July 18, 2017

In the Matter of the Debt Collection Act Petition

LOVETTA WILLIS v. UNITED STATES POSTAL SERVICE

P.S. Docket No. DCA 16-258

APPEARANCE FOR PETITIONER
LoVetta Willis

APPEARANCE FOR RESPONDENT
Jane L. Davis
Labor Relations Specialist
United States Postal Service

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

The Postal Service assessed LoVetta Willis with six debts for unpaid health insurance premiums totaling $8,313.20.  Considering payments and refunds made by both parties, the Postal Service may collect $4,006.10 at a rate of $50 per pay period by involuntary administrative salary offset until the $4,006.10 is paid.

FINDINGS OF FACT

1. Ms. Willis has been employed by the Postal Service for approximately 40 years.  As of 2017, Ms. Willis worked as a general clerk in the Processing and Distribution Center in Oakland, California.  (Tr. 67).
2. Ms. Willis had a series of health challenges resulting in extended periods during which she did not work.  Each of the six debts relate to a period of time when Ms. Willis was in a nonpay status because of her health issues.  (Amended Petition; Tr. 67; Pet. Exhs. 7-32).
3. The Postal Service issued Ms. Willis a consolidated invoice dated December 20, 2016, which identified six debts totaling $8,313.20.  The debts included:
   

   Debt Number 1, Invoice No. 701936802:	$   800.151
   Debt Number 2, Invoice No. 702282686:	$1,153.10
   Debt Number 3, Invoice No. 702249462:	$   616.00
   Debt Number 4, Invoice No. 702564383:	$1,924.05
   Debt Number 5, Invoice No. 702580696:	$1,924.05
   Debt Number 6, Invoice No. 702677241:	$1,895.85
   	$8,313.20

