Casey J. Whittenberg, ALJ Ruling 2025-18 (HHS-CRD May 23, 2025)

DISMISSAL

On March 12, 2025, Petitioner, Casey J. Whittenberg, requested a hearing challenging a February 22, 2025 debt letter from the U.S. Department of Health and Human Services (HHS), stating Petitioner owes a debt to the government in the amount of $7,823.90.  The debt relates to a relocation incentive Petitioner received from the Department of Veterans Affairs (VA) in June 2023, while he was a VA employee.  After Petitioner left the VA and was hired by the National Institutes of Health (NIH), the VA transferred the debt to HHS for collection.

For the reasons stated below, I conclude that HHS does not have the authority to provide a hearing in connection with an alleged debt owed to the VA.  Instead, any such hearing must be provided by the VA.  Therefore, I dismiss Petitioner’s request for hearing and direct HHS to refer the request to the VA.

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I. Relevant Factual and Procedural History1

On June 4, 2023, Petitioner entered into a relocation service agreement with the VA.  See Departmental Appeals Board (DAB) Docket (Dkt.) Entry Nos. 6a, 6c, 6e.  Pursuant to the agreement, Petitioner agreed to relocate to Montana to serve as a Senior Police Officer with the VA for a period of three years, or 78 biweekly periods, in exchange for a lump sum incentive payment of $17,436.  DAB Dkt. Entry No. 6a, 6c, 6e.

According to the VA, Petitioner received the full incentive payment but only fulfilled the service obligation for 43 of 78 biweekly pay periods, resulting in an overpayment of the incentive.  See DAB Dkt. Entry No. 6e at 1.  Specifically, the VA determined that Petitioner owes the agency a debt in the amount of $7,823.90 for the 35 unfulfilled pay periods.  Id.

On or around January 26, 2025, Petitioner began working for the NIH.  DAB Dkt. No. 5 at 1.  After Petitioner left the VA and moved to the NIH, the VA transferred the alleged $7,823.90 debt to HHS “for collection purposes only.”  DAB Dkt. No. 6b ¶ 3.

On February 22, 2025, HHS, through its payroll provider, the Defense Finance and Accounting Service (DFAS), issued a debt letter to Petitioner, providing notice of its intent to initiate salary offset for the transferred debt.  DAB Dkt. Entry No. 1a.  The debt letter stated that if Petitioner disputed the validity of the debt, he could request a hearing by submitting a form to HHS within 30 calendar days of the date of the letter.  Id. at 2-3, 7.  The letter included a link to an HHS intranet site outlining the steps for requesting a hearing before HHS.  See id. at 2-3, 7.  The letter also indicated that Petitioner could submit a request for waiver to HHS and directed Petitioner to the HHS intranet site for guidance on debt waivers.  DAB Dkt. Entry No. 1a at 2-3, 7.

Consistent with the instructions in the debt letter, Petitioner timely submitted a request for hearing to HHS.  DAB Dkt. Entry No. 1.  In the request, Petitioner contends the $7,823.90 debt is invalid because neither the VA nor HHS has provided “adequate documentation” of the debt.  Id. at 2.Petitioner also complains about two prior debts that he allegedly owes to the VA and argues that all three debts should be “waived.”  Id. at 1-2.2  However, the record shows, and Petitioner acknowledges, that the VA provided opportunities for a hearing on the two prior debts in April and May 2024.  See DAB Dkt. Entry No. 1 at 1, 22-29; DAB Dkt. Entry No. 5 at 1.  Since Petitioner has already had opportunities to challenge those debts, they are not at issue in this case.

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On March 12, 2025, HHS referred Petitioner’s request for hearing to the HHS Departmental Appeals Board for adjudication.  DAB Dkt. Entry No. 1.  The request was docketed and assigned to me.

On March 21, 2025, I issued an Acknowledgment, Order to Show Cause, and Stay of Request for Hearing (Prehearing Order).  DAB Dkt. Entry No. 2.  In the Prehearing Order, I acknowledged receipt of Petitioner’s request but raised preliminary concerns about my authority as an HHS-appointed hearing officer to conduct a hearing on an alleged debt owed to the VA.  Id. at 2-3.  To resolve those concerns, I directed the parties to file responses by April 4, 2025, stating their respective positions regarding my authority to hold a hearing in this case.  Id. at 3.  I also stayed the 60-day statutory deadline for issuing a decision pending resolution of this preliminary issue.  Id. at 4.

On March 27, 2025, HHS, on behalf of Petitioner, filed an Unopposed Motion for Extension of Time to respond to the Prehearing Order.  DAB Dkt. Entry No. 3.  According to the Motion, Petitioner asked HHS’s counsel to request the extension because he was in a training facility without access to DAB E-file.  Id.  Based on the representations contained in the Motion, I granted the request and gave the parties until May 5, 2025, to respond to the Prehearing Order.  DAB Dkt. Entry No. 4.

