SUBJECT:

Laura L. Frey,

Petitioner,

Department of Health & Human Service (Program Support Center, Personnel Pay System Division),

Respondent.

DECISION

Petitioner was not overpaid salary in the amount of $615.52 for the pay period ended February 7, 2004. No collection action for this amount may be pursued by the agency.

I. PROCEDURAL HISTORY

Petitioner was notified by letter dated May 17, 2004, from the Department of Health & Human Services (HHS or the agency), Program Support Center (PSC), Personnel Pay System Division (PPSD), that she is indebted for an overpayment of salary in the net amount of $615.52 based on a payment made for the pay period that ended on February 7, 2004. The notice demanded payment within 30 days and advised that if payment was not received, salary deductions would be made to collect the debt plus administrative costs and interest. Petitioner requested that a hearing officer review her indebtedness on May 27, 2004. The request for review was forwarded to the Departmental Appeals Board (DAB) by the HHS Office of General Counsel on July 9, 2004. The request for review was received at the DAB and assigned to me for hearing and decision on July 22, 2004.

Petitioner alleges in her request for hearing that she was not overpaid and that she did not receive a payment in the amount alleged for the pay period that ended on February 7, 2004. Petitioner submitted evidence supporting her allegation with her request for hearing officer review dated May 27, 2004. For ease of reference I have marked Petitioner's request for hearing and supporting evidence as follows.

Petitioner's Exhibit (P. Ex.) 1, page 1 of 2: Memorandum dated May 27, 2004, from Laura Frey to Jo Davis, regarding Request for Hearing on Alleged Salary Overpayment (Case No. 51011861);

P. Ex. 1, page 2 of 2: Hearing/Waiver Request Form dated May 27, 2004;

P. Ex. 2, page 1 of 2: Letter from HHS/PSC/PPSD to Laura Frey dated May 17, 2004; subject: Certification of Salary Overpayment; Case Number: 51011861; SPO: 1189; TID: 34;

P. Ex. 2, page 2 of 2: Form titled "Salary Overpayment Audit Year 2004"; bearing Petitioner's name and social security number; for the pay period ended February 7, 2004; dated April 30, 2004; reviewed May 4, 2004; SPO/ID: 1189/34;

P. Ex. 3, pages 1 and 2: Petitioner's signed statement in support of her hearing request, marked as Attachment 1 to that request;

P. Ex. 4, pages 1 through 8: Attachment 2 to Petitioner's hearing request: Bank statements for the periods January 17 through February 17, 2004, February 18 through March 15, 2004, March 16 through April 15, 2004, and April 16 through May 17, 2004;

P. Ex. 5 (one page): Attachment 3 to Petitioner's hearing request: Memorandum dated June 10, 2003, from Laura Frey to Jo Davis, regarding Notice of Personnel Action;

P. Ex. 6, page 1 of 2: Attachment 4 to Petitioner's hearing request: Letter dated July 16, 2003, from HHS/PSC/PPSD to Laura Frey; subject: Certification of Salary Overpayment; Case Number: 51010981; SPO: 1704; TID: 34;

P. Ex. 6, page 2 of 2: Form titled "Salary Overpayment Audit Year 2003"; bearing Petitioner's name and social security number; for the pay periods ended May 31, 2003 and June 14, 2003; dated July 3, 2003; reviewed July 9, 2003 SPO/ID: 1704/34;

P. Ex. 7, pages 1 and 2: Attachment 5 to Petitioner's hearing request: Letter dated August 7, 2003, from Laura Frey to HHS Division of Payroll; regarding Salary Overpayment; Case Number 51010981; with attached copy of check number 1534 in amount of $118.50 payable to DHHS;

P. Ex. 8, pages 1 through 4: Attachment 6 to Petitioner's hearing request: Bank statements for the periods November 19, 2003 through December 15, 2003 and December 16, 2003 through January 16, 2004;

P. Ex. 9, pages 1 and 2: Attachment 7 to Petitioner's hearing request: E-mail dated February 1, 2, 8, and March 4, 2004; subject: Laura Frey - Additional Payroll Deposits;

P. Ex. 10, pages 1 through 3: Attachment 8 to Petitioner's hearing request: E-mail dated February 1, 2, 8 and March 4 and 5, 2004, subject: Laura Frey - Additional Payroll Deposits;

P. Ex. 11 (one page): Attachment 9 to Petitioner's hearing request: Letter dated March 16, 2004, from Laura Frey to HHS, Division of Payroll: regarding Salary Overpayment; Case Number - Unknown.

On August 2, 2004, I ordered that the agency submit records no later than August 20, 2004, related to the alleged salary overpayment of $615.52 for the pay period ended February 7, 2004. I advised the agency that, pursuant to 5 U.S.C. § 5514(a)(2), any further collection actions related to the alleged debt were stayed by the filing of the request for review. A copy of Petitioner's request for review and supporting evidence was served upon the agency with the Order.

