Don’t Forget to Consider the Relevant Time Period for Your Settlement Agreement
By Louise Ryder on March 4, 2020 in Court Cases with Comments
Earlier this month, the United States Court of Appeals for the Federal Circuit found in a precedential decision, Sánchez v. Dept. of Veterans Affairs, No. 2018-2171, that a term of a federal employee’s settlement agreement had expired where the duration of the term was unspecified and a reasonable time period had elapsed.
José Sánchez, a urologist at the VA’s San Juan VA Medical Center, alleged whistleblower retaliation after his supervisor began to target him after Mr. Sánchez reported improper practices, such as fraudulent acts by physicians and technicians, an excessive number of patient complaints, and wasted and abused resources. Sánchez’s supervisor singled him out for criticism, issued him a negative performance review, and reassigned him to a position where he would be precluded from performing surgery, caring for patients, or supervising other staff.
In 2001, Dr. Sánchez filed a complaint against the VA, and thereafter, the parties entered into a settlement agreement wherein the VA agreed to reassign Dr. Sánchez to the Ponce Outpatient Clinic where he would be permitted to continue to perform surgery and care for patients. However, because this clinic was three hours away from Sánchez’s home, the parties agreed that he would be permitted to work a compressed work schedule of ten hours per day for four days per week, including three hours of travel per day.
Sixteen years later, on July 28, 2017, the VA issued Dr. Sánchez a letter notifying him that he was required to be physically present at the Ponce clinic from 7:30 a.m. to 4:00 p.m. from Monday through Friday. Dr. Sánchez filed a petition with the Merit Systems Protection Board seeking to enforce the terms of the 2001 settlement agreement, and after receiving an adverse decision from the Board; Dr. Sánchez sought review of the Board’s decision with the Federal Circuit.
The court held that the terms of the settlement agreement between the VA and Dr. Sánchez were no longer in force because the agreement was silent on the time limit of its term and a reasonable amount of time had passed. As is set forth in contract law, an agreement is not generally operative in perpetuity, and the court considered the circumstances which led the parties to enter into the original agreement.
The court found those sixteen years was a reasonable time for the alleged hostilities against Dr. Sánchez to dissipate, and that Dr. Sánchez had not presented any evidence that he was still experiencing any retaliation as a result of his whistleblowing activities. Accordingly the court found that the VA could remove Dr. Sánchez from his compressed schedule and change his duties hours without being in breach of the agreement.
In sum, where there is no definite time period governing the terms of a settlement agreement, these terms will not generally operate in perpetuity. Parties should consider this ruling when drafting and reviewing settlement agreements, and look out for agencies attempting to extricate themselves from agreements they find to be inconvenient and outmoded.
In most cases, the best terms for both parties are the ones that can be executed immediately instead of terms that reach into the future. This allows the matter to be resolved once and for all instead of lingering on with uncertainty. If the employee faces additional retaliation or discrimination, etc., they are always free to pursue a new complaint.
Louise Ryder is an Associate at the Federal Practice Group and has substantive experience in federal employment law.