NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

SAMUEL VONZELL GORDON,

Petitioner

v.

OFFICE OF PERSONNEL MANAGEMENT,

Respondent

______________________ 

2017-1165

______________________ 

Petition for review of the Merit Systems Protection 

Board in No. CH-0845-16-0204-I-1.

______________________ 

Decided: May 25, 2017

______________________ 

SAMUEL VONZELL GORDON, South Holland, IL, pro se.

JOSEPH ALAN PIXLEY, Commercial Litigation Branch, 

Civil Division, United States Department of Justice, 

Washington, DC, for respondent. Also represented by 

JOYCE R. BRANDA, ROBERT E. KIRSCHMAN, JR., PATRICIA M.

MCCARTHY. 

______________________ 

Before NEWMAN, O’MALLEY, and REYNA, Circuit Judges.
2 GORDON v. OPM

O’MALLEY, Circuit Judge. 

Petitioner Samuel Gordon appeals the final order of 

the Merits Systems Protection Board (“the Board”) affirming a decision of the Office of Personnel Management 

(“OPM”). See Gordon v. Office of Pers. Mgmt. (Board 

Order), 123 M.S.P.R. 574 (2016). The Board concluded 

that Gordon failed to prove that the recovery of his overpaid benefits from the Federal Employee Retirement 

System (“FERS”) would be against equity and good conscience. For the reasons set forth below, we reverse. 

I. BACKGROUND

Gordon filed a FERS application for immediate retirement and disability retirement benefits in February 

2009. OPM notified Gordon in an April 3, 2009, letter 

that it had approved his application for disability retirement. OPM authorized monthly interim FERS benefits in 

the amount of approximately 80 percent of his estimated

FERS benefits until OPM finished processing his application. 

OPM also directed Gordon to apply for Social Security 

disability benefits and to notify OPM if the Social Security 

Administration awarded him monthly benefits. OPM

explained that Gordon’s FERS benefits would be offset by 

any Social Security disability benefits he received. OPM

then stated:

Because the FERS disability benefit must be reduced by 100 percent of any Social Security benefit payable for 12 months, Social Security checks 

should not be negotiated until the FERS benefit 

has been reduced. The Social Security checks will 

be needed to pay OPM for the reduction which 

should have been made in the FERS annuity.

Gordon v. Office of Pers. Mgmt. (AJ Decision), No. CH0845-16-0204-I-1, 2016 MSPB LEXIS 2622, at *3 

(M.S.P.B. May 2, 2016).
GORDON v. OPM 3

Over a three-year period, Gordon received monthly interim payments at three separate rates: (1) $1,118.28 

from March 2, 2009, to March 30, 2009; (2) $1,118.00 from 

April 1, 2009, to November 30, 2011; and (3) $1,147.00 

from December 1, 2011, to January 30, 2012. OPM calculated these monthly interim payments based on an assumed payable disability benefit with no reduction for 

benefits from the Social Security Administration.

Shortly after OPM authorized the monthly interim 

payments, the Social Security Administration informed 

Gordon that it had approved his request for benefits, 

effective April 1, 2009. Gordon thereafter received monthly Social Security payments of $1,984.00. Despite OPM’s

letter instructing him not to negotiate the Social Security 

checks, Gordon negotiated the checks and began receiving

both the Social Security and interim FERS payments.

Before OPM finalized its review of Gordon’s application, it determined in August 2011 that Gordon was not 

eligible for a FERS disability annuity on his last day of 

pay, January 30, 2009, because he did not have at least 18 

months of creditable civilian service as of that date. OPM 

concluded that he had 17 months and 27 days of creditable civilian service, leaving him three days short of the 18-

month requirement for receiving a FERS disability annuity. Rather than denying Gordon disability retirement 

entirely, OPM credited his service beyond his last day of 

pay to February 4, 2009, so that he would meet the minimum service requirement.

Around this time, OPM also informed Gordon that his 

gross monthly annuity was not sufficient, as of January 1, 

2011, to cover all of the voluntarily-elected health and life 

insurance benefits he received. OPM sent Gordon a new

election form for his health benefits and life insurance, 

but he failed to return the election form. OPM then 

directed Gordon to pay his Federal Employee Health 

Benefits premiums.
4 GORDON v. OPM

OPM completed its review of Gordon’s application in

January 2012, almost three years after approving his 

application for benefits. OPM calculated that the actual

value of Gordon’s annuity before he began receiving Social 

Security benefits in April 2009 was $1,599.00 per month. 

After accounting for the $1,984.00 per month that Gordon

began receiving from his Social Security benefits in April 

2009, however, OPM concluded that Gordon was entitled 

only to an earned rate annuity of $326.00 per month. 

