Here is a question we have seen with increasing regularity over the past several months. A Federal employee/retiree has been receiving disability benefits through OPM, and for some reason or another, OPM determines that the employee/retiree has been overpaid benefits. OPM determines a repayment schedule that is onerous, and it some cases, unconscionable.

The question is this: can a Federal retiree seek waiver of an overpayment of benefits?

Generally, the answer is “yes” – the employee/retiree can appeal OPM’s overpayment decision to the Merit Systems Protection Board (MSPB).

Let’s assume, for this question, that the overpayment is valid – that the employee/retiree has in fact, received more benefits than those to which he/she is entitled.

In those cases, the employee/retiree can seek either a full or partial waiver of OPM’s entitlement to recovery of the overpayment. Waiver of recovery of an overpayment may be granted when the federal employee/retiree meets two criteria

1) the employee is without fault; and,

2) recovery would be against equity and good conscience. 5 U.S.C. § 8346(b); 5 C.F.R. § 831.1401.

Regarding the first element- if the employee is with fault, and had reason to know that the overpayment was occurring, the MSPB has held that the employee/retiree should set aside the overpayment so that the funds are available when OPM comes calling.

Of course, many federal employee/retirees are not in a position to do so. If you have failed to set aside a known overpayment of retirement benefits, it is best to speak to an attorney or lawyer that practices before the MSPB.

Regarding the second element, the MSPB has held that recovery is against equity and good conscience when: “it would cause financial hardship, the federal employee/retiree can show that because of the overpayment (s)he relinquished a valuable right or changed positions for the worse, or recovery could be unconscionable under the circumstances.” 5 C.F.R. § 831.1403(a).

Also, where the appellant is without fault and recovery of some portion, but not all, of the overpayment would be against equity and good conscience, a partial waiver may be warranted. To show that recovery would work a hardship on the federal employee/retiree, (s)he should show that his/her ordinary and necessary monthly expenses, plus a $50 for emergency expenses, exceed his/her current income or liquid assets. Fusco v. Office of Personnel Management, 42 M.S.P.R. 501, 508 (1989).

To do this, in the first letter you receive from OPM, you should be provided a Financial Resource Questionnaire (FRQ). It is important that you fill out this form completely and properly, as OPM will attempt to “nickle and dime” you to prove that you have liquid assets available to repay the overpayment. For example, including a category of “other expenses” will cause OPM to strike any of those expenses claimed, as they were not properly itemized.

The Attig Law Firm, PLLC, recommends that, in addition to using the FRQ provided by the OPM, the Federal employee/retiree should attach, as a continuation sheet to the FRQ, a more thorough and complete “family balance sheet” that paints a more accurate picture of your real financial situation. In some situations, to ensure the best results with a minimum of legal intervention, it is best to include evidence of each claimed amount on this balance sheet.

After submitting the FRQ, the OPM will make a reconsideration decision – they can waive or reduce the overpayment or, as we are seeing with increasing regularity, ignore your position that your expenses exceed your income.

If you are not pleased with the OPM’s decision, you can appeal that decision, within 30 days, to the Merit Systems Protection Board (MSPB).No post on this website is legal advice, is meant to be legal advice, and certainly does not serve as a substitute for legal advice. Information is power, and we are providing this information to give you, the federal employee, with some power. This information is not widely or easily accessible to Federal Employees.

It is best to consult with a lawyer familiar with Merit Systems Protection Board (MSPB) appeals to discuss the facts and law of your particular case.

If you find yourself in a situation where OPM is claiming that you were overpaid retirement benefits, and would like to challenge OPM’s calculations of the overpayment or the waiver amount to the MSPB, contact an MSPB attorney at the Attig Law Firm, PLLC, to schedule a telephone consultation.