Alexander Kovras v. Department of the Air Force ( 2016 )

UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
ALEXANDER KOVRAS, DOCKET NUMBER
Appellant, SF-0846-15-0334-I-1
v.
DEPARTMENT OF THE AIR FORCE, DATE: May 4, 2016
Agency.
THIS FINAL ORDER IS NONPRECEDENTIAL 1
Bobby R. Devadoss, Esquire, Dallas, Texas, for the appellant.
Captain Dennis Wu, El Segundo, California, for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Mark A. Robbins, Member
FINAL ORDER
¶1 The appellant has filed a petition for review and the agency has filed a cross
petition for review of the initial decision, which affirmed the agency’s decision
denying the appellant’s request to make a retroactive election of Nonappropriated
Fund Instrumentalities (NAFI) retirement system coverage pursuant to 5 C.F.R.
§ 847.205. Generally, we grant petitions such as these only when: the initial
1
A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
decision contains erroneous findings of material fact; the initial decision is based
on an erroneous interpretation of statute or regulation or the erroneous application
of the law to the facts of the case; the administrative judge’s rulings during either
the course of the appeal or the initial decision were not consistent with required
procedures or involved an abuse of discretion, and the resulting error affected the
outcome of the case; or new and material evidence or legal argument is available
that, despite the petitioner’s due diligence, was not available when the record
closed. See title 5 of the Code of Federal Regulations, section 1201.115 (5 C.F.R.
§ 1201.115). After fully considering the filings in this appeal, we conclude that
neither party has established any basis under section 1201.115 for granting the
petition or cross petition for review. Therefore, we DENY the petition for review
and the cross petition for review and AFFIRM the initial decision, which is now
the Board’s final decision. 5 C.F.R. § 1201.113(b).
BACKGROUND
¶2 This appeal concerns the appellant’s requests to retroactively elect NAFI
retirement system coverage on the basis of his prior NAFI service with the
Department of the Army (Army) and the agency. The record reflects that, from
November 24, 1988, to November 8, 1995, the appellant was employed in NAFI
positions with the Army and participated in the Army NAFI retirement system.
Initial Appeal File (IAF), Tab 5 at 121-22, 128, 130. On December 5, 1995, the
appellant requested a refund of his contributions to the Army NAFI retirement
system. Id. at 110. From November 29, 1995, to November 12, 1998, the
appellant was employed in an NAFI position with the agency and participated in
the agency NAFI retirement system. Id. at 63, 114-15, 117. In November 1998,
the appellant resigned from this agency NAFI position, effective November 12,
1998. Id. at 63‑64. On November 12, 1998, the appellant requested a refund of
his contributions to the agency NAFI retirement system. Id. at 66‑67. On
November 13, 1998, the appellant was appointed to an appropriated funds (APF)
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position with the agency and was enrolled in the Federal Employees’ Retirement
System (FERS). Id. at 61. The appellant has remained in an APF position with
the agency since his November 13, 1998 appointment. IAF, Tab 12 at 19.
Currently, he is the Director of the Force Support Squadron at Edwards Air Force
Base near Lancaster, California. IAF, Tab 5 at 36.
¶3 In 2008, the appellant apparently requested verification of his NAFI service
for purposes of using it to qualify for immediate civil service retirement. IAF,
Tab 6 at 16. On August 20, 2008, the agency human resources division certified a
form titled “Verification of [NAFI] Service pursuant to an Election to Credit NAF
Service for Immediate Civil Service Retirement under Section 1132 of Public
Law 107-107,” verifying that the appellant had NAFI service with the agency
from November 29, 1995, to November 12, 1998; that his retirement monies had
been refunded; and that he was not eligible for an NAFI retirement benefit. Id.
at 15. The agency refers to this document, which does not contain a notice of
appeal rights, as its first reconsideration decision regarding the appellant’s
eligibility to make an election of retirement system coverage pursuant to 5 C.F.R.
§ 847.205. Id.; IAF, Tab 14 at 5.
