Court Opinion

ID: 2811956
Source: CourtListenerOpinion
Date Created: 2015-06-25 17:00:28.588603+00
Date Added: 2024-06-11T15:34:35.895221
License: Public Domain

UNITED STATES OF AMERICA
                       MERIT SYSTEMS PROTECTION BOARD

     SHIRLEY L. REYES,                               DOCKET NUMBER
                   Appellant,                        SF-0845-14-0686-I-1

                  v.

     OFFICE OF PERSONNEL                             DATE: June 25, 2015
       MANAGEMENT,
                   Agency.

             THIS FINAL ORDER IS NO NPRECEDENTIAL 1

           Shirley L. Reyes, Barstow, California, pro se.

           Christopher H. Ziebarth, 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) denying her request to waive the collection of an overpayment amount.
     Generally, we grant petitions such as this one only when: the initial decision

     1
        A nonprecedential order is one that the Board has determined does not add
     sign ificantly 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 Parties may cite nonprecedential orders,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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     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 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, and based on the
     following points and authorities, we conclude that the petitioner has not
     established any basis under section 1201.115 for granting the petition for review.
     Therefore, we DENY the petition for review and AFFIRM the initial decision,
     which is now the Board’s final decision. 5 C.F.R. § 1201.113(b).
¶2        The appellant’s disability retirement under the Federal Employees’
     Retirement System (FERS) was effective May 12, 2012.            Initial Appeal File
     (IAF), Tab 5 at 6, 11-14. In her approval letter, OPM advised the appellant that
     she must apply for Social Security disability benefits and immediately notify
     OPM of the amount and effective date of her benefits if she received
     them. Id. at 11-12. OPM informed her that her FERS disability benefits would
     be reduced by 100 percent of any Social Security benefits payable for the first 12
     months she received those benefits. Id. at 12. OPM explained that she should not
     negotiate her Social Security checks until her FERS benefits had been reduced
     because she would need the payments she received from the Social Security
     Administration to repay OPM. Id. On December 18, 2012, the appellant was
     approved for Social Security Disability Income (SSDI), based on a disability date
     of May 11, 2012. Id. at 24. Her SSDI payment, effective November 2012, was
     $1,496 per month. Id.
¶3        On January 17, 2013, the appellant notified OPM of the SSDI award by
     mail. Id. at 26, 30-31. OPM apparently did not act upon that notice and sent her
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     another letter, dated May 25, 2013, inquiring about the status of her application
     for SSDI benefits. Id. at 10. She returned the requested information to OPM by
     facsimile on June 11, 2013. Id. at 40-43. On September 14, 2013, OPM informed
     her that her annuity had been reduced based on the SSDI award.          Id. at 32.
     OPM’s letter also informed her that she had received an overpayment of
     $11,455.00. Id. at 33-36. OPM explained that it would collect repayment in 36
     installments of $318.19 per month and a final installment of $0.16. Id. at 33. In
     September 2013, the appellant requested that OPM waive collection of the
     overpayment. Id. at 21-23.
¶4        On reconsideration, OPM affirmed its initial decision. Id. at 5-9. OPM
     denied the appellant’s waiver request, but lowered her monthly installment to
     $125.00 for a period of 91 months with a final installment of $80.00. Id. at 8.
     OPM also refunded her $1,908.18, representing six installment payments of
     $138.03 that had been withheld from her annuity payments between December
     2013 and May 2014, after she asked the agency to reconsider its decision to
     collect the overpayment. Id. at 20. This appeal followed. IAF, Tab 1.
¶5        While the appeal was pending, the appellant submitted a Financial
     Resources Questionnaire (FRQ) dated September 19, 2014, in support of her
