Court Opinion

ID: 3182324
Source: CourtListenerOpinion
Date Created: 2016-03-03 16:02:40.90242+00
Date Added: 2024-06-11T14:28:50.324654
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     RONALD WYLAN GROSS,                             DOCKET NUMBER
                 Appellant,                          AT-0841-14-0988-I-1

                  v.

     OFFICE OF PERSONNEL                             DATE: March 3, 2016
       MANAGEMENT,
                   Agency.

             THIS FINAL ORDER IS NONPRECEDENTIAL 1

           Ronald Wylan Gross, Morristown, Tennessee, 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) finding that he was overpaid $39,497.00 in disability annuity benefits
     under the Federal Employees’ Retirement System (FERS) and was not entitled to

     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        A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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).
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     a waiver of the overpayment. Generally, we grant petitions such as this one only
     when: 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. 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. Except as expressly MODIFIED by this Final Order concerning the
     application of the set-aside rule, we AFFIRM the initial decision.

                                      BACKGROUND
¶2        By letter dated October 21, 2013, OPM informed the appellant that he had
     been overpaid $39,497.00 in FERS disability annuity benefits from August 1,
     2008, through September 30, 2013, caused by his receipt of a retroactive award of
     Social Security Administration (SSA) disability insurance benefits for the same
     time period. Initial Appeal File (IAF), Tab 8 at 17-18. On November 12, 2013,
     the appellant requested reconsideration of the initial decision and a waiver of the
     overpayment.    Id. at 7.   On August 23, 2014, OPM issued a reconsideration
     decision affirming its initial decision and finding that the appellant was not
     entitled to a waiver of the overpayment. Id. at 7-10. OPM’s decision informed
     the appellant that it intended to collect the overpayment in 146 monthly
     installments of $269.42 and 1 installment of $161.68. Id. at 9.
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¶3         The appellant filed an appeal with the Board. IAF, Tab 1. After holding a
     telephonic hearing, 2 the administrative judge issued an initial decision affirming
     OPM’s reconsideration decision and finding that it was undisputed that there was
     an overpayment of $39,497.00.          IAF, Tab 16, Initial Decision (ID) at 1-2.
     Regarding the appellant’s request for a waiver, the administrative judge found
     that the appellant was without fault in the overpayment but that he failed to
     establish that recovery of the overpayment would cause him financial hardship
     because his monthly income exceeded his allowed monthly expenses by $371.21.
     ID at 4-10. In determining the appellant’s monthly expenses, the administrative
     judge excluded $148.52 for DirecTV and $482.00 for charitable donations, which
     she determined were not ordinary and necessary living expenses. ID at 7, 9-10.
¶4         The appellant has filed a petition for review in which he challenges the
     administrative judge’s decision to exclude his expenses for DirecTV and charities
     in determining his ordinary and necessary living expenses. Petition for Review
     (PFR) File, Tab 1 at 1-2. He also argues that his financial situation has changed,
     and he now has additional monthly lawn maintenance expenses.               Id. at 2.   In
     support of his argument, he submits a June 17, 2015 letter from his doctor
     indicating that, as a result of his heart attack, he cannot mow the grass or perform

     2
       A telephonic hearing in this appeal was held on December 17, 2014, ID at 1-2, but we
     are unable to locate the recording of the hearing. Because the administrative judge’s
     findings regarding the appellant’s testimony are not in dispute on petition for review
     and the appellant does not contend that the administrative judge’s characterization of
     his testimony differed from that which he presented at the hearing, we find that the
     regrettable unavailability of the recording has not prejudiced the appellant’s substantive
     rights, and a rehearing is therefore unnecessary. See Harp v. Department of the Army,
     791 F.2d 161, 163 (Fed. Cir. 1986) (finding remand unnecessary where the existing
     record was sufficient to provide meaningful review of the issues raised by the petitioner
     and the petitioner did not allege that any particular testimony was either misconstrued
     by the administrative judge or inconsistent with the record); see also Kemp v.
     Department of Veterans Affairs, 154 F. App’x 912, 914 (Fed. Cir. 2005); Morales v.
     Merit Systems Protection Board, 932 F.2d 800, 802 (9th Cir. 1991); Henderson v.
     Office of Personnel Management, 109 M.S.P.R. 529, ¶ 5 n.1 (2008).
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     any yardwork. Id. at 3. OPM has filed a response in opposition to the appellant’s
     petition. PFR File, Tab 4.

