NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-3133
TOM CARTLEDGE,
Petitioner,
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent.
Frederic W. Schwartz, Jr., of Washington, DC, argued for petitioner.
Matthew H. Solomson, Trial Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for
respondent. With him on the brief were Gregory G. Katsas, Assistant Attorney General,
Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on
the brief was Earl A. Sanders, Attorney, Office of the General Counsel, Office of
Personnel Management, of Washington, DC.
Appealed from: Merit Systems Protection Board
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-3133
TOM CARTLEDGE,
Petitioner,
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent.
Petition for review of the Merit Systems Protection Board in AT831M061041-I-2.
___________________________
DECIDED: January 15, 2009
___________________________
Before SCHALL, GAJARSA, and MOORE, Circuit Judges.
MOORE, Circuit Judge.
Petitioner Tom Cartledge appeals the final decision of the Merit Systems
Protection Board (MSPB or Board). Cartledge v. Office of Pers. Mgmt., No.
AT831M061041-I-2 (M.S.P.B. Nov. 29, 2007). Mr. Cartledge receives the survivor
benefits of his late wife, who was an employee of the United States Postal Service
(USPS). The Board affirmed the Office of Personnel Management’s (OPM) decision
that retirement annuity payments made between January 2, 1999, and February 28,
2001, by OPM to Mrs. Cartledge, were an overpayment subject to collection by OPM.
For the reasons set forth below, we reverse and remand.
BACKGROUND
Mrs. Cartledge retired from her service with USPS on January 2, 1999. At that
time she elected to receive an annuity “payable only during [her] lifetime.” This election
meant that no survivor annuity would be paid to Mr. Cartledge in the event of her death.
The advantage of this annuity is that the payments are higher relative to an annuity that
includes survivor benefits. Mrs. Cartledge further noted on her retirement application
that she believed that her retirement was involuntary, and she initiated an MSPB action
alleging the same.
Mrs. Cartledge began receiving her annuity payments in due course. In early
2001, Mrs. Cartledge learned that she had terminal pancreatic cancer, which rendered
the long-term remedies afforded by her MSPB action considerably less valuable. She
settled her dispute with USPS, agreeing to give up her claims. In exchange, USPS
devised a way to provide survivor benefits to Mr. Cartledge notwithstanding her
irrevocable election to the contrary. In essence, USPS allowed her to re-retire, and thus
choose a new form of annuity—one with survivor benefits—further to her new
retirement. The settlement agreement, executed April 4, 2001, provided:
In consideration for the covenants made by Ms. Cartledge herein, the
USPS agrees to change the effective date of Ms. Cartledge’s retirement
from January 2, 1999 to February 28, 2001. Ms. Cartledge will receive no
back pay for this period of service. Her record will reflect a last day in pay
status of January 2, 1999. She will be carried in a nonpay status from
January 3, 1999 to February 28, 2001.
As part of the agreement, Mrs. Cartledge “completed a new retirement
application on which she made a survivor annuity election.” Specifically, the agreement
provides:
2008-3133 2
Based on her documentation submitted to date, Ms. Cartledge will be
eligible to apply for the Alternative Form of Annuity (AFA)/Lump Sum.
Subject to approval from the Office of Personnel Management (OPM), Ms.
Cartledge will be entitled to receive in a lump sum payment an amount
equal to what she has contributed to the retirement fund. This election of
the AFA/Lump Sum will not affect her right to continue to receive a
monthly annuity . . . .
In order to correct for the fact that annuity payments are greater in the absence of
survivor benefits, the agreement further provides:
[Mrs. Cartledge’s election] will result in a reduction of her monthly annuity
retroactive to January 3, 1999 which is the commencing date of her
annuity. The reduction will be approximately $269 per month. Ms.
Cartledge will be responsible for reimbursing OPM for this reduction in her
monthly annuity from January 3, 1999 to the effective date of this
Agreement[, April 4, 2001].
The total retroactive reduction (or overpayment) is thus $7,263—the amount that Mr.
Cartledge concedes that OPM is entitled to. On May 30, 2001, OPM wrote to Mrs.
Cartledge, stating that “[p]er your request to our office dated April 25, 2001, we have
complied with your request to process the settlement agreement that changes your
retirement date from 1/1/99 [sic] to 2/28/01.” Mrs. Cartledge died the next day.
