Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Mary H. Christofferson,
Petitioner,
v.
U.S. Department of Health and Human Services,
Respondent.
Docket No. C-23-267
Decision No. CR6320
DECISION
Petitioner, Mary H. Christofferson, is an employee of the U.S. Department of Health and Human Services (HHS). Petitioner had a break in her federal service employment at HHS, and her rehire paperwork was processed with an incorrect service computation date. This resulted in Petitioner accruing annual leave in excess of the amount to which she was entitled, which caused HHS to determine Petitioner had received an overpayment of annual leave between December of 2014 and August of 2022. Petitioner filed a Hearing Request through a representative challenging HHS’ debt determination. For the reasons stated below, I conclude that Petitioner is indebted to the United States in the total gross amount of $16,333.42. The total net amount is $15,767.93, plus any interest, penalties, and costs as authorized by 45 C.F.R. §§ 30.18 and 33.13. The debt is subject to collection by administrative offset, administrative wage garnishment, or by other lawful means.
I. Background and Procedural History
The Defense Finance and Accounting Service (DFAS) is the pay agent for HHS. By letter dated December 31, 2022, (Notice Letter), DFAS informed Petitioner that it had determined Petitioner was overpaid the gross amount of $16,333.42 during the pay
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periods ending January 11, 2015, through December 4, 2021, as a result of a personnel change. The Notice Letter indicated that Petitioner needed to repay this alleged overpayment within 30 days of receipt of the Notice Letter and that she could request a hearing if she disputes the validity of the debt. The Notice Letter also referred to an attached debt worksheet that purportedly provided detailed information about the gross amount of the overpayment, but the worksheet was not included with the Notice Letter.
On January 27, 2023, Petitioner submitted a Form HHS-710, Request for Waiver of Overpayment or for Hearing, in which she requested a hearing to dispute the validity of the overpayment because the dates of the alleged overpayment did not correspond to her Leave and Earnings Statements and there was no debt worksheet provided with the Notice Letter. Petitioner’s request for hearing was signed by Petitioner’s operating division or staff division office of human resources on February 2, 2023. The Civil Remedies Division (CRD) received the request for hearing by email on February 7, 2023, from Petitioner’s operating division or staff division designated official, Theresa A. Emery, Branch Chief, Employee Support Team A of the Staffing, Recruitment & Operations Center for HHS. DAB Dkt. Entry No. 1b. On February 8, 2023, I issued an Acknowledgment and Order for Case Development establishing a deadline of March 1, 2023, for the parties to submit pre-hearing exhibits and written arguments. DAB Dkt. Entry No. 2.
On February 20, 2023, Petitioner filed an unopposed motion to extend her pre-hearing submission deadline by one week. According to Petitioner, she requested the debt worksheet and other basis for determining the amount of the debt on January 3, 2023, was still awaiting this information, and could not specify exactly how much of the debt is in dispute until after Respondent filed this information with its pre-hearing submission. On February 21, 2023, I granted Petitioner’s motion, establishing a new deadline of March 8, 2023, for Petitioner’s pre-hearing submission.
On February 23, 2023, counsel for HHS filed an unopposed motion to extend the pre-hearing submission deadlines in order to obtain the debt worksheet from DFAS that should have been attached to the Notice Letter. I granted HHS’ motion and extended both parties’ pre-hearing submission deadlines to March 22, 2023, for HHS and to March 29, 2023, for Petitioner.
On March 21, 2023, counsel for HHS filed a second unopposed motion to extend the pre-hearing submission deadlines. According to HHS, both parties received the outstanding case development records on March 14, 2023, but the complexity and volume of the documents required additional time for review. On March 22, 2023, I granted HHS’ motion and extended both parties’ pre-hearing submission deadlines to April 28, 2023, for HHS and to May 5, 2023, for Petitioner.
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On April 24, 2023, Petitioner filed a second unopposed motion to extend the pre-hearing submission deadlines. The parties were waiting for the results of an audit being performed by the HHS Human Resources Systems, which Petitioner alleged is necessary to determine the leave error forming the basis of the debt.
On April 26, 2023, the attorney advisor assigned to assist me with this case asked the parties if they would oppose a stay in lieu of issuing a fourth amended order for case development. See DAB Dkt. Entry No. 11. Petitioner indicated that because the date of completion of the audit is unknown, she did not oppose a stay. See DAB Dkt. Entry No. 12. Counsel for HHS did not oppose the stay. See DAB Dkt. Entry No. 12a.
As a result, on April 27, 2023, I stayed proceedings in this case pending receipt of the results of an audit being performed by the HHS Human Resources Systems. I directed the parties to file a joint status report within 30 days advising whether any additional information had been received regarding the anticipated date of the audit’s completion, and every 30 days thereafter until the results were received. I also directed the parties to advise in writing within five days of receipt of the audit materials or upon reaching a settlement agreement.
On June 2, 2023, I issued an Order directing the parties to file a joint status report and to show cause for the failure to timely file the same. On June 4, 2023, the parties filed a joint status report and response to the order to show cause, advising that the audit materials were received on June 2, 2023, and that the parties were actively negotiating a waiver of the alleged debt.
On June 7, 2023, I issued an Order discharging the June 2, 2023, Order to Show Cause, lifted the stay in proceedings, and extended both parties’ pre-hearing submission deadlines to June 23, 2023, for HHS and to June 30, 2023, for Petitioner.
On June 23, 2023, HHS filed a motion for summary judgment and brief in support (HHS Br.), and HHS Exhibits (Exs.) 1-2 and 4-7. On June 27, 2023, HHS filed HHS Ex. 3. On June 28, 2023, Petitioner filed a response in opposition to HHS’ motion for summary judgment (P. Br.) and Petitioner Exs. 1-3.
On June 30, 2023, I issued an Order Setting Informal Hearing and set this matter for an informal video teleconference hearing for July 13, 2023.
On July 13, 2023, I presided over an informal video teleconference hearing, wherein I heard statements from the parties regarding the existence of the alleged debt and the calculations of the same. The audio recording of the hearing was uploaded to the record, which is now complete and ready for a decision.
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II. Issues
The issues in this case are:
- Whether Petitioner owes a debt to the United States government;
- Whether Petitioner owes a total gross debt of $16,333.42 and a total net debt of $15,767.93 after previous recoupments; and
- If Petitioner owes a debt to the United States government, what the terms of the repayment schedule shall be.
III. Jurisdiction
The issues identified above are the only appealable issues regarding a salary overpayment matter. 5 U.S.C § 5514(a)(2)(D); 45 C.F.R. §§ 33.4(a)(7), 33.6(d)(2).
The statute authorizing these proceedings specifies that the head of an agency may appoint an administrative law judge (ALJ) to adjudicate an employee’s appeal of an alleged debt. See 5 U.S.C. § 5514(a)(2); see also 45 C.F.R. § 33.2 (definition of Hearing Official).
IV. Waiver
Petitioner’s request for hearing confirmed she was disputing the amount of the debt. Petitioner had not filed a request for a waiver of overpayment at the time of her request for hearing. However, at the hearing, the parties advised me that Petitioner had submitted all of the necessary documentation for her request for a waiver of overpayment and they need a decision regarding the validity of the debt before HHS can consider a waiver.1
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V. Rulings
1. Admission of Evidence
HHS’ complete record is comprised of seven proposed exhibits submitted with its motion for summary judgment. Petitioner’s complete record is comprised of three proposed exhibits submitted with her response in opposition to HHS’ motion for summary judgment. Neither party objected to the proposed exhibits. At the hearing, I admitted HHS Exs. 1-7 and P. Exs. 1-3 into the administrative record.
2. Denial of HHS’ Motion for Summary Judgment
HHS moved for summary judgment. See HHS Br. Summary judgment is appropriate when there is no genuine dispute as to any issue of material fact for adjudication and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986). When ruling on a motion for summary judgment, I do not weigh the evidence and determine the truth of the matter, but determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. at 255. At the hearing, I informed the parties that HHS’ summary judgment motion was denied because there were disputed facts concerning the amount of the alleged overpayment as of the date of the Notice Letter and the amount of any credits for collection activity that occurred before or after the Notice Letter. Specifically, there was a genuine dispute concerning the calculation and collection of the alleged overpayment, based on leave adjustments and monetary deductions that occurred in August and December of 2022. Additionally, there was a genuine dispute concerning any credits or refunds owed to Petitioner due to collections made in April of 2023, during the pendency of Petitioner’s Hearing Request and before the debt was certified.
