Fedweek Legal

The Merit Systems Protection Board (MSPB), in Parker v. Office of Personnel Management, BN-831M-97-0035-R-1 (July 11, 2003), held that OPM has the authority to determine whether the terms of a settlement agreement to which it is not a party are designed to evade statutory requirements for retirement benefits. This decision explicitly overrules Jordan v. Office of Personnel Management, 77 M.S.P.R. 610 (1998), which held that OPM was required to effect the terms of settlement agreements when determining entitlement to retirement benefits.

In Jordon, the parties settled when the agency agreed to cancel Jordon’s removal, reinstate her retroactively in a leave without pay (LWOP) status, and carry her for 90 additional days, at which time she would resign. Shortly after she resigned, she submitted an application for disability retirement. OPM found the application untimely filed, asserting the LWOP period was a “fiction of . . . continued service,” and “an artificial situation [created] solely for the purpose of evading the statutory” one-year filing deadline for disability retirement.

OPM argued that it cannot be bound by the terms of a settlement to which it was not a party. The administrative judge, however, disagreed and found the disability retirement application timely, because Jordan filed it within one year of the separation date effected under the settlement agreement. OPM appealed to the MSPB, which held that OPM’s authority to administer the retirement system does not empower it to ignore separation dates effected pursuant to settlement agreements, noting that public policy favors settlement agreements.

Regardless, in Parker, the MSPB accepted OPM’s assertion that in settlement agreements where OPM was not a party, the agreement improperly binds OPM to take personnel actions. Parker filed an appeal with the MSPB after he was separated from the Rhode Island Army National Guard. The parties entered into a settlement agreement in which the agency re-appointed Parker, and, on the same day, separated him. Parker then filed an application for an immediate retirement annuity. OPM informally determined that Parker had not met the statutory requirements to collect an annuity. Under 5 U.S.C.