   
   (Pet. Exh. 2).
   Debt No. 2, Invoice No. 702282686:  $1,153.10. 
4. The Postal Service seeks to collect $1,153.10, which represents the employee portion of Federal Employee Health Benefits (FEHB, or health insurance) for June 18 to September 2, 2011 (Amended Answer at 2).
5. In 2009 and 2010, Ms. Willis was in a nonpay status and was not working for the Postal Service because of health issues (Resp. Exh. 8, 15; Tr. 85-86).  Ms. Willis returned to work on January 29, 2011 (Tr. 86), but her FEHB plan stopped coverage effective February 1, 2011, at the direction of the Postal Service because she had been in a nonpay status for an extended period of time (Pet. Exhs. 7-10, 13).
6. Ms. Willis sought medical treatment on February 25, 2011, from her FEHB plan and received it.  However, on April 12, 2011, her FEHB plan sent her an invoice for $400 and informed her that she was not enrolled.  (Tr. 86; Pet. Exhs. 7-10).
7. Ms. Willis asked the Postal Service to reinstate her coverage in May 2011, but this request was denied because it was outside of open season and beyond the sixty-day period when she returned to work (Pet. Exhs. 12, 13).  Ms. Willis then submitted an application for health insurance on June 14, 2011, but the Postal Service denied it by letter dated July 1, 2011 (Resp. Exh. 15).  Ms. Willis appealed the denial, but the Postal Service again denied her appeal for health insurance on August 1, 2011 (Pet. Exh. 17).
8. Ms. Willis was treated in a hospital emergency room on August 11, 2011, which cost $1,341.  The hospital’s admission records reflected that Ms. Willis did not have health insurance (Pet. Exhs. 20, 31, 34a).
9. The American Postal Workers Union (APWU) filed a step 2 grievance on behalf of Ms. Willis on August 11, 2011, which the Postal Service received on August 12, 2011.  The APWU argued that the denials were improper because the Postal Service did not provide notice about enrolling in an FEHB plan when Ms. Willis returned to work in January 2011.  (Pet. Exh. 34b; Resp. Exh. 15 at 10).
10. On August 23, 2011, the Postal Service denied the step 2 grievance and concluded that Ms. Willis was not entitled to enroll in FEHB (Resp. Exh. 15 at 10-12).
11. For reasons neither party could explain at trial, on August 29, 2011, the Postal Service overturned its earlier denials of Ms. Willis’s health insurance request, making it retroactive to June 18, 2011 (Pet. Exh. 26).
12. Ms. Willis, however, could not use her FEHB until September 16, 2011 (the next pay period after enrollment approval by the Postal Service) (Tr. 86).  Effectively, Ms. Willis did not have FEHB coverage from February 1 through September 16, 2011 (Tr. 86; Pet. Exhs. 7-10).
13. The FEHB insurance provider continued to try to collect from Ms. Willis for the February 2, 2011, visit in February 2012 (Pet. Exh. 29).
14. Also, despite making the health coverage retroactive, the August 11, 2011 hospital emergency room visit was not covered by insurance (Pet. Exh. 31).
15. Five years later, on September 10, 2016, the APWU and Postal Service resolved a grievance related to this debt.  The settlement says:  “Grievant [Ms. Willis] will be compensated a one time lump sum of $550, less appropriate deductions.  This settlement . . . will not be cited in any forum except for enforcement.”  The settlement agreement also provides:  “As a result of this settlement agreement, the union agrees to withdraw the above-referenced case from the grievance/arbitration process.”  The agreement does not say whether Ms. Willis still owes either $1,153.10 or $603 to the Postal Service for health insurance.  (Resp. Exh. 16).²
16. Pursuant to the settlement agreement, the Postal Service paid Ms. Willis $550 for Debt Number 5 (Tr. 29, 63, 85).
    Debt No. 4, Invoice No. 702564383:  $1,924.05. 
17. The Postal Service assessed a debt to collect $1,924.05 which represents the employee portion of FEHB from April 5 to June 13, 2014 (Amended Answer at 2).  The APWU and Postal Service settled a grievance of this debt whereby Ms. Willis would be indebted to the Postal Service for $186.20 (Resp. Exh. 7(e); Pet. Exh. 39a).  Ms. Willis agrees that the Postal Service is entitled to $186.20, but the parties disagree as to whether Ms. Willis has fully paid the $186.20 to the Postal Service (Tr. 6, 7, 9).
    Debt No. 5, Invoice No. 702580696:  $1,924.05.
18. Ms. Willis did not pay the employee portion of FEHB during the pay periods from June 14 to August 22, 2014 (see pay stubs submitted by Petitioner on April 30, 2017 at 42-50).  The Postal Service assessed a debt to collect $1,924.05 for the employee portion of FEHB from June 14 through August 22, 2014 (Amended Answer at 2-3). 
    Debt No. 6, Invoice No. 702677241:  $1,895.85.
19. Ms. Willis did not pay the employee portion of FEHB during the time period from July 26 to October 3, 2015 (see pay stubs submitted by Petitioner on April 30, 2017 at 42-50; Tr. 8, 33, 39, 40, 90, 91).  The Postal Service assessed a debt to collect $1,895.85, which represents the employee portion of FEHB from July 26 through October 3, 2015 (Amended Answer at 1, 4; Tr. 39, 40).  Ms. Willis does not challenge the amount, but challenges the Postal Service’s proposed payment plan arguing that it would create a severe financial hardship.
    Balance of Payments
20. Starting in 2014, Ms. Willis made 22 payments of varying amounts to the Postal Service totaling $4,558.88 (Resp. Exh. 27).
21. Because the Postal Service withheld money without notice while grievances were pending or while this litigation was pending, it issued five refund checks to Ms. Willis totaling $4,208.88 (Resp. Exh. 27; Pet. Exh. 35b; Tr. 49, 75, 76, 79, 82-84).
22. The Postal Service retained $350 which is the difference between Ms. Willis’s payments and the Postal Service’s refunds ($350 is the amount the parties agreed that Ms. Willis owed for Debt Number 3) (Resp. Exh. 27; see also March 27, 2017 Order, Partial Grant of Petition, Partial Dismissal of Petition, and Memorandum of Telephone Conference.).
    Notice
23. While the Postal Service issued several Notices of Involuntary Administrative Salary Offset, the record is unclear whether it issued such notices for all six debts.  Ms. Willis waived any requirement for additional notice.  (Tr. 5).

