Office of Merit Systems Oversight and Effectiveness

Date: February 20, 2001
Matter of: [claimant]
File Number: 002978
OPM Contact: Jo-Ann Chabot

A federal agency requested that the Office of Personnel Management (OPM) determine the appropriate payee to receive the unpaid compensation of a deceased agency employee. The agency wants to know whether the deceased employees unpaid compensation may be distributed according to a designation of beneficiary signed by the employees cousin, pursuant to his appointment as the decedents attorney-in-fact. For the reasons stated below, we conclude that the designation of beneficiary in this case is not valid and that the decedents surviving spouse should receive his unpaid compensation.

The agency reported that it received two claims for the decedents unpaid compensation. The decedents widow filed a claim on behalf of herself and her children. She also submitted a certified copy of Letters of Administration, dated July 2, 1998, and showing her appointment as the General Personal Representative of the decedents estate. The decedents cousin, acting as the Trustee of a trust established in the decedents name (the Trust), filed a claim on behalf of the Trust. He submitted a certified copy of Letters Testamentary, dated November 4, 1998, and showing his appointment as successor Personal Representative of the decedents estate.

The agency reports that the following events occurred on June 23, 1998:

1. The decedent personally completed and signed two designations of beneficiary, naming his cousin on each designation as his beneficiary for payment of the proceeds from two special employee funds.1
2. The decedent also signed a durable power of attorney appointing his cousin as his attorney-in-fact.
3. The decedents cousin, pursuant to his appointment as the decedents attorney-in-fact, executed a designation of beneficiary form (Standard Form [SF] 1152) for payment of the decedents unpaid compensation and identified the Trust as beneficiary. An employee of the decedents employing agency and another individual signed the SF 1152 as witnesses.
4. The agency employee who had witnessed the execution of the SF 1152 took the signed form to an agency field office and sent it by facsimile machine to agency headquarters, where it was received the same day.

The agency reports that the decedent passed away on June 24, 1998. It also notes that the original SF 1152 was identical to the facsimile and was received at agency headquarters on June 30, 1998. The decedents widow indicated on her claim that the decedent had named her as the beneficiary for payment of his unpaid compensation. However, the agency reports that the SF 1152 of June 23, 1998, which identifies the Trust as the beneficiary, is the only designation in its files.2 The agency reports that, according to its records, the decedent had not previously designated a beneficiary for his unpaid compensation. Although the agency invited each claimant to submit to OPM their views concerning these matters, OPM has not received any correspondence from either claimant.

Disposition of unpaid compensation payable under federal law is governed exclusively by federal statute and regulation, and not by the laws and courts of the state of domicile or other jurisdiction. Raymond H. Hanrahan (Deceased), B-262112 (March 6, 1996); Cornell D. Cooper (Deceased) and Dorothy P. Fouts (Deceased), B-254921 (March 11, 1994); Richard A. Davenport (Deceased); David H. Lambert (Deceased), B-244826 (December 12, 1991); Chester F. Dean (Deceased), B-227728 (March 23, 1988). Section 5582 of title 5, United States Code, and OPM regulations thereunder, at 5 CFR Part 178, govern settlement of the accounts of deceased employees of the federal government. They specify requirements for designating beneficiaries and a statutory order of precedence for disposition of a deceased employees unpaid compensation. Section 5582 provides in part:

1. The employing agency shall notify each employee of his right to designate a beneficiary or beneficiaries to receive money due, and of the disposition of money due if a beneficiary is not designated. An employee may change or revoke a designation at any time under regulations promulgated . . . by the Director of the Office of Personnel Management or his designee . . ..
2. In order to facilitate the settlement of the accounts of deceased employees, money due an employee at the time of his death shall be paid to the person or persons surviving at the date of death, in the following order of precedence, and the payment bars recovery by another person of amounts so paid:

First, to the beneficiary or beneficiaries designated by the employee in a writing received in the employing agency before his death.

Section 5582 thereafter identifies the following individuals in order of precedence: the employees widow or widower, child or children and descendants of deceased children by representation, parents or the survivor of them, the duly appointed legal representative of the employees estate, and finally, the person or persons entitled under the laws of the employees domicile at the time of his death.

