United States Department of Labor 

Employees’ Compensation Appeals Board 

__________________________________________ 

D.O., Appellant 

and 

DEPARTMENT OF THE ARMY, CORPS OF 

ENGINEERS, Portland, OR, Employer 

__________________________________________ 

) 

) 

) 

) 

) 

) 

) 

) 

Docket No. 13-1809 

Issued: September 11, 2014 

Appearances: Case Submitted on the Record

Appellant, pro se 

Office of Solicitor, for the Director 

DECISION AND ORDER 

Before: 

PATRICIA HOWARD FITZGERALD, Judge 

MICHAEL E. GROOM, Alternate Judge 

JAMES A. HAYNES, Alternate Judge 

JURISDICTION 

On July 26, 2013 appellant filed a timely appeal from the February 1, 2013 merit decision 

of the Office of Workers’ Compensation Programs (OWCP) finding that she forfeited her right to 

compensation thus creating an overpayment of compensation. 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 found that appellant forfeited her right to 

compensation for intermittent periods between November 6, 1996 and December 14, 2009; 

(2) whether appellant received an overpayment in the amount of $362,751.51; and (3) whether 

she was at fault in the creation of the overpayment, thereby precluding waiver of recovery. 

On appeal appellant challenges the finding of forfeiture and overpayment due to her 

alleged failure to report earnings from the rental properties appellant owned with her husband. 

 1

 5 U.S.C. § 8101 et seq. 
2

She contends that her involvement in the rental properties was passive; that she was denied due 

process in that she was not provided an opportunity to confront her accuser; that the U.S. 

Attorney’s office declined to prosecute her for not reporting income; and that the investigator’s 

report was deficient.2

FACTUAL HISTORY 

This case has previously been before the Board. The facts as set forth in the Board’s 

prior decision are hereby incorporated by reference.3

 

Between February 6, 1998 and December 14, 2009 appellant completed numerous 

EN1032 forms containing extensive language advising her of what types of employment 

activities and earnings she was required to report for each 15-month period prior to the time she 

signed each form.4 The EN1032 forms instructed appellant to report all employment for which 

she received a salary, wages, income, sales commissions, piecework or payment of any kind. 

She was directed to report all self-employment or involvement in business enterprises, including 

(but not limited to) farming, sales work, operating a business and providing services in exchange 

of money, goods or other services. The kind of services that appellant was required to report 

included such activities as carpentry, mechanical work, painting, contracting, child care, keeping 

books and records, odd jobs and managing and overseeing a business of any kind, including a 

family business. Such activities had to be reported even if they were part time or intermittent. 

The EN1032 forms also instructed appellant to report any work or ownership interest in any 

business enterprise, even if the business lost money or its profits or income were reinvested or 

paid to others. If she performed any duties in a business enterprise for which she was not paid, 

she had to show as the rate of pay what it would have cost the employer or organization to hire 

someone to perform the work or duties she did, even if the work was for her or a family member 

or relative. The forms contained certification clauses which informed appellant of the 

consequences of not accurately reporting her employment activities, such as being subjected to 

criminal penalties and losing the right to receive workers’ compensation. 

On March 21, 2011 OWCP received an investigation report conducted for the employing 

establishment. Special Agent Derek Lindbom conducted an interview on October 14, 2010 with 

appellant. He noted that appellant acknowledged that she was in receipt of compensation 

benefits following an employment injury and acknowledged that “she and her husband have 

 2

 Appellant filed multiple pleadings and letters in this appeal. In a March 15, 2014 letter, she requested oral 

argument; however, her request was made more than 60 days after she filed her appeal on July 26, 2013. Therefore, 

her request for oral argument was untimely. See 20 C.F.R. § 501.5(b). Appellant also submitted new evidence on 

appeal. The Board may not consider new evidence on appeal as its review is limited to the evidence that was before 

OWCP at the time of its final decision. See 20 C.F.R. § 501.2(c)(1); Sandra D. Pruitt, 57 ECAB 126 (2005). 

