December 13, 2017

In the Matter of the Debt Collection Act Petition

ELIZABETH VEENKER v. U.S. DEPARTMENT OF VETERANS AFFAIRS

P.S. Docket No. VA 17-185

APPEARANCE FOR PETITIONER:
Elizabeth Veenker, M.D., pro se

APPEARANCE FOR RESPONDENT:
Kelly Burns, Esq.
Department of Veterans Affairs

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Elizabeth Veenker, M.D., filed a Petition for Hearing on May 19, 2016.¹  Respondent, United States Department of Veterans Affairs (VA or agency), seeks to collect a total of $10,459.12,² which it contends represents a salary overpayment to Petitioner.³ A hearing was held in Gainesville, Florida.⁴ The following findings are based on the record.

FINDINGS OF FACT

1. Petitioner worked as a physician at the North Florida - South Georgia Veterans Affairs Medical Center (VAMC) during all relevant time periods at issue in this Petition (Tr. 178).⁵
2. From July 4, 2010, through March 11, 2011, Petitioner’s total salary was $204,715, consisting of base pay of $101,254 and market pay of $103,461 (AE 1 at 1).
3. A compensation panel for Petitioner was conducted in February 2011.  As the result of the compensations panel’s review of the statutory factors for market pay, the compensation panel recommended that Petitioner’s market pay be increased by $18,552 effective March 13, 2011, and the panel completed VA Form 10-0432A as required by VA Handbook 5007/21 Part IX (December 14, 2005).  This recommended action would increase Petitioner’s total market pay to $122,013.  (Tr. 21, 44, 49, 56; AE 2 at 12).
4. The recommendation of the compensation panel regarding the increase of Petitioner’s market pay was adopted without changes by the approving official, Director Thomas A. Capello (AE 2 at 12).
5. However, rather than reflecting Petitioner’s then correct total compensation of $204,715, VA Form 10-0432A used by the compensation panel and later signed by the Director showed an inaccurate total compensation of $201,448 before the market pay increase (AE 2 at 11).
6. After establishing the market pay increase in accordance with the statutory factors, the compensation panel added the increase in market pay to the incorrect total compensation figure, thus arriving at a new (but inaccurate) total compensation figure of $220,000 (Tr. 21, 38, 51-52, 77; AE 2 at 12).
7. Following the 2011 compensation panel, Petitioner was paid her correct base pay of $101,254 and her properly adjusted market pay of $122,013 for a total compensation of $223,267, notwithstanding the base pay error on VA Form 10-0432A, or the inaccurate total compensation figure of $220,000 (Tr. 55-56, 144-45; AE 5).
8. In 2014, during an audit of Petitioner’s payroll records, the agency discovered that Petitioner had been paid the correct base pay and the correct market pay, but in doing so the amount of her pay exceeded the incorrectly calculated amount of total compensation of $220,000 reflected on VA Form 10-0432A (Tr. 60-61; AE 1 at 8-10; AE 5).
9. Through a series of transactions reflected on Petitioner’s Form 50s (many involving one agency error after another) the agency unilaterally reduced Petitioner’s market pay to offset the amount of salary paid to Petitioner that exceeded the incorrectly calculated $220,000 total compensation figure on VA Form 10-0432A (Tr. 115-16, 119; AE 1).
10. In doing so, the agency created a debt in the amount of $10,459.12, which it contends was a salary overpayment to Petitioner (AE 5).
11. At the same time, the agency was also correcting Petitioner’s payroll records to provide her with backpay for two missed step increases.  Petitioner was entitled to backpay for the step increases retroactive to the anniversary dates when she should have received those increases.  As the result of an agency offset, Petitioner never received the backpay she was entitled to receive for these step increases.  (Tr. 41, 131, 179).
12. Prior to this hearing, the agency offset $6,282.50 of backpay owed to Petitioner (see Finding 11 above) against the overall claim of debt, resulting in a current balance of the claim of debt of $4,517.38 (Tr. 118-21; AE 5).
13. The Petition was timely filed.

