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Federal Disability Retirement Under FERS:
Stephenson v. OPM and Proper Statutory Interpretation

Robert R. McGill, Esquire

Articles which begin with a reference or quotation from the Holy Bible are often dismissed summarily, as being "that kind" of a piece of writing.  Moreover, an article which refers to the Bible itself as "Holy" is dismissed not only summarily, but with greater aplomb.  Nevertheless, we begin thus:  In Job, 40:15 (Job is a book in the Holy Bible, for those who have already summarily dismissed this article but, out of a sense of intellectual curiosity, or outright boredom, have decided to persevere), a reference is made to a "Behemoth" -- an animal of such might and power as to overwhelm the irrelevance of man.  Over time, of course, the expanded definition of a behemoth has evolved to represent any figure, entity or character, whether mythological, fictional or real, which by its very appearance engenders fear, loathing, and in its very presence, a sense of powerlessness and inadequacy.

One such behemoth which comes to mind is the Federal Government.  For years, the U.S. Office of Personnel Management -- a mini-behemoth within the greater Behemoth of the Federal bureaucracy -- systematically decided to misinterpret the statute governing another agency, to the detriment and pecuniary loss (don't you just love that phrase, "pecuniary loss"?  It merely means "less money", but stated with greater verve) of all former Federal and Postal employees.  The undersigned author of this article had the privilege of arguing the case of Stephenson v. OPM, decided by the U.S. Court of Appeals for the Federal Circuit on January 18, 2013.  It was, and will continue to remain, an interesting case, because of the far-ranging consequences which it has, and will have, for years to come, and the impact it will have upon thousands, and tens of thousands, of former Federal and Postal employees -- and how the Federal and Postal annuitants who are receiving disability retirement benefits through the U.S. Office of Personnel Management will be directly affected.

In order to understand the full import of the case, some background and history should be reviewed.  A Federal or Postal employee who files for Federal Disability Retirement benefits under FERS must concurrently (or sometime during the process) file for Social Security Disability Insurance benefits (SSDI).  Most people who file for Federal Disability Retirement benefits never qualify for SSDI, precisely because SSDI has a higher standard of what essentially constitutes "total disability", or what is often termed an inability to perform or engage in "gainful employment".  The standard of eligibility for FERS Disability Retirement benefits is a lower standard -- of merely being unable to perform one or more of the essential elements of one's particular kind of job.  That is why a Federal Disability Retirement annuitant can go out and get a job while receiving disability retirement annuity, and make up to 80% of what one's former position currently pays, on top of the Federal Disability Retirement annuity.

Now, for those Federal or Postal Disability Retirement annuitants who qualify for SSDI, there is an offset of 100% for the first year of concurrent receipt of FERS & SSDI, and a 60% offset every year thereafter.  For many, the receipt of FERS Disability Retirement annuity and SSDI combined to allow for a modest income to compensate for an inability to engage in substantial gainful activity.  Such a recipient could earn some income -- about $1000.00 per month from part-time work -- without endangering one's FERS annuity and SSDI.  But for those who crossed the threshold of the allowable ceiling, and entered into the nefarious world of "substantial gainful employment" (i.e., essentially a full-time job earning too much for SSDI purposes), the Social Security Administration would cut off the SSDI benefits after a period exceeding 9 months of earning beyond the ceiling.  Thus, the "rub" -- and the point which the Court in Stephenson v. OPM impacts -- is when the FERS disability retirement annuitant was receiving both FERS and SSDI, then loses the SSDI because of making too much money, and as a result goes back to OPM and says, "Hey, OPM, since SSDI is no longer paying me, you need to restore the FERS annuity back to the unreduced amount because there is no longer an offsetting amount being received to offset the annuity." 

For decades, OPM has steadfastly refused to restore the full amount of a FERS annuity despite the loss of the offsetting SSDI benefits.  Their reasoning has been to argue in a tripartite manner:  (A) Recalculation to restore the annuity is not mandated because OPM interprets the statute governing Social Security Disability payments to state that the SSDI recipient continues to remain "entitled" to the benefit; (B) since they are still "entitled", OPM can continue to offset the amount even though the FERS annuitant is no longer actually receiving the money, and (C) an agency's interpretation of a statute should be given "deference" by the courts, and so what OPM says must be true.  (Note that the last argument is what is commonly known as a "circular argument of reasoning" -- i.e., a logical fallacy.)  As behemoths go, the U.S. Office of Personnel Management was acting precisely as the overbearing and fearsome entity described in Job.

