Larson v. Saul

• Decision Date: 21 July 2020
• Docket Number: No. 18-35985,18-35985
• Parties: Linda Jackie LARSON, Personal Representative of the Estate of Kenneth Earl Larson, Plaintiff-Appellant, v. Andrew M. SAUL, Commissioner of Social Security, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

967 F.3d 914

Linda Jackie LARSON, Personal Representative of the Estate of Kenneth Earl Larson, Plaintiff-Appellant,

v.Andrew M. SAUL, Commissioner of Social Security, Defendant-Appellee.

No. 18-35985

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 7, 2019 Portland, Oregon

Filed July 21, 2020

William O. Bronson (argued), William O. Bronson PLLC, Great Falls, Montana, for Plaintiff-Appellant.

Sushma Soni (argued) and Alisa B. Klein, Appellate Staff; Kurt G. Alime, United States Attorney; Joseph H. Hunt, Assistant Attorney General; Civil Division, United States Department of Justice, Washington, D.C.; for Defendant-Appellee.

Before: Ronald Lee Gilman,^* Richard A. Paez, and Johnnie B. Rawlinson, Circuit Judges.

PAEZ, Circuit Judge:

Kenneth E. Larson enlisted in the Montana Air National Guard in 1971. Just over a year later, he began working as a full-time dual-status military technician, a role that he held until his retirement in 2004. Dual-status technicians are federal civilian employees who are required to maintain membership in the Selected Reserve. See 10 U.S.C. § 10216(a). Larson also occasionally participated in inactive-duty training and was deployed overseas, for which he received separate military pay. See 37 U.S.C. §§ 204(a)(1), 206 ; 10 U.S.C. §§ 12731 –41. Upon his retirement, Larson was eligible for three types of retirement benefits: a civil service retirement system (CSRS) pension, a military pension, and social-security retirement benefits.

At issue in this case is the manner in which the Social Security Administration (SSA) calculated Larson's social-security benefits. The SSA awarded Larson benefits, but reduced them pursuant to the Windfall Elimination Provision (WEP) of the Social Security Act, 42 U.S.C. §§ 401 et seq. That provision applies to retirees who, like Larson, are entitled to social-security benefits and pension benefits from employment not covered by social security.

There are, however, exceptions to the WEP. Larson argues that one such exception—the uniformed-services exception—shields his benefits from reduction under the WEP. The exception applies to "a payment based wholly on service as a member of a uniformed service." 42 U.S.C. § 415(a)(7)(A)(ii)(III). Larson contends that he is entitled to the uniformed-services exception because he was required to serve in the National Guard (a uniformed service) for the duration of his employment as a dual-status technician.

Larson raised this argument with the SSA and requested reconsideration of the reduction. On reconsideration, the Commissioner rejected Larson's argument, and an administrative law judge affirmed. Larson then sought judicial review in the District Court for the District of Montana. The court agreed with the Commissioner that the uniformed-services exception did not apply and entered judgment for the Commissioner. Larson now appeals, again arguing that the SSA erred in applying the WEP to reduce his retirement benefits.

We conclude that the text of the uniformed-services exception is ambiguous as applied to dual-status technicians. But, because the Commissioner's interpretation of the uniformed-services exception is reasonable, it is entitled to deference under Skidmore v. Swift & Co. , 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944). We therefore affirm the SSA's reduction of Larson's social-security retirement benefits.

I.

A.

The Social Security Act provides retirement benefits for eligible individuals age 62 and older. 42 U.S.C. § 402(a). In its calculation of benefits, the SSA distinguishes between two types of employment: "covered" and "non-covered" employment. Covered employees pay social-security taxes and are entitled to social-security retirement benefits on their earnings; noncovered employees do not pay social-security taxes and are not entitled to social-security benefits. see Das v. Dep't of Health & Human Servs. , 17 F.3d 1250, 1253–55 (9th Cir. 1994) ; see also 42 U.S.C. § 410 ; 20 C.F.R. §§ 404.1003 –38 (2016). Noncovered employees who work in the public sector may still participate in a pension plan like the CSRS and receive a pension upon retirement. see Das , 17 F.3d at 1253.

