P.S. Docket No. DCA 15-42


August 13, 2015

In the Matter of the Debt Collection Act Petition

ROXANA J. RUAN v. UNITED STATES POSTAL SERVICE

P.S. Docket No. DCA 15-42

APPEARANCE FOR PETITIONER:
Roxana Ruan

 APPEARANCE FOR RESPONDENT:
Jevron Velez
Labor Relations Specialist

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner Roxana Ruan challenges a $1,434.96 debt assessment issued by Respondent United States Postal Service seeking collection of unpaid health insurance premiums.  I conducted a hearing on June 30, 2015, and rule that the Postal Service may collect $964.82 through involuntary administrative salary offsets.

FINDINGS OF FACT

  1. During open season for 2009 Federal Employees Health Benefits program (FEHB) enrollment, Petitioner, while working for the Postal Service, selected Pacificare for her health insurance provider (Exh. 8; Tr. 17). 
  2. Responsibility for collecting the employee portion of Petitioner’s health insurance premiums shifted from the Postal Service to the Department of Labor (DOL) in September 2009 when she began receiving workers’ compensation benefits (Exhs. 1, 8; Tr. 17). 
  3. During open season for 2011 FEHB enrollment, while Petitioner still was receiving workers’ compensation payments, she changed her health insurance provider from Pacificare to Kaiser (Exhs. 3, 9; Tr. 12, 17, 74). 
  4. On December 15, 2012, the DOL released Petitioner from the workers’ compensation program when she returned to work as a letter carrier for the Postal Service.  The Postal Service became responsible for administering Petitioner’s FEHB coverage and collecting her FEHB premiums at that time.  The DOL last collected a health insurance premium from Petitioner on December 15, 2012.  However, the DOL did not process paperwork timely concerning the transfer.  (Exhs. 4, 5; Tr. 14, 69, 71-72, 106).
  5. On December 20, 2012, which was after the end of open season for 2013,[1] Petitioner sent a “to whom it may concern” email note or letter to an unidentified location within the DOL asking for her health insurance coverage to end (Pet. Att. 9, 15, 16; Exh. 7; Tr. 106, 116). The DOL did not respond to Petitioner (Tr. 117-18).
  6. On June 4, 2013, the Postal Service accepted the transfer of Petitioner’s FEHB administration.[2]  Neither the DOL nor Petitioner had informed the Postal Service that Petitioner wished to cancel her health insurance coverage for 2013.  Using a Standard Form 2810, Notice of Change in Health Benefits Enrollment (SF 2810) on that date, the Postal Service assigned Petitioner to Pacificare, the last health insurance provider she had selected before her FEHB administration responsibility had transferred from the Postal Service to the DOL. The June 4, 2013 SF 2810 indicated a December 4, 2012 effective date.  (Exh. 5; Tr. 42-44).
  7. liPacificare’s successor company received a copy of the SF 2810, and on June 28, 2013, notified the Postal Service that an error had occurred because Petitioner lived outside its then-current service area (Pet. Att. 1). 
  8. On July 2, 2013, the DOL sent the Postal Service a form titled Transfer Out of FEHB Enrollment.  The form identified December 15, 2012 as the effective date of the transfer of administrative responsibility from DOL to the Postal Service, and the last date on which the DOL had collected a health insurance premium from Petitioner. (Exh. 4).
  9. Also on July 2, 2013, using another SF 2810, the Postal Service voided the erroneous Pacificare coverage and processed a transfer of coverage for Petitioner to Kaiser, retroactively effective to December 2012 (Exhs. 6, 14; Pet. Att. 6; Tr. 14, 21, 54). 
  10. Petitioner inserted hand-written annotations into the July 2, 2013 SF 2810 that she received from the Postal Service. In section B, Termination, Petitioner wrote that she had died, indicating that her death was the basis for termination of her FEHB enrollment. Petitioner inserted “9-24-2013” as her date of death, and signed her name next to that designation.  In section G, Remarks, Petitioner wrote the following, next to an additional handwritten date of 9-24-2013 and another signature of her name:
    11. Please stop my health insurance for 2013. On 12/20/2012, I wrote a letter to OWCP asking that my health insurance be stopped for 2013 (see attachment 1).  I have not enrolled in the USPS health insurance either [sic] the reasons see attachment.
    (Exh. 7 (no attachment appears in the record)).
  11. Petitioner sent the annotated form to an unidentified location in the Postal Service.  The Postal Service did not respond.  The Postal Service could not have cancelled Petitioner’s FEHB coverage until the next open season, which would not have been effective until 2014.  (Tr. 16, 57-60, 121).
  12. Petitioner did not cancel her FEHB enrollment during open season for 2013 coverage, but she did cancel her FEHB enrollment during open season for 2014 coverage (Exh. 8; Tr. 17, 21, 63, 84).
  13. Between pay period 26 of 2012 and pay period 12 of 2013, corresponding to December 1, 2012 – May 31, 2013, the Postal Service did not collect any health insurance premiums from Petitioner (Exh. 16; Tr. 22-27).
  14. Between pay period 13 of 2013 and pay period 18 of 2013, corresponding to June 1, 2013 – August 23, 2013, the Postal Service collected $271.62 in FEHB premiums from Petitioner for Pacificare coverage (Exh. 17; Tr. 28-30).
  15. Beginning pay period 19 of 2013 (starting August 24, 2013), the Postal Service collected FEHB premiums from Petitioner for Kaiser coverage until she cancelled her FEHB coverage for 2014 (Exh. 17; Tr. 22-27).
  16. Between pay period 26 of 2012 and pay period 18 of 2013, the total employee share of Kaiser FEHB premiums was $1,275.52 (Exhs. 16, 17; Tr. 22-27).
  17. Pay period 26 of 2012 corresponded to December 1, 2012 – December 14, 2012.  The Postal Service identified $38.94 as the Kaiser premium for that pay period.  (Exh. 16).
  18. On September 22, 2014, the Postal Service issued Petitioner three letters of demand totaling $1,434.96 and on January 28, 2015, issued three Notices of Involuntary Administrative Salary Offsets seeking the same amount (Exhs. 9, 10).  None of the letters of demand, Notices, or invoices issued by the Postal Service included any explanation of how the assessments were calculated (Exhs. 9, 10, 13).  Ms. Ruan filed a timely Petition challenging the Notices. 
  19. After this case began, the Postal Service recalculated and reduced its $1,434.96 assessment to $1,275.52.  It also credited Petitioner with $271.76 for premiums that it had collected for Pacificare FEHB coverage, resulting in $1,003.76 being sought by the Postal Service at the time of trial.  (Answer; Tr. 6, 20, 27, 30, 44-45).

