[Federal Register Volume 59, Number 247 (Tuesday, December 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31643]
[[Page Unknown]]
[Federal Register: December 27, 1994]
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OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 870, 871, 872, 873, 874, and 890
[RIN 3206-AF94]
Federal Employees' Group Life Insurance and Federal Employees
Health Benefits Programs; Reconsideration of Employing Office
Enrollment Decisions
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing final
regulations to improve the administrative process used by the Federal
Employees' Group Life Insurance (FEGLI) and Federal Employees Health
Benefits (FEHB) Programs in resolving disputes between Federal
employees and agencies over coverage and enrollment issues. The purpose
of these regulations is to improve the performance of the Government by
delegating to Federal agencies the authority to reconsider disputes
over coverage and enrollment issues in these two programs and to make
retroactive as well as prospective corrections of errors.
EFFECTIVE DATE: February 27, 1995.
FOR FURTHER INFORMATION CONTACT: Margaret Sears (202) 606-0191.
SUPPLEMENTARY INFORMATION: On June 17, 1994, OPM published proposed
regulations (59 FR 31171) that would delegate to agencies the authority
to make final reconsideration decisions on enrollment issues under the
FEGLI and FEHB Programs and to make retroactive as well as prospective
corrections where appropriate.
OPM received comments from nine agency headquarters or
installations, one employee organization, and one health insurance
carrier. Three commenters expressed their approval of the proposed
regulations without further comment. The other eight commenters
expressed various concerns about the changes made by the proposed
regulations and about the procedures they would have to develop in
order to comply with them. Generally, the comments reflected
considerable confusion on the part of agencies as to exactly what they
would be required to do under these proposed regulations.
Four commenters expressed the belief that the statistics provided
in the supplementary information do not support the delegation of the
reconsideration decision to agencies because they represent errors on
the part of agencies. These statistics showed that about one-third of
the cases OPM received involved decisions about retroactive changes,
which agencies cannot make under current regulations. Therefore, these
do not represent errors on the part of agencies. An additional 23
percent of the requests OPM received were returned to the agencies
because the employees had not followed administrative procedures--in
most cases employees had not asked their agencies for an initial
decision. These, also, do not represent agency errors. Because some
cases involved both an enrollment issue and a retroactive coverage
issue, the percentages do not show the exact number of cases where
agency error may have been involved. However, in more than half the
cases, agency error was not involved. Considering the tremendous volume
of enrollment decisions that employing offices make each year, the fact
that so few decisions are disputed by employees reflects a remarkable
achievement by employing offices.
Three commenters were uncertain about what ``administrative error''
means. Generally, an administrative error occurs when an employing
office misapplies the law or regulations, misinforms employees, or
fails to inform employees when required to do so. It could include any
mistake on the part of the employing office that directly results in
the loss of a benefit or opportunity to an employee. We have not
incorporated a definition into the regulations because doing so would
tend to narrow the application of the term. One of the commenters asked
that we clarify the difference between ``administrative error'' in
Secs. 870.102(a) and 890.103(a) and ``error'' in Secs. 870.102(b) and
890.103(b). There is no difference; therefore, we are changing the
regulations to read ``administrative error'' in each case.
Three commenters questioned OPM's ``equity and good conscience''
authority and asked if they must give an appeal right to OPM when they
issue a reconsideration decision. OPM's ``equity and good conscience
authority,'' which allows us to order the correction of an
administrative error, is not a part of the administrative review
process. The administrative review process ends with the agency's
reconsideration decision. However, without the authority to order a
correction, OPM could not overrule an agency reconsideration decision
that is obviously in disregard of law and regulations and is unfair to
the employee. While these situations are rare, OPM must retain the
authority to correct them. OPM will issue guidance to agencies to help
them in developing procedures for making reconsideration decisions.
One commenter believes that, although delegation will reduce costs
to OPM, it will increase them for the agencies. Based on the relatively
small number of reconsideration decisions that OPM issues each year for
the entire Government, it is unlikely that any agency will have a large
enough volume of reconsideration requests to affect costs. However, if
an agency should find that it is getting an unusually large number of
reconsideration requests, it may find that the procedures or training
it is giving to personnel staff in its installations need to be
reviewed and strengthened.