                     DISCUSSION OF ARGUMENTS ON REVIEW
¶5        The appellant has not challenged the administrative judge’s findings on the
     existence or amount of the overpayment, and we affirm those findings. However,
     we construe the appellant’s petition for review as a challenge to the
     administrative judge’s finding that he is not entitled to a waiver of collection of
     the overpayment. PFR File, Tab 1 at 1-2. To be entitled to a waiver, an appellant
     must meet a two-fold test. He must show by substantial evidence that (1) he was
     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); Zucker v.
     Office of Personnel Management, 114 M.S.P.R. 288, ¶ 7 (2010); 5 C.F.R.
     §§ 845.301, .307(b).
¶6        A recipient of an overpayment is without fault if he “performed no act of
     commission or omission that resulted in the overpayment.” 5 C.F.R. § 845.302.
     Generally, recovery is against equity and good conscience when it would cause
     financial hardship from whom it is sought, the recipient can show that, because of
     the overpayment, he relinquished a valuable right or changed positions for the
     worse, or recovery would be unconscionable under the circumstances. 5 C.F.R.
     § 845.303. However, individuals who know or suspect that they are receiving
     overpayments must set aside the amount overpaid pending recoupment. IAF, Tab
     8 at 64, Policy Guidelines on the Disposition of Overpayments under the Civil
     Service Retirement System and Federal Employees’ Retirement System, § I.C.4
     (1995) (Policy Guidelines). When the set-aside rule applies, recovery by OPM is
     not against equity and good conscience and cannot be waived absent exceptional
     circumstances, which do not include financial hardship. Id.; see James v. Office
     of Personnel Management, 72 M.S.P.R. 211, 217 (1996).
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     The administrative judge properly found that the appellant did not show he is
     entitled to a waiver of the overpayment.
¶7         The administrative judge credited the testimony of the appellant and his
     wife that, in February 2010, the appellant notified OPM via mail of his receipt of
     SSA disability benefits in early 2010. ID at 2, 4. Thus, she properly found that
     he was without fault. IAF, Tab 8 at 61, Policy Guidelines, § I.B.6 (providing that
     individuals who accept a payment in excess of the amount to which they are
     entitled automatically will be found without fault, if they promptly contact OPM).
     The administrative judge further credited the appellant’s testimony that he set
     aside the SSA disability benefits for 6 months while he waited for a response
     from OPM, and eventually, after having not heard anything from OPM, he
     assumed it was “a wash” and used the money to pay his bills. ID at 5. As a
     result, the administrative judge determined that the set-aside rule did not apply
     because of extreme delay by OPM and because it was not reasonable to expect the
     appellant to set aside the SSA disability benefits for more than 3½ years after
     notifying OPM of receipt. ID at 4-5.
¶8         Contrary to the analysis in the initial decision, however, the issue of
     whether there was an extreme delay by OPM goes to the question of whether
     exceptional circumstances warrant waiver despite the application of the set-aside
     rule. See James, 72 M.S.P.R. at 219. To the extent the administrative judge erred
     in analyzing this issue as an exception to the application of the set-aside rule, any
     such error did not affect the appellant’s substantive rights because, as set forth
     below, we find that the appellant has not shown exceptional circumstances exist
     to warrant a waiver. See Panter v. Department of the Air Force, 22 M.S.P.R. 281,
     282 (1984) (explaining that an adjudicatory error that is not prejudicial to a
     party’s substantive rights provides no basis for reversal of an initial decision).
¶9         OPM informed the appellant that he was required to notify it of his receipt
     of SSA disability benefits and explained the effect his receipt of such benefits
     would have on his FERS disability annuity. IAF, Tab 8 at 11-13, 15-16. OPM
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      further informed him that, if he were overpaid FERS disability benefits because
      of his receipt of SSA disability benefits, he would be required to repay this
      money to OPM. Id. at 15. The appellant testified that, after receiving the SSA
      disability funds, he set them aside for a period of 6 months while waiting to hear
      from OPM. ID at 5. In light of OPM’s notice and the appellant’s testimony, we
      find that he knew or should have known that he was receiving an overpayment
      because his annuity had not been reduced to account for his SSA benefits.
      Therefore, the set-aside rule applies and the appellant is not entitled to a waiver
      unless he can establish exceptional circumstances exist. 3 James, 72 M.S.P.R. at
      217-19.
¶10         Exceptional circumstances may include, but are not limited to, cases in
      which: (1) there has been an exceptionally lengthy delay by OPM in adjusting an
      annuity; (2) OPM failed to respond within a reasonable length of time to an
      annuitant’s inquiries regarding an overpayment; (3) OPM failed to act
      expeditiously to adjust an annuity in the face of specific notice; or (4) OPM was
      otherwise grossly negligent in handling the case. King v. Office of Personnel
      Management, 114 M.S.P.R. 181, ¶ 20 (2010).            “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.” IAF, Tab 8 at 71, Policy Guidelines,
      § I.F.1.
¶11         Although the administrative judge credited the appellant’s testimony that he
      mailed OPM notification of his receipt of SSA disability benefits in February

