DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Appeals Board

Civil Remedies Division

In the Case of

The Inspector General,
- Ver DATE: Nov 15, 1988

Neville Anthony, M.D., Docket No. C-44

Respondent DECISION CR 15

NST RESPONDENT

The Inspector General (the I.G.) has moved to enter a
default judgment against Respondent.1/ This motion has
not been opposed. After careful consideration of the
I.G.’s motion, applicable law, and the record of this
proceeding, I conclude that the motion is meritorious. I
am therefore entering a default judgment against
Respondent which includes imposition of: (1) a penalty of
$60,000; (2) an assessment of $660; and (3) an exclusion
for ten years from the Medicare and Medicaid programs.

BACKGROUND STATEMENT

This is a civil money penalties, assessment, and exclusion
case arising from the I.G.’s determination that Respondent
submitted false claims for Medi-Cal (California’s Medicaid
program) services. By notice dated June 1, 1988, the I.G.
asserted that between June 1 and July 9, 1982, the
Respondent presented or caused to be presented for
Medicaid reimbursement 33 claims for items or services

1/ The 1.G.’s motion also requested additional
alternative relief consisting of admission of certain
items into evidence, partial summary judgment against
Respondent, and establishment of certain assertions by the
I.G. as admissions by Respondent. Although these requests
may have merit, my decision to enter a default judgment
renders them moot, and they are denied.
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Medicaid reimbursement 33 claims for items or services
that were not provided as claimed. The I.G. further
alleged that Respondent knew, had reason to know, or
should have known that the items or services were not
provided as claimed. The I.G. asserted that Respondent’s
culpability in making these allegedly false claims was
substantial, averring that on October 17, 1984, Respondent
was convicted, after trial in California state court, of
15 counts of filing false Medi-Cal claims in violation of
section 1410 of the Welfare and Institute Code of
California and of petty theft in violation of section 488
of the Penal Code of California. These criminal acts were
asserted to be part of a larger pattern of fraudulent or
abusive practices by which Respondent intended to maximize
Medicaid reimbursement with little regard to medical
necessity or the need for integrity of patient charts,
discernible over a period of at least two years. The I.G.
further advised Respondent that it had considered other
potentially aggravating and mitigating factors.

Respondent was advised that in consideration of all of the
foregoing, and pursuant to the provisions of section 1128A
of the Social Security Act (42 U.S.C. 1320a-7a (1983 and
1988 Supp.)) as implemented by 42 C.F.R. 1003.100 et seq.
(1987), the I.G. was proposing to impose a civil money
penalty of $60,000, an assessment of $660, and a ten year
exclusion from the Medicare and Medicaid programs.

The I.G.’s notice also advised Respondent that he was
entitled to request a hearing, and it informed him of the
specific regulatory criteria he had to satisfy in making a
request for a hearing (Respondent was also provided with a
copy of the regulations governing civil money penalty
hearings). Respondent requested, and the I.G. granted, an
extension of time for filing a hearing request.

Respondent filed a handwritten hearing request on August
8, 1988, and the matter was assigned to me for hearing and
decision.

On September 1, 1988, I issued an Order which, among other
things, directed Respondent to file a more definite
hearing request in compliance with the regulations. On
September 19, 1988, I issued an Order which established a
schedule for discovery and exchange of exhibits and names
of proposed witnesses, and which set a hearing date of
November 14, 1988. This Order was twice modified by me at
the I.G.’s request. The I.G. filed its motion for entry
of a default judgment on October 21, 1988, and on October
28,1988 I issued an Order staying the proceeding pending
my decision on the I.G.’s motion.2/

ISSUES

The issues raised by the I.G.’s motion are whether:

1. Respondent has failed to comply with regulatory
requirements and with directives contained in Orders that
I have issued in this proceeding;

2. Respondent has meaningfully participated in this
proceeding;

3. Respondent’s failure to participate in this
proceeding constitutes a failure to defend the action,
pursuant to 42 U.S.C. 1320a-7a(c) (4); and

4. A default judgment against Respondent, including
a penalty of $60,000, an assessment of $660, and a ten
year exclusion from the Medicare and Medicaid programs, is
a sanction which reasonably relates to the severity and
nature of Respondent’s failure to defend the action.

APPLICABLE STATUTES AND REGULATIONS

1. The Civil Monetary Penalties Law. Subsection (a)
of the Civil Monetary Penalties Law, 42 U.S.C. 1320a-
7a(a), provides in relevant part that any person
submitting a claim for Medicare or Medicaid reimbursement
for an item or service that that person knew, had reason
to know, or should have known, was not provided as claimed
shall be subject to a civil money penalty of not more than
$2,000 for each item or service, an assessment of not more
than twice the amount claimed for each item or service,
and exclusion from participating in the Medicare and
Medicaid programs. Subsection (c)(2) provides that an
adverse determination shall not be made against a person
pursuant to the law until the person has been given
written notice and an opportunity for the determination to
be made on the record after an evidentiary hearing.
Subsection (c)(4) provides that the official conducting
the hearing (an Administrative Law Judge) may sanction a
person for failing to comply with an order or procedure,
failing to defend an action, or other misconduct as would
interfere with the speedy, orderly or fair conduct of the

2/ A chronology of this proceeding is set forth in an
Appendix to this Order.
-4-

hearing. "Such sanction shall reasonably relate to the
severity and nature of the failure or misconduct"
(Emphasis added) (Id.). Sanctions may include entering a
default judgment (42 U.S.C. 1320a-7a(c) (4) (F))-

2. The Civil Monetary Penalties Requlations.
Regulations governing civil money penalty, assessment, and
exclusion proceedings are contained in 42 C.F.R. Part
1003. The regulations provide that a respondent who
desires a hearing must specifically answer the I.G.’s
notice of proposed penalty, assessment, and exclusion by
admitting or denying whether the allegedly false claims
itemized in the notice were presented for payment, and
stating any affirmative defenses. 42 C.F.R. 1003.109(b).
If a respondent does not timely request a hearing, the
I.G. may, pursuant to 42 C.F.R. 1003.110, impose the
proposed penalty, assessment, and exclusion. Section
1003.115 vests control of the hearing in the
Administrative Law Judge. Section 1003.117(a) provides
that the Administrative Law Judge shall allow a party
seeking discovery of documents to inspect and copy all
documents which are not privileged, which are relevant to
the issues in the proceeding, and which are in the
possession of the other party. Subsection (c)(1) of this
regulation provides for exchange of witness lists, prior
statements of witnesses, and proposed hearing exhibits
within specified deadlines, and subsection (c) (2)
establishes deadlines for completion of discovery.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. The notice of proposed penalty, assessment, and
exclusion specifically enumerated the items or services
alleged to not have been provided as claimed. Respondent
was specifically advised of the reasons relied upon by the
I.G. to support the proposed penalty, assessment, and
exclusion.

2. The notice explicitly informed Respondent of the
regulatory criteria he had to comply with in filing his
hearing request.

3. Respondent requested a hearing so that he could
"defend (himself) against unfounded allegations and
prejudice--presented as though they are proven facts." He
did not specifically admit or deny that the claims at
issue had been presented or were caused to be presented
for payment, nor did Respondent enumerate any defenses
upon which he intended to rely.
4. Respondent’s hearing request did not comply with
the requirements of 42 C.F.R. 1003.109. He was notified
in writing that his hearing request was deficient, and was
subsequently ordered by me to file a more definite
request. I advised Respondent in that Order that his
failure to comply with my directives could result in the
imposition of sanctions against him, including entry of a
default judgment.

5. Respondent did not file a more definite hearing
request within the time limits ordered by me or at any
time thereafter.

6. On September 1, 1988, I notified the parties in
writing that a prehearing conference would be held on
September 15, 1988 to establish a discovery schedule and
set a date and location for the evidentiary hearing.

7. On September 14, 1988, Respondent requested that
the prehearing conference be rescheduled, allegedly
because of a personal scheduling conflict that he had. He
admitted receiving my September 1 notice, but asserted
that he had not noticed the date of the prehearing
conference. He declined offers to conduct the conference
by telephone or to assist him to resolve his alleged
schedule conflict so that he could attend the prehearing
conference.

8. At my instruction, Respondent was notified that
his request to postpone the prehearing conference was
denied. He did not attend the September 15 prehearing
conference, which was held in his absence.

9. On September 19, 1988, I issued a Prehearing
Order and Notice of Hearing which, among other things,
established a schedule for the parties to exchange
discovery requests, proposed stipulations, documents,
exhibit lists, and witnesses’ names and statements.

10. Respondent has not filed any requests pursuant
to this Order. He has not responded to any of the I.G.’s
requests. He has not offered the names or statements of
any proposed witnesses.

11. The I.G. filed its motion for default judgment
and alternative relief on October 21, 1988. Respondent
has filed no response to the motion.

12. Respondent has not communicated with me or the
I.G. since the inception of this proceeding, aside from
his initial hearing request and his request to postpone
the September 15, 1988 prehearing conference.

13. Respondent has been provided the opportunity to
have an evidentiary hearing in this proceeding, as is
required by 42 U.S.C. 1320a-7a(c) (2). Respondent’s
failure to: file a more specific hearing request; attend
the September 15, 1988 prehearing conference or
satisfactorily explain his failure to attend; comply with
the discovery and other prehearing directives issued by
me; respond to the I.G.’s motion for entry of a default
judgment and for alternative relief; and to meaningfully
participate in this proceeding, constitute a failure to
defend this action, as defined by 42 U.S.C. 1320a-

Ja(c) (4).

14. A default judgment against Respondent, pursuant
to 42 U.S.C. 1320a-7a(c) (4) (F), which includes imposition
of a civil money penalty of $60,000, an assessment of
$660, and an exclusion for ten years from the Medicare and
Medicaid programs, is a sanction which reasonably relates
to the severity and nature of Respondent’s failure to
defend this proceeding.