¶4 According to the agency, in 2014, the appellant sought to redeposit his
withdrawn funds back into the NAFI retirement plan and to make a retroactive
election of NAFI retirement system coverage. IAF, Tab 14 at 5. In response to
his request to make a retroactive election, an agency retirement branch
representative contacted the appellant on September 18, 2014, and explained that
he was ineligible to make an election of retirement system coverage because he
was not vested in the NAFI retirement system when he moved to his APF position
in 1998. Id.; IAF, Tab 12 at 17. According to the agency, this September 18,
2014 notification constitutes the agency’s second reconsideration decision
pertaining to the appellant’s eligibility to make an election of NAFI retirement
system coverage pursuant to 5 C.F.R. § 847.205. IAF, Tab 14 at 5-6. While the
agency submitted a screenshot of a “discussion thread” memorializing the
4
September 18, 2014 conversation, there is no indication that any written second
reconsideration decision regarding his eligibility to make an election was issued
to the appellant. IAF, Tab 12 at 17; see IAF, Tab 14 at 5‑6.
¶5 In response to the appellant’s request to redeposit his agency NAFI
retirement plan contributions, a retirement branch representative responded by
email on April 17, 2014, explaining that the agency’s records showed that the
appellant had elected to receive a refund of his NAFI retirement plan
contributions, with interest, on November 12, 1998, and that there was no further
benefit payable to him under the agency NAFI retirement plan. IAF, Tab 5 at 55;
see IAF, Tab 14 at 5. The representative further advised that the agency
retirement plan did not allow for rescinding elections. IAF, Tab 5 at 55. The
appellant responded that he withdrew his NAFI retirement fund contributions in
1998 because the human resources office (HRO) incorrectly told him that he
was not vested and could not transfer the funds. Id. at 54. The appellant
explained that he wanted to pay back his withdrawn contributions from the Army
and agency NAFI retirement accounts so that he could claim it for retirement
when he turned 60. Id. Another agency representative responded that, on the
basis of the available documentation on file, the decision to deny the appellant’s
request was correct. Id.
¶6 The appellant requested review of the denial from the Air Force Services
Agency (AFSVA) commander. Id. at 49-50. He explained that he had requested
refunds of his NAFI retirement contributions from the Army in 1998 because
Army personnel incorrectly informed him that he could not transfer his Army
NAFI retirement plan contributions to the agency NAFI retirement system. Id.
at 50. He further explained that he withdrew his agency NAFI retirement
contributions in 1998 because agency HRO personnel incorrectly informed him
that he was not vested in the agency NAFI retirement plan and that he had to
withdraw his contributions. Id. In an undated decision, the AFSVA commander
denied the appellant’s request to redeposit his withdrawn contributions because
5
the agency NAFI retirement plan did not allow NAFI employees to redeposit
withdrawn contributions once they elected to receive a refund of the contributions
with interest. Id. at 47. The agency states that this undated memorandum was
signed on September 4, 2014. Id. at 11 n.1, 43, 47.
¶7 On October 15, 2014, a Civilian Personnel Officer submitted a
memorandum to the AFSVA commander on behalf of the appellant requesting
review of the September 4, 2014 decision denying the appellant’s request to
redeposit his withdrawn contributions and restore his agency NAFI retirement
plan. Id. at 30, 39-41. According to the memorandum, at the time the appellant
resigned from his agency NAFI position to accept an agency APF position, he
qualified for portability of pay and benefits under the Portability of Benefits for
Nonappropriated Fund Employees Act of 1990, P. L. No. 101-508 (the Portability
Act). Id. at 39. The memorandum explained, however, that the appellant was not
properly briefed by the agency HRO regarding his portability eligibility and that
his resignation was not processed correctly. Id. at 39‑40. Thus, the
memorandum asserted that the agency failed to comply with the Portability Act
and deprived the appellant of his opportunity to elect to remain in the agency’s
NAFI retirement plan when he transferred to the APF position. Id. The
memorandum concluded that the appellant’s 7 years of Army NAFI retirement
plan participation should have been credited towards his agency NAFI retirement
plan, allowing him to vest in the agency NAFI retirement plan and making him
eligible to elect to remain in the plan when he transferred to APF employment in
1998. Id. at 40. The memorandum recommended that, due to the HRO’s
processing errors and misinformation, the agency could allow the appellant to
retroactively elect to remain in the agency NAFI retirement plan and redeposit his
withdrawn contributions. Id. at 41.
