B-63378, APRIL 15, 1957, 26 COMP. GEN. 783

B-63378, APRIL 15, 1957, 26 COMP. GEN. 783

RETIREMENT - CIVILIAN - DEDUCTIONS - REFUNDS - ERRONEOUS - PAYEE AND CERTIFYING OFFICER LIABILITY IN VIEW OF THE PROVISION IN SECTION 7 OF THE CIVIL SERVICE RETIREMENT ACT, AS AMENDED, REQUIRING THE PAYMENT OF A DEFERRED ANNUITY AT AGE 62 TO EMPLOYEES SEPARATED FROM THE SERVICE AFTER NOT LESS THAN 5 YEARS' SERVICE AND BEFORE BECOMING ELIGIBLE FOR RETIREMENT, A FORMER EMPLOYEE WHO WAS ERRONEOUSLY REFUNDED HIS RETIREMENT DEDUCTION AFTER HE HAD COMPLETED MORE THAN 5 YEARS' CREDITABLE SERVICE TOWARD RETIREMENT IS TO BE REGARDED AS INDEBTED TO THE UNITED STATES IN THE AMOUNT OF SUCH ERRONEOUSLY REFUNDED DEDUCTIONS AND APPROPRIATE ACTION SHOULD BE TAKEN TO EFFECT COLLECTION THEREOF. A CERTIFYING OFFICER WHO, IN CERTIFYING A VOUCHER COVERING REFUND OF RETIREMENT DEDUCTIONS, RELIED UPON THE THEN AVAILABLE OFFICIAL RECORDS INDICATING THAT THE PAYEE THEREOF HAD LESS THAN 5 YEARS' CREDITABLE SERVICE TOWARD RETIREMENT, AND COULD NOT, BY THE EXERCISE OF REASONABLE DILIGENCE AND INQUIRY, HAVE ASCERTAINED THAT THE PAYEE HAD, IN FACT, MORE THAN 5 YEARS' CREDITABLE SERVICE, WHILE WOULD HAVE PRECLUDED REFUND IN VIEW THE DEFERRED ANNUITY PROVISION IN SECTION 7 OF THE CIVIL SERVICE RETIREMENT ACT, AS AMENDED, WILL BE RELIEVED OF RESPONSIBILITY FOR THE RESULTING ERRONEOUS PAYMENT UNDER THE AUTHORITY VESTED IN THE COMPTROLLER GENERAL BY SECTION 2 OF THE ACT OF DECEMBER 29, 1941.

COMPTROLLER GENERAL WARREN TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, APRIL 15, 1947:

THERE HAS BEEN CONSIDERED THE LETTER OF OCTOBER 31, 1946, REFERENCE RET:S:EJH:1B, FROM YOUR COMMISSION, AS FOLLOWS:

RE: ATTACHED NOTICE OF EXCEPTION, OCTOBER 1, 1946, CLARENCE V. YARROW CSR -992958, $106.84, D.O. VOUCHER NO. 2135606, BU. VOUCHER NO. 45787R, APRIL 1944.

REVIEW OF THE ABOVE CASE FILE INDICATES THAT ON THE BASIS OF AN APPLICATION FILED BY MR. YARROW IN MAY 1943 AND RECEIVED BY THE CIVIL SERVICE COMMISSION IN MARCH 1944 THAT A REFUND WAS PAID OF RETIREMENT DEDUCTIONS FOR THE PERIOD OF MACH 2, 1942, TO JUNE 18, 1943. A RETIREMENT RECORD CARD FOR THIS PERIOD OF SERVICE WAS CERTIFIED BY MAJOR JAMES T. WILLETT FOR THE WAR DEPARTMENT THE TOTAL PERIOD OF SERVICE INDICATED WAS LESS THAN ONE AND ONE-HALF YEARS, THEREFORE A REFUND WAS PAID.

SUBSEQUENTLY, ANOTHER RETIREMENT RECORD CARD WAS RECEIVED FROM THE WAR DEPARTMENT INDICATING MILITARY SERVICE OF 4 YEARS FROM 1916 TO 1920 AND FURTHER CIVILIAN SERVICE FROM OCTOBER 1941 TO MARCH 1942, RESULTING IN A RECORD OF SERVICE IN EXCESS OF FIVE YEARS AND DISCLOSING THAT THE REFUND PAYMENT PREVIOUSLY MADE WAS IN ERROR AS THE EMPLOYEE HAD MORE THAN FIVE YEARS OF CREDITABLE SERVICE.