Because Gordon had received $1,118.00 per month for 

almost three years while only being entitled to $326.00 

per month, OPM calculated that it had overpaid Gordon 

by $25,012.90. OPM also calculated overpayments of 

$5,191.39 for Gordon’s voluntary elections for Federal 

Employee Health Benefits premiums and $2,923.13 for 

Federal Employees’ Group Life Insurance premiums. 

OPM therefore determined that Gordon needed to repay 

$33,127.42 because of OPM’s overpayment from April 1, 

2009, to January 30, 2012. OPM developed a repayment 

plan that would have required Gordon to pay more than 

250 monthly installments of $127.96.

Gordon requested reconsideration and submitted a 

Financial Resources Questionnaire in February 2012. In 

August 2014, OPM notified Gordon that it was reviewing 

his request for reconsideration and requested updated 

financial information. Gordon declined to submit an 

updated Financial Resources Questionnaire, but continued to claim that he was entitled to a waiver of the overpayment amount because of his disability, financial 

situation, and inability to receive financial assistance 

from the Veterans Administration and state and local 

organizations because of the overpayment.

OPM issued its decision on December 28, 2015, three 

years and ten months after Gordon requested reconsideration. OPM gave no reason for its delay, merely stating, 

“[w]e apologize for the delay in responding to your request.” Resp’t’s App. 55. In its reconsideration decision, 
GORDON v. OPM 5

OPM affirmed the calculated overpayment amount. OPM 

also concluded that Gordon was not entitled to waiver of 

the overpayment. OPM concluded, “[a]fter a careful 

review of the evidence of record,” that Gordon was not at 

fault in causing or contributing to the overpayment, but

OPM found that recovery was not against equity and good 

conscience. Resp’t’s App. 57. OPM did find, however, 

that Gordon had shown collection at the scheduled rate 

would cause financial hardship, so OPM lowered the 

monthly payments to 662 installments of $50.00 and a 

final installment of $27.42. 

Gordon appealed OPM’s decision to the Board. Gordon did not challenge OPM’s calculation of the overpayment, and the Administrative Judge (“AJ”), upon review 

of the record, found that OPM’s calculations were correct. 

The AJ then found that Gordon failed to meet his burden

to show that recovery of the overpayment would be 

against equity and good conscience. The AJ found that 

Gordon failed to show financial hardship because he 

declined to submit an updated Financial Resources Questionnaire despite multiple requests from OPM and encouragement to do so from the AJ. According to the AJ,

Gordon’s reliance on his 2012 submission did not provide 

sufficient evidence to compare his current monthly income 

with his claimed expenses. Gordon therefore failed to 

prove by substantial evidence that collection of the overpayment at $50.00 per month would be a financial hardship.

The AJ then considered whether Gordon had shown

he had relinquished a valuable right or changed positions 

for the worse due to the overpayment. The AJ found that 

Gordon did not establish a claim for detrimental reliance 

because he received his letter from the Social Security 

Administration regarding his entitlement to Social Security benefits only one month after receiving notification 

from OPM that his FERS disability benefits would be 

reduced based on his receipt of Social Security benefits. 
6 GORDON v. OPM

The AJ also noted that OPM advised Gordon not to negotiate the Social Security benefits until it finalized his 

disability annuity. According to the AJ, Gordon’s failure 

to heed this warning was an intervening circumstance

causing his failure to receive state, local, and Veterans 

Administration aid because he likely could have qualified 

for the aid had he not negotiated the Social Security 

benefits. The AJ therefore found that Gordon had not 

proven that recovery of the overpayment would be against 

equity and good conscience based on a relinquishment of a 

valuable right or a change in position for the worse.

The AJ turned finally to whether Gordon proved his 

entitlement to waiver of the overpayment based on unconscionability. The AJ acknowledged that OPM “was not 

a model of expediency in notifying the appellant of the 

overpayment,” but found that the delay of about three 

years to finalize his annuity was not “so ‘monstrously 

harsh’ that recovery of the overpayment would be unconscionable.” AJ Decision, 2016 MSPB LEXIS 2622, at *22. 

The AJ also found that Gordon had not demonstrated 

unique personal circumstances based on his disability 

because he had not submitted medical evidence supporting the assertion and the AJ found him to be “intelligent, 

articulate, and in full command of his cognitive capabilities in pursuing this appeal.” Id. And the AJ found that 

OPM had not acted with gross negligence in its handling 

of Gordon’s annuity.