ANALYSIS

I am entering a default judgment against Respondent which
includes the penalty, assessment, and exclusion proposed
by the I.G. The sanction I am imposing is among the
strongest permitted by law--resolution of all issues in
the proceeding against Respondent without a hearing or
creation of an evidentiary record. My decision is amply
supported by Respondent’s abandonment of even the pretense
of a defense in this proceeding.

1. Respondent has not complied with regulatory
requirements and with the terms of Orders entered in this
proceeding. The hearing request filed by Respondent was
deficient in two respects. It failed to specifically
admit or deny that the items or services alleged by the
I.G. to have been falsely claimed were presented for
payment, and it failed to specify the defenses Respondent
intended to rely on. Respondent was advised, prior to
filing his request, of the regulatory criteria to which
his request had to conform. He was told by letter that
his hearing request was deficient, and he was requested to
file a more definite request. I subsequently ordered
Respondent to file a more definite request and advised him
that he could be sanctioned for not complying with my

Orders. Despite all of this, Respondent has filed
nothing.

Respondent has ignored all of the discovery directives and
prehearing deadlines articulated in my September 19, 1988
Prehearing Order. He has neither requested discovery nor
has he responded to any of the I.G.’s discovery requests.
He has ignored deadlines for responding to requests for
stipulations, producing documents, submitting the names of
proposed witnesses and copies of any statements by them,
and exchanging proposed hearing exhibits.

2. Respondent has not meaningfully participated in
this proceeding. Respondent’s failure to comply with
regulatory requirements and the terms of my Orders is part
of a pattern of noninvolvement which has persisted since
the inception of this proceeding. Respondent neither
attended the September 15, 1988 prehearing conference, nor
provided a credible explanation for his failure to attend.
He displayed no interest in offers to assist him to adjust
his schedule so that he could either attend the conference
or participate by telephone. During the course of the
proceeding, numerous communications have been directed to
Respondent by me and the I.G. in addition to those
described in the preceding section. These have included
various motions, including motions to amend or clarify my
Prehearing Order, a motion for a stay of proceedings, and
of course, the I.G.’s motion to enter a default judgment.
Respondent has not provided a response to any of them.
Respondent’s obvious disinterest is most manifest in his
failure to respond to the motion to enter a default
judgment, because that motion clearly noticed Respondent
that its resolution could determine the outcome of the
proceeding. I stressed this possible outcome in my Order
staying the proceeding, which was sent to Respondent at a
time when he could have responded to the motion to enter a
default judgment, but this warning obviously failed to
induce Respondent to file a response. Indeed, with the
exception of his hearing request and his request to
postpone the September 15, 1988 prehearing conference,
Respondent has engaged in no communications, either with
me or the I.G., concerning the proceeding.

3. Respondent’s failure to participate in the
proceeding constitutes failure to defend the action. I
will not second-guess Respondent’s reasons for his failure
to participate in the proceeding, but his noninvolvement
clearly constitutes abandonment of any attempt to defend
the action within the meaning of 42 U.S.C. 1320a-7a(c) (4).
My conclusion takes into account Respondent’s pro se
status. A respondent who is not represented by an
attorney may be less sensitive to regulatory requirements
and the terms of prehearing orders than would a respondent
who is represented. A pro se respondent may not prosecute
his defense as efficiently as a represented

respondent. 3/ But even a pro se respondent would be
expected to make some minimal effort to defend his case,
and this Respondent has not done so.

4. A default judgment against Respondent, including

a penalty of $60,00 a ssessme’ fe) and_a_ten
exclusion from the Medica icaid programs is

a sanction which reasonab veri n

nature of Respondent’s failure to Sopot the action. The

Civil Monetary Penalties Law provides that I may enter
sanctions against a party who fails to defend an action.
42 U.S.C. 1320a-7a(c) (4). The enumerated sanctions
include, at subsection (c)(4)(F), entering a default
judgment. However, any sanction I enter "shall reasonably
relate to the severity and nature of the failure or
misconduct" (Id.). In this case, a default judgment,
including the penalty, assessment, and exclusion proposed
by the I.G., is reasonable.

Had Respondent not filed a request for a hearing in this
case, the I.G. could have imposed the proposed penalty,
assessment, and exclusion pursuant to 42 C.F.R. 1003.110.
Here, Respondent filed a plainly inadequate document and
then simply walked away from the matter. Respondent’s
refusal to file a responsive hearing request, coupled with
his subsequent failure to meaningfully participate in the
proceeding, puts him on the same footing as a respondent
who does not file a hearing request.

Were I to address Respondent’s individual failures to
comply with regulatory criteria and prehearing Orders on a
piecemeal basis, applying less severe sanctions than
default judgment in each event, the cumulative effect of
such sanctions in this case would be indistinguishable
from a default judgment. For example, I could have struck

3/ I have given this Respondent more leeway to defend
himself than I would have given to a represented
respondent. I have taken steps to assure that regulatory
requirements and the possible consequences of not
complying with regulations or my Orders were explained to
Respondent. I have also forborne-~until now--from
entering sanctions against Respondent.
Respondent ’s hearing request based on its inadequacies and
Respondent ’s failure to rectify them, pursuant to

42 U.S.C. 1320a-7a(c) (4) (C). Had I done so, the I.G.
would have been free to impose the full proposed penalty,
assessment, and exclusion. I could also have deemed the
allegations in the I.G.’s notice of proposed penalties,
assessments, and exclusion to be established, based on
Respondent’s failure to respond to the I.G.’s discovery
requests and requests for stipulations. Additionally, I
could have prohibited Respondent from offering evidence,
given his failure to file an acceptable hearing request.
The consequence of these sanctions would have been to
establish the I.G.’s case and to preclude Respondent from
offering a defense. There would have been nothing left to
litigate.

I am aware of the expense to the taxpayers that would
result from an evidentiary hearing in this case. I had
originally scheduled a hearing in New York, where
Respondent resides, as an accommodation to him. Neither
the I.G.’s counsel, the Departmental Appeals Board
attorney staff, nor I, are stationed in New York, and all
of the I.G.’s proposed witnesses reside elsewhere. The
cost of travel and per diem which would have been
necessitated by a hearing would have been substantial.
Other costs would include purchasing a hearing transcript,
and the salaries of federal employees involved in the
hearing for the period of their involvement. Due process
and the Civil Monetary Penalties Law require such
expenditures by the government in any case where the
respondent articulates and prosecutes a defense. Such is
not required where a respondent fails to offer a defense
or abandons it. The law requires that respondents be
given the opportunity to present their defenses at a
hearing. Where, as in this case, the government offers a
respondent the opportunity to defend himself and that
opportunity is spurned, the government’s legal obligation
is discharged.

My decision to enter a default judgment against Respondent
does not embody any decision of the merits of this
proceeding. No evidence is before me, and therefore, it
would be inappropriate for me to characterize the I.G.’s
case or to draw conclusions from the I.G.’s allegations.
But inasmuch as Respondent has abandoned his defense, it
would also be inappropriate for me to enter a judgment for
a lesser penalty, assessment, or exclusion than that
proposed by the I.G. As I have previously noted,
Respondent’s failure to defend the case puts him on the
same footing as a respondent who does not request a
- 10 -

hearing. In that circumstance, the I.G. may impose the
full proposed penalty, assessment, and exclusion, and that
consequence is equally merited here.4/

ORDER

I Order that a default judgment be entered against
Respondent. Respondent is Ordered to:

1. Pay a penalty of $60,000;
2. Pay an assessment of $660; and

3. Be suspended from the Medicare and Medicaid
programs for a period of ten years.

/s/

Steven T. Kessel
Administrative Law Judge

4/Although I am not making a finding on the merits, I
would note that the I.G. has alleged that Respondent was
convicted in a criminal proceeding of having filed false
claims on 15 of the 33 items or services at issue in this
proceeding. Were the I.G. to establish the conviction at
a hearing, then the doctrine of collateral estoppel would
operate to direct an adverse finding against Respondent on
those fifteen items or services. 42 U.S.C. 1320a-

J7a(c) (3); 42 C.F.R. 1003.114(c).-
APPENDIX

Chronology of Proceeding

1. June 1,1988: The I.G. sends its notice of
proposed penalty, assessment and exclusion to Respondent.
The notice advises Respondent that any hearing request he
files "(M)ust be accompanied by an answer to this letter
which, with respect to the claims identified in this
notice, admits or denies that you presented or caused to
be presented such claims, and which states any defenses
upon which you intend to rely...." Respondent is also
provided with regulations governing civil money penalty
proceedings. 42 C.F.R. 1003.100 et seq.

2. July 7, 1988: The I.G. grants Respondent's
request for additional time to respond to the notice of
proposed penalty, assessment, and exclusion.

3. August 8, 1988: Respondent files a hearing
request. The request does not admit or deny that
Respondent presented or caused to be presented the claims
at issue, nor does it articulate any defenses upon which
Respondent intends to rely.

4. August 19, 1988: Gerald Choppin, Chief, Civil
Remedies Division, Departmental Appeals Board, writes to
Respondent, advising him, in effect, that his hearing
request does not comply with regulatory requirements.
Respondent is requested to provide the required
information as soon as possible. Respondent does not
reply to this letter.

5. August 29, 1988: The proceeding is assigned to
Administrative Law Judge Steven T. Kessel (ALJ) for
hearing and decision.

6. September 1, 1988: The ALJ issues an Order
scheduling a prehearing conference for September 15, 1988.
The Order is sent to the parties with a transmittal letter
from Mr. Choppin. The transmittal letter refers to Mr.
Choppin's August 19 letter to Respondent and notes that no
response has been received. The letter also refers the
parties to Paragraph 6 of the ALJ's Order, which puts the
parties on notice of possible sanctions for failure to
comply with the ALJ's Orders or any procedural
requirement, including the requirement that specific
information be provided in the hearing request. The ALJ's
Order specifically orders Respondent, at Paragraph 4, to
file a more specific hearing request by September 9, 1988.
7. September 9, 1988: The deadline to file a more
specific hearing request expires without Respondent having
filed anything.

