Welby Thomas Cox v. UNITED STATES DEPARTMENT OF JUSTICE and ZACHARY AUGUSTUS MYERS

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted October 22, 2024 *
Decided October 31, 2024
Before
MICHAEL B. BRENNAN, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
CANDACE JACKSON-AKIWUMI, Circuit Judge
No. 24-1606
WELBY THOMAS COX,
Plaintiff-Appellant,
v.
UNITED STATES DEPARTMENT OF
JUSTICE and ZACHARY AUGUSTUS
MYERS,
Defendants-Appellees.
Appeal from the United States District
Court for the Southern District of
Indiana, Indianapolis Division.
No. 1:23-cv-01601-JPH-MJD
James Patrick Hanlon,
Judge.
O R D E R
Welby Cox, a former federal prisoner, sued the United States Department of
Justice and the United States Attorney for the Southern District of Indiana. The district
court screened and dismissed the complaint and Cox’s motion for a preliminary
* We have agreed to decide the case without oral argument because the briefs and
record adequately present the facts and legal arguments, and oral argument would not
significantly aid the court. FED. R. A PP. P. 34(a)(2)(C).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with FED. R. A PP. P. 32.1

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injunction, which contained allegations about the conditions of Cox’s confinement, the
propriety of his past incarceration, and the collection of his restitution debt via the
Treasury Offset Program, for failure to state a claim. Because Cox’s allegations about the
collection of his restitution debt through the Treasury Offset Program state a claim, we
reverse and remand.
In 2010, Cox was convicted of 30 counts of transporting stolen money interstate,
18 U.S.C. § 2314, in the Western District of Kentucky. The court imposed 75 months’
imprisonment, 3 years’ supervised release, and a restitution obligation of $285,000. The
judgment instructed that the restitution payment was due immediately in a lump sum.
It also established a payment schedule while Cox was in prison, requiring him to pay
either $25 or $60 quarterly. Within 60 days of Cox’s release from prison, the judgment
ordered the probation agent to submit to the court a new proposed payment schedule
after reviewing Cox’s financial circumstances. As a condition of supervised release, Cox
was required to make restitution payments consistent with any payment schedule.
In 2012, Cox was released onto supervision, but the record is not clear about
whether a new payment schedule was approved by the court. Two years later, in 2014,
Cox’s supervision was transferred to the Southern District of Indiana. Cox asserts that
he made monthly payments toward his restitution obligation while on supervised
release. Cox completed his term of supervised release in 2015.
Cox says that he continued to make regular restitution payments until August
2023, when he received a letter from the Office of the United States Attorney for the
Southern District of Indiana, informing him that a new payment agreement was
needed. The letter explained that the $25 quarterly payment plan was only valid while
Cox had been incarcerated. Because the U.S. Attorney’s Office had been unable to reach
an agreement with Cox to establish a new payment schedule, it sent Cox’s account to
the Treasury Offset Program for collection of the remainder of his debt. Soon after, Cox
noticed that the government was offsetting his Social Security checks.
Cox initially filed this suit against the United States Department of Justice and
the United States Attorney for the Southern District of Indiana in the Southern District
of Ohio, but the court transferred the case to the Southern District of Indiana. In his
complaint, in which he also moved for a preliminary injunction, Cox argued that he had
been unlawfully incarcerated and subjected to unconstitutional conditions of
confinement while in prison. He also argued that the U.S. Attorney’s Office wrongly
sent his restitution debt to the Treasury Offset Program, causing the federal government

