By Barbara Haga, September 11, 2023
FELTG President Emeritus Bill Wiley sent me an MSPB decision last week. Many of you are aware I spent most of my Federal career working for the Navy, and Bill spent some time there, too. At the end of my years with the Navy, I worked in the organization that oversaw the operation of the Civilian Benefits Center, which figures prominently in the decision. I was part of the transition team that worked on the original plans to centralize benefits functions in the Department.
The case is Edwards v. Navy, DC-3443-17-0636-I-1 (Aug. 29, 2023)(NP). It was part of that pile of cases that accumulated when there was no Board to issue decisions. The Board has now ruled that a hearing is required to determine the answer of whether Edwards’ retirement was involuntary. The Board says this is a non-precedential decision, but I think it takes a different tack (good Navy term) than what has been followed in misinformation cases previously.
At the time of the events in this case, the Navy used a system called EBIS (Employee Benefits Information System), which allowed employees to complete transactions, such as insurance changes, on their own. Another self-service function was obtaining a retirement estimate. EBIS is replete with warnings that the EBIS annuity could be overestimated if the employee had any part-time service or unpaid deposits or redeposits (Edwards had both). The system also warned that an individual should not retire solely based on the information in the EBIS estimate.
DoDI 1400.25, Volume 830 sets policy on processing Civil Service Retirement applications. This instruction was in place at when the events in this case occurred. It states: “Within the DoD, servicing human resources offices and benefit centers will ensure that employees are provided adequate and timely information and assistance necessary to make informed decisions about retirement and to complete retirement applications.” Under the Navy benefits process, no one is supposed to retire without reviewing their service history and obtaining an estimate from a retirement specialist.
Edwards, a GS-12 auditor, applied for retirement in May 2016 to be effective February 2017. She obtained an EBIS estimate prior to submitting the application showing a monthly annuity of $3,640 per month. When she submitted her retirement application, she was assigned a retirement specialist. The retirement specialist indicated she would provide the estimate and service history. Six months passed without that happening, so Edwards contacted the retirement specialist who said she would mail the estimate and history the following week. The documents were not received, and despite alleged continued attempts by Edwards, the information never arrived. She retired as planned. Her estimate and service history were mailed roughly one month later. That estimate showed a monthly annuity of $1,991 without a deposit/redeposit to cover the time not credited. The official annuity computed by OPM was less at $1,810 per month.
It is not clear what steps Edwards took next when she realized the annuity was so much less than the original estimate. We can’t tell if she tried to get her job back or went to the Benefits Center staff to raise these issues, but she did file an involuntary separation appeal in June 2017.
The AJ dismissed the case, finding that it did not meet the test for involuntariness because the agency did not provide any misinformation to Edwards, and she did not make a nonfrivolous allegation that she reasonably relied on the inaccurate EBIS annuity estimate when she decided to retire.
There are a fair number of retirement misinformation cases that have been decided over the years. Sometimes HR specialists have given bad information and sometimes managers have. Here are two examples of cases the Board has found when an employee relied to his/her detriment on misinformation regarding benefits:
Hardin v. Treasury, 95 M.S.P.R. 416 (2004) (NP). This is a case where the manager gave bad information. Hardin was PIPed and didn’t improve. She was given a few days to think about what she wanted to do. She was advised by management that if she didn’t resign, she would be removed and she would lose all her benefits. The truth was that she met the requirements for discontinued service retirement, so if the IRS removed her for unacceptable performance, she would have qualified for an annuity on that basis.
Sink v. Energy, 2008 MSPB 231. Sink received a directed reassignment and declined to relocate. The HR Specialist informed Sink that if he didn’t retire before the decision to remove was effective, he would lose his health benefits. This was not true. He would also have qualified for discontinued service retirement had the removal decision been issued. The Board described the agency’s actions regarding the advice on health benefits eligibility as “negligent.”
Underneath all of this is the issue of the disservice to longtime Federal employees who are trying to collect their pensions. The fact that Edwards never got the official estimate in time to make an informed decision is unacceptable. We might see that word “negligent” in another decision.
The idea of centralizing benefits in DoD in the 1990s was the subject of huge debate. Taking processing of retirements out of the local offices where someone could go to their HR office and talk to a retirement specialist and switching to a centralized, heavily online system was not something most in HR were excited to see. However, DoD staffing cuts made it impossible to operate as we had before. Unfortunately, this case highlights the difficulties we were afraid it could present for employees and how their lives could be impacted.
What might have been the thinking in 2017 when Edwards’ claim surfaced? The Navy position would likely have been that EBIS contained disclaimers that employees should not rely on the estimate alone. Edwards was an auditor. By OPM’s qualification standards, that means she would have to have a degree in accounting, auditing, or a similar business field or a combination of education and experience in accounting. I think it is a reach to say that someone with that type of education and experience would not understand that the funds she had previously withdrawn from the retirement system would have a significant impact on her annuity. At her level in the organization, she should have known how to escalate the matter if her retirement decision depended on the estimate. The other Navy consideration would likely have been that no one in the Benefits Center improperly advised her. In other misinformation cases, someone answered something incorrectly or gave a misleading answer, but not here.
The complication in 2017 could have been that Edwards’ employer didn’t want her back. Maybe with nine months’ lead time, they had already offered her job to someone. Maybe they had cancelled that position and used that slot for another job that was officially offered to someone. In 2017, the risk in letting the appeal proceed would have been viewed as small – 120 days for an initial decision and maybe 12 more months to get a full Board review. Now they are facing over seven years’ worth of potential back pay, and attorney’s fees –and that will be paid by the employing organization, not the Benefits Center. If Edwards wins, she’ll have seven more years of service and plenty of money to make the deposit/redeposit.
We will keep an eye out for the AJ’s decision. Haga@FELTG.com