In the Matter of the Petition by

CAROLINE HARRINGTON

P.S. Docket No. DCA 08-333

APPEARANCE FOR PETITIONER:
Caroline Harrington

APPEARANCE FOR RESPONDENT:
Linda J. Sanborn
Labor Relations Representative
United States Postal Service

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Caroline Harrington, filed a Petition for Hearing under the Debt Collection Act on November 4, 2008, and supplemented her Petition on November 25, 2008.  The Notice of Involuntary Administrative Salary Offsets identified an alleged salary overpayment of $14,296.59, and stated Respondent’s intent to collect the amount of $12,000 by administrative offset from Petitioner’s salary.[1]

            A hearing was held in Lebanon, New Hampshire on April 14, 2009. [2]  The Postal Service presented testimony from the Lebanon Postmaster.  Petitioner presented testimony from a retired supervisor from the Lebanon Post Office and from Petitioner. 

FINDINGS OF FACT

             1.      Petitioner has been employed by the Postal Service for 14 years.  For the past 8 years she has been in a full-time position and she has been assigned to the Lebanon, New Hampshire Post Office as a Rural Carrier for all relevant dates discussed in this Decision (Tr. 54). [3]

            2.      A Rural Carrier’s compensation is determined by an evaluation of the carrier’s route in accordance with procedures set forth in §531.3 of Postal Service Handbook PO-603, Rural Carriers Duties and Responsibilities (Tr. 35-37).

            3.      Compensation for the carrier is derived from the route classification in accordance with the above evaluation and §563.12 of Postal Service Handbook F-21, Time and Attendance.

            4.      At all relevant times, Petitioner carried a route with a “K Evaluated Hour Route” classification (Handbook F-21, §551.4; Tr. 34-35; Supplemental Answer, pp. 2, 3).

            5.      Between February 24, 2006, and March 9, 2006, the Postal Service conducted a Rural Route Evaluation of Petitioner’s delivery route (Supplemental Answer, p. 4).  After the evaluation, Petitioner signed a Form 4241 Rural Delivery Statistics Report (“RDS Report”) (Supplemental Answer, p. 4). [4]  The results of that evaluation were reported on PS Form 4241-A with a processing date of April 7, 2006 (Supplemental Answer, p. 2).

            6.      In the box marked “Loading” on PS Form 4241-A, a figure of “370” was entered (Supplemental Answer, p. 2).  That figure overstated the loading time for Petitioner’s route, and should have been “53” (Tr. 18, 38-39, 49).

            7.      Because of this overstatement, the route was classified “K45V” instead of “K40V” and Petitioner was paid accordingly (Supplemental Answer, p. 2).

            8.      Petitioner’s route was again evaluated in January 2008, and a Form 4241-A was completed with a processing date of January 29, 2008, and a retroactive effective date of April 15, 2006 (Supplemental Answer, p. 3).  That form substituted the figure “53” for the figure “370” for Loading Time which led to a reduction from the K45V classification to K40V (Supplemental Answer, pp. 3 and 4).

            9.      In April 2008, Respondent’s Accounting Service Center issued Petitioner an invoice alleging overpayments totaling $14,296.59 for the period from Pay Period 9 of 2006 through Pay Period 2 of 2008 (Supplemental Answer, p.1).  In May 2008, the Lebanon Postmaster issued Petitioner a letter of demand based on that invoice (Respondent’s Answer).

            10.    Following a grievance proceeding, Petitioner’s union representative and Respondent agreed to a settlement under which Petitioner would pay the amount of $12,000 (Tr. 6), which Petitioner declined to accept.  In a Notice of Involuntary Salary Offsets dated October 9, 2008, Respondent demanded the payment of the reduced amount of $12,000 (Respondent’s Answer; Tr. 6).

            11.     Petitioner filed a timely Petition under the Debt Collection Act of 1982.

DECISION

            In a Debt Collection Act case, Respondent carries the burden of establishing that a debt exists.  Debbie Eccles, P.S. Docket No. 99-148 (August 26, 1999).  The parties do not dispute that the figure 370 for Loading Time on the 2006 PS Form 4241-A was an error.  Likewise, the parties do not dispute that the figure 53 on the 2008 PS Form 4241-A is an accurate reflection of Loading Time for Petitioner’s route for the period between April 2006 and January 2008.  The result of the correction of that error is that Petitioner’s route was reduced from an evaluated K45V to a K40V for calculation of compensation.  The Postal Service calculated that the reduction created an overpayment of compensation to Petitioner of $14,296.59 for Pay Period 9 of 2006 through Pay Period 2 of 2008.  That calculation was based solely upon the error in the 2006 PS Form 4241-A related to Loading Time.  While the record is silent on the precise method of calculation of that debt, I find that the Postal Service has met its burden as to the debt and amount of the debt. [5]

            Respondent having established the existence of the debt, the burden shifts to Petitioner to show that the debt is inaccurate, or that she has a defense to the collection that would render the debt uncollectible. 

