Deborah A. Perlick v. Department of Veterans Affairs

United States Court of Appeals
for the Federal Circuit
______________________
DEBORAH A. PERLICK,
Petitioner
v.
DEPARTMENT OF VETERANS AFFAIRS,
Respondent
______________________
2023-1091
______________________
Petition for review of the Merit Systems Protection
Board in No. NY-1221-19-0052-P-2.
______________________
Decided: June 20, 2024
______________________
P ATRICK J OHN WALSH , Stulberg & Walsh, LLP, New
York, NY, argued for petitioner. Also represented by
ROBERT B. STULBERG.
D AVID M ICHAEL K ERR, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for respondent. Also represented by
REGINALD T HOMAS BLADES , J R., BRIAN M. B OYNTON,
P ATRICIA M. MC CARTHY .
______________________
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PERLICK v. DVA 2
Before D YK and C UNNINGHAM , Circuit Judges, and
BENCIVENGO, District Judge.1
BENCIVENGO, District Judge.
Dr. Deborah A. Perlick petitions for review of a decision
of the Merit Systems Protection Board (“the Board”) deny-
ing-in-part and granting-in-part her request for consequen-
tial damages and compensatory damages pursuant to
5 U.S.C. § 1221(g). Perlick, Deborah A. v. Dep’t of Veterans
Affs., No. NY-1221-19-0052-P-2, 2022 WL 2905315
(M.S.P.B. July 18, 2022) (“Decision”) (J.A. 77–109).2 We
vacate the Board’s decision and remand for further pro-
ceedings consistent with this opinion.
BACKGROUND
In July 2010, the Department of Veterans Affairs
(“VA”) hired Dr. Deborah A. Perlick as a temporary Re-
search Health Science Specialist for a one-year term, sub-
ject to renewal. Decision at 78; J.A. 13–14. From 2010
through 2017, the VA renewed Perlick’s term each year co-
inciding with the duration of federally funded research pro-
jects Perlick worked on. J.A. 366–73.
In September 2017, while serving as the Principal In-
vestigator for a multi-site study on veterans with mild
traumatic brain injury, Perlick discovered approximately
$78,000 missing from the study’s funding. See Decision at
78–80. She reported the missing funds to various VA offi-
cials. Decision at 79–80. On November 3, 2017, Perlick
1 Honorable Cathy Ann Bencivengo, District Judge,
United States District Court for the Southern District of
California, sitting by designation.
2 Because the reported version of the Board’s deci-
sion is not paginated, citations in this opinion are to the
version of the Board’s decision included in the Joint Appen-
dix. For example, Decision at 1 is found at J.A. 1.
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PERLICK v. DVA 3
was terminated. Decision at 79; J.A. 362. She was 67 years
old and had worked for the VA for over 20 years. Decision
at 79; J.A. 1290.
Perlick filed a complaint with the Office of Special
Counsel seeking corrective action under the Whistleblower
Protection Act (“WPA”) and received no response. J.A. 17–
18. Perlick subsequently filed an Individual Right of Ac-
tion appeal with the Board under the WPA. J.A. 12. The
Board found Perlick had established her claim of protected
whistleblowing disclosures and that her request for correc-
tive action must be granted. J.A. 36. Perlick was awarded
back pay through March 31, 2020, which was the comple-
tion date of the last federally funded research project that
Perlick worked on at the VA. J.A. 36, 63, 80, 1250.
Perlick later moved for both consequential and com-
pensatory damages pursuant to 5 U.S.C. § 1221(g)(1)(A).
Decision at 83; see J.A. 1245–79. She requested $2.146 mil-
lion in consequential damages, in the form of (1) actual and
projected annual salary, (2) estimated lost retirement con-
tributions, and (3) actual and anticipated medical costs.3
Decision at 85–86; J.A. 1270. She also sought $500,000 in
compensatory damages for reputational harm and emo-
tional distress. Decision at 88; J.A. 1272–78. In support of
her request for these damages, Perlick provided an affida-
vit, letters of support, and an expert report opining on the
recovery of future lost earnings. Decision at 85–86.