¶8 In a January 15, 2015 decision, the AFSVA commander affirmed the prior
decision denying the appellant’s request to redeposit his withdrawn contributions
into the agency NAFI retirement plan. Id. at 33-34. The commander explained
6
that there was no evidence of any harmful processing errors or misinformation by
the agency HRO that would justify allowing the appellant to redeposit 3 years of
agency NAFI retirement plan contributions or 7 years of Army NAFI retirement
plan contributions. Id. The commander also found that the agency’s decision not
to offer the appellant the portability option in connection with his November 13,
1998 resignation was correct and appropriate because, when the appellant
enrolled in the agency NAFI retirement system plan, he indicated that he had less
than 1 year of prior NAFI service and retirement plan participation. Id. at 33; see
id. at 114. The agency refers to this decision as the agency’s second
reconsideration decision regarding the appellant’s request to redeposit withdrawn
contributions and clarifies that it does not constitute a reconsideration decision of
the appellant’s request to make an election of NAFI retirement system coverage
pursuant to 5 C.F.R. § 847.205. IAF, Tab 14 at 4.
¶9 The appellant filed a Board appeal on February 17, 2015, challenging the
agency’s decision denying his right to retroactively elect NAFI retirement system
coverage and requesting a hearing. IAF, Tab 1 at 2, 4. The appellant argued that
the agency had violated the Portability Act and Office of Personnel Management
guidance when it failed to offer him the opportunity to elect continued NAFI
retirement system coverage in 1998 when he transferred to APF employment. Id.
at 4; IAF, Tab 3 at 3-4. After holding a telephonic hearing, the administrative
judge issued an initial decision finding good cause to excuse any filing delay on
the appellant’s part because the agency failed to include a notice of Board appeal
rights with any of its decisions, the appellant was pro se, and the appellant
pursued the matter with due diligence once the agency issued its 2014 decisions.
IAF, Tab 19, Initial Decision (ID) at 6. The administrative judge found that the
appellant had failed to show that the Board had jurisdiction to consider his
arguments that the Army improperly allowed him to withdraw his Army NAFI
retirement plan contributions in 1995 or to review his transition from one NAFI
program to another. ID at 7. The administrative judge further found that the
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Board lacked jurisdiction to review the appellant’s argument that the agency
improperly allowed him to withdraw his agency NAFI retirement plan
contributions in 1998. ID at 7‑8. The administrative judge found jurisdiction to
review the agency’s decision denying the appellant’s request to retroactively elect
NAFI retirement system coverage pursuant to 5 C.F.R. § 847.205, but agreed with
the agency that, when the appellant transferred from his agency NAFI position to
the agency APF position in 1998, he was not eligible to elect to continue NAFI
retirement system coverage because he had only 3 of the required 5 years of
qualifying service and was not vested in the NAFI retirement plan. 2 ID at 8‑10.
¶10 The appellant filed a petition for review of the initial decision, the agency
filed a cross petition for review, and the appellant submitted a response to the
agency’s cross petition for review. Petition for Review (PFR) File, Tabs 3, 8, 10.
DISCUSSION OF ARGUMENTS ON REVIEW
¶11 On review, the appellant asserts that the “sole issue in this case is whether
the [administrative judge] erred in denying the appellant’s request for retroactive
election of NAF retirement rights.” PFR File, Tab 3 at 9. Specifically, he argues
that the administrative judge erred in finding that he had only 3 years of
qualifying service for purposes of vesting in the agency NAFI retirement plan.