Gordon petitioned the Board for review of the AJ’s initial decision, but the Board denied the petition and affirmed the AJ’s initial decision. The Board did not state 

that the initial decision was adopted subject to modifications by the Board. See, e.g., Howard v. Dep’t of Transp., 

117 M.S.P.R. 610, 610 (2012) (adopting the AJ’s decision 

as the Board’s final decision “[e]xcept as modified by th[e] 

Final Order”). Instead, the Board indicated that the AJ’s 

initial decision “is now the Board’s final decision.” Board 

Order, 123 M.S.P.R. at 574.
GORDON v. OPM 7

Despite the Board indicating that the AJ’s initial decision had become the Board’s final decision, the Board 

provided additional reasoning regarding its conclusion 

that Gordon had not provided any basis for granting his 

petition for review. The Board based its reasoning on its 

conclusion that the Set-Aside Rule applied to this case. 

Because Gordon received OPM’s letter discussing the 

effect of Social Security benefits on his FERS benefits, the 

Board found that he was “aware of the set-aside requirement and should have anticipated that he was receiving 

an overpayment that he eventually would need to repay.” 

Board Order, 123 M.S.P.R. at 574. The Board also agreed 

with the AJ’s findings that Gordon had not proven by 

substantial evidence that: (1) he did not receive state and 

Veterans Administration benefits because of the overpayment, and (2) he would be financially burdened by 

repaying the overpayment.

Gordon appeals from the Board’s final decision. We 

have jurisdiction over this appeal under 28 U.S.C. 

§ 1295(a)(9). 

II. DISCUSSION

The scope of our review in an appeal from a decision 

of the Board is limited. We must affirm the Board’s 

decision unless it is “(1) arbitrary, capricious, an abuse of 

discretion, or otherwise not in accordance with law; 

(2) obtained without procedures required by law, rule, or 

regulation having been followed; or (3) unsupported by 

substantial evidence.” 5 U.S.C. § 7703(c); see also Fields 

v. Dep’t of Justice, 452 F.3d 1297, 1301 (Fed. Cir. 2006). 

Substantial evidence is “such relevant evidence as a 

reasonable mind might accept as adequate to support” the 

Board’s conclusion. Consol. Edison Co. v. Nat’l Labor 

Relations Bd., 305 U.S. 197, 229 (1938).

Gordon argues that the Board erred in failing to 

waive the collection of the overpayment he received. 

When the recipient of an overpayment argues that the 
8 GORDON v. OPM

overpayment amount should be waived, OPM has the 

burden of establishing by a preponderance of the evidence 

that an overpayment occurred. 5 C.F.R. § 845.307(a). 

The recipient then must establish by substantial evidence 

that he is eligible for a waiver of the overpayment. Id.

§ 845.307(b).

As an initial matter, Gordon argues that OPM’s overpayment calculations are incorrect because they do not 

account for his service with the Transportation Security 

Administration. In support, Gordon provides documentation that appears to show he worked as a Transportation 

Security Officer at O’Hare International Airport. But the 

AJ explained that Gordon “has not come forward with any 

evidence or argument that challenged OPM’s calculations. 

Rather, the appellant’s argument centers on waiver.” AJ 

Decision, 2016 MPSB LEXIS 2622, at *12. In an apparent 

attempt to excuse his failure to address OPM’s alleged 

miscalculation, Gordon states that the documentation he 

cites is new evidence that previously was not available to 

him. But his own documentation shows that he had the 

information during his appeal and even sent it to OPM in 

2011. Because Gordon failed to challenge OPM’s calculations before the AJ and he did not produce new evidence, 

we find that he waived his argument that OPM miscalculated his annuity and overpayment. See Gant v. United 

States, 417 F.3d 1328, 1332 (Fed. Cir. 2005).

Gordon next argues that he is entitled to waiver of the 

overpayment. OPM’s collection of FERS overpayments is 

subject to 5 U.S.C. § 8346(b), which provides in pertinent

part, “[r]ecovery of payments under this subchapter 

[including FERS annuity benefits] may not be made from 

an individual when, in the judgment of the Office of 

Personnel Management, the individual is without fault 

and recovery would be against equity and good conscience.” 5 U.S.C. § 8346(b); see also 5 U.S.C. § 8470(b); 5 

C.F.R. § 845.301. Recovery is against equity and good 

conscience if any of the following three conditions are met:
GORDON v. OPM 9

(a) It would cause financial hardship to the person 

from whom it is sought;

(b) The recipient of the overpayment can show 

(regardless of his or her financial circumstances) 

that due to the notice that such payment would be 

made or because of the incorrect payment he or 

she either has relinquished a valuable right or has 

changed positions for the worse; or

(c) Recovery would be unconscionable under the 

circumstances.

