This case (King v. Office of Personnel Management (CAFC No. 2012-3061) 9/13/13) is yet another example of the tangled mess that some federal employees may leave behind. The facts are taken from the court’s decision.
Don King was the U.S. Forest Service employee living in Montana who married Diana in 1967, divorced her in 1980, remarried her in 1981, and divorced her again in 1982. Even after this second divorce, Don and Diana continued living in the same home with their two children, shared household duties, kept joint credit card accounts, celebrated anniversaries (on the date of their very first marriage), and as far as the community was concerned held themselves out as still very much married to each other. (Opinion pp. 2-3)
In 2002 Don moved out of the house he shared with Diana from whom he had been divorced but with whom he carried on a common law marriage. Apparently believing himself divorced, Don married Kathryn. Before he died from cancer with Kathryn paying the bills and tending to him during his illness, Don designated Kathryn to receive his annuity. (p. 3)
Not surprising that both Kathryn and Diana claimed to be his legal wife when Don died. Kathryn had a piece of paper from the civil ceremony in 2002 and Diana had evidence of the common law marriage. In fact before Don’s death, Diana filed papers in state court to dissolve the common law marriage to Don. After his death, the state case became an extensive fight over Don’s assets, including his federal annuity. (The curious reader can get more details from the appeals court’s decision.)
Eventually Diana and Kathryn signed a settlement agreement in 2004 providing that Diana should receive the annuity disbursements but that if Kathryn receives any such disbursements she agrees they rightfully belong to Diana and Kathryn will either pay them over to Diana or return them to the government for disbursement to Diana. (p. 3) An aside: this is where things got off the rails; such a settlement agreement cannot assure that OPM will go along.
Diana and Kathryn then started fighting over the settlement agreement before the Montana court. Apparently Kathryn had second thoughts and asked the court to void it as “unconscionable and unenforceable.” Diana on the other hand wanted damages for breach of contract. Meanwhile Kathryn applied to OPM as Don’s surviving spouse and started collecting Don’s annuity for almost four years.
The state court eventually ruled that the 2004 settlement agreement was valid and enforceable, meaning Diana was the rightful surviving spouse and she was entitled to get the annuity. Diana then applied to OPM with her state court opinion in hand. Convinced of Diana’s claim, OPM revoked payments to Kathryn and awarded the annuity to Diana. (pp. 3-4)
Hang in there, readers. Now Diana and Kathryn enter into a second settlement agreement in 2008. By now OPM was confused and asked the Montana court to declare just exactly what was Don’s marital status when he died. The court ordered up that Diana was the lawful common law wife of Don on the date of his death and that Don’s marriage to Kathryn was void as a matter of law. The court further indicated that Diana was entitled to “all rights, benefits, and privileges commensurate with her status as Don’s lawful spouse.” (p. 5)
OPM then paid Diana the full annuity amount due to her. But by then under the terms of the second settlement agreement Kathryn had paid Diana the annuity funds Kathryn had received, depositing more than $42,000 of the OPM payments in a trust account for Diana’s benefit.
Not so fast said OPM. It ruled that all payments it had made to Kathryn amounted to an overpayment that Kathryn owed back to the government. (p. 6)
Let’s see if we have this straight—OPM has paid twice. OPM paid Kathryn about $42,000 erroneously and has meanwhile retroactively paid Diana all that she was due as the legal surviving spouse. Naturally OPM wants half of the money back since it amounts to a windfall for someone.
Unfortunately Kathryn does not have the money having paid it to Diana’s benefit under the terms of the settlement and the state court’s ruling. Kathryn fought back and asked OPM to waive the overpayment. When OPM said no, she appealed to the Merit Systems Protection Board. The Board’s ALJ sided with OPM. But the full Board reopened the case and told the ALJ to revisit in light of new evidence concerning the trust fund Kathryn set up for Diana using the annuity money. The ALJ concluded that Kathryn received about $42,000 from OPM and transferred just under $33,600 of that to Diana. Nevertheless the judge again ruled that Kathryn was not entitled to a waiver. Back to the full Board where a 2-1 decision affirmed the ALJ.
Without belaboring an already tangled web, the appeals court stepped in and reversed the MSPB, holding that Kathryn is entitled to a waiver “based on detrimental reliance.” (p. 17)
If OPM wants its money back it is going to have to work things out with Diana. The confusion resulted in Diana receiving a windfall since she got the annuity retroactive to Don’s death and she got an amount representing most of the money Kathryn received erroneously from OPM.