Both parties timely filed responses to the Prehearing Order.  In his response, Petitioner argues that I am authorized to conduct a hearing in this case pursuant to 5 C.F.R. § 550.1104(d)(7) and 45 C.F.R. § 33.4(a)(7).  DAB Dkt. Entry No. 5 at 2.  By contrast, HHS contends I do not have authority to hold a hearing and that any hearing must be provided by the VA.  DAB Dkt. Entry No. 6 at 3-5.

II. Discussion and Analysis

For the reasons stated below, I find that the VA—not HHS—is responsible for providing any hearing on the alleged debt in this case.  Therefore, I dismiss Petitioner’s request for hearing and direct HHS to refer the request to the VA.

This case involves relatively unique facts.  There is no dispute that the VA is the “creditor agency” (i.e., the agency to which the debt is owed) and HHS is the “paying agency” (i.e., the agency employing Petitioner).  See 45 C.F.R. § 33.2.  As the creditor agency, the VA normally would have provided Petitioner with the initial notice of the debt, including information about the debt collection process and Petitioner’s due process rights.  See U.S.C. § 5514(a)(2)(A).  Due to the timing of Petitioner’s change in employment, however, it appears that HHS provided the initial debt notice.  See DAB Dkt. Entry No. 1a.  Further, instead of tailoring the notice to address the circumstances in this case, HHS used a “template” debt letter, stating that Petitioner had a right to inspect HHS records

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and to request a hearing and/or waiver through HHS’s processes, even though the alleged debt originated with and was determined by the VA.  See id.; see also DAB Dkt. Entry No. 6 at 4.

Notwithstanding the language in the debt letter, the statute governing salary offsets for federal employees requires “the head of the agency holding the debt or his designee” (i.e., the VA) to provide “an opportunity for a hearing on the determination of the agency concerning the existence or the amount of the debt.”  5 U.S.C. § 5514(a)(2)(D).  Moreover, the applicable HHS regulations state that when an HHS employee allegedly owes a debt to another creditor agency, “it is the responsibility of that agency to arrange for a hearing if one is requested.”  45 C.F.R. § 33.7(b)(1).3  The HHS regulations also expressly preclude HHS from reviewing the merits of an underlying debt determination in connection with a debt transferred from an outside agency.  See 45 C.F.R. § 33.12(c).  Thus, while the debt letter directed Petitioner to request a hearing through HHS, I find that the law requires the VA to provide any hearing on the debt at issue in this case.

In an attempt to avoid this outcome, Petitioner argues that I have jurisdiction or “would be able to be provided” jurisdiction under 5 C.F.R. § 550.1104(d)(7), which provides for a hearing “conducted by an official arranged by the creditor agency (an administrative law judge, or alternatively, a hearing official not under the control of the head of the agency).”  DAB Dkt. Entry No. 5 at 2.  However, the Office of Personnel Management (OPM) published 5 C.F.R. Part 550 to provide standards for agencies to “prepare regulations” implementing 5 U.S.C. § 5514.  See 5 C.F.R § 550.1101.  The provisions of Part 550 are not binding on HHS, which has adopted its own OPM-approved regulations implementing 5 U.S.C. § 5514.  See 45 C.F.R. § 33.1.  Accordingly, the Part 550 regulations do not apply in this proceeding.

In any event, even if Part 550 were applicable, the VA did not “arrange” for me to conduct a hearing in this case.  Further, as an HHS-appointed administrative law judge, my authority is limited to matters designated by the HHS Secretary.  I am not authorized to unilaterally assert jurisdiction in other agencies’ matters.  Therefore, I find that 5 C.F.R. § 550.1104(d)(7) does not provide any authority for me to hear this case.

Petitioner further argues that I have jurisdiction under 45 C.F.R. § 33.4(a)(7), which requires HHS to provide notice of an employee’s right to a hearing by “an impartial hearing official” prior to initiating salary offset.  DAB Dkt. Entry No. 5 at 2.  Contrary to Petitioner’s position, this regulatory notice requirement does not confer hearing authority

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on any specific official or office.  Instead, as discussed above, the governing statute and regulations require the VA to provide any hearing involving the alleged debt in this case.  See 5 U.S.C. § 5514(a)(2)(D); 45 C.F.R. § 33.7(b)(1).  From a practical standpoint, the VA is also in the best position to provide and participate in a hearing involving its own debt determination.4

In sum, I conclude that I do not have the authority to conduct a hearing in this case.  Instead, any hearing on the alleged debt must be provided by the VA.  This conclusion does not prevent Petitioner from obtaining a hearing to the extent he is entitled to one.  Indeed, Petitioner timely filed his request for hearing in accordance with the instructions in the debt letter and is not at fault for this jurisdictional issue.  Thus, while I find that I am required to dismiss Petitioner’s request for hearing, I also direct HHS to refer the request to the VA for appropriate proceedings under 5 U.S.C. § 5514(a)(2)(D).

III. Order

For the reasons stated above, Petitioner’s request for hearing is DISMISSED.  HHS is directed to refer the request to the VA for appropriate proceedings under 5 U.S.C. § 5514(a)(2)(D).