The Board found Perlick is not entitled to consequen-
tial damages under 5 U.S.C. § 1221(g), stating that the
Federal Circuit has explained such damages “are limited to
out-of-pocket costs and do not include non-pecuniary
3 Perlick’s claim for consequential damages in the
form of medical costs were denied. Decision at 87–88. Per-
lick does not challenge the denial of medical costs, and we
do not review that denial in this opinion.
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PERLICK v. DVA 4
damages . . . .” Decision at 84 (citing Bohac v. Department
of Agriculture, 239 F.3d 1334, 1340–43 (Fed. Cir. 2001)).
The Board explained that Perlick “has the burden of prov-
ing the claimed damages by preponderant evidence.” Deci-
sion at 84. The Board then concluded that damages for lost
earning capacity were not recoverable because Perlick had
“no guarantees of future employment” beyond the March
31, 2020 completion date of her final project with the VA.
Decision at 87. In denying Perlick’s request for consequen-
tial damages, the Board also found Perlick’s expert “as-
sume[d] that [she] was going to work until the age of 80,
which is based on mere conjecture, not facts.” Decision at
87. The Board cited a letter of support from Perlick’s ex-
husband, finding that this letter—like Perlick’s expert—
conveyed that “senior researchers like [Perlick] find it ex-
tremely difficult to get a job even without rumors of profes-
sional malfeasance.” Decision at 85.
The Board then considered the damages Perlick iden-
tified under the consequential damages portion of her mo-
tion as a request for pecuniary compensatory damages. See
Decision at 89. The Board found that “[f]or the same rea-
sons . . . already mentioned above”—i.e., in the consequen-
tial damages section of the Board’s decision—“[Perlick] is
not entitled to future pecuniary losses in the form of future
earnings and retirement contributions.” Decision at 89.
Ultimately, the Board denied Perlick’s request for conse-
quential damages altogether, see Decision at 84–88, and
found she was “only entitled to an award of $20,000 in non-
pecuniary, compensatory damages.” Decision at 99.
Perlick petitions for review of the Board’s decision as to
the denial of future lost earnings. Decision at 77–100.
We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(9).
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PERLICK v. DVA 5
D ISCUSSION
“Statutory interpretation is an issue of law that we re-
view de novo.” Bank of Am. Corp. v. United States, 964
F.3d 1099, 1103 (Fed. Cir. 2020) (citation omitted).
“We review the Board’s determinations of law for cor-
rectness without deference to the Board’s decision.” Har-
rington v. Dep’t of Veterans Affs., 981 F.3d 1356, 1358 (Fed.
Cir. 2020) (citation omitted). We set aside any decisions
from the Board that are “(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).
A
Before conducting a review of the Board’s decision, we
must determine whether future lost earnings are recover-
able as damages pursuant to 5 U.S.C. § 1221(g)(1)(A)(ii).
We find that future lost earnings are recoverable as com-
pensatory damages pursuant to § 1221(g)(1)(A)(ii).
The WPA provides “legal protection for whistleblowers
within the civil service” and its burden-shifting framework
“reflect[s] a determination that ‘[w]histleblowing should
never be a factor that contributes in any way to an adverse
personnel action.’” Murray v. UBS Sec., LLC, 144 S. Ct.
445, 450 (2024) (quoting 135 Cong. Rec. 5032, 5033 (1989)).
Under the WPA, an employee subject to retaliation as a re-
sult of whistleblowing can seek corrective action from the
Office of Special Counsel. 5 U.S.C. § 1214(a)(3). If the Of-
fice of Special Counsel denies an employee’s request, the
employee may file an Individual Right of Action under
5 U.S.C. § 1221 seeking corrective action from the Board.
Id. Congress defined in 5 U.S.C. § 1221(g)(1)(A) what such
corrective action may include. Perlick’s petition to this
court turns in part on our interpretation of this corrective
action provision.
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PERLICK v. DVA 6
In a case turning on statutory interpretation, “[o]ur
starting point is the language of the statute, but we also
look to the provisions of the whole law, and its object and
policy.” Centripetal Networks, Inc. v. Cisco Sys., Inc., 38
F.4th 1025, 1031 (Fed. Cir. 2022) (quotation marks omit-
ted) (cleaned up); see also K Mart Corp. v. Cartier, Inc., 486
U.S. 281, 291 (1988). Our first job is to “try to determine
congressional intent, using traditional tools of statutory
construction.” Dole v. United Steelworkers of Am., 494 U.S.
