[Federal Register Volume 62, Number 246 (Tuesday, December 23, 1997)]
[Proposed Rules]
[Pages 67120-67172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32511]



[[Page 67119]]

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Part II





Department of Labor





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Office of Workers Compensation Programs



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20 CFR Parts 10 and 25



Claims for Compensation Under the Federal Employees' Compensation Act; 
Compensation for Disability and Death of Noncitizen Federal Employees 
Outside the United States; Proposed Rule

Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / 
Proposed Rules

[[Page 67120]]



DEPARTMENT OF LABOR

Office of Workers' Compensation Programs

20 CFR Parts 10 and 25

RIN Number 1215-AB07


Claims for Compensation under the Federal Employees' Compensation 
Act; Compensation for Disability and Death of Noncitizen Federal 
Employees Outside the United States

AGENCY: Office of Workers' Compensation Programs, Employment Standards 
Administration, Labor.

ACTION: Proposed rule; request for comments.

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SUMMARY: The Department of Labor proposes to revise the regulations 
governing the administration of the Federal Employees' Compensation Act 
(FECA), which provides benefits to all civilian Federal employees and 
certain other groups of employees and individuals who are injured or 
killed while performing their jobs. The Office of Workers' Compensation 
Programs (OWCP) administers the FECA.
    The existing rules have been entirely rewritten using plain English 
and have also been reorganized into a more accessible format. A number 
of significant changes are made in the proposed regulations, including 
new sections implementing amendments to the law which provide for 
suspension of benefits during incarceration and termination of benefits 
for conviction of fraud against the program; changes to the 
continuation of pay (COP) provisions, including reducing to 30 days the 
time within which COP may be used where there is a recurrence of 
disability; paying for an attendant as a medical expense instead of as 
a supplemental payment to the claimant; inclusion of OWCP nurse 
services in the definition of vocational rehabilitation services; 
clarifying the review process by distinguishing between modification on 
the Director's own motion (in which case no new evidence or argument is 
needed to reopen claim) and reconsideration at the request of the 
claimant (which will require the claimant to provide new evidence or 
argument to reopen the claim); restricting opportunities to postpone 
oral hearings; clarification of subpoena authority; streamlining the 
standards for review of attorney fees; provision of more detailed 
guidance in regard to claims involving the liability of a third party; 
and clarification of procedures with respect to claims filed by non-
Federal law enforcement officers. Also included in the proposed 
regulations is a major revision of the medical fee schedule to include, 
for the first time, pharmacy and inpatient hospital bills.

DATES: Written comments must be submitted on or before February 23, 
1998.

ADDRESSES: Send written comments to Thomas M. Markey, Director for 
Federal Employees' Compensation, Employment Standards Administration, 
U.S. Department of Labor, Room S-3229, 200 Constitution Avenue NW., 
Washington, DC 20210; Telephone (202) 219-7552.

FOR FURTHER INFORMATION CONTACT: Thomas M. Markey, Director for Federal 
Employees' Compensation, Telephone (202) 219-7552.

SUPPLEMENTARY INFORMATION: The FECA provides compensation for wage 
loss, medical care, and vocational rehabilitation to Federal employees 
and certain other individuals who are injured in the performance of 
their duties, or who develop illness as a result of factors of their 
Federal employment. It also provides monetary benefits to the survivors 
of employees who are killed in the performance of duty or die as the 
result of factors of their Federal employment.
    The program's regulations were last substantially revised in 1987. 
Since then, new provisions have been added to the statute, and 
experience has shown that certain parts of the regulations need 
clarification or revision to improve and streamline the claims process. 
In addition, there has been a significant increase in the number and 
complexity of OWCP issues requiring adjudication, which has strained 
the administrative resources available to fulfill OWCP's statutory 
mandate to adjudicate and administer claims. In addition, several 
developments have enabled OWCP to devise a fee schedule applicable to 
hospital inpatient and pharmacy bills. For all of these reasons, the 
rules have been comprehensively rewritten.
    The proposed rules look significantly different than the existing 
rules. This is both because they have been completely reorganized into 
a format reflecting the organization of the claims process itself and 
because they are presented in a question-and-answer format instead of 
the narrative form used in the existing rules. We believe that the new 
organization and style of the regulations presents the information in a 
way consistent with the needs of the user, and will help the reader 
more easily find information. In addition, unnecessary information has 
been eliminated and material which simply repeats the language of the 
statute itself has been removed from various portions of the 
regulations.
    The regulations have been re-numbered and substantially re-worded. 
The sections have been grouped by type of claims, where appropriate, so 
that the reader who wants to know about filing death claims, for 
example, need only turn to one section to get essentially all the basic 
information about how such claims are filed.
    A description of other significant changes made by these 
regulations follows. Cross references from new sections to the existing 
ones are made to allow the reader to better follow the changes.

Subpart A, General Provisions

    This subpart is substantially the same as current subpart A 
(Secs. 10.1 through 10.23), with the addition of material describing 
the penalties imposed as a result of the amendments to the FECA that 
added 5 U.S.C. 8148.

Introduction

    Section 10.2 has been revised to reflect two changes: employees of 
the Alaska Railroad are no longer covered under the FECA; and 
administration of the FECA for Panama Canal Commission employees was 
returned to OWCP in 1989.

Definitions and Forms

    Section 10.5 now includes definitions that used to appear in 
several later subparts. Definitions of terms defined in the FECA 
itself, such as injury, organ and United States Medical Officers and 
Hospitals, no longer appear in the regulations, because it is felt to 
be unnecessary to repeat these statutory provisions.
    Section 10.5(a) revises the definition of Benefits or Compensation 
to clarify that those terms include the amounts paid out of the 
Employees' Compensation Fund for medical examinations conducted at the 
request of OWCP as part of the claims adjudication process, consistent 
with OWCP's longstanding practice.
    Section 10.5(g) moves the definition for Earnings From Employment 
Or Self-Employment from its existing location in Section 10.125(c) and 
revises it to clarify that earnings from self-employment include a 
reasonable estimate of the cost to have someone else perform the duties 
of an individual who accepts no remuneration. This revision is 
consistent with several decisions by the Employees' Compensation 
Appeals Board (ECAB) in this area. See, e.g., Edward O. Hamilton, 39 
ECAB 1131 (1988); William C. Austin, 39 ECAB 357 (1988).

[[Page 67121]]

    Section 10.5(h) replaces the lengthy and cumbersome list which 
constituted the old definition for Employee with a shorter list that 
omits references to coverage afforded pursuant to other specific 
statutes, since the material omitted merely referenced other statutory 
provisions.
    Section 10.5(i) simplifies and updates the definition of Employer 
or Agency by broadening it to make clear that it encompasses the 
various titles now used by different agencies for persons designated to 
perform the employer's tasks in the FECA claims process. This 
streamlining is not intended to in any way change existing practice.
    The definition of Knowingly in section 10.5(n) is new. It adopts 
the definition for this term, consistently used by the ECAB in numerous 
forfeiture cases construing section 8106(b)(2). See, e.g., Garry Don 
Young, 45 ECAB 621 (1994); Lewis George, 45 ECAB 144 (1993).
    Section 10.5(x) replaces the existing discussion of Recurrence Of 
Disability found in Sec. 10.121, which merely provides that a 
recurrence occurs when the original injury causes the employee to stop 
work again. The definition of recurrence being added to the regulations 
reflects OWCP's understanding of the term recurrence as explained by 
the ECAB in numerous cases which have thoroughly examined both the 
medical and non-medical aspects of this issue. The new definition will 
also enable OWCP to recognize the changes that have occurred in the 
nature of federal employment in this era of continued government 
downsizing by specifically addressing some situations that arise as 
agencies close work sites. See, e.g., Terry R. Hedman, 38 ECAB 222 
(1986); John W. Normand, 39 ECAB 1378 (1988); Don J. Mazurek (Docket 
No. 93-2063, January 23, 1995).
    The definitions of Occupational Disease or Illness, Physician and 
Student have been shortened, with no intent to make a substantive 
change, by deleting (or simply referring to) definitional material 
which already appears in the FECA.
    In Sec. 10.6, current Sec. 10.5(b) is updated to include a new 
category of ``dependents'' for purposes of implementing new section 
8148 of the FECA. That amendment requires a suspension of benefits when 
a claimant is incarcerated for a felony, but allows instead payments of 
a portion of those benefits to eligible dependents.

Rights and Penalties

    Sections which merely repeat provisions of the statute (such as the 
reference to the FECA as the exclusive remedy for employees and their 
families) have been removed. Proposed Sec. 10.16 provides information 
about various provisions of criminal law relating to the FECA claims 
process. In addition to the description of the penalties, a statement 
has been added explaining that enforcement of the criminal laws 
applicable to FECA activities is solely within the jurisdiction of the 
Department of Justice. This is intended to eliminate confusion on the 
part of some individuals who ask that OWCP enforce these criminal law 
provisions.
    Section 10.17 implements a recent addition to the FECA, section 
8148(a). Pursuant to section 8148(a), any beneficiary convicted of 
defrauding the federal government in connection with a FECA claim 
forfeits his or her right to further compensation ``as of the date of 
such conviction.'' To implement this provision in a uniform manner 
consistent with the intent of the statute, the term ``conviction'' is 
interpreted in this section as occurring either on the date that a 
guilty plea is made in open court or the date that a verdict of guilty 
is returned after trial.
    This interpretation, which is consistent with opinions issued by 
the Comptroller General and instructions issued by that office, ensures 
consistency among various government agencies and permits uniform 
application of these procedures despite variations among jurisdictions 
with respect to how the term ``conviction'' has been defined for other 
purposes. In addition, choice of the date a guilty plea is made in open 
court or a verdict of guilty is returned after trial facilitates 
implementation of the statutory provisions because the date is easy to 
ascertain following the submission of pertinent factual evidence, such 
as a copy of a plea agreement or a judgment order that has been filed 
in a criminal case.
    Section 10.18 implements another recent addition to the FECA, 
section 8148(b). Pursuant to section 8148(b), which is similar to 
provisions of several state workers' compensation statutes and a 
provision in the Social Security Act, any beneficiary incarcerated for 
either a state or federal felony conviction forfeits his or her right 
to compensation during the period of such incarceration. However, this 
section also provides the OWCP with the discretionary authority to 
allocate ``a percentage of the benefits that would have been payable'' 
to an incarcerated beneficiary among his or her dependents using the 
percentages stated in section 8133(a)(1) through (5).
    In exercise of this discretion, OWCP has selected the gross current 
entitlement of an incarcerated beneficiary as a ``percentage'' of such 
beneficiary's ``monthly pay'' under section 8101(4), and the proposed 
regulation provides that the resulting amount will be divided, using 
the percentages of section 8133(a)(1) through (5), among his or her 
dependents during the period of any such incarceration.

Subpart B, Filing Notices and Claims; Submitting Evidence

    This subpart contains most of the information in current 
Secs. 10.100 through 10.122, 10.130, and 10.140. The material in 
current Sec. 10.102(e), which addresses the employer's authority to 
provide copies of forms and other records pertaining to a claim, is now 
addressed generally in subpart A, Sec. 10.12. Current Sec. 10.104, 
regarding physicians' reports, has been moved to subpart D (Medical and 
Related Benefits). Current Sec. 10.109(a) (concerning the payment of 
the balance of schedule awards) has been moved to subpart E 
(Compensation and Related Benefits).
    The discussion of development of claims by OWCP found in current 
Sec. 10.110(b) has been omitted from the proposed regulations. This 
discussion has proven to be misleading, and was mistakenly assumed to 
be a commitment by OWCP to undertake development, despite the fact that 
it only describes what OWCP may, on an ad hoc basis, do even though the 
burden of proof to establish the elements of the claim is on the 
claimant at all times. The statements in current Sec. 10.120 and 
Sec. 10.121(d) requiring the employer to report termination of 
disability on Form CA-3 have been removed, as this procedure is no 
longer required. Current Sec. 10.150, which describes OWCP's function 
within the sphere of workers' compensation law generally, has been 
entirely removed as unnecessary.

Notices and Claims for Injury, Disease, and Death--Employee or 
Survivor's Actions

    In Sec. 10.100 and 10.102, which discuss notices of injury and 
occupational disease, the statements that the employer (or another 
person) may file a notice of injury on the employee's behalf are new, 
although the practice it describes is a longstanding one. This 
provision is being added to the regulations to encourage prompt filing 
of claims. OWCP cannot provide case management services, which assist 
in a rapid return to work in the crucial early days of disability, 
without prompt notice. An informational statement that a claimant may 
withdraw a claim before

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it has been adjudicated has also been added to these sections as well 
as to Sec. 10.106.
    Section 10.101 highlights the need for the employee to file a wage 
loss claim (form CA-7 or CA-8) in order to receive wage-loss benefits 
(compensation); this is in addition to the initial notice of injury 
(form CA-1 or CA-2) which must be filed for every injury, whether or 
not the injury results in lost wages. The need to file a separate claim 
for wage loss has in the past sometimes been a point of confusion among 
claimants, who do not realize that even though they filed the form 
notifying OWCP of an injury, OWCP has no way of knowing that the person 
has stopped work and lost wages unless the CA-7 or CA-8 claims for wage 
loss are also filed. In addition, the 10-day time frame within which 
the employee must file the wage-loss claim has been changed to 14 days 
to conform to the two-week pay cycle observed by most federal agencies 
and by OWCP. The longstanding practice that an employee may file a 
claim for permanent impairment (that is, for a schedule award) by 
letter if Form CA-7 has already been filed is specified in Sec. 10.104.
    Section 10.105 clarifies the circumstances under which a notice of 
recurrence (Form CA-2a) is required, rather than a new notice of injury 
(Form CA-1 or CA-2). The statement in (a) concerning the need to file a 
new notice of injury or episode of occupational disease is being added 
as a clarification that reflects current OWCP practice.
    The statement in Sec. 10.106 that the employer may file the claim 
on the survivor's behalf is new. It is added to encourage prompt filing 
of claims. The regulations also explain that the claim may be withdrawn 
before adjudication in order to conserve resources.

Notices and Claims for Injury, Disease, and Death--Employer's Actions

    Proposed Sec. 10.110, which discusses the employer's 
responsibilities when a notice of traumatic injury or occupational 
disease has been received, shortens the time frame for submission of 
notices of injury and occupational disease from 10 to five work days, 
and the regulations now make clear that the employer should not wait 
for any supporting evidence before sending the form to OWCP. These 
changes reflect OWCP's increasing emphasis on early receipt of notices 
of injury and claims for compensation, which enables rapid initiation 
of adjudication and case management procedures, as well as payment of 
benefits, and an earlier return to work.
    Proposed Sec. 10.111 discusses the employer's responsibilities when 
a claim for compensation due to disability or permanent impairment has 
been received. It also changes the time frames for submittal of a claim 
for initial disability when the employee is receiving continuation of 
pay. Similarly, a statement emphasizing that the employer should 
provide the employee with a Form CA-8 to claim continuing disability 
has been added to Sec. 10.112. Both changes represent long-standing 
practice on the part of OWCP and most federal employers.
    The statement that the employer may not charge for assisting 
survivors in filing claims, which is found in current Sec. 10.108, has 
been removed as unnecessary from Sec. 10.113, which discusses the 
employer's responsibilities when an employee dies from a work-related 
injury or disease.

Evidence and Burden of Proof

    Section 10.115 describes, in a more comprehensive and specific 
manner than the existing regulations, the five basic requirements which 
have long been required of a claimant. It supplants the description in 
the existing Sec. 10.110(a), which is more procedural and technical, 
and which contains information (such as what medical evidence is 
required) that is already in development letters and occupational 
disease checklists provided directly to the claimant. The need to 
submit supporting medical evidence when wage loss benefits are claimed 
is emphasized, as this requirement is not always clear to employees.
    Section 10.116 includes a reference to OWCP's use of checklists to 
assist the claimant and employer in determining what information needs 
to be submitted for certain occupational disease cases. While these 
checklists have been in use for many years, and provide specific 
guidance on what information is required for different types of claims, 
they have not previously been mentioned in the regulations.

Decisions on Entitlement to Benefits

    New Sec. 10.125 revises the language in existing Sec. 10.130 to 
include, in the list of authorities used to adjudicate claims, 
decisions of the Employees' Compensation Appeals Board interpreting the 
FECA itself. This statement is added to provide claimants and employers 
with a general idea of the precedents used in making determinations.
    Sections 10.160-10.166 of the existing regulations authorize OWCP 
to appoint a representative and to supervise the management of the 
claimant's funds by the representative payee. Section 10.424 of the new 
regulations regarding representative payees provides that a 
representative payee will be appointed only in situations in which no 
court or administrative body authorized to do so has appointed a 
guardian or other party to manage the financial affairs of the 
claimant, since such an appointment constitutes sufficient 
authorization for payment of FECA benefits by OWCP to the party so 
appointed. Furthermore, OWCP no longer will attempt to supervise a 
representative payee's activities, but will instead rely upon 
appointment of a guardian under applicable state law and supervision in 
accordance with those procedures as necessary.

Subpart C, Continuation of Pay

    This subpart covers the same material as current subpart C 
(Secs. 10.200 through 10.209). The general rules found in current 
Sec. 10.201 have been rearranged and placed in different sections. The 
criteria for eligibility in current Sec. 10.201(a) are now found in 
Sec. 10.205. Current Sec. 10.201(b) is now found at Sec. 10.215; 
current Sec. 10.201(d) is now found at Sec. 10.200; and current 
Secs. 10.201(e) and (f) are now found at Sec. 10.223.

Eligibility for COP

    Sections 10.205 (d) and 10.207 address the time frames applicable 
for paying continuation of pay (COP) when there is a recurrence of 
injury. Under the current rule, COP is payable only when the disability 
begins within 90 days of the date of injury (see current Sec. 10.201). 
Similarly, when an injured employee returns to work but stops again, 
any remaining COP is payable for the additional time lost (see current 
Sec. 10.208(b)(3)). The proposed rules shorten the 90-day period to a 
30-day period in both situations.
    The 90-day period presently set forth in Sec. 10.202(a) and (b) was 
initially adopted to ensure that injured workers (who filed claims for 
COP within 30 days) would receive the full 45 days of COP, while at the 
same time affording employers and OWCP sufficient time to develop and 
adjudicate claims. Such a grace period is no longer necessary since the 
employing agencies are referring Form CA-7s and CA-8s (claims for 
compensation) to OWCP in a timely manner and OWCP is adjudicating about 
93 percent of these claims and, where appropriate, authorizing the 
payment of claims for disability compensation (CA-7s and CA-8s) within 
14 days of receipt.
    OWCP has focused on minimizing or eliminating lost work time 
entirely,

[[Page 67123]]

which requires early intervention in the case. When the employer pays 
COP, OWCP may not necessarily even know about lost work time. The 
artificial extension of the COP period under the 90-day rules makes it 
difficult to intervene in cases where lost time is continuing at the 
point when early intervention is crucial. It is no longer necessary to 
forego the opportunity for this early intervention to ensure that 
income is not disrupted. Indeed, since COP was first introduced, 
payment performance has improved measurably, and the time frames were 
reduced in 1987 from six months to the current 90 days. OWCP's early 
intervention efforts now support an additional reduction of the period 
to 30 days, which is the period chosen by Congress as the time frame 
within which the initial claim has to be filed.

Calculation of COP

    Proposed Sec. 10.217 reworks material found in current 
Sec. 10.201(b), which contains a lengthy discussion of when COP is 
payable. Among other things, the discussion addresses situations where 
an employee continues to work in a different position because he or she 
is unable to work in the job held on the date of injury. The existing 
rule has been re-written to remove excess verbiage and to make clear 
that COP is chargeable where the employee who continues to work, but in 
a different job, would otherwise incur a reduction in pay because of 
the injury, but for COP. There is no intention to change the substance 
of the current rule. Since the methods of computing pay differ among 
agencies, it is difficult to capture all the variables, so we invite 
comments particularly from agencies on whose practices these new rules 
could inadvertently have an unintended adverse effect.

Controversion and Termination of COP

    Section 10.222(b) allows an employer to terminate COP when a 
preliminary notice of a disciplinary action issued before the injury 
becomes final or otherwise effective during the COP period. Current 
Sec. 10.201 states that the final written notice of termination of 
employment for cause must have been issued before the date of injury. 
The proposed change corrects an overly rigid rule and better reflects 
the disciplinary process itself. It simply ensures that the employee 
and the employer are put in the same position as that which would have 
existed but for the injury; the salary would not have continued because 
of the disciplinary action and therefore COP should not be paid.

Subpart D, Medical and Related Benefits

    This subpart contains most of the information found in current 
subpart E (Secs. 10.401 through 10.413), except that some of the 
material about medical reports and payments (Secs. 10.410 through 
10.413) has been moved to new subpart I. The definitions contained in 
current Sec. 10.400 have been shortened and moved to subpart A. This 
subpart also addresses the subjects of current Secs. 10.104(a) and 
10.305. Current Sec. 10.401(d), which addresses the status of federal 
health units, has been removed as superfluous. Current Sec. 10.406, 
which concerns dental benefits, has been removed entirely as dental 
care is just one of many specialized forms of treatment authorized 
under the FECA, and it presents no special issues which need to be 
addressed.

Emergency Medical Care

    In Sec. 10.300, the statement that the employer need not issue a 
Form CA-16 more than one week after the occurrence of the claimed 
injury has been added. This statement reflects long-standing practice, 
consistent with a purpose behind the issuance of this form, which is 
designed to ensure that necessary immediate medical care is not 
hindered through uncertainty by the provider of who is responsible for 
payment. Section 10.301 addresses often-asked questions and reflects 
long-standing policy, by making clear that the physician designated on 
the CA-16 may refer a claimant for additional treatment and OWCP will 
pay the appropriate associated costs.
    Section 10.303 is new and is intended to provide uniform guidance 
to employers who have questions about whether it is proper to use a 
Form CA-16 to authorize medical testing at OWCP expense when their 
employees experience an exposure to a workplace hazard. It has been a 
matter of longstanding practice for OWCP to discourage the use of Form 
CA-16 in this kind of situation and to remind employers that they may 
be under an obligation independent of the FECA to provide their 
employees with medical testing and/or other services. This regulation 
reflects this practice, as well as OWCP's policy regarding payment for 
preventive treatment.

Medical Treatment and Related Issues

    In Sec. 10.310, the references to cost-effectiveness with respect 
to appliances and supplies and to generic equivalents of prescribed 
medications are new. They reflect the need for OWCP to control costs 
wherever possible in the current medical environment. OWCP will not 
approve an elaborate appliance or service where a more basic one is 
suitable, and full reimbursement for the appliance or service may not 
be made without prior approval by OWCP.
    OWCP receives many questions from employees and chiropractors 
concerning the parameters of chiropractic care, and Sec. 10.311 
provides more specific guidance. Two changes to current practice are 
made for administrative convenience: the definition of ``subluxation'' 
which appears in current Sec. 10.400(e) has been moved to new 
Sec. 10.5(aa), and a statement that OWCP will not necessarily require 
the x-ray or a report of the x-ray before adjudication has been added.
    Section 10.312, which concerns the services of clinical 
psychologists, is also new. Treatment of FECA claimants by clinical 
psychologists has become much more common. Cases where a claimant 
exhibits or alleges both physiological and psychological conditions 
have presented problems concerning the proper scope of practice and the 
needs of OWCP for comprehensive medical reports addressing both 
conditions. Section 10.312 specifies that a clinical psychologist may 
treat a FECA claimant as a physician within the scope of practice 
allowed by applicable state law.
    Section 10.313 has been added to address frequently asked questions 
concerning preventive measures. It reflects OWCP policy as stated in 
its internal procedures. What distinguishes situations where preventive 
treatment may be authorized from those where it may not be authorized 
is the presence of a verifiable work-related injury. Without such an 
injury, preventive treatment cannot be authorized.

Attendants

    Section 10.314, which concerns the services of attendants, 
represents a significant departure from current practice. At present, 
an allowance may be paid directly to a claimant for the services of an 
attendant (limited by statute to a maximum of $1,500 per month). 
Because the payment is made directly to the claimant, OWCP has no 
opportunity to properly account for the expenditures, nor to monitor 
the quality of the services provided.
    The payment is a tax-free augmentation of compensation, and as the 
proposed rule makes clear, the Director has determined that requests 
for this augmentation will no longer be considered. Individuals who 
have been awarded an attendant allowance before the effective date of 
the final rule, however, would continue to receive it as

[[Page 67124]]

long as the service is otherwise necessary. Although the augmentation 
payment will no longer be considered, and no new awards made, any 
necessary services will still be payable (up to $1500 per month) but by 
direct payments to the provider, as is generally the case for all other 
services.
    There are several reasons for this change. Foremost among these is 
that it offers OWCP greater fiscal control and quality review, while 
continuing to ensure that any necessary personal care services will 
continue to be available to the claimant. First, augmentation itself is 
paid very rarely. The attendant services for which the supplemental 
income provided for under 5 U.S.C. 8111(a) is intended, is not often 
necessary without the concurrent need for medical services. Under these 
circumstances, the trained medical personnel necessary to perform the 
medical functions also take care of the personal care needs, and both 
are, and can continue to be paid for as a medical service.
    Second, even when only personal care services are necessary, OWCP 
may pay for them directly under 5 U.S.C. 8103. The administrative 
resources expended in considering applications for this augmentation of 
compensation under section 8111(a) are excessive, and most are denied 
because there is no showing that the services are necessary. It is 
expected that fewer requests for these services will be received when 
the payments are made directly to the provider like almost all other 
services. Where the claimant can show that the services are necessary 
(by providing sufficient medical documentation), however, they will 
still be provided for.
    Another reason for this change is that by paying the providers of 
such service, OWCP will gain both increased financial accountability 
and better quality control than now exists. Currently, the allowance is 
paid directly to the claimant resulting in OWCP having no effective 
administrative control; we are unable to determine whether the provider 
is charging too much for the services, for example, or even in some 
cases whether the allowance is actually being spent for the services. 
By paying for any necessary services directly, under section 8103, 
instead of providing an allowance to the claimant, under section 
8111(a), these costs will be subject to the same administrative 
controls to which most other bills for services and supplies are 
subject. Bills will be submitted to OWCP directly by the provider; they 
will be subject through the OWCP fee schedule to a maximum monthly 
charge of $1,500; bills for services will be scrutinized to ensure the 
charges are correct; it will be OWCP, not the claimant, who will be 
responsible for resolving any problems with the payments; and a record 
of payments to the provider will be reported to the Internal Revenue 
Service on form 1099 at the end of each year.
    In addition to financial accountability, the quality of services 
can better be monitored. Providing supplemental compensation to the 
injured employee under section 8111 has in many instances encouraged 
family members to take on the personal care services, even though they 
may not be trained or well-suited to this task. Paying the provider 
directly will give OWCP an added degree of review to ensure that the 
necessary services are being provided by a home health aide, licensed 
practical nurse or similarly trained individual better able to provide 
the care needed. Where a family member can show he or she has the 
appropriate qualifications and training, there will be nothing to 
prevent them from providing the service and receiving payment.
    Section 10.316, which concerns an employee's request to change his 
or her primary treating physician, clarifies that an employee need not 
consult OWCP for approval when the physician initially selected refers 
the employee to a specialist appropriate to the nature of the injury. 
Examples of frequently-approved requests for a change of physician are 
also provided to illustrate the decision-making process.

Directed Medical Examinations

    Sections 10.320 and 10.321 concern second opinion and referee 
examinations. A statement has been added to make clear that the 
claimant is not entitled to have anyone attend such examinations 
(except for a physician of his or her choice, at a second opinion 
examination) unless OWCP finds that exceptional circumstances, such as 
the need for having an interpreter for a hearing-impaired claimant, 
exist. This statement was added to address situations where 
representatives and other parties wished to sit in on examinations, 
even though this action can be disruptive. The statement that a case 
file may be sent for second opinion or referee review where an actual 
examination is not needed, or where the employee is deceased, reflects 
long-standing practice and is consistent with ECAB precedent on this 
issue.
    In Sec. 10.323, which addresses failure to report for or 
obstruction of a second opinion or referee examination, a sentence has 
been added providing that actions of an employee's representative will 
be considered the actions of the employee for the purposes of this 
section. This statement was added to address situations where 
representatives prevent or disrupt examinations, thereby hindering OWCP 
from obtaining information needed to adjudicate and manage claims and 
is consistent with ECAB precedent on this issue.

Medical Reports

    In Sec. 10.330, the list of contents for medical reports has been 
expanded to include the extent of disability and prognosis for 
recovery, as these items are especially useful in managing disability 
cases. Inclusion of these items reflects OWCP practice, and should help 
medical providers and employees provide OWCP the information it 
requires to reach a decision in the case.
    To reduce confusion about submission of medical reports, the 
statement that use of form reports is not required has been added to 
Sec. 10.331. Also, this section makes clear that reports must have 
signatures, although recognizing that many medical providers use 
signature stamps in lieu of actual signatures. OWCP reserves the right 
to request an original signature on any medical report. The use of Form 
CA-17 to obtain interim medical reports is expressly confined to 
employees with disabling traumatic injuries, as this form is not 
properly used with occupational disease cases.

Subpart E, Compensation and Related Benefits

    This subpart contains most of the information found in current 
subpart D (Secs. 10.300 through 10.324), and it addresses the subjects 
of current Secs. 10.109, 10.126 through 10.128, and Secs. 10.160 
through 10.166. The very detailed guidance currently given with respect 
to the appointment and responsibilities of representative payees has 
been condensed into one paragraph, new Sec. 10.424, as most of the 
current material is procedural rather than regulatory in nature.
    No counterpart to current Sec. 10.310, which provided for buy-back 
of annual or sick leave, is included in the new regulations. This 
process is not authorized or required by the FECA, nor is it controlled 
by OWCP. It is controlled by each employing agency, in accordance with 
its general rules regarding leave repurchase. The only relationship 
between those rules and FECA is the general prohibition against paying 
wage-loss compensation benefits for any specific period where leave has 
been used. OWCP needs to know, therefore, whether leave has been taken 
in order to determine whether

[[Page 67125]]

compensation is payable for the same period. By including a reference 
in the regulations to the repurchase of leave, however, OWCP has 
inadvertently given the impression that OWCP controls or supervises 
leave buy-back for injured workers, and disputes concerning leave buy-
back have often been incorrectly submitted to OWCP for resolution. To 
avoid this confusion, the reference to leave buy-back has been removed. 
Individuals who wish to repurchase leave should consult with their 
employing agency. Compensation will not be paid where leave has been 
used. Once restoration of leave has been authorized, however, OWCP will 
entertain a claim for benefits for that period of time.

Compensation for Disability and Impairment; Compensation for Death

    In Sec. 10.400, which defines total disability, a statement 
explicitly recognizing OWCP's view that most employees will eventually 
return to work has been added. This statement represents long-standing 
policy as reflected in OWCP's case management procedures.
    In Sec. 10.404, which concerns payment of compensation for schedule 
impairment, a statement that OWCP uses the American Medical 
Association's Guides to the Evaluation of Permanent Impairment as its 
frame of reference for calculating such awards has been added. OWCP has 
used this publication in calculating schedule awards for many years, 
and the ECAB has approved its use. Since the publication is 
periodically updated, OWCP generally uses the newest edition in effect 
at the time of the decision in calculating loss of use.
    OWCP has received a number of petitions over the years to add 
various internal organs to the list of schedule members. We have 
considered each organ suggested and, after much deliberation, decided 
against any additions. This decision is consistent with most state 
workers' compensation systems, which generally do not provide schedule 
awards for internal organs.
    In Sec. 10.406 and Sec. 10.411, which concern maximum and minimum 
rates of compensation, the word ``basic'' has been prefixed to 
``monthly pay'' to indicate that locality adjustments are not included 
in determinations of maximum and minimum rates of compensation. Also, 
statements have been added to recognize that compensation paid due to 
an assault which occurred during an attempted or actual assassination 
of a federal official in the performance of duty is exempted from the 
maximum rates.
    In Sec. 10.413, the provisions of current Sec. 10.109 have been 
shortened so as not to repeat those appearing in the FECA itself.
    In Sec. 10.417, the second and third paragraphs provide that OWCP 
may, at least twice each year, request reports to verify student status 
or the inability of a child over 18 years of age to support himself or 
herself. This reporting schedule is consistent with most school 
enrollment schedules, and helps avoid situations where overpayments 
occur, by reminding recipients that individuals over the age of 18 who 
are not enrolled in school for any particular semester are not eligible 
for survivor benefits.

Adjustments to Compensation

    Section 10.421(c) is new and reflects long-standing practice 
regarding the concurrent receipt of compensation from OWCP and 
severance or separation pay from the employer. With the increasing use 
of such benefits as the government downsizes, the frequency with which 
this is an issue has increased, and so a provision addressing this 
issue was included in the regulation. This provision is consistent with 
ECAB precedent on this issue.
    Section 10.421(d) is also new and implements the changes made to 
the FECA when the Federal Employees' Retirement System (FERS) was 
instituted. Federal employees whose retirement benefits are provided by 
the FERS receive benefits under the Social Security (SSA) retirement 
system as part of their package of retirement benefits. Federal 
employees eligible to receive retirement benefits under the Civil 
Service Retirement Act (CSRA) must elect between FECA benefits and CSRS 
retirement benefits and cannot receive both at the same time. With the 
enactment of the FERS, Congress amended the dual benefit provisions of 
the FECA (section 8116(d)). A FECA beneficiary may receive FECA 
benefits and SSA benefits, except that OWCP is required to reduce FECA 
benefits by the amount of any SSA retirement benefits attributable to 
the individual's Federal employment.
    In Sec. 10.423, which concerns assignment of compensation payments 
to creditors, a statement concerning garnishment of benefits for 
alimony and child support has been added. The language reflects changes 
to various federal laws, making clear that FECA as well as other 
Federal benefits may be attached to fulfill alimony and child support 
obligations.

Overpayments

    The regulations concerning overpayments have been extensively re-
written to highlight and clarify a FECA beneficiary's obligation to be 
aware of the period for which benefits are paid, and the manner in 
which overpayments are declared, contested, and collected.
    The language in Sec. 10.430 has been added to describe how OWCP 
notifies a recipient of compensation that a payment has been made, 
whether by paper check or electronically. This language was added to 
clarify that a recipient is required to be aware of the time period for 
which each payment of compensation for wage loss or schedule award is 
received and to advise OWCP of any discrepancies noted. Absent 
affirmative evidence to the contrary, the beneficiary will be presumed 
to have received the notice of payment, whether mailed or transmitted 
electronically.
    Sections 10.436 and 10.437 discuss the two circumstances under 
which an overpayment can be waived pursuant to section 8129(b). Section 
10.436 discusses the criteria to be used in determining whether 
recovery would ``defeat the purpose'' of the FECA. Section 10.437 
discusses the criteria to be used in determining whether recovery would 
``be against equity and good conscience.'' Waiver under Sec. 10.436 
because recovery would defeat the purposes of FECA is available only to 
currently or formerly entitled beneficiaries, which continues the 
application of that provision in the existing regulations. In 
Sec. 10.437, the manner in which OWCP applies the ``against equity and 
good conscience'' test for waiver of an overpayment is revised to 
provide that this particular test applies to all individuals who are 
``without fault'' and have received compensation because of an error of 
fact or law, regardless of whether or not they are present or former 
beneficiaries under the Act. This change restores the statutory 
distinction between the application of the two tests for waiver 
contained in section 8129(b), which was unintentionally removed as a 
result of the 1987 revision of the regulations.
    In new section 10.441, language has been added to clarify that an 
overpayment is a debt that is subject to the Debt Collection Act of 
1982 and that if such a debt is not repaid OWCP will attempt to recover 
the debt by any available means including offset of salary, annuity 
benefits or referral for collection to a collection agency or to the 
Department of Justice.

Subpart F, Continuing Entitlement to Benefits

    This subpart contains most of the information found in current 
Secs. 10.123 through 10.128. It also includes some

[[Page 67126]]

material from current Secs. 10.107 and 10.110.

Claims for Continuing Disability

    The regulation concerning continuing receipt of compensation 
benefits, new Sec. 10.500, has been written to include a specific 
statement that OWCP's goal is to return each disabled employee to work 
as soon as medically able. The definition of ``suitable work'' has also 
been revised to clarify the criteria by which it is determined that 
work is ``suitable''. These changes were made because these concepts 
are important to the program and important for both employees and 
employers to understand.
    The language in Sec. 10.500(a) has been added to inform claimants, 
employing agencies and others of OWCP's long-standing practice of 
requiring claimants to periodically submit medical evidence in support 
of continuing disability. It also includes a description, based on a 
consistent line of ECAB precedent, of the type of medical evidence 
necessary to support a claim for continuing compensation.
    The language in new Sec. 10.500(b) has been added to clarify that 
OWCP can require non-invasive testing and functional capacity 
evaluations and that failure to undergo such testing may result in 
suspension of benefits.
    The discussion of weighing medical evidence in Sec. 10.500(c) has 
been added to describe OWCP's long-standing method of evaluating 
medical evidence. It explains that the conclusions reached in medical 
reports are not necessarily accepted at face value. Instead, OWCP 
considers the entire report and determines the weight to be accorded it 
based on a number of factors, including the extent to which the report 
shows a familiarity with the history of the case, whether it contains 
objective findings (as opposed, for example, to unsubstantiated 
complaints), and the strength of the reasoning supporting any opinion 
rendered.