THIS SITUATION IS ILLUSTRATIVE OF A CONDITION WHICH HAS OCCURRED SEVERAL TIMES. HOWEVER, ACKNOWLEDGING THAT AN ERROR HAS BEEN MADE DUE TO THE REFUND HAVING BEEN PAID TO THE INDIVIDUAL, SERIOUS QUESTIONS ARISE AS TO THE ADVISABILITY OF FURTHER ACTION FOR THE FOLLOWING REASONS:

1. NO ACTION HAS OCCURRED WHICH DIVESTS THE INDIVIDUAL OF RIGHTS TO AN ANNUITY UNDER THE RETIREMENT ACT;

2. REPAYMENT OF THE REFUND WILL HAVE TO BE MADE BEFORE ANNUITY PAYMENTS COULD COMMENCE;

3. IF REPAYMENT IS NOT MADE AND CONSEQUENTLY NO ANNUITY IS PAID THE COST TO THE GOVERNMENT AND THE RETIREMENT FUND IS REDUCED BY RESULT OF THE REFUND HAVING BEEN MADE;

4. AS THERE IS NO DEFICIENCY IN THE RETIREMENT FUND CAUSED BY THIS ERROR COLLECTION OF THE SUM INVOLVED FROM THE DISBURSING OR CERTIFYING OFFICERS INVOLVED WOULD RAISE A QUESTION AS TO HOW SUCH COLLECTION SHOULD BE CREDITED. THE INDIVIDUAL HAS ALREADY RECEIVED HIS MONEY AND IF CREDITED AGAIN WOULD RECEIVE A DOUBLE BENEFIT--- HE WOULD THEN HAVE RECEIVED A REFUND AND IN ADDITION WOULD GET FULL ANNUITY BENEFITS OR FULL PAYMENT ON A DEATH CLAIM.

IT IS ACKNOWLEDGED THAT SUCH CASES ARE REGRETTABLE, BUT UNDER THE WAR CONDITIONS AND THE VOLUME OF CLAIMS PAID IN THE PAST THREE YEARS (3,000,000) IT SEEMS THAT REGARDLESS OF THE CARE TAKEN THAT SOME ERRONEOUS REFUNDS COULD NOT BE AVOIDED. HAVING OCCURRED, IT SEEMS TO US THAT THE MOST ADVISABLE ACTION IS TO REQUEST THE INDIVIDUAL TO REPAY THE REFUND AND WHERE THIS FAILS, TO TAKE NO FURTHER IMMEDIATE ACTION.

RELIANCE WOULD REST UPON THE CIVIL SERVICE COMMISSION COLLECTING THE REFUND BEFORE ANY ANNUITY BENEFITS ARE PAID TO THE INDIVIDUAL. AS EACH ANNUITY CASE IS PROMPTLY AUDITED BY YOU SUCH SITUATIONS WOULD AUTOMATICALLY COME TO THE AUDITOR'S ATTENTION.

YOUR USUAL COOPERATION IN CONSIDERATION OF THIS PROBLEM WILL BE SINCERELY APPRECIATED.

REQUESTS FOR REVIEW OF EXCEPTIONS OR DISALLOWANCES MADE IN THE SETTLEMENT OF A DISBURSING OFFICER'S ACCOUNT ORDINARILY ARE NOT FOR CONSIDERATION BY THIS OFFICE UNLESS SUBMITTED BY THE RESPONSIBLE AUTHORIZED CERTIFYING OFFICER CONCERNED OR THE DISBURSING OFFICER WHOSE ACCOUNTS ARE INVOLVED. HOWEVER, IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES APPEARING IN THIS PARTICULAR INSTANCE REPLY WILL BE MADE TO YOU AS HEAD OF THE EXECUTIVE AGENCY PRIMARILY INVOLVED.

SECTION 7 OF THE CIVIL SERVICE RETIREMENT ACT, AS AMENDED BY THE ACT OF JANUARY 24, 1942 (56 STAT. 16), PROVIDES, IN PERTINENT PART, AS FOLLOWS:

* * * SEC. 7 (A) SHOULD ANY OFFICER OR EMPLOYEE TO WHOM THIS ACT APPLIES, AFTER HAVING SERVED FOR A TOTAL PERIOD OF NOT LESS THAN FIVE YEARS AND BEFORE BECOMING ELIGIBLE FOR RETIREMENT BECOME SEPARATED FROM THE SERVICE, SUCH OFFICER OR EMPLOYEE SHALL BE PAID A DEFERRED ANNUITY BEGINNING AT THE AGE OF SIXTY-TWO YEARS, COMPUTED AS PROVIDED IN CLAUSES (1) AND (2) OF SECTION 4 (A) OF THIS ACT: * * * PROVIDED FURTHER, THAT NOTHING IN THIS ACT SHALL BE SO CONSTRUED AS TO PROHIBIT THE REFUND OF DEDUCTIONS, DEPOSITS, OR REDEPOSITS MADE PRIOR TO THE EFFECTIVE DATE OF THIS ACT WITH INTEREST THEREON, OR OF ANY VOLUNTARY CONTRIBUTIONS MADE UNDER THE PROVISIONS OF SECTION 10 OF THIS ACT, WITH INTEREST * * *.

