Stewart v. Mabus

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

ALEXANDER E. STEWART,

Plaintiff,

v. Civil Action No. 15-576(GK)

RAY MABUS,

Defendant.

MEMORANDUM OPINION

This is a sad case. A distinguished, award-winning doctor who

has served the Navy for more than 24 years, whose undergraduate

education, medical studies, and advanced medical education were

paid for by the United States Government, and who received regular

salary increases in exchange for agreeing to remain in the military

for a specific number of years, is suing the Government because it

miscalculated the years he was required to serve. Because of that

miscalculation, which the Government does not deny, the doctor

signed agreements to remain with the Navy until 2015. The

Government now claims that he must remain on active duty until

2018 -- a difference of three years.

****
Plaintiff Captain Alexander E. Stewart ("Plaintiff" or

"Stewart") brings this action against Secretary of the Navy Ray

Mabus ("Defendant," "the Government," or "the Navy") seeking
review of certain determinations by the Board for Correction of

Naval Records ("the Board") regarding the period of Stewart's

obligation to remain on active duty in the Navy in exchange for

substantial educational and financial benefits. See generally

Compl. [Dkt. No. 1].

In exchange for Special Pay offered to naval physicians,

Stewart executed several contracts, which, by their written terms,

extended his active duty obligation to the Navy to at least 2015.

When the Navy discovered that the service obligation dates

specified in the contracts had been miscalculated and failed to

account for pre-existing service obligations, it amended its

records and the contracts with Stewart to reflect a later service

obligation date of 2018. Stewart petitioned the Board to reverse

these amendments, and the Board denied Stewart's request. Stewart

then appealed the Board's decision to this Court.

This matter is currently before the Court on the Government's

Motion to Dismiss or, in the Alternative, Motion for Summary

Judgment [Dkt. No. 12] and Plaintiff's Cross Motion for Summary

Judgment [Dkt. No. 16] . For the reasons that follow, the

Government's Motion to Dismiss shall be denied, the Government's

Motion for Summary Judgment shall be granted, and Plaintiff's Cross

Motion for Summary Judgment shall be denied.

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I . BACKGROUND

A. Factual Background1

1. Stewart's Early Career

Captain Stewart has had a long and distinguished career in

the United States Navy. He has served for over twenty-four years

in the Navy's Medical Corps as a physician and has received

numerous awards for his academic, research, and professional

accomplishments. See e.g., AR 117.

Stewart's career with the Navy began in 1987 when he

matriculated at the United States Naval Academy ("USNA"). Stewart

graduated from the USNA in 1991 and, in exchange for his studies,

incurred an obligation to serve in the Navy for five years.

10 U.S.C. § 6959(a); AR 6; Compl. ~ 8.

From 1991 to 1995, Stewart attended medical school at the

Uniformed Services University of Health Sciences ( "USUHS") .

Because Stewart remained in school, he did not accrue credit toward

his initial five-year service obligation while at USUHS. When

1 Because this matter is an appeal from final agency action, see
5 U.S.C. § 704, the Court relies upon the facts in the
Administrative Record ("AR") [ Dkt. No. 32] before the Board when
it reached its decision, 5 U.S.C. § 706. IMS, P.C. v. Alvarez, 129
F.3d 618, 623 (D.C. Cir. 1997) ("If a court is to review an agency's
action fairly, it should have before it neither more nor less
information than did the agency when it made its decision.").

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Stewart graduated from USUHS in May of 1995, he incurred an

additional seven-year service obligation to the Navy to be served

consecutively with his existing five-year obligation. 10 U.S.C.

§ 2114 (c); AR 10; Fontana v. White, 334 F.3d 80, 86 (D.C. Cir.

2003).

Thus, upon receipt of his medical degree in 1995, Stewart had

a 12-year service obligation, requiring that he engage in

qualifying service in the Navy until at least May of 2007. In other

words, May 2007 constituted Stewart's approximate obligated

service date ("OSD"), which is the time at which a service member

may leave active duty in the Navy without having to complete

additional required service or pay back money or other benefits

received from the Government. See e.g., 37 U.S.C. § 302 (f) ("An

officer who does not complete the period for which the payment was

made under [relevant subsections] shall be subject to the repayment

provisions of section 303a(e) of [title 37] .").