One commenter requested that OPM issue procedures regarding the
review of agency actions when heirs contest the life insurance coverage
of a deceased employee. This kind of dispute is a claims issue rather
than an enrollment issue. Life insurance claims are handled by the
Office of Federal Employees' Group Life Insurance (OFEGLI). If it
appears that enrollment issues are involved OFEGLI normally contacts
OPM for help in resolving the matter. Since this kind of dispute must
be resolved on a case-by-case basis, detailed procedures for agencies
are inappropriate.
One commenter suggested that OPM give agencies more flexibility in
the enrollment and change in enrollment rules. OPM is currently
developing regulations that would bring much greater flexibility to the
rules for enrolling in FEHB plans and for changing FEHB enrollments. We
expect to issue these as proposed regulations within the next few
months.
One commenter asked how these regulations would apply to decisions
on FEGLI and FEHB issues previously handled solely by the agency or the
retirement system (for example, whether an employee meets the
requirements for continuing coverage into retirement, whether a spouse
meets the eligibility requirements for present or future benefits from
the retirement system, or whether an individual meets the requirements
for FEHB coverage as a hostage under Public Law 101-513). These
regulations affect only reconsideration decisions that were previously
made by OPM under Sec. 870.205 and Sec. 890.104, which will now be made
by the employing agencies (or retirement system, if appropriate) rather
than OPM. Agency and retirement system decisions made under other
provisions are unaffected by these regulations.
One commenter asserted that, since OPM has the statutory authority
to administer both of these programs and to enter into contracts with
carriers, these regulations constitute an abrogation of OPM's authority
as plan sponsor. OPM disagrees. Both the FEGLI and the FEHB laws are
structured so that agencies perform the day-to-day functions necessary
to handle their employees' enrollments and enrollment changes. Although
OPM has performed the reconsideration function in the past, the law
does not prohibit the delegation of this function to agencies.
Two commenters expresses the concern that employees would not have
their cases reviewed outside the agency. One of these felt that, since
FEGLI and FEHB decisions are not appealable to the Merit System
Protection Board (MSPB), OPM should review these cases because it is
responsible for the policies on which they are based. The other felt
that OPM has the expertise necessary to resolve enrollment disputes
that agencies lack, and that no change should be made unless chapter 71
of title 5, U.S. Code, is amended to allow employees to grieve agency
decisions on FEGLI and FEHB enrollment issues. It is true that FEGLI
and FEHB decisions are not subject to review by the Merit Systems
Protection Board nor may they be grieved under chapter 71 of title 5,
U.S. Code. We believe that, for the most part, agencies already have
the expertise necessary to make these decisions and that a level of
administrative review that is independent of the agency is unnecessary.
OPM will provide guidance and other assistance to agencies in setting
up procedures for making reconsideration decisions.
One commenter suggested that we set a time limit on the length of
the retroactive period that agencies may authorize. We do not believe
that setting an arbitrary time limit would be appropriate. A
retroactive correction must be based on an administrative error and the
employee must request a retroactive correction. The agency must
consider each case on its own merits. Most requests for retroactive
correction are for FEHB enrollment issues. Generally, these are self-
limiting in terms of the length of the retroactive period because
carriers generally require that claims be made no later than December
31 of the calendar year following the one in which the medical service
was provided. However, we recognize that agencies do not have
experience in granting retroactive corrections; therefore, we are
modifying the FEHB regulations so that they apply only to retroactive
corrections of administrative errors that occur after December 31,
1994.
One commenter requested that OPM provide guidance to help them
develop procedures and allow sufficient lead time for them to do this.
OPM will provide guidance to help agencies set up procedures; however,
agencies will find that the reconsideration function is not difficult.
They have been making the initial decisions on prospective corrections
for many years, and reconsideration decisions are similar. We do not
believe that a lengthy delay is necessary with regard to prospective
corrections. The modification we are making in the regulation to limit
retroactive corrections of administrative errors occurring after
December 31, 1994, will have a delaying effect on decisions regarding
retroactive corrections.
