Court Opinion

ID: 2765108
Source: CourtListenerOpinion
Date Created: 2014-12-30 01:00:19.224663+00
Date Added: 2024-06-11T11:14:11.070999
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     STEPHEN M. MULICH,                              DOCKET NUMBER
                  Appellant,                         DC-0845-13-0477-I-1

                  v.

     OFFICE OF PERSONNEL                             DATE: December 29, 2014
       MANAGEMENT,
                   Agency.

             THIS FINAL ORDER IS NONPRECEDENTIAL 1

           Melinda N. Mulich, Huntersville, North Carolina, for the appellant.

           Kristine Prentice, Washington, D.C., for the agency.

                                           BEFORE

                              Susan Tsui Grundmann, Chairman
                              Anne M. Wagner, Vice Chairman
                                 Mark A. Robbins, Member

                                       FINAL ORDER

¶1         The appellant has filed a petition for review of the initial decision, which
     affirmed the Office of Personnel Management’s (OPM’s) reconsideration decision
     finding that he received an annuity overpayment and found that he established his
     entitlement to a waiver of the overpayment. For the reasons discussed below, we

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        A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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

     GRANT the appellant’s petition for review and AFFIRM the initial decision AS
     MODIFIED.       Except as expressly modified by this Final Order, the initial
     decision is the Board’s final decision.
¶2         On March 21, 2013, OPM issued a reconsideration decision affirming its
     finding that, between November 2010 and July 2012, the appellant was overpaid
     $11,701.61 in disability annuity benefits under the Federal Employees’
     Retirement System (FERS). Initial Appeal File (IAF), Tab 14 at 7-10. OPM paid
     the appellant interim payments while it processed his disability retirement
     application. See id. at 7-8. In calculating the appellant’s regular annuity, OPM
     concluded that he was due payment for his accrued annuity but that he owed
     health and life insurance premiums, which resulted in an overpayment because
     the interim payments he received exceeded the amount he was owed after the
     deduction of health and life insurance premiums.                Id. at 8-9.      In its
     reconsideration decision, OPM also denied the appellant’s request for a waiver of
     the overpayment but agreed to collect the overpayment in 234 monthly
     installments. Id. at 9.
¶3         The   appellant     filed   an   appeal   with   the   Board   regarding   OPM’s
     reconsideration decision, alleging that: (1) he did not receive an overpayment
     and, to the contrary, OPM underpaid him; and (2) if an overpayment did occur, he
     was entitled to a waiver of the overpayment. IAF, Tab 1. He requested a hearing
     but subsequently withdrew that request. IAF, Tab 1 at 2, Tab 17 at 1.
¶4         The administrative judge issued an initial decision based on the written
     record. IAF, Tab 23, Initial Decision (ID). She found that: (1) OPM established
     the existence and amount of the alleged overpayment by preponderant evidence;
     (2) the appellant was without fault in the overpayment; (3) the appellant
     established that he was entitled to a waiver because recovery of the overpayment
     would cause him financial hardship but not based on detrimental reliance or
     unconscionability; and (4) the set-aside rule did not preclude waiver. ID.
                                                                                    3

¶5         The appellant, but not OPM, has filed a petition for review of the initial
     decision. Petition for Review (PFR) File, Tab 1. In his petition for review, the
     appellant contends that OPM failed to prove the existence and amount of the
     alleged overpayment. Id. at 5, 8-9. He states that OPM failed to explain how it
     calculated his high-three salary, specifically, what information it used for that
     calculation, and also failed to identify the figures it used to account for
     cost-of-living adjustments (COLAs). Id. at 9. He also states that OPM may have
     improperly withheld social security wages from his annuity, even though he is not
     entitled to, and does not receive, such benefits. Id. at 8-9.

     OPM proved the existence and amount of the alleged overpayment.
¶6         OPM bears the burden of proving the existence and amount of an annuity
     overpayment by preponderant evidence.             Vojas v. Office of Personnel
     Management, 115 M.S.P.R. 502, ¶ 10 (2011); 5 C.F.R. § 845.307(a).            The
     administrative judge found that OPM satisfied this burden. In so finding, she
     relied on a computer printout OPM provided documenting the interim payments
     made to the appellant, as well as OPM’s reconsideration decision, which set forth
     the interim payments made to the appellant, the required deductions for health
     and life insurance premiums, and the amount of the alleged overpayment. ID at
     5; see IAF, Tab 14 at 7-10, 23-24. She found no error in OPM’s calculations
     because the appellant did “not provide[ ] any probative evidence of the alleged
     miscalculation of the overpayment.” ID at 5.
¶7         We disagree with the administrative judge’s finding that OPM’s evidence
     sufficed to establish by preponderant evidence the existence and amount of the
     alleged overpayment. As the appellant correctly points out on review, OPM did
     not specify the high-three salary it used to determine the amount of accrued
     annuity due, or explain how it calculated the high-three salary used. OPM failed
     to identify the formula it used to calculate the appellant’s annuity. OPM also
     failed to indicate whether it applied a COLA after the appellant’s first year of
     annuity. See 5 C.F.R. § 841.703(e). Moreover, OPM’s reconsideration decision
                                                                                            4