Id. at 9-15. The agency argues that the administrative judge correctly found that
the appellant was not eligible to elect NAFI retirement system coverage because
he was not vested in the agency NAFI retirement system when he transferred
from the agency NAFI to APF position in November 1998. PFR File, Tab 8
at 10-16. In its cross petition for review, the agency argues that the
2
The administrative judge found the appellant’s period of service from November 29,
1995, through November 12, 1998, to constitute qualifying service. ID at 9‑10. The
initial decision thus gave the appellant the benefit of the doubt in considering whether
he was eligible to elect to continue NAFI retirement coverage on the date of his
resignation, November 12, 1998, before he elected to withdraw his agency NAFI
contributions. Id.; IAF, Tab 5 at 63‑64, 66.
8
administrative judge should have dismissed the appeal as barred by the doctrine
of laches. Id. at 17‑18.
The appellant’s petition for review is denied.
¶12 An employee who completes a qualifying move from an NAFI position to a
Civil Service Retirement System- or FERS-covered position may elect to continue
coverage under the NAFI retirement system. 5 C.F.R. § 847.205(a). The agency
is responsible for notifying its employees of the opportunity to make an election
under part 847 and for determining if an employee who wishes to make an
election to continue NAFI retirement coverage is qualified to do so. See 5 C.F.R.
§ 847.105; Regdon v. Department of the Army, 117 M.S.P.R. 348, ¶ 6 (2012). If
the agency determines that an employee is not eligible to make an election to
continue NAFI retirement system coverage, it is required to issue a final written
decision setting forth its findings and conclusions and providing notice of the
appellant’s right to request an appeal. 5 C.F.R. § 847.106(a)-(b). 3 The time
limits for making an election to continue NAFI retirement system coverage may
be waived under certain circumstances, including a lack of notice or counseling.
See Regdon, 117 M.S.P.R. 348, ¶ 6; 5 C.F.R. § 847.206(b). The agency’s final
decision regarding the employee’s eligibility to make an election is appealable to
the Board. 5 C.F.R. §§ 847.106, 847.107.
¶13 As the administrative judge correctly determined, the Board has jurisdiction
to review the agency’s final decision pertaining to the appellant’s eligibility to
retroactively elect continued NAFI retirement system coverage pursuant
to 5 C.F.R. § 847.205. ID at 9. Although the appellant transferred from his
agency NAFI position to an agency APF position in 1998, there is no indication
in the record that the agency determined his eligibility to elect to continue
coverage under the NAFI retirement system at that time. Rather, the agency
3
The regulations in place in 1998 were essentially identical to the current regulations.
See 61 Fed. Reg. 41714-01 (Aug. 9, 1996).
9
appears to have notified the appellant that he was ineligible for an NAFI
retirement benefit for the first time in 2008 and again, by telephone, on
September 18, 2014. 4 IAF, Tab 6 at 15-16, Tab 12 at 17, Tab 14 at 5-6.
Importantly, neither of these agency decisions contains notice of the appellant’s
Board appeal rights or the time limits for filing such an appeal as required by
section 847.106(a)-(b). IAF, Tab 6 at 15-16, Tab 12 at 17. Accordingly, we
agree with the administrative judge that the appellant has shown good cause to
excuse any untimeliness in bringing this appeal because the agency failed to
notify him of his potential Board appeal rights, he was pro se, and he showed due
diligence by continuing to pursue this matter with the agency once it issued the
2014 decisions. ID at 6; IAF, Tab 5 at 33‑34, 47, Tab 12 at 17.
¶14 An employee who, like the appellant, moved from an NAFI position to a
FERS-covered position between August 10, 1996, and December 28, 2001, is
eligible to elect to continue coverage under an NAFI retirement system only if,
among other requirements, he was a vested participant in the NAFI retirement
system prior to the move to the FERS-covered position. See 5 C.F.R.
§ 847.202(d). The term “vested participant” is defined by the NAFI retirement
system in place at that time. Id. Pursuant to the agency NAFI retirement plan in
place on November 12, 1998, an agency NAFI employee becomes vested after
5 years of “credited service.” IAF, Tab 5 at 98. “Credited service” includes
service during which an employee made contributions under the plan, as long as
he did not subsequently withdraw those contributions. Id. at 76.