            Petitioner and Respondent both acknowledge that the error was made by the Postal Service.  While the Postal Service alleges that Petitioner either knew or should have known about the error at the time she signed the RDS Report, I find that Petitioner gave credible testimony that she did not notice the error at the time she signed the RDS Report.  However, that finding does not alleviate Petitioner of responsibility for the debt.  The fact that Petitioner was overpaid as the result of the error is the determining factor.  Absent a defense to that debt, i.e., error in calculation of the debt, Petitioner is liable. 

            Petitioner presents no evidence to support a finding in her favor on the existence or accuracy of the debt.  While Petitioner did testify that she has “no confidence” in the route evaluations conducted on her route, and testified that she was never given paperwork in a timely manner by the Postal Service about the route evaluation, she did not present any evidence to support a claim that the route evaluations were in error.  To the contrary, her testimony supports the figures presented by Respondent.  Likewise, there is nothing in the record to support a finding that the evaluation conducted in 2008 was in error, or that the final classification used to calculate the overpayment was in error. 

            Petitioner received the benefit of the overpayment for the period in question, and, in fact, received an additional $2,296.59 that Respondent does not seek to collect in this action.  Although the Postal Service was at fault in its calculation of Loading Time on the 2006 PS Form 4241-A, and in the entry of data associated with that figure, the debt itself is not in dispute. 

            The Petition is denied as to Petitioner’s claim for relief from the debt and Respondent may collect $12,000 by administrative offset.

            Respondent proposes to collect by administrative offset $208.60 per pay period from Petitioner’s salary to satisfy the debt.  Respondent alleges that this proposed offset schedule represents 15% of Petitioner’s “disposable pay” as that term is defined in the Employee and Labor Relations Manual (ELM), §451.4c.  Petitioner claims that the proposed administrative offset would create “severe financial hardship.” [6]  Petitioner proposes an alternative offset schedule of $25 per pay period until the debt is satisfied.  The burden of establishing severe financial hardship is on Petitioner.  39 C.F.R. §961.4(b)(8).

            To evaluate whether severe financial hardship exists, Petitioner is required to submit information relative to: (1) income from all sources; (2) assets; (3) liabilities; (4) number of dependents; and (5) expenses for food, housing, clothing, transportation, medical care, and exceptional expenses, if any.  Id.  Petitioner’s information is relatively scant of any supporting documentation or explanation.  However, as the Postal Service did not dispute the accuracy of the information submitted, I will review the figures that have been entered into evidence by Petitioner. 

            Petitioner stated that her disposable pay is $3,200 per month.  She submitted expenses totaling $3,491.64 per month.  However, several of the expenses do not appear to be contemplated by the regulations in the calculation of severe financial hardship. [7]

            My calculations bring a total of $2,613.13 in monthly expenses for essential material needs, or approximately $1,207 per pay period.  Given Petitioner’s evidence that her disposable pay is $3,200 per month, or approximately $1,477 per pay period, this leaves Petitioner with $270 per pay period for payment of the debt.  While this sum would be more than the $208.60 offset sought by Respondent, Petitioner has offered testimony that her route is likely to be evaluated downward, and that she anticipates a corresponding salary decrease as a result. 

            Respondent does not dispute the figures submitted by Petitioner in the record or Petitioner’s testimony regarding her upcoming salary decrease.  Respondent also does not dispute the claims by Petitioner that the proposed offset would create severe financial hardship.  Respondent’s only objection is to Petitioner’s proposal to pay only $25 per pay period.  Respondent’s position is that any administrative offset schedule “can’t be dragged out for 10 or 20 years.”  I agree with Respondent that the timeframe proposed by Petitioner, at $25 per pay period, would result in an unreasonably long delay in repayment. [8]

            Nevertheless, I find that Petitioner has established sufficient evidence of severe financial hardship to warrant a reduction in the amount collected by administrative offset per pay period.  Petitioner testified that while her financial situation was difficult at the present time, and may get worse before it gets better, she also suggested that she may be capable of making larger payments at some point in the future when her financial situation improves.  Taking into consideration Petitioner’s current financial situation and the size of the debt to be collected, some relief is in order.  However, a significant reduction in the administrative offset schedule should not continue so as to create the unreasonable delay objected to by Respondent.  Therefore, I find that Respondent may collect the debt by administrative offset according to the following graduated offset schedule:

                        $75 for 26 consecutive pay periods and

                        $150 for the next 67 consecutive pay periods.

