U.S. Department of Labor Office of Administrative Law Judges
Federal Building, Suite 4300
501 W. Ocean Boulevard
Long Beach, California 90802
(310) 980-3594
(310) 980-3596
FAX: (310) 980-3597
DATE: February 15, 1995
CASE NO: 94-DCA-00001
In the Matter of
RONALD VITOLO,
Petitioner,
v.
U.S. DEPARTMENT OF LABOR,
OFFICE OF WORKERS' COMPENSATION PROGRAMS,
Respondent.
DECISION AND ORDER
This case arises under Section 5 of the Debt Collection Act of
1982, (Pub. L. 97-365), 5 U.S.C. 5514 (the "DCA"), and the
implementing regulations at 29 C.F.R. § 20.74 etseq. The DCA authorizes agency heads to deduct amounts from
an employee's pay to satisfy a debt owing to the United States.
Respondent, the U.S. Department of Labor, Office of Workers'
Compensation Programs ("OWCP"), determined that Petitioner's pay
should be offset to satisfy a debt resulting from payments which
were made to Petitioner pursuant to the Federal Employees'
Compensation Act ("FECA").
Procedural Background
Petitioner's pre-hearing statement was received in my office
on May 20, 1994. By way of a transmittal letter dated May 26,
1994, Respondent submitted its exhibits 1 through 7 and asked that
they be admitted into evidence at the rescheduled hearing. By way
of a transmittal letter dated July 28, 1994, Respondent submitted
a declaration of Calvin Sagami and requested that it be admitted
into evidence. As part of this transmission Respondent also
[PAGE 2]
submitted its pre-hearing statement, which states that Respondent
intended to submit its case based solely on documentary evidence.
Petitioner submitted an amended pre-hearing statement which is
dated August 25, 1994. Along with this amended pre-hearing
statement Petitioner submitted Petitioner's Exhibits 1-9 and
reserved Petitioner's Exhibit 10 for a subsequent submission.
The hearing in this matter was held September 8, 1994. At
that hearing, the undersigned admitted Petitioner's Exhibits 1-11
into evidence, with Petitioner's Exhibit 10 being a different
exhibit than was described in Petitioner's amended pre-hearing
statement and Petitioner's Exhibit 11 being a document which the
undersigned asked Petitioner to submit post-hearing (Transcript,
"Tr.," at 5-9, 49). The undersigned also admitted Respondent's
Exhibits 1-8 into evidence, with the declaration of Calvin Sagami
identified as Respondent's Exhibit 8 (Tr. at 31-33).
Petitioner submitted Petitioner's Exhibit 11 by way of a
transmittal letter dated September 12, 1994. By way of a
transmittal letter dated September 28, 1994, Respondent submitted
its Supplemental Declaration of Calvin Sagami. By way of a letter
dated October 13, 1994, Petitioner objected to "post-hearing
submittals of any kind by the Respondent."
On October 27, 1994, the undersigned issued an Order For
Office of Workers' Compensation Programs to Show Cause in this
matter. That Order required the OWCP to show cause as to (1) why
an entry of default should not be entered against them for failure
to appear at the September 8, 1994, hearing; (2) why the ten year
statute of limitations for collection of a debt by administrative
offset had not run by the time OWCP commenced its collection
against Petitioner; (3) why the OWCP had continued to withhold
monies from Petitioner's salary after the time Petitioner requested
a hearing; and (4) why the undersigned should admit into evidence
the supplemental declaration of Calvin Sagami. On November 15,
1994, the undersigned received the OWCP response. That response
was that (1) OWCP appeared at the hearing by way of the July 28,
1994, pre-hearing statement of attorney Jan M. Coplick, by way of
the July 28, 1994, declaration of Calvin Sagami, and by way of the
submission of Respondent's Exhibits 1-7; (2) the statute of
limitations on the administrative offset collection did not
commence running until February 8, 1988; (3) OWCP took steps on
October 19, 1994, to terminate collection from Petitioner's salary;
and (4) OWCP had determined that there are a number of outstanding
issues which need to be developed and therefore withdrew its
intention to collect the debt at issue by salary offset, without
prejudice to later efforts to collect any debt determined to be
[PAGE 3]
owed. The undersigned issued an order on November 17, 1994, to the
effect that the undersigned would remain obligated to issue a
Decision and Order in this matter unless Petitioner agreed to a
remand to OWCP. Petitioner submitted a statement dated November
18, 1994, objecting to a remand to the OWCP for further development
of the issues.
