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Washington, DC

U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code

U.S. Army Medical Command
Tripler Army Medical Center, Hawaii
Back pay due to statutory limit on compensation (title 38 employee)

Damon B. Ford
Compensation and Leave Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance



The claimant occupies a Physician (Orthopedic Surgery), GP-602-15, position with the U.S. Army Medical Command at Tripler Army Medical Center, Hawaii.  He asserts his agency erroneously applied provisions regarding the statutory limit on compensation to his title 38 position, and he thus seeks “payment of outstanding compensation owed to him pursuant to the contractual agreements with the United States.”  We received the claim request filed by his duly appointed representative on November 2, 2020, the agency administrative report on January 7, 2021, and the representative’s comments on the report on March 1, 2021.  For reasons discussed herein, the claim is denied.

The claimant was recruited for and appointed under the National Security Personnel System to his current position as Chief of Sports Medicine.  Upon repeal of the personnel system, his position was moved to the Physicians and Dentists Pay Plan (PDPP), which is a hybrid system combining pay authorities under titles 5, 10, and 38 of the United States Code (U.S.C.).  Department of Defense Instruction (DoDI) 1400.25, Volume 543, implements pay provisions of the PDPP and permits authorized management officials to set pay for physicians by considering personal market pay rates based on level of experience, need for the specialty, labor market, etc.  Upon the claimant’s initial transition, the PDPP Conversion Worksheet documenting the October 14, 2011, pay action shows the authorized management official approved his total annual compensation at $425,118, including a base rate, title 38 market pay supplement, nonforeign area cost-of-living allowance, and a retention incentive.  At the time, the amount in excess of $400,000 (i.e., the statutory limit on total compensation under 38 U.S.C. 7431(e)(4) that may be paid to a physician receiving title 38 market pay in a calendar year) was deferred by the agency and paid to the claimant in a lump sum in the first pay period of the following calendar year.  Based on findings from the pay audit conducted by the U.S. Army Medical Command in 2015, the agency determined the practice of paying the claimant the deferred compensation as a lump-sum payment at the beginning of the following calendar year violated the statutory pay cap provisions applicable to his position.  The agency terminated the practice and thereafter the amount exceeding the statutory limit on annual compensation was forfeited.  Furthermore, the agency considered the deferred compensation received by the claimant from December 31, 2011, to December 13, 2014, as overpayments, and the Defense Finance and Accounting Service (DFAS) took action to recover the money, which was estimated at $22,328.61.  The claimant’s request to waive the total indebtedness involving compensation exceeding the pay cap was approved by DFAS on February 2, 2017.

Since the agency terminated the practice of paying him deferred compensation as a lump-sum payment at the beginning of the following calendar year, the claimant asserts he is specifically owed the following: 

(1)  The balance of the deferred compensation earned in 2015 in the amount of $28,988.26, which he asserts the agency failed to pay him in a lump-sum payment in the first pay period of 2016.

(2)  The balance of retention incentives not paid in 2015.  The Retention Incentive Service Agreement, signed by the approving official on September 22, 2014, for the period from October 19, 2014, to October 17, 2015, established the incentive rate at 7.81 percent of the claimant’s salary and was to be paid in four installments of $7,517.  He asserts the agency failed to pay him the fourth installment “pursuant to the contract executed on September 22, 2014,” and he is thus owed $7,517, which was to be paid to him in pay period 26 of calendar year 2015.

(3)  The full annual retention incentive for 2015 to 2016, as well as “all compensation due pursuant to the agreements for 2016-2017.”

The record includes the Retention Incentive Service Agreement (SA), signed by the approving official on September 4, 2015, for the period from September 20, 2015, to September 17, 2016, which sustained the incentive rate at 7.81 percent of the claimant’s salary but was to be paid biweekly.  Although we note the SA establishes a biweekly payment distribution, the claimant’s request states that “…none of the four installment payments were made resulting in nonpayment of approximately $12,528.30.”[1]  Regarding the request for compensation from 2016-2017 agreements, the record includes the SA, signed on July 14, 2016 (period from July 24, 2016, to January 21, 2017), which established the incentive rate at 3.73 percent.  The claimant’s request however provides no further explanation, but we presume this claim is also based on compensation forfeited due to the statutory limit on annual compensation.

The claimant’s employing agency denied the entirety of his claim in its September 8, 2020, decision, stating in relevant part, “Physicians paid under the PDPP using the enhanced Title 38 authorities are subject to the limitation on total compensation found at 38 U.S. Code §7431(e)(4)…Title 38 provides no exception to its limitation on total compensation and no authority for deferral of compensation otherwise in excess of that limitation.”

