Meyer v. DEPT. OF HEALTH AND HUMAN SERVICES, ETC., 21-80.

• Decision Date: 02 December 1981
• Docket Number: No. 21-80.,21-80.
• Citation: 666 F.2d 540
• Parties: Joseph T. MEYER v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, SOCIAL SECURITY ADMINISTRATION.
• Court: U.S. Claims Court

666 F.2d 540

Joseph T. MEYER v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, SOCIAL SECURITY ADMINISTRATION.

No. 21-80.

United States Court of Claims.

December 2, 1981.

Peter B. Broida, Washington, D. C., atty. of record, for petitioner. Passman, Price & Broida, Washington, D. C., of counsel.

Thomas W. B. Porter, Washington, D. C., with whom was Acting Asst. Atty. Gen., Thomas S. Martin, Washington, D. C., for respondent. Wayne Brown, Dept. of Health and Human Services, of counsel.

Before DAVIS, KASHIWA and SMITH, Judges.

OPINION

SMITH, Judge:

This civilian pay case is before the court on petitioner's appeal for review of an order of the Merit Systems Protection Board (MSPB). The question to be decided is what standard of review should have been applied by the MSPB at the particular time it considered petitioner's case.

Petitioner claims that Congress intended for the preponderance of the evidence standard of review in section 7701(c)(1)(B) of title 5 to be applicable when the MSPB considers agency denials of within-grade pay increase actions, at least until the end of the "interim period." The "interim period" is the period from the effective date of section 4303 of the Civil Service Reform Act of 1978,¹ January 11, 1979, to October 1, 1981, or to the date, if earlier, that the agency establishes a section 4302 of title 5 performance appraisal system. However, respondent argues that the legislative history of the Civil Service Reform Act (act) indicates it was Congress' desire that the MSPB would base its review of denials of within-grade pay increases on the section 7701(c)(1)(A) of title 5 substantial evidence standard. Having examined the submissions and having heard the arguments of the parties, we find respondent's position the more compelling argument, and therefore affirm the order of the MSPB.

I.

Petitioner is employed as a social insurance claims representative, GS-10, step 8, at the Social Security Administration's (SSA) District Office in Athens, Georgia. On May 30, 1979, petitioner was sent a letter from the SSA stating that a number of times in 1978 and in a March 20, 1979, memorandum petitioner was informed of the level of competence required for his position and his deviation from that standard. The letter went on to inform petitioner that, because of his failure to meet an acceptable level of competence, he would be denied his May 20, 1979, within-grade pay step increase.

Petitioner sought reconsideration of the denial of his step increase by filing an internal agency appeal. On December 12, 1979, the SSA affirmed petitioner's supervisor's determination that petitioner's work performance did not entitle him to progress to the GS-10, step 9, level. Petitioner, on December 20, 1979, appealed the agency's action to the MSPB Atlanta Field Office.

The field office board conducted a hearing on March 12 and 13, 1980. It found that, based on Parker v. Defense Logistics Agency,² appeals under section 5335 of title 5 (periodic step-increases) are governed by the substantial evidence standard found in section 7701(c)(1)(A) of title 5.³ Using that standard, the field office's April 18, 1980, initial decision held that the SSA's action was supported by the evidence presented.

On May 21, 1980, petitioner filed with the MSPB his petition for review of the field office's initial decision. In its order of October 8, 1980, the MSPB held that petitioner's petition did not meet the MSPB's criteria for review⁴ and, therefore, the MSPB summarily denied the appeal. On November 7, 1980, petitioner, finding jurisdiction under section 1491⁵ as referenced to by section 7703(b)(1), filed with this court a petition for review.⁶

II.

Congress acted to reform the Civil Service in order to increase the efficiency and effectiveness of the federal bureaucracy. In the process of drafting a comprehensive scheme of reform Congress failed to address specifically how the mechanics of the act would function in certain situations. What standard of review should be applicable to employee appeals before the MSPB for denials of within-grade pay increases (WGPI) is one such statutory lapse. In the process of deciding this issue, we are directed by the principle that

a section of a statute should not be read in isolation from the context of the whole Act, and that in fulfilling our responsibility in interpreting legislation, "we must not be guided by a single sentence or member of a sentence, but should look to the provisions of the whole law, and to its object and policy." * * * Footnotes omitted.⁷

The issues raised in this case center around section 7701(c)(1) of title 5 which provides the relevant standards of review for MSPB hearings of agencies' personnel actions. That section provides:

Subject to paragraph (2) of this subsection, the decision of the agency shall be sustained under subsection (b) only if the agency's decision —

(A) in the case of an action based on unacceptable performance described in section 4303 of this title, is supported by substantial evidence, or

(B) in any other case, is supported by a preponderance of the evidence.