8. September 12, 1988: Mr. Choppin sends a telegram
to Respondent, requesting Respondent to call him on
September 13.

9. September 13, 1988: The I.G. serves initial
proposed stipulations of fact on Respondent and files a
prehearing memorandum. Respondent does not call Mr.
Choppin.

10. September 14, 1988: Respondent telephones Mr.
Choppin to request a postponement of the September 15,
1988 prehearing conference. Respondent asserts that on
September 15 he has a conflict, consisting of a 12:00
noon appearance before the New York Board of Health. He
declines Mr. Choppin's offer to contact the New York Board
of Health on Respondent's behalf. The Respondent also
rejects the offer to have the prehearing conference
conducted by telephone, asserting that he would be enroute
to the Board of Health at the time of the telephone call.
Respondent admits having received the notice of the
prehearing conference, but claims that he had overlooked
the conference date set forth in the notice. Mr. Choppin
advises Respondent that it is unlikely that the ALJ will
postpone the prehearing conference on such short notice,
given the explanation offered by Respondent for his
postponement request.

ll. September 14, 1988: Pursuant to the ALJ's
direction, Mr. Choppin sends a telegram to Respondent
advising him that the prehearing conference will not be
postponed.

12. September 15, 1988: The prehearing conference
is held, and Respondent does not attend.

13. September 19, 1988: Both parties are sent a
Prehearing Order and Notice of Hearing, along with a
transmittal letter from Mr. Choppin. The parties are also
provided with Mr. Choppin's notes concerning his September
14 telephone conversation with Respondent. The
transmittal letter advises Respondent that if he disagrees
with Mr. Choppin's account of the conversation, he should
state his disagreement by no later than five days from
receipt of the letter. Respondent is also advised that
Mr. Choppin will continue to make his services available
to Respondent to answer Respondent's procedural questions.
Respondent communicates nothing in response to this
letter.

The Prehearing Order: sets a hearing on the merits for
November 14, 1988, in New York; recites that Respondent
has not articulated issues, defenses, or mitigating facts
in response to the I.G.'s allegations, and has not
complied with the ALJ's Order directing him to file a more
definite hearing request; directs the parties to identify
the discovery they intend to request and to file and serve
their requests by October 3, 1988; directs Respondent to
respond to the I.G.‘s initial proposed stipulations by
November 1, 1988; directs Respondent to serve any proposed
stipulations he may have by October 15, 1988, and directs
the I.G. to respond to these by November 1, 1988; directs
the parties to exchange initial exhibit lists and proposed
witness lists by October 15, 1988; directs the parties to
exchange written statements in lieu of testimony and
written statements of witnesses, and the last known
addresses of witnesses by October 15, 1988; establishes a
deadline for final exchange of witness lists and exhibits
of November 1, 1988; and establishes November 1, 1988, as
the deadline for preliminary motions by either party.

The Prehearing Order also urges any party having a
question about the proceeding to request a telephone
conference,

14. September 23, 1988: The I.G. moves to advance
Respondent’s deadline (to respond to the I.G.'s proposed
stipulations) to October 15, 1988.

15. September 23, 1988: The ALJ gives Respondent
until September 29, 1988 to answer the I.G.'s motion.

16. September 28, 1988: The 1.G. files its

discovery request.

17. September 30, 1988: Respondent has not answered
the I.G.'s motion. The ALJ issues an Order granting the
motion.

18. September 30, 1988: The deadline for filing
discovery requests expires. Respondent has filed no
request.

19, October 7, 1988: The I.G. submits supplemental
proposed stipulations and moves for an Order directing
Respondent to respond to them by October 15, 1988.
Respondent files no answer to this motion.
20. Qcetober 13, 1988: By direction of the ALJ, Mr.
Choppin corresponds with the parties, clarifying certain
deadlines in the September 19 Prehearing Order.

21. October 14, 1988: The I.G. files its proposed
witness and exhibit lists.

22. October 15, 1988: The deadline expires for
filing proposed witness and exhibit lists. Respondent has
filed neither a proposed witness nor a proposed exhibit
list.

23. October 15, 1988: The deadline for Respondent
to file proposed stipulations expires. Respondent has not
filed any proposed stipulations.

24. October 19, 1988: The ALJ partially grants the
I.G.'s unopposed October 7 motion by issuing an Order
directing Respondent to respond to the I.G.'s supplemental
proposed stipulations by October 21, 1988. Respondent is
sent a telegram advising him of the ALJ's Order.

25. October 21, 1988: The deadline for Respondent
to respond to the I.G.'s supplemental proposed
stipulations expires. Respondent files no response to the
proposed stipulations.

26. October 21, 1988: The I.G. files a motion for a
default judgment against Respondent, and for alternative
relief. Simultaneously, the I.G. moves to stay the
proceedings.

27. October 25, 1988: The ALJ orders the deadline
(to answer the motion for a stay) to be advanced to
October 27, 1988. Respondent is sent a telegram advising
him of the ALJ's Order.

28. October 27, 1988: The deadline to answer the
motion for a stay expires. Respondent does not answer the
motion.

29. October 28, 1988: The ALJ issues an Order
granting a stay of the proceedings. The Order notes that
a decision to grant any of the substantive relief sought
by the I.G. in its motion for a default judgment and for
alternative relief would “profoundly affect the outcome
and trial of this matter," with consequences ranging from
disposition of the proceeding to eliminating or reducing
many of the evidentiary or proof burdens which would
otherwise be assumed by the I.G. Copies of this Order
are sent to Respondent by both Certified and regular
mail.

30. November 1, 1988: The deadline for Respondent
to answer the I.G.°s motion for a default judgment and

alternative relief expires. Respondent files no response
to the motion.


DEPARTMENT OF HEALTH AND HUMAN SERVICES

Departmental Appeals Board

In the Case of:

Department of Health DATE: Oct 11, 1988

and Human Services,
~ Vem Docket No. D~2
Robert H. Meyer, DECISION CR 14

Respondent.

DECISION AND ORDER

This Debt Collection Act case was heard pursuant to a
request for hearing filed by the Respondent wherein he
denied allegations made by the Department of Health and
Human Services (DHHS) that he was indebted to it for a
salary overpayment in the amount of $844.55. After
considering the entire record, I find that DHHS has shown
that an overpayment occurred and that a debt in the amount
of $844.55 is due and owing from Respondent. I find
further that waiver is not available in this case, and
that Respondent must repay DHHS the full amount of the
debt.

BACKGROUND STATEMENT

By notice dated July 2, 1988, Respondent was informed by
DHHS that a salary overpayment existed in the amount of
$844.55, and that failing voluntary repayment by
Respondent, DHHS intended to take action to collect the
debt. This notice constituted a notice of debt according
to the provisions of the Debt Collection Act of 1982

as amended. 5 U.S.C. 5514. Essentially, DHHS claimed that
the alleged overpayment consisted of compensation for 60.5
hours of compensatory time claimed by Respondent that had
not been lawfully ordered or approved by his supervisors.

Respondent timely filed a request for hearing. Although
he did not deny that he received compensation in the
amount of the alleged overpayment, or that the
compensation at issue was for compensatory time claimed by
him, he denied that an overpayment existed. Respondent
-2-

alleged that he had properly claimed compensatory time
either with the approval of his supervisors, or according
to established and recognized procedures. He asserted, in
effect, that he had acted in good faith reliance on what
he understood to be acceptable practices for requesting,
working, and reporting compensatory time. Respondent also
requested that, in the event I found a debt to exist, that
I waive the requirement that he repay it.

I conducted a prehearing conference by telephone on August
30, 1988. In response to my Prehearing Order, and
consistent with an extension of time that I granted to
Respondent, the parties submitted sworn statements of
witnesses, documents and written arguments. I conducted a
second telephone conference on September 27, 1988, at
which time I admitted into evidence without objection the
sworn statements previously submitted and certain of the
documents the parties had submitted. With the consent of
the parties, I also received Respondent's sworn testimony
over the telephone. Based on the parties' representations
that they had no further evidence to submit, I closed the
record of the proceeding. */

ISSUES

The issues are:
1.) Whether the debt claimed by DHHS from Respondent
in the amount of $844.55 is due and owing, and if so;

2.) Whether Respondent should be granted a waiver
from his obligation to repay the debt.

APPLICABLE STATUTES, REGULATIONS
AND_ POLICIES

Statutes:

5 U.S.C. 5514; 5 U.S.C. 5542; 5 U.S.C. 55437
5 U.S.C. 5584.

*/ The method I used to conduct the proceeding, telephone
conferences, reflected my concern that the Respondent be
given due process of law. Respondent presently resides in
Honolulu, Hawaii, the DHHS representative is in San
Francisco, California; and witnesses who potentially might
have been called by both parties reside in Atlanta,
Georgia, and Denver, Colorado. The cost to both parties
of conducting a face-to-face hearing would far exceed the
amount in controversy.
Federal Requiations and Policies

45 C.F.R. Part 30; 5 C.F.R. 550.114
DHHS Personnel Manual, 550-1; 550-9; SSA Personnel
Manual for Supervisors, Ch. $550.

FINDINGS OF FACT AND CONCLUSIONS
OF LAW

1.) The Departmental Appeals Board has jurisdiction in
this matter pursuant to 5 U.S.C. 5514; 45 C.F.R. Part 30;
and DHHS Personnel Manual 550.9 (May 5, 1988).

2.) At all relevant times, Respondent was employed by the
Social Security Administration (SSA) in SSA's Atlanta
Region.

3.) For more than 10 years, ending in late 1987,
Respondent was SSA's Northern Florida Area Director. In
this management position, Respondent managed or supervised
350 employees. Respondent's testimony 9/27/88. He was
responsible for approving overtime and compensatory time
for these employees. He was required to know or should
have known the substance of Federal laws and regulations,
and DHHS and SSA policies concerning overtime and
compensatory time. See HHS Ex. 2; HHS Ex. 3.%**/

4.) Respondent's first line supervisor was Deputy
Assistant Regional Commissioner Jane H. Simmons.
Respondent's second line supervisor was Assistant Regional
Commissioner for Field Operations Francis A. McDougal.

