
    Kathryn CONANT, Petitioner, v. OFFICE OF PERSONNEL MANAGEMENT, Respondent.
    No. 99-3459.
    United States Court of Appeals, Federal Circuit.
    July 10, 2001.
    
      Barbara Kraft, Beins, Axelrod & Kraft, PC, of Washington, DC, argued for petitioner.
    
      Brent M. McBurney, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent. On the brief were David M. Cohen, Director; Kirk T. Man-hardt, Assistant Director; and John Groat, Attorney. Of counsel was Richard P. Sehroeder, Attorney.
    Before PAULINE NEWMAN, RADER, and GAJARSA, Circuit Judges.
   GAJARSA, Circuit Judge.

Kathryn Conant appeals from a decision of the Merit Systems Protection Board (“Board”) affirming a denial by the Office of Personnel Management (“OPM”) of Ms. Conant’s claim for disability retirement. Conant v. Office of Pers. Mgmt, No. PH-831E-97-0369-B-1 (M.S.P.B. July 27,-1999). Because the Board erred by including in Ms. Conant’s disability application the allegations and documents submitted by the Internal Revenue Service (“IRS”) in violation of a settlement agreement, we vacate and remand.

BACKGROUND

Kathryn Conant worked as a revenue officer for the IRS from 1979 through February 1996. Her job required her to travel at least two to three days a week to recover delinquent taxes from taxpayers, and to spend the remainder of each work week in her office. In February 1993, Ms. Conant began to experience symptoms of what was later diagnosed as Chronic Toxic Encephalopathy (“CTE”), a degenerative disease of the brain that she alleges was caused by environmental toxins at her workplace. These CTE symptoms included headaches, pains in her arms and legs, twitching, difficulty breathing and concentrating, blurry vision, dizziness, stumbling, stuttering, abdominal and chest pains, and numbness. On May 10, 1995, Ms. Conant was taken to the emergency room after she became unresponsive and her limbs began jerking. She subsequently and frequently experienced similar attacks, but none required hospitalization. Although Ms. Conant consulted several doctors, her exact medical condition was not diagnosed as CTE until 1996. In the meantime, Ms. Conant notified her supervisors of her condition and they suggested she spend more time outside of the office building, if doing so relieved her symptoms.

In September 1995, the IRS issued a Notice of Proposed Removal (the “Removal SF-50”), proposing to remove Ms. Co-nant on the basis of two incidents. First, on June 20, 1995, Ms. Conant had been scheduled to visit taxpayers for the entire workday; while on duty she stopped at a neurologist’s office for ten to fifteen minutes to obtain a copy of certain medical test results. She failed to report and deduct time for this stop from her official time-sheet. Second, during August 1995, Ms. Conant felt ill frequently and would step outside of the building to get fresh air. Twice that month she was observed reading a book outside of the office building without permission from her supervisor.

After a year of negotiations over her proposed removal, Ms. Conant and the IRS reached a settlement agreement in November 1996. The relevant provisions of the agreement for the purposes of the present appeal are:

1. The Agency will rescind the SF-50 reflecting that the Grievant had been removed, and will issue a new SF-50 reflecting that the Grievant resigned for personal reasons.
. . . . .
3. The Grievant agrees that she will not seek or accept employment in the future with any office of any Department of the Treasury agency or bureau. She further agrees that she will never apply to become an enrolled agent.
. . . . .
4. The Grievant will withdraw with prejudice her grievance concerning the removal, and the union will withdraw with prejudice its invocation of arbitration concerning the removal of the Grievant.
. . . . .
11.The Agency will utilize its best efforts to effectuate the Grievant’s application for disability retirement and life insurance.

In November 1996, after the settlement agreement was signed, Ms. Conant submitted the “Applicant Statement of Disability” forms required to process her disability application. In March 1997, the IRS submitted the “Supervisor’s Statement” forms required from an applicant’s agency in connection with disability retirement. However, Ms. Conant was not aware that the IRS’s documentation included: (1) a declaration by her supervisor on the Supervisor’s Statement asserting that Ms. Conant suffered from “no documented medical condition”; (2) an “Attachment” which alleged that Ms. Conant “falsified time sheets” and “violated the rules of conduct” of her agency, and referenced the June 20, 1995 stop at the neurologist’s office and her breaks outside during August 1995; and (3) the original Removal SF 50 removing Ms. Conant for “failure to observe official duty hours.”

