BNUMBER:  B-271426
DATE:  November 4, 1996
TITLE:  Chief Warrant Officer Rafael G. Amalbert-Erroneous Retired
Pay- Waiver

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Matter of:Chief Warrant Officer Rafael G. Amalbert-Erroneous Retired 
          Pay- Waiver

File:     B-271426

Date:November 4, 1996

DIGEST

A National Guard member applied for reserve retired pay in 1971 upon 
reaching the required age 60 and having over the required 20 years of 
service.  However, the service denied his application because he did 
not have certain required active duty service.  He disagreed and 
repeatedly reasserted his position until in 1989 the service 
established his retired pay retroactive to 1971, but because of the 
statute of limitations, limited retroactive payment to 6 years.  In 
1991, due to his inquiries regarding the retroactive limitation, the 
service discovered that he was not entitled to retired pay and placed 
him in debt for payments received.  Five months later the service 
erroneously reinstated his retired pay and continued the payments 
until 1994 when it again discovered its error.  The Claims Group 
waived the debt related to the first period, but declined to waive the 
second period on the basis that at the time the second period payments 
began, he should have known they were erroneous.  On appeal, we modify 
the Claims Group's settlement to waive collection of the amounts he 
received during the first 9 months of the second period since he had a 
basis then to reasonably believe the payments were proper, but not 
after he received definitive notice of the erroneous nature of the 
payments at the end of those 9 months.

DECISION

This is in response to an appeal of Claims Group settlement 
Z-2927719-025, November 7, 1994, which denied in part the request of 
Chief Warrant Officer Rafael G. Amalbert for waiver of his debt in the 
amount of $53,836.81 which resulted from reserve retired pay being 
erroneously paid to him by the U.S. Army.[1]  The Claims Group waived 
$37,167.65 of Mr. Amalbert's debt.  As explained below, we modify the 
Claims Group's settlement to waive an additional $4,138.41 of the 
debt.

BACKGROUND

Mr. Amalbert was a member of the Puerto Rico National Guard with over 
29 years of service when he reached age 60 in January 1971.  At that 
time he applied for retired pay pursuant to 10 U.S.C.  sec.  1331-1337, 
which at that time included the provisions authorizing non-regular 
retired pay for qualified members of the National Guard.  However, in 
a letter dated September 27, 1971, the U.S. Army Reserve Personnel 
Center (ARPERCEN) notified Mr. Amalbert that he was not entitled to 
retired pay because he had not performed active duty during any of the 
periods of war specified in 10 U.S.C.  sec.  1331(c), a requirement for 
members in his situation.  Mr. Amalbert disputed that determination.  
He indicates he made several attempts to persuade the service of his 
entitlement to retired pay at various times but without success until 
1989, when in March he again made application for retired pay.  As a 
result of that application, by order dated October 4, 1989, ARPERCEN 
notified him that he was certified for retired pay effective January 
29, 1971, the date of his 60th birthday, and monthly payments to him 
were begun.  He was also paid a lump sum for retired pay retroactive 6 
years, and he was advised that the statute of limitations, 31 U.S.C.  sec.  
3702(b), prohibited further retroactive payment beyond that 6 years 
(to January 1971).

Mr. Amalbert disputed the application of the 6-year limitations period 
to his claim because he had first applied for retired pay in January 
1971.  Although he was unsuccessful in convincing the service that his 
claim was not subject to the statute of limitations, his current 
retired pay continued to be paid monthly through March 1991.  As a 
result of Mr. Amalbert's continuing efforts to recover retired pay for 
the additional retroactive period, ARPERCEN advised him in April 1991 
that their review of his entitlement indicated that he had been 
erroneously certified to receive retired pay.  Accordingly, ARPERCEN 
advised him that he owed the government $37,167.65 for the retired pay 
he had been paid.  He also was advised that he could request waiver of 
the debt.

