Jesus Amador, ALJ Ruling 2025-3 (HHS-CRD October 28, 2024)

DISMISSAL

On August 29, 2024, the Social Security Administration (SSA) referred Petitioner’s request for a hearing to the Departmental Appeals Board’s (DAB’s) Civil Remedies Division (CRD) for adjudication.  Petitioner, a former SSA employee, seeks a hearing in connection with a debt involving an alleged overpayment SSA made to the Petitioner in the amount of $12,094.91.  Since August 2023, SSA and the Department of Treasury (Treasury) have initiated collection actions against Petitioner in connection with the debt, including administrative offset and administrative wage garnishment (AWG).

Currently before me is SSA’s motion to dismiss Petitioner’s request for hearing.  In the motion, SSA contends I should dismiss this case because Petitioner is not a current SSA employee and the regulations governing administrative offset against non-employee debtors provide no right to a hearing before the DAB.  SSA further argues Petitioner’s request for hearing is untimely and should be dismissed to the extent it seeks review in response to SSA’s decision to initiate administrative offset.  Finally, SSA concedes Petitioner’s hearing request may be timely to the extent it seeks a hearing regarding AWG but contends any such hearing must be conducted by Treasury.  SSA also argues

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any hearing regarding AWG is moot because the debt has already been recovered in full and AWG was never actually initiated against Petitioner.

As detailed below, I disagree with SSA’s contention that the regulations applicable to non-employee debtors preclude a hearing before the DAB.  However, I agree that Petitioner’s request for hearing is untimely and must be dismissed to the extent it seeks review of SSA’s decision to initiate administrative offset.  I also conclude that I do not have jurisdiction to conduct a hearing regarding AWG and any determination concerning Petitioner’s right to such a hearing must be made by Treasury.  Therefore, I grant SSA’s motion to dismiss and recommend that SSA redirect Petitioner’s hearing request to Treasury to determine whether a hearing before that agency is appropriate.

I.      Background and Procedural History

According to the parties’ respective filings and SSA’s exhibits, Petitioner is a former SSA employee who separated from SSA on May 14, 2005.  DAB Docket (Dkt.) Entry No. 6 at 5-6; DAB Dkt. Entry No. 9 at 1-2.1  Petitioner is not a current federal employee.  DAB Dkt. Entry No. 9 at 2.

In November 2018, Petitioner reached a settlement with SSA in a matter before the Merit Systems Protection Board.  DAB Dkt. Entry No. 7a.  As part of the settlement, SSA agreed to restore certain military, annual, and sick leave hours to Petitioner in connection with Petitioner’s prior employment with SSA.  Id.  During settlement negotiations, SSA advised Petitioner’s counsel that, “after accounting for appropriate offset, the gross payment would be about $3400” for the restored military leave.  DAB Dkt. Entry No. 7b.  SSA claims that when it effectuated the settlement, it erroneously paid Petitioner $15,574.21 for the restored military leave, resulting in an overpayment in the amount of $12,094.01.  DAB Dkt. Entry No. 7c at 1.

On August 16, 2023, SSA notified Petitioner by letter that he owed a debt to the agency in the amount of $12,094.91 due to the alleged overpayment.  DAB Dkt. Entry No. 1a.  The letter stated Petitioner could: (a) pay the debt in full; (b) agree to a repayment plan with SSA; (c) provide evidence disputing the debt within 60 days of the letter; or (d) request a waiver of the collection of the debt.  Id.  The letter noted that if Petitioner provided evidence disputing the debt within 60 days, SSA would review the evidence and provide “written notification of its decision.”  Id.  The letter also explained that if Petitioner failed to pay the debt in full, the debt could be referred to Treasury for administrative offset or AWG.  Id.

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Petitioner claims he was unable to respond to the August 16, 2023 letter because he did not receive a “clear explanation of what the debt was for.”  DAB Dkt. Entry No. 9 at 1.  Petitioner further claims that, after receiving the letter, he requested additional information from SSA about the source of the debt and how the debt was calculated, but SSA failed to provide the requested information.  Id.

