“The presumption of good faith ‘is valid and binding unless well-nigh irrefragable proof is offered to rebut or overcome it.’ McEachern v. Office of Pers. Mgmt., 776 F.2d 1539, 1545 (Fed. Cir. 1985).”
How later courts described this case
- “The presumption of good faith ‘is valid and binding unless well-nigh irrefragable proof is offered to rebut or overcome it.’ McEachern v. Office of Pers. Mgmt., 776 F.2d 1539, 1545 (Fed. Cir. 1985).”
- “The presumption of good faith ⅛ valid and binding unless well-nigh irrefragable proof is offered to rebut or overcome it.’ McEachern v. Office of Pers. Mgmt., 776 F.2d 1539, 1545 (Fed. Cir. 1985).”
Written by the judges who cited it.
The opinion
In the United States Court of Federal Claims
No. 11-148 C
(Filed: August 27, 2013)
________________________________________
)
VLADIMIR KOGAN, MD, )
)
Plaintiff, ) Cross-Motions for Summary
) Judgment; Contract Interpretation;
v. ) Breach of Contract; Implied Duty
) of Good Faith and Fair Dealing
THE UNITED STATES OF AMERICA, )
)
Defendant. )
________________________________________ )
Vladimir Kogan, MD, Minnetonka, MN, pro se. 1
Delisa Maria Sanchez, Trial Attorney, with whom were Stuart F. Delery, Acting
Assistant Attorney General, Jeanne E. Davidson, Director, and Steven J. Gillingham,
Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice, Washington, DC, for defendant. Jason F. Rudie, Staff Attorney,
United States Department of Veterans Affairs, Minneapolis, MN, of counsel.
OPINION
HEWITT, Chief Judge
Dr. Vladimir Kogan (Dr. Kogan or plaintiff) is a Russian-born staff physician at
the Minneapolis Veterans Affairs Healthcare System (the MVAHS), where he has
worked for nearly thirty years. See Compl., Docket Number (Dkt. No.) 1, ¶¶ 3, 7, 10. In
early 2001, plaintiff filed an Equal Employment Opportunity (EEO) claim against the
1
On June 7, 2011 the court granted Dr. Vladimir Kogan’s (Dr. Kogan or plaintiff)
Motion to Allow Mrs. Valentina Kogan, My Wife, to Assist Me in this Case. See Order of June
7, 2011, Docket Number (Dkt. No.) 8, at 1-2. The court found that because Mrs. Valentina
Kogan is plaintiff’s wife, she meets the requirements of Rule 83.1(a)(3) of the Rules of the
United States Court of Federal Claims (RCFC), id. at 1-2, which provides that “[a]n individual
who is not an attorney may represent oneself or a member of one’s immediate family . . . in any
proceeding before this court,” RCFC 83.1(a)(3).
1
United States Department of Veterans Affairs (the VA or defendant), acting through the
Minneapolis Veterans Affairs Medical Center (the MVAMC), 2 alleging age and national
origin discrimination. See id. ¶ 10. Plaintiff and the VA resolved the EEO action by
entering into a settlement agreement dated April 29, 2002 (the Settlement Agreement),
see id. ¶ 14, which, according to plaintiff, required the VA “to pay [Dr. Kogan] 100%
salary for a full time physician in the Radiation Oncology Department,” id. ¶ 27. Plaintiff
alleges that, from January of 2006 to the present, the VA has breached the Settlement
Agreement by failing to pay him an annual “effective salary for a physician in the
Radiation Oncology Department” (count one). Id. ¶ 23 (internal quotation marks
omitted); see id. ¶ 27 (similar). Plaintiff also alleges that the VA has breached an implied
duty of good faith and fair dealing inherent in the Settlement Agreement (count two).
See id. ¶¶ 30-31.
Before the court are: the Complaint, filed March 7, 2011; Plaintiff’s Cross-Motion
for Summary Judgment (plaintiff’s Motion or Pl.’s Mot.), Dkt. No. 38, a Memorandum of
Law in Support of Plaintiff’s Cross-Motion for Summary Judgment (Pl.’s Mem.), Dkt.
No. 39, and Exhibits to Memorandum of Law in Support of Plaintiff’s Cross-Motion for
Summary Judgment (Pl.’s Ex.), 3 Dkt. No. 39-1, filed February 19, 2013; Defendant’s
Cross-Motion for Summary Judgment (Def.’s Mot. or defendant’s Motion), Dkt. No. 40,
and an Appendix to Defendant’s Cross-Motion for Summary Judgment (Def.’s App.), 4
Dkt. No. 40-1, filed February 19, 2013; Plaintiff’s Response to Defendant’s Cross-
Motion for Summary Judgment (Pl.’s Resp.), Dkt. No. 46, filed April 15, 2013;
Defendant’s Response in Opposition to Plaintiff’s Cross-Motion for Summary Judgment
2
The Minneapolis Veterans Affairs Healthcare System (the MVAHS) was formerly
known as the Minneapolis Veterans Affairs Medical Center (the MVAMC). Mem. of Law in
Supp. of Pl.’s Cross-Mot. for Summ. J. (Pl.’s Mem.), Dkt. No. 39, at 1; Def.’s Cross-Mot. for
Summ. J. (Def.’s Mot.), Dkt. No. 40, at 1 n.1; cf. Compl., Dkt. No. 1, ¶ 3 (referring to the
“Minneapolis Veterans Administration Medical Center”). The court understands that the name
change occurred sometime after April 29, 2002, when the parties signed a settlement agreement
(Settlement Agreement), cf. Def.’s App. A4 (Settlement Agreement) (referring to the MVAMC),
and the parties appear to use MVAHS and MVAMC interchangeably in their briefing without
regard to the timing of events. When discussing events that occurred on or before April 29,
2002, the court refers to Dr. Kogan’s place of employment as the MVAMC and when discussing
events that occurred after the parties signed the Settlement Agreement, the court refers to Dr.
Kogan’s place of employment as the MVAHS.
3
When citing to the Exhibits to [the] Memorandum of Law in Support of Plaintiff’s
Cross-Motion for Summary Judgment (Pl.’s Ex.), Dkt. No. 39-1, the court refers to the page
number(s) assigned by the court’s electronic filing system, which appear in the top right corner
of each page.
4
When citing to the Appendix to Defendant’s Cross-Motion for Summary Judgment
(Def.’s App.), Dkt. No. 40-1, the court refers to the page number(s) assigned by defendant.
2
(defendant’s Response or Def.’s Resp.), Dkt. No. 47, and an Appendix to Defendant’s
Response in Opposition to Plaintiff’s Cross-Motion for Summary Judgment (Def.’s Resp.
App.), 5 Dkt. No. 47-1, filed April 19, 2013; Plaintiff’s Reply to the []Defenda[n]t’s
Response in Opposition to P[la]intiff’s Cross-Motion for Summary Judgment (Pl.’s
Reply), Dkt. No. 48, filed May 15, 2013; and Defendant’s Reply to Plaintiff’s Response
to Defendant’s Cross-Motion for Summary Judgment (Def.’s Reply), Dkt. No. 49, filed
May 15, 2013.
Plaintiff moves for summary judgment on count one and count two. See Pl.’s
Mot. 1. Defendant cross-moves for summary judgment, contending that the VA did not
breach the Settlement Agreement. See Def.’s Mot. 11. In its Response, defendant further
argues that plaintiff has shown neither that the VA breached the implied duty of good
faith and fair dealing nor that the VA acted in bad faith. Def.’s Resp. 11.
For the reasons stated below, plaintiff’s Motion is DENIED, and defendant’s
Motion is DENIED-IN-PART. To the extent that defendant seeks dismissal of plaintiff’s
claims for punitive damages and for adjustment of plaintiff’s future pension, defendant’s
Motion is GRANTED-IN-PART.
I. Background 6
A. Plaintiff’s Employment and Salary History from 1985 to 2000
Plaintiff was born and raised in St. Petersburg, Russia, where he earned MD and
PhD degrees in radiation oncology. Pl.’s Mem. 3; Def.’s Mot. 2. Plaintiff practiced
radiation oncology in St. Petersburg from 1968 to 1978. Pl.’s Mem. 3; Def.’s Mot. 2. In
1979, he immigrated to the United States, arriving in New York City. Pl.’s Mem. 3;
Def.’s Mot. 2. In 1981, plaintiff passed the United States Medical Licensing
Examination, a requirement for foreign-trained physicians to practice in the United
States, and thereafter began a residency program in radiation oncology at Montefiore
Medical Center in New York. Def.’s Mot. 2; see Pl.’s Mem. 3-4. Plaintiff completed his
residency program in 1984 and a fellowship in radiation oncology in June of 1985. Pl.’s
Mem. 4; Def.’s Mot. 2. In July of 1985, plaintiff began working at the MVAMC, where
he served as a staff physician in the Radiation Oncology Department until 2000. See
Pl.’s Mem. 4; Def.’s Mot. 2.
From 1985 to 2000, salaries for VA physicians consisted primarily of two
5
When citing to the Appendix to Defendant’s Response in Opposition to Plaintiff’s
Cross-Motion for Summary Judgment, Dkt. No. 47-1, the court refers to the page number(s)
assigned by defendant.
6
Unless otherwise noted, facts relied on in this Opinion and cited to the filings of only
one of the parties do not appear to be in dispute.