     stated, “The amount you were paid in estimated interim payments exceeded the
     correct amount of regular annuity which had accrued. Interim payments had not
     been reduced for Social Security Disability Insurance [(SSDI)] Benefit.” IAF,
     Tab 14 at 7. It thus appeared that OPM’s annuity calculation included an offset
     for SSDI benefits, but OPM provided no evidence that the appellant was entitled
     to SSDI benefits and, to the extent that OPM reduced the appellant’s annuity
     based on his alleged entitlement to SSDI benefits, it did not set forth the amount
     of the SSDI benefits to which the appellant was purportedly entitled, as
     determined by the Social Security Administration (SSA). 2                   See 5 U.S.C.
     § 8452(a)(2)(A);      see     also     Brashears      v.    Office     of      Personnel
     Management, 30 M.S.P.R. 250, 251-52 (1986) (affirming the administrative
     judge’s finding that OPM failed to prove its claim that the appellant was overpaid
     as a result of its failure to reduce his annuity due to his eligibility for social
     security benefits because OPM did not establish that he was eligible for social
     security benefits during the relevant time period, notably failing to explain or
     attempt to correct the absence in the record of a completed form from SSA
     certifying the appellant’s initial eligibility for benefits). In short, OPM did not
     provide sufficient information for the administrative judge to conclude that its
     annuity calculation was correct. We therefore MODIFY the initial decision in
     that regard.
¶8         Because the record was not sufficiently developed for us to determine
     whether OPM’s annuity calculation was correct, we ordered OPM to submit
     evidence on the aforementioned issues and also ordered the appellant to file a
     response to OPM’s submission. PFR File, Tab 13. After reviewing the parties’

     2
       The appellant asserted below that he did not receive any SSDI benefits. IAF, Tab 15
     at 18. We note that it is not relevant whether the appellant actually received social
     security benefits because OPM is required to reduce an appellant’s FERS annuity based
     on his entitlement to, rather than actual receipt of, social security benefits. Cohron v.
     Office of Personnel Management, 96 M.S.P.R. 466, ¶ 12 (2004).
                                                                                           5

      responses to our order, we find that OPM has properly calculated the appellant’s
      annuity and proved that an overpayment occurred. 3
¶9          As an initial matter, we note that OPM provided information regarding its
      calculation of the appellant’s annuity through August 30, 2014. PFR File, Tab 14
      at 9-11.     However, the reconsideration decision before us concerns an
      overpayment the appellant received between November 20, 2010, and July 30,
      2012. IAF, Tab 14 at 8-9. Our review is therefore limited to that time period.
      See Adkins v. Office of Personnel Management, 104 M.S.P.R. 206, ¶ 5 (2006) (the
      Board ordinarily lacks jurisdiction to consider an issue not addressed by OPM in
      a reconsideration decision on a retirement issue).       If the appellant wishes to
      challenge OPM’s calculations for any period occurring after July 30, 2012, which
      it appears he may, see PFR File, Tab 21 at 6-13, he must follow the procedures
      set forth at 5 C.F.R. Part 841, Subpart C.
¶10         As to the overpayment at issue, OPM explained that it applied the formula
      set forth at 5 U.S.C. § 8452(a)(1), which is the appropriate formula for computing
      a disability annuity under FERS. PFR File, Tab 14 at 7; see Cebzanov v. Office of
      Personnel Management, 96 M.S.P.R. 562, ¶ 5 (2004).              OPM identified the
      high-three salary it used to calculate the appellant’s annuity, indicated that it was
      derived from the three-year period immediately preceding the appellant’s
      retirement, and noted the various rates of pay the appellant earned during the
      relevant time period. 4 PFR File, Tab 14 at 8. OPM computed the appellant’s

