Alday v. Office of Pers. Mgmt.
| Decision Date | 21 September 2021 |
| Docket Number | CIVIL 20-194 (RJL) |
| Parties | TY ALDAY, Plaintiff v. OFFICE OF PERSONNEL MANAGEMENT, Defendant |
| Court | U.S. District Court — District of Columbia |
[Dkt. ## 9, 13]
Plaintiff Ty Alday ("plaintiff or "Alday"), is challenging the United States Office of Personnel Management's ("OPM") retroactive termination of his federal health benefits. Specifically, Alday contends that the agency's months-long delay in notifying him of his benefits termination violated the Administrative Procedure Act and the Fifth Amendment's guarantee of due process. Alday has moved for judgment on the pleadings, and OPM has cross-moved for summary judgment. For the following reasons, Alday's motion will be DENIED, and OPM's motion will be GRANTED.
OPM administers the Federal Employees Retirement System ("FERS"). See 5 U.S.C. § 8401 et seq. Under FERS, employees who become disabled are "entitled to an annuity[.]" 5 U.S.C. § 8451(c). An employee is "disabled" if OPM determines he is "unable, because of disease or injury, to render useful and efficient service in the employee's position." Id. § 8451(a)(1)(B). FERS disability annuitants may work in the private sector, but they lose eligibility if "in any calendar year the income of the annuitant from wages or self-employment or both equals at least 80 percent of the current rate of pay of the position occupied immediately before retirement." Id. § 8455(a)(2).
OPM also administers the Federal Employee Health Benefits ("FEHB") Program. See 5 U.S.C. § 8901 et seq.\ 5 C.F.R. § 890.101 et seq. Under the FEHB Program, OPM contracts with health insurance carriers to provide comprehensive health insurance for federal civilian employees, their families, and other eligible individuals. See 5 U.S.C. §§ 8902-04. "Annuitants"-such as FERS disability recipients-may also be eligible for this program. See Id. § 8905(b).
If an individual becomes ineligible for FEHB health benefits, he can convert his coverage from the FEHB group policy to an individual policy offered by participating health carriers. See 5 U.S.C. § 8902(g); accord 5 C.F.R. § 890.401(a), (c)(3); 5 C.F.R. § 890.201(a)(4) (). OPM may also temporarily extend the FEHB group coverage, 5 C.F.R. § 890.401(a)(1), (b), and, upon conversion, "the individual plan coverage is retroactive to the day following the day the temporary extension of group coverage ended," id. § 891.401(c)(4).
OPM is required to notify individuals within 60 days of when they become ineligible for FEHB benefits that (1) their coverage will be terminating, and (2) they have the right to convert their coverage. 5 C.F.R. § 890.401(c)(1). Individuals have "31 days" from "the date of the agency notice of the termination" to exercise their "right to convert." Id. § 890.401(c)(2). However, if "an agency fails to provide" this notice "within 60 days of the date the enrollment terminates," the individual may still request conversion "within 6 months after the individual became eligible to convert[.]" Id. § 890.401(c)(3).
Alday previously worked as a Rural Carrier with the United States Postal Service ("USPS"). Joint Appendix ("JA") [Dkt. # 19] at OPM3. He retired from that position due to a disability in 2005. See Id. Because of his disability, Alday received FERS disability annuity payments for more than a decade. See Id. at OPM69, 158. As a federal annuitant, Alday also received health coverage under the FEHB Program. See Id. at OPM71.
In 2016, however, Alday became ineligible for his FERS disability annuity. As a retired USPS Rural Carrier, his eligibility for the program was conditioned on making less than 80% of the "current rate of pay" for that position in a given calendar year. 5 U.S.C. § 8455(a)(2). For 2016, that rate of pay was $52, 994-80% of which was $42, 395. JA at OPM3. That year, however, Alday worked as a chaplain and received wages totaling $10, 411.80, a housing allowance totaling $31, 600, and retirement plan contributions totaling $2, 649.57-for a total income of $44, 661. Id. at OPM3, 38. Because $44, 661 exceeded the 80% limit of $42, 395, Alday became ineligible "180 days after the end of the calendar year in which earning capacity [wa]s so restored." 5 U.S.C. § 8455. Because that calendar year was 2016, Alday was "not entitled to [the FERS disability] annuity after June 30, 2017." JAatOPM3.