The agency did not respond to my Order of August 2, 2004. Accordingly, on September 22, 2004, the agency was ordered to show cause not later than October 4, 2004, why I should not conclude that the claim of indebtedness was unsupported and summarily issue a decision favorable to Petitioner. On September 28, 2004, Mr. Jack O'Leary, Acting Director, Division of Payroll, PSC, HHS, responded by letter on behalf of the agency. Mr. O'Leary indicates in his letter that the indebtedness for Laura L. Frey was due to an erroneously processed within grade increase from GS14-1 to GS14-2, which was later cancelled. Mr. O'Leary submitted three documents with his letter which I have marked for ease of reference as follows:

HHS Exhibit (HHS Ex.) 1: Form HHS-411A, Error Notice, dated 6/19/2003; bearing Petitioner's name and social security number; indicates in block 5 that error occurred in pay period 12;

HHS Ex. 2: Form titled "Salary Overpayment Audit Year 2003"; bearing Petitioner's name and social security number; for the pay periods ended May 31, 2003 and June 14, 2003; dated July 3, 2003; reviewed July 9, 2003; (HHS Ex. 2 appears to duplicate P. Ex. 6, page 2);

HHS Ex. 3: Form SF 50, Notification Of Personnel Action, dated June 19, 2003; bearing Petitioner's name and social security number.

On October 10, 2004, Petitioner filed a reply to the agency response to the Order to Show Cause. Petitioner requested a prompt favorable decision noting that the agency has not submitted documentation to support the alleged overpayment for the pay period that ended February 7, 2004.

II. APPLICABLE LAW

The debt collection regulations promulgated by the Secretary of HHS (Secretary), which were revised effective October 1, 2003, are found at 45 C.F.R. Part 30. The provisions of 45 C.F.R. Part 30 apply to debt collection actions by or on behalf of the Secretary unless a statute or regulation applicable to a specific situation applies and provides for a different procedure. 45 C.F.R. § 30.4. The Secretary has provided that the agency's failure to comply with the procedures specified by his debt collection regulations is not a defense to any debtor. 45 C.F.R. § 30.10.

Section 30.11 of 45 C.F.R. provides, generally, that the Secretary will take aggressive action to track down debtors and collect debts owed the government. It is specifically provided that a debtor who disputes a debt must promptly provide supporting evidence. 45 C.F.R. § 30.11(e). Section 30.12(a) specifies the contents of the first notice or demand for payment to the debtor, including:

(1) The amount and nature of the debt;

(2) The date payment is due, which will generally be 30 days from the date the notice was mailed; and

(3) The assessment under § 30.13 of interest from the date the notice was mailed, and full administrative costs if payment is not received within the 30 days.

When appropriate, under section 30.12(b), the Secretary will also inform the debtor in writing of:

(1) His or her right to dispute the debt or request a waiver of the debt, citing the applicable review or waiver authority, the conditions for review or waiver, and the effect of the review or waiver request on collection of the debt, interest, charges and late payment penalties (see § 30.14);

(2) The office, address and telephone number that the debtor should contact to discuss repayment, reconsideration or waiver of the debt;

(3) The proposed sanctions if the debt is overdue, including assessment of late payment penalties under § 30.13 (if the debt is more than 90 days overdue) or referral of the debt to a credit reporting agency under § 30.17, or to a collection agency under § 30.18. (See also § 30.5).

Except in the case of administrative offset, the Secretary's regulations provide no right to a hearing or review by a hearing officer or administrative law judge. Administrative offset is the process of satisfying a debt due the government by withholding money due and payable from HHS to a debtor or held by HHS for the benefit of the debtor. 45 C.F.R. § 30.15(b). Administrative offset may only be used in the limited circumstances specified at 45 C.F.R. § 30.15(a). Administrative offset may be used to collect debts owed by employees of HHS but, in such cases, the regulation recognizes that the agency must also comply with the requirements of 5 U.S.C. § 5514, which specifically controls the collection of debt by an agency from its employees. Section 30.15 of 45 C.F.R. provides for notice and a review or hearing by a hearing officer, who may be an administrative law judge, before administrative offset may be effected.

III. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ANALYSIS.

I set forth each conclusion of law which leads to my decision in this case followed by the pertinent findings of fact and discussion.

(1) Petitioner was notified that an administrative offset of her federal salary would occur if payment was not made as demanded and 5 U.S.C. § 5514 is applicable in this case.

The HHS/PSC/PPSD letter of May 17, 2004 (P. Ex. 2, at 1), demanding payment, also notified Petitioner that collection may be by administrative offset of her pay. Title 5 U.S.C. § 5514 and its procedures are applicable in a case involving the administrative offset of a federal employee's pay. Section 5514 requires notice and opportunity for review by a hearing officer and/or hearing before an agency head may direct administrative offset to recover a debt from an employee's pay. ⁽¹⁾

(2) Petitioner's request for hearing officer review was timely filed and I have jurisdiction.