     assertion that recovery of the overpayment would cause her financial hardship.
     IAF, Tab 10.    After a telephonic hearing, the administrative judge issued an
     initial decision finding that OPM met its burden of proving the existence and
     amount of the overpayment. IAF, Tab 17, Initial Decision (ID) at 4-5. Regarding
     her request for a waiver, the administrative judge found that the appellant was
     without fault in the overpayment, but that none of the circumstances that would
     support waiver were evident, and that collection of the debt would not be against
     equity and good conscience. ID at 6-8. The administrative judge likewise found
     that adjustment of the repayment schedule was unwarranted because the
     appellant’s expenses did not exceed her monthly income; instead, she was left
     with a $248.79 surplus each month. ID at 9-12.
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¶6        To be entitled to a waiver, an appellant must meet a two-fold part test. She
     must show by substantial evidence that (1) she 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). The appellant met her obligation to
     inform OPM of the overpayment, and the administrative judge correctly found
     that she was without fault. See ID at 7.
¶7        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 worst;
     or   recovery     could    be    unconscionable     under    the    circumstances.
     Zucker, 114 M.S.P.R. 288, ¶ 7. OPM’s Policy Guidelines provide, however, that
     individuals who know or suspect that they are receiving overpayments must set
     aside the amount overpaid pending recoupment; that absent exceptional
     circumstances, recovery in these cases is not against equity and good conscience;
     and exceptional circumstances do not include financial hardship. Id.; see Policy
     Guidelines on the Disposition of Overpayments under the Civil Service
     Retirement System and Federal Employees’ Retirement System § I.C.4 (1995)
     (hereinafter Policy Guidelines), located in IAF, Tab 5 at 81-119; see also Boone
     v. Office of Personnel Management, 119 M.S.P.R. 53, ¶ 8 (2012). The appellant
     was undoubtedly aware that she was receiving overpayments. See, e.g., IAF, Tab
     5 at 11-12.   The set-aside rule thus applies.    When the set-aside rule applies,
     recovery by OPM is not against equity and good conscience and cannot be waived
     absent exceptional circumstances. 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.
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     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.”          Policy Guidelines
     § I.F.1.
¶8         On review, the appellant asserts that exceptional circumstances exist here.
     Petition for Review (PFR) File, Tab 1 at 1. Her assertion is unavailing. Although
     OPM did not explain why it failed to process her original notification that she
     was receiving SSDI benefits, see IAF, Tab 5 at 26, 30, it adjusted her annuity
     within 9 months of that notification, cf., e.g., Kellet v. Office of Personnel
     Management, 62 M.S.P.R. 1, 5 (1993) (waiver of overpayment was warranted
     where the appellant’s annuity was not adjusted for more than 10 years, despite
     OPM’s receipt of notice of his election to provide a survivor annuity for his new
     spouse).      The administrative judge thus properly found that exceptional
     circumstances do not exist here. ID at 8.
¶9         Even if an appellant is ineligible to receive a waiver, she may still be
     entitled to an adjustment in the recovery schedule if she shows that it would cause
     her financial hardship to make payments at the rate scheduled by the
     agency. 2    5 C.F.R. § 845.301; see, e.g., Boone, 119 M.S.P.R. 53, ¶¶ 11-12.
     Financial hardship may be deemed to exist if the appellant needs substantially all
     of her current income and liquid assets to meet current ordinary and necessary
     living expenses and liabilities.       5 C.F.R. § 845.304.   Pertinent considerations
     include her financial ability to pay when the collection is scheduled to be
     made.      5 C.F.R. § 845.304(a)(1).     The appellant bears the burden of proving
     financial hardship by substantial evidence. 5 C.F.R. § 845.307(b).        The Board

