Court Opinion

ID: 9949792
Source: CourtListenerOpinion
Date Created: 2024-03-12 17:00:32.070265+00
Date Added: 2024-06-11T14:33:38.474634
License: Public Domain

UNITED STATES OF AMERICA
                    MERIT SYSTEMS PROTECTION BOARD

    KARISSA RUND,                                DOCKET NUMBER
                     Appellant,                  DE-0845-19-0254-I-1

               v.

    OFFICE OF PERSONNEL                          DATE: March 11, 2024
      MANAGEMENT,
                  Agency.

         THIS FINAL ORDER IS NONPRECEDENTIAL 1

        Douglas J. Rund , Englewood, Colorado, for the appellant.

        Carla Robinson , Washington, D.C., for the agency.

                                      BEFORE

                          Cathy A. Harris, Vice Chairman
                           Raymond A. Limon, Member

                                  FINAL ORDER

        The appellant has filed a petition for review of the initial decision, which
affirmed the reconsideration decision of the Office of Personnel Management
(OPM) finding that she had been overpaid annuity benefits under the Federal
Employees’ Retirement System (FERS) and that she did not qualify for a waiver
of the overpayment. Generally, we grant petitions such as this one only in the

1
   A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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

following circumstances:     the initial decision contains erroneous findings of
material fact; the initial decision is based 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.         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. Except as expressly MODIFIED to
find that further reduction of the recovery schedule is appropriate, we AFFIRM
the initial decision.

                                 BACKGROUND
      Following the appellant’s diagnosis of recurrent, stage IV colon cancer, she
applied for a Federal Employees’ Retirement System (FERS) disability retirement
annuity, and OPM granted her application on March 23, 2018. Initial Appeal File
(IAF), Tab 10 at 56. On April 27, 2018, OPM issued the appellant an interim
payment of $15,235.84. 2     Id. at 25-26.   On June 16, 2018, OPM notified the
appellant that it had overpaid her by $18,093.62, 3 indicating that her interim
payment exceeded the amount due and thus caused the overpayment. Id. at 27-28.
The notice set forth a repayment schedule of 36 installments in the amount of

2
  This amount represents a gross payment of $18,700.00 for the period from June 1,
2017, to April 30, 2018, less $3,464.16 in Federal income tax, for a net payment of
$15,235.84. IAF, Tab 10 at 25.
3
  This amount represents gross interim payments of $20,400.00 ($18,700.00 for the
period from June 1, 2017 to April 30, 2018 plus $1,700.00 for the period June 1, 2018,
to June 30, 2018) less the $2,306.38 net accrued annuity due to the appellant for
April 21 to May 30, 2018. IAF, Tab 10 at 6.
                                                                                   3

$502.60, with a final installment of $0.02. Id. at 28. The appellant requested that
OPM reconsider its decision regarding the existence and amount of the
overpayment and OPM issued a final reconsideration decision affirming its initial
decision, including the repayment schedule. Id. at 5-7, 23.
      The appellant subsequently filed the instant appeal.        IAF, Tab 1.    The
administrative judge held a hearing and affirmed OPM’s reconsideration decision.
IAF, Tab 43, Initial Decision (ID).      She found that OPM established that it
overpaid the appellant by $18,093.62, as the result of a gross payment of
$20,400.00 less the appellant’s net entitlement of $2,306.38.       ID at 5-6.   The
parties do not challenge this finding and we discern no basis to disturb it.
      The administrative judge next found that the appellant had not met her
burden to have the overpayment waived. ID at 6. First, he determined that the
appellant established that she was without fault in receiving the overpayment. ID
at 6-8. Nevertheless, the administrative judge determined that the appellant failed
to meet her burden to demonstrate that recovery of the overpayment would be
against equity and good conscience because the set-aside rule required her to set
the overpayment amount aside pending recoupment by OPM. ID at 9-15. Lastly,
the administrative judge determined that the appellant failed to meet her burden
to establish that she was entitled to an adjustment to OPM’s repayment schedule
of 36 installments in the amount of $502.60, with a final installment of $0.02. ID
at 15-23.
      In her petition for review, the appellant challenges the administrative
judge’s finding that recovery of the overpayment was not against equity and good
conscience. Petition for Review (PFR) File, Tab 1 at 4. She also argues that the
administrative judge improperly based his determination that OPM’s repayment
schedule would not cause financial hardship on her non-liquid assets. Id. at 4-5;
see 5 C.F.R. § 845.301(b). OPM has filed a response to the appellant’s petition
for review. PFR File, Tab 4.
                                                                                   4

