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't 1 2 3 5 7 32 6 I RENE C. PARODI, vs. ) ) ) O P I N I O N MERIT SYSTEMS PROTECTION BOARD ) and ) OFFICE OF PERSONNEL MANAGEMENT, ) ) Respondents. ) _ ) . Appeal from the Merit Systems Protection Board Argued: February 10, 1982 Submitted: April 13, 1982 Before: CHOY, PREGERSON, and POOLE, Circuit Judges. PREGERSON, Circuit Judge: Appellant Irene C. Parodi, a federal employee, was transferred to an office in which many other employees smoked. She began experiencing pulmonary difficulties. On her doctor's advice, she took a leave of absence from work. She then applied for employment disability benefits, claiming her reaction to cigarette smoke rendered her disabled. Doctors who examined her on behalf of the government found that she had not suffered physical damage. They did conclude,'however, that her hypersensitivity to cigarette smoke prevented her from working in a smoke-filled environment. Appellee Office of Personnel Management (OPM) ruled that her medical condition did not render Parodi disabled within the meaning of the governing statute and denied disability benefits. Appellee Merit Systems Protection Board (MSPB) affirmed the denial. Parodi appeals, claiming that appellees, in denying her disability benefits, misconstrued the statutory meaning of "disability." Appellees answer that this court has no BteN7co /0 "< ?--- F ~ L E D Date Rsce,red /C -.2~- Qru'T 2 119JC UNITED STATES COURT OF APPEALS PN+LLIP B. WINSERR~ FOR THE NINTH CIRCUIT CLE£•f,, J.S. CGU~? 0, A.?FE.'~L MSPB No. SF 831 L09012 Petitioner, ) No. 80-7671

t 1 jurisdiction to review this case, or, if this court has jurisdiction, that Parodi was not disabled under the applicable statute. We conclude that this court has appellate jurisdiction 5 to review appellees' decision and that Parodi was disabled. 6 Accordingly, we reverse and remand for further proceedings. 7 8 BACKGROUND 9 Parodi worked -€or the Defense Logistics Agency for 10 nearly twelve years. In July 1977, the agency transferred 11 her to a new workplace, located in an room occupied by sixty 12 to seventy people, many of whom smoked. 13 Immediately after the transfer, Parodi began missing 14 work due to pulmonary complications which included continual 15 phlegm production, chest pains, congestion, and difficulty 16 breathing and speaking. A pulmonary specialist, Dr. Donald 17 Ho, diagnosed her as suffering from "asthmatic bronchitis 18 with hyper-irritable airways," and concluded her condition :19 stemmed from her reaction to cigarette smoke. Dr. Ho 20 recommended she take leave from work. She did so and her 21 symptoms subsided. Dr. Ho then recommended she not return to 22 work in a smoke-filled environment. Parodi continued her 23 absence from work and, shortly thereafter, on June 26, 1979, 24 she filed for disability retirement benefits. 25 Two doctors examined Parodi on behalf of the OPM. Dr. 26 Charles Bass did not perform any objective tests but reported 27 that Parodi did not suffer any short or long term adverse • t28 physical effects. Dr. Bass acknowledged that his opinion 29 could change if he saw Parodi's chest x-rays and that 30 Parodi's problem could require "personnel and environmental 31 control." Dr. Robert Fallat, in examining Parodi, exposed 32 her to cigarette smoke and within four minutes she suffered O ~~ ~ C..' -2-

4 1 2 6 6 7 20 21 22 23 24 25 26 27 ~ 28 29' 30 31 32 II acute pulmonary problems including airway irritation, an increase in airway resistance, and a reduction in peak-flow rates. Dr. Fallat concluded that Parodi was hypersensitive to cigarette smoke, and recommended she "not rPturn to employment in the same office where she previously experienced significant symptomatology." Dr. Fallat also stated that requiring Parodi to work in her previous job would endanger her health. " The OPM reviewed the medical evidence and, on September 27, 1979, concluded that Parodi was not totally disabled "within the meaning and intent of the Civil Service Retirement Regulations." Parodi appealed to the MSPB. In its decision, the MSPB acknowledged the doctors' recommendation that Parodi not return to work in a smoke-filled environment and that her superior officer believed that she could not do her job due to pulmonary problems. The MSPB also recognized that Parodi "might reasonably be concerned with the probable risk to her future health from working in an environment where exposure to cigarette smoke presents a hazard to all employees, and particularly to herself because of her peculiar physical sensitivity." Despite these findings, the MSPB concluded that Parodi was not totally disabled and affirmed the OPM decision. \ JURISDICTION Parodi requests that this court review the MSPB's denial of her disability retirement claim. Our review of this denial is governed by several statutes. At the time Parodi filed her claim, the employee retirement statute provided that "[a]n administrative action or order affecting the rights or interests of an individual or of the United -3- -

