December 16, 2021

P.S. Docket No. AWG 21-194

In the Matter of Administrative Wage Garnishment Petition

KIMBERLY D. BLALOCK v. UNITED STATES POSTAL SERVICE

APPEARANCE FOR PETITIONER:                 
Kimberly D. Blalock

APPEARANCE FOR RESPONDENT:              
Patricia Jesse
Labor Relations Specialist
United States Postal Service

FINAL DECISION

The Postal Service assessed Kimberly D. Blalock with a debt of $1,410.29 for 69 hours of overdrawn annual leave.  The Postal Service then assessed a second debt of $469.09 for related taxes it forwarded to federal and state authorities on Ms. Blalock’s behalf.  The two debts total $1,879.38.  The Department of Treasury (“Treasury”) added a 30% collection fee to the debts.  Ms. Blalock challenged both debts assessed by the Postal Service and the collection fee.
The Petition is granted in part and denied in part.  The Postal Service is entitled to collect for 56 hours of overdrawn annual leave and related taxes, not 69 hours and related taxes.  Because the Postal Service did not provide notice, the collection fee is disallowed. 
The dispute is remanded to the parties for recalculation consistent with this opinion.  Ms. Blalock is credited with $436.91 which has already been offset by the government.

FINDINGS OF FACT

1. Ms. Blalock began working for the Postal Service in 2009.  She worked as a rural carrier at the Marion Post Office in North Carolina.  (Resp. Exh. 6; Tr. 88).
2. Sometime in 2017, Ms. Blalock moved from Marion, North Carolina, to Morganton, North Carolina.  She updated her employee profile, advised her supervisors, and filed a change of address card with her local post office.  She also regularly updated her change of address card with the post office.  (Tr. 84-85, 89-90). ¹ 
3. In late 2019, Ms. Blalock began having serious issues with her wrists and was diagnosed with carpal tunnel syndrome.  The injury required that she work light duty or not return to work.  (Pet. Exhs. 18-23; Tr. 64). 
4. The Postal Service was not, however, able to find light duty work that would accommodate her injury (Tr. 65-67). ²  Therefore, Ms. Blalock resigned effective June 5, 2020 (Resp. Exh. 6).
5. During the winter and spring of 2020, the Postal Service paid Ms. Blalock for 69 hours she did not work.  The Postal Service characterized the 69 hours as annual leave.  Ms. Blalock’s supervisors knew of her injury and that she wanted to use sick leave for the time off.  Ms. Blalock’s pay records show that she had used more than 150 hours of sick leave in early 2020 because of her injuries.  The pay records also show that Ms. Blalock had accrued 13 hours of sick leave which could have reduced the 69 hours of unearned annual leave to 56 hours.  (Tr. 64-66, 75-76; Resp. Exhs. 7 at 5, 16 at 2). ³
6. The record includes two June 24, 2020 invoices addressed to Ms. Blalock.  The first invoice is addressed to Ms. Blalock in Marion, North Carolina.  It does not include a Notice of Debt Determination advising Ms. Blalock of her due process rights.  (Resp. Exh. 1).  The second invoice is addressed to Ms. Blalock in Morganton, North Carolina.  It includes a Notice of Debt Determination dated May 21, 2021 (after this case was filed) which advises Ms. Blalock of her due process rights.  (Compare Resp. Exh. 1 with Resp. Exh. 14; Tr. 79-80). ⁴  In both invoices, the Postal Service seeks to collect $1,410.29 for 69 hours of unearned annual leave.
7. The Postal Service does not have records showing that the invoices were deposited into the mail (Tr. 56).⁵   The Postal Service also does not have records, such as a Track & Confirm® report, tracking the invoices through the mail from the time they were sent to their delivery address (Tr. 56-57). 
8. The Postal Service’s payroll accounting system shows that the Postal Service’s Accounting Services Center mailed a financial statement to Ms. Blalock in July 2020.⁶   The financial statement was returned as undeliverable.  In other words, the Postal Service’s Accounting Services Center knew, or should have known, that it had an incorrect address.  (Tr. 96-97). 
9. Ms. Blalock did not pay the overdrawn annual leave debt within 90 days, so the Postal Service forwarded it to Treasury (Tr. 6-7).  By forwarding the debt to Treasury, the Postal Service certified that the debt was valid, legally enforceable, and that due process had been provided to Ms. Blalock.  (Resp. Exh. 13, Section I, Paragraph C).
10. In December 2020, Treasury sent Ms. Blalock notice that it intended to collect the first debt of $1,410.29 through administrative wage garnishment.  Treasury also added a 30% collection fee.  The notice was sent to Ms. Blalock’s Morganton, North Carolina address.  (Resp. Exh. 17).  Ms. Blalock filed a timely Petition requesting a hearing.
11. In the spring of 2021, Treasury withheld Ms. Blalock’s expected $1,866 tax refund.  Treasury did not collect the 30% collection fee used with administrative wage garnishment.  Instead of collecting a 30% collection fee used with administrative wage garnishment collections, Treasury collected an $18.80 collection fee used with tax refund offsets.  (Tr. 7, 48-49, 51, 101-02; Pet. Exhs. at 9-10). 
12. Also, in the late spring of 2021, the Postal Service forwarded the second debt of $469.09 to Treasury for collection (Tr. 7; Resp. Exhs. 1, 10, 11).
13. Ms. Blalock requested a hearing on the second debt.  The two debts were consolidated for processing and one hearing was held.
14. Prior to the hearing, the Postal Service returned $1,429.29 to Ms. Blalock for the first debt of $1,410.29 and $18.80 for the collection fee (Tr. 9-10, 13-14).⁷