One commenter suggested that we change the proposed regulations at
5 CFR 870.102 to read ``The employing office may make prospective and
retroactive corrections * * *'' to conform to the language in 5 CFR
890.103. The difference in language is intentional. Under current
regulations, an agency's failure to withhold Basic Life insurance
premiums is always corrected retroactively because coverage is
automatic unless the employee submits a waiver. Similarly, an agency's
failure to process a waiver on a timely basis is retroactive to the
effective date of the waiver. Since agencies are not free to make a
judgment as to whether the change should be retroactive in these cases,
it is not appropriate for the regulations to imply that they do.
However, the language of the FEGLI regulations does not preclude either
prospective or retroactive changes that do not conflict with the law or
regulations. In the case of FEHB enrollments, the agency is generally
free to make a judgment as to whether a prospective or retroactive
change is appropriate.
One commenter suggested that we clarify whether OPM's decision to
order a retroactive correction is subject to retroactive payment of
premiums under Secs. 870.102 and 890.103. Since retroactive payment of
premiums is required under the law, it has been OPM's practice to
include the requirement for payment of retroactive premiums in its
letters to the agencies ordering the retroactive correction. However,
we are modifying the regulations to make it clear that the requirement
for payment of retroactive premiums applies regardless of who
authorizes the retroactive correction.
One commenter suggested that we change the requirements for the
information that must be included in an employee's request for
reconsideration to include a copy of the initial decision. We have
intentionally not included a copy of the initial decision as a
regulatory requirement. This information should be given in the initial
decision itself; however, we do not agree that the copy of the initial
decision need be included for the request to be considered timely under
the regulations. If the request includes sufficient information to
identify the individual, it can be accepted as a timely request and the
initial decision can be requested if it is not included.
One commenter suggested that Secs. 870.103(c)(2) and 890.104(c)(2)
be changed to specify that the reconsideration review is an independent
level of review. We are making this modification in the interest of
clarity.
One commenter asked how these regulations apply to agencies that
have previously delegated initial decisions to another agency through a
Memorandum of Understanding (MOU). Such agencies may need to amend the
MOU's to show which agency is to make the reconsideration decision.
Currently the initial decision letters have been directing employees to
ask OPM to reconsider the initial decision. Under the revised
regulations the initial decision must tell the employee how to seek
reconsideration.
One commenter expressed the concern that the term ``agency'' used
in Sec. 890.104 could restrict the agency's options about the role of
the National Finance Center (NFC) in the reconsideration process for
those agencies that have a MOU with NFC to administer their payroll or
FEHB accounts for enrollees who make direct premium payments. Since NFC
acts as an agent for the agency, these regulations in no way restrict
NFC's role. However, agencies and NFC will need to decide which will
perform the reconsideration function and then modify the MOU
accordingly.
In general, the comments we received indicated that agencies are
uncertain about what reconsideration actually is. Therefore, we are
adding a definition of the term ``reconsideration'' to clarify that it
is the final part of the administrative review process and consists of
a determination of whether the law and regulations were correctly
applied when the initial decision was made.
In addition, there were several suggestions to correct real or
perceived technical or typographical errors in the proposed
regulations. We have made changes where appropriate.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities because it merely
amends administrative procedures currently performed by OPM and Federal
agencies.
List of Subjects
5 CFR Part 870
Administrative practice and procedure, Government employees,
Hostages, Iraq, Kuwait, Lebanon, Life insurance, Retirement.
5 CFR Parts 871, 872, and 873
Administrative practice and procedure, Government employees, Life
insurance, Retirement.
5 CFR 874
Government employees, Life insurance, Retirement.
5 CFR Part 890
Administrative practice and procedure, Government employees, Health
facilities, Health insurance, Health professions, Hostages, Iraq,
Kuwait, Lebanon, Reporting and recordkeeping requirements, Retirement.
Office of Personnel Management.
James B. King,
Director.
Accordingly, OPM is amending 5 CFR parts 870, 871, 872, 873, 874,
and 890 as follows:
PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM
1. The authority citation for part 870 continues to read as
follows:
Authority: 5 U.S.C. 8716; Sec. 870.202(c) also issued under 5
U.S.C. 7701(b)(2); subpart J is also issued under section 599C of
Pub. L. 101-513, 104 Stat. 2064, as amended.
