UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
CHARA L. CORDOVA, DOCKET NUMBER
Appellant, SF-0845-21-0545-I-1
v.
OFFICE OF PERSONNEL DATE: February 15, 2023
MANAGEMENT,
Agency.
THIS ORDER IS NONPRECEDENTIAL 1
Chara L. Cordova, Arcadia, California, pro se.
Jane Bancroft, Washington, D.C., for the agency.
BEFORE
Cathy A. Harris, Vice Chairman
Raymond A. Limon, Member
Tristan L. Leavitt, Member
REMAND ORDER
¶1 The agency has filed a petition for review of the initial decision, which
reversed a reconsideration decision issued by the Office of Personnel
Management (OPM) that concluded that the appellant had received an
overpayment of Federal Employees’ Retirement System (FERS) disability
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A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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
retirement benefits and was not entitled to a waiver of the overpayment. For the
reasons discussed below, we GRANT the agency’s petition for review, VACATE
the initial decision, and REMAND the matter to the Western Regional Office for
further adjudication in accordance with this Remand Order .
ANALYSIS
¶2 Neither party disputes the administrative judge’s conclusion that OPM
proved the existence and amount of the $21,102.00 overpayment at issue, which
occurred as a result of the appellant’s concurrent entitlement to FERS disability
retirement benefits and Social Security Administration (SSA) disability insurance
benefits for the period of January 1, 2018, through March 30, 2020. Initial
Appeal File (IAF), Tab 12 at 29-34, Tab 29, Initial Decision (ID) at 6-7; see
5 U.S.C. § 8452(a); Johnston v. Office of Personnel Management, 70 M.S.P.R.
109, 112-17, aff’d, 99 F.3d 1160 (Fed. Cir. 1996) (Table); 5 C.F.R. § 844.302.
Thus, the dispositive issue in this matter is whether the appellant is entitled to a
waiver of the overpayment.
We vacate the administrative judge’s conclusion that the appellant is entitled to a
waiver of the overpayment and remand the matter for further adjudication.
¶3 The appellant bears the burden of establishing her entitlement to a waiver
by substantial evidence. 2 5 C.F.R. § 845.307(b). To establish entitlement to a
waiver of an overpayment, the appellant must show (1) that she was without fault
and (2) that recovery of the overpayment would be against equity and good
conscience. 5 U.S.C. § 8470(b); Knox v. Office of Personnel Management,
107 M.S.P.R. 353, ¶ 5 (2007); 5 C.F.R. § 845.301. Here, the administrative judge
concluded both that the appellant was without fault in creating the overpayment
and that recovery of the same would be against equity and good conscience. For
2
Substantial evidence is defined as the degree of relevant evidence that a reasonable
person, considering the record as a whole, might accept as adequate to support a
conclusion, even though other reasonable persons might disagree. 5 C.F.R. § 1201.4(p).
3
the reasons set forth herein, we vacate these findings and remand the matter for
further adjudication.
The administrative judge applied an incorrect legal standard in determining
whether the appellant was at fault in creating the overpayment.
¶4 The administrative judge concluded that the appellant was without fault in
creating the overpayment because, although it was undisputed that she had been
advised of her obligation to immediately inform OPM of her receipt of SSA
benefits, she was not awarded SSA benefits until January 2020, “only several
months before” April 25, 2020, when OPM notified her of the overpayment. ID
at 7-8. The administrative judge reasoned that the appellant “had no control over
the fact that, as a result of SSA’s decision to award her benefits retroactive to
January 1, 2018, she had received two full years of FERS disability retirement
overpayments that occurred between January 1, 2018, and December 31, 2019.” 3
ID at 8.
¶5 In determining fault, pertinent considerations generally include the
following: (1) whether payment resulted from any statement the appellant should
have known to be incorrect; (2) whether payment resulted from any failure on her
part to disclose material facts in her possession that she should have known to be
material; and (3) whether she accepted a payment that she knew or shoul d have
known to be erroneous. Knox, 107 M.S.P.R. 353, ¶ 6; 5 C.F.R. § 845.302(a). The
recipient of an overpayment is deemed to be without fault if the individual
“performed no act of commission or omission which resulted in the
overpayment.” 5 C.F.R. § 845.302. OPM guidelines clarify that an individual is
held to be without fault, even if she knew or should have known that the payment
3
We find the administrative judge’s characterization of the appellant having received
“two full years of FERS disability retirement overpayments that occurred between
January 1, 2018, and December 31, 2019” imprecise. ID at 8 (emphasis added).
Indeed, although the appellant was awarded SSA benefits retroactive to January 1,
2018, the administrative judge found that substantial evidence established that she did
not receive any money from SSA until January 2020. See ID at 7-8.