      3
        Because the administrative judge improperly determined the set-aside rule did not
      apply, she also analyzed whether the appellant was entitled to waiver of the
      overpayment on the basis of financial hardship. However, as stated above, when the
      set-aside rule applies, recovery is not against equity and good conscience and cannot be
      waived absent exceptional circumstances, which do not include financial hardship.
      IAF, Tab 8 at 64, Policy Guidelines, § I.C.4; see, e.g., Hulvey v. Office of Personnel
      Management, 93 M.S.P.R. 568, ¶ 8 (2003). Because we find that the set-aside rule
      applies, financial hardship is not a basis for waiver.
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      2010, OPM maintained that it did not receive such notice and that it only learned
      of the appellant’s receipt of benefits through SSA at some later date. ID at 4;
      IAF, Tab 8 at 7. An adjustment to the appellant’s annuity was not made until
      October 1, 2013. IAF, Tab 8 at 7.
¶12         Further, the appellant does not appear to contend and we do not find that
      OPM failed to respond within a reasonable length of time to his inquiries
      regarding the overpayment or otherwise was grossly negligent in handling the
      case. The record reflects that the appellant requested a waiver on November 12,
      2013, and OPM issued a reconsideration decision on August 23, 2014.              IAF,
      Tab 8 at 7. We find that the 9-month delay is not egregious. IAF, Tab 8 at 64,
      Policy Guidelines, § I.C.4 (stating exceptional circumstances would involve
      extremely egregious errors or delays by OPM, such as failure to issue a written
      decision within 4 years of a request for waiver). Accordingly, we find that the
      appellant is not entitled to a waiver.

      The appellant has not shown the current recovery schedule would cause him
      financial hardship.
¶13         Although the appellant does not specifically request an adjustment of the
      payment schedule, his arguments concerning his financial situation and the
      disallowance of certain expenses may be so construed. PFR File, Tab 1 at 1-2.
      Even if an appellant is not entitled to a waiver of recovery of the overpayment, he
      is entitled to an adjustment of OPM’s recovery schedule when he shows that
      recovery under that schedule would cause him a financial hardship. 4 Wagner v.
      Office of Personnel Management, 83 M.S.P.R. 355, ¶ 6 (1999); 5 C.F.R.
      § 845.301. OPM’s regulations provide that financial hardship may be deemed to
      exist when the annuitant “needs substantially all of his or her current income and
      liquid assets to meet current ordinary and necessary living expenses and