On February 14, 2002, over eight months after Mrs. Cartledge died, OPM sent
Mr. Cartledge a somewhat confusing letter indicating that he owed a debt of $73,472.60
that “occurred when annuity benefits were paid to Thelma Cartledge after his/her death.
[sic]” OPM offered some clarification over nine months later in a notice of amount due
stating that the cause of overpayment was the “[s]ettlement agreement through former
agency to change retirement date from 1/2/99 to 2/28/01.” Two weeks later, Mr.
Cartledge duly filed an informal statement concerning the alleged overpayment,
requesting reconsideration and arguing that the settlement agreement limited the
repayment to $269 per month and regardless that he should receive a waiver.
2008-3133 3
Three years later, on December 16, 2005, OPM issued a reconsideration
decision clarifying its action. OPM explained that USPS sent it an amended retirement
record indicating that Mrs. Cartledge had been restored as an employee as of January
3, 1999, and then separated as of February 28, 2001. Thus, OPM reasoned, because
Mrs. Cartledge was an employee during that time, she could not also be an annuitant
and was therefore not entitled to any annuity she received prior to February 28, 2001.
Further, OPM denied the waiver request under
5 U.S.C. § 8346(b) and
5 CFR
§ 831.1403.
Mr. Cartledge timely appealed the December 16, 2005 OPM ruling to the MSPB.
OPM caused further delay by rescinding its reconsideration decision and moving the
Board to dismiss. On August 7, 2006, more than five years after Mrs. Cartledge died,
OPM issued a new final decision reaching the same conclusion as before but with some
minor changes to the overpayment calculation. Mr. Cartledge promptly appealed again.
In a September 5, 2006 letter brief to the Board, OPM added further detail to its
position. In particular, OPM argued that it was not bound by the USPS settlement. It
also revised the alleged overpayment to $79,633.60, representing all of the money
received by Mrs. Cartledge prior to March 1, 2001. In an attempt to collect the
$79,633.60, OPM first seized Mrs. Cartledge’s entire lump-sum annuity payment,
leaving a balance $16,107.46, which it offered to reduce to $15,600 for settlement
purposes.
On July 16, 2007, the Board affirmed the final decision of OPM. Cartledge v.
Office of Pers. Mgmt., No. AT-831M-06-1041-I-2 (M.S.P.B. July 16, 2007). The
administrative judge (AJ) concluded that the settlement agreement was “nothing more
2008-3133 4
than an artifice to evade statutory requirements and, consequently, the agreement is not
binding on OPM” and ruled that:
[w]hen Mrs. Cartledge changed her retirement date to 2001, and when
she was also allowed to make a new irrevocable election and also allowed
to elect an alternative annuity, this established conclusively that she was
not entitled to retirement benefits for any date preceding her established
retirement date in 2001.
Id. at 4-6. Further, the AJ agreed with OPM that Mr. Cartledge did not meet the
requirements for a waiver.
Id. at 6-7. The Board denied Mr. Cartledge’s petition for
review, and the decision became final on November 29, 2007. Mr. Cartledge now
timely appeals.
DISCUSSION
This court must affirm a decision of the Board unless 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); Hayes v. Dep’t of the Navy,
727 F.2d
1535, 1537 (Fed. Cir. 1984). The interpretation of a settlement agreement is reviewed
de novo. See Mays v. U.S. Postal Serv.,
995 F.2d 1056, 1059 (Fed. Cir. 1993) (“The
settlement agreement is a contract, of course, and its interpretation is a matter of law.”).
Preliminarily, the government argues that under the clear terms of the settlement
agreement, it was entitled to collect the alleged overpayment because Mrs. Cartledge
was entitled to none of the payments that she received prior to March 1. We do not
agree. The government’s position conflicts with the plain terms of the settlement
agreement, which required that Mrs. Cartledge pay back only a portion of the
payments—$269 for each month between January 2, 1999 and the effective date of the
2008-3133 5
agreement, which is April 4, 2001. The $269 difference reflects the reduced payments
of an annuity that includes survivor benefits. The government disputes that the express
terms of the agreement limit Mr. Cartledge’s liability to OPM to a total of $7,263 (27
months at $269 per month). It offers two arguments in support of its position—first, that
“the settlement agreement does not mention a total amount,” and second, that “the
settlement agreement contained only an approximation of the amount that would be
deducted from the new monthly annuity, thereby placing the Cartledges on notice that
OPM would deduct any overpayment.” The lack of an express total amount is the
obvious product of not knowing the agreement’s effective date at the time it was drafted.
