In the Matter of the Petition by                         )
                                                                        )
FLORA G. MOORMAN                                     )
123 Tripoli Boulevard                                      )
                                                                        )
             at                                                        )
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Dumfries, VA 22026-2224                               )      P.S. Docket No. DCA 99-74

APPEARANCE FOR PETITIONER:                    Douglas E. Sapp
                                                                        APWU, Local 6803
                                                                        P. O. Box 118
                                                                        Merrifield, VA 22116-0118

APPEARANCE FOR RESPONDENT:                Theresa L. Croson
                                                                        Carol McCrarey
                                                                        Labor Relations Specialists
                                                                        United States Postal Service
                                                                        8409 Lee Highway
                                                                        Merrifield, VA 22081-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Flora Moorman, filed this Petition after receiving a Notice of Involuntary Administrative Salary Offsets from her supervisor, stating the Postal Service's intention to withhold $5,246.95 from her salary to recover for a shortage in an account for which she was responsible.

A hearing was held in Arlington, Virginia on April 29, 1999. The Postal Service presented testimony from Joanne Snodgrass, Petitioner's former supervisor, who performed the audits relevant to the shortage in issue; Michael Snodgrass, a supplier of stamp stock for postal vending machines; and Lynn Rhee, Petitioner's current supervisor, who issued the Notice of Involuntary Administrative Salary Offsets. Petitioner elected not to present any evidence, but Respondent then called Petitioner as a witness. Both parties relied on documents that were submitted with the Petition and the Answer. The parties elected to file written arguments after reviewing the hearing transcript. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

1. During the time pertinent to this case, Petitioner was a window clerk at the Fairfax, Virginia Post Office (Tr. 25, 110-11, 116).⁽¹⁾ She also served as acting supervisor in Ms. Snodgrass' absence, and sometimes issued stock, from her own stock, to other clerks. She did not have access to the main stock. (Tr. 59-60, 111).

2. Petitioner had been a window clerk since at least 1991, with an average accountability of approximately $50,000.00. Her audit history, PS Form 3368, shows that her accountability was audited every four months as required, and that the account was usually within tolerance, or close to it, until October 1994. (PS Ex. 6).⁽²⁾

3. On October 13, 1994, Ms. Snodgrass audited Petitioner's account and found it to be short by $5,083.61 (Tr. 48). Petitioner signed the PS Form 3294, Cash and Stamp Stock Count and Summary, indicating that she agreed that the count was accurate.⁽³⁾ Page 4 of the Form 3294 also contains the handwritten word "Recount." This is written above the two signature boxes where Ms. Snodgrass and Ms. Moorman signed. Neither Ms. Snodgrass nor Ms. Moorman has any present recollection of this audit, or what happened after the audit, but Ms. Snodgrass assumes that the note meant that Petitioner asked that her stock be recounted (Tr. 51, 61-62, 75, 113).

4. The stock was not recounted, nor was the apparent shortage placed into "suspense," as is the required procedure when an unexplained shortage occurs (Tr. 32-33). Handbook F-1, Post Office Accounting Procedures (November 1996), §429.16. "Suspense" is a term used to correct accounting discrepancies. When the origin of an apparent shortage cannot be immediately determined, shortages are transferred to suspense accounts, so that the original account can be balanced (Tr. 55).

5. Window clerk accounts are required to be audited every four months, and Petitioner's account was audited again by Ms. Snodgrass on February 13, 1995. This time the shortage was $5,246.94, and Petitioner again signed the PS Form 3294, stating that she agreed with the count. Because the October 1994 shortage had not been placed in suspense, this February 1995 shortage included that earlier shortage, although both Ms. Snodgrass and Ms. Moorman testified that, when they did the February 1995 count, it did not occur to them that they had found essentially the same shortage just four months earlier. (Handbook F-1, §429.1; Tr. 26-28, 53, 76, 114; PS Ex. 2). The February 13, 1995 shortage was placed in suspense, and Ms. Snodgrass issued Petitioner a Letter of Demand for $5,246.95 on March 3, 1995 (Tr. 29-31; PS Ex. 1).⁽⁴⁾

