Braille Monitor                                                                  December 1985


Kickbacks in the Vending Program

by Marc Maurer

Myrtie Elizabeth (Betty) Tetzlaff is a blind vendor operating a vending facility at the United States Post Office in Evansville, Indiana. When she took over the operation of the vending facility in May, 1982, officials of the Indiana Rehabilitation Services Division of Services for the Blind told Mrs. Tetzlaff that she must pay a percentage of her gross receipts to the Postal Employees Recreation Fund. The state agency for the blind had completed an agreement with the Evansville Postmaster which stated that up to twenty percent of the revenue derived from the vending facility would be paid to the Postal Employees Recreation Fund. This Postal Employees Recreation Fund is not a part of the post office. It is a private association of people, who work at the Evansville Post Office. With the money they get, the Postal Employees Recreation Fund purchases items such as bowling shirts, and provides certain activities, such as picnics or Christmas parties.

Of course, these payments were illegal. However, Mrs. Tetzlaff did not know this. She continued to make these payments through August of 1983.

At that time the Evansville Post Office asked the Indiana Rehabilitation Service to remove Mrs. Tetzlaff from her vending facility. The Indiana Rehabilitation Service agreed to do so. At this point, Mrs. Tetzlaff asked the National Federation of the Blind for assistance in protecting her rights. She learned that the payments she was making were a violation of federal law, the Randolph Sheppard Act. She also learned that the impending termination from her vending facility without a hearing violated federal law, federal regulations, and the due process clause of the Fourteenth Amendment to the United States Constitution. In order to protect Mrs. Tetzlaff a legal action was brought in the United States Federal District Court for the Southern District of Indiana. Mrs. Tetzlaff requested a temporary restraining order directing the Indiana Rehabilitation Service not to remove her from her vending facility. The Randolph-Sheppard Act provides for a full evidentiary hearing and federal arbitration. Mrs. Tetzlaff demanded that she be granted a hearing. The federal judge agreed, and the temporary restraining order was issued.

In the full evidentiary hearing Mrs. Tetzlaff asked for three things: that she not be removed from the vending facility, that the illegal contract requiring her to make payments to the Postal Employees Recreation Fund be declared null and void, and that the money illegally taken from her be repaid. Inasmuch as the Indiana Rehabilitation Service did not have any right to spend Mrs. Tetzlaff's money, Mrs. Tetzlaff and the Federation contended that the Indiana Rehabilitation Service should repay the money.

The hearing officer found that the agreement between the state agency and the post office requiring Mrs. Tetzlaff to pay part of her income to the Postal Employees Recreation Fund was void. However, he also found that this agreement was an inseparable part of the permit to establish the vending facility. In other words, Mrs. Tetzlaff was no longer required to pay any money to the Postal Employees Recreation Fund, but the permit creating the vending facility was also gone.

The order of this hearing officer meant that Mrs. Tetzlaff would not be terminated from the vending facility, but the vending facility would be terminated. The order also recommended that she ask the Postal Employees Recreation Fund (which was not a party and did not appear at the hearing) to pay the money back. If the Postal Employees Recreation Fund felt moved to pay the money back, all would be well and good. If not, Mrs. Tetzlaff would simply have lost her money. It will not come as a surprise that the Postal Employees Recreation Fund did not volunteer to repay the money.

Again (with the help of the National Federation of the Blind) Mrs. Tetzlaff filed an appeal. She requested that a federal arbitration panel be convened to hear her case. She asked that her vending facility not be terminated and that the Indiana Rehabilitation Service be required to reimburse her for the money which it had taken for the Postal Employees Recreation Fund. The arbitration panel was convened, and Ralph Sanders served as one of its members. The panel's decision was issued in June of 1985. That decision required the Indiana Rehabilitation Service to reimburse Mrs. Tetzlaff for the money it has forced her to send to the Postal Employees Recreation Fund. It also reversed the hearing officer on his ruling to terminate the vending facility.

One would think that with this decision in hand, victory would have been achieved. The state agency for the blind in Indiana violates the law; its actions are uncovered; and it is ordered to make amends. However, rather than face up to its mistakes and try to do better, the agency for the blind in Indiana appealed the decision of the panel to the Seventh Circuit Court of Appeals in Chicago. In making its appeal, the Indiana Rehabilitation Services did an astonishing thing. It completely left out Mrs. Tetzlaff--possibly indicating its attitude toward the blind in general and its clients in particular. Although Mrs. Tetzlaff brought the case in the beginning, although she has been the complaining party throughout, and although her rights are inextricably involved in the decision, she is not named in the lawsuit. Nothing daunted, Mrs. Tetzlaff filed a motion to intervene. She also requested that the case be dismissed because it was filed in the wrong court. At this writing, the Court has granted the motion to intervene and directed all other parties to respond to the request for dismissal. The state agency for the blind in Indiana responded to the Court order by agreeing that it will dismiss the case.