Because Petitioner has objected to admission into evidence of
the Supplemental Declaration of Calvin Sagami, which was submitted
post-hearing by Respondent, and because Respondent did not address
this issue in its response to my Order to Show Cause, the
undersigned declines to admit into evidence the Supplemental
Declaration of Calvin Sagami.
Prior to the hearing in this matter, the undersigned requested
the OWCP to supply the undersigned with copies of the documents
pertaining to Petitioner's case as contained in the OWCP file.
OWCP supplied the undersigned with these documents by way of a
transmittal letter dated March 10, 1994. Having reviewed these
documents, the undersigned believes that they are relevant. The
undersigned hereby admits these documents into evidence as
Administrative Law Judge Exhibit 1.
Facts
It is obvious that Petitioner and Respondent have disputed and
still dispute various facts pertaining to the alleged debt in
question here. However, the key facts upon which this Decision and
Order turns appear to be undisputed.
Petitioner injured his back on July 7, 1977, in the course of
his duties with the United States Postal Service, and filed a claim
for FECA benefits that same day. Subsequently, Petitioner received
FECA compensation benefits for various periods of time. By way of
a form dated September 9, 1982, Petitioner informed the OWCP, which
administers FECA benefits, that he had earned commissions as a real
estate sales person from July of 1980 through September 9, 1982.
In a letter to Petitioner dated March 8, 1983, the OWCP referred to
its request of November 22, 1982, for more specific information
regarding Claimant's reported earnings.
OWCP issued Findings of Fact on December 15, 1983, to the
effect that Petitioner had failed to report his employment as a
real estate salesperson during the period from July 15, 1980,
through September 8, 1982, as directed. The OWCP determined that
Petitioner had forfeited his entitlement to benefits for the period
from July 15, 1980, through September 8, 1982, under 5 U.S.C.
§
[PAGE 4]
8106(b).
After Petitioner requested and received a hearing on this
determination, an OWCP hearing representative issued a decision on
September 4, 1984. The hearing representative found that
Petitioner had withheld earnings information for the period from
August 11, 1980, through September 8, 1981, and had forfeited his
entitlement to compensation for that period. However, the hearing
representative determined that although Petitioner had received
overpayments for the periods from July 15, 1980, through August 11,
1980, and from September 8, 1981, through October 27, 1982,
Petitioner had not withheld information for these periods, and had
therefore not forfeited all of his entitlement to compensation
benefits for these periods.
After Petitioner appealed the hearing representative's
decision, the Employees Compensation Appeals Board (ECAB) reviewed
the hearing representative's decision and issued its own decision
on December 15, 1986. The ECAB found that Petitioner had forfeited
his entitlement to compensation benefits for the period from July
15, 1980, through September 8, 1981. The ECAB found that
Petitioner was not without fault for an overpayment which occurred
during the period from September 8, 1981, through September 9,
1982, and that this overpayment was therefore not subject to
waiver.
None of the three OWCP decisions summarized to this point
specified the dollar amounts of compensation benefits which
Petitioner had forfeited or had been overpaid. The first decision
to state such dollar amounts was issued by the OWCP by way of a
letter dated February 8, 1988. This letter specified the amount of
$16,165.09 for the forfeiture, but did not specify amounts for the
other alleged overpayments. In its decision of August 31, 1988,
the ECAB upheld the amount of $16,165.09 for the forfeiture for the
period from July 15, 1980, through September 8, 1981. This
decision did not specify any amount for any other period of
overpayment.