4
was erroneous, if she contacted OPM within 60 days of the receipt of an
overpayment to question the correctness of the payment. Policy Guidelines on
the Disposition of Overpayments under the Civil Service Retirement System and
Federal Employees’ Retirement System (OPM Policy Guidelines), § I.B.6 (1995)
(located at IAF, Tab 12 at 90). Here, the appellant never notified OPM of the
overpayment. Instead, approximately 4 months (i.e., more than 60 days) after the
appellant was awarded SSA benefits, OPM independently learned of the same.
IAF, Tab 12 at 36. Thus, applying the correct legal standard, the appellant has so
far failed to show that she was without fault in creating the overpayment. See
Ewing v. Office of Personnel Management, 100 M.S.P.R. 224, ¶ 5 (2005)
(concluding that the appellant was at fault regarding an overpayment when he
failed to follow the directions provided in OPM’s notification); cf. Boyd v. Office
of Personnel Management, 851 F.3d 1309, 1313 (Fed. Cir. 2017) (explaining that
an appellant who promptly notifies OPM of an overpayment is categorically
deemed to be “without fault”).
¶6 However, our inquiry does not end here. To this end, the appellant argued
before the administrative judge that, at the time she was approved for disability
retirement under FERS, she was undergoing intense psychiatric treatment that
prevented her from understanding the paperwork she had received from OPM; in
other words, the appellant contended that her mental condition caused her to
accept an erroneous payment. 4 IAF, Tab 1 at 5; see 5 C.F.R. § 845.302(b)
(stating that an individual’s mental condition may mitigate against finding fault if
it contributed to the appellant’s acceptance of an erroneous payment). Because
resolving the factual question of whether the appellant’s mental condition
rendered her incapable of knowing or suspecting that she had received an
overpayment may require credibility determinations that are best made first by
the administrative judge, we remand the matter for further adjudication.
4
Although the administrative judge acknowledged this argument, ID at 4, he did not
consider it in his analysis of fault, ID at 7-8.
5
The administrative judge applied an incorrect legal standard in determining
whether recovery would be against equity and good conscience.
¶7 The administrative judge concluded that recovery of the overpayment would
be against equity and good conscience because it would create a substantial
financial hardship for the appellant. ID at 8-17. In so concluding, he reasoned
that the appellant was not required to set aside the overpayment because her
January 2020 award of SSA benefits was retroactive and, therefore, she “was not
aware that she was receiving an overpayment until nearly all of the overpayment
had already occurred.” 5 ID at 8-9.
¶8 Recovery of an overpayment is against equity and good conscience if an
appellant can establish the following: (1) recovery would cause her financial
hardship; (2) she relinquished a valuable right or changed positions for the worse
because of the overpayment; or (3) recovery would be unconsci onable under the
circumstances. 6 Markanich v. Office of Personnel Management, 104 M.S.P.R.
323, ¶ 14 (2006); 5 C.F.R. § 845.303. In assessing these factors, the Board has
found that Federal annuitants who know or suspect that they are receiving
overpayments are expected to set aside the amount overpaid pending recoupment
and that in the absence of exceptional circumstances 7—which do not include
financial hardship—recovery in these cases is not against equity and good
conscience. Knox, 107 M.S.P.R. 353, ¶ 8.
5
Again, the administrative judge’s phrasing is imprecise. As stated, although the
appellant was awarded SSA benefits retroactive to January 1, 20 18, the administrative
judge found that substantial evidence established that she did not receive any monetary
benefits from SSA until January 2020. See ID at 7-8.
6
We discern no basis to disturb the administrative judge’s conclusions that the
appellant failed to show either (1) that she relinquished a valuable right or changed
positions for the worse because of the overpayment or (2) that recovery would be
unconscionable under the circumstances. ID at 9-10. Thus, the dipositive issue for
purposes of determining whether recovery would be against equity and good conscience
is whether recovery of the overpayment would cause the appellant financial hardship.
7
OPM Policy Guidelines explain that “[e]xceptional circumstances would involve
extremely egregious errors or delays by OPM—e.g., a failure to issue a written decision
within 4 years of a debtor’s request for waiver.” IAF, Tab 12 at 93.
6
¶9 Here, it is unclear why the administrative judge concluded that the
retroactive nature of the appellant’s SSA benefits rendered the set-aside rule
inapplicable to her; indeed, the Board has previously found that the rule applies
in such circumstances. E.g., Gulan v. Office of Personnel Management,
86 M.S.P.R. 16, ¶¶ 3-4, 9 (2000). Thus, applying the correct standard, we would
agree with OPM’s contention that the appellant should have set aside any
disbursement from SSA in order to repay OPM for the corresponding reductions
that should have been taken from her disability retirement benefits. IAF, Tab 12
at 14, 66. However, as stated, the appellant argued that her mental conditions
precluded her from understanding correspondence from OPM. IAF, Tab 1 at 5.
