November 2, 2000 In the Matter of the Petition by ALEXANDER A. HAYNES 5595 Pheasant Drive at Fontana, CA 92336-1178 P. S. Docket No. DCA 00-143 APPEARANCE FOR PETITIONER: Mary DiGioia 10414 Felson Street Bellflower, CA 90706-7007 APPEARANCE FOR RESPONDENT: David H. English Labor Relations Specialist United States Postal Service 2300 Redondo Avenue Long Beach, CA 90809-9401
FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Petitioner, Alexander A. Haynes, filed a timely Petition for Hearing Under the Debt Collection Act after receiving a Notice of Involuntary Administrative Salary Offsets from his supervisor on April 6, 2000. The Notice stated the Postal Service’s intention to withhold $36,591.02 from Petitioner’s salary to recover for two shortages discovered in audits of accounts for which Petitioner was responsible.
A hearing was held in Carson, California, on October 5, 2000. The parties presented documents and testimony of witnesses and made oral closing arguments after the presentation of evidence was concluded.
The following findings of fact are based on the documents submitted and the testimony of the witnesses at the hearing, including observation of the witnesses and their demeanor.
FINDINGS OF FACT
1. Petitioner has been an employee of the Postal Service for over fifteen years. In 1993, he was the Customer Services Supervisor at the Lynwood, California Post Office and was assigned responsibility for the main stock at that office and for the unit reserve stock of the East Lynwood Station, which was a subordinate office to the Lynwood Post Office. (Transcript of Hearing, Pages ("Tr.") 99, 165-167; Respondent’s Exhibit ("RX") Q).
2. The main stock and unit reserve hold the post office’s supply of stamps and other accountable paper until they are issued to window clerks for sale to customers. As the custodian of each of these accountabilities, Petitioner was responsible for receiving and accounting for stock sent to the post office from the Stamp Distribution Office and for dispatching and accounting for obsolete stock sent for destruction. Petitioner was also responsible for issuing stamps to the window clerks in the offices. (Tr. 167). When stamp stock is issued to a window clerk, the stock custodian gives the requested stamps to the clerk and must also enter the transfer into the post office computer system to show that the stamps have become the responsibility of the window clerk. Such a transfer has the effect of reducing Petitioner’s accountability in the unit reserve or main stock and increasing the window clerk’s accountability by the value of the stamps issued to the clerk. (Tr. 24, 71, 156-157).
3. Petitioner had exclusive access to the unit reserve and main stock, and he was the only person in Lynwood or East Lynwood who issued stock to the window clerks (Tr. 133, 176).
4. The stock in the East Lynwood unit reserve and the Lynwood main stock were counted regularly by Petitioner and the postmaster to make sure the amount of stock on hand agreed with the amount shown in the official accounting records of the post office as being in the unit reserve and main stock (Tr. 100-101, 167-168; RX B, R, S).
5. The stock in the East Lynwood unit reserve was counted about two or three times per year. In nine of the fourteen counts from June 1993 through October 14, 1999, the stock in the unit reserve agreed to the penny with what was reflected in the post office records. Of the five counts that did not balance exactly, the largest discrepancy was $104 (an overage). The count on October 14, 1999, the last before the East Lynwood counts at issue in this proceeding, balanced exactly. (Tr. 102, 123, 167-168; RX B, S).
6. The main stock at the Lynwood office was also counted two or three times per year. In the sixteen counts ending with that of September 22, 1999, eleven balanced exactly. Of the five counts not in balance, the discrepancies were less than $100 except for a shortage of $275 in 1998 that was eventually found to be related to an overage in a clerk’s account (Tr. 141). The count on September 22, 1999, the last before the Lynwood counts at issue in this proceeding, balanced exactly. (Tr. 102, 123; RX B, R).
7. On November 16, 1999, the Lynwood postmaster evaluated Petitioner’s job performance for the past year, and she found that he "met objectives and expectations." As described on the evaluation form, this evaluation equated to the following: "Overall contribution to the business, both functionally and organizationally, met and sometimes exceeded the expectations of the job. Individual consistently produced proficient results." Petitioner was a good employee whom the postmaster believed generally did a good job managing his accountabilities. (Tr. 106, 123-125, 170-171, 198-199; Petitioner’s Exhibit ("PX") 20).