No amount of overpayment for the period commencing after
September 8, 1981, was specified by OWCP until a letter dated
September 26, 1991. This letter states that Petitioner was
overpaid FECA compensation benefits for the period from September
9, 1981, through January 10, 1982, in the amount of ,884.18.[1]
The letter states that for the period from January 11, 1982,
through March 2, 1983, Claimant was entitled to benefits in the
amount of $5,873.08, which he had not received. By way of a letter
dated March 31, 1992, the OWCP told Petitioner that the September
[PAGE 5]
26, 1991, letter which Petitioner received was not a "formal
decision," but merely an explanation of how the overpayment was
computed. Therefore, Petitioner was not entitled to a hearing
regarding the September 26, 1991, letter. The record does not
indicate the date upon which Petitioner had requested a hearing
regarding the September 26, 1991, letter.
Conclusions of LawA. Scope of Review
It is clear from the arguments and exhibits which Petitioner
has submitted that Petitioner would like the undersigned to conduct
a complete denovo review of the decisions which have
been rendered regarding Petitioner's entitlement to FECA
compensation benefits. Thus, a preliminary issue here is the scope
of the review which the undersigned must conduct. The alleged debt
in question here results from OWCP's determinations that: (1)
Petitioner forfeited his entitlement to all FECA compensation
benefits which he received for the period from July 15, 1980,
through September 8, 1981; (2) Petitioner received excessive FECA
compensation benefits for the period from September 9, 1981,
through December 2, 1981; and (3) although Petitioner has not been
paid FECA compensation benefits to which he is entitled for the
period from December 3, 1981, through March 2, 1983, the total
amount of the previous overpayments (including the forfeiture)
exceeds the total amount of this underpayment (D. Shultz letter of
9/26/91). The undersigned must determine whether, and to what
extent, the undersigned must examine the merits of these OWCP
decisions.
By themselves, the DCA's statutory and regulatory provisions
could be read to call for a substantive review of the OWCP
decisions regarding Petitioner's entitlement to FECA compensation.
Under 5 U.S.C. § 5514(a)(2), an agency seeking to collect a
debt via salary offset must provide the alleged debtor with "an
opportunity for a hearing on the determination of the agency
concerning the existence or the amount of the debt." 5 U.S.C.A.
§ 5514(a)(2) (West Supp. 1994). The regulation at 29 C.F.R.
§ 20.81 (1994) requires the undersigned to reach findings as
to "the amount and validity of the alleged debt."[2]
However, the statutory and regulatory provisions in place for
the adjudication of FECA disputes must be considered. The FECA
requires the Secretary of Labor ("Secretary") to make findings of
fact regarding, and awards for or against, FECA compensation. 5
U.S.C.A. § 8124(a) (1980). The Secretary has delegated the
responsibility for the processing of FECA claims to OWCP claims
[PAGE 6]
examiners, although the final authority in the OWCP is vested in
the Director, OWCP ("Director"). 20 C.F.R. § 10.130 (1994).
The OWCP's FECA decisions must "contain findings of fact and a
statement of reasons." Id. The Secretary's rules and the
statute itself provide that a FECA claimant who is not satisfied
with the initial OWCP decision can request a hearing before an OWCP
representative designated by the Director. 5 U.S.C.A. §
8124(b) (1980); 20 C.F.R. § 10.131 (1994). The Secretary's
rules provide that final OWCP decisions are subject to the review
of the ECAB, 20 C.F.R. § 10.139 (1994), and that an ECAB
decision is "final as to the subject matter appealed and such
decision shall not be subject to review, except by the Board." 20
C.F.R. § 501.6(c) (1994). Further, the statute provides:
The action of the Secretary or his designee in allowing
or denying a payment under this subchapter is--
(1) final and conclusive for all purposes and with
respect to all questions of law and fact; and
(2) not subject to review by another official of the
United States or by a court by mandamus or otherwise. 5
U.S.C.A. § 8128(b) (1980).
