Index

• Insight by Mike Causey: How Many is Most?
• DoD Reduces Across-the-Board Raise Under NSPS
• Average FEDVIP Premium Rises 2%, Blue Cross Jumps 8.5%
• GSA Announces Telework Goal: 50 Percent of Employees by 2010
• DoD Makes Gains in Medical Care for Deployed Civilians
• In Brief: Bush Nominates Mukasey to Replace Gonzales
• In Brief: DoD Publishes History of 9/11 Pentagon Attack
• In Brief: OPM Seeks Updated Review of Clearance Process
• In Brief: Controllers File Lawsuit Alleging Improper Mold Removal
• In Brief: DLA Awards Depot Jobs to Contractor
• In Brief: GSA Issues Site Security Design Guide
• Informed Investor: What Is a Dividend Reinvestment Plan (DRIP)?
• Rulings Roundup: Navy Employee Wins Right to Appeal in Dismissal Case
• You Be The Judge: Was DoD Worker Cheated in Settlement Check Dispute?

Insight By Mike Causey: How Many is Most?

I once had an editor who ruined my life. At least, I thought so for many years.

He planted a seed in my then still-growing brain. That seed, that idea, that concept, has made me less socially charming than I could have been. And should have been.

According to medical science, I have reached the point where my brain is shrinking—yet I retain that seed, that germ that he passed on to me, and to a number of other young reporters.

Like so many evil implants, this one came in the form of a memo. In those days, we used paper. He often put out memos, often dealing with grammar or style. Said memo in question dealt with words. The words were MANY and MOST.

The editor noted that too many reporters (maybe most) were misusing the words. That we were writing the word “most” when we really meant “many.”

Up until that time, I hadn’t given it much thought. But...

Turns out there is a big difference between the words, between many and most. At least, most of the time. That’s a distinction often lost on folks in Washington (or Hollywood), where it is not only not a crime to exaggerate to make a point, but it is considered smart.

But it can lead to some confusion among thinking people, which, fortunately, excludes most people in America. And Great Britain. And Russia. And Uganda.

Example: On a just passed Monday, I was watching one of those entertainment shows (in hopes they might run four hours of some Shakespeare play). In this case, the TV reporter/critic/clown—with spiked hair and a flannel shirt over jeans—told us that EVERYBODY IN AMERICA had watched a Sunday night performance by Britney Spears. Turns out she was making a comeback, although, darn it, I didn’t know she had been away.

Anyhow, he made the point that everybody had watched the show and most people (not many, most) thought she—not to mince words—stunk.

Stank? Anyhow, she wasn’t very good. And she was fat, too, he said we thought.

Later that evening, searching for an Old Vic production of Hamlet, I caught other critics. All agreed that everybody but everybody had watched Brit and that many (most?) critics said she was lazy, and couldn’t lip sync a burp. Even the usually sweet Simon Cowell (famous, I believe, for being famous or killing chefs live on TV, I forget which) had harsh words for her performance. I think he must own stock in a T-shirt company. But I digress...

The reason I can tell you authoritatively that everybody watched Brit is because somebody real famous on TV said it with authority. He didn’t even say most, he said everybody. And that really hurt. I was mortified because, and God forgive me for admitting this, I DIDN’T EVEN KNOW IT WAS ON!!!!

The shame of it all.

Sorry, sorry, sorry.

In my shame, I went to the Style section of our local paper. Style was the Women’s Section before political correctness reared its lovely head. And it reported that her show (good, bad or indifferent) scored something like 7 million viewers. A lot. But not everybody. Not most. Later on, the newspaper said that her show had gotten the top rankings on Sunday night with those 7 million viewers. Hmmmm. Sounded good to me, even though I was among the missing.

Then my old editor reared his ugly head. (Actually, he was a pretty decent looking guy, and a couple of years younger than me, but ugly and old works better.) And I remembered his words. And I thought about 7 million viewers. And I looked up the current U.S. population according to Mr. Google. It said there are 301,139,947 Americans, give or take a couple.

Which means, I’m pretty sure, that 294,139,947 people didn’t watch the show. This does not factor in people who fell asleep or went to the bathroom (that is, left the room to go to the bathroom) when she did whatever she did. Or persons sneaking into the country illegally so they can watch Brit the next time she makes a comeback.

