671 F.2d 607 (D.C. Cir. 1982), 81-2224, National Federation of Federal Employees v. Devine

Docket Nº:81-2224 to 81-2226, 81-2237, 81-2238 and 81-2251.
Citation:671 F.2d 607
Party Name:NATIONAL FEDERATION OF FEDERAL EMPLOYEES and National Association of Government Employees, Intervenor-Appellee, v. Donald J. DEVINE, Director, Office of Personnel Management, et al., Appellants. NATIONAL TREASURY EMPLOYEES UNION v. Donald J. DEVINE, Director, Office of Personnel Management, et al., Appellants. Christina B. KRYWUCKI, et al. v. Donal
Case Date:February 19, 1982
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 607

671 F.2d 607 (D.C. Cir. 1982)

NATIONAL FEDERATION OF FEDERAL EMPLOYEES and National

Association of Government Employees, Intervenor-Appellee,

v.

Donald J. DEVINE, Director, Office of Personnel Management,

et al., Appellants.

NATIONAL TREASURY EMPLOYEES UNION

v.

Donald J. DEVINE, Director, Office of Personnel Management,

et al., Appellants.

Christina B. KRYWUCKI, et al.

v.

Donald J. DEVINE, Director, Office of Personnel Management,

et al., Appellants.

GROUP HEALTH ASSOCIATION OF AMERICA, INC., on Behalf of 52

of Its Members

v.

Donald J. DEVINE, Director, Office of Personnel Management,

Appellant.

Robert H. WALKER, et al.

v.

Donald J. DEVINE, Director, Office of Personnel Management,

et al., Appellants.

NATIONAL TREASURY EMPLOYEES UNION

v.

Donald J. DEVINE, Director, Office of Personnel Management

Blue Cross Association and Blue Shield

Association, Appellants.

Nos. 81-2224 to 81-2226, 81-2237, 81-2238 and 81-2251.

United States Court of Appeals, District of Columbia Circuit

February 19, 1982

Argued Feb. 10, 1982.

Page 608

Kenneth M. Raisler, Asst. U. S. Atty., Washington, D. C., with whom Charles F. C. Ruff, U. S. Atty., Washington, D. C., at the time brief was filed, and Royce C. Lamberth and R. Craig Lawrence, Asst. U. S. Attys., Washington, D. C., were on brief, for the Federal appellants. Anthony J. Steinmeyer and Eloise E. Davies, Attys., Dept. of Justice, Washington, D. C., entered appearances for the Federal appellants.

Philip S. Neal, Washington, D. C., for appellants Blue Cross Ass'n and Blue Shield Ass'n.

Catherine Waelder, Washington, D. C., with whom Bruce P. Heppen, Washington, D. C., was on brief, for appellee Nat. Federation of Federal Emp.

R. Kenly Webster, with whom Martin D. Krall and Judith A. Sandler, Washington, D. C., were on brief, for appellee Group Health Ass'n of America, Inc.

Robert M. Tobias, John F. Bufe, and William F. White, Washington, D. C., were on brief for appellee Nat. Treasury Emp. Union.

James R. Rosa, Joseph F. Henderson and Kevin Grile, Washington, D. C., were on brief for appellees Christina B. Krywucki, et al.

Raymond Malloy and Michael J. Crealy, Washington, D. C., entered appearances for intervenor-appellee Nat. Ass'n of Government Emp.

Before ROBINSON, Chief Judge, and WRIGHT and MacKINNON, Circuit Judges.

Opinion for the court PER CURIAM.

PER CURIAM:

Existing regulations require the Office of Personnel Management (OPM) to hold an "open season" annually in November and December to permit federal employees to transfer freely from one health benefit plan to another. On November 6, 1981 the Director of OPM announced that unforeseen emergency circumstances, including last-minute benefit reductions and pending litigation in federal courts, required postponement of the open season that had been scheduled to begin on November 9, 1981. The District Court granted a preliminary injunction on November 18, holding that OPM's action had been illegal and ordering an open season to begin on or before December 7. In these appeals we must decide whether the District Court correctly found that OPM's postponement decision violated the Administrative Procedure Act (APA). We reverse.

I. FACTS

The Federal Employees Health Benefits Program (FEHBP), established by statute in 1960, gives employees a choice among a number of competing health plans in order to encourage the best possible service at the lowest cost. After an employee or retired annuitant has enrolled in a particular plan, the statute provides that he may transfer his enrollment from one participating plan to another "at the times and under the conditions prescribed by regulations" issued by OPM. 5 U.S.C. § 8905(e) (1976). The OPM regulations currently in effect permit such transfers to be made only during open season periods, which are to be held annually from the Monday of the second full work week in November through the Friday of the first full work week in December. 5 C.F.R. § 890.301(d) (1981).

Page 609

Under this regulation the 1981 open season would have begun on Monday, November 9. On Friday, November 6, however, the Director of OPM issued FPM Bulletin No. 890-77, which postponed open season "to a time which will be announced hereafter, or to the applicable period during 1982 as determined pursuant to 5 C.F.R. § 890.301(d), whichever is earlier." Joint Appendix (JA) 114-115. The bulletin stated a number of reasons for the postponement. Accurate information regarding rates, benefits, and other terms of the 1982 health insurance plans was not available for distribution to employees because contract negotiations had not been completed until October 31, because substantial changes had been made in rates and benefits, and because several pending lawsuits in federal courts created uncertainty with respect to significant aspects of the 1982 program. 1 In addition, the bulletin asserted that the changes in benefit packages for 1982 were so substantial that "the stability of the FEHB program, the financial integrity of many of the plans, and the welfare of employees and annuitants would be threatened if, as the result of an immediate open season, the actuarial and economic data bases underlying the FEHB program were significantly altered." JA 114-115.

A few days later, on November 12, 1981, OPM published an interim regulation in the Federal Register, immediately effective, amending 5 C.F.R. § 890.301(d) to permit the Director of OPM to cancel or reschedule the annual November-December open season by issuing an FPM Bulletin. JA 118-119, 46 Fed.Reg. 55679-55680 (1981). The notice gave a brief statement of reasons, including the unavailability of accurate information concerning the 1982 plans and the uncertainty of terms caused by pending litigation. It also invited public comments for consideration in final rulemaking regarding rescheduling of open seasons in future years.

A number of health plan carriers and two individual federal employees filed suits in the United States District Court for the District of Columbia, alleging that OPM's failure to hold an open season as scheduled was a violation of the Administrative Procedure Act and a breach of their contractual rights. Plaintiffs sought declaratory and injunctive relief. After a hearing on the motion for preliminary injunction on November 16, 1981, the District Court issued a preliminary injunction on November 18, accompanied by a brief memorandum opinion. JA 36-47.

The District Court held that OPM had failed to demonstrate an emergency that would constitute "good cause" for postponement of open season without notice and comment under Section 553 of the APA. Recognizing that the exceptions to notice and comment procedures should be "narrowly construed and only reluctantly countenanced," JA 39, the court rejected the government's reasons for...

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