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No. 24-1606 Page 3
to improperly offset his Social Security payments. He sought damages, a cessation of
the offset, and the expungement of his criminal record.
Soon after, Cox moved for recruited counsel and again for a preliminary
injunction, reiterating the arguments in his complaint. When the government did not
respond, Cox moved for a default judgment. The court denied the motion, reasoning
that Cox had not served either defendant, and, in any event, the government had
appeared in the case the same day Cox had moved for default judgment.
The district court then screened Cox’s complaint. 28 U.S.C. § 1915(e). Because
Cox’s convictions had not been overturned, it concluded that any monetary relief for
time Cox spent incarcerated would be barred by Heck v. Humphrey, 512 U.S. 477 (1994).
The court then rejected Cox’s conditions-of-confinement claim because he had not (and
could not) allege that either defendant was personally involved in any aspect of his
incarceration. The court then disposed of Cox’s restitution arguments by explaining that
it did not have authority to resolve them. The court explained that the proper forum to
seek changes to any restitution payment schedule is the Western District of Kentucky,
where Cox had been convicted. Finally, the court denied Cox’s motions for a
preliminary injunction and for recruited counsel.
Cox moved for reconsideration, asserting that the government had been
untimely in its responses and demanding that his Social Security money be returned to
him. The court denied the motion and entered a final judgment.
Cox appeals. We review the screening order de novo, accepting the complaint’s
factual allegations as true and drawing all reasonable inferences in the plaintiff’s favor.
Schillinger v. Kiley, 954 F.3d 990, 994 (7th Cir. 2020).
Cox first argues that the district court committed certain tort offenses against him
and was biased in favor of the government. But Cox offers as evidence only the court’s
denial of his motion for default judgment against the government. Adverse judicial
rulings alone will almost never suffice to establish judicial bias. Liteky v. United States,
510 U.S. 540, 555 (1994).
The bulk of Cox’s brief on appeal focuses on the government’s collection of his
restitution debt. The district court understood Cox’s allegations about the restitution
payments to be a request to modify a court-established payment plan that presumably
would have been put in place during his supervised release. But Cox completed his
supervised release in 2015. And he clarifies in his appellate brief that he is objecting to

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the U.S. Attorney’s Office’s decision to refer his debt to the Treasury Offset Program
and to the lack of notice he received before his Social Security benefits were offset. In
the claim that survives, he appears to demand only injunctive relief for this harm in the
form of stopping or at least reducing the offset.
The Treasury Offset Program provides the government with statutory authority
to offset funds payable by the United States to any individual who owes delinquent
federal debt. Astrue v. Ratcliffe, 560 U.S. 586, 589–90 (2010); 31 U.S.C. §§ 3711, 3716.
Before collecting a debt by administrative offset, the agency that is owed the debt must
provide the debtor with written notice and opportunity for review. 31 U.S.C. § 3716(a).
Once an agency has concluded that a debt is valid, delinquent, and legally enforceable,
it refers the debt to the Department of the Treasury to apply the offset. 31 C.F.R.
§ 285.5(d)(6).
The district court incorrectly concluded that it lacked the authority to resolve
these claims. No caselaw demands that Cox challenge an offset in his court of
conviction, and our precedent suggests that the Administrative Procedure Act, 5 U.S.C.
§ 702, permits such challenges. See Harrington v. Berryhill, 906 F.3d 561, 568 (7th Cir.
2018). True, Cox does not invoke the Act in his filings. But notice pleading does not
require that Cox identify in his complaint the specific statutes or regulations he argues
the defendants violated. Zimmerman v. Bornick, 25 F.4th 491, 493 (7th Cir. 2022).
Nor has he failed to state a claim. Cox has alleged that he received inadequate
notice before his account was referred to the Treasury Offset Program. The statutes
governing the Program require written notice before collecting a debt via administrative
offset. 31 U.S.C. § 3716(a)(1). Though Cox received a letter from the U.S. Attorney’s
Office explaining that it had referred his restitution debt to the Program, this does not
defeat his claim. The letter does not establish that Cox received written notice before his
debt was referred for collection, and it did not make the disclosures required by the
statute, such as an explanation of Cox’s rights. Id. Moreover, § 3716(a)(3) requires that
Cox receive “an opportunity for review within the agency of the decision of the agency
related to the claim.” Cox asserts he never had an opportunity for such a review. Taking
Cox’s factual allegations as true, we conclude that he plausibly alleged that the
Department of Justice failed to comply with the notice and review requirements in the
offset statute, 31 U.S.C. § 3716(a).
Cox does not challenge the district court’s dismissal of his claims related to the
conditions of his confinement or his alleged unlawful incarceration. Nor does he
address the court’s denial of his motion for counsel or his motion for a preliminary

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injunction. Accordingly, any argument along those lines is waived. Bradley v. Village of
University Park, 59 F.4th 887, 897 (7th Cir. 2023).
REVERSED and REMANDED

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