26, 35 (1990). “Beyond the statute’s text, [the traditional
tools of statutory construction] include the statute’s struc-
ture, canons of statutory construction, and legislative his-
tory.” Timex V.I., Inc. v. United States, 157 F.3d 879, 882
(Fed. Cir. 1998).
The current language of the corrective action provision
provides that
[i]f the Board orders corrective action under [5
U.S.C. § 1221], such corrective action may include:
(i) that the individual be placed, as nearly
as possible, in the position the individual
would have been in had the prohibited per-
sonnel practice not occurred; and
(ii) back pay and related benefits, medical
costs incurred, travel expenses, any other
reasonable and foreseeable consequential
damages, and compensatory damages (in-
cluding interest, reasonable expert witness
fees, and costs).
5 U.S.C. §§ 1221(g)(1)(A)(i)–(ii) (emphasis added).
The common law meaning of “compensatory damages,”
id. at § 1221(g)(1)(A)(ii), indicates future lost earnings are
classifiable as such. It is a “settled principle of statutory
construction that, absent contrary indications, Congress
intends to adopt the common law definition of statutory
terms.” United States v. Shabani, 513 U.S. 10, 13 (1994);
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PERLICK v. DVA 7
see also United States v. Wells, 519 U.S. 482, 491 (1997);
Universal Health Servs., Inc. v. United States, 579 U.S.
176, 187 (2016). In common law, “‘[c]ompensatory dam-
ages’ are the damages awarded to a person as compensa-
tion, indemnity or restitution for harm sustained by him.”
Restatement (Second) of Torts § 903 (1979); Bohac, 239
F.3d at 1341. Compensatory damages are divided into two
categories: pecuniary and non-pecuniary. Restatement
(Second) of Torts §§ 905 and 906 (1979).
Pecuniary compensatory damages include future pecu-
niary losses, such as “harm to earning capacity.” Id. at
§ 906. A comment to the relevant Restatement section ex-
plains that loss in earning capacity may result from “harm
to reputation, as when, because of defamation, a person has
been prevented from obtaining profitable employment.” Id.
at § 906 cmt. c. This is the same kind of future lost earn-
ings that may result from protected whistleblower activi-
ties, where an employee’s reputation is harmed due to
making protected disclosures, leading to loss in earning ca-
pacity. By including the term “compensatory damages” in
the statute, Congress showed its intent for protected whis-
tleblower corrective action to include such future pecuniary
losses.
The legislative history further supports that future lost
earnings are recoverable under 5 U.S.C. § 1221(g)(1)(A).
The original Whistleblower Protection Act of 1989 provided
that the Board could grant a request for corrective action
that included “reasonable attorney’s fees and any other
reasonable costs incurred.” Pub.L. No. 101-12, § 3, 103
Stat. 16, 30 (codified at 5 U.S.C. §§ 1221(g)(1)–(2) (1989)).
In 1994 amendments to the WPA, Congress provided addi-
tional rights and remedies for protected whistleblowers.
The 1994 amendments expanded the corrective action pro-
vision to include “(i) that the individual be placed, as nearly
as possible, in the position the individual would have been
in had the prohibited personnel practice not occurred” and
“(ii) back pay and related benefits, medical costs incurred,
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PERLICK v. DVA 8
travel expenses, and any other reasonable and foreseeable
consequential changes.” Pub.L. No. 103-424, § 8(b)(2), 108
Stat. 4361, 4365 (codified at 5 U.S.C. §§ 1221(g)(1)(A)(i)–
(ii) (1994)). Congress thus expanded the recovery available
to protected whistleblowers; with the addition of
§ 1221(g)(1)(A)(i), Congress expressed its intent to provide
protected employees with make-whole relief.
This trend continued in 2012 when Congress enacted
the Whistleblower Protection Enhancement Act of 2012
(“WPEA”). Pub.L. No. 112-199, 126 Stat. 1465. The WPEA
further expanded the recovery available to protected em-
ployees by adding “compensatory damages (including in-
terest, reasonable expert witness fees, and costs)” to the
corrective actions available under § 1221(g)(1)(A)(ii).