HHS Ex. 6.

5.) Beginning in February 1980, Respondent and the
employees he managed worked pursuant to an Alternate Work
Schedule which permitted them to work "credit hours" under
appropriate circumstances. Credit hours consist of time
worked by an employee in addition to the eight hour tour
of duty and may be used for time off in lieu of leave.

R. Ex. 2.

6.) DHHS policy does not specify how an employee is
required to provide notice of intent to work credit hours.

**/ Exhibits will be cited as follows:

DHHS Exhibit HHS Ex. (exhibit number/ (page)
Respondent Exhibit R. Ex. (exhibit number/ (page)
DHHS policy does require, at a minimum, that the
employee's supervisor be informed of the employee's intent
to work credit hours so that the supervisor may concur or
nonconcur, as may be appropriate. HHS Ex. 5/6-8.

7.) Respondent was not authorized to work credit hours
without providing his supervisor with the requisite notice
of his intent to do so. HHS Ex. 5/1.

8.) "Overtime" and "compensatory time" differ from credit
hours in significant respects. Overtime is defined by 5
U.S.C. 5542(a):

For full-time, part-time and intermittent tours of
duty, hours of work officially ordered or approved in
excess of 40 hours in an administrative workweek,

. . . in excess of 8 hours in a day performed by an
employee are overtime work. .. .

This section provides rates of compensation for overtime,
generally at one and one-half times the compensation rate
for regularly scheduled work.

9.) 5 U.S.C. 5543(a)(1) provides that an agency head may:

On request of an employee, grant the employee
compensatory time off from his scheduled tour of duty
instead of payment for an equal amount of time spent
in irregular or occasional overtime work ....

Compensatory time is a form of overtime which provides the
employee time off in lieu of leave and of overtime pay.
Unlike credit hours, it must be specifically requested by
the employee, and it must be ordered or approved by the
supervisor. Exercise of authority to approve compensatory
time is within the discretion of the supervisor. See 5
C.F.R. 550.114.

10.) DHHS and SSA policies provide for strict controls
over the authorization and performance of overtime and
compensatory time. The DHHS Personnel Manual provides
that employees may not be compensated for overtime unless
the work is “ordered or approved in advance of its being
performed." DHHS Personnel Manual, 550-1-50C, at p.5
(1987); HHS Ex. 2/3. The SSA Personnel Manual for
Supervisors contains identical policies. SSA Personnel
Manual for Supervisors, Ch. $550, IVB, at p.4 (August 22,
1986). HHS Ex 3/4. DHHS policy requires that employees
who perform overtime work must sign a record that
indicates the times of the beginning and end of the
overtime work performed. HHS Ex. 2/3. Both DHHS and SSA
policies require that overtime will be directly supervised
whenever practicable, and that when such direct
supervision is not practicable, the quantity and quality
of the work completed must be reviewed by the employee's
supervisor HHS Ex. 2/3; HHS Ex. 3/5. DHHS policy also
provides that compensatory time that is not used by the
employee within eight pay periods will automatically be
paid at the overtime rate at which it was earned HHS Ex.
2/4.

11.) Area Directors have been delegated authority by SSA
to assign or order employees to work overtime. R Ex. 6.
Area Directors have not been delegated authority to order
or approve overtime or compensatory time for themselves.
HHS Ex. 5/1.

12.) While serving as Area Director in 1987, Respondent
instructed his timekeeper to record credit hours on his
timesheet, and Respondent then used many of these hours in
lieu of leave. HHS Ex. 4/2, 3.

13.) Beginning with the pay period which started on
August 30, 1987, and through the pay period which ended on
October 24, 1987, Respondent instructed his timekeeper to
record 60.5 hours on his timesheet as compensatory time
performed by him. HHS Ex. 4/3.

14.) Respondent's claimed compensatory time was not
ordered or approved by his supervisors. HHS Ex. 6.
Because it was not ordered or approved by them, it was not
compensable overtime. See Finding 8.

15.) Respondent did not use the compensatory time he had
claimed in lieu of leave. After eight pay periods had
elapsed, Respondent was compensated for the compensatory
time as overtime in the amount of $844.55, HHS Ex. 4/4~6.

16.) Because the compensatory time claimed by Respondent
was not compensable overtime, the overtime pay of $844.55
which he received is a salary overpayment in that amount.

17.) The debt in the amount of $844.55 alleged by DHHS
against Respondent is valid, due, and owing.

18.) A waiver of the debt may not be granted by me
because the amount of the debt exceeds $500, and the
Comptroller General of the United States has exclusive
authority to consider waiver requests for debts exceeding
$500. 5 U.S.C. 5584(a) (1).
-6-

ANALYSIS

The issue in this case is whether $844.55 in overtime pay
to Respondent for 60.5 hours of compensatory time claimed
by him between August 30 and October 24, 1987, was a
salary overpayment and a debt owed by Respondent to DHHS.
I conclude that the pay at issue is a salary overpayment
and a debt.

Respondent is an employee of SSA, an agency of DHHS. For
more than 10 years, ending in late 1987, Respondent served
as SSA's Area Director for North Florida. This was a
management position and Respondent managed or supervised
350 employees. He was delegated authority to order or
approve overtime for these employees and was charged with
knowledge of laws, regulations, and DHHS and SSA policies
pertaining to overtime.

Between August 30 and October 24, 1987, Respondent
instructed his timekeeper to record 60.5 hours of
compensatory time as having been worked by him.
Respondent in effect credited himself with 60.5 hours of
compensatory time. Respondent did not use this time in
lieu of leave. After eight pay periods had elapsed from
its posting, and in accord with DHHS policy, Respondent
was compensated for the compensatory time with overtime
pay in the amount of $844.55.

DHHS claims this overtime pay is a salary overpayment to
Respondent and a debt. It asserts that neither of
Respondent's supervisors ordered or approved the
compensatory time as required by DHHS or SSA policies.
DHHS has produced the sworn statements of Respondent's
first and second line supervisors, Deputy Assistant
Regional Commissioner Jane H. Simmons, and then-Assistant
Regional Commissioner for Field Operations Francis P.
McDougal. These individuals deny that Respondent ever
requested the compensatory time at issue; or that they
ordered or approved it.

Respondent has made several arguments to support his
denial that the overtime payment at issue constitutes a
salary overpayment and a debt. He avers that he was
specifically authorized to work the compensatory time he
claimed because he "discussed it with both" Ms. Simmons
and Mr. McDougal “without giving specific hours, which I
could not predict in advance." R. Ex. 1/1. He asserts
that he had been delegated the authority to approve
“credit hours" for himself and the employees he managed or
supervised and this delegation at least implied the
authority to approve his own claims for compensatory time.
As an adjunct to this, he alleges that it has been a
common practice for Area Directors in SSA's Atlanta Region
to approve their own compensatory time. Respondent also
claims that he acted on the good faith belief that his
actions were proper, and he avers that he worked the hours
in question. Finally, he requests that if I conclude that
he was overpaid and that a debt exists, that I waive the
overpayment.

I have carefully considered Respondent's allegation that
he requested compensatory time from his supervisors and
that it was "specifically authorized" against the legal
and policy criteria for ordering or approving overtime and
compensatory time. I am persuaded by the evidence in this
case that Respondent's supervisors did not order or
approve the compensatory time claimed by Respondent. They
have denied authorizing it, and Respondent has offered no
evidence, aside from his recitation of offhand
conversations with his supervisors, to suggest that it was
ordered or approved. I find Respondent's version of the
facts unpersuasive in light of overtime approval and
reporting policies which required very precise and
specific accounting of overtime ordered and worked, and
the sharp contrast between what these policies required
and what Respondent now says happened. Given their duties
to faithfully apply these policies, it would not be
reasonable to conclude that both of Respondent's
supervisors approved his use of compensatory time in the
offhand way he asserts. However, even if Respondent's
recitation of conversations is accurate, the
communications he had with his supervisors would not
constitute lawful ordering or approving of compensatory
time.

Federal law requires that overtime work be compensated
with premium pay. 5 U.S.C. 5542. Compensatory time is a
form of overtime which, if not used in lieu of leave, will
be compensated at premium rates. DHHS and SSA policies
mandate that ordering or approving compensatory time is
never a casual action; because of the budget implications
attendant with overtime pay, such action demands a high
standard of specificity by both the requesting employee
and the authorizing supervisor. At the very least, an
order to work compensatory time must specify the dates and
hours to be worked.

Respondent's depiction of his conversation with his
supervisors concerning his need to work extra time is of a
casual and nonspecific communication -- "not the type of
thing that would be remembered." R. Ex. 1/1. Respondent
admits that his communications did not involve discussion
of either the dates when compensatory time would be worked
by him or the number of hours of such overtime which would
be required. Id. The conversations described by
Respondent, therefore, fail to embody the specific
request, order, or approval required by law and by DHHS
and SSA policy.

Nor can Respondent legitimately assert that he relied on
these conversations to his detriment. Respondent served
for many years as an SSA manager with responsibility for
ordering or approving overtime for 350 employees.
Respondent knew or should have known DHHS and SSA overtime
policies. It would not have been reasonable for him to
rely on the vague and casual conversations he describes as
an order or approval of his compensatory time.

Respondent claims that he asked his timekeeper to "check
to be sure reporting of comp(ensatory) time was correct"
R. Ex. 1/1. He avers that she did check with "Regional
Office and found it to be correct." Id. Such request
could logically have been interpreted by "Regional Office"
to be a request to verify the clerical accuracy of entries
on forms, rather than to ratify claimed compensatory time,
as Respondent asserts. But had the request had been an
effort to establish that approval to work compensatory
time had been given, Respondent could not have reasonably
relied on the answer his timekeeper obtained. Respondent
was required to obtain approval to work compensatory time
from his supervisors. Communications between lower-level
employees could not be used to verify approval when
approval had never been given.

