December 20, 2018
In the Matter of the Debt Collection Act Petition

PAMELA J. PENN-HICKS v. UNITED STATES POSTAL SERVICE

P.S. Docket No. DCA 16-268

APPEARANCE FOR PETITIONER:
Pamela Penn-Hicks

APPEARANCE FOR RESPONDENT:
John Moore
Labor Relations Specialist

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Pamela Penn-Hicks challenges the Postal Service’s $17,736¹ debt assessment for an overpaid grievance settlement.  This resulting case has a long and troubled history.  Events covering five years with two years of litigation, multiple grievances, three Debt Collection Act hearings, and the involvement of two judges lead to this decision.
I grant the Petition in part, and deny it in part.  The Postal Service is permitted to collect $10,522 from Ms. Penn-Hicks by involuntary administrative salary offset.  It is prohibited from collecting the remaining $7,214 portion of the assessed debt.
FINDINGS OF FACT

1. On December 19, 2013, the Postal Service and the American Postal Workers Union (APWU) settled a grievance.  The settlement required the Postal Service to re-post three duty assignments for which eligible employees could apply.  The settlement contemplated that three successful applicants would be paid retroactive “out of schedule premium[s] if applicable from August 24, 2013 until awarded the position[s],” even though the employees would not have worked in the positions during that period.  (Exh. 2; Tr. 62).
2. An out of schedule premium is calculated by comparing the employee’s new work schedule to her original schedule, including comparing scheduled days off.  The resulting number of different hours between the schedules is multiplied by 150% of the employee’s hourly rate to yield the premium.  (Tr. 17-18, 200).
3.  Effective March 8, 2014, the Postal Service awarded one of the three re-posted duty assignments to Ms. Penn-Hicks (Exhs. 3-5; Tr. 142).
4. Lydia Block, an APWU steward, and Kevin Graham, a Postal Service labor relations specialist, were responsible to calculate and agree upon the out of schedule premiums owed Ms. Penn-Hicks (Exhs. 10, 28; Tr. 76, 88-89, 168, 182).
5. On April 26, 2014, Ms. Block sent a proposal to Mr. Graham identifying $17,736 as the amount owed Ms. Penn-Hicks.  The proposal simply showed Ms. Penn-Hicks’ basic work schedule without calculation or analysis.  (Exh. 28).
6. On May 5, 2014, Mr. Graham asked Ms. Block to meet to review her proposal.  Mr. Graham asked Ms. Block to “be prepared to present a [sic] hourly breakdown on how you came up with the amounts you submitted.”  He requested “supporting documentation [which] is necessary to substantiate the amount of Out of Schedule Pay the union is requesting be paid out to these employees.”  (Exh. 10).
7. On May 17, 2014, Ms. Block asked Mr. Graham to “come with your figures so we can settle this please.”  (Exh. 10).

Events of May 23, 2014

1. On May 23, 2014, Ms. Block sent a second proposal to Mr. Graham, this time with summarized calculations identifying $19,381 as the amount owed Ms. Penn-Hicks (Exhs. 11, 28).
2. On that same day, Ms. Block’s first proposal was given to a Postal Service supervisor.  Mr. Graham asked that supervisor to review the proposal, and calculate what the Postal Service owed Ms. Penn-Hicks.  (Exh. 10; Tr. 158-60, 168-69). 
3. Rather than performing her own calculations, the supervisor input the $17,736 figure identified in Ms. Block’s first proposal into the Postal Service’s Grievance Arbitration Tracking System (GATS) (Exh. 27; Tr. 101-02, 113, 158, 170, 186).  That input automatically triggered payment (Tr. 111-12).
4. The supervisor then informed Mr. Graham that she had processed a $17,736 payment in GATS (Tr. 101, 112-13, 158-59, 170).  Mr. Graham immediately responded that the input amount was not agreed upon, and that processing of payment needed to be retracted.  He asked the supervisor to handle the payment retraction with the assistance of a higher-level labor relations specialist.  (Tr. 87-88, 104-05, 113-14, 176-77, 186-87, 194; Exh. 28).
5. The supervisor then emailed that higher-level labor relations specialist, asking for assistance in retracting the payment authorization.  She later forwarded that email to Mr. Graham, at which point Mr. Graham believed that the GATS payment authorization would be retracted.  (Exhs. 27-28; Tr. 186-87, 191, 194-96).
6. Mr. Graham sent an email to Ms. Block later the same day saying that a Postal Service supervisor had been assigned to compute and complete the calculations, and that he would provide “pay history printouts once completed.”  Mr. Graham’s email also stated that it is “always best if both parties do the breakdown and computing to avoid any disagreement.”  (Exh. 10).