VI. Findings of Fact
Petitioner was a federal employee of HHS from March 17, 1999, through April 23, 2004. HHS Ex. 5; HHS Ex. 1 at 1; HHS Br. at 3. Petitioner returned to HHS’ employ on December 14, 2014. Id. When Petitioner was rehired at HHS, she had accumulated five years, one month, and seventeen days of federal service. Id. However, as a result of an administrative error, Petitioner’s service computation date (SCD) was improperly entered as March 17, 1999. See HHS Exs. 5; 6 at 1. As a result, Petitioner was credited with over 15 years of federal service. Id. Petitioner accrued eight hours of annual leave per pay period, instead of the six2 hours she would have accrued had her SCD been properly calculated. HHS Exs. 1 at 2; 6 at 3; P. Br. at 1; HHS Br. at 3.
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Petitioner continued to accrue eight hours of annual leave per pay period from the pay periods ending January 11, 2015, through August 13, 2022, when an audit revealed the erroneous SCD. HHS Br. at 2; HHS Exs. 2, 3. Upon discovering the error, during the pay period ending August 27, 2022, Petitioner’s SCD was recomputed and corrected on her SF-50. HHS Ex. 6 at 3; P. Ex. 1. DFAS calculated the overpaid leave rate to be $16,333.42 and finally issued the Notice Letter on December 31, 2022. HHS Ex. 2.
Petitioner’s erroneous SCD entry resulted in a gross annual leave debt to the United States government in the amount of $16,333.42. P. Ex. 3; HHS Exs. 2; 3 at 10-12; P. Br. at 1; HHS Br. at 2. For the pay period ending April 22, 2023, DFAS deducted $565.49 to offset Petitioner’s overpayment debt. P. Ex. 3. This deduction occurred more than two months after Petitioner’s request for hearing was received by the Departmental Appeals Board and assigned to me, before the debt had been certified, and before a final written decision had been rendered. There has been no explanation for this deduction other than that the amount was collected to correct a personnel debt in accordance with 5 U.S.C. § 5514 and that the remaining balance was $15,767.93. See P. Ex. 3. At the hearing, HHS counsel confirmed that the collection was an error.
VII. Analysis and Conclusions of Law
If HHS determines that a current employee is indebted to the United States government, it may offset the debt from the employee’s salary. 5 U.S.C. § 5514(a)(1); 45 C.F.R. § 33.3. Before HHS offsets the debt, however, it must provide a minimum of 30 days written notice to the employee concerning the nature and amount of the debt, its intent to collect the debt through salary offset, and the employee’s due process rights. 5 U.S.C. § 5514(a)(2); 45 C.F.R. § 33.4(a). The employee has the right to request a hearing before an ALJ in order to dispute the existence of the debt, the amount of the debt, and/or the payment schedule established by the agency. 5 U.S.C. § 5514(a)(2)(D); 45 C.F.R. § 33.4(a)(7).
1. Petitioner owes a debt to the United States government due to an annual leave overpayment.
It is undisputed that Petitioner’s SCD was entered improperly, and she was only entitled to six hours of annual leave from the pay periods ending January 11, 2015, through August 13, 2022.
Petitioner was employed with HHS from March 17, 1999, through April 23, 2004. HHS Ex. 5. Petitioner returned to HHS’ employ on December 14, 2014. Id. When processing Petitioner’s rehire paperwork, a human resources specialist from HHS entered an
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incorrect SCD. HHS Ex. 6 at 1. Petitioner’s SCD was entered as her original hire date of March 17, 1999, without accounting for her break in federal service from April 23, 2004, through December 13, 2014. See HHS Exs. 5; 6 at 1. This resulted in Petitioner being credited with over 15 years of federal service, instead of her actual federal service time of five years, one month, and seventeen days. Id. To properly credit Petitioner for her previous federal service, Petitioner’s SCD should have been entered as November 7, 2009. HHS Exs. 1 at 2; 6 at 3. On August 24, 2022, HHS and DFAS corrected Petitioner’s SCD, which resulted in an overpayment being generated for the excess leave that had accrued since the pay period ending January 11, 2015. HHS Exs. 2; 5; 6 at 3.
Annual leave for full-time federal employees accrues pursuant to 5 U.S.C. § 6303(a). Employees with less than three years of creditable service earn four hours of annual leave per pay period. 5 U.S.C. § 6303(a)(1). Employees with creditable service of three years up to less than fifteen years earn six hours of annual leave per pay period and ten hours of annual leave in the last pay period. 5 U.S.C. § 6303(a)(2). Employees with fifteen or more years of creditable service earn eight hours of annual leave per pay period. 5 U.S.C. § 6303(a)(3).
Petitioner’s incorrect SCD resulted in her accruing two extra hours of annual leave per pay period beginning on December 14, 2014. Petitioner does not dispute that she was not entitled to this excess annual leave. At the hearing, Petitioner also conceded she took annual leave in excess of her available balance, which resulted in an annual leave overpayment in addition to the excess annual leave accrual as a result of the incorrect SCD entry. Therefore, Petitioner owes a debt to the United States government due to an annual leave overpayment.
2. Petitioner owes a total gross debt of $16,333.42.
Petitioner agrees that the total gross debt to the United States government was $16,333.42 as of January of 2022. P. Br. at 1; see HHS Ex. 2 (Notice Letter). Petitioner disputes the total net debt amount. As discussed below, because of previous recoupments, Petitioner owes a total gross debt of $16,333.42 and a total net debt of $15,767.93.
The parties agree that, during the pay periods ending January 11, 2015, through December 4, 2021, Petitioner should have accrued six hours of annual leave per pay period and ten hours of annual leave during the final pay period of each leave year. Thus, she should have earned 160 hours of annual leave per 26-pay period year. However, because of her incorrect SCD, Petitioner erroneously accrued eight hours of annual leave per pay period, totaling 208 hours of annual leave per 26-pay period year. In simple terms, the excess annual leave would appear to be 48 hours of annual leave per 26-pay period year – and it would follow that the total gross debt would be the sum of Petitioner’s hourly rate for each year multiplied by 48 hours.
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However, the total gross debt amount is higher than anticipated because Petitioner’s overpayment is not calculated based simply on her receipt of an extra two hours of annual leave each pay period or an extra 48 hours of annual leave each year. Rather, HHS performed a systematic audit of the relevant time period that accounted for the amount of annual leave that should have accrued each pay period and compared it to the amount of annual leave that Petitioner used during each respective pay period. Thus, the total gross debt is based on salary overpayments that Petitioner received for taking unaccrued annual leave during the pay periods ending January 11, 2015, through December 4, 2021. This methodology explains why the leave audit revealed annual excesses higher than the expected 48 hours for 2018 (80.50 hours) and 2021 (58 hours), as well as partial excess hours for 2019 (17.75) and 2020 (44.25).
To support the calculation of the total gross debt amount, HHS provided the results of Petitioner’s annual leave audit. HHS Ex. 3. The leave audit corrects the excess annual leave Petitioner accrued due to the incorrect SCD entry and subtracts the annual leave Petitioner used in excess of her accrued annual leave balance. During the hearing, HHS counsel reviewed the leave audit and confirmed the overpayment amount relates to both the incorrect SCD entry and the impact of the additional annual leave Petitioner took in excess of her corrected, available annual leave balance. The relevant amounts for the corrected annual leave accrued and the amount of additional annual leave Petitioner used are detailed in tables in the below subsections.
a. Petitioner accrued $478.26 in annual leave overpayments in 2015.
Petitioner should have accrued 160 hours of annual leave in 2015. Petitioner used 185 hours of annual leave in 2015. Petitioner closed 2015 with an annual leave ending balance of -9.00. HHS Ex. 3 at 10. Petitioner does not dispute that her annual hourly rate for 2015 was $53.14. As a result, Petitioner accrued $478.26 (9.00 x $53.14) in annual leave overpayments in 2015. HHS Ex. 3 at 10; HHS Br. at 7.
