Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Department of Health and Human Services,
- v. -
Dolly Jackson,
Respondent.
DATE: October 3, 1990
Docket No. C-265
DECISION
This Debt Collection Act case was heard pursuant to a request for hearing filed
by the Respondent wherein
she denied that the Department of Health and Human Services (DHHS) had overpaid
her in the amount of
$1,603.09. DHHS alleged that overpayment occurred when the total amount of Respondent's
backpay
award, when reduced by required offsets and deductions, was insufficient to
cover health insurance
premiums owed for the period covered by the award. After considering the entire
record, I find that DHHS
has shown that an overpayment occurred and that a debt of $1,603.09 is due and
owing from Respondent.
I further find that, while I lack authority to grant a waiver of this debt,
this is a case in which waiver is
appropriate. I therefore recommend that a waiver be granted.
BACKGROUND
By letter of June 20, 1990, DHHS notified Respondent that she had been overpaid
in the amount of
$1,603.09. The alleged overpayment resulted from implementation of Merit System
Protection Board
(MSPB) Decision #SF07528910643. The MSPB Decision reversed Respondent's retirement
and reinstated
her to a part-time position as a Claims Clerk (Typing), GS-4, step 10, for the
period April 22, 1986 to
August 9, 1989. The MSPB Decision reflected an agreement reached between Respondent
and DHHS to
settle her claim that her retirement had been involuntary.
Respondent timely filed a request for hearing. In her written request, she
did not dispute DHHS'
calculation of the amount of the overpayment. Instead, she argued that she had
not been informed at the
time she entered into the settlement of her MSPB appeal that an overpayment
was possible. Respondent
further argued that there had been no discussion of reinstatement to a part-time
position at the telephone
settlement conference conducted by the MSPB.
On August 1, 1990, I conducted a telephone prehearing conference in this case.
At the prehearing
conference, Respondent stated that she wished to argue both that she was not
indebted to the Department
and, in the alternative, that the amount of the debt was incorrectly calculated.
In response to my Prehearing
Order, the parties submitted documents and written arguments.
DHHS requested that I conduct a paper hearing. Respondent requested the opportunity
to examine
witnesses. However, the testimony Respondent wished to elicit from these witnesses
relates to the fairness
of the agreement reached between Respondent and DHHS to settle her MSPB appeal.
Because I lack
authority to reopen or reconsider the MSPB decision, I conclude that the testimony
Respondent sought is
not relevant to the matters in dispute in the present case. Accordingly, I conclude
that it is appropriate for
me to decide this case on the paper record.
ISSUES
The issues are:
1. Whether the debt claimed by DHHS from Respondent in the amount of $1,603.09
is due and
owing; and, if so,
2. Whether Respondent should be granted a waiver of her obligation to repay the debt.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Respondent retired on April 22, 1986, after 35 years of federal service.
At the time of her retirement
she was employed by DHHS, Social Security Administration (SSA), as a Claims
Clerk, at grade GS-4, step
10, with an annual salary of $16,723. DHHS Ex. 1: MSPB Opinion at 2, MSPB Appeal
at 1.
2. Respondent began receiving annuity payments under the Civil Service Retirement
System (CSRS) on
May 1, 1986. On August 29, 1986, the Office of Personnel Management (OPM) notified
her that she must
redeposit the amount of $5,519.00 or accept a reduction in her annuity payment
from $918.00 to $591.00
per month. The redeposit was required because Respondent had previously withdrawn
the retirement
contributions attributable to approximately nine years of her federal service.
Respondent was unable to
pay the redeposit, but did not wish to accept the reduced annuity. For this
reason, OPM withheld annuity
payments to Respondent until the redeposit amount was satisfied. DHHS Ex. 1:
MSPB Opinion at 2.
3. On May 3, 1987, Respondent requested OPM to allow her to elect an alternative
annuity under an
amendment to 5 U.S.C. 8343, which was effective June 6, 1986. In its decision
on Respondent's request,
OPM concluded that she was not eligible for an alternative annuity because her
annuity had commenced on
May 1, 1986, prior to the effective date of the amendment. On reconsideration,
OPM affirmed its earlier
decision. DHHS Ex. 1: MSPB Opinion at 2-3.
