In the Matter of the Petition by

STEPHEN R. DEAN

P.S. Docket No. DCA 09-168

APPEARANCE FOR PETITIONER:
Stephen R. Dean

APPEARANCE FOR RESPONDENT:
Steven W. Marney
Manager, Labor Relations
United States Postal Service

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Stephen R. Dean, timely filed a Petition for Hearing under the Debt Collection Act after having received a Notice of Involuntary Administrative Salary Offsets from Respondent, United States Postal Service.  The Notice asserted Respondent’s intention to offset $4,876.35 from Petitioner’s salary to recover health insurance premiums that Respondent failed to collect from Petitioner’s salary.

On August 14, 2009, a hearing was conducted in Los Angeles, California, with the undersigned Administrative Judge presiding by speaker telephone from Arlington, Virginia.  All other participants, including the court reporter, were present in a conference room at the hearing site.  Several stipulations were agreed upon prior to the hearing (August 6, 2009 Order; Transcript (Tr.) 6).  At the hearing, Respondent introduced testimony from a payroll supervisor with expertise in the Federal Employees Health Benefits Program (FEHBP), and from a personnel processing specialist.  The Petitioner testified on his own behalf.  The parties also relied upon previously submitted documents. 

FINDINGS OF FACT

1.         Petitioner is a postal inspector, who transferred from the United States Border Patrol to the United States Postal Inspection Service on September 30, 2006.

2.         Prior to his transfer, Petitioner was enrolled in the FEHBP, with Blue Cross Blue Shield (BCBS) providing his health insurance under family plan coverage (Petitioner’s Exhibits 2-4).

3.         Because of administrative error, Petitioner’s continued BCBS health insurance coverage was not transferred until February 19, 2008, and health insurance premiums were not deducted from Petitioner’s salary between his transfer through pay period 4 of 2008 (Stipulation (Stip.) A; Petitioner’s Exhibit 1; Respondent’s Exhibits A21-A23; Tr. 36-37, 46-47).

4.         The employee portion of the health insurance premiums that were not deducted from Petitioner’s pay during this period amounted to $4,876.35, the amount here sought by Respondent (Stip. B; Respondent’s Exhibit A21-A23).  Petitioner bore no fault for the failure of the premiums to have been paid (Stip. C).

5.         On December 17, 2007, BCBS issued Petitioner a Notice of Intent to Disenroll (BCBS Notice).  The BCBS Notice provided that its records reflected that Petitioner was enrolled as an insured through the Department of Agriculture (which provided administrative services for the Border Patrol), but that agency’s records did not indicate that premium payments were current.  The BCBS Notice provided Petitioner 31 days in which to provide documentation to BCBS verifying his current enrollment as an insured under FEHBP.  The Notice further provided that BCBS would disenroll Petitioner at the expiration of the 31 day period if it did not hear from him during that time, and also provided that, “We [BCBS] will not disenroll you until the 31 day period expires.”  (Hearing Exhibit A).

6.         Until an insurer under FEHBP acts following expiration of the period identified in a Notice of Intent to Disenroll, a federal employee continues to have health insurance coverage (Tr. 19, 30-31).

7.         When he received the BCBS Notice, Petitioner contacted postal administrative officials who informed him that postal records did not indicate his health insurance coverage (Tr. 45-47).  Postal officials researched the problem and confirmed that paperwork errors by Petitioner’s former federal employer resulted in the failure to have transferred Petitioner’s FEHBP benefits (Tr. 17, 28, 31, 39, 45-46; Petitioner’s Exhibits 28-53).

8.         BCBS disenrolled Petitioner on January 19, 2008 (Tr. 31, 36).  However, postal officials corrected the disenrollment on February 19, 2008, by processing an appropriate form, and shortly thereafter issuing retroactive premium payments to BCBS for Petitioner’s coverage from the time of his transfer (Tr. 17, 19-21, 27, 36-37, 42; Petitioner’s Exhibit 1; Respondent’s Exhibit A20).  Processing the form and payment to BCBS of the premiums by Respondent ensured uninterrupted retroactive coverage from the date of Petitioner’s transfer (Tr. 20-23, 37-38, 41, 47-48).

9.         During the time in which health insurance premiums were not paid by Petitioner, he went to the doctor and his health insurance claims were paid by BCBS (Tr. 62-63).

10.       On April 22, 2009, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets for the $4,876.35 debt at issue (Respondent’s Exhibit A1).  Petitioner timely challenged this action.

DECISION

The parties agree that Petitioner did not pay the health insurance premiums here sought by Respondent during the time in question (Findings 3-4).  If Petitioner was covered under FEHBP during that time, he is obligated to reimburse Respondent for those premiums.  See 5 CFR § 890.502(a)[1] (providing that an employee is deemed to incur an indebtedness to the United States for any period in which FEHBP enrollment continues but the employee’s share of the premium is not paid); Albert J. Schueren, P.S. Docket No. DCA 03-102 (June 12, 2003).

I have found that Petitioner was covered by BCBS because Petitioner acknowledged having received health insurance benefits during that time, Respondent made retroactive payments to BCBS, and the BCBS Notice as well as witness testimony were consistent that a disenrollment did not occur until January 19, 2008 (Findings 5-6, 8-9).  For the period between the January 19, 2008 disenrollment and the retroactive reinstatement which occurred approximately on February 26, 2008, I was persuaded by the testimony of Respondent’s payroll supervisor that any health insurance claims would have been covered retroactively by BCBS (Finding 8).  I was persuaded by this witness’ testimony based upon her substantial experience in handling similar issues, the consistency of her testimony, her direct and thorough responses to questions, and the absence of conflicting evidence.  This was sufficient to overcome Petitioner’s argument that there is nothing official from BCBS in the record demonstrating coverage for that time.

Although Petitioner is blameless for the administrative error that resulted in premiums not having been deducted from his salary (Finding 4), he was covered by health insurance under FEHBP and must pay for it.  See Victor Buenrostro, P.S. Docket No. DCA 08-25 (April 10, 2008) (where Petitioner was found to have had health insurance coverage he must pay the premiums); Shon C. Hogans, P.S. Docket No. DCA 00-17 (April 7, 2000) (administrative errors in implementing a health benefits plan do not relieve an employee of the obligation to pay the premiums).

Petitioner argues that even if he were covered retroactively, BCBS may have denied him health insurance coverage if he or a family member had suffered a catastrophic illness during the time in question.  That hypothetical suggestion is entirely speculative and cannot be credited.  I find that Petitioner must pay the premiums at issue.  The Petition is denied.

Petitioner also claims severe financial hardship in requesting an alternative offset schedule.  The parties have stipulated that the salary offset schedule proposed by Respondent is flexible, and that I may order an alternative offset schedule (Stip. E).  I exercise my discretion to do so. 

Respondent sought to recover this debt over 13 pay periods, whereas Petitioner proposed at least a 34 pay period schedule because that was the period that Respondent took to correct the health insurance premium gaffe.  I conclude that it is reasonable for the period of recovery to encompass a full year of 26 pay periods.  Cf., Employee and Labor Relation Manual § 452.234(c) (discussing debt repayment in 26 pay periods or less where debtor seeks alternative offset schedule).

The Petition is denied.  Respondent may collect $4,876.35 from Petitioner’s salary over the course of 26 pay periods.

Gary E. Shapiro
Administrative Judge

[1] Even though not made part of the record by the parties, I take official notice of applicable regulations.  See, e.g., Century Tool Co., Inc., GSBCA No. 4012, 77-1 BCA ¶ 12,391, recon. denied, 78-1 BCA ¶ 12,972.