The annual leave overpayment for pay periods ending January 24, 2015, through January 9, 20163 occurred as follows (see HHS Ex. 3 at 10):
| Pay Period End Date |
Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
| 01/24/15 | 16.004 | 6.00 | 0.00 | 22.00 |
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| 02/07/15 | 22.00 | 6.00 | 0.00 | 28.00 |
| 02/21/15 | 28.00 | 6.00 | 0.00 | 34.00 |
| 03/07/15 | 34.00 | 6.00 | 0.00 | 40.00 |
| 03/21/15 | 40.00 | 6.00 | 0.00 | 46.00 |
| 04/04/15 | 46.00 | 6.00 | 29.00 | 23.00 |
| 04/18/15 | 23.00 | 6.00 | 0.00 | 29.00 |
| 05/02/15 | 29.00 | 6.00 | 0.00 | 35.00 |
| 05/16/15 | 35.00 | 6.00 | 8.00 | 33.00 |
| 05/30/15 | 33.00 | 6.00 | 24.00 | 15.00 |
| 06/13/15 | 15.00 | 6.00 | 0.00 | 21.00 |
| 06/27/15 | 21.00 | 6.00 | 0.00 | 27.00 |
| 07/11/15 | 27.00 | 6.00 | 8.00 | 25.00 |
| 07/25/15 | 25.00 | 6.00 | 0.00 | 31.00 |
| 08/08/15 | 31.00 | 6.00 | 40.00 | (3.00) |
| 08/22/15 | (3.00)5 | 6.00 | 0.00 | 3.00 |
| 09/05/15 | 3.00 | 6.00 | 0.00 | 9.00 |
| 09/19/15 | 9.00 | 6.00 | 0.00 | 15.00 |
| 10/03/15 | 15.00 | 6.00 | 0.00 | 21.00 |
| 10/17/15 | 21.00 | 6.00 | 0.00 | 27.00 |
| 10/31/15 | 27.00 | 6.00 | 0.00 | 33.00 |
| 11/14/15 | 33.00 | 6.00 | 0.00 | 39.00 |
| 11/28/15 | 39.00 | 6.00 | 40.00 | 5.00 |
| 12/12/15 | 5.00 | 6.00 | 0.00 | 11.00 |
| 12/26/15 | 11.00 | 10.00 | 4.00 | 17.00 |
| 01/09/16 | 17.00 | 6.00 | 32.00 | (9.00) |
| Totals | 16.00 + | 160.00 - | 185.00 | = -9.00 |
b. Petitioner accrued $1,558.20 in annual leave overpayments in 2016.
Petitioner should have accrued 160 hours of annual leave in 2016. Petitioner used 188 hours of annual leave in 2016. Petitioner closed 2016 with an annual leave ending balance of -28.00. HHS Ex. 3 at 10. Petitioner does not dispute that her annual hourly rate for 2016 was $55.65. As a result, Petitioner accrued $1,558.20 (28.00 x $55.65) in annual leave overpayments in 2016. HHS Ex. 3 at 10; HHS Br. at 7.
The annual leave overpayment for pay periods ending January 23, 2016, through January 7, 2017, occurred as follows (see HHS Ex. 3 at 10):
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| Pay Period End Date |
Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
|---|---|---|---|---|
| 01/23/16 | 0.006 | 6.00 | 0.00 | 6.00 |
| 02/06/16 | 6.00 | 6.00 | 0.00 | 12.00 |
| 02/20/16 | 12.00 | 6.00 | 0.00 | 18.00 |
| 03/05/16 | 18.00 | 6.00 | 0.00 | 24.00 |
| 03/19/16 | 24.00 | 6.00 | 0.00 | 30.00 |
| 04/02/16 | 30.00 | 6.00 | 16.00 | 20.00 |
| 04/16/16 | 20.00 | 6.00 | 0.00 | 26.00 |
| 04/30/16 | 26.00 | 6.00 | 0.00 | 32.00 |
| 05/14/16 | 32.00 | 6.00 | 0.00 | 38.00 |
| 05/28/16 | 38.00 | 6.00 | 2.50 | 41.50 |
| 06/11/16 | 41.50 | 6.00 | 0.00 | 47.50 |
| 06/25/16 | 47.50 | 6.00 | 0.00 | 53.50 |
| 07/09/16 | 53.50 | 6.00 | 8.00 | 51.50 |
| 07/23/16 | 51.50 | 6.00 | 3.00 | 54.50 |
| 08/06/16 | 54.50 | 6.00 | 16.00 | 44.50 |
| 08/20/16 | 44.50 | 6.00 | 48.00 | 2.50 |
| 09/03/16 | 2.50 | 6.00 | 14.50 | (6.00) |
| 09/17/16 | (6.00) | 6.00 | 0.00 | 0.00 |
| 10/01/16 | 0.00 | 6.00 | 0.00 | 6.00 |
| 10/15/16 | 6.00 | 6.00 | 0.00 | 12.00 |
| 10/29/16 | 12.00 | 6.00 | 0.00 | 18.00 |
| 11/12/16 | 18.00 | 6.00 | 16.00 | 8.00 |
| 11/26/16 | 8.00 | 6.00 | 8.00 | 6.00 |
| 12/10/16 | 6.00 | 6.00 | 8.00 | 4.00 |
| 12/24/16 | 4.00 | 10.00 | 0.00 | 14.00 |
| 01/07/17 | 14.00 | 6.00 | 48.00 | (28.00) |
| Totals | 0.00 | 160.00 - | 188.00 | = -28.00 |
c. Petitioner accrued $1,416.96 in annual leave overpayments in 2017.
Petitioner should have accrued 160 hours of annual leave in 2017. Petitioner used 184 hours of annual leave in 2017. Petitioner closed 2017 with an annual leave ending balance of -24.00. HHS Ex. 3 at 10-11. Petitioner does not dispute that her annual hourly rate for 2017 was $59.04. As a result, Petitioner accrued $1,416.96 (24.00 x $59.04) in annual leave overpayments in 2017. HHS Ex. 3 at 10-11; HHS Br. at 7.
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The annual leave overpayment for pay periods ending January 21, 2017, through January 6, 2018, occurred as follows (see HHS Ex. 3 at 10-11):
| Pay Period End Date |
Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
|---|---|---|---|---|
| 01/21/17 | 0.00 | 6.00 | 0.00 | 6.00 |
| 02/04/17 | 6.00 | 6.00 | 0.00 | 12.00 |
| 02/18/17 | 12.00 | 6.00 | 0.00 | 18.00 |
| 03/04/17 | 18.00 | 6.00 | 0.00 | 24.00 |
| 03/18/17 | 24.00 | 6.00 | 0.00 | 30.00 |
| 04/01/17 | 30.00 | 6.00 | 0.00 | 36.00 |
| 04/15/17 | 36.00 | 6.00 | 48.00 | (6.00) |
| 04/29/17 | (6.00) | 6.00 | 8.00 | (8.00) |
| 05/13/17 | (8.00) | 6.00 | 0.00 | (2.00) |
| 05/27/17 | (2.00) | 6.00 | 8.00 | (4.00) |
| 06/10/17 | (4.00) | 6.00 | 8.00 | (6.00) |
| 06/24/17 | (6.00) | 6.00 | 0.00 | 0.00 |
| 07/08/17 | 0.00 | 6.00 | 8.00 | (2.00) |
| 07/22/17 | (2.00) | 6.00 | 0.00 | 4.00 |
| 08/05/17 | 4.00 | 6.00 | 0.00 | 10.00 |
| 08/19/17 | 10.00 | 6.00 | 24.00 | (8.00) |
| 09/02/17 | (8.00) | 6.00 | 16.00 | (18.00) |
| 09/16/17 | (18.00) | 6.00 | 0.00 | (12.00) |
| 09/30/17 | (12.00) | 6.00 | 0.00 | (6.00) |
| 10/14/17 | (6.00) | 6.00 | 0.00 | 0.00 |
| 10/28/17 | 0.00 | 6.00 | 8.00 | (2.00) |
| 11/11/17 | (2.00) | 6.00 | 8.00 | (4.00) |
| 11/25/17 | (4.00) | 6.00 | 8.00 | (6.00) |
| 12/09/17 | (6.00) | 6.00 | 0.00 | 0.00 |
| 12/23/17 | 0.00 | 10.00 | 40.00 | (30.00) |
| 01/06/18 | (30.00) | 6.00 | 0.00 | (24.00) |
| Totals | 0.00 | 160.00 - | 184.00 | = -24.00 |
d. Petitioner accrued $4,862.20 in annual leave overpayments in 2018.
Petitioner should have accrued 160 hours of annual leave in 2018. Petitioner used 240.50 hours of annual leave in 2018. Petitioner closed 2018 with an annual leave ending balance of -80.50. HHS Ex. 3 at 11. Petitioner does not dispute that her annual hourly rate for 2018 was $60.40. As a result, Petitioner accrued $4,862.20 (80.50 x $60.40) in annual leave overpayments in 2018. HHS Ex. 3 at 11; HHS Br. at 7.
