BNUMBER:  B-260909
DATE:  December 17, 1996
TITLE:  Alfred H. Varga

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Matter of:Alfred H. Varga

File:     B-260909

Date:December 17, 1996

DIGEST

1.  The total amount of the debt due the United States on an erroneous 
salary payment is the gross amount, which includes both the amount the 
employee receives directly and other amounts disbursed on his behalf 
for such items as Medicare, health benefits, thrift savings plan, 
retirement, and federal and state tax withholdings.  Nevertheless, the 
determination of the administrative law judge (ALJ) under 5 U.S.C.  sec.  
5514 rejecting salary offset as a means of collection for duplicate 
deductions other than Medicare, federal taxes, and state taxes from 
the employee precludes the agency from using salary offset to collect 
these particular deductions.  As the ALJ found, the agency has 
admitted that it can collect these amounts by adjusting its accounts 
with the parties who received the erroneous withholdings.  The agency 
is advised to promptly take that action.

2.  The waiver statute, at 5 U.S.C.  sec.  5584(a)(2)(A) (1994), limits the 
waiver authority of an agency head to claims "in an amount aggregating 
not more than $1,500."  The term "aggregate amount" is defined in 4 
C.F.R.  sec.  91.2(j) (1996) to mean "the gross amount of the claim against 
the employee . . . "  Thus, the administrative law judge, acting for 
the agency head, erred in waiving $500 of the employee's debt since 
the aggregate amount of the debt totals more than $1,500.  

DECISION

This decision is in response to an appeal from our Settlement 
Certificate Z-2927984-056, February 24, 1995, which denied the 
employee's request for waiver in the gross amount of his debt of 
$3,548 for the overpayment of compensation for the pay period ending 
July 10, 1993.  We sustain our settlement action, except that the 
duplicate deductions for retirement, health insurance, and thrift 
savings plan may not be collected by the agency by salary offset.  The 
agency is advised to collect those deductions totalling $445.31 by 
adjusting its accounts with the parties that received the erroneous 
withholdings.

BACKGROUND

The employee, Alfred H. Varga, while stationed in Detroit, Michigan in 
1993, served as an administrative law judge in the Office of Hearings 
and Appeals (OHA), Social Security Administration (SSA), an agency 
that was, at that time, within the Department of Health and Human 
Services (DHHS).  The problem arose in 1993 when the agency made 
duplicate salary payments to Mr. Varga for the same period.

On July 13, 1993, DHHS erroneously transferred the amount of $2,184.57 
to the employee's credit union account as salary for the pay period 
ending July 10, 1993.  The gross earnings for this pay period were 
$3,548, and the net amount of $2,184.57 resulted after deductions for 
the employee's health plan, thrift savings account, federal retirement 
plan, Medicare, and state and federal taxes.  No leave and earnings 
statement, however, was issued to the employee, and no explanation has 
been offered as to why this payment was made.

One week later, on July 20, 1993, DHHS made its regular salary payment 
to Mr. Varga by transferring the net amount of $2,059.57 to the same 
account and issued a "Leave and Earnings Statement" showing that this 
amount was the net salary the employee earned for the pay period 
ending July 10, 1993.  The gross earnings for the pay period were 
shown as $3,548, and the identical deductions were made, except that 
an additional $125 deduction was made for savings bonds.  Mr. Varga 
became aware of the possible mistake on July 21, and he asked for 
verification of the deposits by the credit union which determined that 
it had received two electronic transfers credited to the employee's 
account on July 13 and July 20 as the employee's federal salary, both 
apparently for the same pay period.  