3
components: base pay and special pay. 7 Def.’s Mot. 2; see Pl.’s Mem. 4. “Base pay was
set according to a scale applicable to physicians and based primarily on the number of
years of service with the []VA or Government service.” Def.’s Mot. 2; see Pl.’s Mem. 4
(defining “basic pay” as a “fixed rate of pay that depend[s] on longevity (tenure)”).
“Special pay was composed of various categories including: full-time status, tenure,
board certification, geographic location, . . . and Scarce Specialty Pay.” Def.’s Mot. 2-3.
Physicians were eligible for Scarce Specialty pay, which “could not exceed $40,000
annually,” if they practiced specialties considered “scarce by the []VA.” Id. at 3
(emphasis omitted). If a physician was approved to receive scarce specialty pay, but “did
not actually work full-time in his/her specialty for which he was receiving Scarce
Specialty pay, then that physician’s Scarce Specialty pay had to be reduced and pro-rated
in accordance to the percentage of time worked in the scarce specialty.” Id.; see Pl.’s
Reply 32 (stating that the VA could prorate the special pay component if the physician
“spen[t] a significant amount of time away from clinical duties within his/her specialty or
assignment” (internal quotation marks omitted)). Radiation oncology was considered a
“scarce specialty,” and, from 1985 to 2000, plaintiff’s salary included the maximum
amount of scarce specialty pay--$40,000. See Pl.’s Mem. 4 (emphasis omitted); Def.’s
Mot. 3.
B. The Settlement Agreement
In February of 2000, the MVAMC placed plaintiff on administrative leave
pending an investigation of certain medical practices within the Radiology Oncology
Department. See Pl.’s Mem. 5; Def.’s Mot. 3. In April of 2001, the MVAMC took
plaintiff off administrative leave and assigned him to work in Compensation & Pension
(C&P) Services. Pl.’s Mem. 6; Def.’s Mot. 3. Plaintiff did not receive scarce specialty
pay while placed on administrative leave, Def.’s Mot. 3; see Pl.’s Resp. 4 (claiming that,
while Dr. Kogan was on administrative leave, the VA “stopped paying him his Scarce
Specialty pay,” among other alleged injuries), or while working in C&P Services, see
Pl.’s Resp. 30 (claiming that the VA’s failure to pay Dr. Kogan scarce specialty pay
“from the time when he was transferred to the C&P and up to the execution of the
Settlement Agreement was unlawful” (internal quotation marks omitted)); Def.’s Mot. 12
(“At the time the Settlement Agreement was executed, Dr. Kogan was not receiving the
scarce specialty pay in the amount of $40,000.00 because he had been transferred to
C&P . . . .”).
In February of 2001, plaintiff filed an EEO claim against the VA, alleging
“Age/62 and National Origin/Russia Discrimination and Retaliation.” Pl.’s Mem. 1; see
Def.’s Mot. 3. In early 2002, plaintiff’s EEO claim was heard before an administrative
7
This pay structure included provisions for cost of living adjustments and tenure
increases. Pl.’s Mem. 4; cf. Def.’s Mot. 3 (noting that plaintiff’s salary from 1985 to 2000
included a tenure component).
4
law judge. See Pl.’s Mem. 7; Def.’s Mot. 4. In March of 2002, the parties began
settlement discussions. Pl.’s Reply 29. On April 29, 2002, plaintiff and the VA--
represented by then Director of the MVAMC, Steven P. Kleinglass (Mr. Kleinglass)--
entered into the Settlement Agreement, see Pl.’s Mem. 8; Def.’s Mot. 4. See generally
Def.’s App. A1-4 (Settlement Agreement). The Settlement Agreement was signed by
both Dr. Kogan and Mr. Kleinglass. Pl.’s Mem. 1; Def.’s App. A4 (Settlement
Agreement).
Under the terms of the Settlement Agreement, plaintiff agreed to withdraw his
EEO claim. See Def.’s App. A1 (Settlement Agreement). In return, the VA agreed to
“[r]estore Dr. Kogan’s full privileges in its Radiation Oncology Department and retain
existing full privileges in [C&P] Services.” Id. at A2. The Settlement Agreement further
provided that plaintiff would work four days a week in C&P Services and one day a week
in Radiation Oncology. Id. Paragraph 3.E of the Settlement Agreement, which is the
primary subject of dispute in this case, provided that the VA agreed to:
Pay Dr. Kogan One Hundred Seventy-Four Thousand Three Hundred Fifty
Seven Dollars ($174,357.00) per year, which is the effective salary for a
physician in the Radiation Oncology Department immediately upon signing
of the Settlement Agreement. The $174,357.00 includes specialty pay in
the amount of $40,000.00.
Id.
As provided in the Settlement Agreement, plaintiff began working four days a
week in C&P Services and one day a week in Radiology Oncology, and the VA paid
plaintiff an annual salary of $174,357. See Pl.’s Mem. 9; Def.’s Mot. 4. Plaintiff also
“received annual cost-of-living adjustments . . . to his Annual Basic Pay as well as tenure
increases to his special pay computation based on his years of []VA service.” Def.’s Mot.
4; see Pl.’s Mem. 28 (showing annual pay increases). By January of 2006, plaintiff was
earning an annual salary of $187,957. Pl.’s Mem. 28; Def.’s App. A122 (tbl. entitled
“Summary of How Dr. Kogan’s Salary Changed from April 2002 To October 30, 2011”
(plaintiff’s salary history)).
C. The Department of Veterans Affairs Health Care Personnel Enhancement
Act of 2004 and Its Application to Plaintiff’s Salary
In 2004 Congress enacted the Department of Veterans Affairs Health Care
Personnel Enhancement Act of 2004 (the Act), Pub. L. No. 108-445, 118 Stat. 2636,
which changed the method for calculating salaries for physicians employed by the VA, §
3(b), 118 Stat. at 2636-40 (codified as amended at 38 U.S.C. § 7431 (2006)) (establishing
the pay structure for VA physicians). The Act eliminated all provisions of physician
special pay and provided that a physician’s salary would consist of base pay, performance
5
pay and market pay. 8 See 38 U.S.C. § 7431(a) (establishing the components of a VA
physician’s salary). But see 38 U.S.C. § 7409 (providing that the Secretary of Veterans
Affairs (the Secretary) may contract with certain “institutions and persons . . . to provide
scarce medical specialist services”).
Under the Act, base pay is “based on the total number of the years of the service of
the physician . . . in the [VA],” id. § 7431(b)(3), and performance pay is based on a
“physician’s . . . achievement of specific goals and performance objectives prescribed by
the Secretary,” id. § 7431(d)(2). Market pay “consist[s] of pay intended to reflect the
recruitment and retention needs for the specialty . . . of a particular physician . . . in a
[VA] facility.” Id. § 7431(c)(2). In making a physician’s market pay determination, the
Secretary must “consult two or more national surveys of pay for physicians . . . , whether
prepared by private, public, or quasi-public entities in order to make a general assessment
of the range of pays payable to physicians,” id. § 7431(c)(4)(A), and “consult with and
consider the recommendations of an appropriate panel or board composed of physicians
[(Compensation Panel)],” id. § 7431(c)(4)(B)(i).
The Act also authorized the Secretary to prescribe “four tiers of minimum and
maximum amounts for a specialty . . . and [to] prescribe for each tier a minimum amount
and maximum amount that the Secretary determines appropriate for the professional
responsibilities, professional achievements, and administrative duties of the
physicians . . . within that tier.” Id. § 7431(e)(1)(B). The VA Handbook 5007, Pay
Administration (VA Handbook)--which was issued “[t]o implement provisions of the
[Act] as it relates to pay for [VA] physicians” and which “contains mandatory procedures
on pay administration,” Def.’s App. A67 (VA Handbook)--provides definitions for the
four tiers to which physicians could be assigned: Tier 1 - staff; Tier 2 - supervisors and
program managers, including service and section chiefs; Tier 3 - “Network-level program
manager and/or Network-level supervisory responsibilities within the specialty;” and Tier
4 - national chief consultant, national chief officer, “or other assignment that meets the
level of responsibility equivalent to that of a national level,” id. at A68.
The Act was to be implemented effective the first pay period of 2006. 9 §3(d)(1),
118 Stat. at 2641. Pursuant to the Act, on January 3, 2006, a “Compensation Panel
8
Salaries for physicians employed by the United States Department of Veterans Affairs
(VA) during this time period could also include cost of living adjustments and tenure increases.
Pl.’s Mem. 10; see 38 U.S.C. § 7431(b)(5)(2006) (providing that cost of living adjustments
would be “determined as a percentage of base pay only”); cf. Def.’s Mot. 7 (noting that
plaintiff’s post-2006 salary included cost of living adjustments and tenure increases).
9
However, “[t]he process of conversion to the new system did not occur on the first day
of pay year 2006.” Def.’s Mot. 7 (citing Def.’s App. A111 (Decl. of Steven P. Kleinglass (Mr.
Kleinglass)). Instead, in late Spring of 2006, physicians received guidance regarding their
“retroactive lump sum payment[s] of additional salary from January 8, 2006 to the date of the
6
assembled to determine [plaintiff’s] initial annual pay.” Pl.’s Resp. 11 (internal quotation
marks omitted); cf. 38 U.S.C. § 7431(c)(4)(B)(i) (requiring the Secretary to “consult with
and consider the recommendations of [a Compensation Panel]” regarding the market pay
component of a VA physician’s pay). See generally Def.’s App. A5-7 (2006
Compensation Panel action). In making plaintiff’s salary determination, defendant
contends that the Compensation Panel relied in part on pay tables from the VA Central
Office titled “Final Approved Pay Ranges for Physicians and Dentists, Effective January
2006” (2006 pay tables). See Def.’s App. A31-32 (Oct. 2, 2007 letter from Mr.