      3
        The appellant argues that the administrative judge erred in failing to rule on his
      motion to compel, notwithstanding OPM’s failure to respond to his discovery requests.
      PFR File, Tab 1 at 7, 9. We find that this issue is now moot because OPM, in response
      to our order, provided detailed information regarding how it calculated the appellant’s
      annuity—the exact information the appellant argues that he was entitled to receive
      below in response to his discovery requests—and the appellant was afforded an
      opportunity to review and respond to that evidence. PFR File, Tab 14; see PFR File,
      Tab 1 at 9, Tabs 15-22.
      4
        OPM did not provide the Individual Retirement Record it should have received from
      the appellant’s last employing agency, so we still cannot verify the accuracy of these
      amounts. See 5 C.F.R. § 841.504(d). However, in his response to OPM’s submission
                                                                                             6

      yearly annuity rate at 60 percent of his high-three salary for the first year, and 40
      percent of his high-three salary thereafter. Id. at 9; see 5 U.S.C. § 8452(a)(1)(A).
      As 5 U.S.C. § 8419(a)(1) requires, OPM then reduced the appellant’s annuity by
      10 percent because the appellant elected a survivor annuity, which he concedes is
      proper. PFR File, Tab 1 at 11, Tab 14 at 9. OPM applied a 2.6 percent COLA
      after the first year of the appellant’s annuity. PFR File, Tab 14 at 9; see 5 U.S.C.
      §§ 8452(a)(1)(B), 8462; see also 5 C.F.R. § 841.703(e). As to the issue of SSDI
      benefits, OPM clarified that it did not reduce the appellant’s annuity pursuant
      to 5 U.S.C. § 8452(a)(2) because SSA notified OPM that the appellant was not
      eligible to receive such benefits. PFR File, Tab 14 at 8.
¶11         We recognize that OPM concedes its initial calculation of the appellant’s
      high-three salary was incorrect. Id. Taking into account the corrected high-three
      salary, OPM underpaid the appellant’s gross annuity by approximately $3,282.00,
      rather than by $2,931.00, while he was receiving interim payments. However, we
      have no jurisdiction to review OPM’s determination that the appellant owed
      $14,632.61 for health and life insurance premiums.              Mitchell v. Office of
      Personnel Management, 97 M.S.P.R. 566, ¶ 9 (2004) (the Board does not have
      jurisdiction to review OPM’s determination that it failed to withhold from an
      annuity the correct amount of life insurance premiums); Lee v. Office of

      pursuant to our order, the appellant does not dispute the agency’s revised calculation of
      his high-three salary. See PFR File, Tab 21. We note that, in his petition for review,
      the appellant asserted that his salary in his last year of employment was at or around
      $129,400, which is consistent with the time period and figures OPM used. Compare
      PFR File, Tab 1 at 12, with PFR File, Tab 14 at 8. Moreover, the appellant indicated
      his belief that his high-three salary may have been up to $111,000, and OPM’s
      calculation of his high-three salary exceeds that amount. Compare IAF, Tab 1 at 12,
      with PFR File, Tab 14 at 8. We therefore find that OPM established the amount of the
      appellant’s high-three salary by preponderant evidence. Cf. Hunter v. Office of
      Personnel Management, 109 M.S.P.R. 514, ¶ 9 (2008) (where the appellant disputed
      OPM’s calculation of an alleged overpayment, but did not dispute that he was overpaid
      by at least as much as OPM alleged, the Board found that OPM proved by preponderant
      evidence that the appellant was overpaid by the amount alleged and found that it did not
      need to determine whether the overpayment was actually greater than the amount OPM
      sought to recover), aff’d, No. 2008-3354 (Fed. Cir. Jan. 27, 2009).
                                                                                           7

      Personnel Management, 32 M.S.P.R. 149, 152-53 (1987) (OPM’s decisions
      concerning federal health insurance benefits are final and are not reviewable by
      the Board); IAF, Tab 14 at 8-9. We are therefore satisfied that, notwithstanding
      OPM’s error, an overpayment occurred because the underpayment of the
      appellant’s annuity was insufficient to offset the amount he owed for health and
      life insurance premiums.

      We affirm the administrative judge’s finding that the appellant is entitled to a
      waiver of the overpayment.
¶12         The administrative judge found that the appellant is entitled to a waiver of
      the overpayment because: (1) he was without fault in receiving the overpayment;
      (2) recovery would be against equity and good conscience because it would cause
      him financial hardship 5; and (3) the set-aside rule did not preclude waiver. ID at
      5-13. OPM does not contest these findings. See PFR File, Tab 14 at 5-6, 11. We
      have reviewed the record and agree with the administrative judge’s conclusions.
      We therefore AFFIRM the initial decision, insofar as the administrative judge
      found that the appellant is entitled to a waiver of the overpayment and ordered
      OPM to waive collection of the overpayment. 6