4. Respondent appealed OPM's decision to the San Francisco Regional Office
of the MSPB. She
contended that she had not been informed during her retirement counseling that
a redeposit would be
required before she could receive an annuity in the amount of $918 per month.
Had she been so informed,
she argued, she would have delayed her retirement date. After a hearing, the
administrative law judge
(ALJ) concluded that Respondent's retirement had been involuntary, because she
had reasonably relied on
misinformation supplied by SSA regarding the amount of her annuity. DHHS Ex.
1: MSPB Opinion at 3-
4.
5. OPM petitioned the MSPB for review of the initial decision of the ALJ. OPM
contended that the ALJ
should have decided Respondent's involuntary retirement claim as an appeal against
SSA, as the former
employing agency, rather than against OPM. On June 6, 1989, the MSPB issued
a decision vacating the
ALJ's decision and remanding Respondent's involuntary retirement claim to the
San Francisco Regional
Office to be docketed as a separate appeal against SSA. DHHS Ex. 1: MSPB Opinion
at 1.
6. On August 9, 1989, Respondent and DHHS entered into an oral agreement to
settle Respondent's claim
that she had been retired involuntarily. The parties' agreement was recorded
in an Initial Decision of that
date, Docket No. SF07528910643, issued by an ALJ of the MSPB's San Francisco
Regional Office.
DHHS Ex. 2 at 1.
7. The terms of the settlement, as recited in the Initial Decision, were as follows:
a. Respondent's April 22, 1986 retirement was to be canceled and she was to
be reinstated to her
former position. The Initial Decision clearly stated that Respondent would be
reinstated to a part-time
position, with a regularly scheduled tour of duty of 24 hours per week.
b. Respondent was to receive back pay for the period April 22, 1986 to August
9, 1989. The
Initial Decision notified Respondent that her back pay would be offset by annuity
payments and outside
earnings she had received during the period, in accordance with relevant laws
and regulations.
c. Respondent would retire effective August 9, 1989, the date of the settlement.
The ALJ found that the settlement was lawful and that it had been fairly reached
by the parties. DHHS Ex.
2 at 2.
8. The Initial Decision contained the following "Notice to Appellant":
This initial decision will become final on September 13, 1989, unless a petition
for review is filed by
that date or the Board reopens the case on its own motion. This is an important
date because it is the last
day on which you can file a petition for review with the Board. . . . You may
request Board review of this
initial decision by filing a petition for review if you believe that the settlement
agreement is unlawful, was
involuntary, or was the result of fraud or mutual mistake.
DHHS Ex. 2 at 3.
9. Respondent did not petition the MSPB for review of the Initial Decision.
10. By letter of June 20, 1990, DHHS notified Respondent that processing her
backpay award had resulted
in an overpayment in the amount of $1,603.09. DHHS Ex. 14.
11. Respondent's backpay for the period May 1, 1986 to August 9, 1990 totaled
$36,757.36. The value of
her accumulated leave totaled $4,569.60. DHHS Ex. 14.
12. During the period May 1, 1986 to August 9, 1989, Respondent received gross
annuity payments from
her Civil Service Retirement plan of $38,091.00. After deducting premiums for
health and life insurance,
Respondent received net annuity payments of $34,544.35 for the period. DHHS
Ex. 10; DHHS Memo of
8-23-90 to DAB.
13. DHHS calculated the overpayment by offsetting against Respondent's backpay
award the net amount
of annuity payments she had received from May 1986 to August 1989. The difference
remaining after the
offset was $6,782.61. From this amount DHHS subtracted $2,573.02 as Respondent's
retirement
contribution for the period of her reinstatement and $599.24 for required contributions
to Medicare. After
those subtractions, $3,610.35 remained. DHHS Ex. 14.
14. Required health insurance premiums covering the period of Respondent's
reinstatement totaled
$5,213.44. The remainder of Respondent's backpay award was insufficient to cover
the deduction for
health benefits. The difference between the remainder of Respondent's backpay
award and the health
insurance premiums is $1,603.09, the amount of the alleged overpayment. DHHS
Ex. 14; see also DHHS
Memo of 8-10-90 to DAB.