5 C.F.R. § 845.303.

The AJ found, and the Board did not dispute, that

Gordon was “without fault” in this case, but the AJ denied 

Gordon’s request for a waiver based on her equity and 

good conscience analysis. Gordon argues that recovery in 

this case would be against equity and good conscience 

because he meets each of the three conditions. After

reviewing each of the conditions, we conclude the AJ erred 

in finding that Gordon had not shown recovery would be 

against equity and good conscience because recovery of 

the overpayment under these circumstances would be

unconscionable due to OPM’s lengthy delays and the 

impact it had on Gordon’s benefits.

A. Fault

Although the AJ and the Board both found that Gordon was without fault, we briefly address the fault inquiry because of its impact on the reasoning used to 

support the finding by the AJ and the Board that Gordon 

failed to prove recovery would be against equity and good 

conscience. As we explained in Boyd v. Office of Personnel 

Management, 851 F.3d 1309 (Fed. Cir. 2017), the relevant 

regulations state that a recipient of an overpayment is 

“without fault if he/she performed no act of commission or 

omission which resulted in the overpayment.” 5 C.F.R. 

§ 831.1402. One of the pertinent considerations when 
10 GORDON v. OPM

considering a finding of fault is whether the recipient of 

an overpayment “accepted a payment which he/she knew 

or should have known to be erroneous.” Id.

§ 831.1402(a)(3).

OPM’s published policy guidelines interpreting its 

regulations further reiterate and explain the fault inquiry. OPM’s guidelines state that “an individual is not

without fault if,” inter alia, “he/she accepted a payment 

which he/she knew to be erroneous[,] or . . . he/she accepted a payment which he/she should have known to be 

erroneous.” Ret. & Ins. Grp., U.S. Office of Pers. Mgmt., 

Policy Guidelines on the Disposition of Overpayments 

under the Civil Service Retirement System and Federal 

Employees’ [sic] Retirement System (“Policy Guidelines”), 

§ I.B.3(c)–(d) (1995). But the guidelines contain an exception under which anyone, even an individual who knows 

that he is receiving an erroneous overpayment, can automatically be found without fault:

Prompt Notification Exception. Individuals who 

accept a payment in excess of the amount to which 

they are entitled will automatically be found 

without fault, regardless of whether they knew or 

should have known that the payment was erroneous, if they promptly contact OPM and question 

the correctness of the payment. In general, an individual must contact OPM within 60 days of the 

receipt of the overpayment—i.e., a onetime 

prompt notification requirement. (Note: This rule 

provides an exception to the general rules cited 

above (I.B.3) by allowing certain persons who 

knowingly accept overpayments to be found without fault if they demonstrate good faith by 

promptly bringing the overpayments to OPM's attention. However, the fact that they suspected or 

knew that they had received an overpayment—as 

evidenced by their contacting of OPM—will have a 
GORDON v. OPM 11

bearing on equity and good conscience determinations. See the Set-Aside Rule, guideline I.C.4.)

Policy Guidelines § I.B.6.

The Set-Aside Rule, which is referenced by the 

Prompt Notification Exception, applies to the equity and 

good conscience inquiry. Boyd, 851 F.3d at 1313–15. 

Although the Set-Aside Rule does not affect the fault 

analysis, the outcome of the fault analysis determines the 

applicability of the Set-Aside Rule. See Policy Guidelines

§§ I.B.6, I.C.4, I.E.7. The Set-Aside Rule states:

Individuals who are aware that they are receiving 

overpayments are obligated by the principles of 

equity and good conscience to set aside the 

amount overpaid pending recoupment by OPM. 

Thus, an individual who accepted a payment 

which he/she suspected or knew to be erroneous 

but who is found without fault under the Prompt 

Notification Exception (I.B.6) is obliged to set the 

overpaid money aside pending recovery by 

OPM. . . . Unless there are exceptional circumstances, recovery by OPM in these cases is not 

against equity and good conscience. (Note: Exceptional circumstances would involve extremely 

egregious errors or delays by OPM—e.g., a failure 

to issue a written decision within 4 years of a 

debtor’s request for waiver. [See I.F.1 and I.F.3.] 

Financial hardship is not an exceptional circumstance.)

Policy Guidelines § I.C.4 (italicized emphasis added). As 

explained by the guideline, the Set-Aside Rule applies to 

any individual who accepted a payment that he “suspected or knew to be erroneous” but was nevertheless found 

without fault due to the Prompt Notification Exception. 

Id.
12 GORDON v. OPM

In this case, there is no indication that the Prompt 

Notification Exception applies to Gordon. OPM’s reconsideration decision, issued on December 28, 2015, merely 

states, “[a]fter a careful review of the evidence of record, 

we find that [Gordon is] not at fault in causing or contributing to the overpayment.” Resp’t’s App. 57. OPM’s 

decision makes no reference to the Prompt Notification 

Exception. The decisions of the AJ and the Board also 

give no indication that the Prompt Notification Exception 

applies in this case, and we see no indication in the record 

that Gordon notified OPM within sixty days of the receipt 

of an overpayment, as required by Policy Guidelines

§ I.B.6. We therefore conclude that the Prompt Notification Exception does not apply to Gordon.

