Opinion

Karissa Rund v. Office of Personnel Management

Court: Merit Systems Protection Board
Filed: Mar 11, 2024
Status: Unpublished
Cited by: 0 cases
Authority: More cited than 15.5%

The opinion

UNITED STATES OF AMERICA

MERIT SYSTEMS PROTECTION BOARD

KARISSA RUND, DOCKET NUMBER

Appellant, DE-0845-19-0254-I-1

OFFICE OF PERSONNEL DATE: March 11, 2024

MANAGEMENT,

Agency.

THIS FINAL ORDER IS NONPRECEDENTIAL 1

Douglas J. Rund , Englewood, Colorado, for the appellant.

Carla Robinson , Washington, D.C., for the agency.

BEFORE

Cathy A. Harris, Vice Chairman

Raymond A. Limon, Member

FINAL ORDER

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 she had been overpaid annuity benefits under the Federal

Employees’ Retirement System (FERS) and that she did not qualify for a waiver

of the overpayment. Generally, we grant petitions such as this one only in the

A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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

following circumstances: 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. 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 to

find that further reduction of the recovery schedule is appropriate, we AFFIRM

the initial decision.

BACKGROUND

Following the appellant’s diagnosis of recurrent, stage IV colon cancer, she

applied for a Federal Employees’ Retirement System (FERS) disability retirement

annuity, and OPM granted her application on March 23, 2018. Initial Appeal File

(IAF), Tab 10 at 56. On April 27, 2018, OPM issued the appellant an interim

payment of $15,235.84. 2 Id. at 25-26. On June 16, 2018, OPM notified the

appellant that it had overpaid her by $18,093.62, 3 indicating that her interim

payment exceeded the amount due and thus caused the overpayment. Id. at 27-28.

The notice set forth a repayment schedule of 36 installments in the amount of

This amount represents a gross payment of $18,700.00 for the period from June 1,

2017, to April 30, 2018, less $3,464.16 in Federal income tax, for a net payment of

$15,235.84. IAF, Tab 10 at 25.

This amount represents gross interim payments of $20,400.00 ($18,700.00 for the

period from June 1, 2017 to April 30, 2018 plus $1,700.00 for the period June 1, 2018,

to June 30, 2018) less the $2,306.38 net accrued annuity due to the appellant for

April 21 to May 30, 2018. IAF, Tab 10 at 6.

$502.60, with a final installment of $0.02. Id. at 28. The appellant requested that

OPM reconsider its decision regarding the existence and amount of the

overpayment and OPM issued a final reconsideration decision affirming its initial

decision, including the repayment schedule. Id. at 5-7, 23.

The appellant subsequently filed the instant appeal. IAF, Tab 1. The

administrative judge held a hearing and affirmed OPM’s reconsideration decision.

IAF, Tab 43, Initial Decision (ID). She found that OPM established that it

overpaid the appellant by $18,093.62, as the result of a gross payment of

$20,400.00 less the appellant’s net entitlement of $2,306.38. ID at 5-6. The

parties do not challenge this finding and we discern no basis to disturb it.

The administrative judge next found that the appellant had not met her

burden to have the overpayment waived. ID at 6. First, he determined that the

appellant established that she was without fault in receiving the overpayment. ID

at 6-8. Nevertheless, the administrative judge determined that the appellant failed

to meet her burden to demonstrate that recovery of the overpayment would be

against equity and good conscience because the set-aside rule required her to set

the overpayment amount aside pending recoupment by OPM. ID at 9-15. Lastly,

the administrative judge determined that the appellant failed to meet her burden

to establish that she was entitled to an adjustment to OPM’s repayment schedule

of 36 installments in the amount of $502.60, with a final installment of $0.02. ID

at 15-23.

In her petition for review, the appellant challenges the administrative

judge’s finding that recovery of the overpayment was not against equity and good

conscience. Petition for Review (PFR) File, Tab 1 at 4. She also argues that the

administrative judge improperly based his determination that OPM’s repayment

schedule would not cause financial hardship on her non-liquid assets. Id. at 4-5;

see 5 C.F.R. § 845.301(b). OPM has filed a response to the appellant’s petition

for review. PFR File, Tab 4.

DISCUSSION OF ARGUMENTS ON REVIEW

The appellant bears the burden of establishing her entitlement to a waiver

of recovery of the overpayment by substantial evidence. Boone v. Office of

Personnel Management, 119 M.S.P.R. 53, ¶ 5 (2012). Generally, the recovery of

a FERS overpayment should be waived if the recipient is without fault and

recovery would be against equity and good conscience. Id.; see 5 U.S.C.

