Kievenaar v. Office of Personnel Management

• Court: Court of Appeals for the Federal Circuit
• Decided: September 1, 2005
• Docket: 2005-3048
• Status: Published

Opinion

Error: Bad annotation destination United States Court of Appeals for the Federal Circuit

05-3048

JOAN M. KIEVENAAR,

Petitioner,

v.

OFFICE OF PERSONNEL MANAGEMENT,

Respondent.

William J. Lafferty, Lafferty & Lafferty, of Burlington, Massachusetts, for petitioner.

J. Reid Prouty, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for respondent. On the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Todd M. Hughes, Assistant Director and James D. Colt, Trial Attorney.

Appealed from: United States Merit Systems Protection Board United States Court of Appeals for the Federal Circuit 05-3048

__________________________

DECIDED: September 1, 2005 __________________________

Before MAYER, LOURIE, and LINN, Circuit Judges.

LINN, Circuit Judge.

Joan M. Kievenaar (“Kievenaar”) petitions for review of the Merit Systems

Protection Board’s (“Board”) denial of a survivor annuity pursuant to 5 U.S.C. § 8343a.

Kievenaar v. Office of Pers. Mgmt., No. BN-0831-03-0055-I-1 (M.S.P.B. Mar. 31, 2003).

Because the Board did not err in determining that Kievenaar could not rely on 5 C.F.R.

§ 831.2203(f) to claim entitlement to an alternative form of annuity, we affirm.

BACKGROUND

Kievenaar’s husband, Peter H. Kievenaar, was a civilian employee of the

Department of the Navy from 1972 through 2002. With his two years of military service,

he had a total of 32 years of federal service, entitling him to retire. On February 22,

2002, in anticipation of his retirement on June 30, 2002, he elected a self-only annuity (“self-only annuity”) in accordance with 5 C.F.R. § 831.614 by completing an

“Application for Immediate Retirement” under the Civil Service Retirement System. This

election provides greater income as compared to the income resulting from a standard

“survivor annuity” but payable only during the retiring employee’s lifetime. Under a

survivor annuity,

the amount of the employee’s monthly payment is reduced by a factor actuarially computed to fund a survivor annuity for the life of the spouse, should the spouse survive the employee . . . [5 U.S.C. §§ 8339(j)(1), 8341(b)] provide[s] that the employee and spouse may together waive the spouse’s right to the survivor annuity by executing the appropriate written form, thereby giving them a larger current income but leaving the spouse without any survivor annuity should he or she survive the annuitant.

Carpisassi v. Office of Pers. Mgmt., 46 F.3d 1094, 1094 (Fed. Cir. 1995). Kievenaar

signed the required “Spouse’s Consent to Survivor Election,” acknowledging that she

freely consented to her spouse’s annuity election and that she understood that consent

was final. Kievenaar also signed, before a notary public, an attachment to the form in

which she consented to her husband’s election “to provide no survivor annuity.”

Kievenaar contends that they were not well informed in retirement matters and she

deferred to her husband’s judgment in this election, assuming that he was making a

reasoned decision. The annuity was to begin after her husband’s retirement, on July 1,

2002. Tragically, only three weeks later, her husband unexpectedly died of cardiac

arrhythmia.

Because the self-only annuity left Kievenaar with no spousal annuity, she

understandably looked for ways to change the election that she and her husband had

previously made under 5 C.F.R. § 831.614. On September 12, 2002, Kievenaar

submitted an application to OPM seeking a survivor annuity. OPM denied the survivor

05-3048 2 annuity, finding that she had freely consented to her husband’s decision to select a self-

only annuity. Kievenaar appealed OPM’s decision to the Board, which held a telephonic

hearing before Chief Administrative Judge William Carroll (the “AJ”).