Events of June 20-21, 2014

1. Mr. Graham and Ms. Block met weekly during the overnight shift Thursday nights into Friday mornings to discuss pending labor relations matters.  Late on Thursday night, June 20, 2014, into early Friday morning on June 21, Mr. Graham and Ms. Block conducted one of those meetings.  Prior to the meeting, Ms. Block and Mr. Graham had not discussed either proposal that Ms. Block had sent about the payment owed Ms. Penn-Hicks.  (Tr. 72-73, 80, 160, 167, 183, 192, 199, 202).
2. During the June 20-21, 2014 meeting, Ms. Block and Mr. Graham jointly calculated the amount due Ms. Penn-Hicks.  They utilized and annotated documents comparing Ms. Penn-Hicks’ schedules.  They jointly reviewed and expressly agreed line-by-line on hourly out of schedule premiums due, and performed the needed calculations as indicated by handwritten notes on the calculation sheets.  Based on that analysis, they agreed that the Postal Service owed Ms. Penn-Hicks $6,814.  (Exh. 11; Tr. 66, 69, 73, 80, 82-83, 89, 91, 161-63, 170-71, 199-200).
3. Although Ms. Block agreed with Mr. Graham on their joint $6,814 calculation, Ms. Block nonetheless believed that a higher figure was owed.  She did not, however, express this belief to Mr. Graham.  Ms. Block’s reason for agreeing to $6,814 rather than a higher figure she thought was owed was that she “looked at it as free money” that would be paid to Ms. Penn-Hicks “for doing nothing.”  (Tr. 81-82, 89-90).
4. Postal employees received their regularly-scheduled paychecks on the morning of June 21, 2014.  In addition to that paycheck, Ms. Penn-Hicks received a $17,736 payment based on the May 23 GATS input by the postal supervisor, which had not been retracted.  (Exh. 27; Tr. 12, 142).
5. Later on June 21, 2014, Mr. Graham presented a settlement agreement to Ms. Block confirming the agreement they reached that morning that the Postal Service owed Ms. Penn-Hicks $6,814 (Exh. 12; Tr. 163-65, 189-90).
6. By then, Ms. Block had learned that Ms. Penn-Hicks received a $17,736 payment that day.  For that reason, she declined to sign the settlement agreement.  (Tr. 6, 76, 164-65, 189).