These statutory and regulatory provisions of the FECA make it clear
to the undersigned that an administrative law judge who is assigned
to a DCA case arising from FECA compensation payments lacks the
authority to conduct a substantive review of a final FECA decision
of the Secretary.[3]
Further, not only does the administrative law judge lack the
authority to review the merits of a final FECA decision, the
administrative law judge lacks the authority to rule on substantive
FECA questions that have yet to become final. Such a ruling would
be contrary to the Secretary's delegations of authority as
contained in the FECA regulations cited above and to the spirit of
5 U.S.C. § 8128(b). The Secretary has not delegated the
authority to decide substantive FECA issues to administrative law
judges. Hawthorne, supra note 3.
In the context of a DCA proceeding arising from FECA
compensation payments, the undersigned interprets 5 U.S.C. §
5514(a)(2), and the Secretary's requirement that the assigned
administrative law judge make findings as to "the amount and
validity of the alleged debt," 29 C.F.R. § 20.81 (1994), to
mean that the assigned administrative law judge must (1) determine
whether a final Secretary decision has been reached with respect to
[PAGE 7]
the relevant issues of the alleged debt, and (2) if such a decision
has been reached, verify that the amount of the debt claimed by the
United States agrees with the final FECA decision. The undersigned
interprets the statutory and regulatory provisions of FECA to mean
that a final Secretary decision cannot be said to have been reached
on a FECA issue unless the due process requirements of these FECA
provisions have been met.[4] If a final FECA decision has not
been reached, the administrative law judge must disallow the
proposed DCA salary offset. Hawthorne, supra note 3.
B. Finality of FECA Decisions and Validity and Amount of
Debt
As described above, multiple OWCP and ECAB decisions regarding
Petitioner's entitlement to FECA compensation benefits have been
rendered. These decisions must be scrutinized to determine if
final decisions on the issues relevant to the alleged debt have
been reached.
1. The Period From July 15, 1980, through September 8, 1981
The undersigned finds that a final Secretary decision has been
reached with respect to Petitioner's forfeiture of the FECA
compensation benefits which he received for the period from July
15, 1980, through September 8, 1981.
A finding of a forfeiture of compensation benefits for at
least the period from July 15, 1980, through September 8, 1981, was
made in the initial OWCP determination rendered on December 15,
1983, by John Sharp, Chief of Claims, OWCP.[5] After Petitioner's
hearing before hearing representative Robert W. Barnes, Mr. Barnes
issued a decision on September 4, 1984, to the effect that
Petitioner had forfeited his compensation benefits for the period
from August 11, 1980, through September 8, 1981. Upon considering
Petitioner's appeal, the ECAB determined on December 15, 1986, that
Petitioner had forfeited his compensation benefits for the period
from July 15, 1980, through September 8, 1981.
The ECAB's decision of December 15, 1986, did not yield a
final determination as to the amount of the forfeiture for
the period from July 15, 1980, through September 8, 1981. However,
by way of a letter dated February 8, 1988, Edwin Hurd, Supervisory
Claims Examiner, OWCP, informed Petitioner that he owed the amount
of $16,165.09 because "From 7/15/80 through 9/9/81 [Petitioner] did
not report earnings as required." The ECAB affirmed this amount in
its August 31, 1988, decision.
Petitioner appears to have been afforded all the due process
[PAGE 8]
required by the statutory and regulatory provisions of FECA with
respect to his forfeiture of benefits for the period from July 15,
1980, through September 8, 1981, in the amount of $16,165.09.
Therefore, this determination of debt constitutes a final Secretary
decision. Even if the undersigned believed that this determination
was incorrect, the undersigned would have to abide by it.
