In the Matter of the Petition by:

LYDIA E. MORALES-WASHINGTON,
150-70 116th Road,
Jamaica, NY 11434-1515

P.S. Docket no. DCA-103

09/16/91

Mason, Randolph D., Administrative Law Judge

APPEARANCE FOR PETITIONER: Lydia E. Morales-Washington, Pro Se,
150-70 116 Road, Jamaica, NY 11434-1515

APPEARANCES FOR RESPONDENT: Victor Olmo, Esq., Labor Relations
Representative, Arthur Carucci, Manager, Human Resources,
590 Grand Concourse, Bronx, NY 10451-9994

FINAL DECISION UNDER DEBT COLLECTION ACT OF 1982

This proceeding arises out of a Petition filed on June 21, 1991, by Lydia Morales-Washington appealing a Notice of Involuntary Administrative Salary Offsets under the Debt Collection Act ("Notice") dated May 30, 1991. The Notice determined that Petitioner owes the Postal Service $3,208 for failure to follow proper procedures and exercise reasonable care in the accepting and cashing of a check which was returned by the bank as a forgery.

After the pleadings were filed, Petitioner submitted a statement of facts, Respondent submitted an affidavit, and Petitioner submitted a final response on August 23, 1991. Although given an opportunity to do so, neither party has filed final arguments. In accordance with the agreement of the parties, this decision is based upon the above documents and the exhibits attached thereto.

FINDINGS OF FACT

On about January 30, 1989, Petitioner Lydia Morales-Washington was the supervisor responsible for the financial close-out of Mott Haven Station, Bronx, NY 10454. As such, she was responsible for the acceptance of checks. On that day Postal Carrier Miguel Algarin brought a check to Petitioner at the Mott Haven Post Office and requested that Petitioner cash it for the payee, who was allegedly known to Algarin as a patron on his route. In fact the address of the payee on the check was not on his route, and the zip code was not for Mott Haven Station. The check was issued by Blue Cross-Blue Shield and payable to Catalina Hernandez at 218 N. Tremont Avenue, Bronx, NY 10453-5321 (Mott Haven Station is 10454). The check contained an alleged endorsement by Hernandez. Also, Carrier Algarin signed the check and stated that he would vouch for Hernandez's signature.

The check was accepted by Petitioner as part of the day's business receipts, but was subsequently returned to the Postal Service because the signature on the check was a forgery.

Ms. Morales, who has been a supervisor in this capacity since 1985, admits that she "did not follow instructions to the letter" in cashing the above check (letter dated February 6, 1991 to Cory Weiss).

General Order #463 dated February 11, 1986, issued by USPS at Bronx, NY, provides as follows:

CASHING CHECKS

The following guidelines must be adhered to when cashing checks using USPS funds:

A) NO PERSONAL CHECKS CAN BE CASHED USING POSTAL FUNDS]

B) ONLY TWO (2) TYPES OF CHECKS MAY BE CASHED:

1) U. S. TREASURY CHECKS

2) USPS SALARY CHECKS

C) FOR WHOM CHECKS MAY BE CASHED:

Treasury and USPS salary checks must not be cashed for anyone but the payee named on the face of the check. Checks must be endorsed by the payee in the presence of the employee cashing the check.

(See also Handbook F-1, April 1991, § 313.1)

Since the check accepted by Petitioner was neither a U.S. Treasury check nor a USPS salary check, and was not endorsed by the payee in Petitioner's presence, Petitioner's acceptance of the check failed to comply with General Order #463 and Section 311.12 (checks must be for products or services) and § 313.1 (U.S. Treasury checks and USPS salary checks may be cashed), Handbook F-1, April, 1991.

General Order #464 dated May 9, 1985, provides further procedures for accepting checks at the Post Office in Bronx, NY. Failure to comply places financial responsibility for loss incurred to the USPS on the accepting employee and/or the approving supervisor. Generally, checks may be accepted for Postal products and services except money orders and food coupons, but they must be made payable to USPS in the exact amount of the transaction. Company checks issued by well-known firms "may be accepted from known representatives of the company without a check guarantee in payment for all postal transactions except money orders."

The General Order further provides that Postal funds are not to be used to cash personal checks. Only travelers checks and U. S. Treasury checks can be cashed for more money than the services or charges provided.

The check in question was issued by a well-known firm, Blue Cross-Blue Shield, but was payable to a postal customer, Ms. Hernandez. Although purportedly endorsed by Hernandez, the check was cashed by Carrier Algarin, who apparently forged Hernandez's signature. Since the check was not payable to USPS for postal products or services, and was not presented by a known representative of the firm, the check failed to meet the requirements of General Order #464 and should not have been accepted by Petitioner.

Although Petitioner claims that a past practice has been established which overrides the above published orders, the evidence does not support such a claim. Petitioner points to three instances in 1988-1989 in which carriers presented stolen checks to be cashed at the Mott Haven Station and only the carriers were held liable for the loss. However, these cases are distinguishable since these were U. S. Treasury checks, which supervisors have the discretion to cash under the above orders. n1

n1 As Petitioner points out, it appears that these instances may also have constituted a violation of policy by the supervisor since the checks were not endorsed in the presence of the supervisor cashing the checks. These examples are insufficient to show a change in the endorsement policy. In any event, they clearly would have no bearing on the policy against cashing checks other than U. S. Treasury or Postal salary checks.

Although Petitioner assumes that other examples exist where third party checks were cashed, she has not provided any evidence to prove the establishment of a new policy overriding the written orders above. Assuming for the sake of argument that the instance of two personal checks presented by one clerk in June 1989 is similar to the situation herein, this would not demonstrate a change of policy since it occurred five months after Petitioner's incident, and may also be an isolated error.

Petitioner has been a Postal supervisor for about 15 years, with 6 years in her present job (with the last year at Mott Haven Station), and should be aware of the published Postal Service procedures mentioned above.

On November 6, 1990, Petitioner was issued a letter of demand by Nadyne Johnson, Manager of the Mott Haven Station, for the amount of the check, $3,208. Petitioner refused to sign for the letter.

On March 1, 1991, Petitioner issued a letter of demand to Carrier Algarin for the same amount, but this action was deemed improper and the Station Manager instructed her to rescind that letter of demand.

Subsequently, on April 1, 1991, the November 6 letter of demand to Petitioner was cancelled because it was procedurally incorrect, and a new letter of demand was issued to her.

Later, Petitioner received a Notice of Involuntary Administrative Salary Offsets under the Debt Collection Act ("Notice") dated May 30, 1991. The Notice determined that Petitioner owes the Postal Service $3,208 for failure to follow proper procedures and to exercise reasonable care in the accepting and cashing of the above check.

CONCLUSIONS OF LAW

1. Handbook F-1, "Post Office Accounting Procedures," provides the following provision concerning employees' liability for losses:

130 Liability

* * * * *

132 Other Employees

The postmaster consigns postal funds and accountable paper to other employees. Employees are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties.

See also, Financial Management Manual, § 340 "Protection of Funds and Accountable Paper", § 341 (Liability for Accountable Loss).

2. Since Petitioner failed to exercise reasonable care in the performance of her duties when she cashed a third party check which was neither a U.S. Treasury check nor a USPS salary check, she is liable to the Postal Service for $3,208, the amount of the loss. In accordance with the Notice of Involuntary Administrative Salary Offsets, such debt will be payable by deductions of approximately $146.53 from each paycheck until the debt is collected.