Kleinglass to Lillette Turner (Ms. Turner) (Oct. 2, 2007 letter)) (explaining how the VA
reached plaintiff’s salary determination); cf. Def.’s App. A9 (2006 pay tables).
The 2006 pay tables provided the tiers and ranges of pay available to physicians
employed by the VA. See Def.’s Mot. 5 (“The initial pay tables that became effective in
January 2006 disclosed to the Compensation Panel the various applicable tiers and pay
ranges that would guide and limit physician pay pursuant to the new law.”); Def.’s App.
A9 (2006 pay tables); cf. 38 U.S.C. § 7431(e)(1)(B) (authorizing the Secretary to set
maximums and minimums for physicians across four payment tiers). “Relevant here, Pay
Table 4 set forth the pay ranges applicable to a physician with a radiation oncology
specialty employed by the []VA,” Def.’s Mot. 5, and is reproduced, in part, below:
Pay Table 4 Specialty/Assignment
Tier 1: $90,000 - 255,000 Anesthesiology
Cardio-Thoracic Surgery
Tier 2: $125,000 - 275,000 Neurosurgery
Orthopedic Surgery
Tier 3: $140,000 - 285,000 Plastic Surgery
Radiology
Tier 4: $150,000 - 295,000 Vascular Surgery
Def.’s App. A9 (2006 pay tables). But see Pl.’s Resp. 40-41 (disagreeing with
defendant’s claim that the Compensation Panel relied on Pay Table 4 to determine
plaintiff’s salary); infra Part I.D (addressing plaintiff’s view of how the Compensation
Panel determined plaintiff’s salary)
Given plaintiff’s status as a staff physician, see Compl. ¶ 7 (stating that from 1985
to the present, plaintiff has worked as a staff physician), the Compensation Panel
recommended that plaintiff be assigned to Tier 1 10 and that plaintiff earn an annual salary
payment[s] . . . and [their] new revised salar[ies] going forward.” Def.’s App. A111 (Decl. of
Mr. Kleinglass).
10
Plaintiff does not dispute his assignment to Tier 1. See Pl.’s Reply to the “Def.’s
Resp. in Opp’n to Pl.’s Cross-Mot. for Summ. J.[”] (Pl.’s Reply), Dkt. No. 48, at 41 (“Dr. Kogan
7
of $195,200, Def.’s App. A6 (2006 Compensation Panel action). Defendant contends
that, as is required under the Act, see 38 U.S.C. § 7431(c)(5) (governing the
determination of market pay), and the procedures set forth in the VA Handbook, see
Def.’s App. A68 (VA Handbook) (describing factors for consideration in determining
market pay), the Compensation Panel considered the appropriate factors in reaching this
determination, including plaintiff’s level of experience in his specialty; the need for
plaintiff’s specialty at the MVAHS; the health care labor market for plaintiff’s specialty;
any board certifications earned by plaintiff; and plaintiff’s previous employment with the
VA, see Def.’s App. A32-33 (Oct. 2, 2007 letter). Mr. Kleinglass, the MVAHS
approving official in 2006, adopted the Compensation Panel’s recommendation, although
he ultimately reduced plaintiff’s annual rate of pay by $145. Def.’s Mot. 6; cf. Def.’s
App. A68 (VA Handbook) (referring to an “approving official”). Accordingly, in
January of 2006 plaintiff’s annual salary increased to $195,055. Def.’s App. A122
(plaintiff’s salary history); see Def.’s Mot. 6 (stating that a salary of $195,055 was
approved for plaintiff); cf. Compl. ¶ 18 (stating that plaintiff’s salary was increased to
$195,000 in 2006).
D. The Salary Chart Provided by the MVAHS Human Resources Specialist
On July 23, 2007 plaintiff met with MVAHS human resources specialist Marion
Johnson (Ms. Johnson) to discuss how the Compensation Panel had determined his
salary. See Def.’s App. A14 (Aug. 17, 2007 letter from plaintiff to Ms. Turner (Aug. 17,
2007 letter)) (discussing this meeting). According to plaintiff, Ms. Johnson informed him
that, since 2006, his salary had been prorated--that is, 4/5 or eighty percent of his salary
had been based on his work in C&P Services 11 and 1/5 or twenty percent of his salary had
been based on his work in the Radiation Oncology Department. See Pl.’s Mem. 13. At
plaintiff’s request, and in an attempt to explain how the Compensation Panel had
calculated his salary, Ms. Johnson provided plaintiff with a chart titled “Initial Salary
Considerations for Dr. Kogan” (salary chart). See Compl. ¶ 19; Def.’s Mot. 7. See
has never challenged his assignment as a Tier 1 radiation oncologist or requested a
reconsideration of his tier.” (internal quotation marks omitted)); cf. Def.’s App. A75 (VA
Handbook) (providing that “employees may request reconsideration of a tier determination”).
11
There appears to be a discrepancy as to whether 4/5 or eighty percent of plaintiff’s
salary was based on the effective salary of a physician working in Compensation and Pension
(C&P) Services, see, e.g., Pl.’s Mem. 22; Pl.’s Resp. to Def.’s Cross-Mot. for Summ. J. (Pl.’s
Resp.), Dkt. No. 46, at 13, or whether 4/5 or eighty percent of plaintiff’s salary was based on the
effective salary of a physician working in Internal Medicine/Sports Medicine, see, e.g., Pl.’s
Mem. 15, 26. According to plaintiff, Compensation and Pension (C&P) Services is simply a
department within the MVAHS, and “[t]here is [no] such medical specialty as C&P nor [is there
a] C&P salary.” Pl.’s Mem. 34. The court does not consider this discrepancy to be material to
the court’s resolution of the pending motions.
8
generally Def.’s App. A8 (salary chart). The salary chart provided by Ms. Johnson is
approximated below:
C&P Radiation Final Salary
Salary Oncology Salary Ranges
low range $155,000 $220,000
% time commitment 80% 20%
Prorated salaries $124,000 $44,000 $168,000
high range $155,000 $356,000
% time commitment 80% 20%
Prorated salaries $124,000 $71,200 $195,200
Approved Initial Salary
Market Pay $75,055
Base Pay $120,000
$195,055
January 2007 Change
Market Pay $75,055
Base Pay $122,040
$197,095
July 8, 2007 Tenure Increase
Market Pay $75,055
Base Pay $125,091
$200,146
Def.’s App. A8 (salary chart).
Plaintiff contends that, upon reviewing the salary chart, he realized that the
MVAHS had been breaching the Settlement Agreement since January 2006. Compl. ¶
19. Specifically, plaintiff contends that the MVAHS breached the Settlement Agreement
beginning in January 2006 by (1) not “paying him an effective salary for a physician in
the Radiation Oncology Department” and (2) prorating his salary. Pl.’s Resp. 24 (internal
quotation marks omitted); cf. Def.’s App. A2 (Settlement Agreement) (stating that the
VA will pay plaintiff “$174,357.00[] per year, which is the effective salary for a
physician in the Radiation Oncology Department immediately upon signing of the
9
Settlement Agreement”). That is, according to plaintiff, the Compensation Panel
identified $356,000 as the effective salary for a physician in the Radiation Oncology
Department, Pl.’s Resp. 46, but based only twenty percent of his salary on that amount,
id. at 28; cf. id. at 15 (explaining that the Compensation Panel calculated plaintiff’s salary
($195,200) by adding 4/5 of $155,000 ($124,000) to 1/5 of $356,000 ($71,200)).
E. Procedural History
On August 17, 2007 plaintiff sent a letter to Ms. Turner, chief of policy and
compliance at the VA’s Office of Resolution Management, requesting compensatory
damages resulting from the alleged breach of the Settlement Agreement by the VA. See
Def.’s App. A13 (Aug. 17, 2007 letter). In the August 17, 2007 letter, plaintiff claimed
that, beginning in 2006, the VA “stopped paying [plaintiff] 100% of the effective salary
for a physician in the Radiation Oncology Department” in violation of the Settlement
Agreement. Id. at A16 (internal quotation marks omitted). Instead, plaintiff explained
that “only 1/5 of his salary was calculated with respect to the effective salary for a
Radiation Oncologist and 4/5 [of his salary was] calculated based on the effective salary
for [an] Internal Medicine physician.” Id.; cf. supra note 11 (noting discrepancy between
plaintiff’s arguments as to whether eighty percent of his salary was based on the effective
salary of an internal medicine/sports medicine physician or that of a physician working in
C&P Services).
On September 12, 2007 Ms. Turner sent a letter to Mr. Kleinglass that “contained
questions related to Dr. Vladimir Kogan’s assertion that the [VA] has breached [the
Settlement Agreement].” Def.’s App. A27 (Oct. 2, 2007 letter). Mr. Kleinglass
responded with a letter dated October 2, 2007, see id., in which he claimed that the VA
“[was] in full compliance with the [Settlement Agreement],” id. at A33. In the October
2, 2007 letter, Mr. Kleinglass explained that plaintiff had been “classified as a ‘tier one’
physician” and that, pursuant to the 2006 pay tables, the MVAHS “was required to assign
[plaintiff] a salary somewhere between $90,000 and $255,000.” Id. at A31; cf. Def.’s
App. A9 (2006 pay tables) (setting a range of $90,000 to $225,000 for tier one physicians
specializing in radiology). Mr. Kleinglass also explained that the Compensation Panel
“followed the process set forth in [the] VA Handbook” and that “application of the 1/5 v.