The employee promptly asked the manager of the Detroit office to 
contact the OHA payroll staff in Falls Church, Virginia.  The manager 
did so and, after an unexplained delay, on November 23, 1993, the OHA 
payroll staff forwarded documentation to DHHS to initiate recovery of 
the net overpayment of $2,184.57.  On January 18, 1994, the Assistant 
Director for Personnel and Pay Systems within DHHS issued a 
Certification of Salary Overpayment to advise the employee that he had 
received an overpayment in the gross amount of $3,548 and that, unless 
he repaid that amount within 30 days, salary deductions would begin to 
satisfy the debt.  Mr. Varga states that he did not receive this 
memorandum and did not become aware of it until after deductions in 
the amount of $136.46 each were taken from his pay beginning on March 
19, 1994, for each of four consecutive payroll periods, totalling 
$545.84.  He then requested a stay of collection and requested a 
hearing and a waiver of the debt.  Since that time, no additional 
amounts have been collected.

The employee's request for a hearing was granted under the Debt 
Collection Act, 5 U.S.C.  sec.  5514, which provides an opportunity for a 
hearing before salary offset may be taken against a federal employee.  
On November 8, 1994, an administrative law judge (ALJ) within the 
Civil Remedies Division of DHHS' Departmental Appeals Board determined 
that the employee owed the net amount erroneously received 
($2,184.57), plus the amounts withheld for Medicare ($51.45), federal 
taxes ($711.62), and state taxes ($155.05).  The ALJ then further 
reduced this sum totaling $3,102.69 by $545.84, the amount already 
offset by DHHS's collection efforts, thus finding that the outstanding 
debt owed by the employee under the Debt Collection Act to be 
$2,556.85. 

In reaching this result, the ALJ determined that it would be 
inequitable for DHHS to require the employee to repay duplicate 
deductions the agency had made for his retirement, health insurance, 
and thrift savings account, since the employee had never authorized 
duplicate deductions for the same payroll period.  Moreover, the ALJ 
pointed out that DHHS has admitted its capability to recoup these 
improper deductions by adjusting its payments to the parties who 
received the duplicate withholdings.[1]

The ALJ then waived $500 of the amount owed of $2,556.85 in 
consideration of the employee's time and effort in pursuing his claim.  
As a result, the ALJ determined that the outstanding total amount owed 
by the employee to be $2,056.85.
 
On December 20, 1994, DHHS referred Mr. Varga's waiver request to the 
GAO, contending that the employee owes the gross amount of the 
overpayment or $3,548, minus the amount of $545.84 previously paid by 
the salary offset.  Additionally,  DHHS also argued that the action of 
the DHHS administrative law judge in waiving $500 of the employee's 
debt was beyond the scope of her authority since waiver claims over 
$1,500 must be submitted to the General Accounting Office under the 
waiver statute, 5 U.S.C.  sec.  5584.

On February 24, 1995, our Office issued a Settlement Certificate 
Z-2927984-056, denying the employee's request for waiver and finding 
that the administrative law judge had no authority to waive any part 
of the overpayment since it exceeded $1,500.  We further determined 
that the employee was indebted for $3,548, the gross amount of the 
overpayment, even though he did not directly receive all the monies 
which he is indebted to repay, since the deductions were withheld on 
his behalf.

Mr. Varga has appealed the denial, basically contending that the debt 
should be waived because the agency was at fault and that he promptly 
reported the error.  He also objects to repaying the gross amount of 
the salary overpayment because he only received the net amount.

OPINION

There are two basic issues to be decided on this waiver appeal:  the 
first is the amount of the debt to be collected back from the 
employee; and the second is the DHHS administrative law judge's 
authority to waive $500 of the debt.  We shall discuss both issues 
below.

Amount of Debt

The issue of the amount to be collected from the employee is 
complicated because of the intervening factor of a decision by the 
agency's administrative law judge who was appointed to consider the 
issue of salary offset under 5 U.S.C.  sec.  5514 (1988).  Under section 
5514, the administrative law judge had the authority to determine 
whether the debt could be collected by salary offset, but not to 
extinguish other remedies for collecting the debt.  Secretary of 
Energy, B-211626, Dec. 19, 1984.

