P.S. Docket No. DCA 12-167


November 1, 2012

In the Matter of the Petition by

TRACEE E. LAWSON

P.S. Docket No. DCA 12-167

APPEARANCE FOR PETITIONER
Tracee E. Lawson

APPEARANCE FOR RESPONDENT
Robert E. Ocasio

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Tracee E. Lawson, filed a timely Petition for Hearing under the Debt Collection Act after receiving a Notice of Involuntary Administrative Salary Offsets dated April 18, 2012, from Respondent, United States Postal Service.  The Notice stated Respondent’s intention to withhold $3,515.94 from Petitioner’s Postal Service pay to recover health insurance premiums that the Office of Workers’ Compensation Programs (OWCP) did not withhold from compensation payments made to her following an on-the-job injury.  An oral hearing was held in Tampa, Florida.

FINDINGS OF FACT

  1. Following an on-the-job injury, Petitioner submitted a claim for compensation by filing a Form CA-7 for submittal by Respondent to the Department of Labor, OWCP.  Petitioner filled out the information required from her on the first page of the form.  Respondent filled out the information required from the employing agency on the second page of the form, but failed to fill out the portion indicating that Petitioner was receiving health benefits at the time she stopped receiving pay from Respondent.  (August 6, 2012 submittal by Petitioner (“8/6 subm.”), pages 4, 5; Transcript pages (Tr.) 10, 16).
  2. From approximately September 11, 2010, through October 22, 2011, OWCP did not make deductions for health insurance coverage from payments it made to Petitioner (Resp. Exh. 1; Tr. 11-13).  During that period, however, Petitioner had health insurance coverage and Respondent continued to pay the full premiums for that coverage directly to the Federal Employees Health Benefits program (Tr. 29-31).
  3. All payments made by OWCP to Respondent’s employees are eventually reimbursed by Respondent.   Ordinarily, Respondent receives a credit against this reimbursement by OWCP’s deduction of the employee’s portion of health insurance premiums from payments made by it to the employee – thereby reducing the amount to be reimbursed by Respondent.  (Tr. 10, 31).
  4. By letter dated November 10, 2011, OWCP informed Petitioner that she had been overpaid in the amount of $4,665.93, because deductions for health insurance and life insurance premiums had not been taken from her compensation payments.  In that letter, OWCP also advised Petitioner that she had been found to be without fault in creating the overpayment.  OWCP asked Petitioner to make arrangements to repay the amount in question.  (July 31, 2012 submittal by Petitioner (“7/31 subm.”), page 17).
  5. Thereafter, Petitioner requested a waiver of the repayment obligation and, in a January 5, 2012 letter to Petitioner, OWCP granted the request and advised Petitioner that “you are released from the responsibility of repaying this debt.”  The basis cited by OWCP was that Petitioner was without fault in the creation of the overpayment and that repayment would create “undue financial hardship which would defeat the purpose of the Federal Employees Compensation Act or would be against equity and good conscience.”  (Petition, pp. 14-16; see also, 7/31 subm., pp. 19-22 (unsigned copy of Form OWCP-20, “Overpayment Recovery Questionnaire”)).
  6. In a Notice of Involuntary Administrative Salary Offsets dated April 18, 2012, citing an earlier letter that is not in the record, Respondent stated its intent to withhold $3,515.94 from Petitioner’s pay because of the unpaid health insurance premiums.  Petitioner filed a timely Petition.

    7. DECISION

    In this case, Petitioner had health insurance coverage during the period when premiums for that coverage were not being withheld by OWCP from its compensation payments to her.  Petitioner argues, and Respondent concedes, that she was not at fault in creating the paperwork error that led to the failure to withhold the premiums.   Respondent argues, primarily, that because it was not a party to the waiver granted by OWCP, it should not be bound by the waiver.  Respondent contends that it should be entitled to recover from Petitioner the amounts that it reimbursed OWCP for the employee portion of the health insurance premiums that OWCP did not deduct from its payments to Petitioner.

    As this office has repeatedly held, Petitioner’s lack of fault in the failure to withhold health insurance premiums ordinarily would not extinguish her ultimate obligation to pay those premiums.  E.g., Timothy L. Hudson, P.S. Docket No. DCA 11-204 (February 15, 2012), and cases cited therein.  In this case, however, it is necessary to determine whether, as a matter of law, the waiver granted by OWCP (Finding 5) is effective against Respondent with respect to the debt at issue in this proceeding.

    Section 8129 of Title 5 of the United States Code, which is one of the provisions of the Federal Employees’ Compensation Act, provides that in case of an overpayment to an employee,

    (a)  When an overpayment has been made to an individual under this subchapter because of an error of fact or law, adjustment shall be made under regulations prescribed by the Secretary of Labor by decreasing later payments to which the individual is entitled . . . .

    (b)  Adjustment or recovery by the United States may not be made when incorrect payment has been made to an individual who is without fault and when adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience.

    OWCP’s regulations implementing the above provision appear in Title 20 of the Code of Federal Regulations, Part 10 (20 C.F.R. §§ 10-430 – 10-441).  The regulations set up standards for determining, for example, when recovery of an overpayment would “defeat the purpose of this subchapter or would be against equity and good conscience.”  The regulations also set up a process to be used by OWCP in collecting information and deciding whether a waiver is appropriate.

    In the present case, Petitioner applied to OWCP for a waiver of the overpayment and OWCP, after evaluating the relevant information, determined that a waiver should be granted.  OWCP’s decision to grant a waiver, made under the authority of the above statute and regulations, is conclusive and may not be challenged in a Debt Collection Act proceeding.  See, e.g., Gerald S. Sivley, P.S. Docket No. DCA 00-45 (March 13, 2001); Patsy L. Turner, P.S. Docket No. DCA 99-311 (November 19, 1999); see also, 5 U.S.C. § 8128(b)(making an action by the Secretary of Labor or his designee with respect to allowing or denying a workers’ compensation payment “not subject to review by another official of the United States . . . .”); Brumley v. U.S. Dept. of Labor, 28 F.3d 746 (8th Cir. 1994), cert. den. 513 U.S. 1082 (1995).

    As noted above, under 5 U.S.C. § 8147, payments made by OWCP to Respondent’s employees are ultimately repaid by Respondent.  Thus, the overpayments made by, and waived by, OWCP will ultimately come out of Respondent’s funds.  Nevertheless, under the statutory scheme established by Congress, it is OWCP that has the ultimate authority over this process.   Accordingly, although Respondent played no part in granting the waiver, as a matter of law the waiver granted by OWCP is effective against Respondent.  Therefore, Respondent may not recover the debt alleged in this proceeding.

    Accordingly, the Petition is granted.  Respondent may not withhold from Petitioner’s pay the health insurance premiums waived by OWCP.

    David I. Brochstein
    Administrative Judge


     

    [1] The hearing was conducted by the undersigned Administrative Judge via speaker telephone from Arlington, Virginia.  All other participants, including the court reporter, were present in a conference room at the hearing site.

    [2] The paperwork error that caused the failure to withhold the premiums was not recognized until October 2011.  Thereafter, Respondent retroactively transferred Petitioner’s health insurance coverage to OWCP, and that agency began withholding the premiums.  (7/31 subm. (pp. 35, 38, 42); Tr. 25).

    [3] See 5 U.S.C. § 8147(b) and (c).

    [4] There was disagreement as to whether Petitioner should have been aware that the premiums were not being withheld, but it is not necessary to resolve that question in the course of deciding this case.

    [5] See also, USPS Employee and Labor Relations Manual, § 541.12.