Improper completion of forms squanders benefits

Federal employees who have found it difficult to complete forms used by the Office of Personnel Management may be interested in a recent case decided by the U.S. Court of Appeals. The court was asked to decide whether the OPM form that allows federal workers to elect or decline life insurance coverage complied with the requirements of the Federal Employees' Group Life Insurance Act (FEGLIA).

Ruth Mae Grooms, a U.S. Postal Service employee from 1983 to 1993, had increased her life insurance coverage to an amount equal to four times her salary. In March 1993, Grooms was suffering from cervical cancer, so she successfully applied for workers' compensation benefits and retired on a disability from her USPS job. When she filed for her disability retirement, she filled out Standard Form 2817 for continuation of life insurance coverage.

But when she filled out the SF 2817, Grooms signed up for "basic coverage" for only the amount of her salary. She left blank the places in the form that would have provided the additional coverage she had enjoyed when she was working.

The wording on the form seems unambiguous. The third section says employees who want basic coverage should sign and date the form in the space provided. That was the section that Grooms signed.

After the signature line, the form instructs those who have signed for basic coverage that they are also entitled to additional optional coverage. There are three boxes below for standard optional insurance, for additional optional insurance and for family optional insurance, respectively. The form says employees who want additional coverage must sign in the appropriate boxes. Grooms did not sign on any of these lines.

Following Grooms' death in April 1995, OPM's contracting insurance company, Metropolitan Life Insurance Co., paid $33,000 to her beneficiaries—the amount to which they were entitled under basic coverage.

But the beneficiaries said they also were entitled to $146,000 because Grooms intended to continue her previous optional coverage. When OPM rejected their claim, the beneficiaries sued.

Grooms' beneficiaries produced evidence suggesting that she did not intend to cancel her optional coverage upon retirement. They pointed out that in 1992, Grooms had active cervical cancer, and she did not expect to recover. Consequently, it would not make sense for her to decrease her life insurance.

The most important piece of evidence the beneficiaries offered was the fact that USPS continued to deduct premiums for the optional coverage from Grooms' benefits checks until her death.

A district court dismissed the beneficiaries' claim, ruling that the SF 2817 was "clear and unambiguous" and not contrary to FEGLIA's requirements.

When the Court of Appeals got this case, it had to decide whether the SF 2817 met the requirements of FEGLIA, which says insured employees must affirmatively indicate their intention to cancel optional life insurance coverage.

The court said the SF 2817 satisfied the minimal requirements of FEGLIA (U.S. Court of Appeals for the Fourth Circuit, CA-96-268-3, Grooms v. Office of Personnel Management, Metropolitan Life Insurance Co., Sept. 8, 1998). It ruled that employees must sign the form on only two occasions: when they commence government employment and when they wish to change coverage. So a federal worker who completes the form any time after being hired is taking an affirmative action that he wants to change coverage.

The court also noted that the form explicitly states that employees will not be covered for any options for which they did not sign and that their selections will supersede all previous selections.

I empathize with the beneficiaries but cannot fault the court. I think it is clear that Grooms thought she had more coverage. What is not clear is why she did not fill out the form properly.

--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.