3

 Docket No. 11-1607 (issued April 23, 2012). Appellant has an accepted occupational disease claim from 1991 

for cervical strain, bilateral carpal tunnel syndrome and cervical spondylosis with myelopathy. On August 21, 2006 

OWCP found that appellant had the capacity to earn wages as an information clerk and reduced her monetary 

compensation. This determination was affirmed by the Board in the prior appeal. 

4

 Appellant completed EN1032 forms on February 6 and December 10, 1998; January 6 and December 18, 2000; 

May 10 and December 16, 2002; December 12, 2004; December 13, 2005; December 8, 2006; February 7, 2008; 

January 17 and December 14, 2009. 
3

multiple rental properties in which they receive rental income.” Special Agent Lindbom noted 

that appellant stated that she never recorded her income from her rental property on her annual 

EN1032 form because it was her understanding that income from rental property was not 

considered employment. He noted that when asked about her involvement with the rental 

properties, appellant stated that she worked approximately two to three hours a week in matters 

concerning ensuring receipt of rental payments, balancing business bank accounts, lease 

preparation, placing ads for new tenants, addressing tenant concerns, coordinating major repairs 

to rental property and end of the year tax preparation. Appellant estimated that it would 

probably cost approximately $10.00 to $12.00 per hour to complete the general type of 

bookkeeping she performed for the rental property. The investigation interview report was not 

signed by appellant. 

Special Agent Lindbom submitted evidence including court documents, deeds and 

correspondence to reflect that appellant acted to collect rent, utility bills and evict tenants. In an 

April 6, 2010 report, he stated that property records from Oregon and Georgia indicated that 

appellant owned approximately 11 pieces of rental property with her husband, with several 

pieces of property containing multiple dwelling units on individual lots. The property records 

indicated that she received rental income on multiple properties. 

In an investigation report dated March 24, 2010, Agent Jim Sills of the employing 

establishment stated that appellant and her husband owned two upholstery businesses in Oregon 

and numerous properties. He specifically noted that they owned four properties in Cartersvile, 

Georgia; one in White, Georgia; and three in Oregon City, Oregon; and one in Milwaukie, 

Oregon. Agent Sills drove by one of the properties and it had a “for rent” sign with appellant’s 

telephone number. He stated that appellant sold properties located in Portland, Oregon in 

January 2002, September 2005 and April 2007. Agent Sills also noted that he conducted 

surveillance on her home and that he observed appellant travel to Lowe’s Home Improvement 

store on July 6, 2009. He noted that on July 7, 2009 a construction crew performed work on her 

residence. Agent Sills interviewed one of appellant’s tenants, Diana Taylor, on August 7, 2009. 

Ms. Taylor advised that she had been renting property from appellant for approximately 11 years 

and that appellant did work on the property, including painting, moving a dishwasher, putting 

some electrical wiring on the stove and spraying mold killer in the attic. He interviewed another 

tenant, Michael James Bush, on February 24, 2010, who indicated that he had lived in the 

residence between 8 and 10 years and that he paid rent deposited into an account belonging to 

appellant. Another tenant, Kristi Toner, interviewed on the same date, had lived in her residence 

since November 2009 and paid rent to appellant. She did not observe appellant do any physical 

labor on the residence, but did state that appellant had to fly to Portland from Georgia several 

times to deal with a lawsuit between her and the former tenant. None of the interview reports 

were signed by the individuals interviewed by Agent Sills. 

