RECORD OF PROCEEDINGS
AIR FORCE BOARD FOR CORRECTION OF MILITARY RECORDS

IN THE MATTER OF:			DOCKET NUMBER:  BC-2015-02232
		
 						COUNSEL:  NONE

 						HEARING DESIRED:  NO

APPLICANT REQUESTS THAT:

He receive a refund of the Survivor Benefit Plan (SBP) premiums paid by his brother.  

APPLICANT CONTENDS THAT:

His brother’s records did not reflect he was the only living relative and was entitled to a refund of the SBP premiums his brother paid.

Sometime after 2013, a letter was sent to his brother’s former spouse indicating she was not entitled to the SBP benefit but he as the Next of Kin (NOK) would receive the benefit.  There was no expiration date mention in the letter.

He recently found out there was money in his brother’s name at Unclaimed Property in Colorado and that he is eligible to claim it.  He only learned this because an estate company contacted him about the money.  He hopes an exception can be made so he can get the money his brother left for him.  

He provides a letter from the Defense Finance and Accounting Service (DFAS) dated 12 March 2015 which states his claim for unpaid compensation received on 20 February 2015 could not be paid since the statute of limitation was reached on 14 February 2012 (six years after the former service member’s death on 14 February 2006).  He was advised the six year statute of limitations could be waived by the Military Service and that he could petition the AFBCMR for the claim.  

The applicant’s complete submission, with attachments, is at Exhibit A.

STATEMENT OF FACTS:

The decedent retired on 31 July 1969 in the grade of Technical Sergeant (TSgt, E-6).  He was credited with 20 years, 7 months and 20 days of active duty service.  

The certificate of death issued by the State of Colorado reflects he died on 14 February 2006 and was divorced at the time of his death.

According to DFAS, the decedent elected SBP spouse coverage effective 21 September 1972 and continued to pay SBP premiums with his former spouse as the named spouse beneficiary through his death on 14 February 2006, although the parties divorced on 18 July 1979.

Public Law 94-496, effective 1 October 1976, authorized request for termination of SBP because the former service member no longer had an eligible spouse.  

Public Law 98-94, authorized an insurable interest option for beneficiaries following a divorce if previously covered as spouse.  An enrollment period from 24 September 1983 to 23 September 1984 for election of former spouse SBP was provided.  

The decedent’s former spouse provided DFAS with a copy of a one-page divorce decree which did not include a property settlement agreement or direct the former service member to provide former spouse SBP coverage.  She also advised DFAS that she had remarried and that her new spouse was also deceased; however, she did not provide a copy of the marriage certificate.  

On 23 January 2015, the applicant signed SF 1174, Claim for Unpaid Compensation of Deceased Member of the Uniformed Services, as the NOK.  Part C, Widow or Widower and Designated Beneficiaries is blank.   The decedent’s former spouse signed as the witness for the applicant’s NOK beneficiary.   

In a letter dated 12 March 2015, DFAS advised the applicant his claim for unpaid compensation was received on 20 February 2015 and since the former service member passed away on 14 February 2006, they were unable to process his claim because the statute of limitation was reached on 14 February 2012.  However, he could submit his appeal to the AFBCMR for waiver of the statute of limitations.  

In a letter dated 18 March 2016, DFAS advised the applicant that the Barring Act, 31 U.S.C. § 3702, bars payment of any claim not received within six years from the date it accrues.  A SBP refund was identified on the account and would be due with the Arrears of Pay (AOP).  However, the claim for a SBP refund in the amount of $12,781.76 for the time period of 1 August 1979 through 13 February 2000 was denied.  The applicant was advised he had the right to submit an appeal of the determination to the Defense Office of Hearings and Appeals (DOHA).  The request to DFAS must be received within 30 days of the date of the letter.  Failure to timely submit the appeal or request an extension within 30 days would end the appeal process.  DFAS notes in their evaluation an appeal was not submitted to DOHA since no response from the applicant was received.  The letter also stated that “In addition to an appeal of this determination to DOHA, you also have the right to request a waiver of the time limitations established by 31 U.S.C § 3702.  Waiver requests should be submitted in writing directly to the Secretary of the service under which the claim arose at the address listed below.  Waivers are limited to claims up to $25,000.  Waiver requests should be in writing and include your name, mailing address, telephone number, and the basis of your claim, the amount you are seeking to have waived, a complete description of the claim, all relevant documentation, and state the specific reasons why you believe a waiver of the time limitations is warranted.”

In a letter dated 20 May 2016, the applicant was advised that the AFBCMR is the highest administrative level of appeal within the Air Force and an applicant must first exhaust all available avenues of administrative relief provided by existing law or regulations prior to seeking relief before this Board.  He was also afforded the opportunity to request his case be administratively closed until such time as he had exhausted admin remedies.  He was also advised that if he did respond by the end of the 30-day period, his request would be processed to the Board where it may be denied.