In oral arguments before a 3-Judge panel at the U.S. Court of Appeals for the Federal Circuit, when the attorney for the Federal Government was asked to explain how a person could be "entitled" to something, yet not receive it, the answer provided was in the form of an example of a Federal employee who had accrued sick leave, was entitled to use it, but did not use it, but continues to remain "entitled" to the sick leave.  Of course, where such an analogy fails in the proposed example was quite obvious:  the employee still has a day of sick leave remaining if he doesn't use it; the FERS Disability annuitant who is purportedly "entitled" to SSDI benefits never received any such "entitled" money in his or her bank account.

As for deference to an agency's statutory interpretation, the undersigned attorney argued to the Court that deference should first be given to fidelity to Truth, and a rational basis for a proper application of the meaning of words.  Words must ultimately have a conceptual constraint upon meaning; otherwise, if there does not exist a reasonable parameter of meaning, all discourse will fail, and words will become meaningless in a very real sense.  Thus, in the submitted brief before the U.S. Court of Appeals for the Federal Circuit, the undersigned attorney began with the famous but troublesome conundrum which Bertrand Russell, the famous English Logician and Philosopher, proposed:  Does the statement, "The King of France is bald" mean anything?  Taking the words individually, we can all understand the meaning of each; collectively, we can comprehend and create a word-picture of a bald French Monarch.  However, the problem presents itself thus:  There is no King of France.  As such, the King of France cannot be bald.  As there is no King of France, and certainly no bald King of France, how can the sentence convey any meaning?  This was the clever and mischievous puzzle which Russell proposed in debating against the classical Correspondence Theory of Truth.   For our purposes, however, the reason why the undersigned author presented Russell's word-game, was to show that OPM was engaging in a similar sleight-of-hand, by attaching to the word "entitled" no more integrity of meaning than to state that the King of France is bald.  For, how can a Federal or Postal employee be "entitled" to something, but never receive the actual benefit of such entitlement? 

Fortunately, common sense prevailed, and the Court agreed that non-receipt of SSDI benefits could not possible mean that Mr. Stephenson was entitled to such benefits.  As for showing any deference to OPM's interpretation of the SSDI Statute, the Court was unequivocal in its repudiation of granting any deferential status, pointing out that "the dispositive issue of statutory interpretation involves the Social Security Act, which is administered by SSA, not OPM."  Thus, while some modicum of deference may be accorded to an agency interpreting a statute which applied to itself, no such deference would be granted where one agency decided to unreasonably interpret the statute of another agency.  That would be like having one behemoth living in the same cage with another behemoth.  Furthermore, the Court stated that they "conclude that OPM's position is unreasonable and unpersuasive and therefore not entitled to deference."  As asserted in oral arguments, deference cannot be granted where fidelity to Truth and a rational basis for a proper application of the meaning of words do not exist.

In the end, Stephenson v. OPM is a major victory for fairness, the importance of a reasonable interpretation of a statute, and the proper meaning of words.  As a practical matter, those Federal and Postal employees who receive both FERS and SSDI, with the statutory offset, can be secure in the realization that if they decide to engage in any substantial gainful activity in the future, the loss of the offsetting amount of SSDI against the FERS Disability Retirement benefit will not result in the injustice of mandating an offset when no money is actually received.  Work should always be encouraged, and never penalized.  For the former Federal or Postal employee Disability Retirement annuitant, the future for a second vocation without being penalized, should be welcomed good news.  For the Behemoth referred to in Job, may your fearful countenance always remind us that Truth, Rationality, and conceptual meaningfulness will, and should, ultimately triumph.  

Posted:  02/08/2013

About the Author

Robert R. McGill is an attorney who specializes in federal disability retirement, a practice area he dedicates 100% of his time helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS. For more information about his legal services, publications and forum, please visit his CSRS and FERS Disability Retirement Website.