September 23, 2021

P.S. Docket No. AO 21-154

In the Matter of the Administrative Offset Petition

CHRISTOPHER SURGEN v. UNITED STATES POSTAL SERVICE 

APPEARANCE FOR PETITIONER: Christopher Surgen

APPEARANCE FOR RESPONDENT: Rhett Walton, Labor Relations Specialist, United States Postal Service

FINAL DECISION

The United States Postal Service (“Postal Service”) assessed Christopher Surgen with a $3,504.36 debt for continuation of pay after Mr. Surgen’s workers’ compensation claim was denied.  The Postal Service forwarded the debt to the United States Department of Treasury (“Treasury”) for collection.  Treasury added a 30% collection fee of $1,051.31 to the debt which raised the total debt to $4,555.67.  Treasury, through the IRS, withheld Mr. Surgen’s 2020 tax refund of $644.81 to pay a portion of the debt.
The Postal Service has the initial burden of proof in this case.  It must show that it made payments to Mr. Surgen, the amount of the payments, and that he is not entitled to keep them.  Because the Postal Service did not provide key documents, such as the Payroll Journal and witness testimony to support its case, it has not met its burden of proof. 
The Petition, therefore, is granted.  The government may not collect the assessed debt and the Postal Service shall return $644.81 to Mr. Surgen.

FINDINGS OF FACT

1. Mr. Surgen worked for the Postal Service in 2019 as a City Carrier Assistant in Waterbury, Vermont (Resp. Exh. 1). 
2. On April 1, 2019, Mr. Surgen filed a workers’ compensation claim for a traumatic injury sustained on March 31, 2019.  The Department of Labor, Office of Workers’ Compensation Programs (OWCP) denied the claim.  (Resp. Exh. 3).
3. As part of the decision, OWCP advised “[y]our employing agency will charge any previously paid Continuation of Pay to your sick and/or annual leave balance or declare it an overpayment.”  (Resp. Exh. 3).
4. Effective August 24, 2019, Mr. Surgen resigned from the Postal Service and relocated to Las Vegas, Nevada (Tr. 30, 32, 35; Resp. Exh. 1).¹  
5. In August or early September 2019, Mr. Surgen informed his supervisor of his change of address.  He also provided his local Post Office with a change of address form.  (Tr. 33, 35-38).
6. At the time of Mr. Surgen’s departure from the Postal Service, his salary was $17.79 per hour (Resp. Exh. 1).
7. A year later, the Postal Service believes it sent Mr. Surgen an invoice dated August 19, 2020, in the amount of $3,504.36 to Mr. Surgen’s old Waterbury, Vermont address, not the Las Vegas, Nevada, address (Tr. 19-20; Resp. Exh. 4).
8. The invoice provided in the notes section:  “PY AR (1 OF 1): PER REQUEST FROM OFFICE WE ARE ESTABLISHING AN INVOICE FOR PP’S08-09-10/2019 FOR A TOTAL OF 198.71 HRS OF CONTINUATION OF PAY.  OWCP CLAIM DENIED.  ANY QUESTIONS, SEE YOUR SUPERVISOR.  PROCESSED PP 16/2020 RF JONES 9661 SALARY 17.29, 17.79.”  (Resp. Exh. 4).
9. The Postal Service believes that it attached to the invoice another document entitled:  “NOTICE OF DEBT DETERMINATION.”  (Tr. 48-49; Resp. Exh. 4).  The Notice of Debt Determination (hereinafter the “Notice”) provides:  “This debt is based on PAYROLL RELATED DEBT.”  (Resp. Exh. 4).  In addition to providing an address to pay the debt, the Notice provides:  “provisions of the Debt Collection Act, 31 U.S.C. § 3716 provide you with the opportunity to exercise certain rights before the Postal Service may refer this debt for collection by administrative offset.”  (Resp. Exh. 4).
10. The Postal Service signed an agreement with Treasury entitled “CY 2021 Agreement to Certify Federal Nontax Debts for Centralized Receivables Service, the Cross-Servicing Program, and the Treasury Offset Program” (the “Certification Agreement”).  In the Certification Agreement, the Postal Service’s chief of the Accounting Services Center certified that the debt being forwarded to Treasury was legally enforceable and that the former employee had been provided with the required due process.  (USPS Response dated July 7, 2021, Attachment 1).
11. The Postal Service forwarded the debt to Treasury, which used the available tools to collect the debt based on the certification.  Treasury offset $644.81 from Mr. Surgen’s tax refund.  (Tr. 7; Pet. Exh. July 19, 2021).  Treasury also sent Mr. Surgen notice that it intended to administratively garnish his wages to collect the debt assessed by the Postal Service.  Upon receiving the Treasury notice, Mr. Surgen filed a timely request for a hearing.