In an October 19, 2010 letter to OWCP, appellant noted that she was not aware that she 

needed to claim her two-hour involvement in paperwork or periodically talking with tenants 

regarding the rental properties on her Form EN1032. She stated that most of the rents were 

automatically deposited in the bank account belonging to herself and her husband. Appellant 

noted that they sold the Ogden property in 2007 and that her Oregon properties were managed by 

her brother and sister with the exception of a house where her son resided. With regard to the 

property in Georgia, she stated that Johnny Dover collected most of the rents and did 
4

maintenance, unless it was electrical or heating and air, in which case Perry Redd performed the 

work. Appellant noted that in 2008 and 2009, their passive income was a loss of $9,619.00 for 

2008 and $13,293.00 for 2009. She stated that, although her name was on the properties, her 

husband’s income made it possible for them to purchase the majority of the properties and 

maintain them. In a January 26, 2011 letter, appellant reiterated that her family in Oregon dealt 

with the Oregon properties and that bills were either sent to her and her husband directly or they 

were provided credit card information over the phone. She noted that her husband performed the 

major repairs when necessary. Appellant and her husband jointly reviewed the rental applicants 

and that “Johnny” made necessary calls verifying employment and tenant selection. She stated 

that this year she spent at most four hours on the property. 

In a decision dated May 26, 2011, OWCP determined that appellant had willfully and 

knowingly omitted and/or understated her earnings on her EN1032 forms covering the period 

November 7, 2007 through January 17, 2009. Therefore she forfeited all compensation for this 

period which created an overpayment. In another decision dated May 26, 2011, OWCP made a 

preliminary determination that appellant was overpaid in the amount of $27,731.25 because she 

made false statements on her EN1032 forms covering the period November 7, 2007 through 

January 17, 2009. OWCP made a preliminary finding that appellant was at fault in the creation 

of the overpayment and was not eligible for waiver. 

By letter dated June 20, 2011, appellant requested a prerecoupment hearing before an 

OWCP hearing representative. She noted that she disagreed with the fact and amount of the 

overpayment and finding of fault. 

By decision dated September 8, 2011, an OWCP hearing representative set aside the 

May 26, 2011 decisions. She remanded the case for a complete review of investigative evidence 

of record prior to 2007 and a determination as to whether it supported that appellant failed to 

report self-employment or work duties as early as 1999. The hearing representative further noted 

that if forfeiture was found for these periods, then a greater overpayment would exist. 

In a September 20, 2011 letter, appellant argued that an overpayment was not created 

because the IRS did not require owners of rental property to pay self-employment tax, that she 

unintentionally did not report the two hours of paperwork she performed on her rental properties 

and that her husband only owned one upholstery shop and she did not assist him with that 

business. 

Further investigative reports and exhibits were submitted. In notes from a February 3, 

2006 interview of appellant, Agent Gregory R. Michigan reported that appellant and her husband 

owned most of their properties prior to her injury and that the tenants in her rental property 

located next to the upholstery shop did not pay rent because they looked after the property. He 

noted that appellant owned four properties in Oregon and three in Georgia, but that their 

daughter managed the properties and collected the rent. Agent Michigan indicated that appellant 

spends approximately two hours a month working on paperwork, her husband handled all the 

repairs and that an accountant did the tax work. When there was a turnover in tenants, 

appellant’s son or husband performed clean-up work and her niece was paid to paint. When 
5

there was an opening, appellant reviewed the applications in a single day, but there was not much 

turnover.5 Again, neither appellant nor her husband signed the interview report. 

On March 1, 2006, Mark Mansfield, an investigator for the employing establishment, 

noted contact with OWCP concerning the information regarding appellant and the interview in 

which she admitted working approximately two hours a month on paperwork related to the rental 

properties. The investigator was apprised by OWCP that while appellant should have disclosed 

her activity, her admission would not have changed her compensation benefits had she reported 

it on her EN1032 forms. The income received by appellant from the rental properties was 

viewed as investment income. 

On April 7, 2006 Mr. Mansfield contacted the Office of the Inspector General with the 

Department of Labor in Seattle, who had coordinated with the Assistant U.S. Attorney’s office in 

Portland, Oregon. It was noted that the U.S. Attorney declined to prosecute appellant based on a 

lack of physical evidence to warrant an indictment. The U.S. Attorney made reference to 

OWCP’s decision not to reduce appellant’s compensation based on her admission that she 

worked approximately two hours a month on paperwork related to the rental properties. Further, 

the investigative findings were past the statute of limitations and could not be considered for 

criminal charges. 