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The annual leave overpayment for pay periods ending January 20, 2018, through January 5, 2019, occurred as follows (see HHS Ex. 3 at 11):
| Pay Period End Date | Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
|---|---|---|---|---|
| 01/20/18 | 0.00 | 6.00 | 8.00 | (2.00) |
| 02/03/18 | (2.00) | 6.00 | 8.00 | (4.00) |
| 02/17/18 | (4.00) | 6.00 | 0.00 | 2.00 |
| 03/03/18 | 2.00 | 6.00 | 0.00 | 8.00 |
| 03/17/18 | 8.00 | 6.00 | 8.50 | 5.50 |
| 03/31/18 | 5.50 | 6.00 | 40.00 | (28.50) |
| 04/14/18 | (28.50) | 6.00 | 16.00 | (38.50) |
| 04/28/18 | (38.50) | 6.00 | 8.00 | (40.50) |
| 05/12/18 | (40.50) | 6.00 | 0.00 | (34.50) |
| 05/26/18 | (34.50) | 6.00 | 0.00 | (28.50) |
| 06/09/18 | (28.50) | 6.00 | 0.00 | (22.50) |
| 06/23/18 | (22.50) | 6.00 | 0.00 | (16.50) |
| 07/07/18 | (16.50) | 6.00 | 0.00 | (10.50) |
| 07/21/18 | (10.50) | 6.00 | 0.00 | (4.50) |
| 08/04/18 | (4.50) | 6.00 | 0.00 | 1.50 |
| 08/18/18 | 1.50 | 6.00 | 40.00 | (32.50) |
| 09/01/18 | (32.50) | 6.00 | 56.00 | (82.50) |
| 09/15/18 | (82.50) | 6.00 | 0.00 | (76.50) |
| 09/29/18 | (76.50) | 6.00 | 0.00 | (70.50) |
| 10/13/18 | (70.50) | 6.00 | 0.00 | (64.50) |
| 10/27/18 | (64.50) | 6.00 | 0.00 | (58.50) |
| 11/10/18 | (58.50) | 6.00 | 16.00 | (68.50) |
| 11/24/18 | (68.50) | 6.00 | 0.00 | (62.50) |
| 12/08/18 | (62.50) | 6.00 | 0.00 | (56.50) |
| 12/22/18 | (56.50) | 10.00 | 0.00 | (46.50) |
| 01/05/19 | (46.50) | 6.00 | 40.00 | (80.50) |
| Totals | 0.00 | 160.00 - | 240.50 | = -80.50 |
e. Petitioner accrued $1,129.61 in annual leave overpayments in 2019.
Petitioner should have accrued 160 hours of annual leave in 2019. Petitioner used 177.75 hours of annual leave in 2019. Petitioner closed 2019 with an annual leave ending balance of -17.75. HHS Ex. 3 at 11. Petitioner does not dispute that her annual hourly rate for 2019 was $63.64. As a result, Petitioner accrued $1,129.61 (17.75 x $63.64) in annual leave overpayments in 2019. HHS Ex. 3 at 11; HHS Br. at 7.
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The annual leave overpayment for pay periods ending January 19, 2019, through January 4, 2020, occurred as follows (see HHS Ex. 3 at 11):
| Pay Period End Date | Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
|---|---|---|---|---|
| 01/19/19 | 0.00 | 6.00 | 0.00 | 6.00 |
| 02/02/19 | 6.00 | 6.00 | 0.00 | 12.00 |
| 02/16/19 | 12.00 | 6.00 | 24.00 | (6.00) |
| 03/02/19 | (6.00) | 6.00 | 0.00 | 0.00 |
| 03/16/19 | 0.00 | 6.00 | 0.00 | 6.00 |
| 03/30/19 | 6.00 | 6.00 | 0.00 | 12.00 |
| 04/13/19 | 12.00 | 6.00 | 0.00 | 18.00 |
| 04/27/19 | 18.00 | 6.00 | 33.25 | (9.25) |
| 05/11/19 | (9.25) | 6.00 | 9.00 | (12.25) |
| 05/25/19 | (12.25) | 6.00 | 16.00 | (22.25) |
| 06/08/19 | (22.25) | 6.00 | 0.00 | (16.25) |
| 06/22/19 | (16.25) | 6.00 | 0.00 | (10.25) |
| 07/06/19 | (10.25) | 6.00 | 24.00 | (28.25) |
| 07/20/19 | (28.25) | 6.00 | 0.00 | (22.25) |
| 08/03/19 | (22.25) | 6.00 | 0.00 | (16.25) |
| 08/17/19 | (16.25) | 6.00 | 31.50 | (41.75) |
| 08/31/19 | (41.75) | 6.00 | 0.00 | (35.75) |
| 09/14/19 | (35.75) | 6.00 | 0.00 | (29.75) |
| 09/28/19 | (29.75) | 6.00 | 0.00 | (23.75) |
| 10/12/19 | (23.75) | 6.00 | 0.00 | (17.75) |
| 10/26/19 | (17.75) | 6.00 | 0.00 | (11.75) |
| 11/09/19 | (11.75) | 6.00 | 0.00 | (5.75) |
| 11/23/19 | (5.75) | 6.00 | 0.00 | 0.25 |
| 12/07/19 | 0.25 | 6.00 | 0.00 | 6.25 |
| 12/21/19 | 6.25 | 10.00 | 0.00 | 16.25 |
| 01/04/20 | 16.25 | 6.00 | 40.00 | (17.75) |
| Totals | 0.00 | 160.00 - | 177.75 | = -17.75 |
f. Petitioner accrued $2,915.19 in annual leave overpayments in 2020.
Petitioner should have accrued 160 hours of annual leave in 2020. Petitioner used 204.25 hours of annual leave in 2020. Petitioner closed 2020 with an annual leave ending balance of -44.25. HHS Ex. 3 at 11-12. Petitioner does not dispute that her annual hourly rate for 2020 was $65.88. As a result, Petitioner accrued $2,915.19 (44.25 x $65.88) in annual leave overpayments in 2020. HHS Ex. 3 at 11-12; HHS Br. at 7.
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The annual leave overpayment for pay periods ending January 18, 2020, through January 2, 2021, occurred as follows (see HHS Ex. 3 at 11-12):
| Pay Period End Date | Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
|---|---|---|---|---|
| 01/18/20 | 0.00 | 6.00 | 8.00 | (2.00) |
| 02/01/20 | (2.00) | 6.00 | 8.00 | (4.00) |
| 02/15/20 | (4.00) | 6.00 | 0.00 | 2.00 |
| 02/29/20 | 2.00 | 6.00 | 0.00 | 8.00 |
| 03/14/20 | 8.00 | 6.00 | 4.00 | 10.00 |
| 03/28/20 | 10.00 | 6.00 | 8.00 | 8.00 |
| 04/11/20 | 8.00 | 6.00 | 0.00 | 14.00 |
| 04/25/20 | 14.00 | 6.00 | 3.00 | 17.00 |
| 05/09/20 | 17.00 | 6.00 | 0.00 | 23.00 |
| 05/23/20 | 23.00 | 6.00 | 0.00 | 29.00 |
| 06/06/20 | 29.00 | 6.00 | 8.00 | 27.00 |
| 06/20/20 | 27.00 | 6.00 | 8.00 | 25.00 |
| 07/04/20 | 25.00 | 6.00 | 8.00 | 23.00 |
| 07/18/20 | 23.00 | 6.00 | 32.00 | (3.00) |
| 08/01/20 | (3.00) | 6.00 | 0.00 | 3.00 |
| 08/15/20 | 3.00 | 6.00 | 3.00 | 6.00 |
| 08/29/20 | 6.00 | 6.00 | 0.00 | 12.00 |
| 09/12/20 | 12.00 | 6.00 | 40.00 | (22.00) |
| 09/26/20 | (22.00) | 6.00 | 8.00 | (24.00) |
| 10/10/20 | (24.00) | 6.00 | 0.00 | (18.00) |
| 10/24/20 | (18.00) | 6.00 | 10.25 | (22.25) |
| 11/07/20 | (22.25) | 6.00 | 0.00 | (16.25) |
| 11/21/20 | (16.25) | 6.00 | 0.00 | (10.25) |
| 12/05/20 | (10.25) | 6.00 | 0.00 | (4.25) |
| 12/19/20 | (4.25) | 10.00 | 0.00 | 5.75 |
| 01/02/21 | 5.75 | 6.00 | 56.00 | (28.00) |
| Totals | 0.00 | 160.00 - | 204.25 | = -44.25 |
g. Petitioner accrued $3,973.00 in annual leave overpayments in 2021.
Petitioner should have accrued 160 hours of annual leave in 2021. Petitioner used 218 hours of annual leave in 2021. Petitioner closed 2021 with an annual leave ending balance of -58.00. HHS Ex. 3 at 12. Petitioner does not dispute that her annual hourly rate for 2021 was $68.50. As a result, Petitioner accrued $3,973.00 (58.00 x $68.50) in annual leave overpayments in 2021. HHS Ex. 3 at 12; HHS Br. at 7.