Debt assessments and grievances

1. In January 2015, the Postal Service performed an accounting procedure ostensibly paying Ms. Penn-Hicks $6,814, but crediting that accounting-only payment against the prior overpayment (Exhs. 14, 27; Tr. 14-17).
2. On January 14, 2015, the Postal Service issued Ms. Penn-Hicks a Letter of Demand for Indebtedness assessing a $17,736 debt, without deducting the $6,814 credit (Exh. 14).
3. On April 2, 2015, the APWU filed a grievance on Ms. Penn-Hicks’ behalf contesting the Letter of Demand for Indebtedness (Exh. 6).
4. On November 20, 2015, the Postal Service’s Accounting Service Center (ASC) calculated the out of schedule payment owed Ms. Penn-Hicks, finding that $6,355 was due (Exhs. 14, 27).  The record does not explain the ASC’s calculation.
5. On March 25, 2016, Ms. Penn-Hicks requested that the Postal Service waive the assessed debt based on its administrative error.  On May 4, 2016, the Postal Service denied that waiver request.  (Exhs. 19-20).  Ms. Penn-Hicks and the APWU separately appealed the waiver denial on May 12, and May 17, 2016 respectively, (Exhs. 21, 24), which the Postal Service denied on June 10, 2016 (Exh. 22).
6. On June 19, and June 30, 2016, the APWU filed grievances challenging the Postal Service’s refusal to waive the debt, which the Postal Service denied at Step 2 on July 18, 2016 (Exhs. 7-8, 15).
7. On September 29, 2016, the Postal Service and the APWU settled the grievance at Step 3.  They agreed that Ms. Penn-Hicks owed and must re-pay the entire assessed debt because the Postal Service overpaid her.  Ms. Penn-Hicks did not participate in the grievance process or its settlement.  (Exhs. 17-18).
8. Based on detailed analysis of clock rings, schedules, and payroll documents, a financial manager for the Postal Service calculated the out of schedule premium due Ms. Penn-Hicks as $7,214, based on 540 compensable hours.  The financial manager explained those calculations under oath and subject to cross-examination during the May 30 hearing.  (Exh. 29; Tr. 1-2, 10, 19, 25-27, 39-40).
9. On September 30, 2016, the Postal Service issued a Notice of Involuntary Administrative Salary Offsets to Ms. Penn-Hicks, assessing a $17,736 debt without a corresponding credit for the payment to which she was entitled (Exh. 25).  On October 17, 2016, Ms. Penn-Hicks filed a Petition for a hearing under the Debt Collection Act. 