Pub.L. No. 112-199, § 107(b), 126 Stat. 1465, 1469. Allow-
ing protected whistleblowers to recover future lost earn-
ings as compensatory damages comports with the intent of
Congress: to provide covered whistleblowers with make-
whole relief. See 5 U.S.C. § 1221(g)(1)(A)(i) (the Board may
order corrective action such that the individual be “placed,
as nearly as possible, in the position the individual would
have been in had the prohibited personnel practice not oc-
curred”). Congress’s expansion of the recovery available for
protected whistleblowers indicates we should interpret the
2012 addition of “compensatory damages” broadly. Here,
we think it is clear that compensatory damages encompass
future lost earnings.
Interpretations of similar statutes support the conclu-
sion that future lost earnings are recoverable as compensa-
tory damages. For instance, recovery for lost future
earnings under Title VII of the Civil Rights Act, which gov-
erns recovery for those who suffer from employment dis-
crimination, “compensate plaintiff for a lifetime of
diminished earnings resulting from . . . reputational
harms.” Williams v. Pharmacia, Inc., 137 F.3d 944, 953
(7th Cir. 1998). Additionally, “the award of future lost
earnings in Title VII cases is an alternative to the
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PERLICK v. DVA 9
traditional equitable remedy of reinstatement.” Goss v.
Exxon Office Systems Co., 747 F.2d 885, 890 (3d Cir. 1984).
Like our sister circuits who interpreted this recovery as a
compensatory damage under Title VII, we hold that future
lost earnings are recoverable as compensatory damages
pursuant to § 1221(g)(1)(A)(ii). The Board here was correct
to consider Perlick’s request for them as such.
We need not decide at this time whether future lost
earnings are also recoverable as consequential damages
pursuant to 5 U.S.C. § 1221(g)(1)(A)(ii). In Bohac, we in-
terpreted the phrase “any other reasonable and foreseeable
consequential changes” in a previous version of the correc-
tive action provision. See 239 F.3d at 1337–43 (interpret-
ing the phrase as used in 5 U.S.C. § 1221(g)(1)(A)(ii)
(1994)); Pub.L. No. 103-424, § 8(b)(2), 108 Stat. 4361, 4365
(1994 amendments to the WPA). We concluded “the term
‘consequential damages’ in section 1221(g) is limited to re-
imbursement of out-of-pocket costs.” 239 F.3d at 1343.
The issue presented in Bohac was limited to whether
non-pecuniary damages could be recovered as consequen-
tial damages under the limitations of the statute. Id. at
1339. In contrast to the current version of the statute, the
version of the statute interpreted in Bohac did not envision
recovery for compensatory damages. Compare 5 U.S.C.
§ 1221(g)(1)(A)(ii) (1994), with 5 U.S.C. § 1221(g)(1)(A)(ii)
(as amended by the WPEA, Pub.L. No. 112-199, § 107(b),
126 Stat. 1465, 1469). The court noted that “if Congress
had intended to allow broad recovery for non-pecuniary
damages, it seems likely that it would have used the well-
understood term ‘compensatory damages’” in the corrective
action provision. Bohac, 239 F.3d at 1341. The court ulti-
mately found “the term ‘consequential damages’ in section
1221(g) [under the WPA of 1994] is limited to reimburse-
ment of out-of-pocket costs and does not include non-pecu-
niary damages.” Id. at 1343. We do not interfere with the
findings of Bohac, nor do we hold that future lost earnings
are not recoverable as consequential damages under
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PERLICK v. DVA 10
§ 1221(g). However, we do note that the corrective action
provision has been amended since the Bohac decision to in-
clude recovery for compensatory damages, and future lost
earnings are recoverable as compensatory damages under
this provision.
B
We next review the Board’s decision denying Perlick’s
request for future lost earnings as consequential and pecu-
niary compensatory damages. We find the Board erred by
improperly raising the burden for Perlick to establish these
damages.
In her petition for review by this court, Perlick re-
quested “review of that portion of [the Board’s] July 18,
2022 Initial Decision . . . that denied Ms. Perlick the full
corrective action and remedies she sought from the Board
and the Department of Veterans Affairs, including conse-
quential and/or compensatory damages.” ECF No. 1 (Peti-
tion for Review) at 5 (emphasis added). We therefore read
Perlick’s challenge as a challenge of the Board’s “Pecuniary
Compensatory Damages” denial as well. This reading is
supported by the Board’s decision to consider “the damages
[Perlick] identified under the consequential damages por-
tion of her motion . . . as a compensatory damages request.”