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The annual leave overpayment for pay periods ending January 16, 2021, through January 1, 2022, occurred as follows (see HHS Ex. 3 at 12):
| Pay Period End Date | Beginning Balance | Annual Leave Accrued | Annual Leave Used | Annual Leave Ending Balance |
|---|---|---|---|---|
| 01/16/21 | 0.00 | 6.00 | 0.00 | 6.00 |
| 01/30/21 | 6.00 | 6.00 | 0.00 | 12.00 |
| 02/13/21 | 12.00 | 6.00 | 0.00 | 18.00 |
| 02/27/21 | 18.00 | 6.00 | 23.50 | 0.50 |
| 03/13/21 | 0.50 | 6.00 | 0.00 | 6.50 |
| 03/27/21 | 6.50 | 6.00 | 8.00 | 4.50 |
| 04/10/21 | 4.50 | 6.00 | 24.00 | (13.50) |
| 04/24/21 | (13.50) | 6.00 | 0.00 | (7.50) |
| 05/08/21 | (7.50) | 6.00 | 0.00 | (1.50) |
| 05/22/21 | (1.50) | 6.00 | 0.00 | 4.50 |
| 06/05/21 | 4.50 | 6.00 | 0.00 | 10.50 |
| 06/19/21 | 10.50 | 6.00 | 24.00 | (7.50) |
| 07/03/21 | (7.50) | 6.00 | 8.00 | (9.50) |
| 07/17/21 | (9.50) | 6.00 | 0.00 | (3.50) |
| 07/31/21 | (3.50) | 6.00 | 3.00 | (0.50) |
| 08/14/21 | (0.50) | 6.00 | 40.00 | (34.50) |
| 08/28/21 | (34.50) | 6.00 | 0.00 | (28.50) |
| 09/11/21 | (28.50) | 6.00 | 0.00 | (22.50) |
| 09/25/21 | (22.50) | 6.00 | 0.00 | (16.50) |
| 10/09/21 | (16.50) | 6.00 | 8.00 | (18.50) |
| 10/23/21 | (18.50) | 6.00 | 1.50 | (14.00) |
| 11/06/21 | (14.00) | 6.00 | 6.00 | (14.00) |
| 11/20/21 | (14.00) | 6.00 | 0.00 | (8.00) |
| 12/04/21 | (8.00) | 6.00 | 8.00 | (10.00) |
| 12/18/21 | (10.00) | 10.00 | 0.00 | 0.00 |
| 01/01/22 | 0.00 | 6.00 | 64.00 | (58.00) |
| Totals | 0.00 | 160.00 - | 218.00 | = -58.00 |
h. Petitioner accrued accrued a total of $16,333.42 in annual leave overpayments from 2015 through 2021.
As demonstrated by the table below, Petitioner’s total annual leave overpayment amount was calculated by taking each year’s ending annual leave balance and multiplying it by Petitioner’s annual hourly pay rate, then adding each year’s total annual leave overpayment amount. See also HHS Br. at 7. Petitioner accrued $16,333.42 in total annual leave overpayments from 2015 through 2021. As a result, Petitioner is indebted to the United States in the gross amount of $16,333.42.
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| Annual Year | (Excess Annual Leave Balance) x | (Annual Hourly Pay Rate) | =Total Annual Leave Overpayment Amount |
|---|---|---|---|
| 2015 | 9.00 | $53.14 | $478.26 |
| 2016 | 28.00 | $55.65 | $1,588.20 |
| 2017 | 24.00 | $59.04 | $1,416.96 |
| 2018 | 80.50 | $60.40 | $4,862.20 |
| 2019 | 17.75 | $63.64 | $1,129.61 |
| 2020 | 44.25 | $65.88 | $2,915.19 |
| 2021 | 58.00 | $68.50 | $3,973.00 |
| Total Gross Debt | $16,333.42 |
3. Petitioner owes a total net debt of $15,767.93 after the April 2023 recoverable.
Having determined that Petitioner owes a total gross debt of $16,333.42 as a result of annual leave overpayments, I must next calculate what amount, if any, has been recovered since Petitioner was notified of the overpayment amount.
a. DFAS corrected issues with Petitioner’s credit hours in August and December of 2022, which are not recoupments of the annual leave overpayment debt.
In her brief, Petitioner argues that HHS involuntarily recovered some of the debt before issuance of the Notice Letter on December 31, 2022. P. Br. at 2-3. Petitioner argues that for the pay period ending August 27, 2022, HHS deducted 96 hours of previously accrued leave. P. Br. at 2; P. Ex. 1. Petitioner argues that for the pay period ending December 3, 2022, HHS collected $309.37 to settle a time and attendance correction debt, and also deducted 5.12 hours in the amount of $361.04 as negative retroactive earnings. P. Br. at 2-3; P. Ex. 2.
HHS concedes in its brief that two deductions were “to offset Petitioner’s debt.” See HHS Br. at 2, 8. Specifically, HHS “removed 90 hours of leave and $600 to offset Petitioner’s debt” in August 2022 and “a total of 96 hours was deducted and an additional $309.36 was collected to offset Petitioner’s debt” in December 2022. HHS Br. at 8. In neither of these instances did Petitioner receive notice that an offset would be done. Id. However, HHS’ brief does not clarify whether this alleged debt was the annual leave overpayment amount as referenced in the Notice Letter, or whether this was some other debt. See id. At the hearing, HHS was able to shed some light on the issue. Instead of deducting 186 hours of leave to offset Petitioner’s annual leave overpayment debt, DFAS
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corrected issues with Petitioner’s forfeiture of excess credit hours7. HHS did not provide any documentation of the credit hours Petitioner earned that DFAS needed to correct during the pay periods ending August 27 and December 3, 2022. Although it was not filed as an exhibit or produced at the hearing, the parties agreed Petitioner received an email in May of 2023 from her operating division or staff division designated official that explained the credit hours issue. When asked, Petitioner said she still did not fully understand the credit hours deductions and that she had not received notice of that alleged debt. Petitioner also conceded it is plausible that she could have earned 186 credit hours and that the August and December 2022 deductions could be a time and attendance debt unrelated to the annual leave overpayment debt at issue before me.
Petitioner provided a leave and earnings statement, which confirms that her SCD changed, her leave accrual rate changed, retroactive time and attendance adjustments were processed, and retroactive personnel data were processed all during the pay period ending August 27, 2022. P. Ex. 1. The changes on Petitioner’s leave and earnings statement are consistent with the data in the annual leave audit and the Leave History Summary dated January 20, 2023. P. Ex. 1; HHS Exs. 3-4. Both documents reflect that Petitioner’s SCD was changed to November 7, 2009, as noted on the leave and earnings statement ending August 27, 2022. P. Ex. 1 (stating in Remarks that “service comp date (leave) changed.”); HHS Ex. 3 at 1 (identifying the “old SCD” of 3/17/99 and the “new SCD” of 11/7/09); HHS Ex. 4 at 2, 4, 6, 8 (each summary showing a “leave SCD date” of “2009-11-07”). In particular, the leave audit shows that Petitioner’s correct SCD of “11/07/09” had been entered already, starting with the pay period beginning “03/29/20.” Cf. HHS Ex. 3 at 2 (spreadsheet titled “SF-50, -1190 (Was)”) and 5 (spreadsheet titled “SF-50, -1190 (Correct)”). Likewise, it appears that the correct annual leave accrual rate of 6.00 hours, except for the final yearly pay periods where Petitioner earned 10.00 hours, had been entered already, starting with the pay period ending “08/15/20” through the pay period ending “11/19/22.” Cf. HHS Ex. 3 at 7-9 (spreadsheet titled “Leave (Was)”) and 10-12 (spreadsheet titled “Leave (Correct)”); see also HHS Ex. 4 at 7, 12-13. Thus, I
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infer that these initial changes to Petitioner’s SCD and annual leave accrual rate were processed during the pay period ending August 27, 2022, as indicated on Petitioner’s leave and earnings statement. However, the adjustments were limited to 2020 through 2022; specifically, from pay period beginning 03/29/20 forward for Petitioner’s SCD corrections and from pay period ending 08/15/20 forward for Petitioner’s annual leave accrual rate corrections. Although I note that the original spreadsheet titled “Leave (Was),” leave history summary, and Petitioner’s leave and earnings statement each reflect -49.00 hours of annual leave, I am unable to conclude that Petitioner’s negative leave balance is the result of the removal of 90 hours of annual leave to offset this debt. Cf. P. Ex. 1 with HHS Ex. 3 at 9 (spreadsheet titled “Leave (Was)) and HHS Ex. 4 at 7, 12 (spreadsheet titled “DFAS Leave History”); HHS Br. at 2. I also cannot conclude that HHS collected $600 to offset Petitioner’s overpayment debt. Id. The annual leave audit, leave history summary, and Petitioner’s leave and earnings statements do not document a lump sum deduction of 90 hours of annual leave. HHS Exs. 3-4; P. Ex. 1. Similarly, Petitioner’s leave and earnings statement for the pay period ending August 27, 2022, does not include any monetary or annual leave deduction for offsetting this debt. Indeed, the evidence of record lacks any lump sum deduction of 90 hours of annual leave or debt collection totaling $600 on or about August 24, 2022. Those purported amounts of premature offsets are not substantiated. Further, Petitioner’s negative leave balance, as of pay period ending August 27, 2022, was the result of the retroactive leave accrual rate corrections made in August 2022 compared to the annual leave she had already used. Accordingly, I conclude that the record evidence does not support a credit for the monetary value of 90 hours of annual leave or a credit of $600 to offset Petitioner’s gross debt of $16,333.42.