DECISION
Procedural history
I originally assigned this case to Administrative Judge Alan R. Caramella (Assigning Order, October 21, 2016),² who stayed proceedings while the parties unsuccessfully tried to negotiate a settlement (Orders of October 21, 2016, November 8, 2016, December 20, 2016, January 11, 2017, February 3, 2017).
Ms. Penn-Hicks states that during a March 10, 2017 telephone conference, Judge Caramella solicited the parties’ agreement to suspend the case further.  She states that the Judge indicated that due to their similarities, he likely would rule the same in this case as he would in a different pending case involving another of the three employees who were due out of schedule premiums based on the December 2013 grievance settlement (Motion to Recuse, July 4, 2018).  The official Order and Memorandum of Telephone Conference simply stated that the case would be suspended “until after [Judge Caramella] issue[d] a decision in another Petition that raises similar factual and legal issues to this Petition.”  (Order and Memorandum of Telephone Conference, March 10, 2017).
On August 9, 2017, Judge Caramella issued a decision in that related case.  He ruled in favor of the petitioner due to the Postal Service’s failure to submit evidence to prove the amount that it should have paid to that employee.  McCrary v. U.S. Postal Service, DCA 16-269, 2017 WL 5516580 (August 9, 2017).
On September 14, 2017, Judge Caramella conducted another telephone conference with the parties.  Ms. Penn-Hicks states that during this conference, Judge Caramella coached the Postal Service’s representative on why the Postal Service had lost the McCrary case and what needed to be done differently in this case to allow it to achieve a more favorable result.  (Motion to Recuse, July 4, 2018).  The official Order and Memorandum of Telephone Conference, September 14, 2017 does not mention any such aspect of the conference.³
On May 30, 2018, Judge Caramella presided at a hearing in which the Postal Service presented its case-in-chief.  The Postal Service’s representative did not arrange for the attendance of its employees who had been approved by the Judge to testify as witnesses for Ms. Penn-Hicks, however.  Judge Caramella ruled that the hearing would be completed at a later date.  (Tr. 52-54; Order, August 8, 2018).
On June 25, 2018, the Postal Service filed a submission seeking guidance from the Judge.  The Postal Service explained that Ms. Block of the APWU, who Ms. Penn-Hicks had called to testify as a witness, was not cooperating and did not want to testify.
On July 4, 2018, Ms. Penn-Hicks filed a Motion to Recuse (dated June 16, 2018).  The motion accused Judge Caramella of judicial bias, alleging that he coached the Postal Service’s representative, and asking that he be replaced with another judge.  Judge Caramella responded to Ms. Penn-Hicks’ Motion to Recuse as follows:
I have carefully considered the assertions in Ms. Penn-Hicks’s motion.
I disagree with her contention that I cannot hear and decide this case in a fair and impartial manner. Nonetheless, I understand her frustration and believe her concerns are sincere. To allay those concerns, I am thus returning this Petition to the Judicial Officer for further proceedings, and
I will not have any further involvement with it.
Order, August 8, 2018.
Following Judge Caramella’s recusal, I re-assigned this case to myself to serve as the Presiding Official (Re-Assignment and Scheduling Order, August 14, 2018). 
I then convened a telephone conference to address the Postal Service’s June 25, 2018 submission.  I ordered the Postal Service to secure Ms. Block’s attendance at the hearing as doing so was within the Postal Service’s control.  I also notified the parties that I intended to call Mr. Graham, who no longer was employed by the Postal Service, to testify as a court witness.  Neither party had sought to cause Mr. Graham to testify.  (Order and Memorandum of Telephone Conference, August 30, 2018).   
Ms. Penn-Hicks filed a Motion to Suppress asking me to expunge all evidence presented during the May 30 hearing as well as related documentary evidence.  The basis for Ms. Penn-Hicks’ motion was her claim that the referenced testimony was tainted by Judge Caramella’s alleged misconduct.  (Motion to Suppress, September 2, 2018 (but dated August 27, 2018)).
On September 10, 2018, I convened a telephone conference with the parties to discuss Ms. Penn-Hicks’ Motion to Suppress.  In the resulting Order, I explained my denial of the motion:
I solicited the parties’ differing versions of the events raised in Ms. Penn-Hicks’ Motion to Suppress the testimony given by Ms. Bradford on May 30, 2018, and to suppress the documents she referenced.  Based on their statements, I concluded that the previous judge assigned to this case reiterated the holdings and analysis in the decision issued in McCrary v. U.S. Postal Service, DCA 16-269, 2017 WL 5516580 (August 9, 2017).  The parties’ explanations did not cause me to conclude that the prior judge acted unfairly, or that he improperly provided guidance to the Postal Service.  Due to the prior judge’s August 9, 2018 Order (based on Ms. Penn-Hicks’ Motion to Recuse), returning the case to me for re-assignment and concluding that the prior judge would not have any further involvement with this case, I am unable to consult with him.
