BNUMBER:  B-260849
DATE:  September 19, 1995
TITLE:  Bruce C. Hanson-Waiver-Post Differential

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Matter of:Bruce C. Hanson-Waiver-Post Differential 

File:     B-260849

Date:     September 19, 1995

DIGEST

Employee requests waiver of erroneous payments occurring prior to 
formal notification of error by the agency.  The request is denied 
because he knew or had reason to know of the error before formal 
agency notification.  Therefore, collection of the overpayment is not 
considered to be against equity, good conscience, or in the best 
interest of the United States, even though the employee brought the 
situation to the attention of the proper authorities and sought 
explanation or correction of the error.

DECISION

This decision is in response to correspondence from Mr. Bruce C. 
Hanson, who is appealing from our Claims Group Settlement Z-2927891, 
December 13, 1994, which granted only partial waiver of his debt 
incident to an overpayment of post differential (PD).  We concur with 
our Claim Group's action for the following reasons.

On March 9, 1992, Mr. Hanson, a Geodesist with the Defense Mapping 
Agency (DMA), Patrick Air Force Base, was transferred to his new 
overseas duty station in Kwajalein Atoll, Marshall Islands.  Because 
of an administrative oversight by the DMA Human Resources Office, Mr. 
Hanson was authorized PD allowances at an outdated rate of 15 percent 
of base salary, instead of the correct rate of 10 percent of base 
salary.  Consequently, Mr. Hanson received the incorrect PD rate for 
the period of March 23, 1992, through December 2, 1993.

On August 16, 1993, after hearing from other federal employees on the 
island that the PD rate had changed, Mr. Hanson sent a letter to DMA 
Human Resources indicating concern about the accuracy of the PD rate 
and requesting verification.  In late September 1993, DMA Human 
Resources personnel, following verification of the new PD rate with 
the State Department, orally advised Mr. Hanson of the reduced PD 
rate.  Following this notification, Mr. Hanson completed a revised 
Standard Form 1190, Foreign Allowance Application, Grant & Report to 
reflect the new 10 percent PD rate.  DMA Human Resources received this 
application in late September and Mr. Hanson received a formal 
notification of the correct PD rate on November 2, 1993.  The new rate 
became effective in December 1993.  As a result of these occurrences, 
Mr. Hanson was overpaid $3,389.24 during the period of March 23, 1992, 
through December 2, 1993.

Our Claims Group granted waiver of $2,750.84, representing the PD 
overpayment received by Mr. Hanson during the periods of March 22, 
1992, through August 7, 1993, and denied waiver of $638.40, 
representing the payments received by Mr. Hanson after he became aware 
of the possible error in August 1993.

In his appeal, Mr. Hanson argues that he was formally told of the 
correct PD rate on November 2, 1993, and that his August 16, 1993, 
letter to DMA Human Resources requesting verification of the correct 
PD rate does not constitute awareness of an incorrect rate.  
Consequently, it is his view that all overpayments prior to DMA formal 
written notification in November 1993 should be waived.

OPINION

Section 5584 of title 5, United States Code, provides authority for 
waiving claims for erroneous payments of pay and certain allowances 
made to federal employees, if collection of the claim would be against 
equity and good conscience and not in the best interest of the United 
States.  Generally, these criteria are met by a finding that the claim 
arose from administrative error with no indication of fraud, fault, 
misrepresentation, or lack of good faith on the part of the employee 
or other person having an interest in obtaining waiver.  In this case, 
the agency determined that the overpayments were initiated by an 
administrative error by the agency, and there is no indication in the 
record that the error was caused by fraud, misrepresentation, fault or 
lack of good faith.

We have held that an employee who accepts payments after notice that 
they may be erroneous cannot reasonably expect to be able to retain 
them and should make provision for eventual repayment.[1]  We have 
also held that employee notice begins when the employee should 
reasonably know of the error or the possibility of an error in pay, 
not the date of formal notification from the agency.[2]

In this case, Mr. Hanson became aware on or before August 16, 1993, of 
the possibility that his salary was being miscomputed.  His August 16, 
1993, letter specifically states that "in recent months many concerns 
and questions have been expressed concerning the PD authorized for the 
Marshall Islands . . . ."  Therefore, we believe that Mr. Hanson 
should have retained the excess salary payments he subsequently 
received for possible refund to the government.  Collection of the 
overpayments in this case would not be against equity and good 
conscience and would be in the best interest of the United States.

Accordingly, the Claims Group's settlement is affirmed.

/s/Seymour Efros
for Robert P. Murphy
General Counsel

1. Ronald L. Porcella, B-255591, Aug. 10, 1994, and decisions cited.

2. Terry R. Allison, et al., B-256934, Sept. 20, 1994.