Likewise, I conclude that the record evidence does not support awarding Petitioner a credit for the value of 96 hours of annual leave and $309.36 purportedly deducted in December 2022. HHS Br. at 2. Additional SCD and annual leave accrual rate corrections were made during the leave audit, which was initiated on December 2, 2022. HHS Ex. 3 at 1. Petitioner’s SCD was changed from “03/17/99” to “11/07/09” for each leave year beginning with the pay period ending “01/10/15” through the pay period ending “03/28/20.” Cf. HHS Ex. 3 at 2 (spreadsheet titled “Leave (Was)”) and 5 (spreadsheet titled “Leave (Correct)”). The same SCD adjustments were made for the pay periods beginning “01/05/20” and ending “02/01/20” and beginning “02/02/20” and ending “03/28/20.” Id. Likewise, the annual leave audit shows that Petitioner’s “earned” annual leave accrual rate changed from “8.00” hours to “6.00” hours for each pay period, with the exception of the final yearly pay periods that were changed to 10.00 hours, starting with the pay period ending “12/27/14” through the pay period ending “08/15/20,” as explained above. Cf. HHS Ex. 3 at 7-8 (spreadsheet titled “Leave (Was)”) and 10-12 (spreadsheet titled “Leave (Correct)”). I infer that this second round of changes to Petitioner’s SCD and annual leave accrual rate were made during the annual leave audit to capture the earlier pay periods that were not included in the August 2022 corrections – i.e., from Petitioner’s Entry On Duty date of December 14, 2014, when her SCD and
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annual leave accrual rate were first entered incorrectly. HHS Ex. 3 at 1. Similar to the first round of adjustments made in August 2022, the record lacks substantiating evidence that a lump sum of 96 hours of annual leave and $309.37 were recovered in December 2022 to offset Petitioner’s overpayment debt. The annual leave audit and Petitioner’s leave and earnings statement ending December 3, 2022, do not include any lump sum annual leave deduction of 96 hours. P. Ex. 2. Petitioner’s leave and earnings statement ending December 3, 2022, states that “$309.37 [was] collected this pay period for a $617.48 . . . time & attendance correction debt . . .” Id. Although it is listed as a routine debt collection, HHS counsel stated at the hearing that this offset was for a different debt owed by Petitioner related to her credit hours, and it was not an offset related to her overpayment of annual leave. See P. Ex. 2 (listing $309.37 under “Deductions” for “Debt, Routine”). Petitioner confirmed at the hearing that the $617.48 debt and the $309.37 collected were possibly related to her credit hours. Upon consideration of the parties’ statements at the hearing and the lack of any evidence in the record to support that these monetary amounts are attributable to Petitioner’s overpayment related to changes in her SCD and annual leave accrual rate, I conclude that Petitioner is not entitled to credits for the monetary value of 96 hours of lump sum annual leave or $309.37 purportedly recovered in December 2022 to offset her gross debt. These amounts are related to credit hours and not the overpayment at issue.
It appears that Petitioner also forfeited 14.25 hours of credit hours during the pay periods ending August 27, 2022, and December 3, 2022, which may be related to the credit hour corrections that DFAS made to Petitioner’s credit hour balance. P. Exs. 1-2. Although, as stated above, DFAS’ corrections to Petitioner’s credit hours balance and any resulting debts or collection activity are not before me, the potential due process issues concerning DFAS’ actions with respect to Petitioner’s credit hours balance are discussed below. I find that the credit hour forfeiture deductions totaling 28.50 hours processed in pay periods ending August 27 and December 3, 2022, are not offsets of the $16,333.42 total gross debt amount as referenced in the December 31, 2022 Notice Letter.
Finally, Petitioner argues that “5.12 hours equaling $361.04 was also deducted as negative ‘retroactive earnings’ without explanation” during pay period ending December 3, 2022. P. Br at 3. Petitioner states that HHS “concedes that these deductions were to collect against this debt, prior to the issuance of a debt letter.” Id. Petitioner also provided a leave and earnings statement which confirms that retroactive earnings were processed during pay period ending December 3, 2022. P. Ex. 2. Based on the evidence of record, I cannot conclude that the retroactive earnings deduction is an offset against the overpayment debt at issue in this case. Although this deduction appears on Petitioner’s leave and earnings statement, it does not appear on the annual leave audit or Petitioner’s leave history summary. P. Ex. 2; see generally HHS Ex. 3 at 9, 12; HHS Ex. 4 at 7, 13. Thus, I find no corroborating evidence in the record and conclude that the retroactive earnings deduction taken in the pay period ending December 3, 2022, is not an
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offset of the $16,333.42 total gross debt amount as referenced in the December 31, 2022, Notice Letter.
b. DFAS improperly processed a $565.49 salary offset related to Petitioner’s annual leave overpayment amount in April of 2023.
In her brief, Petitioner argues that HHS involuntarily recovered some of the overpayment debt while her hearing request was pending. P. Br. at 3-4. Specifically, she alleges that HHS erred in collecting $565.49 during the pay period ending April 22, 2023. Id.; P. Ex. 3. I agree.
Debts owed to the United States by a federal employee may be collected in installments from the employee’s pay account, subject to the provisions of 5 U.S.C. § 5514. Before an agency head may direct collection of indebtedness from an employee’s salary, the employee must be given written notice a minimum of 30 days prior to any attempt to collect and the notice must inform the employee of the nature and amount of the debt determined to be due; the intention of the agency to effect collection through deduction from the employee’s pay; and the notice must explain the employee’s rights under 5 U.S.C. § 5514. The employee must: 1) be given the opportunity to inspect and copy government records related to the debt; 2) offered an opportunity to enter a written agreement agreeable to the agency head establishing a repayment schedule; and 3) given the opportunity for a hearing on the determination of the agency regarding the existence or the amount of the debt and any repayment schedule not established by written agreement. The timely filing of a request for hearing shall stay the collection of the debt. 5 U.S.C. § 5514(a)(2)(D) (emphasis supplied); 45 C.F.R. § 33.10(d)(2) (“If the employee files a timely petition for hearing . . . , deductions will begin after the hearing official has provided the employee with a hearing and final written decision has been rendered in favor of [HHS].”). Collection of any amount must be in accordance with standards promulgated pursuant to 31 U.S.C. §§ 3711 and 3716 through 3718. 5 U.S.C. § 5514(a)(4). There are exceptions to the notice and collection stay requirements, but none apply here. 5 U.S.C. § 5514(a)(3); 45 C.F.R. § 33.3(d).
For the pay period ending April 22, 2023, DFAS deducted $565.49 to offset Petitioner’s overpayment debt. P. Ex. 3 (remarks stating that “$565.49 [was] collected this pay period for a $16[,]333.42 . . . personnel correction debt in accordance with 5 U.S.C. [§] 5514.”). This deduction occurred well after Petitioner’s January 27, 2023, request for hearing was received by the Departmental Appeals Board and assigned to me. This matter was stayed pending the results of Petitioner’s annual leave audit, the debt had yet to be certified, and no decision in favor of HHS had been issued. As a result, collection proceedings were required to be stayed by HHS and DFAS. There has been no explanation for this deduction other than that the amount was collected to correct a personnel debt in accordance with 5 U.S.C. § 5514 and that the remaining balance was $15,767.93. See P. Ex. 3. At the hearing, HHS conceded this collection occurred in
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error, and counsel represented that the amount would be refunded. However, HHS counsel and Petitioner confirmed that this refund had not yet been processed. Until the refund is completed, I must apply the deduction for the pay period ending April 22, 2023, as a salary offset against Petitioner’s $16,333.42 debt under 5 U.S.C. § 5514. As a result, Petitioner owes a total net debt of $15,767.93 after the April 22, 2023, offset.
4. A formal repayment schedule has not been established and Petitioner’s Due Process rights were violated.
HHS’ debt letter did not establish a repayment schedule. However, HHS – through DFAS – appears to have begun an involuntary repayment schedule in violation of the debt collection procedures. Petitioner alleges, and the evidence of record supports, several serious due process violations in this case. See P. Br. The only debt that is at issue in this case is the $16,333.42 overpayment under 5 U.S.C. § 5514. However, the due process violations in this case are relevant to the confusion and dispute over the amount of the overpayment, risk a potential future overpayment dispute, and risk misuse of taxpayer funds and government resources. For this reason, I also conclude that Petitioner’s request for hearing was not baseless or resulted from an intent to delay collection activity. 45 C.F.R. § 33.6(d)(2)(ii).
a. The due process requirements are mandatory.