Kievenaar presented three principal arguments to the AJ. First, she contended

that she and her husband had no understanding of retirement regulations and were not

properly counseled by his agency regarding the consequences of their selection. The

AJ, citing Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), rejected

this argument because the Board may not make monetary payments not authorized by

law, regardless of any error committed by the agency. Second, she argued that, under

5 C.F.R. § 831.621, she should have been allowed to change his election within 30

days after the first regular monthly payment. Citing Pruden v. Office of Personnel

Management, 68 M.S.P.R. 681, 683 (1995), the AJ held that § 831.621 only permits an

employee, and not a spouse, to change an election. Third, Kievenaar argued that

because her husband died before the date of OPM’s final adjudication of his retirement

application, 5 C.F.R. § 831.2203(f) applied and would deem her husband to have

selected a survivor “alternative form of annuity” (“AFA”) regardless of any previous

election. That regulation states:

Except as provided in paragraph (g), an annuitant who dies before the date of final adjudication is deemed to have made an affirmative election under paragraph (a) with a fully reduced annuity to provide a current spouse annuity, regardless of any election completed under § 831.614 [for a self-only annuity], and the lump-sum credit will be paid in accordance with the order of precedence established under 5 U.S.C. 8342(c).

05-3048 3 5 C.F.R. § 831.2203(f) (2002). The AJ disagreed and found that, as argued by OPM,

§ 831.2203(f) is only applicable to employees who retired between June 5, 1986 and

November 30, 1990, and would therefore not apply to Kievenaar’s husband, who retired

on June 30, 2002. The AJ thus affirmed the decision of the OPM.

Kievenaar filed a petition for Board review of the AJ’s initial decision. The Board

members agreed with the AJ regarding Kievenaar’s first two arguments: lack of

information cannot change the terms of a valid waiver of survivor annuity benefits, and

only Kievenaar’s husband had the right to change the annuity election under 5 C.F.R.

§ 831.621. However, the two Board members could not agree regarding the

applicability of 5 C.F.R. § 831.2203(f). Acting Chairman Neil McPhie noted that there

was no language in the regulation limiting its application to employees who retired

between June 1986 and November 1990. He, thus, considered the regulation

applicable to the facts of this case and effective to provide Kievenaar with a spousal

annuity. Board Member Susanne Marshall disagreed, concluding that § 831.2203(f)

only related to AFAs and required evidence of a life-threatening affliction or other critical

medical condition to be presented to OPM before retirement. Member Marshall

reasoned that, because Kievenaar’s husband did not select an AFA initially, and was

healthy at the time of his retirement, this subsection would not be applicable. With a

lack of consensus between the two reviewing Board members, the initial decision of the

AJ became the final decision of the Board pursuant to 5 C.F.R. § 1200.3(d).

Kievenaar petitions for review of the Board’s final decision. We have jurisdiction

pursuant to 28 U.S.C. § 1295(a)(9).

05-3048 4 DISCUSSION

I. Standard of Review

We may only set aside the Board’s decision if it is (1) arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law; (2) obtained without

procedures required by law, rule, or regulation having been followed; or (3) unsupported

by substantial evidence. 5 U.S.C. § 7703(c) (2000); Carpisassi, 46 F.3d at 1097.

Issues of statutory and regulatory construction are reviewed de novo. Billings v. United

States, 322 F.3d 1328, 1332 (Fed. Cir. 2003).

II. Analysis

A. Scope of Review

As a preliminary matter, OPM argues that this court may not consider

Kievenaar’s argument regarding the applicability of 5 C.F.R. § 831.2203(f) because it

was not initially made to OPM in Kievenaar’s original request for a survivor annuity

benefit. “Objections to the proceedings of an administrative agency must be made

while it has an opportunity for correction in order to raise issues reviewable by the

courts. A corollary is that the issue must be raised with sufficient specificity and clarity

that the tribunal is aware that it must decide the issue, and in sufficient time that the

agency can do so.” Kachanis v. Dep’t of Treasury, 212 F.3d 1289, 1293 (Fed. Cir.