I denied Ms. Penn-Hicks’ Motion to Suppress.  I explained that the Fourth Amendment concerns she expressed do not apply to civil or administrative litigation.  I explained that her Fifth Amendment due process concerns are alleviated by the hearing I am conducting.  I explained that judges endeavor to decide cases based on all available relevant evidence; we strive not to have to decide cases based on a lack of evidence.  I explained further that the Rules of Practice support this philosophy.  See, e.g., 39 CFR § 961.8(f) (judge’s responsibilities include assuring that relevant information is elicited and that a satisfactory record is developed); 39 CFR § 961.8(g) (judge may require either party to submit additional evidence on any relevant matter).
Order and Memorandum of Telephone Conference, September 10, 2018 at 1-2.
During this telephone conference, I offered Ms. Penn-Hicks the opportunity to convert her Motion to Suppress into a motion for rehearing.  I explained that, if so requested and granted, the testimony provided at the May 30, 2018 hearing would be expunged as she had requested, but the Postal Service would be allowed to present the testimony of its witness again in a new hearing over which I would preside.  I granted Ms. Penn-Hicks’ request for time to consider this possibility.  (Order and Memorandum of Telephone Conference, September 10, 2018 at 2).  On September 12, 2018, Ms. Penn-Hicks informed my staff that she did not want a re-hearing.  I then issued an Order confirming that the May 30, 2018 testimony remains in the record.  (Order, September 12, 2018).
Two additional sessions of the hearing were held.  On September 20, 2018, the hearing re-convened, and Ms. Penn-Hicks presented her case.  She elicited testimony from seven witnesses, including Ms. Block whose testimony I had ordered.  On October 10, 2018, Mr. Graham testified as a court witness.  I examined Mr. Graham, and both parties questioned him on cross-examination.  On November 13, 2018, the parties filed post-hearing briefs, closing the record.
Analysis
The Postal Service bears the burden to prove that it overpaid Ms. Penn-Hicks by demonstrating the amount it paid her, and the lower amount to which she was entitled.  See Skadsberg v. United States Postal Service, DCA 14-198, 14-200, 2014 WL 12767841 (September 16, 2014).  The Postal Service indisputably paid Ms. Penn-Hicks $17,736 (Finding 17).  This case turns, therefore, on determining the amount to which she was entitled.  In deciding this amount, I also must address two defenses for which Ms. Penn-Hicks bears the burden of proof:  whether a higher payment was agreed upon; and whether the Postal Service should be bound to a higher amount due to its conduct.
The Postal Service identified three different amounts owed to Ms. Penn-Hicks:  $6,814, as agreed between Ms. Block and Mr. Graham in June, 2014 (Finding 15); $6,355, as calculated by the ASC in November 2015 (Finding 23), and $7,214, as testified to during the May 2018 hearing (Finding 27).  Ms. Penn-Hicks did not present evidence of any different calculation.
In this Debt Collection Act case, Ms. Penn-Hicks is not bound by the June 2014 agreement that $6,814 is owed her because she neither participated in the negotiations nor signed a settlement agreement.  See McCrary, DCA 16-269, 2017 WL 5516580.⁴   The higher amount owed - $7,214 - was explained under oath subject to cross-examination, and is supported by detailed calculations (Finding 27).  I therefore adopt it as correct based on the record before me.  Subtracting $7,214 owed, from $17,736 paid, yields a $10,522 overpayment.
Next I examine whether the parties agreed to a higher payment.  As a defense, Ms. Penn-Hicks must prove an authorized, binding settlement to a higher amount.  See Matthew J. Williams, Jr., AO 13-375, 2014 WL 12767823 (I.D. March 20, 2014).  The record shows, without doubt, that no agreement was reached as to the payment owed Ms. Penn-Hicks before the June 20-21, 2014 meeting between her union steward, Ms. Block, and the Postal Service’s labor relations specialist, Mr. Graham.  Until that meeting, the parties had not even discussed Ms. Block’s payment proposals and the Postal Service had not identified any proposed figure (Findings 5-9, 14). 
During the June 20-21, 2014 meeting, Ms. Block and Mr. Graham jointly calculated the payment, and agreed that $6,814 was due (Finding 15).  The Postal Service subsequently changed its litigation position from that $6,814 amount to its present position of $7,214, which I have adopted.  Ms. Block’s unsupported belief that Ms. Penn-Hicks was owed considerably more than she herself agreed upon during the meeting with Mr. Graham is legally irrelevant because it was never agreed upon by the Postal Service (Finding 16).