I thought of my old editor—the many vs. most guy—the other day when I got an e-mail from someone who had read something I had written about the possibility of charging fees to heavy users of the federal Thrift Savings Plan. Currently, everybody pays the same fees. But officials say they are looking at other 401(k) plans to see what, if anything, they do about people who trade a lot. And their impact on the now shared TSP standard fee, which is the lowest in the business.

First reaction was all in favor of charging people who make frequent trades a fee. The e-mail ran 4-1 one in favor of the user tax.

Then my name got on some kind of list, available to frequent traders, as the guy who was going to wreck the TSP by forcing them to pay more. The fact that I was reporting something under study, not advocating it, was lost on them. They were furious that, as one said, “the Nanny State wants to charge me for investing my own money.”

The point is that he and others often said the same thing. That is, that they had never met anybody in government who favored the higher fees for heavy users. Not one person. That to me sounded like a many vs. most deal in reverse. In other words, there was no one among the majority of the nearly 3 million TSP investors who favored limits on trades, or special fees for persons who exceed a certain number of trades each month.

That’s hard to believe, unless they don’t have many friends or associates. But that’s what they said.

Anyhow, it reinforced the point I think my old boss was trying to make. I think he would be proud of how I turned out. His point, which I finally get, is this:

We should be very careful how we use the word most.

At least many of the time.

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DoD Reduces Across-the-Board Raise Under NSPS

The National Security Personnel System (NSPS)—DoD’s “pay-for-performance” system—moved another step toward full implementation last week as 110,000 employees currently working under the new rules found out they will not get the regular across-the-board pay raise that many expected to get this coming fiscal year.

Deputy Defense Secretary Gordon England announced in a memo that instead of awarding the full scheduled FY 2008 general pay and cost-of-living increase—predicted to be 3.5 percent across the board—he was assigning half of the money to the new NSPS.

Les Melnyk, a DoD spokesman told FEND that this means that 110,000 “Spiral 1” employees that are now part of NSPS will get one-half of their raise in the form of an across-the-board hike, while the remaining half of the pay hike allocated by Congress will fund NSPS “pay pools.” Pool money is to be divvied up among employees based strictly on performance ratings, Melnyk explained. That means, of course, that not everyone will receive a share of it.

“Most of our employees are valued performers,” Melnyk said. “And they will be better compensated under NSPS—many will get more under the pay band system.”

But many employees, according to the largest union representing them, were surprised that the NSPS would be allocated any of the funding for raises before 2009.

“These Spiral 1 folks thought they’d get the full regular pay increase this year, and then it would be possible to get in addition the pay-for-performance increase after that,” Mark Gibson, a labor relations specialist with the American Federation of Government Employees (AFGE), told FEND. “Now they’re being told they will only get half the increase they expected this year—and that they only qualify to compete in the pay-for-performance pool for some part of the rest of the increase.”

Gibson told FEND that for most employees, the news is an unwelcome surprise.

“It shouldn’t be a surprise,” Melnyk said. “We’ve been open all along that with NSPS, all raises will go eventually into the pay pools.”

DoD has said that by FY 2009, all funding for civilian raises is expected to be allocated through NSPS pay pools. By that time, the 110,000 Spiral 1 employees will be joined by the remaining 90,000 employees in Spiral 2.

For FY 2008, however, Spiral 2 employees will get their raise the old-fashioned way—the full increase will be allocated across the board.

“Being ‘spiraled’ into NSPS, the term the DoD uses, is a good one,” Gibson joked darkly. “Because it’s like a plane out of control on its way to crashing. Look, the DoD told employees when you first get into NSPS you will still get the first year’s regular pay increase, and it just wasn’t the case.”

“They bought the herd of sheep—and now they don’t care if they graze those sheep or not,” he added.

AFGE and other employee organizations are considering filing a lawsuit in the Supreme Court to overturn portions of NSPS. A case they had pursued since 2005 against the plan died in a federal appeals court last spring.

“Hopefully there will be a legislative fix, if Congress doesn’t buckle under President Bush’s veto threat,” Gibson said of the union’s fight against the system. “For now, Bush says he will veto the entire Defense appropriations bill if NSPS is rolled back in it, on the grounds that it would hamper his agenda in creating a pay-for-performance system at DoD.”

“The critics here are refusing to acknowledge that the glass is more than half full for some people,” Melnyk said. “If we do as we used to do, then we’re not rewarding performance.”