DECISION

The Postal Service has the initial burden of proving the existence and amount of the debt to a preponderance level of the evidence.  31 C.F.R. § 285.11(f)(8)(i).  In order to meet this burden, the Postal Service must show:  (1) the overpayments were made; (2) the amount of the overpayments; and, (3) that Mr. Surgen is not entitled to the overpayments.  See, e.g., Reid v. United States Postal Service, DCA 19-392, 2021 WL 1390580 (March 16, 2021).  If the Postal Service meets this burden, the burden shifts to Mr. Surgen who must show to a preponderance level of the evidence that no debt exists or that the amount of the debt is incorrect.  31 C.F.R. § 285.11(f)(8)(ii).

Initial Burden of Proof
The Postal Service submitted only five exhibits which were admitted into the record.  Its entire case rests on these five exhibits.  A review of these five exhibits is necessary to determine if the Postal Service has met its initial burden of proof.
Exhibit 1 is a Form 50, Notification of Personnel Action with an effective date of August 24, 2019.  It shows that Mr. Surgen’s last day with the Postal Service was August 24, 2019.  It also shows that his base salary was $17.79 per hour at that time.
Exhibit 2 is the Employee Everything Report, which presumably shows the hours Mr. Surgen worked.  It includes time codes.  Some unknown individual wrote “Date of Alleged Injury” and a table with numbers for five time codes and what they apparently mean.  The table does not include a total for the number of hours for continuation of pay.  In his opening argument, the Postal Service’s representative argued that the total hours of continuation of pay can be calculated from the Employee Everything Report.  A total number of continuation of pay hours does not appear on the Employee Everything Report.  The Postal Service did not offer witness testimony to explain the report or the calculations.
Exhibit 3 is a decision by OWCP dated June 5, 2019.  OWCP denied Mr. Surgen’s workers’ compensation claim, which would then be a denial of his entitlement to receive continuation of pay.  This exhibit shows that Mr. Surgen is not entitled to continuation of pay for a particular period of time.  It does not show that overpayments were made or the amount of the overpayments.
Exhibit 4 is an invoice dated August 19, 2020, from the Postal Service for $3,504.36.  The Postal Service provided no testimony as to how the calculations on the invoice were determined or why they should be relied upon.
Attached to the invoice was a Notice of Debt Determination dated “MAR-04-2021”.  It provides:  “This debt is based on PAYROLL RELATED DEBT.”  The Notice then includes information about some of the rights that Mr. Surgen had.  On its face, the date on the notice appears to be wrong.  The date is different than that on the invoice.  In its argument, the Postal Service requested that I ignore the date on a record produced by its accounting systems and substitute a different date.  The Postal Service did not offer testimony as part of its case in chief to explain why I should ignore the plain language on the exhibit while accepting the accuracy of the rest of the exhibit.
Exhibit 5 is a Notice of Intent to Initiate Administrative Wage Garnishment Proceedings dated February 9, 2021, that Treasury sent to Mr. Surgen at his Las Vegas address.  It does not show what payments if any were made to Mr. Surgen or how the debt amount was calculated.  Upon receipt of this notice, Mr. Surgen filed a timely request for a hearing.
I convened an initial call with the parties on June 11, 2021.  During the conference, I discussed the Postal Service’s initial burden of proof.  See Order and Memorandum of Telephone Conference dated June 11, 2021.  In the Order and Memorandum of Telephone Conference I specifically noted:  “Based on a preliminary review of the exhibits, the Postal Service may want to submit Payroll Journal records and calculations showing how it determined the debt amount.”  The Payroll Journal is an accounting record which “shows the details of payments, deductions, and adjustments applicable to Postal Service employees each pay period.”²   Payroll Journal Guide, Handbook F-18, January 2014 Transmittal Letter.  The Postal Service did not to file copies of the Payroll Journal for the relevant time period. 
