Court Opinion

ID: 4026617
Source: CourtListenerOpinion
Date Created: 2016-08-19 19:00:20.054558+00
Date Added: 2024-06-11T14:07:07.869806
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     MARK S. HUNTER,                                 DOCKET NUMBER
                  Appellant,                         SF-0845-15-0711-I-1

                  v.

     OFFICE OF PERSONNEL                             DATE: August 19, 2016
       MANAGEMENT,
                   Agency.

             THIS FINAL ORDER IS NONPRECEDENTIAL *

           Mark S. Hunter, Atwater, California, pro se.

           Karla W. Yeakle, Washington, D.C., for the agency.

                                           BEFORE

                              Susan Tsui Grundmann, Chairman
                                 Mark A. Robbins, Member

                                       FINAL ORDER

¶1         The appellant has filed a petition for review of the initial decision, which
     affirmed the reconsideration decision of the Office of Personnel Management
     (OPM). Generally, we grant petitions such as this one only when: the initial
     decision contains erroneous findings of material fact; the initial decision is based

     *
        A nonprecedential order is one that the Board has determined does not add
     significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
     but such orders have no precedential value; the Board and administrative judges are not
     required to follow or distinguish them in any future decisions. In contrast, a
     precedential decision issued as an Opinion and Order has been identified by the Board
     as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
                                                                                        2

     on an erroneous interpretation of statute or regulation or the erroneous application
     of the law to the facts of the case; the administrative judge’s rulings during either
     the course of the appeal or the initial decision were not consistent with required
     procedures or involved an abuse of discretion, and the resulting error affected the
     outcome of the case; or new and material evidence or legal argument is available
     that, despite the petitioner’s due diligence, was not available when the record
     closed. See title 5 of the Code of Federal Regulations, section 1201.115 (5 C.F.R.
     § 1201.115). After fully considering the filings in this appeal, we conclude that
     the petitioner has not established any basis under section 1201.115 for granting
     the petition for review.     Therefore, we DENY the petition for review and
     AFFIRM the initial decision, which is now the Board’s final decision. 5 C.F.R.
     § 1201.113(b).
¶2         The appellant sustained a work-related injury while employed with the U.S.
     Postal Service, making him eligible for benefits from the Office of Workers’
     Compensation Programs (OWCP). Initial Appeal File (IAF), Tab 11 at 48. The
     appellant took his OWCP benefit in a lump-sum payment of $100,153.62, i.e., a
     schedule award. Id. at 54. The appellant also became eligible for Social Security
     disability benefits commencing on November 1, 2009; however, he received a
     reduced benefit because of his OWCP payment.          Id. at 24.   Additionally, he
     became eligible for a disability retirement annuity under the Federal Employees’
     Retirement System (FERS) commencing on June 10, 2009. Id. at 34. He received
     both a FERS disability annuity and reduced Social Security disability benefits
     until June 1, 2012.
¶3         In a reconsideration decision, OPM found that the appellant had been
     overpaid $34,246 in disability retirement annuity benefits because OPM had not
     reduced his FERS annuity to account for his Social Security benefits during the
     period of time from June 9, 2009, to June 1, 2012. Id. at 6. In calculating the
     overpayment, OPM deemed the appellant to have received the full amount of the
     Social Security benefit to which he would have been entitled but for the OWCP
                                                                                       3

     payment, not the reduced Social Security benefit that he actually had received
     during the period of time that he was overpaid. Id. at 34.
¶4        In his petition for appeal, the appellant contended that OPM should have
     calculated the overpayment using only the amount of the Social Security
     disability benefit that he actually received; that is, the benefit as reduced by his
     receipt of the OWCP schedule award. IAF, Tab 3. He did not request a hearing.
     Based on the written record, the administrative judge found that OPM properly
     calculated the appellant’s overpayment as though he had received 100% of the
     Social Security benefit to which he would have been entitled had he not received
     the OWCP award. IAF, Tab 17, Initial Decision (ID) at 5-8. He also found that
     the appellant failed to show that he was entitled to waiver of the overpayment.
     ID at 8-10. He found that the appellant did not show that he had surrendered a
     valuable right because of the overpayment or that collection would be patently
     unfair because of OPM’s delay in adjusting his annuity. ID at 8-9. He found
     further that the appellant presented no evidence that collection of the
     overpayment in the amount of $398 per month for 86 months with a final payment
     of $18 would cause him financial hardship. ID at 10; IAF, Tab 11 at 9.