The claimant disagrees with his agency’s decision, stating in his claim request:

The Department of the Army relies entirely on their narrow interpretation of the limitation on total compensation found at 38 U.S.C. § 7431(e)(4) in order to justify denying [claimant] the compensation rightfully owed to him.  However, 38 U.S.C. § 7431(e)(4) provides only that “the total amount of compensation paid to a physician…” shall not exceed $400,000.  (emphasis added).  While [claimant] recognizes that this statutory provision places limits on the amount of compensation that can be paid to him in one year, the statute places no such limitations on the amount of compensation he is owed.  By agreeing to compensate [claimant] in excess of $400,000 annually for his services, and by agreeing to defer any compensation in excess of $400,000 to the following year, Agency officials demonstrated the parties’ clear understanding that [claimant] was entitled to receive all compensation owed to him, including such amount that could not be paid to him in any given year due to the statutory cap.

In addition, the claimant asserts DoDI 1400.25, Volume 543, provides the authority to set pay for his and other PDPP-covered positions to authorized management officials.  Thus, the retention incentive SAs and other pay documents on record, having been approved and signed by authorized management officials, show the “United States contractually agreed to pay [him] compensation that is being unlawfully denied.”  Alternatively, he requests that OPM grant his claim based on application of the promissory estoppel doctrine.

Under 38 U.S.C. 7431, the pay of physicians consists of three elements, i.e., base, market, and performance pay.  The total pay of a physician is subject to the requirements and limitations described in 38 U.S.C. 7431(e)(4) as follows:

In no case may the total amount of compensation paid to a physician, podiatrist, or dentist under this title in any year exceed the amount of annual compensation (excluding expenses) specified in section 102 of title 3.  (emphasis added)

It is clear that physicians paid under title 38 pay authorities and flexibilities, like the claimant, may not receive total compensation in any calendar year exceeding the annual compensation of the President of the United States, which is provided for under 3 U.S.C. 102 (“The President shall receive in full for his services during the term for which he shall have been elected compensation in the aggregate amount of $400,000 a year…”).

There appears to be no dispute the statutorily imposed pay limitation in 38 U.S.C. 7431(e)(4) applies to the claimant’s position, as the claim request states he “recognizes that this statutory provision places limits on the amount of compensation that can be paid to him in one year…”  Based on claimant’s rationale distinguishing between compensation paid and compensation owed to him, it appears that the claimant generally views the law and regulations allowing for the deferring of compensation to be paid as a lump-sum payment at the beginning of the following calendar year as applicable to his compensation.  This view is misplaced.  For employees covered by 5 U.S.C. 5307, specific provisions limit the aggregate of basic pay and certain additional payments authorized under title 5, U.S.C., that may be paid to an employee in a calendar year, with the proviso that any amount of such additional payments not paid because of the annual aggregate limitation on pay must be paid in a lump sum at the beginning of the next calendar year.  See 5 U.S.C. 5307(b) and 5 CFR 530.204. We cite the 5 U.S.C. 5307 aggregate limitation on pay authority here to show that, if Congress had intended to similarly provide authority to defer and pay compensation under title 38 in excess of the limitation under 38 U.S.C. 7431(e)(4), it would have done so.

Based on the plain language in 38 U.S.C. 7431(e)(4) (indicating that “In no case may the total amount of compensation paid to a physician, podiatrist, or dentist under this title in any year exceed the amount of annual compensation (excluding expenses) specified in section 102 of title 3.”), we conclude that there is no authority under that section to defer compensation under title 38 which is in excess of the annual aggregate limitation for payment as a lump sum in the next calendar year.  In enacting this section, Congress unequivocally indicated that “[i]n no case” may total compensation paid under title 38 in any year exceed the amount specified in 3 U.S.C 102.  Statutory terms are to be given meaning and not rendered superfluous; thus, claimant may not receive pay in excess of the amount specified in 3 U.S.C. 102 in any year, and deferral of additional compensation under title 38 is not permitted.

Unlike the statutory aggregate pay limitation provisions authorizing deferral of title 5 additional payments under 5 U.S.C. 5307(b), there is no parallel statutory provision authorizing deferral of additional payments under title 38.  Absent statutory provisions authorizing deferral of such payments, those payments may not be deferred.