Respondent also asserts that "installation heads at my
level and below commonly work and approve their own
comp(ensatory) time." R. Ex 2/2. From this he concludes
that: (1) he was similarly entitled to approve
compensatory time for himself; and (2) he believed he was
permitted to work the compensatory time at issue, and
relied on this belief to work extra hours and claim
compensatory time. He has offered no evidence to
substantiate this allegation, beyond his assertion, and it
has been denied by Ms. Simmons and Mr. McDougal. I find
it to be without substance. However, assuming this
allegation were true, it would not legitimize the
compensatory time claimed by Respondent. The possibility
that other Federal employees may be engaged in illegal
actions could not legitimize Respondent's unlawful
conduct. And given Respondent's management
responsibilities and knowledge of policy, he could not
justifiably rely on other employees' unlawful conduct to
support his actions.
Respondent attempts to blur the distinctions between
"credit hours" and compensatory time and to argue from his
analysis that he legitimately believed that he could
approve his own taking of compensatory time. Respondent
avers that he was authorized by his supervisors to approve
his own use of credit hours. He asserts that credit hours
and compensatory time "seem very similar" (R. Ex. 1/1),
that they serve the same purpose, and that inasmuch as he
was authorized to approve his own use of credit hours, he
inferred that he could approve his own use of compensatory
time. Respondent's supervisors strongly dispute his
assertion that he was authorized to approve his own use of
credit hours. Neither Respondent's statements nor the
documents he has produced (see R. EXx.2.) convince me that
he had such authority. But even if he did, Respondent
would not have been justified in believing that
authorization to approve his own use of credit hours
encompassed authorization to approve his own use of
compensatory time.

There are significant differences between credit hours and
compensatory time and Respondent should have understood
such differences. Compensatory time is a form of overtime
compensation and is subject to the statutes, regulations,
and policies which I have previously discussed.

Respondent has admitted knowing that unused compensatory
time would, after eight pay periods, be compensated at
overtime rates. Credit hours cannot be converted to cash
compensation. Credit hours are a way for employees to
adjust their work schedules by working extra hours in a
day and by using these hours to reduce their workday on
another occasion. Whereas overtime and compensatory time
are statutorily mandated in appropriate cases, the use of
credit hours is an option that rests with management. See
R. Ex. 2. Compensatory time must be expressly ordered or
approved in advance to be legitimate, whereas supervisors
are merely required to concur or nonconcur in an
employee's expression of intent to work credit hours. See
Findings 5/6.

Respondent also asserts that inasmuch as he worked extra
hours as compensatory time, he is entitled to be paid for
that time (see Respondent's request for hearing at p.2).
This claim is clearly without merit. By law, overtime or
compensatory time cannot be credited to an employee unless
it has been ordered or approved by that employee's
supervisor. If overtime has not been directed, the fact
that an employee may have worked extra hours is
irrelevant. Respondent's claimed compensatory time was
not ordered or approved by his supervisors. Therefore, he
-10-

may not be compensated for it even if he worked extra
hours.

This is not to suggest that a supervisor could knowingly
lure an employee into working overtime without technically
ordering or approving it, and then withhold compensation.
Nor am I suggesting that a supervisor could direct an
employee to perform extra work and then refuse to approve
overtime compensation. But the facts of this case do not
conform to either circumstance.

Respondent has requested that I order a waiver of any
salary overpayment found to exist. I am without authority
to order a waiver in this case. 5 U.S.C. 5584(a) (2) (A)
provides, in effect, that I may only consider a waiver
request for an amount not exceeding $500, and the amount
of the debt in this case exceeds $500. Authority to
review waiver requests for amounts greater than $500 rests
with the Comptroller General of the United States.

Therefore, I find that a salary overpayment to Respondent
exists in the amount of $844.55, and that this constitutes
a debt due and owing from Respondent to DHHS. I find
further that I lack authority to grant a waiver to
Respondent. ***/

x*k/ This is the final administrative determination of
the Department of Health and Human Services in this case;
there are no other administrative remedies. If Respondent
wishes to seek judicial review he may do so in the
appropriate court of the United States, provided he acts
within prescribed time limits.
-i1l-

ORDER

Based on the evidence of record, on applicable law,
regulations and policies, I Order that:

(1) Respondent is indebted to DHHS in the amount of

$844.55;
(2) Respondent's request for a waiver is denied.

/s/

Steven T. Kessel
Administrative Law Judge


DEPARTMENT OF HEALTH AND HUMAN SERVICES
Departmental Grant Appeals Board

In the Case of:
Department of Health DATE: June 6, 1988
and Human Services,
Docket No. D-1
-vwe-
DECISION CR 13

Gerald M. Anderson,
Respondent.

DECISION AND ORDER
This Debt Collection Act case was heard pursuant to a
request for a hearing filed by the Respondent wherein he
denied allegations made by the Department of Health and
Human Services (DHHS) that he was indebted to the Social
Security Administration (SSA, a part of DHHS) for
relocation expenses paid on his behalf by SSA in the
amount of $24,093.75. DHHS notified the Respondent that
SSA had made a determination that all relocation expenses
paid to a government relocation services contractor,
Homequity, on behalf of the Respondent must be repaid;
DHHS alleged that the applicable Federal Travel
Regulations barred payment of expenses for the relocation
from one house in Olympia, Washington to a second house in
Olympia. After considering the entire record, I hereby
conclude that DHHS established that SSA’s determination
was correct, that the debt claimed by SSA is valid, that
neither waiver nor offset is available in this case, and
that the Respondent must repay the $24,093.75 expended by
SSA to relocate him.

BACKGROUND STATEMENT

On February 4, 1988, DHHS issued a letter (Notice)
informing Gerald M. Anderson (the Respondent) that he was
indebted to SSA in the amount of $24,093.75 and that DHHS
intended to collect the debt according to the provisions
of the Debt Collection Act of 1982 (P.L. 97-365), as
amended. 5 U.S.C. sec. 5514. See also, 5 U.S.C. secs.
5584, 5724; 31 U.S.C. secs. 3711-3719; 45 C.F.R. sec. 30.
5 C.F.R. secs. 550, 831; 4 C.F.R. sec. 101 to 105. The
Notice stated that the Federal Travel Regulations require
that:

the relocation must reduce commuting time between the
old residence and the new duty station and the new
residence and the new duty station . . . by at least
30 minutes. .. .
The Notice concluded that:

you relocated to a residence that is .7 miles farther
from your new duty station and from which it take 4
minutes more travel time than from your old residence
» » » your relocation was not incident to your change
of station, and you are required to reimburse SSA for
the funds expended to relocate you.

The Respondent timely requested a hearing, disputed SSA’s
determination, and requested a waiver or an offset of the
debt. The Respondent argued that SSA agreed to pay the
relocation expenses in question and that SSA agreed to
waive all requirements in the Federal Travel Regulations.
See, R Posthearing Br/3, 4.1/ The Respondent then argued,
in effect, that even if the requirements in the Federal
Travel Regulations were not waived by SSA, the short
distance provisions of the Federal Travel Regulations
relied upon by SSA do not apply. The Respondent argued
that, alternatively, that if the short distance provisions
(or some other comparable provisions) do apply, the
Respondent’s relocation from one house in Olympia to a
second house in Olympia was "incident to" the Respondent’s
“change of official station" from Olympia to Aberdeen,
Washington (a distance of 60 miles) within the meaning of
the Federal Travel Regulations. See, R Br/1l to 4.2/ The
Respondent also argued that, in equity and good
conscience, the debt should be waived or an offset
granted. See R Posthearing Br/11,12.

1/ References to the briefs, the transcript, the
stipulations, hearing exhibits, and to the Findings of
Fact and Conclusions of Law herein are as follows:

DHHS brief

DHHS Posthearing brief
Respondent’s brief
Respondent’s Posthearing

DHHS Br/[page]
DHHS Posthearing Br/[page]
R Br/[page]

Joint Exhibits

Respondent’s Exhibit

ALJ Findings of Fact and
Conclusions of Law

J Ex/[number]
R Ex/[number]

brief = R Posthearing Br/[page]
Transcript = TR/ [page]
Joint Written Stipulations = Stip/ [page]

FFCL/ [page]

2/ The Respondent, in effect, abandoned the argument that
he had established a residence in and relocated to
Aberdeen between January 4, 1987 and February 28, 1987.
I determined that an oral hearing was necessary to resolve
issues of the credibility or veracity of material
witnesses. I granted the Respondent a requested
extension, and an oral hearing was held on Wednesday,
April 27, 1988, in accordance with guidelines set forth in
the April 21, 1988 Prehearing Order and Summary. The
parties submitted prehearing briefs. The parties
submitted joint stipulations of issue, facts, and
applicable statutes and federal regulations at the
hearing. The stipulations were entered into the record,
exhibits were received, and a written transcript of the
oral hearing was prepared. Two witnesses testified on
behalf of the Respondent and two witnesses testified on
behalf of DHHS. I granted an extension to file briefs
requested by DHHS. Posthearing briefs were timely
submitted by the parties and received on May 10, 1988.

Most of the facts have been stipulated to and are
undisputed, such as the facts covering the relevant
observable actions of the Respondent during the period in
question. The few facts in dispute surround the
Respondent’s intent.

