[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