shaw bransford & roth case law update

MSPB Grants Former Federal Employee Adjustment in OPM Recovery of Overpayment

The Merit Systems Protection Board granted the petition for review of a former employee overpaid by $84,546.02, allowing the employee a major adjustment in his monthly repayment, and applying new language from the Office of Personnel Management on the nature of the employee’s ongoing debt.

The Office of Personnel Management determined that a former employee had received $84,546.02 of overpayment because he had received benefits from both the Office of Workers’ Compensation Programs (“OWCP”) and disability retirement payments for a period from August 27, 2005, to March 30, 2010. The employee appealed OPM’s decision, but an MSPB administrative judge found that OPM proved the existence and amount of the overpayment. The administrative judge also found that the employee was not without fault, given that he had received a letter in February 2006 stating that OPM would be suspending his disability retirement payments due to his receipt of compensation from OWCP, and should have known that payments received after that letter were received in error. The administrative judge also found that the employee had a monthly income of $167.08 in excess of his ordinary and necessary expenses, which prevented him from receiving an entitlement to an adjustment of OPM’s $125 per month recovery schedule. The employee petitioned the full Board for review. On December 27, 2016, the Merit Systems Protection Board granted the employee’s petition for review, granting the employee an adjustment.

The Board agreed with the administrative judge that the employee was ineligible for a total waiver of the overpayment because he knew or should have known that he was receiving an overpayment, given OPM’s 2006 letter to the employee. But, as the Board noted, “[a]n annuitant who is ineligible for waiver nevertheless may be entitled to an adjustment in the recovery schedule if he shows that it would cause him financial hardship to make payment at the rate scheduled.” Relying on OPM regulations, the Board defined “financial hardship” as existing when the annuitant needs substantially all of his income and liquid assets to meet current ordinary and necessary living expenses and liabilities.

The Board therefore calculated the employee’s ordinary and necessary living expenses, finding that the employee’s monthly expenses exceeded his monthly income by $59. The Board generally gives the employee the benefit of any doubt regarding his expenses unless an expense clearly constitutes an extravagance or luxury, and OPM made no challenge (indeed, it specifically stated in a footnote to its reply it would not object if the Board found that an adjustment may be proper) to the employee’s listed expenses.

Board precedent when finding a financial hardship has been to reduce OPM’s repayment schedule to $5 a month, and the Board ordered OPM to do so in this case. The Board also stated that while this case was pending on review, it asked OPM for an advisory opinion on what the Board should provide debtors as notice to “let them know that their debt to the United States Government may not terminate—and may continue to be collectible through various means—even after their deaths.”

OPM provided the Board with the following language, which the Board in turn provided to the employee in this case: “The 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 representatives 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.”

For the above stated reasons, the Board ordered OPM to reduce the employee’s schedule to a rate of $5 per month.

Read the full case: Pierotti v. Office of Personnel Management


This case law update was written by Conor D. Dirks, associate attorney, Shaw Bransford & Roth, PC.

For thirty years, Shaw Bransford & Roth P.C. has provided superior representation on a wide range of federal employment law issues, from representing federal employees nationwide in administrative investigations, disciplinary and performance actions, and Bivens lawsuits, to handling security clearance adjudications and employment discrimination cases.

Posted in Case Law Update

Tags: MSPB, Merit Systems Protection Board



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