VA Employee Bonus Recoupment Appeals — OPM Review of Department of Veterans Affairs Award Clawbacks

Legal Authority

• 38 U.S.C. § 721 — Authorizes the Secretary of Veterans Affairs to recoup awards and bonuses paid to VA employees who engaged in misconduct or performance failures; provides specific recoupment authority beyond OPM's general civilian service rules
• 38 U.S.C. § 723 — Establishes the right of VA employees to appeal bonus recoupment decisions to the Office of Personnel Management (OPM); specifies OPM's review authority and the standard for sustaining or reversing recoupment
• 5 CFR Part 755 — OPM implementing regulations governing the appeal process for VA bonus recoupment decisions; specifies filing deadlines, procedures, scope of review, and OPM's decision standards

Key Mechanics

5 CFR Part 755 establishes the OPM administrative appeal process for VA employees whose performance awards or bonuses have been recouped (clawed back) by the Department of Veterans Affairs under 38 U.S.C. §§ 721–723. Congress enacted these provisions after the VA wait-time scandal in 2014, which revealed that senior VA executives had received substantial performance bonuses despite systemic failures in veteran healthcare delivery. The recoupment authority allows the VA Secretary to recover awards paid to employees who engaged in performance failures or misconduct — particularly senior executives and senior leaders. An employee who receives a recoupment notice may appeal to OPM within the deadline specified in Part 755 (generally 30 days). OPM reviews whether the recoupment was: (1) supported by substantial evidence of the underlying misconduct or performance failure; and (2) procedurally proper. OPM may sustain the recoupment, reduce the amount, or reverse it. OPM's decision is final administrative action; further appeal to the Merit Systems Protection Board (MSPB) or federal court may be available depending on the employee's status and the type of action. The regulation distinguishes VA recoupment (VA-specific statutory authority) from general federal employee grade or pay actions (which are appealable to MSPB).

Current Rule (2026)

What This Rule Does

The Department of Veterans Affairs has unique authority under Title 38 to claw back awards, bonuses, and relocation expenses paid to its employees — including executives, senior managers, and physicians — when it determines those payments were undeserved, made based on false information, or granted to employees who subsequently engaged in misconduct. VA can order current or former employees to repay these amounts.

But Congress recognized that VA's clawback authority needed a check. Five CFR Part 755 provides that check: an independent appeal process to the Director of the Office of Personnel Management. Employees — both current and former — who receive a VA recoupment order can appeal to OPM, which reviews whether the VA's order is valid, timely, and legally sound.

The rule has two subparts mirroring the two separate statutory authorities: Subpart A covers appeals under 38 U.S.C. § 721 (recoupment of awards and bonuses), and Subpart B covers appeals under 38 U.S.C. § 723 (recoupment of relocation expenses and bonuses for executives and senior employees). The procedures are parallel but the underlying authority and covered employees differ.

Key Provisions — Awards and Bonus Recoupment Appeals (Subpart A)

• § 755.101 — Scope: covers current and former civil service employees of the Department of Veterans Affairs, as defined by Title 38; both Title 5 and hybrid Title 38 employees at VA may be subject to recoupment orders and may appeal under this subpart

• § 755.102 — Filing: appeals are filed with the Director, U.S. Office of Personnel Management, Accountability and Workforce Relations (Room 7H28); OPM provides forms and procedures for filing; the employee bears the burden of showing the appeal is timely and that the VA's order is in error

• § 755.103 — Standard: the burden is on the employee to establish both that the appeal is timely filed and that the VA's recoupment order is in error; OPM does not give the benefit of the doubt to the employee — the VA's factual determination is given weight, but OPM reviews legal and procedural correctness de novo

• § 755.104 — Timeline: OPM issues its decision within 30 business days of receiving the appeal; the decision is in writing and states OPM's reasons

• § 755.105 — Finality: OPM appeal decisions under this subpart are final under 38 U.S.C. § 721(b)(2); no further administrative review is available at OPM; the employee's next option after an adverse OPM decision is federal court

Key Provisions — Relocation Expense and Executive Bonus Appeals (Subpart B)

• § 755.201 — Scope: covers appeals by "covered employees" — VA executives, senior managers, and certain other senior employees — appealing recoupment of relocation expenses, relocation bonuses, and other awards under 38 U.S.C. § 723
• § 755.202 — Filing: same procedural requirements as Subpart A; the employee files with OPM's Accountability and Workforce Relations office
• § 755.203 — Standard: same as Subpart A — the employee bears the burden of establishing timeliness and error in the VA order
• § 755.204 — Timeline: OPM issues its decision within 30 business days; written decision with reasoning
• § 755.205 — Finality: decisions under § 723 are also final at OPM; judicial review in federal court is the next available step

How It Affects You

If you are a current or former VA employee and you have received a notice that the VA is seeking to recoup an award, bonus, retention incentive, or relocation payment, Part 755 is your administrative appeal process at OPM. It is separate from Merit Systems Protection Board appeals — OPM is the specific reviewer for VA clawback actions under 38 U.S.C. §§ 721 and 723.

The burden is entirely on you to show the VA's order is wrong. OPM does not investigate independently; it reviews the record and your arguments. Build your appeal on specific factual and legal errors in the VA's recoupment determination, not general fairness arguments.

The 30-business-day decision timeline means OPM moves relatively quickly. Be prepared to file a well-developed appeal promptly after receiving the VA's recoupment notice — deadlines for filing are set by the underlying statutes and must be met or your appeal will be rejected as untimely regardless of its merits.

OPM decisions are final administratively. If OPM upholds the VA's recoupment order, your only remaining option is federal court review. Consult a federal employment attorney about the appropriate jurisdiction and standard of review before deciding whether to challenge an adverse OPM decision.

Statutory Authority

This rule implements:

• 38 U.S.C. § 721 — Authorizes VA to recoup awards and bonuses paid to VA employees in certain circumstances; establishes OPM's role as the independent appellate reviewer for employees challenging recoupment orders
• 38 U.S.C. § 723 — Extends recoupment authority to relocation expenses and additional bonus categories for VA executives and senior employees; requires OPM to provide a comparable appeal process

Recent Rulemakings

No major Federal Register amendments reported since promulgation.

Pending Action