Ilan Fouks v. Department of Veterans Affairs

UNITED STATES OF AMERICA

MERIT SYSTEMS PROTECTION BOARD

2015 MSPB 37

Docket No. NY-3443-14-0380-I-1

Ilan Fouks,

Appellant,

v.

Department of Veterans Affairs,

Agency.

May 22, 2015

Ilan Fouks, Montclair, New Jersey, pro se.

Christopher P. Richins, Esquire, Brooklyn, New York, for the agency.

BEFORE

Susan Tsui Grundmann, Chairman

Mark A. Robbins, Member

OPINION AND ORDER

¶1 The appellant has filed a petition for review of the initial decision, which

dismissed the appeal of his reduction in pay and grade for lack of jurisdiction.

For the reasons set forth below, we GRANT the petition for review and

REMAND the appeal to the field office for further adjudication in accordance

with this Opinion and Order.

BACKGROUND

¶2 The agency selected the appellant for a Supervisory General Engineer

position with the Hudson Valley Healthcare System. Initial Appeal File (IAF),

Tab 6, Subtab 6 at 1. The appellant was a Supervisory General Engineer with the

2

New York Harbor Healthcare System when he applied for this position. IAF, Tab

9 at 10. The agency states that the appellant was a General Schedule (GS) 13,

step 6 at the time of his selection. Id. The appellant disagrees and states that he

actually was a GS-14, step 2 at the time of his selection. IAF, Tab 1 at 5. The

vacancy announcement stated that the position was at the GS-12 grade level with

pay ranging from $77,585 to $100,859. IAF, Tab 6, Subtab 4.

¶3 The agency appointed the appellant, effective September 22, 2013, at the

GS-13, step 8 level. Id., Subtab 8 at 1. On May 13, 2014, the agency notified the

appellant that an error had been made in setting his grade and pay and that he had

only been entitled to be paid at the GS-12, step 10 level beginning September 22,

2013. Id. The agency stated that it would make corrections effecting all

personnel actions retroactive to September 22, 2013, to reflect his proper grade

and step. Id. The appellant submitted a letter of resignation on May 14, 2014.

Id., Subtabs 9-10. The appellant transferred to the New York Harbor Healthcare

System effective May 17, 2014, at the GS-12, step 10 level. Id., Subtab 10. On

May 31, 2014, the Defense Finance and Accounting Service notified the appellant

that it would collect overpayments made to him between December 28, 2013, and

May 3, 2014. Id., Subtab 11. The appellant filed a petition for hearing,

challenging the validity of this debt collection. Id., Subtab 13. There is no

evidence in the record regarding the outcome of this proceeding.

¶4 On September 11, 2014, the appellant filed a Board appeal and requested a

hearing concerning the reduction in his pay and grade. IAF, Tab 1. After giving

both parties an opportunity to file evidence and arguments regarding jurisdiction,

the administrative judge issued an initial decision, without holding a hearing,

finding that the Board lacks jurisdiction over this appeal because the reduction in

the appellant’s grade and pay was to correct a rate of pay that was set contrary to

law or regulation. IAF, Tab 11, Initial Decision (ID) at 5-6.

3

¶5 The appellant has filed a petition for review. Petition for Review (PFR)

File, Tab 1. The agency has filed a response in opposition to the petition, to

which the appellant has replied. PFR File, Tabs 3-4.

ANALYSIS

The appellant’s reduction in grade claim is not excluded from the Board’s

jurisdiction under 5 C.F.R. § 752.401(b)(15).

¶6 The agency claims that it demoted the appellant from GS-13, step 8 to

GS-12, step 10 after it concluded that it had erred in setting his grade when he

began working in a new position effective September 22, 2013, following a

competitive selection process for a position that was advertised and graded at the

GS-12 level. IAF, Tab 6, Subtab 8. As relevant here, 5 U.S.C. chapter 75

establishes a process, including Board appeal rights, that generally applies when

qualified federal employees are subjected to certain actions, including a

“reduction in grade” or a “reduction in pay.” 5 U.S.C. §§ 7512, 7513(d). The

agency argues, and the administrative judge found, that the appellant’s demotion

cannot be reviewed by the Board based on 5 C.F.R. § 752.401(b)(15), which

provides that the adverse action appeal process under 5 U.S.C. chapter 75 does

not apply to the “[r]eduction of an employee’s rate of basic pay from a rate that is

contrary to law or regulation.” PFR File, Tab 3 at 8-9; ID at 5. For the following

reasons, we find that the agency’s action was more than just a correction to the

appellant’s rate of basic pay within the meanin g of 5 C.F.R. § 752.401(b)(15).

See Simmons v. Department of Housing & Urban Development, 120 M.S.P.R.

