Court Opinion

ID: 4180933
Source: CourtListenerOpinion
Date Created: 2017-06-26 21:02:46.380723+00
Date Added: 2024-06-11T09:21:44.029291
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     AUDREY D. MCCADNEY,                             DOCKET NUMBER
                  Appellant,                         SF-0845-16-0346-I-1

                  v.

     OFFICE OF PERSONNEL                             DATE: December 27, 2016
       MANAGEMENT,
                   Agency.

             THIS FINAL ORDER IS NONPRECEDENTIAL 1

           Audrey D. McCadney, Inglewood, California, pro se.

           Roxann Johnson, 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) concerning an overpayment. Generally, we grant petitions such as this
     one only when: the initial decision contains erroneous fin dings of material fact;

     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        A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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 id entified by the Board
     as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
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     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 dili gence, 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, w hich is now the Board’s
     final decision. 5 C.F.R. § 1201.113(b).
¶2         The appellant filed an appeal with the Board challenging a reconsideration
     decision by OPM, affirming its initial determination that she received an
     overpayment of disability retirement annuity benefits in the amount of $8,208.74,
     and that recovery of the overpayment would not be agai nst equity and good
     conscience. Initial Appeal File (IAF), Tab 1, Tab 6 at 6, 15, 60. On June 28,
     2010, OPM approved the appellant’s application for disability retirement under
     the Federal Employees’ Retirement System (FERS). IAF, Tab 6 at 28. In the
     approval letter, OPM informed the appellant that her FERS disability benefits for
     the first 12 months would equal 60 percent of her high-3-year average salary
     minus 100 percent of her Social Security benefit for any month that she is entitled
     to Social Security disability benefits. Id. at 62. OPM also stated that, after the
     first year, her disability annuity would be equal to 40 percent of her high-3-year
     average salary minus 60 percent of her Social Security benefit for any month in
     which she was entitled to Social Security disability benefits. Id.
¶3         OPM also advised the appellant to apply for Social Security disability
     benefits and to notify OPM when her application was received and approved. Id.
     at 61. OPM further cautioned the appellant that:
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           FERS disability benefits usually begin before the claim for Social
           Security benefits is fully processed. 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.
     Id. OPM paid the appellant interim annuity payments from July 15, 2010 through
     June 1, 2011. IAF, Tab 6 at 8. The July 15, 2010 check issued by OPM covered
     her annuity payments for the period of October 24, 2009 to June 30, 2010, based
     on an annuity commencement date of September 13, 2009. Id. at 7-8, 19.
¶4         On March 19, 2011, the Social Security Administration (SSA) issued a
     notice of award stating that the appellant was eligible for Social Security
     disability benefits retroactive to July 2009. Id. at 35. Social Security awarded
     the appellant $16,426 for July 2009 through February 2011, and a recurrent
     monthly payment of $1,105 beginning in March 2011. Id. OPM finalized her
     annuity on June 2, 2011, adjusting her annuity to account for the amount of her
     SSA award.    Id. at 9.   On June 7, 2011, OPM notified the appellant that she
     received an annuity overpayment of $8,208.74 and proposed a 36-month
     repayment plan. Id. at 15, 60. OPM stated that the overpayment occurred during
     the period of September 13, 2009 to May 30, 2011, because the appellant’s
     interim annuity payments were not reduced by the applicable SSA deduction
     required by law. Id. at 9, 17.
¶5         The appellant filed a request for reconsideration and waiver on June 17,
     2011, arguing that she did not receive an overpayment because the start date for
     her annuity was incorrect and she was underpaid. IAF, Tab 6 at 13-14. The
     appellant did not base her waiver request on financial hardship.    On July 11,
     2011, OPM responded to her request and confirmed that her last day of pay was
     incorrect. Id. at 59. OPM changed the commencement date for her annuity from
     September 13, 2009 to July 3, 2009, and recalculated her high-3-salary. Id. OPM
     also determined that her annuity should have been higher and authorized a
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     payment of $4,633.87 for direct deposit in her bank account, representing the
     difference in her annuity from July 3, 2009 to June 30, 2011. Id. OPM explained
     that it paid that amount directly to the appellant rather than reducing the
     overpayment because her request for reconsideration was still pending. Id.
¶6         OPM issued a final decision, denying the appellant’s request for
     reconsideration and affirming the existence and amount of her overpayment. Id.
     at 6-11. OPM rejected the appellant’s argument that she remained underpaid and
     found that she was not entitled to a waiver of her overpayment because she was
     required by the principles of equity and good conscious to set aside any
     retroactive payment she received from Social Security to pay any resulting debt
     owed to OPM. Id. OPM also reaffirmed the originally proposed debt collection
     schedule consisting of 36 installments of $228.02 with a final payment of . 02,
     noting that the appellant did not submit evidence of financial hardship. Id. at 10.
¶7         The appellant filed an appeal with the Board arguing that she did not
     receive any annuity overpayment because the agency acknowledged that she was
     in fact underpaid. IAF, Tab 1. After holding a hearing, the administrative judge
     issued an initial decision finding that OPM proved by preponderant evidence the
     existence and amount of the $8,208.74 annuity overpayment to the appellant for
     the period from September 13, 2009 to May 30, 2011.           IAF, Tab 16, Initial
     Decision (ID) at 5-8. The administrative judge found no underpayment remained
     because OPM resolved that issue in 2011 when it corrected the start date for the
     appellant’s annuity and paid her the amount owed because of that mistake,
     leaving unaffected the existence and amount of the annuity overpayment to the
     appellant. ID at 7. The administrative judge also found that the appellant was
     not entitled to a waiver because she was at fault in causing the overpayment.    ID
     at 9-11. The appellant filed a petition for review. Petition for Review (PFR)
     File, Tab 1.
¶8         OPM bears the burden of proving, by preponderant evidence, the existence
     and amount of an annuity overpayment. See 5 C.F.R. § 831.1407(a). If OPM
                                                                                     5