4/5 tool” was among the many factors considered by the Compensation Panel in
determining plaintiff’s salary. Def.’s App. A32 (Oct. 2, 2007 letter). On October 19,
2007, based on the information provided by Mr. Kleinglass, the VA’s Office of
Resolution Management concluded that the VA “ha[d] fully complied with the provisions
in the settlement agreement and [that] therefore no breach ha[d] occurred.” See Def.’s
App. A81 (Oct. 19, 2007 letter from Ms. Turner to Valentina Kogan).
On January 3, 2008 plaintiff filed a complaint alleging breach of the Settlement
Agreement in the United States District Court for the District of Minnesota (the District
Court). See Pl.’s Mem. 15-16; Def.’s Mot. 8. On April 23, 2009 the District Court
dismissed plaintiff’s complaint, holding that “[b]ecause the monetary relief sought by Dr.
10
Kogan in his breach of contract claim exceeds $10,000, jurisdiction over his claim lies
exclusively with the [United States] Court of Federal Claims.” Kogan v. Peake, No. 08-
16 ADM/JJK, 2009 WL 1097915, at *5 (D. Minn. Apr. 23, 2009).
On March 7, 2011 plaintiff filed his Complaint in this court, alleging that the VA
breached both the Settlement Agreement (count one) and the implied duty of good faith
and fair dealing inherent in the Settlement Agreement (count two). See generally Compl.
Plaintiff contends that there are two key issues: “Whether the terms of the Settlement
Agreement require the MVAMC to pay Dr. Kogan an effective salary for a physician in
the Radiation Oncology Department,” and “[w]hether the terms of the Settlement
Agreement require the MVAMC not to pro-rate Dr. Kogan’s Salary.” 12 Pl.’s Resp. 20
(internal quotation marks omitted). For each claim, plaintiff seeks “[d]amages in an
amount of $765,000.00 (salary lost from January 2006 to January 2011) plus an amount
to be determined at trial;” payment of a “100% effective salary for a full time physician
in the Radiation Oncology Department equal to $356,000.00 plus an amount to be
determined at trial;” and adjustment of his future pension. Compl., Prayer for Relief.
Plaintiff also seeks costs of this suit, pre- and post-judgment interest and “[s]uch other
relief as this Court may [find] proper.” Id.
II. Legal Standards
A. Jurisdiction
“[T]he United States may be sued only to the extent that it allows its sovereign
immunity to be waived.” United Electric Corp. v. United States, 227 Ct. Cl. 236, 240,
647 F.2d 1082, 1084 (1981). The Tucker Act, 28 U.S.C. § 1491 (2006), “serves as both a
waiver of sovereign immunity and a jurisdictional grant for this court,” Liberty Mut. Ins.
Co. v. United States, 70 Fed. Cl. 37, 41 (2006). The Tucker Act provides that the United
States Court of Federal Claims (Court of Federal Claims) has jurisdiction over “any claim
against the United States founded either upon the Constitution, or any Act of Congress or
any regulation of an executive department, or upon any express or implied contract with
the United States, or for liquidated or unliquidated damages in cases not sounding in
tort.” 28 U.S.C. § 1491(a)(1). Although, with respect to the types of claims specified,
the Tucker Act waives the sovereign immunity necessary for a plaintiff to sue the United
States for money damages, United States v. Mitchell, 463 U.S. 206, 212 (1983), it does
not confer any substantive rights upon a plaintiff, United States v. Testan, 424 U.S. 392,
398 (1976). A plaintiff must establish an independent substantive right to money
damages from the United States--that is, a money-mandating source within a contract,
12
Plaintiff also claims that “another critical issue in this case is . . . [w]hether the [Act]
abrogated the April 29, 2002 Settlement Agreement between the []VA and Dr. Kogan.” Pl.’s
Resp. 22. The court addresses this issue in Part III.B.2.
11
regulation, statute or constitutional provision--in order for the case to proceed. See Jan’s
Helicopter Serv., Inc. v. Fed. Aviation Admin., 525 F.3d 1299, 1306 (Fed. Cir. 2008).
B. Cross-Motions for Summary Judgment
The parties have filed cross-motions for summary judgment pursuant to Rule 56 of
the Rules of the United States Court of Federal Claims (RCFC). 13 See Pl.’s Mem. 1;
Def.’s Mot. 1. A motion for summary judgment may be granted only when “there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.” RCFC 56(a). The moving party has the initial burden of establishing “the
absence of any genuine issue of material fact and entitlement to judgment as a matter of
law.” Crater Corp. v. Lucent Techs., Inc., 255 F.3d 1361, 1366 (Fed. Cir. 2001). “The
party opposing the motion must point to an evidentiary conflict created on the record;
mere denials or conclusory statements are insufficient.” SRI Int’l v. Matsushita Electric
Corp. of Am., 775 F.2d 1107, 1116 (Fed. Cir. 1985) (en banc). “[T]he mere existence of
some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no genuine
issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)
(emphasis omitted). A fact is material if it might affect the outcome of the suit, and a
dispute over a material fact is genuine “if the evidence is such that a reasonable
[factfinder] could return a verdict for the nonmoving party.” Id. at 248.
In considering a motion for summary judgment, the court draws all inferences in
favor of the nonmoving party. See Matsushita Electric Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986); Mann v. United States, 334 F.3d 1048, 1050 (Fed. Cir. 2003).
When considering cross-motions for summary judgment, “the court must evaluate each
party’s motion on its own merits, taking care in each instance to draw all reasonable
inferences against the party whose motion is under consideration.” Mingus Constructors,
Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987).
C. Breach of Contract
“To recover for breach of contract, a party must allege and establish: (1) a valid
contract between the parties, (2) an obligation or duty arising out of the contract, (3) a
breach of that duty, and (4) damages caused by the breach.” San Carlos Irrigation &
Drainage Dist. v. United States (San Carlos), 877 F.2d 957, 959 (Fed. Cir. 1989). The
13
The Rules of the United States Court of Federal Claims generally mirror the Federal
Rules of Civil Procedure (FRCP). See RCFC 56 rules committee note (2008 amendment) (“The
language of RCFC 56 has been amended to conform to the general restyling of the FRCP.”);
C. Sanchez & Son, Inc. v. United States, 6 F.3d 1539, 1541 n.2 (Fed. Cir. 1993) (“The [RCFC]
generally follow the [FRCP]. [RCFC] 56(c) is, in pertinent part, identical to [FRCP] 56(c).”).
Accordingly, this court relies on cases interpreting FRCP 56 as well as those interpreting RCFC
56.
12
parties do not dispute that the Settlement Agreement is a valid contract, but they interpret
differently the obligations or duties that arise out of the Settlement Agreement. Compare
Pl.’s Mem. 23 (claiming the Settlement Agreement requires the VA to pay plaintiff “an
effective salary for a physician in the Radiation Oncology Department, including required
salary increases, for as long as Dr. Kogan is working at [the] MVAHS and [requires that]
his salary must not be pro-rated” (internal quotation marks omitted)) with Def.’s Resp. 9
(claiming that the Settlement Agreement requires the VA to pay plaintiff “an annual
salary of $174,357.00”). Determining the obligation or duty that arises out of a contract
“is a legal question of contract interpretation,” San Carlos, 877 F.2d at 959, and contract
interpretation is “generally amenable to summary judgment,” Varilease Tech. Grp., Inc.
v. United States, 289 F.3d 795, 798 (Fed. Cir. 2002).
D. Contract Interpretation
“It has been a fundamental precept of common law that the intention of the parties
to a contract control[s] its interpretation.” Beta Sys., Inc. v. United States (Beta), 838
F.2d 1179, 1185 (Fed. Cir. 1988) (alteration and internal quotation marks omitted).
“‘That intention must, in the first instance, be derived from the language of the
contract.’” Nicholson v. United States, 29 Fed. Cl. 180, 194 (1993) (quoting 4 Samuel
Williston, A Treatise on the Law of Contracts § 601 (3d ed. 1961)). Therefore, when
interpreting a contract, the court must first consider the plain language of the contract.
See Aleman Food Servs., Inc. v. United States (Aleman), 994 F.2d 819, 822 (Fed. Cir.
1993); Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991). The plain
language of the contract “must be given that meaning that would be derived from the
contract by a reasonably intelligent person acquainted with the contemporaneous
circumstances.” TEG-Paradigm Envtl., Inc. v. United States (TEG-Paradigm), 465 F.3d
1329, 1338 (Fed. Cir. 2006) (alteration in original) (internal quotation marks omitted).
The plain language of the contract will be viewed as controlling if it is
unambiguous on its face. Coast Fed. Bank, FSB v. United States, 323 F.3d 1035, 1040-
41 (Fed. Cir. 2003) (en banc); see TEG-Paradigm, 465 F.3d at 1338 (“When the
contract’s language is unambiguous it must be given its plain and ordinary meaning and
the court may not look to extrinsic evidence to interpret its provisions.” (internal
quotation marks omitted)). Accordingly, the court may not introduce extrinsic evidence
“to create an ambiguity where the language is clear.” City of Tacoma, Dep’t of Pub.