6. PS Form 571 is titled, Discrepancy of $100 or More in Financial Responsibility, and is required to be completed by the appropriate supervisor and forwarded to the Postal Inspection Service whenever a shortage or overage of more than $100 is discovered (Handbook F-1, §429.16; Tr. 126). Ms. Snodgrass completed and signed this form on February 13, 1995, listing the $5,246.94 shortage in Petitioner's account. In the "Remarks" section of the form, Ms. Snodgrass wrote, "2 large overages - may be related to above shortage." (PS Ex. 5). Ms. Snodgrass does not now recall what she was referring to when she wrote that note (Tr. 125).

7. The Form 571 also lists the results of Petitioner's six previous audits. For the October 13, 1994 count, the form shows a total credit of $46,416.36 in the column labeled "Amount of Credit," and an overage of approximately $15.00.⁽⁵⁾ Obviously, this is far different from the $5,083.61 shortage shown on Petitioner's PS Form 3368 (PS Ex. 6), and on the Form 3294 dated October 13, 1994 (see Findings of Fact 2 and 5). On the Form 3368, the figure $51,416.36 is written over another figure - what appears to be $46,416.36. Ms. Snodgrass cannot presently recall why the Form 571 contains different figures, and assumes that she may have made an error when filling out the form (Tr. 127-28).

8. During the time period pertinent to this case, an accounting technician in the Fairfax office kept handwritten ledgers (PS Form 25) to track total employee shortages and overages for the office as a whole (Tr. 41, 73-74). This was done in the form of a running, cumulative total, listing individual employees, amounts and dates (PS Ex. 8 - shortages, PS Ex. 11 - overages) (Tr. 79, 81). The "suspense" list, recording shortages, runs from July 22, 1994 through June 20, 1997 (Ps. Ex. 8). Ms. Moorman's $5,246.94 shortage is entered on "2-13-95," making the total office shortages $11,825.47 as of that date. The highest cumulative total shown on this form is $32,245.63, reached on January 18, 1996. The "trust" list, recording overages, runs from June 21, 1994 through August 11, 1995 (PS Ex. 11). As of February 13, 1995, the date of Ms. Moorman's shortage, the cumulative total of office overages was more than $25,000, and it grew steadily to over $40,000 by July 1995. The last entry, on August 11, 1995, showed a total of $37,799.21. Ms. Snodgrass did no review of these overages, at the time of Petitioner's February 1995 shortage, to determine if there could be some offset (Tr. 57-58).

9. Petitioner did not review any PS Form 17s pertaining to her issuance of stock to other clerks, after either the October 1994 audit or the February 1995 audit, to attempt to find the cause of the large shortage (Tr. 112-13). After being issued the Letter of Demand, Petitioner filed a grievance under labor/management procedures, through her union representative. It is unclear what became of this, but any further collection action by the Postal Service lay dormant until Ms. Rhee became the Supervisor of Customer Services in Fairfax in October 1997 (Tr. 88). She undertook to clear up many suspense items that then existed and, after reviewing Petitioner's $5,246.95 shortage and being unable to reconcile it with any corresponding overage, issued Petitioner a Notice of Involuntary Administrative Salary Offsets on February 11, 1999 (Tr. 89-97).

Petitioner makes several arguments, most of which are based on the fact that the alleged loss is actually based on the October 1994 audit, rather than the February 1995 audit. Petitioner contends that the Postal Service is not permitted to "carry over" a shortage from one audit period, without taking the prescribed actions, and then use that shortage to assert a debt against an employee after a subsequent audit. Petitioner also contends that she was hindered in her ability to defend this case because she was not aware until a few weeks before the hearing that the shortage was based on the October 1994 audit. She also asserts that this shortage was settled in the grievance process.⁽⁶⁾