As a final decision exists, the undersigned finds that the
amount of $16,165.09, in principal alone (without considering
interest) is a valid debt which Petitioner owes the United States
as a result of FECA compensation benefits which were paid to him
for the period from July 15, 1980, through September 8, 1981. Mr.
Hurd's letter of February 8, 1988, states that interest would
accrue as of the date of the letter. Therefore, pursuant to 29
C.F.R. § 20.57 (1994), interest on the principal amount of
$16,165.09 began accruing on February 8, 1988. 29 C.F.R. §
20.58 (1994) describes the method for determining the appropriate
interest rate.
2. All Periods Subsequent to September 8, 1981
As noted above, the initial OWCP determination rendered on
December 15, 1983, was to the effect that Petitioner had forfeited
FECA compensation benefits for the period from July 15, 1980,
through September 8, 1982. It was determined on appeal of this
decision with hearing representative Robert W. Barnes and with the
ECAB that the forfeiture extended only through September 8, 1981.
However, it was also determined, by both Mr. Barnes and the ECAB,
that Petitioner had received an overpayment for a period commencing
September 9, 1981 (after the period of forfeiture).[6] The ECAB
determined in its December 15, 1986, decision that this overpayment
was due to Petitioner's failure to timely report earnings, and
could therefore not be waived.
The undersigned finds, based on the initial OWCP decision of
December 15, 1983, Mr. Barnes' hearing representative decision of
September 4, 1984, and the ECAB decision of December 15, 1986, that
Petitioner was afforded all the due process required by the
statutory and regulatory provisions of FECA with respect to the
issue of whether the overpayment for a period commencing September
9, 1981, could be waived. Therefore, a final Secretary decision
exists on this issue.
However, the undersigned finds that a final Secretary decision
does not exist with respect to the amount of compensation to which
Petitioner is entitled for the periods after September 8, 1981.
[PAGE 9]
According to the documents in the record, no amount of
overpayment for the period commencing after September 8, 1981, was
specified by OWCP until the September 26, 1991, letter from D.
Shultz, Senior Claims Examiner, OWCP, to Petitioner. This letter
states that Petitioner was overpaid FECA compensation benefits for
the period from September 9, 1981, through January 10, 1982, in the
amount of ,884.18.[7] The letter states that for the period
from January 11, 1982, through March 2, 1983, Claimant was entitled
to benefits in the amount of $5,873.08, which he had not received.
This letter of September 26, 1991, appears to constitute an initial
OWCP decision with respect to Petitioner's entitlement to
compensation benefits for periods from September 9, 1981, through
March 2, 1983.
Pursuant to the statutory and regulatory provisions described
above, Petitioner was entitled to a hearing with respect to the
findings in the September 26, 1991, OWCP letter, if he timely
requested such a hearing. The fact that he had previously been
afforded due process with respect to other issues did not eliminate
the need to afford him due process with respect to the new findings
contained in the September 26, 1991, letter. The letter dated
March 31, 1992, from Robert W. Barnes, Chief, Branch of Hearing and
Review, to Petitioner, shows that Petitioner requested a hearing
regarding OWCP's September 26, 1991, letter, but was not provided
such a hearing. In his March 31, 1992, letter Mr. Barnes states
that he is responding to a recent letter from Petitioner requesting
a hearing before an OWCP hearing representative. Mr. Barnes states
that the September 26, 1991, letter which Petitioner received was
not a "formal decision," but merely an explanation of how the
overpayment was computed. Therefore, according to Mr. Barnes,
Petitioner was not entitled to a hearing regarding the September
26, 1991, letter. The record does not indicate the date upon which
Petitioner requested a hearing regarding the September 26, 1991,
letter. However, because Mr. Barnes did not reject the request for
a hearing on the ground that it was untimely, the undersigned finds
that Petitioner's request for a hearing following his receipt of
the September 26, 1991, letter, was timely within the meaning of 20
C.F.R. § 10.131 (1994).
