53:0196(28)AR - - DOD Dependents Schools and Overseas Education Association - - 1997 FLRAdec AR - - v53 p196
[ v53 p196 ]
The decision of the Authority follows:
53 FLRA No. 28
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF DEFENSE
OVERSEAS EDUCATION ASSOCIATION
July 11, 1997
Before the Authority: Phyllis N. Segal, Chair; and Donald S. Wasserman, Member.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator John B. LaRocco filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Union filed an opposition to the Agency's exceptions.
The Arbitrator sustained in part and denied in part a grievance over the Agency's failure to observe the pre-collection hearing procedures of the Debt Collection Act (DCA) when recouping overpayments of living quarters allowance (LQA) advances made to employees.
The Agency excepts to two portions of the award. First, it excepts to the portion of the award in which the Arbitrator held that the Agency was required to use the pre-collection hearing procedures of the DCA in certain circumstances to recoup overpayments of LQA advances. For the reasons set forth below, we set aside this portion of the award.
Second, the Agency excepts to the portion of the award in which the Arbitrator incorporated a mediated settlement agreement that waives an employee's repayment of part of a salary overpayment. For the reasons set forth below, we deny this exception.
II. Background and Arbitrator's Award
This case involves the relationship of the DCA (1) and 5 U.S.C. § 5922(b) (hereinafter "the 1966 statute") (2), two statutes that authorize agencies to recoup overpayments to employees. The dispute in this case concerns the extent to which the Agency may use the 1966 statute, as opposed to the DCA with its pre-collection hearing procedures, to recoup overpayments of LQA advances from employees.(3)
Under the Department of State Standardized Regulations (DSSR), the Agency pays LQA to employees stationed in a "foreign area." DSSR Section 040 f. The Agency pays LQA advances using estimates computed every 14 days to reimburse employees for housing and other expenses. The actual entitlement amount for LQA is determined through an annual LQA "reconciliation", which is usually completed 3 to 6 months after the end of the calendar year. If this reconciliation indicates that the Agency underpaid the LQA, the employees are reimbursed. If the Agency overpaid the LQA, the Agency institutes proceedings to recoup the overpayment. If there is an error in the initial reconciliation, a revised reconciliation is completed.
The Union filed a class action grievance (4) alleging that the Agency violated the DCA and Article 45 of the parties' agreement (5) by not always using the DCA pre-collection hearing procedures when it sought to recoup overpayments of LQA advances. The parties could not resolve the grievance and submitted it to arbitration. They stipulated that the controversy would be resolved by litigating a lead case, which involved the grievance of an employee named Tardif.
The day before the arbitration hearing, the parties met with the Arbitrator to discuss several of the individual grievances. The Arbitrator acted as a mediator and the parties reached settlement on the grievances of three employees, including one named Shackleford.(6) The Arbitrator retained jurisdiction over these cases and incorporated these mediated settlements into his award.
The parties did not agree on a statement of the issue before the Arbitrator, and the Arbitrator framed the issue as follows:
[T]he dispute centers on whether the notice and hearing provisions of the 1982 [DCA] are triggered when the [Agency] recoups money from employees who received an overpayment of their [LQA]. More specifically, the question is whether the [Agency] may always and routinely invoke administrative (salary) offsets to recover LQA payments or whether (and if so, when) Section 5 of the [DCA] applies to recovering such monies.
Award at 2-3.
Before the Arbitrator, the Union contended that if the Agency discovers that the annual LQA reconciliation contained an error to the detriment of the employee or if the LQA reconciliation was not timely performed, then any overpayment to the employee which the Agency seeks to recoup is no longer an advance of an allowance. According to the Union, in these two circumstances, the overpayment is a debt for which DCA pre-collection hearing procedures apply. The Agency contended that it may always use the 1966 statute to recoup overpayments of LQA advances, regardless of the accuracy or timeliness of the LQA reconciliation.