OPM regulations, at 5 CFR 178.203(a) and 178.204, track 5 U.S.C. 5582. Moreover, 5 CFR 178.203(d) states the requirements for executing and filing a designation of beneficiary form, specifying that:

The Standard Form 1152 must be executed in duplicate by the employee and filed with the employing agency where the proper officer will sign it and insert the date of receipt in the space provided on each part, file the original, and return the duplicate to the employee.

Interpretation of a statute begins with "the language of the statute itself" and, "[a]bsent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive." Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 835, 110 S. Ct. 1570, 1575 (1990), citing Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S. Ct. 2051, 2056 (1980). It is clear from the language in 5 U.S.C. 5582(b) that Congress intended to establish a simple and straightforward method for distributing a deceased employees unpaid compensation. According to the statute, and corresponding regulations (5 CFR 178.203(a) and 178.204), employees must designate their beneficiaries in a writing received in the employing agency before the employees death. Thus, the statute authorizes employees to designate beneficiaries for their unpaid compensation, does not provide for an individual other than the employee to designate his or her beneficiaries, and provides for distribution according to a specified order of precedence in the absence of such a designation. Moreover, 5 CFR 178.203(d) specifies that employees must execute, or sign, the designation form (SF 1152).

The pertinent legislative history shows that Congress enacted the provision that became 5 U.S.C. 5582 to "simplify and improve the method of settling and adjusting the accounts of deceased civilian employees." S. Rep. No. 1933 (1950), reprinted in 1950 U.S.C.C.S. 2866. Congress noted that S. 3652, the bill that became 5 U.S.C. 5582,

authorizes civilian officers and employees to designate a beneficiary or beneficiaries to receive all amounts due from the Government on account of their employment at the time of death, except amounts payable under their retirement act or amounts the disposition of which is otherwise expressly prescribed by Federal law. In the event no beneficiary is designated, the bill authorizes payment of amounts due to be made to the officers or employees surviving spouse; . . . Id., at 2867.

The legislative history does not show that Congress authorized, or intended to authorize, any individual other than the employee to designate a beneficiary for his or her unpaid compensation.

In settling claims for deceased employees unpaid compensation, the General Accounting Office (GAO) construed the statute and accompanying regulations narrowly. In Cornell D. Cooper (Deceased) and Dorothy P. Fouts (Deceased), B-254921 (March 11, 1994), an employee personally filled out the SF 1152, designated his grandmother as the beneficiary to receive his unpaid compensation, and secured two witnesses who signed the SF 1152. However, the employee did not sign or date the form. Id. Noting that its regulation required the employee to execute, i.e., sign, the SF 1152, the GAO concluded that the designation was not legally valid and the unpaid compensation should be given to the person or persons in the next highest order of precedence under the statute.3 Id. In another decision, the GAO concluded that the statute required unpaid compensation to be distributed according to the previously executed SF 1152 in the employing agencys files, when the employees newly executed SF 1152, changing the beneficiary, was not received in agency before employees death. Katharina Walters, B-157353 (August 12, 1965). The GAO noted in reaching this conclusion that it did not have the authority to waive any of the statutory provisions governing the disposition of a deceased employees unpaid compensation. Id.

The statute and regulations require that the employee designate the beneficiary or beneficiaries for his or her unpaid compensation, and do not permit other individuals to perform this function. Therefore, the designation of beneficiary that the decedents cousin executed as the decedents attorney-in-fact is not valid. The decedents unpaid compensation should be paid to the next person in the statutory order of precedence the decedents surviving spouse.4

1 These designations, and payment of the proceeds from these funds, are not under review here.
2 The agency reports that the decedent was estranged from his wife.
3 The GAO regulation, which is identical to the corresponding OPM regulation, provides that "[t]he SF 1152 must be executed by the employee and filed with the employing agency. . .. 4 CFR 35.5(c) (1994).
4 Her estrangement from the decedent at the time of his death does not preclude payment of his unpaid compensation to her. Mary M. Leach, B-178403 (June 5, 1973); Clara D. Rucker, B-126036 (December 27, 1955).