DIGEST: A former member who was overpaid by direct deposit on two occasions subsequent to his separation. Who questioned the overpayment when he examined his bank statement but was advised to wait until he heard from the Navy Finance Center. May not have the claim against him waived. Based on the fact that repayment will cause financial hardship. Koharski was discharged from the Navy on February 28. 1990 and was overpaid $136.51 at that time for accumulated leave. 523.75 was direct deposited to his bank account for two pay periods in March. Koharski states that he became aware of the overpayments upon examining his April bank statements and immediately attempted to resolve the error with the Navy but was advised to wait until he was contacted by the Navy Finance Center.
B-244882, Nov 15, 1991
DIGEST: A former member who was overpaid by direct deposit on two occasions subsequent to his separation, who questioned the overpayment when he examined his bank statement but was advised to wait until he heard from the Navy Finance Center, may not have the claim against him waived, based on the fact that repayment will cause financial hardship.
Daniel N. Koharski - Request for Waiver:
Daniel N. Koharski appeals a settlement by our Claims Group partially denying his request for waiver of the collection of erroneous payments of pay and allowances made to him subsequent to his separation from the United States Navy. We agree with the Claims Group's action.
Mr. Koharski was discharged from the Navy on February 28, 1990 and was overpaid $136.51 at that time for accumulated leave. Subsequently, through administrative error, an additional $1,523.75 was direct deposited to his bank account for two pay periods in March. Mr. Koharski states that he became aware of the overpayments upon examining his April bank statements and immediately attempted to resolve the error with the Navy but was advised to wait until he was contacted by the Navy Finance Center. In August, the Navy informed him of the overpayment and of its intention to collect it. Our Claims Group, following the Navy's recommendation, waived the separation overpayment concluding that Mr. Koharski reasonably might not have suspected that he had been erroneously overpaid for leave. They denied waiver of collection of the amounts direct-deposited on the basis that since he was aware that an error had occurred he should have set aside the amounts for eventual repayment.
Mr. Koharski claims that repayment at this time would severely strain his family's finances. He also states that he was never reimbursed for travel expenses incurred at separation to return home from his duty station.
The Comptroller General may waive collection of certain debts under 10 U.S.C. Sec. 2774 if collection would be against equity and good conscience and not in the best interests of the United States. Subsection 2774(b)(1) precludes waiver where there is an indication of fault or lack of good faith on the part of the individual requesting the waiver. /1/ In this regard we have held that knowledge that an error has been made entails an obligation to return the excess sums or set the amount aside for eventual refund when the error is eventually corrected. Thomas M. Welsch, B-196461, Feb. 13, 1980. We have also held that financial hardship incurred as a result of denial of waiver provides no legal basis for granting it. Frank A. Ryan, B-218722, Dec. 17, 1985.
The Claims Group's action is affirmed.
Regarding Mr. Koharski's statement that he never received reimbursement for his travel expenses upon separation from the Navy, such claim is separate and distinct from this waiver request. Mr. Koharski should file such travel claim with his last Naval Command.
To: Director, Claims Group/GGD - Sharon S. Green
From: General Counsel - James F. Hinchman
Subject: Daniel N. Koharski - Waiver Request (B-244882) Z-2914187
Returned is Claims File No. Z-2914187 and a copy of decision B-244882 of today's date, affirming the Claims Group's
Honorable Henry J. Nowak
Member, United States House of Representatives
Reference is made to your letter dated July 8, 1991, with enclosures, on behalf of your constituent, Daniel Koharski. Mr. Koharski, a former member of the United States Navy, has requested waiver of the Navy's claim against him for erroneous overpayments of pay and allowances, received by him subsequent to his separation.
As noted in our decision B-244882, a copy of which is enclosed, we have sustained our Claims Group's partial denial of waiver which granted waiver of collection of amounts overpaid him for unused leave, but denied the remainder of his waiver request.
We trust that this serves the purpose of your inquiry.
/1/ "Fault" is considered to exist if the member should have known that an error existed but failed to take any action to have it corrected. William K. Kelly, B-235936, Nov. 29, 1990.
We have held that failure to review one's bank statements when pay is being direct-deposited or otherwise take corrective action to resolve discrepancies revealed by such review is "fault" which will preclude waiver.