DECISION

For each pay period during which an employee is covered by FEHB, part of the premium is paid by the Postal Service with the remainder paid by the employee through payroll deductions.  If the employee’s share of the premium is not collected during the pay period in which the employee is enrolled in FEHB, a debt is incurred.  5 C.F.R. § 890.502(a)(1); Morgan v. United States Postal Service, DCA 16-214 (January 12, 2017); Phillips v. United States Postal Service, DCA 15-142 (November 18, 2015).  The Postal Service has the initial burden of showing that (1) it did not collect the FEHB premiums from an employee during that time period, and (2) the employee had FEHB insurance during that time period.  Ruan v. United States Postal Service, DCA 15-42 (August 13, 2015).
If the Postal Service meets this burden, there is a rebuttable presumption that the Postal Service, in compliance with its own regulations and federal law, paid the employee’s portion of the FEHB insurance premium.  In such case, the employee is then liable for the resulting debt.  Phillips, DCA 15-142.
Debt No. 2, Invoice No. 702282686:  $1,153.10. 
The Postal Service proved that it did not collect FEHB premiums for Ms. Willis’s portion of health benefits between June 18 and September 2, 2011.  The Postal Service, as discussed below, has not proved that Ms. Willis had FEHB insurance during that time period.
Ms. Willis returned to work in January 2011 after being in a non-pay status.  Later, on June 14, 2011, Ms. Willis submitted a form asking to be enrolled in an FEHB insurance plan.  Normally, Ms. Willis’s FEHB insurance would have been activated the first pay period after her request.  See Employee Labor Relations Manual (ELM) § 524.6 referencing the Office of Personnel Management’s Healthcare Reference Materials (https://www.opm.gov/healthcare-insurance/healthcare/reference-materials/) (“See the regulations which govern the Federal Employees Health Benefits Program” which includes 5 C.F.R. § 890.301).
The Postal Service must show an employee had coverage for the relevant period of time for which it seeks to collect FEHB.  Saunders v. United States Postal Service, AO 14-307 (February 24, 2015)(the Postal Service failed to meet its burden of proof in showing that employee was enrolled in FEHB and was, therefore, unable to establish entitlement to collect FEHB premiums from the employee).  The Postal Service argues that Ms. Willis’s FEHB insurance was effective as of June 18, 2011, but that argument is not persuasive under the facts presented here.
In Ms. Willis’s case, backdating the period of coverage after the Postal Service had already denied coverage several times was not effective.  Ms. Willis sought treatment at a hospital emergency room because she did not have coverage.  Ms. Willis’s FEHB provider would not pay the hospital even though the coverage was backdated.  The hospital continued to invoice Ms. Willis for the emergency room visit two years later.  In short, backdating the FEHB did not work to get Ms. Willis coverage from June 18, 2011 to September 2, 2011.  Based on these facts, I conclude that the Postal Service has not met its burden of showing that Ms. Willis had health insurance from June 18, 2011 to September 2, 2011.
Moreover, the Postal Service and the APWU had an open grievance until 2016.  The 2016 grievance settlement between the Postal Service and the APWU had the Postal Service paying Ms. Willis $550 (not Ms. Willis paying the Postal Service $1,153.10).³ The Postal Service has not shown why it is not bound by its grievance settlement with the APWU or why I should not enforce it pursuant to the terms of the agreement. 
In the alternative to seeking $1,153.10, the Postal Service argues that it is entitled to $603.10.⁴  The Postal Service provided no evidence supporting its calculations.  Accordingly, the alternative argument fails.
In summary, the Postal Service is not entitled to collect either $1,153.10 or $603.10 for Debt Number 3.  Ms. Willis may retain the $550 paid by the Postal Service which the Postal Service paid pursuant to the grievance settlement between the Postal Service and the APWU.
