P.S. Docket No. VA 13-397


March 24, 2015

In the Matter of the Debt Collection Act Petition

BINALI MEHTA v. U.S. DEPARTMENT OF VETERANS AFFAIRS

P.S. Docket No. VA 13-397

APPEARANCE FOR PETITIONER:
Andrew Melrose,Esq.

APPEARANCE FOR RESPONDENT:
Patricia Trujillo, Esq
Department of Veteran Affairs

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Binali Mehta, filed a Petition under the Debt Collection Act of 1982 after receiving a Notice of Involuntary Administrative Salary Offset from Respondent, the Department of Veterans Affairs (VA).1  The VA alleges it overpaid Dr. Mehta by $16,014.40.  After giving Dr. Mehta credit for offsets it has already taken, the VA now seeks to collect the remaining balance of $6,552.90.  For the reasons set out below, I find the VA has proved the existence and amount of the debt.  Dr. Mehta, however, has shown entitlement to a credit of $452.13, which reduces the remaining balance to $6,100.17.  The VA may collect that amount by administrative offset.

FINDINGS OF FACT

  1. Dr. Mehta worked for the Department of Veterans Affairs as a psychiatrist at all times relevant to this dispute until she resigned effective January 29, 2014 (Exh. 1; Exh. G at 3).2
  2. Dr. Mehta was a full-time employee until September 8, 2012 (Exh. B at 1; Exh. G at 4–5).  As a full-time employee she earned $627.96 per day3 (Exh. C at 1).
  3. From June through early September 2012, Dr. Mehta was on maternity leave (Exh. B at 1; Exh. 7 at 4).  While she was on maternity leave, the parties agreed that Dr. Mehta could return as a part-time employee (Exh. B at 1; Exh. D at 1–8).
  4. In accordance with the agreement, Dr. Mehta returned to work as a part-time employee on September 9, 2012 (Exh. B at 1; Exh. D at 1–8).  Over the next five pay periods, the VA mistakenly paid Dr. Mehta as a full-time employee (Exh. C at 2–5; Exh. 2 at 15, 27–53).  These salary overpayments totaled $16,014.40 (Exh. 2 at 15).
  5. As early as October 2012, Dr. Mehta made repeated attempts to stop the overpayments and correct her salary.  She contacted, among others, her supervisor and the VA’s human resources department.  (Exh. B at 1; Exh. D at 9–14).
  6. Despite Dr. Mehta’s efforts, the VA failed to review and approve the necessary documents to effectuate the change until November 30, 2012 (Exh. G at 4, Part C).
  7. Dr. Mehta began to receive her correct part-time salary on November 18, 2012 (Exh. 2 at 10).
  8. As a full-time employee, Dr. Mehta earned one day of annual leave per pay period at the end of 2011.  When the VA converted Dr. Mehta from a full-time to a part-time employee, it also retroactively adjusted the amount of annual leave she had earned during the first 18 pay periods in 2012 when she was a full-time employee.  The VA gave Dr. Mehta .96 days of annual leave in these 18 pay periods (the annual leave rate for a part-time employee) instead of the one day per pay period she should have received.  (Exh. 7 at 1; Lalor Declaration, Question and Response No. 23).  This resulted in Dr. Mehta receiving .72 fewer days of annual leave than she should have.4
  9. As of the pay period ending September 22, 2012, Dr. Mehta earned four hours of annual leave per pay period until she separated from the VA in January 2014 (Exh. 7 at 1).
  10. On August 2, 2013, the Defense Finance and Accounting Service (DFAS), acting as the VA’s payroll agent, made deductions and adjustments to Dr. Mehta’s salary for the pay period ending on July 27, 2013, to recoup part of the $16,014.40 salary overpayments (Exh. C at 24; Exh. 2 at 15).  After those deductions and adjustments, the remaining debt was $9,096.17 (Exh. 2 at 15; Exh. D at 49).
  11. On August 10, 2013, DFAS issued a letter to Dr. Mehta notifying her of the salary overpayments.  The letter stated DFAS’s intention to collect the debt by involuntary salary offsets beginning on September 21, 2013.  (Exh. 2 at 10–11).
  12. In a letter dated September 3, 2013, Dr. Mehta timely contested the debt and requested a hearing (Exh. 2 at 6–9).  The VA forwarded the letter to the Postal Service Judicial Officer, and the Petition was docketed on November 4, 2013.  The Notice of Docketing informed the VA that a timely filed petition stayed further collection action.
  13. Between September 2013 and January 2014, DFAS offset $2,543.27 from Dr. Mehta’s salary to recover part of the salary overpayments (Exh. C at 28–37; Exh. 3 at 2).  After these offsets, the balance of the salary overpayments was reduced to $6,552.90 (Exh. 3)
  14. Dr. Mehta resigned from the VA effective January 29, 2014 (Exh. 1).  As part of the resignation process, Dr. Mehta and the VA completed a form entitled Employee’s Clearance from Indebtedness.  The form is signed or initialed by several VA employees, including a payroll official.  The form does not mention the debt related to the salary overpayments at issue in this case.  (Exh. G at 3).

