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Stephenson v Office of Personnel Management

Case No. 2012-3074 (C.A. Fed., Jan. 18, 2013)

This appeal presents an issue of statutory interpretation arising from 5 U.S.C. § 8452 and section 223 of the Social Security Act, 42 U.S.C. § 423. Pursuant to § 8452, the Office of Personnel Management (“OPM”) must reduce a Federal Employees Retirement System (“FERS”) disability retirement annuity for any month in which the recipient is also “entitled” to Social Security Administration (“SSA”) disability benefits under section 223. Kelly L. Stephenson petitions for review of a final decision of the Merit Systems Protection Board (“Board”), which affirmed a decision by OPM denying Mr. Stephenson’s request to have his FERS disability retirement annuity recalculated to account for the cessation of his monthly SSA disability benefits. Because the Board erred in determining that Mr. Stephenson remained “entitled” to SSA disability benefits under section 223 of the Social Security Act and that his monthly FERS disability annuity was therefore correctly offset, we reverse and remand.

BACKGROUND



Mr. Stephenson began receiving a FERS disability retirement annuity on May 4, 2005. He also applied for SSA disability benefits, as he was required to do as an applicant for FERS disability retirement, and SSA determined that he was entitled to receive monthly SSA disability benefits beginning July 2005. As required by statute, OPM reduced Mr. Stephenson’s FERS disability annuity to account for the monthly SSA disability benefits to which he was entitled. See 5 U.S.C. § 8452(a)(2)(A); 42 U.S.C. § 423.

The Social Security Act allows a person receiving SSA disability benefits to test his or her ability to work during a period of nine months, referred to as a “period of trial work” or “trial work period,” without losing his or her benefits. See 42 U.S.C. §§ 422, 423. In May 2009, Mr. Stephenson completed a nine-month trial work period in which he demonstrated his ability to work. Following the completion of his trial work period, SSA notified Mr. Stephenson that because he was able to perform “substantial work,” it had determined that his disability had ended, and that he was “not entitled to Social Security disability payments beginning September 2009.” Resp’t’s Supplemental App. 3 (emphasis added). SSA further noted:

You get an extended period of eligibility that begins right after the trial work period. This is a 36- month period when we restart payments for any month(s) your work is not substantial if your health problems still meet our rules. Your extended period of eligibility months are June 2009 through May 2012.


Id. (emphases added).
 

 

Judge(s): Sharon Prost
Jurisdiction: U.S. Court of Appeals, Federal Circuit
Related Categories: Employment
 
Circuit Court Judge(s)
Pauline Newman
Sharon Prost
Jimmie Reyna

 
Petitioner Lawyer(s) Petitioner Law Firm(s)
Robert McGill Law Office

 
Respondent Lawyer(s) Respondent Law Firm(s)
Jeanne Davidson U.S. Department of Justice
Stuart Delery U.S. Department of Justice
Kirk Manhart U.S. Department of Justice
Matthew Scarlato U.S. Department of Justice

 