“Some people are going to be uncomfortable with the new system, but this is a paradigm shift and we’ve made that decision,” he said. “We are going to reward our high performers.”

For more, go to:  www.cpms.osd.mil/nsps.

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Average FEDVIP Premium Rises 2%, Blue Cross Jumps 8.5%

Enrollees in the Federal Employees Health Benefits Program (FEHBP) will see an average increase of 2.1 percent in their 2008 health insurance premiums, the Office of Personnel Management (OPM) has announced.

However, federal employee unions note that the Blue Cross/Blue Shield plan—which enrolls about 60 percent of the 8 million federal employees, retirees and family members—will see an 8.5 percent average increase in premiums for 2008. For example, enrollees in the Blue Cross and Blue Shield Standard Family Plan will see monthly premiums rise from $290.98 to $314.47, a jump of $23.49, or 8.07 percent. Per year, that will cost enrollees an additional $281.88.

Although some of the other FEHBP premiums will drop, some sharply, most federal employees will be paying more, said National Treasury Employees Union (NTEU) President Colleen Kelley.

“With more than 4 million people in the Blue Cross plan, this is a rate hike of staggering impact,” she said Sept. 13.

Kelley noted that the current rate-setting cycle marks the second year that OPM has allowed insurance companies to draw down cash reserves to offset the cost of their plans. “I am concerned about the potential risks—such as the impact of sharply-higher and unexpected levels of claims—inherent in turning to this strategy on a long-term basis,” Kelley said.

National Active and Retired Federal Employees Association (NARFE) President Margaret Baptiste said NARFE was troubled by the continued disparity between the government/employer and enrollee shares of premiums. For example, in the Blue Cross standard option family plan, the government share increased by only 2.3 percent, while enrollees will see their out-of-pocket premiums rise by 8 percent, Baptiste said.

Federal employees unions have endorsed a plan that would increase the government’s share of the premium from an average of 72 percent to the average 80 percent that is widely paid in the private sector. House Majority Leader Steny Hoyer, D-Md., and Rep. Frank Wolf, R-Va., have co-sponsored a bill that would increase the government’s share to 80 percent, but the legislation has languished in committee.

Kelley also said OPM has refused to take advantage of the substantial prescription drug subsidy to which it is entitled under Medicare. Using the Medicare subsidy could help in holding down premium increases, she said. A Government Accountability Office report earlier this year found that using the subsidy would have cut premium increases by 2.6 percent.

“OPM leaves $1 billion on the table, which could be used to lower worker and annuitant premium costs,” said Baptiste.

OPM officials testified earlier this year that the subsidy is intended to encourage employers to provide prescription drug coverage to employees who are enrolled in Medicare. Because the federal government already provides drug coverage to its employees, taking the subsidy is unnecessary and would be wasteful, OPM reasons.

OPM also announced that premiums for its popular dental insurance program, instituted only a year ago, will rise sharply by 6.1 percent. Unlike the FEHBP itself, under which the cost is shared by the government and employees, federal workers pay the entire premium for their dental care plan on a pre-tax basis, Kelley said.

To see more, go to: www.nteu.org or www.narfe.org. Premium rates are posted at www.opm.gov/insure/health/08rates/index.asp.

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GSA Announces Telework Goal: 50 Percent of Employees by 2010

General Services Administration (GSA) Administrator Lurita Doan announced last week that her agency has a new goal for its agency regarding telework—50 percent of eligible GSA employees should telework at least one day a week by 2010.

“It won’t be easy, but the leaders of GSA have already proven they are capable of extraordinary achievements, no matter the odds,” Doan said at a Sept. 12 event hosted by the Telework Exchange, a public-private nonprofit that is promoting the practice.

Doan listed the benefits of increasing telework in federal workplaces: savings on energy use, reduced greenhouse gas emissions, less dependence on foreign oil, greater productivity and substantial savings to the taxpayer. She added that such benefits warrant an aggressive campaign, so that GSA can lead the government “by example” on the issue.

Specifically, Doan said her agency is producing plans to get 20 percent of her agency’s work force into some telework by the end of 2008, and to raise that to 50 percent two years later. Currently, some 10 percent of eligible GSA employees telework, compared to 4.2 percent for the overall federal work force.

