Verbeck v. United States
2014 U.S. Claims LEXIS 951
Fed. Cl.2014Background
- Mary Verbeck, a former PHS Commissioned Corps Lieutenant Commander (nurse practitioner), was terminated on June 1, 2002; she sued the United States challenging the termination and seeking back pay under the Military Pay Act, 37 U.S.C. § 204.
- After multiple administrative proceedings and three remands from this Court, the Court held in 2013 that the termination was improper and remanded to the Secretary for calculation of back pay and allowances.
- On the fourth remand the PHS Correction Board calculated amounts due through Dec. 31, 2013 and offset those amounts by Verbeck’s civilian earnings; Verbeck accepted some items but challenged several specific calculations.
- Disputed items included specialty pay rate and entry date, recoverable medical/dental insurance costs, California state income taxes, accrued annual leave, lost morale/welfare/recreation and education benefits, and the scope of mitigation offsets (including whether to allow moonlighting, relocation costs, and condominium sale loss).
- The Court reviewed the Board’s remand decision under the substantial-evidence/arbitrary-and-capricious standard and resolved the contested items, ordering reinstatement and a net monetary award of $128,773.64 through Dec. 31, 2013, plus continued pay/allowances until actual reinstatement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Specialty pay rate and entry date | Verbeck: higher specialty pay ($66,913.27) and earlier entry credit (including Navy service) | Gov: proper rate is Non‑Physician Board Certification Pay under 37 U.S.C. §302c(d); entry date is PHS start Nov. 1999 | Court: Board used correct statutory pay rate; insufficient evidence to credit earlier entry; specialty pay $26,493.76 granted |
| Medical & dental insurance costs | Verbeck: recover full value of coverage lost (annualized valuation) totaling large sums | Gov: only actual, documented medical expenses paid are recoverable; Verbeck provided limited documentation | Court: follows precedent that actual expenses paid are compensable; accepted Verbeck’s documented and sworn amounts totaling $25,765.50 (medical) and $13,261.02 (dental) |
| State income tax (California) | Verbeck: entitled to recover California income taxes paid after mitigation employment | Gov: PHS not liable for state taxes attributable to Verbeck’s choice to live/work in CA; she may seek refund from state after reinstatement | Court: PHS not responsible for CA income taxes; no reimbursement ordered; Verbeck must seek state refund if eligible |
| Annual leave accrual | Verbeck: recover leave from 2002–2013 (large sum) | Gov: statutory cap on accumulation (60 days) applies; only unpaid leave at separation recoverable | Court: no estoppel from procedural error; statutory 60‑day cap applies; award limited to 4 days unpaid leave ($808.10) |
| Lost morale/welfare/recreation benefits | Verbeck: these are pecuniary “other benefits” and valued expert‑estimate should be awarded | Gov: such benefits are non‑pecuniary/speculative and not recoverable | Court: too speculative; denied recovery for these benefits |
| Education benefits | Verbeck: entitled to monetary award for lost education benefits | Gov: no evidence she used or would have used such benefits | Court: Board decision upheld; no award for education benefits |
| Mitigation offsets and deductible mitigation expenses | Verbeck: offset should be limited (e.g., only 25%) because she could have moonlighted; also deduct relocation, condo loss, parking, etc. | Gov: civilian earnings properly offset as mitigation; moonlighting exception not applicable; only relocation allowance amount would be deductible | Court: civilian earnings are proper full offset (mitigation substitute); moonlighting unsupported; allowed deduction only for relocation/dislocation allowance ($2,118.10); condo loss and parking not deductible |
Key Cases Cited
- Gearinger v. United States, 412 F.2d 862 (Ct. Cl. 1969) (medical expenses actually paid are compensable)
- Dilley v. Alexander, 627 F.2d 407 (D.C. Cir. 1980) (reimbursement of pay and allowances available to the extent calculable with reasonable certainty)
- Naekel v. Department of Transp., FAA, 850 F.2d 682 (Fed. Cir. 1988) (documented relocation/job search expenses may reduce mitigation offset)
- Melendez Camilo v. United States, 642 F.3d 1040 (Fed. Cir. 2011) (court will not disturb agency action that considered relevant evidence and reached a reasonable conclusion)
- Heisig v. United States, 719 F.2d 1153 (Fed. Cir. 1983) (standard that court will not reweigh evidence; substantial‑evidence review)
- Chambers v. United States, 417 F.3d 1218 (Fed. Cir. 2005) (burden on plaintiff to show agency action arbitrary, capricious, contrary to law, or unsupported by substantial evidence)