James Patrick Pierotti v. Office of Personnel Management
2016 MSPB 46
| MSPB | 2016Background
- Appellant James Patrick Pierotti appealed an OPM reconsideration finding that he was overpaid $84,546.02 for receiving both OWCP compensation and disability retirement from Aug. 27, 2005 to Mar. 30, 2010.
- OPM notified Pierotti in Feb. 2006 that his disability retirement payments would be suspended because he was receiving OWCP benefits, but payments continued in error.
- Administrative judge found OPM proved the overpayment amount and that Pierotti was not without fault because he knew or should have known payments were erroneous.
- AJ denied waiver of recovery and upheld OPM’s $125/month recoupment schedule after concluding Pierotti had $167.08/month of disposable income.
- On review the Board recalculated income and expenses (accounting for Medicare and correct medical expense accounting) and found Pierotti’s monthly expenses exceeded income by $59.
- Because collection at $125/month would cause financial hardship, the Board modified the repayment schedule to $5/month and ordered OPM to implement the change and notify the appellant when done.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellant is without fault for the overpayment (entitling him to waiver) | Pierotti relied on OPM’s Feb. 2006 statement that benefits were suspended and reasonably believed his payments were proper | OPM contended appellant should have known payments were erroneous and is therefore at fault | Held: Appellant not without fault; he knew or should have known payments were erroneous and should have set aside amounts pending recoupment |
| Whether recovery would be against equity and good conscience (financial hardship) | Pierotti asserted $125/month would cause financial hardship given his expenses and reduced Social Security (Medicare) withholding | OPM maintained recovery schedule but did not specifically challenge expense claims and conceded Board may reconsider schedule | Held: Financial hardship established — expenses exceed income; recovery schedule reduced to $5/month |
| Proper calculation of income and expenses for hardship analysis | Pierotti contested AJ’s calculations and claimed certain medical expenses and Medicare withholding should be considered | OPM offered no substantive challenge and suggested Board could reconsider schedule | Held: Board adjusted income (reduced by $122 for Medicare) and expenses (adjusted medical expense entries) and concluded expenses exceed income |
| Notice concerning collectability after debtor’s death | N/A (issue arose during review) | OPM recommended language advising debt may be collected from estate/beneficiaries | Held: Board adopted recommendation to note that debts may be collectible from estate/other responsible parties; reminded that hardship analysis is income-based not asset-based |
Key Cases Cited
- Wright v. Office of Personnel Management, 105 M.S.P.R. 419 (2007) (OPM policy on expecting recipients to set aside suspected overpayments; financial hardship exceptions narrow)
- Zelenka v. Office of Personnel Management, 107 M.S.P.R. 522 (2007) (use of reasonable person test for ordinary and necessary living expenses)
- Knox v. Office of Personnel Management, 107 M.S.P.R. 353 (2007) (reducing repayment schedule to nominal amount where expenses exceed income)
- Dorrello v. Office of Personnel Management, 91 M.S.P.R. 535 (2002) (financial hardship may justify reduction of repayment schedule)
- Matthews v. Office of Personnel Management, 85 M.S.P.R. 531 (2000) (Board precedent on reducing recoupment when debtor lacks sufficient income)
- Derrico v. Office of Personnel Management, 42 M.S.P.R. 491 (1989) (burden regarding substantiation of income/expenses when information not facially incomplete)
- Pinat v. Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991) (Federal Circuit rule that statutory deadline for review is strictly construed)