“Administrator Doan’s keynote was the announced 50 percent goal,” Cindy Auten, the general manager at Telework Exchange, told FEND. “It’s terrific because now the agency is really walking the walk on telework—they’re going to be a great leader on this.”

The event included a panel of government chief information officers and chief information security officers, and Auten said she was encouraged that all of the speakers reported increasing use of government-owned laptop computers—a development she said her organization believes will lead to reduced risk of security breaches and other setbacks that might slow down the planned vast expansion of government telework.

Doan has been a big supporter of federal telework, but acknowledges that the option hasn’t found favor with the cadre of federal agency managers. Managers have voiced concerns about data security, office staffing and employee productivity.

But such criticism is virtually baseless, Doan said, and research shows that teleworkers perform equal to or better than office-bound workers. One way to overcome management resistance is to get managers to experience telework for themselves, she said.

“Many of those who argue the loudest against telework are actually those who have never tried it,” she said. “Managers are far more receptive when they telework themselves.”

Doan also pointed out that telework will be especially critical in times of emergency by ensuring continuity of operations (COOP).

“Robust COOP capacity is a natural benefit of telework, but we can’t wait until an emergency to implement the program,” she said. “Federal agencies must have a viable telework program in place as part of normal operations.”

To see more, go to: www.gsa.gov/Portal/gsa/ep/contentView.do?pageTypeId=8199&channelId=-13259&P=XI&contentId=23523&contentType=GSA_BASIC.

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DoD Makes Gains in Medical Care for Deployed Civilians

DoD has made significant gains in the delivery of health care to civilian federal employees deployed to Iraq and Afghanistan, including comprehensive health screenings that can better assess their well-being, officials told Congress last week.

DoD officials testified at a hearing before a House Armed Services Oversight and Investigations Sub-committee on Sept. 18. The panel, chaired by Rep. Vic Snyder, D-Ark., looked into health care and compensation issues for federal employees and government contractors deployed in the two regions.

“As the Department’s DoD civilian support expanded in theaters of operation,” said Patricia Bradshaw, DoD deputy undersecretary for civilian personnel policy, “policies have been implemented to provide injured DoD deployed civilian employees pre- and post-deployment assessments, prompt and professional medical treatment, both in theater and upon their return to the United States.”

Snyder said that 6,000 civilian Defense employees have been deployed to Iraq and 1,500 to Afghanistan since 2001. Also, more than 1,400 Department of State employees have served in Iraq since 2003. To date, 118 DOD civilians have been wounded and seven have been killed, Snyder said.

Government Accountability Office (GAO) and DoD officials told lawmakers that the agency has gone to great lengths to improve its policies toward deployed civilians. For example, DoD responded to earlier GAO criticism and in December issued a revised policy establishing a centralized deployment and health-related databank. Centralized collection of data on the identity of its deployed civilians, their movements in theater, and their health status are all necessary elements for DoD to assess the effectiveness of its force health protection efforts, GAO said.

DoD has also established medical treatment policies that cover its federal civilians—including pre- and post-deployment medical screenings—while they are deployed in combat zones, GAO said. A check of selected workers’ compensation claims confirmed that those deployed federal civilians received care that was consistent with DoD policies, said Brenda Farrell, director of the GAO Defense Capabilities and Management Team. “DoD is taking steps in the right direction,” Farrell said.

Snyder said the subcommittee shortly will begin holding informal meetings with injured federal employees to get a better understanding of the challenges they faced.

“Our goal is to ensure that the health care system available for these individuals is providing adequate medical treatment and that these important groups are not falling through the cracks,” Snyder and Ranking Member Todd Akin, R-Mo., said in a statement. “We are asking these civilians to face many of the same dangers as our troops face. They must be taken care of just as thoroughly.”

To see more, go to: http://armedservices.house.gov/apps/list/press/armedsvc_dem/snyderpr091807.shtml or http://armedservices.house.gov/hearing_information.shtml.