Because the Prompt Notification Exception does not 

apply, the decisions of OPM, the AJ, and the Board finding Gordon “without fault” must be based on the underlying conclusions that Gordon (1) did not know his payment 

was erroneous, and (2) could not have reasonably been 

expected to know his payment was erroneous.1 If either 

of these conclusions were not true, then Gordon would not 

be without fault under the Policy Guidelines because the 

Prompt Notification Exception, which “provides an exception to the general rules cited above (I.B.3) by allowing 

certain persons who knowingly accept overpayments to be 

found without fault . . . ,” Policy Guidelines § I.B.6, does 

not apply in this case. See Policy Guidelines § I.B.3(c)–(d).

B. Financial Hardship

Gordon argues that he has burdensome financial obligations caused by his disability and now by the overpay-

 

1 A parenthetical note at the end of Policy Guidelines § I.B.3 states, “[t]he phrase ‘should have known’ can 

be interpreted as ‘could have reasonably been expected to 

know.’”
GORDON v. OPM 13

ment. Gordon asserts that his financial obligations 

became so great that he was forced to return to work 

against the advice of his doctor.2 To demonstrate his

financial obligations, Gordon filed a Financial Resources 

Questionnaire in February 2012. OPM requested that 

Gordon submit an updated questionnaire in 2014, but he 

declined to file one. OPM again requested an updated 

questionnaire while the case was before the AJ. The AJ 

even encouraged Gordon to submit an updated questionnaire before his hearing and specifically informed him 

that the AJ would find it difficult to find in his favor on 

financial hardship grounds without an updated questionnaire. Gordon declined once again.

To show financial hardship, an individual must show 

that he needs substantially all of his “current income and 

liquid assets to meet current ordinary and necessary 

living expenses and liabilities.” 5 C.F.R. § 845.304. A 

pertinent consideration in this determination is the 

“individual’s financial ability to pay at the time collection 

is scheduled to be made.” Id. § 845.304(a)(1) (emphasis 

added). The AJ found that Gordon failed to meet his 

burden to show financial hardship because he declined to 

submit an updated questionnaire, which left the AJ

without sufficient evidence to compare Gordon’s thencurrent monthly household income with his claimed 

expenses. Because Gordon’s ability to pay at the time of 

collection is a pertinent consideration in analyzing finan-

 

2 Gordon appears to allege separately that he was 

improperly terminated from his positions working for the 

U.S. Postal Service on three separate occasions when he 

tried to return to work. As the AJ explained to Gordon, 

those claims are not relevant to this case. If he desires, 

Gordon can pursue a claim against his former employers 

by filing a separate action. See AJ Decision, 2016 MSPB 

LEXIS 2622, at *7.
14 GORDON v. OPM

cial hardship and there is substantial evidence to support 

the AJ’s conclusion that Gordon failed to show his financial ability to pay at the time of the appeal, we find no 

error in the AJ’s consideration of this issue.

C. Relinquishment of a Valuable Right or 

Changed Position for the Worse 

Gordon argues that he lost valuable healthcare benefits from the Veterans Administration, Medicare, and 

Medicaid because of the overpayment. He also argues 

that he lost nearly all of a $35,000 forgivable home loan 

from the State of Illinois because the overpayment falsely 

inflated his reportable income to the IRS.

Waiver of an overpayment is justified under § I.E.3 of 

OPM’s guidelines when the relinquishment of a valuable 

right or change in position is:

a) directly caused by the overpayment or notice 

that such payment would be made (i.e., loss or 

change would not have otherwise occurred);

b) detrimental to the overpayment recipient;

c) material (i.e., significant enough to warrant the 

waiver); and

d) irrevocable (i.e., the forfeited right cannot be 

recovered, the change in position cannot be reversed).

Policy Guidelines § I.E.3; see also King v. Office of Pers. 

Mgmt., 730 F.3d 1342, 1349 (Fed. Cir. 2013). But the

Policy Guidelines explain that relinquishment of a valuable right or change in position does not warrant a waiver 

of an overpayment if the debtor knew or strongly suspected that the payment was erroneous:

A debtor’s claim that an overpayment caused 

him/her to lose a valuable right or to change positions for the worse should be rejected if there is
GORDON v. OPM 15

substantial proof that the debtor knew or strongly 

suspected that the payment in question was erroneous: e.g., debtor inquired as to correctness of the 

payment. See I.C.4.