4r 1 2 6 7 8 States under this subchapter [5 U.S.C. §§ 8331 et seq.] may be aooealed to the Merit Systems Protection Board." 5 U.S.C. -~„• - § 8347(d). Another statute provided that persons could appeal decisions of the t4SPB to the United States Court of Claims or the United States Court of Appeals. 5 U.S.C. §§ 7703(a)(1) and (b)(1). Under section 7703, courts must set aside agency actions found to be "(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by law, rule or regulation having been followed; or (3) unsupported by substantial evidence." 5 U.S.C. 7703(c). The retirement statute, 5 U.S.C. §§ 8331-48, also provided, however, that "[t]he Office [of Personnel Management] shall determine questions of disability and dependency arising under this subchapter. The decisions of the Office concerning these matters are final and conclusive and not subject to review." 5 U.S.C. § 8347(c).l The question before us is whether this court may review the MSPB's denial of Parodi's claim, and if so, what standard of review should be applied. Parodi argues that this court should review the MSPB decision pursuant to the standard of review set forth in section 7703(c). Appellees contend that section 8347(c), in mandating that OPM decisions concerning disability and dependency "are final and conclusive and not subject to review," bars any judicial review of Parodi's claim. With one exception, discussed below, courts have rejected both these positions. Courts have recognized that the "conventional 'substantial evidence'" standard of review--which Parodi seeks to apply--does not apply to disabilitX determinations because section 8347(c) places a "special and unusual restriction on judicial examination," -4- ~ ~ ~ ~-•-~

. 1 C Scroggins v. United States, 397 F.2d 295, 297, 298 (Ct. C1.), cert. denied, 393 U.S. 952 (1968).2 3 Courts, have also rejected the contention that section 4 8347(c) bars all judicial review of OPM disability 5 determinations. That section specifically limits its effect 6 to questions of "disability and dependency." Thus, courts 7 have interpreted section 8347(c) as barring judicial review 8 only of the evidentiary basis of determinations concerning 9 disability and dependency. See Scroggins, 397 F.2d at 298, 10 299. Courts, however, have allowed judicial review in 11, disability cases "where there has been a substantial 12 departure from important procedural rights, a misconstruction 13 of the governing legislation, or some like error 'going to 14 the heart of the administrative determination.'" Scroggins, 15 397 F.2d at 297, quoting Gaines v. United States, 158 Ct.Cl. 16 497, 502, cert. denied, 371 U.S. 936 (1962). See also Polos 17 v. United States, 621 F.2d 385, 391 n.9 (Ct.Cl. 1980); 18 Fancher v. United States, 588 F.2d 803, 806 (Ct.C1. 1978); 19 Allen v. United States, 571 F.2d 14, 17 (Ct.Cl. 1978); 20 McFarland v. United States, 517 F.2d 938, 942-43 (Ct.Cl. 21 1975), cert. denied, 423 U.S. 1049 (1976); McGlasson v. 22 United States, 397 F:2d 303, 307 (Ct.C1. 1968); Smith-v: 23 Dulles, 236 F.2d 739, 742 (D.C.Cir.); cert. denied, 352 U.S. 24 955 (1956); Matricciana v. Hampton, 416 F. Supp. 288, 289 25 (D.Md. 1976); Cantrell v. United States, 240 F. Supp. 851, 26 853 (W.D.S.C. 1965), aff'd, 356 F.2d 915 (4th Cir. 1966).3 27 Thus, under this so-called Scroggins rule, courts treat 428 section 8347(c) as limiting, rather than barring, judicial 29 review otherwise provided by section 7703(c). While the 30 Scroggins standard of judicial review and the standard of 31 review provided by section 7703(c) are similar--both allow 32 courts to overturn decisions based upon improper procedures . Q ® CJ ~ -5- C.J GC ,n .:• **.I «7