The Postal Service was permitted to call witnesses.  In its answer submitted prior to the hearing, the Postal Service identified three witnesses, including a “Field Financial Specialist [from] Concord[,] NH, who manages debts, invoices, and Letters of Demand in the Northeast Area.”  At the outset of the hearing, the Postal Service advised that it would not be calling any witnesses as part of its case in chief.  I noted that the Postal Service was allowed to make such a choice, but it would not change its burden of proof.
The evidence presented by the Postal Service in its case in chief only includes five exhibits.  When taken together, the Postal Service’s five exhibits do not show that the Postal Service made a salary overpayment or how the Postal Service calculated the amount of the assessed debt.  In other words, the absence of the Payroll Journal and testimony was detrimental to the Postal Service’s case because the Postal Service did not show that payments were made and the amount of the payments.  I considered the Employee Everything Report without the handwritten comments and concluded that without the comments, I could not calculate the number of continuation of pay hours. 
The Postal Service also asks me to believe the calculations in the invoice because I should be able to rely on its accounting systems.  Based on the evidence presented in this case, the argument is not persuasive.  The Postal Service’s accounting system put the wrong date on the Notice of Debt Determination.  Additionally, the same accounting systems did not retain records showing that the notice was actually sent.  The Administrative Wage Garnishment regulations provide:  “The agency will retain evidence of service indicating the date of mailing of the notice.”  31 C.F.R. § 285.11(e).  Finally, even assuming that the Postal Service sent notice a year after Mr. Surgen left the Postal Service, the document was addressed to Mr. Surgen’s Vermont address, not his Nevada address.  In short, the Postal Service’s argument is unpersuasive.
In its closing argument, the Postal Service noted that Mr. Surgen never testified that he did not receive payment for the continuation of pay hours.  The argument is based on a faulty premise.  Mr. Surgen wasn’t named as a Postal Service witness and he didn’t have to testify as part of the Postal Service’s case in chief.  The Postal Service had the initial burden of proof and failed to meet the burden of showing that the overpayments were made and the amount of the overpayments.  In summary, the Postal Service failed to meet its initial burden of proof, therefore, the government is not entitled to collect $3,504.36.  The debt is invalidated.

Notice
During the hearing, Mr. Surgen testified that he never received notice of the assessed debt from the Postal Service.  I allowed the Postal Service to provide rebuttal testimony on this issue.  The Postal Service’s witness said that a notice should have gone out, but she did not process the notice, see it go out, or confirm through the Postal Service’s records (such as Track & Confirm®) that it was actually sent.  In the present case, I do not need to determine whether the Postal Service sent notice or if Mr. Surgen received the notice.  Because the Postal Service has not met its initial burden of proof, whether Mr. Surgen received notice from the Postal Service is academic.

Tax Offset
Because the Postal Service has not met its initial burden of proof, it may not collect the debt.  Because the debt has been invalidated, the Postal Service shall return the $644.81 which has been improperly offset by the Treasury Department.

ORDER

The Petition is GRANTED.  The Postal Service shall refund the $644.81 which was offset from Mr. Surgen.

Peter F. Pontzer, Administrative Judge.

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