Mr. Amalbert filed a waiver request dated May 16, 1991, with the 
Defense Finance and Accounting Service (DFAS) which was responsible 
for collecting the debt.  He also followed up with a letter dated June 
27, 1991, pointing out that in view of his age (at that time he was 80 
years old), DFAS should expedite a "positive solution" to the matter.  
Apparently the next communication Mr. Amalbert received from DFAS was 
notice in September 1991 that his retired pay had been reestablished 
retroactive to April 1991, when it had been revoked.  He received a 
lump sum payment for the retroactive period, and his current monthly 
retired pay was paid but with a monthly deduction of $71 to collect 
the previous debt.  Apparently no further explanation was provided to 
him at that time.  By letter dated November 11, 1991, to DFAS, Mr. 
Amalbert referred to both the retroactive payment and the current 
payments he had received and stated that based on the resumption of 
his retired pay, he assumed that the response to his prior request had 
been positive and that he would continue to receive his monthly 
retired pay.  He requested confirmation of this and indicated that he 
would assume that his position was correct unless he received 
information to the contrary.

The record does not show that Mr. Amalbert received a direct response 
to his November 11 letter.  However, on December 10, 1991, DFAS 
responded to his waiver request, stating that he should have 
questioned his entitlement to retired pay when it was established for 
him in 1989 since his application for it had been previously denied in 
1971.  Therefore, DFAS stated, waiver of his debt would not be 
appropriate since he was not without fault in the matter.  However, 
his retired pay payments continued, as reestablished in September 1991 
with the deductions for collection of the prior debt, until February 
1994, when DFAS again discovered that he was receiving retired pay 
erroneously and stopped the payments.  DFAS then calculated Mr. 
Amalbert's total debt for such payments to be $53,836.81, consisting 
of the $37,167.65 he had been paid for the period prior to April 1991, 
and $16,669.16 for the period from April 1991 to February 1994.

DFAS submitted the matter to our former Claims Group for waiver 
consideration.  In doing so, DFAS indicated that it had changed its 
previous position on waiver of the portion of the debt related to the 
first period of erroneous payments, $37,167.65, and recommended waiver 
of that amount.  The reason given for this recommendation was that 
although Mr. Amalbert initially had been advised in 1971 that he was 
not entitled to retired pay, it appeared that he was convinced at all 
times he was entitled to it, and when it was established for him in 
1989, he had no reason to question the payments he then began to 
receive.  DFAS, however, recommended against waiver of the $16,669.16 
Mr. Amalbert received during the second period of overpayments on the 
grounds that after being notified in April 1991 that he was not 
entitled to retired pay, he should have questioned the reestablishment 
of the payments in September 1991.

The Claims Group accepted the DFAS recommendations, waived the 
$37,167.65, and denied waiver of the $16,669.16.

Mr. Amalbert has appealed the partial denial of waiver, arguing that 
it is against equity and good conscience to revoke his retired pay at 
his advanced age, and indicating that he continues to believe that he 
is entitled to such pay.

ANALYSIS

Under 10 U.S.C.  sec.  2774, we are authorized to waive Mr. Amalbert's debt 
if collection would be against equity and good conscience and not in 
the best interests of the United States.  We must also conclude that 
there is no indication of fault, fraud, misrepresentation, or lack of 
good faith on the part of the member.  See the Standards for Waiver, 4 
C.F.R.  sec.  91.5(b).

It is a long-standing rule that waiver is not appropriate for 
erroneous payments received after the member receives notice that an 
error has occurred.  Lieutenant Gary L. Francis, 69 Comp. Gen. 226 
(1990).  See also, Richard F. Lipke, B-231084, May 10, 1988.  In such 
a case, the payee is expected to hold the erroneous payment for refund 
when the matter is corrected.  Larry C. Brown, B-251935, Feb. 23, 
1993.  It was under these rules that the Claims Group denied waiver of 
the overpayments that occurred due to reestablishment of Mr. 
Amalbert's retired pay after he was advised in April 1991 that he was 
not entitled to retired pay.  However, in light of Mr. Amalbert's 
persistent efforts to receive retired pay to which he believed he was 
entitled, it is our view that he did not receive sufficient 
information to put him on notice that he was receiving payments in 
error until December 1991. 