Title 5 U.S.C. § 5514(a)(2), requires that a request for hearing be filed within 15 days of the notice of indebtedness. The notice of indebtedness, demand for payment, and notice of administrative offset from HHS/PSC/PPSD to Petitioner is dated May 17, 2004. Petitioner's hearing/waiver request form is dated May 27, 2004 and her memorandum forwarding the hearing request and supporting documents to Jo Davis is also dated May 27, 2004. There is no indication when Jo Davis received the request for hearing. However, the agency has not raised any issue regarding the timeliness of Petitioner's request for a hearing. Accordingly, I conclude that Petitioner's request for hearing officer review was timely filed in this case and I have jurisdiction. ⁽²⁾

(3) This case may be decided on the written record presently before me.

The Secretary's regulation at 45 C.F.R. § 30.15(l) requires that the request for hearing be supported with facts, witnesses, and documents sufficient to raise genuine issues of fact or law. As discussed in greater detail hereafter, Petitioner contends that she never received the alleged overpayment and has submitted documents sufficient for a prima facie showing that she did not receive the alleged overpayment. I also conclude, as discussed hereafter, that the agency has failed to address or rebut Petitioner's evidence. Given the state of the evidence and the fact that neither party has indicated a need for a hearing to receive additional evidence, disposition on the documentary record before me is appropriate. Furthermore, 45 C.F.R. § 30.15(n) provides that an oral hearing will normally not be conducted unless the hearing officer determines such a hearing is necessary to resolve an issue of credibility or veracity. In this case, the agency does not challenge the accuracy of Petitioner's allegations or their credibility or the credibility of her documents. Thus, I find no oral hearing is necessary for disposition of this case.

(4) No debt of a principal amount of $615.52, plus interest and administrative charges, related to an overpayment of salary for the pay period ended February 7, 2004, has been shown to be owing from Petitioner to HHS and no collection by offset or otherwise may be effected.

The HHS/PSC/PPSD notice dated May 17, 2004, advised Petitioner that she was overpaid in the amount of $615.52 for an overpayment of salary. The salary overpayment audit form indicates in remarks that the overpayment was due to an erroneous pay adjustment. The overpayment audit shows that for the pay period that ended February 7, 2004, Petitioner was allegedly paid a net amount of $615.52 that she was not supposed to have been paid. P. Ex. 2. Petitioner asserts that she did not receive an amount of $615.52 for the pay period that ended February 7, 2004. P. Ex. 3, at 1. She has presented copies of her bank statements for the only account where she receives direct deposits of government payments, and no direct deposit of $615.52 is shown during the period January 17, 2004 through May 17, 2004. The bank statements reflect only deposits of Petitioner's regular salary. P. Ex. 3, at 1; P. Ex. 4. Petitioner acknowledges that she did erroneously receive direct deposits of $615.52 on December 1, 2003 and again on January 6, 2004, (P. Ex. 3, at 2), which is reflected in her bank statements at P. Ex. 8. However, there is no dispute that Petitioner paid back the two deposits. P. Ex. 4, at 6; P. Exs. 9, 10, 11.

The documents submitted by Mr. O'Leary have to do with an overpayment of salary for pay periods ended May 31, 2003 and June 14, 2003, in a total amount of $118.50. HHS Ex. 2. There is no dispute that Petitioner repaid that overpayment. P. Exs. 6, 7. While Mr. O'Leary may be correct in his assertion that Petitioner's within grade increase was erroneously processed, that does not establish that Petitioner ever received a payment of $615.52 for the pay period that ended February 7, 2004 or rebut Petitioner's evidence that she did not receive that payment. The agency does not dispute the accuracy or credibility of Petitioner's statements or documents.

Accordingly, I conclude that the evidence does not show that Petitioner was paid the amount of $615.52 for the pay period ended February 7, 2004.

IV. CONCLUSION

For the foregoing reasons, I conclude that Petitioner was not overpaid and no collection action may be pursued by the agency.

KEITH W. SICKENDICK

Administrative Law Judge

1. 5 U.S.C. § 5514(a)(2) provides that the hearing officer may not be under the supervision or control of the agency head, but it also provides that that prohibition should not be construed to prohibit the appointment of an administrative law judge to hear and decide the case.

2. 5 U.S.C. § 5514(a)(2) also requires that a decision be issued not later than 60 days from the date of filing of the request for hearing. See also 45 C.F.R. § 30.15(j)(7). Timely decision was not possible in this case. Petitioner's request for hearing was filed on May 27, 2004. The Office of the General Counsel for HHS did not forward the request for hearing for assignment of an administrative law judge until July 9, 2004, with receipt on July 12, 2004. The case was not assigned for hearing and decision until July 22, 2004, nearly 60 days after the date of the request for hearing.