAINED.

BACKGROUND

ACCORDING TO THE RECORD, MR. DE HOYOS HAS BEEN EMPLOYED WITH THE BUREAU OF LAND MANAGEMENT, ALASKA STATE OFFICE, ANCHORAGE, ALASKA SINCE NOVEMBER 1977. EFFECTIVE JANUARY 9, 1983, MR. DE HOYOS WAS PROMOTED AND CONVERTED FROM COMPUTER OPERATOR, GRADE GS-8, STEP 4, TO ELECTRONIC DIGITAL COMPUTER MECHANIC, GRADE WG-8, STEP 1. UPON HIS PROMOTION AND CONVERSION, MR. DE HOYOS RECEIVED A STANDARD FORM 50 (SF-50), "NOTIFICATION OF PERSONNEL ACTION," WHICH DID NOT INDICATE THAT HE WAS ENTITLED TO A COLA, AS DID THE SF-50 HE RECEIVED WHEN HE WAS PROMOTED TO HIS FORMER GENERAL SCHEDULE POSITION. HOWEVER, THROUGH ADMINISTRATIVE ERROR, MR. DE HOYOS CONTINUED TO RECEIVE COLA PAYMENTS FOR FIVE PAY PERIODS UNTIL MARCH 20, 1983. ACCORDING TO THE RECORD, THE AGENCY PROVIDED MR. DE HOYOS WITH A LEAVE AND EARNINGS STATEMENT FOR EACH BI-WEEKLY PAYCHECK WHICH CLEARLY REFLECTED THE COLA PAYMENTS. YET, IT WAS NOT UNTIL AFTER HE RECEIVED HIS THIRD PAYCHECK AS A WAGE GRADE EMPLOYEE THAT MR. DE HOYOS CONTACTED THE PERSONNEL OFFICE TO REQUEST A RECORDS CHECK. THE ERROR IN COLA PAYMENTS WAS THEREUPON DETECTED AND CORRECTED, ALTHOUGH NOT BEFORE TWO MORE IMPROPER PAYCHECKS WERE ISSUED.

ON APRIL 19, 1983, A BILL FOR COLLECTION IN THE AMOUNT OF $1,119.59, REPRESENTING THE TOTAL AMOUNT OF COLA OVERPAYMENTS, WAS SENT TO MR. DE HOYOS. SUBSEQUENTLY, MR. DE HOYOS REQUESTED A WAIVER OF THE ENTIRE OVERPAYMENT ASSERTING THAT HE HAD COMPARED HIS FIRST TWO PAYCHECKS AS A WAGE GRADE EMPLOYEE WITH THE CHECK OF A COWORKER WHO WAS CONTEMPORANEOUSLY CONVERTED TO A WAGE GRADE. THE AMOUNTS WERE IDENTICAL. MOREOVER, ONCE HE RECEIVED AN UNEXPECTED INCREASE IN HIS THIRD PAYCHECK, MR. DE HOYOS IMMEDIATELY CONTACTED THE PAYROLL OFFICE. FINALLY, DE HOYOS CONTENDS THAT HE RELIED ON THE ACCURACY OF HIS PAYCHECKS AS A WG-8 IN COMMITTING HIMSELF TO THE DOWNPAYMENT ON A NEW HOME. HE IS NOW CONCERNED ABOUT HIS ABILITY TO MAKE THE PAYMENTS ON THAT HOUSE DUE TO ANY REPAYMENT OF THE COLA OVERPAYMENTS AND THE RESULTING REDUCTION IN HIS PAY.

IN DECEMBER 1983, THE BUREAU OF LAND MANAGEMENT FORWARDED MR. DE HOYOS' CLAIM TO OUR CLAIMS GROUP WITH A RECOMMENDATION THAT WAIVER BE DENIED UNDER THE PROVISIONS OF 5 U.S.C. SEC. 5584 (1982). WAIVER WAS DENIED ON MARCH 4, 1985, BECAUSE THE CLAIMS GROUP FOUND MR. DE HOYOS TO BE AT LEAST PARTIALLY AT FAULT FOR THE OVERPAYMENT IN THAT HE HAD BEEN PROVIDED WITH A LEAVE AND EARNINGS STATEMENT FOR EACH PAY PERIOD WHEN AN OVERPAYMENT WAS RECEIVED, AND AN EXAMINATION OF THESE STATEMENTS WOULD HAVE SHOWN HIM THAT HE WAS RECEIVING COLA PAYMENTS.