Decision at 89. Additionally, the WPEA’s make-whole re-
lief provision, 5 U.S.C. §§ 1221(g)(1)(A)(i), indicates Con-
gress’s intent that a tribunal should fashion “the most
complete relief possible” within the terms of the statute.
See Albemarle Paper Co. v. Moody, 422 U.S. 405, 421 (1975)
(finding Congress’s intent in vesting discretionary powers
in courts was to allow the “fashioning of the most complete
relief possible,” reaffirming Title VII’s “make whole” pur-
pose) (cleaned up). In this case, we find that intent is best
served by treating Perlick’s request for future lost earnings
as a request for compensatory pecuniary damages. As we
explained above, we consider lost future earnings
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PERLICK v. DVA 11
recoverable as compensatory damages pursuant to
§ 1221(g). Accordingly, we focus our analysis on compen-
satory damages.
We have yet to interpret the proper burden of proof for
showing entitlement to compensatory damages under the
WPEA. The Board’s decision purported to review both con-
sequential and compensatory damages under the WPEA
under the preponderance of the evidence standard. Deci-
sion at 84, 88. To support applying the preponderance
standard to compensatory damages determinations, the
Board cited to a Board decision reviewing compensatory
damages under Title VII, Sloan v. U.S. Postal Service, No.
AT-0752-94-0387-P-1, 1997 WL 693605 (M.S.P.B. Oct. 29,
1997) and a Board decision reviewing consequential dam-
ages under the WPA, Johnston v. Department of Treasury,
No. NY-1221-00-0220-P-1, 2005 WL 2481560 (M.S.P.B.
Aug. 29, 2005). See Decision at 88. We find no reason to
disturb the Board’s burden of proof for these damages.
A Board regulation defines preponderance of the evi-
dence as “the degree of relevant evidence that a reasonable
person, considering the record as a whole, would accept as
sufficient to find that a contested fact is more likely to be
true than untrue.” 5 C.F.R. § 1201.4(q); Holmes v. United
States Postal Serv., 987 F.3d 1042, 1046 (Fed. Cir. 2021).
We have found that the preponderance of the evidence
standard does not require certainty. See Moberly ex rel.
Moberly v. Sec’y of Health & Hum. Servs., 592 F.3d 1315,
1322 (Fed. Cir. 2010) (finding that where preponderant ev-
idence is the standard, the “level of proof is not certainty”).
Therefore, it was error for the Board to require Perlick to
“guarantee” future employment to recover future lost earn-
ings. See Decision at 87.
We note the Board’s error regarding “guarantees of fu-
ture employment” was in its consequential damages anal-
ysis. Decision at 87. We consider this error present in
Board’s pecuniary compensatory damages analysis as well
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PERLICK v. DVA 12
because the Board stated “[f]or the same reasons . . . al-
ready mentioned above”—i.e., in the consequential dam-
ages analysis—“I find that [Perlick] is not entitled to future
pecuniary losses in the form of future earnings and retire-
ment contributions.” Decision at 89.
The VA argues that substantial evidence nonetheless
supports the Board’s decision because Perlick’s time lim-
ited appointment only supported a back pay award through
March 31, 2020. See Respondent’s Response Br. at 16–17.
This argument is unpersuasive. Back pay, as written in
§ 1221(g)(1)(A)(ii), is separate and apart from compensa-
tory damages. The back pay award is irrelevant to the in-
quiry of whether Perlick could establish lost future
earnings by a preponderance of the evidence.
On remand, the Board should determine under the pre-
ponderance of the evidence standard whether Perlick met
her burden to prove entitlement to pecuniary compensa-
tory damages in the form of future lost earnings. We do
not review the Board’s award of $20,000 in non-pecuniary
compensatory damages, Decision at 99, nor do we ask the
Board to reconsider that award on remand.
The Board acted contrary to law when it raised the bur-
den of proof for Perlick to establish these compensatory
damages. Accordingly, we vacate the Board’s decision to
the extent it fails to properly consider future lost earnings
and remand for further proceedings consistent with this
opinion.
VACATED AND REMANDED
COSTS
Costs awarded to petitioner.
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