Catching up on some unfinished business

I have received a fair amount of correspondence recently, and I would like to respond to those letters that appear to be of broad general interest.

One writer drew my attention to changes in the Federal Employees Health Benefits Program (which appeared in the March 1995 Federal Register that require federal employees who feel they have not gotten proper medical treatment from a health maintenance organization (HMO) to sue the Office of Personnel Management rather than the HMO. This also applies to indemnity benefit plans.

Under this regulation, if you're unhappy with the way an HMO or indemnity benefit plan has handled your claim and you appeal to OPM, and it finds against you, you can't then turn around and sue the organization or plan. You have to sue OPM.

I'm not sure why this change was made, though it could have been a cost-saving effort on OPM's part. In other words, if neither HMOs nor indemnity plans can be sued by feds, that will reduce OPM's cost of litigation and will potentially reduce the premiums that it has to charge.

From that standpoint, I guess it makes sense, although, as an employee, having to sue OPM rather than the health benefit plan you're enrolled in is not a very good deal because you lose a lot of leverage. If you sue or threaten to sue a health benefit plan, it might be tempted to settle to avoid litigation costs and bad publicity.

However, if you now have to sue OPM, the HMO or indemnity benefit plan is off the hook.

It's a well-intentioned—though not very well thought out—move by OPM. On balance, however, I think it's a bad deal for feds.

The writer also points to another incongruity resulting from this change—namely, that it violates contract law. OPM, a government agency, will, in effect, be representing the private contractor (the HMO or indemnity benefit plan) in a tort action, an obvious conflict of interest.

Thus OPM, in the way it treats feds, now seems about to join the Merit Systems Protection Board, which is supposed to be the protector of feds' rights in disputes with management but which, the record shows, comes down on the side of management in the overwhelming majority of cases. I completely agree with the writer who feels that this is a very bad idea.

A few readers wrote to comment that I had confused veterans preference under the civil service laws with veterans status as defined by the Department of Veterans Affairs.

The readers point out that veterans who serve wholly in the all-volunteer military during peacetime do not get veterans preference. Wartime service in a combat zone or peacetime service during an era of conscription is required to get veterans preference (five or 10 points).

Also, there is no veterans preference in the post-Vietnam era (after August 1976) except for those who earned ribbons for service in the Persian Gulf War, the Panama campaign, etc.

The readers' point is well taken. I had written in my column that veterans who did not see combat and sat behind a desk at no risk or peril to themselves didn't seem to be entitled to any veterans preference. The readers correctly point out that most veterans are not entitled; only draftees are. I apologize for not having researched this topic more carefully.

With respect to veterans preference accorded those who were drafted (and are therefore entitled to it under present law) but who did not see any military action—thereby doing essentially the same work as any other federal employee—there is a question in my mind as to whether such folks should get veterans preference when applying for federal government jobs.

The bottom line is that I certainly am in favor of according veterans preference to those who placed their lives on the line in a hostile situation, and any implication in my column to the contrary is incorrect.

Finally, I have received mail from a few readers who are upset with my contention that, because of the way feds are being treated (e.g., during the recent shutdown) and the fact that they are grossly underpaid, many bright feds will leave government service.

In addition, I said only the bottom of the barrel of college graduates will be attracted to government service. I did not mean to imply that those who currently work for the federal government are mediocre. Far from it. I have the highest regards for federal employees. I do predict, however, that the caliber of feds will deteriorate if salaries continue to lag behind the private sector and the benefit package available to feds continues to shrink.

There are, of course, many bright people currently working for the federal government who have been with Uncle Sam for quite a while and want to finish their careers with Uncle Sam. However, feds with just a few years of service have very little to lose by jumping ship and moving on to greener pastures.


Bureaucratus is a retired federal employee who is a regular contributor to Federal Computer Week and the author of Bureaucratus Moneyline, a personal finance newsletter for federal employees, available by subscription on FCW's Web page at For more information, contact Bureaucratus at


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