The Arbitrator concluded that the Agency may use the 1966 statute in some circumstances, but that in other circumstances, the Agency must observe the pre-collection hearing procedures of the DCA.(7) In so concluding, he made a distinction between when an overpayment of an LQA advance is properly characterized as an advance (in which case the Agency may recoup the overpayment through the 1966 statute) and when it is properly characterized as a debt (in which case the Agency must observe the pre-collection hearing procedures of the DCA).
The Arbitrator determined that an overpayment of an LQA advance is an advance in three situations: (1) when the Agency timely conducts an initial reconciliation; (2) after a revised reconciliation, so long as the mistake in the initial reconciliation was made in good faith; and (3) when the affected employee acted in bad faith or negligently or willfully sabotaged the LQA reconciliation process. The award permits the Agency to use the 1966 statute only in these situations.
The Arbitrator determined that an overpayment of an LQA advance is converted or "matures" into an entitlement, so as to constitute a debt, in two situations: (1) when the Agency has acted in bad faith(8); and (2) when the Agency is culpable for a lapse in reasonable time before completing the initial reconciliation.(9) Award at 26. The award requires the Agency to observe the pre-collection hearing procedures of the DCA in these situations.
In addition, the Arbitrator's award, in relevant part: (1) finds that the Tardif grievance is moot because of a settlement agreement but directs the Agency, as a penalty for improperly invoking the 1966 statute, to reimburse the grievant for any interest or administrative fees it charged her; and (2) sets forth and incorporates the mediated settlement agreements reached during the mediation session, including the parties' agreement that the Agency would waive recoupment of the approximately $200 in remaining salary overpayment that Shackleford owed.
III. Positions of the Parties
A. Agency's Exceptions
The Agency disagrees with the Arbitrator's conclusion that it may use the 1966 statute to recoup overpayments of LQA advances only in the three situations set forth in the award. According to the Agency, the Arbitrator's conclusion is not supported by the plain wording of the applicable statutes. The Agency asserts that the DCA states that the pre-collection hearing procedures of the DCA do not apply where other statutes explicitly provide for use of offsets to collect claims, and contends that the 1966 statute is such a statute. The Agency claims that the pertinent statutes, as well as the implementing regulations and relevant Comptroller General decisions, demonstrate that agencies may recoup overpayments of LQA advances through the 1966 statute in all circumstances.
The Agency also contends that: (1) the Arbitrator erred in finding that the Agency could not use the 1966 statute with regard to the Tardif grievance; (2) the award is contrary to 5 U.S.C. § 5584(a) and the Back Pay Act, 5 U.S.C. § 5596; and (3) the Arbitrator exceeded his authority.
The Agency disputes the Arbitrator's statement of the mediated settlement agreement pertaining to the Shackleford grievance. The Agency argues that it did not agree to waive the remainder of Shackleford's salary overpayment, and that the results of mediation sessions are not legally binding on the parties. The Agency also argues that it had no authority to waive a debt that had been determined to be a valid debt. The Agency asserts that a debt may be waived only when the collection of the debt "would be against equity and good conscience and not in the best interests of the United States[.]" Exceptions at 14, citing 5 U.S.C. § 5584(a). According to the Agency, those conditions are not present here. The Agency also asserts that the debt may not be waived under the Back Pay Act because the debt was not generated by a harmful or erroneous personnel action.
B. Union's Opposition
The Union argues that under the DCA "at some point LQA payments become 'accrued' allowances." Opposition at 5. According to the Union, the "accrued" allowances mature into an accrued entitlement that must be treated as a debt under the DCA, and if the Agency attempts to recoup any such overpayments that have matured into an accrued entitlement, then it must observe the DCA pre-collection hearing procedures. Id. The Union contends that in setting forth guidelines for the parties to observe when the Agency seeks to recoup overpayments of LQA advances, the Arbitrator recognized the statutory distinction between advances and debts and that his award is consistent with law.
As to the mediated settlement agreement exception, the Union argues that it is "unconscionable" for the Agency to settle a matter during mediation and then claim that the Arbitrator violated law by incorporating the mediated settlement agreement reached by the parties into his award. Opposition at 12.