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In Brief: Bush Nominates Mukasey to Replace Gonzales

In an attempt to avoid a bruising nomination battle, President Bush on Sept. 17 named Michael Mukasey, a retired federal judge and law-and-order conservative, to replace Alberto Gonzales as attorney general. Bush nominated Mukasey, 66, an authority on national security issues, after Senate Democratic leader Harry Reid said he would block another potential top nominee, former U.S. Solicitor General Theodore Olson. Reid and many other Democrats consider Olson—who represented Bush in the court fight over the 2000 presidential elections—as too partisan. Mukasey, appointed by President Reagan to the federal bench in New York, presided over a number of high-profile cases, including the trial of the so-called “Blind Sheikh,” Omar Abdel-Rahman, and others charged with plotting the 1993 bombing of the World Trade Center and other terrorist acts. In making the nomination, Bush said: “Judge Mukasey brings impressive credentials to this task. Throughout his time on the bench Judge Mukasey was widely admired for his brilliance and his integrity.” To see more, go to: www.whitehouse.gov/news/releases/2007/09/20070917.html.

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In Brief: DoD Publishes History of 9/11 Pentagon Attack

DoD this month announced the publication of a new book that provides a detailed, documented history of the Sept. 11, 2001, attack on the Pentagon. The book, Pentagon 9/11, went on sale on Sept. 11 at the Government Printing Office (GPO). Five authors, led by Office of the Secretary of Defense Historian Alfred Goldberg, worked from more than 1,300 oral history interviews to produce the narrative. The book also includes previously unpublished photographs, diagrams and illustrations. The 250-page history costs $31, and is available from GPO at: http://bookstore.gpo.gov/collections/pentagon911.jsp.

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In Brief: OPM Seeks Updated Review of Clearance Process

Office of Personnel Management (OPM) Director Linda Springer said her agency is doing a much better job in reducing background investigation times for the federal government’s personnel clearance process and wants another Government Accountability Office (GAO) review to document those improvements. Springer said that since the last report on the matter was issued in September 2006, OPM has cleaned up its act. “Considerable improvement has occurred in the period subsequent to the date of the data used in the field work for that report,” Springer said in a Sept. 17 letter to lawmakers. “I believe that if Congress asked GAO to conduct an update to this review, they would find that substantial progress has been made.” To see more, go to: www.opm.gov/news/opm-requests-new-gao-report-on-background-investigations,1325.aspx.

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In Brief: Controllers File Lawsuit Alleging Improper Mold Removal

Air traffic controllers from the Detroit Metro Air Traffic Control Tower filed a lawsuit alleging that the Federal Aviation Administration (FAA) has failed to properly address a nearly three-year-old problem of toxic black mold at the facility that has sickened controllers. The lawsuit alleges that FAA contractors failed to properly remove the mold, provide a work plan for effective removal of mold contamination or advise the FAA of the deficiencies in their efforts, said Vince Sugent, National Air Traffic Controllers Association (NATCA) Detroit Tower facility representative. The problem began in January 2005 with efforts to remove mold and correct a moisture problem in the tower. The complaint alleges that toxic mold remains in the building, NATCA said in a Sept. 14 statement. “The air traffic controllers at the Detroit Metro Tower continue to be exposed to toxic microbes and are suffering significant health problems,” said Sugent. “The controllers are also concerned with reprisal for coming forward.”  To see more, go to: www.natca.org/mediacenter/press-release-detail.aspx?id=454.

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In Brief: DLA Awards Depot Jobs to Contractor

The Defense Logistics Agency (DLA) announced Sept. 18 that it had finalized a decision to shift 102 federal jobs at the Defense Distribution Depot in Richmond, Va., to a private contractor. DLA awarded the depot contract to GENCO Infrastructure Solutions, Inc., Pittsburgh, Pa., as the result of an A-76 competition, DLA said in a statement. The depot is a 350-acre distribution center that receives, stores and maintains material for the U.S. military, foreign military sales customers and federal agencies. The Sept. 18 announcement made final a tentative Aug. 17 decision in which DLA decided it was more cost-effective to convert the federal employee positions. DLA noted that no protests were filed with the agency after it announced the Aug. 17 preliminary ruling. The transition period from current federal operations to the contracted structure is scheduled to take approximately 180 days, DLA said. To see more, go to: www.dla.mil.

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In Brief: GSA Issues Site Security Design Guide

The General Services Administration (GSA) on Sept. 17 announced the publication of a new guide that offers detailed direction in designing site security for federal buildings. The new GSA Public Buildings Service Site Security Design Guide lays out the process security professionals, designers and project managers should follow to create a secure federal workplace. The guide’s approach is applicable to nonfederal facilities as well, said David Winstead, GSA commissioner for the Public Buildings Service. The 152-page guide highlights lessons learned in a variety of test cases from around the nation. The guidebook follows security standards developed by the Interagency Security Committee that outline required analysis and performance benchmarks for federal buildings. “GSA’s highest priority is to provide federal customer agencies with safe, secure and productive workplaces in order to carry out their missions,” Winstead said. To see more, go to: www.gsa.gov/ssdg.