Return to Work--Employer's Responsibilities

    The discussion of an employer's responsibilities to return an 
employee to work in Sec. 10.505 has been revised to specifically 
reference the provisions of section 8151, which grants reinstatement 
rights to injured employees and requires employers to take steps to 
reemploy them. Language has also been added to inform employees, 
employers and others that the Office of Personnel Management (not OWCP) 
administers this provision. In the past, employees and former employees 
have sought OWCP intervention in disputes concerning reemployment 
rights based upon the mistaken belief that OWCP had jurisdiction over 
such matters and authority over agency decisions concerning employment 
decisions. This provision of the regulations is being added to correct 
that misunderstanding of OWCP's role in regard to reemployment.
    Section 10.506 includes a new provision allowing employers to 
contact employees at reasonable intervals to request periodic medical 
reports addressing their ability to return to work. This statement is 
consistent with OWCP's case management procedures, which are designed 
to include the employing agency in the effort to return the injured 
employee to work. The provision is not intended to allow employers to 
obtain medical reports for any reason other than evaluation of an 
employee's ability to return to work.
    The discussion of payment of relocation expenses, in Sec. 10.508, 
has been revised to include a provision that OWCP may pay relocation 
expenses when the new employer is other than a federal employer, a 
situation which the current Sec. 10.123(f) does not address. Requests 
for reimbursement in this context do not arise frequently, and the 
expenses claimed are usually modest.
    Section 10.509 adds a discussion, not contained in the current 
regulations, of OWCP's practice with respect to injured employees who 
have returned to light-duty work and are separated when their employers 
eliminate their light-duty positions in a subsequent reduction-in-force 
(RIF) as part of a general agency downsizing at a particular work site. 
Consistent with established ECAB precedent, OWCP does not consider such 
a termination of employment to be a recurrence of employment-related 
disability, since it is not caused by a change in the nature or extent 
of the employee's accepted medical condition or a change in the duties 
of the light-duty position, which clearly would have continued to be 
available in the absence of the RIF.
    In such cases, OWCP will determine the employee's wage-earning 
capacity based on his or her actual earnings in the former light-duty 
position, if such a determination is appropriate and has not already 
been made. Unless the employee has been working in a position for which 
the employer has prepared a written position description, OWCP will 
assume that the employee was engaged in non-competitive employment that 
does not represent the employee's wage-earning capacity. This 
requirement is consistent with ECAB precedent concerning wage-earning 
capacity determinations, which provides that OWCP may not use an 
unclassified or ``odd-lot'' position that has been specifically 
tailored to fit the work limitations of a particular injured employee 
to determine the wage-earning capacity of that employee.

Return to Work--Employee's Responsibilities

    Section 10.516 incorporates into the regulations the procedures 
followed when OWCP rejects an employee's reasons for refusing a 
position that OWCP has found suitable. OWCP adopted these procedures 
several years ago in accordance with the decision of the ECAB in Maggie 
Moore, 42 ECAB 484 (1991). The proposed regulation provides for a 15-
day period during which an employee may accept the offered job without 
penalty after OWCP has determined that his or her proffered reasons for 
declining to accept an offer of suitable work are not reasonable.
    Section 10.518 adds a discussion of ``vocational rehabilitation 
services'' to the regulations. This definition is intended to clarify 
that such services include the services of registered nurses working at 
the direction of OWCP to assist employees in returning to work. These 
nursing services, which generally take place in the weeks immediately 
following the injury, are an integral part of OWCP's efforts to return 
injured employees to work. Vocational rehabilitation includes a variety 
of services, all of which are designed to assist an injured employee's 
return to work. Including this definition of vocational rehabilitation 
services clarifies that OWCP considers nursing services to be such 
services and that the benefits and sanctions set forth in section 8104 
and section 8113(b), which apply to other vocational services, will 
also apply to nurse services. This discussion also states that OWCP 
considers vocational evaluation, testing, training and placement 
services, and functional capacity evaluations to be vocational 
rehabilitation services.
    Section 10.520 incorporates into the regulations an explanation of 
how OWCP determines an employee's wage-earning capacity after 
completion of a vocational rehabilitation program. This discussion is 
intended to inform employees and others of OWCP's long-standing 
practice in this area and is consistent with ECAB precedent concerning 
determination of wage-earning capacity.

Reports of Earnings From Employment and Self-Employment

    The FECA authorizes OWCP to require FECA claimants to report

[[Page 67127]]

earnings from employment or self-employment. The ``earnings'' from 
employment or self-employment that must be reported by any employee who 
is receiving compensation for either partial or total disability are 
defined in Sec. 10.5(g). The language in Sec. 10.525(b) has been added 
to clarify the distinction between the effects of having earnings, 
which may or may not result in a reduction of FECA compensation, and 
the effects of failing to report earnings, which can result in the 
forfeiture of all compensation paid or found to be payable during the 
reporting period.
    The discussion of volunteer activity in Sec. 10.526 has been added 
to clarify that employees receiving compensation for partial or total 
disability are required to report volunteer activity as part of their 
report of earnings from employment and self-employment. Volunteer 
service can be a valuable indicator of the kind of gainful employment 
that the employee may be able to undertake, and thus OWCP may be able 
to use this information to help determine the employee's wage-earning 
capacity.
    The language in Sec. 10.527 has been added to the regulations to 
inform employees and others of the fact that OWCP attempts to verify 
reports of earnings in a number of ways, including computer matches 
with the Office of Personnel Management and state workers' compensation 
agencies.

Reduction and Termination of Compensation

    Sections 10.540 and 10.541 are new and reflect OWCP's long-standing 
practices with respect to how and under what circumstances it will 
provide beneficiaries with written notice that it intends to either 
reduce or terminate their compensation in the next 30 days, as well as 
the administrative steps it will take after it provides such notice. 
These provisions are to inform employees and others when and how OWCP 
notifies beneficiaries of its intention to terminate compensation and 
to clarify that, in situations when the beneficiary has no reasonable 
expectation that compensation will continue, OWCP will not provide this 
pre-termination notice.

Subpart G, Disallowances and Appeals

    This subpart contains most of the information found in current 
Secs. 10.130 through 10.145, except for the material found in current 
Sec. 10.142, which is moved to subpart H.

Reconsiderations and Reviews by the Director

    Review of a decision on application of the claimant is addressed in 
current Sec. 10.138(b), and review of a decision on the Director's own 
motion is addressed in current Sec. 10.138(a). Sections 10.605 through 
10.610 revise and expand the description of reviewing a decision on 
application of the claimant and on the Director's own motion in order 
to clarify the difference between these two separate procedures. These 
provisions state that the Director's authority is not subject to a 
request or application. Further, these provisions adopt OWCP's long-
standing position that the Director does not need new evidence or 
argument to review a decision and that the decision by the Director to 
review a decision is not a proper subject for review or appeal.
    In many cases, claimants appear not to have understood the 
distinction between the two distinct review procedures authorized by 
section 8128(a). Some individuals, who remain dissatisfied with an OWCP 
decision after exhausting all their review and appeal rights, have 
asked the Director to review the decision with which they disagree 
pursuant to the Secretary's authority under section 8128(a), delegated 
to the Director, to review a decision on his or her own motion. The 
distinction between the Director's authority to review a decision on 
his or her own motion and a claimant's application for review is not 
new in practice. Claimants have never been entitled to ``apply'' for 
review outside the process described as a ``reconsideration'' in the 
review and appeal options accompanying all adverse decisions. When a 
request to the Director to review a decision on his or her own motion 
is received, it has been OWCP's long-standing practice to treat it as a 
reconsideration request rather than an additional avenue for claimants 
to seek review.
    To alleviate the confusion that has been demonstrated in regard to 
this issue, Sec. 10.610 specifically states that OWCP will not consider 
a request for review on the Director's own motion. The statutory 
provision authorizing a claimant to request review of a decision ``upon 
application'' is fulfilled by the application for reconsideration. 
Since no other mechanism for a claimant dissatisfied with a decision to 
obtain a review ``upon application'' is available, OWCP will continue 
to treat requests that the Director review a decision on his or her own 
motion as requests for reconsideration.
    A number of ECAB cases have addressed the question of whether the 
Director is required to have new evidence or argument to review a 
decision under section 8128(a). In Eli Jacobs, 32 ECAB 1147 (1981), the 
ECAB held that the Director may reopen a claim at any time without 
specifying what standard, if any, applied to that decision. In a later 
decision, Daniel E. Phillips, 40 ECAB 1111, petition for 
reconsideration denied, 41 ECAB 201 (1989), however, over the dissent 
of one member of the panel, the ECAB held that to reopen and rescind 
acceptance of a claim, the Director must establish that the original 
decision was erroneous through the use of ``new or different 
evidence.'' The ECAB reached this conclusion without specifying any 
statutory or regulatory basis for this limitation. Its only rationale 
was its opinion that reopening a decision should not become a 
surreptitious route for OWCP to readjudicate a claim. In later cases 
that formulation was expanded to include allowing reopening and 
rescission of a prior decision through new or different evidence, legal 
argument or rationale. See, e.g., Beth A. Quimby, 41 ECAB 683 (1990); 
Billie C. Rae, 43 ECAB 192 (1991); Shelby J. Rycroft, 44 ECAB 795 
(1993); Laura H. Hoexter (Nicholas P. Hoexter), 44 ECAB 987 (1993).
    Section 10.610 adopts the long-standing position of the Director 
that the plain language of section 8128(a) authorizes the Director, 
without pre-condition, to review a decision ``at any time.'' The 
existing regulations contain a provision, carried over in Sec. 10.608, 
limiting the right of a claimant to obtain a merit review and a new 
decision from OWCP to those situations in which the claimant meets one 
of the requirements set out in Sec. 10.138(b). Without this limitation, 
the effective administration of the program could be undermined by 
taxing the limited resources available to administer the program 
through frivolous requests for review. Allowing the claimant to reopen 
the claim just to have the same evidence reviewed again would both 
waste the claims staff time and slow down the appellate process.
    In view of the fact that the statute imposes no limitation upon the 
right of the Director to review a decision ``at any time,'' Sec. 10.610 
grants the Director an unconditional right to review any decision 
without requiring new evidence or argument. Effective administration of 
the program requires that the Director be able to review decisions at 
any time without having to supply new evidence or argument.
    This does not mean, however, that the claimant has no recourse when 
the

[[Page 67128]]

Director reviews a decision and issues a new decision with which he or 
she disagrees. Any adverse decision is subject to the full range of 
review and appeal options which protects the claimant from arbitrary 
action. Congress clearly did not contemplate restricting the Director's 
ability to reopen a claim when it gave the Director authority to review 
a decision ``at any time''.
    Consistent with this broad authority, Sec. 10.610 provides that the 
determination whether or not to review a decision on his or her own 
motion is not subject to reconsideration, review or appeal. Since the 
Director has unfettered discretion in deciding whether or not to review 
a decision, and any claimant unhappy with a new decision issued after 
such a review by the Director is provided the same rights to seek 
reconsideration, review or appeal associated with any OWCP decision, no 
purpose would be served by allowing further review of the Director's 
decision to review a previous decision.

Hearings

    In Sec. 10.615 a provision has been added granting hearing 
representatives discretion to conduct an oral hearing by telephone or 
teleconference. Section 10.616(b) revises the time period in which a 
claimant can request a change in the format of a hearing. A request 
received by the Branch of Hearings and Review before the date OWCP 
issues a notice that the record is closed for written review, or has 
set a date for an oral hearing, will be granted. Later requests will be 
subject to OWCP's discretion.
    Section 10.617(g) makes clear that the hearing representative may 
terminate a hearing at any time that he or she deems the actions of the 
claimant and his or her representative to be disruptive. This provision 
reflects current practice.
    The discussion of issuing subpoenas, Sec. 10.619, has been revised 
to set forth the criteria for issuing a subpoena. To alleviate 
confusion that has been demonstrated concerning the circumstances under 
which subpoenas can be issued, Sec. 10.619(a) specifically provides, 
consistent with practice based upon ECAB precedent, that subpoenas will 
be issued at the request of a claimant only in connection with 
hearings. Moreover, it makes clear that this method of gathering 
evidence is to be used as a last resort. Because the hearing is an 
informal procedure, not bound by rules of evidence or formal rules of 
procedure, the need for subpoenas is limited and is sufficiently 
accommodated by providing that a subpoena can be issued for documents 
when the information is not available by other means and for witnesses 
when oral testimony is the best way to ascertain the facts. To avoid 
disruptions of the hearing process and encourage early and active 
development of the evidence, Sec. 10.619(a)(1) provides that a subpoena 
must be requested within 60 days after the date of the original hearing 
request.
    To clarify the role of a representative of the employer at a 
hearing, the discussion of this subject, in Sec. 10.621(b), has been 
revised to specifically note that a hearing representative may deny a 
request by the claimant that the agency representative testify where 
the claimant cannot establish that such testimony would be relevant or 
because the representative does not have the appropriate level of 
knowledge.
    Section 10.622 revises the rules concerning postponement of oral 
hearings to address problems that have arisen since the institution of 
the current rules concerning postponements in 1987. Oral hearings are 
scheduled at locations within a reasonable proximity to claimants' 
places of residence. As a result, hearings are scheduled throughout the 
country, several times a year in some locations and only once a year in 
other locations. For each trip, one hearing representative is assigned 
a number of cases as the ``docket''. Before the trip, the hearing 
representative must review each file, research the issues, and prepare 
the record, all of which requires many hours of work.
    Scheduling and workload constraints prevent OWCP from sending the 
same hearing representative to the same city each time. Thus, when a 
hearing is postponed, it often requires that another hearing 
representative repeat the preparation for the hearing undertaken by the 
previous representative. Furthermore, in many cases it is too late to 
schedule another case for that slot on the docket, thus needlessly 
delaying hearings for other claimants.
    The current rule, found at Sec. 10.137, which allows a postponement 
for ``good cause'' if the request is received at least three days prior 
to the date of the hearing, has proven completely ineffective at 
controlling the waste of resources caused by postponements. Disputes 
over what constitutes ``good cause'' sometimes take longer and require 
more resources than rescheduling the hearing itself. The result is 
delay, not only for the claimant whose hearing was scheduled and 
postponed, but for other claimants adversely affected by the 
inefficiency of the current process.
    Thus, new procedures are being adopted which provide that, once the 
oral hearing is scheduled, it cannot be postponed unless the hearing 
can be rescheduled on that same trip. In the event that an oral hearing 
cannot be rescheduled on that same trip, the claimant will be provided 
a review of the written record instead. The proposed limitation is a 
reasonable compromise which will improve the administration of the 
program. The program's resources must be preserved to ensure the best 
service to all those seeking a hearing. Constant and repeated 
postponement of oral hearings constitute a serious drain on those 
resources. The review of the written record by a hearing representative 
as a substitute for an oral hearing has served as an effective way to 
provide the review contemplated by the FECA on a more timely basis than 
resources otherwise would permit.
    In most cases, the issues relate to written evidence (particularly 
medical evidence). A face-to-face hearing does little to clarify 
medical issues, since the determination, in most cases, must be made on 
the basis of written medical evidence in the file. A review of the 
written record has been selected, therefore, as an effective way to 
provide the review of the decision by a hearing representative where 
the claimant must postpone the hearing.
    Another change to the oral hearing procedure is to allow a claimant 
to express a preference for scheduling an oral hearing. OWCP will 
attempt to comply with any scheduling preferences of which it is 
advised at the time of the original request. Once the notice of hearing 
is sent, the claimant can request a change in the day and the time of 
the hearing within the same docket.

Review by the Employees' Compensation Appeals Board (ECAB)

    Claims on appeal often have continuing issues, such as payments of 
bills or actions on collateral issues such as recurrences, requiring 
actions by OWCP. Sometimes, because the case is under the jurisdiction 
of the ECAB, there are questions as to what can and cannot be done by 
OWCP when cases are before the ECAB. To clarify this issue, language 
has been added to the regulations, in Sec. 10.626, which explains the 
circumstances under which OWCP still has jurisdiction over issues in 
cases pending before the ECAB.

Subpart H, Specialized Topics

    This subpart contains most of the information found in current 
subparts G and H (Secs. 10.500 through 10.624), as well as the material 
found in Sec. 10.142.

[[Page 67129]]

Representation

    Current Sec. 10.143 states, with no elaboration, that a claimant 
may authorize any individual as a representative in a claim before 
OWCP. Section 10.700 more fully describes who may act as a 
representative, what authority a representative has, and specifies that 
there can be only one representative in a claim at a time. These 
provisions essentially incorporate current practice.
    The FECA gives to the Director, as the Secretary's delegate, the 
authority to approve fees associated with representation of a claim 
under the FECA. In the past, OWCP claims personnel have reviewed all 
bills for representatives' services, even if the claimant did not 
disagree with the amount billed. To reduce the workload imposed by 
extensive review of bills with which claimants do not disagree, 
Sec. 10.702 implements a new procedure by which OWCP would 
automatically approve all fees unless the represented party objects to 
the amount billed. In that case, OWCP will give that party an 
opportunity to submit further information. OWCP will then adjudicate 
the request according to the criteria set forth in Sec. 10.703(c). This 
section adopts the criteria in the existing regulations at 
Sec. 10.145(b), after removing items that are essentially duplicative.

Third-Party Liability

    Current Sec. 10.501 through Sec. 10.507 essentially restate 
provisions of sections 8131 and 8132 of the FECA. Much of that material 
has, therefore, been removed as redundant. Sections 10.704 to 10.719 
explain, interpret and clarify duties of FECA claimants and their 
counsel pursuant to sections 8131 and 8132 of the FECA. Section 
10.705(b) incorporates into the regulations a specific reference to the 
fact that the Office of the Solicitor (SOL) administers the subrogation 
aspects of certain FECA claims for OWCP. (This does not, however, 
preclude an employing agency from participating in administering the 
subrogation aspect of its employees' cases under a specific agreement 
with OWCP.) Section 10.706 explains how a FECA beneficiary is informed 
of the obligation to pursue a claim against a third party. Section 
10.707 provides a list of all actions that must be taken by a FECA 
beneficiary in order to comply with the requirement in section 8131 of 
the FECA that a claimant prosecute an action against a third party when 
required to do so by OWCP. The purpose of this section is to inform 
claimants that failure to comply with any of the requirements in this 
section could result in forfeiture of all FECA benefits arising out of 
the injury at issue. Section 10.708 further details the penalties that 
can be applied to a FECA beneficiary who fails to prosecute a claim or 
to assign it to the United States when requested to do so by indicating 
that OWCP may order forfeiture of such benefits or alternatively could 
suspend such benefits until the request to assign or prosecute is 
complied with. In many instances, review of the information available 
to OWCP indicates that there is a possibility of third party liability, 
which, upon further investigation by private counsel consulted by the 
FECA beneficiaries, is either not economical to pursue or simply not 
meritorious. Section 10.709 sets forth the procedure to be followed by 
a FECA beneficiary to be released from the obligation to prosecute an 
action against a third party.
    Section 10.710 is being added to the regulations to clarify that 
any person who has filed a FECA claim that has been accepted or who has 
received FECA benefits in connection with a claim filed by another 
person must report any receipt of money or other property as a result 
of the liability arising out of that injury to OWCP or SOL within 30 
days of receipt. Section 10.711 is being added to the regulations in 
order to provide a step by step explanation of the calculation of the 
refund to be paid to the United States and any credit against future 
benefits calculated in accordance with the formula contained in section 
8132 of the FECA. The only change contemplated from existing practice 
by this formula is elimination of the opportunity to offset payment of 
medical expenses to federal facilities or other parties from any 
recovery. This practice has been allowed as an administrative 
accommodation, but rarely occurs and is no longer considered necessary. 
Any medical expenses paid directly by the FECA beneficiary should be 
submitted directly to OWCP for reimbursement as appropriate.
    Section 10.712 incorporates into the regulations OWCP's 
longstanding practices in regard to what amounts are included in the 
gross recovery reported in connection with third party liability for an 
injury covered by the FECA. Section 10.713 is being incorporated into 
the regulations to require that a FECA beneficiary who receives a 
structured settlement (one which provides for payment of funds over a 
specified period of time rather than immediately) report as the gross 
recovery the present value of the right to receive all of the payments 
called for in the settlement. This requirement is in keeping with the 
plain language of section 8132 of the FECA, which covers the receipt of 
``money or other property'' and the recognition that the right to 
receive a stream of payments in the future is clearly a valuable 
property right. This definition is intended to overrule the holding of 
the ECAB in Benjamin S. Purser, Jr., 42 ECAB 204 (1990).
    Section 10.714 sets forth the manner in which OWCP calculates 
disbursements which it makes in connection with a FECA claim to be 
refunded in accordance with the formula set out in section 8132 and 
Sec. 10.711 of these regulations. The only change from existing 
practice is to allow for subtraction from the total of refundable 
disbursements of the cost of any medical examination that the FECA 
beneficiary establishes that the employing agency should have made 
available at no charge to the employee under a statute other than the 
FECA. This change is being made to ensure that employees who sustain 
injuries covered by the FECA are not treated less favorably than those 
who receive such treatment but have not sustained injuries covered by 
the FECA.
    OWCP has decided to impose interest charges on refunds due to the 
United States pursuant to section 8132 of the FECA as set forth in 
Sec. 10.715. This is a change in current policy and is consistent with 
the Debt Collection Act of 1982. In view of the fact that certain FECA 
beneficiaries currently receiving compensation payments owe refunds and 
have refused to pay, a provision is being added to the regulations at 
Sec. 10.716 allowing collection of such refund by withholding from 
payments currently payable under FECA. Section 10.717 is being added to 
the regulations to clarify OWCP's longstanding interpretation that, 
since an injury caused by medical malpractice in treating a FECA-
covered injury is itself an injury covered by FECA, any recovery 
received in a negligence suit arising out of such malpractice is a 
recovery subject to section 8132 of the FECA. Similarly, Sec. 10.718 is 
being added to the regulations to make clear another longstanding OWCP 
interpretation: that insurance payments to a beneficiary pursuant to a 
policy the beneficiary has purchased do not constitute a recovery 
pursuant to section 8132.
    Section 10.719 is being added to the regulations to interpret the 
phrase ``same injury'' for the purposes of implementing section 8132 of 
the FECA. While an argument can be made that the statute intended that 
each recovery for a medical condition or wound should be

[[Page 67130]]

treated separately for the purpose of calculating any required refund 
or credit against future benefits (an argument which has been accepted 
by one district court, in Benjamin S. Purser, Jr. v. United States 
Department of Labor, 943 F.Supp. 898 (M.D. Tenn. 1996), the approach 
being adopted by these regulations is more consistent with the intent 
of section 8132 and the administration of the FECA. Attempting to 
separate out each different ``injury'' incurred in, for example, an 
automobile accident as a result of which an injured employee may have 
multiple medical conditions affecting numerous body parts in order to 
allocate a single settlement from the other driver into pieces appears 
to be an artificial exercise that serves no purpose set forth by the 
statute. Such an interpretation invites artful drafting of settlement 
agreements designed to negate the intended effect of the statute to, in 
part, shift the costs of FECA onto parties who have caused injuries 
covered under the FECA. Since each claim for FECA benefits arising out 
of a single incident is administered as one file, regardless of the 
number of wounds or medical conditions involved, attempting to 
separately account for the recovery attributable to each wound and to 
offset any credit against future benefits only to medical payments 
attributable to that wound would be nearly impossible, except in the 
most arbitrary manner and even then would be time-consuming, cumbersome 
and a source of immense delay and confusion.

Federal Grand and Petit Jurors

    Current Sec. 10.620 on the definition of jurors has been moved to 
the list of definitions at Sec. 10.5(h), while current Sec. 10.621 on 
the applicability of the other subparts of the regulations has been 
removed as unnecessary.

Peace Corps Volunteers

    Current Sec. 10.600 on the definition of Peace Corps volunteers, 
Sec. 10.601 on the applicability of the FECA, Sec. 10.602 on when 
disability compensation commences, Sec. 10.603(a) through (c) on 
special pay rate considerations, and Sec. 10.604 on the period of 
service of volunteers essentially restated provisions of the FECA and 
other relevant statutes and have therefore been removed as redundant.

Non-Federal Law Enforcement Officers

    Current Sec. 10.612(d) on the eligibility of non-federal law 
enforcement officers, Sec. 10.617(c) on the adjudication of these 
claims, Sec. 10.618 regarding consultation with the Attorney General 
and other agencies, and Sec. 10.619 on cooperation with state and local 
agencies essentially restated provisions of the FECA and have therefore 
been removed as redundant.
    Subsections (a) and (c) of Sec. 10.735 combine current Secs. 10.611 
and 10.612, which have been rewritten to accommodate the question and 
answer format and to delete material that simply restated provisions of 
the FECA, without any attempt to make a substantive change. Subsection 
(b) is new and restates other parts of the FECA for use as a general 
rule. The last sentence of subsection (b) reflects OWCP's longstanding 
practice with respect to the issue of coverage under this subpart for 
individuals who only perform administrative functions in support of 
eligible officers.
    The last sentence of Sec. 10.736 is new and reflects a recent ECAB 
decision which construed the time limitation provision of 5 U.S.C. 
8193(c)(3).
    Section 10.738 has been rewritten with minor changes throughout to 
address a growing body of ECAB precedent regarding the nature and 
extent of coverage for officers who are injured in situations that 
involve potential federal crimes (as distinguished from actual crimes 
that have resulted in a criminal prosecution).
    Section 10.739 is new and describes the type of objective evidence 
necessary to establish the existence of a potential federal crime for 
purposes of coverage consistent with several ECAB decisions on this 
point. An enumeration of the various methods for making this type of 
showing is necessary to assist OWCP in its adjudication of a growing 
number of these sorts of claims.
    Section 10.741 is new and substantially rewrites the existing 
regulation at Sec. 10.616 to reflect longstanding administrative 
practices regarding the interpretation of what constitutes 
``comparable'' benefits consistent with ECAB precedent. Section 
10.741(c) is added to the regulations to explain how these benefits are 
calculated in certain circumstances where the officer contributes to 
the fund which is the source of the benefit. These provisions are 
needed to provide OWCP with guidance in adjudicating these matters, 
which have generated a number of inquiries from officers and their 
representatives. This interpretation is consistent with OWCP's current 
practice in calculating how much of the eligible officer's FECA benefit 
must be offset as a result of the receipt of comparable benefits.

Subpart I, Information for Medical Providers

    This subpart is designed to gather in one section all of the 
information needed by medical providers. It combines some of current 
Secs. 10.410 through 10.413 with Secs. 10.450 through 10.457.
    It also contains proposed revisions in the rules establishing 
procedures for submission and reimbursement of inpatient hospital 
services and pharmaceutical bills under the FECA. These revisions would 
supplement rules in effect since 1986, which provide for a fee schedule 
for reimbursement of medical procedures and services. This fee schedule 
currently applies to all physician services as defined under the FECA, 
and to outpatient professional services.

Medical Bills

    In Sec. 10.801, references to National Drug Codes and Revenue 
Center Codes have been added to the list of codes which the medical 
provider must specify. References to UB-82 have been changed to UB-92, 
as the latter has become the standard billing form for hospitals. A 
statement that pharmacy bills are to be submitted on the Universal 
Claim Form has also been added.

Medical Fee Schedule

    Sections 10.809 and 10.810 are new. OWCP believes that expanding 
its ability to control and monitor medical costs is a critical element 
in ongoing efforts to enhance the management of injuries under FECA. 
Under these rules, both pharmacy bills and inpatient hospital bills 
will be subject to cost containment methods.
    Under the FECA, OWCP authorizes payment for medical services and 
establishes limits for fees for such services (March 10, 1986, 51 FR 
8276-82, as amended). Since 1994, the schedule for payment of 
professional services has been based on the relative value units 
(RVU's) devised by the Department of Health and Human Services, Health 
Care Financing Administration (HCFA). When appropriate for the 
schedule, OWCP devises its own RVU's for procedures not covered under 
the HCFA schedule, for procedures without an assigned RVU under the 
HCFA schedule, for services HCFA covers under other schedules, and for 
services unique to OWCP, such as second opinion and impartial medical 
evaluations. In addition, OWCP devises its own conversion factors to 
meet program needs.
    The Department recognizes the worth of using a schedule to 
reimburse

[[Page 67131]]

covered medical services in that it provides an equitable method to 
implement cost control measures, and it enhances the ability to manage 
injury claims, especially the appropriateness of the medical services 
provided and their relatedness to the compensable injury. These same 
principles underlie the extension of cost controls to pharmacy and 
hospital bills.
    Pharmacy bills: At present, pharmacy payments, which constitute 
nearly 6% of the total medical outlays of the program, are not 
controlled by the fee schedule. These rules would reimburse pharmacies 
under a set schedule. To standardize payments for medicinal drugs, the 
program has devised a fee schedule based on the Average Wholesale Price 
(AWP) of each individual drug plus a dispensing fee established by the 
Director. AWP prices will be obtained from a file provided by a 
nationally recognized vendor containing medicinal drugs listed by their 
unique National Drug Codes (NDCs). AWP prices will be updated on a 
regular basis.
    The AWP is set by the industry, and represents what pharmacies are 
expected to pay for the drug. The dispensing fee will be twenty percent 
of the cost of the drug up to a maximum of $12.50. Thus, if the AWP of 
a drug is $20.00, there would be a dispensing fee of $4.00, and the 
maximum allowable charge for the drug would be $24.00. If the AWP of 
the drug was $500.00, however, the dispensing fee would be limited to 
$12.50, and the maximum allowable charge would be $512.50.
    The basic methodology is widely practiced. In all, 23 state 
workers' compensation programs have some form of control over drug 
costs through the use of a maximum allowable schedule; 17 of these 
states have a set schedule for prescription drugs and six more have 
reimbursement formulas based on average wholesale price similar to that 
proposed for the FECA program or comparable data. OWCP's Division of 
Coal Mine Workers' Compensation uses this formula for reimbursement of 
drugs under the Black Lung Benefits Act.
    Hospital bills: Proposed Sec. 10.810 concerns hospital bills. 
Currently, only hospital outpatient services are subject to a fee 
schedule. The OWCP now proposes to reimburse hospital inpatient 
services under a prospective payment system (PPS) that is based on the 
systems used by the Health Care Financing Administration's Medicare 
program (42 CFR parts 412 et al).
    The OWCP now proposes to use the HCFA prospective payment system 
(PPS) using Diagnostic Related Groups (DRGs) (42 CFR part 412, et al.) 
as the foundation of a PPS for determining the allowable reimbursement 
for inpatient services covered under FECA. OWCP has already 
successfully converted the foundation of its professional medical fee 
schedule to the HCFA RVUs, and the use of the HCFA PPS will establish a 
common base for payment of medical services under both agencies. OWCP's 
proposal to use the HCFA PPS is compatible with hospital inpatient cost 
control measures used by other federal agencies such as the Department 
of Veterans Affairs (VA) and the Department of Defense, Civilian Health 
and Medical Program of the Uniformed Services (CHAMPUS), who are also 
using DRG-based reimbursement systems. In addition, several state 
workers' compensation programs are using DRG-based systems to control 
the cost of inpatient services for work-related injuries.
    The HCFA PPS is based on the premise that similar medical 
conditions and surgeries require similar inpatient services and 
resources, and that those conditions and surgeries can be categorized 
into DRGs according to the primary diagnoses and major surgical 
procedures performed, as coded under the International Classification 
of Diseases, 9th Revision (ICD-9-CM). Under the HCFA PPS, hospitals 
receive a fixed, predetermined reimbursement for each beneficiary's 
inpatient stay according to the assigned DRG and whether or not the 
length of stay is considered to be an outlier (the number of inpatient 
days is not within the nationally calculated range for the assigned 
DRG).
    Under the HCFA PPS, the reimbursement rate is hospital-specific and 
is determined through a complex formula that considers national average 
costs for all inpatient services, geographic wage and overhead indices, 
medical education costs, patient mix, indigent care costs, and capital 
investments. The HHS PPS DRG rates are updated each year and are 
described in detail in the Federal Register (42 CFR part 412, et al.)
    OWCP's decision to use the HCFA PPS as the foundation of its 
reimbursement system is based on research that explored available 
options, and on a study of FECA inpatient bills. OWCP reviewed a 
representative sample of inpatient services reimbursed under FECA, 
assigned DRGs in accordance with the HCFA DRG grouper rules, and used 
the HCFA pricer program to determine allowable amounts under Medicare.
    In the study, fourteen DRGs accounted for 61% of the dollars billed 
and 64% of the inpatient stays. A wide range of diagnostic conditions 
and medical procedures were represented in the study, nevertheless, and 
they comprised a diverse list of DRGs. It is evident from the study 
analyses that there is considerable variation in the amounts different 
hospitals bill FECA for similar services. These billed amounts are 
greater by a mean of 45% than the amounts that would be allowed if the 
inpatient stay were paid under the HCFA PPS.
    In instances of musculoskeletal soft tissue injuries, however, the 
OWCP study indicated that the injured worker under FECA may at times 
require a very short stay compared to that common for a patient under 
HCFA's Medicare program. For that reason, the billed amounts under FECA 
were in some cases actually less than that allowed under the HCFA PPS 
for the same DRG. Short inpatient stays, however, are not uncommon for 
work-related injuries and often are considered appropriate for post-
trauma observation and for diagnostic procedures. Services at 
psychiatric and rehabilitation hospitals were excluded from this 
portion of the analysis because they are not currently subject to the 
HHS PPS for acute care.
    Although there are differences in the medical conditions treated 
under the HCFA and the FECA beneficiary populations, the study 
indicated that the HCFA PPS using DRGs is well-suited to OWCP's efforts 
to expand its ability to monitor and control inpatient costs covered 
under FECA. Other federal agencies have reached similar conclusions, 
such as CHAMPUS (32 CFR part 199) and the VA (38 CFR 17.55).
    HCFA currently collects comprehensive hospital-specific fiscal 
data, and has considerable experience in this regard. They have been 
paying for inpatient services under a PPS since October 1983. OWCP does 
not have the resources to collect such data now or in the foreseeable 
future. In addition, the Department believes that duplicate collection 
of data is not an efficient use of staff and resources.
    It is proposed, therefore, that OWCP base reimbursement of 
inpatient services covered under FECA on the HCFA PPS as described 
below:
    a. Hospitals must submit bills for inpatient services covered under 
FECA on the Standard Form UB-92, or its equivalent, with all common 
information completed. This information includes the hospital's 
Medicare number, the patient's Social Security number, the FECA claim 
number when available, the billed amount, and the primary conditions

[[Page 67132]]

treated and procedures performed coded under the current edition of the 
International Classification of Diseases, 9th Revision, Clinical 
Modification (ICD-9-CM), Volumes I, II, and III, and/or in accordance 
with that specified in the yearly update of the HCFA regulations (42 
CFR part 412, et. al.)
    b. OWCP's adaptation of the HCFA PPS includes use of the HCFA 
grouper and pricer programs, and an adjustment factor (AF) to the HCFA 
DRG maximum allowable, which considers the uniqueness of work-related 
injuries. For example, the median age of the FECA patient is about 42 
years, rather than over 65, as is the case under the Medicare program. 
Secondly, a low volume of FECA patients is expected at any one hospital 
compared to the number of patients covered under the Medicare program. 
Thirdly, at times there will be a need for more comprehensive 
diagnostic and test procedures to determine the work-relatedness of 
conditions, and/or conditions that may delay return to work. Finally, 
FECA patients may have nationally common length of stays (LOSs) 
different than those for Medicare patients, and FECA's goal to return 
injured employees to work as soon as possible is not a Medicare goal 
for a retired population.
    OWCP believes, however, that the HCFA PPS is well-suited to be the 
foundation of an OWCP PPS for inpatient services, and that it provides 
a comprehensive data resource not otherwise available to the 
Department. OWCP's proposal to use an adjustment factor (AF) to adapt 
the HCFA PPS to individual program needs is consistent with similar 
methods used by other federal and state agencies. The AFs used under 
the OWCP PPS are based on the results of comprehensive studies of 
inpatient services conducted by OWCP in 1996 and 1990, and on ongoing 
analyses of medical costs and services provided under FECA.
    c. Under OWCP's proposed PPS, the HCFA allowable for a specific DRG 
at a particular facility constitutes OWCP's Threshold Amount (TA) for 
the DRG. The OWCP AF to each TA considers: (1) Lengths of stay (LOS) 
that are outside the HCFA LOS parameters; (2) LOS that are within the 
HCFA LOS parameters but under OWCP are consistently on the short or 
long end of the parameter for particular DRGs; and (3) cost outliers 
that are the result of unique care requirements, particularly expensive 
hardware such as that frequently used in joint replacements, or are 
attributable to inflated charges.
    In addition: (1) The proposed OWCP PPS per diem rate will not be 
less than that allowable under the HCFA DRG program when based on the 
50th percentile LOS as reported in the Federal Register by HCFA for the 
Medicare program; and (2) the total dollar amounts reduced from billed 
amounts will be consistent with reduction rates under other portions of 
the OWCP medical fee schedule and with cost to charge ratios for 
inpatient services reported by HCFA.
    The following abbreviations are used in OWCP's formulae for setting 
the AF:

TA--Threshold Amount--the HCFA Medicare program maximum allowable for a 
specific DRG at a particular facility.
TA/H50--Threshold Amount Per Diem rate--the daily rate when the TA is 
divided by the HCFA national 50th percentile LOS days.
HCFA LOS--The length of stay days as defined under the HCFA national 
data sets reported in the Federal Register yearly; three sets are used 
for these formulae:

H25 = 25th percentile
H50 = 50th percentile
H75 = 75th percentile

OWCP LOS--The actual number of inpatient days billed for covered 
services provided a claimant under FECA.
    OWCP's formulae for setting the AF are:

(1) The OWCP DRG standard maximum allowable (MA)

    The OWCP LOS is within the HCFA LOS parameters, the 25th (H25) to 
the 75th (H75) percentiles, and the billed amount is not greater than 
twice the OWCP TA.

(TA  x  1.24)--[(TA/H50*0.12) * (H75-LOS)] = MA
(2) The OWCP Short Stay Maximum Allowable (MASS)

    The OWCP LOS is less than the HCFA 25th percentile (H25). Short 
stays regardless of billed amounts are covered under this formula.

[(TA/H50) * (1.72*LOS)] + [(TA/H50*0.33) * (H50-LOS)] = MASS

    This formula allows for higher costs typically associated with the 
first days of an inpatient stay, and an incentive allowance for IP days 
less than the H25.

(3) The OWCP Long Stay and/or Cost Outlier Maximum Allowable (MACO)

    The OWCP LOS is (a) greater than the HCFA 75th (H75) percentile 
LOS, considered a long stay, or (b) the billed amount is considered a 
cost outlier (greater than twice the TA) but the LOS is within the HCFA 
LOS parameters (H25 to H75).

(TA  x  1.24) + [(Billed Amount-(TA  x  1.24))  x  0.50] = MACO

    This formula adjusts for the outlier length of stay, or 
confinements with documented outlier costs when the length of stay is 
within the H25-H75. The costs beyond the OWCP MA, however, are only 
paid at 50% of the billed amount. There is no additional adjustment for 
number of inpatient days. If the long stay billed amount is less than 
the TA  x  1.24, then no charges are paid at the 50% rate.
    These formulae always result in a payment greater than the HCFA 
Medicare program allowable per diem rate (TA/H50). They are consistent 
with reimbursement principles used by CHAMPUS, the VA, and state 
workers' compensation programs for short and long stays, and for cost 
outliers.
    d. OWCP proposes to use a separate schedule to reimburse facilities 
not covered (FNCs) under the HCFA PPS, such as those that only provide 
rehabilitation or psychiatric services. The information required on 
each bill will be the same as that required of acute care facilities, 
including ICD-9-CM coding of diagnostic conditions being treated and 
any major procedures performed. During a two-year phase-in period, this 
FNC schedule is to be based on HCFA-calculated cost to charge ratio 
(CCR) data for acute care inpatient services, currently set at about 
55%, on data shared by CHAMPUS and state workers' compensation 
programs, and on the 1996 OWCP inpatient hospital services study.
    The FNC schedule will be applied to inpatient services provided at 
FNCs when CCR data is available to OWCP. When CCR data is not 
available, reimbursements will be negotiated prior to services based on 
locality FNC estimated CCR and available cost data.