By letter dated September 18, 2023, SSA informed Petitioner that because he had not paid the debt within 30 days of the August 16, 2023 letter, the debt was considered delinquent.  DAB Dkt. Entry No. 5b.  Subsequently, in December 2023, SSA referred the debt to Treasury for collection.  DAB Dkt. Entry No. 5a at 4.

By notice dated June 21, 2024, CBE Group, on behalf of Treasury, sent Petitioner a notice stating it intended to collect a portion of the debt through AWG.  DAB Dkt. Entry No. 5c at 1, 3.  The notice stated that if Petitioner objected to AWG, he could request a hearing within 15 business days.  Id. at 1.

On July 15, 2024, Petitioner sent an email to SSA’s Debt Management Team, stating he was “requesting an administrative law judge hearing for the issue referenced above.”  DAB Dkt. Entry No. 1.2  The email referenced an account number and a “trace number” but contained no other information about the alleged debt or the basis for Petitioner’s request for hearing.  Id.  The request does not indicate whether Petitioner intended to request a hearing in response to the June 21, 2024 AWG notice or the August 16, 2023 letter from SSA.  See id.

On August 29, 2024, SSA referred Petitioner’s hearing request to CRD for adjudication, along with a copy of the August 16, 2023 debt letter.  DAB Dkt. Entry Nos. 1, 1a.  In the cover email, SSA stated its Office of General Counsel “deem[ed] this request untimely after much review.”  DAB Dkt. Entry No. 1.  The email did not explain why SSA concluded the request was untimely, nor did it provide any details concerning the nature or status of the alleged debt, the hearing regulations applicable to Petitioner’s request, or Petitioner’s employment status with SSA.  See id.

On September 5, 2024, I issued an Acknowledgment and Order to Show Cause (Order to Show Cause).  DAB Dkt. Entry No. 2.  In the Order to Show Cause, I instructed SSA to file a statement explaining why it waited 45 days to forward Petitioner’s hearing request to CRD.  Id. at 3.  I also directed the parties to submit written responses by September 13,

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2024, stating: (1) which hearing regulations govern the adjudication of this case; (2) whether Petitioner received proper notice of his right to a hearing; (3) whether Petitioner’s request for hearing was timely; (4) Petitioner’s current employment status with SSA; and (5) the current collection status of the alleged debt in this case.  Id. at 4.  Finally, I directed Petitioner to state his basis for challenging the alleged debt and to specify whether an oral hearing was requested.  Id.

On September 10, 2024, SSA filed its statement explaining the delay in referring Petitioner’s hearing request to CRD, with three proposed exhibits.  See DAB Dkt. Entry Nos. 4-5c.  On September 13, 2024, SSA timely filed a response to the Order to Show Cause, with three additional proposed exhibits, and moved to dismiss Petitioner’s hearing request.  See DAB Dkt. Entry Nos. 6-7c.  In the response and motion to dismiss, SSA states Petitioner is not a current federal employee, and therefore, this case is governed by the regulations located at 20 C.F.R. §§ 422.822 and 422.823.  DAB Dkt. Entry No. 6 at 5.  SSA also argues that this case should be dismissed because:  (a) the provisions of 20 C.F.R. §§ 422.822 and 422.823 provide no right to a hearing before the DAB; (b) Petitioner’s request for hearing is untimely to the extent it seeks administrative review of the August 16, 2023 debt letter; and (c) to the extent Petitioner is requesting a hearing in response to the June 21, 2024 AWG notice, any such hearing would need to be conducted by Treasury—not the DAB.  Id. at 5-8.  SSA further argues any request for hearing concerning AWG is moot because Treasury recovered the full amount of the debt through administrative offset and never actually initiated AWG.  Id. at 7.

