The opinion
UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
BERND MCCONNELL, DOCKET NUMBER
Appellant, DE-0845-14-0416-I-1
v.
OFFICE OF PERSONNEL DATE: March 13, 2015
MANAGEMENT,
Agency.
THIS FINAL ORDER IS NO NPRECEDENTIAL 1
Bernd McConnell, Colorado Springs, Colorado, pro se.
Roxann Johnson, 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) reconsideration decision
finding that the appellant was overpaid $785.96 in Federal Employees’
Retirement System annuity benefits. Generally, we grant petitions such as this
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A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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).
2
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 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).
DISCUSSION OF ARGUMENTS ON REVIEW
¶2 The appellant served as a midshipman at the U.S. Naval Academy from
June 28, 1961, to June 8, 1965. Initial Appeal File (IAF), Tab 5 at 51.
Thereafter, he served on active military duty with the U.S. Air Force until 1992,
at which point he retired from the military and joined the federal civilian work
force. Id. at 38, 50. In 1998, the appellant made a service deposit of $184.04 to
obtain civil service retirement credit for his 3 years and 11 months of academy
service as a midshipman. Id. at 48. Effective December 31, 2012, the appellant
retired from federal service. Id. at 34, 43.
¶3 In January and February 2013, OPM made interim annuity payments to the
appellant in the gross amount of $5,824 ($2,912 per month). Id. at 11, 23. In
March 2013, OPM finalized the appellant’s annuity benefits and, failing to credit
the appellant with his 3 years and 11 months of academy service, determined that
he was entitled to only $2,539 per month and a refund of his $184.04 academy
3
service deposit. See id. at 11, 17, 22. Based on the lower annuity rate, academy
service deposit refund, and life insurance premiums that had not been withheld
from the interim payments, OPM determined that the appellant had received an
overpayment of $785.96. 2 See id. at 11, 22-23, 25.
¶4 Several weeks later, OPM determined that the appellant should receive
retirement credit for his academy service. See id. at 4. Accordingly, on
March 28, 2013, OPM recomputed the appellant’s annuity to account for his
academy service and derived a gross monthly annuity of $3,361. Id. at 4, 17,
22-23. To cover the underpayments in January, February, and March 2013, OPM
authorized a one-time payment of $2,466. 3 See id. OPM did not withhold the
earlier overpayment of $785.96 but eventually collected the erroneous academy
service deposit refund by withholding $184.04 from the September 2013 annuity
payment. 4 See id. at 4, 12-13, 22.
¶5 In August 2013, OPM notified the appellant of the $785.96 overpayment
and advised that collection of the overpayment would begin in November unless
the appellant requested reconsideration or waiver. Id. at 22-26. The appellant
timely requested reconsideration of the overpayment amount. Id. at 20-21. In
May 2014, OPM issued its reconsideration decision affirming the initial
overpayment decision, which the appellant timely appealed. Id. at 16-18; IAF,
2
OPM derived the overpayment as follows: final monthly annuity for January and
February ($2,539 + $2,539 = $5,078) – interim payments for January and February
($2,912 + $ 2,912 = $5,824) – life insurance premiums not withheld from the interim
payments ($112 + $112 = $224) + academy service deposit refund ($184.04) =
-$785.96.
3
Although the appellant actually received interim payments of $2,912 in January and
February, OPM derived the one-time payment of $2,466 based on the assumption that
the appellant was paid $2,539 (the amount OPM determined the appellant was due when
his academy service was erroneously excluded) in January, February, and March; i.e.,
($3,361 x 3 months = $10,083) – ($2,539 x 3 months = $7,617) = $2,466.
4
In May and June 2013, OPM initiated overpayment collections in the amount of
$242.70 per month but later cancelled the withholdings and refunded $485.40 to the
appellant as he had not been afforded due process. See IAF, Tab 5 at 22-23.
4
Tab 1. Without holding a hearing, the administrative judge affirmed OPM’s
reconsideration decision, finding that: (1) the agency established the existence
and amount of the overpayment by preponderant evidence; and (2) the appellant
failed to establish by substantial evidence the he was eligible for adjustment or
waiver of the overpayment. IAF, Tab 13, Initial Decision (ID).