§ 8470(b); 5 C.F.R. § 845.301. Recovery is against equity and good conscience

when it would cause financial hardship, the annuitant can show that she

relinquished a valuable right or changed positions for the worse, or recovery

would be unconscionable under the circumstances. Boone, 119 M.S.P.R. 53, ¶ 5;

5 C.F.R. § 845.303. However, individuals who suspect that they have received an

overpayment are expected to set aside the amount overpaid pending recoupment,

and, in the absence of exceptional circumstances, which do not include financial

hardship, recovery of the overpayment in such cases is not against equity and

good conscience. Boone, 119 M.S.P.R. 53, ¶ 6.

The administrative judge correctly found that recovery of the overpayment is not

against equity and good conscience .

As noted above, the appellant challenges the administrative judge’s finding

that recovery of the overpayment is not against equity and good conscience. PFR

File, Tab 1 at 4-5. For the following reasons, we agree with the administrative

judge.

The administrative judge found that the appellant was without fault. ID

at 6-9. In doing so, he relied on OPM’s Overpayment Policy Guidelines 4 (OPM

Guidelines), which provide, in pertinent part, that an individual is not without

fault if she accepted a payment which she knew to be erroneous. ID at 7; IAF,

Tab 13 at 11. He found that the appellant’s passive receipt of the payment did not

indicate that she “accepted” the payment in any meaningful sense. ID at 7-8.

The administrative judge also declined to find that the appellant “should have

IAF, Tab 13, OPM Overpayment Policy Guidelines (1995).

known” that the payment was erroneous before she received OPM’s notice of the

overpayment. ID at 8.

However, he also found that the set-aside rule applied because the appellant

was either aware or reasonably should have suspected that the interim payment

was erroneous no later than the date that she received OPM’s overpayment notice,

which the administrative judge found was no later than July 13, 2018. ID

at 10-11; Boone, 119 M.S.P.R. 53, ¶ 6. The administrative judge determined that

the appellant’s subsequent attempt to call OPM demonstrated that she at least

suspected that the payment was erroneous, and that under those circumstances,

the principles of equity and good conscience obligated her to set the overpayment

aside pending recoupment by OPM. ID at 10-11; Boone, 119 M.S.P.R. 53, ¶ 6.

The administrative judge further found no exceptional circumstances, i.e., no

extremely egregious errors or delays by OPM, that would exempt the appellant

from the consequences of the set-aside rule and entitle her to a waiver of the

repayment. ID at 11-14; Boone, 119 M.S.P.R. 53, ¶ 6.

On review, the appellant does not challenge the administrative judge’s

finding that she was aware of the overpayment by at least July 13, 2018, and that

she therefore should have set the overpayment amount aside pending recoupment

by OPM. When the set-aside rule applies, as we agree it does here, financial

hardship is not considered an exceptional circumstance that would preclude the

collection of an overpayment. Boone, 119 M.S.P.R. 53, ¶¶ 5-6. Thus, the

appellant’s financial hardship does not make OPM’s collection of the

overpayment against equity and good conscience. ID at 10-15.

The appellant is entitled to a reduction in the repayment schedule .

The administrative judge found that the appellant’s monthly household

expenses exceeded her gross monthly household income by $242.78. ID at 21. In

arriving at that number, the administrative judge made several modifications to

the appellant’s claimed expenses and OPM’s adjustments to them. ID at 16-21.

Neither party challenges the administrative judge’s findings concerning the

amount of the appellant’s gross income or monthly household expenses.

However, in considering the appellant’s monthly expenses, the administrative

judge failed to consider that, according to OPM’s Policy Guidelines, repayment

of the overpayment is an expense. Russell v. Office of Personnel Management,

69 M.S.P.R. 125, 128 (1995); see OPM Guidelines, § I–D–9, IAF, Tab 13 at 18.

When the $502.60 monthly repayment amount is added to the appellant’s average

monthly household expenses, those expenses exceed her gross monthly household

income by $745.38.