Section 4303(a) states that "subject to the provisions of this section, an agency may reduce in grade or remove an employee for unacceptable performance." Unacceptable performance is defined as being the "performance of an employee which fails to meet established performance standards in one or more critical elements of such employee's position."⁸

One other section of title 5 is relevant to our discussion. Subsection (c) of section 5335 (periodic step-increases) provides, in part, that "when a determination is made * * * that the work of an employee is not of an acceptable level of competence, the employee is entitled to prompt written notice * * *. If the determination is affirmed by the agency on reconsideration, the employee is entitled to appeal to the Merit Systems Protection Board."

III.

An examination of the legislative history of the act reveals a general scheme to give supervisors more latitude in actions against undesirable employees. In discussing the amendments to chapter 77 of title 5, the report of the Senate Governmental Affairs Committee stated that the changes were

intended to give agencies greater ability to remove or discipline expeditiously employees who engage in misconduct, or whose work performance is unacceptable. Henceforth, the Board and the courts should only reverse agency actions under the new procedures where the employee's rights under this title have been substantially prejudiced.⁹

More specifically, the legislative history, as summarized in the House Conference Report, of section 7701(c)(1) is informative as to what standard of review Congress intended for the MSPB to apply in WGPI cases.¹⁰

The Senate bill provided that agency actions for unacceptable performance would be upheld unless "there is no reasonable basis on the record for the agency's decision." For actions based on misconduct the standard of review was to be substantial evidence. However, the House bill applied a preponderance of the evidence standard for both actions.¹¹

As cited above, section 7701(c)(1), as finally enacted, has a preponderance of the evidence standard for misconduct cases, while the standard for performance cases is substantial evidence.

The committee agreed to a lower standard of proof for performance cases "because of the difficulty of proving that an employee's performance is unacceptable."¹² The committee selected the substantial evidence standard "both because it is clearly a lower standard than now used in performance cases and because it is a generally understood term in administrative law."¹³ (Emphasis added.)

While not directed at WGPI actions,¹⁴ the above legislative history demonstrates that Congress' intent was to change the personnel system in order to give agencies broader and more flexible means of disciplining and removing employees whose work performance is inadequate.

We now consider how denials of within-grade pay increase actions fit within the general scheme of the act.

IV.

It can be assumed that when Congress drafted the act, it was aware of the standard used by the Civil Service Commission and by this court in WGPI cases.¹⁵ Prior to the act, the standard of review applied by the Civil Service Commission, MSPB's predecessor, for a denial of a WGPI was "whether the action was arbitrary, or whether it was otherwise accomplished contrary to the Commission's regulations."¹⁶ We also applied an arbitrary and capricious test prior to 1978.¹⁷

It, therefore, could be argued that since Congress failed to include section 5335 actions under section 7701(c)(1), it wanted to retain the arbitrary and capricious standard of review for WGPI actions. However, we reject that argument and accept the MSPB's conclusion in Parker that section 7701(c)(1) governs WGPI actions.

In Parker, the MSPB was confronted with the same issue we have here — how negative WGPI's fit within the terms of section 7701(c)(1). The MSPB began its analysis by pointing to section 7701(c)'s legislative history. That history shows that Congress rejected the arbitrary and capricious standard.¹⁸

The board then turned its attention to the phrasing of section 7701(c)(1)(A). The board found that WGPI actions could be inferred to be included within the clause "an action based on unacceptable performance described in section 4303 of this title." The board based this result on four factors. First, in section 4302(a)(3),¹⁹ Congress indicated its desire to create a unified system where performance appraisals would be used to provide bases for all personnel actions including "rewarding * * * employees."²⁰ Second, the Office of Personnel Management, through its section 4305 authority, included WGPI denials among the personnel actions in which agencies were required to use section 4302 performance appraisals as bases for decisions.²¹

Third, the Senate report on the act offers glimpses of...