Isaac L. Tillman-Separation Pay-Waiver Request

B-266193 Feb 23, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights An Army member separating from the service properly was paid separation pay upon separation. He was granted monthly disability compensation by the Department of Veterans Affairs retroactive to his separation from the Army. Action by the General Accounting Office Claims Group waiving the separation pay was incorrect. It is rescinded. DECISION This decision is in response to a request from the Department of Veterans Affairs (VA) that we reconsider the action of our Claims Group in waiving collection of separation pay Mr. Tillman received was not an "erroneous" payment to which our waiver authority (10 U.S.C. Was involuntarily separated from the Army. Pursuant to which he was properly determined to be entitled to separation pay under 10 U.S.C. View Decision Matter of: Isaac L. Tillman-Separation Pay-Waiver Request File: B-266193 Date: February 23, 1996 An Army member separating from the service properly was paid separation pay upon separation. Subsequently, he was granted monthly disability compensation by the Department of Veterans Affairs retroactive to his separation from the Army. In this situation, the separation pay statute (10 U.S.C. Sec. 1174) requires that there be deducted from the disability compensation an amount equal to the separation pay the former member received. A subsequent disability award does not render the separation pay payment "erroneous" and subject to waiver under 10 U.S.C. Sec. 2774. Therefore, action by the General Accounting Office Claims Group waiving the separation pay was incorrect, and it is rescinded. DECISION This decision is in response to a request from the Department of Veterans Affairs (VA) that we reconsider the action of our Claims Group in waiving collection of separation pay Mr. Isaac L. Tillman received upon separation from the Army, which subsequently became collectible when VA awarded him disability compensation. [1] We rescind the Claims Group's waiver action because the separation pay Mr. Tillman received was not an "erroneous" payment to which our waiver authority (10 U.S.C. Sec. 2774) applies. BACKGROUND In January 1993, Mr. Tillman, then a Warrant Officer with insufficient service to qualify for retirement, was involuntarily separated from the Army, pursuant to which he was properly determined to be entitled to separation pay under 10 U.S.C. Sec. 1174, which the Army paid him in the amount of $52,822.80. In September 1993, the VA awarded Mr. Tillman monthly disability compensation payments effective February 1, 1993. Upon doing so, VA notified Mr. Tillman that his disability compensation payments were subject to withholding until the amount withheld equaled the amount of separation pay he had received from the Army, as required by 10 U.S.C. Sec. 1174(h)(2). VA accordingly began withholding payment of the disability compensation payments. Subsequently, apparently upon Mr. Tillman's inquiry, the Defense Finance and Accounting Service (DFAS) referred the matter to our Claims Group, recommending that collection of Mr. Tillman's separation pay be waived pursuant to our authority under 10 U.S.C. Sec. 2774. In support of this request, DFAS cited our decision Henry B. Jenkins, 64 Comp.Gen. 15 (1994), in which we had waived an erroneous payment of severance pay made to a civilian employee upon his separation from federal service. Our Claims Group accepted the DFAS request and granted the waiver. VA, however, disagrees with the waiver action and continues to withhold the disability compensation. VA states that it is aware of our authority under 10 U.S.C. Sec. 2774 to waive a claim of the United States "arising out of an erroneous payment" of any pay or allowances to or on behalf of a member or former member of the uniformed services, if collection would be against equity and good conscience and not in the best interest of the United States. It is VA's position, however, that collection of the severance pay in this case by withholding the disability compensation is not subject to our waiver authority under 10 U.S.C. Sec. 2774 because the amount subject to collection does not arise out of an "erroneous payment." VA notes that the separation pay statute, 10 U.S.C. Sec. 1174, does not condition payment of separation pay upon VA compensation not being awarded. Instead, the statute recognizes that VA compensation may be awarded subsequent to payment of separation pay and requires that in such a case, payment of the compensation is to be withheld in an amount equal to the separation pay received by the former member. In VA's view, this does not render the payment of the separation pay "erroneous." VA distinguishes 64 Comp.Gen. 15, supra, the decision cited by DFAS, from the current case.