8. In September and October of 1999, Lynwood and East Lynwood were converted to a new computerized accounting and reporting system known as POS ONE (Tr. 22). The system was designed to record all transactions between customers and window clerks as well as the issuance of stock from the main stock and unit reserve to the clerks (Tr. 23). The accounts from the old system, known as the IRT system, were transferred automatically to the new POS ONE system. The stamp inventory figures for the unit reserve and main stock from the old IRT system were extracted from the computerized records of the post office and electronically entered into the new POS ONE inventory records. No physical count of the stamp stock was done, but Petitioner and the POS ONE installer compared the old and new inventory lists after the conversion and confirmed that the items listed in the POS ONE system for both stations’ stamp inventories were the same as the inventory listings before conversion. (Tr. 46-52; RX N).
9. Petitioner received training in operations under the POS ONE system, and he called the POS ONE "help desk" a number of times after the changeover when he had problems with the system (Tr. 39, 43, 127, 168-170; RX A). Petitioner did not advise the postmaster that he was having any significant problems with the POS ONE system (Tr. 126).
10. On December 30, 1999, Petitioner became noticeably ill at work and, with the permission of the postmaster, left work early. He did not return to work at Lynwood or East Lynwood thereafter. Until December 30, Petitioner appeared to the postmaster to have been functioning normally and performing his duties satisfactorily. He had been out of the office on sick leave several days in October 1999, but the postmaster understood that absence to be related to Petitioner's hypertension and diabetes, medical conditions she was aware Petitioner had. He had not advised the postmaster of any problems performing his job. (Tr. 106-108, 128-129, 139, 172, 179, 185, 196, 197-198; PX 11).
11. The postmaster did not know how long Petitioner would be out of the office. He later provided medical documentation recommending he be out until at least January 19, 2000. (Tr. 108).
12. During Petitioner’s absence, the window clerks at Lynwood and East Lynwood needed stamps from the main stock and unit reserve, respectively. The postmaster decided to open the safes containing the stock in order to assign responsibility for the stamp stocks and for issuing stamps to another employee, Ms. Turk. A count of each stock and changing the combinations to the vaults were necessary as part of the transfer of the stock to Ms. Turk. (Tr. 78, 80, 109; PX 11).
13. Until the unit reserve and main stock were transferred to Ms. Turk in early January 2000, Petitioner had had exclusive access to the stamp stock stored in the safes. No one else had a key or the combination necessary to open the safes. However, Petitioner had been required to complete Duplicate Key Inventory envelopes (PS Form 3977) which contained the keys and/or combinations to the safes. These envelopes were sealed by Petitioner and were kept secure in the post office for use only if Petitioner were not available to open the safes. (Tr. 36, 41).
14. On each Duplicate Key Inventory envelope, the employee is asked to designate in writing a witness who can participate in counts in the event the employee is not available (Tr. 41). On all of his Duplicate Key Inventory envelopes, Petitioner had listed the postmaster as one of his designated witnesses. Under Postal Service regulations, an employee or a witness designated by the employee is generally entitled to be present whenever the employee’s stamp stock is counted. (Tr. 50-51, 53, 132; RX P).
15. Petitioner was responsible for properly securing the stock in the safe. On January 5, 2000, in preparation for counting the stock and transferring responsibility to Ms. Turk, the postmaster arranged for the combinations to the safes to be changed by a maintenance mechanic. Before beginning his work, the mechanic noticed and pointed out to the postmaster and Ms. Turk that the door to the East Lynwood safe was not locked. (Tr. 79-80, 82, 86, 110). That the vault door was unlocked was not readily apparent to someone looking at it, but the unit reserve stock was within the safe and not in locked compartments, so anyone opening the door could have had access to the stock (Tr. 80, 92, 110, 131). Petitioner was the last person to have had official access to the safe, on December 30, 1999, or earlier (Tr. 110-111; RX Q).
16. On January 6, 2000, the postmaster and Ms. Turk counted the unit reserve stock at the East Lynwood Station and discovered a significant shortage. The postmaster called Petitioner at home and advised him of the shortage. She asked him if he had other stamps at the station that they had not counted. He told her that there were other stamps in a safe compartment and that he would send in his key to the compartment. (Tr. 80-81; PX 2). Between January 6 and January 10, the safe was not "sealed", but only Ms. Turk and the postmaster had access, and neither opened it (Tr. 90).
