Two weeks ago, the Federal Circuit issued its opinion in Director of the Office of Personnel Management v. Moulton, a case we have been following because it attracted an amicus brief. In this case, the Federal Circuit reviewed a judgment of the Merit Systems Protection Board. The MSPB affirmed an administrative judge’s decision that a statutory provision requires the Office of Personnel Management “to divide an annuity supplement only if expressly provided for in a court order.” Judge Prost authored an opinion for the Federal Circuit affirming the judgment. In particular, the court held “that OPM cannot divide a retiree’s annuity supplement unless the division of the supplement is expressly provided for in a court order.” This is our opinion summary.
Judge Prost first gave a summary of the relevant statutory scheme:
[The Federal Employees’ Retirement System Act] generally provides a three-part plan for federal retirees: (1) Social Security benefits, (2) a Thrift Savings Plan (a retirement savings and investment plan similar to 401(k) plans available to private-sector employees), and (3) a basic annuity payment. Some federal employees retire before the age of sixty-two and thus do not have access to their Social Security benefits immediately upon retirement. As a result, these retirees may receive an annuity supplement until they reach the minimum age to qualify for Social Security benefits. . . . Congress recognized that a retiree might allocate some portion of his or her benefits to a former spouse. Section 8467(a) provides that “[p]ayments under this chapter which would otherwise be made to an employee . . . shall be paid (in whole or in part) . . . to another person if and to the extent expressly provided for in the terms of– (1) any court decree of divorce, annulment, or legal separation . . . . Section 8421(c) provides that annuity supplements “be treated in the same way as” the basic annuity. Before 2016 and for almost thirty years, “OPM did not include the [a]nnuity [s]upplement in the calculation of annuity benefits to be paid to a former spouse, except under certain circumstances where the state court order expressly addressed the [a]nnuity [s]upplement.” . . . In 2016, OPM “reverse[d]” the way it apportioned annuitysupplements. . . . Under OPM’s new interpretation, if a court order required that basic annuity be divided, then the retiree’s annuity supplement must also be divided the same way, even if the court order did not expressly provide that the supplement should be divided. . . . OPM also applied its new interpretation retroactively . . . OPM’s Office of the Inspector General reporting that “OPM lacks the authority to” do so.
Then, Judge Prost summerized the factual background:
Mr. Moulton is a former air traffic controller with the Department of Transportation. [When he divorced from his ex-wife, . . . [a] state court issued a “Decree of Dissolution of Marriage” stating in relevant part that Ms. Moulton was entitled to a “pro[ ]rata share” of Mr. Moulton’s “gross monthly annuity” and “any benefit [he] earn[ed] based on [his] special [Air Traffic Controller] service.” The decree did not explicitly mention allocation of his annuity supplement. Mr. Moulton retired in May 2010 at age forty-seven. Because he was younger than sixty-two, he was entitled to and received an annuity supplement under 5 U.S.C. § 8421. On August 25, 2016, OPM issued a letter to Mr. Moulton informing him that it had miscalculated the amount owed to his ex-wife and that he owed her nearly $25,000. . . . Mr. Moulton requested reconsideration of OPM’s decision, but OPM affirmed its initial decision. Mr. Moulton eventually challenged OPM’s decision at the Board. The administrative judge rejected OPM’s reinterpretation and concluded § 8421(c) requires OPM to divide an annuity supplement only if expressly provided for in a court order. OPM petitioned the Board for review. The Board denied OPM’s petition and affirmed the administrative judge’s decision. OPM then timely petitioned this court for review.
After outlining the standard of review, Judge Prost defined the question presented to the court: “whether, under 5 U.S.C. §§ 8421(c) and 8467(a), OPM may apportion a federal retiree’s annuity supplement only when expressly provided for in a court order.” Judge Prost then began her analysis by first looking at the statutory text. Based on dictionary definitions of “treat” and “way” from around the time the provisions in question were enacted, along with the context and additional clarity provided by § 8421(c)’s language “for purpose of section 8467,” Judge Prost concluded that “[t]o treat annuity supplements ’in the same way’ means that the supplement may be apportioned only if expressly provided for in a court order.”
Judge Prost supported her interpretation by referring to the broader statutory scheme. She said it “supports Mr. Moulton’s and the Board’s interpretation.” First, the judge noted, “the annuity supplement was created for early retirees who are not yet eligible to receive their Social Security benefits.” She explained that Social Security-type benefits are “presumptively not allocable between former spouses.” Second, Judge Prost observed, “Congress has shown that it knows how to specify when annuity supplements will be included in any annuity division.” She described how, when Congress enacted FERS, it also amended the CIA Retirement Act of 1964 to let certain CIA employees receive FERS benefits with specific modifications. She explained that one modification, found in § 304(g) (“Special Rules for Former Spouses”), expressly states that a former spouse’s entitlement to a share of a CIA employee’s annuity includes any supplementary annuity payments the employee receives under 5 U.S.C. § 8421. According to Judge Prost, “[w]hen Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Accordingly, she concluded, “under §§ 8421(c) and 8467(a), Congress intended to have court orders resolve how the annuity supplement is allocated.” Third, Judge Prost warned that adopting OPM’s interpretation would “result in OPM effectively rewriting divorce decrees and departing from the express will of the parties.” After briefly describing hypothetical scenarios in which OPM’s interpretation will alter court orders, she emphasized that “OPM’s task is purely ministerial with respect to court ordered property settlements.”
Judge Prost next addressed OPM’s argument that “Mr. Moulton’s and the Board’s interpretation would render § 8421(c) superfluous.” She identified “several flaws” with this argument. First, she noted, “OPM’s interpretation has its own superfluity problems.” She elaborated by explaining that, “[i]f annuity supplements are always allocated in the same manner as the basic, . . . then § 8467(a)’s language that ‘[p]ayments under [chapter 84]’ will be apportioned only when ‘expressly provided for’ by a court order is superfluous.” She also recognized that “the canon against surplusage is not absolute and has limited force here because both parties’ interpretations do not give effect to every word.” Lastly, she added, “redundancies can also serve a clarifying purpose.” She explained that “Section 8421(c) clarifies for OPM [that] annuity supplements should only be apportioned if expressly provided for in a court order.”
As a result of her analysis, Judge Prost explained, the panel “interpret[ed] 5 U.S.C. §§ 8421(c) and 8467(a), together, to require OPM to apportion a retiree’s annuity supplement only when expressly provided for in a court order.” Based on this interpretatiaon, the panel affirmed the judgment of the Merit Systems Protection Board.