United States District Court, M.D. Pennsylvania
WILLIAM J. NEALON, District Judge.
On January 28, 2013, Plaintiff, Barry Walker, an inmate currently confined at the Canaan United States Penitentiary ("USP-Canaan") in Waymart, Pennsylvania, filed a pro se complaint pursuant to the Federal Torts Claim Act ("FTCA"), 28 U.S.C. § 2401, et seq., and 28 U.S.C. § 2675, et seq. (Doc. 1). Plaintiff alleges that in June of 2011, he suffered Salmonella poisoning at USP-Canaan from eating chicken fajitas that contained "bad" chicken contaminated with salmonella bacteria. (Id.) On January 29, 2013, an Order was issued by Magistrate Judge Martin C. Carlson, which stated that the Court appointed Joseph Barrett, Esquire to serve as mediator in a string of salmonella cases, including this instant case, with mediation sessions and an accompanying comprehensive status report to be completed by Defendant and Attorney Joseph Barrett by March 31, 2013. (Doc. 8). On May 24, 2013, Mediator Joseph A. Barrett, Esquire filed a Report of Mediator, in which it was reported that Defendant settled his FTCA claim and a 90-day Dismissal Order was requested. (Doc. 20). On May 24, 2013, this Court issued an Order dismissing the case without costs and without prejudice to the right of either party, upon good cause shown within ninety (90) days, to reinstate the action if settlement were not consummated. (Doc. 21).
On October 25, 2013, Plaintiff filed a "Status Report" advising that settlement had not been consummated, and requesting that his case be reinstated. (Doc. 27). On February 5, 2014, Plaintiff filed a Motion to Reopen his case. (Doc. 31). On February 18, 2014, Defendant filed its Response with two attached exhibits. (Doc. 33).
On March 7, 2014, Magistrate Judge Carlson issued a Report and Recommendation ("R&R") recommending that Plaintiff's Motion to Reopen be denied. (Doc. 34). On April 9, 2014, Plaintiff filed Objections to the R&R. (Doc. 37). On April 23, 2014, Defendant filed a Brief in Opposition to Plaintiff's Objections. (Doc. 38). For the reasons set forth below, the R&R will be adopted, and Plaintiff's Motion to Reopen will be denied.
Standard of Review
When objections to a report and recommendation have been filed under 28 U.S.C. § 636(b)(1)(C), the district court must make a de novo review of those portions of the report to which specific objections are made. Sample v. Diecks , 885 F.2d 1099, 1106 n.3 (3d Cir. 1989); see Goney v. Clark , 749 F.2d 5, 6-7 (3d Cir. 1984) ("providing a complete de novo determination where only a general objection to the report is offered would undermine the efficiency the magistrate system was meant to contribute to the judicial process."); see also Mutombo v. Carl, 2003 U.S. Dist. LEXIS 27124 (M.D. Pa. 2003) (Kane, J.). Conversely, in the absence of objections, review may properly be limited to ascertaining whether there is clear error that not only affects the rights of the plaintiff, but also seriously affects the integrity, fairness, or public reputation of judicial proceedings. Cruz v. Chater , 990 F.Supp. 375, 377 (M.D. Pa. 1998) (Vanaskie, J.); See Garcia v. I.N.S. , 733 F.Supp. 1554, 1555 (M.D. Pa. 1990) (Kosik, J.) (stating "the district court need only review the record for plain error or manifest injustice."). The district court may accept, reject, or modify, in whole or in part, the findings and recommendations contained in the report. 28 U.S.C. § 636(b)(1)(C); M.D. Pa. L. R. 72.3.
In his Motion to Reopen, Plaintiff alleges that settlement has not been fully consummated because he has not received his payment according to the settlement agreement terms. (Doc. 31). In its Response, Defendant explains that full payment was made to Plaintiff by the U.S. Treasury pursuant to the settlement agreement, but that the Treasury, which is not a party to the case, has statutory authority to collect "delinquent non-tax debts owed to the federal government by offsetting payments made by other federal agencies." (Doc. 34, pp. 2-3). Non-tax debts owed includes child support, federal and state taxes, restitution, and any other delinquent amount owed to the federal, state or local government. (Id. at 3). Furthermore, Defendant states that "payments made from the Judgment Fund to satisfy awards are statutorily required to be offset pursuant to 31 U.S.C. § 3728 and 31 U.S.C. § 3716. Therefore, absent some explicit statutory language to the contrary, there is no exception to this legal requirement that these payments be offset." (Id.). "In this case, pursuant to the legally-mandated Treasury Offset Program, the Treasury has confirmed these settlement funds have been applied against some other outstanding debt owed by the plaintiff." (Id.). Defendant also notes that "due to privacy considerations, the Treasury cannot disclose the precise nature of these offset obligations to the defendant." (Id.).