17. On January 10, 2000, the postmaster and Ms. Turk, after receiving the key Petitioner sent in, opened the East Lynwood safe compartment and found additional stamps which they added to the unit reserve. They counted the total East Lynwood unit reserve stock at least three times and confirmed that the stock originally counted on January 6 was still there (Tr. 88, 113-114, 132). Their method for these counts as well as for the main stock counts was for the postmaster to count the stock first and record her results and then for Ms. Turk to count the stock by herself and compare her figures to the postmaster’s (Tr. 81, 91, 111-112). The final result for East Lynwood, as recorded on PS Form 3294, Cash and Stamp Stock Count and Summary, was that there was $63,812.26 in stamp stock on hand, including the stamps added from the locked compartment. According to the office records, however, the unit reserve should have contained stamps with a total value of $87,536.21, so the stock was short by $23,723.95. A large portion of the shortage was in stamp coils (100 stamps each); the unit reserve had 165 coils when it should have had 615 (at $33 each). (Tr. 26, 80-81, 85-88, 90-91, 111-114, 132; PX 4; RX B, K, S).
18. On December 22, 1999, stamps valued at $660 had been sent by the Stamp Distribution Office to East Lynwood, but Petitioner did not enter the shipment into his accounts. There is no evidence that the shipment was received by Petitioner or that the stamps were ever physically placed in the unit reserve. The postmaster assumed Petitioner had the stamps in the unit reserve and had failed to enter their receipt in his records, so she increased his accountability by the $660, increasing the amount of the claimed shortage by that amount, to $24,383.95. (PX 2, 5, 6; RX V).
19. On January 10, 2000, the postmaster and Ms. Turk counted the stock at the Lynwood main office, recording the results of their count on PS Form 3294, Cash and Stamp Stock Count and Summary. The stock was counted at least three times (Tr. 88, 113). The safe was secure between counts and until the stock was turned over to Ms. Turk because Ms. Turk had the combination to the safe (the mechanic having changed it on January 5) and the postmaster had the key to the inner compartment where the stock was held, so neither could access the stock without the other (Tr. 89, 116, 137-138). Their count showed $28,736.47 worth of stamp stock on hand, but the office records showed there should have been $42,832.54 on hand. The difference was a shortage of $14,106.07. However, subsequent adjustments to the accounts reduced the shortage to $12,207.07. (Tr. 81-82, 88-91, 111-114, 115; PX 9, 10, 16; RX M).
20. In early January, before the main stock was counted, two window clerks from the Lynwood main office came forward and notified management that on December 29, 1999, Petitioner had filled their stamp requisitions by giving them stamps but that Petitioner had failed to account for the transfer in the office POS ONE computer system as he should have. The clerks had the stamps, but as there was no record of the transfer, the official record accountability of the main stock had not been reduced as it should have been. Before the count, Ms. Turk made a downward adjustment to the main stock accountability for which Petitioner was responsible for part of the stock so transferred, but further reductions to the main stock accountability totaling $2,425 could have been made. Instead, this amount was entered into a trust account at the office. (Tr. 118-119, 137, 140-141, 157-160; PX 11, 12, 13, 14).
21. Another Lynwood window clerk came forward and pointed out that on December 29, 1999, Petitioner had issued him stamps worth $1,653 but had recorded a transfer of only $1,613. Thus, the main stock accountability should have been reduced by an additional $40 to reflect the transfer. Instead, the $40 was entered into a trust account at the post office. (Tr. 140, 157-160; PX 15).
22. On or about January 10, 2000, a clerk found an opened parcel of stamps in an unlocked storage closet at the East Lynwood Station. The parcel was intended for the East Lynwood station unit reserve and contained stamps worth over $200. The stock had been sent to East Lynwood Station on December 23, 1999, and was received before Petitioner left duty. Petitioner should have secured the shipment in the unit reserve vault and increased the official recorded accountability of the unit reserve by the value of the stock. This stock was credited to Petitioner’s accountability in calculating the shortage. (Tr. 121-122, 145-156; RX U, V).