FNC Per diem rate * CCR * 1.24 = FNC MA

    Outlier costs will be negotiated based on the FNC formula.

20 CFR Part 25

Subpart A--General Provisions

    Former Sec. 25.3 regarding the use of local workers' compensation 
law and the Special Schedule has been deleted as unnecessary.

Subpart C--Extensions of the Special Schedule of Compensation

    Section 25.200(a) now includes a specific statement that direct-
hire employees of the U.S. Military Forces covered by the Philippine 
Medical Care Program and the Employees' Compensation Program pursuant 
to the agreement signed by the United States and the Republic of the 
Philippines on March 10, 1982 who are also members

[[Page 67133]]

of the Philippine Social Security System are not covered by the 
modified Special Schedule that is otherwise applicable in the Republic 
of the Philippines.
    In addition, old reserved Secs. 25.23 and 25.24 have been deleted 
as unnecessary. Furthermore, old Sec. 25.25 has also been deleted to 
reflect OWCP's prior policy determination (and concomitant 
administrative practice) to apply the lesser of the provisions of local 
law in the Republic of Korea or FECA (not the special schedule).

Statutory Authority

    Section 8149 of the Federal Employees' Compensation Act, (5 U.S.C. 
8101, et seq.), provides the general statutory authority for the 
Secretary to prescribe rules and regulations necessary for 
administration and enforcement of the Act. Section 5 U.S.C. 8103 
provides specific authority regarding medical treatment and care, 
including determining the appropriateness of charges. The Debt 
Collection Act of 1982, as amended authorizes imposition of interest 
charges and collection of debts by withholding funds due the debtor.

Executive Order 12866

    This proposed regulatory action constitutes a ``significant'' rule 
within the meaning of Executive Order 12866. The Department believes, 
however, that this regulatory action will not have a significant 
economic impact on the economy, or any person or organization subject 
to the proposed changes. The proposed changes will have little or no 
effect on the level of benefits paid (which in any case involve 
payments almost exclusively to Federal employees from funds 
appropriated by Congress); nor will there be a significant economic 
impact upon the hospitals and pharmacies which, for the first time, 
will be subject to the fee schedules established by these rules. The 
total dollar amount paid for inpatient hospital services in fiscal year 
1996 was $81,955,562.00, and subjecting these charges to the DRG 
schedule is expected to result in a 20 percent decrease in the amount 
paid, or about $16.4 million. The total dollar amount paid for pharmacy 
costs in fiscal year 1996 was $31.9 million, and subjecting these 
charges to the fee schedule is expected to result in a 10 to 15 percent 
decrease in the amount paid, or about $3-4.5 million. Insofar as the 
proposed amendments make it easier to seek benefits under the FECA and 
streamline the administration of the program, they would decrease 
administrative costs. The proposed changes have been reviewed by the 
Office of Management and Budget for consistency with the President's 
priorities and the principles set forth in Executive Order 12866.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995, as well 
as E.O. 12875, this rule does not include any federal mandate that may 
result in increased expenditures by state, local and tribal 
governments, or increased expenditures by the private sector of more 
than $100 million.

Paperwork Reduction Act

    The new collection of information contained in this rulemaking has 
been submitted for review to the Office of Management and Budget (OMB) 
in accordance with the Paperwork Reduction Act of 1995. No person is 
required to respond to a collection of information request unless the 
collection of information displays a valid OMB control number.
    The new information collection requirements contained in this 
proposed rule are set forth in Secs. 10.801 and 10.802, and they relate 
to information required to be submitted by pharmacies and hospitals 
covering certain in-patient bills. The Department is proposing to 
create a new form (Universal Pharmacy Billing Form) which will be used 
by pharmacies in submitting claims for payment. Another form (the 
claimant reimbursement form) will be used by claimants seeking 
reimbursement for medical expenses for which they have paid the 
providers directly. The public reporting burden for these collections 
of information is estimated to average as follows: Universal Pharmacy 
Billing Form--It will take five (5) minutes to complete the form, 
including time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed and completing and 
reviewing the collection of information; Claimant Reimbursement Form--
we estimate it will take an average of ten (10) minutes to complete 
this form, including reviewing instructions, searching for existing 
data sources, gathering and maintaining the data needed, and completing 
and reviewing the collection of information.
    The Department would like to solicit comments to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
    Type of Review: New Collection.
    Agency: Employment Standards Administration.
    Title: Claimant Medical Reimbursement Form (CA-915).
    OMB Number: None.
    Affected Public: Individuals or households, Federal Government.
    Total Respondents: 40,500.
    Frequency: On occasion.
    Total Responses: 40,500.
    Average Time per Response: 10 minutes.
    Total Hours: 6,723.
    Total Burden Cost (capital/startup): 0.
    Total Burden Cost (operating/maintenance): 0.
    Type of Review: New Collection.
    Agency: Employment Standards Administration.
    Title: NCPDP Universal Pharmacy Billing Form (79-1A).
    OMB Number: None.
    Affected Public: Businesses or other for-profit; Not-for-profit 
Institutions; Individuals or households; Federal Government; State, 
Local or Tribal Government.
    Total Respondents: 406,198.
    Frequency: On occasion.
    Total Responses: 406,198.
    Average Time per Response: 5 minutes.
    Total Hours: 33,714.
    Total Burden Cost (capital/startup): 0.
    Total Burden Cost (operating/maintenance): 0.
    Send comments regarding this burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden to the Office of information Management, U.S. Department of 
Labor, Room N-1301, 200 Constitution Avenue, Washington, DC, 20210; and 
to the Office of Information and Regulatory Affairs, Attn: ESA Desk 
Officer, OMB New Executive Office Bldg., 725 17th Street NW., Room 
10235, Washington, DC 20003.

Regulatory Flexibility Act

    The Department believes that the rule will have ``no significant 
economic impact upon a substantial number of small entities'' within 
the meaning of

[[Page 67134]]

section 3(a) of the Regulatory Flexibility Act. Pub. L. No. 96-354, 91 
Stat. 1164 (5 U.S.C. 605(b)). The provisions of the proposed rules 
extending cost control measures to hospital inpatient services and 
pharmacies is the only provision of the regulations which may have a 
monetary effect on small businesses. That effect will not be 
significant on a substantial number of those businesses, however, for 
no one business bills a significant amount to OWCP for FECA-related 
services, and the effect on those bills which are submitted, while a 
worthwhile savings for the government in the aggregate, will not be 
significant for individual businesses affected.
    The two new cost containment provisions are: (1) a set schedule for 
payment of pharmacy bills; and (2) a prospective payment system for 
hospital inpatient services. The two methodologies are fully explained 
in the text of the preamble, including the fact that the use of 
Diagnostic Related Groups (DRGs) for setting payment for in-patient 
hospital charges essentially is an adaptation of a system used by the 
Health Care Finance Agency (HCFA) in payment of Medicare bills. The use 
of Average Wholesale Prices (AWP) in setting the maximum reimbursable 
amount for pharmacy bills is also commonplace in the industry.
    The method selected by OWCP is therefore one which contains 
efficiencies both for the government and providers. The government 
benefits because OWCP did not reinvent the wheel, but minimized 
resources by adopting existing and well-recognized systems already in 
place. The providers benefit because submitting a bill to OWCP and 
receiving payment will be almost the same process as submitting it to 
Medicare, a program with which hospitals are already familiar and have 
in place for billing, so they will not have to learn a new process and 
the FECA bills will not represent an unnecessary administrative cost 
because the FECA bill process will not be essentially distinguished 
from that for Medicare. Similarly, the pharmacies are used to billing 
through clearing houses and having charges subject to limits by private 
insurers. By adopting the uniform billing statement and a familiar cost 
control methodology, OWCP has kept close to the environment with which 
the pharmacies are already familiar. The methods chosen, therefore, 
represent a familiar environment to the providers.
    The costs savings resulting from the implementation of these cost 
containment methods are significant only in the aggregate and will have 
no significant effect on any individual businesses. First, the need for 
cost containment in the FECA program is self evident and these methods 
are already utilized by Medicare, CHAMPUS and Veterans Administration 
among government entities, and for the private insurance carriers which 
cover Federal employees as part of the Federal employees' health 
benefit insurance programs. The costs to providers whose charges may be 
reduced are relatively small, both in incremental and in actual terms.
    Incrementally, FECA bills simply do not represent a large share of 
any one provider's total business. Since Federal employees are spread 
throughout the United States and this system covers only those Federal 
employees who are injured on the job and require either prescription 
drugs or inpatient hospital care (a tiny subset of all employees), the 
number of bills submitted by any one provider which may be subject to 
these provisions is likely to be very small.
    Second, in actual terms, the amount by which these bills might be 
reduced will not have a significant impact on any business. As noted 
earlier in this preamble, in fiscal year (FY) 1996, the program paid 
$81.9 million dollars on about 15,700 bills received for in-patient 
hospital services (an average charge of $5,225.00 per stay). The total 
number of hospitals on our provider files is about 5,000, for an 
average patient load of slightly over three FECA-claimant patients per 
hospital. If we assume that no hospital had more than three patients, 
then the average annual billings subject to these rules for any 
hospital would be about $15,775 (3 x $5,225). As also noted earlier in 
the preamble, the DRG method will reduce the $81.9 million by about 20 
percent, or $16.4 million. Thus, the average dollar amount of the 
reduction in bills submitted by any one hospital resulting from these 
rules would be about $3,150.00.
    A similarly small actual dollar reduction applies to pharmacy 
charges. OWCP paid about $32,000,000 for pharmacy charges, although we 
cannot identify exactly what portion of this amount was paid to 
institutions, since much of this dollar figure represents 
reimbursements directly to claimants. We cannot identify with certainty 
the number of pharmacies who provided supplies, for the same reason, 
but there are about 4,000 pharmacies in our provider files. Similarly, 
we cannot determine the exact number of bills paid, since we capture 
only those submitted by a provider for direct payment and not those 
submitted by a claimant for reimbursement. Assuming for purposes of 
this analysis that the reimbursements were evenly divided among 
pharmacies already part of our provider files, we divide 4,000 
providers in to the total number of dollars paid to get an average 
annual aggregate of charges paid to a provider of about $8,000.00. It 
is estimated that the schedule would result in an average reduction of 
five percent in pharmacy charges; based on these figures, the average 
pharmacy would see a reduction in the total amount of charges submitted 
of about $400.
    These figures illustrate that the ``cost'' of these rules to any 
one provider is negligible. On the other hand, OWCP will see 
substantial aggregate cost savings as a result (estimated at 
$18,000,000). These savings benefit OWCP (by strengthening the 
integrity of the program), the employing agencies (which ultimately 
foot the bill for FECA through the chargeback system), and taxpayer and 
rate payers to whom the ultimate costs of the program are eventually 
charged through appropriations.
    The Assistant Secretary for Employment Standards has certified to 
the Chief Counsel for Advocacy of the Small Business Administration 
that these rules will not have a significant impact on a substantial 
number of small entities. Accordingly, no regulatory impact analysis is 
required.

List of Subjects for 20 CFR Parts 10 and 25

    Administrative practice and procedures, Claims, Government 
employees, Labor, Workers' compensation.

    For the reasons set forth in the preamble, it is proposed that 20 
CFR Chapter I be amended as follows:
    1. It is proposed that part 10 be revised to read as follows:

PART 10--CLAIMS FOR COMPENSATION UNDER THE FEDERAL EMPLOYEES' 
COMPENSATION ACT, AS AMENDED

Subpart A--General Provisions

Sec.

Introduction

10.0  What are the provisions of the FECA, in general?
10.1  What rules govern the administration of the FECA and this 
chapter?
10.2  What do these regulations contain?
10.3  Have the collection of information requirements of this part 
been approved by OMB?

Definitions and Forms

10.5  What definitions apply to these regulations?
10.6  What special statutory definitions apply to dependents and 
survivors?

[[Page 67135]]

10.7  What forms are needed to process claims under the FECA?

Information in Program Records

10.10  Are all documents relating to claims filed under the FECA 
considered confidential?
10.11  Who maintains custody and control of FECA records?
10.12  How may a FECA claimant or beneficiary obtain copies of 
protected records?
10.13  What process is used by a person who wants to correct FECA-
related documents?

Rights and Penalties

10.15  May compensation rights be waived?
10.16  What are the criminal law penalties for making a false report 
in connection with a claim under the FECA?
10.17  Is a beneficiary who defrauds the government in connection 
with a claim for benefits still entitled to those benefits?
10.18  Can a beneficiary who is incarcerated based on a felony 
conviction still receive benefits?

Subpart B--Filing Notices and Claims; Submitting Evidence

Notices and Claims for Injury, Disease and Death--Employee or 
Survivor's Actions

10.100  How and when is a notice of traumatic injury filed?
10.101  How and when is a claim for wage loss compensation on 
account of traumatic injury filed?
10.102  How and when is a notice of occupational disease filed?
10.103  How and when is a claim for wage loss compensation on 
account of occupational disease filed?
10.104  How and when is a claim for permanent impairment filed?
10.105  How and when is a claim for recurrence filed?
10.106  How and when is a notice of death and claim for benefits 
filed?

Notices and Claims for Injury, Disease and Death--Employer's 
Actions

10.110  What should the employer do when an employee files a notice 
of traumatic injury or occupational disease?
10.111  What should the employer do when an employee files an 
initial claim for compensation due to disability or permanent 
impairment?
10.112  What should the employer do when an employee files a claim 
for continuing compensation due to disability?
10.113  What should the employer do when an employee dies from a 
work-related injury or disease?

Evidence and Burden of Proof

10.115  What evidence is needed to establish a claim?
10.116  What additional evidence is needed in cases based on 
occupational disease?
10.117  What happens if the employer contests any of the facts as 
stated by the claimant?
10.118  Does the employer participate in the claims process in any 
other way?
10.119  What action will OWCP take with respect to information 
submitted by the employer?
10.120  May a claimant submit additional evidence?
10.121  What happens if OWCP needs more evidence from the claimant?

Decisions on Entitlement to Benefits

10.125  How does OWCP determine entitlement to benefits?
10.126  What does the decision contain?
10.127  To whom is the decision sent?

Subpart C--Continuation of Pay

10.200  What is continuation of pay?

Eligibility for COP

10.205  What other conditions must be met to receive COP?
10.206  May an employee who uses leave after an injury later decide 
to use COP instead?
10.207  May an employee who returns to work, then stops work again 
due to the effects of the injury, receive COP?

Responsibilities

10.210  What are the employee's responsibilities in COP cases?
10.211  What are the employer's responsibilities in COP cases?

Calculation of COP

10.215  How does OWCP compute the number of days of COP used?
10.216  How is the pay rate for COP calculated?
10.217  Is COP charged if the employee continues to work, but in a 
different job that pays less?

Controversion and Termination of COP

10.220  When is an employer not required to pay COP?
10.221  How is a claim for COP controverted?
10.222  When may an employer terminate COP which has already begun?
10.223  Are there other circumstances under which OWCP will not 
authorize payment of COP?
10.224  What happens if OWCP finds that the employee is not entitled 
to COP after it has been paid?

Subpart D--Medical and Related Benefits

Emergency Medical Care

10.300  What are the basic rules for authorizing emergency medical 
care?
10.301  May the physician designated on Form CA-16 refer the 
employee to another medical specialist or medical facility?
10.302  Should the employer authorize medical care if he or she 
doubts that the injury occurred, or that it is work-related?
10.303  Should the employer use a Form CA-16 to authorize medical 
testing when an employee is exposed to a workplace hazard just once?
10.304  Are there any exceptions to these procedures?

Medical Treatment and Related Issues

10.310  What are the basic rules for obtaining medical care?
10.311  What are the special rules for the services of 
chiropractors?
10.312  What are the special rules for the services of clinical 
psychologists?
10.313  Will OWCP pay for preventive treatment?
10.314  Will OWCP pay for the services of an attendant?
10.315  Will OWCP pay for transportation to obtain medical 
treatment?
10.316  After selecting a treating physician, may an employee choose 
to be treated by another physician instead?

Directed Medical Examinations

10.320  Can OWCP require an employee to be examined by another 
doctor?
10.321  What happens if the physician selected by OWCP does not 
agree with the physician selected by the employee?
10.322  Who pays for second opinion and referee examinations?
10.323  What are the consequences of failing to report for or 
obstructing a second opinion or referee examination?
10.324  May an employer require an employee to undergo a physical 
examination in connection with a work-related injury?

Medical Reports

10.330  What are the requirements for medical reports?
10.331  How and when should the medical report be submitted?
10.332  What additional medical information will OWCP require to 
support continuing payment of benefits?
10.333  What additional medical information will OWCP require to 
support a claim for a schedule award?

Medical Bills

10.335  How are medical bills submitted?
10.336  What are the time frames for submitting bills?
10.337  If OWCP reimburses an employee only partially for a medical 
expense, must the provider refund the balance of the amount paid to 
the employee?

Subpart E--Compensation and Related Benefits

Compensation for Disability and Impairment

10.400  What is total disability?
10.401  When and how is compensation for total disability paid?
10.402  What is partial disability?
10.403  When and how is compensation for partial disability paid?
10.404  When and how is compensation for a schedule impairment paid?
10.405  Who is considered a dependent in a claim based on disability 
or impairment?
10.406  What are the maximum and minimum rates of compensation in 
disability cases?

[[Page 67136]]

Compensation for Death

10.410  What are the rates of compensation payable in death cases?
10.411  What are the maximum and minimum rates of compensation in 
death cases?
10.412  Will OWCP pay the costs of burial and transportation of the 
remains?
10.413  If a person dies while receiving a schedule award, to whom 
is the balance of the schedule award payable?
10.414  What reports of dependents are needed in death cases?
10.415  What must a beneficiary do if the number of beneficiaries 
decreases?
10.416  How does a change in the number of beneficiaries affect the 
amount of compensation paid to the other beneficiaries?
10.417  What reports are needed when compensation payments continue 
for children over age 18?

Adjustments to Compensation

10.420  How are cost-of-living adjustments applied?
10.421  May a beneficiary receive other kinds of payments from the 
federal government concurrently with compensation?
10.422  May compensation payments be issued in a lump sum?
10.423  May compensation payments be assigned to, or attached by, 
creditors?
10.424  May someone other than the beneficiary be designated to 
receive compensation payments?

Overpayments

10.430  How does OWCP notify an individual of a payment made?
10.431  What does OWCP do when an overpayment is identified?
10.432  How can an individual present evidence to OWCP in response 
to a preliminary notice of an overpayment?
10.433  Under what circumstances can OWCP waive recovery of an 
overpayment?
10.434  If OWCP finds that the recipient of an overpayment was not 
at fault, what criteria are used to decide whether to waive recovery 
of it?
10.435  Is an individual responsible for an overpayment that 
resulted from an error by OWCP or another government agency?
10.436  Under what circumstances would recovery of an overpayment 
defeat the purpose of the FECA?
10.437  Under what circumstances would recovery of an overpayment be 
against equity and good conscience?
10.438  Can OWCP require the individual who received the overpayment 
to submit additional financial information?
10.439  May other issues be addressed at the pre-recoupment hearing?
10.440  How does OWCP communicate its final decision concerning 
recovery of an overpayment, and what appeal right accompanies it?
10.441  How are overpayments collected?

Subpart F--Continuing Entitlement to Benefits

10.500  What are the basic rules governing continuing receipt of 
compensation benefits?

Return to Work--Employer's Responsibilities

10.505  What actions must the employer take?
10.506  May the employer monitor the employee's medical care?
10.507  How should the employer make an offer of suitable work?
10.508  May relocation expenses be paid for an employee who would 
need to move to accept an offer of reemployment?
10.509  If an employee's light-duty job is eliminated due to 
downsizing, what is the effect on compensation?

Return to Work--Employee's Responsibilities

10.515  What actions must the employee take?
10.516  How will an employee know if OWCP considers a job to be 
suitable?
10.517  What are the penalties for refusing to accept a suitable job 
offer?
10.518  Does OWCP provide services to help employees return to work?
10.519  What action will OWCP take if an employee refuses to undergo 
vocational rehabilitation?
10.520  How does OWCP determine compensation after an employee 
completes a vocational rehabilitation program?

Reports of Earnings From Employment and Self-Employment

10.525  What information must the employee report?
10.526  Must the employee report self-employment?
10.527  Does OWCP verify reports of earnings?
10.528  What action will OWCP take if the employee fails to file a 
report of activity indicating an ability to work?
10.529  What action will OWCP take if the employee files an 
incomplete report?

Reports of Dependents

10.535  How are dependents defined, and what information must the 
employee report?
10.536  What is the penalty for failing to submit a report of 
dependents?
10.537  What reports are needed when compensation payments continue 
for children over age 18?

Reduction and Termination of Compensation

10.540  When and how is compensation reduced or terminated?
10.541  What action will OWCP take after issuing written notice of 
its intention to reduce or terminate compensation?

Subpart G--Appeals Process

10.600  How can final decisions of OWCP be reviewed?

Reconsiderations and Reviews by the Director

10.605  What is reconsideration?
10.606  How does a claimant request reconsideration?
10.607  What is the deadline for requesting reconsideration?
10.608  How does OWCP decide whether to grant or deny the request 
for reconsideration?
10.609  How does OWCP decide whether new evidence requires 
modification of the prior decision?
10.610  What is a review by the Director?

Hearings

10.615  What is a hearing?
10.616  How does a claimant obtain a hearing?
10.617  How is an oral hearing conducted?
10.618  How is a review of the written record conducted?
10.619  May subpoenas be issued for witnesses and documents?
10.620  Who pays the costs associated with subpoenas?
10.621  What is the employer's role when an oral hearing has been 
requested?
10.622  May a claimant withdraw a request for or postpone a hearing?

Reviews by the Employees' Compensation Appeals Board (ECAB)

10.625  What kinds of decisions may be appealed?
10.626  Who has jurisdiction of cases on appeal to the ECAB?

Subpart H--Special Provisions

Representation

10.700  May a claimant designate a representative?
10.701  Who may serve as a representative?
10.702  How are fees for services paid?
10.703  How are fee applications approved?

Third Party Liability

10.705  When must an employee or other FECA beneficiary take action 
against a third party?
10.706  How will a beneficiary know if OWCP or SOL has determined 
that action against a third party is required?
10.707  What must a FECA beneficiary who is required to take action 
against a third party do to satisfy the requirement that the claim 
be ``prosecuted''?
10.708  Can a FECA beneficiary who refuses to comply with a request 
to assign a claim to the United States or to prosecute the claim in 
his or her own name be penalized?
10.709  What happens if a beneficiary directed by OWCP or SOL to 
take action against a third party does not believe that a claim can 
be successfully prosecuted at a reasonable cost?
10.710  Under what circumstances must a recovery of money or other 
property in connection with an injury or death for which benefits 
are payable under the FECA be reported to OWCP or SOL?
10.711  How much of any settlement or judgment must be paid to the 
United States?
10.712  What amounts are included in the gross recovery?

[[Page 67137]]

10.713  How is a structured settlement (that is, a settlement 
providing for receipt of funds over a specified period of time) 
treated for purposes of reporting the gross recovery?
10.714  What amounts are included in the refundable disbursements?
10.715  Is a beneficiary required to pay interest on the amount of 
the refund due to the United States?
10.716  If the required refund is not paid within 30 days of the 
request for repayment, can it be collected from payments due under 
the FECA?
10.717  Is a settlement or judgment received as a result of 
allegations of medical malpractice in treating an injury covered by 
the FECA a gross recovery that must be reported to OWCP or SOL?
10.718  Are payments to a beneficiary as a result of an insurance 
policy which the beneficiary has purchased a gross recovery that 
must be reported to OWCP or SOL?
10.719  If a settlement or judgment is received for more than one 
wound or medical condition, can the refundable disbursements paid on 
a single FECA claim be attributed to different conditions for 
purposes of calculating the refund or credit owed to the United 
States?

Federal Grand and Petit Jurors

10.725  When is a federal grand or petit juror covered under the 
FECA?
10.726  When does a juror's entitlement to disability compensation 
begin?
10.727  What is the pay rate of jurors for compensation purposes?

Peace Corps Volunteers

10.730  What are the conditions of coverage for Peace Corps 
volunteers and volunteer leaders injured while serving outside the 
United States?
10.731  What is the pay rate of Peace Corps volunteers and volunteer 
leaders for compensation purposes?

Non-Federal Law Enforcement Officers

10.735  When is a non-federal law enforcement officer covered under 
the FECA?
10.736  What are the time limits for filing a claim?
10.737  How is a claim filed, and who can file a claim?
10.738  Under what circumstances are benefits payable?
10.739  What kind of objective evidence of a potential federal crime 
must exist for coverage to be extended?
10.740  In what situations will OWCP automatically presume that a 
law enforcement officer is covered by the FECA?
10.741  How are benefits calculated?

Subpart I--Information for Medical Providers

Medical Records and Bills

10.800  What kind of medical records must providers keep?
10.801  How are medical bills to be submitted?
10.802  How should an employee prepare and submit requests for 
reimbursement for medical expenses, transportation costs, loss of 
wages, and incidental expenses?
10.803  What are the time limitations on OWCP's payment of bills?

Medical Fee Schedule

10.805  What services are covered by the OWCP fee schedule?
10.806  How are the maximum fees defined?
10.807  How are payments for particular services calculated?
10.808  Does the fee schedule apply to every kind of procedure?
10.809  How are payments for medicinal drugs determined?
10.810  How are payments for inpatient medical services determined?
10.811  When and how are fees reduced?
10.812  If OWCP reduces a fee, may a provider request 
reconsideration of the reduction?
10.813  If OWCP reduces a fee, may a provider bill the claimant for 
the balance?

Exclusion of Providers

10.815  What are the grounds for excluding a provider from payment 
under the FECA?
10.816  What will cause OWCP to automatically exclude a physician or 
other provider of medical services and supplies?
10.817  When are OWCP's exclusion procedures initiated?
10.818  How is a provider notified of OWCP's intent to exclude him 
or her?
10.819  What requirements must the provider's reply and OWCP's 
decision meet?
10.820  How can an excluded provider request a hearing?
10.821  How are hearings assigned and scheduled?
10.822  How are subpoenas or advisory opinions obtained?
10.823  How will the administrative law judge conduct the hearing 
and issue the recommended decision?
10.824  How can a party request review by the Director of the 
administrative law judge's recommended decision?
10.825  What are the effects of exclusion?
10.826  How can an excluded provider be reinstated?

    Authority: 5 U.S.C. 301, 8103, 8145 and 8149; 31 U.S.C. 3716 and 
3717; Reorganization Plan No. 6 of 1950, 15 FR 3174, 64 Stat. 1263; 
Secretary's Order 5-96, 62 FR 107.

Subpart A--General Provisions

Introduction


Sec. 10.0  What are the provisions of the FECA, in general?

    The Federal Employees' Compensation Act (FECA) as amended (5 U.S.C. 
8101 et seq.) provides for the payment of workers' compensation 
benefits to civilian officers and employees of all branches of the 
Government of the United States. The regulations in this part describe 
the rules for filing, processing, and paying claims for benefits under 
the FECA.
    (a) The FECA has been amended and extended a number of times to 
provide workers' compensation benefits to volunteers in the Civil Air 
Patrol (5 U.S.C. 8141), members of the Reserve Officers' Training Corps 
(5 U.S.C. 8140), Peace Corps Volunteers (5 U.S.C. 8142), Job Corps 
enrollees and Volunteers In Service to America (5 U.S.C. 8143), members 
of the National Teachers Corps (5 U.S.C. 8143a), certain student 
employees (5 U.S.C. 5351 and 8144), certain law enforcement officers 
not employed by the United States (5 U.S.C. 8191-8193), and various 
other classes of persons who provide or have provided services to the 
Government of the United States.
    (b) The FECA provides for payment of several types of benefits, 
including compensation for wage loss, schedule awards, medical and 
related benefits, and vocational rehabilitation services for conditions 
resulting from injuries sustained in performance of duty while in 
service to the United States.
    (c) The FECA also provides for payment of monetary compensation to 
specified survivors of an employee whose death resulted from a work-
related injury and for payment of certain burial expenses subject to 
the provisions of 5 U.S.C. 8134.
    (d) All types of benefits and conditions of eligibility listed in 
this section are subject to the provisions of the FECA and of this 
part. This section shall not be construed to modify or enlarge upon the 
provisions of the FECA.


Sec. 10.1  What rules govern the administration of the FECA and this 
chapter?

    In accordance with 5 U.S.C. 8145 and Secretary's Order 5-96, the 
responsibility for administering the FECA, except for 5 U.S.C. 8149 as 
it pertains to the Employees' Compensation Appeals Board, has been 
delegated to the Assistant Secretary for Employment Standards. The 
Assistant Secretary, in turn, delegated the authority and 
responsibility for administering the FECA to the Director of the Office 
of Workers' Compensation Programs (OWCP). Except as otherwise provided 
by law, the Director, OWCP and his or her designees have the exclusive 
authority to administer, interpret and enforce the provisions of the 
Act.

[[Page 67138]]

Sec. 10.2  What do these regulations contain?

    Part 10 of this chapter sets forth the regulations governing 
administration of all claims filed under the FECA, except to the extent 
specified in certain particular provisions. Its provisions are intended 
to assist persons seeking compensation benefits under the FECA, as well 
as personnel in the various federal agencies and the Department of 
Labor who process claims filed under the FECA or who perform 
administrative functions with respect to the FECA. Part 10 applies to 
part 25 of this chapter except as modified by part 25. The various 
subparts of this part contain the following:
    (a) Subpart A: The general statutory and administrative framework 
for processing claims under the FECA. It contains a statement of 
purpose and scope, together with definitions of terms, descriptions of 
basic forms, information about the disclosure of OWCP records, and a 
description of rights and penalties under the FECA, including 
convictions for fraud.
    (b) Subpart B: The rules for filing notices of injury and claims 
for benefits under the FECA. It also addresses evidence and burden of 
proof, as well as the process of making decisions concerning 
eligibility for benefits.
    (c) Subpart C: The rules governing claims for and payment of 
continuation of pay.
    (d) Subpart D: The rules governing emergency and routine medical 
care, second opinion and referee medical examinations directed by OWCP, 
and medical reports and records in general. It also addresses the kinds 
of treatment which may be authorized and how medical bills are paid.
    (e) Subpart E: The rules relating to the payment of monetary 
compensation benefits for disability, impairment and death. It includes 
the provisions for identifying and processing overpayments of 
compensation.
    (f) Subpart F: The rules governing the payment of continuing 
compensation benefits. It includes provisions concerning the employee's 
and the employer's responsibilities in returning the employee to work. 
It also contains provisions governing reports of earnings and 
dependents, recurrences, and reduction and termination of compensation 
benefits.
    (g) Subpart G: The rules governing the appeals of decisions under 
the FECA. It includes provisions relating to hearings, 
reconsiderations, and appeals before the Employees' Compensation 
Appeals Board.
    (h) Subpart H: The rules concerning legal representation and for 
adjustment and recovery from a third party. It also contains provisions 
relevant to three groups of employees whose status requires special 
application of the provisions of the FECA: federal grand and petit 
jurors, Peace Corps volunteers, and non-federal law enforcement 
officers.
    (i) Subpart I: Information for medical providers. It includes rules 
for medical reports, medical bills, and the OWCP medical fee schedule, 
as well as the provisions for exclusion of medical providers.


Sec. 10.3  Have the collection of information requirements of this part 
been approved by OMB?

    The collection of information requirements in this part have been 
approved by the Office of Management and Budget and assigned OMB 
control numbers 1215-0055, 1215-0067, 1215-0103, 1215-0115, 1215-0154, 
1215-0155, 1215-0167, 1215-0176 and 1215-0182.

Definitions and Forms


Sec. 10.5  What definitions apply to these regulations?

    Certain words and phrases found in this part are defined in this 
section or in the FECA statute. Some other words and phrases that are 
used only in limited situations are defined in the later subparts of 
these regulations.
    (a) Benefits or Compensation means the money OWCP pays to or on 
behalf of a beneficiary from the Employees' Compensation Fund for lost 
wages, a loss of wage-earning capacity or a permanent physical 
impairment, as well as the money paid to beneficiaries for an 
employee's death. These two terms also include any other amounts paid 
out of the Employees' Compensation Fund for such things as medical 
treatment, medical examinations conducted at the request of OWCP as 
part of the claims adjudication process, vocational rehabilitation 
services, services of an attendant and funeral expenses, but does not 
include continuation of pay.
    (b) Beneficiary means an individual who is entitled to a benefit 
under the FECA and this part.
    (c) Claim means a written assertion of an individual's entitlement 
to benefits under the FECA, submitted in a manner authorized by this 
part.
    (d) Claimant means an individual whose claim has been filed.
    (e) Director means the Director of OWCP or a person designated to 
carry out his or her functions.
    (f) Disability means the incapacity, because of an employment 
injury, to earn the wages the employee was receiving at the time of 
injury. It may be partial or total.
    (g) Earnings from employment or self-employment means:
    (1) Gross earnings or wages before any deductions and includes the 
value of subsistence, quarters, reimbursed expenses and any other goods 
or services received in kind as remuneration; or
    (2) A reasonable estimate of the cost to have someone else perform 
the duties of an individual who accepts no remuneration. Neither lack 
of profits, nor the characterization of the duties as a hobby, removes 
an unremunerated individual's responsibility to report the estimated 
cost to have someone else perform his or her duties.
    (h) Employee means, but is not limited to, an individual who fits 
within one of the following listed groups:
    (1) A civil officer or employee in any branch of the Government of 
the United States, including an officer or employee of an 
instrumentality wholly owned by the United States;
    (2) An individual rendering personal service to the United States 
similar to the service of a civil officer or employee of the United 
States, without pay or for nominal pay, when a statute authorizes the 
acceptance or use of the service, or authorizes payment of travel or 
other expenses of the individual;
    (3) An individual, other than an independent contractor or an 
individual employed by an independent contractor, employed on the 
Menominee Indian Reservation in Wisconsin in operations conducted under 
a statute relating to tribal timber and logging operations on that 
reservation;
    (4) An individual appointed to a position on the office staff of a 
former President; or
    (5) An individual selected and serving as a federal petit or grand 
juror.
    (i) Employer or Agency means any civil agency or instrumentality of 
the United States Government, or any other organization, group or 
institution employing an individual defined as an ``employee'' by this 
section. These terms also refer to officers and employees of an 
employer having responsibility for the supervision, direction or 
control of employees of that employer as an ``immediate superior,'' and 
to other employees designated by the employer to carry out the 
functions vested in the employer under the FECA and this part, 
including officers or employees delegated responsibility by an employer 
for authorizing medical treatment for injured employees.
    (j) Entitlement means entitlement to benefits as determined by OWCP 
under the FECA and the procedures described in this part.

[[Page 67139]]

    (k) FECA means the Federal Employees' Compensation Act, as amended.
    (l) Hospital services means services and supplies provided by 
hospitals within the scope of their practice as defined by State law.
    (m) Impairment means any anatomic or functional abnormality or 
loss. A permanent impairment is any such abnormality or loss after 
maximum medical improvement has been achieved.
    (n) Knowingly means with knowledge, consciously, willfully or 
intentionally.
    (o) Medical services means services and supplies provided by or 
under the supervision of a physician. Reimbursable chiropractic 
services are limited to physical examinations (and related laboratory 
tests), x-rays performed to diagnose a subluxation of the spine and 
treatment consisting of manual manipulation of the spine to correct a 
subluxation.
    (p) Medical support services means services, drugs, supplies and 
appliances provided by a person other than a physician or hospital.
    (q) Occupational disease or illness means a condition produced by 
the work environment over a period longer than a single workday or 
shift.
    (r) OWCP means the Office of Workers' Compensation Programs.
    (s) Pay rate for compensation purposes means the employee's pay, as 
determined under 5 U.S.C. 8114, at the time of injury, the time 
disability begins or the time compensable disability recurs if the 
recurrence begins more than six months after the injured employee 
resumes regular full-time employment with the United States, whichever 
is greater, except as otherwise determined under 5 U.S.C. 8113 with 
respect to any period.
    (t) Physician means an individual defined as such in 5 U.S.C. 
8101(2), except during the period for which his or her license to 
practice medicine has been suspended or revoked by a State licensing or 
regulatory authority.
    (u) Qualified hospital means any hospital licensed as such under 
State law which has not been excluded under the provisions of subpart I 
of this part. Except as otherwise provided by regulation, a qualified 
hospital shall be deemed to be designated or approved by OWCP.
    (v) Qualified physician means any physician who has not been 
excluded under the provisions of subpart I of this part. Except as 
otherwise provided by regulation, a qualified physician shall be deemed 
to be designated or approved by OWCP.
    (w) Qualified provider of medical support services or supplies 
means any person, other than a physician or a hospital, who provides 
services, drugs, supplies and appliances for which OWCP makes payment, 
who possesses any applicable licenses required under State law and who 
has not been excluded under the provisions of subpart I of this part.
    (x) Recurrence of disability means an inability to work after an 
employee has returned to work, caused by a spontaneous and material 
change in a medical condition which had resulted from a previous injury 
or illness without an intervening injury or new exposure to the work 
environment that caused the illness. This term also means an inability 
to work that takes place when a light-duty assignment made specifically 
to accommodate an employee's physical restrictions due to his or her 
work-related injury or illness is withdrawn (except when such 
withdrawal occurs for reasons of misconduct, non-performance of job 
duties or a reduction-in-force), or when the physical requirements of 
such an assignment are altered so that they exceed his or her 
established physical restrictions.
    (y) Representative means an individual properly authorized by a 
claimant in writing to act for the claimant in connection with a claim 
or proceeding under the FECA or this part.
    (z) Student means an individual defined at 5 U.S.C. 8101(17). Two 
terms used in that particular definition are further defined as 
follows:
    (1) ``Additional type of educational or training institution'' 
means a technical, trade, vocational, business or professional school 
accredited or licensed by the United States Government or a state 
government or any political subdivision thereof providing courses of 
not less than three months' duration, that prepares the individual for 
a livelihood in a trade, industry, vocation or profession.
    (2) ``Year beyond the high school level'' means:
    (i) The 12-month period beginning the month after the individual 
graduates from high school, provided he or she had indicated an 
intention to continue schooling within four months of high school 
graduation, and each successive 12-month period in which there is 
school attendance or the payment of compensation based on student 
attendance; or
    (ii) If the individual has indicated that he or she will not 
continue schooling within four months of high school graduation, the 
12-month period beginning with the month that the individual enters 
school to continue his or her education, and each successive 12-month 
period in which there is school attendance or the payment of 
compensation based on student status.
    (aa) Subluxation means an incomplete dislocation, off-centering, 
misalignment, fixation or abnormal spacing of the vertebrae which must 
be demonstrable on any x-ray film to an individual trained in the 
reading of x-rays.
    (bb) Surviving spouse means the husband or wife living with or 
dependent for support upon a deceased employee at the time of his or 
her death, or living apart for reasonable cause or because of the 
deceased employee's desertion.
    (cc) Temporary aggravation of a pre-existing condition means that 
factors of employment have directly caused that condition to be more 
severe for a limited period of time and have left no greater impairment 
than existed prior to the employment injury.
    (dd) Traumatic injury means a condition of the body caused by a 
specific event or incident or series of events or incidents within a 
single workday or shift. Such condition must be caused by external 
force, including stress or strain, which is identifiable as to time and 
place of occurrence and member or function of the body affected.


