[Request for Waiver of Repayment of Severance Pay]

An Economic Development Administration (EDA) employee requested waiver of repayment of the severance pay that he received after his position was eliminated due to a reduction in force. The employee, whose request for disability retirement had been rejected, was granted a retroactive disability retirement subsequent to his separation, making the severance pay an overpayment. GAO found that the overpayment resulted from the erroneous denial of the employee's request for disability retirement, and there was no indication of fraud or misrepresentation on the employee's part. GAO has held that, if an employee knew or should have known that he was receiving erroneous payments, waiver of the repayment will be denied. GAO found that there was no evidence that the employee was aware that he had received an overpayment and, at the time that he received the severance pay, he could not have known that it would become erroneous. Accordingly, the full amount of the severance pay may be waived.