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also eligible to receive benefits from the social se- br. 23. however, we are not bound by cohron and do not chevron, u.s.a., inc. v. natural res. def. council, inc., health problems continued to satisfy ssa’s rules. this, disability benefits to test his or her ability to work during ty act to mean that mr. stephenson did not have a legal activity.” id., dissent slip op. at 4. edential order dated december 13, 2011. see stephenson subject to subsection (e) of this section, the termi- courts to give some deference to informal agency interpre- shall be entitled to a disability insurance benefit employment resulted in the suspension of your expressed intent of congress.”). second, skidmore defer- section 223, regardless of whether those benefits are bility retirement annuity for any month in which the setting ssa benefits for any given month during the 36- language of the statute, and where the statutory language prost, circuit judge. stephenson v. opm 4 following the end of his trial work period.” id. § 423(e). that the reduction be based on eligibility for social leading up to the “termination month” explicitly “subject stant litigation about whether opm was correctly off- in a footnote at the end of its opinion, the board ma- to subsection (e).” 42 u.s.c. § 423(a)(1). by making mr. expertness, and to the persuasiveness of the agency’s stops working during the 36-month period following the for support, the majority cited a prior board opinion in a annuity under § 8452, ssa disability benefits under stantial work,” it had determined that his disability had it is “(1) arbitrary, capricious, an abuse of discretion, or 2 opm also quotes the definition “to give a title to.” ment period,” without requiring the recipient to file a new stephenson v. opm 8 quired to deny his request. in other words, during the stephenson v. opm 6 ing its own statute has been understood to vary with decided: january 18, 2013 2012-3074 the ssa regulations cited by opm in its brief indicate period of trial work with respect to which such in- ty,” and provides that “[n]o benefit shall be payable . . . 60%, depending on the timing) of “the annuitant’s as- cessation of his monthly ssa disability benefits. period in question, he had no “right to benefits” or “proper gainful activity.” 20 c.f.r. § 404.1592a(a). these regula- period of trial work in which he engages or is determined reason of any medically determinable physical or mental “entitled” to ssa disability benefits during the period in because mr. stephenson stopped receiving ssa disa- bility benefits under section 223 for any month in which stephenson that because he was able to perform “sub- end of the trial work period can regain entitlement to ssa you are still deemed disabled. stephenson v. opm15 each month beginning with the first month during payment case, it is “on all fours with this case.” resp’t’s he had previously applied for, and been granted, ssa tions, however, simply demonstrate that a person who clear, that is the end of the matter; for the court, as well annuity to account for the monthly ssa disability benefits the three members of the board denied in a final nonprec- entitle definition, merriam-webster, actual ssa payments were reduced to $175 per month. under a disability as defined in subsection (d)1 and meets favor mr. stephenson, we turn to opm’s remaining ar- this appeal presents an issue of statutory interpreta- id. § 8452(a)(2)(b)(i). it is true that mr. stephenson’s “termination month” resp’t’s supplemental app. 3 (emphases added). nor do stephenson v. opm5 __________________________ candle co. v. u.s. int’l trade comm’n, 400 f.3d 1352, month(s) your work is not substantial if your during the period at issue: slip op. at 6 n.4. as an additional concern, the majority benefits which terminated, or had a period of dis- denied mr. stephenson’s request, explaining: able to engage in substantial gainful activity.” opm notes we begin with the meaning of the word “entitled.” __________________________ plain language of section 223 is clear: during the 36- ssa payments as computed under section 223 of the health problems still meet our rules. your extend- out procedures required by law, rule, or regulation having maryland, argued for petitioner. affirmed a decision by opm denying mr. stephenson’s statutory interpretation involves the social security act, regulations, she concluded that because mr. stephenson month(s) your work is not substantial if your through may 2012. case of an individual who has a period of trial under the plain language of section 223, he was not director, and kirk t. manhart, assistant director. we reverse the board’s decision and remand the case unreasonable and unpersuasive and therefore not entitled phenson could have regained entitlement to ssa disabil- premise that ssa has found that mr. stephenson re- was unable to engage in “substantial gainful activity.” is clear and unambiguous, it generally ends there as completion of his trial work period, ssa notified mr. preceding whichever of the following months is referred to above in connection with the “termination otherwise. rather, they merely indicate that mr. ste- pension of those benefits,’ and that during that time, ability . . . which ceased, within the 60-month pe- petitioner, matthew f. scarlato, trial attorney, commercial stephenson v. opm13 benefits under section 223 of the social security act. the award. under section 223, the petitioner was entitled to rate concepts under the ssa statute.” id., dissent slip op. guments in support of the board’s decision. opm cites an thus, an offset in his fers annuity for his ssa benefits social security act, not under section 224,” and finding month shall be the earlier of (i) the third month based upon section 223, without considering the deduc- we have decided that your disability has ended in sum, we hold that for those months during the 36- there is no dispute that from july 2005 through au- section 223.” 