Because the September 26, 1991, letter contained new findings,
including findings as to Petitioner's wage-earning capacity
subsequent to September 8, 1981, Petitioner had a right to a
hearing with regard to those findings. Because no hearing was
afforded Petitioner, the September 26, 1991, letter does not
constitute a final decision of the Secretary. Therefore,
Petitioner's entitlement to FECA compensation benefits for periods
subsequent to September 8, 1981, has not been administratively
[PAGE 10]
finalized.
C. Statute of Limitations
There is no limitations period for the collection of a debt by
salary offset in the statutory language of 5 U.S.C. § 5514.[8]
However, the implementing regulations provide:
Agencies may not initiate offset to collect a debt more
than 10 years after the Government's right to collect the
debt first accrued, unless facts material to the right to
collect the debt were not known and could not reasonably
have been known by the official of the Agency who was
charged with the responsibility to discover and collect
such debts. When the debt first accrued should be
determined according to existing laws regarding the
accrual of debts, such as under 28 U.S.C. 2415. 29
C.F.R. § 20.77(e) (1994).
This provision raises the question of whether the United States is
time-barred from using salary offset to collect Petitioner's
forfeiture debt of $16,165.09 in principal.
Based on Respondent's pre-hearing statement of July 28, 1994,
the undersigned finds that the United States commenced using salary
offset to collect Petitioner's debt on November 12, 1993.
The question of when the 10-year limitations period began to
run, or when "the Government's right to collect the debt first
accrued," is more difficult. A preliminary issue is whether the
limitations period could have begun to run before the OWCP's
February 8, 1988, letter to Petitioner stating the amount of the
debt.
Respondent relies on United States v. Meyer, 808 F.2d
912 (1st Cir. 1987), for the proposition that "since OWCP could not
have attempted to recover any part of the overpayment . . . until
it made a final determination that there was an overpayment, and
the amount of the overpayment, the statute of limitations on the
overpayment in question commenced running on February 8, 1988."
(Respondent's response to show cause order of 10-27-94, at 4-5).
In Meyer, the First Circuit held that where administrative
proceedings for the final assessment of an administrative penalty
had been "seasonably initiated," the five year limitations period
of 28 U.S.C. § 2462 for judicial enforcement of that penalty
did not begin to run until a final administrative decision
regarding the penalty had been reached. Meyer at 922.
[PAGE 11]
Respondent's argument is appealing. However, the penalty
which the government sought to enforce in Meyer did not
arise from FECA compensation payments, but from the Export
Administration Act. The undersigned is aware of only one judicial
or administrative opinion which discusses the accrual of a debt
arising from an overpayment of FECA compensation benefits, that of
United States v. Limbs, 524 F.2d 799 (9th Cir. 1975).
The debt in Limbs arose under the FECA provision, 5
U.S.C. § 8132, which requires recipients of FECA compensation
benefits to reimburse the United States in the event that they also
receive money from a third party in satisfaction of liability
arising from the work injury. Limbs at 800. Although the
Ninth Circuit in Limbs did not find it necessary to
determine the actual date that the cause of action accrued,
Id. at n.2, the court did determine that the government's
statutory claim was "quasi-contractual," and that the applicable
limitations period was therefore the period of 28 U.S.C. §
2415(a). Id. at 801. The undersigned finds the debt at
issue in Limbs to be closely analogous to the debt at hand,
which arises from 5 U.S.C. § 8106. Both debts resulted when
the government paid FECA compensation benefits to claimants and
then later determined that under the statutory provisions of FECA
the claimants had forfeited their entitlement to these benefits.