In June 1997, OPM denied Ms. Conant’s disability application. OPM determined that Ms. Conant had failed to establish: (a) that she had a disabling medical condition; that she was disabled for useful and efficient service; or (b) that a nexus existed between her putative medical condition and her “falsification of time, and work reports.” Ms. Conant appealed OPM’s denial of her disability application to the Board. In October 1997, the Board affirmed OPM’s decision, holding that Ms. Conant had not proven a nexus between her alleged medical condition and her misconduct. Ms. Conant petitioned for a rehearing which the Board granted, and after this rehearing the Board reaffirmed OPM’s denial of her disability application. As before, the Board concluded that Ms. Conant had not proven that her medical condition “caused her to falsify her time and work record or to absent herself from the workplace.” Ms. Conant petitioned for review, which was denied by the Board on July 27, 1999. Ms. Conant timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. 1295(a)(9) (1994).

DISCUSSION

The Board’s decision must be sustained unless it is (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) (1994).

Ms. Conant contends that the Board erred by considering the IRS’s allegations of misconduct in conjunction with her disability application. She argues that the Conant IRS Settlement Agreement resolved all disputes between the parties as to any alleged misconduct. Therefore by re-alleging this same misconduct on the forms it filed in connection with Ms. Co-nant’s disability application, the IRS breached the terms of the agreement and compromised Ms. Conant’s ability to receive disability retirement. The government asserts that it did not breach the agreement, and that Ms. Conant did not raise the issue below, thereby waiving her right to appeal the breach of the settlement agreement by the IRS. Therefore, before analyzing the merits of Ms. Co-nant’s claim, we must determine whether she preserved this issue for appeal.

It is well-settled law that appellants from an administrative agency decision may not raise claims for the first time on appeal. Kachanis v. Dep’t of Treasury, 212 F.3d 1289, 1293 (Fed.Cir.2000); Wallace v. Dep’t of the Air Force, 879 F.2d 829, 832 (Fed.Cir.1989). As explained by the United States Supreme Court, “objections to the proceedings of an administrative agency [must] be made while it has an opportunity for correction in order to raise issues reviewable by the courts.” United States v. LA. Tucker Truck Lines, 344 U.S. 33, 37, 73 S.Ct. 67, 97 L.Ed. 54 (1952). This court’s standard for assessing whether an issue was adequately raised before the administrative agency is that “the issue must be raised with sufficient specificity and clarity that the tribunal is aware that it must decide the issue, and in sufficient time that the agency can do so.” Wallace, 879 F.2d at 832. Therefore, Ms. Conant’s claim is reviewable by this court only if she raised the issue before the Board with sufficient specificity and clarity to make the tribunal aware of the issue.

Ms. Conant has objected to the IRS’s failure to adhere to the settlement agreement at every stage of her case. When OPM first denied her disability retirement in June 1997, Ms. Conant’s appeal complained of the IRS’s “failure to keep the agreement” to “effectuate” her disability application. Nevertheless, in October 1997, the Board affirmed OPM’s denial of her disability retirement. Ms. Conant then petitioned the Board for review, arguing that the IRS’s allegations of misconduct had already been resolved: “The appellant grieved the charge and the employing agency withdrew the charge.” The Board granted Ms. Conant a rehearing on the basis that she had not waived her right to a hearing. After this hearing, Ms. Conant submitted a post-hearing statement where she reasserted her claim that the IRS had “agreed to facilitate Appellant’s application for disability retirement” but had “reneged on this commitment [agreement]” when it stated she had no disability on its agency forms. The Board reaffirmed the denial of her application whereupon Ms. Conant petitioned for review, repeating her complaint that the IRS’s allegations of misconduct violated the settlement agreement:

By entering the agreement to support her application and then not doing so, and instead bringing up the allegations of misconduct, [the IRS] injected into Ms. Conant’s disability application the question of whether her alleged misconduct leading to her proposed removal was justified, precisely the question it had agreed not to litigate.... By reneging on the settlement agreement, the agency never had to meet its burden of proving her alleged misconduct in an adverse action hearing.

After the Board issued its final decision denying her petition for review, Ms. Co-nant appealed to this court, again arguing that the IRS violated the terms of the settlement agreement by alleging misconduct on the forms it submitted as part of her disability application. Thus, Ms. Co-nant has repeated her claim with more than adequate specificity and clarity for the Board to realize the issue was before it. Although the issue was clearly before the Board, it failed to consider this question. Given that Ms. Conant has preserved the issue, this court may review the merits of her claim that the IRS breached the settlement agreement by alleging misconduct in the documents it submitted regarding her disability application.

A settlement agreement is a contract, and its construction is a question of law which this court reviews de novo. Harris v. Dep’t of Veterans Affairs, 142 F.3d 1463, 1467 (Fed.Cir.1998); Tretchick v. Dep’t of Transp., 109 F.3d 749, 752 (Fed.Cir.1997). When interpreting a settlement agreement, we first ascertain whether the agreement clearly states the parties’ understanding. King v. Dep’t of the Navy, 130 F.3d 1031, 1033 (Fed.Cir. 1997). Any remaining ambiguities are resolved by implementing the parties’ intent at the time the agreement was made. King, 130 F.3d at 1033.