DECISION

This case presents three issues.  The first issue is whether the Postal Service is entitled to collect for 69 hours of unearned annual leave.  The second issue is whether the Postal Service is entitled to collect $469.09 for related taxes.  The third issue is whether the government prematurely added collection fees.

Overdrawn Annual Leave
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).  To meet this burden for the first debt, the Postal Service must show:  (1) the overpayments were made; (2) the amount of the overpayments; and, (3) that Ms. Blalock is not entitled to the overpayments.  See, e.g., Calhoun v. United States Postal Service, AWG 21-218, 2021 WL 5824359 (November 23, 2021); 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 Ms. Blalock 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).
Here, the evidence shows that the Postal Service paid Ms. Blalock $1,410.29 for 69 hours of annual leave.  Ms. Blalock does not contest that she received the money, but credibly testified that she wanted to reduce that amount by using 13 hours of sick leave, which she was entitled to use, had requested to use, and for which a leave form (PS Form 3971) was submitted on her behalf.  The evidence shows that more than 150 hours of sick leave were used by Ms. Blalock because of her injuries.  The Postal Service could not produce any of the relevant leave forms or rebut Ms. Blalock’s credible testimony.  Based on the weight of the evidence, I reduce the assessed debt by 13 hours of sick leave.  Because the debt was not properly calculated, I conclude that the assessed debt is too high.  Ms. Blalock did not work the remaining 56 hours and is therefore not entitled to keep any money she was paid for those hours.  See, e.g., Ting v. United States Postal Service, DCA 20-52, 2020 WL 4501818 (July 22, 2020).  The Postal Service is only entitled to collect for 56 hours of overpaid annual leave.

