SUBJECT:

Lisa Meegs Joldersma,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

Petitioner, Lisa Meengs Joldersma, ⁽¹⁾ has no right to hearing or review by a hearing officer, as she is not an employee of the federal government and the agency ⁽²⁾ has not attempted collection of Petitioner's debt by administrative offset. Accordingly, I have no jurisdiction to issue an order, as requested by Petitioner, to require the agency to refund amounts she argues were "unlawfully demanded of [her]." Petitioner's letter dated March 30, 2004.

Pursuant to the Secretary's debt collection regulations, Petitioner does have a right to written notice regarding her debt and the opportunity to present evidence to support her dispute of the debt. In this case, because the agency forwarded the matter to the Departmental Appeals Board (DAB) for assignment to an administrative law judge and a possible hearing, Petitioner submitted her evidence to me rather than an appropriate agency official for decision. Accordingly, I return this matter to Jack O'Leary, Acting Director, Division of Payroll, Program Support Center, Human Resources Service, Personnel and Pay Systems Division, HHS, for determination of the correct agency official to review Petitioner's submissions and for action consistent with the guidance of the Comptroller General, as discussed below.

I. PROCEDURAL HISTORY

Petitioner was advised by letter dated October 10, 2003, from Phyllis A. Buckley, Manager, Operations and Technical Support Group, Program Support Center, Human Resources Service, Division of Payroll, HHS, that, on her separation from HHS, she was indebted to the government in the amount of $5,748.12 for 126 hours of advanced sick leave. The letter advised Petitioner that she could submit a request for review by a hearing officer within 15 days of the date of the notice. Petitioner requested a hearing, by letter dated October 25, 2003, to her former Servicing Personnel Officer, disputing the amount of her indebtedness. Petitioner asserted that she should not pay the gross amount but, rather, the net amount she actually received (the $5,748.12 minus taxes). Petitioner's hearing request was forwarded to the DAB by Mary A. Stella, Human Resources Specialist, Division of Employment Benefits & Service, Human Resources Management Group, Office of Operations Management, CMS, on January 5, 2004. Ms. Stella's memorandum of January 5, 2004, with the attached request for hearing and supporting documents, is marked and admitted as Exhibit 1, pages 1 through 8. ⁽³⁾

On January 14, 2004, this case was assigned to me for hearing and decision. Receipt of the hearing request was acknowledged by letter dated January 14, 2004, in which theparties were advised to have counsel formally enter their appearance. ⁽⁴⁾

On January 28, 2004, I issued an order directing that, not later than February 6, 2004, the agency produce records for Petitioner's review, as required by 5 U.S.C. � 5514(a)(2)(B) (alleged debtor must be given an opportunity to inspect and copy government records relating to the debt), specifically requiring the agency to provide:

1. Any and all evidence in the government's possession reflecting the calculation of the alleged overpayment.

2. A declaration of a qualified agency representative, executed in accordance with 28 U.S.C. � 1746, explaining the calculation of the overpayment amount, including citations for statutes or regulations relied on in preparing the calculations.

3. Copies of any governmental or agency policies or legal opinions relied upon in doing the calculation of indebtedness.

I also directed that the agency document the reason for the delay in forwarding Petitioner's request for hearing. I provided that Petitioner had until March 5, 2004, to submit any reply.

In a letter dated February 13, 2004, Petitioner advised me that on January 7, 2004, she had remitted payment for $5,748.12 to William Darracott of the Debt Management Branch, Division of Financial Operations, Program Support Center, which office had dunned her for payment and advised her that, if the debt was not paid within 30 days, interest would accrue. Petitioner's correspondence and enclosures are marked and admitted as Exhibit 2, pages 1 through 9. ⁽⁵⁾ The amount paid was the full amount claimed by HHS. Petitioner advised me that, by having remitted payment, she did not intend to concede the debt or waive her right to hearing.

By memorandum dated February 18, 2004, Mary A. Stella, Human Resources Specialist for HHS, advised that she had received my January 28, 2004 Order on February 4, 2004. She further advised that the correct agency contact for this matter is Jack O'Leary, Division of Payroll, whose office did the calculation of overpayment and notified Petitioner of the debt. Ms. Stella's February 18, 2004 correspondence is marked and admitted as Exhibit 3.