      meets that burden, the appellant bears the burden of proving, by substantial
      evidence, her entitlement to a waiver or adjustment of the overpayment.     See
      5 C.F.R. § 831.1407(b). A waiver may be granted when the annuitant is without
      fault and recovery would be against equity and good conscience. Davis v. Office
      of Personnel Management, 109 M.S.P.R. 48, ¶ 7 (2008). Generally, recovery is
      against equity and good conscience when: it would cause financial hardship; the
      annuitant can show that, because of the overpayment, she relinquished a valuable
      right or changed positions for the worse; or recovery would be unconscionable
      under the circumstances. Id.
      The administrative judge correctly found that OPM proved the existence and
      amount of the overpayment.
¶9          The administrative judge found that OPM correctly determined the amount
      and existence of an overpayment owing to the appellant’s having received
      unreduced interim FERS disability retirement annuity payments during the period
      from September 13, 2009 to May 30, 2011. ID at 7. The appellant argues on
      review that the administrative judge failed to consider a June 2011 letter from
      OPM determining that she was underpaid, and that her underpayment superseded
      the overpayment determination by OPM.             PFR File, Tab 1 at 5.     The
      administrative judge’s failure to mention all of the evidence of record does not
      mean that he did not consider it in reaching his decision. Marques v. Department
      of Health & Human Services, 22 M.S.P.R. 129, 132 (1984), aff’d, 776 F.2d 1062
      (Fed. Cir. 1985) (Table).           As explained in the initial decision by the
      administrative judge, OPM submitted documentation showing that the appellant
      received an annuity overpayment in the amount of $8,208.74 that she is required
      to repay, and there is no outstanding underpayment owed to the appellant. ID
      at 7-8; IAF, Tab 6 at 19, 53, 59.
¶10         In the June 2011 letter to the appellant, OPM determined that it made an
      error in the commencement date for her annuity, which caused an underpayment
      of $4,633.87. ID at 7; IAF, Tab 6 at 19, 53, 59. Rather than deduct that sum
                                                                                      6