Sec. 10.6  What special statutory definitions apply to dependents and 
survivors?

    (a) 5 U.S.C. 8133 provides that certain benefits are payable to 
certain enumerated survivors of employees who have died from an injury 
sustained in the performance of duty.
    (b) 5 U.S.C. 8148 also provides that certain other benefits are 
payable to certain family members of employees who have been 
incarcerated due to a felony conviction.
    (c) 5 U.S.C. 8110(b) further provides that any employee who is 
found to be eligible for a basic benefit shall be entitled to have such 
basic benefit augmented at a specified rate for certain persons who 
live in the beneficiary's household or who are dependent upon the 
beneficiary for support.
    (d) 5 U.S.C. 8101, 8110, 8133 and 8148, which define the nature of 
such survivorship or dependency necessary to qualify a beneficiary for 
a survivor's benefit or an augmented benefit, apply to the provisions 
of this part.


Sec. 10.7  What forms are needed to process claims under the FECA?

    (a) Notice of injury, claims and certain specified reports shall be 
made on forms prescribed by OWCP. Employers are expected to maintain an 
adequate

[[Page 67140]]

supply of the basic forms needed for the proper recording and reporting 
of injuries.

------------------------------------------------------------------------
         Form No.                              Title                    
------------------------------------------------------------------------
(1) CA-1.................  Federal Employee's Notice of Traumatic Injury
                            and Claim for Continuation of Pay/          
                            Compensation.                               
(2) CA-2.................  Notice of Occupational Disease and Claim for 
                            Compensation.                               
(3) CA-2a................  Notice of Employee's Recurrence of Disability
                            and Claim for Pay/Compensation.             
(4) CA-3.................  Report of Termination of Disability and/or   
                            Payment.                                    
(5) CA-5.................  Claim for Compensation by Widow, Widower and/
                            or Children.                                
(6) CA-5b................  Claim for Compensation by Parents, Brothers, 
                            Sisters, Grandparents, or Grandchildren.    
(7) CA-6.................  Official Superior's Report of Employee's     
                            Death.                                      
(8) CA-7.................  Claim for Compensation Due to Traumatic      
                            Injury or Occupational Disease.             
(9) CA-8.................  Claim for Continuing Compensation on Account 
                            of Disability.                              
(10) CA-12...............  Claim for Continuance of Compensation.       
(11) CA-16...............  Authorization of Examination and/or          
                            Treatment.                                  
(12) CA-17...............  Duty Status Report.                          
(13) CA-20...............  Attending Physician's Report.                
(14) CA-20a..............  Attending Physician's Supplemental Report.   
------------------------------------------------------------------------

    (b) Copies of the forms listed in this paragraph are available for 
public inspection at the Office of Workers' Compensation Programs, 
Employment Standards Administration, U.S. Department of Labor, 
Washington, DC 20210. They may also be obtained from district offices, 
employers (i.e., safety and health offices, supervisors), and the 
Internet.

Information in Program Records


Sec. 10.10  Are all documents relating to claims filed under the FECA 
considered confidential?

    All records relating to claims for benefits, including copies of 
such records maintained by an employer, are considered confidential and 
may not be released, inspected, copied or otherwise disclosed except as 
provided in the Freedom of Information Act and the Privacy Act of 1974. 
All FECA-related records are covered by the government-wide Privacy Act 
system of records entitled DOL/GOVT-1 (Office of Workers' Compensation 
Programs, Federal Employees' Compensation Act File). The routine uses 
to which such records may be put are set forth in the Notice published 
in the Federal Register by the Department of Labor. The regulations and 
routine uses promulgated by the Department of Labor control decisions 
regarding access to all FECA-related records.


Sec. 10.11  Who maintains custody and control of FECA records?

    All documents covered by DOL/GOVT-1 are official records of OWCP 
and, as such, are maintained by and under the control of OWCP. While an 
employer may establish procedures an injured employee or FECA 
beneficiary should follow in requesting access to documents it 
maintains, any decision issued in response to such a request must 
comply with the rules and regulations of the Department of Labor.


Sec. 10.12  How may a FECA claimant or beneficiary obtain copies of 
protected records?

    (a) A claimant seeking copies of his or her official FECA file 
should address a request to the District Director of the OWCP office 
having custody of the file. A claimant seeking copies of FECA-related 
documents in the custody of the employer should follow the procedures 
established by that agency. In responding to a claimant's request, the 
employer must comply with the rules and regulations of the Department 
of Labor which govern all aspects of safeguarding the records.
    (b) Any appeal from a decision denying access to the FECA-related 
documents must be filed with the Solicitor of Labor as provided in 29 
CFR part 71.


Sec. 10.13  What process is used by a person who wants to correct FECA-
related documents?

    Any request to amend a record covered by DOL/GOVT-1 should be 
directed to the district office having custody of the official file. No 
employer has the authority to issue determinations with regard to 
requests for the correction of records contained in or covered by DOL/
GOVT-1. Any request for correction received by an employer must be 
referred to OWCP for review and decision.

Rights and Penalties


Sec. 10.15  May compensation rights be waived?

    No employer or other person may require an employee or other 
claimant to enter into any agreement, either before or after an injury 
or death, to waive his or her right to claim compensation under the 
FECA. No waiver of compensation rights shall be valid.


Sec. 10.16  What are the criminal law penalties for making a false 
report in connection with a claim under the FECA?

    (a) A number of statutory provisions make it a crime to file a 
false or fraudulent claim or statement with the government in 
connection with a claim under the FECA. Included among these provisions 
are sections 287, 1001, 1920, and 1922 of title 18, United States Code. 
Enforcement of these and other criminal provisions that may apply to 
claims under the FECA are within the jurisdiction of the Department of 
Justice.
    (b) In addition, administrative proceedings may be initiated under 
the Program Fraud Civil Remedies Act of 1986 (PFCRA), 31 U.S.C. 3801-
12, to impose civil penalties and assessments against persons who make, 
submit, or present, or cause to be made, submitted or presented, false, 
fictitious or fraudulent claims or written statements to OWCP in 
connection with a claim under the FECA. The Department of Labor's 
regulations implementing the PFRCA are found at 29 CFR part 22.


Sec. 10.17  Is a beneficiary who defrauds the government in connection 
with a claim for benefits still entitled to those benefits?

    When a beneficiary either pleads guilty to or is found guilty on 
charges of defrauding the federal government in connection with a claim 
for benefits, the beneficiary's entitlement to any further compensation 
benefits will terminate effective the date either the guilty plea is 
accepted or a verdict of guilty is returned after trial, for any injury 
occurring on or before the date of such guilty plea or verdict. 
Termination of entitlement under this section is not affected by any 
subsequent change in or recurrence of the beneficiary's medical 
condition.

[[Page 67141]]

Sec. 10.18  Can a beneficiary who is incarcerated based on a felony 
conviction still receive benefits?

    (a) Whenever a beneficiary is incarcerated in a state or federal 
jail, prison, penal institution or other correctional facility due to a 
state or federal felony conviction, he or she forfeits all rights to 
compensation benefits during the period of incarceration. A 
beneficiary's right to compensation benefits for the period of his or 
her incarceration is not restored after such incarceration ends, even 
though payment of compensation benefits may resume.
    (b) If the beneficiary has eligible dependents, OWCP will pay 
compensation to such dependents at a reduced rate during the period of 
his or her incarceration, by applying the percentages of 5 U.S.C. 
8133(a)(1) through (5) to the beneficiary's gross current entitlement.
    (c) If OWCP's decision on entitlement is pending when the period of 
incarceration begins, and compensation is due for a period of time 
prior to such incarceration, payment for that period will only be made 
to the beneficiary following his or her release.

Subpart B--Filing Notices and Claims; Submitting Evidence

Notices and Claims for Injury, Disease, and Death--Employee or 
Survivor's Actions


Sec. 10.100  How and when is a notice of traumatic injury filed?

    (a) To claim benefits under the FECA, an employee who sustains a 
work-related traumatic injury must give notice of the injury in writing 
on Form CA-1, which may be obtained from the employer. The employee 
must forward this notice to the employer. Another person, including the 
employer, may give notice of injury on the employee's behalf. The 
person submitting a notice shall include the Social Security Number 
(SSN) of the injured employee.
    (b) For injuries sustained on or after September 7, 1974, a notice 
of injury must be filed within three years of the injury. (The form 
contains the necessary words of claim.) The requirements for filing 
notice are further described in 5 U.S.C. 8119. Also see Sec. 10.205 
concerning time requirements for filing claims for continuation of pay.
    (1) If the claim is not filed within three years, compensation may 
still be allowed if notice of injury was given within 30 days or the 
employer had actual knowledge of the injury or death within 30 days 
after occurrence. This knowledge may consist of written records or 
verbal notification. An entry into an employee's medical record may 
also satisfy this requirement if it is sufficient to place the employer 
on notice of a possible work-related injury or disease.
    (2) OWCP may excuse failure to comply with the three-year time 
requirement because of truly exceptional circumstances (for example, 
being held prisoner of war).
    (3) The claimant may withdraw his or her claim (but not the notice 
of injury) by so requesting in writing to OWCP at any time before OWCP 
determines eligibility for benefits.


Sec. 10.101  How and when is a claim for wage loss compensation on 
account of traumatic injury filed?

    (a) Form CA-7 is used to claim compensation for initial periods of 
disability.
    (1) An employee who is disabled with loss of pay for more than 
three calendar days due to an injury, or someone acting on his or her 
behalf, must file Form CA-7 before compensation can be paid.
    (2) The employee shall complete the front of Form CA-7 and submit 
the form to the employer for completion and transmission to OWCP. The 
form should be completed as soon as possible, but no more than 14 
calendar days after the date pay stops due to the injury or disease.
    (3) The requirements for filing claims are further described in 5 
U.S.C. 8121.
    (b) Form CA-8 is used to claim compensation for additional periods 
of disability after Form CA-7 is submitted to OWCP.
    (1) It is the employee's responsibility to submit Form CA-8. 
Without receipt of such claim, OWCP has no knowledge of continuing wage 
loss. Therefore, while disability continues, the employee should submit 
a claim on Form CA-8 each two weeks until otherwise instructed by OWCP.
    (2) The employee shall complete the front of Form CA-8 and submit 
the form to the employer for completion and transmission to OWCP.
    (3) The employee is responsible for submitting, or arranging for 
the submittal of, medical evidence which establishes both that 
disability continues and that the disability is due to the work-related 
injury. Form CA-20a is attached to Form CA-8 for this purpose.


Sec. 10.102  How and when is a notice of occupational disease filed?

    (a) To claim benefits under the FECA, an employee who has a disease 
which he or she believes to be work-related must give notice of the 
condition in writing on Form CA-2, which may be obtained from the 
employer. The employee must forward this notice to the employer. 
Another person, including the employer, may do so on the employee's 
behalf. The person submitting a notice shall include the Social 
Security Number (SSN) of the injured employee. The claimant may 
withdraw his or her claim (but not the Notice of Injury) by so 
requesting in writing to OWCP at any time before OWCP determines 
eligibility for benefits.
    (b) For occupational diseases sustained as a result of exposure to 
injurious work factors that occurs on or after September 7, 1974, a 
notice of occupational disease must be filed within three years of the 
onset of the condition. (The form contains the necessary words of 
claim.) The requirements for timely filing are described in 
Sec. 10.100(b)(1) through (3).
    (c) However, in cases of latent disability, the time for filing 
claim does not begin to run until the employee has a compensable 
disability and is aware, or reasonably should have been aware, of the 
causal relationship between the disability and the employment (see 5 
U.S.C. 8122(b)).


Sec. 10.103  How and when is a claim for wage loss compensation on 
account of occupational disease filed?

    Compensation for the initial period of disability, additional 
periods of disability, and impairment of a body part is claimed as 
described in Secs. 10.101 and 10.104.


Sec. 10.104  How and when is a claim for permanent impairment filed?

    Form CA-7 is used to claim compensation for impairment to a body 
part covered under the schedule established by 5 U.S.C. 8107. If Form 
CA-7 has already been filed to claim disability compensation, an 
employee may file a claim for impairment compensated according to the 
schedule by sending a letter to OWCP which specifies the nature of the 
benefit claimed.


Sec. 10.105  How and when is a claim for recurrence filed?

    (a) A recurrence should be reported on Form CA-2a if it causes the 
employee to lose time from work and incur a wage loss. However, a 
notice of recurrence should not be filed for time loss due to traumatic 
injury during the period covered by continuation of pay. Also, a notice 
of recurrence should not be filed when a new injury or event 
contributing to an occupational disease has occurred. In these 
instances, the employee should file Form CA-1 or CA-2.

[[Page 67142]]

    (b) The employee has the burden of establishing by the weight of 
reliable, probative and substantial evidence that the recurrence of 
disability is causally related to the original injury.
    (1) The employee must include a statement with Form CA-2a 
describing his or her duties upon return to work after the original 
injury, stating whether there were any other injuries or illness, and 
giving a general description of his or her physical condition during 
the intervening period. The employer may submit comments concerning the 
employee's statement.
    (2) The employee should arrange for the submittal of a detailed 
medical report from the attending physician as described on Form CA-2a. 
The employee should also submit, or arrange for the submittal of, 
similar medical reports for any examination and/or treatment received 
after returning to work following the original injury.


Sec. 10.106  How and when is a notice of death and claim for benefits 
filed?

    (a) If an employee dies from a work-related traumatic injury or an 
occupational disease, any survivor may file a claim for death benefits 
using Form CA-5 or CA-5b, which may be obtained from the employer. The 
survivor must provide this notice in writing and forward it to the 
employer. Another person, including the employer, may do so on the 
survivor's behalf. The claimant may also submit the completed Form CA-5 
or CA-5b directly to OWCP. The claimant shall disclose the SSNs of the 
survivors in addition to the SSN of the deceased employee. The claimant 
may withdraw his or her claim (but not the notice of death) by so 
requesting in writing to OWCP at any time before OWCP determines 
eligibility for benefits.
    (b) For deaths that occur on or after September 7, 1974, a notice 
of death must be filed within three years of the death. The form 
contains the necessary words of claim. The requirements for timely 
filing are described in Sec. 10.100(b) (1) through (3).
    (c) However, in cases of death due to latent disability, the time 
for filing the claim does not begin to run until the claimant is aware, 
or reasonably should have been aware, of the causal relationship 
between the death and the employment (see 5 U.S.C. 8122(b)).
    (d) The filing of a notice of injury will satisfy the time 
requirements for a death claim based on the same injury. If an injured 
employee or someone acting on the employee's behalf does not file a 
claim before the employee's death, the right to claim compensation for 
disability other than medical expenses ceases and does not survive.
    (e) A survivor must be alive to receive any payment; there is no 
vested right to such payment. A report as described in Sec. 10.414 of 
this part must be filed once each year to support continuing payments 
of compensation.

Notices and Claims for Injury, Disease, and Death--Employer's Actions


Sec. 10.110  What should the employer do when an employee files a 
notice of traumatic injury or occupational disease?

    (a) The employer shall complete the agency portion of Form CA-1 
(for traumatic injury) or CA-2 (for occupational disease) no more than 
five calendar days after receipt of notice from the employee. The 
employer shall also complete the Receipt of Notice and give it to the 
employee.
    (b) The employer must transmit the form to OWCP within five 
calendar days if the injury or disease will likely result in:
    (1) A medical charge against OWCP;
    (2) Disability for work beyond the day or shift of injury;
    (3) The need for more than two appointments for medical examination 
and/or treatment on separate days, leading to time loss from work;
    (4) Future disability;
    (5) Permanent impairment; or
    (6) Continuation of pay pursuant to 5 U.S.C. 8118.
    (c) The employer should not wait for submittal of supporting 
evidence before sending the form to OWCP.
    (d) If none of the conditions in paragraph (b) of this section 
applies, the Form CA-1 or CA-2 shall be retained as a permanent record 
in the Employee Medical Folder in accordance with the guidelines 
established by the Office of Personnel Management.


Sec. 10.111  What should the employer do when an employee files an 
initial claim for compensation due to disability or permanent 
impairment?

    (a) When an employee is disabled by a work-related injury and loses 
pay for more than three calendar days, or has a permanent impairment or 
serious disfigurement as described in 5 U.S.C. 8107, the employer shall 
furnish the employee with Form CA-7 for the purpose of claiming 
compensation.
    (b) If the employee is receiving continuation of pay (COP), the 
employer should give Form CA-7 to the employee by the 30th day of the 
COP period and submit the form to OWCP by the 40th day of the COP 
period. If the employee has not returned the form to the employer by 
the 40th day of the COP period, the employer should ask him or her to 
submit it as soon as possible.
    (c) Upon receipt of Form CA-7 from the employee, or someone acting 
on his or her behalf, the employer shall complete the appropriate 
portions of the form. As soon as possible, but no more than five 
working days after receipt from the employee, the employer shall 
forward the completed Form CA-7 and any accompanying medical report to 
OWCP.


Sec. 10.112  What should the employer do when an employee files a claim 
for continuing compensation due to disability?

    (a) If the employee continues in a leave-without-pay status due to 
a work-related injury after the period of compensation initially 
claimed on Form CA-7, the employer shall furnish the employee with Form 
CA-8 for the purpose of claiming continuing compensation.
    (b) Upon receipt of Form CA-8 from the employee, or someone acting 
on his or her behalf, the employer shall complete the appropriate 
portions of the form. As soon as possible, but no more than five 
working days after receipt from the employee, the employer shall 
forward the completed Form CA-8 and any accompanying medical report to 
OWCP.


Sec. 10.113  What should the employer do when an employee dies from a 
work-related injury or disease?

    (a) The employer shall immediately report a death due to a work-
related traumatic injury or occupational disease to OWCP by telephone, 
telegram, or telefax. No more than 10 working days after notification 
of the death, the employer shall complete and send Form CA-6 to OWCP.
    (b) When possible, the employer shall furnish a Form CA-5 or CA-5b 
to all persons likely to be entitled to compensation for death of an 
employee. The employer should also supply information about completing 
and filing the form.
    (c) The employer shall promptly transmit Form CA-5 or CA-5b to 
OWCP. The employer shall also promptly transmit to OWCP any other claim 
or paper submitted which appears to claim compensation on account of 
death.

Evidence and Burden of Proof


Sec. 10.115  What evidence is needed to establish a claim?

    Forms CA-1, CA-2, CA-5 and CA-5b describe the basic evidence 
required. OWCP may send any request for additional evidence to the 
claimant and to his or her representative, if any. Evidence should be 
submitted in writing. The evidence submitted must

[[Page 67143]]

be reliable, probative and substantial. Each claim for compensation 
must meet five requirements before OWCP can accept it. These 
requirements are as follows:
    (a) The claim was filed within the time limits specified by the 
FECA;
    (b) The injured person was, at the time of injury, an employee of 
the U.S. as defined in 5 U.S.C. 8101(1) and Sec. 10.5(h) of this part;
    (c) The fact that an injury, disease or death occurred;
    (d) The injury, disease or death occurred while the employee was in 
the performance of duty; and
    (e) The medical condition for which compensation or medical 
benefits is claimed is causally related to the claimed injury, disease 
or death. For wage loss benefits, the claimant must also submit medical 
evidence showing that the condition claimed is disabling. The rules for 
submitting medical reports are found in Secs. 10.330 through 10.333.


Sec. 10.116  What additional evidence is needed in cases based on 
occupational disease?

    (a) The employee must submit the specific detailed information 
described on Form CA-2 and on any checklist (Form CA-35, A-H) provided 
by the employer. OWCP has developed these checklists to address 
particular occupational diseases. The medical report should also 
include the information specified on the checklist for the particular 
disease claimed.
    (b) The employer should submit the specific detailed information 
described on Form CA-2 and on any checklist pertaining to the claimed 
disease.


Sec. 10.117  What happens if the employer contests any of the facts as 
stated by the claimant?

    (a) An employer who has reason to disagree with any aspect of the 
claimant's report shall submit a statement to OWCP that specifically 
describes the factual allegation or argument with which it disagrees 
and provide evidence or argument to support its position. The employer 
may include supporting documents such as witness statements, medical 
reports or records, or any other relevant information.
    (b) Any such statement shall be submitted to OWCP with the notice 
of traumatic injury or death, or within 30 calendar days from the date 
notice of occupational disease or death is received from the claimant. 
If the employer does not submit a written explanation to support the 
disagreement, OWCP may accept the claimant's report of injury as 
established. The employer may not use a disagreement with an aspect of 
the claimant's report to delay forwarding the claim to OWCP or to 
compel or induce the claimant to change the claim.


Sec. 10.118  Does the employer participate in the claims process in any 
other way?

    (a) The employer is responsible for submitting to OWCP all relevant 
and probative factual and medical evidence in its possession, or which 
it may acquire through investigation or other means. Such evidence may 
be submitted at any time.
    (b) The employer may ascertain the events surrounding an injury and 
the extent of disability where it appears that an employee who alleges 
total disability may be performing other work, or may be engaging in 
activities which would indicate less than total disability. This 
authority is in addition to that given in Sec. 10.118(a). However, the 
provisions of the Privacy Act apply to any endeavor by the employer to 
ascertain the facts of the case (see Secs. 10.10 and 10.11).
    (c) The employer does not have the right, except as provided in 
subpart C of this part, to actively participate in the claims 
adjudication process.


Sec. 10.119  What action will OWCP take with respect to information 
submitted by the employer?

    OWCP will consider all evidence submitted appropriately, and OWCP 
will inform the employee, the employee's representative, if any, and 
the employer of any action taken. Where an employer contests a claim at 
time of the initial submittal and the claim is later approved, OWCP 
will notify the employer of the rationale for approving the claim.


Sec. 10.120  May a claimant submit additional evidence?

    A claimant or a person acting on his or her behalf may submit to 
OWCP at any time any other evidence relevant to the claim.


Sec. 10.121  What happens if OWCP needs more evidence from the 
claimant?

    If the claimant submits factual evidence, medical evidence, or 
both, but OWCP determines that this evidence is not sufficient to meet 
the burden of proof, OWCP will inform the employee of the additional 
evidence needed. The claimant will be allowed up to 30 calendar days to 
submit the evidence required. OWCP is not required to notify the 
claimant a second time if the evidence submitted in response to its 
first request is not sufficient to meet the burden of proof.

Decisions on Entitlement to Benefits


Sec. 10.125  How does OWCP determine entitlement to benefits?

    (a) In reaching any decision with respect to FECA coverage or 
entitlement, OWCP considers the claim presented by the claimant, the 
report by the employer, and the results of such investigation as OWCP 
may deem necessary.
    (b) OWCP claims staff apply the law, the regulations, and its 
procedures to the facts as reported or obtained upon investigation. 
They also apply decisions of the Employees' Compensation Appeals Board 
and administrative decisions of OWCP as set forth in FECA Program 
Memoranda.


Sec. 10.126  What does the decision contain?

    The decision shall contain findings of fact and a statement of 
reasons. It is accompanied by information about the claimant's appeal 
rights, which may include the right to a hearing, a reconsideration, 
and/or a review by the Employees' Compensation Appeals Board. (See 
subpart G of this part.)


Sec. 10.127  To whom is the decision sent?

    A copy of the decision shall be mailed to the employee's last known 
address. If the employee has a designated representative before OWCP, a 
copy of the decision should also be mailed to the representative. 
Notification to either the employee or the representative will be 
considered notification to both. A copy of the decision will also be 
sent to the employer.

Subpart C--Continuation of Pay


Sec. 10.200  What is continuation of pay?

    (a) For most employees who sustain a traumatic injury, the FECA 
provides that the employer must continue the employee's regular pay 
during any periods of resulting disability, up to a maximum of 45 
calendar days. This is called continuation of pay, or COP. The 
employer, not OWCP, pays COP. Unlike workers' compensation benefits, 
COP is subject to taxes and all other payroll deductions that are made 
from regular income.
    (b) While the employer must generally continue the pay of an 
employee entitled to COP, the employer may make certain preliminary 
determinations regarding an employee's entitlement to COP (including 
not paying salary under Sec. 10.220 or terminating COP under 
Sec. 10.221), and may in all circumstances controvert the payment. OWCP 
has the exclusive authority to finally determine questions of 
entitlement and all other issues relating to COP.

[[Page 67144]]

    (c) The FECA excludes certain persons from eligibility for COP. COP 
cannot be authorized for members of these excluded groups, which 
include but are not limited to: persons rendering personal service to 
the United States similar to the service of a civil officer or employee 
of the United States, without pay or for nominal pay; volunteers (for 
instance, in the Civil Air Patrol and Peace Corps); Job Corps and Youth 
Conservation Corps enrollees; individuals in work-study programs, and 
grand or petit jurors (unless otherwise federal employees).

Eligibility for COP


Sec. 10.205  What other conditions must be met to receive COP?

    (a) To be eligible for COP, a person must:
    (1) Have a ``traumatic injury'' as defined at Sec. 10.5(dd) which 
is job-related and the cause of the disability;
    (2) File Form CA-1 within 30 days of the date of the injury (but if 
that form is not available, using another form would not alone preclude 
receipt); and
    (3) Begin losing time from work due to the traumatic injury within 
30 days of the injury.
    (b) OWCP may find that the employee is not entitled to COP for 
other reasons consistent with the statute (see Sec. 10.220).


Sec. 10.206  May an employee who uses leave after an injury later 
decide to use COP instead?

    On Form CA-1, an employee may elect to use accumulated sick or 
annual leave, or leave advanced by the agency, instead of electing COP. 
The employee can change the election between leave and COP for 
prospective periods at any point while eligibility for COP remains. The 
employee may also change the election for past periods and request COP 
in lieu of leave already taken for the same period. In either 
situation, the following provisions apply:
    (a) The request must be made to the employer within one year of the 
date the leave was used or the date of the written approval of the 
claim by OWCP, whichever is later.
    (b) Where the employee is otherwise eligible, the agency shall 
restore leave taken in lieu of any of the 45 COP days. Where any of the 
45 COP days remain unused, the agency shall continue pay prospectively.
    (c) The use of leave may not be used to delay or extend the 45-day 
COP period or to otherwise affect the time limitation as provided by 5 
U.S.C. 8117. Therefore, any leave used during the period of eligibility 
counts towards the 45 day maximum entitlement to COP.


Sec. 10.207  May an employee who returns to work, then stops work again 
due to the effects of the injury, receive COP?

    If the employee recovers from disability and returns to work, then 
becomes disabled again and stops work, the employer shall pay any of 
the 45 days of entitlement to COP not used during the initial period of 
disability where:
    (a) The employee completes Form CA-2a and elects to receive regular 
pay;
    (b) OWCP did not deny the original claim for disability;
    (c) The disability recurs and the employee stops work within 30 
days of the time the employee first returned to work following the 
initial period of disability; and
    (d) Pay has not been continued for the entire 45 days.

Responsibilities


Sec. 10.210  What are the employee's responsibilities in COP cases?

    An employee who sustains a traumatic injury which he or she 
considers disabling, or someone authorized to act on his or her behalf, 
must take the following actions to ensure continuing eligibility for 
COP. The employee must:
    (a) Complete and submit Form CA-1 to the employing agency as soon 
as possible, but no later than 30 days from the date the traumatic 
injury occurred.
    (b) Ensure that medical evidence supporting disability resulting 
from the claimed traumatic injury, including a statement as to when the 
employee can return to his or her date of injury job, is provided to 
the employer within 10 calendar days after filing the claim for COP.
    (c) Ensure that relevant medical evidence is submitted to OWCP, and 
cooperate with OWCP in developing the claim.
    (d) Ensure that the treating physician specifies work restrictions 
and provides them to the employer and/or representatives of OWCP.
    (e) Provide to the treating physician a description of any specific 
alternative positions offered the employee, and ensure that the 
treating physician responds promptly to the employer and/or OWCP, with 
an opinion as to whether and how soon the employer could perform that 
or any other specific position.


Sec. 10.211  What are the employer's responsibilities in COP cases?

    Once the employer learns of a traumatic injury sustained by an 
employee, it shall:
    (a) Provide a Form CA-1 and Form CA-16 to authorize medical care in 
accordance with Sec. 10.300. Failure to do so may mean that OWCP will 
not uphold any termination of COP by the employer.
    (b) Advise the employee of the right to receive COP, and the need 
to elect among COP, annual or sick leave or leave without pay, for any 
period of disability.
    (c) Inform the employee of any decision to controvert COP and/or 
terminate pay, and the basis for doing so.
    (d) Complete Form CA-1 (or other form approved by the Secretary) 
and return it, along with all other available pertinent information, 
(including the basis for any controversion), to OWCP within five 
calendar days after receiving the completed form from the employee.

Calculation of COP


Sec. 10.215  How does OWCP compute the number of days of COP used?

    COP is payable for a maximum of 45 calendar days, and every day 
used is counted toward this maximum. The following rules apply:
    (a) Time lost on the day or shift of the injury does not count 
toward COP. (Instead, the agency must keep the employee in a pay status 
for that period);
    (b) The first COP day is the first day disability begins following 
the date of injury (providing it is within the 30 days following the 
date of injury), except where the injury occurs before the beginning of 
the work day or shift, in which case the date of injury is charged to 
COP;
    (c) Any part of a day or shift (except for the day of the injury) 
counts as a full day toward the 45 calendar day total;
    (d) Regular days off are included if COP has been used on the 
regular work days immediately preceding and following the regular 
day(s) off; and
    (e) Leave used during a period when COP is otherwise payable is 
counted toward the 45 day COP maximum as if the employee had been in a 
COP status.


Sec. 10.216  How is the pay rate for COP calculated?

    The employer shall calculate COP using the period of time and the 
weekly pay rate.
    (a) The pay rate for COP purposes is equal to the employee's 
regular ``weekly'' pay (the average of the weekly pay over the 
preceding 52 weeks).
    (1) The pay rate excludes overtime, but includes applicable 
premium, Sunday and holiday pay, night and shift differential or other 
extra pay.
    (2) Changes in pay or salary (for example, promotion, demotion, 
within-grade increases, termination of a

[[Page 67145]]

temporary detail, etc.) which would have otherwise occurred during the 
45-day period are to be reflected in the weekly pay determination.
    (b) The weekly pay for COP purposes is determined according to the 
following formulas:
    (1) For full or part-time workers (permanent or temporary) who work 
the same number of hours each week of the year (or of the appointment), 
the weekly pay rate is the hourly pay rate (A) in effect on the date of 
injury multiplied by ( x ) the number of hours worked each week (B): A 
x  B = Weekly Pay Rate.
    (2) For part-time workers (permanent or temporary) who do not work 
the same number of hours each week, but who do work each week of the 
year (or period of appointment), the weekly pay rate is an average of 
the weekly earnings, established by dividing (<divide>) the total 
earnings (excluding overtime) from the year immediately preceding the 
injury (A) by the number of weeks (or part of a week) worked in that 
year (B): A<divide>B = Weekly Pay Rate.
    (3) For intermittent, seasonal and on-call workers, whether 
permanent or temporary, who do not work either the same number of hours 
or every week of the year (or period of appointment), the weekly pay 
rate is the average weekly earnings established by dividing (<divide>) 
the total earnings during the full 12-month period immediately 
preceding the date of injury (excluding overtime) (A), by the number of 
weeks (or part of a week) worked during that year (B) (that is, 
A<divide>B); or 150 times the average daily wage earned in the 
employment during the days employed within the full year immediately 
preceding the date of injury divided by 52 weeks, whichever is greater.


Sec. 10.217  Is COP charged if the employee continues to work, but in a 
different job that pays less?

    If the employee cannot perform the duties of his or her regular 
position, but instead works in another job with different duties with 
no loss in pay, then COP is not chargeable. COP must be paid and the 
days counted against the 45 days authorized by law whenever an actual 
reduction of pay results from the injury. This includes work which 
results in loss of salary or premium (that is, Sunday or night 
differential) pay authorized for the employee's normal administrative 
workweek.

Controversion and Termination of COP


Sec. 10.220  When is an employer not required to pay COP?

    An employer shall continue the regular pay of an eligible employee 
without a break in time for up to 45 calendar days, except when:
    (a) The disability was not caused by a traumatic injury;
    (b) The employee is not a citizen of the United States or Canada;
    (c) No written claim was filed within 30 days from the date of 
injury;
    (d) The injury was not reported until after employment has been 
terminated;
    (e) The injury occurred off the premises and was otherwise not 
within the performance of official duties;
    (f) The injury was caused by the employee's willful misconduct, 
intent to injure or kill himself or herself or another person, or was 
proximately caused by intoxication by alcohol or illegal drugs; or
    (g) Work did not stop until more than 30 days following the injury.


Sec. 10.221  How is a claim for COP controverted?

    When the employer stops an employee's pay for one of the reasons in 
Sec. 10.220, the employer must controvert the claim for COP on Form CA-
1, explaining in detail the basis for the refusal. The final 
determination on entitlement to COP always rests with OWCP.


Sec. 10.222  When may an employer terminate COP which has already 
begun?

    (a) Where the employer has continued the pay of the employee, it 
may be stopped only when at least one of the following circumstances is 
present:
    (1) Medical evidence which on its face supports disability due to a 
work-related injury, is not received within 10 calendar days after the 
claim is submitted (unless the employer's own investigation shows 
disability to exist);
    (2) The medical evidence from the treating physician shows the 
individual is not disabled from his or her regular position;
    (3) Medical evidence from the treating physician shows that the 
employee is not totally disabled and the employee refuses a written 
offer of a suitable alternative position as determined by OWCP;
    (4) The employee returns to work with no loss of pay;
    (5) The employee's period of employment expires or employment is 
otherwise terminated (as established prior to the date of injury);
    (6) OWCP directs the employer to stop COP; and/or
    (7) COP has been paid for 45 calendar days.
    (b) An employer may not interrupt or stop COP to which the employee 
is otherwise entitled because of a disciplinary action, unless a 
preliminary notice was issued to the employee before the date of injury 
and the action becomes final or otherwise takes effect during the COP 
period.
    (c) An employer must file a controversion with OWCP, setting forth 
the basis on which it terminated COP, no later than the effective date 
of the termination.


Sec. 10.223  Are there other circumstances under which OWCP will not 
authorize payment of COP?

    When OWCP finds that an employee refuses or obstructs a required 
medical examination, the right to COP is suspended until the refusal or 
obstruction ceases. COP already paid or payable for the period of 
suspension is forfeited. If already paid, the COP may be charged to 
annual or sick leave or considered an overpayment of pay consistent 
with 5 U.S.C. 5584.


Sec. 10.224  What happens if OWCP finds that the employee is not 
entitled to COP after it has been paid?

    Where OWCP finds that the employee is not entitled to COP after it 
has been paid, the employee may chose to have the time charged to 
annual or sick leave, or considered an overpayment of pay under 5 
U.S.C. 5584. The employer must correct any deficiencies in COP as 
directed by OWCP.

Subpart D--Medical and Related Benefits

Emergency Medical Care


Sec. 10.300  What are the basic rules for authorizing emergency medical 
care?

    (a) When an employee sustains a work-related traumatic injury that 
requires medical examination, medical treatment, or both, the employer 
shall authorize such examination and/or treatment by issuing a Form CA-
16. This form may be used for occupational disease or illness only if 
the employer has obtained prior permission from OWCP.
    (b) The employer shall issue Form CA-16 within four hours of the 
claimed injury. If the employer gives verbal authorization for such 
care, he or she should issue a Form CA-16 within 48 hours. The employer 
is not required to issue a Form CA-16 more than one week after the 
occurrence of the claimed injury. The employer may not authorize 
examination or medical or other treatment in any case that OWCP has 
disallowed.
    (c) Form CA-16 must contain the full name and address of the 
qualified physician or qualified medical facility authorized to provide 
service. The authorizing official must sign and date

[[Page 67146]]

the form and must state his or her title. Form CA-16 authorizes 
treatment for 60 days from the date of issuance, unless OWCP terminates 
the authorization sooner.
    (d) The employee has an initial choice of physician. The employer 
shall allow the employee to select a qualified physician, after 
advising him or her of those physicians excluded under subpart I of 
this part. The physician may be in private practice, including a health 
maintenance organization (HMO), or employed by a federal agency such as 
the Department of the Army, Navy, Air Force, or Veterans Affairs. Any 
qualified physician may provide initial treatment of a work-related 
injury in an emergency. See also Sec. 10.825(b).


Sec. 10.301  May the physician designated on Form CA-16 refer the 
employee to another medical specialist or medical facility?

    The physician designated on Form CA-16 may refer the employee for 
further examination, testing, or medical care. OWCP will pay this 
physician or facility's bill on the authority of Form CA-16. The 
employer should not issue a second Form CA-16.


Sec. 10.302  Should the employer authorize medical care if he or she 
doubts that the injury occurred, or that it is work-related?

    If the employer doubts that the injury occurred, or that it is 
work-related, he or she should authorize medical care by completing 
Form CA-16 and checking block 6B of the form. If the medical and 
factual evidence sent to OWCP shows that the condition treated is not 
work-related, OWCP will notify the employee, the employer, and the 
physician or hospital that OWCP will not authorize payment for any 
further treatment.