489, ¶ 5 (2014).

¶7 The agency argues that the appellant was “demoted” within the meaning of

5 C.F.R. § 531.203 when he accepted the GS-12 position. IAF, Tab 9 at 5; PFR

File, Tab 3 at 5. That regulation, contained in the part of the Office of Personnel

Management’s (OPM’s) regulations concerning pay under the GS scale, defines a

demotion as a change from one GS grade to a lower GS grade, while continuously

employed, with or without a reduction in pay. 5 C.F.R. § 531.203. Thus, that

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definition notes a distinction between “grade” and “pay” and recognizes that a

change in one does not necessarily require a change in the other. The adverse

action procedures established in 5 U.S.C. chapter 75 similarly differentiate

between a “reduction in pay” and a “reduction in grade.” 1 5 U.S.C. § 7512.

Under chapter 75, “grade” is defined as “a level of classification under a position

classification system.” 5 U.S.C. § 7511(a)(3). It is noteworthy that this

definition does not include any explicit reference to pay. The statute separately

defines “pay” as “the rate of basic pay fixed by law or administrative action for

the position held by an employee.” 5 U.S.C. § 7511(a)(4). We find that the

statutory language clearly provides that chapter 75 may apply when there has

been either a reduction in grade or a reduction in pay.

¶8 Here, the agency’s action was undeniably a reduction in grade for the

appellant. He was reduced from a GS-13 to a GS-12 because the agency

determined he could not retain the higher grade while appointed to the new GS-12

position. IAF, Tab 6, Subtab 8, Tab 9 at 10. Although he also received a

corresponding reduction in his pay, that reduction was consequential to the

reduction in grade. There is no general statutory or regulatory exclusion from the

chapter 75 process for reductions in grade intended to correct an “administrative

error,” as the agency characterizes its error in this case. See IAF, Tab 9 at 7; PFR

File, Tab 3 at 9. The exclusion contained in 5 C.F.R. § 752.401(b)(15) is specific

to a reduction in an employee’s “rate of basic pay” only, and we do not find a

valid basis for extending it to the circumstances of the appellant’s reduction in

grade, particularly given the statutory and regulatory distinctions between

“grade” and “pay” discussed above. 2 The Board has recognized an exception

1

The more general term, “demotion,” does not appear in 5 U.S.C. chapter 75,

subchapter II.

2

The exclusion might have applied had the agency reduced the appellant’s rate of basic

pay to a rate equivalent to the GS-12, step 10 level, without a reduction in grade, and it

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from chapter 75 for a reduction in grade resulting from the merits of a

classification decision. See, e.g., Quinlan v. Department of Homeland Security,

118 M.S.P.R. 362, ¶ 9 (2012). But, in this appeal, it appears that the appellant’s

position was at all times correctly classified at a GS-12 grade, and thus that

exception would not apply. See IAF, Tab 6, Subtab 5. Therefore, we conclude

that 5 C.F.R. § 752.401(b)(15) does not preclude the application of chapter 75 to

the appellant’s reduction in grade. 3 4

The appellant has made a nonfrivolous allegation that his demotion was

involuntary based on agency-supplied misinformation.

¶9 The facts of this appeal present another issue regarding whether the

appellant has been subjected to an appealable reduction in grade. Specifically,

the appellant applied for a position that was advertised as only a GS-12 position,

and there is evidence in the record suggesting that he may have voluntarily

was only the appellant’s rate of basic pay that was contrary to law or regulation.

According to OPM’s pay tables, GS-13, steps 1, 2, and 3 had salary rates lower than

GS-12, step 10 in the appellant’s locality pay area for fiscal year 2013. See IAF, Tab 9

at 13.

3

The administrative judge relied on Gessert v. Department of the Treasury,

113 M.S.P.R. 329 (2010), aff’d sub nom. Gessert v. Merit Systems Protection Board,

No. 2010-3115, 2011 WL 463094 (Fed. Cir. Feb. 10, 2011), in concluding that the

Board lacks jurisdiction over this appeal. ID at 5-6. Gessert, however, is

distingu ishable, and we decline to follow it in this circumstance. The appellant in

Gessert received notice and an opportunity to respond prior to the agency action.

Gessert, 113 M.S.P.R. 329, ¶ 4. There was little discussion in Gessert of the

jurisdictional aspects of the appeal. In contrast in this appeal, the agency did not afford

the appellant notice and an opportunity to respond prior to his demotion, and thus the

jurisdictional question is the central question. See Simmons, 120 M.S.P.R. 489, ¶ 7.