2 3 5 6 disability determination. This.construction of section 8347(c), which limits rather than bars judicial review, is consistent with the presumption favoring judicial review of agency actions. "Only upon a showing of 'clear and convincing evidence' of a contrary legislative intent should the courts•restrict access to judicial review." Abbott Laboratories v. Gardner, 387 U.S. 136, 141 (1967), cited in Dunlop v. Bachowski, 421 U.S. 560, 567 (1975). The language of section 8347(c) does not provide clear and convincing evidence of a congressional intent to bar all judicial review of disability determinations. The statute.orily evinces a congressional intent to bar judicial review of factual questions concerning disability and dependency.4 The Eighth Circuit recently became the first court to reject the Court of Claims' Scroggins rule by holding that courts lack jurisdiction to review voluntary--i.e., I 32 or misconstruction of the law--the Scroggins standard of review is narrower. Courts reviewing agency decisions under section not supported by substantial evidence whereas, courts reviewing decisions controlled by section 8347(c), as construed by Scroggins, may not reexamine the evidentiary basis for an agency's employee-initiated--disability retirement decisions. Morgan v. Office of Personnel Management, 675 F.2d 196 (8th Cir. 1982). The Morgan court asserted that the 1980 amendment to the disability statute, Pub. L. No. 96-500, 94 Stat. 2696 (December 1980), indicates that Congress recognized that section 8347(c) mandates a total bar on judicial review of voluntary disability decisions. The 19B0 amendment, however, made involuntary--i.e., agency-initiated--disability retirement determinations based on an employee's mental -6- +.w~+~-r'«.~ V.•~Y^r^^r!~-~Tr~ ~-~..~-.~- ..---.-~-~.-~--~ ~

c c 1 2 3 4 5 6 7 8 9 10 11 12 13 14. 15 16 17 18 19 20 21 22 23 24 25 26 27 428 29 30 31 32 condition subject to judicial review pursuant to the provisions of 5 U.S.C. § 7703, rather than the narrower - provisions of section 8347 ('c`)"'-- According to Morgan: this amendment expressly providing for judicial review under § 7703 would have been redundant if § 8347(c) had already provided for judicial review under § 7703. The 1980 amendments are specific. Had Congress intended to provide for judicial review of all disability determinations and not just - agency-initiated involuntary disability retirement determinations based in whole or in part upon mental-condition, Congress could have so provided. Morgan, 675 F.2d at 200 (emphasis original). We disagree with the Morgan analysis. The argument that the 1980 amendment would have been redundant if section 8347(c) had provided for judicial review under section 7703 is irrelevant for the simple reason that section 8347(c), as construed by Scroggins, does not provide for review under section 7703. Rather, as noted above, Scroggins teaches that section 8347(c) limits the review provided by section 7703(c). The 1980 amendment gave courts power to review the facts underlying an MSPB decision involving an involuntary disability determination based on mental condition--a power courts do not possess, under Scroggins, when reviewing a MSPB decision involving a voluntary disability application. Thus, there is no conflict or redundancy between Scroggins' interpretation of section 8347(c) and the 1980 amendment. The amendment, rather than duplicating Scroggins, expands judicial review beyond that provided for by Scroggins for involuntary disability retirement determinations based on mental condition. The Morgan court also misread the legislative reports accompanying the 1980 amendment. Morgan contends that the reports refer to a bar on all judicial review. The House -7- " '1^ r