DECISION

To recover in a salary overpayment case, the VA bears the initial burden to prove it made salary overpayments to Dr. Mehta, the amount of those payments, and that Dr. Mehta is not entitled to the payments.  See Patricia A. Skadsberg v. United States Postal Service, P.S. Docket Nos. DCA 14-198, 14-200 (September 16, 2014).  Here, the VA has met that burden.

The VA has proved that Dr. Mehta received salary overpayments totaling $16,014.40 after she returned from maternity leave in 2012 (Finding 4).  Dr. Mehta has acknowledged the existence and amount of these overpayments (Exh. 2 at 9).  Indeed, she made numerous good-faith attempts to prevent and correct the overpayments (Finding 5).  Nonetheless, an employee who receives an erroneous salary overpayment does not acquire any rights to that money, and it must be repaid.  This holds true even if (1) the VA caused the overpayment, (2) the VA knew about the overpayment, and (3) the VA failed to correct the mistake after it was told about the overpayment.  See John F. Breslin, P.S. Docket No. DCA 13-357 (April 28, 2014).

As to the remaining balance, the VA has shown, and Dr. Mehta has confirmed, that the balance after the August 2013 offsets was $9,096.17 (Finding 10; Exh. D at 49; Exh. 2 at 9).  The VA also has shown, and Dr. Mehta has never disputed, that the remaining balance after the offsets taken between September 2013 and January 2014 is $6,552.90 (Finding 13).

Because the VA has proved the existence and amount of the debt, as well as the remaining balance, the burden shifts to Dr. Mehta to demonstrate an excuse relieving her from the debt.  See Caroline Harrington, P.S. Docket No. DCA 08-333 (May 13, 2009).  In her brief, she has presented several arguments in an attempt to meet that burden.5

First, Dr. Mehta argues that the VA waived the remaining balance when the parties completed the Employee’s Clearance from Indebtedness form in February 2014 (Pet. Resp. to Agency’s Motion to Dismiss).  As the party asserting waiver, Dr. Mehta bears the burden to prove the parties intended to waive the debt by completing the form.  See Patricia A. Skadsberg v. United States Postal Service, P.S. Docket Nos. DCA 14-198, 14-200 (September 16, 2014).  Here, Dr. Mehta has not met that burden.  Specifically, the form itself does not mention the VA’s salary overpayment or otherwise suggest the VA waived its right to collect the balance of the debt by completing the form.  Further, Dr. Mehta has not presented evidence establishing that anyone who signed the form for the VA knew about or intended to forgive the debt.  She also has not shown that anyone who signed the form for the VA had the authority to waive the debt.  Thus, Dr. Mehta has not proved the VA waived the debt when it signed the Employee’s Clearance from Indebtedness form.

Second, Dr. Mehta argues that the VA violated the Debt Collection Act and her due process rights by offsetting her salary before she received written notice from DFAS, and then by continuing the offsets after she filed a hearing request.  Dr. Mehta argues that the VA also violated the Debt Collection Act when it offset more than 15% of her salary on August 2, 2013.  (Pet. Br. at 8–11).

Although Dr. Mehta is correct that those actions violated the Debt Collection Act, the statute does not provide for the remedy sought by Dr. Mehta, i.e., complete relief from the debt.  See 5 U.S.C. § 5514.  As to the alleged due process violation, we have explained that petitioners are entitled to (1) clear notice of the alleged debt, (2) information on which the allegations are based, and (3) a full opportunity to be heard and respond to the allegations.  Chenelle M. Medina, P.S. Docket No. DCA 98-164 (August 14, 1998) (citing 5 U.S.C. § 5514(a)(2)).  Here, Dr. Mehta does not dispute that she received notice of the debt (Pet. Br. at 9).  Through this proceeding, Dr. Mehta has received information and documents explaining the basis of the alleged debt (Exh. 2), and she has had a full opportunity to be heard and to respond to the alleged debt.  Thus, even though the VA improperly offset Dr. Mehta’s salary before and during this proceeding, Dr. Mehta is not entitled to substantive relief from the debt based on the premature offsets.

Third, Dr. Mehta argues that the VA failed to timely file an Answer to her Petition (Pet. Br. at 11–12).  She observes that we have granted a Debt Collection Act Petition when an agency failed to timely respond to orders, citing Patricia Mitchell, P.S. Docket Nos. DCA 11-205, 206, 207 (December 15, 2011) as an example.  In Patricia Mitchell, however, the agency failed to respond timely to a series of orders, including an Order to Show Cause.  The default judgment against the agency in that case was permitted by 39 C.F.R. § 961.8, which gives the presiding hearing official discretion to manage debt collection proceedings.  Here, on the other hand, the VA’s delay in filing its Answer does not reflect the indifference demonstrated by the agency in Patricia Mitchell.  After assigning an attorney to this case, the VA requested a single, one-week extension for filing its Answer.  Thereafter, the VA timely filed its Answer and provided seven exhibits.  Under these facts, and based on the discretion provided by § 961.8, I will not excuse the debt because of the VA’s initial delay.