WITH RESPECT TO REFUNDS OF AMOUNTS DEDUCTED FROM AN EMPLOYEE'S SALARY UNDER THE CIVIL SERVICE RETIREMENT ACT, SUPRA, SECTION 12 (B) OF THAT ACT, AS AMENDED, 56 STAT. 16, CONTAINS THE FOLLOWING PROVISION:

* * * PROVIDED, THAT WHEN AN OFFICER OR EMPLOYEE BECOMES INVOLUNTARILY SEPARATED FROM THE SERVICE, NOT BY REMOVAL FOR CAUSE ON CHARGES OF MISCONDUCT OR DELINQUENCY BEFORE COMPLETING FIVE YEARS OF CREDITABLE SERVICE THE TOTAL AMOUNT OF DEDUCTIONS FRM HIS BASIC SALARY, PAY, OR COMPENSATION WITH INTEREST AT 4 PERCENTUM COMPOUNDED ON JUNE 30 OF EACH YEAR SHALL BE RETURNED TO SUCH OFFICER OR EMPLOYEE * * *.

IN DECISION OF MAY 8, 1942, 21 COMP. GEN. 1000, IT WAS STATED AT PAGE 1002, AS FOLLOWS:

UNDER THE PROVISIONS OF SECTION 7 OF THE RETIREMENT ACT, AS AMENDED BY SECTION 5 OF THE ACT OF JANUARY 24, 1942, SUPRA, AN EMPLOYEE WHO HAS SERVED A TOTAL PERIOD OF 5 YEARS OR MORE AND IS SEPARATED FROM THE SERVICE AFTER THE DATE OF THE ACT MAY NOT WITHDRAW FROM THE RETIREMENT FUND THE AMOUNT DEDUCTED FROM HIS SALARY, FOR RETIREMENT PURPOSES, ON AND AFTER THE DATE OF THE ACT; AND HE MAY ELECT TO LEAVE IN THE RETIREMENT FUND THE AMOUNT WHICH WAS DEDUCTED FOR RETIREMENT PURPOSES PRIOR TO THE DATE OF THE ACT, SAID AMOUNT, TOGETHER WITH THE AMOUNT DEDUCTED ON OR AFTER THE DATE OF THE ACT, TO REMAIN AVAILABLE AS THE BASIS OF AN ANNUITY AT THE AGE OF 62 YEARS. * * *

IN VIEW OF THAT HOLDING THERE CAN BE NO DOUBT BUT THAT THE REFUND IN THE INSTANT CASE WAS NOT AUTHORIZED BY LAW AND THAT MR. YARROW HAD NO LEGAL RIGHT TO RECEIVE IT. ACCORDINGLY, IT MUST BE CONCLUDED THAT HE IS INDEBTED TO THE UNITED STATES IN THE PRINCIPLE SUM OF $106.84, AND APPROPRIATE ACTION SHOULD BE TAKEN TO EFFECT COLLECTION THEREOF.

ON THE OTHER HAND, AS REGARDS THE LIABILITY OF THE CERTIFYING OFFICER WHO CERTIFIED THE REFUND VOUCHER FOR PAYMENT, SINCE IT APPEARS FROM THE SUBMITTED FACTS THAT HIS ACTION IN SO CERTIFYING THE VOUCHER FOR PAYMENT WAS BASED UPON OFFICIAL RECORDS THEN AVAILABLE TO HIM AND THAT BY THE EXERCISE OF REASONABLE DILIGENCE AND INQUIRY HE COULD NOT HAVE ASCERTAINED THE TRUE FACTS, THE EXCEPTION STATED AGAINST HIM ON VOUCHER NO. 2135606 FOR THE AMOUNT INVOLVED WILL BE REMOVED UNDER THE AUTHORITY VESTED IN ME UNDER THE FIRST PROVISO OF SECTION 2 OF THE ACT OF DECEMBER 29, 1941, 55 STAT. 875.