Policy Guidelines § I.E.7. This limitation on the relinquishment of a valuable right or change in position analysis coincides with § I.C.4—the Set-Aside Rule—because a 

debtor who is “aware,” or who “knew or strongly suspected” (in the language of § I.E.7), that he is receiving overpayments cannot receive a waiver of the overpayment for

equity and good conscience “[u]nless there are exceptional 

circumstances,” which do not include financial hardship. 

Policy Guidelines § I.C.4. In other words, if a debtor was 

“aware” or “knew or strongly suspected” that he received 

an overpayment, then the Set-Aside Rule applies and the 

equity and good conscience analysis hinges on whether 

exceptional circumstances exist, not the separate factors 

relating to the inquiries of financial hardship or relinquishment of a valuable right or change of position for the 

worse.3 See, e.g., Policy Guidelines §§ I.C.4, I.E.7; James 

v. Office of Pers. Mgmt., 72 M.S.P.R. 211, 220 (1996) 

(analyzing a debtor’s argument related to a change in 

position for the worse due to a commitment to buy a new 

house based on the exceptional circumstances standard, 

 

3 To be clear, we are not saying that a situation involving loss of a valuable right or a change in position for 

the worse cannot rise to the level of exceptional circumstances. Although the Set-Aside Rule specifies that 

“[f]inancial hardship is not an exceptional circumstance,” 

Policy Guidelines § I.C.4, it does not state that a loss of a 

valuable right or a change in position for the worse cannot 

create an exceptional circumstance. We do not offer any 

further analysis on this issue because, as explained below, 

the Set-Aside Rule does not apply in this case.
16 GORDON v. OPM

not the factors relating to a change in position for the 

worse, when the Set-Aside Rule applied).

In her analysis, the AJ appears to have combined the 

first prong of § I.E.3—direct causation—with the note in 

§ I.E.7 to conclude that Gordon did not qualify for waiver 

under this condition. The AJ found that Gordon could not 

show detrimental reliance “when [he] was made aware 

just one month prior to receiving social security that he 

should set aside those payments until OPM finalized his 

case.” AJ Decision, 2016 MSPB LEXIS 2622, at *18–19. 

The AJ concluded that Gordon’s negotiation of his Social 

Security benefits despite notice from OPM not to negotiate the benefits “served as an intervening circumstance 

precluding good-faith reliance to his detriment.” Id. at 

*19. The AJ also found that there is “substantial proof in 

the record that the appellant knew that his FERS annuity 

payments were subject to reduction upon receipt of” a 

Social Security benefits award. Id. (citing Policy Guidelines § I.E.7).

The AJ’s analysis on this issue is not supported by 

substantial evidence and is erroneous. First, to the extent 

the AJ’s analysis relies specifically on the direct causation 

element of § I.E.3, the AJ’s “intervening circumstance” 

conclusion is not supported by substantial evidence and is 

otherwise not in accordance with law. The Policy Guidelines explain that the direct causation element considers 

whether the “loss or change would not have otherwise 

occurred.” Policy Guidelines § I.E.3(a). The receipt of an 

overpayment that disqualifies a person from the receipt of 

benefits he otherwise would have received falls directly 

within the criteria that the “loss or change would not have 

otherwise occurred.” Id. The AJ’s attempt to skirt this 

conclusion because Gordon negotiated his Social Security 

benefits conflates this element with the fault determination, which had already been made in Gordon’s favor. As 

noted, OPM concluded that Gordon was “without fault,” 

so Gordon’s fault should not have come into play at that 
GORDON v. OPM 17

point. AJ Decision, 2016 MSPB LEXIS 2622, at *14. The 

AJ’s reintroduction of fault during an analysis of 

§ I.E.3(a) is contrary to law.

To the extent the AJ relied on § I.E.7 because Gordon 

allegedly knew that he was receiving an overpayment, the 

AJ’s conclusion must be erroneous because it contradicts

the AJ’s previous conclusion that Gordon was without 

fault. As discussed above, the record provides no evidence 

that the Prompt Notification Exception applies to Gordon. 

OPM, the AJ, and the Board also made no indication that 

the Prompt Notification Exception applies in this case. 

Because the Prompt Notification Exception does not 

apply, Gordon must not have known or had a reasonable 

expectation to know that his payments were erroneous; 

otherwise, OPM, the AJ, and the Board could not have 

found him without fault under Policy Guidelines

§ I.B.3(c)–(d). The AJ’s contradictory conclusions that 

Gordon was without fault in this case, which required a 

conclusion that he did not know or have a reasonable 

expectation to know that the payments were erroneous, 

but that he could not satisfy the detrimental reliance

criteria because he knew that the payments were erroneous cannot stand. 