529 f.3d 1071, 1074 (fed. cir. 2008). in he becomes so entitled to such insurance benefits, 42 u.s.c. § 423(a)(1) (emphases added). subsection (e), during months in which he worked. definition of disability in subsection (d) of this sec- board’s final decision. we have jurisdiction pursuant to disability benefits for any month during the period at he performed “substantial gainful activity,” even though having found that the plain language of section 223 of decision in this case. ing. social security act, 42 u.s.c. § 423. pursuant to § 8452, the parties do not dispute that mr. stephenson could have ed period of eligibility months are june 2009 his earned income after the conclusion of his 36-month dec. 13, 2011) (“final order”). the majority acknowl- ended, and that he was “not entitled to social security thus, section 223 creates a statutory scheme that governs stephenson v. opm 2 of section 223 of the social security act because the ment. according to opm, “[p]ut together, these provisions leighton too broadly. leighton instructs that when opm was performing substantial gainful activity, “the plain id., slip op. at 5. you are not entitled to payments beginning sep- annuity under this subchapter as computed under para- substantial gainful activity during the 36-month period language in ssa’s statute does not entitle him to any even for those months in which he could not receive them. the computation of a fers disability annuity is gov- when an individual becomes “entitled” to ssa disability case found that opm’s interpretation of the fers disabil- since you retain full eligibility of your social se- certain other criteria: month,” is titled “[e]ngaging in substantial gainful activi- opm was required to pay her a reduced fers annuity after his waiting period . . . in which he becomes mead, 533 u.s. at 228. here, the dispositive issue of robert r. mcgill, attorney at law, of walkersville, ssa regulation that provides an example of calculating c.f.r. § 404.325. opm also cites an ssa regulation titled stephenson v. opm 14 ity statute—which opm is charged with administering— example “he entitled his book ‘my life on mars.’” this ty was therefore correctly offset, we reverse and remand. was may 2012, and that until then, mr. stephenson could (i) for each month beginning with the first month ‘entitlement’ and ‘eligibility’ when they are clearly sepa- september 2009 through may 2012, which ssa called his parties also agree that mr. stephenson is not entitled to seeking or claiming something.’” resp’t’s br. 12 (quoting $1,855 per month. however, section 224 of the social mr. stephenson appealed opm’s decision to the later reaffirmed by united states v. mead corp., 533 u.s. ssa disability benefits after the completion of his 36- __________________________ found that the petitioner “‘continued to be entitled to, or received ssa disability benefits during the period from this court will set aside a decision of the board only if extended period of eligibility if he continues to work. to mgmt., 96 m.s.p.r. 466 (2004). in cohron, the board entitlement to ssa disability benefits during the period ent. with him on the brief were stuart f. delery, to deduct the social security disability benefits from mr. stephenson’s fers disability payments, he would “re- that he was “not entitled” to ssa disability benefits in view of the above, the board majority in the present mined that he was entitled to receive monthly ssa disa- to which he was entitled. see 5 u.s.c. § 8452(a)(2)(a); 42 opinion. she read the plain language of the social securi- resume paying disability benefits “during the reentitle- his fers disability retirement annuity to account for the 8452’s use of the word ‘entitled’ can encompass individu- tled” to ssa disability benefits during his extended period have used when determining whether to continue to offset following the earliest month after the end of such disability benefits. if mr. stephenson had requested stephenson would have received if his application for ssa a period of nine months, referred to as a “period of trial ble administrative hardship for opm, resulting in con- benefits; rather, it merely provides a mechanism for . . . . bility benefits, he requested that opm terminate the period following his trial work period. id., slip op. at 3-6. 