ISSUES
The issues are:

1. Whether the debt in the amount of $24,093.75 claimed
by DHHS from the Respondent is due and owing (i.e.,
whether the decision of SSA, that the Respondent should
reimburse SSA the $24,093.75 that SSA paid to Homequity
for the relocation expenses of the Respondent, should be
affirmed because the Respondent’s relocation was not
incident to the change of official station within the
meaning of applicable federal law and regulations) and, if
so,

2. Whether the Respondent should be granted a waiver or
an administrative offset pursuant to 45 C.F.R. sec. 30.15.

APPLICABLE STATUTES AND FEDERAL REGULATIONS
Statutes:

5 U.S.C. sec. 5514; 5 U.S.C. sec. 5724; 5 U.S.C. sec.
5584; 31 U.S.C. secs. 3711-3719.

Federal Regulations, Manuals, and Guidelines

45 C.F.R. Part 16; 45 C.F.R. sec. 30; 5 C.F.R. secs. 550,
831; 4 C.F.R. sec. 101 to 105.
Federal Travel Regulations - GSA Bulletin FPMR 101-7; FPMR
A-40 Supp. 10, March 13, 1984 (Effective November 14,
1983), Chapter 2-1.5(b) - Relocation Allowances.

(J Ex/1A.)

SSA Administrative Instruction Manual System - Financial
Management - Manual Chapter 7 - Travel; Instruction 22
dated November 7, 1986 Relocation Allowances Within the
Conterminous United States - FMM, SSA g:07.22.03.

(J Ex/2A.)

SSA Administrative Directives Systems Guide with
Transmittal Notice 68 dated December 30, 1985 - Travel,
General Services SEA, ORC g:240-39. Relocation
Allowances. (J Ex/2B.)

SSA Administrative Directives System Guide dated February
28, 1986 with Transmittal Notice 7 SEA ORC f£:240-39. (ot
Ex/2C.)

FINDINGS OF FACT AND CONCLUSION OF LAW 3/4

Having considered the entire record, the arguments and the
submissions of the parties, and being advised fully
herein, I make the following Findings of Fact and
Conclusions of Law:

1. The Respondent, Gerald M. Anderson, began his
employment with SSA on January 3, 1961. He was
employed as an Operations Supervisor in the SSA
District Office in Olympia, Washington until April 1,
1986. Stip/1.

2. On April 1, 1986, the Respondent was demoted from
Supervisor Grade 11 to Claims Representative Grade 10
because of alleged poor performance; he requested a

3/ Some of the proposed findings and conclusions offered
were rejected because they were not supported by the
evidence in the record, needed to be modified, or were not
material. Also, I have incorporated some findings and
conclusions elsewhere in this Decision.

4/ Any part of this Decision and Order preceding or
following the Findings of Fact and Conclusions of Law
which is obviously a finding of fact or conclusion of law
is hereby incorporated herein as a finding of fact or
conclusion of law; these are primarily the facts and
conclusions that were not disputed or which are clear and
do not need to be repeated.
hearing before the Merit System Protection Board
(MSPB). Stip/1.

During informal discussions between the parties while
they were before the MSPB (J Ex/5A; Stip 2):

(a) the Respondent was offered "early out," to be
effective December 31, 1986;

(b) he declined this offer because of financial
responsibilities involving his residence;

(c) SSA offered to transfer him to Mount Vernon,
Washington as a Claims Representative;

(d) SSA also offered to purchase his residence and
pay for all moving expenses should "early out" be
made available to him during the first year
following the transfer;

(e) after discussion with his wife, he requested that
SSA change the duty station from Mount Vernon to
Aberdeen, Washington, since his wife worked in
Olympia and his son attended college in Olympia
and could commute from Aberdeen;

(f) SSA agreed to this change and settlement was
reached on July 23, 1986.

By the terms of the MSPB settlement agreement (J
Ex/5A; Stip/2):

(a) the Respondent withdrew his MSPB appeal;

(b) SSA cancelled its demotion action and processed a
voluntary downgrade to a claims representative
position;

(c) SSA agreed to a paid change of station;

(d) both parties agreed that "current standard change
of station rules will apply to appellant’s move."

On August 4, 1986, the Respondent completed Form 106
requesting authorization for moving and related travel
expenses for his upcoming change of station (Stip/2):

(a) he indicated that he and his family were moving
to Aberdeen and that he had 18,000 lbs. of
household goods to be moved to Aberdeen; he
requested two months storage for the household
goods;

(b) he requested 60 days temporary quarters for
himself and his family;

(c) he also stated that he would be selling his
residence in Olympia and buying a new residence
at the new duty station in Aberdeen;
10.

11.

12.

(ad) thereafter, he reaffirmed the information on Form
106 and requested assistance in finding a new
home at the new duty station.

Based on the foregoing information, a travel order was
issued by SSA on August 14, 1986 authorizing (Stip/3):

(a) a move and change of station from Olympia to
Aberdeen;

(b) relocation services to be provided by Homequity;

(c) temporary quarters for the Respondent and his
family for a period not to exceed 30 days.

The relocation service through Homequity included the
purchase of the Respondent’s residence in Olympia and
assistance in locating a new residence at the new duty
station in Aberdeen. Stip/3.

On September 1, 1986, the Respondent was contacted by
Homequity; he informed them that he did not want home
finding services at the new duty station in Aberdeen.
Stip/4.

On December 1, 1986, the Respondent accepted
Homequity’s offer to purchase his residence at 2920
Southwest 93rd Avenue in Olympia. On December 30,
1986, the Homequity transaction was effective and the
Respondent moved out of that residence. Also, on that
date his household goods were picked up by Homequity
and put in storage in Olympia. Stip/5.

At the time the Respondent sold his residence in
Olympia to Homequity, he also owned another house in
Olympia which he rented; it is located at 5515
Southeast 65th Avenue (hereinafter referred to as the
Respondent’s "second house"). Stip/5; TR/72, 73.

On January 4, 1987, the Respondent and his family
traveled to Hoquiam (adjacent to Aberdeen) and they
lived in various motels or temporary quarters in that
area on a temporary quarters allowance, which was
originally authorized by the travel order for 30 days.
Stip/6; TR 46 to 70.

Also, on January 4, 1987, the Respondent served an
eviction notice on his tenants in his second house in
Olympia, requiring said tenants to vacate as of
February 15, 1987; he informed the tenants that he
intended to move into that house when they moved out.
Stip/6.
13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

On January 5, 1987, the Respondent started working in
the Aberdeen Branch Office of SSA. Stip/7.

On January 20, 1987, the Respondent requested an
extension of temporary quarters allowance and storage of
household goods until February 12, 1987. The stated
reason was that he was going to move into a furnished
rental house. The travel order was amended in
compliance with his request, although additional funds
had to be allocated. Stip/8.

About the same time as he requested an extension of
temporary quarters, the Respondent negotiated to
housesit in Hoquiam (at 343 Emerson) for a Reverend
Voight, until the Respondent’s tenants moved out of his
second house in Olympia. Stip/s.

On February 5, 1987, the Respondent was advised by
Joanne Johnson, of DHHS Region X, that he actually had
to relocate to the Aberdeen area if he wanted SSA to pay
for his moving expenses and that he personally would
have to bear the expenses of moving his household goods
if he were to move the goods directly from storage to
his second house in Olympia. Stip/9.

On February 10, 1987, the Respondent rented a house at
446 Eklund in Hoquiam (hereinafter, "Eklund" house). The
rental was transacted through a local bank. Also on
February 10, 1987, he notified Homequity of the Eklund
house address. On February 12, 1987, he had his
household goods moved from storage into the rented
Eklund house. Stip/10.

On February 13, 1987, the Respondent gave notice to the
bank that the rental agreement for the Eklund house
would be terminated on March 10, 1987. The Respondent
never lived in the Eklund house. Stip/11.

On February 12, 1987, the Respondent’s extended
temporary quarters allowance was terminated. Stip/12.

On February 13, 1987, the Respondent moved into Reverend
Voight’s house to house-sit, where he remained until
February 28, 1987. Stip/12.

The Respondent’s tenants moved out of his second house
in Olympia on February 15, 1987. The cleaning of that
house took until February 28, 1987. Stip/13.

On February 18, 1987, the Respondent submitted a voucher
for his temporary quarters in the Hoquiam-Aberdeen area
for the period of January 4, 1987 through February 12,
1987; the Respondent used his rented Eklund house
address, although he never lived there. Stip/14.

23. On February 28, 1987, the Respondent moved his household
goods at his own expense from the rented Eklund house to
his second house in Olympia. The Respondent commuted
from his second house in Olympia to Aberdeen until his
retirement on December 31, 1987. Stip/15.

24. The expenses in question in this case incurred by
Homequity on behalf of the Respondent are as follows:

Services provided Amount Date paid by SSA
to Homequity

(a) Marketing Action Plan $750 10/24/86

(b) Guaranteed Home Sale $19,005.00 4/3/87

(21% fee to Homequity
for purchase, carrying
expenses, and subsequent
sale of the Respondent’s
Olympia house)
(c) Shipment and Storage of
Household goods $ 4,338.75 4/11/87

See TR/136 to 145; Notice.

25. The Respondent’s transfer from Olympia to Aberdeen was
for the good of the government and not primarily for the
benefit of the Respondent or at his request. J Ex/6A,
6B.

26. The distance between the Respondent’s old residence
located at 2920 SW 93rd Avenue, Olympia, WA 98502, and
his place of work (official station) in Aberdeen was
approximately 55.8 miles; the commuting time by the most
direct route was approximately 1 hour 10 minutes. The
distance between the Respondent’s new residence (second
Olympia house), located at 5515 SE 65th Avenue, Olympia,
WA 98503, and his new place of work (official station)
in Aberdeen was approximately 56.5 miles; the commuting
time by the most direct route was approximately 1 hour
and 14 minutes. See, Tr/46 to 70.

27. The Respondent did not relocate any closer to his place
of work (official station) in Aberdeen; the distance
from the Respondent’s new residence in Olympia to the
Respondent’s new official station in Aberdeen was
farther than that of his old residence to his new
official station in Aberdeen. There was no saving in
commuting time.
28.

29.

30.

31.

32.

33.

34.

35.

36.

The distance between the Respondent’s old residence in
Olympia and his new residence (second Olympia house) is
approximately 11 miles. TR/50.