Accordingly, on remand, the administrative judge shall determine whether the
appellant’s mental conditions precluded her from knowing or suspecting that she
was receiving an overpayment and, therefore, whether the set-aside rule should
apply to her. See Zucker v. Office of Personnel Management, 114 M.S.P.R. 288,
¶¶ 8-10 (2010) (remanding an overpayment appeal for further adjudication
regarding the set-aside rule when the administrative judge failed to consider the
appellant’s claim that his deteriorating mental conditions led him to erroneously
believe that he had not received an overpayment).
On remand, the administrative judge shall further develop the record regarding
the appellant’s finances.
¶10 As stated, the administrative judge concluded that the appellant showed by
substantial evidence that recovery of the overpayment would create a financial
hardship for her. ID at 10. Although the administrative judge found that the
appellant’s monthly living expenses exceeded her monthly income, ID at 15 -16,
he also acknowledged that, at the time she filed her Board ap peal, she had “a
substantial amount of personal savings,” i.e., approximately $52,000.00 as of
October 2021, ID at 16; IAF, Tab 24 at 5. The administrative judge expressed
7
uncertainty as to the source of some these savings, 8 a large portion of which
stemmed from recent deposits. ID at 12; IAF, Tab 24 at 10, Tab 25 at 5, Tab 26
at 6. To this end, the administrative judge acknowledged that the appellant had
testified that some of these deposits reflected her sale of a diamond ring;
however, he found it “largely improbable that she was able to generate nearly
$20,000.00 from the sale of diamonds from a single ring.” ID at 12.
¶11 Financial hardship may be deemed to exist when the appellant “needs
substantially all of [] her current income and liquid assets to meet current and
ordinary living expenses and liabilities.” 5 C.F.R. § 845.304. However, when
information submitted by the appellant is incomplete, the adm inistrative judge
should request additional information so that he can make a reasoned
determination on the question of financial hardship. Zelenka v. Office of
Personnel Management, 107 M.S.P.R. 522, ¶ 15 (2007).
¶12 Here, we find the information concerning the appellant’s financial status to
be incomplete; accordingly, we vacate the administrative judge’s conclusion that
the appellant showed by substantial evidence that recovery of the overpayment
would create a financial hardship for her. On remand, the administrative judge
shall further develop the record regarding the appellant’s finances and provide the
appellant an opportunity to submit an updated Financial Resources Questionnaire
(FRQ). 9 See Zucker, 114 M.S.P.R. 288, ¶ 9 (instructing the administrative judge
8
The appellant indicated on a July 7, 2021 Financial Resources Questionnaire that she
had $39,000.00 in savings. IAF, Tab 12 at 17. Banking statements that she provided
indicated that, as of September 2021, she had over $54,000.00 in savings. IAF, Tab 24
at 9. The appellant also seemingly paid off a $7,528.32 car loan during the pendency of
her appeal before the administrative judge. IAF, Tab 12 at 17, Tab 24 at 4.
9
To the extent the administrative judge concludes on remand that the appellant is not
entitled to a waiver of the overpayment, this additional evidence will be relevant for
purposes of the repayment schedule. Indeed, even if an appellant is not entitled to a
waiver of recovery of the overpayment, she is entitled to an adjustment of OPM’s
recovery schedule if she is able to show that recovery under that schedule would cause
her a financial hardship. Malone v. Office of Personnel Management, 113 M.S.P.R.
104, ¶ 4 (2010); 5 C.F.R. § 845.301.
8
to provide the appellant an opportunity to submit an updated FRQ when
remanding an overpayment appeal).
¶13 Accordingly, we remand this appeal to the Western Regional Office for
further adjudication. On remand, the administrative judge shall apply the legal
standards set forth above, further develop the record as described, and, if
necessary, hold a supplemental hearing. See Spithaler v. Office of Personnel
Management, 1 M.S.P.R. 587, 589 (1980) (explaining that an initial decision must
identify all material issues of fact and law, summarize the evidence, resolve
issues of credibility, and include the administrative judge’s c onclusions of law
and his legal reasoning, as well as the authorities on which that reasoning rests ).
ORDER
¶14 For the reasons discussed above, we remand this case to the Western
Regional Office for further adjudication in accordance with this Remand Order.
FOR THE BOARD: /s/ for
Jennifer Everling
Acting Clerk of the Board
Washington, D.C.