In an October 3, 2011 letter, appellant’s husband stated that appellant did not help him 

with his upholstery business. He also stated his understanding that their real estate was 

considered investment income and not self-employment income. 

By decision dated June 27, 2012, OWCP advised appellant that she forfeited 

compensation for the period November 6, 1996 to December 14, 2009 in the amount of 

$362,751.51. In a separate decision dated June 27, 2012, it determined that an overpayment was 

created in the amount of $362,751.51 because she forfeited compensation for the following 

periods: November 6, 1996 to December 18, 2000; February 10, 2001 to December 16, 2002; 

September 12, 2003 to February 7, 2008; and September 14, 2008 to December 14, 2009. 

OWCP also made a preliminary determination that appellant was at fault in the creation of the 

overpayment. 

On July 19, 2012 appellant requested a prerecoupment hearing. She disagreed with the 

fact and amount of the overpayment and finding of fault. 

At the hearing held on October 3, 2012, appellant’s counsel argued that the overpayment 

findings should have been handled separately for each period of forfeiture, that the investigative 

reports were deficient, that OWCP should have provided more information to appellant 

concerning the reporting requirements and that her involvement with the rental properties was 

passive and not active. 

 5

 In an October 28, 2009 letter to appellant, the interim electrical inspector supervisor for Oregon City, Oregon 

discussed electrical work on a house in Milwaukie, Oregon. In another October 28, 2009 letter, a Plans Examiner 

for Oregon City noted that a plumbing violation complaint was closed as there was no evidence of sewage leakage 

or new plumbing work. 
6

In an October 29, 2012 letter to OWCP, the employing establishment argued that 

appellant admitted to active work in her husband’s upholstery business and the management of 

their rental properties. It contended that she failed to report her activities on the EN1032 forms 

submitted.6

In a brief dated December 17, 2012, appellant’s counsel argued that the forfeiture 

decision and the overpayment decision should be reversed. He contended that three separate 

attempts at criminal prosecution had been refused; that the videotape evidence did not support 

the statement by the investigators; that the agent’s reports distorted the evidence; that appellant 

reasonably concluded that her involvement with the rental properties was passive; that her 

involvement with the rental properties was considerably less than 20 hours a month; and that any 

error was perpetuated by OWCP as it knew of appellant’s investment properties but failed to 

follow up for over a decade. Counsel concluded that OWCP has not met its burden of proof. 

By decision dated February 1, 2013, an OWCP hearing representative affirmed the 

forfeiture and overpayment decisions of June 27, 2012. 

LEGAL PRECEDENT -- ISSUE 1 

Section 8106(b) of FECA7 provides in pertinent part: 

“The Secretary of Labor may require a partially disabled employee to report his 

earnings from employment or self-employment, by affidavit or otherwise, in the 

manner and at the times the secretary specifies.... An employee who-- 

(1) fails to make an affidavit or report when required; or 

(2) knowingly omits or understates any part of his earnings; 

forfeits his right to compensation with respect to any period for which the 

affidavit or report was required. Compensation forfeited under this subsection, if 

already paid, shall be recovered by a deduction from the compensation 

 6

 By letter dated November 16, 2012, the employing establishment forwarded to OWCP physical evidence to 

support the investigative reports, which included videotapes and photographs. 

7

 5 U.S.C. § 8106(b). 
7

payable to the employee or otherwise recovered under section 8129 of this title, 

unless recovery is waived under that section.”8

 Section 10.5(g) of OWCP’s implementing federal regulations define earnings from 

employment or self-employment as follows: 

“(1) Gross earnings or wages before any deduction 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 not remuneration. Neither lack or 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.9” 

An employee can only be subjected to the forfeiture provision of 5 U.S.C. § 8106(b) if he 

knowingly omitted or understated earnings. It is not enough to merely establish that there were 

unreported earnings. OWCP procedure manual recognizes that forfeiture is a penalty.10 As a 

penalty provision, it must be narrowly construed.11 Under OWCP’s regulations, knowingly is 

defined as: with knowledge, consciously, willfully or intentionally.12 To meet this burden, 

