LAW REVIEW 1104
The Federal Government Is Not Bound by Incorrect
By Captain Samuel F. Wright, JAGC, USN (Ret.)
10.2—Other Supreme Court
Office of Personnel
Management v. Richmond, 496
U.S. 414 (1990).
This important Supreme Court
case establishes an important lesson. When
dealing with a Federal Government official or employee, military or civilian,
you cannot rely on the information or advice that the official or
employee provides you. Even if your
reliance was reasonable under the circumstances, and even if you suffer adverse
consequences from your reliance on the incorrect information, the Federal
Government will not compensate you financially for the adverse effects of your
detrimental reliance on the incorrect information.
Charles Richmond was a
civilian welder for the Navy Public Works Center in San Diego, California. He left his
position in 1981 when the Office of Personnel Management (OPM) approved his
application for disability retirement.
OPM determined that Richmond’s impaired eyesight prevented him from
performing his federal job and made him eligible for a disability annuity under
title 5, United States Code, section 8337(a) [5 U.S.C. 8337(a)].
Section 8337(a) provides this
benefit to a federal employee who has completed at least five years of federal
employment. The statute directs,
however, that the benefit will end if the retired employee is “restored to an
earning capacity fairly comparable to the current rate of pay of the position
occupied at the time of retirement.” 5
The statute specifies
precisely how it is to be determined that the retiree’s earning capacity has
been restored such that the disability annuity is to cease, and Congress
amended that formula in 1982. That
amendment and a federal employee’s unawareness of the amendment are crucial to
Prior to the 1982 amendment,
the disability retiree’s annuity was to be terminated if he or she received (as
salary or wages from non-federal employment) more than 80% of the current rate
of pay of the position occupied immediately before retirement in each of two
succeeding calendar years. The
Omnibus Budget Reconciliation Act of 1982 amended this provision. As amended, the disability retiree is to lose
the annuity if in a single year the retiree receives more than 80% of
the current rate of pay of the position the retiree occupied immediately before
After taking disability
retirement for his vision impairment, Richmond undertook part-time employment as a school bus
driver. From 1982 to
1985, Richmond earned an average of $12,494 per year for the
part-time driver job, and that left him under the 80% threshold for each
year. In 1986, the school district gave Richmond the opportunity to work overtime and earn additional
money. He consulted with an employee
relations specialist of the Civilian Personnel Department of the Navy Public
Works Center where he had been employed.
Richmond needed to know exactly how much he could earn from
the bus driver job without exceeding the 80% limit for continued entitlement to
the annuity payments. The employee
relations specialist was not aware of the 1982 statutory amendment and advised Richmond that he could continue receiving his annuity payments
so long as his earnings did not exceed the 80% threshold in two consecutive
The employee relations
specialist also gave Richmond a copy of a 1981 OPM pamphlet that was correct as
written in 1981 but out-of-date and incorrect after the 1982 amendment. Richmond returned to the Navy personnel office in January 1987
and was again advised in error that his eligibility for the annuity would be
determined under the old two-year rule.
Richmond relied on the incorrect advice that he had been
given, and he worked overtime in 1986 and earned more than 80% of the 1986 pay
of the welder job from which he had retired for disability. As a result, OPM cut off his disability
payments for six months and he lost $3,993.
Richmond appealed the denial of benefits to the Merit Systems
Protection Board (MSPB), a quasi-judicial federal agency created by the Civil
Service Reform Act of 1978. Richmond argued that the erroneous advice given him by Navy
personnel officials should estop OPM and bar its finding him ineligible for
benefits under the statute. The MSPB
denied Richmond relief, holding that “OPM cannot be estopped from
enforcing a statutorily imposed requirement for retirement eligibility.” The MSPB denied Richmond’s petition for review, and he then appealed to the
United States Court of Appeals for the Federal Circuit. A divided panel of the Federal Circuit
reversed, accepting Richmond’s contention that misinformation from Navy personnel
estopped the government and that estoppel required payment of the disability
benefits despite the statutory provision to the contrary.