      from the previously determined overpayment amount, OPM corrected the error by
      directly paying the appellant $4,633.87, thereby leaving the amount of her
      previously determined overpayment unchanged. IAF, Tab 6 at 53. The appellant
      does not dispute the administrative judge’s finding that she received payment of
      $4,633.87 from OPM, and she submits no new evidence or argument on review
      showing that she remains underpaid. ID at 7.
¶11        Because the appellant also fails to identify any error in the administrative
      judge’s finding that OPM properly determined the existence and amount of the
      overpayment, we affirm the administrative judge’s finding on this issue .      ID
      at 5‑6; see Crosby v. U.S. Postal Service, 74 M.S.P.R. 98, 105-06 (1997) (finding
      no reason to disturb the administrative judge’s findings when she considered the
      evidence as a whole, drew appropriate references, and made reasoned
      conclusions); Broughton v. Department of Health & Human Services, 33 M.S.P.R.
      357, 359 (1987).
      The administrative judge correctly found that the appellant is not entitled to a
      waiver of the overpayment.
¶12        We further find that the administrative judge correctly found that the
      appellant failed to establish her entitlement to a waiver of the overpayment. The
      appellant bears the burden of establishing her 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 2-part test. She must show by substantial evidence that:
      (1) she is without fault in creating the overpayment; and (2) recovery of the
      overpayment would be against equity and good conscience.           See 5 U.S.C.
      § 8470(b); Boone v. Office of Personnel Management, 119 M.S.P.R. 53, ¶ 5
      (2012); 5 C.F.R. § 845.301.
¶13        On review, the appellant argues that OPM is solely at fault in the
      overpayment. PFR File, Tab 5. A recipient of an overpayment is without fault if
      she performed no act of commission or omission that resulted in the overpayment.
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      Vojas v. Office of Personnel Management, 115 M.S.P.R. 502, ¶ 18 (2011);
      5 C.F.R. § 845.302. The pertinent considerations in finding fault are as follows:
      (1) whether payment resulted from the individual’s incorrect, but not necessarily
      fraudulent statement, which she should have known to be incorrect; (2) whether
      payment resulted from the individual’s failure to disclose material facts in her
      possession, which she should have known to be material; or (3) whether she
      accepted a payment which she knew or should have known to be erroneous. Id.
¶14        Applying the factors here, the administrative judge did not find that the
      appellant was at fault because the overpayment resulted from either the first or
      second considerations. The administrative judge, however, determined that the
      appellant was at fault because she accepted a payment which she should have
      known to be erroneous. ID at 9-11. The appellant does not dispute this finding
      on review.
¶15        Specifically, the administrative judge found that the SSA notified the
      appellant on March 19, 2011, that she was entitled to monthly disability benefits
      retroactive to July 2009. Id. at 9. The administrative judge further found that the
      appellant was on notice that she should not cash her checks from SSA absent
      prior adjustment to her FERS annuity, because those checks would be needed to
      pay OPM for the reduction which should have been made in her FERS annuity.
      Id. The administrative judge found no evidence that the appellant did not cash
      her SSA checks while continuing to accept her FERS annuity benefits and the
      appellant submits no such evidence or argument on review . Id. We therefore find
      no reason to disturb the administrative judge’s finding that she accepted a
      payment that she should have known to be erroneous.
¶16        The administrative judge further found that the appellant did not qualify for
      a waiver under the “prompt notification” exception in OPM’s “Policy Guidelines
      on the Disposition of Overpayments under the Civil Service Retirement System
      and Federal Employees’ Retirement System” (Guidelines).         ID at 9-10; IAF,
      Tab 6 at 64-103. The Guidelines dictate that a debtor should be found without
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      fault when the debtor promptly—in general, within 60 days—contacts OPM to
      question the correctness of a payment or to report an overpayment, regardless of
      whether the individual knew or should have known the payment was erroneous.
      ID at 10; IAF, Tab 6 at 76 (Guidelines § I.B.6). The Guidelines also provide that
      claims of contact should be supported by written evidence, or if not, then at least
      a “reasonable and credible description of the asserted contact,” to include the
      OPM employee office or employee contacted and the date of contact. IAF, Tab 6
      at 73 (Guidelines § I.B.8).
¶17        The administrative judge found that the appellant testified that she only
      contacted OPM after she received the notice of overpayment dated June 7, 2011,
      and that contact occurred more than 60 days after SSA had notified her that it was
      paying her disability payments. ID at 10 n.5. He further found that the appellant
      contacted OPM to dispute that she received an overpayment, not to report an
      overpayment.    Id.   The appellant argues on review that she was without fault
      because she promptly requested reconsideration and provided everything OPM
      requested, but she provides no evidence or argument that she contacted OPM to
      question the correctness of a payment or to report an overpayment within the
      specified time period. PFR File, Tab 1 at 5-6. We find that the administrative
      judge correctly determined that the appellant was at fault in creating the
      overpayment because she accepted a payment that she should have known to be
      erroneous and she did not demonstrate good faith by promptly bringing the
      overpayment to OPM’s attention; therefore, she does not qualify for a waiver
      under the “prompt notification” exception. 2 ID at 10-11; IAF, Tab 6 at 72.
¶18        On review, the appellant also argues that recovery of the overpayment
      would be against equity and good conscious because, inter alia, OPM failed to
      issue a final decision within 4 years of her request for reconsideration and waiver,

      2
        The appellant also argued on review that she did not defraud the Government;
      however, the administrative judge did not find that the appellant committed fraud. PFR
      File, Tab 1 at 5.
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and OPM made egregious errors that resulted in her annuity overpayment and
underpayment. 3 Id. at 6. Because we affirm the administrative judge’s finding
that the appellant was at fault in creating the overpayment, we need not address
the appellant’s argument that recovery would be against equity and good
conscience. ID at 11; see Vojas, 115 M.S.P.R. 502, ¶ 18; 5 C.F.R. § 831.1401.
We find that the administrative judge properly weighed the evidence, reached the
correct decision under the law, and issued a well-reasoned decision. We therefore
deny her petition for review. 4

                 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).
3
  According to the Guidelines, “errors or delays by OPM or other F ederal agencies, per
se, do not justify a without-fault finding,” but may be a factor in determining whether it
is against equity and good conscious to recover an overpayment from an individual
found without fault in creating the overpayment. IAF, Tab 6 at 71, 76 (Guidelines
§§ I.B.2, I.C.4).
4
  The administrative judge noted that the appellant did not claim financial hardship or
detrimental reliance while her case was pending before OPM, and she did not seek an
adjustment in the recovery schedule. ID at 11. The appellant does not dispute these
findings on review.
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      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
Merit Systems Protection Board neither endorses the service s 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.