We disagree with the employee's assertion that his debt is the net 
amount[2] of his duplicate salary payment rather than the gross amount 
($3,548) as stated in our Settlement Certificate.  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.  In other words, the required 
withholding of monies for these items does not reduce the total 
indebtedness.  Fort Polk Employees, B-261699, October 25, 1996, and 
Charles R. Ryon, Sr., B-234731, June 19, 1989, and decisions cited.  
However, we have also said that, if the agency has not already done 
so, it should attempt to recover the disbursements for all 
withholdings other than federal and state income taxes and credit the 
employee with any recovery.  The employee  should contact the federal 
Internal Revenue Service and his state taxation authorities for 
information concerning the appropriate methods of adjusting his tax 
liability as the result of repaying the overpayment he received.   Dr. 
Joella Campbell, B-259660, June 8, 1995, and Amadeo Martinez, Jr., 
B-261628, June 13, 1996.

As shown above, the ALJ took a different approach by starting with the 
net amount of the debt.  She then determined under the Debt Collection 
Act that all duplicate deductions (i.e., retirement, health insurance, 
and thrift savings plan) other than Medicare, federal taxes, and state 
taxes were not subject to offset by the agency.   The ALJ reduced the 
balance remaining of $3,102.69 by the amount of $545.84 previously 
collected to find that the outstanding debt owed by Mr. Varga to be 
$2,556.85.

Under the Debt Collection Act, 5 U.S.C.  sec.  5514(a), the determination 
of the ALJ rejecting offset as a means of collection for the duplicate 
deductions other than Medicare, federal taxes, and state taxes 
precludes the agency from using salary offset to collect these 
particular deductions.  Although the agency is not precluded from 
initiating collection action for these amounts through other remedies, 
including litigation,[3] we note the ALJ's finding that DHHS admits 
that it can collect back these deductions by adjusting its payments to 
the retirement fund, health insurance carrier, and thrift savings 
board.  Accordingly, we hereby advise the agency to promptly take 
action to adjust those accounts thereby reducing the balance due from 
Mr. Varga by $445.31.

ALJ's Authority to Grant Waiver

Under the provisions of 5 U.S.C.  sec.  5584 (1994), the Comptroller 
General may waive, in whole or in part, a claim in any amount arising 
out of an erroneous payment of pay to an employee if there is no 
indication of fraud, misrepresentation, fault, or lack of good faith 
on the part of the employee and the collection thereof would be 
against equity and good conscience and not in the best interest of the 
United States.  Richard C. Clough, 68 Comp. Gen. 326 (1989).  Section 
5584(a)(2)(A), however, provides that the maximum amount of debt in 
each case that may be considered for waiver by an agency head "is in 
an amount aggregating not more than $1,500."  Under the authority 
granted to the Comptroller General to prescribe standards for waiver, 
5 U.S.C.  sec.  5584(A)(2)(c) (1994), the term "aggregate amount," as used 
in the waiver provisions, is defined in 4 C.F.R.  sec.  91.2(j) (1996) to 
mean "the gross amount of the claim against the employee . . . from 
whom collection is sought."  Under the definition, the term "aggregate 
amount" means the entire amount of the overpayment found due, before 
any repayment is made and without reduction for any required 
withholdings.  Therefore the DHHS administrative law judge, acting for 
the Secretary of DHHS, had no authority to grant waiver of $500 of 
this employee's debt since the aggregate amount totals more than 
$1,500.  Fort Polk Employees, B-261699, supra. 

Accordingly, the amount to be collected back from Mr. Varga is the 
amount of the outstanding debt, namely $2,556.85, as found by the 
administrative law judge, and, under 5 U.S.C.  sec.  5584, we sustain our 
prior denial of waiver in that corrected amount.

/s/Seymour Efros
for Robert P. Murphy
General Counsel

1. The ALJ relied upon an opinion letter dated June 30, 1988, to the 
DHHS Payroll Accounting Group from Ronald S. Young, Senior Associate 
Director, AFMD, U.S. General Accounting Office.

2. We accept the ALJ's determination in this case of the net amount of 
the debt- $2,184.57. 

3. See Secretary of Energy, B-211626, supra.