INITIAL DECISION

Petitioner, Esteban A. Sotuyo, filed a Petition challenging the decision by Respondent, United States Postal Service, to have the Office of Personnel Management withhold funds from Petitioner's retirement annuity to repay a debt owed to Respondent. Petitioner challenges primarily the size of each monthly installment and the timing of the withholding, having conceded that most of the debt is owed to Respondent.

.FINDINGS OF FACT

1. On April 17, 1996, the Merit Systems Protection Board (MSPB) issued an Initial Decision denying Petitioner's appeal of the Postal Service's decision to remove him from employment. That decision became final on May 22, 1996. (Pet. Ex. 2).⁽¹⁾

2. Petitioner was separated from the Postal Service, apparently through retirement, on or about May 1, 1996. (Rx-5, 6, 8).

3. Petitioner had not been in a pay status since November 1995. However, Respondent erroneously issued Petitioner a paycheck covering a pay period in May 1996. The check was issued in the net amount of $109.15, calculated as follows:

(Pet. Ex. 6; Rx-4).

4. On or about June 13, 1996, Petitioner filed an action in U.S. District Court for the District of Utah, seeking review of the MSPB decision. (Pet. Ex. 2).

5. On or about July 24, 1996, Respondent issued an invoice to Petitioner. The invoice demanded the payment of $590.60 because of the pay check that had been issued to Petitioner in error (Finding 3). The invoice bore a payment due date of August 23, 1996. (Pet. Ex. 6; Rx-5).

6. At the time of Petitioner's separation from the Postal Service, he had a negative balance of 144 hours in his annual leave account and a negative balance of 232 hours in his sick leave account (Rx-6; Petitioner's Response dated May 3, 1997). On or about August 21, 1996, Respondent issued Petitioner a second invoice, in the amount of $6,083.12, to recover the value of the "overdrawn" leave. That invoice required payment by September 20, 1996. (Rx-7).

7. Petitioner did not respond to either invoice and, on October 8, 1996, Respondent filed with the Office of Personnel Management (OPM) a "Request for Recovery of Debt Due the United States." Respondent requested that OPM recover $6,673.72 from Petitioner's retirement account, in installments of 25 percent of the retirement payments otherwise due Petitioner. (Rx-8).

8. On or about January 6, 1997, OPM notified Petitioner that it would deduct $6,673.72 from Petitioner's annuity payments, beginning in February 1997, in 24 monthly installments of $272.57, followed by one installment of $132.04. The notice also informed Petitioner that OPM had no authority to change the deductions without authorization from the Postal Service. (Rx-9).

9. By letter dated January 27, 1997, to Respondent's Minneapolis Service Center, Petitioner acknowledged that he owed a debt to Respondent but requested that collection of the debt be deferred until a decision was rendered by the court (Finding 4). As a basis for the request, Petitioner stated that his only income was the annuity from the Postal Service of $1,090 per month and a $126 Social Security payment; that he had been unable to secure other employment because of his age and physical condition; that he had expenses consisting of $450 per month for housing, $250 per month for food, and $500 per month for college tuition and fees for one of his daughters; and that he was scheduled for foot surgery in February that would take at least three months to heal. (Rx-10).

10. In a reply dated February 18, 1997, the Supervisor of the Receivables Section denied Petitioner's request. As reasons for denying the request, the Supervisor stated that at the current rate of deduction, collection would take approximately two years; that some of the invoices had remained unpaid since 1995; and that Respondent was collecting only 25 percent of the annuity, although it was authorized to collect up to 50 percent. (Rx-11).

11. Petitioner filed a "Petition for Hearing Under the Debt Collection Act" on March 24, 1997. In the Petition, Mr. Sotuyo stated that he was seeking a deferral of the debt collection. He also argued that the amount of the debt related to the erroneously issued paycheck ($590.60) was incorrect, since he had received only $109.15. Because Petitioner was a former employee and because Respondent's collection actions had not begun until after Petitioner's separation, this action was docketed as an action under the Administrative Offset regulations (39 C.F.R. Part 966), rather than under Debt Collection Act procedures (39 C.F.R. Part 961).⁽²⁾

PROCEDURAL BACKGROUND

When this case was docketed, in March 1997, Respondent was directed in the Notice of Docketing to "temporarily stay collection action pending further order by the Judicial Officer." This is required by 39 C.F.R. §966.5. On July 28, 1997, in response to a statement from Petitioner that deductions from his annuity were continuing, Judge Brochstein directed Respondent "to take any action necessary to stay collection of any further funds from Petitioner's annuity, pending a decision in this matter, and to reimburse Petitioner for any deductions made after receipt of the Notice of Docketing, which was dated March 25, 1997."