A. The Agency Was Not Required to Use the Pre-collection Hearing Procedures of the DCA in Certain Circumstances to Recoup Overpayments of LQA Advances
The Agency excepts to the award on the basis that it is inconsistent with statutory provisions. In circumstances where a party's exceptions involve an award's consistency with law, we review the questions of law raised by the arbitrator's award and the party's exceptions de novo. National Treasury Employees Union, Chapter 24 and U.S. Department of the Treasury, Internal Revenue Service, 50 FLRA 330, 332 (1995) (citing U.S. Customs Service v. FLRA, 43 F.3d 682, 686-87 (D.C. Cir. 1994)).
Resolving a dispute over the meaning of a statutory provision "begins where all such inquiries must begin: with the language of the statute itself." National Air Traffic Controllers Association, MEBA, AFL-CIO and U.S. Department of Transportation, Federal Aviation Administration, 51 FLRA 204, 207 (1995) (quoting United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241 (1989) (citation omitted)).
The DCA provides general procedures for the Government to observe in collecting debts owed to it. The plain wording of the DCA, as set forth at note 1 above, establishes that the DCA does not apply where other statutes govern the collection of specific monies owed to the Government. Consistent with this plain wording, the Comptroller General has ruled that if a statute other than the DCA explicitly provides for salary offset to recover overpayments, and that statute contains its own procedures for collecting the claim, then an agency is required to follow only the procedures of that statute, not the procedures of the DCA.(10) "Offset under statutes other than Debt Collection Act of 1982," 64 Comp. Gen. 142, 142-45 (1984) (CG Offset Decision). If there is no explicit statute that permits salary offset to recoup a debt owed by an employee to the Government, then an agency must follow the DCA and the procedures set forth in section 5 of the DCA.(11) Id. Further, passage of the DCA did not "impliedly repeal" preexisting statutes that authorize offset in particular situations. Id. at 149.
Where a statute other than the DCA explicitly provides for salary offset to recover overpayments, but does not contain its own procedures, then the agency follows the substance of that statute and the procedures set forth in section 10 of the DCA to collect the claim. Id. at 143. For example, 5 U.S.C. § 5704 provides for advance payment of per diem or mileage allowances for employees on travel, and an agency may use administrative offset to recoup overpayment of an advance for this purpose. However, that statute does not contain its own procedures for collecting the overpayment. As such, an agency would use the procedures set forth in section 10 of the DCA to implement the substantive authority for salary offset under section 5704. Id. Like section 5704, the 1966 statute does not contain its own procedures and, therefore, an agency is required to follow the substance of the 1966 statute and the procedures set forth in section 10 of the DCA to collect the claim. In this case, the Agency followed the substance of the 1966 statute and the Agency's own procedures, which are substantively the same as the procedures set forth in section 10 of the DCA.
Consistent with the foregoing, it is necessary to determine whether the 1966 statute is a preexisting statute that authorizes salary offset in particular situations. If it is, and if the particular situations in which it authorizes salary offset encompass the situations involved in this case, then the 1966 statute was not repealed by the DCA and applies in this case.
For the following reasons, we conclude that the 1966 statute, as set forth at note 2 above, is a preexisting statute that authorizes salary offset in particular situations. Clearly, the 1966 statute predated the DCA, which was enacted in 1982. Thus, it was preexisting at the time of the DCA enactment. In addition, the 1966 statute explicitly provides for salary offset in particular situations: those involving "[a]n advance of funds not subsequently covered by allowances accrued to [an] employee . . . ." We also conclude that the advances of funds covered by the 1966 statute include the LQA advances in dispute in this case. The Union does not dispute that the 1966 statute applies to recoupment of some overpayments of LQA advances. The Union asserts only that, consistent with the Arbitrator's award, "at some point LQA payments become 'accrued allowances.'" Opposition at 4-5.
There is no support asserted or apparent in relevant statutory wording, legislative history, or Authority and other administrative decisions for the construction of the DCA and the 1966 statute applied in the Arbitrator's award. The Arbitrator found that two factors determine whether the Agency is required to use the pre-collection hearing procedures of the DCA--the good faith of the Agency's actions and the amount of time taken to complete an initial reconciliation. The wording of the 1966 statute neither explicitly nor implicitly supports a conclusion that the "advances of funds" encompassed therein are dependent on these factors. The plain wording of the statute, which contains no limitations on the "advances of funds" it encompasses, supports a conclusion that it applies to all such advances.