In analyzing these filings, Magistrate Judge Carlson recommends that the Motion to Reopen the case be denied because "the defendant has substantially complied with the terms of the agreement, but under other provisions of federal law[, ] the plaintiff's settlement payment has been applied to the plaintiff's outstanding, pre-existing financial obligations." (Id. at 3-4).
In the R&R, Magistrate Judge Carlson cites the Treasury Offset Program ("TOP") and an abundance of case law that supports the TOP's ability to collect payment against a debtor to satisfy outstanding debts. (Doc. 34, p. 5). Initially, Plaintiff's settlement is subject to collection by a federal agency under the TOP because "[an inmate's] settlement falls under 31 U.S.C. § 1304(a)(3)(A)." (Id.), citing United States v. Bailey, CRIM. 03-370 ADM/AJB, 2013 WL 5964447 (D. Minn. Nov. 4, 2013). Once funds are subject to offset, payments under the TOP "can then be used to pay a wide range of debts owed by a federal prisoner, including child support obligations  and victim restitution." (Id. at 6).
Magistrate Judge Carlson emphasizes that not only is Plaintiff's settlement debt subject to offset under the TOP, but that Plaintiff has been afforded proper due process of the law that requires the federal agency attempting to collect the debt ("creditor agency") to notify the debtor that the debt is subject to offset and to provide the debtor with an opportunity to dispute the debt or make arrangements to pay it. See 31 U.S.C. § 3716(a), (c)(6). After the debtor is provided with notice and is given the opportunity to dispute the debt or make other arrangements to pay it, the creditor agency attempting to collect the debt "must certify to Treasury that the debt is eligible for collection by offset and that all due process protections have been met. See 31 C.F.R. § 285.5(d)(3)(ii), (d)(6)." (Id. at 7), citing Johnson v. U.S. Dep't of Treasury, 300 F.Appx. 860, 862 (11th Cir. 2008).
Additionally, if a person is dissatisfied with a TOP offset, there are administrative procedures "established by statute and administered under implementing regulations, which provide due process to debtors against whom offset is sought." (Doc. 34, pp. 7-8), citing United States v. Beulke , 892 F.Supp.2d 1176, 1187 (D.S.D. 2012). After an administrative procedure regarding TOP offset debt is exhausted, a prisoner may then file an action in federal court challenging this offset decision. (Id. at 8), citing Omegbu v. U.S. Dep't of Treasury , 118 F.Appx. 989, 990 (7th Cir.2004).
Magistrate Judge Carlson explains that while the creditor agency must notify the debtor of any collection efforts, and give the debtor an opportunity to dispute the debt or make arrangement for payment, "the United States Attorney's Office is not responsible for [an inmate's] personal debts and [does] not have an additional responsibility to remind [the inmate] in the settlement agreement that the funds would be offset." (Id.), citing United States v. Bailey, 2013 WL 5964447 (D. Minn. Nov. 4, 2013).
In light of these aforementioned legal principles governing the TOP, Magistrate Judge Carlson recommends that Plaintiff's Motion to Reopen be denied for the following reasons: (1) "the defendant has substantially complied with the agreement by arranging for the Treasury to issue a payment to the plaintiff in the amount agreed upon by the parties" which means there was no material breach of the agreement; (2) the plaintiff "has received benefit of this payment under the agreement, albeit in an indirect fashion, through the reduction of the plaintiff's outstanding and pre-existing indebtedness"; (3) "the application of the Treasury offset to this payment is mandated by law and is largely a non-discretionary function by Treasury"; (4) "the statute and regulations creating the [TOP] provide ample due process protections to a prisoner plaintiff prior to offset, and allow for administrative agency review of any offset decisions, followed by judicial review of particular offsets, if necessary"; (5) "attempting to modify, or set aside, this offset action at this point could harm the interests of third parties, including victims entitled to restitution or dependants awaiting child support"; (6) "as a matter of law[, ] the plaintiff simply was not entitled to additional, specific advance notice that the proceeds obtained in this settlement might at some later date be subject to a Treasury offset"; and (7) "vacating or ...