2. In subpart A, Sec. 870.102 is revised, Sec. 870.103 is
redesignated as Sec. 870.104, a new Sec. 870.103 is added, and newly
redesignated Sec. 870.104 is amended by revising the introductory text
of the definition of Employing office, adding paragraph (d) to the
definition of Employing office and by adding a definition of
Reconsideration to read as follows:
Sec. 870.102 Correction of errors.
(a) The employing office may make corrections of administrative
errors as to coverage or changes in coverage at any time.
(b) OPM may order correction of an administrative error upon a
showing satisfactory to OPM that it would be against equity and good
conscience not to do so.
(b) Retroactive corrections of coverage are subject to the
provisions of Sec. 870.401(h).
Sec. 870.103 Initial decision and reconsideration.
(a) Who may file. (1) An employee may request his or her agency to
reconsider an employing office's initial decision denying insurance
coverage or the opportunity to change coverage.
(2) An annuitant may request his or her retirement system to
reconsider its initial decision affecting insurance coverage.
(3) A judge may request his or her agency, or retirement system if
applicable, to reconsider an employing office's initial decision that
denies an entitlement related to assignments under 5 U.S.C. 8706(e) of
this chapter.
(b) Initial employing office decision. An employing office's
decision is considered an initial decision as used in paragraph (a) of
this section when rendered by the employing office in writing and
stating the right to an independent level of review (reconsideration)
by the appropriate agency or retirement system. However, an initial
decision rendered at the highest level of review available within OPM
is not subject to reconsideration.
(c) Reconsideration. (1) A request for reconsideration must be made
in writing, must include the claimant's name, address, date of birth,
Social Security number, reason(s) for the request, and, if applicable,
retirement claim number.
(2) The reconsideration review must be an independent level of
review made at or above the level at which the initial decision was
rendered.
(d) Time limit. A request for reconsideration of an initial
decision must be filed within 30 calendar days from the date of the
written decision stating the right to a reconsideration. The time limit
on filing may be extended when the individual shows that he or she was
not notified of the time limit and was not otherwise aware of it, or
that he or she was prevented by circumstances beyond his or her control
from making the request within the time limit. An agency or retirement
system decision in response to a request for reconsideration of an
employing office's decision is a final decision as described in
paragraph (e) of this section.
(e) Final decision. After reconsideration, the agency or retirement
system must issue a final decision, which must be in writing and must
fully set forth the findings and conclusions.
Sec. 870.104 Definitions.
* * * * *
Employing office means the office of the agency or retirement
system to which jurisdiction and responsibility for life insurance
actions have been delegated.
* * * * *
(d) For judges of the United States Court of Veterans Appeals, the
employing office is the United States Court of Veterans Appeals.
* * * * *
Reconsideration means the final level of administrative review of
an employing office's initial decision to determine if the employing
office correctly applied the law and regulations.
* * * * *
3. In subpart B, Sec. 870.205 is removed.
PART 871--STANDARD OPTIONAL LIFE INSURANCE
1. The authority citation for part 871 continues to read as
follows:
Authority: 5 U.S.C. 8716.
2. In subpart A, Sec. 871.103 is revised to read as follows:
Sec. 871.103 Correction of errors; initial decision and
reconsideration.
The rules and procedures under Secs. 870.102 and 870.103 are
applicable in this part, subject to the provisions of Sec. 871.401(g).
Sec. 871.104 [Amended]
3. In Sec. 871.104 the reference to ``Sec. 870.103'' is removed and
``Sec. 870.104'' is added in its place.
Sec. 871.206 [Removed]
4. In subpart B, Sec. 871.206 is removed.
PART 872--ADDITIONAL OPTIONAL LIFE INSURANCE
1. The authority citation for part 872 continues to read as
follows:
Authority: 5 U.S.C. 8716.
2. In subpart A, Sec. 872.103 is revised to read as follows:
Sec. 872.103 Correction of errors; initial decision and
reconsideration.
The rules and procedures under Secs. 870.102 and 870.103 are
applicable in this part, subject to the provisions of Sec. 872.401(g).
Sec. 872.104 [Amended]
3. In Sec. 872.104 the reference to ``Sec. 870.103'' is removed and
``Sec. 870.104'' is added in its place.