Sec. 10.303  Should the employer use a Form CA-16 to authorize medical 
testing when an employee is exposed to a workplace hazard just once?

    (a) Simple exposure to a workplace hazard, such as an infectious 
agent, does not constitute a work-related injury entitling an employee 
to medical treatment under the FECA. The employer therefore should not 
use a Form CA-16 to authorize medical testing for an employee who has 
merely been exposed to a workplace hazard, unless the employee has 
sustained an identifiable injury or medical condition as a result of 
that exposure. OWCP will authorize preventive treatment only under 
certain well-defined circumstances (see Sec. 10.313).
    (b) Employers may be required under other statutes or regulations 
to provide their employees with medical testing and/or other services 
in situations described in paragraph (a) of this section. For example, 
regulations issued by the Occupational Safety and Health Administration 
at Chapter XVII of Title 29 of the Code of Federal Regulations require 
employers to provide their employees with medical consultations and/or 
examinations when they either exhibit symptoms consistent with exposure 
to a workplace hazard, or when an identifiable event such as a spill, 
leak or explosion occurs and results in the likelihood of exposure to a 
workplace hazard. In addition, 5 U.S.C. 7901 authorizes employers to 
establish health programs whose staff can perform tests for workplace 
hazards, counsel employees for exposure or feared exposure to such 
hazards, and provide health care screening and other associated 
services.


Sec. 10.304  Are there any exceptions to these procedures?

    In cases involving emergencies or unusual circumstances, OWCP may 
authorize treatment in a manner other than as stated in this subpart.

Medical Treatment and Related Issues


Sec. 10.310  What are the basic rules for obtaining medical care?

    (a) The employee is entitled to receive all medical services, 
appliances or supplies which a qualified physician prescribes or 
recommends and which OWCP considers necessary to treat the work-related 
injury. The employee need not be disabled to receive such treatment. If 
there is any doubt as to whether a specific service, appliance or 
supply is necessary to treat the work-related injury, the employee 
should consult OWCP prior to obtaining it.
    (b) Any qualified physician or qualified hospital may provide such 
services, appliances and supplies. A qualified provider of medical 
support services may also furnish appropriate services, appliances, and 
supplies. OWCP may apply a test of cost-effectiveness to appliances and 
supplies. With respect to prescribed medications, OWCP may require the 
use of generic equivalents where they are available.


Sec. 10.311  What are the special rules for the services of 
chiropractors?

    (a) The services of chiropractors that may be reimbursed are 
limited by the FECA to treatment to correct a spinal subluxation. The 
costs of physical and related laboratory tests performed by or required 
by a chiropractor to diagnose such a subluxation are also payable.
    (b) In accordance with 5 U.S.C. 8101(3), a diagnosis of spinal 
``subluxation as demonstrated by X-ray to exist'' must appear in the 
chiropractor's report before OWCP can consider payment of a 
chiropractor's bill.
    (c) A chiropractor may interpret his or her x-rays to the same 
extent as any other physician. To be given any weight, the medical 
report must state that x-rays support the finding of spinal 
subluxation. OWCP will not necessarily require submittal of the x-ray, 
or a report of the x-ray, but the report must be available for 
submittal on request.
    (d) A chiropractor may also provide services in the nature of 
physical therapy under the direction of a qualified physician.


Sec. 10.312  What are the special rules for the services of clinical 
psychologists?

    A clinical psychologist may serve as a physician only within the 
scope of his or her practice as defined by state law. Therefore, a 
clinical psychologist may not serve as a physician for conditions that 
include an organic component unless the applicable state law allows 
clinical psychologists to treat organic conditions. A clinical 
psychologist may also perform testing, evaluation and other services 
under the direction of a qualified physician.


Sec. 10.313  Will OWCP pay for preventive treatment?

    The FECA does not authorize payment for preventive measures such as 
vaccines and inoculations, and in general, preventive treatment may be 
a responsibility of the employing agency under the provisions of 5 
U.S.C. 7901 (see Sec. 10.303). However, OWCP can authorize treatment 
for the following conditions, even though such treatment is designed, 
in part, to prevent further injury:
    (a) Complications of preventive measures which are provided or 
sponsored by the agency, such as an adverse reaction to prophylactic 
immunization.
    (b) Actual or probable exposure to a known contaminant due to an 
injury, thereby requiring disease-specific measures against infection. 
Examples include the provision of tetanus antitoxin or booster toxoid 
injections for puncture wounds; administration of rabies vaccine for a 
bite from a rabid or potentially rabid animal; or appropriate measures 
where exposure to human immunodeficiency virus (HIV) has occurred.
    (c) Conversion of tuberculin reaction from negative to positive 
following exposure to tuberculosis in the performance of duty. In this 
situation, the appropriate therapy may be authorized.
    (d) Where injury to one eye has resulted in loss of vision, 
periodic

[[Page 67147]]

examination of the uninjured eye to detect possible sympathetic 
involvement of the uninjured eye at an early stage.


Sec. 10.314  Will OWCP pay for the services of an attendant?

    Yes, the OWCP will pay for the services of an attendant up to a 
maximum of $1,500 per month, where the need for such services has been 
medically documented. In the exercise of the discretion afforded by 5 
U.S.C. 8111(a), the Director has determined that, except where payments 
were being made prior to [insert the effective date of the final rule], 
direct payments to the claimant to cover such services will no longer 
be made. Rather, the cost of providing attendant services will be paid 
under section 8103 of the Act. This decision is based on the following 
factors:
    (a) The additional payments authorized under section 8111(a) should 
not be necessary since OWCP will authorize payment for personal care 
services under 5 U.S.C. 8103, whether or not such care includes medical 
services, so long as the personal care services have been determined to 
be medically necessary and are provided by a home health aide, licensed 
practical nurse, or similarly trained individual.
    (b) A home health aide, licensed practical nurse, or similarly 
trained individual is better able to provide quality personal care 
including assistance in feeding, bathing, and using the toilet. In the 
past, provision of supplemental compensation directly to injured 
employees may have encouraged family members to take on these 
responsibilities even though they may not have been trained to provide 
such services. By paying for the services under section 8103, OWCP can 
better determine whether the services provided are necessary and/or 
adequate to meet the needs of the injured employee. In addition, a 
system requiring the personal care provider to submit a bill to OWCP 
will result in greater fiscal accountability as the amount billed will 
be subject to OWCP's fee schedule.


Sec. 10.315  Will OWCP pay for transportation to obtain medical 
treatment?

    The employee is entitled to reimbursement of reasonable and 
necessary expenses, including transportation needed to obtain 
authorized medical services, appliances or supplies. To determine what 
is a reasonable distance to travel, OWCP will consider the availability 
of services, the employee's condition, and the means of transportation. 
Generally, 25 miles from the place of injury, the work site, or the 
employee's home, is considered a reasonable distance to travel. The 
standard form designated for federal employees to claim travel expenses 
should be used to seek reimbursement under this section.


Sec. 10.316  After selecting a treating physician, may an employee 
choose to be treated by another physician instead?

    (a) When the physician originally selected to provide treatment for 
a work-related injury refers the employee to a specialist for further 
medical care, the employee need not consult OWCP for approval. In all 
other instances, however, the employee must submit a written request to 
OWCP with his or her reasons for desiring a change of physician.
    (b) OWCP will approve the request if it determines that the reasons 
submitted are sufficient. Requests that are often approved include 
those for transfer of care from a general practitioner to a physician 
who specializes in treating conditions like the work-related one, or 
the need for a new physician when an employee has moved. The employer 
may not authorize a change of physicians.

Directed Medical Examinations


Sec. 10.320  Can OWCP require an employee to be examined by another 
doctor?

    OWCP sometimes needs a second opinion from a medical specialist. 
The employee must submit to examination by a qualified physician as 
often and at such times and places as OWCP considers reasonably 
necessary. The employee may have a qualified physician, paid by him or 
her, present at such examination. However, the employee is not entitled 
to have anyone else present at the examination unless OWCP decides that 
exceptional circumstances exist. For example, where a hearing-impaired 
employee needs an interpreter, the presence of an interpreter would be 
allowed. Also, OWCP may send a case file for second opinion review 
where actual examination is not needed, or where the employee is 
deceased.


Sec. 10.321  What happens if the physician selected by OWCP does not 
agree with the physician selected by the employee?

    If a conflict exists between the medical opinion of the employee's 
physician and the medical opinion of either a second opinion physician 
or an OWCP medical adviser or consultant, OWCP shall appoint a third 
physician to make an examination (see 5 U.S.C. 8123(a)). This is called 
a referee examination. OWCP will select a physician who is qualified in 
the appropriate specialty and who has had no prior connection with the 
case. The employee is not entitled to have anyone present at the 
examination unless OWCP decides that exceptional circumstances exist. 
For example, where a hearing-impaired employee needs an interpreter, 
the presence of an interpreter would be allowed. Also, a case file may 
be sent for referee medical review where there is no need for an actual 
examination, or where the employee is deceased.


Sec. 10.322  Who pays for second opinion and referee examinations?

    OWCP will pay second opinion and referee medical specialists 
directly. OWCP will reimburse the employee all necessary and reasonable 
expenses incident to such an examination, including transportation 
costs and actual wages lost for the time needed to submit to an 
examination required by OWCP.


Sec. 10.323  What are the consequences of failing to report for or 
obstructing a second opinion or referee examination?

    If an employee refuses to submit to or in any way obstructs an 
examination required by OWCP, his or her right to compensation under 
the FECA is suspended until such refusal or obstruction stops. The 
action of the employee's representative is considered to be the action 
of the employee for purposes of this section. The employee will forfeit 
compensation otherwise paid or payable under the FECA for the period of 
the refusal or obstruction, and any compensation already paid for that 
period will be declared an overpayment and will be subject to recovery 
pursuant to 5 U.S.C. 8129.


Sec. 10.324  May an employer require an employee to undergo a physical 
examination in connection with a work-related injury?

    The employer may have authority independent of the FECA to require 
the employee to undergo a medical examination to determine whether he 
or she meets the medical requirements of the position held or can 
perform the duties of that position. Nothing in the FECA or in this 
part affects such authority. However, no agency-required examination or 
related activity shall interfere with the employee's initial choice of 
physician or the provision of any authorized examination or treatment, 
including the issuance of Form CA-16.

[[Page 67148]]

Medical Reports


Sec. 10.330  What are the requirements for medical reports?

    In all cases reported to OWCP, a medical report from the attending 
physician is required. This report should include:
    (a) Dates of examination and treatment;
    (b) History given by the employee;
    (c) Physical findings;
    (d) Results of diagnostic tests;
    (e) Diagnosis;
    (f) Course of treatment;
    (g) A description of any other conditions found but not due to the 
claimed injury;
    (h) The treatment given or recommended for the claimed injury;
    (i) The physician's opinion, with medical reasons, as to causal 
relationship between the diagnosed condition(s) and the factors or 
conditions of the employment;
    (j) The extent of disability affecting the employee's ability to 
work due to the injury;
    (k) The prognosis for recovery; and
    (l) All other material findings.


Sec. 10.331  How and when should the medical report be submitted?

    (a) Form CA-16 may be used for the initial medical report; Form CA-
20 may be used for the initial report and for subsequent reports; and 
Form CA-20a may be used where continued compensation is claimed. Use of 
medical report forms is not required, however. The report may also be 
made in narrative form on the physician's letterhead stationery. The 
report should bear the physician's signature or signature stamp. OWCP 
may require an original signature on the report.
    (b) The report shall be submitted directly to OWCP as soon as 
possible after medical examination or treatment is received, either by 
the employee or the physician. (See also Sec. 10.210.) The employer may 
request a copy of the report from OWCP. The employer should use Form 
CA-17 to obtain interim reports concerning the duty status of an 
employee with a disabling traumatic injury.


Sec. 10.332  What additional medical information will OWCP require to 
support continuing payment of benefits?

    In all cases of serious injury or disease, especially those 
requiring hospital treatment or prolonged care, OWCP will request 
detailed narrative reports from the attending physician at periodic 
intervals. The physician will be asked to describe continuing medical 
treatment for the condition accepted by OWCP, a prognosis, a 
description of work limitations, if any, and the physician's opinion as 
to the continuing causal relationship between the employee's condition 
and factors of his or her federal employment.


Sec. 10.333  What additional medical information will OWCP require to 
support a claim for a schedule award?

    To support a claim for a schedule award, a medical report must 
contain accurate measurements of the function of the organ or member. 
These measurements may include: the actual degree of loss of active or 
passive motion or deformity; the amount of atrophy; the decrease, if 
any, in strength; the disturbance of sensation; and pain due to nerve 
impairment.

Medical Bills


Sec. 10.335  How are medical bills submitted?

    Usually, medical providers submit bills directly to OWCP. The rules 
for submitting and paying bills are stated in subpart I of this part. 
An employee claiming reimbursement of medical expenses should submit an 
itemized bill as described in Sec. 10.802.


Sec. 10.336  What are the time frames for submitting bills?

    To be considered for payment, bills must be submitted by the end of 
the calendar year after the year when the expense was incurred, or by 
the end of the calendar year after the year when OWCP first accepted 
the claim as compensable, whichever is later.


Sec. 10.337  If OWCP reimburses an employee only partially for a 
medical expense, must the provider refund the balance of the amount 
paid to the employee?

    (a) The OWCP fee schedule sets maximum limits on the amounts 
payable for many services (see Sec. 10.805). The employee may be only 
partially reimbursed for medical expenses because the amount he or she 
paid to the medical provider for a service exceeds the maximum 
allowable charge set by the OWCP fee schedule.
    (b) If this happens, OWCP shall advise the provider of the maximum 
allowable charge for the service in question and ask the provider to 
refund to the employee, or credit to the employee's account, the amount 
he or she paid which exceeds the maximum allowable charge. The provider 
may request reconsideration of the fee determination as provided by 
Sec. 10.812.
    (c) If the provider does not refund to the employee or credit to 
his or her account the amount of money paid in excess of the charge 
which OWCP allows, OWCP may make reasonable reimbursement to the 
employee after reviewing the facts and circumstances of the case.

Subpart E--Compensation and Related Benefits

Compensation for Disability and Impairment


Sec. 10.400  What is total disability?

    (a) Permanent total disability is presumed to result from the loss 
of use of both hands, both arms, both feet, or both legs, or the loss 
of sight of both eyes. However, the presumption of permanent total 
disability as a result of such loss may be rebutted by evidence to the 
contrary, such as evidence of continued ability to work and to earn 
wages despite the loss.
    (b) Temporary total disability is defined as the inability to 
return to the position held at the time of injury or earn equivalent 
wages, or to perform other gainful employment, due to the work-related 
injury. Except as presumed under paragraph (a) of this section, an 
employee's disability status is always considered temporary pending 
return to work.


Sec. 10.401  When and how is compensation for total disability payable?

    (a) Compensation is payable when the employee starts to lose pay if 
the injury causes permanent disability or if pay loss continues for 
more than 14 days. Otherwise, compensation is payable on the fourth day 
after pay stops. Compensation may not be paid while an injured employee 
is in a continuation of pay status or receives pay for leave.
    (b) Compensation for total disability is payable at the rate of 
66\2/3\ percent of the pay rate if the employee has no dependents, or 
75 percent of the pay rate if the employee has at least one dependent.


Sec. 10.402  What is partial disability?

    An injured employee who cannot return to the position held at the 
time of injury (or earn equivalent wages) due to the work-related 
injury, but who is not totally disabled for all gainful employment, is 
considered to be partially disabled.


Sec. 10.403  When and how is compensation for partial disability paid?

    (a) 5 U.S.C. 8115 outlines how compensation for partial disability 
is determined. If the employee has actual earnings which fairly and 
reasonably represent his or her wage-earning capacity, those earnings 
may form the basis for payment of compensation for partial disability. 
If the employee's actual earnings do not fairly and reasonably 
represent his or her wage-

[[Page 67149]]

earning capacity, or if the employee has no actual earnings, OWCP uses 
the factors stated in 5 U.S.C. 8115 to select a position which 
represents his or her wage-earning capacity. However, OWCP will not 
secure employment for the employee in the position selected for 
establishing a wage-earning capacity.
    (b) Compensation for partial disability is payable as a percentage 
of the difference between the employee's pay rate for compensation 
purposes and the employee's wage-earning capacity. The percentage is 
66\2/3\ percent of this difference if the employee has no dependents, 
or 75 percent of this difference if the employee has at least one 
dependent.
    (c) The formula which OWCP uses to compute the compensation payable 
for partial disability employs the following terms: pay rate for 
compensation purposes, which is defined in Sec. 10.5(s) of this part; 
current pay rate, which means the salary or wages for the job held at 
the time of injury at the time of the determination; and earnings, 
which means the employee's actual earnings, or the salary or pay rate 
of the position selected by OWCP as representing the employee's wage-
earning capacity.
    (d) The employee's wage-earning capacity in terms of percentage is 
computed by dividing the employee's earnings by the current pay rate. 
The comparison of earnings and ``current'' pay rate for the job held at 
the time of injury need not be made as of the beginning of partial 
disability. OWCP may use any convenient date for making the comparison 
as long as both wage rates are in effect on the date used for 
comparison.
    (e) The employee's wage-earning capacity in terms of dollars is 
computed by first multiplying the pay rate for compensation purposes by 
the percentage of wage-earning capacity. The resulting dollar amount is 
then subtracted from the pay rate for compensation purposes to obtain 
the employee's loss of wage-earning capacity.


Sec. 10.404  When and how is compensation for a schedule impairment 
paid?

    Compensation is provided for specified periods of time for the 
permanent loss or loss of use of certain members, organs and functions 
of the body. Such loss or loss of use is known as permanent impairment. 
Compensation for proportionate periods of time is payable for partial 
loss or loss of use of each member, organ or function. OWCP evaluates 
the degree of impairment to schedule members, organs and functions as 
defined in 5 U.S.C. 8107 according to the standards set forth in the 
specified (by OWCP) edition of the American Medical Association's 
Guides to the Evaluation of Permanent Impairment available from the 
Order Department, OP-025493, American Medical Association, P.O. Box 
109050, Chicago, Illinois, 60610.
    (a) 5 U.S.C. 8107(c) provides a list of schedule members. Pursuant 
to the authority provided by 5 U.S.C. 8107(c)(22), the Secretary has 
added the following organs to the compensation schedule for injuries 
that were sustained on or after September 7, 1974:

------------------------------------------------------------------------
                             Member                               Weeks 
------------------------------------------------------------------------
Breast (one)...................................................       52
Kidney (one)...................................................      156
Larynx.........................................................      160
Lung (one).....................................................      156
Penis..........................................................      205
Testicle (one).................................................       52
Tongue.........................................................      160
Ovary (one)....................................................       52
Uterus/cervix and vulva/vagina.................................      205
------------------------------------------------------------------------

    (b) Compensation for schedule awards is payable at 66\2/3\ percent 
of the employee's pay, or 75 percent of the pay when the employee has 
at least one dependent.
    (c) The period of compensation payable under 5 U.S.C. 8107(c) shall 
be reduced by the period of compensation paid or payable under the 
schedule for an earlier injury if:
    (1) Compensation in both cases is for impairment of the same member 
or function or different parts of the same member or function, or for 
disfigurement; and
    (2) OWCP finds that compensation payable for the later impairment 
in whole or in part would duplicate the compensation payable for the 
pre-existing impairment.
    (d) Compensation not to exceed $3,500 may be paid for serious 
disfigurement of the face, head or neck which is likely to handicap a 
person in securing or maintaining employment.


Sec. 10.405  Who is considered a dependent in a claim based on 
disability or impairment?

    (a) Dependents include a wife or husband; an unmarried child under 
18 years of age; an unmarried child over 18 who is incapable of self-
support; a student, until he or she reaches 23 years of age or 
completes four years of school beyond the high school level; or a 
wholly dependent parent.
    (b) Augmented compensation payable for an unmarried child, which 
would otherwise terminate when the child reached the age of 18, may be 
continued while the child is a student as defined in 5 U.S.C. 8101(17).


Sec. 10.406  What are the maximum and minimum rates of compensation in 
disability cases?

    (a) Compensation for total or partial disability may not exceed 75 
percent of the basic monthly pay of the highest step of grade 15 of the 
General Schedule. (Basic monthly pay does not include locality 
adjustments.) However, this limit does not apply to disability 
sustained in the performance of duty which was due to an assault which 
occurred during an attempted assassination of a federal official 
described under 10 U.S.C. 351(a) or 1751(a).
    (b) Compensation for total disability may not be less than 75 
percent of the basic monthly pay of the first step of grade 2 of the 
General Schedule or actual pay, whichever is less. (Basic monthly pay 
does not include locality adjustments.)

Compensation for Death


Sec. 10.410  What are the rates of compensation payable in death cases?

    The rates of compensation payable in death cases are stated in 5 
U.S.C. 8133.


Sec. 10.411  What are the maximum and minimum rates of compensation in 
death cases?

    (a) Compensation for death may not exceed the employee's pay or 75 
percent of the basic monthly pay of the highest step of grade 15 of the 
General Schedule, except that compensation may exceed the employee's 
basic monthly pay if such excess is created by authorized cost-of-
living increases. (Basic monthly pay does not include locality 
adjustments.) However, the maximum limit does not apply when the death 
occurred during an assassination of a federal official described under 
18 U.S.C. 351(a) or 18 U.S.C. 1751(a).
    (b) Compensation for death is computed on a minimum pay rate equal 
to the basic monthly pay of an employee at the first step of grade 2 of 
the General Schedule. (Basic monthly pay does not include locality 
adjustments.)


Sec. 10.412  Will OWCP pay the costs of burial and transportation of 
the remains?

    In a case accepted for death benefits, OWCP will pay up to $800 for 
funeral and burial expenses. When an employee's home is within the U.S. 
and the employee dies outside the U.S., or away from home or the 
official duty station, an additional amount may be paid for 
transporting the remains to the employee's home. An additional amount 
of $200 is paid to the personal representative of the decedent for 
reimbursement of the costs of

[[Page 67150]]

terminating the decedent's status as an employee of the United States.


Sec. 10.413  If a person dies while receiving a schedule award, to whom 
is the balance of the schedule award payable?

    The circumstances under which the balance of a schedule award may 
be paid to an employee's survivors are described in 5 U.S.C. 8109. 
Therefore, if there is no surviving spouse or child, OWCP will pay 
benefits as follows:
    (a) To the parent, or parents, wholly dependent for support on the 
decedent in equal shares with any wholly dependent brother, sister, 
grandparent or grandchild;
    (b) To the parent, or parents, partially dependent for support on 
the decedent in equal shares when there are no wholly dependent 
brothers, sisters, grandparents or grandchildren (or other wholly 
dependent parent); and
    (c) To the parent, or parents, partially dependent upon the 
decedent, 25 percent of the amount payable, shared equally, and the 
remaining 75 percent to any wholly dependent brother, sister, 
grandparent or grandchild (or wholly dependent parent), share and share 
alike.


Sec. 10.414  What reports of dependents are needed in death cases?

    If a beneficiary is receiving compensation benefits on account of 
an employee's death, OWCP will ask him or her to complete a report once 
each year on Form CA-12. The report requires the beneficiary to note 
changes in marital status and dependents. If the beneficiary fails to 
submit the form (or an equivalent written statement) within 30 days of 
the date of request, OWCP shall suspend compensation until the 
requested form or equivalent written statement is received. The 
suspension will include compensation payable for or on behalf of 
another person (for example, compensation payable to a widow on behalf 
of a child). When the form or statement is received, compensation will 
be reinstated at the appropriate rate retroactive to the date of 
suspension, provided the beneficiary is entitled to such compensation.


Sec. 10.415  What must a beneficiary do if the number of beneficiaries 
decreases?

    The circumstances under which compensation on account of death 
shall be terminated are described in 5 U.S.C. 8133(b). A beneficiary in 
a claim for death benefits should promptly notify OWCP of any event 
which would affect his or her entitlement to continued compensation. 
The terms ``marriage'' and ``remarriage'' include common-law marriage 
as recognized and defined by state law in the state where the 
beneficiary resides. If a beneficiary, or someone acting on his or her 
behalf, receives a check which includes payment of compensation for any 
period after the date when entitlement ended, he or she must promptly 
return the check to OWCP.


Sec. 10.416  How does a change in the number of beneficiaries affect 
the amount of compensation paid to the other beneficiaries?

    If compensation to a beneficiary is terminated, the amount of 
compensation payable to one or more of the remaining beneficiaries may 
be reapportioned. Similarly, the birth of a posthumous child may result 
in a reapportionment of the amount of compensation payable to other 
beneficiaries. The parent, or someone acting on the child's behalf, 
shall promptly notify OWCP of the birth and submit a copy of the birth 
certificate.


Sec. 10.417  What reports are needed when compensation payments 
continue for children over age 18?

    (a) Compensation payable on behalf of a child, brother, sister, or 
grandchild, which would otherwise end when the person reaches 18 years 
of age, shall be continued if and for so long as he or she is not 
married and is either a student as defined in 5 U.S.C. 8101(17), or 
physically or mentally incapable of self-support.
    (b) At least twice each year, OWCP will ask a beneficiary receiving 
compensation based on the student status of a dependent to provide 
proof of continuing entitlement to such compensation, including 
certification of school enrollment.
    (c) Likewise, at least twice each year, OWCP will ask a beneficiary 
or legal guardian receiving compensation based on a dependent's 
physical or mental inability to support himself or herself to submit a 
medical report verifying that the dependent's medical condition 
persists and that it continues to preclude self-support.

Adjustments to Compensation


Sec. 10.420  How are cost-of-living adjustments applied?

    (a) In cases of disability, a beneficiary is eligible for cost-of-
living adjustments under 5 U.S.C. 8146(a) where injury-related 
disability began more than one year prior to the date the cost-of-
living adjustment took effect. The employee's use of continuation of 
pay as provided by 5 U.S.C. 8118, or of sick or annual leave, during 
any part of the period of disability does not affect the computation of 
the one-year period.
    (b) Where an injury does not result in disability but compensation 
is payable for permanent impairment of a covered member, organ or 
function of the body, a beneficiary is eligible for cost-of-living 
adjustments under 5 U.S.C. 8146(a) where the award for such impairment 
began more than one year prior to the date the cost-of-living 
adjustment took effect.
    (c) In cases of recurrence of disability, where the pay rate for 
compensation purposes is the pay rate at the time disability recurs, a 
beneficiary is eligible for cost-of-living adjustments under 5 U.S.C. 
8146(a) where the effective date of that pay rate began more than one 
year prior to the date the cost-of living adjustment took effect.
    (d) In cases of death, entitlement to cost-of-living adjustments 
under 5 U.S.C. 8146(a) begins with the first such adjustment occurring 
more than one year after the date of death. However, if the death was 
preceded by a period of injury-related disability, compensation payable 
to the survivors will be increased by the same percentages as the cost-
of-living adjustments paid or payable to the deceased employee for the 
period of disability, as well as by subsequent cost-of-living 
adjustments to which the survivors would otherwise be entitled.


Sec. 10.421  May a beneficiary receive other kinds of payments from the 
federal government concurrently with compensation?

    (a) 5 U.S.C. 8116(a) provides that a beneficiary may not receive 
wage-loss compensation concurrently with a federal retirement or 
survivor annuity. The beneficiary must elect the benefit that he or she 
wishes to receive, and the election, once made, is revocable.
    (b) An employee may receive compensation concurrently with military 
retired pay, retirement pay, retainer pay or equivalent pay for service 
in the Armed Forces or other uniformed services, subject to the 
reduction of such pay in accordance with 5 U.S.C. 5532(b).
    (c) An employee may not receive compensation for total disability 
concurrently with severance pay or separation pay. However, an employee 
may concurrently receive compensation for partial disability or 
permanent impairment to a schedule member with severance pay or 
separation pay.
    (d) Pursuant to 5 U.S.C. 8116(d), a beneficiary may receive 
compensation under the FECA for either the death or disability of an 
employee concurrently with benefits under title II of the Social 
Security Act on account of the age or death of such employee. However, 
this provision of the FECA also requires OWCP to reduce the amount of 
any such

[[Page 67151]]

compensation by the amount of any Social Security Act benefits that are 
attributable to the federal service of the employee.
    (e) To determine the employee's entitlement to compensation, OWCP 
may require an employee to submit an affidavit or statement as to the 
receipt of any federally funded or federally assisted benefits. If an 
employee fails to submit such affidavit or statement within 30 days of 
the date of the request, his or her right to compensation shall be 
suspended until such time as the requested affidavit or report is 
received. At that time compensation will be reinstated retroactive to 
the date of suspension provided the employee is entitled to such 
compensation.


Sec. 10.422  May compensation payments be issued in a lump sum?

    (a) In exercise of the discretion afforded under 5 U.S.C. 8135(a), 
OWCP has determined that lump-sum payments will not be made to persons 
entitled to wage-loss benefits (that is, those payable under 5 U.S.C. 
8105 and 8106). Therefore, when OWCP receives requests for lump-sum 
payments for wage-loss benefits, OWCP will not exercise further 
discretion in the matter. This determination is based on several 
factors, including:
    (1) The purpose of the FECA, which is to replace lost wages;
    (2) The prudence of providing wage-loss benefits on a regular, 
recurring basis; and
    (3) The high cost of the long-term borrowing that is needed to pay 
out large lump sums.
    (b) However, a lump sum payment may be made to an employee entitled 
to a schedule award under 5 U.S.C. 8107 where OWCP determines that such 
a payment is in the employee's best interest. Lump-sum payments of 
schedule awards generally will be considered in the employee's best 
interest only where the employee does not rely upon compensation 
payments as a substitute for lost wages (that is, the employee is 
working or is receiving annuity payments). An employee possesses no 
absolute right to a lump-sum payment of benefits payable under 5 U.S.C. 
8107.
    (c) Lump-sum payments to surviving spouses are addressed in 5 
U.S.C. 8135(b).


Sec. 10.423  May compensation payments be assigned to, or attached by, 
creditors?

    (a) As a general rule, compensation and claims for compensation are 
exempt from the claims of private creditors. This rule does not apply 
to claims submitted by federal agencies. Further, any attempt by a FECA 
beneficiary to assign his or her claim is null and void. However, 
pursuant to provisions of the Social Security Act, 42 U.S.C. 659, and 
regulations issued by the Office of Personnel Management (OPM) at 5 CFR 
part 581, FECA benefits, including survivor's benefits, may be 
garnished to collect overdue alimony and child support payments.
    (b) Garnishment for child support and alimony may be requested by 
providing a copy of the state agency or court order to the district 
office handling the FECA claim.


Sec. 10.424  May someone other than the beneficiary be designated to 
receive compensation payments?

    A beneficiary may be incapable of managing or directing the 
management of his or her benefits because of a mental or physical 
disability, or because of legal incompetence, or because he or she is 
under 18 years of age. In this situation, absent the appointment of a 
guardian or other party to manage the financial affairs of the claimant 
by a court or administrative body authorized to do so, OWCP in its sole 
discretion may approve a person to serve as the representative payee 
for funds due the beneficiary.

Overpayments


Sec. 10.430  How does OWCP notify an individual of a payment made?

    (a) In addition to providing narrative descriptions to recipients 
of benefits paid or payable, OWCP includes on each periodic check an 
indication of the period for which payment is being made. A form is 
sent to the recipient with each supplemental check which states the 
date and amount of the payment and the period for which payment is 
being made. For payments sent by electronic funds transfer (EFT), a 
notification of the date and amount of payment appears on the statement 
from the recipient's financial institution.
    (b) By these means, OWCP puts the recipient on notice that a 
payment was made and the amount of the payment. If the amount received 
differs from the amount indicated on the written notice or bank 
statement, the recipient is responsible for notifying OWCP of the 
difference. Absent affirmative evidence to the contrary, the 
beneficiary will be presumed to have received the notice of payment, 
whether mailed or transmitted electronically.


Sec. 10.431  What does OWCP do when an overpayment is identified?

    Before seeking to recover an overpayment or adjust benefits, OWCP 
will advise the beneficiary in writing that:
    (a) The overpayment exists, and the amount of overpayment;
    (b) A preliminary finding shows either that the individual was or 
was not at fault in the creation of the overpayment;
    (c) He or she has the right to inspect and copy Government records 
relating to the overpayment; and
    (d) He or she has the right to present evidence which challenges 
the fact or amount of the overpayment, and/or challenges the 
preliminary finding that he or she was at fault in the creation of the 
overpayment. He or she may also request that recovery of the 
overpayment be waived.


Sec. 10.432  How can an individual present evidence to OWCP in response 
to a preliminary notice of an overpayment?

    The individual may present this evidence to OWCP in writing or at a 
pre-recoupment hearing. The evidence must be presented or the hearing 
requested within 30 days of the date of the written notice of 
overpayment. Failure to request the hearing within this 30-day time 
period shall constitute a waiver of that right.


Sec. 10.433  Under what circumstances can OWCP waive recovery of an 
overpayment?

    (a) OWCP may consider waiving an overpayment only if the individual 
to whom it was made was not at fault in accepting or creating the 
overpayment. Each recipient of compensation benefits is responsible for 
taking all reasonable measures to ensure that payments he or she 
receives from OWCP are proper. The recipient must show good faith and 
exercise a high degree of care in reporting events which may affect 
entitlement to or the amount of benefits. A recipient who has done any 
of the following will be found to be at fault with respect to creating 
an overpayment:
    (1) Made an incorrect statement as to a material fact which he or 
she knew or should have known to be incorrect; or
    (2) Failed to provide information which he or she knew or should 
have known to be material; or
    (3) Accepted a payment which he or she knew or should have known to 
be incorrect. (This provision applies only to the overpaid individual.)
    (b) Whether or not OWCP determines that an individual was at fault 
with respect to the creation of an overpayment depends on the 
circumstances surrounding the overpayment. The degree of care expected 
may vary with the complexity of those circumstances and the

[[Page 67152]]

individual's capacity to realize that he or she is being overpaid.


Sec. 10.434  If OWCP finds that the recipient of an overpayment was not 
at fault, what criteria are used to decide whether to waive recovery of 
it?

    If OWCP finds that the recipient of an overpayment was not at 
fault, repayment will still be required unless:
    (a) Adjustment or recovery of the overpayment would defeat the 
purpose of the FECA (see Sec. 10.436), or
    (b) Adjustment or recovery of the overpayment would be against 
equity and good conscience (see Sec. 10.437).


Sec. 10.435  Is an individual responsible for an overpayment that 
resulted from an error by OWCP or another government agency?

    (a) The fact that OWCP may have erred in making the overpayment, or 
that the overpayment may have resulted from an error by another 
Government agency, does not by itself relieve the individual who 
received the overpayment from liability for repayment if the individual 
also was at fault in accepting the overpayment.
    (b) However, OWCP may find that the individual was not at fault if 
failure to report an event affecting compensation benefits, or 
acceptance of an incorrect payment, occurred because:
    (1) The individual relied on misinformation given in writing by 
OWCP (or by another governmental agency which he or she had reason to 
believe was connected with the administration of benefits) as to the 
interpretation of a pertinent provision of the FECA or its regulations; 
or
    (2) OWCP erred in calculating cost-of-living increases, schedule 
award length and/or percentage of impairment, or loss of wage-earning 
capacity.


Sec. 10.436  Under what circumstances would recovery of an overpayment 
defeat the purpose of the FECA?

    Recovery of an overpayment will defeat the purpose of the FECA if 
such recovery would cause hardship to a currently or formerly entitled 
beneficiary because:
    (a) The beneficiary from whom OWCP seeks recovery needs 
substantially all of his or her current income (including compensation 
benefits) to meet current ordinary and necessary living expenses; and
    (b) The beneficiary's assets do not exceed a specified amount as 
determined by OWCP from data furnished by the Bureau of Labor 
Statistics. A higher amount is specified for a beneficiary with one or 
more dependents.


Sec. 10.437  Under what circumstances would recovery of an overpayment 
be against equity and good conscience?

    (a) Recovery of an overpayment is considered to be against equity 
and good conscience when any individual who received an overpayment 
would experience severe financial hardship in attempting to repay the 
debt.
    (b) Recovery of an overpayment is also considered to be against 
equity and good conscience when any individual, in reliance on such 
payments or on notice that such payments would be made, gives up a 
valuable right or changes his or her position for the worse. In making 
such a decision, OWCP does not consider the individual's current 
ability to repay the overpayment.
    (1) To establish that a valuable right has been relinquished, it 
must be shown that the right was in fact valuable, that it cannot be 
regained, and that the action was based chiefly or solely in reliance 
on the payments or on the notice of payment. Donations to charitable 
causes or gratuitous transfers of funds to other individuals are not 
considered relinquishments of valuable rights.
    (2) To establish that an individual's position has changed for the 
worse, it must be shown that the decision made would not otherwise have 
been made but for the receipt of benefits, and that this decision 
resulted in a loss.


Sec. 10.438  Can OWCP require the individual who received the 
overpayment to submit additional financial information?

    (a) The individual who received the overpayment is responsible for 
providing information about income, expenses and assets as specified by 
OWCP. This information is needed to determine whether or not recovery 
of an overpayment would defeat the purpose of the FECA, or be against 
equity and good conscience. This information will also be used to 
determine the repayment schedule, if necessary.
    (b) Failure to submit the requested information within 30 days of 
the request shall result in denial of waiver, and no further request 
for waiver shall be considered until the requested information is 
furnished.


Sec. 10.439  May other issues be addressed at the pre-recoupment 
hearing?

    At the pre-recoupment hearing, the OWCP representative will 
consider all issues in the claim on which a formal decision has been 
issued. The hearing will thus fulfill OWCP's obligation to provide pre-
recoupment rights and a hearing under 5 U.S.C. 8124(b). Pre-recoupment 
hearings shall be conducted in exactly the same manner as provided in 
Sec. 10.615 through Sec. 10.622.


Sec. 10.440  How does OWCP communicate its final decision concerning 
recovery of an overpayment, and what appeal right accompanies it?

    (a) OWCP will send a copy of the final decision to the individual 
from whom recovery is sought; his or her representative, if any; and 
the employing agency.
    (b) The only review of a final decision concerning an overpayment 
is to the Employees' Compensation Appeals Board. The provisions of 5 
U.S.C. 8124(b) (concerning hearings) and 5 U.S.C. 8128(a) (concerning 
reconsiderations) do not apply to such a decision.


Sec. 10.441  How are overpayments collected?

