Chad H. Lennon, Esq., for Tully Rinckey PLLC
The “Tainted Claim Policy” is commonly unknown by service members yet can cost a service member thousands of dollars, which can set them up for a lifetime of debt. This policy is when the Defense Finance Accounting Service (DFAS) will seek to recoup all money paid in cases of overpayment where they suspect a military member was at fault for the overpayment. This means DFAS will seek to recoup not just the amount of overpayment but the entire entitlement. If a member of the military states a spouse or other dependent will accompany him or her on orders, when in fact they do not, DFAS will seek to recoup not just the BAH based on only the dependent, but the entire BAH amount from the date of the fraud.
DOD Financial Management Regulation 250203 requires action when it is discovered that a fraudulent claim has been paid. Once payment is made and it is discovered, or information is provided, suggesting a claim was paid on fraudulent information, the claim is considered a “tainted claim.” If the claim is confirmed to be tainted, action will be taken to recover the illegal, incorrect, or improper payment as described in the regulation. Furthermore, a request will be sent to the parent command to initiate an investigation into the matter.
In one case, the Air Force referred to the “Tainted Claim Policy,” where DFAS generated an official debt against an Airman to recoup overpayment, which was attributed to the Airman’s actions. This specific amount represented all allowances received after the date of a divorce, including all allowances he would have been entitled to receive as a military member without dependents. In other words, DFAS was seeking unjust enrichment at the Airman’s expense.
Under the False Claims Act and the Program Fraud Civil Remedies Act, the government may recoup fraudulent payments. Specifically, the government may collect damages and penalties from service members who submit fraudulent travel expense claims, including when submitting dependents on a PCS move. This means that a service member can pay a penalty for the fraud, just like a criminal fine.
The General Accounting Office Military Personnel Law Manual states agency actions to recoup fraudulent overpayments of subsistence expense claims from fraudulent payees should be taken in light of those Acts and other applicable statutes and regulations. Prior decisions advising agencies to recoup from fraudulent payees both the fraudulent overpayments and nonfraudulent subsistence expenses claimed for any day tainted by the fraudulent claim are overruled.
A service member should follow this information to make sure the administrative process accurately states if and when a dependent is added or removed. However, submitting a change to the record is not enough to protect the service member. Follow-up actions must be annotated with emails, phone calls, in-person conversations, etc. A service member cannot personally make the correction but should follow up to ensure those responsible are actioning the change. Without making the change to the record, one could not only face administrative discharge but also criminal charges as well.
Chad Lennon is an attorney in the military law section at Tully Rinckey, PLLC. Also, he is a Major in the Marine Corps reserves. Concurrently he is the Co-Chair for the New York State Bar Association Committee on Veterans, Co-Chair for the Suffolk County Bar Association Committee on Military and Veterans Affairs, and is an Officer for the Suffolk County Bar Association Academy of Law. He can be reached at (646) 705-0049 or at email@example.com.