                     DISCUSSION OF ARGUMENTS ON REVIEW
¶5        In his petition for review, the appellant repeats the arguments that he made
     below, asserting that recovery would be patently unfair and that the
     administrative judge erred in finding that he was not entitled to waiver. Petition
     for Review File, Tab 1.
¶6        A FERS disability annuity must be reduced by the Social Security disability
     amount to which the annuitant is entitled, as determined by the Social Security
     Administration (SSA).     5 U.S.C. § 8452(a)(2); Maxwell v. Office of Personnel
     Management, 78 M.S.P.R. 350, 355 (1998), overruled on other grounds by
     Conner v. Office of Personnel Management, 120 M.S.P.R. 670 (2014); Johnston
     v. Office of Personnel Management, 70 M.S.P.R. 109, 112–17, aff’d, 99 F.3d
4

     1160 (Fed. Cir. 1996) (Table); 5 C.F.R. § 844.302(b)(2).       During the first 12
     months after a FERS annuity commences, the FERS annuity is reduced by 100%
     of the Social Security disability benefit to which the annuitant is entitled during
     that period; thereafter, the FERS annuity is reduced by 60% of the Social Security
     disability benefit to which the annuitant is entitled during that period. 5 U.S.C.
     § 8452(a)(2)(A); Maxwell, 78 M.S.P.R. at 355; 5 C.F.R. § 844.302(b)(2), (c)(2).
     The Board has found that OPM is correct in determining that it is required to
     reduce the appellant’s FERS annuity based on the annuitant’s entitlement, rather
     than actual receipt, of Social Security benefits. See Maxwell, 78 M.S.P.R. at 355;
     cf. Hicks v. Office of Personnel Management, 44 M.S.P.R. 340, 343 (1990)
     (observing that there is no requirement that the appellant actually receive Social
     Security benefits before his annuity will be offset under 5 U.S.C. § 8332(j)).
¶7         The Board reviewed the relevant statutory and regulatory provisions and
     concluded that, notwithstanding that a disability retirement annuitant is in receipt
     of a schedule award from the OWCP, OPM is correct in its determination that it is
     required to reduce the appellant’s FERS annuity by the full, unreduced Social
     Security disability insurance amount to which he is entitled, as determined by the
     SSA, because such amount represents the assumed Social Security disability
     insurance amount used in computing the appellant’s FERS annuity.                 See
     Johnston, 70 M.S.P.R. 109, 111. The Board found that nowhere in the relevant
     legislation as proposed or enacted is there any expression of Congress that a
     FERS annuitant’s annuity should not be reduced by all of the Social Security
     benefits to which he is entitled. Id. at 116.
¶8         The Board noted that the Social Security component is the largest
     component of FERS and found that it is reasonable that any deductions required
     would be from the primary component and would be taken by the SSA from the
     full amount of the Social Security disability insurance benefit.        The FERS
     disability annuity is offset by the unreduced Social Security disability insurance
     amount to avoid any duplicate payments. For example, if the SSA already offset
                                                                                        5

      the appellant’s Social Security disability insurance benefit by an OWCP schedule
      award and the entire amount of such disability benefit is offset from FERS, the
      appellant receives no duplicate payments—the payments from OWCP, the
      payment from the SSA, and the FERS annuity contain no duplicate benefits. Id.
¶9         The U.S. Court of Appeals for the Federal Circuit affirmed the Board’s
      reasoning. The court held that OPM’s interpretation of the controlling statute, as
      manifested in the regulation designed to implement the statute, is not
      unreasonable. See Johnston v. Office of Personnel Management, 99 F.3d 1160,
      1163 (Fed. Cir. 1996) (Table).      The court found that OPM’s interpretation
      essentially leaves to the SSA the task of adjusting the SSA benefits in light of,
      e.g., OWCP awards and schedule payments. Id. Applying the Board’s and the
      court’s Johnston decisions in the overpayment context, OPM also properly uses
      the full amount that the SSA calculates as an employee’s benefit entitlement in
      both the adjustment of the FERS annuity and the calculation of any overpayment
      caused by temporary dual payment by the SSA and FERS.
¶10        Regarding waiver, the appellant asserts that he is entitled to waiver because
      OPM failed to notify him of the correct amount of the overpayment for 3 years
      and only told him to set aside the amount that he was receiving from SSA, an
      amount that is insufficient to pay the overpayment. The appellant contends that
      OPM should have informed him of its method to calculate the overpayment as
      OPM was aware that the SSA disability payment had been reduced because of his
      OWCP schedule award.
¶11        The appellant bears the burden of establishing his entitlement to a waiver of
      recovery of the overpayment by substantial evidence.      See Knox v. Office of
      Personnel Management, 107 M.S.P.R. 353, ¶ 5 (2007).            To be entitled to a
      waiver, the appellant must meet a two-part test. He must show by substantial
      evidence that:      (1) he is without fault in creating the overpayment; and
      (2) recovery   of   the   overpayment   would   be   against    equity   and   good
      conscience. 5 U.S.C. § 8470(b); 5 C.F.R. § 845.301; see, e.g., Parker v. Office of
                                                                                         6

