E. 1986 Refund to 1985 Enrollees
OPM's decision, while valid, to offer the BCBSA refund to current rather than past enrollees raises the question of whether the agency acted arbitrarily or capriciously in nonetheless allowing payment to May 1, 1985 enrollees in the calendar year 1986. OPM justifies this practice for six reasons: (1) the decision was made and announced in 1985, (2) the 1986 rates had been set with the assumption that the proposed refund would deplete BCBSA's reserves of the refund amount, (3) an "open season" had intervened between announcement and implementation, (4) the annuitant legislation, an important part of the entire refund package, was not enacted until 1986 and Congress with full knowledge still approved the 1985 eligibility date, (5) no one ever contemplated execution of the refund proposal in 1985, and (6) other refunding plans had not worked out their own mechanics by the end of 1985.
The chief weakness in continuing to use the May 1, 1985 eligibility date, as plaintiffs stress, is that by the time the refund proceeds in 1986, its recipients are no longer "current" enrollees. As in 1985, many plaintiffs had left BCBSA or even the Government. By 1986, the same observation could be true of the 1985 enrollees eligible under the terms of the refund. Thus, OPM's insistence on a refund to "current" enrollees is logically inconsistent with its insistence that refund checks, mailed in 1986, go to those enrolled in 1985.
We see no way to avoid this inconsistency.
As the exchange of contract proposals demonstrates, refunding $ 784 million is a lengthy process. Particularly here where OPM needed first to secure a statutory amendment, it is hardly surprising that enrollment had shifted during the planning stages. If OPM had defined "current" enrollees as those enrolled at the time of refund rather than at the time of announcement, OPM would have distorted the intervening "open season" by allowing new enrollees to opt into the refund.
It could also be argued that it is not in fact incongruous to view 1985 enrollees as still "current" in 1986. The operative date for distinguishing past and present could reasonably be the date of announcement rather than the date of refund. OPM's reference to 1986 rates in the Decisional Memorandum also supports its decision. By setting aside the $ 784 refund in considering 1986 rates, defendants treated this money as if it had already been refunded. Isolated from 1986 management of the plan, this refund in principle represents a reduction in 1985 contributions.
Furthermore, it should be remembered that Congress tacitly approved not just a reduction in "current" contributions but specifically a reduction in 1985 contributions. In his floor remarks on February 2, 1986, Senator Stevens noted that OPM had authorized rebates "as a method for reducing the 1985 contributions of subscribers." 132 Cong. Rec. S1725. In urging passage of the annuitant legislation -- allowing refunds to proceed in 1986 -- he recognized that under the bill, rebates to annuitants would be authorized "even if made to annuitants enrolled in a plan as of a specific date in 1985 . . . ." Id. at S1726; see also H. Rep. No. 262 at 3. Congress thus was aware of OPM's plan to maintain a May 1, 1985 eligibility date despite refund payments in 1986. Congress' failure to register any disagreement with OPM's plan of distribution serves as implicit assent. See United States v. Rutherford, 442 U.S. at 554 n.10.
OPM's decision to view 1985 enrollees as still current enrollees in 1986 is therefore sustainable on the basis of the reasons OPM has advanced. The 1985 announcement, the negotiation of the 1986 rates without consideration of $ 784 million in the contingency reserve, the intervening open season, and Congress' approval all support OPM's decision.
The fact that OPM's reasons for denying the refund to 1986, or to the actual "current" enrollees, do not justify excluding 1983 and 1984 subscribers is irrelevant. Once OPM decided to benefit current enrollees, the issue was how to identify current enrollees, not whether past enrollees should also qualify. Accordingly, we find that the record supports OPM's decision to use a May 1, 1985 eligibility date and that this decision was neither arbitrary, capricious nor not in accordance with law.
Plaintiffs only authority to compel their inclusion in the refund is equity. Plaintiffs claim that BCBSA overcharged them, and that they should enjoy the fruit of their "excessive" premium payments, the refund. Simply stated, plaintiffs' equitable argument is that the refund is their money.
Plaintiffs' invocation of equity does not impress us. As we have emphasized, this case does not concern the proper level of premiums in 1983 and 1984. Whether BCBSA's huge Contingency Reserve -- the basis for the refund -- was fed by "excessive" premiums does not matter here. Plaintiffs voluntarily paid the premiums. Moreover, plaintiffs received the benefits for which they had contracted. Plaintiffs do not suggest that defendants somehow defrauded them in setting the premium charges. Yet having received the benefit of their bargain, plaintiffs now complain that equity demands restricting BCBSA's freedom to disperse the money received for providing the health insurance benefits it promised. Equity does not prescribe such a one-sided approach.
Furthermore, plaintiffs' restitutionary claims are not purely equitable. As defendants note, some plaintiffs may have submitted medical claims far in excess of their premium payments. These plaintiffs did not contribute to the surplus yet, if we adopted plaintiffs' distribution formula, would share in the "restitutionary" refund. Similarly, ten other carriers are presently implementing refunds, many if not all on the basis of a 1985 eligibility date. See, e.g., R. 677, 688, 694, 699. If a plaintiff in the "Employee Class" switched to one of the new plans, he or she would receive a refund based on enrollment in 1985. An order requiring the BCBSA refund to include 1983 and 1984 enrollees would result in a double benefit for those plaintiffs -- hardly an equitable result.
Plaintiffs' claim of equity has a hollow ring and is self-defeating.
Plaintiffs premise their cause of action on a single, simple theory: equity. Yet plaintiffs have failed to prove that principles of equity of necessity mandate that they be included in the BCBSA refund. This attempt, while vigorously presented, falls short. In contrast, OPM's decision to permit the refund to benefit only the Government and persons enrolled as of May 1, 1985 is supported by the record and is not arbitrary, capricious or an abuse of discretion. We will not interfere with that decision.
Accordingly, we deny plaintiffs' motion and grant summary judgment for defendants.
An order consistent with the foregoing has been entered this day.