Utils. v. United States, 31 F.3d 1130, 1134 (Fed. Cir. 1994); see Beta, 838 F.2d at 1183
(“The general rule is that extrinsic evidence will not be received to change the terms of a
contract that is clear on its face.”). 14
14
This contract interpretation approach, which is endorsed by the United States Court of
Appeals for the Federal Circuit (Federal Circuit), “is contrary to the majority Restatement
(Second) [of Contracts] approach, which allows extrinsic evidence of the parties’ intent
regardless of the common or plain meaning of contractual terms.” Travelers Cas. & Sur. Co. of
13
A contract is ambiguous if it is “susceptible to more than one reasonable
meaning.” Barron Bancshares, Inc. v. United States, 366 F.3d 1360, 1375-76 (2004).
Although the parties’ differing interpretations of contract terms do not necessarily create
an ambiguity, Cmty. Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1578 (Fed. Cir.
1993), a contract will be considered ambiguous if “it sustains the interpretations
advanced by both parties to the suit,” Pacificorp Capital, Inc. v. United States, 25 Cl. Ct.
707, 716 (1992), aff’d per curiam, 988 F.2d 130 (Fed. Cir. 1993) (unpublished table
disposition).
If a contract is ambiguous, the court may rely on extrinsic evidence to discern the
parties’ intent. Tecom, Inc. v. United States, 66 Fed. Cl. 736, 743 (2005); see Metro.
Area Transit, Inc. v. United States (Metro.), 463 F.3d 1256, 1260 (Fed. Cir. 2006)
(“Having found the contract ambiguous, we may appropriately look to extrinsic evidence
to aid in our interpretation of the contract.”). Extrinsic evidence may include prior
negotiations between the parties, see Sylvania Electric Prods., Inc. v. United States
(Sylvania), 198 Ct. Cl. 106, 126, 458 F.2d 994, 1005 (1972) (“Expressions of the parties
during negotiations for the contract are . . . a frequent source for interpretation of its
text.”), as well as the parties’ subsequent course of performance under the contract,
Metro., 463 F.3d at 1260; see Max Drill, Inc. v. United States, 192 Ct. Cl. 608, 620, 427
F.2d 1233, 1240 (1970) (en banc) (per curiam) (“The interpretation of a contract by the
parties to it before the contract becomes the subject of controversy is deemed by the
courts to be of great, if not controlling weight.”).
However, if the court must weigh extrinsic evidence of the parties’ intent to
interpret an ambiguous contract, “the matter is not amenable to summary resolution.”
See Beta, 838 F.2d at 1183 (“To the extent that the contract terms are ambiguous,
requiring weighing of external evidence, the matter is not amenable to summary
resolution.”); Tecom, Inc., 66 Fed. Cl. at 743 (stating that when a contract is “ambiguous,
necessitating a review of extrinsic evidence to determine the parties’ intent,” summary
judgment is not appropriate “if material facts are genuinely in dispute”).
E. The Implied Duty of Good Faith and Fair Dealing
Government contracts, like all other contracts, include an implied duty of good
faith and fair dealing, which requires that each party not interfere with the other party’s
rights under the contract. Precision Pine & Timber, Inc. v. United States (Precision
Pine), 596 F.3d 817, 828 (Fed. Cir. 2010); Centex Corp. v. United States (Centex), 395
F.3d 1283, 1304 (Fed. Cir. 2005). Each party has the duty “‘to do everything that the
Am. v. United States, 75 Fed. Cl. 696, 709 (2007); cf. Carter v. United States, 102 Fed. Cl. 61,
69 n.7 (2011) (“[T]he Federal Circuit is one of the less receptive circuits with respect to the use
of extrinsic evidence to elucidate an otherwise plain contract.”).
14
contract presupposes should be done by a party to accomplish the contract’s purpose.’”
Stockton E. Water Dist. v. United States, 583 F.3d 1344, 1365 (Fed. Cir. 2009) (quoting
30 Richard A. Lord, Williston on Contracts § 77.10 (4th ed. 1999)), partial reh’g granted
on other grounds, 638 F.3d 281 (Fed. Cir. 2011). Because this implied duty protects
contractual rights, exactly what it “entails depends in part on what [a given] contract
promises.” Precision Pine, 596 F.3d at 830. Significantly, a party’s contractual
obligations are not expanded by the implied duty of good faith and fair dealing. Id. at
831; see Bradley v. Chiron Corp., 136 F.3d 1317, 1326 (Fed. Cir. 1998) (citing Racine &
Laramie, Ltd. v. Cal. Dep’t of Parks & Recreation, 14 Cal. Rptr. 2d 335, 339 (Cal. Ct.
App. 1992) for the proposition that “implied covenants of good faith and fair dealing are
limited to assuring compliance with the express terms of the contract and [cannot] be
extended to create obligations not contemplated in the contract”).
To support a claim for breach of the implied duty of good faith and fair dealing
with respect to a government contract, a plaintiff must show that the government acted in
a way “specifically designed to reappropriate the benefits the other party expected to
obtain from the [contract], thereby abrogating the government’s obligations under the
contract.” Precision Pine, 596 F.3d at 829; see Centex, 395 F.3d at 1311 (similar). In
other words, a party must not “act so as to destroy the reasonable expectations of the
other party regarding the fruits of the contract.” Centex, 395 F.3d at 1304. Moreover,
“proof of ‘bad faith’ is not required to show a breach of the implied duty of good faith
and fair dealing.” TigerSwan, Inc. v. United States, 110 Fed. Cl. 336, 346 (2013) (citing,
inter alia, D’Andrea Bros. LLC v. United States, 96 Fed. Cl. 205, 222 n.24 (2010)); see
Westlands Water Dist. v. United States, 109 Fed. Cl. 177, 204 (2013) (stating that “[a]
showing of bad faith is not an element of [a claim for breach of the implied duty of good
faith and fair dealing]”); Rivera Agredano v. United States, 70 Fed. Cl. 564, 574 n.8
(2006) (similar).
F. The Presumption of Good Faith Conduct by Government Officials
A party alleging that the government has acted in bad faith must overcome the
presumption that government officials discharge their duties in good faith. Road &
Highway Builders, LLC v. United States (Road & Highway), 702 F.3d 1365, 1368 (Fed.
Cir. 2012). The presumption of good faith “is valid and binding unless well-nigh
irrefragable proof is offered to rebut or overcome it.” McEachern v. Office of Pers.
Mgmt., 776 F.2d 1539, 1545 (Fed. Cir. 1985) (internal quotation marks omitted); see
Galen Med. Assocs., Inc. v. United States (Galen), 369 F.3d 1324, 1330 (Fed. Cir. 2004)
(stating that when a party “alleges bad faith, in order to overcome the presumption of
good faith on behalf of the government, the proof must be almost irrefragable”
(alterations and internal quotation marks omitted)). In Am-Pro Protective Agency v.
United States, 281 F.3d 1234 (Fed. Cir. 2002), the Federal Circuit equated “well-nigh
irrefragable proof” with “clear and convincing evidence,” id. at 1239-40 (internal
quotation marks omitted); see Road & Highway, 702 F.3d at 1368 (“[I]t is ‘well-
established . . . that a high burden must be carried to overcome this presumption,’
15
amounting to clear and convincing evidence to the contrary.” (omission in original)).
“[T]he necessary irrefragable proof has [also] been equated with evidence of some
specific intent to injure the plaintiff.” Galen, 369 F.3d at 1330 (internal quotation marks
omitted); see Road & Highway, 702 F.3d at 1369 (“[A] challenger seeking to prove that a
government official acted in bad faith in the discharge of his or her duties must show a
specific intent to injure the plaintiff by clear and convincing evidence.” (internal
quotation marks omitted)). 15
III. Discussion
A. Jurisdiction
The Settlement Agreement includes a money-mandating provision that requires
the VA to pay plaintiff “One Hundred Seventy-Four Thousand Three Hundred Fifty
Seven Dollars ($174,357.00) per year, which is the effective salary for a physician in the
15
Plaintiff contends that the United States Court of Federal Claims has, at times, applied
the “‘preponderance of the evidence’” standard when determining whether the government acted
in bad faith. See Pl.’s Reply 48-49 (citing Harrington v. United States, 161 Ct. Cl. 432, 441-42
(1963) (per curiam)). Plaintiff argues, in the alternative, that a party could meet the “‘well-nigh
irrefragable proof’” standard “by showing a lack of evidence to support an official’s decision.”
Id. at 49 (citing Crocker v. United States, 130 Ct. Cl. 567, 574-75, 127 F. Supp. 568, 572 (1995);
Marcus v. United States, 200 Ct. Cl. 544, 552, 473 F.2d 896, 900 (1973) (en banc); Kozak v.
United States, 198 Ct. Cl. 31, 35-37, 458 F.2d 39, 40-42 (1972) (en banc)).
