The city of Chattanooga is suing a former city employee after overpaying her $44,000 for mileage reimbursement.
According to court filings, Eulena Danielle Davis, who was employed as an outreach coordinator for the city's homeless outreach program, submitted mileage reimbursement requests for $432.17 in January of this year to cover travel costs from July 2020.
Instead, $44,010.17 was incorrectly added to her paycheck and deposited into her bank account on Feb. 11.
It was quite a windfall, as her base salary for the year was $31,548.
Davis never reported the receipt of the funds to her supervisors or city payroll, according to the lawsuit, and the city only learned of the mistake on Sept. 1. After it was discovered, she was placed on administrative leave pending an investigation.
As part of that investigation, the lawsuit said Davis reported to Human Resources on Sept. 7 for an interview during which she was told city officials knew about the extra funds she received. She claimed she didn't know that money had been deposited into her account until they told her. The city then requested that Davis present proof from her bank indicating whether she actually received the funds. She failed to do so despite multiple requests.
On Sept. 10, the city sent Davis a letter asking for the money back. Three days later on Sept. 13, Davis put in her notice at work. She had not repaid any of the money at that time and still has not, according to the lawsuit.
The city now alleges Davis received "unjust enrichment" by refusing to repay the funds and by not informing anyone that she'd been overpaid.
"Defendant Davis has either negligently or intentionally misrepresented to the city whether she received funds that were not proper in connection with her mileage reimbursement and her Feb. 11, 2021, paycheck that has resulted in her intentional or willful appropriation of taxpayer funds for her personal gain in violation of the Tennessee Governmental Tort Liability Act," the city said in the lawsuit.
Davis could not be reached for comment.
In an email on Wednesday, City Auditor Stan Sewell told the Times Free Press an internal review of transactions for the fiscal year ending June 30 was conducted and no other similar errors were found.
"As you can imagine, the one error definitely stood out as a major anomaly," he said.
Asked how this one anomaly slipped through the cracks, Sewell said "internal control procedures were relaxed [primarily] due to the COVID-19 pandemic."
According to Sewell, the city stopped issuing a separate check to employees for expense reimbursements and started adding them as a separate item on employee paychecks a few years ago.
(READ MORE: Chattanooga City Council approves new curfew hours for teens)
Expense reimbursement requests still went through the standard approval and verification process. After that, Sewell said the amounts were manually entered by a payroll division staff member to add the amount to employee paychecks. To compensate for potential human error during the input process, a second payroll division employee was required to complete a control check to identify any errors.
That did not happen.
"At the time this error occurred, staff were working from home due to the COVID-19 pandemic. In addition, the payroll supervisor was out on [family leave] and the staff were working on implementation of a new system," Sewell said. "Thus, the Payroll Division was understaffed, handling an additional workload and working from home. The expense reimbursement was properly completed and verified. However, a keying entry error was made when transferring the amount to the payroll system. The error was not caught prior to processing because the control check was not completed by the secondary employee after the manual entries were made."
In a phone call on Wednesday, Sewell acknowledged that the control check "still should have happened" even with the work challenges presented by the pandemic but said he understood the pressure employees were under.
"Can a person make a mistake? Yes. Did a person make a mistake here? Yes. Does that give an employee the right to take $44,000 in city money? No," he said. "One question is how could this happen. The other is why didn't the employee step forward and let us know we made a mistake? When you see that money hit your bank account, you have an ethical and moral requirement to step forward. There's no question about that."
Effective July 1, Sewell said the city began using a new electronic accounting system. Employee expense reimbursements are initiated, verified and approved in the electronic system and then deposited via ACH, an electronic payment processing company, to the employee's bank account without any subsequent manual entries.
(READ MORE: Chattanooga City Court Judge Sherry Paty will seek reelection)
"The risk of a recurrence is highly unlikely," Sewell said.
Contact Kelcey Caulder at kcaulder@timesfreepress.com or 423-757-6327. Follow her on Twitter @kelceycaulder.