2000) (internal citation omitted). This has clearly occurred here. Kievenaar argued this

issue extensively before the AJ and the reviewing Board. Although the AJ recognized

that the applicability of the regulation had not been decided by the OPM, the AJ

nonetheless proceeded to rule directly on this issue, finding Kievenaar’s argument to be

“without merit” because the applicability of the subsection is limited to employees who

05-3048 5 retired “between June 5, 1986 and November 30, 1990.” The applicability of

§ 831.2203(f) was then presented to and argued before the reviewing Board, producing

a split between the two Board members, which resulted in the AJ’s initial decision

becoming the final decision.

Thus, Kievenaar raised the issue with “sufficient specificity and clarity” such that

the AJ and both reviewing Board members were able to consider the issue and make

thoughtful, reasoned decisions regarding it. The OPM also has been given ample

opportunity to present arguments, and its position is clear. Under the circumstances,

we find that Kievenaar has adequately preserved the issue for appeal, and we may

review the applicability of § 831.2203(f) to Kievenaar. See Kachanis, 212 F.3d at 1294

(holding an issue properly before the court where the issue was presented in various

filings to the AJ and the full Board, providing both the opportunity to address the matter).

B. Applicability of 5 C.F.R. § 831.2203(f)

Kievenaar bases her appeal on the applicability of 5 C.F.R. § 831.2203(f). This

section was intended to provide a safety-net for surviving spouses when an employee

dies without selecting an annuity, or dies immediately after retiring without having

benefited from the higher monthly payouts furnished by a self-only annuity. See

Retirement; Alternative Forms of Annuity, 51 Fed. Reg. 42,987 (proposed Nov. 28,

1986) (to be codified at 5 C.F.R. pt. 831) (“[I]f a retiree dies before making an election,

OPM will deem the annuitant to have elected the full survivor benefit for any current

spouse plus the alternative form of annuity (and the lump-sum credit).”). Kievenaar

argues that because the regulation makes no mention of a date restriction and was

promulgated specifically for those individuals who did not affirmatively elect an AFA

05-3048 6 during their lifetimes, it should be applicable to her husband and entitle her to a survivor

annuity. OPM argues that the regulation is applicable only when a retiree elects an

AFA, not a self-only annuity. OPM further argues that § 831.2203(f) is to be read in

conjunction with other sections relating to AFAs, and that together they require a

showing of a life-threatening affliction or other critical medical condition. Thus, OPM

argues, absent proof of such a medical condition for her husband, Kievenaar is not

entitled to receive a spousal survivor annuity.

We begin with a brief history of the statutory framework underlying the regulation

in issue. On June 6, 1986, Congress created AFAs to make additional retirement

available to retirees. Federal Employee’s Retirement System Act of 1986, Pub. L. No.

99-335, § 204, 100 Stat. 514, 532-33 (codified as amended at 5 U.S.C. § 8343a

(2000)). OPM was given administrative authority to prescribe regulations under which

employees could elect an AFA. 5 U.S.C. § 8343a(a) (2000). In implementing this

statute, the OPM promulgated a series of regulations, including § 831.2203(f),1 under

“Subpart V – Alternative Forms of Annuities.” Retirement; Alternative Form of Annuity,

51 Fed. Reg. 42,987 (1986) (interim rules with request for comments, Nov. 28, 1986).

When § 8343a was originally enacted, AFAs were an option for all federal

employees, Federal Employee’s Retirement System Act of 1986 § 204, and, as such,

§ 831.2203(f) conformed to the intent of Congress as expressed in the language of the

statute. In 1990, however, § 8343a was amended in a wide-ranging budget bill. The

1 Section 831.2203(f) has remained substantially unchanged since its adoption. In 1993, language referring to § 831.607 was eliminated and replaced with the present reference to § 831.614. Payment of Survivor Deposits by Actuarial Reduction, 58 Fed. Reg. 52,877, 52,881 (1993) (interim rules with request for comments, Oct. 13, 1993).

