                           UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD


     NATHAN R. JAMES,                                DOCKET NUMBER
                  Appellant,                         PH-0845-15-0101-I-1

                  v.

     OFFICE OF PERSONNEL                             DATE: August 13, 2015
       MANAGEMENT,
                   Agency.



                  THIS ORDER IS NONPRECEDENTIAL *

           Nathan R. James, Philadelphia, Pennsylvania, pro se.

           Roxann Johnson, Washington, D.C., for the agency.


                                           BEFORE

                              Susan Tsui Grundmann, Chairman
                                 Mark A. Robbins, Member


                                     REMAND ORDER

¶1         The appellant has filed a petition for review of the initial decision, which
     affirmed as modified the reconsideration decision of the Office of Personnel
     Management (OPM) finding that he was overpaid $26,064.00 in Federal
     Employees’ Retirement System (FERS) disability benefits.             For the reasons


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        A nonprecedential order is one that the Board has determined does not add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 Parties may cite nonprecedential orders,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

     discussed below, we GRANT the petition for review and REMAND the case to
     the regional office for further adjudication in accordance with this Order.

                     DISCUSSION OF ARGUMENTS ON REVIEW
¶2         The appellant filed an appeal of OPM’s reconsideration decision, which
     found that he was overpaid $26,064.00 in annuity benefits under FERS and that
     he was not entitled to a waiver of the overpayment. Initial Appeal File (IAF),
     Tab 1. It is undisputed that the appellant was separated for disability retirement
     on March 17, 1995, by his employing agency, the Department of the Navy. In a
     letter dated September 15, 2005, OPM granted the appellant’s disability
     retirement application and advised him that he was required to apply for social
     security benefits. IAF, Tab 5, Subtab 5 at 38-40. OPM’s letter also explicitly
     notified the appellant that his social security checks should be set aside until the
     FERS annuity had been properly reduced, and that those checks would be needed
     to pay OPM for the reduction which should have been made in the FERS annuity.
     Id.   In a letter dated April 16, 2013, OPM notified the appellant that it had
     received information that he became entitled to social security benefits effective
     August 1, 2009. IAF, Tab 5, Subtab 4 at 21-23. OPM advised the appellant that
     his annuity had been adjusted because of his social security benefits, and that, as
     a result, he had been overpaid $26,064.00; it notified him that his repayment
     schedule would consist of 121 monthly payments of $214.00, with a final
     payment of $170.00. Id.
¶3         The appellant requested reconsideration of OPM’s decision, and he
     requested a waiver of the overpayment.      IAF, Tab 5, Subtab 3 at 16-19.       He
     submitted a Financial Resources Questionnaire (FRQ) showing that his average
     monthly expenses exceeded his average monthly income by $31.10. Id. OPM’s
     reconsideration decision affirmed the existence of the overpayment and found that
     the appellant was not entitled to a waiver of the overpayment.         IAF, Tab 5,
                                                                                      3