DISCUSSION:

UNDER 5 U.S.C. SEC. 5584, THE COMPTROLLER GENERAL IS AUTHORIZED TO WAIVE CLAIMS FOR ERRONEOUS PAYMENTS OF PAY AND ALLOWANCES IF COLLECTION WOULD BE "AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTEREST OF THE UNITED STATES." THIS AUTHORITY MAY NOT BE EXERCISED IF THERE IS "AN INDICATION OF FRAUD, MISREPRESENTATION, FAULT, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE OR ANY OTHER PERSON HAVING AN INTEREST IN OBTAINING A WAIVER OF THE CLAIM." SINCE THERE IS NO INDICATION OF FRAUD, MISREPRESENTATION, OR LACK OF GOOD FAITH ON THE PART OF THE EMPLOYEE IN THIS CASE, WAIVER HINGES ON WHETHER MR. DE HOYOS IS FOUND TO BE AT FAULT.

WE CONSIDER "FAULT" TO EXIST IF, IN LIGHT OF ALL THE CIRCUMSTANCES, IT IS DETERMINED THAT THE INDIVIDUAL CONCERNED SHOULD HAVE KNOWN THAT AN ERROR EXISTED, BUT FAILED TO TAKE CORRECTIVE ACTION. FREDERICK D. CRAWFORD, 62 COMP.GEN. 608, 610 (1983); 4 C.F.R. SEC. 91.5(C) (1985). IN MAKING THIS DETERMINATION, WE ASK WHETHER A REASONABLE PERSON IN THE EMPLOYEE'S POSITION SHOULD HAVE BEEN AWARE THAT HE WAS RECEIVING PAYMENT IN EXCESS OF HIS PROPER ENTITLEMENTS. SEE FREDERICK D. CRAWFORD, 62 COMP.GEN. AT 610 AND CASES CITED THEREIN.

IF AN EMPLOYEE HAS RECORDS WHICH, IF REVIEWED, WOULD INDICATE AN OVERPAYMENT AND THE EMPLOYEE FAILS TO REVIEW SUCH DOCUMENTS FOR ACCURACY OR OTHERWISE FAILS TO TAKE CORRECTIVE ACTION, HE IS NOT WITHOUT FAULT AND WAIVER WILL BE DENIED. E.G., FREDERICK D. CRAWFORD, SUPRA; EDWARD E. WOLFE, B-204973, MARCH 4, 1982. THIS IS PARTICULARLY RELEVANT IN THE CASE OF LEAVE AND EARNINGS STATEMENTS. AS WE STATED IN ARTHUR WEINER, B-184480, MAY 20, 1976, WE CANNOT STRESS TOO HIGHLY THE IMPORTANCE OF CAREFUL REVIEW BY EACH EMPLOYEE OF THE PAY DATA PROVIDED BY THE EMPLOYING AGENCY. SUCH REVIEW, AND REPORTING OF DISCREPANCIES FOR REMEDIAL ACTION, IS AN ESSENTIAL FUNCTION IN THE GOVERNMENT'S ATTEMPT TO REDUCE PAYROLL ERRORS. THUS, IF AN EMPLOYEE IS GIVEN A SF 50 WHICH DOES NOT INDICATE THAT HE IS ENTITLED TO RECEIVE A COLA, BUT HIS LEAVE AND EARNINGS STATEMENTS SHOW THAT A COLA, WAS PAID, THE EMPLOYEE HAS NOTICE OF AN ERROR AND IS ORDINARILY CONSIDERED TO BE AT LEAST PARTIALLY AT FAULT IF HE FAILS TO TAKE CORRECTIVE ACTION. CF. FREDERICK D. CRAWFORD, 62 COMP.GEN. AT 610 AND CASES CITED THEREIN (INSURANCE PREMIUMS).

