704 F. 2d 91 - Lancellotti v. Office of Personnel Management

Petitioner, Albert D. Lancellotti, seeks review of a decision of the Merit Systems Protection Board (MSPB) affirming respondent Office of Personnel Management's (OPM's) order to terminate petitioner's disability annuity. Respondent argues that this Court lacks jurisdiction to decide the merits of the case. This contention compels us to confront the difficult interplay among several statutes that may grant appellate jurisdiction.

For the reasons that follow, we hold that, while Lancellotti's petition is not reviewable under either 5 U.S.C. Sec. 7703 (Supp. II 1978) or 5 U.S.C. Sec. 8347(c) (Supp. IV 1980), which are provisions of the Administrative Code, it is reviewable under a "catch-all" provision of the Judicial Code, 28 U.S.C. Sec. 2342(6) (Supp. IV 1980). Although this latter provision was repealed by the Federal Court Improvement Act of 1982, P.L. 97-164, 96 Stat. 25, reprinted in 50 U.S.L.W. 77 (April 27, 1982), which transfers the bulk of appellate jurisdiction over MSPB cases from the Circuit Courts of Appeals to the Court of Appeals for the Federal Circuit, section 2342(6) was in effect when this petition was filed.1 We thus will reach the merits, and we will deny the petition for review. While the most difficult question before us is that of reviewability, an understanding of the issues requires us first to set forth the factual background of this action.

Petitioner retired from his position in the Department of the Navy in 1973, pursuant to provisions of the Civil Service Retirement Law that permit retirement when total medical disability prevents performance of useful and efficient service. 5 U.S.C. Secs. 8331, 8337 (1976 & Supp. IV 1980). The statute provides for the termination of disability annuities upon the annuitant's recovery from his disability or upon his restoration to an earning capacity "fairly comparable to the current rate of pay of the position occupied the time of retirement." 5 U.S.C. Sec. 8337(d) (1976).2 An annuitant is deemed restored to the relevant earning capacity if his income in each of two consecutive years is at least eighty percent (80%) of the current rate of pay for the previously held position.

For 1978, petitioner reported income from wages or self-employment in the amount of $22,533.00. The rate of pay in 1978 for an individual occupying petitioner's last position (i.e., grade GS-7, step 10) was $16,920.00. Petitioner concedes that his salary in 1978 greatly exceeded 80% of the then-current salary of his former position. For 1979, petitioner reported income from wages and self-employment in the amount of $14,670.00. The salary for a grade GS-7, step 10, employee in 1979 was $18,101.00, 80% of which was $14,480.00. Thus, petitioner's income in both 1978 and 1979 exceeded 80% of the current salary for petitioner's last position. Accordingly, OPM correctly informed petitioner on January 31, 1981, that petitioner's disability annuity was being terminated effective January 1, 1981, as required by the terms of 5 U.S.C. Sec. 8337(d).

Petitioner sought reconsideration of the initial decision pursuant to 5 C.F.R. Sec. 831.109(e)-(f) (1981), arguing that, although he had reported income of $14,670.00 in 1979, $600.00 of that amount was "vacation pay" actually accrued in 1978. He further contended that the current salary for the position he formerly had occupied was not $18,101.00 but, rather, $19,012.50.3 On March 27, 1981, OPM affirmed its initial determination that petitioner's income from wages in both 1978 and 1979 had exceeded 80% of the current pay of his former position. Addressing petitioner's vacation-pay argument, OPM held that, because the money actually had been received in 1979, it would be included as part of petitioner's total income for that year. OPM concluded by informing petitioner of his right to pursue an administrative appeal before the MSPB pursuant to 5 U.S.C. Sec. 8347(d) (Supp. IV 1980) and 5 C.F.R. Sec. 831.110 (1981).

By letter dated April 22, 1981, petitioner filed with the MSPB a notice of appeal from OPM's determination. In a subsequent brief, written with the assistance of counsel, petitioner based his appeal on two theories: (1) the assertion that the amount by which petitioner's 1979 income had exceeded 80% of the then-current pay for his former job--$189.20--was so small that it should be ignored as de minimis; and (2) the assertion, raised in a different context before OPM, that $600 should be deducted from petitioner's reported income because it was vacation pay accrued in 1978 and not part of petitioner's 1979 wages.