As part of the ConanNIRS settlement agreement, the IRS expressly agreed to rescind its removal action against Ms. Conant and issue a new SF-50 stating she resigned voluntarily for personal reasons, and agreed to help her obtain disability retirement. In return, Ms. Conant agreed to drop her grievances and promised never to seek or accept employment with the agency.

The IRS has clearly breached its obligations under the agreement. In paragraph 1, the IRS stipulated that it would “rescind” the original Removal SF-50 and issue a new SF-50 stating that Ms. Conant resigned for personal reasons. By agreeing to “rescind” the Removal SF-50, the IRS promised in effect to destroy it, erasing “removal” and all reasons for such a removal from Ms. Conant’s professional record with the agency. By agreeing to issue a new SF-50 in its place, the IRS promised that the only legal document recording the end of Ms. Conant’s employment with the agency would henceforth be the SF-50 stating she resigned for personal reasons. Accordingly, by submitting the original Removal SF-50 with Ms. Co-nant’s disability application, the IRS breached the agreement and prejudiced the disability proceedings.

Furthermore, the IRS breached its obligation to use its “best efforts” to “effectuate” Ms. Conant’s disability retirement, as stipulated in paragraph 11. By promising to “effectuate” Ms. Conant’s application, the IRS bound itself to help Ms. Conant receive the full extent of any disability retirement available to her under law. An agency’s “best efforts” to “effectuate” an employee’s application for benefits do not include sabotaging that application through unproven allegations of misconduct or by submitting forms that it had promised to rescind. At a minimum, an agency’s “best efforts” must include adherence to any settlement agreement that it has signed. The agency in this instance did not use its best efforts to assist Ms. Conant in obtaining her disability retirement, but rather took affirmative steps to impede and to prejudice the process.

Although the IRS’s breach of the settlement agreement compromised Ms. Co-nant’s disability application, both OPM and the Board failed to recognize the questionable nature of the materials submitted by the IRS. The IRS’s documentation of alleged misconduct had not been adjudicated by any competent authority. The IRS had not met any burden of proving these allegations, nor had Ms. Conant been afforded the opportunity to defend herself against them. Hence, it was abuse of discretion for the Board to include such unproven allegations in its evaluation of Ms. Co-nant’s disability application.

Furthermore, neither OPM nor the Board construed the Conant-IRS settlement agreement as it applied to Ms. Conant’s benefits, despite the fact that the text of the settlement agreement was before each tribunal in making its determinations. Where a settlement agreement between the parties is relevant to an administrative proceeding, directly addresses an issue in dispute, and is not contrary to law, an administrative agency cannot choose to ignore the agreement. In the present case, the settlement agreement resolved the dispute surrounding Ms. Conant’s proposed removal. Therefore, it was abuse of discretion for the Board not to construe the agreement as it applied to Ms. Conant’s disability application.

CONCLUSION

The IRS breached the settlement agreement by submitting documents it had agreed to rescind, and by using its “best efforts” to undermine rather than “effectuate” Ms. Conant’s disability application when it reiterated those allegations of misconduct resolved by the agreement. This breach of the settlement agreement was not immaterial because, on the basis of the IRS’s allegations, both OPM and the Board expected Ms. Conant to prove a nexus between her disability and the alleged misconduct. Because these documents and allegations materially compromised Ms. Conant’s eligibility for disability retirement, we vacate the Board’s decision and remand for redetermination of Ms. Conant’s disability application. At the rehearing, Ms. Conant is entitled to a rede-termination of her disability retirement and the Board may not consider any allegations of misconduct or documents that were infected by the breach of the Co-nant-IRS settlement agreement.

VACATED AND REMANDED.

COSTS

See, e.g., Morton v. Ruiz, 415 U.S. 199, 235, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974) (“Where the rights of individuals are affected, it is incumbent upon agencies to follow their own procedures.”). The VA not only gave incorrect information by telephone, but did not follow its own procedure for sending written notice to dependents. Whether the Secretary’s regulations exceed the statute’s requirements (benefitting the veteran’s dependents), as the majority contends, does not assuage the serious concern that is here raised. It is bad enough that dependents such as Mrs. Westberry do not receive correct information when they inquire; but the Secretary’s refusal to remedy its admitted errors is unconscionable.

Costs to Petitioner.

RADER, Circuit Judge, dissents. 
      
      . It is a generally accepted rule that an ambiguous contract is to be construed in accordance with the intent of the parties. Edward R. Marden Corp. v. United States, 803 F.2d 701, 705 (Fed.Cir. 1986), but if that intent cannot be determined, the rules stated in Hills Materials Co. v. Rice, 982 F.2d 514, 516 (Fed.Cir. 1992) would apply. Such is not the case here.
     