THE FACT THAT THE OVERPAYMENTS WERE MADE THROUGH ADMINISTRATIVE ERROR DOES NOT RELIEVE AN INDIVIDUAL OF RESPONSIBILITY FOR DETERMINING THE TRUE STATE OF AFFAIRS IN CONNECTION WITH OVERPAYMENTS. IT IS FUNDAMENTAL THAT PERSONS RECEIVING MONEY ERRONEOUSLY PAID BY A GOVERNMENT AGENCY OR OFFICIAL ACQUIRE NO RIGHT TO THE MONEY; SUCH PERSONS ARE BOUND IN EQUITY AND GOOD CONSCIENCE TO MAKE RESTITUTION. E.G., EDWARD E. WOLFE, B-204973; SUPRA; FRANK A. RYAN, B-218722, DECEMBER 17, 1985.

IN THE PRESENT CASE, MR. DE HOYOS' PROMOTION AND CONVERSION TO A WAGE GRADE STATUS WAS DOCUMENTED BY AN SF-50, DATED JANUARY 6, 1983, WHICH DID NOT INDICATE THAT HE WAS ENTITLED TO COLA PAYMENTS. THE RECORD FURTHER INDICATES THAT MR. DE HOYOS CONTINUED TO RECEIVE BI WEEKLY EARNINGS STATEMENTS AFTER HIS PROMOTION, AND THAT THESE STATEMENTS SHOWED THAT HE WAS RECEIVING COLA PAYMENTS. WE BELIEVE THAT AN EXAMINATION OF THESE STATEMENTS TOGETHER WITH THE SF-50 DOCUMENTING HIS CONVERSION SHOULD HAVE REVEALED THE IMPROPER INCLUSION OF COLA PAYMENTS. UNDER THESE CIRCUMSTANCES, WE CAN ONLY CONCLUDE THAT MR. DE HOYOS WAS PARTIALLY AT FAULT FOR FAILING TO RECOGNIZE THE ADMINISTRATIVE ERROR BY CHECKING HIS LEAVE AND EARNINGS STATEMENTS ON A REGULAR BASIS. COMPARISON WITH A COWORKER'S PAYCHECK IS NOT ENOUGH.

SINCE WE FIND THAT MR. DE HOYOS WAS ON NOTICE OF THE OVERPAYMENTS, WE CANNOT FIND THAT HE WAS FREE FROM FAULT OR THAT COLLECTION OF THE OVERPAYMENTS IS AGAINST EQUITY AND GOOD CONSCIENCE OR CONTRARY TO THE BEST INTERESTS OF THE UNITED STATES. THE FACT THAT MR. DE HOYOS MAY HAVE TO SUFFER A FINANCIAL HARDSHIP IN REPAYMENT OF THE DEBT IS NOT A SUFFICIENT BASIS UPON WHICH TO AUTHORIZE WAIVER. E.G., HERBERT A. PECK, B-212478, DECEMBER 19, 1983; FRANK A. RYAN, B-2187722, SUPRA.

FINALLY, WE NOTE THAT MR. DE HOYOS COULD NOT EXPECT TO RETAIN THE COLA OVERPAYMENT CONTAINED IN THE FOURTH AND FIFTH PAYCHECKS AT ISSUE. AT THAT POINT, HAVING ALREADY CONTACTED PAYROLL AFTER AN UNEXPECTED INCREASE IN HIS THIRD PAYCHECK, HE KNEW OF THE ADMINISTRATIVE ERROR AND ITS IMMINENT CORRECTION. WE HAVE CONSISTENTLY HELD THAT WHEN AN EMPLOYEE IS AWARE OF AN OVERPAYMENT OF PAY WHEN IT OCCURS, HE IS NOT ENTITLED TO RELIEF UNDER 5 U.S.C. SEC. 5584. IF HE ACCEPTS SUCH OVERPAYMENT, KNOWING IT TO BE ERRONEOUS, HE CANNOT REASONABLY EXPECT TO KEEP IT AND HE SHOULD MAKE PROVISION FOR ITS REPAYMENT. SEE E.G., BEATRICE M. LANSDOWN, B-201815, MARCH 25, 1981; KATHLEEN M. LEGAULT, B-214740, OCTOBER 2, 1984.

ACCORDINGLY, THE DENIAL OF MR. DE HOYOS' REQUEST FOR WAIVER OF HIS INDEBTEDNESS IS SUSTAINED.