This graduated offset schedule permits Petitioner to prepare financially for a larger offset, but keeps the payment of the debt on a schedule for full repayment in approximately 42 months.

            The Petition is denied as to Petitioner’s claim for relief from the debt and allowed as to her request for an alternative offset schedule.  Respondent may collect the entire debt of $12,000 by administrative offset from Petitioner’s salary, but may do so only in accordance with the graduated offset schedule reflected in this Decision.

James G. Gilbert
Chief Administrative Law Judge

[1] In the Notice of Involuntary Administrative Salary Offsets, Respondent elected to seek collection on the $12,000 only, and not the total $14,296.59 debt figure cited in the Notice. See Findings of Fact ¶10, supra. 

[2] The hearing was conducted by Chief Administrative Law Judge Bruce R. Houston via speaker-telephone from the Judicial Officer office in Arlington, Virginia.  The undersigned attended the hearing in Arlington, Virginia.  All other participants, including the court reporter, were present in a conference room at the hearing site.  On April 14, 2009, as the result of Judge Houston’s pending retirement, the Judicial Officer transferred the case to the undersigned for final disposition.

[3] References to the hearing transcript are “Tr. __.”  Documents attached to Respondent’s Supplemental Answer dated April 10, 2009, are numbered consecutively by page, and will be referred to as “Supplemental Answer, p. __.”  Other documents in the record will be referred to by date and/or description as necessary.

[4] The RDS Report signed by Petitioner is dated February 7, 2006.  It appears from the testimony and documents that this date is an error as it pre-dates the actual evaluation.  The true date of Petitioner’s execution of the document is not clear, however, Petitioner does not dispute the validity of her signature on the document, or that the document accurately reflects the evaluation figures on PS Form 4241-A.

[5] The Postal Service submitted evidence that Petitioner was overpaid for pay periods 09/2006 through 02/2008 (Supplemental Answer, p. 4).  The Postal Service also submitted Rural Carrier Evaluated Schedules with effective dates for pay periods 07/2006, 19/2006, 25/2007, and 07/2008 (Supplemental Answer, pp. 18, 19, 6, 7 respectively).  There is nothing in the record that explains how the Postal Service calculated the specific debt of $14,296.59 alleged in this matter.  Petitioner did not challenge the debt figure identified by the Postal Service nor has she raised its calculation as an issue in this case.  A review of the evidence submitted, however, supports a finding that the debt was at least in the amount sought to be recovered by Respondent in this case (Supplemental Answer, pp. 6-7, 18-19).

[6] “Severe Financial Hardship” is defined as “an employee’s inability to meet the essential material needs of the employee and his or her spouse and dependents because of offsets against pay. These essential material needs are food, housing, clothing, transportation, medical care, and any exceptional expenses.”  ELM §451.4h.

[7] As best as can be gleaned from the figures submitted by Petitioner, the following appear to be her monthly expenses covered by the regulations:  Food - $200; Housing - $1,005.53 mortgage plus $490 real estate taxes; Transportation - $400 gas, $525 Auto Van, $408.05 Truck Loan, $291.34 Auto Insurance. The figures submitted pertaining to personal loans, credit card debt, cellular telephone, and rubbish collection, along with certain items that are undefined such as “Citi Flex” and “Summit Coll.” do not appear to be “essential material needs of the employee, and his or her spouse, and dependents” absent more detailed information that was not submitted by Petitioner.  ELM §451.4h.  It was also unclear whether the mortgage payment is the responsibility of the ex-husband co-signer on the mortgage, or whether Petitioner pays the mortgage.  The same issue arises with the Truck Loan.  However, given the testimony that Petitioner’s ex-husband is unemployed, I will assume for these purposes that Petitioner pays half the mortgage and half of the truck loan. Petitioner submitted no evidence regarding medical expenses, clothing, or exceptional expenses. Petitioner does mention a dependent with medical issues but no figures were presented for any corresponding expense related to that condition.

[8] At $25 per pay period, it would take 480 pay periods to satisfy the debt, which is roughly the equivalent of 18 years.