United States Department of Labor 

Employees’ Compensation Appeals Board 

__________________________________________ 

C.G., Appellant 

and 

U.S. POSTAL SERVICE, BULK MAIL 

CENTER, Jacksonville, FL, Employer 

__________________________________________ 

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Docket No. 15-0701 

Issued: December 9, 2015 

Appearances: Case Submitted on the Record

Appellant, pro se 

Office of Solicitor, for the Director 

DECISION AND ORDER 

Before: 

CHRISTOPHER J. GODFREY, Chief Judge 

PATRICIA H. FITZGERALD, Deputy Chief Judge 

COLLEEN DUFFY KIKO, Judge 

JURISDICTION 

On February 6, 2015 appellant filed a timely application for review from an October 22, 

2014 merit decision of the Office of Workers’ Compensation Programs (OWCP). Pursuant to 

the Federal Employees’ Compensation Act1 (FECA) and 20 C.F.R. §§ 501.2(c) and 501.3, the 

Board has jurisdiction over the merits of this case. 

ISSUES 

The issues are: (1) whether OWCP properly determined that appellant received an 

overpayment of compensation in the amount of $2,816.00 from May 4 through June 28, 2014; 

(2) whether OWCP properly found that appellant was at fault in the creation of the overpayment 

and therefore not entitled to waiver of the recovery; and (3) whether it properly required 

repayment of the overpayment by deducting $50.00 every 28 days from her continuing 

compensation. 

 1

 5 U.S.C. § 8101 et seq. 
2

FACTUAL HISTORY 

On October 16, 1996 appellant, then a 48-year-old mail handler, filed an occupational 

disease claim (Form CA-2) alleging pain in her arms and hands. OWCP accepted her claim for 

bilateral carpal tunnel syndrome on December 27, 1996. Appellant received periodic rolls 

payments as of June 16, 2002. 

On June 9, 2003 appellant chose to receive electronic direct deposit of her compensation 

benefits. 

After several attempts to reduce appellant’s wage-earning capacity, on March 17, 2011, 

she was returned to the periodic rolls at a gross payment of $3,335.00 every 28 days. 

On February 26, 2014 OWCP again proposed to reduce appellant’s compensation based 

on her ability to earn wages as a customer service representative. It noted that the wage-earning 

capacity of this position was $392.00 per week and that, because this rate of pay was lower than 

the current pay of the job held when she was injured, it proposed to reduce her wage-loss 

benefits to $1,751.00 every four weeks. 

By decision dated April 16, 2014, OWCP finalized the reduction of appellant’s 

compensation as she had the ability to earn wages of a customer service representative. 

On May 5, 2014 appellant requested a review of the written record before the Branch of 

Hearings and Review. By decision dated June 12, 2014, OWCP denied her request as untimely. 

In an “ACPS” report dated July 1, 2014, OWCP noted that compensation had not been 

reduced as appropriate following the decision of April 16, 2014. 

By letter dated August 8, 2014, OWCP informed appellant of a preliminary finding of 

overpayment in the amount of $2,816.00 because compensation for temporary total disability had 

inadvertently been paid at the previous higher rate from May 4 through June 28, 2014 after she 

had received a decision regarding a reduction of her compensation based on her wage-earning 

capacity. 

By decision dated October 22, 2014, OWCP finalized its finding of overpayment in the 

amount of $2,816.00. It directed withholding $50.00 of continuing compensation payments 

effective October 19, 2014. 

LEGAL PRECEDENT -- ISSUE 1 

Section 8102(a) of FECA2

 provides that the United States shall pay compensation for the 

disability or death of an employee resulting from personal injury sustained while in the 

performance of his or her duty.3

 Section 8129(a) of FECA provides, in pertinent part, that when 

an overpayment has been made to an individual under this subchapter because of an error of fact 

 2 Id. 

3 Id. at § 8102(a). 
3

or law, adjustment shall be made under regulations prescribed by the Secretary of Labor by 

decreasing later payments to which an individual is entitled.4

 OWCP’s procedure manual 

identifies various situations when overpayments of compensation may occur, including when 

adjustments are made to the rate of pay.5

ANALYSIS -- ISSUE 1 

The Board finds that appellant received an overpayment of compensation in the amount 

of $2,816.00. The record reflects that OWCP issued a decision on April 16, 2014 finalizing a 

proposed reduction of her compensation on the basis that she had the ability to earn wages of a 

customer service representative. The wage-earning capacity of this position was $293.00 per 

week and because this rate of pay was lower than the current pay of the job held when appellant 

was injured, OWCP proposed to reduce her wage-loss benefits to $1,751.00 every four weeks. 

However for the period May 4 through June 28, 2014, appellant was paid at her prior pay rate. 

She is not contesting the amount of overpayment. The Board finds that OWCP properly 

determined that appellant received an overpayment in the amount of $2,816.00 for the period 

May 4 through June 28, 2014. 

LEGAL PRECEDENT -- ISSUE 2 

Section 8129(b) of FECA provides that adjustment or recovery by the United States may 

not be made when incorrect payment has been made to an individual who is without fault and 

when adjustment or recovery would defeat the purpose of this subchapter or would be against 

equity and good conscience.6

 No waiver of an overpayment is possible if the claimant is at fault 

in creating the overpayment.7

On the issue of fault, 20 C.F.R. § 10.433(a) provides that an individual is with fault in the 

creation of an overpayment who: (1) made an incorrect statement as to a material fact which the 

individual knew or should have known to be incorrect; (2) failed to furnish information which 

the individual knew or should have known to be material; or (3) with respect to the overpaid 

individual only, accepted a payment which the individual knew or should have been expected to 

know was incorrect.8

With respect to whether an individual is without fault, section 10.433(b) of OWCP 

regulations provide that 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 

 4 Id. at § 8129(a). 

5

 Federal (FECA) Procedure Manual, Part 6 -- Debt Management, Initial Overpayment Actions, Chapter 

6.200.2(e) (May 2004). 