23. Beginning right after the audits and continuing for about two weeks, the postmaster and Ms. Turk audited the individual accountabilities of every window clerk in the Lynwood and East Lynwood offices to determine whether they had overages that might relate to the main stock and unit reserve shortages. The largest overage found was about $700-800, and otherwise, except for the three circumstances described in Findings 20 and 21, above, the clerks were in balance or close to it. No relationship between any clerk overage and Petitioner’s shortages was found. (Tr. 92-93, 94-97, 134-135, 163-164).
24. On February 23, 2000, the postmaster issued Petitioner a letter of demand for $36,591.02, the sum of the East Lynwood shortage of $24,383.95 and the Lynwood shortage of $12,207.07 (Tr. 119; PX 18; RX G).
25. On April 6, 2000, the postmaster issued Petitioner a Notice of Involuntary Administrative Salary Offsets stating an intention to collect the claimed $36,591.02 by involuntary deductions from Petitioner’s salary of $222.42 per pay period (PX 1; RX G).
26. On April 28, 2000, Petitioner filed a claim for workers’ compensation related to his work, claiming a stress-related medical condition stemming from his treatment at the post office (RX D).
27. Postal employees who are assigned responsibility for unit reserves and main stocks are responsible for losses to the accountabilities assigned to them. Under Postal Service regulations, they are "held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties." Postal Service Handbook F-1, Post Office Accounting Procedures, Section 141.
DECISION
Respondent argues that the counts of Petitioner’s stock in the East Lynwood and Lynwood Stations were done properly and that they reflected shortages totaling $36,591.02. Respondent argues that Petitioner did not follow established procedures in managing these two accountabilities and that, therefore, Petitioner is liable for the amount of the shortages.
Petitioner argues that the counts were not done according to standard procedures. He alleges specifically that the East Lynwood unit reserve was not properly sealed between the start of the count on January 6 and the completion of the count on January 10, 2000. He argues that he should not be held liable for the shortages because he was a good employee, he was careful with the accountabilities and he followed established procedures. Additionally, Petitioner argues that he should be relieved of the debt because he was suffering from a mental condition during the period leading up to December 30, 1999, caused by stress from his job, and that any financial or accounting errors he might have made resulted from that condition. He claims not to remember many events that happened or are alleged to have happened during that period of time. He contends that he did not take any money from the Postal Service.
Respondent’s burden of proof in a case of an unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. Respondent is not required to prove theft or any specific dereliction or act of negligence by Petitioner. When a properly conducted inventory or audit shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. If Respondent proves a loss, the burden then shifts to the employee to show that he followed established procedures, or to present other evidence that would warrant relieving him of liability.
Lynwood Main Post Office
Respondent has shown that the postmaster and Ms. Turk carefully counted the main stock at the Lynwood Post Office. They counted the stock more than once to make sure of the accuracy of the final result (Finding 19), and the counts complied with Postal Service requirements requiring the presence of the custodian or a designated witness (Finding 14). The stock was secured between counts and until responsibility for the main stock was turned over to Ms. Turk (Finding 19). Thus, Respondent has demonstrated that the main stock was short $12,207.07 on January 10, 2000 (Finding 19).
However, the loss to the Postal Service resulting from the shortage discovered in the audit was less than $12,207.07. Before December 30, 1999, Petitioner had given stock with a value of $2,465 to clerks at the main office without properly recording the transfers in the accounts relating to the main stock (Findings 20, 21). The main stock accountability should have been reduced by that amount to reflect these transfers. The $2,465 reduction to Petitioner’s accountability for the main stock would work a commensurate reduction of Respondent’s loss resulting from the shortage. Thus, Respondent has shown a loss related to the main stock shortage of $9,742.07 ($12,207.42 (Finding 19) less $2,465 (Findings 20, 21))1.
Petitioner claims that he used reasonable care in managing the main stock, but the evidence does not support this assertion. The unrecorded and under-recorded transfers of stamps to window clerks (Findings 20, 21) dispel any conclusion that Petitioner followed established procedures when managing the main stock.