Indeed, some opinions of our predecessor court, the Court of Claims, “stated that a
‘preponderance of the evidence’ standard applied in determining whether government actions
were . . . in bad faith.” Tecom, Inc. v. United States, 66 Fed. Cl. 736, 768 (2005) (citing, inter
alia, Harrington, 161 Ct. Cl. at 441-442). “And while ‘well-nigh irrefragable proof’ was often
stated as the standard, it could still be met by showing a lack of evidence to support an official’s
decision.” Id. (citing Crocker, 130 Ct. Cl. at 574-75, 127 F. Supp. at 572; Marcus, 200 Ct. Cl. at
552, 473 F.2d at 900; Kozak, 198 Ct. Cl. at 35-37, 458 F.2d at 40-42). However, the Federal
Circuit has applied the “clear and convincing” standard to the presumption of good faith since its
decision in Am-Pro Protective Agency v. United States (Am-Pro), 281 F.3d 1234 (Fed. Cir.
2002). Road & Highway Builders, LLC v. United States (Road & Highway), 702 F.3d 1365,
1369 (Fed. Cir. 2012); see Rodriguez v. United States, 69 Fed. Cl. 487, 499 (2006) (stating that
the Federal Circuit ultimately “equated ‘well-nigh irrefragable proof’ with the traditional clear
and convincing standard of proof, and held that the latter legal standard ‘most appropriately
describes the burden of proof applicable to the presumption of the government[’]s good faith’”
(alteration in original) (footnote omitted) (quoting Am-Pro, 281 F.3d at 1239)). Moreover, the
Federal Circuit has recently confirmed that a party “seeking to prove that a government official
acted in bad faith in the discharge of his or her duties must show a specific intent to injure the
plaintiff,” Road & Highway, 702 F.3d at 1369 (internal quotation marks omitted), rather than
merely “showing a lack of evidence to support [the government] official’s decision,” cf. Tecom,
Inc., 66 Fed. Cl. at 768 (describing the standard formerly applied).
16
Radiation Oncology Department immediately upon signing of the Settlement
Agreement.” Def.’s App. A2 (Settlement Agreement). Accordingly, the court finds that
the Settlement Agreement is a money-mandating source of the type required for Tucker
Act jurisdiction and that the court has jurisdiction over plaintiff’s claims of breach of
contract and breach of the implied duty of good faith and fair dealing. Cf. Fisher v.
United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in relevant part) (“[I]n
order to come within the jurisdictional reach and the waiver of the Tucker Act, a plaintiff
must identify a separate source of substantive law that creates the right to money
damages.”). However, for the reasons provided below, the court lacks jurisdiction to
determine plaintiff’s future pension and to award plaintiff punitive damages.
1. The Court Does Not Have Jurisdiction to Determine Plaintiff’s Future
Pension
Defendant argues that this court lacks “jurisdiction to adjudicate claims relating to
Federal employee retirement benefits,” Def.’s Resp. 27, and that, to the extent plaintiff
requests that the court determine the amount of his future pension, the court should
dismiss any such claim, id. at 26-27; cf. Compl. 10 (requesting, with respect to counts
one and two, that the court “determine the amount of [his] future pension based on the
effective salary for a physician in the Radiation Oncology Department”).
Plaintiff’s future pension falls under the Federal Employees’ Retirement System
(FERS). Pl.’s Reply 49; see Federal Employees’ Retirement System Act of 1986, Pub. L.
No. 99-335, 100 Stat. 514 (codified as amended at 5 U.S.C. §§ 8401-8480 (2006)).
FERS is administered by the Office of Personnel Management (OPM), see 5 U.S.C. §
8461(b), which is also responsible for “adjudicat[ing] all claims” arising under FERS, id.
§ 8461(c); Agee v. United States, 77 Fed. Cl. 84, 92 (2007) (“Congress entrusted the
OPM with administering . . . FERS, and to adjudicate all claims arising under [this]
retirement system[].”). Therefore, to the extent that plaintiff seeks revisions to his “future
pension,” see Compl. 10, plaintiff’s only source of recourse is with OPM, cf. Agee, 77
Fed. Cl. at 92 (stating that “this Court is barred from adjudicating . . . retirement related
claims” and advising the plaintiffs to, therefore, “seek review and revision of their
[retirement] benefits with OPM”). Accordingly, plaintiff’s request is dismissed for lack
of subject matter jurisdiction.
2. The Court Does Not Have Jurisdiction to Award Punitive Damages
Defendant also argues that this court lacks jurisdiction to award punitive damages
and that, to the extent that plaintiff requests that the court award him punitive damages,
the court should dismiss such a claim. Def.’s Resp. 28; cf. Pl.’s Mem. 45 (claiming that
the “[t]otal amount of Dr. Kogan’s money damages” includes “[p]unitive damages as this
Court may f[i]nd proper”). It is well-established that this court does not have jurisdiction
to award punitive damages. Mastrolia v. United States, 91 Fed. Cl. 369, 382 (2010); see,
17
e.g., Meschkow v. United States, 109 Fed. Cl. 637, 645 (2013); Envtl. Safety
Consultants, Inc. v. United States, 95 Fed. Cl. 77, 98 (2010). Therefore, to the extent that
plaintiff requests that the court award him punitive damages, plaintiff’s request is
dismissed for lack of subject matter jurisdiction.
B. Count I: Breach of Contract
1. Paragraph 3.E of the Settlement Agreement Supports the Interpretations
Advanced by Both Parties and Is Therefore Ambiguous
The parties have competing interpretations of Paragraph 3.E of the Settlement
Agreement, and each reads Paragraph 3.E as requiring different duties on the part of the
VA. Plaintiff contends that Paragraph 3.E obligates the VA to pay him “an effective
salary for a physician in the Radiation Oncology Department,” see Pl.’s Resp. 27
(internal quotation marks omitted), and that Paragraph 3.E prohibits the VA from
prorating his salary, Pl.’s Mem. 29. In contrast, defendant contends that Paragraph 3.E
obligates the VA to pay plaintiff an annual salary of $174,357.00 and does not prohibit
the VA from prorating plaintiff’s salary. Def.’s Resp. 9-10. Each party further argues
that Paragraph 3.E is clear and unambiguous and that its respective interpretation is
supported by the plain language of the Settlement Agreement. See Pl.’s Reply 24 (“The
language of [Paragraph 3.E of the Settlement Agreement] is not ambiguous and [is]
clear.”); Def.’s Reply 4 (“The plain language of Paragraph 3.E is clear and
unambiguous[.]” (emphasis and some capitalization omitted)). But see Pl.’s Mem. 23
(“If the Settlement Agreement contains an ambiguity it will be appropriate for the Court
to rule in Dr. Kogan’s Favor.” (emphasis omitted)); id. at 24 (“This Court will interpret
the Settlement Agreement and may detect an ambiguity in provision 3.E.”).
As plaintiff correctly states, “The purpose of interpreting a contract is, of course,
to ‘accomplish the intentions of the parties.’” Pl.’s Mem. 25 (quoting In re Binghamton
Bridge, 70 U.S. 51, 74 (1865)); see also Beta, 838 F.2d at 1185 (“It has been a
fundamental precept of common law that the intention of the parties to a contract
control[s] its interpretation.” (alteration and internal quotation marks omitted)). In order
to discern the intent of the parties, the court must first look to the plain language of the
Settlement Agreement. Cf. Aleman, 994 F.2d at 822 (stating that “courts should look to
the plain language of the contract to resolve any questions of contract interpretation”);
Nicholson, 29 Fed. Cl. at 194 (stating that the parties’ “intention must, in the first
instance, be derived from the language of the contract” (internal quotation marks
omitted)). In doing so, the court must give the language of the Settlement Agreement
“that meaning that would be derived from the contract by a reasonably intelligent person
acquainted with the contemporaneous circumstances.” Cf. TEG-Paradigm, 465 F.3d at
1338 (internal quotation marks omitted).
18
The Settlement Agreement provides that its purpose is to “resolve [plaintiff’s]
allegation of Age/62 and National Origin/Russian discrimination and Retaliation” against
the VA. Def.’s App. A1 (Settlement Agreement). In exchange for plaintiff’s agreeing to
“[w]ithdraw the formal complaints of discrimination . . . and his request for a hearing
before the EEOC,” see id. at A1-2, the VA agreed to several performance obligations, see
id. at A2-3. The obligation in dispute here is found in Paragraph 3.E of the Settlement
Agreement, which provides that the VA agrees to:
Pay Dr. Kogan One Hundred Seventy-Four Thousand Three Hundred Fifty
Seven Dollars ($174,357.00) per year, which is the effective salary for a
physician in the Radiation Oncology Department immediately upon signing
of the Settlement Agreement. The $174,357.00 includes specialty pay in
the amount of $40,000.00.
Id. at A4.
In the court’s view, the plain language of the Settlement Agreement “is susceptible
of two different and reasonable interpretations, each of which is . . . consistent with the
contract language.” Cf. Cmty. Heating & Plumbing Co., 987 F.2d at 1579. Plaintiff
interprets Paragraph 3.E as obligating the VA to pay him “an effective salary for a
physician in the Radiation Oncology Department, including all salary increases, for as
long as Dr. Kogan is working at the MVAMC.” Pl.’s Resp. 27 (internal quotation marks
omitted); see id. at 30 (“The intent of the provision 3.E[] of the Settlement Agreement
was to establish the basis upon which Dr. Kogan’s effective salary for a physician in the
Radiation Oncology Department, that in 2002 was $174,357.00, would be increased in
the future.” (internal quotation marks omitted)). Defendant interprets Paragraph 3.E as
obligating the VA to pay plaintiff an annual salary of “$174,357.00 per year going
forward.” Def.’s Resp. 18; see Def.’s Mot. 13 (“The Settlement Agreement is
unequivocal that Dr. Kogan’s salary was to be $174,357.00 after the execution of the
[settlement] agreement.”); Def.’s Reply 9 (arguing that the phrase “‘the effective salary
for a physician in the radiation oncology department’ . . . merely describes what the
amount of $174,357.00 then represented in connection with the agreement”). In
summary, plaintiff reads Paragraph 3.E as obligating the VA to pay plaintiff an annual
salary of a physician in the Radiation Oncology Department from time to time ($174, 357
at the time of the Settlement Agreement), and defendant reads Paragraph 3.E as
obligating the VA to pay plaintiff an annual salary of $174,357 for as long as he works at
the MVAHS. The court considers the readings of both parties reasonable because neither
the plain language of Paragraph 3.E nor the remainder of the Settlement Agreement
clearly establishes for what period of time the VA obligated itself to pay plaintiff an
annual salary of $174,375. See Def.’s App. A1-4 (Settlement Agreement).