                  DISCUSSION OF ARGUMENTS ON REVIEW
         The appellant bears the burden of establishing her entitlement to a waiver
of recovery of the overpayment by substantial evidence.         Boone v. Office of
Personnel Management, 119 M.S.P.R. 53, ¶ 5 (2012). Generally, the recovery of
a FERS overpayment should be waived if the recipient is without fault and
recovery would be against equity and good conscience.            Id.; see 5 U.S.C.
§ 8470(b); 5 C.F.R. § 845.301. Recovery is against equity and good conscience
when it would cause financial hardship, the annuitant can show that she
relinquished a valuable right or changed positions for the worse, or recovery
would be unconscionable under the circumstances. Boone, 119 M.S.P.R. 53, ¶ 5;
5 C.F.R. § 845.303. However, individuals who suspect that they have received an
overpayment are expected to set aside the amount overpaid pending recoupment,
and, in the absence of exceptional circumstances, which do not include financial
hardship, recovery of the overpayment in such cases is not against equity and
good conscience. Boone, 119 M.S.P.R. 53, ¶ 6.

The administrative judge correctly found that recovery of the overpayment is not
against equity and good conscience .
         As noted above, the appellant challenges the administrative judge’s finding
that recovery of the overpayment is not against equity and good conscience. PFR
File, Tab 1 at 4-5. For the following reasons, we agree with the administrative
judge.
         The administrative judge found that the appellant was without fault. ID
at 6-9. In doing so, he relied on OPM’s Overpayment Policy Guidelines 4 (OPM
Guidelines), which provide, in pertinent part, that an individual is not without
fault if she accepted a payment which she knew to be erroneous. ID at 7; IAF,
Tab 13 at 11. He found that the appellant’s passive receipt of the payment did not
indicate that she “accepted” the payment in any meaningful sense. ID at 7-8.
The administrative judge also declined to find that the appellant “should have

4
    IAF, Tab 13, OPM Overpayment Policy Guidelines (1995).
                                                                                 5

known” that the payment was erroneous before she received OPM’s notice of the
overpayment. ID at 8.
      However, he also found that the set-aside rule applied because the appellant
was either aware or reasonably should have suspected that the interim payment
was erroneous no later than the date that she received OPM’s overpayment notice,
which the administrative judge found was no later than July 13, 2018.          ID
at 10-11; Boone, 119 M.S.P.R. 53, ¶ 6. The administrative judge determined that
the appellant’s subsequent attempt to call OPM demonstrated that she at least
suspected that the payment was erroneous, and that under those circumstances,
the principles of equity and good conscience obligated her to set the overpayment
aside pending recoupment by OPM. ID at 10-11; Boone, 119 M.S.P.R. 53, ¶ 6.
The administrative judge further found no exceptional circumstances, i.e., no
extremely egregious errors or delays by OPM, that would exempt the appellant
from the consequences of the set-aside rule and entitle her to a waiver of the
repayment. ID at 11-14; Boone, 119 M.S.P.R. 53, ¶ 6.
      On review, the appellant does not challenge the administrative judge’s
finding that she was aware of the overpayment by at least July 13, 2018, and that
she therefore should have set the overpayment amount aside pending recoupment
by OPM. When the set-aside rule applies, as we agree it does here, financial
hardship is not considered an exceptional circumstance that would preclude the
collection of an overpayment.      Boone, 119 M.S.P.R. 53, ¶¶ 5-6.      Thus, the
appellant’s financial hardship does not make OPM’s collection of the
overpayment against equity and good conscience. ID at 10-15.