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Informed Investor: What Is a Dividend Reinvestment Plan (DRIP)?

Individuals who want to buy the stock of an individual company in a low-cost and efficient manner may want to consider a dividend reinvestment plan, or DRIP. Two types of DRIPs are available; one is a traditional DRIP, in which an investor buys the “initial” stock shares (one or two shares) through a brokerage and pays commission, and the other is a “direct purchase plan” in which an investor buys the initial shares commission-free directly from the company.

There are good reasons for using a DRIP to purchase company stock. Since 2003, dividends have received preferential tax treatment from the IRS. Any taxpayer in a 25 percent or higher federal marginal tax bracket pays a flat 15 percent tax on dividends paid from qualified U.S. stocks. Any taxpayer in a 10 percent or 15 percent marginal tax bracket currently pays 5 percent on qualified stock dividends. The 5 percent tax will reduce to zero during the years 2008, 2009 and 2010 for taxpayers in the 10 or 15 percent marginal tax brackets. The tax treatment of reinvested dividends is discussed in more detail below.

A second reason for using reinvested dividends for building one’s stock portfolio is that DRIPs allow investors to efficiently build up their equity position in a company. Keeping investment costs at a minimum is important, and DRIPs usually result in less overall expense for investors.

A number of major discount brokerage firms offer traditional DRIPs. This allows investors associated with these firms to reinvest at a minimal cost the dividends of the stocks that are owned through the brokerage firms. This is important because normally an investor who reinvests dividends to buy additional stock shares that are of “odd-lot” sizes often has to pay higher transaction charges.

While traditional DRIP and direct purchase plans offer cost advantages, investors will still have to pay taxes on their dividend income, even though the dividends are used to purchase additional company stock shares. Since dividends of most U.S. companies are taxed at preferential (5 or 15 percent) rates, most investors will most likely pay less federal income tax on their dividend income compared to their other income such as salary or interest income.

The IRS considers dividend income received in a DRIP to be equal to the fair market value of shares on the day they are acquired. The fair market value is the price on the exchange or market where shares are traded. Any brokerage commissions paid by a company in order to acquire shares in an open market are considered additional dividend income.

Here is an example that illustrates:

Joan purchases stock of XYZ Co. through a direct purchase plan. On Sept. 15, the value of Joan’s 100 shares in the company is $1,000. On Sept. 15, XYZ Co. declares a 5 percent dividend, or a $0.05 dividend per share to shareholders of record. This means that Joan will receive 5 percent of $1,000—$50 worth of new shares, or five shares. XYZ pays the $15 commission resulting from the issuance of Joan’s five additional shares. Joan owes federal income tax on $50 plus $15, or $65 of dividend income.

When shares are sold, an investor is liable for the capital gains tax on the difference between the sales price of the stock sold (less any commissions paid), and the fair market value of the shares on the day they were acquired (plus any brokerage commissions paid).

Participants in traditional DRIPs and direct purchase plans will receive 1099-DIV forms from the company each January, explaining the dividend income they received during the previous year that is being reported to the IRS. Among the companies offering direct purchase plans are Bank of America Corp., Dell, IBM, Home Depot and Waste Management. Minimum purchases range from $25 to $2,500, with $250 a typical minimum. Some companies offer direct purchase plans even though cash dividends are not paid.

Potential investors in company DRIP plans always should request a plan prospectus. The prospectus can be requested from either a company’s shareholder relations department or the plan administrator. The prospectus provides information on such items as eligibility requirements, plan options, costs, how and when purchases are made, how and when certificates will be issued, and how participants can withdraw from the plan.

Companies with direct purchase plans appoint an outside agent to serve as their plan administrator. Among an agent’s duties: maintain plan records, handle purchases and sales of the shares, and furnish share certificates upon request.