      5
        The appellant argues that the administrative judge erred in not finding that he was
      entitled to a waiver based on detrimental reliance, unconscionability, and because
      OPM’s recovery collection schedule of 234 months violated its internal policy which he
      alleges limits the length of collection periods to 10 years. PFR File, Tab 1; see ID at
      7-9. We find it unnecessary to reach these arguments because we agree that he is
      entitled to a waiver on other grounds.
      6
        The appellant appears to assert that, as a result of the waiver, OPM must pay him the
      amount of the overpayment. See PFR File, Tab 21 at 12. He is mistaken. The waiver
      requires OPM to forego collection of the amount the appellant owes but does not entitle
      him to receive payment for funds he never paid to OPM. He is entitled to repayment of
      any amounts OPM actually collected for the overpayment, to the extent not already
      repaid. See Fitzpatrick v. Office of Personnel Management, 42 M.S.P.R. 396, 397-98
      (1989). This would not include OPM’s retroactive deduction of the appellant’s optional
      life insurance premiums from his annuity which, as explained below, are entirely
      separate from any monies it collected to offset the overpayment at issue in the
      reconsideration decision before us.
                                                                                                  8

      The appellant makes several requests in his petition for review, which we must
      deny.
¶13         The appellant argues that OPM should be ordered to cease collecting past
      due premiums for standard optional, additional optional, and family optional life
      insurance, and to refund him for such premiums which it has already deducted
      from his annuity. 7 PFR File, Tab 1 at 5-6, 10. As an initial matter, we note that
      the overpayment calculation that is the subject of this appeal did not include past
      due premiums for optional life insurance. See IAF, Tab 14 at 8-9. Indeed, OPM
      had erroneously informed the appellant that he was ineligible to continue his
      optional life insurance coverage. IAF, Tab 7, Subtab L at 3, Subtab M at 9. It
      was not until after OPM issued its initial decision regarding the overpayment that
      he elected to receive this coverage, with the understanding and agreement that
      premiums for such coverage would be withheld retroactive to the commencing
      date of his retirement annuity. PFR File, Tab 7 at 9; IAF, Tab 7, Subtab M at 9.
      In any event, as previously stated, the Board does not have jurisdiction to review
      OPM’s determination that it failed to withhold from an annuity the correct
      amount of life insurance premiums. 8 Mitchell, 97 M.S.P.R. 566, ¶ 9. Thus, we
      must DENY the appellant’s request.
¶14         The appellant also requests that the Board order OPM to correct the IRS
      1099-R forms it issued to him between 2010 and 2012, which he alleges
      contained erroneous information that caused him to suffer adverse tax

      7
        The appellant contends, and the administrative judge noted in the initial decision, that
      OPM agreed during the prehearing conference to refund these amounts. PFR File,
      Tab 1 at 5; ID at 5 n.4. It is unclear why OPM made this agreement. However, we find
      it irrelevant because, for the reasons set forth below, it is clear to us that the appellant’s
      optional life insurance premiums are not a part of the overpayment at issue in this
      appeal.
      8
        The appellant filed a motion for interim relief on the same basis. PFR File, Tab 6.
      For the same reasons stated above, his motion is DENIED. His request to file an
      additional pleading, which appears to be a reply to OPM’s response to his motion for
      interim relief, with accompanying attachments that are already in the record, is also
      DENIED. PFR File, Tab 10.
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      consequences. See PFR File, Tab 1 at 6. His request is DENIED, as he has cited
      no legal authority, and we are not aware of any, which permits us to issue such an
      order. Cf. Quackenbush v. Department of Justice, 45 M.S.P.R. 543, 544 (1990)
      (the question of whether the amount of income tax withheld from a back pay
      award is in accordance with law, rule or regulation does not fall within the
      Board’s jurisdiction). We also DENY the appellant’s request for the Board to
      correct the record because the administrative judge incorrectly stated in the initial
      decision that he has three children, although he actually has four children. PFR
      File, Tab 1 at 4-5; ID at 11 n.5; see IAF, Tab 7, Subtab A at 38. We recognize
      that the appellant is certainly in a better position to know how many children he
      has, but the purpose of a petition for review is not to seek correction of minor
      misstatements that have no bearing on the outcome of an appeal. See 5 C.F.R.
      § 1201.115(a)(1) (any alleged factual error must be material, meaning of
      sufficient weight to warrant an outcome different from that of the initial
      decision).

                                            ORDER
¶15         We ORDER the Office of Personnel Management (OPM) to waive the
      collection of overpayment of the appellant’s disability retirement annuity in the
      amount of $11,701.61. OPM must complete this action no later than 20 days after
      the date of this decision.
¶16         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 took 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).
¶17         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
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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 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 the United States Court of Appeals for the Federal Circuit to review this
final decision.    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
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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 your court
appeal, you may visit our website at http://www.mspb.gov/probono for a list of
attorneys who have expressed interest in providing pro bono representation for
Merit Systems Protection Board appellants before the court. 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.