From 1995 to 1996, Stewart completed a one-year medical

internship, during which time his 12-year service obligation was

stayed. 10 U.S.C. § 2114(d). Accordingly, when Stewart completed

his medical internship in 1996, his twelve-year obligation

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remained, committing him to remain in the Navy -- and extending

his OSD -- until at least 2008. 2

From 1996 to 1999, Stewart served as a flight surgeon, which

satisfied three years of his 12-year active duty service

obligation. Upon completion of his tour of duty in 1999, Stewart

owed nine years of service, and his OSD remained at 2008.

From 1999 to 2004, Stewart completed a medical residency in

otolaryngology. This period of further training again stayed his

service obligation to the Navy. 10 U.S.C. § 2114(d). Upon

completion of the residency in 2004, Stewart still owed nine years

of service, and his OSD was moved up to 2013. 3

2 The sources in the Administrative Record and the Parties' briefs
are generally not precise with respect to the exact date of
Stewart's OSD. They often state that the OSD falls in a particular
month in a particular year or simply state the year of the OSD.
Because resolution of this case does not require any more precision
than reference to a particular year, the Court follows the Record
and the Parties' practice.
3 Stewart did incur an additional service obligation by entering
the residency program; however, Department of Defense regulations
allow service members to fulfill obligations generated by medical
residencies conducted in military facilities concurrently with
obligations incurred by undergraduate studies and medical school.
Magnusson Deel. at <_![ 7 [ Dkt. No. 12-3] (citing DODI 6000. 13
<_![ 6.6.3.1). Accordingly, while Stewart's otolaryngology residency
stayed completion of the years of service he owed, it did not
extend his OSD.
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 2. MSP Agreements

In July of 2004, Stewart applied for his first "Multi-Year

Special Pay" ( "MSP") agreement with the Navy. AR 4 5-4 6. MSP

agreements provide Navy Medical Corps officers with annual

lump-sum payments in addition to their normal pay in exchange for

the commitment to remain on active duty in the Navy for a specified

period of time. See 37 U.S.C. § 302. Section 302 provides that

"[a] n officer may not be paid additional special pay . or

incentive special pay . . . for any twelve-month period unless the

officer first executes a written agreement under which the officer

agrees to remain on active duty for a period of not less than one

year beginning on the date the officer accepts the award of such

special pay." 37 U.S.C. § 302(c) (1).

Stewart's first MSP request was for a two-year MSP agreement

effective July 27, 2004 ("the first MSP Agreement"). AR 45. In the

formal request that he executed, Stewart stated, "If my application

for MSP is approved, I agree to not tender a resignation or request

release from active duty that would be affected during this MSP

service obligation. This obligation will be for a period of two

years beyond any existing active military service obligation for

education or training." AR 45 (emphasis in original). As described

above, as of July 2004, Stewart was already obligated to remain on

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active duty for at least nine more years in exchange for the

extensive education and training he had received. Since Stewart's

OSD was set at 2013 before he requested the first MSP agreement,

an additional two-year obligation in exchange for Special Pay would

have increased his OSD to 2015.

Unfortunately, when Stewart requested the first MSP

agreement, the Navy made a significant mistake in calculating his

OSD. That error was not discovered until nearly seven years later.

When the Navy calculated Stewart's OSD in response to the first

MSP request, it neglected to include Stewart's five-year service

obligation incurred by his attendance at the USNA. AR 42. Thus,

the Navy's OSD calculation worksheet mistakenly set Stewart's pre-

MSP OSD at July 2008; two additional years yielded a post-MSP OSD

of July 31, 2010. Id.

