Kientz v. Commissioner, SSA

954 F.3d 1277
Court of Appeals for the Tenth Circuit·Decided April 1, 2020·No. 18-3240·Published·Cited by 12 cases

Opinion

FILED

United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS April 1, 2020

Christopher M. Wolpert

FOR THE TENTH CIRCUIT Clerk of Court

STEVEN KIENTZ,

Plaintiff - Appellant, No. 18-3240

v.

COMMISSIONER, SSA,

Defendant - Appellee.

Appeal from the United States District Court for the District of Kansas (D.C. No. 5:17-CV-04067-SAC)

Roger D. Moore, Rehm, Bennett, & Moore, P.C., LLO, Lincoln, Nebraska, for Plaintiff- Appellant.

Sushma Soni, Attorney (Joseph H. Hunt, Assistant Attorney General, Stephen R. McAllister, United States Attorney, and Alisa B. Klein, Attorney, with her on the brief), U.S. Department of Justice, Washington, DC, for Defendant-Appellee.

Before TYMKOVICH, Chief Judge, MURPHY, and CARSON, Circuit Judges.

CARSON, Circuit Judge.

A dual status technician occupies a hybrid role—created by Congress under 10 U.S.C. § 10216—that includes a balance of traditionally civilian and traditionally military responsibilities. Dual status technicians are federal civilian employees who

perform “maintenance and repair of supplies or equipment issued to” reserve components of the United States military branches, including the National Guard. 10 U.S.C. § 10216(a)(1)(C). A dual status technician may participate in the Civil Service Retirement System and receive a pension in retirement. This case requires us to consider whether a dual status service technician’s civil service pension is “based wholly on service as a member of a uniformed service” under 42 U.S.C. § 415(a)(7)(A). Our jurisdiction to do so arises under 28 U.S.C. § 1291.

I.

Plaintiff Steven Kientz spent many years as a dual status technician with the Kansas Army National Guard, where he worked as a mechanic on electronic measurement equipment. Plaintiff’s position required him to simultaneously serve as a member of the National Guard, a second job with separate pay and separate responsibilities. In retirement, Plaintiff receives a monthly pension payment under the Civil Service Retirement System based on his service as a dual status technician. Plaintiff also receives Social Security retirement benefits based on contributions he made to the Social Security system from his separate pay as a National Guard member. And this matters because the amount of Plaintiff’s Social Security retirement benefits depends on how we classify Plaintiff’s employment, and specifically his civil service pension in particular, under the Social Security statutory scheme. We begin our analysis with a description of the relevant statutory background.

A.

The Social Security Administration (SSA) calculates an individual’s Social Security retirement benefits according to a statutory formula. See 42 U.S.C. § 415. The formula determines how much money an individual receives from the SSA in retirement based partially on how much the individual paid into the system via Social Security taxes.1 See id. From the SSA’s perspective, there are two types of civilian employment: covered and noncovered. If an employer withholds Social Security taxes from an individual’s paycheck, the individual works in covered employment. See 20 C.F.R. § 404.1001(a)(1). If not, the individual works in noncovered employment. See 42 U.S.C. § 410(a)(5); 20 C.F.R. § 404.1018. And only those who work in covered employment receive the full measure of Social Security retirement benefits because covered employees pay into the Social Security system while noncovered employees do not. See 42 U.S.C. § 415. Noncovered employees (at one time including civil service employees) often receive a pension instead of Social Security retirement benefits because these employees did not pay into the Social Security system. See 20 C.F.R. § 404.1018.

1 Employees and employers generally pay Social Security taxes to fund the “Federal Old-Age and Survivors Insurance Trust Fund.” 42 U.S.C. § 401(a). That fund pays out Social Security retirement benefits, administered by the SSA, to qualifying “old-age” beneficiaries based, in part, on beneficiaries’ past contributions to the fund. See id.; see also Francine Lipman & Alan Smith, The Social Security Benefits Formula and the Windfall Elimination Provision: An Equitable Approach to Addressing ‘Windfall’ Benefits, 39 J. Legis. 181, 185 (2013).

In some instances, there are individuals who spend their careers in both covered and noncovered positions. These people stand to receive both a civil service pension and Social Security retirement benefits. And such persons could ultimately receive a windfall not available to their peers who worked solely in covered or noncovered positions. The windfall occurs because of the way the Social Security formula works. The statutory formula provides persons with lower covered earnings a greater percentage (vis-à-vis what they paid in) of Social Security retirement benefits than persons with higher covered earnings. See 42 U.S.C. § 415(a)(1)(A)(i)– (iii). Thus, persons with both covered and noncovered earnings stand to receive a windfall from Social Security. See id.

To address this inequity in the Social Security system, Congress enacted the Windfall Elimination Provision (WEP). Social Security Amendments of 1983, Pub. L. No. 98–21, § 113, 97 Stat. 65, 76 (codified at 42 U.S.C. § 415(a)(7)(A)). The WEP modifies the usual statutory formula to proportionally reduce Social Security retirement benefits for any individual who also receives “a monthly periodic payment”—such as a pension payment—“based in whole or in part upon his or her earnings” for noncovered work. Id. But the WEP is not without its own exceptions.

Relevant to this case, Congress decided that certain individuals defending our country as members of the armed forces should not be subject to the reduction. Thus, Congress created an exception to the WEP for any monthly periodic payment “based wholly on service as a member of a uniformed service.” Id. (we call this the “uniformed services exception”). Thus, a typical military pension does not reduce an

individual’s Social Security retirement benefits from covered employment under the WEP, even if the individual earned the military pension through noncovered employment. Id.; see also 20 C.F.R. § 404.213(e)(9).

B.

Plaintiff worked as a dual status technician from 1978 to 2007. To obtain and keep the dual status technician position, Plaintiff had to remain a member of the National Guard, wear a military uniform at work, and maintain military fitness standards. 32 U.S.C. § 709(b)(2)–(4), (j)(2). As a member of the National Guard, Plaintiff participated in periodic military training drills separate from his time as a dual status technician. See 32 U.S.C. § 502; 37 U.S.C. § 206.

Plaintiff received separate military pay for his National Guard service, apart from his dual status technician job, from 1978 to 2007.2 See 5 U.S.C. § 5534. And Plaintiff paid Social Security taxes on those National Guard wages—covered employment. He now receives Social Security retirement benefits based on his contributions to Social Security from his National Guard wages. See 42 U.S.C. § 410(l)(1)(A), (B). At the same time, Plaintiff also receives a military pension from a United States Department of Defense agency based exclusively on his National Guard service.

2 Prior to becoming a dual status technician, Plaintiff served in the active duty of the United States Army from 1972 to 1976. Plaintiff was also on active duty for about two months in 2005 during his National Guard tenure.

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Kientz v. Commissioner, SSA, 954 F.3d 1277 (10th Cir. 2020).

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