     Subtab 2 at 10-14.      However, OPM adjusted the repayment schedule to
     208 monthly payments of $125 and one final payment of $64.00. Id. at 13.
¶4        On appeal, the appellant asked the Board to waive recovery of the
     overpayment because of financial hardship. IAF, Tab 1. Because the appellant
     did not request a hearing, the administrative judge decided the case on the written
     record. Initial Decision (ID) at 1; IAF, Tab 1. The administrative judge found
     that OPM established the existence and amount of the overpayment, $26,064.00,
     and that the appellant was not entitled to a waiver of collection of the
     overpayment under the set-aside rule. ID at 5-6. While the appeal was pending,
     OPM offered to further reduce the appellant’s monthly installment payments from
     $125.00 to $100.00. IAF, Tab 5 at 4-5. The administrative judge found that the
     repayment schedule was properly adjusted to a monthly payment of $100.00 due
     to financial hardship and he affirmed OPM’s reconsideration decision as
     modified. ID at 6-7.
¶5        On review, the appellant has not challenged the administrative judge’s
     findings regarding the overpayment amount or that he was not entitled to a waiver
     because of the set-aside rule.   ID at 3-6.   Thus, we affirm the administrative
     judge’s findings on these issues. Nevertheless, an annuitant who is ineligible for
     a waiver may be entitled to a recovery schedule adjustment if he shows that it
     would cause him financial hardship to make payments at the scheduled rate.
     Malone v. Office of Personnel Management, 113 M.S.P.R. 104, ¶ 4 (2010);
     Dorrello v. Office of Personnel Management, 91 M.S.P.R. 535, ¶ 7 (2002);
     5 C.F.R. § 845.301. Pursuant to OPM’s regulations, financial hardship may exist
     where the annuitant needs substantially all of his income and liquid assets to meet
     current ordinary and necessary living expenses and liabilities.           Malone,
     113 M.S.P.R. 104, ¶ 4; 5 C.F.R. § 845.304.      Ordinary and necessary expenses
     include those for rent, mortgage payments, utilities, maintenance, food, clothing,
     insurance, taxes, installment payments, and medical expenses.            5 C.F.R.
     § 831.1405.   The Board has the authority, based on the appellant’s financial
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     situation, to order OPM to adjust the monthly repayment schedule.        Malone,
     113 M.S.P.R. 104, ¶ 4; Gott v. Office of Personnel Management, 97 M.S.P.R.
     538, ¶ 10 (2004).
¶6        Here, although the appellant does not specifically request an adjustment in
     the repayment schedule on review, he claims that he is currently behind on all of
     his bills and he asserts that he submitted an FRQ which shows that he is unable to
     pay his bills and living expenses. Petition for Review File, Tab 1. We find that,
     while he has not met his burden of proving that he is entitled to a waiver of
     recovery of the overpayment, the FRQ indicates that further adjustment of the
     repayment schedule may be warranted. IAF, Tab 5, Subtab 3 at 18-19.
¶7        The administrative judge discussed Board law regarding adjustment of the
     repayment schedule due to financial hardship and he stated that he reviewed the
     appellant’s FRQ in affirming OPM’s subsequent adjustments of his monthly
     installment payments from the original $214 to $100. The administrative judge
     explicitly found that the adjusted monthly payment of $100.00 “does not
     substantially exceed the appellant’s demonstrated monthly income/expense
     margin and would not therefore cause the appellant financial hardship.” ID at 7.
     However, there is no indication in the initial decision that the administrative
     judge fully reviewed the FRQ regarding the appellant’s income/expense margin.
     ID at 6-7; see Gott, 97 M.S.P.R. 538, ¶ 11 (finding that the administrative judge
     is required to consider whether the type of each claimed expense is ordinary and
     necessary).   Further, the FRQ reflects that the appellant’s monthly income is
     $1,457.90, expenses are $1,489.00, and expenses exceed income by $31.10. IAF,
     Tab 5, Subtab 3 at 18. However, there is an error in the computation of the
     appellant’s expenses; his monthly expenses actually exceed his income by $41.10.
     Id. Additionally, when considering OPM’s offer to adjust the repayment schedule
     and the appellant’s assertion that the scheduled rate would cause him financial
     hardship, the record shows that the administrative judge did not take into account
     that the appellant is entitled to $50.00 per month in emergency expenses. See
                                                                                            5

     Maseuli v. Office of Personnel Management, 111 M.S.P.R. 439, ¶ 12 (2009) (the
     Board has long recognized that OPM allows $50.00 in emergency expenses per
     month in calculating repayment scheduled for overpayment of annuity benefits).
     Adjusting the figures in the appellant’s FRQ accordingly, we find that his
     reported monthly expenses would exceed his monthly income of $1,457.90 by
     $91.90.   Thus, it appears that he may be entitled to an adjustment of the
     repayment schedule.
¶8         Nonetheless, in light of the administrative judge’s errors in considering the
     FRQ, the time lapse since the FRQ was completed, the appellant’s assertions on
     review that his financial situation has since deteriorated, and because it appears
     that at least one of his installment debts may now be paid in full, it is appropriate
     to provide him with an opportunity to submit updated financial information. See
     Spinella v. Office of Personnel Management, 109 M.S.P.R. 185, ¶ 12 (2008).
     Accordingly, remand is appropriate here to allow the appellant to submit an
     updated   FRQ    and   supporting    documentation      to   reflect   any   change    in
     circumstances since his last FRQ was prepared. On remand, the administrative
     judge must allow the parties an opportunity to supplement the record on the issue
     of the appellant’s finances.        Afterwards, the administrative judge must
     specifically consider the appellant’s income and his current ordinary and
     necessary living expenses and liabilities and adjust the repayment schedule, if
     appropriate,   based   on   his   current   financial   situation.     Otherwise,     the
     administrative judge should let his previous decision stand, depending on the
     evidence supplied.
                                                                         6

                                    ORDER
     For the reasons discussed above, we REMAND this case to the regional
office for further adjudication in accordance with this Remand Order.




FOR THE BOARD:                          ______________________________
                                        William D. Spencer
                                        Clerk of the Board
Washington, D.C.