After several efforts to insure that this direction was carried out (see Orders dated August 27, 1997 and September 22, 1997), an Order to Show Cause was issued on October 20, 1997. This Order directed Respondent to show cause why the relief requested in the Petition should not be granted, based on Respondent's failure to comply with the Orders of July 28, August 27, and September 22, 1997. On November 7, 1997, Respondent reported that the Office of Personnel Management (OPM) had suspended collection, and that the amount collected since the Notice of Docketing would be repaid to Petitioner by check, by November 21, 1997. On confirmation by this office, on December 3, 1997, that Mr. Sotuyo has been reimbursed, I find that Respondent has satisfactorily complied with the Order to Show Cause, and that the merits of this case can now be addressed.

DECISION

The First Invoice - $590.60

Petitioner does not deny that a paycheck was erroneously issued to him in May 1996. He argues that the amount of the alleged debt is incorrect, because the check he received was for only $109.15. Petitioner misunderstands the effect of the deductions taken from his gross pay (see chart in Finding of Fact #3). Three of those deductions are considered the same as money paid to Petitioner. They are his union dues ($11.92), an allotment ($400.00), and a sum, separate from the debt alleged in this case, owed to the Postal Service ($85.30). In determining the amount of the erroneous overpayment, therefore, those amounts are properly added to the $109.15 that Petitioner actually received.⁽³⁾

The Second Invoice - $6,083.12

Petitioner concedes that he owes this debt. In his January 27, 1997 letter to the Postal Service Finance Branch at the Minneapolis Service Center, he stated, "I realize that the debt should be paid. However, all I ask is that it be deferred until the court makes the final decision." (Rx-10). Similarly, in a May 3, 1997 memorandum filed in this action, he states, "I have never denied owing the debt for advance sick and annual leave."

The record establishes, therefore, that Petitioner owes a debt to Respondent totaling $6,673.72 ($590.60 + $6,083.12).

Deferral of Repayment

Although Respondent has not specifically addressed Petitioner's request that collection be deferred, neither has Petitioner demonstrated why such relief should be granted. The Rules of Practice, 39 C.F.R. §966.4(a)(1) and (2), provide that a Petitioner may obtain review of "the existence or amount of the debt," or of the "offset schedule proposed . . . for collecting any such debt." The relief that Petitioner requests, i.e., deferral of collection until the District Court acts, is beyond the scope of §966.4 and should require Petitioner to show that there is some likelihood the court's decision will erase the debt, and that he would be irreparably harmed if collection goes forward in the meantime. Petitioner has made no such showing, and I find that suspending action on this administrative offset case is not appropriate.⁽⁴⁾

The Offset Schedule

Petitioner has also argued that the offset schedule creates a hardship. (See Finding of Fact #9). His gross monthly annuity is $1,300.00, with a net payment of $1,090.31. The offset schedule would reduce the net payment to $827.93. (Pet. Ex. 5). I do not find the repayment schedule to be unduly harsh. As was noted in the agency's reply to Petitioner's January 27, 1997 letter, a maximum withholding of 50 percent is permitted ((5 C.F.R §831.1807(b)), but only 25 percent was requested. At that rate, repayment is spread over two years. Petitioner stated in his January 27, 1997 letter that he had been unable to find employment, but he offers no evidence that this situation cannot change, or even that it remains so now. Also, another of his stated reasons supporting his hardship argument was that he was to have foot surgery in February 1997 and would need three months to heal. That time is long past. The proposed offset schedule is not unreasonable, and Petitioner has not provided sufficient evidence to warrant changing it.

CONCLUSION

The Petition is denied. Respondent may collect $6,673.72 from Petitioner's retirement annuity at the proposed installment rate.

Bruce R. Houston
Chief Administrative Law Judge

1. "Pet. Ex. _" (Petitioner's exhibits) refers to documents attached to the Petition. "Rx-_" refers to documents attached to Respondent's Answer.

2. In his Petition, Mr. Sotuyo asked for an oral hearing, but in a May 3, 1997 letter, stated that an oral hearing was not necessary. Accordingly, in an Order dated June 4, 1997, Judge Brochstein stated that this case would be decided on the written record, and gave the parties until June 30, 1997 to submit additional evidence. Some comments were received, but neither party filed additional evidence.

3. The reason that the arithmetic does not square up is that two of the deductions the Postal Service gave Petitioner credit for, "Fed Tax" and "Med," were taken from the second column, rather than the first column. Because this apparent error inures to Petitioner's benefit, no corrective action is appropriate.

4. It should be noted that, because of tedious process of getting the collection stopped, in accordance with 39 C.F.R. §966.5, and the eventual reimbursement of funds to Petitioner, he has in part achieved his objective of postponing collection of the debt.