This error was included in the first MSP agreement itself,

which states, "Pursuant to [cited authority], [Stewart's first MSP

request] is approved for Otolaryngology, for two years, at $12,000

per year, effective 27 July 2004. [Stewart's] new obligated service

date, as computed on enclosure (2) [the OSD calculation worksheet]

is July 2010." AR 40.

After having received one annual payment of $12,000 under the

first MSP agreement, Stewart decided to request a new MSP

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agreement. In a request dated November 8, 2004, Stewart requested

that his first MSP agreement be terminated in favor of a longer,

four-year MSP agreement ("the second MSP agreement") with more

attractive annual payments of $25, 000. In ·his request, Stewart

acknowledged that the "obligation [under the new MSP agreement]

shall be for a period of 4 years beyond any existing active

military service obligation for education or training." AR 54.

Stewart also acknowledged that he would "repay the unearned portion

of [the July 2004] MSP contract[.]" Id.

Stewart's second MSP agreement was approved on December 10,

2004. AR 51. The second MSP agreement had a retroactive effective

date of October 1, 2004 and served to terminate Stewart's first

MSP agreement as of September 30, 2004. Id. In calculating

Stewart's new OSD pursuant to the second MSP agreement, the Navy

again included its previous error. AR 56. Failing to account for

Stewart's five-year USNA obligation, the Navy set Stewart's

pre-MSP OSD in July 2008, added two months for the period that the

first MSP agreement was in force, and added an additional four

years to account for the second MSP agreement. Id. 4 Accordingly,

4 The typed portion of the calculation table at AR 56 purports to
add three months for the period the first MSP agreement was in
force; however, the agreement appears to have been in force only
from July 27, 2004 to September 30, 2004 (i.e., just over two
months). AR 56. That apparent arithmetic error appears to have
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the second MSP agreement reflects a new OSD of "September 2012."

AR 51.

On October 20, 2005, Stewart requested a third MSP agreement

("the third MSP agreement") with even more favorable terms than

the last: $33,000 per year in lump-sum payments for four years. AR

63. In his request, Stewart stated that he would undertake an

additional service obligation "of 4 years beyond any existing

active military service obligation for education or training."

AR 63. As before, this third MSP agreement would terminate and

replace the then-existing second MSP agreement. Id.

On November 9, 2005, Stewart's third MSP agreement request

was approved, establishing the third MSP agreement. AR 62. The

third MSP agreement had a retroactive effective date of October 1,

2005 and terminated the second MSP agreement effective September

30, 2005. AR 62.

Again, the Navy included its initial failure to account for

Stewart's five-year USNA service obligation. It set Stewart's OSD

prior to the second MSP agreement at September 30, 2008. 5 AR 69.

been corrected by hand and is not reflected in the MSP agreement
itself. AR 51, 56.

5 This OSD already included two months governed by the very first
MSP agreement executed in July of 2004.

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The Navy then added one year to the OSD for the payment received

under the second MSP agreement and four years for the anticipated

payments under the newly executed third MSP agreement. Id. This

calculation yielded an OSD of September 2013, AR 69, which is

reflected in the third and final MSP agreement, AR 62. 6

3. Rhinology Fellowship

From July 2009 to July 2010, Stewart participated in a

graduate medical education ("GME") rhinology fellowship. By

participating in the program, Stewart incurred an additional one-

year service obligation. This obligation was to be served

consecutively with Stewart's -0bligations incurred by the Navy's

6 The Administrative Record shows that Stewart made efforts to
understand the implications of entering into each of the three MSP
agreements and posed several clarifying questions to Karen M.
Gaston, Assistant Program Director for Navy Medical Special Pays,
and Bill Marin, Director of Navy Medical Special Pays. AR 84-96.
Several e-mails suggest Stewart's desire to not incur any service
obligations that would require him to stay in the Navy beyond 2015,
see AR 88, 94, 103, and on at least one occasion, Stewart noted
that he "went to the Naval Academy and then to the Uniformed
Services University[,]" AR 103. Although on several occasions, Ms.
Gaston and Mr. Marin confirmed the incorrect OSDs reflected in the
MSP agreements, "no one person or officer within the Navy Medicine
[was] responsible for ensuring the accuracy of DOW physicians'
overall OSD. ." AR 89, 92, 101.