Further, a review of the DCA legislative history does not support the premise that an allowance advance matures after the passage of time into an entitlement for which collection is subject to the DCA. See generally USCCAN at 3377-3427. The legislative history recognized that "[u]nder the current law, a government agency may use a setoff procedure to collect a debt which arises from 'an erroneous payment'. . . . An erroneous payment is typically an overpayment . . . for salary or other benefits." See id. at 3386. The DCA recognizes and exempts from the requirements of section 5 of the DCA other statutes that provide for the recoupment of funds through offset, such as the 1966 statute.
As for Authority precedent, in U.S. Department of Defense Dependents Schools, Germany Region and Overseas Education Association, 39 FLRA 13 (1991) (DODDS, Germany Region), an arbitrator ruled that the Agency erred when it used the 1966 statute to recoup overpayments of LQA advances instead of using the pre-collection hearing procedures of the DCA. However, unlike the instant case, the Agency's exceptions to that award did not allege that the pre-collection hearing procedures of the DCA did not apply, and the Authority's decision did not address that issue. To the extent that DODDS, Germany Region can be read to suggest that the Agency must use the pre-collection hearing procedures of the DCA to recoup overpayments of LQA advances, for the reasons discussed above, we will not follow DODDS, Germany Region.
In sum, based on the statutory provisions, legislative history, and the Comptroller General's decision, we find that the Arbitrator's determination that an allowance advance can mature into an entitlement that the Agency may collect only under the pre-collection hearing procedures of the DCA is inconsistent with the 1966 statute and the DCA.(12) The Agency is entitled to recoup overpayments of LQA advances under the 1966 statute by use of salary offset under the Agency's own procedures, which are substantively the same as the procedures set forth in section 10 of the DCA. The record establishes that the Agency followed such requirements in effecting the recoupments at issue here.
We further find that, because the Arbitrator erred in finding that the Agency was required to observe the pre-collection hearing procedures of the DCA in situations like the Tardif grievance, he likewise erred in requiring the Agency to reimburse Tardif for any interest or administrative fees charged her as a result of invoking the 1966 statute. Accordingly, we set aside the portions of the award: (1) finding that an overpayment of an LQA advance may mature into an entitlement, subjecting the recoupment of an overpayment of an LQA advance to the pre-collection hearing procedures of section 5 of the DCA; and (2) requiring the Agency to reimburse Tardif for any interest or administrative fees charged her as a result of invoking the 1966 statute.
B. The Mediated Settlement Agreement
1. The Award Is Not Contrary to Law
The Agency contends that the portion of the award pertaining to the Shackleford grievance is contrary to law because the Agency cannot waive a valid debt owed to the Government. As set forth above, the Authority examines an allegation that an award is contrary to law de novo.
Under 5 U.S.C. § 5584 and its implementing regulations, 4 C.F.R. §§ 91.1 - 91.5 (Standards for Waiver), claims against Federal employees may under certain circumstances be waived when collection "would be against equity and good conscience and not in the best interests of the United States." 5 U.S.C. § 5584(a). The conditions for waiver are set forth in 4 C.F.R. § 91.5. Under that section, claims arising out of an erroneous payment may be waived by an agency when, among other things, a finding is made "that the erroneous payment occurred through administrative error and that there is no indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee . . . . Waiver under this standard must necessarily depend upon the facts existing in the particular case." 4 C.F.R. § 91.5(b). See U.S. Navy Public Works Center and International Association of Machinists and Aerospace Workers, 27 FLRA 156, 157-58 (1987).
