BNUMBER:  B-272194
DATE:  August 27, 1996
TITLE:  Phyllis J. Wright -- Waiver Appeal

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Matter of:Phyllis J. Wright -- Waiver Appeal

File:     B-272194

Date:August 27, 1996

DIGEST

An employee switched from a regular work schedule to a compressed work 
schedule, but due to administrative error, began to receive overtime 
pay for extra hours worked on days that were in excess of 8 hours.  
Although her leave and earnings statements identified the payments as 
overtime, she asserts that she thought that the payments were for 
specialty pay due her because of her duties that had been improperly 
identified.  Failure to make inquiry of appropriate officials 
regarding the accuracy of her pay is sufficient to make her partially 
at fault in the matter, thus precluding waiver of her debt.  5 U.S.C.  sec.  
5584(b) (1994). 

DECISION

This decision is in response to a request from Ms. Phyllis J. Wright, 
appealing Settlement Z-2943306, April 29, 1996, which sustained her 
employing agency's denial of waiver of her debt to the United States 
in the amount of $4,259.84.  We conclude that the denial of waiver was 
correct, for the following reasons.

Ms. Wright, a licensed practical nurse employed by the VA Medical 
Center in Salem, Virginia, changed her work schedule from a regular to 
a compressed workweek beginning May 29, 1994.  Although she only 
worked a 40-hour workweek and did not actually work overtime, she was 
erroneously paid overtime for extra hours worked on days that were in 
excess of 8 hours.  As a result, she was overpaid $4,259.84 during the 
period from May 29, 1994, through January 7, 1995.

The record shows that Ms. Wright regularly received biweekly leave and 
earnings statements during the period of the overpayment clearly 
identifying the additional payments as compensation for overtime 
hours.  Our settlement denying waiver was based on the determination 
that since Ms. Wright did not actually work overtime hours during this 
period, she should have questioned the extra payments by bringing them 
to the attention of the appropriate officials.

Ms. Wright admits that she did examine her leave and earnings 
statements and discussed receipt of the money with several other 
nurses similarly situated.  She and the others came to the conclusion 
that the extra money was for specialty pay that she contends had been 
previously mentioned to her, and that it was simply marked as overtime 
on her leave and earning statement because there was no other place to 
put it.  She also claims that the change in her pay also took place at 
a time when she was due a step increase in her pay.

Waiver of debts under 5 U.S.C.  sec.  5584 (l994) is an equitable remedy.  
As such, waiver must depend on the facts in each case, since by 
statute "an indication of. . . fault. . .on the part of the employee" 
precludes waiver.[1]  Fault, as used in 5 U.S.C.  sec.  5584, is considered 
to exist if it is determined that an employee exercising reasonable 
diligence should have know that an error existed, but failed to take 
corrective action.[2]  The standard employed is whether a reasonable 
person should have been aware of receiving payment in excess of the 
proper entitlement.[3]

We recognize that erroneous payments usually arise as a result of 
mistakes by those who are charged with the administrative 
responsibility for making the payments.  However, where the payment 
made is in excess of the amount authorized to be paid, the government 
has the right to recover the excess amount.  We have held that an 
employee who knows or should know that she has received an overpayment 
should be prepared to return any overpayment received and it is not 
against equity or good conscience to collect an overpayment to such a 
person.[4]  We have also held that financial hardship does not provide 
a basis to grant waiver of an indebtedness.[5]

In the present case, we have been informed by the payroll section of 
the medical center in Salem, Virginia, that there is no "specialty 
pay" available for licensed practical nurses, as asserted by Ms. 
Wright.  However, licensed practical nurses are entitled to a special 
salary rate represented as a percentage increase in their annual basic 
pay.  The record shows that Ms. Wright was properly receiving that 
increased pay well before the payment of the erroneous overtime 
compensation had begun.  The record also shows that her step increase 
did not coincide with the initial payments of erroneous overtime 
compensation.  Her step increase did not become effective until 
October 2, 1994, nearly 4 months after the erroneous overtime payments 
had begun.  Therefore, since Ms. Wright has admitted being aware that 
she was receiving additional compensation identified on her leave and 
earnings statements as overtime, she should have made inquiry with the 
medical center payroll section to clarify her entitlement, rather than 
simply discussing it with other nurses.  Accordingly, it is our view 
that Ms. Wright must be deemed to be partially at fault in the matter 
and our settlement action dated April 29, 1996, denying waiver is 
sustained.

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

B-272194

August 27, 1996

The Honorable John Warner
United States Senator
1003 First Union Bank Building
213 South Jefferson Street
Roanoke, Virginia  24011-1714

Dear Senator Warner:

This is in response to your letter dated May 24, 1996, enclosing 
correspondence from Ms. Phyllis J. Wright, appealing settlement 
Z-2943306, Apr. 29, 1996, which denied waiver of her debt to the 
United States incident to the overpayment of compensation.

By decision B-272194, dated today, copy enclosed, we sustain the 
denial of waiver in Ms. Wright's case because, upon receipt of her 
leave and earnings statements showing the extra payments, she should 
have made inquiry of appropriate officials in the medical center 
payroll section about her entitlement.  Since she failed to do so, she 
is deemed to be partially at fault in the matter, thus precluding 
waiver under 5 U.S.C.  sec.  5584(b) (1994). 

We trust, this will serve the purpose of your inquiry.

Sincerely yours,

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

Enclosure

1. 5 U.S.C. sec.  5584(b) (1994)

2. 4 C.F.R.  sec.  91.5 (1995)

3. George R. Beecherl, B-192485, Nov. 17, 1978.

4. Hawley E. Thomas, B-227322, Sept. 19, 1988.

5. Dr. Joella Campbell, citing to David L. Williams, 70 Comp. Gen. 699 
(1991).