Respondent's position is simply that the audits show a loss in Petitioner's account, that Petitioner signed the Form 3294 each time, indicating her agreement that the counts were accurate, and that Petitioner has presented no evidence that she exercised reasonable care in managing her account, or any other evidence that would be a basis for relieving her of liability. To the contrary, Respondent argues that Petitioner's testimony that she may have made errors in issuing stock to other clerks is evidence that she did not exercise reasonable care. In response to Petitioner's statement in the Petition that her shortage was probably related to overages somewhere else, Respondent cites the testimony of Ms. Snodgrass and Ms. Rhee that records reveal no overage that could be related. As to the four-month delay in placing the shortage in suspense and issuing the letter of demand, Respondent argues that Petitioner was in no way harmed by this. Finally, Respondent argues that the Petition was not timely filed, because the Recorder's Office did not receive the Petition until March 2, 1999, more than 15 days after Petitioner was given the Notice of Involuntary Administrative Salary Offsets.⁽⁷⁾

The standard for determining an employee’s liability in a case such as this provides that employees to whom postal funds and accountable paper are consigned (such as Petitioner) "are held strictly accountable for any loss unless evidence establishes that they exercised reasonable care in the performance of their duties." Postal Service Handbook F-1, Post Office Accounting Procedures (April 1991), §132.⁽⁸⁾ Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. Respondent is not required to prove any specific dereliction, or act of negligence, by Petitioner. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. In this case, the evidence fails to prove a loss.

I find no authority for Petitioner's position that the Postal Service is not permitted to charge an employee with a shortage that occurred outside the four-month period immediately preceding an audit. I am also not persuaded by Petitioner's argument that she was hindered in presenting her case because the October 1994 audit was not cited in the Notice of Involuntary Administrative Salary Offsets as the basis for the shortage. Nevertheless, there are too many uncertainties in Respondent's proof to conclude that the Postal Service has suffered an actual loss of $5,246.95. The long delay, while not requiring dismissal of the case, as Petitioner argued, has done significant damage to Respondent's case. Ms. Snodgrass appears to be a competent and conscientious supervisor, but her inability to remember what happened in October 1994 and February 1995 (see Findings of Fact 3, 5, and 6), and why the figures on the different forms do not match (see Finding of Fact 7), leaves much doubt about whether some of the many overages that existed in the Fairfax office during this same time might be related to Petitioner's shortage. This doubt is reinforced by the confusing testimony over PS Exhibits 8 and 11, the "suspense" and "trust" ledgers (see Finding of Fact 8). While it may be correct that one cannot point to a specific entry of an overage that relates to Petitioner's shortage, there is no satisfactory explanation for why the trust totals far exceed the suspense totals. With no clear reconciliation of these accounts, along with the uncertainties discussed above, it is too speculative to conclude that Petitioner's shortage represents an actual loss.

The fact that Petitioner took no initiative herself to attempt to reconcile her account, and apparently just assumed that someone else would do it, does not make her liable. It is Respondent's burden to prove a loss. For the reasons stated, Respondent has not done so. The Petition is sustained. Respondent may not collect $5,246.95 from Petitioner's salary.

Bruce R. Houston
Chief Administrative Law Judge

1. References are to pages of the hearing transcript.

2. Numbered Postal Service exhibits refer to documents attached to the Answer, received on March 29, 1999.

3. This document is found in the case file as part of a group of documents submitted by Respondent on March 19, 1999, in response to Petitioner's request for documents.

4. The extra 1¢, for which there is no explanation, is disregarded.

5. Some of the numbers on the copy of this form are too faint to read.

6. For this last argument to be successful, a Petitioner must present some evidence to support it. Respondent claims to have no record of any grievance settlement, Petitioner presented nothing, and the bare assertion carries no weight.

7. Assuming that this last issue can be raised for the first time at this point in the proceedings, it is without merit. It has long been the practice of this office that a pleading is considered to be "filed" when it is placed in the mail. Wendy Keller, P.S. Docket No. DCA-88 (March 8, 1991). By that standard, the Petition was filed within the required 15 days.

8. The F-1 Handbook was revised effective November 1996. However, because the events relevant to this case arose before then, the April 1991 edition applies. The language stating the standard of liability is slightly different, but that difference has no bearing on the outcome of this case.