The remaining relevant facts pertaining to this application are described in the memorandum prepared by DFAS, which is included at Exhibit D.

DEFENSE FINANCE AND ACCOUNTING SERVICE (DFAS) EVALUATION:

DFAS states they do not have the authority to waive the barring statute.  The applicant is requesting waiver of the “Barring Act” 31 U.S.C. § 3702(b) which would entitle him to the “barred portion” of the refund of SBP premiums.  If the AFBCMR grants payment of the “barred” amount, DFAS will pay the applicant the refund of SBP premiums for the period of 1 August 1979 through 13 February 2000 in the amount of $12,781.76 withheld after the decedent’s divorce.  

The former service member retired on 1 August 1969.  He elected SBP effective 21 September 1972 for his spouse.  On 10 March 2006, the former spouse telephoned DFAS to report the death of the former service member who died on 12 [sic] February 2006.

On 13 March 2006, DFAS sent correspondence to the family of the decedent that was returned for “bad address.”  On 16 October 2009, DFAS received a copy of the death certificate provided by his former spouse.  In response, DFAS sent her a letter on 16 December 2009 requesting a copy of the divorce decree since he did elect the SBP and premiums were being deducted from his retired pay until the time of his death.

On 5 January 2010, DFAS received a letter from the former spouse accompanied by a SF Form 1174 and a copy of the Dissolution of Marriage from the former service member on 18 July 1979.  She also provided the name of the applicant, the decedent’s only living relative who also signed the SF 1174.  It is unclear why the claim form was not paid.

On 20 February 2015, another claim form, SF 1174, was received at DFAS from the applicant.  This claim was referred to DFAS Office of General Counsel (OGC) to determine if the applicant is an eligible beneficiary under Colorado law.  Federal Law requires arrears of pay (AOP) to be paid in according with 10 U.S.C. § 2271(a) (1)-(6).  The decedent did not have any payees set forth by 10 U.S.C. § 2271(a)(1)-(5), no designated beneficiary, surviving spouse, children, or descendants, surviving parents or legal representative of the decedent’s estate.  Thus, AOP must be paid in accordance with the law of the member’s domicile, in this case, Colorado.  

DFAS OGC determined that in accordance with Colorado law, the applicant is the sole beneficiary.  At the time of his death, the former service member was having SBP premiums deducted from his retired pay.  However, the former service member was divorced on 18 July 1979.  Thus, on the date of his death, the former service member had a claim for repayment of SBP spousal premiums that were withheld after his divorce.  However, his claim must be limited to six years because of application of the Barring Act (31 U.S.C. 3702(b) (1).  Consequently, the AOP due from the applicant’s retirement account includes his prorated monthly retirement from the month of February 2006 but also includes all SBP spousal coverage premiums collected from 15 February 2000 until 31 January 2006.  

The applicant did submit a claim within six years of the decedent’s death, although it is unclear why the 2 January 2010 claim was not paid.  Because the applicant submitted a claim within six years of the former service member’s death, he should have been paid both the prorated monthly retirement for February 2006 (AOP) and the SBP spousal coverage premiums collected from the decedent’s military retirement pay from 14 February 2000 until 13 February 2006 in the total amount of $6,011.13.  OGC advised DFAS that this claim should have been paid.  Therefore, on 23 March 2016, the applicant was paid $6,011.13.

On 18 March 2016, DFAS sent the applicant a letter advising of his right to appeal the waiver of the Barring Act for the portion of his claim that is time barred, specifically all SBP spousal coverage premiums collected from 1 August 1979 until 13 February 2000.  DFAS did not receive an appeal request within 30 days of the date of DFAS letter to appeal the decision; however, he did submit his request for correction to the AFBCMR.  Since DFAS did not receive an appeal request, they did not forward his claim to DOHA and DFAS, in lieu of, provides the advisory opinion in response to his DD Form 149, Application for Correction of Military Records.   

A complete copy of the DFAS evaluation is at Exhibit D.

APPLICANT'S REVIEW OF DFAS EVALUATION:

A copy of the DFAS evaluation was forwarded to the applicant on 14 June 2016 for review and comment within 30 days (Exhibit E).  As of this date, no response has been received by this office.

