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Schwartz v. United States Office of Personnel Management

United States District Court, Fourth Circuit

September 25, 2013

CHARLES A. SCHWARTZ,
v.
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for review in this dispute over life insurance benefits continuing into retirement under the Federal Employees' Group Life Insurance Act ("FEGLIA"), 5 U.S.C. §§ 8701, et seq. , is the motion to dismiss, or in the alternative, for summary judgment filed by Defendant United States Office of Personnel Management ("OPM" or "Defendant") (ECF No. 10) and a cross-motion for summary judgment filed by Plaintiff Charles Schwartz ("Plaintiff") (ECF No. 21). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the court will grant Defendant's motion and deny Plaintiff's cross-motion for summary judgment.

I. Background

A. Factual Background

The salient facts are undisputed and are drawn from the administrative record before OPM.[1] In 1968, Plaintiff began a federal judicial clerkship in the United States Court of Claims, which he asserts is now the United States Court of Appeals for the Federal Circuit. (ECF No. 1 ¶ 1).[2] On September 3, 1968, Plaintiff completed Standard Form ("SF") 176 covering election, declination, or waiver of life insurance coverage. (ECF No. 10-2, at 73). The form gave Plaintiff the following options: (1) to "elect the $10, 000 additional optional insurance... [t]his optional insurance is in addition to [employee's] regular insurance";[3] (2) to "decline the $10, 000 additional optional insurance, " but not regular insurance; or (3) to waive coverage under Federal Employees' Group Life Insurance ("FEGLI") altogether.[4]

When Plaintiff completed SF 176 in 1968, FEGLIA offered to federal employees regular life insurance and "Optional insurance" under 5 U.S.C. § 8714a. Section 8702 of the FEGLIA, enacted in 1954, addressed "Automatic coverage" for regular or "Basic life insurance." See 5 U.S.C. § 8702; see also Pub.L.No. 89-554, 80 Stat 578, 593 (1966). Specifically, Section 8702 provided that "[a]n employee is automatically insured on the date he becomes eligible for insurance." 5 U.S.C. § 8702(a). The statute further provided that "[a]n employee desiring not to be insured shall give written notice to his employing office on a form prescribed by the Commission, " such as SF 176. 5 U.S.C. § 8702(b).[5]

Individuals with regular or "Basic life insurance" could also elect "Optional insurance" pursuant to 5 U.S.C. § 8714a, which was enacted on December 16, 1967. See Pub.L.No. 90-206.[6] Section 8714a(b) provided that "[t]he optional life insurance... shall be made available to each insured employee under such conditions as the Commission shall prescribe and in amounts approved by the Commission but not more than the greater of $10, 000 or an amount which, when added to the amount provided in section 8704(a) of this title, makes the sum of his insurance equal to his annual pay."[7]

When Plaintiff completed SF 176 on September 3, 1968, he elected to waive all life insurance available under FEGLIA at the time, namely regular or "Basic life insurance" under 5 U.S.C. § 8702 and "Optional insurance" under Section 8714a.[8] Plaintiff remained a law clerk until 1970. After completing his two-year clerkship, Plaintiff worked in the private sector for approximately twenty-nine (29) years. (ECF No. 1, at 2). Plaintiff entered federal service again on December 6, 1999 in various contractual positions with the United States Agency for International Development ("USAID"), during which time he was ineligible to participate in FEGLI. ( Id. at 3). Then, on July 22, 2007, Plaintiff began employment with the United States Department of Agriculture ("USDA") as a "Schedule B" employee, at which point he became eligible for FEGLI coverage. ( Id. at 4). On August 19, 2007, Plaintiff elected "Basic life insurance" and "Additional optional life insurance" under FEGLI. (ECF No. 10-2, at 72).

USDA terminated Plaintiff's employment and then Plaintiff retired effective September 10, 2010, just over three years after he elected to participate in FEGLI. ( Id. at 76, 83). Plaintiff elected an annuity at retirement. ( Id. at 76). Upon termination, USDA informed Plaintiff that he would be ineligible to continue receiving life insurance into retirement because he did not have life insurance for the five years immediately preceding retirement and he waived life insurance coverage at his first opportunity to elect it when he joined federal service in 1968 as a law clerk. ( Id. at 67).

B. Procedural Background

On October 22, 2011, Plaintiff submitted a letter to OPM, in which he requested that the agency waive the "5-year service requirement" to be eligible to continue life insurance into retirement." ( Id. at 66-67). Plaintiff asserted that he was never informed during his clerkship, a temporary two-year position, about "the consequences of not accepting... Life Insurance at the earliest opportunity." ( Id. at 67). Plaintiff further stated that even though he rejoined the federal government in 1999, he was employed as a contractor until 2007 and in that capacity was ineligible for life insurance coverage under FEGLIA. Plaintiff maintained that he elected to participate in life insurance under FEGLIA at the earliest opportunity, which he believed to be in August 19, 2007, when he was hired as a Schedule B employee with USDA.

On January 20, 2012, OPM denied Plaintiff's request to continue "Basic life insurance" under FEGLIA into retirement on the ground that Plaintiff "[d]id not have insurance for the full period(s) it was available or for the five years immediately preceding the annuity commencing date." ( Id. at 59). Specifically, the agency noted that "Basic life insurance" became available to Plaintiff on August 26, 1968, he first elected to receive life insurance on August 19, 2007, and subsequently retired on September 11, 2010. ( Id. ). Furthermore, OPM stated that "[s]ince the continuation of optional life insurance depends upon the continuation of Basic Life Insurance, [Plaintiff is] not eligible to continue any optional life insurance [he] may have had as an employee." ( Id. ).

On February 15, 2012, Plaintiff timely requested reconsideration from OPM, raising many of the same arguments as in his initial request, namely that he elected to be covered under life insurance at his first opportunity, which he believed to be when he joined USDA as a "Schedule B" employee on July 22, 2007. ( Id. at 13-14). Plaintiff reiterated that he did not recall being informed of the consequences of not accepting life insurance when he first began federal employment in 1968 with the U.S. Court of Claims.

On April 19, 2012, OPM issued a final agency decision affirming the agency's initial decision to deny Plaintiff's request to extend life insurance into retirement. ( Id. at 5-6). OPM referenced 5 C.F.R. § 870.701(a)(1-3), which states that when an insured ...


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