The MSPB's Philadelphia Regional Office (Regional Office) affirmed OPM's decision on August 20, 1981. The Regional Office first rejected petitioner's de minimis argument, reasoning that the language of 5 U.S.C. Sec. 8337(d) unequivocally establishes receipt of 80% of current salary as the standard for determining whether earning capacity had been restored and contains no provision requiring that this amount be "substantially" exceeded. The Regional Office also affirmed OPM's determination regarding vacation pay and advised petitioner of his right to further review pursuant to 5 C.F.R. Sec. 1201.114-.115 (1981).

Petitioner, through counsel, filed a petition for review before the MSPB on September 19, 1981, raising the same claims that he had presented to the Regional Office. In addition, petitioner reasserted the allegation (raised before OPM) that OPM should have used $19,012.50 instead of $18,101.00 as the 1979 salary of petitioner's former position. By order and opinion of April 25, 1982, the MSPB denied the petition for review, holding (1) that petitioner had failed to prove by a preponderance of the evidence that he had not been restored to earning capacity; (2) that OPM had not erred in determining petitioner's 1979 wages to have exceeded the 80% maximum; and (3) that petitioner had failed to offer any evidence in support of his claim that a portion of his 1979 income actually was vacation pay accrued in 1978. The Board advised petitioner of a right to judicial review "as specified in 5 U.S.C. Sec. 7703." Petitioner filed this petition pro se on May 24, 1982.

Turning to the question of reviewability, we note that there are three possible grants of jurisdiction: 5 U.S.C. Sec. 7703 (Supp. II 1978); 5 U.S.C. Sec. 8347 (1976 & Supp. IV 1980); and 28 U.S.C. Sec. 2342(6) (Supp. IV 1980), repealed as of October 1, 1982. We will examine each of these provisions.

The dispositive order of the MSPB advised petitioner of the "right to seek judicial review of the Board's action as specified in 5 U.S.C. Sec. 7703." We do not believe that section 7703 confers upon this Court jurisdiction to review the Board's ruling.

Prior to its amendment by the Federal Court Improvement Act of 1982, supra, section 7703 provided, in pertinent part:

(a)(1) Any employee or applicant for employment adversely affected or aggrieved by a final order or decision of the Merit Systems Protection Board may obtain judicial review of the order or decision.

....

(b)(1) Except as provided in paragraph (2) of this subsection, a petition to review a final order or final decision of the Board shall be filed in the Court of Claims or a United States court of appeals as provided in chapters 91 and 158, respectively, of title 28.

* * *

(Emphasis added).4 Petitioner, however, does not fall within the scope of section 7703(a)(1) as he is neither an "employee" nor an "applicant for employment" within the meaning of the statute. At best, petitioner, as a disability annuitant, would appear to be a former employee. In addition, the definitional section of the statute would appear to exclude petitioner as an "employee."5 Moreover, petitioner's claim (i.e., that his disability annuity was wrongfully terminated) does not relate to an adverse employment decision, such as suspension, removal, or reduction in grade, initiated by the agency, as the statute by its terms, requires. The legislative history of the Civil Service Reform Act of 1978, P.L. 95-454, 92 Stat. 1111, 1143, also suggests that section 7703 was enacted to provide judicial review of adverse actions initiated by agencies against employees engaged in misconduct or performing at an unacceptable level.6 Petitioner's claims do not fall within the scope of section 7703; we therefore reject the Board's statement of jurisdiction.

Because petitioner's claim appears to present a disability-retirement question, we turn to another possible jurisdictional basis: that found in the Civil Service Retirement Act, 5 U.S.C. Secs. 8331-8348. Our review of disability-retirement questions, however, is circumscribed by 5 U.S.C. Sec. 8347, which provides:

....

(c) The Office [OPM] shall determine questions of disability and dependency arising under this subchapter [5 U.S.C. Secs. 8331-8348]. Except to the extent provided under subsection (d) of this section, the decisions of the Office concerning these matters are final and conclusive and are not subject to review. The Office may direct at any time such medical or other examinations as it considers necessary to determine the facts concerning disability or dependency of an individual receiving or applying for annuity under this subchapter. The Office may suspend or deny annuity for failure to submit to examination.

(d)(1) Subject to paragraph (2) of this subsection, an administrative action or order affecting the rights or interests of an individual or of the United States under this subchapter may be appealed to the Merit Systems Protection Board under procedures prescribed by the Board.

