Frantz v. Office of Personnel Management, 85-603

• Citation: 778 F.2d 783
• Decision Date: 04 December 1985
• Docket Number: No. 85-603,85-603
• Parties: Angelina FRANTZ, Petitioner, v. OFFICE OF PERSONNEL MANAGEMENT, Respondent. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 783

778 F.2d 783

Angelina FRANTZ, Petitioner, v. OFFICE OF PERSONNEL MANAGEMENT, Respondent.

Appeal No. 85-603.

United States Court of Appeals Federal Circuit.

Dec. 4, 1985.

John F. Schuck, Keogh, Marer & Flicker, Palo Alto, Cal., for petitioner.

John S. Groat, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for respondent. With him on brief were Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director and Robert A. Reutershan.

Before NIES, Circuit Judge, COWEN, Senior Circuit Judge, and BISSELL, Circuit Judge.

NIES, Circuit Judge.

This is an appeal from the final decision of the Merit Systems Protection board (MSPB or board), Docket No. SF08318310928, reported at 21 M.S.P.R. 652 (1984). The full board reversed the initial decision of the presiding official and upheld the ruling of the Office of Personnel Management (OPM), which denied petitioner's application to amend her survivor's annuity election. We reverse the board's decision and remand the case with instructions to accept petitioner's application.

Background

The federal civil service retirement system has long provided the option of providing a survivor's annuity for the spouse of a retiring employee. When such an election is made, the monthly payment to the retiree is reduced. The election of a survivor's annuity or no survivor's annuity is initially made at the time the employee applies for retirement. Once a binding election is made, a change is not permitted.

Angelina Frantz retired from the General Services Administration on September 25, 1981. At the time of her retirement, she was married and had been married for 34 years. Prior to retirement, Mrs. Frantz met with the agency's personnel counselors, including Patricia Royce, who advised her that if she elected to provide a survivor's annuity for her husband and he predeceased her, she would have to continue making payments for his annuity (i.e., she would receive a reduced annuity) for the rest of her life. The retirement application, form SF-2801, which Mrs. Frantz filled out gave the same information as that given by Mrs. Royce in that it stated:

If your wife (or husband) should die before you, no change in type of annuity will be permitted, your annuity will not be increased, nor may you name any other person as a survivor * * *.

Since Mrs. Frantz's husband was older and, therefore, as a matter of statistics, was likely to predecease Mrs. Frantz, Mrs. Royce counselled Mrs. Frantz that the election of a survivor annuity for Mr. Frantz would be financially impractical. Based on the information on the form and given in counselling, Mrs. Frantz chose not to elect a survivor's annuity for her husband. Her SF-2801 application so indicated.

The statement in the retirement application, as well as the advice given to Mrs. Frantz, is admitted by OPM to be wholly erroneous. In 1974 the retirement laws had been amended to permit an annuity to be recomputed to the higher amount without reduction for a survivor should the retiree outlive the spouse, or should the marriage be dissolved by divorce or annulment. However, OPM failed to change the SF-2801 application form until sometime in 1982.

Prior to the first payment to a retiree, OPM routinely sends out a form to the retiree on which the retiree is to confirm or to change the retiree's previous election with regard to a survivor's annuity. The form must be returned to OPM before payments will begin. This type of verification has been utilized since 1962. Its purpose is principally to confirm OPM's information as to the election already made, to advise the retiree of amounts receivable with and without a survivor's annuity, and to obtain the spouse's acknowledgment or reacknowledgment (on a separate Spouse's Notification form) that no survivor's annuity had been elected. The retiree can change an election up to this point.

Approximately five months after Mrs. Frantz retired, she received such a form (BRI 46-270A (temp.) ), which we will refer to as the "confirmation form." It stated that her annuity could not be processed until that form was returned to OPM. Mrs. Frantz signed and returned that form on February 2, 1982, confirming her original election of no survivor's annuity, together with a properly executed Spouse's Notification form.

The confirmation form arguably contained accurate information with respect to the 1974 changes in the law, and OPM originally asserted in a number of cases, including this one, that the confirmation form was sufficient in itself to correct misinformation given to retirees. OPM no longer makes that assertion here or in other cases. ¹ Rather, OPM asserts here that an information sheet, which bears the identification "Form BRI 46-270 Temp." and which presumably was sent to Mrs. Frantz with the confirmation form, contains correct information, including a statement calling attention to incorrect information in the original SF-2801 annuity application. Per OPM, the information sheet should have alerted Mrs. Frantz to change her election. ² Mrs. Frantz does not dispute that the information sheet contains correct information concerning the effect of an election of a survivor's annuity on her benefits. However, she asserts that, if she received and read the information sheet, she did not appreciate its import. She was not expecting a major correction of information from that on which she based her election in September, 1981. Accordingly, she merely reaffirmed her previous election.

In August, 1982, after Mrs. Frantz read several articles in a magazine for retirees which explained the misinformation she had previously received, she contacted Mrs. Royce. Mrs. Royce explained that she (Royce) had received new information on survivor's annuities through an OPM bulletin in January, 1982. Mrs. Frantz met with Mrs. Royce and was told that Mrs. Frantz would soon be receiving new forms which would enable her to change her survivor's annuity election. (Mrs. Royce testified that she understood that the law was changed in December, 1981, which was, of course, incorrect and is mentioned only to indicate the persistent confusion over retirement benefits even among those who are supposed to be most knowledgeable.)

In September, 1982, Mrs. Frantz received new forms from OPM (BRI 46-390, 390A and 395), which explained the 1974 change in the law in great detail and clarity and included another survivor annuity election form. These forms were necessitated by a settlement agreement in a class action against OPM, directed to correcting its handling of the matter of election of a survivor's annuity. American Federation of Government Employees v. Devine, No. 81-2527 (D.D.C. April 16, 1982) (Devine I ).

Mrs. Frantz submitted the new form to OPM, this time electing to provide a survivor's annuity for her husband. In a series of decisions, the last on July 22, 1983, OPM denied her application on the ground that she had signed the confirmation form in February, 1982, being "fully informed" of her rights.

The presiding official overturned OPM's decision, holding that Mrs. Frantz's actions did not indicate that she was fully informed in her election at that time. She remained confused. The presiding official concluded that it was obvious that OPM had issued the BRI 46-390 forms to clarify and rectify the problems created by previous forms. The presiding official also found that the information sheet, which accompanied Mrs. Frantz's...