The claimant requests compensation he identifies as the balance of the deferred pay earned in 2015, the unpaid portion of his retention incentive from the SA in 2014-2015, and the full retention incentive from SAs in 2015-2016 and 2016-2017.  The record does not contain leave and earnings statements for the entirety of the claim period in order to confirm the agency paid the claimant the total amount of compensation allowable under 38 U.S.C. 7431(e)(4), i.e., $400,000.  For purposes of adjudicating this claim, and since claimant refers to claims for deferred pay, we assume that the agency paid him the total amount of pay allowable during the claim period and that his specific claim requests involve compensation not paid by the agency as a result of the statutorily imposed pay limitation.  Based on the preceding discussion, no authority exists under 38 U.S.C. 7431(e)(4) to defer his compensation in excess of the annual compensation limitation to be paid as a lump sum in the following calendar year.  Therefore, any amount earned exceeding the $400,000 statutory limitation on his total pay may not be paid and must be forfeited.  This compensation limit is statutory, and OPM does not have any authority to disregard this statutory ceiling on compensation, make exceptions to this limit, or waive the restrictions on compensation required by this statutory provision.

The claimant states that, notwithstanding the statutory pay cap applicable to his position, the retention incentive SAs and other pay documents constitute binding contracts and the agency’s failure to compensate him is “unlawful.”  However, the SAs and other documents do not permit the agency to pay him the compensation he seeks since such payment was otherwise prohibited by law (i.e., it would violate the statutory limit on total annual compensation limit under 38 U.S.C. 7431(e)(4)), as reflected in DoDI 1400.25, Volume 543.  Furthermore, it is well established that where a Federal employee holds his or her position by virtue of appointment, any entitlement to compensation must be based solely on the applicable statutes and regulations, and those statutes and regulations do not give rise to an implied-in-fact contract.  See Chu v. United States, 773 F.2d 1226, 1229 (Fed. Cir. 1985) (“[A]bsent specific legislation, federal employees derive the benefits and emoluments of their positions from appointment rather than from any contractual or quasi-contractual relationship with the government”; see also Schism v. United States, 316 F.3d 1259, 1275 (Fed. Cir. 2002) (noting that “[f]ederal employees, both military and civilian, serve by appointment, not contract…”).

As for the claimant’s assertion regarding the applicability of the promissory estoppel doctrine to his situation, OPM will not apply that doctrine to this claim.  While it is unfortunate that the claimant was misinformed regarding his entitlement to compensation, it is well settled by the courts that a claim may not be granted based on misinformation provided by agency officials.  Payments of money from the Federal Treasury are limited to those authorized by statute, and erroneous advice given by a Government employee cannot bar the Government from denying benefits not otherwise permitted by law.  See Office of Personnel Management v. Richmond, 496 U.S. 414, rehearing denied, 497 U.S. 1046, 111 S. Ct. 5 (1990).  Therefore, to the extent the claimant may have been misinformed as to his compensation, that error does not confer entitlement to compensation not otherwise permitted by statute or its implementing regulations.

The claimant also requests payment for incurred attorney fees.  OPM’s claim adjudication authority under 31 U.S.C. 3702(a)(2) is narrow and limited to deciding if the governing statutes and regulations have been properly interpreted and applied in determining the pay and benefits to which an employee is entitled.  Section 3702 does not include authority to award attorney fees or expenses pursuant to the proceedings under this part.  Therefore, OPM does not consider such requests within the context of the claim adjudication function it performs under 31 U.S.C. 3702.

Under 5 CFR 178.105, the burden is upon the claimant to establish the liability of the United States and the claimant’s right to payment.  Joseph P. Carrigan, 60 Comp. Gen. 243, 247 (1981); Wesley L. Goecker, 58 Comp. Gen. 738 (1979).  The settlement of claims is based upon the written record only, which will include submissions from the claimant and agency.  OPM will accept the facts asserted by the agency, absent clear and convincing evidence to the contrary.  5 CFR 178.105.  As discussed previously, the claimant has failed to do so.  Since the agency decision was made in accordance with established laws and regulations, there is no basis upon which to reverse the decision.  Therefore, the entirety of his claim must be denied.

This settlement is final.  No further administrative review is available within OPM.  Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.

[1] The record includes the SA, signed by the approving official on January 21, 2016, for the period from February 7, 2016, to January 7, 2017, which reduced the incentive rate from 7.81 to 3.19 percent of the claimant’s salary.  However, in support of his claim for the full annual retention incentive for 2015 to 2016, his request states that “termination of the [SA signed on September 4, 2015] could only be done after written notification, which was never done by the United States” and, furthermore, the “reduced [retention incentive] was not retroactive to September 20, 2015.”

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