Application of the waiver standard requires examining whether the erroneous overpayment occurred through administrative error, and whether there was any fraud, misrepresentation, fault, or lack of good faith on the part of the employee. 4 C.F.R. § 91.5(b). According to the record, it is undisputed that the overpayment was made through administrative error and there is no assertion that there was any indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee. Under these circumstances, the conditions under which a waiver of an erroneous payment is permitted have been fulfilled. As such, the Agency has not established that the Shackleford portion of the award is contrary to law.(13) Accordingly, this exception does not provide a basis upon which to find the Arbitrator's award deficient.
2. The Award Is Not Deficient on Other Grounds
In addition to contending that the portion of the award pertaining to the Shackleford grievance is contrary to law, the Agency makes other contentions that we construe as exceptions that the award is based on a nonfact, that it fails to draw its essence from the parties' agreement, and that the Arbitrator exceeded his authority.
a. The Award Is Not Based on a Nonfact
We construe the Agency's contention that it did not agree to waive the remaining salary repayment in the Shackleford case in mediation as a contention that the Arbitrator's award is based on a nonfact. To establish that an award is based on a nonfact, the appealing party must demonstrate that the central fact underlying the award is clearly erroneous, but for which a different result would have been reached by the arbitrator. U.S. Department of the Air Force, Lowry Air Force Base, Denver, Colorado and National Federation of Federal Employees, Local 1497, 48 FLRA 589, 593 (1993). The Authority will not find an award deficient on the basis of an arbitrator's determination on any factual matter that the parties disputed at arbitration. Id. at 594 (citing Mailhandlers v. U.S. Postal Service, 751 F.2d 834, 843 (6th Cir. 1985)).
The Agency's contention that the Arbitrator was mistaken in stating that the Agency had agreed to waive the remaining salary repayment in the Shackleford case is not supported by any record evidence. Accordingly, the Agency's contention does not establish that the central fact underlying the award is clearly erroneous, but for which a different result would have been reached. As such, the contention provides no basis to find the award deficient.
b. The Award Does Not Fail to Draw Its Essence from the Agreement
To demonstrate that an award fails to draw its essence from the collective bargaining agreement, the appealing party must show that the award: (1) is so unfounded in reason and fact, and so unconnected with the wording and purposes of the agreement, as to manifest an infidelity to the obligation of the arbitrator; or (2) does not represent a plausible interpretation of the agreement; or (3) cannot in any rational way be derived from the agreement; or (4) evidences a manifest disregard of the agreement. United States Department of Labor (OSHA) and National Council of Field Labor Locals, 34 FLRA 573, 575-77 (1990).
Unlike the typical case alleging that an award fails to draw its essence from a collective bargaining agreement, this case involves an unwritten mediated settlement agreement. However, the settlement agreement constitutes an agreement between the parties that the Arbitrator interpreted, and we will apply the essence criteria, set forth above, to the record before us.
The Agency has not demonstrated that the award is unfounded, implausible, irrational, or manifests a disregard of the mediated settlement agreement. The Agency's exception merely disagrees with the Arbitrator's account of the mediated settlement agreement. As such, the contention provides no basis to find the award deficient.
c. The Arbitrator Did Not Exceed His Authority
Arbitrators exceed their authority when they fail to resolve an issue submitted to arbitration, resolve an issue not submitted to arbitration, disregard specific limitations on their authority, or award relief to those not encompassed within the grievance. American Federation of Government Employees, Local 1617 and U.S. Department of the Air Force, San Antonio Air Logistics Center, Kelly Air Force Base, Texas, 51 FLRA 1645, 1647 (1996).
The Agency has not established any of these grounds. Therefore, the Agency has not demonstrated that the Arbitrator exceeded his authority in incorporating the mediated settlement agreement of the Shackleford grievance into the award.
We set aside the portions of the award: (1) finding that an overpayment of an LQA advance may mature into an entitlement, subjecting the recoupment of an overpayment of an LQA advance to the procedures of section 5 of the DCA; and (2) requiring the Agency to reimburse Tardif for any interest or administrative fees charged her as a result of invoking the 1966 statute. The Agency's exception regarding the mediated settlement agreement is denied.
(If blank, the decision does not have footnotes.)