As Petitioner was injured in and resided in Tucson, Arizona,
at the time of the events leading to OWCP's forfeiture
determination, as petitioner still resided in Tucson, Arizona, at
the time this DCA proceeding commenced, and as the OWCP office
which has processed Petitioner's FECA compensation claims and
initiated salary offset is located in San Francisco, California,
the undersigned finds it appropriate to give deference to the
opinions of the Court of Appeals for the Ninth Circuit over any
conflicting opinions from other courts of appeals. Considering
this deference, considering that, at least to the knowledge of the
undersigned, Limbs is the only judicial or administrative
opinion which discusses the accrual of a claim arising from an
overpayment of FECA compensation benefits, considering that 29
C.F.R. § 20.77(e) (1994) specifies that the issue of debt
accrual should be determined according to existing laws such as
under 28 U.S.C. § 2415, and considering the similarities
between debts arising under 5 U.S.C. § 8132 and 5 U.S.C.
§ 8106, the undersigned relies on the holding of the Ninth
Circuit in Limbs and finds that the debt at hand is "quasi-
contractual," and that its accrual should be determined in
accordance with the law under 28 U.S.C. § 2415(a).
Having found that accrual of the debt at hand should be
[PAGE 12]
determined in accordance with the law under 28 U.S.C. §
2415(a), it follows easily that the debt accrued prior to the time
of the OWCP letter of February 8, 1988. Under 28 U.S.C. §
2415(a), which is subject to 28 U.S.C. § 2416, every action
for money damages brought by the United States which is founded
upon contract "shall be barred unless the complaint is filed within
six years after the right of action accrues or within one year
after final decisions have been rendered in applicable
administrative proceedings required by contract or by law,
whichever is later." 28 U.S.C.A. § 2415(a) (1994). It seems
clear to the undersigned from this language alone that under 28
U.S.C. § 2415(a) the time of accrual does not depend on the
time that a final administrative decision has been issued. The
Ninth Circuit determined as much in United States v. California
Care Corporation, 709 F.2d 1241 (9th Cir. 1983). A contrary
reading of 28 U.S.C. § 2415(a) would render the provision
allowing a complaint to be filed one year from the time of the
final administrative decision meaningless. United States v.
General Electronics, 556 F.Supp. 801, 804 (D.N.J. 1983).
ContraUnited States v. Birmingham Fire Insurance Co. of
Pa., 370 F.Supp. 501 (W.D.Pa. 1974).
Because the time of accrual under 28 U.S.C. § 2415(a)
does not depend on the time that a final administrative decision
has been issued, it seems that the general rule for time of accrual
under 28 U.S.C. § 2415(a) would apply in the case at hand. In
applying 28 U.S.C. § 2415(a) the Ninth Circuit has stated that
"a cause of action generally accrues when a plaintiff knows or has
reason to know of the injury that is the basis of the action."
United States v. Gavilan Joint Community College Dist., 849
F.2d 1246, 1249 (9th Cir. 1988). The Ninth Circuit has followed
this rule in applying 28 U.S.C. § 2415(a) even where
administrative adjudication proceedings followed the time that the
government became aware of the injury in question. United
States v. California Care Corporation, 709 F.2d 1241 (9th Cir.
1983) (claim determined to have accrued at time of standard year-
end audit, despite the debtor's subsequent administrative appeal
and the agency's final dismissal of that appeal).
Given the Ninth Circuit's rule that accrual occurs under 28
U.S.C. § 2415(a) at the time the government becomes aware of
the injury, the undersigned finds that the government's right to
collect the debt at issue here accrued no later than November 22,
1982. Petitioner informed the OWCP via a form dated September 9,
1982, that he had earned commissions as a real estate sales person
from July of 1980 through September 9, 1982. Upon receiving this
document, OWCP had information that Petitioner had not reported
earnings when required for the period from July of 1980 through
[PAGE 13]
September 8, 1981. As this information satisfied the requirements
of 5 U.S.C. § 8106 for a forfeiture for failure to report
earnings when required, the debt accrued when OWCP received this
information. Based on the letter dated March 8, 1983, which
references an OWCP request of November 22, 1982, for specific
information regarding Claimant's reported earnings, the undersigned
finds that OWCP had received the form dated September 9, 1982, by
no later than November 22, 1982.