     2
       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. See Conway v. Office of Personnel Management, 56 M.S.P.R. 82, 86
     (1992).
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      applies a “reasonable person” test in determining whether an appellant’s asserted
      living expenses are ordinary or necessary.          Fearon v. Office of Personnel
      Management, 107 M.S.P.R. 122, ¶ 11 (2007). The Board will give an appellant
      the benefit of the doubt unless an expense clearly constitutes an extravagance or a
      luxury. Gott v. Office of Personnel Management, 97 M.S.P.R. 538, ¶ 11 (2004).
¶10          Here, the administrative judge calculated the appellant’s monthly income
      and obligations based on the information she supplied in her September 2014
      FRQ.     See IAF, Tab 10.     The administrative judge found her gross monthly
      income to be $2,562.00. 3 ID at 10; IAF, Tab 10 at 2. Her approved expenses
      totaled $2,313.21, leaving a monthly surplus of $248.79.           ID at 10-12; IAF,
      Tab 10 at 2. The administrative judge found her only asset was her car, a non-
      liquid asset unavailable for recovery of the overpayment. ID at 12; see Spinella
      v. Office of Personnel Management, 109 M.S.P.R. 185, ¶ 11 (2008). The initial
      decision thus is correctly decided given the evidence submitted to the
      administrative judge, and we AFFIRM it.
¶11          On review, the appellant argues that she has incurred additional expenses
      resulting from her diabetes, newly-diagnosed kidney disease, and possible heart
      disease. PFR File, Tab 1 at 1. She asserts she has “required several stays in the
      hospital[,] ambulance trips, [a] change of medication and now am required to
      have heart studies and the need for[ ]kidney physician service.” Id. She asserts
      that she has incurred $49,226.00 in unpaid medical bills, 4 and she must now cover
      additional copayments for ongoing medical treatment as well as the purchase of
      new medications, special socks and underwear for diabetes, an orthopedic boot to
      3
        The appellant’s gross monthly income was calculated by adding her FERS monthly
      gross annuity of $1,044.00 and her monthly SSDI payment of $1,518.00. IAF, Tabs
      10-11.
      4
        It is unclear how much money the appellant owes to health care providers. She
      submitted medical bills for which the unique charges total $49,027.77. PFR File, Tab 1
      at 7-18. Insurance claims were denied for two of these bills. See id. at 7, 9. For other
      bills, the appellant received an insurance payment and now owes the providers. See id.
      at 8, 10. Additional bills are for copayments. See id. at 11, 13-18.
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      support her foot, and specific foodstuffs and bottled water for a special renal
      diet. Id. The appellant avers that her food costs have increased from $205.70,
      see ID at 12, to $500 per month, PFR File, Tab 1 at 2. She also avers that she has
      incurred additional monthly expenses of $240 for debts in collection and $481 for
      medical and dental costs (an increase over $329.65, the amount submitted in her
      September 2014 FRQ). Id.; see IAF, Tab 10 at 2. She additionally asserts that
      she has been threatened with eviction because she is behind on her rent, and that
      her vehicle was repossessed.     PFR File, Tab 1 at 1. She included supporting
      documentation postdating the close of the record. Id. at 3-6.
¶12        Although the appellant’s expenses were correctly calculated based on
      information she submitted to the administrative judge, her petition for review
      indicates that she may have considerable new expenses. Some of these expenses
      are partially documented in the petition for review, but others—for example,
      added food costs for her renal diet—require further explanation. Moreover, her
      day-to-day living expenses may have changed when her vehicle was repossessed
      or if she was forced to find other housing. Thus, the appellant may submit a
      mid-collection request to OPM where her living expenses may be reexamined.
      See 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 her expenses prove overwhelming due
      to unanticipated medical expenses, she could make a mid-collection request to
      OPM for lower payments, compromise, suspension, or write-off, as provided for
      by OPM’s Policy Guidelines).        When appropriate, OPM may grant lower
      payments, compromise part or all of the debt, or suspend or terminate collection.
      See Policy Guidelines § V.F.5.
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                   NOTICE TO THE APPELLANT REGARDING
                      YOUR FURTHER REVIEW RIGHTS
      You have the right to request review of this final decision by the United
States Court of Appeals for the Federal Circuit. You must submit your request to
the court at the following address:
                           United States Court of Appeals
                               for the Federal Circuit
                             717 Madison Place, N.W.
                              Washington, DC 20439

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