6

 5 U.S.C. § 8129(b). 

7 Gregg B. Manston, 45 ECAB 344, 354 (1994). 

8

 20 C.F.R. § 10.433(a). See Kenneth E. Rush, 51 ECAB 116, 118 (1999). 
4

overpayment. The degree of care expected may vary with the complexity of those circumstances 

and the individual’s capacity to realize that he or she is being overpaid.9

ANALYSIS -- ISSUE 2 

OWCP applied the third standard in this case, finding that appellant accepted 

compensation payments that she knew or should have known were incorrect. Appellant accepted 

wage-loss compensation for the period May 4 through June 28, 2014, at her original pay rate 

despite a decision dated April 16, 2014 reducing her benefits based upon her wage-earning 

capacity. The Board finds, however, that OWCP failed to establish that, at the time she accepted 

the first payment of compensation, she knew or should have known that the payments were 

incorrect. 

In cases where a claimant receives compensation through direct deposit, the Board has 

held that OWCP must establish that at the time a claimant received the direct deposit in question 

that he or she knew or should have known that the payment was incorrect.10 The Board has held 

that an employee who receives payments from OWCP in the form of a direct deposit may not be 

at fault for the first incorrect deposit into his or her account, since the acceptance of the 

overpayment, at the time of receipt of the direct deposit, lacks the requisite knowledge.11 

Because the fault is defined by what the claimant knew or should have known at the time of 

acceptance, one of the consequences of electronic fund transfers is that the claimant lacks the 

requisite knowledge at the time of the first incorrect payment.12 Whether or not OWCP 

determines that an individual is at fault with respect to the creation of an overpayment depends 

on the circumstances surrounding the overpayment.13 It is not appropriate, however, to make a 

finding that a claimant has accepted an overpayment by direct deposit until such time as a 

reasonable person would have been aware that this overpayment had occurred. This awareness 

could be established either through documentations such as a bank statement or notification from 

OWCP or where a reasonable period of time has passed during which a claimant could have 

reviewed independent confirmation of the incorrect payment.14

The Board finds that appellant was not at fault in the creation of the overpayment for the 

first direct deposit payment she received on May 31, 2014. While appellant received the 

decision dated April 16, 2014 reducing her compensation, and received compensation during the 

period May 4 through June 28, 2014, her check was deposited electronically into her account and 

this was the first incorrect payment made to her. There is no documentation or other evidence to 

demonstrate that she had clear knowledge at the time she received a direct deposit from OWCP 

that the payment was incorrect or that a reasonable period of time passed during which she could 

 9 Id. at § 10.433(b). 

10 See C.K., Docket No. 12-746 (issued May 1, 2012). 

11 See Tammy Craven, 57 ECAB 689, 692 (2006). 

12 J.S., Docket No. 12-1707 (issued June 10, 2013). 

13 Id., see also K.D., Docket No. 13-451 (issued April 12, 2013). 

14 See K.H., Docket No. 13-451 (issued April 12, 2013). 
5

have reviewed bank statements or been informed of the incorrect payment. Accordingly, OWCP 

improperly determined that appellant was at fault in the creation of the overpayment for the 

direct deposit on May 31, 2014. 

Although OWCP may have been negligent in making incorrect payments, this does not 

excuse a claimant from accepting payments he or she knew or should have known to be 

incorrect.15 In cases involving a series of incorrect payments, where the requisite knowledge is 

established by documentation from OWCP or simply with the passage of time and opportunity 

for discovery, the claimant will be at fault for accepting the payments subsequently deposited.16 

Thus, by the time of the second payment dated June 28, 2014, appellant should have known that 

she was no longer entitled to the same amount of FECA wage-loss compensation as she had 

received prior to the April 16, 2014 decision, which reduced her compensation benefits.17

The Board finds that this case is not in posture for decision regarding the issue of waiver 

of the recovery of the overpayment for the direct deposit on May 31, 2014. The Board will set 

aside the October 22, 2014 decision regarding the issue of fault as to this direct deposit and will 

remand the case to OWCP to determine whether appellant is entitled to waiver of recovery for 

the direct deposit of compensation covering the period May 4 through 31, 2014. After such 

further development as necessary, OWCP shall issue an appropriate decision.18

CONCLUSION 

The Board finds that OWCP has established fact and amount of overpayment for the 

period May 4 through June 28, 2014. The Board further finds that appellant was without fault 

for the period May 4, through 31, 2014. The case will be remanded for findings of fact regarding 

waiver of the recovery of the overpayment for the period May 4 through 31, 2014. 

 15 See William E. McCarty, 54 ECAB 525 (2003). 

16 M.M., Docket No. 15-265 (issued May 27, 2015). 

17 Id.

18 In view of the Board’s decision on fault, it is premature to address the issue of recovery of the overpayment 

from continuing compensation payments. 
6

ORDER 

IT IS HEREBY ORDERED THAT the October 22, 2014 decision of the Office of 

Workers’ Compensation Programs is affirmed in part and set aside in part and the case is 

remanded for further action consistent with this decision of the Board. 

Issued: December 9, 2015 

Washington, DC 

 

 Christopher J. Godfrey, Chief Judge 

 Employees’ Compensation Appeals Board 

 

 Patricia H. Fitzgerald, Deputy Chief Judge 

 Employees’ Compensation Appeals Board 

 

 Colleen Duffy Kiko, Judge 

 Employees’ Compensation Appeals Board