Petitioner did not file a timely response to the Order to Show Cause.  Accordingly, on September 16, 2024, I issued a second Order directing Petitioner to respond to SSA’s motion to dismiss by September 25, 2024, and to state any reasons I should not dismiss the hearing request for Petitioner’s failure to prosecute the case.  DAB Dkt. Entry No. 8.

On September 25, 2024, Petitioner submitted a response to my September 16, 2024 Order via email.  DAB Dkt. Entry No. 9.  In the response, Petitioner confirms he is not currently an SSA employee and agrees this matter is governed by 20 C.F.R. §§ 422.822 and 422.823.  Id. at 1. Petitioner asks me to deny SSA’s motion to dismiss and argues SSA failed to adequately explain the basis for the debt or how the debt was collected.  Id.  Petitioner also claims he was not informed of any right to a hearing until the debt was referred to Treasury.  Id. at 1-2.  Petitioner further states the debt has been paid in full, and he is still waiting on money the agency owes him.  Id. at 2.

II.     Issues

SSA’s motion to dismiss presents three issues:

1. Whether DAB administrative law judges have the authority to conduct hearings under 20 C.F.R. §§ 422.822 and 422.823;

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2. Whether Petitioner’s hearing request should be dismissed as untimely to the extent it seeks review of SSA’s decision to initiate administrative offset; and
3. Whether Petitioner’s hearing request should be dismissed for lack of jurisdiction to the extent it seeks a hearing in connection with the June 21, 2024 AWG notice.

III.   Discussion and AnalysisH

1. Pursuant to the governing regulations and an interagency agreement, DAB administrative law judges may conduct hearings on behalf of SSA under 20 C.F.R. § 422.823(c).

SSA contends Petitioner’s hearing request should be dismissed because Petitioner is not a current SSA employee and the regulations governing administrative offsets against non‑employee debtors provide no right to a hearing before the DAB.  DAB Dkt. Entry No. 6 at 5-6.  As explained below, however, SSA’s position is inconsistent with the regulations and an interagency agreement between SSA and the DAB establishing the DAB’s authority to conduct hearings in SSA debt cases.  Therefore, I decline to dismiss Petitioner’s hearing request on this basis.

SSA debt cases are governed by 20 C.F.R. Part 422.  The applicable provisions of Part 422 depend on the debtor’s employment status with the agency and the type of collection action at issue.  Here, since Petitioner is not a current SSA employee, the regulations at 20 C.F.R. §§ 422.822 and 422.823 apply to the extent Petitioner is seeking review of SSA’s decision to collect the debt by administrative offset.

According to the regulations, SSA is required to provide a non-employee debtor with the opportunity “for a review within the agency of the determination of indebtedness” prior to initiating administrative offset.  See 20 C.F.R. § 422.822(a)(2)(iii).  If the debtor timely requests such a review, then SSA must provide the debtor with an opportunity for either an “oral hearing” or a “paper hearing.”  20 C.F.R. § 422.823(c)(1)-(4).3

In its motion to dismiss, SSA appears to argue, in somewhat conclusory terms, that I lack jurisdiction to conduct the hearings described in 20 C.F.R. § 422.823(c) because the regulation does not explicitly provide a “right to a hearing before the DAB.”  DAB Dkt. Entry No. 6 at 5 (emphasis added).  Contrary to SSA’s position, however, my authority to conduct hearings under Part 422 is not derived directly from the text of the regulations.  Indeed, none of the Part 422 regulations explicitly provide a right to hearing before the DAB.  Instead, my authority to conduct hearings in these cases exists pursuant to an

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interagency agreement between SSA and the DAB.  See Portia L. Pierce, DAB CR2049 at 5-6 (2009) (discussing DAB jurisdiction in SSA debt cases).  Under the agreement, SSA may refer hearing requests submitted by current or separated employees under Part 422 to the DAB for adjudication.  When SSA refers a debt case to the DAB, the DAB assigns an administrative law judge to conduct a hearing on behalf of SSA.