Employees who are interested in direct purchase plans are encouraged to join the American Association of Individual Investors (www.aaii.com) and request “AAII’s Guide to Direct Purchase Plans,” which is updated annually. Among the guide features is a list of companies offering DRIP direct purchase plans. Currently, 430 companies offer DRIP direct purchase plans.

Potential investors in DRIPs should be aware that investing in stocks involves certain risks and that past investment returns of a particular stock (including past dividends) are no guarantee of its future performance.

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Rulings Roundup: Navy Employee Wins Right to Appeal in Dismissal Case

Jose F. Ladrido, a civilian Navy employee who worked as a Material Handler Supervisor at one of the service’s medical centers in California, was dismissed after being charged with “gross negligence resulting in great monetary loss.” Specifically, a refrigerator for which Ladrido was responsible malfunctioned, resulting in the destruction of more than $735,000 worth of vaccines and other medical supplies, according to the Navy. On Feb. 2, 2002, the head of the Material Service Department effected Ladrido’s removal.

Ladrido appealed to the Merit Systems Protection Board (MSPB)—but his appeal came more than two months later, technically making his appeal invalid. The administrative judge (AJ) in the case noted that the removal letter specifically warned Ladrido that he had 30 “calendar days” to appeal his removal.

The AJ acknowledged that the letter neglected to note any consequences of filing late. Nonetheless, the AJ concluded Ladrido did not show “good cause for his delay in filing his appeal,” according to official documents in the case—and dismissed Ladrido’s appeal as untimely.

Ladrido appealed to the full MSPB, but was turned down. He appealed to the U.S. Court of Appeals for the Federal Circuit, which re-examined several elements in the case.

First, the court took the Navy’s failure to warn of the consequences of a late appeal to be a very serious mistake. “An agency’s failure to provide notice of appeal rights required by applicable regulations, if serious enough can, by itself, constitute good cause for untimely filing,” the court wrote, citing a precedent case, Shiflett v. USPS (1988).

MSPB had noted, however, that Ladrido testified that he had relied on his son to read the dismissal letter and convey its contents to him, and that his son had erred in telling him he had one year—rather than the actual 30 days—in which to appeal. But the board rejected this as a defense. Indeed, the panel wrote, even if the dismissal letter had warned of the consequences of late filing—as required by federal statute and emphasized by the Shiflett case—Ladrido’s son would also have botched the transmittal of such added information to his father. “Neither Ladrido or his son, whose help Ladrido had enlisted, carefully read the notice” in the first letter, the MSPB wrote—implying the two men would have dropped the ball regardless.

The appeals court rejected the board’s reasoning on this point. If the proper warning had been included in the letter, his son “might have appreciated the fatal consequences of late filing and taken action to avoid it,” the court wrote. Other factors in Ladrido’s favor included his age, limited English language ability, declaration of emotional strain he was under, and the fact that initially he lacked professional counsel in the case, the court wrote. Because of the sum of these circumstances, the appeals court found for Ladrido, and remanded his case to MSPB to be reconsidered on the merits of the case.

(Ladrido v. MSPB, U.S. Court of Appeals for the Federal Circuit, Docket No. 2007-3182, 9/11/07)

Security Guard Loses Disability Appeal

Michelle West, a Security Guard at the Smithsonian Institution, left her job in 1999. Seven years later—in May 2006—she submitted an application for disability retirement benefits, claiming that serious back pain and stress at that job had rendered her partly disabled. In August 2006, the Office of Personnel Management (OPM), which handles such claims, replied in writing that her application was untimely and had been denied.

The letter cited 5 U.S.C. Section 8337(b), which specifically states that applications for disability retirement benefits must be filed within one year of separation from employment. The only exception, the letter informed, was if the applicant could show they were mentally incompetent from the time of separation until some later date that should be noted. Under such circumstances, the clock on the one-year filing period begins from the point of regaining mental competency, rather than separation from employment, the letter said.

West wrote OPM arguing that she had suffered from anxiety and depression as well as extreme pain when she separated and long afterward, and that her conditions rendered her “physically and mentally incompetent to timely file for disability retirement.” But OPM turned her request down. She took her case to the Merit Systems Protection Board (MSPB) but an administrative judge with the board affirmed OPM’s finding, because West had provided “no evidence” of incompetence. The full board also turned her down.

West filed an appeal with the U.S. Court of Appeals for the Federal Circuit, but the appeals court agreed with the board’s take on her case, finding inadequate evidence of incompetence to justify a waiver of the one-year filing deadline.