15. Subchapter S-8 of FPM Supplement 990-2 contains instructions to federal
personnel officers
governing computation of backpay awards.
16. FPM Supplement 990-2, section S8-7(d) provides for the recovery of civil
service retirement annuity
payments from erroneously separated employees. That section provides, in pertinent
part:
Any employee who, as a result of separation that is subsequently determined
by an appropriate authority
to have been erroneous, has been in receipt of retirement annuity payments .
. . is indebted to the
Government for the gross amount of retirement annuity payments authorized for
the period covered by the
corrective action.
17. FPM Supplement 990-2, section S8-7(d) further provides that the Government
must reduce the gross
amount of annuity payments by the required deductions for health benefits and
life insurance before
collecting the net amount of annuity payments from the employee:
Because the gross amount of annuity payments had already been reduced by required
health benefits
and life insurance premiums, the agency recovers an amount of annuity from the
backpay award equal to
the gross annuity less health benefits and life insurance premiums, and transfers
that amount to the
retirement system.
18. FPM Supplement 990-2, section S8-7(e) governs other deductions from backpay
awards. That section
requires deductions for retirement contributions and health benefits. Regarding
deductions for health
benefits section S8-7(e) provides:
Health benefits premiums for an employee restored to duty following an erroneous
separation for
retirement must be deducted if coverage under the health benefits program continued
without interruption
during the erroneous retirement [emphasis original].
19. Respondent's health benefits continued uninterrupted throughout the period
of her erroneous
retirement. DHHS Ex. 10.
20. DHHS calculated the overpayment in accordance with applicable statutes, regulations and policies.
21. Respondent has been overpaid in the amount of $1,603.09. That amount constitutes
a debt owed by
Respondent to DHHS.
ANALYSIS
The issue in this case is whether the $1,603.09 balance due for health insurance
premiums for the period of
Respondent's reinstatement, April 22, 1986 to August 9, 1989, is an overpayment
and a debt owed by
Respondent to DHHS. I conclude that the unpaid health insurance premiums constitute
an overpayment
and a debt.
At the time of her original retirement, on April 22, 1986, Respondent was employed
by SSA, an agency of
DHHS. She retired as a Claims Clerk, Typing, GS-4, step 10, earning $16,723.00
annually. Shortly after
her retirement, OPM informed her that she was required to redeposit $5519.00
to her retirement account or
accept a reduced annuity. Respondent was unable to make the redeposit. Therefore,
OPM collected the
redeposit amount by temporarily reducing her annuity payments. This redeposit
and offset was a financial
hardship to Respondent. It was at this point, in May of 1987, that Respondent
requested OPM to allow her
to elect an alternative annuity. OPM's denial of that request, and Respondent's
subsequent appeal to the
MSPB, ultimately resulted in the settlement agreement which underlies the overpayment
at issue in this
case.
The MSPB treated Respondent's request for an alternative annuity as a claim
that her retirement had been
involuntary. The MSPB found credible her testimony that, had she been informed
at the time she retired
that the redeposit was required, she would have elected to delay her retirement
and to continue working
long enough to satisfy the redeposit amount. The MSPB remanded the involuntary
retirement claim to the
ALJ. Respondent and DHHS agreed to settle the involuntary retirement claim.
The terms of the settlement
agreement reversed Respondent's retirement and reinstated her to her former
position. Respondent agreed
that she would retire effective August 9, 1989, the date of the settlement.
DHHS agreed that it would pay
her based on a part-time tour of duty of 24 hours per week for the period of
her reinstatement.
Respondent does not argue that DHHS' calculations of her backpay award are
erroneous or that the award
was computed contrary to applicable statutes or regulations. Rather, her arguments
primarily relate to the
fairness of the agreement she reached with DHHS to settle her MSPB appeal of
her retirement date.