Mr. O'Leary responded to my Order of January 28, 2004, by memorandum dated March 4, 2004, which is marked and admitted as Exhibit 4, pages 1 through 11. ⁽⁶⁾ Mr. O'Leary responded that he had consulted with a human relations specialist at the Office of Personnel Management (OPM), Gene Holson, who opined that 5 C.F.R. � 630.209 is applicable and should be interpreted to require the agency to recover the gross amount paid to the employee.

On March 10, 2004, I issued an order for Petitioner to respond to the agency submission by Mr. O'Leary not later than March 31, 2004. ⁽⁷⁾ Petitioner filed her response in the form of a letter with enclosures dated March 30, 2004, which is marked and admitted as Exhibit 5, pages 1 through 4. ⁽⁸⁾

II. ANALYSIS

Congress, through the Federal Claims Collection Act of 1966, the Debt Collection Act of 1982, and the Debt Collection Improvement Act of 1996 (Pub. L. No. 104-134, 110 Stat. 1321, 1358 (Apr. 26, 1996)), mandated that executive, judicial, and legislative agencies collect claims of the United States. 31 U.S.C. � 3711(a). The heads of the executive agencies are required to prescribe debt collection regulations consistent with the standards established by the Attorney General and the Secretary of the Treasury. 31 U.S.C. � 3711(d). ⁽⁹⁾ Congress did not specify procedures for agency heads to follow in determining the existence of a valid debt, but did specify the minimum procedures required to be followed if the agency head determined to report a valid and overdue debt to a credit reporting agency. No right to a hearing is provided by any of these Acts.

The standards promulgated by the Attorney General and the Secretary of the Treasury pursuant to the Debt Collection Improvement Act, 31 U.S.C. � 3711(d)(2), are found at 31 C.F.R. Parts 900 to 904 (2003) and are referred to as the Federal Claims Collection Standards. A "debt" owed to the government or "claim" of the government are synonymous under the standards and are defined as "an amount of money, funds, or property that has been determined by an agency official to be due the United States from any person, organization, or entity, except another Federal agency." 31 C.F.R. � 900.2(a). The standards specify that they are not the exclusive means for claims collection, but the procedures of other statutes and regulations for particular types of claims apply to those claims. 31 C.F.R. � 900.4. The standards prescribe no specific administrative process to be followed by agency heads (31 C.F.R. � 900.7), except that a written demand for payment of the debt must be made. 31 C.F.R. � 901.2. The contents of the written demand are specified at 31 C.F.R. � 901.2(b), which provides that the letter will inform the debtor of:

(1) The basis for the indebtedness and the rights, if any, the debtor may have to seek review within the agency;

(2) The applicable standards for imposing any interest, penalties, or administrative costs;

(3) The date by which payment should be made to avoid late charges . . . .

It is specifically noted that employees of agencies who administer the Social Security Act are not exempt from the application of the Federal Claims Collection Standards. 31 C.F.R. � 901.12(b). No right to a hearing is provided by the Federal Claims Collection Standards.

In this case, the debt has been declared by an official of HHS. Accordingly, the regulations of the Secretary of HHS regarding debt collection are applicable. The Secretary's regulations, which were revised effective October 1, 2003, are found at 45 C.F.R. Part 30. The provisions of 45 C.F.R. Part 30 apply unless a statute or regulation applicable to a specific situation applies and provides for a different procedure. 45 C.F.R. � 30.4. The Secretary has provided that failure to comply with the procedures specified by his debt collection regulations is no defense. 45 C.F.R. � 30.10.

Section 30.11 of 45 C.F.R. provides, generally, that the Secretary will take aggressive action to track-down debtors and collect debts owed the government. It is specifically provided that a debtor who disputes a debt must promptly provide supporting evidence. 45 C.F.R. � 30.11(e). Section 30.12(a) specifies the contents of the first notice or demand for payment to the debtor, including:

(1) The amount and nature of the debt;

(2) The date payment is due, which will generally be 30 days from the date the notice was mailed; and

(3) The assessment under � 30.13 of interest from the date the notice was mailed, and full administrative costs if payment is not received within the 30 days.