Furthermore, the use of the word “approximately” prior to “$269 each month” cannot
mean that OPM is entitled to collect over ten times the amount stated in the settlement
agreement.
The government also argues that because the terms of the settlement agreement
gave it the authority “to approve the lump sum,” it therefore “necessarily” gave it “the
authority to approve the monthly annuity, because the size of the annuity is inextricably
tied to the size of the lump sum.” The agreement contemplated Mrs. Cartledge
receiving part of her annuity in a lump sum, subject to OPM’s determination that she
met certain statutory requirements. The government erroneously relates two
determinations: first, whether, after March 1, 2001, Mrs. Cartledge receives larger
monthly payments or a combination of smaller monthly payments and a lump sum
payment, and second, whether she can be required to repay all of the annuity payments
she received prior to March 1, 2001. The first determination is ministerial, and affects
only the timing of payments, not the amount. The second determination is the subject
2008-3133 6
of this appeal and affects the amount of the payments. OPM’s authority to make the
first determination gives it no right to contravene the clear terms of the settlement
agreement with regard to the second. Accordingly, the settlement agreement limits Mr.
Cartledge’s repayment to $7,263.
The government next argues that if we construe the settlement agreement as we
have, to allow Mr. Cartledge to keep his late wife’s annuity payments—as reduced by
the terms of the agreement—prior to March 1, 2001, then the settlement agreement is
contrary to law and therefore not binding on OPM. See Utah Power & Light Co. v.
United States,
243 U.S. 389, 409 (1917) (“[T]he United States is neither bound nor
estopped by acts of its officers or agents in entering into an arrangement or agreement
to do or cause to be done what the law does not sanction or permit.”). Although the
Board did not set forth what statutory requirements it believed that the settlement
agreement evaded, the government contends that the settlement agreement is contrary
to
5 U.S.C. § 8345(b)(1), which provides that “an annuity of an employee or Member
commences on the first day of the month after—(i) separation from the service; or (ii)
pay ceases and the service and age requirements for title to annuity are met.” The
government focuses on the first part of § 8345(b)(1)(A), arguing that because the
settlement agreement changed Mrs. Cartledge’s retirement date from January 2, 1999
to February 28, 2001, Mrs. Cartledge was therefore not separated from her service until
February 28, 2001. Thus, the government concludes, OPM cannot allow Mrs.
Cartledge’s annuity to commence until February 28, 2001.
It is, however, the second part of § 8345(b)(1)(A) that governs this case. The
government does not dispute that Mrs. Cartledge received no back pay pursuant to the
2008-3133 7
settlement agreement or pay of any kind after January 2, 1999. Hence, on this day,
“pay cease[d]” and Mrs. Cartledge’s annuity could commence the first day of the month
after. § 8345(b)(1)(A)(ii). The government is correct that in Grabis v. Office of Pers.
Mgmt.,
424 F.3d 1265 (Fed. Cir. 2005), we held that retirees cannot collect annuity
payments and back pay during the same period of time. Mrs. Cartledge did not receive
an annuity and back pay during the same period. Mr. Cartledge is not receiving an
unlawful or even unfair windfall. To the contrary, the settlement agreement quite
reasonably requires him to return to OPM the difference in payments between Mrs.
Cartledge’s original annuity and the one selected under the agreement. Because the
settlement agreement is fully consistent with § 8345(b)(1)(A)(ii), the government cannot
repudiate the agreement by asserting that it is contrary to law.
The government has not established that the settlement agreement is unlawful.
As it clearly provides that Mr. Cartledge is liable to OPM for $7,263 and no more, Mr.
Cartledge is entitled to all of the annuity payments received by Mrs. Cartledge prior to
March 1, 2001, less $7,263. Because the record does not clearly indicate how much
money OPM must now return to Mr. Cartledge, we remand to the Board for such a
determination. Accordingly, the decision of the Board is reversed and remanded.
COSTS
Costs to petitioner.
2008-3133 8