This saga of illegality and bureaucratic incompetence has one bright note. For many years the director of the agency for the blind in Indiana has been Frederick Silver. On August 15, 1985, Mr. Silver was relieved of his responsibilities as director of the Indiana Rehabilitation Services Division of Services for the Blind. Governor Orr has promised a thorough revamping of the Indiana Rehabilitation Services. The new director of that agency says: "There are worried people over there (at the Division of Services for the Blind), and they should be worried."

Meanwhile, Mrs. Tetzlaff continues to wait to be reimbursed for the money which was illegally taken from her. Her story was reported in the press. On August 18, 1985, the Indianapolis Star carried the following article:

Despite Ruling, State Won't Pay Blind Vendor

by Joseph Gelarden
Star Staff Writer

State officials say they won't pay $6,400 to a blind woman despite a recent award from a federal arbitration panel. They insist the money should be paid by a postal workers recreation fund that collected a share of her earnings. "We don't owe her the money, so we appealed the award to the 7th Circuit Court of Appeals," Mark A. Willoughby, the staff lawyer for the state Department of Rehabilitation Services, said Friday.

Myrtie Tetzlaff, a 44-year-old blind woman who operates 15 vending machines at the Evansville Post Office, won the award after she and her lawyer balked at an arrangement that forced her to "kickback" as much as 20 percent of her income, half of that to a postal workers recreation fund.

In 1982, Mrs. Tetzlaff agreed to operate the post office vending machines as part of a state program that finds blind workers jobs selling pop, snacks, and notions in public buildings. However, when she got her permit from the postal authorities, Mrs. Tetzlaff discovered that it required her to give 10 percent of her net proceeds to the Post Office Employee Recreation Fund and 10 percent to the state Rehabilitation Services Department.

Willoughby said Mrs. Tetzlaff was "stretching it" by using the word "kickback." Instead, he said, the legal arrangement was a "set aside" and "limitation." In August 1983, after Mrs. Tetzlaff objected to paying 20 percent of her net profits to others, postal officials ordered her out of the building. Marc Maurer, a Baltimore lawyer who is also blind, filed suit, and federal Judge William E. Steckler barred postal officials from acting against her until they followed federal administrative hearing procedures.

After a hearing, a federal arbitrator ruled that the "commission agreement" violated federal law and that the postal permit was invalid.

Postal officials ordered her to vacate the building, but Mrs. Tetzlaff appealed the arbitrator's decision to an arbitration panel. The panel modified the earlier decision.

On June 19, the panel ruled that "the permit was, and still is, valid and that the commission money ($6,447.01) paid to the Post Office Employee Recreation Fund should be repaid to the plaintiff." The award said that under the Randolph-Sheppard Act, the woman should recover the money from the Rehabilitation Services Department. The state agency could then recover the money from the post office, the award said. She was earning about $11,000 per year from the vending machine business and the 'kickbacks' cost her about $4,000," said Maurer, a graduate of Indiana University School of Law-Indianapolis who once served as a campaign aide to former Indiana Secretary of State Larry Conrad. Edward E. Hayes, the Evansville postmaster, said the vendor does not have to pay the postal employee recreation fund any longer. He said the fund is collected and administered by a committee of postal workers who used the money for picnics, bowling shirts and flowers. "We have no complaints about her services," he said.

Jean Merritt, the director of the rehabilitation services agency, was not available for comment.

R. Mark Lubbers, an aide to Gov. Robert D. Orr, promised an investigation of the situation.

"It is a complicated affair," said Willoughby.

"We are not paying the money because the state doesn't owe it. The money was paid to the Postal Employee Recreation Fund, not to the state. We think it was wrong for the arbitration panel to order the state to pay the money when we didn't get it. We felt the arbitration panel overstepped their authority." He defended the requirement that blind vendors send 10 percent of their net profits to the state, saying it was approved by law.

The money paid by Mrs. Tetzlaff and the 34 other blind vendors in public buildings around the state is used to provide stock and equipment for other vendors. He said 80 percent of the money used to equip blind vendors is paid by the federal government.

"We would love to see her get the money back, but we want her to get it from the postal fund," he said.