When appropriate, under section 30.12(b), the Secretary will also inform the debtor in writing of:

(1) His or her right to dispute the debt or request a waiver of the debt, citing the applicable review or waiver authority, the conditions for review or waiver, and the effect of the review or waiver request on collection of the debt, interest, charges and late payment penalties (see � 30.14);

(2) The office, address and telephone number that the debtor should contact to discuss repayment, reconsideration or waiver of the debt;

(3) The proposed sanctions if the debt is overdue, including assessment of late payment penalties under � 30.13 (if the debt is more than 90 days overdue) or referral of the debt to a credit reporting agency under � 30.17, or to a collection agency under � 30.18. (See also � 30.5).

Except in the case of administrative offset, the Secretary's regulations provide no right to a hearing or review by a hearing officer or administrative law judge. Administrative offset is the process of satisfying a debt due the government by withholding money due payable from HHS to a debtor or held by HHS for the benefit of the debtor. 45 C.F.R. � 30.15(b). Administrative offset may only be used in the limited circumstances specified at 45 C.F.R. � 30.15(a). Administrative offset may be used to collect debts owed by employees of HHS but, in such cases, the regulation recognizes that the agency must also comply with the requirements of 5 U.S.C. � 5514, which specifically controls the collection of debt by an agency from its employees. Section 30.15 of 45 C.F.R. provides for notice and a review or hearing by a hearing officer, who may be an administrative law judge, before administrative offset may be effected. Title 5 U.S.C. � 5514 also requires notice and a hearing before an agency head may direct withholding to recover a debt from an employee's pay.

In this case, Phyllis Buckley, Manager of the Operations and Technical Support Group, Program Support Center, Human Resources Service, Division of Payroll, HHS, advised Petitioner by letter dated October 10, 2003, that she was indebted to the government in the amount of $5,748.12 for 126 hours of sick leave charged at a rate of $45.62 per hour. Ms. Buckley demanded payment in her letter. Ms. Buckley also advised Petitioner, without citation of any authority, that Petitioner could request review by a "hearing office" within 15 days. Exhibit 1, at 6. Petitioner then executed the Hearing/Waiver Request Form on October 25, 2003, indicating that she wanted a hearing officer to review her indebtedness. Id. at 2. Ms. Stella forwarded the request for hearing to the DAB by letter dated January 5, 2004, in which she indicates that:

We are transferring her request to your office because the Office of the General Counsel, General Law Division informed us that the Departmental Appeals Board has the jurisdiction to conduct hearings pursuant to 5 U.S.C. � 5514 and 45 C.F.R. � 30.15.

Id. at 1. ⁽¹⁰⁾

Upon review of the evidence presented by Petitioner and the agency, I find that the citations to 5 U.S.C. � 5514, pertaining to the collection of debts of federal employees, and 45 C.F.R. � 30.15, pertaining to collection of debts by administrative offset, do not apply to this case. The evidence clearly shows that Petitioner resigned from government employment effective August 8, 2003, and that she was no longer a government employee after that date. ⁽¹¹⁾ Exhibits 1, at 7 & 8; 2, at 6 & 7; 4, at 9 & 10. Furthermore, there is no indication that the agency ever sought to recover this debt by administrative offset from amounts payable to or held for the benefit of Petitioner. The notices involved were demands for payment, not notices of intent to effect an administrative offset. See Exhibit 4, at 9; Exhibit 5, at 4. Because Petitioner is not a federal employee, she is not entitled to the due process procedures specified in 5 U.S.C. � 5514. Because no administrative offset is involved, Petitioner is not entitled to the due process procedures specified by 45 C.F.R. � 30.15. Petitioner has no right to hearing or review by a hearing officer. The Secretary's regulations provide only that Petitioner has right to written notice and an opportunity to promptly submit evidence in support of her dispute of the debt. 45 C.F.R. �� 30.11 and 30.12.

The dispute in this case relates to the agency attempt to recover a debt from Petitioner that exists because Petitioner received pay for unearned sick leave. There is no dispute by Petitioner that when she separated from federal employment on August 8, 2003, she was indebted for 126 hours of sick leave. Petitioner does not dispute the calculation of indebtedness for the 126 hours of sick leave at a rate of $45.62 per hour ⁽¹²⁾ for a total indebtedness of $5,748.12. Exhibit 4, at 6-8. Petitioner, however, disputes that the agency should collect from her that portion of the total debt that was not paid to her directly, but was rather paid on her behalf to other entities for state and federal taxes, Medicare, and Social Security. She estimates this amount to be approximately $1,494.51. The issue raised is thus whether the agency recovery of indebtedness should be limited to the amount Petitioner was actually paid or whether the agency may recover from Petitioner the amount she was actually paid plus an additional amount equivalent to employer contributions and withholding for federal, state, Medicare and Social Security taxes.

