Request for Waiver of Overpayments

A Department of the Army employee appealed a Claims Division settlement which denied her request for waiver of collection of optional life insurance premiums. The employee applied for optional life insurance coverage but, due to an administrative error, no deductions were made from her pay for 8 years. The employee argued that the erroneous nondeductions were the fault of the agency and that, since the payroll office did not process the request for optional life insurance, her request for waiver was justified. The criteria for the waiver of claims arising out of erroneous payments are met when the payments occurred out of administrative error and there is no indication of fraud, misrepresentation, or fault or bad faith on the part of the employee. Whether an employee is free from fault can only be determined by an analysis of whether the employee reasonably could have been expected to have been aware that an error had been made. GAO held that the employee should have known that, upon taking out the optional life insurance, her pay would decrease slightly. However, her pay remained constant. Therefore, the employee was at fault in failing to notify agency officials of the fact that the premium deductions were not being taken from her pay. Accordingly, the request for waiver was denied.