The court also finds that it is unclear whether the Settlement Agreement allowed
plaintiff’s salary to be prorated. The Settlement Agreement states, “The $174,357.00
19
includes specialty pay in the amount of $40,000.00.” Id. at A2. Plaintiff suggests that
this language prohibits the VA from ever prorating his salary. See Pl.’s Mem. 29
(claiming that “there is a requirement in the provision 3.E[] to avoid to pro-rate his
salary” (emphasis omitted)); Pl.’s Reply 32 (claiming that “the requirement [] not to pro-
rate Dr. Kogan’s salary . . . was expressed by the []VA in the following language: ‘The
$174,357 includes specialty pay in the amount of $40,000’”). Defendant counters that
the same language “ensure[d] that Dr. Kogan’s pay was inclusive of $40,000 [of scarce
specialty pay] per year irrespective of the fact that Dr. Kogan was not working full-time
in Radiation Oncology,” without resolving whether his salary might otherwise be
prorated, see Def.’s Mot. 13; Def.’s Resp. 16 (arguing that the VA used “the term ‘pro-
rate’ [to] refer[] to the preservation of the $40,000 in Dr. Kogan’s total annual salary . . .
not [as] an expression of an understanding that Dr. Kogan’s salary would never be
prorated in any manner or calculated using a formula”); cf. Def.’s App. A2 (Settlement
Agreement) (providing that “Dr. Kogan will work one day per week in Radiation
Oncology and four days per week in [C&P Services]”). The court finds that both parties’
interpretations of this provision of Paragraph 3.E are reasonable because it is unclear
from the plain language whether the provision was meant to prevent any future prorating
of Dr. Kogan’s salary or meant only to preserve the $40,000 of scarce specialty pay. See
Def.’s App. A2 (Settlement Agreement).
Paragraph 3.E of the Settlement Agreement “sustains the interpretations advanced
by both parties” and is therefore ambiguous. Cf. Pacificorp Capital, Inc., 25 Cl. Ct. at
716. Because the obligation or duty required of the VA under Paragraph 3.E is
ambiguous the court cannot, at this stage of the proceedings, determine whether the VA
breached that duty. 16 Cf. San Carlos, 877 F.2d at 959 (“To recover for breach of contract,
a party must allege and establish: (1) a valid contract between the parties, (2) an
obligation or duty arising out of the contract, (3) a breach of that duty, and (4) damages
caused by the breach.”). Accordingly, summary judgment as to the breach of contract
portion of plaintiff’s claim is precluded.
16
The court also finds it premature to address whether, if the Settlement Agreement
obligates the VA to pay plaintiff “the effective salary for a physician in the Radiation Oncology
Department,” see Def.’s App. A2 (Settlement Agreement), that salary, from January 2006 to the
present, is $356,000, cf. Pl.’s Resp. 24 (claiming that the Compensation Panel selected $356,000
as the “salary for a Radiation Oncology physician”), 46 (claiming that the $356,000 figure is
derived from American Association of Medical Colleges data, “mirrors” data from the
Accreditation Counsel for Graduate Medical Education, and is consistent with the Compensation
and Production Survey); Def.’s Resp. 19 (claiming that the VA “had no obligation or duty to pay
Dr. Kogan a yearly salary in the amount of $356,000.00 after the implementation of the
Department of Veterans Affairs Health Care Personnel Enhancement Act of 2004[, Pub. L. No.
108-445, 118 Stat. 2636]”).
20
Further, although the court may generally look to extrinsic evidence to discern the
parties’ intent, cf. Tecom, Inc., 66 Fed. Cl. at 743 (stating that, if a contract is ambiguous,
the court may rely on extrinsic evidence to discern the parties’ intent), here, the parties
raise genuine issues of material fact regarding the extrinsic evidence. 17 And, where
contract interpretation “require[s] weighing of external evidence, the matter is not
amenable to summary resolution.” Beta, 838 F.2d at 1183; see Tecom, Inc., 66 Fed. Cl. at
743 (stating that where “material facts are genuinely in dispute,” regarding extrinsic
evidence of the parties’ intent, “summary judgment may not be granted”).
2. Questions Remain Regarding the Act’s Effect on the Settlement
Agreement
As addressed above in Part I.C, the Act changed the method by which salaries for
VA physicians would be calculated and eliminated scarce specialty pay. See supra Part
I.C. It is undisputed that the passage of the Act was an intervening event that the parties
did not foresee. See Def.’s App. A30 (Oct. 2, 2007 letter) (“Section 3E of the settlement
[agreement] does not address future changes in the VA’s physician pay system.”), A33
(“The April 29, 2002 EEO settlement [agreement] failed to anticipate a change in federal
law that eliminated special pay agreements.”).
Plaintiff claims, simply, that the Act did “not abrogate the April 29, 2002
Settlement Agreement.” Pl’s Mem. 12; see id. at 32 (claiming that the Act “does not
have a requirement to abrogate the Settlement[] Agreement” and “does not identify any
conditions under which the Settlement Agreement[] must be canceled” (emphasis
omitted)); Pl.’s Resp. 13 (similar). Plaintiff also argues that the VA prorated his salary in
violation of both the Act and the VA Handbook. See Pl.’s Resp. 16; Pl.’s Reply 48; see
17
In support of his interpretation of Paragraph 3.E of the Settlement Agreement, plaintiff
invokes the following extrinsic evidence: (1) a settlement proposal dated February 20, 2002
(Settlement Proposal), see Pl.’s Mem. 19-20; cf. Pl.’s Ex. 35-36 (Settlement Proposal); (2)
declarations of Mr. Kleinglass and Marion Johnson (Ms. Johnson), Pl.’s Reply 32; cf. Pl.’s Ex.
41-51 (Decl. of Mr. Kleinglass), 52-61 (Decl. of Ms. Johnson); and (3) “[a]ctions taken by the
MVAHS Administration after the Settlement Agreement was signed in April 2002 and before the
breach of the Settlement Agreement occurred in January 2006,”--that is, plaintiff’s salary history
from April 2002 through January 2006, see Pl.’s Mem. 27-28; Pl.’s Resp. 29-30; cf. Def.’s App.
A122 (plaintiff’s salary history). Although plaintiff contends that he “does not seek to
incorporate any extrinsic evidence, as all evidence already [is contained] in [Paragraph 3.E of the
Settlement Agreement],” Pl.’s Reply 24; see id. at 36 (“All evidence presented by Dr. Kogan to
the court are not extrinsic, as they confirm requirements, which are already contained in the body
of the Settlement Agreement[.]” (capitalization omitted)), the evidence on which plaintiff relies
is not found within the four corners of the Settlement Agreement and is therefore extrinsic, cf.
supra Part II.D (stating that extrinsic evidence may include the parties’ prior negotiations and
subsequent course of performance).
21
also Pl.’s Mem. 30-32 (claiming that neither the Act nor the VA Handbook require the
VA to prorate physicians’ salaries).
Defendant does not directly address plaintiff’s arguments. Instead, defendant
argues only that the Compensation Panel complied with the Act and the VA Handbook in
selecting plaintiff’s salary. See Def.’s Mot. 14-16; Def.’s Reply 10-14; cf. supra note 16
(finding it premature to address whether, as defendant claims, the VA “had no obligation
or duty to pay Dr. Kogan a yearly salary in the amount of $356,000.00 after the
implementation of the [Act]”).
The court requires further briefing on whether the change in law affected the
Settlement Agreement. Specifically, the court seeks additional briefing from defendant
as to whether, as plaintiff claims, the Act did “not abrogate the April 29, 2002 Settlement
Agreement,” see Pl.’s Mem. 12, and whether the VA prorated plaintiff’s salary in
violation of the Act and the VA Handbook, see Pl.’s Resp. 16; Pl.’s Reply 48.
C. Count II: Breach of the Implied Duty of Good Faith and Fair Dealing
Plaintiff contends that the VA breached the duty of good faith and fair dealing “by
refusing to comply with . . . provision 3.E of the Settlement Agreement to pay [him]
100% salary of a full time physician in [the] Radiation Oncology Department,” Compl. ¶
31; see Pl.’s Mem. 40-41 (stating that the VA’s “failure to deal fairly or in good faith
is . . . evidence[d]” by the VA’s “breach[] [of] the Settlement Agreement” and failure to
pay plaintiff “an effective salary for a physician in the Radiation Oncology Department”
(internal quotation marks omitted)), and by prorating his salary, see Pl.’s Mem. 40- 42.