    (a) When an overpayment has been made to an individual who is 
entitled to further payments, the individual shall refund to OWCP the 
amount of the overpayment as soon as the error is discovered or his or 
her attention is called to same. If no refund is made, OWCP shall 
decrease later payments of compensation, taking into account the 
probable extent of future payments, the rate of compensation, the 
financial circumstances of the individual, and any other relevant 
factors, so as to minimize any hardship. Should the individual die 
before collection has been completed, collection shall be made by 
decreasing later payments, if any, payable under the FECA with respect 
to the individual's death.
    (b) When an overpayment has been made to an individual who is not 
entitled to further payments, the individual shall refund to OWCP the 
amount of the overpayment as soon as the error is discovered or his or 
her attention is called to same. The overpayment is subject to the 
provisions of the Debt Collection Act of 1982 and may be reported to 
the Internal Revenue Service as income. If the individual fails to make 
such refund, OWCP may recover the same through any available means, 
including offset of salary, annuity benefits, or other Federal 
payments, including tax refunds as authorized by the Tax Refund Offset 
Program, or referral of the debt to a collection agency or to the 
Department of Justice.

Subpart F--Continuing Entitlement to Benefits


Sec. 10.500  What are the basic rules governing continuing receipt of 
compensation benefits?

    OWCP's goal is to return each disabled employee to suitable work as

[[Page 67153]]

soon as medically able. ``Suitable work'' is defined as employment 
which is: appropriate to the nature of the injury; the degree of 
physical impairment; the employee's usual work; the employee's age; the 
employee's qualifications for other work; and the availability of the 
work.
    (a) Benefits are available only while the effects of a work-related 
condition continue. Compensation for wage loss due to disability is 
available only for any periods during which an employee's work-related 
medical condition prevents him or her from earning the wages earned 
before the work-related injury. Payment of medical benefits is 
available for all treatment necessary due to a work-related medical 
condition. The employee is responsible for providing sufficient medical 
evidence to justify payment of any compensation sought.
    (1) To support payment of continuing compensation, narrative 
medical evidence must be submitted whenever OWCP requests it but not 
less than once a year. It must contain a physician's rationalized 
opinion as to whether the specific period of alleged disability is 
causally related to the employee's accepted injury or illness.
    (2) The physician's opinion must be based on the facts of the case 
and the complete medical background of the employee, must be one of 
reasonable medical certainty and must include objective findings in 
support of its conclusions. Subjective complaints of pain are not 
sufficient, in and of themselves, to support payment of continuing 
compensation. Likewise, medical restrictions based solely on the fear 
of a possible future injury are also not sufficient to support payment 
of continuing compensation. See Sec. 10.330 for a fuller discussion of 
medical evidence.
    (b) OWCP may require any kind of non-invasive testing to determine 
the employee's functional capacity. In addition, OWCP may direct the 
employee to undergo a second opinion or referee examination in any case 
it deems appropriate (see Secs. 10.320 and 10.321).
    (c) In considering the medical and factual evidence, OWCP will 
weigh the probative value of the attending physician's report, any 
second opinion physician's report, any other medical reports, or any 
other evidence in the file. If OWCP determines that the medical 
evidence supporting one conclusion is more consistent, logical, and 
well-reasoned than evidence supporting a contrary conclusion, OWCP will 
use the conclusion that is supported by the weight of the medical 
evidence as the basis for awarding or denying further benefits. If 
medical reports that are equally well-reasoned support inconsistent 
determinations of an issue under consideration, OWCP will direct the 
employee to undergo a referee examination to resolve the issue. The 
results of the referee examination will be given special weight in 
determining the issue.
    (d) Once OWCP has advised the employee that it has accepted a claim 
and has either approved continuation of pay or paid medical benefits or 
compensation, benefits will not be terminated or reduced unless the 
weight of the evidence establishes that:
    (1) The disability for which compensation was paid has ceased;
    (2) The disabling condition is no longer causally related to the 
employment;
    (3) The employee is only partially disabled;
    (4) The employee has returned to work;
    (5) The beneficiary was convicted of fraud in connection with a 
claim under the FECA, or the beneficiary was incarcerated based on any 
felony conviction; or
    (6) OWCP's initial decision was in error.

Return to Work--Employer's Responsibilities


Sec. 10.505  What actions must the employer take?

    Upon authorizing medical care, the employer should advise the 
employee in writing as soon as possible of his or her obligation to 
return to work under Sec. 10.210 and as defined in this subpart. The 
term ``return to work'' as used in this subpart is not limited to 
returning to work at the employee's normal worksite or usual position, 
but may include returning to work at other locations and in other 
positions. In general, the employer should make all reasonable efforts 
to place the employee in his or her former or an equivalent position, 
in accordance with 5 U.S.C. 8151(b)(2), if the employee has fully 
recovered within one year. The Office of Personnel Management (not 
OWCP) administers this provision.
    (a) Where the employer has specific alternative positions available 
for partially disabled employees, the employer should advise the 
employee of the specific duties and physical requirements of those 
positions.
    (b) Where the employer has no specific alternative positions 
available for an employee who can perform restricted or limited duties, 
the employer should advise the employee of any accommodations the 
agency can make to accommodate the employee's limitations due to the 
injury.
    (c) The employer must make any job offer in writing. The offer must 
include a description of the duties of the position, the physical 
requirements of those duties, and the date by which the employee is 
either to return to work or notify the employer of his or her decision 
to accept or refuse the job offer. The employer must send a complete 
copy of any job offer to OWCP when it is sent to the employee.


Sec. 10.506  May the employer monitor the employee's medical care?

    The employer may monitor the employee's medical progress and duty 
status by obtaining periodic medical reports. Form CA-17 is provided 
for this purpose. To aid in returning an injured employee to suitable 
employment, the employer may also contact the employee's physician in 
writing concerning the work limitations imposed by the effects of the 
injury and possible job assignments. When such contact is made, the 
employer shall send a copy of any such correspondence to OWCP and the 
employee, as well as a copy of the physician's response when received. 
The employer may also contact the employee at reasonable intervals to 
request periodic medical reports addressing his or her ability to 
return to work.


Sec. 10.507  How should the employer make an offer of suitable work?

    Where the attending physician or OWCP notifies the employer in 
writing that the employee is partially disabled (that is, the employee 
can perform some work but not return to the position held at date of 
injury), the employer should act as follows:
    (a) If the employee can perform in a specific alternative position 
available in the agency, and the employer has advised the employee of 
the specific duties and physical requirements, the employer should 
notify the employee immediately of the date of availability.
    (b) If the employee can perform restricted or limited duties, the 
employer should determine whether such duties are available or whether 
an existing job can be modified. If so, the employer shall advise the 
employee of the duties, their physical requirements and availability.


Sec. 10.508  May relocation expenses be paid for an employee who would 
need to move to accept an offer of reemployment?

    If possible, the employer should offer suitable reemployment in the 
location where the employee currently resides. If this is not 
practical, the employer may

[[Page 67154]]

offer suitable reemployment at the employee's former duty station or 
other location. Where the distance between the location of the offered 
job and the location where the employee currently resides is at least 
50 miles, OWCP may pay such relocation expenses as are considered 
reasonable and necessary if the employee has been terminated from the 
agency's employment rolls and would incur relocation expenses by 
accepting the offered reemployment. OWCP may also pay such relocation 
expenses when the new employer is other than a federal employer. To 
determine whether a relocation expense is reasonable and necessary, 
OWCP shall use as a guide the federal travel regulations for permanent 
changes of duty station.


Sec. 10.509  If an employee's light-duty job is eliminated due to 
downsizing, what is the effect on compensation?

    (a) In general, an employee will not be considered to have 
experienced a compensable recurrence of disability as defined in 
Sec. 10.5(x) merely because his or her employer has eliminated the 
employee's light-duty position in a reduction-in-force or some other 
form of downsizing. When this occurs, OWCP will determine the 
employee's wage-earning capacity based on his or her actual earnings in 
such light-duty position if this determination is appropriate on the 
basis that such earnings fairly and reasonably represent the employee's 
wage-earning capacity and such a determination has not already been 
made.
    (b) For the purposes of this section only, a ``light-duty 
position'' means a classified position that conforms to the established 
physical restrictions of the injured employee and for which the 
employer has already prepared a written position description such that 
the position constitutes ``regular'' federal employment. In the absence 
of a ``light duty position'' as described in this paragraph, OWCP will 
assume that the employee was instead engaged in non-competitive 
employment which does not represent the employee's wage-earning 
capacity, i.e., work of the type provided to injured employees who 
cannot otherwise be employed by the federal government or in any well-
known branch of the general labor market.

Return to Work--Employee's Responsibilities


Sec. 10.515  What actions must the employee take?

    (a) If an employee can resume regular federal employment because 
total disability has ceased, he or she must do so. No further 
compensation for wage loss is payable once the employee has recovered 
from the work-related injury to the extent that he or she can perform 
the duties of the position held at the time of injury, or earn 
equivalent wages.
    (b) If an employee cannot return to the job held at the time of 
injury due to partial disability from the effects of the work-related 
injury, but has recovered enough to perform some type of work, he or 
she must accept suitable work. (See Sec. 10.500 for a definition of 
``suitable work''.) This work may be with the original employer or 
through job placement efforts made by or on behalf of OWCP.
    (c) If the employer has advised an employee in writing that 
specific alternative positions exist within the agency, the employee 
shall provide the description and physical requirements of such 
alternate positions to the attending physician and ask whether and when 
he or she will be able to perform such duties.
    (d) If the employer has advised an employee that it is willing to 
accommodate his or her work limitations, the employee shall so advise 
the attending physician and ask him or her to specify the limitations 
imposed by the injury. The employee is responsible for advising the 
employer immediately of these limitations.
    (e) From time to time, OWCP may require the employee to report his 
or her efforts to obtain suitable employment, whether with the federal 
government, state and local governments, or in the private sector.


Sec. 10.516  How will an employee know if OWCP considers a job to be 
suitable?

    OWCP shall advise the employee that it has found the offered work 
to be suitable and afford the employee 30 days to accept the job or 
present any reasons to counter OWCP's finding of suitability. If the 
employee presents such reasons, and OWCP determines that the reasons 
are unacceptable, it will notify the employee of that determination and 
that he or she has 15 days in which to accept the offered work without 
penalty. At that point in time, OWCP's notification need not state the 
reasons for finding that the employee's reasons are not acceptable.


Sec. 10.517  What are the penalties for refusing to accept a suitable 
job offer?

    (a) 5 U.S.C. 8106(c) provides that a partially disabled employee 
who refuses to seek suitable work, or refuses to or neglects to work 
after suitable work is offered to or arranged for him or her, is not 
entitled to compensation. An employee who refuses or neglects to work 
after suitable work has been offered or secured for him or her has the 
burden to show that this refusal or failure to work was reasonable or 
justified.
    (b) After providing the two notices described in Sec. 10.516, OWCP 
will terminate the employee's entitlement to further compensation under 
5 U.S.C. 8105, 8106, and 8107, as provided by 5 U.S.C. 8106(c)(2). 
However, the employee remains entitled to medical benefits as provided 
by 5 U.S.C. 8103.


Sec. 10.518  Does OWCP provide services to help employees return to 
work?

    (a) OWCP may, in its discretion, provide vocational rehabilitation 
services as authorized by 5 U.S.C. 8104. These services include 
assistance from registered nurses working under the direction of OWCP. 
Among other things, these nurses visit the worksite, ensure that the 
duties of the position do not exceed the medical limitations as 
represented by the weight of medical evidence established by OWCP, and 
address any problems the employee may have in adjusting to the work 
setting. The nurses do not evaluate medical evidence; OWCP claims staff 
perform this function.
    (b) Vocational rehabilitation services may also include vocational 
evaluation, testing, training, and placement services with either the 
original employer or a new employer, when the injured employee cannot 
return to the job held at the time of injury. These services also 
include functional capacity evaluations, which help to tailor 
individual rehabilitation programs to employees' physical 
reconditioning and behavioral modification needs, and help employees to 
meet the demands of current or potential jobs.


Sec. 10.519  What action will OWCP take if an employee refuses to 
undergo vocational rehabilitation?

    Under 5 U.S.C. 8104(a), OWCP may direct a permanently disabled 
employee to undergo vocational rehabilitation. If an employee without 
good cause fails or refuses to apply for, undergo, participate in, or 
continue to participate in a vocational rehabilitation effort when so 
directed, OWCP will act as follows:
    (a) Where a suitable job has been identified, OWCP will reduce the 
employee's future monetary compensation based on the amount which would 
likely have been his or her wage-earning capacity had he or she 
undergone vocational rehabilitation. OWCP will determine this amount in 
accordance with the job identified through the vocational 
rehabilitation planning process, which includes

[[Page 67155]]

meetings with the OWCP nurse and the employer. The reduction will 
remain in effect until such time as the employee acts in good faith to 
comply with the direction of OWCP.
    (b) Where a suitable job has not been identified, because the 
failure or refusal occurred in the early but necessary stages of a 
vocational rehabilitation effort (that is, meetings with the OWCP 
nurse, interviews, testing, counseling, functional capacity 
evaluations, and work evaluations), OWCP cannot determine what would 
have been the employee's wage-earning capacity.
    (c) Under the circumstances identified in paragraph (b) of this 
section, in the absence of evidence to the contrary, OWCP will assume 
that the vocational rehabilitation effort would have resulted in a 
return to work with no loss of wage-earning capacity, and OWCP will 
reduce the employee's monetary compensation accordingly (that is, to 
zero). This reduction will remain in effect until such time as the 
employee acts in good faith to comply with the direction of OWCP.


Sec. 10.520  How does OWCP determine compensation after an employee 
completes a vocational rehabilitation program?

    After completion of a vocational rehabilitation program, OWCP may 
adjust compensation to reflect the injured worker's wage-earning 
capacity. Actual earnings will be used if they fairly and reasonably 
reflect the earning capacity. The position determined to be the goal of 
a training plan is assumed to represent the employee's earning capacity 
if it is suitable and performed in sufficient numbers so as to be 
reasonably available, whether or not the employee is placed in such a 
position.

Reports of Earnings From Employment and Self-Employment


Sec. 10.525  What information must the employee report?

    (a) An employee who is receiving compensation for partial or total 
disability must advise OWCP immediately of any return to work, either 
part-time or full-time. In addition, an employee who is receiving 
compensation for partial or total disability will periodically be 
required to submit a report of earnings from employment or self-
employment, either part-time or full-time. (See Sec. 10.5(g) for a 
definition of ``earnings''.)
    (b) The employee must report even those earnings which do not seem 
likely to affect his or her level of benefits. Many kinds of income, 
though not all, will result in reduction of compensation benefits. 
While earning income will not necessarily result in a reduction of 
compensation, failure to report income may result in forfeiture of all 
benefits paid during the reporting period.


Sec. 10.526  Must the employee report self-employment?

    The employee is required to report self-employment, including 
volunteer work or any other kind of activity which shows that the 
employee is no longer totally disabled for work.


Sec. 10.527  Does OWCP verify reports of earnings?

    To make proper determinations of an employee's entitlement to 
benefits, OWCP may attempt to verify the earnings reported by the 
employee through a variety of means, including but not limited to 
computer matches with the Office of Personnel Management and inquiries 
to the Social Security Administration. Also, OWCP may perform computer 
matches with records of state workers' compensation administrations to 
determine whether private employers are paying workers' compensation 
insurance premiums for recipients of benefits under the FECA.


Sec. 10.528  What action will OWCP take if the employee fails to file a 
report of activity indicating an ability to work?

    OWCP periodically requires each employee who is receiving 
compensation benefits to complete an affidavit as to any work, or 
activity indicating an ability to work, which the employee has 
performed for the prior 15 months. If an employee who is required to 
file such a report fails to do so within 30 days of the date of the 
request, his or her right to compensation for wage loss under 5 U.S.C. 
8105 or 8106 is suspended until OWCP receives the requested report. At 
that time, OWCP will reinstate compensation retroactive to the date of 
suspension if the employee remains entitled to compensation.


Sec. 10.529  What action will OWCP take if the employee files an 
incomplete report?

    (a) If an employee knowingly omits or understates any earnings or 
work activity in making a report, he or she shall forfeit the right to 
compensation with respect to any period for which the report was 
required. A false or evasive statement, omission, concealment, or 
misrepresentation with respect to employment activity or earnings in a 
report may also subject an employee to criminal prosecution.
    (b) Where the right to compensation is forfeited, OWCP shall 
recover any compensation already paid for the period of forfeiture 
pursuant to 5 U.S.C. 8129 and other relevant statutes.

Reports of Dependents


Sec. 10.535  How are dependents defined, and what information must the 
employee report?

    (a) Dependents are defined in Sec. 10.405. While the employee has 
one or more dependents, the employee's basic compensation for wage loss 
or for permanent impairment shall be augmented as provided in 5 U.S.C. 
8110. (The rules for death claims are found in Sec. 10.414.)
    (b) An employee who is receiving augmented compensation on account 
of dependents must advise OWCP immediately of any change in the number 
or status of dependents. The employee should also promptly refund to 
OWCP any amounts received on account of augmented compensation after 
the right to receive augmented compensation has ceased. Any difference 
between actual entitlement and the amount already paid beyond the date 
entitlement ended is an overpayment of compensation and may be 
recovered pursuant to 5 U.S.C. 8129 and other relevant statutes.
    (c) An employee who is receiving augmented compensation shall be 
periodically required to submit a statement as to any dependents, or to 
submit supporting documents such as birth or marriage certificates or 
court orders, to determine if he or she is still entitled to augmented 
compensation.


Sec. 10.536  What is the penalty for failing to submit a report of 
dependents?

    If an employee fails to submit a requested statement or supporting 
document within 30 days of the date of the request, OWCP will suspend 
his or her right to augmented compensation until OWCP receives the 
requested statement or supporting document. At that time, OWCP will 
reinstate augmented compensation retroactive to the date of suspension, 
provided that the employee is entitled to receive augmented 
compensation.


Sec. 10.537  What reports are needed when compensation payments 
continue for children over age 18?

    (a) Compensation payable on behalf of a child that would otherwise 
end when the child reaches 18 years of age will continue if and for so 
long as he or she is not married and is either a student as defined in 
5 U.S.C. 8101(17), or physically or mentally incapable of self-support.
    (b) At least twice each year, OWCP will ask an employee who 
receives compensation based on the student status of a child to provide 
proof of continuing entitlement to such

[[Page 67156]]

compensation, including certification of school enrollment.
    (c) Likewise, at least twice each year, OWCP will ask an employee 
who receives compensation based on a child's physical or mental 
inability to support himself or herself to submit a medical report 
verifying that the child's medical condition persists and that it 
continues to preclude self-support.
    (d) If an employee fails to submit proof within 30 days of the date 
of the request, OWCP will suspend the employee's right to compensation 
until the requested information is received. At that time OWCP will 
reinstate compensation retroactive to the date of suspension, provided 
the employee is entitled to such compensation.

Reduction and Termination of Compensation


Sec. 10.540  When and how is compensation reduced or terminated?

    (a) Except as provided in paragraphs (b) and (c) of this section, 
where the evidence establishes that compensation should be either 
reduced or terminated, OWCP will provide the beneficiary with written 
notice of the proposed action and give him or her 30 days to submit 
relevant evidence or argument to support entitlement to continued 
payment of compensation. This notice will include a description of the 
reasons for the proposed action and a copy of the evidence upon which 
OWCP is basing its determination. Payment of compensation will continue 
until any evidence or argument submitted has been reviewed and an 
appropriate decision has been issued, or until 30 days have elapsed if 
no additional evidence or argument is submitted.
    (b) OWCP will not provide such written notice when the beneficiary 
has no reasonable basis to expect that payment of compensation will 
continue. For example, when a claim has been made for a specific period 
of time and that specific period expires, no written notice will be 
given. Written notice will also not be given when a beneficiary dies, 
when OWCP either reduces or terminates compensation when an employee 
returns to work, when OWCP terminates medical benefits only after a 
physician indicates that further medical treatment is not necessary or 
has ended, or when OWCP denies payment for a particular medical 
expense.
    (c) OWCP will also not provide such written notice when 
compensation is suspended or forfeited due to one of the following: a 
beneficiary's conviction for fraud in connection with a claim under the 
FECA, a beneficiary's incarceration based on any felony conviction, an 
employee's failure to report earnings from employment or self-
employment, an employee's failure or refusal to either continue 
performing suitable work or to accept an offer of suitable work, or an 
employee's refusal to undergo or obstruction of a directed medical 
examination or treatment for substance abuse.


Sec. 10.541  What action will OWCP take after issuing written notice of 
its intention to reduce or terminate compensation?

    (a) If the beneficiary submits evidence or argument prior to the 
issuance of the decision, OWCP will evaluate it in light of the 
proposed action and undertake such further development as it may deem 
appropriate, if any. Evidence or argument which is repetitious, 
cumulative, or irrelevant will not require any further development. If 
the beneficiary does not respond within 30 days of the written notice, 
OWCP will issue a decision consistent with its prior notice. OWCP will 
not grant any request for an extension of this 30-day period.
    (b) Evidence or argument which refutes the evidence upon which the 
proposed action was based will result in the continued payment of 
compensation. If the beneficiary submits evidence or argument which 
fails to refute the evidence upon which the proposed action was based 
but which requires further development, OWCP will not provide the 
beneficiary with another notice of its proposed action upon completion 
of such development. Once any further development of the evidence is 
completed, OWCP will either continue payment or issue a decision 
consistent with its prior notice.

Subpart G--Review Process


Sec. 10.600  How can final decisions of OWCP be reviewed?

    There are three methods for reviewing an initial final decision of 
the OWCP (Secs. 10.125-10.127 discuss how decisions are made). These 
methods are: reconsideration by the district office; a hearing before 
an OWCP hearing representative; and appeal to the Employees' 
Compensation Appeals Board (ECAB). For each method there are time 
limitations and other restrictions which may apply, and not all options 
are available for all decisions, so the employee should consult the 
requirements set forth below. Further rules governing appeals to ECAB 
are found at part 501 of this title.

Reconsiderations and Reviews by the Director


Sec. 10.605  What is reconsideration?

    The FECA provides that the Director may review an award for or 
against compensation upon application by an employee (or his or her 
representative) who receives an adverse decision. The employee shall 
exercise this right through a request to the district office. The 
request, along with the supporting statements and evidence, is called 
the ``application for reconsideration.''


Sec. 10.606  How does a claimant request reconsideration?

    (a) An employee (or representative) seeking reconsideration should 
send the application for reconsideration to the address as instructed 
by OWCP in the final decision.
    (b) The application for reconsideration, including all supporting 
documents, must:
    (1) Be submitted in writing;
    (2) Set forth arguments and contain evidence that either:
    (i) Shows that OWCP erroneously applied or interpreted a specific 
point of law;
    (ii) Advances a relevant legal argument not previously considered 
by OWCP; or
    (iii) Constitutes relevant and pertinent new evidence not 
previously considered by OWCP.


Sec. 10.607  What is the deadline for requesting reconsideration?

    (a) An application for reconsideration must be sent within one year 
of the date of the OWCP decision for which review is sought. If 
submitted by mail, the application will be deemed timely if postmarked 
by the U.S. Postal Service within the time period allowed. If there is 
no such postmark, or it is not legible, other evidence such as (but not 
limited to) certified mail receipts, certificate of service, and 
affidavits, may be used to establish the mailing date.
    (b) OWCP will consider an untimely application for reconsideration 
only if the application demonstrates clear evidence of error on the 
part of OWCP in its most recent merit decision. The application must 
establish, on its face, that such decision was erroneous.


Sec. 10.608  How does OWCP decide whether to grant or deny the request 
for reconsideration?

    (a) A timely request for reconsideration may be granted if OWCP 
determines that the employee has presented evidence and/or argument 
that meets at least one of the standards described in 
Sec. 10.606(b)(2). If reconsideration is granted, the case is

[[Page 67157]]

reopened and the case is reviewed on its merits (see Sec. 10.609).
    (b) Where the request is timely but fails to meet at least one of 
the standards described in Sec. 10.606(b)(2), or where the request is 
untimely and fails to present any clear evidence of error, OWCP will 
deny the application for reconsideration without reopening the case for 
a review on the merits. A decision denying an application for 
reconsideration cannot be the subject of another application for 
reconsideration. The only review for this type of non-merit decision is 
an appeal to the ECAB (see Sec. 10.625), and OWCP will not entertain a 
request for reconsideration or a hearing on this decision denying 
reconsideration.


Sec. 10.609  How does OWCP decide whether new evidence requires 
modification of the prior decision?

    When application for reconsideration is granted, OWCP will review 
the decision for which reconsideration is sought on the merits and 
determine whether the new evidence or argument requires modification of 
the prior decision.
    (a) After OWCP decides to grant reconsideration, but before 
undertaking the review, OWCP will send a copy of the reconsideration 
application to the employer, which will have 15 days from the date sent 
to comment or submit relevant documents. OWCP will provide any such 
comments to the employee, who will have 15 days from the date the 
comments are sent to him or her within which to comment. If no comments 
are received from the employer, OWCP will proceed with the merit review 
of the case.
    (b) A claims examiner who did not participate in making the 
contested decision will conduct the merit review of the claim. When all 
evidence has been reviewed, OWCP will issue a new merit decision, based 
on all the evidence in the record. A copy of the decision will be 
provided to the agency.
    (c) An employee dissatisfied with this new merit decision may again 
request reconsideration under this subpart or appeal to the ECAB. An 
employee may not request a hearing on this decision.


Sec. 10.610  What is a review by the Director?

    The FECA specifies that an award for or against payment of 
compensation may be reviewed at any time on the Director's own motion. 
Such review may be made without regard to whether there is new evidence 
or information. If the Director determines that a review of the award 
is warranted (including, but not limited to circumstances indicating a 
mistake of fact or law or changed conditions), the Director (at any 
time and on the basis of existing evidence) may modify, rescind, 
decrease or increase compensation previously awarded, or award 
compensation previously denied. A review on the Director's own motion 
is not subject to a request or petition and none shall be entertained.
    (a) The decision whether or not to review an award under this 
section is solely within the discretion of the Director. The Director's 
exercise of this discretion is not subject to review by the ECAB, nor 
can it be the subject of a reconsideration or hearing request.
    (b) Where the Director reviews an award on his or her own motion, 
any resulting decision is subject as appropriate to reconsideration, a 
hearing and/or appeal to the ECAB. Jurisdiction on review or on appeal 
to ECAB is limited to a review of the merits of the resulting decision. 
The Director's determination to review the award is not reviewable.

Hearings


Sec. 10.615  What is a hearing?

    A hearing is a review of an adverse decision by a hearing 
representative. Initially, the claimant can choose between two formats: 
an oral hearing or a review of the written record. At the discretion of 
the hearing representative, an oral hearing may be conducted by 
telephone or teleconference. In addition to the evidence of record, the 
employee may submit new evidence to the hearing representative.


Sec. 10.616  How does a claimant obtain a hearing?

    (a) A claimant, injured on or after July 4, 1966, who has received 
a final adverse decision by the district office may obtain a hearing by 
writing to the address specified in the decision. The hearing request 
must be sent within 30 days (as determined by postmark or other 
carrier's date marking) of the date of the decision for which a hearing 
is sought. The claimant must not have previously submitted a 
reconsideration request (whether or not it was granted) on the same 
decision.
    (b) The claimant may specify the type of hearing desired when 
making the original hearing request. If the request does not specify a 
format, OWCP will schedule an oral hearing. The claimant can request a 
change in the format of the hearing by making a written request to the 
Branch of Hearings and Review. A request received by the Branch of 
Hearings and Review before either the date OWCP issues notice that the 
record is closed for written review, or the date OWCP issues a notice 
that OWCP has set a date for an oral hearing, will be granted. A 
request received after that date will be subject to OWCP's discretion. 
The decision to grant or deny a change of format is not reviewable.


Sec. 10.617  How is an oral hearing conducted?

    (a) The hearing representative retains complete discretion to set 
the time and place of the hearing, including the amount of time 
allotted for the hearing, considering the issues to be resolved.
    (b) Unless otherwise directed in writing by the claimant, the 
hearing representative will mail a notice of the time and place of the 
oral hearing to the claimant and any representative at least 30 days 
before the scheduled date. The employer will also be notified at least 
30 days before the scheduled date.
    (c) The hearing is an informal process, and the hearing 
representative is not bound by common law or statutory rules of 
evidence, by technical or formal rules of procedure or by section 5 of 
the Administrative Procedure Act. During the hearing process, the 
claimant may state his or her arguments and present new written 
evidence in support of the claim.
    (d) Testimony at oral hearings is recorded, then transcribed and 
placed in the record. Oral testimony shall be made under oath.
    (e) OWCP will furnish a transcript of the oral hearing to the 
claimant and the employer, who have 15 days from the date it is sent to 
comment. Any comments received from the employer shall be sent to the 
claimant, who will be given an additional 15 days to comment from the 
date OWCP sends any agency comments.
    (f) The hearing remains open for the submittal of additional 
evidence until the date the decision is mailed to the claimant's last 
known address and to any representative. A copy of the decision will 
also be mailed to the employer.
    (g) The hearing representative determines the conduct of the oral 
hearing and may terminate the hearing at any time he or she determines 
that all relevant evidence has been obtained, or because of misbehavior 
on the part of the claimant and/or representative at or near the place 
of the oral presentation.


Sec. 10.618  How is a review of the written record conducted?

    (a) The hearing representative will review the official record and 
any additional evidence submitted by the claimant and by the agency. 
The hearing representative may also conduct whatever investigation is 
deemed necessary. New evidence and arguments may be submitted at any 
time up to the

[[Page 67158]]

time the hearing is closed, but it should be submitted as soon as 
possible to avoid delaying the hearing process.
    (b) The claimant should submit, with his or her application for 
review, all evidence or argument that he or she wants to present to the 
hearing representative. A copy of all pertinent material will be sent 
to the employer, which will have 15 days from the date it is sent to 
comment. (Medical evidence is not considered ``pertinent'' for review 
and comment by the agency, and it will therefore not be furnished to 
the agency. OWCP has sole responsibility for evaluating medical 
evidence.) Any comments received from the employer shall be sent to the 
claimant, who will be given an additional 15 days to comment from the 
date OWCP sends any agency comments.


Sec. 10.619  May subpoenas be issued for witnesses and documents?

    A claimant may request a subpoena, but the decision to grant or 
deny such a request is within the discretion of the hearing 
representative. The hearing representative may issue subpoenas for the 
attendance and testimony of witnesses, and for the production of books, 
records, correspondence, papers or other relevant documents. Subpoenas 
are issued for documents only if they are relevant and cannot be 
obtained by other means, and for witnesses only where oral testimony is 
the best way to ascertain the facts.
    (a) A claimant may request a subpoena only as part of the hearings 
process, and no subpoena will be issued under any other part of the 
claims process. To request a subpoena, the requestor must:
    (1) Submit the request in writing and send it to the hearing 
representative as early as possible but no later than 60 days (as 
evidenced by postmark, electronic marker or other objective date mark) 
after the date of the original hearing request.
    (2) Explain why the testimony or evidence is directly relevant to 
the issues at hand, and a subpoena is the best method or opportunity to 
obtain such evidence because there are no other means by which the 
documents or testimony could have been obtained.
    (b) No subpoena will be issued for attendance of employees of OWCP 
acting in their official capacities as decision-makers or policy 
administrators. For hearings taking the form of a review of the written 
record, no subpoena for the appearance of witnesses will be considered.
    (c) The hearing representative issues the subpoena under his or her 
own name. It may be served in person or by certified mail, return 
receipt requested, addressed to the person to be served at his or her 
last known principal place of business or residence. A decision to deny 
a subpoena can only be appealed as part of an appeal of any adverse 
decision which results from the hearing.


Sec. 10.620  Who pays the costs associated with subpoenas?

    (a) Witnesses who are not employees or former employees of the 
federal government shall be paid the same fees and mileage as paid for 
like services in the District Court of the United States where the 
subpoena is returnable, except that expert witnesses shall be paid a 
fee not to exceed the local customary fee for such services.
    (b) Where OWCP asked that the witness submit evidence into the case 
record or asked that the witness attend, OWCP shall pay the fees and 
mileage. Where the claimant requested the subpoena, and where the 
witness submitted evidence into the record at the request of the 
claimant, the claimant shall pay the fees and mileage.


Sec. 10.621  What is the employer's role when an oral hearing has been 
requested?

    (a) The employer may send a representative to observe the 
proceeding, but the agency representative cannot give testimony or 
argument or otherwise participate in the hearing, except where the 
claimant or the hearing representative specifically asks the agency 
representative to testify.
    (b) The hearing representative may deny a request by the claimant 
that the agency representative testify where the claimant cannot show 
that the testimony would be relevant or where the agency representative 
does not have the appropriate level of knowledge to provide such 
evidence at the hearing. The employer may also comment on the hearing 
transcript, as described in Sec. 10.618(b).


Sec. 10.622  May a claimant withdraw a request for or postpone a 
hearing?

    (a) The claimant and/or representative may withdraw the hearing 
request at any time up to and including the day the hearing is held, or 
the decision issued. Withdrawing the hearing request means the record 
is returned to the jurisdiction of the district office and no further 
requests for a hearing on the underlying decision will be considered.
    (b) OWCP will entertain any reasonable request for scheduling the 
oral hearing, but such requests should be made at the time of the 
original request; scheduling is at the sole discretion of the hearing 
representative, and is not reviewable. Once the oral hearing is 
scheduled and OWCP has mailed appropriate written notice to the 
claimant, the oral hearing cannot be postponed at the claimant's 
request for any reason, unless the hearing representative can 
reschedule the hearing on the same docket (that is, during the same 
hearing trip). When the request to postpone a scheduled hearing cannot 
be accommodated on the docket, no further opportunity for an oral 
hearing will be provided. Instead, the hearing will take the form of a 
review of the written record and a decision issued accordingly. In the 
alternative, a teleconference may be substituted for the oral hearing 
at the discretion of the hearing representative.

Review by the Employees' Compensation Appeals Board (ECAB)


Sec. 10.625  What kinds of decisions may be appealed?

    Only final decisions of OWCP may be appealed to the ECAB. However, 
certain types of final decisions, described in this part as not subject 
to further review, cannot be appealed to the ECAB. Decisions that are 
not appealable to the ECAB include: decisions concerning the amounts 
payable for medical services, decisions concerning exclusion and 
reinstatement of medical providers, decisions by the Director to review 
an award on his or her own motion, and denials of subpoenas independent 
of the appeal of the underlying decision. In appeals before the ECAB, 
attorneys from the Office of the Solicitor of Labor shall represent 
OWCP.


Sec. 10.626  Who has jurisdiction of cases on appeal to the ECAB?

    While a case is on appeal to the ECAB, OWCP has no jurisdiction 
over the claim with respect to issues which directly relate to the 
issue or issues on appeal. The OWCP continues to administer the claim 
and retains jurisdiction over issues unrelated to the issue or issues 
on appeal and issues which arise after the appeal as a result of 
ongoing administration of the case. Such issues would include, for 
example, the ability to terminate benefits where an individual returns 
to work while an appeal is pending at the ECAB.

Subpart H--Special Provisions

Representation


Sec. 10.700  May a claimant designate a representative?

    (a) The claims process under the FECA is informal. Unlike many 
workers' compensation laws, the employer is not a party to the claim, 
and OWCP acts as an impartial evaluator of the evidence. Nevertheless, 
a claimant may appoint one individual to represent his or her

[[Page 67159]]

interests, but the appointment must be in writing.
    (b) There can be only one representative at any one time, so after 
one representative has been properly appointed, OWCP will not recognize 
another individual as representative until the claimant withdraws the 
authorization of the first individual. In addition, OWCP will recognize 
only certain types of individuals (see Sec. 10.701).
    (c) A properly appointed representative who is recognized by OWCP 
may make a request or give direction to OWCP regarding the claims 
process, including a hearing. This authority includes presenting or 
eliciting evidence, making arguments on facts or the law, and obtaining 
information from the case file, to the same extent as the claimant. Any 
notice requirement contained in this subpart or the FECA is fully 
satisfied if served on the representative, and has the same force and 
effect as if sent to the claimant.


Sec. 10.701  Who may serve as a representative?

    A claimant may authorize any individual to represent him or her in 
regard to a claim under the FECA, unless that individual's service as a 
representative would violate any applicable provision of law (such as 
18 U.S.C. 205 and 208). A federal employee may act as a representative 
only:
    (a) On behalf of immediate family members, defined as a spouse, 
children, parents, and siblings of the representative, provided no fee 
or gratuity is charged; or
    (b) While acting as a union representative, defined as any 
officially sanctioned union official, provided such representation 
would not conflict with any other provision of law, and no fee or 
gratuity is charged.


Sec. 10.702  How are fees for services paid?

    A representative may charge the claimant a fee and other costs 
associated with the representation before OWCP. The claimant is solely 
responsible for paying the fee and other charges. The claimant will not 
be reimbursed by OWCP, nor is OWCP in any way liable for the amount of 
the fee. Administrative costs (mailing, copying, messenger services, 
travel and the like, but not including secretarial services, paralegal 
and other activities) need not be approved before the representative 
collects them. Before any fee for services can be collected, however, 
the fee must be approved by the Secretary. (Collecting a fee without 
this approval may constitute a misdemeanor under 18 U.S.C. 292.)


Sec. 10.703  How are fee applications approved?

    (a) Fee application. (1) The representative must submit the fee 
application to the district office and/or the Branch of Hearings and 
Review, according to where the work for which the fee is charged was 
performed. The application shall contain the following:
    (i) An itemized statement showing the representative's hourly rate, 
the number of hours worked and specifically identifying the work 
performed and a total amount charged for the representation (excluding 
administrative costs).
    (ii) A statement of agreement or disagreement with the amount 
charged, signed by the claimant. The statement must also acknowledge 
that the claimant is aware that he or she must pay the fees and that 
OWCP is not responsible for paying the fee or other costs.
    (2) An incomplete application will be returned with no further 
comment.
    (b) Approval where there is no dispute. Where a fee application is 
accompanied by a signed statement indicating the claimant's agreement 
with the fee as described in paragraph (a)(2) of this section, the 
application is deemed approved.
    (c) Disputed requests. (1) Where the claimant disagrees with the 
amount of the fee, as indicated in the statement accompanying the 
submission, OWCP will evaluate the objection and decide whether or not 
to approve the request. OWCP will provide a copy of the request to the 
claimant and ask him or her to submit any further information in 
support of the objection within 15 days from the date the request is 
forwarded. After that period has passed, OWCP will evaluate the 
information received to determine whether the amount of the fee is 
substantially in excess of the value of services received by looking at 
the following factors:
    (i) Usefulness of the attorney's services;
    (ii) The nature and complexity of the claim;
    (iii) The actual time spent on development and presentation of the 
claim; and
    (iv) Customary local charges for similar services.
    (2) Where the claimant disputes the attorney's request and files an 
objection with OWCP, an appealable decision will be issued.

