United States District Court, District of Connecticut
March 23, 1988
UNITED STATES OF AMERICA
MANUEL W. VETTI.
The opinion of the court was delivered by: Dorsey, District Judge.
RULING ON MOTION FOR SUMMARY JUDGMENT
I. Facts and Procedural History*fn1
"On August 5, 1976, while an employee of the United States
Postal Service, defendant filed a claim for benefits under the
Federal Employees' Compensation Act (`FECA')," Statement,
¶ 1, for hypertension, cephalalgia,*fn2 sleeplessness, and
high blood pressure, allegedly as a result of occupation
Apparently, in the early 1970s, defendant, along with a
number of associates, owned several parcels of property in
Stamford, Connecticut, which were offered for sale to the
Postal Service. Defendant's involvement with these properties
and his potential conflict of interest prompted investigations
by his superiors and the United States Attorney. A subsequent
indictment resulted in defendant's eventual conviction in 1979
on a charge that he participated, as a government employee, in
a decision or recommendation which he knew he had a financial
interest, in violation of 18 U.S.C. § 208(a). See Employees'
Compensation Appeals Board ("ECAB") Decision and Order
Defendant claimed that the investigations, the suspension of
further merit increases until the investigations were
concluded, and the attack on his honor and integrity caused
his medical problems. Id.
"Compensation was awarded from September 30, 1976 through
February 28, 1977 and April 1977 through February 5, 1981."
Statement, ¶ 3. "On February 23, 1981 the Director of Office of
Workers' Compensation Programs ("OWCP") issued an order
rejecting defendant's claims." Id., ¶ 4. The Director found
that defendant's medical problems were not the result "of his
Federal employment as a Postmaster, but related to his outside
business activities." Compensation Order at 1 (2/23/81).
Defendant's subsequent application for review was denied.
Statement, ¶¶ 6-7.
After the OWCPL's decision, defendant was informed that he
had been overpaid in the amount of $102,329.32. Id., ¶ 9.
Defendant sought review of both the denial of his benefits and
a review of the overpayment order. Id., ¶¶ 11-15. On March 18,
1982, the ECAB affirmed OWCP's decision denying defendant
further benefits. Id., ¶¶ 16-17. "On August 9, 1984 an OWCP
hearing representative ("HR") conducted a hearing on the issues
of: a. overpayment; b. amount of overpayment; c. existence of
absence of fault by defendant." Id., ¶ 22. The HR found that
the correct amount of overpayment was $102,329.32 and that
defendant was not without fault in causing the overpayment. See
Decision of HR (1/25/85). Specifically, the HR found that
defendant should have known that he was not entitled to
benefits because his problems related to his "outside business
association and his financial interest in certain parcels of
property." Id. at 4. By representing that his medical problems
were job related, defendant was found to have violated
5 U.S.C. § 8129(a).*fn3 "On July 23, 1985 OWCP moved the ECAB to remand
for a further hearing as there had been an incorrect finding as
to [defendant's] fault." Statement, ¶ 26. The motion was
subsequently granted. Id., ¶ 28.
On remand, the HR issued a new decision on January 7, 1986,
and found defendant without fault in creating the overpayment.
Id., ¶¶ 30-32. However, waiver of the overpayment was denied.
Although defendant was found to be without fault in causing the
payments, the HR concluded that recovery would not defeat the
purpose of the FECA and would not be against equity and good
conscience. This conclusion was based on the HR's finding that
defendant had sufficient assets to afford repayment.
Defendant appealed the HR decision on April 9, 1986. On
March 31, 1987, the ECAB affirmed the HR's decision denying a
waiver based on defendant's estimated asset worth of
$584,833.78. See ECAB Decision and Order (3/31/87). Several
demand letters have subsequently been sent to defendant
requesting overpayment. No payment has yet been made.
On October 2, 1987, plaintiff instituted this action seeking
recovery from defendant of the $102,329.32 in FECA
overpayments made to him, plus interest to date of judgment.
Defendant denies plaintiff's entitlement to repayment on the
basis that the procedures "followed by the U.S. Department of
Labor, Office of Workers' Compensation Programs in purporting
to determine and assess the amount of alleged overpayment to
defendant violated the due process rights guaranteed to the
defendant by the Fifth Amendment to the U.S. Constitution."
at 1. Plaintiff has moved for summary judgment. For the
reasons set forth herein, the motion is denied in part and
granted in part.
A. Summary Judgment
. . .Fed.R.Civ.P. 56(c) provides, in part, that
summary judgment shall be rendered only when a
review of the entire record demonstrates "that
there is no genuine issue as to any material
fact." The burden falls on the moving party to
establish that no relevant facts are in dispute.