1. The DCA was enacted as Pub. L. No. 97-365 (1982). Two sections of the DCA are relevant to this case: section 5, which is codified at 5 U.S.C. § 5514, and section 10, which is codified at 31 U.S.C. § 3716. Section 5 states, in relevant part:
Subsection(a) of [5 U.S.C. § 5514] does not modify existing statutes which provide for forfeiture of pay or allowances. . . .
5 U.S.C. § 5514(c).
Section 10 states, in relevant part:
This section does not apply--. . . (2) when a statute explicitly provides for or prohibits using administrative offset to collect the claim or type of claim involved.
31 U.S.C. § 3716(c)(2).
2. 5 U.S.C. § 5922(b) was enacted in 1966 and states in relevant part:
An advance of funds not subsequently covered by allowances accrued to the employee under this subchapter is recoverable by the Government by--
(1) setoff against accrued pay, compensation, amount of retirement credit, or other amount due the employee from the Government[.]
3. The DCA provides that if an employee owes a debt to the United States, then an agency must give the employee 30 days' advance notice of the intent to collect the debt and a pre-collection hearing, if timely requested by the employee, before attempting to collect the debt. In contrast, the 1966 statute allows an agency to directly recoup overpayments of allowance advances from an employee's pay. Although the 1966 statute does not prescribe procedures, it is undisputed that the employees here are afforded other due process protections, such as notice, access to documents, and review mechanisms under the Agency's own procedures, which are substantively the same as those in section 10 of the DCA.
4. The class action grievance combined a Union grievance and numerous employees' grievances.
5. Article 45, entitled "Debt Collection Act Procedures," provides in relevant part:
Unit employees shall be entitled to an oral hearing, which shall include the right to present evidence, including witnesses and documents. Further, unit employees shall have the right of reasonable pre-hearing discovery and the opportunity to question material government witnesses concerning their calculations and conclusions of indebtedness.
The timely filing of a petition for hearing shall stay the commencement of collection proceedings pending decision of the hearing officer.
All hearings held pursuant to the Debt Collection Act will take place at the overseas work site.
Award at 4-5.
6. The record contains little information regarding the facts of the Shackleford grievance. It appears that Shackleford was overpaid salary during one pay period through an administrative error. According to the record, Shackleford was anticipating a salary increase for earning an advanced degree when she received the erroneous salary overpayment through administrative error. It also appears that the Agency had recouped most of the overpayment through salary offset during succeeding pay periods, but approximately $200 of the overpayment remained due.
7. The Arbitrator determined that Article 45 of the parties' agreement applies only to debts collected under section 5 of the DCA. According to the Arbitrator, "Article 45 supplements the DCA by imposing additional requirements on the [Agency] (such as specifying the situs of a hearing) but does not extend the application of Section 5 of the DCA to situations beyond the purview of 5 U.S.C. § 5514." Award at 21.
8. The Arbitrator declined to set forth "a lengthy discourse of what conduct constitutes good faith." Award at 25.
9. The Arbitrator was "unwilling to set any fixed time period as to what would constitute an unreasonable amount of time to engage in an initial reconciliation." Award at 26. However, he found that 3 to 6 months after the end of the calendar year is "well within the realm of reasonableness." Id. He also stated that the lapse of time becomes unreasonable if the Agency delays in the initial LQA reconciliation until after it has reconciled LQA for a subsequent year.
10. The Comptroller General's ruling was issued in response to an inquiry from an agency under authority granted by 31 U.S.C. § 3529. Under section 3529, a disbursing or certifying official or the head of an agency may request a decision from the Comptroller General on a question involving a payment the disbursing official or head of the agency will make.
11. For example, if an employee has failed to repay a student loan, an agency may recover the monies owed by the employee to the Government only through the provisions of the DCA. See U.S. Code Congressional and Administrative News, 97th/Cong., 2d/Sen. 1982 (USCCAN) at 3387.
12. In light of this determination, we need not address the Agency's other contentions regarding use of the pre-collection hearing procedures of the DCA.
13. The Agency raises the Back Pay Act in its exceptions. The Arbitrator did not rely on the Back Pay Act in his award. The award is based on a waiver of overpayment under 5 U.S.C. § 5584, and the