(2) In the case of any individual found by the Office to be disabled in whole or in part on the basis of the individual's mental condition, ... the decision of the Board shall be subject to judicial review under section 7703 of this title. (Emphasis added.)7

Interpreting section 8347, this Court recently joined the Eighth Circuit in holding that subsection (c) provides only for "administrative," not "judicial," review of most questions of physical disability and dependency arising under 5 U.S.C. Secs. 8331-8348. Campbell v. Office of Personnel Management, supra note 7. Accord Morgan v. Office of Personnel Management, 675 F.2d 196 (8th Cir.1982).8 Petitioner in Campbell sought to avoid the plain language of section 8347(c) by analogizing his case to a line of cases from the Court of Claims, which read into the statute a "fundamental fairness" due process concept to support jurisdiction.9 The Court of Claims in those cases asserted jurisdiction over normally unreviewable agency decisions that were procedurally ultra vires and based on a clear misreading of a statute, or other error of great magnitude, such that due process required judicial intervention. Agreeing with the Eighth Circuit, however, this Court concluded in Campbell that Congress expressly had foreclosed judicial review of physical disability determinations, 694 F.2d at 308, and buttressed its holding by relying on the Supreme Court's decision in United States v. Erika, Inc., 456 U.S. 201, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982).10 Campbell thus recognized Congress' ability explicitly to foreclose judicial review of administrative proceedings.

Although we are, of course, bound by the panel's ruling in Campbell, the compass of that opinion is narrow. Factual determinations of physical disability clearly are not judicially reviewable under section 8347(c), but we are not asked here to make a determination of physical disability or dependency. Rather, we are presented only with a challenge to "an administrative action or order affecting the rights or interests of an individual" within the meaning of section 8347(d)(1), for petitioner requests, in effect, a legal ruling as to whether the statute and regulations contain a de minimis exception to the 80% requirement of section 8337(d) and whether petitioner's 1978 vacation pay appropriately was included in his 1979 salary. Such determinations are not disability or dependency evaluations within the meaning of section 8347(c); they therefore must fall within section 8347(d)(1).11

Section 8347(d)(1) thus authorizes the MSPB to review OPM determinations. That section does not, however, provide for judicial review of MSPB orders. While we recognize that the statute neither forecloses judicial review (as does section 8347(c)) nor limits it to claims of either employees or applicants (as does section 7703), we believe that appellate jurisdiction must rest upon an affirmative grant. Review, then, if it is available, must be based on a different jurisdictional provision.

We now turn to 28 U.S.C. Sec. 2342(6), which provided (at the time this appeal was filed):

The court of appeals has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of--

....

(6) all final orders of the Merit Systems Protection Board except as provided for in section 7703(b) of title 5.

This broad grant of jurisdiction appears to apply to the case before us. The legislative history of the Civil Service Reform Act of 1978, which comprehends 5 U.S.C. Sec. 7703 and 28 U.S.C. Sec. 2342, indicates that those sections were intended to be co-extensive grants of jurisdiction over all MSPB orders. See S.Rep. No. 969, 95th Cong., 2d Sess. 62 (1978), reprinted in 1978 U.S.Code Cong. & Ad.News 2784 ("The section [i.e., section 7702(a), now 7703(a) ] applies to judicial review of all final orders or decisions of the Board....") (emphasis added); id. at 64, reprinted in 1978 U.S.Code Cong. & Ad.News 2786 (amendment adds final orders of MSPB to list of matters over which Courts of Appeals have jurisdiction).

While 28 U.S.C. Sec. 2342(6), by its terms, does not cover appeals available pursuant to 5 U.S.C. Sec. 7703(b), which section may be invoked only by employees (or applicants for employment) and must involve adverse employment actions, see discussion in Part IIA, supra, it seems reasonable to read section 2342(6) as a "catch-all" provision encompassing all appeals brought by non -employees. Such a reading would include disability retirement annuitants or claims of the sort brought here by petitioner. Failure so to read section 2342(6) would create in the jurisdictional authorization a void that Congress does not appear to have intended.

This conclusion is buttressed by the Supreme Court's declaration in Abbott Laboratories v. Gardner, supra note 11, 387 U.S. at 140, 87 S.Ct. at 1510, that "judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress." In contrast to the clear intent of Congress to preclude judicial review of administrative determinations of physical disability and dependency questions, see Campbell v. Office of Personnel Management, supra note 7, 694 F.2d at 307-08; Morgan v. Office of Personnel Management, supra, 675 F.2d at 199-200, there is no evidence of such clear intent with respect to that class of final orders that are neither adverse employee or applicant actions (5 U.S.C. Sec. 7703) nor physical disability or dependency decisions (5 U.S.C. Sec. 8347(c)). Under Abbott Laboratories, review is favored.