Social-security benefits are calculated on the basis of retirees' lifetime earnings. Retirees who earned lower average monthly incomes receive a higher percentage of their earnings than retirees who earned higher average monthly incomes. This progressive pay-out system is intended to balance benefit adequacy with equity for retirees.¹ Before 1983, retirees who had earnings from both covered and noncovered employment could receive unusually high windfall payments because they were eligible for both social-security retirement benefits and a pension from an employer who did not withhold social-security taxes. These retirees had their social-security retirement benefits calculated using the higher-percentage return intended for workers with lower lifetime covered employment, but also received a separate pension from their noncovered employment. The combined benefits often exceeded the social-security benefit paid to a retiree who had similar earnings under covered employment.

To eliminate this windfall, Congress passed the WEP, 42 U.S.C. § 415(a)(7). The WEP reduces the social-security benefits of individuals who earn a pension from noncovered employment and qualify for covered-employment retirement benefits. See Social Security Administration Publication No. 05-10045, Windfall Elimination Provision (2020).

There are, however, statutory exceptions to the WEP. One of these exceptions is the "uniformed-services exception." This provision excludes from the WEP

a payment based wholly on service as a member of a uniformed service (as defined in section 410(m) of this title) which is based in whole or in part upon his or her earnings for service which did not constitute "employment" as defined in section 410 of this title for purposes of this subchapter[.]

42 U.S.C. § 415(a)(7)(A)(ii)(III). A "member of uniformed service" is defined in section 410(m) as

[a]ny person appointed, enlisted, or inducted in a component of the Army, Navy, Air Force, Marine Corps, or Coast Guard (including a reserve component as defined in section 101(27) of title 38), or in one of those services without specification of component[.]

Congress enacted the exception to the WEP in order to address an anomaly in military service pensions. Before its passage, most categories of military service were already classified as covered employment and did not implicate the WEP or were expressly exempt. See 42 U.S.C. §§ 415(a)(7)(B)(i), 410(l)(1)(A)–(B). Active military service was classified as covered employment under the Social Security Act in 1957, and inactive duty by reservists became covered in 1988. See H.R. Rep. No. 103-670, at 125 (1994) (Conf. Rep.), as reprinted in 1994 U.S.C.C.A.N. 1553. A pension based on either type of service, therefore, if performed before 1957, did not trigger the WEP. Id. The only military pension that triggered the WEP before the passage of the uniformed-services exception was a pension based on inactive duty completed between 1956 and 1988. Id. The passage of the exception conformed the treatment of individuals receiving inactive-duty pensions based on service between 1956 and 1988 with the treatment of all other military retirees.

* * *

Kenneth E. Larson² ("Larson") worked as an enlisted member of the Montana Air National Guard for thirty-five years. He received military pay for his part-time inactive-duty National Guard drills and training, which took place on weekends and during annual field trainings, and for his full-time active deployments. Nineteen months after enlisting, Larson began working for the Montana National Air Guard as a full-time dual-status military technician.

Dual-status technicians are members of the armed forces who are assigned to work in civilian positions. See 10 U.S.C. § 10216(a). They may help organize, administer, instruct, or train members of the National Guard, or they help maintain and repair supplies or equipment issued to the reserve or other armed forces. Id. § 10216(a)(C). The job requires that they also satisfy various military-service requirements: they must participate in inactive-duty training, wear a uniform, comply with military standards of conduct, meet physical requirements, and must be available for active deployment. Importantly, dual-status technicians must maintain membership in the National Guard for the duration of their employment. See 32 U.S.C. § 709(b) ; 10 U.S.C. § 10216(a).

After Larson retired in 2004, he began receiving his federal CSRS pension. Larson was also eligible for social-security retirement benefits because he paid social-security taxes on the military pay he earned while he served on inactive-duty training, active duty, and on his non-governmental civilian employment. See 37 U.S.C. §§ 204(a)(1), 206 ; 10 U.S.C. §§ 12731 –41. Upon his retirement, then, Larson was entitled to two separate pensions: (1) his CSRS pension, based on his thirty-two years of noncovered earnings as a dual-status technician, and (2) his military pension, based on his thirty-five years of military service in the Montana Air National Guard. His military retirement benefits are plainly exempt from the WEP, either because his military service qualifies as covered employment under the Social Security Act, or because those benefits were based on Larson's membership in a uniformed service.

Larson was also eligible for social-security retirement benefits, which he applied for in early 2015. The same month, SSA notified Larson that he would receive reduced benefits because his employment as a technician was subject to the WEP. The SSA explained that Larson's monthly benefits would be reduced because he was entitled to "both Social Security and a pension based on work that is not covered by Social Security." In other words, the pension that Larson received from his employment as a dual-status...