¶6 The appellant has filed a petition for review of the initial decision, arguing
that OPM incorrectly calculated the amount of the overpayment. Petition for
Review (PFR) File, Tab 1. The agency has responded in opposition, and the
appellant has submitted a reply to the agency’s response. PFR File, Tabs 4-5.
¶7 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); see 5 C.F.R. § 845.307(a). The
appellant does not dispute the existence of an overpayment, but argues that the
overpayment should be calculated on the basis of his net, rather than gross,
annuity payments. 5 PFR File, Tab 1 at 6, Tab 5 at 3. Using the net figures, the
appellant proffers that the outstanding overpayment is only $313.65 (interim
annuity overpayment of $497.69 less the academy service deposit refund of
$184.04 that OPM has already collected). PFR File, Tab 5 at 3.
¶8 The record reflects that federal tax withholdings account for the difference
between the gross and net interim annuity payments. 6 See IAF, Tab 5 at 11, 23.
OPM is required by law to withhold federal income taxes from the benefit it pays
and to remit that amount to the Internal Revenue Service (IRS). Cebzanov v.
Office of Personnel Management, 96 M.S.P.R. 562, ¶ 11 (2004). To the extent
that an adjustment to an annuitant’s benefits affects his tax liability for past
5
Although the appellant also raised this argument below, it does not appear that the
administrative judge addressed it in the initial decision. IAF, Tab 7 at 4; see ID at 3-5.
Accordingly, we will address it now.
6
OPM did not withhold the appellant’s life insurance premiums from the interim
payments in January and February 2013, and later sought to collect the premiums by
including them in the overpayment calcu lations. See IAF, Tab 5 at 11, 23.
5
years, the annuitant must seek a remedy from the IRS. See id.; see also Hopkins
v. Department of the Navy, 86 M.S.P.R. 11, ¶ 2 (2000) (the Board lacks authority
to remedy the tax consequences of a back pay award). Thus, OPM did not err by
basing its overpayment calculations on the pre-tax annuity paid to the appellant.
If the appellant believes that the overpayment created excess tax liability or that
he is entitled to an adjustment of his 2013 federal taxes, his remedy, if any, lies
with the IRS.
¶9 The appellant also contends that his overpayment should be reduced
because OPM has already collected the erroneously refunded academy service
deposit. See PFR File, Tab 1 at 6. The evidence presented by OPM, however,
shows that the appellant still owes $785.96. Initially, OPM calculated the
appellant’s final annuity rate without credit for his academy service and arrived at
a monthly annuity of $2,539. See IAF, Tab 5 at 17, 22-23, 25. As the appellant’s
interim payments of $2,912 per month were higher than the initial final rate of
$2,539.00 and because life insurance premiums had not been withheld from the
interim payments, OPM determined that the appellant had received an
overpayment in January and February. See id. Moreover, because the initial final
rate did not include credit for the appellant’s academy service, OPM determined
that the academy service deposit should be refunded to the appellant. See id.
OPM thus “refunded” the academy service deposit of $184.04 by applying it to
the overpayment, which reduced the amount of the outstanding overpayment from
$970.00 7 to $785.96 8. See id. Several weeks later, OPM correctly revised the
appellant’s final annuity to include credit for his academy service, which then
required the appellant to repay the academy service deposit. See id. at 17, 22. At
7
Final monthly annuity owed to the appellant ($2,539 + $2,539 = $5,078) – interim
payments received by the appellant ($2,912 + $2,912 = $5,824) – life insurance
premiums not withheld from interim payments ($112 + $112 = $224) = $970. See IAF,
Tab 5 at 17, 22-23, 25.
8
Overpayment ($970) – military service credit refund ($184.04) = $785.96. See IAF,
Tab 5 at 17, 22-23, 25.
6
that point, the appellant owed OPM the outstanding overpayment amount of
$785.96 plus the erroneously refunded academy service deposit of $184.04; i.e.,
the appellant owed OPM a total of $970.00. OPM collected the military deposit
refund in September 2013, and the amount owed to OPM is once again $785.96.
See id.
¶10 Although we understand the appellant’s frustration with OPM’s handling of
this matter, we discern no basis to disturb the administrative judge’s
determination that OPM has established the amount of the overpayment by
preponderant evidence and that the appellant has failed to establish that the
amount is incorrect.
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
7
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 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.