The Board’s characterization of the AJ’s decision on 

this issue as an application of the Set-Aside Rule, Board 

Order, 123 M.S.P.R. at 574, fails for similar reasons.4 The 

 

4 The AJ did not cite the Set-Aside Rule in her decision. The AJ also did not analyze Gordon’s arguments 

under the Set-Aside Rule, as shown by the AJ not analyzing Gordon’s argument under the “exceptional circumstances” standard, which specifically disqualifies financial 

hardship as an exceptional circumstance, Policy Guidelines § I.C.4. Instead, the AJ analyzed Gordon’s arguments, including financial hardship, on the merits. See

AJ Decision, 2016 MSPB LEXIS 2622, at *19. The Board 
18 GORDON v. OPM

Set-Aside Rule explains that it applies to “[i]ndividuals 

who are aware that they are receiving overpayments . . . .” 

Policy Guidelines § I.C.4. It then specifies that it applies 

to “an individual who accepted a payment which he/she 

suspected or knew to be erroneous but who is found 

without fault under the Prompt Notification Exception . . . .” Id. As addressed above, the Prompt Notification Exception does not apply, and the conclusion by 

OPM, the AJ, and the Board that Gordon was without 

fault must be premised on findings that he did not know 

and could not have reasonably been expected to know that 

his payments were erroneous. See Policy Guidelines

§ I.B.3(c)–(d). The Board’s conclusion that the AJ “correctly found [that] the appellant [wa]s without fault,” 

Board Order, 123 M.S.P.R. at 574, directly contradicts the 

Board’s subsequent conclusion that Gordon was subject to 

the Set-Aside Rule because he was aware that he was 

receiving overpayments. See id. These contradictory 

conclusions cannot both stand; given the conclusions of 

OPM, the AJ, and the Board that Gordon was without 

 

denied Gordon’s petition for review and adopted the AJ’s 

initial decision as the Board’s final decision; the Board did 

not state that the initial decision was adopted subject to 

modifications by the Board, as it does in some instances. 

See, e.g., Howard v. Dep’t of Transp., 117 M.S.P.R. 610, 

610 (2012) (adopting the AJ’s decision as the Board’s final 

decision “[e]xcept as modified by th[e] Final Order”). 

Because the Board’s application of the Set-Aside Rule 

suffers from the same internal inconsistency as the AJ’s

analysis of Gordon’s arguments, we do not address the 

effect of the Board affirming the AJ’s decision as the final 

decision without modification but then offering reasoning 

that clearly departs from that given by the AJ.
GORDON v. OPM 19

fault based on the facts of this case, the Set-Aside Rule 

could not apply.5

Because the decisions of the AJ and the Board on this 

issue contradict the premise underlying the previous 

conclusions of the AJ and the Board that Gordon was 

without fault, we conclude that the decisions are arbitrary, capricious, or otherwise not in accordance with law. 

We would normally remand the matter to the Board for 

reconsideration in light of the inconsistent factual findings made and the inconsistent legal theories employed. 

We need do that, however, because we conclude that the 

recoupment of the overpayment in these circumstances is 

otherwise unconscionable.

 

5 On this issue, the Board also stated, “[t]here is no 

evidence that [Gordon] made an effort to inform the VA or 

the Illinois state authorities, who oversaw the benefits 

that he sought, that the income that was reported by 

OPM to the Internal Revenue Service was erroneous, i.e., 

falsely inflated by OPM’s failure to reduce [Gordon’s] 

FERS benefit as of the date of his receiving Social Security benefits.” Board Order, 123 M.S.P.R. at 574. According to the Board, Gordon would not be entitled to waiver 

“[a]bsent proof of such effort and a showing that it failed 

to persuade the VA and the state authorities to allow him 

the benefits to which he would have been entitled at a 

lower income level . . . .” Id. The government also references this logic in its brief. Resp’t’s Br. 11–12. But 

neither the Board nor the government cites any authority 

for placing this additional burden on Gordon. We find no 

support in the statute or regulations for the Board’s 

requirement that an individual must show that he tried to 

convince a state or local agency his income was falsely 

inflated by overpayments before he can receive waiver of 

an overpayment based on the loss of other benefits.
20 GORDON v. OPM

D. Unconscionability

As the AJ recognized, the Board will waive recovery 

based on unconscionability only under exceptional circumstances. AJ Decision, 2016 MSPB LEXIS 2622, at 

*20. The Board considers “all relevant factors using a 

‘totality-of-the-circumstances’ approach in order to determine whether recovery of an annuity overpayment is 

unconscionable in a given case.” Aguon v. Office of Pers. 