Implementation of that agreement resulted in the backpay award. Respondent contends
that the ALJ's
Initial Decision does not accurately reflect the substance of the oral agreement
she entered into with
DHHS. Specifically, she alleges that DHHS' representative never stated that
her reinstatement would be to
a part-time position. Respondent further argues that the settlement agreement
violates 5 U.S.C. 5596, in
that reinstatement to a part-time position fails to make her whole, since she
was employed full time prior to
her involuntary retirement. Finally, Respondent argues that, had she been informed
at the time of
settlement that reinstatement to a part-time position might result in an overpayment
to her, she would not
have entered into the agreement.
I do not have the authority to reopen or otherwise modify the Initial Decision
of the MSPB, the
implementation of which resulted in the overpayment to Respondent. For this
reason, I cannot consider
arguments that challenge the validity of that decision and the agreement on
which it is based. If, as
Respondent now argues, no mention was made of reinstatement to a part-time position
at the settlement
conference, her remedy was to petition the MSPB for review of the ALJ's Initial
Decision. The Initial
Decision clearly reflected the ALJ's understanding that Respondent was to be
reinstated to a part-time
position.
Moreover, the Initial Decision notified Respondent that she could petition
for review if she believed the
settlement agreement was unlawful, involuntary, or was the result of fraud or
mutual mistake.
Accordingly, Respondent could also have petitioned the MSPB for review of the
decision based on her
arguments that the settlement violated 5 U.S.C. 5596 and/or that the agreement
resulted from DHHS'
failure fully to inform her as to the possible consequences of the settlement.
This she did not do. The
Initial Decision became final on September 13, 1989. I cannot now reopen that
decision.
Taking the ALJ's Initial Decision as the starting point, DHHS properly calculated
the amount of the
overpayment. DHHS complied with the terms of the settlement agreement and properly
applied applicable
statutes, regulations, and policies. Federal personnel policies require that
backpay awards be offset by the
amount of retirement annuity payments received by an employee during the period
covered by a corrective
action. FPM Supplement 990-2 S8-7(d). The FPM also specifies that the agency
is to recover from the
backpay award an amount equal to the gross annuity payment less deductions for
health benefits and life
insurance premiums. Id. Therefore, DHHS properly offset Respondent's backpay
award by the net amount
of annuity payments she received for the period. The deductions made for retirement
contributions and
health benefits were also required. FPM Supplement 990-2 S8-7(e). Accordingly,
I conclude that the
amount of $1,603.09 constitutes an overpayment to Respondent and a debt owed
to DHHS.
Respondent has requested, in the event I conclude a debt is due and owing to
DHHS, that she be granted a
waiver of that debt. I am without authority to order a waiver in this case.
I may only grant a waiver
request for an amount not exceeding $500. 5 U.S.C. 5584(a)(2)(A). The amount
of the debt in this case
exceeds $500. Authority to grant waiver requests for amounts greater than $500
rests with the Comptroller
General of the United States.
However, I note that this case may present a situation in which waiver of the
debt may be appropriate.
HHS Personnel Manual, Instruction 550-8-30(C) provides that waiver is appropriate
where "Action to
collect the claim would be against equity and good conscience and not in the
best interest of the Federal
Government." In this case, I believe those criteria are met.
Respondent argues that the DHHS representative did not inform her at the time
of settlement that
reinstatement to a part-time position might result in an overpayment to her.
She argues that, had she been
so informed, she would not have entered into the settlement agreement. I am
quite convinced that had
Respondent known that the settlement she reached with DHHS would result in her
owing money to DHHS,
she would not have made the agreement. The record in this case amply demonstrates
the financial
difficulties that have confronted Respondent since her retirement. It is apparent
to me that Respondent
only initiated the MSPB appeal which gave rise to this overpayment in an attempt
to get some relief from
the financial difficulties facing her. Thus, while there is no indication that
the DHHS representative
affirmatively misled Respondent, it does appear that he may not have fully explained
the possible
consequences of the settlement to her. Accordingly, it is my view that action
to collect the debt would be
against equity and good conscience in this instance
CONCLUSION
Based on the evidence of record, on applicable law, regulations and policies,
I conclude that Respondent is
indebted to DHHS in the amount of$1,603.09.
___________________________
Steven T. Kessel
Administrative Law Judge