      4
        A showing of financial hardship warranting an adjustment in the recovery schedule is
      a lesser showing than the showing that would justify a waiver of the recovery of the
      overpayment. Conway v. Office of Personnel Management, 56 M.S.P.R. 82, 86 (1992).
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      liabilities.” 5 C.F.R. § 845.304. Ordinary and necessary living expenses include
      rent, mortgage payments, utilities, maintenance, transportation, food, clothing,
      insurance (life, health, and accident), taxes, installment payments, medical
      expenses, support expenses for which the annuitant is legally responsible, and
      other miscellaneous expenses that the individual can establish are “ordinary and
      necessary.” 5 C.F.R. § 845.305.
¶14        On review, the appellant challenges the administrative judge’s decision to
      exclude his expenses for DirecTV and charitable donations in determining his
      ordinary and necessary living expenses. PFR File, Tab 1 at 1. OPM’s Policy
      Guidelines, however, state that ordinary and necessary living expenses do not
      include charitable contributions in most circumstances. IAF, Tab 8 at 66, Policy
      Guidelines, § I.D.7. Therefore, we agree with the administrative judge that the
      appellant’s donations are not ordinary and necessary living expenses and should
      be suspended during the period of repayment.
¶15        The appellant also argues that, after finding television expenses beyond
      basic cable are not ordinary and necessary living expenses, the administrative
      judge deducted $148.42 for DirecTV, but improperly failed to add in $70 for
      basic cable. PFR File, Tab 1 at 1. We disagree. The record reflects that the
      administrative judge allowed a total of $600.84 in utility expenses, including
      $23.48 for water, $313.99 for electric, $108.12 for basic television and expanded
      basic television, internet, and phone services, and $155.25 for AT&T wireless
      charges.   ID at 7; see IAF, Tab 9 at 11-15.     Thus, the administrative judge
      allowed expenses for basic cable and deducted only DirecTV expenses.
¶16        Based on the information submitted by the appellant, the administrative
      judge properly calculated the appellant’s gross monthly income to be $5,906.00
      and his approved expenses to be $5,534.79, leaving a monthly surplus of $371.21.
      ID at 6, 10. The administrative judge also found that the appellant did not have
      any savings or liquid assets. ID at 10. Although we find that the appellant’s
      expenses were correctly calculated based on information he submitted to the
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      administrative judge, on petition for review, he indicates that he may have new
      maintenance expenses as a result of his heart condition, which now prevents him
      from doing yard work.     PFR File, Tab 1 at 2-3.     Because it appears that the
      appellant learned of this on June 17, 2015, after the administrative judge issued
      the initial decision in this case, we will consider this evidence on review.
      5 C.F.R. § 1201.115(d); see Avansino v. U.S. Postal Service, 3 M.S.P.R. 211, 214
      (1980) (holding that the Board will not consider evidence submitted for the first
      time with the petition for review absent a showing that it was unavailable before
      the record was closed despite the party’s due diligence).
¶17        The appellant attaches estimate quotes from several companies for mowing
      and yard services, ranging from $75 per mowing service to $210-300 per month,
      depending on the nature and frequency of the services. PFR File, Tab 1 at 4-5.
      We find such information alone insufficient to establish financial hardship to the
      extent the appellant has not explained the nature and frequency of services
      needed.   The appellant’s monthly income/expense ratio is $371.21.      ID at 10.
      After payment of the $269.42 monthly installment, the appellant still has a
      monthly income surplus of $101.79 to utilize for lawn services. Thus, assuming
      without deciding that such expenses are ordinary and necessary, we find the
      appellant has not shown financial hardship warrants an adjustment of the
      repayment schedule. However, the appellant may submit a mid-collection request
      to OPM where his living expenses may be reexamined if his yard maintenance or
      other unanticipated expenses overwhelm his ability to meet ordinary and
      necessary living expenses. IAF, Tab 8 at 87, Policy Guidelines, § V.F.5; see also
      Martin v. Office of Personnel Management, 49 M.S.P.R. 134, 138–39 (1991)
      (finding that, should the appellant’s financial condition change and his expenses
      prove overwhelming due to unanticipated medical expenses, he could make a
      mid-collection request to OPM for lower payments, compromise, suspension, or
      write off, as provided for by OPM’s Policy Guidelines), aff’d, 960 F.2d 156 (Fed.
      Cir. 1992) (Table).
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      The administrative judge did not abuse her discretion concerning closing
      arguments.
¶18        Finally, the appellant argues that the administrative judge erred by excusing
      the untimeliness of the agency’s closing argument.         PFR File, Tab 1 at 1.
      Although the agency’s closing argument does appear to have been untimely filed,
      IAF, Tab 14 at 6, the appellant has not shown that the administrative judge
      abused her discretion in accepting OPM’s closing argument or that he was
      prejudiced by OPM’s late filing, see Panter, 22 M.S.P.R. at 282.

                      NOTICE TO THE APPELLANT REGARDING
                         YOUR FURTHER REVIEW RIGHTS
            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 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
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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 services provided by any
attorney nor warrants that any attorney will accept representation in a given case.

FOR THE BOARD:                            ______________________________
                                          William D. Spencer
                                          Clerk of the Board
Washington, D.C.