Mgmt., 42 M.S.P.R. 540, 550 (1989). Possible circumstances include, inter alia, an “exceptionally lengthy delay 

by OPM in adjusting an annuity,” id., or a failure by OPM 

to respond to a without-fault debtor’s request for reconsideration within four years of the debtor’s request, Policy 

Guidelines § I.F.3. A delay of less than four years “does 

not mean that a finding of inequitable recovery is absolutely precluded”; instead, “it simply means that a delay 

of less than [four] years will not automatically be presumed to render recovery inequitable.” Id. But granting 

a waiver based on egregious errors or delays “requires a 

determination that OPM’s handling of a case was so 

offensive—so monstrously harsh and shocking to the 

conscience—that one’s sense of equity forbids recovery.” 

Id. § I.F.1.

The AJ concluded that OPM’s three-year delay to finalize its calculations for Gordon’s benefits, although 

inexplicable, was not “so ‘monstrously harsh’ that recovery of the overpayment would be unconscionable . . . .” AJ 

Decision, 2016 MSPB LEXIS 2622, at *22. The AJ also 

found that Gordon had failed to demonstrate unique 

personal circumstances and credited OPM for acting

equitably during the delay by extending Gordon’s last day 

of pay by a few days to qualify him for benefits despite its 

belief that he had not met the 18-month requirement. Id.

at *22–24.

But the AJ did not address the delay between Gordon’s request for reconsideration and OPM’s reconsidera-
GORDON v. OPM 21

tion decision. Gordon requested reconsideration of OPM’s 

initial decision on February 10, 2012, but OPM did not 

issue a decision until December 28, 2015. Resp’t’s App. 

55. OPM provided no reason for its delay; instead, it 

merely stated, “[w]e apologize for the delay in responding 

to your request.” Id. Although this delay does not automatically qualify as an exceptional circumstance under 

Policy Guidelines § I.F.3, it only barely misses that mark 

and remains an important consideration. See Aguon, 42 

M.S.P.R. at 550.

In considering the totality of the circumstances, we 

also acknowledge Gordon’s failure to qualify for aid and 

benefits from state agencies, local agencies, and the 

Veterans Administration because of OPM’s delay in 

finalizing its calculations. See AJ Decision, 2016 MSPB 

LEXIS 2622, at *19. The AJ recognized that Gordon 

likely would have qualified for these benefits without the 

overpayments. Id. And the Board did not disagree with 

that conclusion.

Because of OPM’s lengthy delays on two separate occasions, the effect the first delay had on Gordon’s inability 

to qualify for benefits he likely would have received, and 

the fact that the second delay fell only forty days short of 

the presumptively impermissible four-year time frame, we 

conclude that recovery of the overpayment is unconscionable. OPM would have required Gordon to forego nearly 

$1,200.00 per month (comparing his $1,118.00 FERS 

interim benefits with the $1,984.00 Social Security benefits and $326.00 earned FERS annuity he was entitled to 

receive)—a hefty percentage of his income—for almost 

three years because OPM did not finalize its calculations 

more quickly.6 But OPM did not learn from its initial 

 

6 The AJ’s belief that Gordon’s circumstances are 

far from unique because they “fit squarely with a great 

deal of former federal employees who are overpaid on 
22 GORDON v. OPM

delay. Instead, OPM waited another three years and 

almost eleven months to respond to Gordon’s request for 

reconsideration. Although the delayed response to the 

request for reconsideration does not qualify as automatically inequitable under Policy Guidelines § I.F.3, it follows 

a delay of almost three years to calculate Gordon’s annuity. To be clear, we do not endorse a rule that merely adds 

up multiple delays to conclude that the greater than fouryear presumptively unconscionable time period has 

passed. We simply find that where, as here, there is a 

wholly unexplained delay of three years and almost 

eleven months, which followed an earlier three-year 

delay, and the AJ found both that Gordon was without 

fault and that Gordon was deprived of the opportunity to 

pursue and receive other benefits he likely would have 

received during those delays, the requirements of 5 U.S.C. 

§ 8346(b) have been met, despite the other countervailing 

considerations addressed by the AJ. Considering the 

totality of the circumstances, we conclude that OPM’s 

recovery of the $33,127.42 overpayment would be unconscionable. 

III. CONCLUSION

For the foregoing reasons, we reverse the Board’s Final Order adopting the AJ’s initial decision as the Board’s 

final decision. The Board is directed to instruct OPM to 

waive recovery of the $33,127.42 claimed as an overpayment.

 

account of interim pay and corresponding social security 

benefits,” AJ Decision, 2016 MSPB LEXIS 2622, at *23, 

creates cause for concern regarding the statutory scheme 

and OPM’s efficiency, especially in addressing disability 

benefits for veterans such as Gordon. But we are tasked 

with applying the law, not rewriting it.
GORDON v. OPM 23

REVERSED

COSTS

No costs.