0 1 2 3 8 26 27 428 29 30 31 32 Report, however, in discussing the problem Congress intended the amendment to remedy, pointed to three cases that did not allow "judicial ie`view„"tb show that the amendment was necessary. H. Rep. No. 1080, 96th Cong., 2d Sess. 4 (1980). All three cases--Scroggins v. United States, 397 F.2d 295 (Ct.Cl.), cert. denied, 393 U.S. 952 (1968), McGlasson v. United States, 397 F.2d 303 (Ct.Cl. 1968), and McFarland v. United States, 517 F.2d 938 (Ct.Cl. 1975)--held that under- section 8347(c), courts could not review the factual findings that underlie an agency's disability and dependency determinations, but that limited judicial review, i.e., review under the Scroggins rule, is appropriate. Thus, the bar on judicial review referred to by the reports precludes only judicial review of factual findings. The legislative history of the 1980 amendment also indicates that Congress amended the statute based, in part, on the OPM's representation that section 8347(c) already allowed limited judicial review of all disability proceedings. As Morgan notes, Congress passed the 1980 amendment to prevent involuntary disability retirement proceedings from being misused to force employees out of active service for reasons of mental competency. .Morgan, 675 F.2d at 200. See also S. Rep. No. 1004, 96th Cong., 2d Sess. 2, reprinted in 1980 Code Cong. & Ad. News 5986, 5987. At the time the initial House version of the amendment.was passed, the OPM objected that the proposed standard of judicial review--de novo review of the evidence--was too broad. See letter of Alan K. Campbell, Director, OPM, May 14, 1980, H.R. 96-1080, at 8. The OPM, however, did not argue that judicial review was not otherwise available. In fact, the OPM took a position opposed to that which it now takes before this court by admitting that judicial review exists for all disability -8-

C 0 1 2 3 4 5 6 retirement decisions and that the Scroggins rule was appropriate for revie,.,ri.ng ••-)lo^tary disability - - - ------- determinations. The Director of the OPM wrote Congress: We believe it is reasonable and proper to restrict expanded judicial review to involuntary disability retirements. An employee who voluntarily applies for disability retirement seeks to establish title to a benefit granted by law; the Office of Personnel Management is the administrative agency charged under the law with the managerial function of adjudicating disability retirement claims. It is appropriate, therefore, that OPM decisions on voluntary applications be conclusive, reviewa e on y to determine w et er t ere has been a substantial procedural error, a misconstruction o governing egis ation, or some like error going to the heart of t e administrative determination. H.R. 96-1080 at 8 (emphasis added).5 Thus, we disagree with the Eighth Circuit's conclusion that the 1980 amendment indicates that section 8347(c) forecloses all judicial review.6 Rather, the history and language of the 1980 amendment indicate Congress merely wished to expand: judicial review for involuntary disability retirement determinations based on an employee's mental condition, not that Congress believed the law barred all judicial review of disability determinations. Therefore, we decline to follow the Morgan decision and agree with the prior section 8347(c) does not adopt the voluntary Scroggins rule consistent judicial opinions that bar all judicial review.7 We and hold that judicial review of disability determinations is available where there has been a substantial departure from important procedural rights, a misconstruction of the governing legislation, or some like error going to the heart of the administrative determination. Here, Parodi claims the agency misconstrued the governing legislation by not finding her "totally disabled" ;i -9-

C -r 1 despite her inability to perform her work in her assigned 2 worksite. This case, therefore, falls squarely within the 3 Scroggins doctrine and is subject-to'ji7dib*-a-1-review. 4 5 DISABILITY 6 The parties do not dispute the essential facts of this 7 case: Parodi worked in an environment containing cigarette 8 smoke; due to her hypersensitivity to cigarette smoke, she 9 could not work at her assigned worksite; further employment 10 at her worksite would subject her to risk of permanent lung 11 impairment; but she could work in an environment containing 12 less cigarette smoke. Given these facts, the issue here is 13 whether the OPM and MSPB erred in finding that Parodi was 14 not "totally disabled." 15 Under the governing legislation a person is totally 16 disabled if unable to perform "useful and efficient service 17 in the grade or class of position last occupied by the 18 employee or Member because of disease or injury not due to 19 vicious habits, intemperance, or willful misconduct on his 20 part within five years before becoming so disabled." 5 21 U.S.C. § 8331(6).8 Under this statute, the party seeking 22 to prove disability meets its initital burden of proof by 23 showing that the employee is unable, due to disease or 24 injury, to perform useful and efficient service in the 25 specific position occupied at the time proceedings for' 26 voluntary or involuntary retirement are instituted by either 27 the employee ot the government. See Cerrano v. Fleishman, 128 339 F.2d 929, 931 (2nd Cir. 1964), cert. denied, 382 U.S. 29 855 (1965). 30 dispute that Parodi, because of her Appellees do not 31 disease,9 is unable to perform the specific position she 32 last occupied. Rather, appellees contend that Parodi is not ~ ~ W -10- N