THE BOARD CONCLUDES THAT:

1.  The applicant has not exhausted all remedies provided by existing law or regulations.

2.  The application was timely filed.  

3.  Sufficient relevant evidence has been presented to demonstrate the existence of an error or an injustice.   The laws governing SBP are complex and this is a unique case with several matters for the Board’s consideration.  First, we note that the applicant has not exhausted his administrative remedies by requesting a waiver of the Barring Act through DOHA.  However, in a letter dated 12 March 2015, DFAS instructed the applicant to submit his application to the AFBCMR.  The March 2015 letter was silent in regard to a potential Barring Act waiver.  However, after the applicant submitted his application (dated 26 May 2015) to the Board per the DFAS instruction, on 18 May 2016, DFAS advised him of his right to appeal DFAS’s decision to DOHA, or  in the alternative, his right to request a waiver of the Barring Act through the Air Force Comptroller to DOHA.  In view of the conflicting information received from DFAS and being mindful of administrative economy, we believe the applicant’s failure to submit an appeal for a waiver of the Barring Act should be excused.  Secondly, in cases of this nature, the Board must make a determination as to whether there are any potential competing interests.  The applicant was paid the decedent’s AOP, to which he was lawfully entitled, in the form of refunded SBP spousal coverage premiums collected from the decedent’s military retirement pay from 14 February 2000 until 13 February 2006 in the total amount of $6,011.13.  Therefore the only entity with a legal entitlement to the unrefunded premiums is the United States Treasury, by virtue of the Barring Act.  Thus, the only remaining issue for the Board to consider is whether the SBP spousal coverage premiums collected from 1 August 1979 through 13 February 2000 should be refunded to the applicant through a correction of the decedent’s military record or whether the SBP premiums should be retained by the Treasury as intended by Congress through the Barring Act.  We also note that should this Board deny the requested correction, the unrefunded premiums could be used to the benefit of the former spouse, should she similarly request this Board to use its equitable authority to award her SBP.  Although the parties divorced on 18 July 1979, the former member elected SBP spouse coverage effective 21 September 1972 and continued to pay SBP premiums with his former spouse as the named spouse beneficiary through his death on 14 February 2006.  We are keenly aware that in the past the Board has awarded SBP coverage to former spouses in some situations; however, in this case we are unable to determine the former service member’s intent to provide his former spouse the SBP as he may not have known he could have requested termination of the SBP per Public Law 94-496 effective 1 October 1976.  Furthermore, there is no evidence the applicant or his former spouse made a deemed election for former spouse SBP coverage during any subsequent open enrollment period.  While not a strict statutory prohibition, based on a past opinion from the Air Force General Counsel’s office, we are also aware that in cases where there are possible competing interests, there should be a rebuttal presumption that no record correction should be made if the result would be unfavorable to another person eligible to seek relief from the BCMR.  However, given the former spouse signed the applicant’s SF 1174 as a witness confirming the applicant is the sole beneficiary to the decedent’s estate, we find this sufficient to eliminate any competing interest to the SBP spousal coverage premiums.   Although, there is no evidence of an error or injustice on part of the Air Force, we believe it would be an injustice to deny the applicant’s request as the designated NOK beneficiary per law and it would result in the Treasury Department receiving an “unearned” windfall in the form of unrefunded premiums.  Based on all the circumstances in this case, we believe the interest of justice can best be served by correcting the record in a manner to allow the applicant to receive the additional SBP spousal coverage premiums his brother paid for.  Accordingly, we recommend the decedent’s records be corrected as indicated below. 

THE BOARD RECOMMENDS THAT:

The pertinent military records of the Department of the Air Force relating to the DECEDENT be corrected to show that from 19 July 1979 to 13 February 2000 on a monthly basis, as Survivor Benefit Plan (SBP) costs were deducted in error from his retired pay, he submitted and the appropriate government agency received written, dated and signed claims for each of the erroneous monthly SBP cost deductions.  When he died on 14 February 2006, claims for the refund of SBP costs had yet been paid and a refund of each erroneous monthly cost deduction was still due and owing to him.  

The following members of the Board considered AFBCMR Docket Number BC-2015-02232 in Executive Session on 25 August 2016 and 22 November 2016 under the provisions of AFI 36-2603:

	 , Panel Chair
	 , Member
	 , Member

All members voted to correct the records as recommended.  The following documentary was considered:

	Exhibit A.  DD Form 149, dated 26 May 2015, w/atchs.
	Exhibit B.  Decedent’s Master Personnel Records.
	Exhibit C.  Letter, DFAS, dated 18 March 2016.
	Exhibit D.  Letter, AFBCMR, dated 20 May 2016.
	Exhibit E.  Memorandum, DFAS, dated 14 June 2016.
	Exhibit F.  Letter, AFBCMR, dated 14 June 2016.
	 
Pursuant to paragraph 1 of AFI 36-2603 (Title 32 Code of Federal Regulations, Part 865.1), it is certified that a quorum was present at the Board's review and deliberations, and that the foregoing is a true and complete record of the Board's proceedings in the above entitled matter.