Fourth, Dr. Mehta asserts that the VA’s negligence caused her to suffer an additional tax burden because the corrections took place in a different calendar year than the one in which they occurred.  The tax burden was exacerbated, she alleges, by the substantial reduction in her salary (and the tax consequences of that reduction) when she became a part-time employee.  (Pet. Brief at 12–14).  Whatever the impact on her taxes, Dr. Mehta is not entitled to relief from the debt because of the VA’s alleged negligence.  Cf. John F. Breslin, P.S. Docket No. DCA 13-357 (April 28, 2014) (Petitioner not entitled to relief from a salary overpayment even though the agency originally—but negligently—said he was entitled to the overpayments).  Relief from the alleged extra tax burden, if there is any relief to be had, must be sought from the IRS by seeking a deduction or credit on her tax returns.  See Aaron Thorne, P.S. Docket No. DCA 12-319 (April 16, 2013).  Dr. Mehta is not, however, entitled to any relief from the debt based on the tax issues she has raised.

Finally, Dr. Mehta argues that she is entitled to relief from the debt because the VA failed to give her the right amount of annual leave for the first 18 pay periods in 2012.  She asserts that as a full-time employee during those pay periods she was entitled to one day of annual leave per pay period instead of the part-time rate (.96 days per pay period) she actually received.

Citing Eric A. Van Dyke, P.S. Docket No. DCA 12-2 (April 26, 2012), the VA argues that I do not have jurisdiction to consider this issue.  I disagree.  The judge in Van Dyke held that he did not have jurisdiction over an affirmative claim for wages not paid to Petitioner for work at a higher level job.  That claim accrued over one year after the alleged salary overpayment that was originally in dispute.  Petitioner’s claim in Van Dyke also did not have any relationship to the earlier overpayment.

Here, on the other hand, the VA adjusted Dr. Mehta’s annual leave balance as part of its overall efforts to correct the salary overpayments at issue in this dispute, resulting in an underpayment.  That underpayment overlapped with, and directly resulted from, the salary overpayments to such an extent that I may consider the underpayment, if proved, as a credit against the debt.  See Ashley A. Nokes, P.S. Docket No. DCA 14-149 (July 16, 2014); see also George Harkanson v. United States Postal Service, P.S. Docket No. AO 14-224 (November 13, 2014).

As to the merits of Dr. Mehta’s assertions, the record supports her argument that the VA mistakenly adjusted her annual leave totals over the first 18 pay periods in 2012.  Instead of receiving one full day of annual leave in each pay period, as she was entitled to as a full-time employee, Dr. Mehta only received .96 days of annual leave each pay period.  She is thus entitled to a credit of .72 days of annual leave.  (Finding 8).

As a full-time employee in 2012, Dr. Mehta earned $627.96 per day (Finding 2).  She is thus entitled to a credit of $452.13 for the .72 days of annual leave she should have received.

CONCLUSION

The VA has met its burden as to the existence and amount of the debt and the remaining balance.  Dr. Mehta has proved entitlement to a credit of $452.13.  Accordingly, the VA may collect $6,100.17 by administrative offset.6

Alan R. Caramella
Administrative Judge

1 Jurisdiction for the Petition is based on a Memorandum of Understanding between the United States Postal Service and the Department of Veterans Affairs.  The memorandum is on file with the USPS Judicial Officer, 2101 Wilson Blvd., Suite 600, Arlington, Virginia 22201.  It provides for the use of administrative judges and administrative law judges to hear matters arising under the Debt Collection Act of 1982, 5 U.S.C. § 5514.  Procedural matters in this forum are governed by 39 C.F.R. Part 961.

2 The record includes Exhibits 1–7, which were attached to the VA’s Motion to Dismiss dated May 2, 2014; two declarations submitted by the VA; and Exhibits A–H submitted by Petitioner.  

3 $6,279.56 gross pay per pay period ÷ 10 working days per pay period = $627.96 per day (Exh. C at 1, block 21).

4 18 pay periods  × .04 days per pay period = .72 days.

5 During the proceedings, Dr. Mehta also asked me to consider a debt related to Federal Employee Health Benefits payments.  Specifically, Dr. Mehta asked for “a formal statement that this specific claim has been settled.”  Pet. Br. at 8.  In their briefs, both parties ultimately agreed that the balance of Dr. Mehta’s FEHB debt, after the VA’s offsets, is $333.43.  See Resp. Supp. Br. at 2–4, Pet. Supp. Br. at 1–2.  Thus, there does not appear to be any remaining dispute as to this issue.

6 Because Dr. Mehta was a VA employee when the debt was assessed and the Petition was docketed, the case was covered by the Memorandum of Understanding between the Postal Service and the VA as a case arising under Section 5 of the Debt Collection Act.  Because Dr. Mehta has now resigned, the VA does not have the ability to collect the debt by the usual method used in a Section 5 case (involuntary administrative salary offset).  Instead, the VA may rely on the collection methods used in a Section 10 case involving former employees.