Heyman v. Commerce & Indus. Ins. Co.,
524 F.2d 1317, 1319-20 (2d Cir. 1975); accord Addickes v.
S.H. Kress & Co., 398 U.S. 144, 157 [90 S.Ct. 1598,
1608, 26 L.Ed.2d 142] (1970). Moreover, in
determining whether a genuine issue has been
raised, a court must resolve all ambiguities and
draw all reasonable inferences against the moving
party. United States v. Diebold, Inc.,
369 U.S. 654, 655 [82 S.Ct. 993, 994, 8 L.Ed.2d 176] (1962)
(per curiam); Quinn v. Syracuse Model Neighborhood
Corp., 613 F.2d 438, 445 (2d Cir. 1980).
Properly employed, summary judgment allows the
court to dispose of meritless claims before
becoming entrenched in a frivolous and costly
trial. Knight v. U.S. Fire Ins. Co., 804 F.2d 9 (2d
Cir. 1986), cert. denied, [___ U.S. ___], 107 S.Ct.
1570 [94 L.Ed.2d 762) (1987). It must, however, be
used selectively to avoid trial by affidavit. Judge
v. Buffalo, 524 F.2d 1321 (2d Cir. 1975).
Hence, the fundamental maxim remains that on a
motion for summary judgment a court "cannot try
issues of fact; it can only determine whether there
are issues to be tried." Heyman, 524 F.2d at
1319-20. As long as the plaintiff has adduced
sufficient facts to substantiate the elements of
his claim, summary judgment is inappropriate.
Celotex Corp. v. Catrett, [477 U.S. 317] 106 S.Ct.
2548, 2554 [91 L.Ed.2d 265] (1986).
Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54,
57-58 (2d Cir. 1987).
B. Plaintiff's Argument
Relying principally on 5 U.S.C. § 8128(b), plaintiff contends
that the decision of March 31, 1987, is final and unreviewable.
Section 8128(b) provides, in relevant part:
The action of the Secretary or his designee in
allowing or denying a payment under this
subchapter is —
(1) final and conclusive for all purposes and
with respect to all questions of law and
(2) not subject to review by another official of
the United States or by a court by mandamus
Under plaintiff's reading of the statute, the court only has
the authority to hear constitutional challenges to the actions
of the Secretary. It argues that defendant's fifth amendment
challenge in this case is meritless as it is clear that the
Secretary followed the regulations set out at
20 C.F.R. § 10.321 and in so doing provided defendant the process to which
he was due.
C. Defendant's Argument
Defendant argues that § 8128(b) does not preclude judicial
review in this instance as he is not seeking reconsideration of
a decision "allowing or denying payment," but the decision on
his obligation to reimburse the government for payments which
were found in retrospect to have been incorrectly made. His
contention, therefore, is that denial of judicial review of the
Secretary's decision in this regard would amount to a
deprivation of property without due process of law. Defendant
also argues that whether repayment would defeat the purpose of
the FECA or "would be against equity and good conscience" are
questions which are inappropriate for summary judgment.
A. Constitutional Challenge
Plaintiff concedes that the court is authorized to hear
constitutional challenges to the Secretary's actions. See
Paluca v. Secretary, 813 F.2d 524, 526 (1st Cir.), cert.
denied, ___ U.S. ___, 108 S.Ct. 328, 98 L.Ed.2d 355 (1987),
citing Rodrigues v. Donovan, 769 F.2d 1344, 1347-48 (9th Cir.
(§ 8128(b)'s language "under this subchapter" "refers to
statutory, and not constitutional action"). One may not
circumvent the statute by disguising a claim for benefits or an
objection to the denial of benefits as a constitutional
challenge. Traynor v. Walters, 791 F.2d 226, 228 (2d Cir.
1986), cert. granted, ___ U.S. ___, 107 S.Ct. 1368, 94 L.Ed.2d
684 (1987); Pappanikoloaou v. Administrator of the VA,
762 F.2d 8, 9 (2d Cir.), cert. denied, 474 U.S. 851, 106 S.Ct. 150, 88
L.Ed.2d 124 (1985). To be considered, the Secretary's actions
must be challenged as constitutionally defective, viz, in
this case, that the decision to recoup and determine the amount
of the alleged overpayment constituted a deprivation of
property without due process of law. In this light, defendant's
argument that these questions are inappropriate for summary
judgment is unsound. Whether the Secretary made the correct
decision depends on the merits of the dispute and presents a
statutory challenge; whether he afforded defendant the due
process rights guaranteed to him by the fifth amendment is a
constitutional question and does not involve the merits of the
dispute. The correctness of the decision raises questions of
material fact which preclude summary judgment. See infra. The
due process issue poses no questions of fact and warrants the
entry of judgment for plaintiff.