Taxes
The Postal Service is entitled to recoup from an employee the excess taxes forwarded on behalf of an employee to the federal and state tax authorities.  Thorne v. United States Postal Service, DCA 12-319, 2013 WL 12303256 (April 16, 2013).  The Postal Service sent $469.09 to federal and state tax authorities on behalf of Ms. Blalock.  The amount was calculated based on 69 hours, not 56 hours.  Here, however, because the Postal Service is only entitled to collect for the taxes associated with 56 hours, the amount of the debt related to taxes needs to be recalculated.
In the most basic sense, employees and former employees are entitled to notice and an opportunity to be heard before the government collects a debt.  See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542 (1985); 5 U.S.C. § 5514; 31 U.S.C. §§ 3716(a)(1), 3720A(b)(1), 3720D(b)(2); 39 C.F.R. Parts 961 and 966; see also Employee Labor Relations Manual § 472.11 (March 2021)(“The Postal Service may initiate administrative offset only after the former employee has been provided with written notice . . . .”).  At a bare minimum, the Postal Service needs to show that it sent the notice.  39 C.F.R. § 258.11(e)(1).⁸   The Postal Service provided some evidence that its accounting systems sent Ms. Blalock notice of its intent to administratively offset the debt to her last known address, which can be sufficient.  See 31 C.F.R. § 285.5(d)(5). 
The Postal Service produced a Notice of Debt Determination for both debts which advised Ms. Blalock of the debt and her rights.  If notice were not an issue, that would generally be sufficient.  I would presume that saving an electronic version of a letter would generally mean it was sent by routine business processes.  I would also presume that a letter deposited into the mail is delivered as addressed.  See, e.g., Republic of Sudan v. Harrison, 139 S. Ct. 1048, 1057 (2019)(the Court relied on “the venerable ‘mailbox rule’” for the proposition that mail properly addressed and deposited into the mail stream will be delivered); see also Restatement (Second) Contracts § 66 (Am. Law. Inst. 1981).
Ms. Blalock, however, credibly testified that she never received the Postal Service’s notices.  Her testimony is unrebutted.  The presumptions I just noted above come into question.  The Postal Service did not produce a Track & Confirm® report, a USPS Tracking® report, or testimony from a records custodian stating that the notices were deposited into the mail stream.  Furthermore, even if notices were sent, the record also includes evidence that the Postal Service may have sent them to Ms. Blalock’s old address in Marion.  Finally, the different versions of the invoices reduce the weight of any presumption I am inclined to give the Postal Service.
In sum, after weighing the evidence, I find that the Postal Service has not proved that it sent Ms. Blalock notice of its intention to collect the two debts at issue in this Petition, thereby depriving her of a chance to contest the debts before they were referred to Treasury.
Notwithstanding the requirements of due process, the Postal Service forwarded the debts to Treasury for collection.  As part of the forwarding process, the Postal Service certified that Ms. Blalock had been provided all due process guaranteed by the applicable regulations and that the Postal Service had “complied with . . .  statutes, regulations, and policies applicable to collection of the Debt . . . .”  (Resp. Exh. 13).  In reliance on the Postal Service’s certification of the debts, Treasury then used its tax offset authority to offset Ms. Blalock’s tax refund.  See 31 U.S.C. § 3720A. 
Treasury also added a collection fee.  The Postal Service’s failure to provide notice resulted in an improper addition of collection fees whether $18.80 or 30% by Treasury.  Ms. Blalock was prejudiced by the Postal Service’s failure to provide notice.  See, e.g., Suntec Indus. Co. Ltd. v. United States, 857 F.3d 1363, 1368 (Fed. Cir. 2017)(litigant must show that the lack of notice prejudiced it in order to receive relief).  Because the Postal Service prematurely sent the debt to Treasury for collection, the government is not entitled to retain the $18.80 or 30% collection fees.  Calhoun, AWG 21-218.

Conclusion
The Postal Service assessed Ms. Blalock with two debts totaling $1,879.38.  Treasury added a collection fee of $18.80 bringing the total due to $1,898.18.  Treasury offset $1,866 from Ms. Blalock’s tax refund.
The Postal Service returned $1,429.09 to Ms. Blalock.  The government retained $436.91.
Because the Postal Service incorrectly concluded that it paid Ms. Blalock for 69 hours of overdrawn annual leave and related taxes, not 56 hours and related taxes, the debts are remanded to the parties for recalculation without a collection fee.  Ms. Blalock is credited with the $436.91 retained by the government.

ORDER

The Petition is denied in part and granted in part.  The calculation of the amount of the first debt shall be reduced by 13 hours of sick leave.  Because of the 13-hour reduction, the related taxes also need to be recalculated. 
Ms. Blalock is credited with $436.91 which was retained by the government.  This amount shall be applied to any balance owed by Ms. Blalock.
The Postal Service failed to provide Ms. Blalock with the required due process before forwarding the debt to Treasury.  The collection fees were improperly added to the debts and are therefore disallowed.

Within four weeks of receiving this Decision, the parties shall file a joint status report identifying their revised calculations.  If the parties cannot agree on the contents of the status report, they may file separate status reports.  I retain jurisdiction over the recalculated debts.

Peter F. Pontzer
Administrative Judge

---