Pursuant to 5 C.F.R. � 630.101, the Secretary is responsible for ensuring implementation of the regulations regarding personnel administration including "maintaining an account of leave for each employee in accordance with methods prescribed by the General Accounting Office." ⁽¹³⁾ Title 5 C.F.R. � 630.209(a) provides:

When an employee who is indebted for unearned leave is separated, the agency shall:

(1) Require him to refund the amount paid him for the period covering the leave for which he is indebted; or

(2) Deduct that amount from any pay due him.

This provision is the legal basis for the agency declaring Petitioner indebted to the government in this case. None of the exceptions to the requirement for the agency to recover from Petitioner listed in 5 C.F.R. � 630.209(b) apply in this case. The dispute in this case relates to the meaning of the phrase in section 630.209(a)(1), "the amount paid him." Petitioner argues that "the amount paid her" was the amount of the pay she actually received for the period of leave, i.e., the gross amount of pay less withholdings for federal and state tax, Medicare and Social Security. The agency position, and, according to Mr. O'Leary's letter (Exhibit 4, at 1), the OPM position, is that the agency is required to recover from Petitioner the gross amount paid.

The Comptroller General of the United States ⁽¹⁴⁾ addressed the issue in the matter of Alfred H. Varga, B-260909, December 17, 1996, specifically ruling that:

This Office has consistently held that the total amount of the employee's debt due the United States includes both the amount the employee received directly and other amounts disbursed on his behalf for such items as medicare, health benefits, savings account, life insurance, retirement, and federal and state tax withholdings.

Id. at 4. The opinion indicates that, in the case of an employee, the agency should attempt to recover disbursements for all withholdings, other than federal and state income taxes, and credit them against the debt owed, but that the employee is responsible for contacting the Internal Revenue Service and state tax authorities for adjusting tax liability.

My review of the facts and law applicable in this case indicates that the agency correctly concluded that Petitioner was indebted to the government in the amount of $5,748.12 (126 hours of advance or unearned sick leave at Petitioner's hourly rate of $45.62 per hour). Pursuant to 5 C.F.R. � 630.209(a), and the Comptroller General's opinion in the Varga matter, Petitioner was liable for the full debt, not just the net pay she received. Although the Comptroller General opined in Varga that the agency should attempt to recover disbursements on an employee's behalf (except federal and state tax) to credit against the debt, the Comptroller General does not indicate that such action is mandated or that it extends to the debt of a former employee. It is clear that the agency did not, in this case, credit against Petitioner's debt any amount recovered for Medicare, health benefits, savings account, life insurance, or retirement. I cannot determine from the evidence before me whether it is possible for the agency to recover such amounts and credit them against the debt Petitioner owed, resulting in a refund from the agency to Petitioner, or whether it will be necessary for Petitioner to seek refunds from the appropriate entities as she must do with federal and state tax officials.

III. CONCLUSION

Petitioner has no right to hearing or review by a hearing officer as she is not an employee of the federal government and the agency has not attempted collection of Petitioner's debt by administrative offset. Accordingly, I have no jurisdiction to issue an order as requested by Petitioner.

Pursuant to the Secretary's debt collection regulations, Petitioner does have a right to written notice regarding her debt and the opportunity to present evidence to support her dispute of the debt. In this case, because the agency forwarded the matter to the DAB for assignment to an administrative law judge and a possible hearing, Petitioner submitted her evidence to me rather than an appropriate agency official for decision. Accordingly, I return this matter to Jack O'Leary, Acting Director, Division of Payroll, Program Support Center, Human Resources Service, Personnel and Pay Systems Division, HHS, for determination of the correct agency official to review Petitioner's submissions and for action consistent with the guidance of the Comptroller General.

KEITH W. SICKENDICK

Administrative Law Judge

1. The letter notifying Ms. Joldersma of her debt was sent to "Ms. Lisa Joldersma Meengs" and "Ms. Lisa Joldersma Meengs" is how the case was originally captioned. By Order of March 10, 2004, I modified the caption to reflect that Petitioner's name is Lisa Meengs Joldersma, not Lisa Joldersma Meengs. Thus, the case is now captioned "Lisa Meengs Joldersma."