4 in discussing leighton, opm also repeats the so entitled to such insurance benefits, or (ii) for health problems still meet our rules. your extend- subsection (a)(1) conditions his entitlement on whether he they are entitled.” resp’t’s br. 20. opm, however, reads impairment which can be expected to result in death or on entitlement to social security benefits and not by opm, mr. stephenson was not “entitled” to ssa disa- was reasonable and therefore entitled to deference. see 3 section 224 of the social security act is codified at __________________________ which his disability ceases; except that, in the security act3 requires that ssa payments be offset by an requires opm to reduce a fers disability annuity “[f]or issue—between september 2009 and may 2012—in which your disability ceased because you performed substantial office of pers. mgmt., 347 f.3d 930, 932 (fed. cir. 2003). skidmore applied, we conclude that opm’s position is reversed and remanded month period.” id. deference depending on the circumstances.” cathedral ssa disability benefits. because the board erred in riod preceding the first month in which he is and section 223 of the social security act are clear. thus, you get an extended period of eligibility that be- 467 u.s. 837, 842-43 (1984) (“if the intent of congress is benefits be reduced if the disability annuitant is either ssa’s definition or the dictionary definition cited statute, opm reduced mr. stephenson’s fers disability his fers annuity.4 the social security act allows a person receiving ssa discussion recalculated to account for the cessation of his monthly ment that it is not pressing the board’s concern with gust 2009, mr. stephenson was entitled to ssa disability board. an administrative judge denied the appeal. mr. by its express terms, section 223 of the social securi- ous period of not less than 12 months.” 42 u.s.c. section 223 of the social security act, which is codi- tion (“ssa”) disability benefits under section 223. kelly u.s.c. § 423. the merit systems protection board (“board”), which ssa disability benefits under section 223 of the social opm nevertheless used the full $1,855 when calculating board in case no. ph0841100307-i-1. the statutes at issue here. month in which he attains retirement age . . . , or, l. stephenson petitions for review of a final decision of disability payments beginning september 2009.” resp’t’s federal law (section 8452[a][2][a] of title 5, unit- “[t]he fair measure of deference to an agency administer- security benefits, not the actual receipt of social work period in which he did not receive ssa disability section 223 of the social security act.” 5 u.s.c. gainful activity], the termination month,” where the son. benefits for any such month, ssa would have been re- “entitle,” such as “‘to furnish with proper grounds for opm argues that its position is supported by the text cussed earlier, the statutory dictates of 5 u.s.c. § 8452 opm’s brief also cites dictionary definitions of the verb determining that mr. stephenson remained “entitled” to request to have his fers disability retirement annuity after the end of the 36-month reentitlement period.” 20 ¶ 16). the cohron board found further support for this ssa disability benefits. the skidmore standard “requires she reasoned that opm “has conflated the concepts of case involving overpayment to a woman whose ssa stephenson v. opm7 opm argues that “leighton affirms that section tations of ambiguous statutory dictates, with the degree of “entitle” is more akin to “designate,” and it provides the v. office of personnel management in which this court ssa benefits at least until 36 months after his trial work we also note that opm conceded during oral argu- od of trial work in which he engages or is deter- the actual receipt of such benefits. though your right to payment for any month in which he performed but nevertheless found that mr. stephenson remained termination month cannot occur before the first month amount.” final order, slip op. at 4 (quoting cohron, benefits, when the individual’s entitlement to such bene- statute provides that the entitlement to benefits “end[s] tence, the termination month for any individual 1 subsection (d) defines “disability” to mean the stephenson v. opm 10 office of personnel management, question. no offset thus should have been made for ssa disability payments beginning september 2009. mined able to engage in substantial gainful security benefits. ing to opm, he continued to be “entitled” to ssa benefits graph (1) and to a disability insurance benefit under noted that during the 36-month extended period of eligi- tion arising from 5 u.s.c. § 8452 and section 223 of the petition for review of the merit systems protection during the 36-month period following a recipient’s trial gainful activity, you stopped engaging in substantial ceive an unwarranted windfall”—i.e., “the unreduced v. office of pers. mgmt., no. ph0841100307-i-1 (m.s.p.b otherwise not in accordance with law; (2) obtained with- occur at any time before the first month following the 36- edged § 8452’s use of the word “entitled,” not “eligible,” to be deducted from leighton’s fers disability annuity mr. stephenson began receiving a fers disability re- disability benefits were suspended because she was found which mr. stephenson’s work was not substantial and his jority also expressed concern that if opm did not continue recipient is also “entitled” to social security administra- tember 2009 because you were doing substantial month period when we restart payments for any § 8452(a)(2)(a) (emphases added). the amount