Third Party Liability


Sec. 10.705  When must an employee or other FECA beneficiary take 
action against a third party?

    (a) If an injury or death for which benefits are payable under the 
FECA is caused, wholly or partially, by someone other than a federal 
employee acting within the scope of his or her employment, the claimant 
can be required to take action against that third party.
    (b) The Office of the Solicitor of Labor (SOL) is hereby delegated 
authority to administer the subrogation aspects of certain FECA claims 
for OWCP. Either OWCP or SOL can require a FECA beneficiary to assign 
his or her claim for damages to the United States or to prosecute the 
claim in his or her own name.


Sec. 10.706  How will a beneficiary know if OWCP or SOL has determined 
that action against a third party is required?

    When OWCP determines that an employee or other FECA beneficiary 
must take action against a third party, it will notify the employee or 
beneficiary in writing. If the case is transferred to SOL, a second 
notification may be issued.


Sec. 10.707  What must a FECA beneficiary who is required to take 
action against a third party do to satisfy the requirement that the 
claim be ``prosecuted''?

    At a minimum, a FECA beneficiary must do the following:
    (a) Seek damages for the injury or death from the third party, 
either through an attorney or on his or her own behalf;
    (b) Either initiate a lawsuit within the appropriate statute of 
limitations period or obtain a written release of this obligation from 
OWCP or SOL unless recovery is possible through a negotiated settlement 
prior to filing suit;
    (c) Refuse to settle or dismiss the case for any amount less than 
the amount necessary to repay OWCP's refundable disbursements, as 
defined in Sec. 10.714, without receiving permission from OWCP or SOL;
    (d) Provide periodic status updates and other relevant information 
in response to requests from OWCP or SOL;
    (e) Submit detailed information about the amount recovered and the 
costs of the suit on a ``Statement of Recovery'' form approved by OWCP; 
and
    (f) Pay any required refund.

[[Page 67160]]

Sec. 10.708  Can a FECA beneficiary who refuses to comply with a 
request to assign a claim to the United States or to prosecute the 
claim in his or her own name be penalized?

    When a FECA beneficiary refuses a request to either assign a claim 
or prosecute a claim in his or her own name, OWCP may determine that he 
or she has forfeited his or her right to all past or future 
compensation for the injury with respect to which the request is made. 
Alternatively, OWCP may also suspend the FECA beneficiary's 
compensation payments until he or she complies with the request.


Sec. 10.709  What happens if a beneficiary directed by OWCP or SOL to 
take action against a third party does not believe that a claim can be 
successfully prosecuted at a reasonable cost?

    If a beneficiary consults an attorney and is informed that a suit 
for damages against a third party for the injury or death for which 
benefits are payable is unlikely to prevail or that the costs of such a 
suit are not justified by the potential recovery, he or she should 
request that OWCP or SOL release him or her from the obligation to 
proceed. This request should be in writing and provide evidence of the 
attorney's opinion. If OWCP or SOL agrees, the beneficiary will not be 
required to take further action against the third party.


Sec. 10.710  Under what circumstances must a recovery of money or other 
property in connection with an injury or death for which benefits are 
payable under the FECA be reported to OWCP or SOL?

    Any person who has filed a FECA claim that has been accepted by 
OWCP (whether or not compensation has been paid), or who has received 
FECA benefits in connection with a claim filed by another, is required 
to notify OWCP or SOL of the receipt of money or other property as a 
result of a settlement or judgment in connection with the circumstances 
of that claim. This includes an injured employee, and in the case of a 
claim involving the death of an employee, a spouse, children or other 
dependents entitled to receive survivor's benefits. OWCP or SOL should 
be notified in writing within 30 days of the receipt of such money or 
other property or the acceptance of the FECA claim, whichever occurs 
later.


Sec. 10.711  How much of any settlement or judgment must be paid to the 
United States?

    The statute permits a FECA beneficiary to retain, as a minimum, 
one-fifth of the net amount of money or property remaining after a 
reasonable attorney's fee and the costs of litigation have been 
deducted from the third-party recovery. The U.S. shares in the 
litigation expense by allowing the beneficiary to retain, at the time 
of distribution, an amount equivalent to a reasonable attorney's fee 
proportionate to the refund due the United States. After the refund 
owed to the United States is calculated, the FECA beneficiary retains 
any surplus remaining, and this amount is credited, dollar for dollar, 
against future compensation for the same injury, as defined in 
Sec. 10.719. OWCP will resume the payment of compensation only after 
the FECA beneficiary has been awarded compensation which exceeds the 
amount of the surplus.
    (a) The refund to the United States is calculated as follows, using 
the Statement of Recovery form approved by OWCP:
    (1) Determine the gross recovery as set forth in Sec. 10.712;
    (2) Subtract the amount of attorney's fees actually paid, but not 
more than the maximum amount of attorney's fees considered by OWCP or 
SOL to be reasonable, from the gross recovery (Subtotal A);
    (3) Subtract the costs of litigation, as allowed by OWCP or SOL 
(Subtotal B);
    (4) Subtract one fifth of Subtotal B from Subtotal B (Subtotal C);
    (5) Compare Subtotal C and the refundable disbursements as defined 
in Sec. 10.714. Subtotal D is the lower of the two amounts.
    (6) Multiply Subtotal D by a percentage that is determined by 
dividing the gross recovery into the amount of attorney's fees actually 
paid, but not more than the maximum amount of attorney's fees 
considered by OWCP or SOL to be reasonable, to determine the 
government's allowance for attorney's fees, and subtract this amount 
from Subtotal D.
    (b) The credit against future benefits (also referred to as the 
surplus) is calculated as follows:
    (1) If Subtotal C, as calculated according to paragraph (a)(4) of 
this section, is less than the refundable disbursements, as defined in 
Sec. 10.714, there is no credit to be applied against future benefits;
    (2) If Subtotal C is greater than the refundable disbursements, the 
credit against future benefits (or surplus) amount is determined by 
subtracting the refundable disbursements from Subtotal C.
    (c) An example of how these calculations are made follows. In this 
example, a federal employee sues another party for causing injuries for 
which the employee has received $22,000 in benefits under the FECA, 
subject to refund. The suit is settled and the injured employee 
receives $100,000, all of which was for his injury. The injured worker 
paid attorney's fees of $25,000 and costs for the litigation of $3,000.

(1) Gross recovery...........................................   $100,000
Attorney's fees..............................................    -25,000
                                                              ----------
(2) Subtotal A...............................................     75,000
(3) Costs of suit............................................     -3,000
                                                              ----------
Subtotal B...................................................    -72,000
One-fifth of Subtotal B......................................    -14,400
                                                              ----------
(4) Subtotal C...............................................     57,600
Refundable Disbursement......................................     22,000
(5) Subtotal D (lower of Subtotal C or refundable                       
 disbursements)..............................................     22,000
(6) Government's allowance for attorney's fees [25,000/                 
 100,000 x 22,000]...........................................     -5,500
                                                              ----------
(Attorney's fees divided by gross recovery then multiplied by           
 Subtotal D) Refund to the United States.....................     16,500
(7) Credit against future benefits [57,600-22,000] (Subtotal            
 C minus refundable disbursements)...........................     35,600
                                                                        

Sec. 10.712  What amounts are included in the gross recovery?

    (a) When a settlement or judgment is paid to, or for, one 
individual, the entire amount, except for the portion representing 
damage to real or personal property, is reported as the gross recovery. 
If a settlement or judgment is paid to or for more than one individual 
or in more than one capacity, such as a joint payment to a husband and 
wife for personal injury and loss of consortium or a payment to a 
spouse representing both loss of consortium and wrongful death, the 
gross recovery to be reported is the amount allocated to the injured 
employee. If a judge or jury specifies the percentage of a contested 
verdict attributable to each of several plaintiffs, OWCP or SOL will 
accept that division.
    (b) In any other case, where a judgment or settlement is paid to or 
on behalf of more than one individual, OWCP or SOL will determine the 
appropriate amount of the FECA beneficiary's gross recovery and advise 
the beneficiary of its determination. FECA beneficiaries may accept 
OWCP's or SOL's determination or demonstrate good cause for a different 
allocation. Whether to accept a specific allocation is at the 
discretion of SOL or OWCP.

[[Page 67161]]

Sec. 10.713  How is a structured settlement (that is, a settlement 
providing for receipt of funds over a specified period of time) treated 
for purposes of reporting the gross recovery?

    In this situation, the gross recovery to be reported is the present 
value of the right to receive all of the payments included in the 
structured settlement, allocated in the case of multiple recipients in 
the same manner as single payment recoveries.


Sec. 10.714  What amounts are included in the refundable disbursements?

    The refundable disbursements of a specific claim consist of the 
total money paid by OWCP from the Employees' Compensation Fund with 
respect to that claim to or on behalf of a FECA beneficiary, less 
charges for any medical file review (i.e., the physician does not 
examine the employee) done at the request of OWCP. Charges for medical 
examinations also may be subtracted if the FECA beneficiary establishes 
that the examinations were required to be made available to the 
employee under a statute other than the FECA by the employing agency or 
at the employing agency's cost.


Sec. 10.715  Is a beneficiary required to pay interest on the amount of 
the refund due to the United States?

    If the refund due to the United States is not submitted within 30 
days of receiving a request for payment from SOL or OWCP, interest 
shall accrue on the refund due to the United States from the date of 
the request. The rate of interest assessed shall be the rate of the 
current value of funds to the United States Treasury as published in 
the Federal Register (as of the date the request for payment is sent). 
Waiver of the collection of interest shall be in accordance with the 
provisions of the Department of Labor regulations on Federal Claims 
Collection governing waiver of interest, 29 CFR 20.61.


Sec. 10.716  If the required refund is not paid within 30 days of the 
request for repayment, can it be collected from payments due under the 
FECA?

    If the required refund is not paid within 30 days of the request 
for payment, OWCP can, in its discretion, collect the refund by 
withholding all or part of any payments currently payable to the 
beneficiary under the FECA with respect to any injury. The waiver 
provisions of Secs. 10.432 through 10.440 do not apply to such 
determinations.


Sec. 10.717  Is a settlement or judgment received as a result of 
allegations of medical malpractice in treating an injury covered by the 
FECA a gross recovery that must be reported to OWCP or SOL?

    Since an injury caused by medical malpractice in treating an injury 
covered by the FECA is also an injury covered under the FECA, any 
recovery in a suit alleging such an injury is treated as a gross 
recovery that must be reported to OWCP or SOL.


Sec. 10.718  Are payments to a beneficiary as a result of an insurance 
policy which the beneficiary has purchased a gross recovery that must 
be reported to OWCP or SOL?

    Since payments received by a FECA beneficiary pursuant to an 
insurance policy purchased by someone other than a liable third party 
are not payments in satisfaction of liability for causing an injury 
covered by the FECA, they are not considered a gross recovery covered 
by section 8132 that requires filing a Statement of Recovery and paying 
any required refund.


Sec. 10.719  If a settlement or judgment is received for more than one 
wound or medical condition, can the refundable disbursements paid on a 
single FECA claim be attributed to different conditions for purposes of 
calculating the refund or credit owed to the United States?

    (a) All wounds, diseases or other medical conditions accepted by 
OWCP in connection with a single claim are treated as the same injury 
for the purpose of computing any required refund and any credit against 
future benefits in connection with the receipt of a recovery from a 
third party, except that an injury caused by medical malpractice in 
treating an injury covered under the FECA will be treated as a separate 
injury for purposes of section 8132.
    (b) If an injury covered under the FECA is caused under 
circumstances creating a legal liability in more than one person, other 
than the United States, to pay damages, OWCP or SOL will determine 
whether recoveries received from one or more third parties should be 
attributed to separate conditions for which compensation is payable in 
connection with a single FECA claim. If such an attribution is both 
practicable and equitable, as determined by OWCP or SOL, in its 
discretion, the conditions will be treated as separate injuries for 
purposes of calculating the refund and credit owed to the United States 
under section 8132.

Federal Grand and Petit Jurors


Sec. 10.725  When is a federal grand or petit juror covered under the 
FECA?

    (a) Federal grand and petit jurors are covered under the FECA when 
they are in performance of duty as a juror, which includes that time 
when a juror is:
    (1) In attendance at court pursuant to a summons;
    (2) In deliberation;
    (3) Sequestered by order of a judge; or
    (4) At a site, by order of the court, for the taking of a view.
    (b) A juror is not considered to be in the performance of duty 
while traveling to or from home in connection with the activities 
enumerated in paragraphs (a)(1) through (4) of this section.


Sec. 10.726  When does a juror's entitlement to disability compensation 
begin?

    Pursuant to 28 U.S.C. 1877, entitlement to disability compensation 
does not commence until the day after the date of termination of 
service as a juror.


Sec. 10.727  What is the pay rate of jurors for compensation purposes?

    For the purpose of computing compensation payable for disability or 
death, a juror is deemed to receive pay at the minimum rate for Grade 
GS-2 of the General Schedule unless his or her actual pay as an 
``employee'' of the United States while serving on court leave is 
higher, in which case the pay rate for compensation purposes is 
determined in accordance with 5 U.S.C. 8114.

Peace Corps Volunteers


Sec. 10.730  What are the conditions of coverage for Peace Corps 
volunteers and volunteer leaders injured while serving outside the 
United States?

    (a) Any injury sustained by a volunteer or volunteer leader while 
he or she is located abroad shall be presumed to have been sustained in 
the performance of duty, and any illness contracted during such time 
shall be presumed to be proximately caused by the employment. However, 
this presumption will be rebutted by evidence that:
    (1) The injury or illness was caused by the claimant's willful 
misconduct, intent to bring about the injury or death of self or 
another, or was proximately caused by the intoxication by alcohol or 
illegal drugs of the injured claimant; or
    (2) The illness is shown to have preexisted the period of service 
abroad; or
    (3) The injury or illness claimed is a manifestation of symptoms 
of, or consequent to, a preexisting congenital defect or abnormality.

[[Page 67162]]

    (b) If the presumption that an injury or illness was sustained in 
the performance of duty is rebutted as provided by paragraph (a) of 
this section, the claimant has the burden of proving by the submittal 
of substantial and probative evidence that such injury or illness was 
sustained in the performance of duty with the Peace Corps.
    (c) If an injury or illness, or episode thereof, comes within one 
of the exceptions described in paragraph (a)(2) or (3) of this section, 
the claimant may nonetheless be entitled to compensation. This will be 
so provided he or she meets the burden of proving by the submittal of 
substantial, probative and rationalized medical evidence that the 
illness or injury was proximately caused by factors or conditions of 
Peace Corps service, or that it was materially aggravated, accelerated 
or precipitated by factors of Peace Corps service.


Sec. 10.731  What is the pay rate of Peace Corps volunteers and 
volunteer leaders for compensation purposes?

    The pay rate for these claimants is defined as the pay rate in 
effect on the date following separation, provided that the rate equals 
or exceeds the pay rate on the date of injury. It is defined in 
accordance with 5 U.S.C. 8142(a), not 8101(4).

Non-Federal Law Enforcement Officers


Sec. 10.735  When is a non-federal law enforcement officer covered 
under the FECA?

    (a) A law enforcement officer (officer) includes an employee of a 
state or local government, the governments of U.S. possessions and 
territories, or an employee of the United States pensioned or 
pensionable under sections 521-535 of Title 4, D.C. Code, whose 
functions include the activities listed in 5 U.S.C. 8191.
    (b) Benefits are available to officers who are not ``employees'' 
under 5 U.S.C. 8101, and who are determined in the discretion of OWCP 
to have been engaged in the activities listed in 5 U.S.C. 8191 with 
respect to the enforcement of crimes against the United States. 
Individuals who only perform administrative functions in support of 
officers are not considered officers.
    (c) Except as provided by 5 U.S.C. 8191 and 8192 and elsewhere in 
this part, the provisions of the FECA and of subparts A, B, and D 
through I of this part apply to officers.


Sec. 10.736  What are the time limits for filing a claim?

    OWCP must receive a claim for benefits under 5 U.S.C. 8191 within 
five years after the injury or death. This five-year limitation is not 
subject to waiver. The tolling provisions of 5 U.S.C. 8122(d) do not 
apply to these claims.


Sec. 10.737  How is a claim filed, and who can file a claim?

    A claim for injury or occupational disease should be filed on Form 
CA-721; a death claim should be filed on Form CA-722. All claims should 
be submitted to the officer's employer for completion and forwarding to 
OWCP. A claim may be filed by the officer, the officer's survivor, or 
any person or association authorized to act on behalf of an officer or 
an officer's survivors.


Sec. 10.738  Under what circumstances are benefits payable?

    (a) Benefits are payable when an officer is injured while 
apprehending, or attempting to apprehend, an individual for the 
commission of a federal crime. However, either an actual federal crime 
must be in progress or have been committed, or objective evidence (of 
which the officer is aware at the time of injury) must exist that a 
potential federal crime was in progress or had already been committed. 
The actual or potential federal crime must be an integral part of the 
criminal activity toward which the officer's actions are directed. The 
fact that an injury to an officer is related in some way to the 
commission of a federal crime does not necessarily bring the injury 
within the coverage of the FECA. The FECA is not intended to cover 
officers who are merely enforcing local laws.
    (b) For benefits to be payable when an officer is injured 
preventing, or attempting to prevent, a federal crime, there must be 
objective evidence that a federal crime is about to be committed. An 
officer's belief, unsupported by objective evidence, that he or she is 
acting to prevent the commission of a federal crime will not result in 
coverage. Moreover, the officer's subjective intent, as measured by all 
available evidence (including the officer's own statements and 
testimony, if available), must have been directed toward the prevention 
of a federal crime. In this context, an officer's own statements and 
testimony are relevant to, but do not control, the determination of 
coverage.


Sec. 10.739  What kind of objective evidence of a potential federal 
crime must exist for coverage to be extended?

    Based on the facts available at the time of the event, the officer 
must have an awareness of sufficient information which would lead a 
reasonable officer, under the circumstances, to conclude that a federal 
crime was in progress, or was about to occur. This awareness need not 
extend to the precise particulars of the crime (the section of Title 
18, United States Code, for example), but there must be sufficient 
evidence that the officer was in fact engaged in actual or attempted 
apprehension of a federal criminal or prevention of a federal crime.


Sec. 10.740  In what situations will OWCP automatically presume that a 
law enforcement officer is covered by the FECA?

    (a) Where an officer is detailed by a competent state or local 
authority to assist a federal law enforcement authority in the 
protection of the President of the United States, or any other person 
actually provided or entitled to U.S. Secret Service protection, 
coverage will be extended.
    (b) Coverage for officers of the U.S. Park Police and those 
officers of the Uniformed Division of the U.S. Secret Service who 
participate in the District of Columbia Retirement System is 
adjudicated under the principles set forth in paragraph (a) of this 
section, and does not extend to numerous tangential activities of law 
enforcement (for example, reporting to work, changing clothes). 
However, officers of the Non-Uniformed Division of the U.S. Secret 
Service who participate in the District of Columbia Retirement System 
are covered under the FECA during the performance of all official 
duties.


Sec. 10.741  How are benefits calculated?

    (a) Except for continuation of pay, eligible officers and survivors 
are entitled to the same benefits as if the officer had been an 
employee under 5 U.S.C. 8101. However, such benefits may be reduced or 
adjusted as OWCP in its discretion may deem appropriate to reflect 
comparable benefits which the officer or survivor received or would 
have been entitled to receive by virtue of the officer's employment.
    (b) For the purpose of this section, a comparable benefit includes 
any benefit that the officer or survivor is entitled to receive because 
of the officer's employment, including pension and disability funds, 
state workers' compensation payments, Public Safety Officers' Benefits 
Act payments, and state and local lump sum payments. Health benefits 
coverage and proceeds of life insurance policies purchased by the 
employer are not considered to be comparable benefits.
    (c) The FECA provides that, where an officer receives comparable 
benefits,

[[Page 67163]]

compensation benefits are to be reduced proportionally in a manner that 
reflects the relative percentage contribution of the officer and the 
officer's employer to the fund which is the source of the comparable 
benefit. Where the source of the comparable benefit is a retirement or 
other system which is not fully funded, the calculation of the amount 
of the reduction will be based on a per capita comparison between the 
contribution by the employer and the contribution by all covered 
officers during the year prior to the officer's injury or death.
    (d) The non-receipt of compensation during a period where a dual 
benefit (such as a lump sum payment on the death of an officer) is 
being offset against compensation entitlement does not result in an 
adjustment of the respective benefit percentages of remaining 
beneficiaries because of a cessation of compensation under 5 U.S.C. 
8133(c).

Subpart I--Information for Medical Providers

Medical Records and Bills


Sec. 10.800  What kind of medical records must providers keep?

    Agency medical officers, private physicians and hospitals are 
required to keep records of all cases treated by them under the FECA so 
they can supply OWCP with a history of the injury, a description of the 
nature and extent of injury, the results of any diagnostic studies 
performed, the nature of the treatment rendered and the degree of any 
impairment arising from the injury.


Sec. 10.801  How are medical bills to be submitted?

    (a) All charges for medical and surgical treatment, appliances or 
supplies furnished to injured employees, except for treatment and 
supplies provided by nursing homes, shall be supported by medical 
evidence as provided in Sec. 10.800. The physician or provider shall 
itemize the charges on the standard Health Insurance Claim Form, HCFA 
1500 or OWCP 1500, (for professional charges), the UB-92 (for 
hospitals), the Universal Claim Form (for pharmacies), or other form as 
warranted, and submit the form promptly to OWCP.
    (b) The provider shall identify each service performed using the 
Physician's Current Procedural Terminology (CPT) code, the Health Care 
Financing Administration Common Procedure Coding System (HCPCS) code, 
the National Drug Code (NDC), or the Revenue Center Code (RCC), with a 
brief narrative description. Where no code is applicable, a detailed 
description of services performed should be provided.
    (c) The provider shall also state each diagnosed condition and 
furnish the corresponding diagnostic code using the ``International 
Classification of Disease, 9th Edition, Clinical Modification'' (ICD-9-
CM), or as revised. A separate bill shall be submitted when the 
employee is discharged from treatment or monthly, if treatment for the 
work-related condition is necessary for more than 30 days.
    (1)(i) Hospitals shall submit charges for medical and surgical 
treatment or supplies promptly to OWCP on the Uniform Bill (UB-92). The 
provider shall identify each outpatient radiology service, outpatient 
pathology service and physical therapy service performed, using HCPCS/
CPT codes with a brief narrative description. The charge for each 
individual service, or the total charge for all identical services, 
should also appear in the UB-92.
    (ii) Other outpatient hospital services for which HCPCS/CPT codes 
exist shall also be coded individually using the coding scheme noted in 
this paragraph. Services for which there are no HCPCS/CPT codes 
available can be presented using the RCCs described in the ``National 
Uniform Billing Data Elements Specifications'', current edition. The 
provider shall also furnish the diagnostic code using the ICD-9-CM. If 
the outpatient hospital services include surgical and/or invasive 
procedures, the provider shall code each procedure using the proper 
CPT/HCPCS codes and furnishing the corresponding diagnostic codes using 
the ICD-9-CM.
    (2) Pharmacies shall itemize charges for prescription medications, 
appliances, or supplies on the Universal Claim Form and submit them 
promptly to OWCP. Bills for prescription medications must include the 
NDC assigned to the product, the generic or trade name of the drug 
provided, the prescription number, the quantity provided, and the date 
the prescription was filled.
    (3) Nursing homes shall itemize charges for appliances, supplies or 
services on the provider's billhead stationery and submit them promptly 
to OWCP.
    (d) By submitting a bill and/or accepting payment, the provider 
signifies that the service for which reimbursement is sought was 
performed as described and was necessary. In addition, the provider 
thereby agrees to comply with all regulations set forth in this subpart 
concerning the rendering of treatment and/or the process for seeking 
reimbursement for medical services, including the limitation imposed on 
the amount to be paid for such services.
    (e) Bills submitted by providers must: be itemized on the Health 
Insurance Claim Form (for physicians), the UB-92 (for hospitals), or 
the Universal Claim Form (for pharmacies); contain the signature or 
signature stamp of the provider; and identify the procedures using 
HCPCS/CPT codes, RCCs, or NDCs. Otherwise, OWCP may return the bill to 
the provider for correction and resubmission.


Sec. 10.802  How should an employee prepare and submit requests for 
reimbursement for medical expenses, transportation costs, loss of 
wages, and incidental expenses?

    (a) If an employee has paid bills for medical, surgical or dental 
services, supplies or appliances due to an injury sustained in the 
performance of duty, he or she may submit an itemized bill on the 
Health Insurance Claim Form, HCFA 1500 or OWCP 1500, together with a 
medical report as provided in Sec. 10.800, to OWCP for consideration.
    (1) The provider of such service shall state each diagnosed 
condition and furnish the applicable ICD-9-CM code and identify each 
service performed using the applicable HCPCS/CPT code, with a brief 
narrative description of the service performed, or, where no code is 
applicable, a detailed description of that service.
    (2) The bill must be accompanied by evidence that the provider 
received payment for the service from the employee and a statement of 
the amount paid. Acceptable evidence that payment was received 
includes, but is not limited to, a signed statement by the provider, a 
mechanical stamp or other device showing receipt of payment, a copy of 
the employee's canceled check (both front and back) or a copy of the 
employee's credit card receipt.
    (b) If services were provided by a hospital, pharmacy or nursing 
home, the employee should submit the bill in accordance with the 
provisions of Sec. 10.801(a). Any request for reimbursement must be 
accompanied by evidence, as described in paragraph (a) of this section, 
that the provider received payment for the service from the employee 
and a statement of the amount paid.
    (c) OWCP may waive the requirements of paragraphs (a) and (b) of 
this section if extensive delays in the filing or the adjudication of a 
claim make it unusually difficult for the employee to obtain the 
required information.
    (d) OWCP will not accept copies of bills for reimbursement unless 
they bear the original signature of the provider,

[[Page 67164]]

with evidence of payment. Payment for medical and surgical treatment, 
appliances or supplies shall in general be no greater than the maximum 
allowable charge for such service determined by the Director, as set 
forth in Sec. 10.805.
    (e) An employee will be only partially reimbursed for a medical 
expense if the amount he or she paid to a provider for the service 
exceeds the maximum allowable charge set by the Director's schedule. In 
this instance, OWCP shall advise the provider of the maximum allowable 
charge for the service in question and allow the provider the 
opportunity to refund to the employee, or credit to the employee's 
account the amount paid by the employee which exceeds the maximum 
allowable charge, or request reconsideration of the fee determination 
as provided by Sec. 10.812.
    (f) If the provider fails to make appropriate refund to the 
employee, or to credit the employee's account, within 60 days after the 
date of this notification by OWCP, or the date of a subsequent 
reconsideration decision which continues to disallow all or a portion 
of the appealed amount, OWCP shall initiate exclusion procedures as 
provided by Sec. 10.815.
    (g) After notification as provided in paragraph (e) of this 
section, OWCP may make reasonable reimbursement to the employee, based 
on a review of the facts and circumstances of the case, if the provider 
does not refund or credit to the employee's account the amount of money 
paid in excess of the charge allowed by OWCP.


Sec. 10.803  What are the time limitations on OWCP's payment of bills?

    OWCP will pay providers and reimburse employees promptly for all 
bills received on an approved form and in a timely manner. However, no 
bill will be paid for expenses incurred if the bill is submitted more 
than one year beyond the end of the calendar year in which the expense 
was incurred or the service or supply was provided, or more than one 
year beyond the end of the calendar year in which the claim was first 
accepted as compensable by OWCP, whichever is later.

Medical Fee Schedule


Sec. 10.805  What services are covered by the OWCP fee schedule?

    (a) Payment for medical and other health services furnished by 
physicians, hospitals and other providers for work-related injuries 
shall not exceed a maximum allowable charge for such service as 
determined by the Director, except as provided in this section.
    (b) The schedule of maximum allowable charges does not apply to 
charges for services provided in nursing homes, but it does apply to 
charges for treatment furnished in a nursing home by a physician or 
other medical professional.
    (c) The schedule of maximum allowable charges also does not apply 
to charges for appliances, supplies, services or treatment furnished by 
medical facilities of the U.S. Public Health Service or the Departments 
of the Army, Navy, Air Force and Veterans Affairs.


Sec. 10.806  How are the maximum fees defined?

    For professional medical services, the Director shall maintain a 
schedule of maximum allowable fees for procedures performed in a given 
locality. The schedule shall consist of: an assignment of a value to 
procedures identified by Health Care Financing Administration Common 
Procedure Coding System/Current Procedural Terminology (HCPCS/CPT) code 
which represents the relative skill, effort, risk and time required to 
perform the procedure, as compared to other procedures of the same 
general class; an index based on a relative value scale that considers 
skill, labor, overhead, malpractice insurance and other related costs; 
and a monetary value assignment (conversion factor) for one unit of 
value in each of the categories of service.


Sec. 10.807  How are payments for particular services calculated?

    Payment for a procedure identified by a HCPCS/CPT code shall not 
exceed the amount derived by multiplying the relative values for that 
procedure by the geographic indices for services in that area and by 
the dollar amount assigned to one unit in that category of service.
    (a) The ``locality'' which serves as a basis for the determination 
of average cost is defined by the Bureau of Census Metropolitan 
Statistical Areas. The Director shall base the determination of the 
relative per capita cost of medical care in a locality using 
information about enrollment and medical cost per county, provided by 
the Health Care Financing Administration (HCFA).
    (b) The Director shall assign the relative value units (RVUs) 
published by HCFA to all services for which HCFA has made assignments, 
using the most recent revision. Where there are no RVUs assigned to a 
procedure, the Director may develop and assign any RVUs that he or she 
considers appropriate. The geographic adjustment factor shall be that 
designated by Geographic Practice Cost Indices for Metropolitan 
Statistical Areas as devised for HCFA and as updated or revised by HCFA 
from time to time. The Director will devise conversion factors for each 
category of service, and in doing so may adapt HCFA conversion factors 
as appropriate using OWCP's processing experience and internal data.
    (c) For example, if the unit values for a particular surgical 
procedure are 2.48 for physician's work (W), 3.63 for practice expense 
(PE), and 0.48 for malpractice insurance (M), and the dollar value 
assigned to one unit in that category of service (surgery) is $61.20, 
then the maximum allowable charge for one performance of that procedure 
is the product of the three RVUs times the corresponding geographical 
indices for the locality times the conversion factor. If the geographic 
indices for the locality are 0.988 (W), 0.948 (PE), and 1.174 (M), then 
the maximum payment calculation is:

[(2.48)(0.988) + (3.63)(0.948) + (0.48)(1.174)]  x  $61.20
[2.45 + 3.44 + .56]  x  $61.20
6.45  x  $61.20 = $394.74


Sec. 10.808  Does the fee schedule apply to every kind of procedure?

    Where the time, effort and skill required to perform a particular 
procedure varies widely from one occasion to the next, the Director may 
choose not to assign a relative value to that procedure. In this case 
the allowable charge for the procedure will be set individually based 
on consideration of a detailed medical report and other evidence. At 
its discretion, OWCP may set fees without regard to schedule limits for 
specially authorized consultant examinations, for examinations 
performed under 5 U.S.C. 8123, and for other specially authorized 
services.


Sec. 10.809  How are payments for medicinal drugs determined?

    Payment for medicinal drugs prescribed by physicians shall not 
exceed the amount derived by multiplying the average wholesale price of 
the medication by the quantity or amount provided, plus a dispensing 
fee.
    (a) All prescription medications identified by National Drug Code 
(NDC) will be assigned an average wholesale price representing the 
product's nationally recognized wholesale price as determined by 
surveys of manufacturers and wholesalers. The Director will establish 
the dispensing fee.
    (b) The NDCs, the average wholesale prices, and the dispensing fee 
shall be reviewed from time to time and updated as necessary.

[[Page 67165]]

Sec. 10.810  How are payments for inpatient medical services 
determined?

    (a) OWCP will pay for inpatient medical services according to pre-
determined, condition-specific rates based on the Prospective Payment 
System (PPS) devised by HCFA (42 CFR parts 412, 413, 424, 485, and 
489). Using this system, payment is derived by multiplying the 
diagnosis-related group (DRG) weight assigned to the hospital discharge 
by the provider-specific factors.
    (1) All hospital discharges will be classified according to the 
DRGs prescribed by the HCFA in the form of the DRG Grouper software 
program. On this list, each DRG represents the average resources 
necessary to provide care in a case in that DRG relative to the 
national average of resources consumed per case.
    (2) The provider-specific factors will be provided by HCFA in the 
form of their PPS Pricer software program. The software takes into 
consideration the type of facility, census division, actual geographic 
location (MSA) of the hospital, case mix cost per discharge, number of 
hospital beds, intern/beds ratio, operating cost to charge ratio, and 
other factors used by HCFA to determine the specific rate for a 
hospital discharge under their PPS. The Director may devise pricer 
adjustment factors as appropriate using OWCP's processing experience 
and internal data.
    (3) OWCP will base payments to facilities excluded from HCFA's PPS 
on consideration of detailed medical reports and other evidence.
    (4) The Director shall review the pre-determined hospital rates at 
least once a year, and may adjust any or all components when he or she 
deems it necessary or appropriate.
    (b) The Director shall review the schedule of fees at least once a 
year, and may adjust the schedule or any of its components when he or 
she deems it necessary or appropriate.


Sec. 10.811  When and how are fees reduced?

    (a) OWCP shall accept a provider's designation of the code to 
identify a billed procedure or service if the code is consistent with 
medical reports and other evidence. Where no code is supplied, OWCP may 
determine the code based on the narrative description of the procedure 
on the billing form and in associated medical reports. OWCP will pay no 
more than the maximum allowable fee for that procedure.
    (b) If the charge submitted for a service supplied to an injured 
employee exceeds the maximum amount determined to be reasonable 
according to the schedule, OWCP shall pay the amount allowed by the 
schedule for that service and shall notify the provider in writing that 
payment was reduced for that service in accordance with the schedule. 
OWCP shall also notify the provider of the method for requesting 
reconsideration of the balance of the charge.


Sec. 10.812  If OWCP reduces a fee, may a provider request 
reconsideration of the reduction?

    (a) A physician or other provider whose charge for service is only 
partially paid because it exceeds a maximum allowable amount set by the 
Director may, within 30 days, request reconsideration of the fee 
determination.
    (1) The provider should make such a request to the OWCP district 
office with jurisdiction over the employee's claim. The request must be 
accompanied by documentary evidence that the procedure performed was 
incorrectly identified by the original code, that the presence of a 
severe or concomitant medical condition made treatment especially 
difficult, or that the provider possessed unusual qualifications. In 
itself, board-certification in a specialty is not sufficient evidence 
of unusual qualifications to justify an exception. These are the only 
three circumstances which will justify reevaluation of the paid amount.
    (2) A list of OWCP district offices and their respective areas of 
jurisdiction is available upon request from the U.S. Department of 
Labor, Office of Workers' Compensation Programs, Washington, D. C. 
20210. Within 30 days of receiving the request for reconsideration, the 
OWCP district office shall respond in writing stating whether or not an 
additional amount will be allowed as reasonable, considering the 
evidence submitted.
    (b) If the OWCP district office issues a decision which continues 
to disallow a contested amount, the provider may apply to the Regional 
Director of the region with jurisdiction over the OWCP district office. 
The application must be filed within 30 days of the date of such 
decision, and it may be accompanied by additional evidence. Within 60 
days of receipt of such application, the Regional Director shall issue 
a decision in writing stating whether or not an additional amount will 
be allowed as reasonable, considering the evidence submitted. This 
decision shall be final, and shall not be subject to further review.


Sec. 10.813  If OWCP reduces a fee, may a provider bill the claimant 
for the balance?

    A provider whose fee for service is partially paid by OWCP as a 
result of the application of its fee schedule or other tests for 
reasonableness in accordance with this subpart shall not request 
reimbursement from the employee for additional amounts.
    (a) Where a provider's fee for a particular service or procedure is 
lower to the general public than as provided by the schedule of maximum 
allowable charges, the provider shall bill at the lower rate. A fee for 
a particular service or procedure which is higher than the provider's 
fee to the general public for that same service or procedure will be 
considered a charge ``substantially in excess of such provider's 
customary charges'' for the purposes of Sec. 10.815(d).
    (b) A provider whose fee for service is partially paid by OWCP as 
the result of the application of the schedule of maximum allowable 
charges and who collects or attempts to collect from the employee, 
either directly or through a collection agent, any amount in excess of 
the charge allowed by OWCP, and who does not cease such action or make 
appropriate refund to the employee within 60 days of the date of the 
decision of OWCP, shall be subject to the exclusion procedures provided 
by Sec. 10.815(h).

Exclusion of Providers


Sec. 10.815  What are the grounds for excluding a provider from payment 
under the FECA?

    A physician, hospital, or provider of medical services or supplies 
shall be excluded from payment under the FECA if such physician, 
hospital or provider has:
    (a) Been convicted under any criminal statute of fraudulent 
activities in connection with any federal or state program for which 
payments are made to providers for similar medical, surgical or 
hospital services, appliances or supplies;
    (b) Been excluded or suspended, or has resigned in lieu of 
exclusion or suspension, from participation in any federal or state 
program referred to in paragraph (a) of this section;
    (c) Knowingly made, or caused to be made, any false statement or 
misrepresentation of a material fact in connection with a determination 
of the right to reimbursement under the FECA, or in connection with a 
request for payment;
    (d) Submitted, or caused to be submitted, three or more bills or 
requests for payment within a twelve-month period under this subpart 
containing charges which the Director finds to be substantially in 
excess of such provider's customary charges, unless the Director finds 
there is good

[[Page 67166]]

cause for the bills or requests containing such charges;
    (e) Knowingly failed to timely reimburse employees for treatment, 
services or supplies furnished under this subpart paid by OWCP;
    (f) Failed, neglected or refused on three or more occasions during 
a twelve-month period, to submit full and accurate medical reports, or 
to respond to requests by OWCP for additional reports or information, 
as required by the FECA and Sec. 10.800 of this subpart;
    (g) Knowingly furnished treatment, services or supplies which are 
substantially in excess of the employee's needs, or of a quality which 
fails to meet professionally recognized standards; or
    (h) Collected or attempted to collect from the employee, either 
directly or through a collection agent, an amount in excess of the 
charge allowed by OWCP for the procedure performed, and has failed or 
refused to make appropriate refund to the employee, or to cease such 
collection attempts, within 60 days of the date of the decision of 
OWCP.