Ms. Penn-Hicks argues, though, that the Postal Service should be bound to pay her $17,736 because it processed a payment in that amount which she received on June 21, 2014.  If that payment had resulted from an agreed-upon settlement extinguishing the Postal Service’s obligation created by the 2013 grievance settlement and subsequent events, I would consider it under the contract doctrine of accord and satisfaction.  However, accord and satisfaction requires an actual agreement between the parties.  See Brock & Blevins Co. v. United States, 343 F.2d 951, 955 (Ct. Cl. 1965).  I have found that nobody within the Postal Service agreed or concluded that it owed Ms. Penn-Hicks $17,736.⁵   The only explanation for the Postal Service’s payment of that amount therefore, is that an administrative error occurred resulting in that payment being issued, which is precisely what the record reveals.  A valid accord and satisfaction requires more than merely the payment of money.  There must be a clear, unmistakable, and explicit communication establishing that performance according to the terms of an express agreement satisfies the underlying obligation.  See generally, Baylor Health Care Sys. v. Emp’rs Reinsurance Corp., 492 F.3d 318 (5th Cir. 2007). 
Ms. Penn-Hicks believes that she should not be responsible for this debt because it resulted from administrative error.  However, a “salary overpayment typically results from a mistake or administrative error.”  Morey v. United States Postal Service, DCA 14-292, 2015 WL 13647631 (June 9, 2015).  While administrative error may be relevant to a decision by the Postal Service to waive a debt, it has no effect on my decision to determine whether that debt exists.  See Lofton v. United States Postal Service, AO 13-313, 2018 WL 2688562 (P.S.D. May 18, 2018) (“A debt created by administrative error or affected by procedural errors, even without the knowledge of the debtor, remains collectible under the Debt Collection Act.”).
As for Ms. Penn-Hicks’ argument that the Postal Service should have waived collection of the debt under the circumstances presented, waiver based on administrative error is entirely a discretionary decision for the Postal Service, in which I have no role.  See Ann v. United States Postal Service, AO 14-160, 2015 WL 13647612 (P.S.D. January 7, 2015).  The Postal Service opted not to exercise its discretion to waive the debt.  I here decide the underlying basis for the debt, not whether that non-waiver decision was appropriate.  As explained in Kathryn R. Yates, AO 08-67, 2008 WL 11383898 (I.D. June 18, 2008):
Much of Petitioner’s argument addresses what she perceives as the improper denial of her request for waiver.  Those issues are not relevant in this proceeding.  A Hearing Official in an Administrative Offset [or Debt Collection Act] case has no authority to grant a waiver or to review the decisions of others who may have acted on a waiver request.
I understand and empathize with Ms. Penn-Hicks about her frustration that the Postal Service lost the similar McCrary case while being successful in this case.  The result in McCrary was based solely on the Postal Service’s failure to present necessary evidence.  Judge Caramella concluded in McCrary that this “absence of evidence is fatal to the Postal Service’s case.  Simply put, on this record, the Postal Service has not explained how it calculated the amount of the premium pay it believes Ms. McCrary was entitled to.”  McCrary, DCA 16-269, 2017 WL 5516580 at 4.  The Postal Service proved its case here; it did not do so in McCrary.
It is true that the Postal Service likely learned from the failures of proof described in the McCrary decision resulting in its adducing testimony to prove the amount due in this case.  I have found, however, that this knowledge did not result from any improper conduct by the prior judge (Finding 42).  Each case must be based on its own record.
Ms. Penn-Hicks argued and has shown severe financial hardship.  She is entitled to relief regarding an appropriate schedule to pay her $10,522 debt to the Postal Service.  I remand negotiation of that payment schedule to the parties who should consult the principles I explained in Kline v. United States Postal Service, AO 17-98, 2018 WL 1606048 (P.S.D. March 23, 2018).  If the parties cannot agree, Ms. Penn-Hicks may file another Petition and I will order a payment schedule.
ORDER
The Petition is granted in part, and denied in part.  The Postal Service is permitted to collect $10,522 from Ms. Penn-Hicks by involuntary administrative salary offset but is prohibited from collecting the remaining $7,214 portion of the assessed debt.  The salary offset schedule is remanded to the parties to negotiate.

Gary E. Shapiro
Administrative Judge