Sec. 872.206 [Removed]
4. In subpart B, Sec. 872.206 is removed.
PART 873--FAMILY OPTIONAL LIFE INSURANCE
1. The authority citation for part 873 continues to read as
follows:
Authority: 5 U.S.C. 8716.
2. In subpart A, Sec. 873.103 is revised to read as follows:
Sec. 873.103 Correction of errors; initial decision and
reconsideration.
The rules and procedures under Secs. 870.102 and 870.103 are
applicable in this part, subject to the provisions of Sec. 873.401(e).
Sec. 873.104 [Amended]
3. In Sec. 873.104 the reference to ``Sec. 870.103'' is removed and
``Sec. 870.104'' is added in its place.
Sec. 873.206 [Removed]
4. In subpart B, Sec. 873.206 is removed.
PART 874--ASSIGNMENT OF LIFE INSURANCE
1. The authority citation for part 874 continues to read as
follows:
Authority: 5 U.S.C. 8716.
Sec. 874.101 [Amended]
2. In subpart A, Sec. 874.101, the reference to ``Sec. 870.103'' is
removed and ``Sec. 870.104'' is added in its place.
3. In subpart C, Sec. 874.305 is revised to read as follows:
Sec. 874.305 Correction of errors; initial decision and
reconsideration.
The rules and procedures under Secs. 870.102 and 870.103 are
applicable in this part, subject to the provisions of Sec. 874.502.
PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM
1. The authority citation for part 890 continues to read as
follows:
Authority: 5 U.S.C. 8913; Sec. 890.803 also issued under 50
U.S.C. 403p, 22 U.S.C. 4069c and 4069c-1; subpart L also issued
under sec. 599C of Pub. L. 101-513, 104 Stat. 2064, as amended.
2. Section 890.101 is amended by adding the definition
Reconsideration to read as follows:
Sec. 890.101 Definitions; time computations.
* * * * *
Reconsideration means the final level of administrative review of
an employing office's initial decision to determine if the employing
office correctly applied the law and regulations.
* * * * *
3. In Sec. 890.103, paragraphs (a) and (b) are revised and
paragraph (d) is added to read as follows:
Sec. 890.103 Correction of errors.
(a) The employing office may make prospective corrections of
administrative errors as to enrollment at any time. The employing
office may make retroactive corrections of administrative errors that
occur after December 31, 1994.
(b) OPM may order correction of an administrative error upon a
showing satisfactory to OPM that it would be against equity and good
conscience not to do so.
* * * * *
(d) Retroactive corrections are subject to withholdings and
contributions under the provisions of Sec. 890.502.
4. Section 890.104 is revised to read as follows:
Sec. 890.104 Initial decision and reconsideration on enrollment.
(a) Who may file. Except as provided under Sec. 890.1112, an
individual may request an agency or retirement system to reconsider an
initial decision of its employing office denying coverage or change of
enrollment.
(b) Initial employing office decision. An employing office's
decision is considered an initial decision as used in paragraph (a) of
this section when rendered by the employing office in writing and
stating the right to an independent level of review (reconsideration)
by the agency or retirement system. However, an initial decision
rendered at the highest level of review available within OPM is not
subject to reconsideration.
(c) Reconsideration. (1) A request for reconsideration must be made
in writing, must include the claimant's name, address, date of birth,
Social Security number, name of carrier, reason(s) for the request,
and, if applicable, retirement claim number.
(2) The reconsideration review must be an independent review
designated at or above the level at which the initial decision was
rendered.
(d) Time limit. A request for reconsideration of an initial
decision must be filed within 30 calendar days from the date of the
written decision stating the right to a reconsideration. The time limit
on filing may be extended when the individual shows that he or she was
not notified of the time limit and was not otherwise aware of it, or
that he or she was prevented by circumstances beyond his or her control
from making the request within the time limit. An agency or retirement
system decision in response to a request for reconsideration of an
employing office's decision is a final decision as described in
paragraph (e) of this section.
(e) Final decision. After reconsideration, the agency or retirement
system must issue a final decision, which must be in writing and must
fully set forth the findings and conclusions.
[FR Doc. 94-31643 Filed 12-23-94; 8:45 am]
BILLING CODE 6325-01-M