For the foregoing reasons, we hold that we have jurisdiction to consider Lancellotti's petition. We reach this conclusion notwithstanding the repeal of section 2342(6). Lancellotti filed his petition for review on May 24, 1982, well before the Federal Court Improvement Act (FCIA) became effective on October 1, 1982. Thus, there was jurisdiction in this Court at the time Lancellotti filed the petition, and we currently retain such jurisdiction in all cases filed with us before the effective date of the FCIA.12

Turning to the merits: petitioner alleges, inter alia, (1) that OPM and the Board committed certain errors in calculating both petitioner's earnings for 1979 and the "current salary" against which his earnings were measured; (2) that the inclusion of 1978 "vacation pay" in petitioner's 1979 earnings was erroneous; and (3) that a de minimis rule should be applied to the 80% maximum of current salary imposed by 5 U.S.C. Sec. 8337(d). We find no error in the agencies' determinations, and we therefore will deny the petition on the merits.

Petitioner first asserts that OPM initially used salary figures for a lower "step" in grade GS-7 in computing the "current salary" for petitioner's former job: instead of working with $18,101.00 as the "current salary" earned by a GS-7, step 10, employee in 1979, petitioner claims, OPM should have computed the applicable figure on the basis of petitioner's annuity. Petitioner's theory, however, is supported by neither fact nor statute. The applicable pay rates for 1979 were set by the President, pursuant to 5 U.S.C. Secs. 5305 and 5332 (1976 & Supp. V 1981); the rates became effective on October 1, 1979, and were promulgated in Executive Order 12165, 44 F.R. 58671 (Oct. 9, 1979), reprinted in 3 C.F.R. 445 (1980). The salary for a GS-7, step 10, employee was $18,101.00. 5 U.S.C. Sec. 8337(d) makes no reference to any alternative method of computing "current rate of pay"; nor does it suggest that calculation of salary should refer to an annuity, which itself is based on "average pay", see 5 U.S.C. Sec. 8339(g)(1) (Supp. V 1981).13 We agree with respondent that the "current rate of pay" figure must derive from the applicable Government pay scale, promulgated pursuant to 5 U.S.C. Secs. 5305 and 5332, and not from an annuity.

Petitioner also argues, in the alternative, that his annuity was miscalculated on the basis of "average" pay rather than "current salary." It is clear that increases in Civil Service annuities have been linked to flat, non-discretionary percentage increases in the Consumer Price Index, see 5 U.S.C. Secs. 8340, 8331(15) (1976 & Supp. V 1981); this formula protects the annuitant from inflationary spirals and the vagaries of politics. The salary of Government employees, on the other hand, always is subject to political forces. 5 U.S.C. Sec. 5305 grants to the President discretion to determine, with the concurrence of Congress, federal salary increases. Petitioner's argument therefore is incorrect.

Petitioner next asserts that "vacation pay" should not be deemed "wages" for purposes of the 80% maximum imposed by section 8337(d) and that, even if "vacation pay" is so construed, certain amounts should not be deemed as accrued in 1979. Petitioner reads section 8337(d) too narrowly. We agree with respondent that "vacation pay" constitutes income earned by the employee in the course of his duties. That amount is taxable and properly included as income for purposes of calculating section 8337(d)'s 80% maximum amount. In addition, we agree with the Board that there is no indication in the record that the disputed vacation pay actually was received in 1978 instead of 1979.

Petitioner finally contends that the amount by which his income exceeded the 80% maximum imposed by 5 U.S.C. Sec. 8337(d) was so small as to warrant a de minimis exception to the statutory prescription. Nothing in the legislative history supports such a concept. The clear language of the statute requires that the income be "at least 80 percent of the current rate of pay." Had petitioner's income been 79.999% of the current rate of pay, Lancellotti would have escaped the bar of section 8337(d). Because the legislative history is clear and the statutory language unambiguous, further discussion of this claim is unwarranted. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 201, 96 S.Ct. 1375, 1384, 47 L.Ed.2d 668 (1976); Burns v. Alcala, 420 U.S. 575, 580-81, 95 S.Ct. 1180, 1184, 43 L.Ed.2d 469 (1975). We therefore reject petitioner's de minimis theory.

For the reasons expressed herein, we conclude that we have jurisdiction to decide the cause. Finding no error in the Board's determinations, we will deny the petition on the merits.