OWCP is required to examine closely appellant’s activities and statements. OWCP may meet 

this burden without an admission by an employee if the circumstances of the case establish that 

he failed to reveal fully and truthfully the full extent of his employment activities and earnings.13 

The Board has held that OWCP may not base its application of the forfeiture provision 

strictly on conclusions drawn in an investigation; rather, the evidence of record must establish 

that the claimant had unreported earnings from employment which were knowingly not 

reported.14 In FECA Bulletin No. 83-7, OWCP noted that an investigative report showing that a 

claimant had unreported earnings from employment must be used in conjunction with other 

 8

 While section 8106(b) refer only to partially disabled employees, the Board has held that the test for 

determining partial disability is whether, for the period under consideration, the employee was in fact either totally 

disabled or merely partially disabled and not whether he received compensation for that period for total or partial 

loss of wage-earning capacity. Ronald H. Ripple, 24 ECAB 254, 260 (1973). The Board explained that a totally 

disabled employee normally would not have any employment earnings and therefore a statutory provision about 

such earnings would be meaningless. Id. at 260. 

9

 20 C.F.R. §10.5(g). 

10 Federal (FECA) Procedure Manual, Part 2 -- Claims, Forfeiture, Chapter 2.1402.8 (May 2012). 

11 See Christine P. Burgess, 43 ECAB 449, 458 (1992). 

12 20 C.F.R. § 10.5(n); see Anthony A. Nobile, 44 ECAB 268, 271-73 (1992). 

13 Terry A. Geer, 51 ECAB 168 (1999). 

14 B.Y., Docket No. 11-1798 (issued July 24, 2012); Louis P. McKenna, Jr., 46 ECAB 328 (1994). 
8

evidence of record in order to properly find a forfeiture of compensation.15 FECA Bulletin No. 

83-7 was cited in Claudia J. Thibault,

16 in support of the finding that the evidence of record was 

insufficient to establish that the employee had earnings within the meaning of FECA. In finding 

forfeiture, the only document was a memorandum in which a special agent with the employing 

establishment’s Office of Inspector General memorialized a telephone interview with a witness 

who commented on the employee’s activities. The Board noted that the memorandum was 

written by the special agent rather than the person interviewed and found that it was not 

sufficient evidence to outweigh the employee’s testimony that she did not have earnings. 

ANALYSIS -- ISSUE 1 

OWCP determined that appellant forfeited her compensation between November 6, 1996 

and December 14, 2009 finding that she knowingly failed to report earnings and employment 

activities related to management of rental properties on the EN1032 forms submitted to the 

record. The amount of compensation found to be forfeited was $362,751.51, which created an 

overpayment of compensation for which she was found at fault. 

On appeal, appellant contended that her involvement with the rental properties owned 

jointly with her husband was passive. She denied that she was a property manager, noting that 

the fact that her name was on several leases established only that she was a landlord with her 

husband. Counsel for appellant argued that the forfeiture and overpayment decisions should be 

reversed. He noted that criminal prosecution had been refused; that the videotape evidence did 

not support work activities; that the investigative reports distorted the evidence; that appellant’s 

involvement with the rental properties was passive and considerably less than 20 hours a month; 

and that OWCP knew of appellant’s investment properties for over a decade. 

The Board has held that OWCP may not base its application of the forfeiture provision 

strictly on conclusions drawn from investigation reports. Rather, the evidence of record must 

establish that appellant had unreported earnings from employment activities that were knowingly 

not reported.17 The Board finds insufficient evidence of record to establish that appellant failed 

to report earnings or employment activities on the EN1032 forms she completed such that she 

should be subjected to the forfeiture provisions of FECA. 

