April 9, 2018

In the Matter of the Debt Collection Act Petition

DEREK C. EDINBUGH v. U.S. DEPARTMENT OF VETERANS AFFAIRS

P.S. Docket No. VA 18-4

APPEARANCE FOR PETITIONER:
Derek C. Edinbugh

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

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

The Department of Veterans Affairs (VA) assessed Derek C. Edinbugh with a debt of $4,067.68 for unpaid Federal Employees Health Benefits (FEHB) premiums.¹ Mr. Edinbugh transferred from the Social Security Administration (SSA) to the VA effective January 8, 2017; however, the VA failed to complete the form necessary to collect FEHB premiums from Mr. Edinbugh until August 29, 2017.  Notwithstanding this failure, Mr. Edinbugh remained enrolled with his health insurance provider and he is responsible for his FEHB premiums.  The Petition is denied.  The VA may collect $95 per pay period until the $4,067.68 debt is paid.

FINDINGS OF FACT

1. Mr. Edinbugh began work with the SSA in 2005 at which point he elected to be insured with Blue Cross Blue Shield (BCBS) and selected Standard coverage for himself and his family (AE 1; Tr. 21-23).  He continued with this coverage until his departure from the SSA (AE 3; Tr. 23-25).
2. Mr. Edinbugh worked at the SSA until January 7, 2017, when he transferred to the VA.  Mr. Edinbugh began working at the VA on January 8, 2017; there was no break in service.  (AE 2, 10; Tr. 25-26).  The Standard Form 50, Notification of Personnel Action (SF 50), recording the transfer to the VA provides that “HEALTH BENEFITS COVERAGE CONTINUES.”  (AE 10).
3. While the VA recorded the transfer from the SSA to the VA with the SF 50, it did not process a Standard Form 2810, Notice of Change in Health Benefits Enrollment, which would change the agency paying the government’s portion of the FEHB premiums from the SSA to the VA and would cause the employee FEHB premium to be deducted from Mr. Edinbugh’s biweekly pay (Tr. 25-28; AE 11).
4. BCBS sent Mr. Edinbugh a letter dated July 13, 2017, with the heading “NOTICE OF INTENT TO DISENROLL” explaining that BCBS was reconciling its records with the records of the “BUREAU OF RECLAMATION” and that the “BUREAU OF RECLAMATION[’S]” records did not show Mr. Edinbugh being enrolled in BCBS.  The letter asked Mr. Edinbugh to confirm his current enrollment within 31 days or BCBS would disenroll him.  Mr. Edinbugh received the letter in late July or early August 2017, but it did not cause him concern because he had never worked for the Bureau of Reclamation or its parent agency the Department of Interior. (Pet. Exhs. at 23-24; Tr. 92-94).
5. In mid-August 2017, Mr. Edinbugh’s wife took his two children to the doctor. The doctor told his wife that Mr. Edinbugh’s family did not have coverage under BCBS. Mr. Edinbugh paid the doctor for the visits.  (Tr. 89-91; Petition at 1).
6. Mr. Edinbugh then contacted the VA’s human resources office and explained the problem.  The VA then processed the SF 2810, Notice of Change in Health Benefits Enrollment, on August 29, 2017.  (AE 11; Tr. 28-29).
7. On September 2, 2017, the VA paid BCBS $15,687.75 which represents $11,620.07 for the VA’s portion of the FEHB premiums and $4,067.68 for the employee portion of the FEHB premiums from January 8, to September 1, 2017.². The VA calculated the amount due for the employee portion by multiplying the biweekly premium of $254.23 by the number of pay periods (sixteen) during which it had not withheld the employee FEHB premium.³ (Tr. 65-66; AE 8, 9).
8. By letter dated September 16, 2017, the VA assessed Mr. Edinbugh with a debt of $4,067.68. The letter issued by the Defense Finance and Accounting Service (DFAS), which serves as the VA’s payroll office, provides:  “[y]ou can find additional information on hearings and/or waivers at [blank].”  Notwithstanding the lack of notice on where to file a petition, Mr. Edinbugh filed his Petition challenging the assessed debt. (AE 8 at 1; Petition).
9. Mr. Edinbugh has not submitted a claim to BCBS for reimbursement of the medical appointments he paid for (Tr. 89-91).

DECISION

In a Debt Collection Act case, the VA bears the burden of proving that a debt exists for FEHB premiums owed by Mr. Edinbugh.  See Ruan v. United States Postal Service, DCA 15-42, 2015 WL 13647646 (August 13, 2015), recon. den., 2015 WL 13647647 (September 16, 2015); see also Dept. of Veterans Affairs, Financial Policy, vol. XII, Debt Management, Chapter 1F, Administrative Wage Garnishment at 6 (July 29, 2016) (“[i]f the debtor challenges the existence, enforceability, or the amount of the debt, [the] VA has the initial burden to prove the existence or amount of the debt.”).⁴
Part of an employee’s health benefits is paid for by the VA while the remainder is paid for by the employee through payroll deductions.  5 U.S.C. §§ 8905-06.  “An employee . . . incurs a debt to the United States in the amount of the proper employee . . . withholding required for each pay period during which they are enrolled if the appropriate health benefits withholdings . . . are not made.”  5 C.F.R.
§ 890.502(a)(1); Ramos v. United States Postal Service, DCA 16-84, 2016 WL 10572248 (July 14, 2016).
In short, to collect under the Debt Collection Act, the VA must show:  (1) it did not collect the FEHB premiums from an employee during the relevant time period; (2) the employee had FEHB insurance during that time period; and, (3) it later forwarded payment of the FEHB premiums on behalf of the employee. See Willis v. United States Postal Service, DCA 16-258, 2017 WL 5516578 (July 18, 2017), recon. den., 2017 WL 551657
With regard to the first element, the VA did not collect $254.23 for FEHB premiums from Mr. Edinbugh for sixteen pay periods (Finding 7).  Mr. Edinbugh does not contest the first element.
With regard to the second element, the VA has shown that even though it did not change the agency making the payment to BCBS and even though it did not collect Mr. Edinbugh’s premiums from January through August 2017, his coverage continued (Findings 2, 4). In the July 13, 2017 letter, BCBS said the earliest it would cancel the insurance was 31 days later (i.e., August 13, 2017).  The record shows that BCBS provided coverage at least through August 13, 2017.
Mr. Edinbugh argues that because his doctor said that he did not have coverage, he does not owe for the entire time period.  However, Mr. Edinbugh did not submit a claim to BCBS for the amount he paid for the visits to the doctor. Even though the doctor said that there was no coverage in mid-August 2017, nothing in the record shows that BCBS did not retroactively cover these two weeks.  Accordingly, I conclude that Mr. Edinbugh had FEHB coverage during the relevant time period.
With regard to the third element, the VA forwarded $4,067.68 to BCBS (Finding 7). Mr. Edinbugh does not contest the third element.
Mr. Edinbugh also challenges the payment schedule established by the VA because it would create a severe financial hardship.  In the alternative, he proposed a payment plan of $95 per pay period until the assessed debt was satisfied. The VA does not oppose this alternate payment plan.

ORDER

The Petition is denied. The VA may collect $95 per pay period from Mr. Edinbugh by involuntary administrative salary offset until the $4,067.68 debt is satisfied.

Peter F. Pontzer
Administrative Judge