DECISION

Under the Debt Collection Act of 1982 (Debt Collection Act), the agency carries the burden of establishing that a debt exists. Herrin v. U.S. Dep’t of Veterans Affairs, VA 17-48 (June 30, 2017).  The obligation to meet that burden in a salary overpayment case requires the agency to produce sufficient evidence that Petitioner owes the debt, and that the amount the agency seeks to collect is an accurate calculation of the debt alleged.  Price v. United States Postal Service, AO 15-212 (I.D. May 17, 2016).  Once Respondent meets that initial burden, the burden of persuasion shifts to Petitioner to prove that the debt is erroneous or not otherwise owed.  Caroline Harrington, DCA 08-333 (May 13, 2009).  In this case, the agency seeks to collect what it contends was an overpayment of salary to Petitioner that occurred as the result of adjustments made to Petitioner’s market pay.
Market pay is one element of a VA physician’s salary.  A physician’s salary is also impacted by base pay, which is set by statute according to the individual’s length of service.  38 U.S.C. § 7431(b).  Base pay may fluctuate in accordance with adjustments to annual salary schedules under 5 U.S.C. § 5303.  Such fluctuations may occur due to adjustments in salary rates, or by longevity increases also known as step pay.  38 U.S.C. § 7431(b)(3), (4).⁶
Congress created this comprehensive compensation scheme for VA physicians to ensure the recruitment and retention of highly qualified physicians for the agency and its patients.  38 U.S.C. § 7431(c)(2).  The Secretary was charged with developing appropriate regulations to implement the statutory procedures for physician compensation.  38 U.S.C. § 7433(a)(1).  VA Handbook 5007/21 Part IX (December 14, 2005)(“VA Handbook”) sets forth the regulatory and administrative procedures involving pay for VA physicians and dentists. (AE 8).  Under these regulations, the VA must convene a compensation panel for the purpose of determining a physician’s market pay at least once every 24 months. (AE 8, ¶10(a)).  The compensation panel is charged with determining the physician’s market pay by taking into consideration the statutory factors outlined by Congress. 38 U.S.C. § 7431(c).  The compensation panel recommends to the approving official (in this case the VAMC Director) adjustments to the physician’s salary.  The decision of the approving official is final. (AE 8, ¶10(d)).
Congress compelled the agency to consider several factors for market pay analysis.  The compensation panel charged with this responsibility does not set base pay, which is established by law, but rather applies the statutory factors to arrive at a recommendation for market pay.  Once determined, the proposed market pay is added to the base pay in a pro forma manner to calculate the physician’s total compensation. 
The agency argues that when the 2011 compensation panel conducted for Petitioner set market pay, it intended to identify only the total compensation, including base pay, not the market pay increase reflected on VA Form 10-0432A ($18,552) stated in its recommendation and later adopted by the Director.  The agency further argues that the $220,000 figure, which it admits includes an inaccurate base pay figure as part of the calculation, is the only compensation Petitioner is entitled to receive under the statute because that is the amount approved by the Director.
There was testimony to suggest that practically speaking, the compensation panel’s practice has been to review total compensation and back into market pay by subtracting the physician’s then current base pay from the panel’s determination for total compensation (Tr. 21, 93-95).  Certainly the numbers reflected on the compensation form seem to support this argument, as the proposed increase in market pay, added to the inaccurate prior salary, would equal exactly $220,000.  Such a practice, however, is not consistent with the statutory obligations of the compensation panel.⁷
The statute is clear that market pay must be separately calculated using the statutory factors.  VA Form 10-0432A reflects the compensation panel’s considered analysis and conclusion that Petitioner’s market pay should be increased by $18,552 in accordance with the factors determined by the statute.  The Director’s adoption of the panel’s recommendation regarding market pay was final in accordance with the VA Handbook.  Thus, once the authorizing official approves a physician’s market pay, it cannot later be reduced by the agency in the absence of another compensation panel or other specific circumstances not applicable here.  The statute makes this unequivocal.  “[N]o adjustment of market pay of a physician or dentist under paragraph (5) may result in a reduction of the amount of market pay of the physician or dentist while in the same position or assignment. . . .”  38 U.S.C. § 7431(c)(6).  As both parties agree that Petitioner’s assignment or position remained unchanged during the applicable period, the agency’s unilateral decision to reduce Petitioner’s market pay violated the express provisions of the physician pay statute.⁸
The agency in this case confused the role of the compensation panel and the Director and incorrectly applied the physician pay statute.  Rather than noting that market pay, as recommended by the panel and later adopted by the authorizing official is the key factor that cannot be reduced after the fact, it focused instead on the total compensation calculation as sacrosanct, which in this case both parties agree was calculated based on inaccurate information.  Because the agency incorrectly focused on total compensation, all subsequent agency “corrective” actions were also wrong.  The agency improperly adjusted Petitioner’s market pay to correct what was an earlier base pay error on VA Form 10-0432A. That is, of course, illogical on its face, as one would normally correct a base pay error by simply adjusting the base pay retroactively.  However, because the agency mistakenly believed that the total compensation figure on the VA Form 10-0432A was inviolable, it chose instead to reduce Petitioner’s market pay.  As the statute makes clear, this they cannot do.
Compounding the confusion is that the “errors” the agency purportedly “corrected” were salary payments already made to Petitioner of her correct base pay and her correct market pay as approved by the Director during the relevant timeframe.  For reasons not clear on this record, the base pay error reflected on VA Form 10-0432A was not implemented by the agency’s payroll department back in 2011.  As a result, because the salary payments were correct when made, and because the agency lacks authority to reduce a physician’s market pay under these circumstances, no debt exists.  Accordingly, the agency has failed to meet its burden of proof on the claim of debt and Petitioner is entitled to judgment in her favor.
However, that does not resolve the entire problem.  As noted earlier, backpay was owed to Petitioner because of the failure to process her step increases in a timely fashion.  The agency improperly offset that backpay against the claim of debt in violation of the procedures under the Debt Collection Act.  5 U.S.C. § 5514.  Accordingly, the agency must refund to Petitioner the amounts offset.  Consistent with agency submissions, the total claim of debt invalidated by this Decision is $10,459.12.  By my calculation, and confirmed by witness testimony, the agency offset $6,282.50 in backpay owed to Petitioner against the total claim of debt in advance of this proceeding.  The agency must now refund that sum to Petitioner in accordance with this Decision and my Order that follows.

ORDER

The Petition is GRANTED.
The claim of debt of $10,459.12 is INVALIDATED.
The agency shall REFUND to Petitioner all sums improperly taken in offset against the claim of debt within SIXTY DAYS of the date of this Order ($6,282.50).

James G. Gilbert
Chief Administrative Law Judge