Defendant had a property interest in the retention of the
benefits paid to him. See Goldberg v. Kelly, 397 U.S. 254, 90
S.Ct. 1011, 25 L.Ed.2d 287 (1970). Before he is deprived of
that interest he must be afforded notice and opportunity for a
hearing appropriate to the nature of the case. Bell v. Burson,
402 U.S. 535, 542, 91 S.Ct. 1586, 1591, 29 L.Ed.2d 90 (1971).
"Procedural due process rules are meant to protect persons not
from the deprivation, but from the mistaken or unjustified
deprivation of life, liberty, or property." Carey v. Piphus,
435 U.S. 247, 259, 98 S.Ct. 1042, 1050, 55 L.Ed.2d 252 (1978).
In determining what process is due, "we must weigh the strength
of the individual's interest, the risk of erroneous
deprivation, the probable value, if any, of requested
additional procedures, and the state's interest in providing
(or not providing) those procedures." Baden v. Koch,
799 F.2d 825, 831 (2d Cir. 1986); accord Mathews v. Eldridge,
424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).
The record illustrates the procedures afforded defendant to
ensure that his position was heard and considered. Those
procedures, detailed at 20 C.F.R. § 10.321, undeniably provide
defendant with the notice and opportunity to be heard to which
he is constitutionally entitled. The record also illustrates
that defendant took advantage of each of these procedures.
Indeed, he succeeded in obtaining a reversal of the HR's
initial decision that he was at fault in causing the benefits
to be paid. Defendant's only claim as to this procedure is that
the court should be part of the process. But the fifth
amendment does not require that the courts act as forums for
final review on the merits of individual cases. Bishop v. Wood,
426 U.S. 341, 349-50, 96 S.Ct. 2074, 2079-80, 48 L.Ed.2d 684
(1976). It only requires that the court ensure that the
procedures afforded one whose life, liberty or property is
subject to deprivation are adequate. The procedures set out at
§ 10.321 are found to be adequate and have been provided to
defendant. Accordingly, so much of the defense which is based
on a constitutional challenge must be rejected and summary
judgment entered for plaintiff in this regard.
B. Statutory Challenge
The heart of defendant's challenge is that he is entitled to
review of the Secretary's decision that requiring him to
return the payments would be consistent with the purposes of
the FECA and not against equity or good conscience. As noted
previously, this question and the question regarding how much
money should be repaid are not constitutional challenges, but
challenges to the application of the statute.
Section 8129 provides for the recovery of overpayments made
to an individual because of an error of fact or law. Although
the statute does not cover the situation when an overpayment
or improper payment has been made and no future payments are
available from which to recoup the past overpayment,
Regulation § 10.321(b) provides that the individual should make
appropriate refund. Unlike § 8128, neither § 8129 nor its
implementing regulations contain a provision that the
Secretary's decision is final and conclusive. Section 8128
provides the Secretary with unreviewable discretion in
"allowing or denying a payment." It has nothing to do with the
recoupment of payments which have already been allowed. See
Paluca, 813 F.2d at 528 (distinguishing United States v.
Lorenzetti, 467 U.S. 167, 104 S.Ct. 2284, 81 L.Ed.2d 134
(1984), as holding that § 8132 — concerning the reimbursement
to the Employees' Compensation Fund of compensation received
from a tort judgment rendered under a state no-fault insurance
statute — did not preclude judicial review). In § 8128(b),
Congress chose language which was comprehensive and
unambiguously precluded judicial review. Lindahl v. OPM,
470 U.S. 768, 780 n. 13, 105 S.Ct. 1620, 1627 n. 13, 84 L.Ed.2d 674
(1985). Its failure to use the same language in § 8129 strongly
suggests that it did not intend to vest the Secretary with
unreviewable discretion with regard to decisions made under
that suggestion. Id.
Accordingly, to the extent plaintiff's motion seeks to
preclude defendant from challenging the Secretary's decision
that it would not be inconsistent with the purpose of the FECA
nor against equity or good conscience to order defendant to
repay the benefits he received it is denied. Section 8129 does
not provide plaintiff with final authority nor does it bar
judicial review. The statute does not prevent defendant from
contesting the amount of the overpayment. The motion is
granted with respect to defendant's challenge of the
Secretary's decision as a deprivation of property without due
process of law.
Plaintiff's motion is, therefore, granted in part and denied
in part. The parties shall report as to their time
requirements for further pretrial processing of this matter,
including motions, on or before April 5, 1988.