B-240049, Nov 1, 1990

B-240049, Nov 1, 1990

MILITARY PERSONNEL - Pay - Dual compensation restrictions - Overpayments - Debt collection - Waiver DIGEST: Army officer who retired on disability subsequently accepted employment with the U.S. Postal Service but did not so advise the Army, with the result that he received $32,672.61 over the next 11 years in violation of the dual compensation law. Debt may not be waived, since at retirement the officer signed a statement expressly taking personal responsibility for advising the Army of any future dual status; should have known he was receiving full retired pay; and never attempted to insure that his total compensation was appropriate and accurate.

Major Albert L. Bagnaschi, USA Retired:

Major Alfred L. Bagnaschi, USA (Retired), appeals our Claims Group's denial of his request that an overpayment of retired pay from November 1977 through April 1988 be waived. We agree with the Claims Group.

Major Bagnaschi was released from active duty and placed on the Temporary Disability Retired List on June 19, 1970. He was transferred to the Permanent Disability Retired List on October 1, 1971, with a 40 percent disability for diabetes. In November 1977, Major Bagnaschi accepted a full-time position with the United States Postal Service. The dual compensation law, 5 U.S.C. Sec. 5532, requires a reduction in retired pay in that circumstance according to a formula set out in the statute. Major Bagnaschi, however, failed to notify the Army of his new employment, so that the Army did not reduce his retired pay.

Major Bagnaschi's federal employment was ascertained in January 1988, as a result of a cross-check by the Defense Manpower Data Center with Postal Service personnel records; apparently, that was the first time this was done. The debt of $32,672.61 represents the amount Major Bagnaschi was paid in violation of the dual compensation law, and is being collected by setoff against Major Bagnaschi's retired pay.

In requesting waiver, Major Bagnaschi said that he never attempted to hide his Postal Service employment from the Army, and that when he took the civilian job he reported his status as a retired officer on the Postal Service's standard personnel action form. Major Bagnaschi maintains that his retired pay should be exempt from the dual compensation law anyway because his retirement was based on a physical disability.

Under the provisions of 10 U.S.C. Sec. 2774, the Comptroller General may waive collection of certain debts where collection would be against equity and good conscience and not in the best interest of the United States, if there is no indication of fraud, misrepresentation, fault or lack of good faith on the part of the claimant.

Major Bagnaschi is not exempt from dual compensation restrictions based on his disability status. The dual compensation law exempts the retired pay of a disabled former member from reduction only if the disability resulted from injury or disease received in the line of duty as a direct result of armed conflict, or was caused by an instrument of war and incurred in the line of duty during war. 5 U.S.C. Sec. 5532(d)(1). The record shows that although Major Bagnaschi's diabetes first appeared while he served in Viet Nam, the Army specifically has declined to characterize his illness as coming within the above described exemption.

We have held that a retired officer who accepts civilian employment and thinks he might be exempt from dual compensation restrictions is at fault in drawing military retired pay in an unreduced amount if he fails to notify his agency and his military finance office of his dual status, to obtain a definite determination of his entitlements. Rear Admiral Harvey E. Lyon, USN (Retired), B-198955, April 13, 1981. Thus, in our decision in Commander Loyd F. Galyean, USN (Retired), we denied waiver of a debt representing 6 years of overpayment ($26,024.45) to a retired Navy officer who took a civilian job 8 years after retirement. The debtor said that he thought the dual compensation restrictions did not apply to him because of emergency conditions, /1/ although no such exemption was ever requested by or for him. We held that because the debtor knew that under the dual compensation law his civilian employment could affect his retired pay entitlement but he did not make a prudent inquiry into the matter, he was not without fault in accepting the resulting overpayments.

Major Bagnaschi clearly knew that his retired pay could be affected by his acceptance of a civilian position. When he retired in June 1970, Major Bagnaschi signed a standard form that provided that if he takes a civilian position with the government he "will notify the appropriate finance center immediately." While we appreciate that Major Bagnaschi may have believed his retirement pay was exempt because of his disability status, upon his retirement the Major expressly accepted the personal responsibility to notify the appropriate Army finance office of any civilian employment. Major Bagnaschi does not suggest that anything in the notification requirement relieved him of responsibility based on his disability.

Moreover, even if the Major initially thought it sufficient to tell only the Postal Service that he was a retired officer, he presumably received 11 years of retirement statements from the Army that did not indicate any reduction in retired pay for dual compensation purposes, or any reason for exemption. In our view, the Major's failure to tell the Army of the civilian employment he accepted despite having agreed in writing to do so, and his subsequent failure to pursue the matter if only to insure that, being compensated from two government sources, his pay was appropriate and accurate, puts him at least at partial fault for the overpayment.

Major Bagnaschi maintains that a denial of waiver would be inconsistent with our decision in Admiral James D. Watkins, USN (Retired), B-235501, June 23, 1989, where we waived the debt of a retired Navy officer who received erroneous payments of retired pay because government employees erred in not reporting his civilian employment to the Navy. We disagree.

In Watkins, the Admiral had been retired for a year before he accepted civilian employment, and nevertheless took steps to insure that his dual status would be recognized. The Admiral specifically directed administrative personnel to inform the Navy of his new appointment, and then followed up on that direction at least twice; in all cases the Admiral was incorrectly advised that the matter had been taken care of. No similar attempts to be sure his dual status was recognized for pay purposes are apparent from the record on Major Bagnaschi's debt.

In sum, we agree with the Claims Group that Major Bagnaschi was at least partially at fault with respect to the overpayments in issue. The Claims Group's decision denying waiver of his debt therefore is affirmed.