Plaintiff contends that, for each of these actions, “the presumption that the MVAMC
acted in good faith is overc[o]me since ‘it affirmatively appeared that the reason [for the
action] was something improper, or the action was taken without reason.’” Pl.’s Resp. 1
(quoting Marcus v. United States, 200 Ct. Cl. 544, 552, 473 F.2d 896, 900 (1973) (en
banc).
Defendant contends that “a good faith and fair dealing claim must be based upon a
right or entitlement found in a pre-existing contract.” Def.’s Resp. 26. And, according to
defendant, “[b]ecause Dr. Kogan has not identified a specific contractual obligation from
which the covenant of good faith and fair dealing could arise, his good faith and fair
dealing claim should be dismissed.” Id.
A plaintiff alleging breach of the implied duty of good faith and fair dealing in a
government contract must show that the government acted in a way “specifically
designed to reappropriate the benefits the other party expected to obtain from the
[contract], thereby abrogating the government’s obligations under the contract.”
Precision Pine, 596 F.3d at 829; see Centex, 395 F.3d at 1311 (similar). Moreover, what
the implied duty of good faith and fair dealing “entails depends in part on what [a given]
contract promises.” Precision Pine, 596 F.3d at 830. Here, because the court finds that
22
the obligations required of the VA under Paragraph 3.E of the Settlement Agreement are
ambiguous, see supra Part III.B.1, the court considers it premature to address whether the
VA acted in a way “designed to reappropriate the benefits [plaintiff] expected to obtain
from the [Settlement Agreement],” cf. Precision Pine, 596 F.3d at 829. Accordingly,
summary judgment as to the breach of the implied duty of good faith and fair dealing
portion of plaintiff’s claim is precluded.
D. There Are Genuine Issues of Material Fact as to Whether the VA Acted in
Bad Faith
Plaintiff further argues that the VA’s “actions toward [him] are ‘so arbitrary and
grossly erroneous as to constitute bad faith.’” Pl.’s Mem. 43 (quoting reporter’s
statement of Levering & Garrigues Co. v. United States, 71 Ct. Cl. 739, 757 (1931)).
Plaintiff alleges that in early 2000, unbeknownst to plaintiff, see Compl. ¶ 9, the VA
“falsified his record by changing his Radiation Oncology specialty to Internal
Medicine/Sport Medicine specialty and consequently his Assignment from--Radiation
Therapeutic (Radiation Oncology) to . . . Internal Med[icine],” 18 Pl.’s Mem. 9; see also
id. at 42 (similar). That is, according to plaintiff, the VA “changed [his] status . . . from
staff physician Radiation Oncologist (assignment code 39) to staff physician [Internal
Medicine/]Sport Medicine (assignment code 21),” 19 Compl. ¶ 9; see Pl.’s Mem. 5-6,
which also affected the VA payroll system, see Pl.’s Reply 52-53. Plaintiff states that the
VA eventually “restored” plaintiff’s status to that of a Radiation Oncologist on December
23, 2007. Pl.’s Mem. 15; see Pl.’s Reply 52 (claiming that “Dr. Kogan’s ‘assignment
code’ . . . was unlawfully changed one time and seven years later it was restored”).
Plaintiff contends that the VA concealed this change from him when he signed the
Settlement Agreement, and, in doing so, the “[]VA deprived Dr. Kogan of his right to
fully evaluate his pre-settlement agreement working status and to introduce in the
Settlement Agreement provisions . . . to restore his Assignment and . . . Radiation
Oncology specialty in his record.” Pl.’s Mem. 38-39; cf. id. at 40 (stating that the
MVAHS failed to “restore Dr. Kogan’s Radiation Oncology specialty in his record in
2002--at the time of the settlement negotiations”). Therefore, according to plaintiff, the
Compensation Panel’s recommendation for plaintiff’s salary was based on a “deception”
that plaintiff worked in two specialties--both Radiation Oncology and Internal
18
Plaintiff claims that the VA disguised the change it made to plaintiff’s record by
changing the wording of the Settlement Proposal. Pl.’s Mem. 39; see id. at 29-30 (referring to
“how [the] MVAHS Administration disguised the change in specialty they made in Dr. Kogan’s
record”); cf. supra note 17 (discussing the Settlement Proposal).
19
According to plaintiff, “every medical specialty [in the VA] has [a] unique assignment
Code”: the assignment code for Radiation Oncology, a scarce specialty is 39, Pl.’s Mem. 5, and
the assignment code for Internal Medicine/Sport Medicine, a non-scarce specialty, is 21, see id.
at 6.
23
Medicine/Sports Medicine. See id. at 22; cf. supra note 10 (discussing plaintiff’s
contention that the Compensation Panel based eighty percent of his salary on that of a
physician practicing in Internal Medicine/Sports Medicine and that “[t]here is [no] such
medical specialty as C&P nor [is there a] C&P salary”). Plaintiff contends that the VA
intended “not to pay Dr. Kogan an effective salary for a physician in the Radiation
Oncology Department,” Pl.’s Reply 53 (internal quotation marks and emphasis omitted),
by “[e]xploiting the fact[] that in Dr. Kogan’s record and in the []VA payroll system his
medical specialty [was] unlawfully changed to Internal Medicine/Sport Medicine,” id. at
52-53.
The record supports plaintiff’s contention that his assignment was changed to
Internal Medicine/Sports Medicine in early 2000, see Def.’s Resp. App. A177 (Feb. 19,
2000 notification of personnel action) (listing internal medicine as plaintiff’s
assignment), and that he was reassigned to Radiation Oncology in 2007, see Pl.’s Ex. 15-
16 (Def.’s Answers to Pl.’s Interrogs.) (stating that plaintiff’s assignment code was
changed back to 39 on December 23, 2007). Defendant argues, however, that plaintiff
“has provided no evidence to suggest that changes to his assignment code were the result
of ‘falsification,’ implemented with the . . . intent to injure him, withheld from him, or
that they had any effect at all on his pay or his position.” Def.’s Resp. 24. According to
defendant, “At all times relevant to the facts and circumstances at issue in this case, [Dr.]
Kogan was fully informed that his payroll records periodically reflected ‘internal
medicine’ as an assignment,” and the “MVAHS did not withhold that information from
him.” Id. As support, defendant points out that, since at least February 19, 2000,
plaintiff has received notifications of personnel action that specifically listed plaintiff’s
assignment as internal medicine, id., and, indeed, the record suggests that plaintiff
received at least seven notifications of personnel action between February 19, 2000 and
February 18, 2002, several of which identified “internal med” as plaintiff’s “assignment,”
see Def.’s Resp. App. A177-183 (notifications of personnel action) (capitalization
omitted); cf. Pl.’s Ex. 13-14 (Def.’s Answers to Pl.’s Interrogs.) (stating that employees
receive original notifications of personnel action if their employee codes are changed and
that copies are placed in their personnel folders).
Defendant further contends that plaintiff’s argument that the Compensation Panel
considered plaintiff a physician in Internal Medicine/Sports Medicine is similarly
unsupported. Def.’s Resp. 24. Defendant claims that plaintiff “has provided no evidence
to establish that the Compensation Panel was even aware” that plaintiff’s payroll code
“periodically changed between 2000 and 2006.” Id.; see Pl.’s Ex. 60 (Decl. of Ms.
Johnson) (stating that the “[Compensation] Panel did not consider any codes that may
have been used to describe Dr. Kogan in the MVAMC computer system”).
Plaintiff counters that “[d]efendant does not present any evidence” that the VA
acted lawfully when it changed his assignment to Internal Medicine/Sports Medicine.
Pl.’s Reply 44. However, to the extent that plaintiff alleges that the VA acted in bad
24
faith, the burden is on plaintiff to overcome the presumption that government officials
discharge their duties in good faith. Cf. Road & Highway, 702 F.3d at 1368 (stating that
“it is well-established . . . that a high burden must be carried to overcome this
presumption, amounting to clear and convincing evidence to the contrary” (omission in
original) (internal quotation marks omitted)). The high burden of proof has “been
equated with evidence of some specific intent to injure the plaintiff.” Galen, 369 F.3d at
1330; see Road & Highway, 702 F.3d at 1369 (“[A] challenger seeking to prove that a
government official acted in bad faith in the discharge of his or her duties must show a
specific intent to injure the plaintiff by clear and convincing evidence” (internal quotation
marks omitted)).
Notwithstanding the high burden that plaintiff must overcome to establish bad
faith on the part of government officials, the court finds that there are genuine issues of
material fact as to whether the VA acted in bad faith when it changed plaintiff’s
assignment to Internal Medicine/Sports Medicine. The court also finds that there are
genuine issues of material fact as to the effect of this change on plaintiff’s personnel
records and payroll. Accordingly, summary judgment as to these portions of plaintiff’s
claim is precluded.
IV. Conclusion
Given the foregoing, plaintiff’s Motion is DENIED, and defendant’s Motion is
DENIED-IN-PART. To the extent that defendant seeks dismissal of plaintiff’s claims for
punitive damages and relating to his future pension, defendant’s Motion is GRANTED-
IN-PART. See supra Part III.A (finding that the court lacks jurisdiction over these
aspects of plaintiff’s suit). The court will contact the parties to arrange a telephonic
status conference to address further proceedings in this matter.
IT IS SO ORDERED.
_________________
EMILY C. HEWITT
Chief Judge
25