DECISION

To recover, the Postal Service bears the burden of proving that a debt exists for unpaid FEHB premiums owed by Petitioner.  Saunders v. United States Postal Service, AO 14-307 (I.D. February 24, 2015).  Part of the cost of an employee’s health insurance is paid by the Postal Service with the remainder paid by the employee through a payroll deduction each pay period.  An employee becomes indebted to the United States if during any pay period in which FEHB enrollment continues, deductions for the employee’s share are not collected. 5 C.F.R. § 890.502(a)(1); Holly v. United States Postal Service, AO 14-404 (I.D. May 11, 2015).  If the Postal Service demonstrates FEHB enrollment and failure to collect the employee’s share of premiums, a rebuttable presumption applies that the Postal Service complied with its own regulations and federal law regarding its payment of FEHB premiums during the coverage period, and the employee becomes liable for the debt.  Teng v. United States Postal Service, AO 14-267 (I.D. April 17, 2015).

Once elected, health insurance coverage under the FEHB carries over from year to year unless the employee acts to change coverage (Tr. 15).  Absent an intervening qualifying life event such as death, marriage or birth of a child, federal employees may change their FEHB enrollment only during an open season, which occurs sometime between November and December each year (Tr. 15, 17, 57, 59-60).[3]  Even when a Postal Service employee is being paid under the DOL workers’ compensation program, changes in health insurance enrollment must be made with the Postal Service (Tr. 67-68). 