As a part of the settlement of his MSPB appeal, SSA
agreed to pay the Respondent’s relocation expenses,
including the purchase of his residence in Olympia, as
it had proposed to do in its initial offer to transfer
him to Mount Vernon, with the provision that "current
change of station rules will apply." J Ex/5A.

At the time he entered into the settlement agreement
with SSA on July 23, 1986, the Respondent considered
relocating to the Aberdeen area. The Respondent did not
prove that he ever intended to relocate to the Aberdeen
area.

The Respondent never actually occupied the Eklund house,
never established a residence in the Aberdeen area, and
never relocated to the Aberdeen area. See, TR/41 at
lines 7, 8.

In the fall of 1986, the Respondent made some inquiries
about finding a residence suitable to his family in the
Aberdeen area and his wife made some inquiries

regarding a new job. These and the Respondent’s other
actions were not sufficient to prove that the Respondent
intended to relocate to the Aberdeen area. In fact,

the Respondent’s refusal to accept the free services of
Homequity (See FFCC 8) strongly indicates no intent to
relocate to the Aberdeen area.

At some time prior to February 13, 1987 (and most
likely subsequent to September 1, 1986), the Respondent
decided to move into the second house in Olympia and
commute from there to Aberdeen.

The Respondent proved that he had trouble in the fall
of 1986 with the tenants that occupied his second
Olympia house.

The official duty station (Aberdeen) in the instant case
was not in a remote area and adequate family housing was
available within reasonable daily commuting distance.

The change of the Respondent’s official station involves
a short distance within the same local or general
metropolitan area, within the meaning of the short
distance provision of the Federal Travel Regulations.
37.

38.

39.

40.

41.

42.

43.

44.

45.

-10-

Even if the short distance provisions of the Federal
Travel Regulations did not apply here, the Federal
Travel Regulations require, generally, that a relocation
be "incident to" or directly related to the change of
official station in order for the agency to pay
relocation expenses.

The Respondent’s relocation to his second house in
Olympia did not constitute a relocation "incident to" or
directly related to the change of official station,
within the meaning of federal law and regulations.

The Departmental Grant Appeals Board has jurisdiction
over these proceedings. 5 U.S.C. Sec. 5514; 45 C.F.R.,
Part 16, sec. 30.

The MSPB agreement (J Ex/5A) is binding on DHHS, as
well as the Respondent.

While SSA waived the 12 month continued service
requirement in the Federal Travel Regulations, SSA did
not waive any of the other eligibility requirements or
conditions in the Federal Travel Regulations.

The major purpose of the Debt Collection Act, P.L. 97-
365, is to improve collection procedures in the federal
government. See, 1982 U.S. Code Cong. Ad. News, 3377.

The debt in the amount of $24,093.75 claimed by DHHS
from the Respondent is valid, due, and owing (i.e., the
decision of the Social Security Administration, DHHS,
that the Respondent should reimburse SSA the $24,093.75
that SSA paid to Homequity for the relocation expenses
of the Respondent is affirmed because the Respondent’s
relocation was not incident to the change of official
station within the meaning of applicable federal
regulations).

A waiver of the debt is not available in this case; the

collection of the debt in this case would not be against
equity and good conscience or against the best interests
of the United States.

With regard to offset, there is no proof in the record
as to whether the repayment of the debt in the manner
suggested by DHHS will cause extreme financial hardship.
-11-

DISCUSSION

The Respondent’s change of official station or post of duty
from the SSA office in Olympia to the SSA office in Aberdeen,
a distance of approximately 60 miles, was the result of a
settlement agreement dated July 23, 1986 (J Ex/5A), disposing
of an appeal before the MSPB of a demotion action involving
the Respondent. FFCL 2, 3. The parties agreed that the
Respondent would change his official station from Olympia to
Aberdeen, and that SSA would pay the Respondent’s relocation
expenses so long as the Respondent’s relocation complied with
“current standard change of station rules." FFCL 4; J Ex/5A;
TR 18, 19, 25, 37 to 45.

I have affirmed SSA’s determination that the Respondent’s
relocation (i.e., move from one Olympia residence to another)
did not comply with "current standard change of station
rules" (i.e., the Federal Travel Regulations and the SSA
instructions) and that the Respondent is not entitled to
relocation expenses for moving from his first Olympia house
to his second Olympia house because the Respondent’s
relocation was not “incident to" or directly related to his
"change of official station," within the meaning of the
Federal Travel Regulations and the SSA instructions.5/

On August 4, 1986, shortly after entering into the settlement
agreement with SSA, the Respondent signed an official
document stating to SSA that he intended to relocate from
Olympia to Aberdeen, that he wanted his household goods
shipped to Aberdeen, and that he intended to buy a residence
at his new duty station (Aberdeen) for approximately
$115,000. FFCL 5; J Ex/6A. It was on the basis of these and
other similar assertions by the Respondent that SSA paid
Homequity the $24,093.75 in question. FFCL 6, 7. The
Respondent never relocated to the Aberdeen area, as he had
initially led SSA to believe he would. Instead, within
approximately 2 months after he sold his first residence in
Olympia, the Respondent relocated to a second house he owned
in Olympia. 6/

5/ These Federal Travel Regulations are found in Joint
Exhibit 1A; the SSA instructions or guidelines interpreting
those Federal Travel Regulations are found in Joint Exhibits
2A, 2B, and 2C. See, Stip/3, page 6.

6/ In the two months between the time the Respondent sold
his first residence in Olympia (Dec. 31, 1986) and the time
(continued...)
-12-

Federal law provides that the relocation expenses of an
employee are payable by a federal agency only to the extent
authorized in the Federal Travel Regulations, and then only
when necessary, appropriate, and if agency funds are
available. 5 U.S.C. secs. 5724, 5724a.

The Federal Travel Regulations and SSA’s travel instructions
provide that a federal agency can authorize the payment of
relocation expenses of an employee when such employee is
transferred from one official station to another, so long as
the relocation meets certain conditions. These conditions
were designed to insure that relocation expenses be paid by
an agency only if the relocation is "incident to" or directly
related to the federal employee’s change of official station
or post of duty.7/ Once paid, a federal agency must seek
repayment from a federal employee for relocation expenses if
the agency determines that the federal employee’s relocation

6/(...continued)

he relocated to his second residence in Olympia (Feb. 28,
1987), the Respondent and his family lived in temporary
quarters in the Aberdeen area. FFCL 12. The Respondent
never established a residence in the Aberdeen area and never
relocated to the Aberdeen area. FFCL 31.

Z/ An official station or post of duty is defined in the
Federal Travel Regulations as (J Ex/1A, para. 2-1.5. (1)):

Official station or post of duty. The building or other
place where the officer or employee regularly reports for
duty. (For eligibility for change of station allowances, see
2-1.3 and 2-1.5b.) With respect to entitlement under these
regulations relating to the residence and the household goods
and personal effects of an employee, official station or post
of duty also means the residence or other quarters from which
the employee regularly commutes to and from work. However,
where the official station or post of duty is in a remote
area where adequate family housing is not available within
reasonable daily commuting distance, residence includes the
dwelling where the family of the employee resides or will
reside, but only if such residence reasonably relates to the
official station as determined by an appropriate
administrative official.

~13-

did not conform to the conditions required in the Federal
Travel Regulations.8/

One condition required by the Federal Travel Regulations is
that the new official station be at least 10 miles distant
from the old station; another is that the transfer must be
for the convenience of the government agency. See, J Ex/1A
at para. 2-1.3.a. Here, there is no dispute that SSA agreed
to and authorized a paid change of station for the
Respondent, that the Respondent’s change of station was in
the interests of SSA, and the Respondent’s new official
station was at least 10 miles distant from the old station.

Another condition in the Federal Travel Regulations is that
an employee receiving payment for relocation expenses must
remain in government service for 12 months or repay the
agency for the relocation expenses. In the settlement
agreement, SSA agreed to waive this condition and not seek
repayment from the Respondent (including the expenses of
purchasing his residence) if “early out" became available
"in the first year following his transfer." J Ex/5A, para.
5. The Respondent argued that, since SSA waived this one
requirement, SSA, in effect, waived all requirements or
conditions in the Federal Travel Regulations (and in SSA’s
guidelines). See, R Posthearing Br/5,6.

This argument that SSA was bound to purchase the Respondent’s
residence and pay all moving expenses regardless of the
Federal Travel Regulations is unpersuasive. It is clear from
reading the settlement agreement that the parties never
intended such a result. Also as a legal matter, there is no
support for such an argument.9/ Nevertheless, while the

8/ Erroneous payment by an agency of relocation expenses to
(or on behalf of) a federal employee constitutes a debt by
the federal employee which must be repaid to the agency.
Such debt is recoverable by the federal agency pursuant to
the provisions of the Debt Collection Act of 1982, as
amended. 5 U.S.C. Sec. 5514. See also, 5 U.S.C. Secs. 5724,
5584

9/ DHHS argued that it is questionable whether the SSA
representative had the legal authority to waive the 12 month
continued service requirement found in the Federal Travel
Regulations and that there is no estoppel against the United
States Government. DHHS Posthearing Br/15, 16. Even though
I did not reach this issue because I found that the
(continued...)
- 14 -

argument has no merit, it may be revealing with regard to
what the Respondent actually believed from the time he
entered into the agreement with SSA on July 23, 1986 (J
Ex/5A) until the time Joanne Johnson informed the Respondent
that he would not be paid any relocation expenses unless he
relocated to Aberdeen. See, FFCL 16.