(West v. OPM, U.S. Court of Appeals for the First Circuit, Docket No. 2007-3154, 9/11/07)

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You Be the Judge: Was DoD Worker Cheated in Settlement Check Dispute?

“I worked for the Defense Department for more than a decade,” said Ralph McMullen,* a longtime civilian employee of the Defense Commissary Agency (DCA). “But I ran into trouble over what I still say are ridiculous allegations that I took sick leave under false pretenses.”

“My managers and I were at loggerheads—and so, under pressure, I took a settlement agreement,” he said. “They were offering me only $10,000 to give up my fight, and my job, and so later I refused to sign the final papers and I returned the check.”

“Later the top guys told me, ‘Too late—you can’t come back to work.’ Fine, I said, I’ll take my check and I’ll leave, but they wouldn’t give it back to me!” he said.

“McMullen made a few mistakes,” said Sally Fulbright, an attorney with DoD. “He got into trouble, then he settled with us and we did our part—we sent him the check, but he returned it—our position is we don’t owe him another one.”

FACTS: Ralph McMullen worked for the DCA for many years with no major run-ins with superiors. But several years ago, he began taking off lengthy stretches from work, claiming illness. Ultimately, he was unable to produce medical evidence to justify his extensive leave time. DCA lodged administrative charges of “unauthorized absence.” McMullen was informed that he faced removal from the agency’s employment.

In November 1997, DCA removed him from employment. Soon afterward, McMullen filed an appeal with the Merit Systems Protection Board (MSPB)—but meanwhile entered into a settlement discussion with managers at DCA. According to official records, in April 1998, McMullen and the agency “reached a settlement agreement, on terms that the administrative judge (AJ) read into the record.” The settlement required him to sign away his job, while the DCA was required to send him a check for $10,000.

In May 1998, McMullen received the $10,000 check—but did not deposit it into his account. He had misgivings about the settlement and so he retained counsel. In September, his attorney returned the check by mail to the government. McMullen enclosed a letter explaining that he “rejected the settlement negotiated,” and stating that he “declined to sign the written settlement agreement prepared by the agency.”

In February 2002, McMullen filed a claim with MSPB. He charged that his agency had broken the agreement, and he demanded that a $10,000 replacement check be sent to him. The board found that indeed the agreement should be in effect. McMullen’s “refusal to sign the written agreement, and his statement that he returned the money paid to him under the agreement, cannot negate the agreement that had been entered into the record,” the board wrote. At that point, McMullen waited for his check to be returned—but it never came.

In October 2004, McMullen wrote to DCA, requesting that he be sent a replacement “settlement check” for the amount provided in the agreement. But a letter from DCA said that the “agency had complied with the terms of the settlement agreement when it first sent the $10,000 payment”—and that the agency had “no obligation to send another check.”

Does the government owe McMullen a new $10,000 check?

DECISION: McMullen appealed to MSPB for enforcement of the settlement agreement, yet in August 2006 an AJ for the board denied his petition on three grounds. First, McMullen had taken an excessive period to try to recover the check; second, he had abandoned the check, in effect, by returning it; and third, the AJ supported the agency’s claim that it had complied when it sent the check in the first place, and owed McMullen nothing more—not even a replacement for the returned check.

The appellant then took the case to the U.S. Court of Appeals for the Federal Circuit. The court, based on “principles of law and equity” in general, found that the agency and MSPB had erred. The panel stated that MSPB’s finding that McMullen had “unreasonably delayed is not supported by substantial evidence.” Furthermore, the court wrote, “the agency’s refusal to pay was inappropriate, for the agency had successfully maintained that the settlement agreement was in full effect.” The appeals court remanded the case to MSPB, for the board to enforce its order that DCA ensure that McMullen receive a replacement check in the sum of $10,000.

(U.S. Court of Appeals for the Federal Circuit, Docket No. 2007-3163, 9/18/07)

Discuss the outcome of this case at www.FederalSoup.com. Click on the "You Be The Judge" Forum.

*Names and dialogue are fictitious, but details are based on a real case.

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Linda Young Gsell, Publisher
Phil Piemonte, Managing Editor
Nathan Abse, Staff Writer
Frank Klimko, Staff Writer
Mike Causey, Columnist
Edward Zurndorfer, Columnist

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