None of Stewart's e-mails caused the Navy to recognize its
mistake. However, there is no evidence in the Administrative Record
that Stewart kept his own tally of the obligations he incurred nor
that he ever challenged the Navy's calculation of his OSD before
entering into any of the three MSP agreements.
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sponsorship of his undergraduate and medical education, AR 77-78,

but could be served concurrently with obligations incurred through

MSP agreements, AR 86.

In order to formalize Stewart's participation in the

rhinology fellowship, the Navy prepared a GME agreement, which

stated that upon completion of his fellowship, Stewart would owe

a five-year obligation to the Navy. AR 78 ("When I complete this

GME, my total [active duty service obligation] will be: 5 years").

Ironically, the worksheet used to calculate this obligation

actually includes Stewart's five-year obligation incurred by his

attendance at the USNA, but omits any reference to service

obligations incurred through Stewart's multiple MSP agreements.

AR 75.

The worksheet notes that as of July 2004, Stewart still had

an obligation to serve nine additional years to account for his

remaining USNA and USUHS obligations. Id. It accounts for five

years of creditable service performed between July 2004 and July

2009. Id. The worksheet then notes the stay of Stewart's

obligations during the fellowship, and adds a year of additional

service for the fellowship, arriving at an OSD of July 2015. Id.

This OSD could not have been correct given the lack of any

reference to obligations incurred under the MSP agreements.

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 The Government ·asserts that the GME agreement worksheet was

not meant to account for MSP obligations and that "anyone familiar

with the acronyms MSP and MISP [Multi-year Incentive Special Pay]

should have known that these obligations were not included in the

OSD calculation of 2015." Gov't's Reply at 3.

4. Recapitulation

For the sake of clarity, the Court will sum up what would

have happened if Stewart had made each of the same three MSP

requests and the Navy had correctly calculated his OSD in each MSP

agreement. As of July 2004, Stewart still owed nine years of

service in exchange for his education at the USNA and USUHS, and

thus, had an OSD of July 2013. He entered a two-year MSP agreement

(the first MSP agreement), which would have moved his OSD to July

2015. However, that first MSP agreement was terminated after just

two months in favor of a four-year MSP agreement (the second MSP

agreement). Under the second MSP agreement, Stewart's OSD would

have been September 2017 (a date which takes account of the two

months under the first MSP agreement and four years under the

second). Finally, after just a year under the second agreement,

Stewart signed a third MSP agreement, terminating the second MSP

agreement. Thus, Stewart's OSD should have been adjusted again to

September 2018 (beginning at July 2013, adding two months for the

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first MSP agreement, one year for the second MSP agreement, and

four years for the third and final MSP agreement).

The one-year obligation incurred as a result of Stewart's

rhinology fellowship could be served concurrently with any

obligation incurred under an MSP agreement. Because any MSP

agreement necessarily increased Stewart's OSD by at least a year,

37 U.S. C. § 302 ( c) (1) , participation in the fellowship program

would not have affected Stewart's OSD.

If the Navy had never made its initial error, and Stewart had

entered into MSP agreements of the same duration, his OSD clearly

would be in September of 2018, not September of 2013 as the third

MSP agreement states, AR 62, nor July 2015 as the GME worksheet

states, AR 75.

4. Error Correction Letters

In 2010, the Chief of Naval Personnel became concerned that

many contracts with Navy medical officers contained incorrectly

calculated OSDs and requested that the Naval Audit Service perform

a review. See Pl.'s Ex. 1 [Dkt. No. 16-2]. The auditors identified

eight Navy physicians affected by OSD computation errors,

including Stewart. Pl.'s Ex. l; Compl. ~ 29.