of the tirement annuity on may 4, 2005. he also applied for receive ssa disability benefits for the period in question. were $0. under leighton, this is the amount opm should to receive benefits from ssa. the law requires 218 (2001), this court should defer to opm’s and ssa’s workers compensation programs (“owcp”) schedule period was completed, which was in may 2012.” resp’t’s use of the higher amount, noting that § 8452 “refers to phenson was not “entitled” to ssa disability benefits board’s concern that ruling in favor of mr. stephenson you get an extended period of eligibility that be- forth in skidmore v. swift & co., 323 u.s. 134 (1944), and month period following his trial work period, mr. ste- which he demonstrated his ability to work. following the 1365 (fed. cir. 2005). as the court explained in mead, mr. stephenson filed a petition for review of the your annuity was reduced because you were eligi- trast, for months in which mr. stephenson worked, his first month occurring after the 36 months following such which states that termination of ssa benefits shall not full fers annuity plus the income he earns from work- “termination month” can be “in no event earlier than the work which ends as determined by application of § 423(d)(1)(a). annuity. v. mained entitled to ssa disability benefits. in fact, ssa as the agency, must give effect to the unambiguously should be accorded skidmore deference. first, as dis- month in which such individual engages or is de- ssa disability benefits because he was working. accord- “that a person has applied and has proven his or her right leighton, the petitioner was receiving a fers disability the earliest: the month in which he dies, the the office of personnel management (“opm”) must reduce the “termination month” for a person engaging in sub- es over the language in subsection (a)(1), which makes the result in “42 u.s.c. § 423(a)(1), the social security act, webster’s indicates, however, that this definition of reduction is equal to a certain percentage (either 100% or ity benefits during his 36-month extended period of from a disabling physical or mental impairment, that “opm, therefore, reasonably calculated the amount acting assistant attorney general, jeanne e. davidson, opm correctly notes, other than cohron being an over- such as statutory interpretation, de novo. kindall v. erned by 5 u.s.c. § 8452. relevant to this appeal, § 8452 month period following the end of mr. stephenson’s trial work period. kelly l. stephenson, occurring after the 36 months following such peri- but only if he was entitled to disability insurance be made to an individual who would not meet the conclusion prompt resumption of such benefits in the event an indi- to benefits for a period of time.” 20 c.f.r. § 404.303. blindness] thereof for any month in which he en- “in construing a statute, our analysis begins with the shall be the third month following the month in at 2. after analyzing the relevant statutes and ssa sumed disability benefit,” which is defined as “the amount owcp schedule award. as a result, the petitioner’s was appropriate. mr. stephenson argues on appeal that gins right after the trial work period. this is a 36- for further proceedings consistent with this opinion. stephenson v. opm9 ssa disability benefits without actually receiving pay- bility, ssa would restart payments for any month in stephenson v. opm3 ence applies to “an agency administering its own statute.” well.” langston v. office of pers. mgmt., 395 f.3d 1349, stephenson completed a nine-month trial work period in ty act prohibited ssa from paying mr. stephenson ssa all of which he is under a disability and in which of the disability insurance benefit to which the annuitant disability benefits, as implied by the term “reentitlement benefits he did not receive. we agree with mr. stephen- as an initial matter, we disagree with opm’s initial ed states code) requires that fers disability and ssa disability benefits. to be “doing substantial work.” cohron v. office of pers. stephenson v. opm 16 applicant for fers disability retirement, and ssa deter- have received ssa disability benefits for any month in is calculating the amount to deduct from an individual’s period.” interpretations that mr. stephenson remained entitled to id. at 5. mr. stephenson sought reconsideration, which circumstances, and courts have looked to the degree of the ty, he was not “entitled” to ssa disability benefits under fits ends, and when an individual can receive benefits br. 15. fied at 42 u.s.c. § 423, provides that an individual who is month period when we restart payments for any work” or “trial work period,” without losing his or her erred in denying mr. stephenson’s request to recalculate “inability to engage in any substantial gainful activity by stephenson then filed a petition for review, which two of stantial gainful activity, and which makes clear that “the tions required under section 224.” id. 1351 (fed. cir. 2005). explicitly told mr. stephenson in its august 7, 2009 letter any month, after the third month, in which he engages in work. that subsection (e) provides only that “[n]o benefit shall be united states court of appeals opm also cites the board’s decision in cohron, which activity. no payment under this paragraph may ity benefits were reduced because you are eligible curity benefits, we cannot honor your request to __________________________ dence.” 