The appellant is entitled to a reduction in the repayment schedule .
      The administrative judge found that the appellant’s monthly household
expenses exceeded her gross monthly household income by $242.78. ID at 21. In
arriving at that number, the administrative judge made several modifications to
the appellant’s claimed expenses and OPM’s adjustments to them. ID at 16-21.
Neither party challenges the administrative judge’s findings concerning the
                                                                                      6

amount of the appellant’s gross income or monthly household expenses.
However, in considering the appellant’s monthly expenses, the administrative
judge failed to consider that, according to OPM’s Policy Guidelines, repayment
of the overpayment is an expense. Russell v. Office of Personnel Management,
69 M.S.P.R. 125, 128 (1995); see OPM Guidelines, § I–D–9, IAF, Tab 13 at 18.
When the $502.60 monthly repayment amount is added to the appellant’s average
monthly household expenses, those expenses exceed her gross monthly household
income by $745.38.
      In her petition for review, the appellant argues that the administrative judge
erred in considering non-liquid assets in determining that the repayment schedule
would not be a financial hardship.       PFR File, Tab 1 at 4.     The administrative
judge declined to modify the repayment schedule because, among other things, he
found that the appellant’s assets, both liquid and non-liquid, were substantial,
observing that the appellant’s Financial Resources Questionnaire reported
$11,368.15 in liquid assets, 5 as well as $120,411.00 in her husband’s individual
retirement account, three cars valued at a total of $23,800.00, and a paid -off home
valued at $330,000.00. ID at 22; IAF, Tab 10 at 13. The administrative judge
further found that the appellant had converted liquid assets to non-liquid assets
after she received OPM’s overpayment notice, crediting the appellant’s
explanation that she used $4,278.28 out of the $15,235.84 post-tax overpayment
to help pay off her mortgage, $4,021.60 to pay a medical bill, and the remainder
to pay tax bills caused by the withdrawal of her Thrift Savings Plan (TSP) and to
pay off her house. 6 ID at 22; IAF, Tab 19 at 6-7. Because the appellant could
have instead used existing assets and set the disputed funds aside pending
5
  OPM’s guidelines suggest that, as a general rule, $5,000.00 of liquid assets should
generally be considered available in making a financial hardship determination, and
therefore be exempt from recovery. OPM Guidelines, § I-D-9, IAF, Tab 13 at 17;
Martin v. Office of Personnel Management, 49 M.S.P.R. 134, 138 (1991), aff’d per
curiam, 960 F.2d 156 (Fed. Cir. 1992). However, it may be appropriate to protect more
than $5,000.00 if the debtor’s expenses, as here, exceed her income and the debtor has
significant current liabilities not reflected in expenses. OPM Guidelines, § I-D-9, IAF,
Tab 13 at 17.
                                                                                        7

resolution of the overpayment, the administrative judge found that the appellant’s
request to waive recovery was contrary to the set-aside rule and general principles
of equity.    ID at 22.     The administrative judge declined to reduce OPM’s
repayment schedule, finding that the appellant did not need substantially all of
her income and current assets to meet her monthly expenses. ID at 22-23.
      Nevertheless, to the extent that the administrative judge considered the
appellant’s assets in analyzing financial hardship, such assets are not relevant to
the appropriateness of the repayment schedule. Pierotti v. Office of Personnel
Management, 124 M.S.P.R. 103, ¶ 14 (2016) (explaining that the Board’s
hardship analysis, in considering a collection schedule established by OPM, is
income-based and not asset-based). When, as here, an annuitant is ineligible for a
waiver of an overpayment but her monthly expenses exceed her monthly income,
an adjustment of the recovery schedule is appropriate.              Stone v. Office of
Personnel Management, 55 M.S.P.R. 657, 661 (1992).                As noted above, the
record shows that the appellant’s monthly household expenses exceed her gross
monthly household income. ID at 21. Thus, the appellant needs all of her current
income to meet her current ordinary and necessary living expenses, and collection
of the overpayment at the repayment schedule of $502.60 per month would cause
her financial hardship. Pierotti, 124 M.S.P.R. 103, ¶ 12.
      Accordingly, we modify the repayment schedule to $5.00 per month. 7 Id.;
Knox v. Office of Personnel Management, 107 M.S.P.R. 353, ¶¶ 12-13 (2007)

6
  The appellant explained below that the net proceeds from the withdrawal from her
TSP were $81,632.46 and that, as a result of the TSP withdrawal, the household owed
an additional $6,308.00 in Federal income tax and $5,798.00 in state income tax,
payments for which came from their emergency funds. IAF, Tab 19 at 6-7, 23-24.
7
  OPM has advised the Board that it may seek recovery of any debt remaining upon your
death from your estate or other responsible party. A party responsible for any debt
remaining upon your death may include an heir (spouse, child or other) who is deriving
a benefit from your Federal benefits, an heir or other person acting as the representative
of your estate if, for example, the representative fails to pay the United States before
paying the claims of other creditors in accordance with 31 U.S.C. § 3713(b), or
transferees or distribute[r]s of your estate. See Pierotti, 124 M.S.P.R. 103, ¶ 13.
                                                                                    8

(reducing OPM’s repayment schedule to $5.00 per month because the appellant’s
expenses exceeded her income); Dorrello v. Office of Personnel Management,
91 M.S.P.R. 535, ¶ 10 (2002) (same); Matthews v. Office of Personnel
Management, 85 M.S.P.R. 531, ¶ 11 (2000) (same).