SSA points to no provision in the interagency agreement which prevents me from conducting a hearing on behalf of SSA under 20 C.F.R. § 422.823(c).  In fact, SSA’s motion to dismiss fails to even mention the interagency agreement.  Further, the regulations impose no restrictions on SSA’s authority to designate a hearing official under 20 C.F.R. § 422.823(c).  Thus, contrary to SSA’s argument, neither the agreement nor the regulations preclude me from presiding over a hearing under 20 C.F.R. § 422.823(c) on behalf of SSA.

I also note that SSA—not Petitioner—made the decision to refer Petitioner’s hearing request to the DAB in the first place.  At the time of the referral, SSA presumably knew Petitioner was not a current SSA employee.  Given these circumstances, I find it puzzling that SSA is now arguing Petitioner could not possibly be entitled to a hearing before the DAB based on his employment status.  If SSA believed it referred Petitioner’s hearing request to the DAB in error, then the appropriate course of action would be to withdraw the referral and redirect Petitioner’s request to the correct office or official—not to seek dismissal of the request.  Indeed, dismissing Petitioner’s request for hearing on these grounds would essentially penalize Petitioner for SSA’s choice of venue.

In sum, SSA referred Petitioner’s hearing request to the DAB pursuant to an interagency agreement which authorizes me to conduct hearings on behalf of SSA under Part 422.  Because Petitioner is not a current SSA employee, the hearing provisions in 20 C.F.R. § 422.823(c) apply to the extent Petitioner is seeking review of SSA’s decision to initiate administrative offset.  Neither the interagency agreement nor the regulations prevent me from conducting a hearing on behalf of SSA under 20 C.F.R. § 422.823(c).  In fact, the interagency agreement explicitly covers cases involving separated employees.  Therefore, I find no merit in SSA’s argument that 20 C.F.R. § 422.823(c) precludes a hearing before the DAB, and I decline to dismiss Petitioner’s hearing request on that basis.

2. Petitioner’s request for hearing is untimely and must be dismissed to the extent it seeks review of SSA’s decision to initiate administrative offset under 20 C.F.R. §§ 422.822 and 422.823.

SSA further argues that Petitioner’s request for hearing is untimely and should be dismissed to the extent it seeks review of SSA’s August 16, 2023 notice regarding administrative offset.  DAB Dkt. Entry No. 6 at 6.  I agree and find the regulations require me to dismiss Petitioner’s request for hearing on this basis.

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As noted above, the SSA regulations governing administrative offsets for non-employee debtors are located at 20 C.F.R. §§ 422.822 and 422.823.  Pursuant to those regulations, SSA must provide a debtor with notice of SSA’s intent to collect a debt by administrative offset at least 30 days prior to initiating such action.  20 C.F.R. § 422.822(a)(1).  The notice must include the type and amount of the debt and, if applicable, state SSA’s intent to refer the debt to Treasury for collection through centralized administrative offset 60 days after the date of the notice.  Id.  In addition to the notice requirement, the rules require SSA to provide the debtor with the opportunity to seek review “within the agency of the determination of indebtedness.”  20 C.F.R. § 422.822(a)(2)(iii).  If the debtor timely request such a review, then SSA must provide an opportunity for either an “oral hearing” or a “paper hearing.”  20 C.F.R. § 422.823(c)(1)-(4).

In cases involving a proposed referral to Treasury for centralized administrative offset, such as the present case, the debtor must request administrative review within 60 days of the date of SSA’s notice regarding the proposed offset.  20 C.F.R. § 422.823(c).  Importantly, unlike other hearing provisions in Part 422, the regulations governing administrative offset provide no exceptions to the 60-day deadline and afford no discretion to SSA or the reviewing official to consider an untimely request.  Compare 20 C.F.R. § 422.823(c) (requiring request for review within 60 days without exception), with 20 C.F.R. § 422.810(h)(2)(i) (permitting consideration of an untimely request for hearing under certain circumstances).