In her petition for review, the appellant argues that the administrative judge

erred in considering non-liquid assets in determining that the repayment schedule

would not be a financial hardship. PFR File, Tab 1 at 4. The administrative

judge declined to modify the repayment schedule because, among other things, he

found that the appellant’s assets, both liquid and non-liquid, were substantial,

observing that the appellant’s Financial Resources Questionnaire reported

$11,368.15 in liquid assets, 5 as well as $120,411.00 in her husband’s individual

retirement account, three cars valued at a total of $23,800.00, and a paid -off home

valued at $330,000.00. ID at 22; IAF, Tab 10 at 13. The administrative judge

further found that the appellant had converted liquid assets to non-liquid assets

after she received OPM’s overpayment notice, crediting the appellant’s

explanation that she used $4,278.28 out of the $15,235.84 post-tax overpayment

to help pay off her mortgage, $4,021.60 to pay a medical bill, and the remainder

to pay tax bills caused by the withdrawal of her Thrift Savings Plan (TSP) and to

pay off her house. 6 ID at 22; IAF, Tab 19 at 6-7. Because the appellant could

have instead used existing assets and set the disputed funds aside pending

OPM’s guidelines suggest that, as a general rule, $5,000.00 of liquid assets should

generally be considered available in making a financial hardship determination, and

therefore be exempt from recovery. OPM Guidelines, § I-D-9, IAF, Tab 13 at 17;

Martin v. Office of Personnel Management, 49 M.S.P.R. 134, 138 (1991), aff’d per

curiam, 960 F.2d 156 (Fed. Cir. 1992). However, it may be appropriate to protect more

than $5,000.00 if the debtor’s expenses, as here, exceed her income and the debtor has

significant current liabilities not reflected in expenses. OPM Guidelines, § I-D-9, IAF,

Tab 13 at 17.

resolution of the overpayment, the administrative judge found that the appellant’s

request to waive recovery was contrary to the set-aside rule and general principles

of equity. ID at 22. The administrative judge declined to reduce OPM’s

repayment schedule, finding that the appellant did not need substantially all of

her income and current assets to meet her monthly expenses. ID at 22-23.

Nevertheless, to the extent that the administrative judge considered the

appellant’s assets in analyzing financial hardship, such assets are not relevant to

the appropriateness of the repayment schedule. Pierotti v. Office of Personnel

Management, 124 M.S.P.R. 103, ¶ 14 (2016) (explaining that the Board’s

hardship analysis, in considering a collection schedule established by OPM, is

income-based and not asset-based). When, as here, an annuitant is ineligible for a

waiver of an overpayment but her monthly expenses exceed her monthly income,

an adjustment of the recovery schedule is appropriate. Stone v. Office of

Personnel Management, 55 M.S.P.R. 657, 661 (1992). As noted above, the

record shows that the appellant’s monthly household expenses exceed her gross

monthly household income. ID at 21. Thus, the appellant needs all of her current

income to meet her current ordinary and necessary living expenses, and collection

of the overpayment at the repayment schedule of $502.60 per month would cause

her financial hardship. Pierotti, 124 M.S.P.R. 103, ¶ 12.

Accordingly, we modify the repayment schedule to $5.00 per month. 7 Id.;

Knox v. Office of Personnel Management, 107 M.S.P.R. 353, ¶¶ 12-13 (2007)

The appellant explained below that the net proceeds from the withdrawal from her

TSP were $81,632.46 and that, as a result of the TSP withdrawal, the household owed

an additional $6,308.00 in Federal income tax and $5,798.00 in state income tax,

payments for which came from their emergency funds. IAF, Tab 19 at 6-7, 23-24.

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 representative

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. See Pierotti, 124 M.S.P.R. 103, ¶ 13.

(reducing OPM’s repayment schedule to $5.00 per month because the appellant’s

expenses exceeded her income); Dorrello v. Office of Personnel Management,

91 M.S.P.R. 535, ¶ 10 (2002) (same); Matthews v. Office of Personnel

Management, 85 M.S.P.R. 531, ¶ 11 (2000) (same).

ORDER

We ORDER the Office of Personnel Management (OPM) to reduce the

appellant’s repayment schedule to a rate of $5.00 per month. OPM must

complete this action no later than 20 days after the date of this decision.

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 has taken

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).

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

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 RIGHT TO REQUEST

ATTORNEY FEES AND COSTS

You may be entitled to be paid by the agency for your reasonable attorney

fees and costs. To be paid, you must meet the requirements set out at Title 5 of

the United States Code (5 U.S.C.), sections 7701(g), 1221(g), or 1214(g). The

regulations may be found at 5 C.F.R. §§ 1201.201, 1201.202, and 1201.203. If

you believe you meet these requirements, you must file a motion for attorney fees

and costs WITHIN 60 CALENDAR DAYS OF THE DATE OF THIS DECISION.

You must file your motion for attorney fees and costs with the office that issued

the initial decision on your appeal.