                                      ORDER
      We ORDER the Office of Personnel Management (OPM) to reduce the
appellant’s repayment schedule to a rate of $5.00 per month.             OPM must
complete this action no later than 20 days after the date of this decision.
      We also ORDER OPM to tell the appellant promptly in writing when it
believes it has fully carried out the Board’s Order and of the actions it has taken
to carry out the Board’s Order. We ORDER the appellant to provide all necessary
information OPM requests to help it carry out the Board’s Order. The appellant,
if not notified, should ask OPM about its progress. See 5 C.F.R. § 1201.181(b).
      No later than 30 days after OPM tells the appellant it has fully carried out
the Board’s Order, the appellant may file a petition for enforcement with the
office that issued the initial decision on this appeal if the appellant believes that
OPM did not fully carry out the Board’s Order.         The petition should contain
specific reasons why the appellant believes OPM has not fully carried out the
Board’s Order, and should include the dates and results of any communications
with OPM. See 5 C.F.R. § 1201.182(a).

                NOTICE TO THE APPELLANT REGARDING
                      YOUR RIGHT TO REQUEST
                     ATTORNEY FEES AND COSTS
      You may be entitled to be paid by the agency for your reasonable attorney
fees and costs. To be paid, you must meet the requirements set out at Title 5 of
the United States Code (5 U.S.C.), sections 7701(g), 1221(g), or 1214(g). The
regulations may be found at 5 C.F.R. §§ 1201.201, 1201.202, and 1201.203. If
you believe you meet these requirements, you must file a motion for attorney fees
                                                                                      9

and costs WITHIN 60 CALENDAR DAYS OF THE DATE OF THIS DECISION.
You must file your motion for attorney fees and costs with the office that issued
the initial decision on your appeal.

                         NOTICE OF APPEAL RIGHTS 8
      The initial decision, as supplemented by this Final Order, constitutes the
Board’s final decision in this matter.      5 C.F.R. § 1201.113.      You may obtain
review of this final decision. 5 U.S.C. § 7703(a)(1). By statute, the nature of
your claims determines the time limit for seeking such review and the appropriate
forum with which to file. 5 U.S.C. § 7703(b). Although we offer the following
summary of available appeal rights, the Merit Systems Protection Board does not
provide legal advice on which option is most appropriate for your situation and
the rights described below do not represent a statement of how courts will rule
regarding which cases fall within their jurisdiction. If you wish to seek review of
this final decision, you should immediately review the law applicable to your
claims and carefully follow all filing time limits and requirements. Failure to file
within the applicable time limit may result in the dismissal of your case by your
chosen forum.
      Please read carefully each of the three main possible choices of review
below to decide which one applies to your particular case. If you have questions
about whether a particular forum is the appropriate one to review your case, you
should contact that forum for more information.

      (1) Judicial review in general . As a general rule, an appellant seeking
judicial review of a final Board order must file a petition for review with the U.S.
Court of Appeals for the Federal Circuit, which must be received by the court
within 60 calendar days of the date of issuance of this decision.             5 U.S.C.
§ 7703(b)(1)(A).
8
  Since the issuance of the initial decision in this matter, the Board may have updated
the notice of review rights included in final decisions. As indicated in the notice, the
Board cannot advise which option is most appropriate in any matter.
                                                                                      10

      If you submit a petition for review to the U.S. Court of Appeals for the
Federal   Circuit,   you   must   submit   your   petition    to   the   court   at   the
following address:
                              U.S. Court of Appeals
                              for the Federal Circuit
                             717 Madison Place, N.W.
                             Washington, D.C. 20439

      Additional information about the U.S. Court of Appeals for the Federal
Circuit 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, 10, 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
Board neither endorses the services provided by any attorney nor warrants that
any attorney will accept representation in a given case.