On February 9, 2011, the Navy notified Stewart that it had

discovered that his MSP contracts failed to account for his five-

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year USNA service obligation. AR 80. The letter notes the

inaccurate pre-MSP OSD of July 2008, id., which had been the

baseline for the calculation of Stewart's OSD in his very first

MSP agreement, AR 42, and states that his OSD had been adjusted to

August 2013, AR 80. The letter goes on to warn that "[a]s a result

of this OSD adjustment, it is possible any Multiyear Special Pay

(MSP) agreement you entered into may be affected." Id.

A second letter arrived two days later on February 11, 2011.

That letter again noted the original OSD calculation error, and

correctly identified its source as Stewart's "initial MSP

agreement executed July 27, 2004." AR 82. In order to correct the

error, the Navy stated that it would amend the OSD contained in

Stewart's third and final MSP agreement from September 2013 to

October 2018. AR 82. 7

7 Given that the third MSP agreement lists an OSD of "September
2013," AR 62, and the Navy's correction letters of February 9 and
11, 2011 purport to add Stewart's five~year USNA service obligation
to his OSD, AR 80 & 82, it is not immediately clear why Stewart's
amended OSD should be October 2018 rather than September 2018.
However, the worksheet appended to the third MSP agreement shows
an OSD of "2013/09/30," AR 69, so any difference may just be a
matter of a single day. Moreover, the Parties' briefs and the
Administrative Record do not consistently track shifts in
Stewart's OSD by days. Instead, they generally measure changes to
his OSD in months or even just years. Finally, Plaintiff has not
raised this issue, so the Court will treat the difference between
a September 2018 and an October 2018 OSD as de minimis and will
not address it further.
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 Both letters advised Stewart that he could "submit a request

to the Board for Correction of Naval Records (BCNR) to dispute

[the] decision." AR 82; accord AR 80.

B. Procedural Backg~ound

Nearly three years later, on January 12, 2014, Stewart did

petition the Board to overturn the amendments referred to in the

two letters of February 9 and 11, 2011. Compl. ~ 36. Specifically,

he requested that the Navy reinstate his pre-MSP OSD as July 2008

and recognize as binding the OSD of July 27, 2015 reflected in the

worksheet accompanying the GME agreement Stewart executed before

beginning his rhinology fellowship. AR 18-19.

On July 16, 2014, in response to Stewart's petition, the Board

requested an advisory opinion from the Navy Medicine Professional

Development Center, AR 27, and on September 15, 2014, the Navy's

Bureau of Medicine and Surgery responded, recommending disapproval

of Stewart's petition, AR 24. On November 7, 2014, the Board denied

Stewart's petition. AR 3-4.

On April 16, 2015, Stewart filed his Complaint [Dkt. No. 1]

challenging the Board's denial of his petition. The Complaint

asserts three causes of action, all under the Administrative

Procedure Act, 5 U.S.C. §§ 702, 706(2) (A). Compl. ~~ 40-79.

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 Stewart's first claim alleges that it was contrary to law for

the Navy to amend I his OSD to a date different from the date

contained in his third and final MSP agreement. Compl. ~~ 40-53.

Stewart's second claim alleges that it was contrary to law for the

Navy to amend Stewart's OSD to a date different from the date

contained in the GME agreement executed before he began his

rhinology fellowship. Compl. ~~ 54-67. Finally, Stewart's third

claim alleges that the Navy's amendments of Stewart's OSD were

arbitrary, capricious, and an abuse of discretion. Compl. ~~ 68-

7 9.

On August 3, 2015, the Government filed its Motion to Dismiss

or, in the Alternative, Motion for Summary Judgment [Dkt. No. 12].