05-3048 7 1990 amendment, inter alia, enacted subsection (f), which suspended the AFA for five

years, beginning December 2, 1990, for all federal employees, with exceptions only for

those with serious medical conditions in narrow circumstances in which “equity and

good conscience” justified the option. In response, OPM promulgated 5 C.F.R.

§ 831.2203(h), which permitted employees to elect an AFA only if they satisfied the

requirements of 5 C.F.R. § 831.2207(c)(2) and (3). Retirement; Credit For Service And

Alternative Forms of Annuity, 56 Fed. Reg. 6,549 (1991) (interim rules with request for

comments, Feb. 19, 1991). Sections 831.2207(c)(2) and (3), in turn, defined “life-

threatening affliction or other critical medical condition” and outlined the evidence

required to make the necessary showing.

Section 8343a was again amended by Congress in 1993. Omnibus Budget

Reconciliation Act of 1993, Pub. L. No. 103-66, § 11002, 107 Stat. 312, 409 (1993).

The amendment, entitled “Permanent Elimination of the Alternative-Form-of-Annuity

Option Except for Individuals with a Critical Medical Condition,” essentially incorporated

the restriction in subsection (f) into subsection (a) and eliminated subsection (f). Id. As

stated, subsection (a) originally had established broad AFA eligibility by stating that “an

employee or Member may . . . elect annuity benefits under this section.” The 1993

amendment, however, changed the language to read, “any employee or Member who

has a life-threatening affliction or other critical medical condition may” elect annuity

benefits under this section. Id. (emphasis added). The net effect of the 1993

amendment was to permanently narrow the availability of AFAs to a small group of

individuals who suffered from a life-threatening affliction or other critical medical

condition. Congress thus eliminated the AFA for all other employees.

05-3048 8 Following the amendments to the statute, OPM amended 5 C.F.R. § 831.2203 to

add subsection (h)(1)(ii), which permits employees with annuities commencing on or

after October 1, 1994 to elect an AFA only if they meet the required showing of a critical

medical condition as set forth in § 831.2207(c)(2) and (3). Retirement; Alternative

Forms Of Annuity, 60 Fed. Reg. 54,585 (1995) (interim rules with request for comments,

Oct. 25, 1995).

Section 831.2203(f), which remained unchanged following the amendments to

§ 8343a, is not limited to employees with critical medical conditions. The regulation, by

its terms, provides an AFA to any employee who dies of any cause—including accidents

unrelated to any health condition—before the date of final adjudication of an election

previously made. Thus, the regulation would permit results beyond those authorized by

Congress in the amended statute. Where regulations and statutes are in conflict,

regulations must necessarily yield. K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 294

(1988) (holding a C.F.R. provision invalid because it conflicted with the unequivocal

language of the statute); Brush v. Office of Pers. Mgmt., 982 F.2d 1554, 1560 (Fed. Cir.

1992) (holding a C.F.R. provision invalid because it did not “comport with the clear

statutory mandate”). Because § 831.2203(f) conflicts with and is no longer supported

by the amendments to § 8343a, it is ineffective. Resort to that regulation to affect an

AFA following the effective dates of amendments is foreclosed.

Here, Kievenaar’s husband completed the annuity paperwork in February 2002.

His annuity was to begin on July 1, 2002, and he died suddenly on July 22, 2002. Thus,

his annuity commenced at a time when § 831.2203(f) was ineffective. While we are

05-3048 9 sympathetic to Kievenaar’s position, we have no alternative but to conclude that she is

not eligible for the AFA she seeks.

Because the unavailability of § 831.2203(f) during the period relevant to

Kievenaar is dispositive of her case, we need not and do not decide the issue of validity

of the regulation prior to the effective dates of the amendments to § 8343a.

CONCLUSION

The Board correctly determined that 5 C.F.R. § 831.2203(f) was inapplicable to

Kievenaar’s request to change her husband’s self-only annuity to an AFA. The Board’s

affirmance of OPM’s decision to deny the requested AFA was in accordance with law

and is affirmed.

AFFIRMED

05-3048 10