The due process rights of employees indebted to the United States are not permissive. 5 U.S.C. § 5514(a) requires:
(1) When the head of an agency or [their] designee determines that an employee . . . is indebted to the United States for debts to which the United States is entitled to be repaid at the time of the determination by the head of an agency or [their] designee, or is notified of such a debt by the head of another agency or [their] designee the amount of indebtedness may be collected in monthly installments, or at officially established pay intervals, by deduction from the current pay account of the individual. The deductions may be made from basic pay, special pay, incentive pay, retired pay, retainer pay, or, in the case of an individual not entitled to basic pay, other authorized pay. The amount deducted for any period may not exceed 15 percent of disposable pay, except that a greater percentage may be deducted upon the written consent of the individual involved.
****
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(2) Except as provided in paragraph (3) of this subsection, prior to initiating any proceedings under paragraph (1) of this subsection to collect any indebtedness of an individual, the head of the agency holding the debt or [their] designee, shall provide the individual with—
(A) a minimum of thirty days written notice, informing such individual of the nature and amount of the indebtedness determined by such agency to be due, the intention of the agency to initiate proceedings to collect the debt through deductions from pay, and an explanation of the rights of the individual under this subsection;
(B) an opportunity to inspect and copy Government records relating to the debt;
(C) an opportunity to enter into a written agreement with the agency, under terms agreeable to the head of the agency or [their] designee, to establish a schedule for the repayment of the debt; and
(D) an opportunity for a hearing on the determination of the agency concerning the existence or the amount of the debt, and in the case of an individual whose repayment schedule is established other than by a written agreement pursuant to subparagraph (C), concerning the terms of the repayment schedule.
A hearing, described in subparagraph (D), shall be provided if the individual, on or before the fifteenth day following receipt of the notice described in subparagraph (A), and in accordance with such procedures as the head of the agency may prescribe, files a petition requesting such a hearing. The timely filing of a petition for hearing shall stay the commencement of collection proceedings. A hearing under subparagraph (D) may not be conducted by an individual under the supervision or control of the head of the agency, except that nothing in this sentence shall be construed to prohibit the appointment of an administrative law judge. The hearing official shall issue a final decision at the earliest practicable date,
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but not later than sixty days after the filing of the petition requesting the hearing.
5 U.S.C. § 5514(a)(1)-(2) (emphasis supplied); see also 45 C.F.R. §§ 30.10(a) (“Normally, an initial written demand for payment shall be made no later than 30 days after a determination by an appropriate official that a debt exists.”), 30.11(a)(1) (written demand for payment shall be made promptly).
Except under specific limited circumstances, none of which apply here, debtors must be given due process prior to the United States initiating debt collection via involuntary salary offset. 5 U.S.C. § 5514(a)(2); 45 C.F.R. § 33.4. Due process procedures are not required prior to collecting overpayments of pay and allowances from Federal employees through routine intra-agency pay adjustments that have occurred within the four pay periods preceding the adjustment, or for any adjustments that amount to $50 or less. 5 U.S.C. § 5514(a)(3); 45 C.F.R. § 33.3(d). The debtor must be provided with a written notice of the nature and the amount of the adjustment, as well as a point of contact for questions regarding the adjustment, by the payday for the pay period in which the adjustment is processed, or as soon thereafter as practical. Id. Notice of these routine adjustments is typically provided on the debtor’s leave and earnings statement. Routine pay adjustments may be used to correct clerical errors, administrative errors, or delays in processing pay documents. Id.
In certain limited circumstances, accelerated procedures may be used to collect a debt by salary or administrative offset prior to, or while providing, notice and an opportunity for review to the debtor. HHS argues it would have been prejudiced by giving Petitioner due process before initiating collection proceedings because the failure to take the offset would have resulted in continued overpayments; however, due process requirements for non-centralized offsets may only be omitted when there is insufficient time before payment to the debtor to allow for prior notice and opportunity for review. See 45 C.F.R. § 30.12(c)(3). The only remedy for violation of mandatory due process violations is found in 45 C.F.R. § 30.12(c)(3)(iii) (collecting delinquent debts via non-centralized administrative offsets):
When prior notice and an opportunity for review are omitted, the Secretary shall give the debtor such notice and an opportunity for review as soon as practical and shall promptly refund any money ultimately found not to have been owed to the Government.
There is no stated remedy for violation of any of the mandatory due process requirements in 5 U.S.C. § 5514(a)(1)-(2).
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b. HHS committed multiple due process violations.
In this case, HHS committed due process violations by failing to stay collection proceedings on Petitioner’s alleged overpayment before the debt was certified by an ALJ and by collecting an amount in excess of fifteen percent of Petitioner’s calculated disposable income. HHS has failed to demonstrate that the alleged time and attendance credit hour debt is one authorized to be recovered by a routine intra-agency pay adjustment and not subject to the standards for the administrative collection of debts, requiring separate notice and opportunity for dispute. Finally, HHS failed to give timely notice of Petitioner’s alleged annual leave overpayment, and has still failed to give Petitioner any notice of an annual leave overpayment for 2022. Because of HHS’ due process violations, Petitioner is entitled to a refund for the premature collection of the debt at issue before me.
i. HHS failed to stay collections during the dispute proceedings and collected an amount in excess of fifteen percent of Petitioner’s net disposable pay.
The Notice Letter did not establish a repayment schedule. Petitioner argues that her due process rights were violated because HHS started to collect the debt after she filed a hearing request on January 27, 2023. P. Br. at 3-4; P. Ex. 3. Petitioner’s argument has merit. According to Petitioner’s Earnings and Leave Statement, $565.49 was deducted from Petitioner’s wages for the pay period ending April 22, 2023. P. Ex. 3 (see “Debt, FullDue” amount under Deductions and the personnel correction debt discussion under Remarks). This deduction occurred in April 2023, months after Petitioner filed a hearing request and before any final decision was rendered. Thus, collection proceedings of the debt were required to be suspended pending resolution of this administrative proceeding. HHS initially argued that it was not required to give Petitioner notice of any recovery because the offset arose out of the same occurrence as the overpayment, that HHS needed to address the error immediately to ensure that another overpayment would not be made to Petitioner in an upcoming pay period, and that the debt could be collected at the discretion of the agency through non-centralized administrative offsets because it arose from an internal error in the rate at which she accrued leave. HHS Br. at 8-9. However, at the hearing, HHS confirmed the collection was in error and Petitioner would be refunded this amount.
I do not excuse the premature collection of $565.49 in this case. There has been no evidence that HHS was unaware of Petitioner’s request for hearing in this case or that HHS was not on notice that collection proceedings should be stayed. To the contrary, the overpayment dispute was stayed before me while HHS was awaiting the results of a leave audit. See April 27, 2023, Order Granting Petitioner’s Motion for Extension in Part and Instituting Stay of Proceedings. Further, there was no risk that additional overpayments would occur or that the offset arose out of the same occurrence as the overpayment, since
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the SCD accrual error had been corrected eight months prior. See HHS Ex. 6 at 3; P. Ex. 1. I reject HHS’ briefed arguments that it was not required to abide by the notice requirements or the requirement to stay debt collection during a dispute and accept HHS’ concession during the hearing that the offset was an error.
I also do not excuse the collection of an amount in excess of the amount calculated as Petitioner’s net disposable pay. Compare HHS Ex. 2 at 2 (“The maximum amount deductible . . . is 15% of your disposable net pay each pay period until the debt is repaid in full. Our estimate of your disposable net pay, based on current payroll information, is $2,844.67. Therefore, the maximum deduction would be $426.70 . . . .”) with P. Ex. 3 (“$565.49 collected this pay period for a $16[,]333.42 (less amt applied leaves a remaining balance $15[,]767.93) personnel correction debt in accordance with 5 U.S.C. [§] 5514.”). HHS has provided no evidence that Petitioner was notified of HHS’ intent to recalculate her disposable net pay and to collect an increased amount while she was disputing the existence of the debt itself.
The record overwhelmingly supports my finding that HHS improperly began an involuntary repayment schedule during the pendency of this case, and collected an amount in excess of that permitted by the collection procedures. As discussed above, HHS – through DFAS – initiated collection proceedings while Petitioner’s hearing request was pending, in excess of the maximum amount permitted by the Notice Letter. P. Ex. 3; HHS Ex. 2 at 2. At the hearing, HHS conceded this collection occurred in error, and counsel represented that the amount would be refunded. However, HHS and Petitioner confirmed that this refund had not yet been processed. I find that HHS has not imposed a proper repayment schedule8 on Petitioner and her due process rights were violated. As a result, Petitioner is entitled to a $565.49 refund for a recoupment made before the debt was certified and a final decision was issued.
ii. HHS has failed to demonstrate that the alleged time and attendance credit hour debt is exempt from the due process requirements.