As noted above, Mr. Amalbert met the age and length of service 
requirements for reserve retired pay.  However, a review of his 
service records indicated that he had not met the additional 
requirement applicable to a person such as Mr. Amalbert who was a 
member before August 16, 1945, because he had not served on active 
duty during a period of war as required under the applicable 
statute.[2]  Apparently this latter requirement was overlooked by the 
service when his retired pay was initially established in March 1989, 
and again when it was reestablished in September 1991.

Mr. Amalbert's first application for retired pay, made in 1971 when he 
reached the qualifying age of 60, was denied because he was found not 
to meet the war service requirement.  He repeatedly reargued his 
entitlement until 1989 when his application was approved.  At that 
time he apparently believed that he finally had convinced the service 
of the correctness of his position and, as recognized by DFAS and the 
Claims Group, he had no reason to question the payments he then began 
receiving.  Also, apparently it was because of his appeals of the 
application of the statute of limitations to his claim, that the 
erroneous entitlement was discovered by the service and his initial 
indebtedness established.  While he then requested waiver of the debt, 
it is apparent that he was still convinced of his entitlement to 
retired pay.  By this time he was 80 years of age, had been disputing 
with the service for 20 years, and had been successful once.  When his 
retired pay was reinstated in September 1991, but with a deduction for 
the prior debt, it was not unreasonable for him to have believed that 
his persistence had paid off, and the service had reconsidered and 
agreed that he was entitled to retired pay, at least as of April 1991.  
As noted, he did write to DFAS in November 1991, specifically 
referring to the fact that his retired pay had been reinstated, that 
he had received a check for the retroactive period from April through 
September, and asking for a confirmation of his belief that his 
retired pay would continue.  He apparently never received a direct 
reply to that letter.  

In December, however, he received notice that his waiver request 
applicable to his debt for the first period of erroneous payments had 
been denied.  While payments continued, subject to the deduction to 
collect the prior debt, the December letter should have put Mr. 
Amalbert on notice that his receipt of retired pay was erroneous.  At 
that point he should have made further inquiries and should have begun 
holding further payments for repayment to the government.  See 69 
Comp. Gen. at 229; B-231084, supra; and B-251935, supra.  Therefore, 
it appears that he had a basis to reasonably believe the payments he 
received for the April through December period were proper, but not 
for payments received thereafter.   

Accordingly, we modify the Claims Group's settlement to waive an 
additional $4,138.41 of Mr. Amalbert's debt, the amount of retired pay 
he received from April 1991 through December 1991.  This reduces his 
debt to $12,530.75, for which we sustain the waiver denial.

Robert P. Murphy
General Counsel

1. Mr. Amalbert is represented in this matter by Juan Cruz-Cruz, 
Attorney.

2. This requirement, now found in 10 U.S.C.  sec.  12731(c), was set out in 
10 U.S.C.  sec.  1331(c) at the time Mr. Amalbert initially applied for 
retired pay.  It is not entirely clear on what basis Mr. Amalbert 
continues to believe he is entitled to retired pay, except that he 
believes it inequitable to deny such pay to a person who has over 29 
years of service.  As to the service's authority to revoke payment to 
him on the basis that he did not meet the statutory requirement, we 
note that 10 U.S.C.  sec.  12738 (formerly  sec.  1406) provides that after a 
person is granted such retired pay, his eligibility for such pay may 
not be revoked "on the basis of any error, miscalculation, 
misinformation, or administrative determination of years of service 
performed as required by section 12731(a)(2)," which is the 
requirement to have performed at least 20 years of service.  However, 
Mr. Amalbert's retired pay was revoked on the basis of not having 
served during the periods specified by  sec.  12731(c), and not on the 
basis of an error in determination of the number of years of service 
under  sec.  12731(a).  See also, 51 Comp. Gen. 91 (1971).