Unfortunately, however, OPM did not discover Alday's ineligibility until months after the fact. Alday mistakenly believed that his $31, 600 "housing allowance would not be counted as earned income" and thus failed to report his full income to OPM. See Id. at OPM70-71. OPM discovered the error in when it noticed a "discrepancy between what [Alday] reported to OPM as [his] earned income for calendar year[] 2016 and the amount reported to [OPM] by [the Social Security Administration]."[1] Id. at OPM189. OPM thus first notified Alday of his potential ineligibility on January 23, 2018. Id. at OPM 189-90. Then, after confirming that Alday was ineligible, OPM informed him on April 27, 2018 that the agency was terminating his benefits retroactively, "effective June 30, 2017." Id. atOPM187.
This delayed determination caused five distinct harms to Alday. First, of course, Alday was no longer eligible to receive FERS disability annuity payments. See Id. Second, because Alday had received FERS annuity payments for months after he became ineligible, the Government sought to collect $8, 923.10 in overpayments it made to Alday during that time. See Id. at OPM158-59. Third, because Alday's eligibility for the FEHB Program was conditioned on his status as a FERS annuitant, his group health coverage was also retroactively terminated, effective June 30, 2017. See Id. at OPM 187-88. Fourth, the retroactive termination of his health coverage left Alday with thousands of dollars "in uncovered medical expenses" incurred before he knew his coverage was terminated. See Id. at OPM72. Fifth, because OPM terminated Alday's FEHB coverage on April 27, 2018-more than six months from the date he lost his FEHB eligibility-he was precluded from exercising his right to convert his group coverage to an individual plan. See 5 C.F.R. § 890.401(c)(3); accord at OPM71.
Alday first challenged OPM's decision at the agency level. He disputed the agency's income calculation, urging OPM to reconsider its decision to terminate his FERS benefits. See JA at OPM68-69; 128-29. He alternatively sought a waiver of the agency's assessed overpayment under an exception to collection where "(a) the annuitant is without fault and (b) recovery would be against equity and good conscience." See Id. at OPM69-71; accord 5 U.S.C. § 8470(b); 5 C.F.R. § 845.301. OPM accepted Alday's argument in part. While the agency declined to reverse its underlying eligibility decision, it "decided that collection would be against equity and good conscience" and thus granted a waiver for collecting the $8, 923.10 overpayment. JA at OPM19.
Alday then sought reconsideration. Accord 5 C.F.R. § 890.104(c). He argued that "OPM should be equitably estopped from retroactively terminating" his FEHB medical coverage. JA at OPM11. Alleging unfairness and financial hardship, Alday asked OPM to "reinstate Mr. Alday's medical and dental coverage to the date that OPM notified Mr. Alday of the termination of coverage, April 27, 2018." Id. OPM disagreed. Noting that the agency "sympathize [d]" with Alday, it concluded that OPM "ha[d] no administrative discretion" to change the date on which Alday became ineligible-being bound by federal statute-and thus "affirm[ed]" its "initial decision" to retroactively terminate Alday's FERS and FEHB benefits. Id. at OPM5. OPM represented that this determination was its "final decision" on Alday's "health benefits entitlement" and that Alday "ha[d] the right to appeal this decision to the appropriate Federal district court." Id. at OPM6; accord 5 C.F.R. § 890.104(e).
Alday got the point and filed his complaint in this Court on January 24, 2020, alleging two counts. See Plaintiffs Complaint for Declaratory and Injunctive Relief [Dkt. #1]. First, Alday contends that OPM's delay in informing him of the termination of his FEHB benefits was arbitrary and capricious, in violation of the Administrative Procedure Act ("APA"). Id. ¶¶ 19-22. Second, Alday contends that the retroactive termination of his health benefits violated his Fifth Amendment right to procedural due process by depriving him of the right to convert his coverage to an individual plan. Id. at ¶¶ 23-28. Alday subsequently moved for judgment on the pleadings. See Plaintiffs Motion for Judgment on the Pleadings ( ) [Dkt. # 9]. OPM cross-moved for summary judgment. Defendant's Opposition to Plaintiffs Motion for Judgment on the Pleadings and Cross-Motion for Summary Judgment ("Def Mot.") [Dkt. #15]. Both motions are now ripe for review.
"[W]hen a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal." Am Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001). In these actions, "[t]he entire case on review is a question of law." Id. (citations and quotations omitted). Resolution of such cases turn "on the agency record-regardless of whether it is presented in the context of a motion for judgment on the pleadings or in a motion for summary judgment[.]" Doe v. Rogers, 139 F.Supp.3d 120, 133 (D.D.C. 2015) (Hogan, J.) (quoting University Med. Ctr. of S. Nevada v. Shalala, 173 F.3d 438, 441 n.3 (D.C. Cir. 1999)).
DISCUSSION[2]
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