Debt No. 4, Invoice No. 702564383:  $1,924.05.
The parties agree that the Postal Service is entitled to $186.20 for Debt Number 4, but they disagree as to whether Ms. Willis has made full payment on this debt.  The Postal Service is entitled to collect $186.20 for this debt and Ms. Willis is entitled to credit for the payments she made.  However, given the numerous payments and refunds, I will address this issue when addressing the balance of payments below.
Debt No. 5, Invoice No. 702580696:  $1,924.05.
The Postal Service met its burden of proving that Ms. Willis had FEHB coverage from June 14 to August 22, 2014 and that Ms. Willis did not pay the employee portion of the premiums totaling $1,924.05.  In her defense, Ms. Willis argues that the Postal Service issued her a check for $1,924.05 dated February 27, 2015, accompanied with a note saying “THE ATTACHED CHECK REPRESENTS A REFUND DUE TO AN INVOICE BEING CANCELLED, AMENDED OR ADJUSTED.”  (Pet. Exh. 35b).  In addition, an email between the Postal Service and the APWU indicates that the $1,924.05 was already collected as a result of an “improper wage deduction.”  (Pet. Exh. 36). 
The record indicates that a grievance was pending when the Postal Service collected the $1,924.05 from Ms. Willis, which would make collection premature.  See ELM § 462.41, Stay of Collection of Debt (“the Postal Service will stay the collection of the debt until after the disposition of the grievance and/or the petition”).  Refunding money which was withheld prematurely does not affect whether the Postal Service is ultimately entitled to collect for the underlying debt.  Thus, Ms. Willis’s argument that the note accompanying the check shows a waiver of the debt is incorrect.  Accordingly, I do not find Ms. Willis’s argument persuasive.  The Postal Service is entitled to collect $1,924.05 from Ms. Willis for Debt Number 5.
Debt No. 6, Invoice No. 70267741:  $1,895.85.
The Postal Service met its burden of proving that Ms. Wills had FEHB coverage from July 25 to October 3, 2015, and Ms. Willis does not contest the assessed debt of $1,895.85 which represents the employee premium for FEHB.  Ms. Willis argues that payments of more than $25 a pay period would create a severe financial hardship.  This issue is addressed below in the balance of payments discussion.
Balance of Payments.
While Ms. Willis made 22 payments to the Postal Service, this money was refunded except for $350 which is the amount agreed upon between the Postal Service and the APWU for Debt Number 3.  In addition, because the Postal Service has not shown that Ms. Willis had health insurance until September 2011, the Postal Service may not collect for Debt Number 2.  The Postal Service may collect for Debt Nos. 4, 5, and 6. 
In summary, the Postal Service has shown that it is entitled to collect the following additional amounts:
Debt No. 1                 $            0
Debt No. 2                 $            0⁵
Debt No. 3                 $            0
Debt No. 4                 $   186.20
Debt No. 5                 $1,924.05
Debt No. 6                 $1,895.85
Total Due                  $4,006.10
The Postal Service seeks to collect at the regulatory rate of 15% of Ms. Willis’s biweekly disposable pay.  See ELM § 462.42, Limit on Amount of Salary Offset to Collect Debt.  Ms. Willis opposes that payment plan saying that such payments would cause a severe financial hardship particularly in light of her trying to rebuild her financial reputation given the repeated unannounced withholdings by the Postal Service.  See 39 C.F.R. § 961.4(b)(4).  Instead, Ms. Willis requests a repayment schedule of $25 a pay period.  Having considered the evidence presented by the parties, I conclude that the Postal Service may collect $50 per pay period until it collects $4,006.10.

ORDER

The Petition is denied in part and granted in part.  The Postal Service may collect from Ms. Willis by involuntary administrative salary offset $50 per pay period until $4,006.10 is paid.

Peter F. Pontzer
Administrative Judge