Black’s Law Dictionary defines “estoppel” as follows: “Estoppel is a bar or impediment which
precludes allegation or denial of a certain fact or state of facts, in
consequence of previous allegation or denial or conduct or admission … Elements
or essentials of estoppel include change of position of parties so that party
against whom estoppel is invoked has received a profit or benefit or party
invoking estoppel has changed his position to his detriment.” Black’s Law Dictionary, Revised Fourth Edition,
The ancient and venerable
equitable doctrine of estoppel is routinely applied in litigation involving
private parties. The Supreme Court has
repeatedly held that the doctrine of estoppel cannot be applied to order a
federal agency to make payments from the public treasury in derogation of the
requirements of a federal statute. Such
a court order violates the Constitution’s “Appropriations Clause” which reads
as follows: “No Money shall be drawn
from the Treasury, but in Consequence of Appropriations made by Law.” United States Constitution, Article I,
section 7. Yes, it is capitalized just
that way, in the style of the late 18th Century.
The Supreme Court’s majority
decision cites, relies upon, and reaffirms Federal Crop Insurance Corp. v.
Merrill, 332 U.S. 380 (1947). I
discuss that case in detail in Law Review 1008.
In Merrill, the Supreme Court held that “not even the temptations
of a hard case” will provide a basis for ordering monetary recovery contrary to
the terms of the regulation for to do so would disregard “the duty of all
courts to observe the conditions defined by Congress for charging the public
treasury.” Merrill, 332 U.S. at 385-386.
In his presentation to the
Supreme Court in Richmond, the
Solicitor General of the United States asked the Court to adopt a sweeping rule that under
no circumstances could estoppel run against the Federal Government. The Court did not go quite that far, but
almost. The concluding paragraph of the
majority decision is as follows:
“Respondent [Richmond] points to no authority in precedent or history for
the type of claim he advances today.
Whether there are any extreme circumstances that might support
estoppel in a case not involving
payment from the Treasury is a matter we need not address. As for monetary claims, it is enough to say
that this Court has never upheld an assertion of estoppel against the Government
by a claimant seeking public funds. In
this context there can be no estoppel, for courts cannot estop the
Constitution. The judgment of the Court
of Appeals is Reversed.” Richmond, 496 U.S. at 434 (emphasis supplied).
The Supreme Court majority
decision also addresses the question of whether its “no estoppel” holding will
hurt or harm members of the public who need information and advice from Federal
Government employees: “Also questionable
is the suggestion [by Richmond] that if the Government is not bound by its
agents’ statements, the citizens will not trust them and will instead seek
private advice from lawyers, accountants, and others, creating wasteful
expenses. Although mistakes occur, we
may assume with confidence that Government agents attempt conscientious
performance of their duties and in most cases provide free and valuable
information to those who seek advice about Government programs. A rule of estoppel might create not more
reliable advice, but less advice. … The
natural consequence of a rule that made the Government liable for statements of
its agents would be a decision to cut back and impose strict controls upon
Government provision of information in order to limit liability. Not only would valuable information programs
be lost to the public, but the greatest impact of this loss would fall on those
of limited means, who can least afford the alternative of private advice.” Richmond, 496 U.S. at 433.
Let me take the opportunity to reiterate the advice I
offered in Law Review 1008 and that William Aramony and I offered in Law Review
1099. In both your military and civilian
careers, it is important that you understand the laws and regulations that
apply and that you take timely action to protect your legal rights. You cannot depend upon a military or civilian
personnel office to understand all these laws and regulations, to explain them
to you, and to protect your legal rights.
You should consider consulting, and if necessary retaining, an attorney
who is familiar with this specialized area of law.
The Supreme Court decision does not attempt to explain how a man whose impaired
vision precludes him from working as a welder can safely drive a school bus.
For information about the MSPB and appellate review of MSPB decisions, please
see Law Review 189 at www.roa.org/law_review.
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