NOTICE OF APPEAL RIGHTS 8

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 may obtain

review of this final decision. 5 U.S.C. § 7703(a)(1). By statute, the nature of

your claims determines the time limit for seeking such review and the appropriate

forum with which to file. 5 U.S.C. § 7703(b). Although we offer the following

summary of available appeal rights, the Merit Systems Protection Board does not

provide legal advice on which option is most appropriate for your situation and

the rights described below do not represent a statement of how courts will rule

regarding which cases fall within their jurisdiction. If you wish to seek review of

this final decision, you should immediately review the law applicable to your

claims and carefully follow all filing time limits and requirements. Failure to file

within the applicable time limit may result in the dismissal of your case by your

chosen forum.

Please read carefully each of the three main possible choices of review

below to decide which one applies to your particular case. If you have questions

about whether a particular forum is the appropriate one to review your case, you

should contact that forum for more information.

(1) Judicial review in general . As a general rule, an appellant seeking

judicial review of a final Board order must file a petition for review with the U.S.

Court of Appeals for the Federal Circuit, which must be received by the court

within 60 calendar days of the date of issuance of this decision. 5 U.S.C.

§ 7703(b)(1)(A).

Since the issuance of the initial decision in this matter, the Board may have updated

the notice of review rights included in final decisions. As indicated in the notice, the

Board cannot advise which option is most appropriate in any matter.

If you submit a petition for review to the U.S. Court of Appeals for the

Federal Circuit, you must submit your petition to the court at the

following address:

U.S. Court of Appeals

for the Federal Circuit

717 Madison Place, N.W.

Washington, D.C. 20439

Additional information about the U.S. Court of Appeals for the Federal

Circuit 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, 10, 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

Board neither endorses the services provided by any attorney nor warrants that

any attorney will accept representation in a given case.

(2) Judicial or EEOC review of cases involving a claim of

discrimination . This option applies to you only if you have claimed that you

were affected by an action that is appealable to the Board and that such action

was based, in whole or in part, on unlawful discrimination. If so, you may obtain

judicial review of this decision—including a disposition of your discrimination

claims —by filing a civil action with an appropriate U.S. district court ( not the

U.S. Court of Appeals for the Federal Circuit), within 30 calendar days after you

receive this decision. 5 U.S.C. § 7703(b)(2); see Perry v. Merit Systems

Protection Board, 582 U.S. 420 (2017). If you have a representative in this case,

and your representative receives this decision before you do, then you must file

with the district court no later than 30 calendar days after your representative

receives this decision. If the action involves a claim of discrimination based on

race, color, religion, sex, national origin, or a disabling condition, you may be

entitled to representation by a court-appointed lawyer and to waiver of any

requirement of prepayment of fees, costs, or other security. See 42 U.S.C.

§ 2000e-5(f) and 29 U.S.C. § 794a.

Contact information for U.S. district courts can be found at their respective

websites, which can be accessed through the link below:

http://www.uscourts.gov/Court_Locator/CourtWebsites.aspx .

Alternatively, you may request review by the Equal Employment

Opportunity Commission (EEOC) of your discrimination claims only, excluding

all other issues . 5 U.S.C. § 7702(b)(1). You must file any such request with the

EEOC’s Office of Federal Operations within 30 calendar days after you receive

this decision. 5 U.S.C. § 7702(b)(1). If you have a representative in this case,

and your representative receives this decision before you do, then you must file

with the EEOC no later than 30 calendar days after your representative receives

this decision.

If you submit a request for review to the EEOC by regular U.S. mail, the

address of the EEOC is:

Office of Federal Operations

Equal Employment Opportunity Commission

P.O. Box 77960

Washington, D.C. 20013

If you submit a request for review to the EEOC via commercial delivery or

by a method requiring a signature, it must be addressed to:

Office of Federal Operations

Equal Employment Opportunity Commission

131 M Street, N.E.

Suite 5SW12G

Washington, D.C. 20507

(3) Judicial review pursuant to the Whistleblower Protection

Enhancement Act of 2012 . This option applies to you only if you have raised

claims of reprisal for whistleblowing disclosures under 5 U.S.C. § 2302(b)(8) or

other protected activities listed in 5 U.S.C. § 2302(b)(9)(A)(i), (B), (C), or (D).

If so, and your judicial petition for review “raises no challenge to the Board’s

disposition of allegations of a prohibited personnel practice described in

section 2302(b) other than practices described in section 2302(b)(8), or

2302(b)(9)(A)(i), (B), (C), or (D),” then you may file a petition for judicial

review either with the U.S. Court of Appeals for the Federal Circuit or any court

of appeals of competent jurisdiction. 9 The court of appeals must receive your

petition for review within 60 days of the date of issuance of this decision.

5 U.S.C. § 7703(b)(1)(B).

If you submit a petition for judicial review to the U.S. Court of Appeals for

the Federal Circuit, you must submit your petition to the court at the