4
The January 15, 2015 “second reconsideration decision” and September 4, 2014
decision pertain mainly to the appellant’s requests to redeposit his withdrawn NAFI
retirement contributions, with interest, on the grounds that the Army and agency HROs
gave the appellant misinformation regarding his retirement options and deprived him of
the right to elect to continue NAFI retirement system coverage in 1995 and 1998. IAF,
Tab 5 at 11 n.1, 33-34, 47; see IAF, Tab 14 at 4-6. As discussed below, we agree with
the administrative judge that the Board lacks jurisdiction to review these allegations.
10
¶15 The administrative judge found that the appellant was not a vested
participant in the agency NAFI retirement system when he transferred to his APF
position and, therefore, that the agency properly denied his request to make a
retroactive election to continue NAFI retirement system coverage pursuant to
section 847.205. ID at 9-10. The administrative judge explained that the
appellant had approximately 3 years of total agency NAFI service, which failed to
satisfy the 5-year credited service requirement to have vested rights under the
agency NAFI retirement system in effect in November 1998. ID at 10‑11. The
administrative judge rejected the appellant’s argument that he was vested in the
agency NAFI retirement plan in 1998 on the basis of his combined Army NAFI
retirement plan participation (7 years) and agency NAFI retirement plan
participation (3 years) because it was undisputed that the appellant withdrew all
of his Army NAFI retirement contributions in December 1995. ID at 9.
¶16 On review, the appellant challenges the administrative judge’s finding that
he was not vested in the agency NAFI retirement system in 1998 and argues that
the administrative judge relied on “conflicting logic” in finding that he had
3 years of credited service, rather than 0 or 10 years, because he withdrew his
NAFI retirement contributions both in 1995 and 1998. PFR File, Tab 3 at 9-19.
We find no merit to the appellant’s argument. As noted above, if an NAFI
employee subsequently withdraws his NAFI retirement plan contributions, his
participation in that NAFI retirement plan no longer counts towards “credited
service” for purposes of vesting in the plan. IAF, Tab 5 at 76. The
administrative judge is correct that the appellant had, at most, 3 years of credited
service towards vesting in the agency NAFI retirement system on the date he
resigned from his agency NAFI position. IAF, Tab 5 at 63-64, 76. Once the
appellant requested to withdraw his agency NAFI retirement plan contributions,
however, he no longer had any credited service in the agency NAFI retirement
plan. Id. at 66, 76. Likewise, because the appellant withdrew his Army NAFI
retirement contributions in 1995, he had no credited service towards vesting in
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the Army NAFI retirement plan. Id. at 76, 110. In any event, the administrative
judge correctly determined that the appellant was not vested in the agency NAFI
retirement plan and was not eligible to make an election to continue coverage
under the plan when he transferred to APF employment in November 1998. ID
at 9-10; see IAF, Tab 5 at 76, 98; see also 5 C.F.R. § 847.202(d).
¶17 The appellant next argues that the administrative judge failed to consider
and afford appropriate weight to his arguments that the Army HRO incorrectly
advised him regarding his retirement plan options in 1995, that this
misinformation rendered his decision to withdraw his retirement contributions
involuntary, and that, but for this misinformation, the appellant would not have
withdrawn his contributions and would have had 10 years of credited service and
would have been vested in the agency NAFI retirement plan in 1998. PFR File,
Tab 3 at 16‑19. As the administrative judge correctly explained, however, the
Board lacks jurisdiction to review the appellant’s transition from one NAFI
program to another or to consider whether the Army or the agency improperly
allowed the appellant to withdraw his NAFI retirement system contributions. ID
at 9-10. Moreover, even if it is true that the Army or agency personnel gave the
appellant incorrect information regarding his ability to continue his NAFI
retirement system coverage in 1995 or 1998, such facts would not establish his
entitlement to retroactively elect to continue NAFI retirement system coverage
pursuant to section 847.205. The Supreme Court has made clear that the
United States cannot be estopped from denying monetary benefits not otherwise
permitted by law, even if the claimant was denied those benefits due to reliance
on mistaken advice given by a Government official. Office of Personnel
Management v. Richmond, 496 U.S. 414, 424 (1990).