Entitlement

In this case, the Postal Service has shown that it was obligated to collect premiums from Petitioner upon her return to work for the Postal Service if she was enrolled in the FEHB program (Findings 4, 6, 8, 9, 11, 12).  To be sure, the transition from the DOL’s administration of Petitioner’s FEHB account to the Postal Service’s administration was far from seamless (Findings 4, 6, 9).  The Postal Service also made mistakes in the amounts it collected from Petitioner, and communications between the parties were ineffective (Findings 6, 7, 11).  Nonetheless, the critical dispute that I must resolve in this case is whether Petitioner had cancelled her FEHB enrollment for 2013 within the rules of the program.  As explained below, I conclude that she did not.

Both of Petitioner’s attempts to cancel her 2013 FEHB coverage were ineffective.  Petitioner first attempted to cancel her FEHB enrollment by sending a note to DOL on December 20, 2012.  This notification occurred outside open season and was sent to an unidentified location in DOL rather than to the Postal Service after she had been released from the DOL workers’ compensation program (Findings 5, 12).  This effort therefore was ineffective to end her FEHB enrollment.

Petitioner next annotated an SF 2810 by falsely informing the Postal Service that she had died, therefore asserting that a qualifying life event permitted cancellation of her FEHB enrollment outside open season (Findings 10, 11).  This notification was ineffective as an enrollment termination outside open season because Petitioner had not died, and therefore a qualifying life event exception did not apply.

I conclude that Petitioner remained enrolled in the FEHB program until she properly cancelled her 2014 enrollment during open season (Finding 12).

Calculation of the Debt

The Postal Service’s flawed FEHB administration in this matter and its lack of explanation for the assessment amounts in its communications with Petitioner have complicated the calculations (Findings 7, 8, 19).  At the hearing, the Postal Service demonstrated to my satisfaction that the premiums that should have been collected from Petitioner for Kaiser health insurance between pay period 26 of 2012 and pay period 18 of 2013 amounted to $1,275.52 (Finding 16). 

During that period, the Postal Service did not collect any FEHB premiums from Petitioner for Kaiser coverage (Finding 13).  However, the Postal Service collected $271.76 from Petitioner for premiums mistakenly attributed to Pacificare FEHB coverage and it now concedes that Petitioner is due a credit in that amount (Findings 6, 7, 9, 14).  I therefore initially reduce its recovery to $1,003.76 (Finding 15).[4]  An additional reduction to the Postal Service’s recovery also is required. 

The Postal Service’s calculations include $38.94 that it argues corresponds to the premium (or perhaps portion of a premium) for Kaiser FEHB coverage during pay period 26 of 2012 (December 1, 2012 – December 14, 2012) (Finding 17).  However, the DOL collected FEHB premiums from Petitioner through December 15, 2012 (Finding 4), and therefore already had collected the premium for that pay period.  Accordingly, I deduct $38.94 from the Postal Service’s $1,003.76 recovery, yielding a net debt due for underpaid FEHB premiums of $964.82.

The Petition is granted as to the $470.14 difference between the $1,434.96 assessment and the amount awarded.  The reduction includes a credit for the Postal Service’s $271.76 concession concerning improperly collected premiums for Pacificare, and the $38.94 premium collected by the DOL. I award the Postal Service the resulting $964.82 net amount. 

ORDER

The Petition is granted in part and denied in part.

The Postal Service is permitted to collect $964.82 from Petitioner through administrative salary offsets.  I remand the payment schedule to the parties to negotiate an agreeable salary offset schedule.

Gary E. Shapiro
Administrative Judge

 

[1] FEHB open season ended December 10, 2012 (Tr. 66); see also www.opm.gov/retirement-services/publications-forms/benefits-administration-letters/2012/12-401) (last visited July 28, 2015).

[2] Although DOL’s notification method and precise timing are not reflected in the record, I infer that DOL notified the Postal Service on or shortly before this date.

[3] Petitioner does not argue nor present evidence for an infrequent exception to these rules based on not participating in premium conversion under 39 C.F.R. § 890.301.

[4] The Postal Service never explained how it calculated its original $1,434.96 assessment.