      (2) Judicial   or    EEOC    review    of   cases      involving   a   claim     of
discrimination . This option applies to you only if you have claimed that you
were affected by an action that is appealable to the Board and that such action
was based, in whole or in part, on unlawful discrimination. If so, you may obtain
judicial review of this decision—including a disposition of your discrimination
claims —by filing a civil action with an appropriate U.S. district court ( not the
U.S. Court of Appeals for the Federal Circuit), within 30 calendar days after you
receive this decision.      5 U.S.C. § 7703(b)(2); see Perry v. Merit Systems
Protection Board, 582 U.S. 420 (2017). If you have a representative in this case,
and your representative receives this decision before you do, then you must file
with the district court no later than 30 calendar days after your representative
receives this decision. If the action involves a claim of discrimination based on
                                                                                11

race, color, religion, sex, national origin, or a disabling condition, you may be
entitled to representation by a court-appointed lawyer and to waiver of any
requirement of prepayment of fees, costs, or other security.        See 42 U.S.C.
§ 2000e-5(f) and 29 U.S.C. § 794a.
      Contact information for U.S. district courts can be found at their respective
websites, which can be accessed through the link below:
      http://www.uscourts.gov/Court_Locator/CourtWebsites.aspx .
      Alternatively, you may request review by the Equal Employment
Opportunity Commission (EEOC) of your discrimination claims only, excluding
all other issues . 5 U.S.C. § 7702(b)(1). You must file any such request with the
EEOC’s Office of Federal Operations within 30 calendar days after you receive
this decision. 5 U.S.C. § 7702(b)(1). If you have a representative in this case,
and your representative receives this decision before you do, then you must file
with the EEOC no later than 30 calendar days after your representative receives
this decision.
      If you submit a request for review to the EEOC by regular U.S. mail, the
address of the EEOC is:
                            Office of Federal Operations
                     Equal Employment Opportunity Commission
                                  P.O. Box 77960
                             Washington, D.C. 20013

      If you submit a request for review to the EEOC via commercial delivery or
by a method requiring a signature, it must be addressed to:
                            Office of Federal Operations
                     Equal Employment Opportunity Commission
                                 131 M Street, N.E.
                                   Suite 5SW12G
                             Washington, D.C. 20507

      (3) Judicial     review   pursuant   to   the   Whistleblower    Protection
Enhancement Act of 2012 . This option applies to you only if you have raised
claims of reprisal for whistleblowing disclosures under 5 U.S.C. § 2302(b)(8) or
                                                                                     12

other protected activities listed in 5 U.S.C. § 2302(b)(9)(A)(i), (B), (C), or (D).
If so, and your judicial petition for review “raises no challenge to the Board’s
disposition of allegations of a prohibited personnel practice described in
section 2302(b) other than practices described in section 2302(b)(8), or
2302(b)(9)(A)(i), (B), (C), or (D),” then you may file a petition for judicial
review either with the U.S. Court of Appeals for the Federal Circuit or any court
of appeals of competent jurisdiction. 9 The court of appeals must receive your
petition for review within 60 days of the date of issuance of this decision.
5 U.S.C. § 7703(b)(1)(B).
      If you submit a petition for judicial review to the U.S. Court of Appeals for
the Federal Circuit, you must submit your petition to the court at the
following address:
                              U.S. Court of Appeals
                              for the Federal Circuit
                             717 Madison Place, N.W.
                             Washington, D.C. 20439

      Additional information about the U.S. Court of Appeals for the Federal
Circuit 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, 10, 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

9
   The original statutory provision that provided for judicial review of certain
whistleblower claims by any court of appeals of competent jurisdiction expired on
December 27, 2017. The All Circuit Review Act, signed into law by the President on
July 7, 2018, permanently allows appellants to file petitions for judicial review of
MSPB decisions in certain whistleblower reprisal cases with the U.S. Court of Appeals
for the Federal Circuit or any other circuit court of appeals of competent jurisdiction.
The All Circuit Review Act is retroactive to November 26, 2017. Pub. L. No. 115-195,
132 Stat. 1510.
                                                                           13

Board neither endorses the services provided by any attorney nor warrants that
any attorney will accept representation in a given case.
      Contact information for the courts of appeals can be found at their
respective websites, which can be accessed through the link below:
      http://www.uscourts.gov/Court_Locator/CourtWebsites.aspx .

FOR THE BOARD:                        ______________________________
                                      Gina K. Grippando
                                      Clerk of the Board
Washington, D.C.