A recent decision by a federal appeals court rejects a disability retiree’s argument that an amount he received in a court award should not be counted toward the maximum allowable earnings used to determine if he is still eligible for benefits.

The U.S. Court of Appeals for the Federal Circuit in case No. 2009-3254 was considering a ruling from the Merit Systems Protection Board that upheld OPM’s decision to terminate benefits for a retiree who had found a retiree recovered to earning capacity following his receipt of a back pay award related to a job he took after retiring on disability from the government. The award resulted from what was determined to be an unwarranted action taken by his new employer, but it put the individual over the allowable threshold of 80 percent of the salary of the former federal position.

On appeal, the retiree argued that the award should not have been counted as salary, since it covered a period of time he was not working. However, the court agreed that the amount was countable since it was received in the course of earning a livelihood and noted that the award was treated as employment-related income for purposes of federal and other taxes.

The court did send the case back to MSPB, however, saying the board needs to determine which period the award covers and whether it put the retiree over the limit for a particular year.