¶18 The appellant additionally argues that the administrative judge failed to
address the Board’s jurisdiction over his Army NAFI “issues” from 1988 to 1994
and failed to “fully review the record in its totality,” which would have revealed
that there are conflicting documents in the record, that the agency failed to
12
properly assess the appellant’s case, and that the agency’s final decision was
based on a “limited understanding of the appellant’s case.” PFR File, Tab 3 at 20
‑28. We have considered these arguments, but find that they do establish any
basis to disturb the initial decision. For the reasons stated above, we agree with
the administrative judge that the agency properly denied the appellant’s request to
make a retroactive election for NAFI retirement system coverage pursuant
to 5 C.F.R. § 847.205 and that the Board lacks jurisdiction over his
remaining claims.
The agency’s cross petition for review is denied.
¶19 In its cross petition for review, the agency argues that this appeal should
have been dismissed as barred by the doctrine of laches because the appellant
failed to diligently pursue the matter for 16 years and the delay is prejudicial to
the agency’s ability to defend itself against the appellant’s “bad advice” claims.
PFR File, Tab 8 at 17-19. The appellant did not submit a substantive response to
this argument. PFR File, Tab 10 at 5‑6.
¶20 The equitable defense of laches bars an appeal when an unreasonable delay
in bringing the appeal has prejudiced the agency. See Pueschel v. Department of
Transportation, 113 M.S.P.R. 422, ¶ 6 (2010). The party asserting laches must
prove both unreasonable delay and prejudice. Id. Under laches, the mere fact
that time has elapsed from the date a cause of action first accrued is not sufficient
to bar suit; rather, the delay must be unreasonable and unexcused. Cornetta v.
United States, 851 F.2d 1372, 1377-78 (Fed. Cir. 1988) (en banc). One type of
prejudice that may stem from delay in filing suit is “evidentiary” or “defense”
prejudice, which arises when a defendant is unable to present a full and fair
defense on the merits due to the loss of records, the death of a witness, or the
unreliability of memories of long past events, thereby undermining the Board’s
ability to judge the facts. See A.C. Aukerman Co. v. R.L. Chaides Construction
Co., 960 F.2d 1020, 1033 (Fed. Cir. 1992) (en banc).
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¶21 Here, we find that the agency has failed to establish that the 16-year delay
prejudiced the agency from mounting a full and fair defense on the merits because
the appellant’s arguments that the agency or Army personnel provided him “bad
advice” are irrelevant to the disposition of this appeal. As explained above, the
United States cannot be estopped from denying monetary benefits not otherwise
permitted by law, even if the claimant was denied those benefits due to reliance
on mistaken advice given by a government official. Richmond, 496 U.S. at 424.
Therefore, we deny the agency’s cross petition for review.
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the U.S.
Court of Appeals for the Federal Circuit. You must submit your request to the
court at the following address:
United States Court of Appeals
for the Federal Circuit
717 Madison Place, N.W.
Washington, DC 20439
The court must receive your request for review no later than 60 calendar days
after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec. 27,
2012). If you choose to file, be very careful to file on time. The court has held
that normally it does not have the authority to waive this statutory deadline and
that filings that do not comply with the deadline must be dismissed. See Pinat v.
Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you need further information about your right to appeal this decision to
court, you should refer to the Federal law that gives you this right. It is found in
title 5 of the U.S. Code, section 7703 (5 U.S.C. § 7703) (as rev. eff. Dec. 27,
2012). You may read this law as well as other sections of the U.S. Code, at our
website, http://www.mspb.gov/appeals/uscode.htm. Additional information is
available at the court’s website, www.cafc.uscourts.gov. Of particular relevance
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is the court’s “Guide for Pro Se Petitioners and Appellants,” which is contained
within the court’s Rules of Practice, and Forms 5, 6, and 11.
If you are interested in securing pro bono representation for an appeal to
the U.S. Court of Appeals for the Federal Circuit, you may visit our website
at http://www.mspb.gov/probono for information regarding pro bono
representation for Merit Systems Protection Board appellants before the Federal
Circuit. The Merit Systems Protection Board neither endorses the services
provided by any attorney nor warrants that any attorney will accept representation
in a given case.
FOR THE BOARD: ______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.