East Lynwood Station
Respondent has shown that the postmaster and Ms. Turk carefully counted the stock at East Lynwood. They counted the stock more than once and contacted Petitioner after their first count to make sure they had included all the unit reserve stamp stock in their counts (Findings 16, 17). The counts complied with Postal Service requirements regarding the presence of the custodian (Finding 14). Petitioner argues that the count was defective because the postmaster failed to seal the vault between the count on January 6 and that of January 10. However, there is no evidence that anyone other than Ms. Turk and the postmaster could have had access to the stock, and in their counts of January 10, they confirmed that the stock originally counted on January 6 was still there (Findings 16, 17). The stock added to the count was secured in the safe compartment that even they could not access until the postmaster received Petitioner’s key (Findings 16, 17). Therefore, Respondent has demonstrated that a $23,723.95 shortage existed as of January 10, 2000, and that that amount represents a loss to the Postal Service.
Respondent has not shown that the stock valued at $660 intended for the East Lynwood unit reserve (Finding 18) had been physically added to the unit reserve and was included in the stock the postmaster and Ms. Turk counted. Accordingly, Respondent has not demonstrated a loss in the amount of the $660 that the postmaster added to Petitioner’s accountability, increasing the apparent shortage after completion of the count.
The evidence does not demonstrate that Petitioner followed established procedures in managing the unit reserve at the East Lynwood Station. While the known instances of Petitioner giving stamps to clerks without accounting for the transfer occurred at the main office, Petitioner has not presented evidence to show that he managed the East Lynwood stock any differently. Additionally, it was at East Lynwood that Petitioner left the safe unlocked when he left (Finding 15) and where Petitioner left an opened parcel containing stamps unsecured in an unlocked storage closet (Finding 22). Accordingly, Petitioner has not shown that he followed established procedures in managing the unit reserve at the East Lynwood Station.
Other Defenses
Petitioner suggested that the shortages at East Lynwood and the main office might be related to the conversion of those offices to the POS ONE accounting system. However, Respondent demonstrated that the conversions occurred without significant problems. Additionally, immediately after the installation of the POS ONE system was completed, the POS ONE unit reserve and main stock inventories were confirmed to be the same as the inventories in the old IRT system (Finding 8). Also, Petitioner received training on the POS ONE system, and there was help available for problems (Finding 9). There was no showing that conversion of the accounting systems had any effect on Petitioner’s shortages.
Petitioner argues that he should be relieved of liability because during the time leading up to December 30, 1999, he was suffering from a stress-induced mental condition that prevented him from performing his job and now prevents him from remembering the events leading up to the audits in order to defend himself. Although the postmaster knew Petitioner had medical conditions (hypertension and diabetes) (Finding 10), she was not aware of mental conditions impairing his performance. Until his illness on December 30, 1999, and the subsequent audits, the postmaster believed Petitioner was performing his job adequately. He had received a "met expectations" evaluation in November. (Findings 7, 10). Petitioner had not advised the postmaster that he was having any problems managing the stock, and he had a very good record of audits of the unit reserve and main stock up until those of early January 2000 (Findings 4, 5, 6, 9). No medical evidence was offered of Petitioner’s mental condition except his testimony that he could not remember what happened during the period leading up to December 30, 1999, and that he was under stress. It has not been shown that the postmaster should have known of a medical condition impairing Petitioner’s ability to perform his duties or that Petitioner had such a condition.
As to defending himself in this proceeding, the hearing was postponed once to allow Petitioner to attend an appointment with his psychiatrist to determine whether he would be able to proceed with and participate in a Debt Collection Act hearing. After that appointment, Petitioner expressed his desire to proceed with the hearing, and reported that his doctor had given a medical clearance for such participation. Petitioner participated in the hearing, although he stated that he remembered little of what occurred in the months leading up to the audits. He was, however, able to remember and testify to a number of occurrences during the period in question, and he assisted his representative in the presentation of his case.
In conclusion, there was no medical evidence presented that would warrant finding Petitioner not responsible for the loss suffered by Respondent due to the shortages in the Lynwood main stock or the East Lynwood unit reserve or that he was incapable of defending himself in this proceeding.
Accordingly, Petitioner is responsible for the $9,742.07 loss due to the shortage in the Lynwood main stock and for the $23,723.95 loss suffered by Respondent due to the shortage in the unit reserve of the East Lynwood Station.
Except as the amounts claimed by Respondent have been reduced as set forth above, the Petition is denied. Respondent may recover by offset from Petitioner’s salary the sum of the Lynwood main stock and East Lynwood unit reserve losses, $33,466.02.
Norman D. Menegat Administrative Judge