As discussed in section VIII(3)(a), supra, it appears that DFAS was processing Petitioner’s compensatory time or credit hours simultaneously with correcting Petitioner’s SCD and calculating the annual leave overpayment. For the pay period ending August 27, 2022, HHS deducted 96 hours of previously accrued leave. P. Ex. 1. For the pay period ending December 3, 2022, HHS collected $309.37 to settle a time and attendance correction debt, and also deducted 5.12 hours in the amount of $361.04 as
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negative retroactive earnings. P. Ex. 2. HHS has not provided any evidence that it was permitted to deduct 186 hours of leave to offset a time and attendance debt without providing Petitioner with notice and an opportunity to dispute the amount deducted, forfeited, or owed. The parties agreed that Petitioner received an email in May of 2023 from her operating division or staff division designated official explaining the credit hours issue, but it was not filed as evidence of record. Although Petitioner withdrew her dispute of what HHS characterized as an issue with Petitioner’s credit hours, she still expressed confusion about how the amount forfeited and converted to cash for deduction was calculated.
I share Petitioner’s confusion, particularly in light of the fact that Petitioner was unaware that she had been accruing two extra hours per pay period for nearly eight years that HHS would “promptly” begin to claw back. The parties have not submitted any evidence that Petitioner received notice she had accrued credit hours in excess of her division’s policy. If Petitioner had known of the alleged annual leave overpayment, or that her SCD had been improperly entered and HHS would assess an overpayment, Petitioner may have used her credit hours that she allegedly forfeited. For example, Petitioner took 40 hours of annual leave for the pay period ending August 13, 2022, leaving an annual leave balance of -65.50. See HHS Ex. 3 at 12. Had she been notified in advance that she would forfeit 90 credit hours the following pay period, she may have used credit hours in lieu of annual leave. Instead, Petitioner was left to answer that it was plausible that she could have accrued that amount of credit hours and that she could possibly have needed to forfeit them. However, the purpose of the notice requirements is to advise the debtor of the amount and the nature of a debt, the basis for the indebtedness, the date by which payment should be made to avoid further charges and collection proceedings, and any rights the debtor may have to seek review and to enter into a reasonable repayment agreement – not leaving a debtor wondering whether it is plausible to owe that amount.
Unfortunately for Petitioner, based on the evidence of record, the alleged time and attendance debt is only related to the annual leave overpayment debt at issue before me to the extent that notice may have lessened the gross amount of the debt and my finding that the hours and amounts deducted in August and December of 2022 are not offsets of the $16,333.42 overpayment debt. I have no authority to remedy any lack of notice related to a credit hours issue.
iii. HHS failed to give Petitioner timely notice of the overpayment debt.
The Secretary of HHS “shall aggressively and timely collect all debts arising out of activities of, or referred or transferred for collection actions to, [HHS].” 45 C.F.R. § 30.10(a). “Normally, an initial written demand for payment shall be made no later than 30 days after a determination by an appropriate official that a debt exists.” Id.; see also 45 C.F.R. § 30.11(a)(1) (written demand for payment shall be made promptly).
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The incorrect SCD entry occurred in December of 2014 and was not discovered or remedied until the pay period ending August 27, 2022. HHS Exs. 1, 5, 6; P. Ex. 1. The Notice Letter was not issued until December 31, 2022. HHS Ex. 2. HHS was able to correct the error in the same pay period that the error was discovered, but there has been no explanation for the four-month time period between when the SCD was discovered and corrected and when the Notice Letter was issued. Petitioner advised at the hearing that she takes annual leave during the December holidays to see her family. This is supported by the annual leave taken during the last December pay period from 2015 through 2021. See HHS Ex. 3 at 10-12. Having prompt notice of an alleged annual leave overpayment would have made Petitioner aware of the alleged negative annual leave balance, may have allowed her to change her plans to avoid taking additional annual leave, potentially avoiding an annual leave overpayment for 2022. I question whether HHS’ practice of clawing back seven years of annual leave that a public servant received as a result of HHS’ own clerical error and that went unnoticed would be equitable, in good conscience, and in the best interests of the United States. Unfortunately for Petitioner, however, there is no remedy for HHS’ failure to give her timely notice of the overpayment debt.
iv. HHS has failed to give Petitioner timely notice of an annual leave overpayment for 2022.
The most perplexing due process violation was revealed at the hearing, and concerns Petitioner’s alleged annual leave balance from 2022. HHS’ leave audit was filed as HHS Ex. 3 on June 27, 2023, and required a stay in proceedings due to the delay in the audit’s completion. The leave audit ends for the pay period ending November 19, 2022. HHS Ex. 3 at 12. There are only 23 pay periods included in the table of calculations for 2022. See id. According to HHS Ex. 3, Petitioner’s corrected annual leave ending balance as of the pay period ending November 19, 2022, is -31.50. At the hearing, HHS confirmed the debt dispute before me does not include any calculations from 2022. This is supported by the Notice Letter, which informed Petitioner that the overpayment was for the pay periods ending January 11, 2015, through December 4, 2021. HHS Ex. 2 at 1. HHS also confirmed that Petitioner has not been notified of the 2022 annual leave overpayment. It is unclear whether an appropriate official has determined that a debt exists for 2022 or whether HHS intends to collect on any outstanding annual leave amounts for 2022. In any event, there has not been a demand for payment, but counsel alleges an overpayment exists.
I question what definition HHS applies to prompt notice and if or when it intends to send Petitioner a letter alleging thousands of dollars of overpayments, which will then be deducted from her paycheck at some unknown date in the future, perhaps while she is contesting that as-yet-determined overpayment. This entire dispute process was the result of a clerical error that occurred over eight years ago and was discovered nearly one year ago. This one clerical error has already required government resources in the form of an
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investigation, an audit, and a hearing to confirm the accuracy of the calculations, and it may require another round for the remaining alleged overpayment. Unfortunately for Petitioner, there is no remedy for HHS’ failure to give Petitioner timely notice of an annual leave overpayment for 2022 and simply declaring that one exists during a hearing. I remind HHS that repeated failures to correct overpayments resulting from its own clerical errors are ripe for waiver and, if it intends to collect any overpayments calculated by the failure to correct these issues, the due process requirements are mandatory. To the extent HHS intends to collect any overpayment attributed to Petitioner’s annual leave balance for 2022, HHS must follow proper notice and collection procedures.
VIII. Conclusion
Petitioner is indebted to the United States government in the total gross amount of $16,333.42. Petitioner is indebted to the United States government in the total net amount of $15,767.93 after previous recoupments.
Petitioner is entitled to a $565.49 refund for a recoupment made before the debt was certified. Once the refund is processed, the total gross amount may be collected via salary offset or in any other manner permitted by law.
My determination is an official certification regarding the existence and amount of the debt for purposes of executing federal salary offset pursuant to 5 U.S.C. § 5514.
Endnotes
1 Although the salary offset regulations do not preclude an employee from requesting waiver of an overpayment under 5 U.S.C. § 5584, HHS’ policy prohibits employees from filing a waiver request and hearing request simultaneously. 45 C.F.R. § 33.1(c)(3); HHS Ex. 7 at 2 (instructing employees to “select only one” option between requesting a hearing to dispute the debt, a waiver of the debt, or a waiver of only administrative charges and interest) (emphasis in original).
2 As discussed below, Petitioner should have accrued six hours of annual leave per pay period and ten hours of annual leave on the last annual pay period.
3 Similar to federal pay periods, federal leave years may not start and end within the same calendar year. See C.F.R. § 630.201 (definition of “Leave year”).
4 Petitioner entered 2015 with a beginning annual leave balance of 16 hours, because she earned six hours for the pay period ending December 27, 2014, and ten hours for the pay period ending January 10, 2015. HHS Ex. 3 at 10.
5 An amount in parentheses and red text represents a negative balance.
6 With the exception of 2015, HHS represented that for the purposes of calculating Petitioner’s overpayment, each year began at an annual leave balance of zero. The ending leave balances from the previous years are set aside and not represented or carried over in the table calculations.
7 “Credit hours” refers to any hours, within a flexible work schedule, which are in excess of an employee’s basic work requirement and which the employee elects to work so as to vary the length of a workweek or a workday. 5 U.S.C. § 6121(4). An agency head may restrict the use of credit hours under certain circumstances. 5 U.S.C. § 6122(b). In other words, “Full-time . . . employees under flexible work schedules may earn credit hours if agency policies for flexible work schedules or union agreements permit,” and “an agency may establish limitations on how credit hours are earned and the number of credit hours that may be earned.” https://www.opm.gov/policy-data-oversight/pay-leave/work-schedules/fact-sheets/credit-hours-under-a-flexible-work-schedule/ (last accessed July 18, 2023) (emphasis omitted). In relevant part, a full-time employee may only carry over 24 credit hours to the next pay period, and an agency policy or union agreement may restrict this amount further. 5 U.S.C. § 6126(a).
8 Before imposing a repayment schedule on Petitioner, I urge HHS to come to an agreement with Petitioner concerning the repayment schedule. See 5 U.S.C. § 5514(a)(2)(C).
/s/
Karen R. Robinson Administrative Law Judge