2. While the Respondent in this case is the Centers for Medicare & Medicaid Services (CMS), the delegated authority with respect to debt collection cases is not CMS but the Secretary of Health and Human Services (HHS or agency).

3. None of the documents submitted by the Petitioner or agency representatives were marked as exhibits. I am marking them as exhibits for ease of reference. Exhibit 1 includes the January 5, 2004 memorandum of Mary Stella; the Hearing/Waiver Request Form dated October 25, 2003, with the name, signature, and SSN of Petitioner, Lisa Meengs Joldersma; the October 25, 2003 letter from Petitioner to Adrienne Ferguson, subject Request for Hearing on Statement of Indebtedness; a letter to Petitioner from Phyllis Buckley, dated October 10, 2003; a Record of Leave data bearing Petitioner's name and SSN for the pay period ending August 23, 2003; and an Earnings and Leave Statement bearing Petitioner's name, address, and SSN for the pay period ending August 9, 2003. Unless otherwise indicated, all documents submitted are either photocopies or facsimile copies.

4. However, counsel did not put in an appearance for either party in this proceeding.

5. Exhibit 2 includes a facsimile cover sheet from Petitioner to Debra Berube (who is an attorney with the DAB); a letter from Petitioner to me dated February 13, 2004; a letter from Phyllis Buckley to Petitioner dated October 10, 2003; Petitioner's Hearing/Waiver Request Form dated October 25, 2003; the record of leave data for Petitioner for the pay period ending August 23, 2003; a letter from William Darracott to Petitioner demanding payment of $5,748.12; a January 7, 2004 letter to Mr. Darracott from Petitioner; and a copy of a check payable to "Health and Human Services-CP" in the amount of $5,748.12, dated January 7, 2004, with a copy of the address for Mr. Darracott (which may be a copy of a business size envelope).

6. Exhibit 4 includes the memorandum from Jack O'Leary, dated March 4, 2004, to Maxine Winerman (who is an attorney with the DAB and the attorney assigned to assist me with this case); a copy of Ms. Stella's February 18, 2004 memorandum informing Ms. Winerman that Jack O'Leary is the agency contact in this case; a copy of Ms. Stella's letter to Petitioner dated January 5, 2004; a copy of the letter from Ms. Stella to the DAB dated January 5, 2004, referencing Petitioner's enclosed request for hearing; Petitioner's Hearing/Waiver Request Form dated October 25, 2003; Petitioner's October 25, 2003 letter to Adrienne Ferguson requesting a hearing; the October 10, 2003 letter from Phyllis Buckley to Petitioner; a Record of Leave Data for Petitioner for the pay period ending August 23, 2003; and Petitioner's Earnings and Leave Statement for the pay period ended on August 9, 2003.

7. Served with the Order was a copy of the regulation cited by Mr. O'Leary and a copy of his correspondence and enclosures, as it did not appear that he had served a copy on Petitioner.

8. Exhibit 5 includes Petitioner's letter dated March 30, 2004 and the demand letter from Mr. Darracott to Petitioner.

9. Prior to October 19, 1996, the Comptroller General shared responsibility with the Attorney General for debt collection. General Accounting Office Act of 1996, Pub. L. 104-316, 110 Stat. 3826, 3834-35.

10. When forwarding Petitioner's request for hearing on January 5, 2004, Ms. Stella referred to a request for hearing of a different individual. However, Mr. O'Leary subsequently produced the letter that apparently was intended to be used to forward Petitioner's request, which includes nearly identical language to the one actually received at the DAB, but with Petitioner's name. Exhibit 4, at 4.

11. 5 U.S.C. � 2105 (employee defined).

12. This is the hourly rate reflected on Petitioner's earnings and leave statement for the pay period ended August 9, 2003. Exhibit 4, at 11.

13. Pursuant to 5 U.S.C. � 2304, the General Accounting Office (GAO) conducts audits and reviews of the executive branch to ensure the "effectiveness and soundness" of federal personnel management. Pursuant to 5 U.S.C. � 6311, OPM is responsible for promulgating regulations for administration of the federal personnel management system as prescribed by Congress in 5 U.S.C.

14. The Comptroller General is head of the GAO. 31 U.S.C. � 702.