Because the government's right to collect the debt at issue
here accrued no later than November 22, 1982, the undersigned finds
that the first offset against Petitioner's salary of November 12,
1993, occurred more than 10 years after the government's right to
collect the debt accrued. Therefore, this initial salary offset
was contrary to 29 C.F.R. § 20.77(e) (1994). OWCP is now
barred from using salary offset to collect Petitioner's debt in the
principal amount of $16,165.09. Because OWCP commenced salary
offset outside the 10 year limitations period, the undersigned
finds it appropriate to order OWCP to return the funds so collected
to Petitioner, with interest. As the regulations do not specify
the appropriate interest rate in this precise context, the
undersigned finds it appropriate to order OWCP to utilize the
procedures of 29 C.F.R. § 20.58 (1994) in determining the
appropriate interest rate.
ORDER
1. Respondent is time-barred from using salary offset to
collect Petitioner's forfeiture debt in the principal amount of
$16,165.09.
2. Respondent shall pay Petitioner or make arrangements for
Petitioner to be paid the amounts which have been withheld from
Petitioner's pay via salary offset. Interest on these amounts
shall be paid at a rate to be determined by Respondent per 29
C.F.R. § 20.58 (1994).
3. The question of the amount of compensation to which
Petitioner is entitled for periods after September 8, 1981, is
remanded to OWCP so that Petitioner can receive the due process
allowed by FECA's statutory and regulatory provisions.
Entered this day of February, 1995, at Long Beach,
California.
SAMUEL J. SMITH
Administrative Law Judge
[ENDNOTES]
[1] The letter states that Petitioner only received benefits
through December 2, 1981, but that OWCP had selected the period
from September 9, 1982, through January 10, 1982, as the period
for calculation.
[2] The regulations provide that debtors "shall have the
opportunity to obtain a hearing by an administrative law judge of
the agency's determination concerning the existence or amount of
the debt." 29 C.F.R. § 20.81(a) (1994). Upon completion of
the hearing the administrative law judge must transfer to the
debtor a written decision which includes "findings and
conclusions, as to the employee's and/or creditor agency's
grounds" and a statement of "the amount and validity of the
alleged debt." 29 C.F.R. § 20.81(f) (1994).
[3] Various other administrative law judges assigned to DCA cases
arising from FECA compensation payments have ruled themselves
unable to reexamine the final FECA decisions.Clark v.
Department of Defense, 91-DCA-2, slip op. at 5 (ALJ E. Earl
Thomas, November 6, 1992), Hawthorne v. U.S. Department of
Labor, 92-DCA-2, slip op. at 6 (ALJ George A. Fath, July 17,
1992), McPhee v. U.S. Department of Labor, 90-DCA-2, slip
op. at 2 (ALJ Chester Shatz, January 7, 1991). As stated by the
ECAB, the doctrine of resjudicata generally
precludes the redetermination in a subsequent proceeding of
identical issues between the same parties which were addressed in
a previous proceeding. In the Matter of Sandoval and Panama
Canal Commission. 42 ECAB 282, 286-87 (1990).
[4] These interpretations appear to eliminate any conflict
between the DCA and the FECA.
[5] The period of forfeiture actually stated in this decision is
July 15, 1980, through September 8, 1982.
[6] The actual statement of the overpayment period in the ECAB
decision of December 15, 1986, is "from September 8, 1981 to
September 9, 1982."
[7] See note 1, supra.
[8] Another section of the DCA, codified at 31 U.S.C. §
3716, makes its provisions for administrative offset applicable
only to claims that have been outstanding for 10 years or less.
31 U.S.C.A. § 3716(c)(1) (1994).