On August 31, 2015, Plaintiff filed his combined Memorandum in

Opposition and Cross Motion for Summary Judgment [Dkt. No. 16]. On

October 13, 2015, the Government filed its combined Reply to

Plaintiff's Opposition and Memorandum in Opposition to Plaintiff's

Cross Mot.ion for Summary Judgment [Dkt. No. 23]. On November 3,

2015, Plaintiff filed his Reply to the Government's Opposition

[Dkt. No. 26] .s

8 Plaintiff also filed a Motion for Leave to File a Surreply in
Opposition to Defendant's Motion to Dismiss or, in the Alternative,
Motion for Summary Judgment ("Pl.'s Mot. for Leave") [Dkt. No.
27]. On November 19, 2016, the Government filed its Opposition to
Plaintiff's Motion for Leave [Dkt. No. 28]. The Court denied
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II. STANDARD OF REVIEW

A. Motion to Dismiss for Lack of Jurisdiction

Under Fed. R. Civ. P. 12(b) (1), "[t]he plaintiff bears the

burden of invoking the court's subject matter jurisdiction" to

hear his or her claims. Arpaio v. Obama, 797 F.3d 11, 19 (D.C.

Cir. 2015). In deciding whether to grant a motion to dismiss for

lack of jurisdiction, the Court must "accept all of the factual

allegations in [the] [C]omplaint as true[.]" Jerome Stevens

Pharm., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 (D.C. Cir.

2005) (quoting United States v. Gaubert, 499 U.S. 315, 327 (1991))

(internal quotation marks omitted). However, "[w]here necessary to

resolve a jurisdictional challenge under Rule 12(b) (1), the court

may consider the complaint supplemented by undisputed facts

evidenced in the record, or the complaint supplemented by

undisputed facts plus the court's resolution of disputed facts."

Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1129 (D.C. Cir.

2015) (internal citation and quotation marks omitted).

B. Summary Judgment

Summary judgment may be granted only if the moving party has

shown that there is no genuine dispute of material fact and that

Plaintiff's Motion for Leave on February 2, 2016. Memorandum Order
of Feb. 2, 2016 [Dkt. No. 35].

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the moving party is entitled to judgment as a matter of law. See

Fed .. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 325

(1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991 (D.C.

Cir. 2002).

Plaintiff's challenge arises under the APA, 5 u. s.c.
§ 706 (a) (2), which provides that reviewing courts "shall

hold unlawful and set aside agency action, findings, and

conclusions found to be . . arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law[.]" Courts in

this Circuit routinely apply the APA's standards to the Board's

decisions. See Piersall v. Winter, 435 F. 3d 319, 321 ( D. C. Cir.

2006) ("These are not uncharted waters. We have many times reviewed

the decisions of boards for correction of military records in light

of familiar principles of administrative law." (internal quotation

marks omitted)).

When a district court reviews an administrative action,

"[t] he entire case on review is a question of law." Am. Bioscience,

Inc. v. Thompson, 269 F.3d 1077, 1083-84 (D.C. Cir. 2001) (internal

quotation marks omitted). "Summary judgment thus serves as the

mechanism for deciding, as a matter of law, whether the agency

action is supported by the administrative record and otherwise

consistent with the APA standard of review." Sierra Club v.

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Mainella, 459 F. Supp. 2d 76, 90 (D.D.C. 2006) (citing Richards v.

INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)). Finally, the

Court's review on summary judgment is limited to the Administrative

Record. Holy Land Found. for Relief and Dev. v. Ashcroft, 333 F.3d

156, 160 (D.C. Cir. 2003) (citing Camp v. Pitts, 411 U.S. 138, 142

(1973)); Fund for Animals v. Babbitt, 903 F. Supp. 96, 105 (D.D.C.

1995) amended, 967 F. Supp. 6 (D.D.C. 1997) ("Summary judgment is

an appropriate procedure for resolving a challenge to a federal

agency's administrative decision when review is based upon the

administrative record.").

III. ANALYSIS

A. Jurisdiction

"Federal courts have limited jurisdiction and may not presume

the existence of jurisdiction in order to decide a case on other

grounds." Morrison v. Sec'y of Def., 760 F. Supp. 2d 15, 17 (D.D.C.

2011) (citing Tuck v. Pan Am. Health Org., 668 F.2d 547, 549 (D.C.

Cir. 1981)). On its face, Plaintiff's Complaint seeks review of

the Board's failure to correct his OSD to follow his third MSP and

GME agreements as originally written, see Compl.