It appears that the Respondent acted out of ignorance rather
than with malice or with fraudulent intent as implied by
DHHS. Apparently, his initial interpretation of the
settlement agreement was that he would be paid for
relocating, no matter where he relocated. He was obviously
mistaken. Subsequently, after he was told by SSA on February
5 1987, that he had to relocate to Aberdeen to be paid by SSA
for his relocation expenses, the Respondent seemed to believe
that moving his household goods to a rented house in the
Aberdeen area would qualify him for payment even though he
never spent one night in the house. Again he was mistaken
and failed to meet the conditions required in the Federal
Travel Regulations. A Supervisory Fiscal Management Analyst
for SSA testified that if the Respondent had actually moved
into the Eklund house and established a residence there, SSA
would have considered that he had relocated to the Aberdeen
area; she said: "I don’t think we’d be here today." TR 41.
While the Respondent’s plight is unfortunate, he is not
entitled to payment, waiver, or offset merely because he
might have been under a false impression with regard to the
provisions of his settlement agreement and the provisions of
the Federal Travel Regulations.

SSA’s determination that the Respondent must repay the
relocation expenses in question was based on the conclusion
that the Respondent’s relocation was not "incident to" the
Respondent’s "change of station," within the meaning of the
Federal Travel Regulations, because the Respondent relocated
to a residence farther away from his new official station.
See, Notice, P. 1. In response, the Respondent argued, in
effect, that SSA erroneously relied on requirements found in
the "short distance" provisions of the Federal Travel
Regulations and that those provisions do not apply in this
case. The Respondent also argued, alternatively, that even
if the "short distance" provisions (or some other comparable
provisions) did apply, the Respondent’s change of residence
was "incident to" his "change of duty station." R
Posthearing Br/5, 6, 11.

9/(...continued)

Respondent is obliged to repay the debt for other reasons, I
note that this argument is not persuasive and is not
supported by the record.
-15-

The Federal Travel Regulations do not expressly define what a
“short distance" change of official station means; the term
is, however, described as "within the same general local or
metropolitan area." The words "general local or metropolitan
area" are descriptive rather than restrictive; there is no
hard and fast rule. See, 58 Comp. Gen. 751, B-193316 (March
12, 1979), Matter of Harvey Knowles - Relocation Expenses.
Here, it appears reasonable to conclude that since the
Respondent commuted for almost a year from Olympia to
Aberdeen (and that many others do so), the change of station
from Olympia to Aberdeen involves a transfer in the same
"local or metropolitan area" within the meaning of paragraph
2-1.5b(1) of the Federal Travel Regulations and that the
“short distance" provisions apply here.10/

The Respondent’s relocation was not "incident to" or directly
related to his "change of station," as required for payment
under the "short distance" provisions of the Federal Travel
Regulations. I conclude that even if the "short distance"
provisions did not apply in this case, the Federal Travel
Regulations, nevertheless, require, generally, that any
federal employee’s relocation expenses be incurred as a
result of a relocation "incident to" or directly related to
his change of official station. See, Matter of Harvey
Knowles ~ Relocation Expenses, supra. Since the relocation
expenses incurred by the Respondent were not "incident to" or
directly related to the Respondent’s "change of official
station," SSA is barred from paying for them. See, ___ Comp.
Gen. ___, B-179907 (June 7, 1974), Matter of James A. Grant.
Furthermore, while a federal agency has broad authority to
make a determination as to whether an employee’s relocation
from one residence to another is in fact "incident to" or
directly related to the "change of official station," unless
the agency’s determination is "arbitrary, capricious, or an
abuse of discretion," the determination should stand. Grant,

10/ This type of determination should be made on a case-by-
case basis. One might also conclude that the relocation from
one Olympia residence to another Olympia residence invokes
the "short distance" provisions of the Federal Travel
Regulations because paragraph 2-1.5 (1) includes residence in
its definition of official station or post of duty and the
distance between the old and the new residences is only 11
miles. See, footnote 7.
-16-

supra. Here, SSA’s determination is based on a reasonable
interpretation of the facts and the law.11/

11/ In the case of a short distance relocation, a
determination of eligibility must be made under the
provisions of paragraph 2 - 1.5. b.(1) of the Federal Travel
Regulations which provide:

Shor is ice_involved.

(1) Transfers. When the change of official
station involves a short distance within the
same general local or metropolitan area. .
[relocation] expenses shall be authorized only when
the agency determines that the relocation was
incident to the change of official station. . .
Circumstances surrounding a particular case (e.g.,
relative commuting time) may suggest that the move
of residence was not incident to the change of
official station. [Emphasis added].

A short distance move is defined in the SSA travel instructions
or guidelines as follows (J Ex/2A):

» . . In case of a relatively short distance transfer, a
determination must be made that the relocation of

the residence is incident to the official change of

of duty station. A negative determination precludes
reimbursement and . . . in making the "incident
determination," the distance and commuting times between
the following locations are to be taken into
consideration:

1. Old residence and old duty station.
2. Old residence and new duty station.
3. Proposed residence and new duty station.

the relocation of the residence ordinarily will not be
considered "incident" unless the commuting time between
the proposed new residence and the new duty station is
appreciably less (at least 30 minutes) than that between
the old residence and the new duty station. Each
prospective change of residence must be examined
individually, and it is advisable to contact the
appropriate SSA financial management office or the
serving fiscal office prior to authorizing the travel
order.

(continued...)
-17-

Finally, the Respondent cited several opinions of the
Comptroller General involving transfers where the official
stations were "relatively close" to each other. See, Matter
of Harvey Knowles, supra. These held that the distance and
commuting time reduction requirements in the Federal Travel
Regulations and in the agency guidelines are general criteria
rather than fixed rules. The cases cited by the Respondent
do not fit the facts and circumstances in this case. Not one
case resulted in an employee moving farther away from his new
duty station, as here. There is no compelling reason in this
case to disregard the requirements found in the Federal
Travel Regulations, as there were in the cited cases.

In support of his argument that the mileage and distance
conditions in the Federal Travel Regulations and the SSA
guidelines should not be applied in this case, the Respondent
argued that his intent should control. The Respondent
proposed a finding that, since he initially intended to
relocate to the Aberdeen area (and that it was not until
February 1987 that he changed his intent and relocated to his
second house in Olympia), his relocation was "incident to"
his transfer from Olympia to Aberdeen. See, R Br/7, 8; R
Posthearing Br/6é to 11. He cited a case where the
Comptroller General found that an employee’s move was
“incident to" a transfer. In that case, the employee had
sold his residence and originally intended to relocate near
the new duty station, but could not carry out that intention
due to his wife’s inability to find employment near the new
duty station. See, Comp. Gen. ___, B~175822 (June 14,
1972), Matter of Johnny L. Thomas. I conclude that, unlike
that case, the Respondent did not prove that he ever intended
to relocate to the Aberdeen area. Intent is discerned from
action. The Respondent’s actions were not consistent with an
intent to relocate to the Aberdeen area.

My finding is that at the time of his MSPB agreement with SSA
in July 1986, at most, he considered the possibility of
moving to Aberdeen. The Respondent and his wife later made
inquiries regarding homes in the Aberdeen area and made

11/(...continued)

Thus, relocation expenses are not "incident to the change of
official station," unless an SSA employee relocates to a
residence closer to the new duty station and there is a
savings in commuting time. Here, the Respondent relocated to
a residence farther away from the new duty station and his
commuting time was increased, not decreased.

- 18 -

inquiries regarding employment for her, but never took action
consistent with an intent to relocate to the Aberdeen area.
Rather, the Respondent’s actions are more consistent with an
intent to relocate to his second home in Olympia. The
Respondent refused the free relocation services of Homequity
(FFCL 8) on September 1, 1986. Also, on January 4, 1987, the
Respondent told his tenants to vacate his second house in
Olympia because he planned to move there. Certainly by the
time he cancelled the rental of the Eklund house on February
13, 1987, he had decided to relocate to his second house in
Olympia. Certain events -- the Respondent’s half-hearted
efforts to find housing outside of Olympia, his wife’s
minimal efforts to find a suitable job in Aberdeen, the
problems with the tenants in his second house -- may have
influenced him, but the Respondent did not prove that he made
up his mind only after these events. Furthermore, some of
these events occurred prior to the sale of his first
residence in Olympia, in December 1986, and the Respondent
should have stopped the sale of his first Olympia house if
these events, in fact, caused him to change his mind.

At the hearing on April 27, 1988, the Respondent seemed
unsure and hesitant regarding his intentions with regard to
relocating to the Aberdeen area in 1987 and seemed to
continue to insist that he had relocated to the Eklund house
(in the Aberdeen area) .12/ This indicates to me that the
Respondent was tenuous about his 1987 intentions, that he
relocated to his second Olympia house in knowing disregard of
the advice given by SSA (or because he believed that he had
somehow done all that was required of him) and subsequently
tried to retain his relocation gains by a pretext or mistaken
impression which ultimately even he recognized to be without
merit and thus abandoned. This makes his testimony less
credible as to how and when he decided to move to his second
residence in Olympia.

Despite the provisions of 45 C.F.R. sec 30.15(p), waiver is
not available in this case because 5 U.S.C. Sec. 5584 (a)
appears to give the Comptroller General the sole authority to
consider waiver if the debt is above $500. Even if I had
authority to consider waiver in this case, I would find that
collection of the debt in this case is not against equity and
good conscience and is in the interests of the United States
because the Respondent’s claim is of doubtful validity. The
Respondent submitted no proof or argument regarding offset.

12/ In the Posthearing brief, the Respondent abandoned this
argument.
-19 -

Accordingly, SSA‘s determination is affirmed, the debt was

proven valid by DHHS, and waiver or offset is not available
in this case.13/

ORDER

Based on the evidence in the record, federal law, and federal
regulations and guidelines, it is hereby Ordered that

(1) SSA’s determination (as outlined in DHHS’s notice) is
affirmed;

(2) The Respondent is indebted to SSA in the amount of
$24,093.75;

(3) The Respondent’s request for a waiver or an offset is
denied.

/s/

Charles E. Stratton
Administrative Law Judge

13/ This is the final administrative determination of the
Department of Health and Human Services in this case; there
are no other administrative remedies. If the Respondent
wishes to seek judicial review, he is free to do so in the
appropriate judicial tribunal of the United States, provided
he acts within the time limits prescribed.