      Personnel Management, 75 M.S.P.R. 688, 692 (1997); Sawyer v. Office of
      Personnel Management, 74 M.S.P.R. 527, 530 (1997) Here, the administrative
      judge determined that it was undisputed that the appellant was without fault. ID
      at 8.    Recovery is against equity and good conscience when it would cause
      financial hardship, the annuitant can show that he relinquished a valuable right or
      changed positions for the worse, or recovery would be unconscionable under the
      circumstances. Knox, 107 M.S.P.R. 353, ¶ 8; 5 C.F.R. § 845.303.
¶12           We agree with the administrative judge that, even if the appellant is without
      fault, because he failed to submit evidence to show that repaying the overpayment
      would cause him financial hardship, he failed to show that he is entitled to waiver
      on that basis. We also agree that the appellant failed to show that the fact that he
      used the overpayment in part to pay existing debts, service his roof, and pay
      needed living expenses does not rise to the level necessary to show that he
      changed position for the worse or surrendered a valuable right. We further agree
      that, contrary to the appellant’s assertion on petition for review, OPM informed
      him that it would reduce his FERS disability annuity by the amount to which SSA
      determined that he was entitled as disability payments. IAF, Tab 11 at 17, 34. It
      is unfortunate that the appellant did not read OPM’s notification as leading to the
      calculation of his overpayment using the amount to which the SSA determined he
      was entitled, prior to the reduction to account for his schedule award from the
      OWCP.       Nonetheless, we agree with the administrative judge that OPM’s
      communications with the appellant did not render recovery unconscionable under
      the circumstances.     Accordingly, we affirm OPM’s decision that the appellant
      must repay OPM the overpayment amount of $34,246 in monthly installments of
      $398 plus one installment of $18.
                                                                                        7

                   NOTICE TO THE APPELLANT REGARDING
                      YOUR FURTHER REVIEW RIGHTS
         You have the right to request review of this final decision by the U.S.
Court of Appeals for the Federal Circuit. You must submit your request to the
court at the following address:
                           United States Court of Appeals
                               for the Federal Circuit
                             717 Madison Place, N.W.
                              Washington, DC 20439

The court must receive your request for review no later than 60 calendar days
after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec. 27,
2012). If you choose to file, be very careful to file on time. The court has held
that normally it does not have the authority to waive this statutory deadline and
that filings that do not comply with the deadline must be dismissed. See Pinat v.
Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
         If you need further information about your right to appeal this decision to
court, you should refer to the Federal law that gives you this right. It is found in
title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the United
States     Code,    at   our     website,    http://www.mspb.gov/appeals/uscode.htm.
Additional         information         is         available      at    the         court’s
website, www.cafc.uscourts.gov. Of particular relevance is the court’s “Guide
for Pro Se Petitioners and Appellants,” which is contained within the
court’s Rules of Practice, and Forms 5, 6, and 11.
         If you are interested in securing pro bono representation for an appeal to
the U.S. Court of Appeals for the Federal Circuit, you may visit our website
at   http://www.mspb.gov/probono            for    information   regarding   pro     bono
representation for Merit Systems Protection Board appellants before the Federal
Circuit.                                                                              The
                                                                                  8

Merit Systems Protection Board neither endorses the services provided by any
attorney nor warrants that any attorney will accept representation in a given case.

FOR THE BOARD:                            ______________________________
                                          Jennifer Everling
                                          Acting Clerk of the Board
Washington, D.C.