Sec. 10.816  What will cause OWCP to automatically exclude a physician 
or other provider of medical services and supplies?

    (a) OWCP shall automatically exclude a physician, hospital, or 
provider of medical services or supplies who has been convicted of a 
crime described in Sec. 10.815(a), or has been excluded or suspended, 
or has resigned in lieu of exclusion or suspension, from participation 
in any program as described in Sec. 10.815(b).
    (b) The exclusion applies to participating in the program and to 
seeking payment under the FECA for services performed after the date of 
the entry of the judgment of conviction or order of exclusion, 
suspension or resignation, as the case may be, by the court or agency 
concerned. Proof of the conviction, exclusion, suspension or 
resignation may be by a copy thereof authenticated by the seal of the 
court or agency concerned.


Sec. 10.817  When are OWCP's exclusion procedures initiated?

    Upon receipt of information indicating that a physician, hospital 
or provider of medical services or supplies (hereinafter the provider) 
has engaged in activities enumerated in paragraphs (c) through (h) of 
Sec. 10.815, the Regional Director, after completion of inquiries he or 
she deems appropriate, may initiate procedures to exclude the provider 
from participation in the FECA program. For the purposes of this 
section, ``Regional Director'' may include any officer designated to 
act on his or her behalf.


Sec. 10.818  How is a provider notified of OWCP's intent to exclude him 
or her?

    The Regional Director shall initiate the exclusion process by 
sending the provider a letter, by certified mail and with return 
receipt requested, which shall contain the following:
    (a) A concise statement of the grounds upon which exclusion shall 
be based;
    (b) A summary of the information, with supporting documentation, 
upon which the Regional Director has relied in reaching an initial 
decision that exclusion proceedings should begin;
    (c) An invitation to the provider to:
    (1) Resign voluntarily from participation in the FECA program 
without admitting or denying the allegations presented in the letter; 
or
    (2) Request that the decision on exclusion be based upon the 
existing record and any additional documentary information the provider 
may wish to provide;
    (d) A notice of the provider's right, in the event of an adverse 
ruling by the Regional Director, to request a formal hearing before an 
administrative law judge;
    (e) A notice that should the provider fail to answer (as described 
in Sec. 10.819) the letter of intent within 30 calendar days of 
receipt, the Regional Director may deem the allegations made therein to 
be true and may order exclusion of the provider without conducting any 
further proceedings; and
    (f) The name and address of the OWCP representative who shall be 
responsible for receiving the answer from the provider.


Sec. 10.819  What requirements must the provider's reply and OWCP's 
decision meet?

    (a) The provider's answer shall be in writing and shall include an 
answer to OWCP's invitation to resign voluntarily. If the provider does 
not offer to resign, he or she shall request that a determination be 
made upon the existing record and any additional information provided.
    (b) Should the provider fail to answer the letter of intent within 
30 calendar days of receipt, the Regional Director may deem the 
allegations made therein to be true and may order exclusion of the 
provider.
    (c) By arrangement with the official representative, the provider 
may inspect or request copies of information in the record at any time 
prior to the Regional Director's decision.
    (d) The Regional Director shall issue his or her decision in 
writing, and shall send a copy of the decision to the provider by 
certified mail, return receipt requested. The decision shall advise the 
provider of his or her right to request, within 30 days of the date of 
the adverse decision, a formal hearing before an administrative law 
judge under the procedures set forth in Sec. 10.820. The filing of a 
request for a hearing within the time specified shall stay the 
effectiveness of the decision to exclude.


Sec. 10.820  How can an excluded provider request a hearing?

    A request for a hearing shall be sent to the official 
representative named under Sec. 10.818(f) and shall contain:
    (a) A concise notice of the issues on which the provider desires to 
give evidence at the hearing;
    (b) Any request for a more definite statement by OWCP;
    (c) Any request for the presentation of oral argument or evidence; 
and
    (d) Any request for a certification of questions concerning 
professional medical standards, medical ethics or medical regulation 
for an advisory opinion from a competent recognized professional 
organization or federal, state or local regulatory body.


Sec. 10.821  How are hearings assigned and scheduled?

    (a) If the designated OWCP representative receives a timely request 
for hearing, the OWCP representative shall refer the matter to the 
Chief Administrative Law Judge of the Department of Labor, who shall 
assign it for an expedited hearing. The administrative law judge 
assigned to the matter shall consider the request for hearing, act on 
all requests therein, and issue a Notice of Hearing and Hearing 
Schedule for the conduct of the hearing. A copy of the hearing notice 
shall be served on the provider by certified mail, return receipt 
requested. The Notice of Hearing and Hearing Schedule shall include:
    (1) A ruling on each item raised in the request for hearing;
    (2) A schedule for the prompt disposition of all preliminary 
matters, including requests for more definite statements and for the 
certification of questions to advisory bodies; and
    (3) A scheduled hearing date not less than 30 days after the date 
the schedule is issued, and not less than 15 days after the scheduled 
conclusion of preliminary matters, provided that the specific time and 
place of the hearing may be set on 10 days' notice.
    (b) The purpose of the designation of issues is to provide for an 
effective hearing process. The provider is entitled to be heard on any 
matter placed in issue by his or her response to the Notice of Intent 
to Exclude, and may designate ``all issues'' for purposes of

[[Page 67167]]

hearing. However, a specific designation of issues is required if the 
provider wishes to interpose affirmative defenses, or request the 
issuance of subpoenas or the certification of questions for an advisory 
opinion.


Sec. 10.822  How are subpoenas or advisory opinions obtained?

    (a) The provider may apply to the administrative law judge for the 
issuance of subpoenas upon a showing of good cause therefor.
    (b) A certification of a request for an advisory opinion concerning 
professional medical standards, medical ethics or medical regulation to 
a competent recognized or professional organization or federal, state 
or local regulatory agency may be made:
    (1) As to an issue properly designated by the provider, in the 
sound discretion of the administrative law judge, provided that the 
request will not unduly delay the proceedings;
    (2) By OWCP on its own motion either before or after the 
institution of proceedings, and the results thereof shall be made 
available to the provider at the time that proceedings are instituted 
or, if after the proceedings are instituted, within a reasonable time 
after receipt. The opinion, if rendered by the organization or agency, 
is advisory only and not binding on the administrative law judge.


Sec. 10.823  How will the administrative law judge conduct the hearing 
and issue the recommended decision?

    (a) To the extent appropriate, proceedings before the 
administrative law judge shall be governed by 29 CFR part 18.
    (b) The administrative law judge shall receive such relevant 
evidence as may be adduced at the hearing. Evidence shall be presented 
under oath, orally or in the form of written statements. The 
administrative law judge shall consider the Notice and Response, 
including all pertinent documents accompanying them, and may also 
consider any evidence which refers to the provider or to any claim with 
respect to which the provider has provided medical services, hospital 
services, or medical services and supplies, and such other evidence as 
the administrative law judge may determine to be necessary or useful in 
evaluating the matter.
    (c) All hearings shall be recorded and the original of the complete 
transcript shall become a permanent part of the official record of the 
proceedings.
    (d) Pursuant to 5 U.S.C. 8126, the administrative law judge may:
    (1) Issue subpoenas for and compel the attendance of witnesses 
within a radius of 100 miles;
    (2) Administer oaths;
    (3) Examine witnesses; and
    (4) Require the production of books, papers, documents, and other 
evidence with respect to the proceedings.
    (e) At the conclusion of the hearing, the administrative law judge 
shall issue a written decision and cause it to be served on all parties 
to the proceeding, their representatives and the Director.


Sec. 10.824  How can a party request review by the Director of the 
administrative law judge's recommended decision?

    (a) Any party adversely affected or aggrieved by the decision of 
the administrative law judge may file a petition for discretionary 
review with the Director within 30 days after issuance of such 
decision. The administrative law judge's decision, however, shall be 
effective on the date issued and shall not be stayed except upon order 
of the Director.
    (b) Review by the Director shall not be a matter of right but of 
the sound discretion of the Director.
    (c) Petitions for discretionary review shall be filed only upon one 
or more of the following grounds:
    (1) A finding or conclusion of material fact is not supported by 
substantial evidence;
    (2) A necessary legal conclusion is erroneous;
    (3) The decision is contrary to law or to the duly promulgated 
rules or decisions of the Director;
    (4) A substantial question of law, policy, or discretion is 
involved; or
    (5) A prejudicial error of procedure was committed.
    (d) Each issue shall be separately numbered and plainly and 
concisely stated, and shall be supported by detailed citations to the 
record when assignments of error are based on the record, and by 
statutes, regulations or principal authorities relied upon. Except for 
good cause shown, no assignment of error by any party shall rely on any 
question of fact or law upon which the administrative law judge had not 
been afforded an opportunity to pass.
    (e) A statement in opposition to the petition for discretionary 
review may be filed, but such filing shall in no way delay action on 
the petition.
    (f) If a petition is granted, review shall be limited to the 
questions raised by the petition.
    (g) A petition not granted within 20 days after receipt of the 
petition is deemed denied.
    (h) The decision of the Director shall be final with respect to the 
provider's participation in the program, and shall not be subject to 
further review by any court or agency.


Sec. 10.825  What are the effects of exclusion?

    (a) OWCP shall give notice of the exclusion of a physician, 
hospital or provider of medical services or supplies to:
    (1) All OWCP district offices;
    (2) All federal employers;
    (3) The HCFA;
    (4) The State or Local authority responsible for licensing or 
certifying the excluded party; and
    (5) All employees who are known to have had treatment, services or 
supplies from the excluded provider within the six-month period 
immediately preceding the order of exclusion.
    (b) Notwithstanding any exclusion of a physician, hospital, or 
provider of medical services or supplies under this subpart, OWCP shall 
not refuse an employee reimbursement for any otherwise reimbursable 
medical treatment, service or supply if:
    (1) Such treatment, service or supply was rendered in an emergency 
by an excluded physician; or
    (2) The employee could not reasonably have been expected to have 
known of such exclusion.
    (c) An employee who is notified that his or her attending physician 
has been excluded shall have a new right to select a qualified 
physician.


Sec. 10.826  How can an excluded provider be reinstated?

    (a) If a physician, hospital, or provider of medical services or 
supplies has been automatically excluded pursuant to Sec. 10.816, the 
provider excluded will automatically be reinstated upon notice to OWCP 
that the conviction or exclusion which formed the basis of the 
automatic exclusion has been reversed or withdrawn. However, an 
automatic reinstatement shall not preclude OWCP from instituting 
exclusion proceedings based upon the underlying facts of the matter.
    (b) A physician, hospital, or provider of medical services or 
supplies excluded from participation as a result of an order issued 
pursuant to this subpart may apply for reinstatement one year after the 
entry of the order of exclusion, unless the order expressly provides 
for a shorter period. An application for reinstatement shall be 
addressed to the Director for Federal Employees' Compensation, and 
shall contain a concise statement of the basis for the application. The 
application should be accompanied by supporting documents and 
affidavits.
    (c) A request for reinstatement may be accompanied by a request for 
oral argument. Oral argument will be allowed only in unusual 
circumstances where it will materially aid the decision process.

[[Page 67168]]

    (d) The Director for Federal Employees' Compensation shall order 
reinstatement only in instances where such reinstatement is clearly 
consistent with the goal of this subpart to protect the FECA program 
against fraud and abuse. To satisfy this requirement the provider must 
provide reasonable assurances that the basis for the exclusion will not 
be repeated.
    2. It is proposed that part 25 be revised to read as follows:

PART 25--COMPENSATION FOR DISABILITY AND DEATH OF NONCITIZEN 
FEDERAL EMPLOYEES OUTSIDE THE UNITED STATES

Subpart A--General Provisions

25.1  How are claims of federal employees who are neither citizens 
nor residents adjudicated?
25.2  In general, what is the Director's policy regarding such 
claims?
25.3  What is the authority to settle and pay such claims?
25.4  What type of evidence is required to establish a claim under 
this part?
25.5  What special rules does OWCP apply to claims of third and 
fourth country nationals?
25.6  How does OWCP adjudicate claims of non-citizen residents of 
possessions?

Subpart B--The Special Schedule of Compensation

25.100  How is compensation for disability paid?
25.101  How is compensation for death paid?
25.102  What general provisions does OWCP apply to the Special 
Schedule?

Subpart C--Extensions of the Special Schedule of Compensation

25.200  How is the Special Schedule applied in the Republic of the 
Philippines?
25.201  How is the Special Schedule applied in Australia?
25.202  How is the Special Schedule applied for Japanese seamen?
25.203  How is the Special Schedule applied to non-resident aliens 
in the Territory of Guam?

    Authority: 5 U.S.C. 301, 8137, 8145 and 8149; 1946 
Reorganization Plan No. 2, sec. 3, 3 CFR 1943-1948 Comp., p. 1064; 
60 Stat. 1095; Reorganization Plan No. 19 of 1950, sec. 1, 3 CFR 
1943-1953 Comp., p. 1010; 64 Stat. 1271; Secretary's Order 5-96, 62 
FR 107.

Subpart A--General Provisions


Sec. 25.1  How are claims of federal employees who are neither citizens 
nor residents adjudicated?

    This part describes how OWCP pays compensation under the FECA to 
employees of the United States who are neither citizens nor residents 
of the United States, any territory or Canada, as well as to any 
dependents of such employees. It has been determined that the 
compensation provided under the FECA is substantially disproportionate 
to the compensation for disability or death which is payable in similar 
cases under local law, regulation, custom or otherwise, in areas 
outside the United States, any territory or Canada. Therefore, with 
respect to the claims of such employees whose injury (or injury 
resulting in death) has occurred subsequent to December 7, 1941, or may 
occur, the regulations in this part shall apply.


Sec. 25.2  In general, what is the Director's policy regarding such 
claims?

    (a) Pursuant to 5 U.S.C. 8137, the benefit features of local 
workers' compensation laws, or provisions in the nature of workers' 
compensation, in effect in areas outside the United States, any 
territory or Canada shall, effective as of December 7, 1941 and as 
recognized by the Director, be adopted and apply in the cases of 
employees of the United States who are neither citizens nor residents 
of the United States, any territory or Canada, unless a special 
schedule of compensation for injury or death has been established under 
this part for the particular locality, or for a class of employees in 
the particular locality.
    (b) The benefit provisions adopted under paragraph (a) of this 
section are those dealing with money payments for injury and death 
(including medical benefits), as well as those dealing with services 
and purposes forming an integral part of the local plan, provided they 
are of a kind or character similar to services and purposes authorized 
by the FECA.
    (1) Procedural provisions, designations of classes of beneficiaries 
in death cases, limitations (except those affecting amounts of benefit 
payments), and any other provisions not directly affecting the amounts 
of the benefit payments, in such local plans, shall not apply, but in 
lieu thereof the pertinent provisions of the FECA shall apply, unless 
modified in this section.
    (2) However, the Director may at any time modify, limit or 
redesignate the class or classes of beneficiaries entitled to death 
benefits, including the designation of persons, representatives or 
groups entitled to payment under local statute or custom whether or not 
included in the classes of beneficiaries otherwise specified by this 
subchapter.
    (c) Compensation in all cases of such employees paid and closed 
prior to [insert the effective date of the final rule] shall be deemed 
compromised and paid under 5 U.S.C. 8137. In all other cases, 
compensation may be adjusted to conform with the regulations in this 
part, or the beneficiary may by compromise or agreement with the 
Director have compensation continued on the basis of a previous 
adjustment of the claim.
    (d) Persons employed in a country or area having no well-defined 
workers' compensation benefits structure shall be accorded the benefits 
provided--either by local law or special schedule--in a nearby country 
as determined by the Director. In selecting the benefit structure to be 
applied, equity and administrative ease will be given consideration, as 
well as local custom.
    (e) Compensation for disability and death of non-citizens outside 
the United States under this part, whether paid under local law or 
special schedule, shall in no event exceed that generally payable under 
the FECA.


Sec. 25.3  What is the authority to settle and pay such claims?

    In addition to the authority to receive, process and pay claims, 
when delegated such representative or agency receiving delegation of 
authority shall, in respect to cases adjudicated under this part, and 
when so authorized by the Director, have authority to make lump sum 
awards (in the manner prescribed by 5 U.S.C. 8135) whenever such 
authorized representative shall deem such settlement to be for the best 
interest of the United States, and to compromise and pay claims for any 
benefits provided for under this part, including claims in which there 
is a dispute as to questions of fact or law. The Director shall, in 
instructions to the particular representative concerned, establish such 
procedures in respect to action under this section as he or she may 
deem necessary, and may specify the scope of any administrative review 
of such action.


Sec. 25.4  What type of evidence is required to establish a claim under 
this part?

    Claims of employees of the United States who are neither citizens 
nor residents of the United States, any territory or Canada, if 
otherwise compensable, shall be approved only upon evidence of the 
following nature without regard to the date of injury or death for 
which claim is made:
    (a) Appropriate certification by the Federal employing 
establishment; or
    (b) An armed service's casualty or medical record; or
    (c) Verification of the employment and casualty by military 
personnel; or
    (d) Recommendation of an armed service's ``Claim Service'' based on 
investigations conducted by it.

[[Page 67169]]

Sec. 25.5  What special rules does OWCP apply to claims of third and 
fourth country nationals?

    (a) Definitions. A ``third country national'' is a person who is 
neither a citizen nor resident of the United States who is hired by the 
United States in the person's country of citizenship or residence for 
employment in another foreign country, or in a possession or territory 
of the United States. A ``fourth country national'' is a person who is 
neither a citizen nor resident of either the country of hire or the 
place of employment, but who otherwise meets the definition of third 
country national. ``Benefits applicable to local hires'' are the 
benefits provided in this part by local law or special schedule, as 
determined by the Director. With respect to a United States territory 
or possession, ``local law'' means only the law of the particular 
territory or possession.
    (b) Benefits payable. Third and fourth country nationals shall be 
paid the benefits applicable to local hires in the country of hire or 
the place of employment, whichever benefits are greater, provided that 
all benefits payable on account of one injury must be paid under the 
same benefit structure.
    (1) Where no well-defined workers' compensation benefits structure 
is provided in either the country of hire or the place of employment, 
the provisions of Sec. 25.2(d) shall apply.
    (2) Where equitable considerations as determined by the Director so 
warrant, a fourth country national may be awarded benefits applicable 
to local hires in his or her home country.


Sec. 25.6  How does OWCP adjudicate claims of non-citizen residents of 
possessions?

    An employee who is a bona fide permanent resident of any United 
States possession, territory, commonwealth or trust territory will 
receive the full benefits of the FECA, as amended, except that the 
application of the minimum benefit provisions provided therein shall be 
governed by the restrictions set forth in 5 U.S.C. 8138.

Subpart B--The Special Schedule of Compensation


Sec. 25.100  How is compensation for disability paid?

    Compensation for disability shall be paid to the employee as 
follows:
    (a) Permanent total disability. In cases of permanent total 
disability, 66\2/3\ percent of the monthly pay during the period of 
such disability.
    (b) Temporary total disability. In cases of temporary total 
disability, 66\2/3\ percent of the monthly pay during the period of 
such disability.
    (c) Permanent partial disability. In cases of permanent partial 
disability, 66\2/3\ percent of the monthly pay, for the following 
losses and periods:
    (1) Arm lost: 280 weeks' compensation.
    (2) Leg lost: 248 weeks' compensation.
    (3) Hand lost: 212 weeks' compensation.
    (4) Foot lost: 173 weeks' compensation.
    (5) Eye lost: 140 weeks' compensation.
    (6) Thumb lost: 51 weeks' compensation.
    (7) First finger lost: 28 weeks' compensation.
    (8) Great toe lost: 26 weeks' compensation.
    (9) Second finger lost: 18 weeks' compensation.
    (10) Third finger lost: 17 weeks' compensation.
    (11) Toe, other than great toe, lost: 8 weeks' compensation.
    (12) Fourth finger lost: 7 weeks' compensation.
    (13) Loss of hearing: One ear, 52 weeks' compensation; both ears, 
200 weeks' compensation.
    (14) Phalanges: Compensation for loss of more than one phalanx of a 
digit shall be the same as for the loss of the entire digit. 
Compensation for loss of the first phalanx shall be one-half of the 
compensation for the loss of the entire digit.
    (15) Amputated arm or leg: Compensation for an arm or a leg, if 
amputated at or above the elbow or the knee, shall be the same as for 
the loss of the arm or leg; but, if amputated between the elbow and the 
wrist, or between the knee and the ankle, the compensation shall be the 
same as for the loss of the hand or the foot.
    (16) Binocular vision or percent of vision: Compensation for loss 
of binocular vision, or for 80 percent or more of the vision of an eye 
shall be the same as for the loss of the eye.
    (17) Two or more digits: Compensation for loss of two or more 
digits, one or more phalanges of two or more digits of a hand or foot 
may be proportioned to the loss of use of the hand or foot occasioned 
thereby, but shall not exceed the compensation for the loss of a hand 
or a foot.
    (18) Total loss of use: Compensation for a permanent total loss of 
use of a member shall be the same as for loss of the member.
    (19) Partial loss or partial loss of use: Compensation for 
permanent partial loss or loss of use of a member may be for 
proportionate loss of use of the member.
    (20) Consecutive awards: In any case in which there shall be a loss 
or loss of use of more than one member or parts of more than one member 
set forth in paragraphs (c)(1) through (19) of this section, but not 
amounting to permanent total disability, the award of compensation 
shall be for the loss or loss of use of each such member or part 
thereof, which awards shall run consecutively, except that where the 
injury affects only two or more digits of the same hand or foot, 
paragraph (c)(17) of this section shall apply.
    (21) Other cases: In all other cases within this class of 
disability the compensation during the continuance of disability shall 
be that proportion of compensation for permanent total disability, as 
determined under paragraph (a) of this section, which is equal in 
percentage to the degree or percentage of physical impairment caused by 
the disability.
    (22) Compensation under paragraphs (c)(1) through (21) of this 
section for permanent partial disability shall be in addition to any 
compensation for temporary total or temporary partial disability under 
this section, and awards for temporary total, temporary partial, and 
permanent partial disability shall run consecutively.
    (d) Temporary partial disability. In cases of temporary partial 
disability, during the period of disability that proportion of 
compensation for temporary total disability, as determined under 
paragraph (b) of this section, which is equal in percentage to the 
degree or percentage of physical impairment caused by the disability.


Sec. 25.101  How is compensation for death paid?

    If the disability causes death, the compensation shall be payable 
in the amount and to or for the benefit of the persons, determined as 
follows:
    (a) To the undertaker or person entitled to reimbursement, 
reasonable funeral expenses not exceeding $200.
    (b) To the surviving spouse, if there is no child, 35 percent of 
the monthly pay until his or her death or remarriage.
    (c) To the surviving spouse, if there is a child, the compensation 
payable under paragraph (b) of this section, and in addition thereto 10 
percent of the monthly wage for each child, not to exceed a total of 
66\2/3\ percent for such surviving spouse and children. If a child has 
a guardian other than the surviving spouse, the compensation payable on 
account of such child shall be paid to such guardian. The compensation 
of any child shall cease when he or she dies, marries or reaches the 
age of 18 years, or if over such age and incapable of self-

[[Page 67170]]

support, becomes capable of self-support.
    (d) To the children, if there is no surviving spouse, 25 percent of 
the monthly pay for one child and 10 percent thereof for each 
additional child, not to exceed a total of 66\2/3\ percent thereof, 
divided among such children share and share alike. The compensation of 
each child shall be paid until he or she dies, marries or reaches the 
age of 18, or if over such age and incapable of self-support, becomes 
capable of self-support. The compensation of a child under legal age 
shall be paid to its guardian, if there is one, otherwise to the person 
having the custody or care of such child, for such child, as the 
Director in his or her discretion shall determine.
    (e) To the parents, if one is wholly dependent for support upon the 
deceased employee at the time of his or her death and the other is not 
dependent to any extent, 25 percent of the monthly pay; if both are 
wholly dependent, 20 percent thereof to each; if one is or both are 
partly dependent, a proportionate amount in the discretion of the 
Director. The compensation to a parent or parents in the percentages 
specified shall be paid if there is no surviving spouse or child, but 
if there is a surviving spouse or child, there shall be paid so much of 
such percentages for a parent or parents as, when added to the total of 
the percentages of the surviving spouse and children, will not exceed a 
total of 66\2/3\ percent of the monthly pay.
    (f) To the brothers, sisters, grandparents and grandchildren, if 
one is wholly dependent upon the deceased employee for support at the 
time of his or her death, 20 percent of the monthly pay to such 
dependent; if more than one are wholly dependent, 30 percent of such 
pay, divided among such dependents share and share alike; if there is 
no one of them wholly dependent, but one or more are partly dependent, 
10 percent of such pay divided among such dependents share and share 
alike. The compensation to such beneficiaries shall be paid if there is 
no surviving spouse, child or dependent parent. If there is a surviving 
spouse, child or dependent parent, there shall be paid so much of the 
above percentages as, when added to the total of the percentages 
payable to the surviving spouse, children and dependent parents, will 
not exceed a total of 66\2/3\ percent of such pay.
    (g) The compensation of each beneficiary under paragraphs (e) and 
(f) of this section shall be paid until he or she, if a parent or 
grandparent, dies, marries or ceases to be dependent, or, if a brother, 
sister or grandchild, dies, marries or reaches the age of 18 years, or 
if over such age and incapable of self-support, becomes capable of 
self-support. The compensation of a brother, sister or grandchild under 
legal age shall be paid to his or her guardian, if there is one, 
otherwise to the person having the custody or care of such person, for 
such person, as the Director in his or her discretion shall determine.
    (h) Upon the cessation of any person's compensation for death under 
this subpart, the compensation of any remaining person entitled to 
continuing compensation in the same case shall be adjusted, so that the 
continuing compensation shall be at the same rate such person would 
have received had no award been made to the person whose compensation 
ceased.
    (i) In cases where there are two or more classes of persons 
entitled to compensation for death under this subpart, and the 
apportionment of such compensation as provided in this section would 
result in injustice, the Director may in his or her discretion modify 
the apportionments to meet the requirements of the case.


Sec. 25.102  What general provisions does OWCP apply to the Special 
Schedule?

    (a) The definitions of terms in the FECA, as amended, shall apply 
to terms used in this subpart.
    (b) The provisions of the FECA, unless modified by this subpart or 
otherwise inapplicable, shall be applied whenever possible in the 
application of this subpart.
    (c) The provisions of the regulations for the administration of the 
FECA, as amended or supplemented from time to time by instructions 
applicable to this subpart, shall apply in the administration of 
compensation under this subpart, whenever they can reasonably be 
applied.

Subpart C--Extensions of the Special Schedule of Compensation


Sec. 25.200  How is the Special Schedule applied in the Republic of the 
Philippines?

    (a) Modified special schedule of compensation. Except for injury or 
death of direct-hire employees of the U.S. Military Forces covered by 
the Philippine Medical Care Program and the Employees' Compensation 
Program pursuant to the agreement signed by the United States and the 
Republic of the Philippines on March 10, 1982 who are also members of 
the Philippine Social Security System, the special schedule of 
compensation established in subpart B of this part shall apply, with 
the modifications or additions specified in paragraphs (b) through (k) 
of this section, in the Republic of the Philippines, to injury or death 
occurring on or after July 1, 1968, with the following limitations:
    (1) Temporary disability. Benefits for payments accruing on and 
after July 1, 1969, for injuries causing temporary disability and which 
occurred on and after July 1, 1968, shall be payable at the rates in 
the special schedule as modified in this section.
    (2) Permanent disability and death. Benefits for injuries occurring 
on and after July 1, 1968, which cause permanent disability or death, 
shall be payable at the rates specified in the special schedule as 
modified in this section for
    (i) All awards not paid in full before July 1, 1969, and
    (ii) Any award paid in full prior to July 1, 1969: Provided, that 
application for adjustment is made, and the adjustment will result in 
additional benefits of at least $10. In the case of injuries or death 
occurring on or after December 8, 1941 and prior to July 1, 1968, the 
special schedule as modified in this section may be applied to 
prospective awards for permanent disability or death, provided that the 
monthly and aggregate maximum provisions in effect at the time of 
injury or death shall prevail. These maxima are $50 and $4,000, 
respectively.
    (b) Death benefits. 400 weeks' compensation at two-thirds of the 
weekly wage rate, shared equally by the eligible survivors in the same 
class.
    (c) Death beneficiaries. Benefits are payable to the survivors in 
the following order of priority (all beneficiaries in the highest 
applicable classes are entitled to share equally):
    (1) Surviving spouse and unmarried children under 18, or over 18 
and totally incapable of self-support.
    (2) Dependent parents.
    (3) Dependent grandparents.
    (4) Dependent grandchildren, brothers and sisters who are unmarried 
and under 18, or over 18 and totally incapable of self-support.
    (d) Burial allowance. 14 weeks' wages or $400, whichever is less, 
payable to the eligible survivor(s), regardless of the actual expense. 
If there is no eligible survivor, actual burial expenses may be paid or 
reimbursed, in an amount not to exceed what would be paid to an 
eligible survivor.
    (e) Permanent total disability. 400 weeks' compensation at two-
thirds of the weekly wage rate.
    (f) Permanent partial disability. Where applicable, the 
compensation provided in paragraphs (c)(1) through (19) of Sec. 25.100, 
subject to an aggregate

[[Page 67171]]

limitation of 400 weeks' compensation. In all other cases, provided for 
permanent total disability that proportion of the compensation 
(paragraph (e) of this section) which is equivalent to the degree or 
percentage of physical impairment caused by the disability.
    (g) Temporary partial disability. Two-thirds of the weekly loss of 
wage-earning capacity.
    (h) Compensation period for temporary disability. Compensation for 
temporary disability is payable for a maximum period of 80 weeks.
    (i) Maximum compensation. The total aggregate compensation payable 
in any case, for injury or death or both, shall not exceed $8,000, 
exclusive of medical costs and burial allowance. The weekly rate of 
compensation for disability or death shall not exceed $35.
    (j) Method of payment. Only compensation for temporary disability 
shall be payable periodically. Compensation for permanent disability 
and death shall be payable in full at the time the extent of 
entitlement is established.
    (k) Exceptions. The Director in his or her discretion may make 
exceptions to regulations in this section by:
    (1) Reapportioning death benefits, for the sake of equity.
    (2) Excluding from consideration potential death beneficiaries who 
are not available to receive payment.
    (3) Paying compensation for permanent disability or death on a 
periodic basis, where this method of payment is considered to be in the 
best interest of the beneficiary.


Sec. 25.201  How is the Special Schedule applied in Australia?

    (a) The special schedule of compensation established by subpart B 
of this part shall apply in Australia with the modifications or 
additions specified in paragraph (b) of this section, as of December 8, 
1941, in all cases of injury (or death from injury) which occurred 
between December 8, 1941 and December 31, 1961, inclusive, and shall be 
applied retrospectively in all such cases of injury (or death from 
injury). Compensation in all such cases pending as of July 15, 1946, 
shall be readjusted accordingly, with credit taken in the amount of 
compensation paid prior to such date. Refund of compensation shall not 
be required if the amount of compensation paid in any such case, 
otherwise than through fraud, misrepresentation or mistake, and prior 
to July 15, 1946, exceeds the amount provided for under this paragraph, 
and such case shall be deemed compromised and paid under 5 U.S.C. 8137.
    (b) The total aggregate compensation payable in any case under 
paragraph (a) of this section, for injury or death or both, shall not 
exceed the sum of $4,000, exclusive of medical costs. The maximum 
monthly rate of compensation in any such case shall not exceed the sum 
of $50.
    (c) The benefit amounts payable under the provisions of the 
Commonwealth Employees' Compensation Act of 1930-1964, Australia, shall 
apply as of January 1, 1962, in Australia, as the exclusive measure of 
compensation in cases of injury (or death from injury) according on and 
after January 1, 1962, and shall be applied retrospectively in all such 
cases, occurring on and after such date: Provided, that the 
compensation payable under the provisions of this paragraph shall in no 
event exceed that payable under the FECA.


Sec. 25.202  How is the Special Schedule applied for Japanese seamen?

    (a) The special schedule of compensation established by subpart B 
of this part shall apply as of November 1, 1971, with the modifications 
or additions specified in paragraphs (b) through (i) of this section, 
to injuries sustained outside the continental United States or Canada 
by direct-hire Japanese seamen who are neither citizens nor residents 
of the United States or Canada and who are employed by the Military 
Sealift Command in Japan.
    (b) Temporary total disability. Weekly compensation shall be paid 
at 75 percent of the weekly wage rate.
    (c) Temporary partial disability. Weekly compensation shall be paid 
at 75 percent of the weekly loss of wage-earning capacity.
    (d) Permanent total disability. Compensation shall be paid in a 
lump sum equivalent to 360 weeks' wages.
    (e) Permanent partial disability. (1) The provisions of Sec. 25.100 
shall apply to the types of permanent partial disability listed in 
paragraphs (c)(1) through (19) of that section: Provided that weekly 
compensation shall be paid at 75 percent of the weekly wage rate and 
that the number of weeks allowed for specified losses shall be changed 
as follows:
    (i) Arm lost: 312 weeks.
    (ii) Leg lost: 288 weeks.
    (iii) Hand lost: 244 weeks.
    (iv) Foot lost: 205 weeks.
    (v) Eye lost: 160 weeks.
    (vi) Thumb lost: 75 weeks.
    (vii) First finger lost: 46 weeks.
    (viii) Second finger lost: 30 weeks.
    (ix) Third finger lost: 25 weeks.
    (x) Fourth finger lost: 15 weeks.
    (xi) Great toe lost: 38 weeks.
    (xii) Toe, other than great toe lost: 16 weeks.
    (2) In all other cases, that proportion of the compensation 
provided for permanent total disability in paragraph (d) of this 
section which is equivalent to the degree or percentage of physical 
impairment caused by the injury.
    (f) Death. If there are two or more eligible survivors, 
compensation equivalent to 360 weeks' wages shall be paid to the 
survivors, share and share alike. If there is only one eligible 
survivor, compensation equivalent to 300 weeks' wages shall be paid. 
The following survivors are eligible for death benefits:
    (1) Spouse who lived with or was dependent upon the employee.
    (2) Unmarried children under 21 who lived with or were dependent 
upon the employee.
    (3) Adult children who were dependent upon the employee by reason 
of physical or mental disability.
    (4) Dependent parents, grandparents and grandchildren.
    (g) Burial allowance. $1,000 payable to the eligible survivor(s), 
regardless of actual expenses. If there are no eligible survivors, 
actual expenses may be paid or reimbursed, up to $1,000.
    (h) Method of payment. Only compensation for temporary disability 
shall be payable periodically, as entitlement accrues. Compensation for 
permanent disability and death shall be payable in a lump sum.
    (i) Maxima. In all cases, the maximum weekly benefit shall be $130. 
Also, except in cases of permanent total disability and death, the 
aggregate maximum compensation payable for any injury shall be $40,000.
    (j) Prior injury. In cases where injury or death occurred prior to 
November 1, 1971, benefits will be paid in accordance with regulations 
previously promulgated, contained in the 20 CFR, parts 1 to 399, 
edition revised as of January 1, 1971.


Sec. 25.203  How is the Special Schedule applied to non-resident aliens 
in the Territory of Guam?

    (a) The special schedule of compensation established by subpart B 
of this part shall apply, with the modifications or additions specified 
in paragraphs (b) through (k) of this section, to injury or death 
occurring on or after July 1, 1971 in the Territory of Guam to non-
resident alien employees recruited in foreign countries for employment 
by the military departments in the Territory of Guam. However, the 
Director may, in his or her discretion, adopt the benefit features

[[Page 67172]]

and provisions of local workers' compensation law as provided in 
subpart A of this part, or substitute the special schedule in subpart B 
of this part or other modifications of the special schedule in this 
subpart C, if such adoption or substitution would be to the advantage 
of the employee or his beneficiary. This schedule shall not apply to 
any employee who becomes a permanent resident in the Territory of Guam 
prior to the date of his or her injury or death.
    (b) Death benefits. 400 weeks' compensation at two-thirds of the 
weekly wage rate, shared equally by the eligible survivors in the same 
class.
    (c) Death beneficiaries. Beneficiaries of death benefits shall be 
determined in accordance with the laws or customs of the country of 
recruitment.
    (d) Burial allowance. 14 weeks' wages or $400, whichever is less, 
payable to the eligible survivor(s), regardless of the actual expense. 
If there is no eligible survivor, actual burial expenses may be paid or 
reimbursed, in an amount not to exceed what would be paid to an 
eligible survivor.
    (e) Permanent total disability. 400 weeks' compensation at two-
thirds of the weekly wage rate.
    (f) Permanent partial disability. Where applicable, the 
compensation provided in paragraphs (c)(1) through (19) of Sec. 25.100, 
subject to an aggregate limitation of 400 weeks' compensation. In all 
other cases, that proportion of the compensation provided for permanent 
total disability (paragraph (e) of this section) which is equivalent to 
the degree or percentage of physical impairment caused by the 
disability.
    (g) Temporary partial disability. Two-thirds of the weekly loss of 
wage-earning capacity.
    (h) Compensation period for temporary disability. Compensation for 
temporary disability is payable for a maximum period of 80 weeks.
    (i) Maximum compensation. The total aggregate compensation payable 
in any case, for injury or death or both, shall not exceed $24,000, 
exclusive of medical costs and burial allowance. The weekly rate of 
compensation for disability or death shall not exceed $70.
    (j) Method of payment. Compensation for temporary disability shall 
be payable periodically. Compensation for permanent disability and 
death shall be payable in full at the time the extent of entitlement is 
established.
    (k) Exceptions. The Director may in his or her discretion make 
exception to the regulations in this section by:
    (1) Reapportioning death benefits for the sake of equity.
    (2) Excluding from consideration potential beneficiaries of a 
deceased employee who are not available to receive payment.
    (3) Paying compensation for permanent disability or death on a 
periodic basis, where this method of payment is considered to be in the 
best interest of the employee or his or her beneficiary(ies).

    Signed at Washington, D.C., this 28th day of November, 1997.
Alexis M. Herman,
Secretary of Labor.

Bernard E. Anderson,
Assistant Secretary for Employment Standards Administration.
[FR Doc. 97-32511 Filed 12-22-97; 8:45 am]
BILLING CODE 4510-27-P