5 u.s.c. § 7703(c). we review questions of law, amount of ssa disability benefits as computed under supplemental app. 3 (emphasis added). ssa further . . . . he performed substantial gainful activity. for the federal circuit grounds for seeking or claiming” benefits. thus, under to deference. security act and that his monthly fers disability annui- and that you are not entitled to social security under subsection (a)(1) of this section to an individual for visited aug. 21, 2012)).2 eliminate the social security offset of your fers under such disability, and ending with the month opm also argues that decisions of this court and the vidual becomes unable to perform substantial gainful tivity, but in no event earlier than the first month “engages in substantial gainful activity.” accordingly, the ssa disability benefits as computed under section 223 board vice chairman anne wagner filed a dissenting of eligibility for any month in which he did not receive benefits. see 42 u.s.c. §§ 422, 423. in may 2009, mr. there is no reason to defer to agency interpretations. see ment of justice, of washington, dc, argued for respond- curity administration (ssa). your fers disabil- stephenson’s entitlement “subject to subsection (e),” dividual is determined to no longer be suffering gages in substantial gainful activity . . . . which he did not work. opm’s argument, however, gloss- id. at 8. section 223 of the social security act, and an office of payable,” and is silent as to the termination of entitle- ssa benefits, you still retained eligibility because gins right after the trial work period. this is a 36- disability benefits had been denied from the outset. offset in his fers annuity. on september 21, 2009, opm als who are not actually paid for the benefits to which application, “if after the month for which we found that administrative hardship as an independent reason to been followed; or (3) unsupported by substantial evi- [concerning an individual who engages in substantial background agency’s care, its consistency, formality, and relative board make clear that an individual can be “entitled” to similarly, he will receive both the full fers annuity plus a federal employees retirement system (“fers”) disa- is entitled under section 223 of the social security act.” opm denied on february 25, 2010, explaining: ed period of eligibility months are june 2009 ment during the period in question. opm cites leighton stephenson v. opm11 the only dispute is whether mr. stephenson was “enti- affirm the board’s decision. the reduction of his fers annuity. we affirmed opm’s section 422(c)(4)(a) of this title, the termination ssa’s implementing regulations define “entitled” to mean respondent. fers annuity and the money earned from working.” id., definition is not relevant to the use of the word “entitle” in benefits because he performed substantial gainful activi- __________________________ demonstrate that mr. stephenson remained entitled to eligibility or reentitlement period if he had stopped work- before newman, prost, and reyna, circuit judges. noted: that the reduction in your annuity remain based termined able to engage in substantial gainful ac- bility benefits beginning july 2005. as required by the board relied on in its final decision in this case. as month period of eligibility ending in may 2012. finally, would result in a “windfall” because he would receive a id. (emphases added). stephenson v. opm 12 any month in which an annuitant is entitled both to an the social security act and ssa’s definition of “entitled” finally, opm argues that under the standard set http://www.merriam-webster.com/dictionary/entitle (last or (ii) the third month following the earliest “extended period of eligibility,” for any month in which he the extent this could be characterized as a “windfall,” it is a result of the different requirements for receiving fers ssa disability benefits, as he was required to do as an substantial work, and therefore he was not “entitled” to fers annuity payments, it should look only to the ble to receive benefits from ssa. the law requires position.” mead, 533 u.s. at 228. in addition, we disagree that opm’s interpretation according to the majority, “could well cause an unworka- which is administered by ssa, not opm. finally, even if month extended period of eligibility.” id., slip op. at 4-5. section 223 of the social security act. accordingly, opm which has lasted or can be expected to last for a continu- with the month preceding . . . , subject to subsection (e) ing. resp’t’s br. 21-22. but that is exactly what mr. addressed “the meaning of the word ‘entitled’ as used in litigation branch, civil division, united states depart- 28 u.s.c. § 1295(a)(9). through may 2012. “entitled” to ssa disability benefits during the 36-month “[t]he reentitlement period,” which provides that ssa will reduced by operation of another statute. here, in con- tion except for paragraph (1)(b) [an exception for nation month. for purposes of the preceding sen- find it persuasive for the same reasons we reject board’s 42 u.s.c. § 424a. eligible for, ssa disability benefits . . . despite the sus-


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