Here, SSA’s August 16, 2023 letter to Petitioner contained the information required by 20 C.F.R. § 422.822(a)(1).  DAB Dkt. Entry No. 1a.  Specifically, the letter included the type and amount of the debt and stated SSA’s intent to refer the debt to Treasury for collection by centralized administrative offset.  Id. at 1, 5.  Further, with respect to administrative review, the letter stated Petitioner could submit evidence disputing the debt within 60 days and that SSA would review any such evidence and issue a written determination.  Id. at 2.

Petitioner does not deny receiving the August 16, 2023 letter regarding SSA’s intent to initiate administrative offset.  See DAB Dkt. Entry No. 9 at 1.  Further, it is undisputed Petitioner did not submit the request for hearing in this case until July 15, 2024, almost 11 months after the date of the letter and well past the 60-day regulatory deadline for requesting review under 20 C.F.R. § 422.823(c).  In an effort to explain this delay, Petitioner claims SSA’s letter did not provide sufficient information for him to challenge the debt and SSA failed to provide information about the debt when he requested it.  DAB Dkt. Entry No. 9 at 1.  Petitioner also contends he was not advised of any right to a hearing until the debt was referred to Treasury.  Id.  As explained above, however, SSA’s August 16, 2023 letter contained the information required by the regulations.  Further, by giving Petitioner 60 days to provide evidence disputing the debt, the letter sufficiently provided an opportunity for administrative review in accordance with 20 C.F.R. § 422.822(a)(2)(iii).

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It is also important to note that the purpose and scope of a hearing under 20 C.F.R. § 422.823(c) is limited to reviewing “the determination of indebtedness.”  See 20 C.F.R. § 422.822(a)(2)(iii).  Petitioner’s arguments concerning SSA’s alleged actions (or inactions) during the collections process, including SSA’s alleged failure to provide requested information about the debt, raise ancillary issues which are not directly relevant to the underlying debt determination.  Therefore, those arguments are outside the limited scope of issues I am authorized to consider or address.

I understand Petitioner is frustrated by the collection actions taken against him.  I also recognize that Petitioner appears to be genuinely confused about the source and basis for SSA’s debt determination.  However, it is undisputed that Petitioner did not request administrative review within 60 days of SSA’s letter regarding administrative offset, as required by 20 C.F.R. § 422.822(c).  Because the regulations afford me no discretion to consider an untimely request for hearing under these circumstances, I have no choice but to dismiss Petitioner’s hearing request to the extent it seeks review under 20 C.F.R. § 422.822(c).

3. Any determination regarding Petitioner’s right to a hearing in connection with the AWG notice must be made by Treasury.

SSA acknowledges Petitioner’s request for hearing may be timely to the extent it seeks a hearing in connection with the June 21, 2024 AWG notice.  DAB Dkt. Entry No. 6 at 6.  SSA argues, however, that any such hearing must be conducted by Treasury under 20 C.F.R. § 422.833(f).  Id. at 6-7.  SSA further argues that any hearing regarding AWG is moot because Treasury already collected the full amount of the debt through administrative offset and never actually initiated AWG against Petitioner.  Id.  While I agree that any hearing on AWG must be conducted by Treasury, I also find that any arguments concerning Petitioner’s right to such a hearing must be resolved by Treasury.

Pursuant to 20 C.F.R. § 422.833(f), a debtor who has received notice of AWG proceedings may request a hearing before Treasury concerning the existence or amount of the alleged debt.  As the regulations clearly specify that AWG hearings must be conducted by Treasury, I conclude that I do not have the authority to conduct such a hearing or make any findings regarding Petitioner’s right to a such hearing, including whether Petitioner’s request for hearing is moot due to the current status of the debt.  Therefore, I dismiss Petitioner’s hearing request to the extent it seeks a hearing regarding AWG and recommend that SSA redirect Petitioner’s request to Treasury to determine whether Petitioner is entitled to a hearing under 20 C.F.R. § 422.833(f).4

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IV.    Conclusion

For the reasons stated above, SSA’s motion to dismiss Petitioner’s request for hearing is GRANTED.