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We have considered the appellant’s arguments on review that his appointment at the

GS-13 level was not an administrative error because the Standard Form 50 documenting

his demotion also documents his conversion to a career appointment, a number of

agency officials approved his grade, and the error came to management’s attention via

an equal employment opportunity complaint. PFR File, Tab 1 at 4-5. We have

considered these arguments but find that they are immaterial to the issue of the Board’s

jurisdiction.

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sought and would have accepted the position even if it had been offered to him at

the GS-12, step 10 level. IAF, Tab 6, Subtab 6. Generally, a reduction in grade

that an employee accepts voluntarily is not within the Board’s jurisdiction.

Harris v. Department of Veterans Affairs, 114 M.S.P.R. 239, ¶ 8 (2010); see

Elmore v. Department of Transportation, 421 F.3d 1339, 1344 (Fed. Cir. 2005).

However, a reduction in grade will be considered involuntary, and an appealable

adverse action, if the employee reasonably and materially relied on

agency-supplied misinformation to his detriment, based on an objective

evaluation of the surrounding circumstances. Herrin v. Department of the Air

Force, 95 M.S.P.R. 536, ¶ 10 (2004). This is true even though the agency, in

providing the misinformation, did not intend to mislead the employee. Id. Based

on the current record, it is unclear whether the appellant voluntarily accepted a

reduction in grade.

¶10 The agency admits that it supplied the appellant with misinformation

regarding the grade of the position, appointed him as a GS-13, step 8, and

subsequently reduced his grade to GS-12, step 10. See IAF, Tab 6, Subtab 8 at 1,

Tab 9 at 10. The appellant alleges that he was offered a higher grade after

negotiating with the agency and that he accepted this offer in “good faith.” IAF,

Tab 1 at 5. The record also contains the appellant’s statement that “the sole

reason [he] took the position was the offer of the grade 13-8.” IAF, Tab 6,

Subtab 13 at 7. We find that the appellant has made a nonfrivolous allegation

that his reduction in grade was involuntary because he relied to his detriment on

agency-supplied misinformation. See Paszek v. Department of Defense,

50 M.S.P.R. 534, 538-39 (1991) (finding that the appellant’s reduction in grade

was covered by 5 U.S.C. chapter 75 based on misinformation about the

corresponding rate of pay, even though the agency’s correction of the rate of pay

was not itself a covered action); see also Garcia v. Department of Homeland

Security, 437 F.3d 1322, 1344 (Fed. Cir. 2006) (once an appellant makes

nonfrivolous allegations that, if proven, would establish the Board’s jurisdiction,

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then the appellant has the right to a jurisdictional hearing); Ferdon v. U.S. Postal

Service, 60 M.S.P.R. 325, 329 (1994) (in determining whether the appellant has

made a nonfrivolous allegation of jurisdiction, the Board may not weigh evidence

and resolve conflicting assertions of the parties and the agency’s evidence may

not be dispositive). On remand, the administrative judge should provide notice to

the parties of the jurisdictional requirements for an involuntary reduction in grade

claim and an opportunity to present evidence and arguments concerning whether

the appellant reasonably relied on the misinformation provided by the agency to

his detriment. See, e.g., Herrin, 95 M.S.P.R. 536, ¶ 10. The appellant requested

a hearing, IAF, Tab 1 at 2, and is entitled to a jurisdictional hearing on remand

given his nonfrivolous allegation that, if proven, would establish the Board’s

jurisdiction.

The issues of timeliness and jurisdiction are inextricably intertwined.

¶11 The agency has argued that this appeal should be dismissed as untimely.

IAF, Tab 6, Subtab 1 at 2. Because of her finding regarding jurisdiction, the

administrative judge did not address the timeliness issue. ID at 1 n.1. The issues

of timeliness and jurisdiction are inextricably intertwined in this appeal; that is,

resolution of the timeliness issue depends on whether the appellant was subjected

to an appealable action. See Wright v. Department of Transportation,

99 M.S.P.R. 112, ¶ 13 (2005) (when the voluntariness of the personnel action is

in question, jurisdiction and timeliness are inextricably intertwined, and the issue

of timeliness cannot be resolved before deciding the jurisdictional issue); see also

Lomax v. Department of Defense, 78 M.S.P.R. 553, 560-61 (1998) (stating that, if

the agency subjected the appellant to an appealable reduction in pay then it

should have advised her of her appeal rights, and its failure to do so could

support a finding of good cause for filing her appeal late). If the administrative

judge determines that the Board has jurisdiction over this appeal, then she should

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adjudicate the timeliness issue, after providing the appellant with notice of his

burden of proof.

ORDER

¶12 For the reasons discusses above, we REMAND this appeal to the field

office for further adjudication in accordance with this Opinion and Order.

FOR THE BOARD:

______________________________

William D. Spencer

Clerk of the Board

Washington, D.C.