In finding that appellant forfeited compensation, OWCP relied on memoranda of 

interviews obtained by special agents of the employing establishment. In the memoranda 

memorializing interviews, Special Agent Lindbom noted that he conducted an interview with 

appellant on October 14, 2010. He stated that she acknowledged being in receipt of 

compensation benefits and that she and her husband owned multiple rental properties in Georgia 

and Oregon from which they received rental income. Special Agent Lindbom noted appellant’s 

understanding that such income was not considered employment. He listed that she worked 

approximately two to three hours a week in ensuring receipt of rents, balancing bank accounts, 

 15 FECA Bulletin No. 83-7 (issued March 31, 1984). 

16 40 ECAB 836, 846 (1989). 

17 R.W., Docket No. 09-1607 (issued July 26, 2010). 
9

lease preparation, placing ads for tenants and coordinating major repairs. The Board notes that 

appellant subsequently disputed this information as inaccurate, stating that she did not work 

more than two hours a month. Appellant stated that the rents were automatically deposited to a 

joint bank account with her husband, that the Oregon properties were managed by her brother 

and sister, with the exception of the house in which her son resided. With regard to the Georgia 

properties, she identified two individuals who collected the rents and performed maintenance. 

The Board notes that the investigative reports of record by Special Agent Lindbom and 

others merely provided summaries of the interviews conducted by the various special agents. 

The record does not contain any transcript detailing the questions the investigators asked of 

appellant or the tenants of the rental properties or the actual responses made by the interviewees. 

There are no individual statements signed by any of the parties questioned with the exception of 

appellant and her husband who disagreed with certain aspects of the reports. Agent Sills drove 

to certain of the properties and conducted surveillance on appellant’s home. His reports noted 

that he observed appellant drive to Home Depot on July 6, 2009, without further information. 

On July 7, 2009, he observed a construction crew at her home, but did not observe appellant. His 

interviews with various tenants are summarized without any signature by any individual as to the 

questions asked or accuracy of the responses made. 

In the case of R.W.,

18 the Board found that the forfeiture determination by OWCP was 

based on memorandum in which a special agent from the employer’s OIG provided summaries 

of interviews conducted with the employee and several witnesses. The memorandum did not 

delineate the questions asked of the witnesses or contain the actual answers provided. There was 

nothing signed by any of the individuals attesting to the accuracy of the information provided. 

The Board found that the evidence was not sufficient to support the forfeiture decision. The 

facts of this case are substantially similar. 

With regard to earlier investigative reports, the Board notes that on February 3, 2006 

appellant advised Mr. Michigan that she spent approximately two hours a month on paperwork 

related to the rental properties. On March 1, 2006 Mr. Mansfield noted contact with OWCP 

concerning this information. He was advised by a representative of OWCP that while appellant 

should have noted her activity on the EN1032 forms, her admission would not have changed her 

receipt of compensation as the income was viewed as investment income. Mr. Mansfield also 

had contact with the U.S. Attorney’s office on April 7, 2006, who declined prosecution of 

appellant based on the lack of physical evidence to warrant an indictment. Reference was made 

to OWCP’s decision not to reduce appellant’s compensation based on this information. The 

record reflects that OWCP was informed as to the nature of appellant’s participation in rental 

properties owned with her husband. The Board finds that as in Thibault and R.W., the evidence 

of record is not sufficient to support the forfeiture finding in this case. OWCP did not meet its 

burden of proof to establish that appellant knowingly omitted earnings or employment activities 

so as to forfeit her compensation from November 6, 1996 and December 14, 2009. Based on this 

determination, the evidence of record does not support the fact of overpayment. The issue is 

rendered moot. 

 18 Docket No. 09-1607 (issued July 26, 2010). 
10

CONCLUSION 

The Board finds that OWCP improperly determined that appellant forfeited her right to 

compensation from November 6, 1996 and December 14, 2009. For this reason, the fact of 

overpayment is not established and moot. 

ORDER 

IT IS HEREBY ORDERED THAT the February 1, 2013 decision of the Office of 

Workers’ Compensation Programs is reversed. 

Issued: September 11, 2014 

Washington, DC 

 

 Patricia Howard Fitzgerald, Judge 

 Employees' Compensation Appeals Board 

 

 Michael E. Groom, Alternate Judge 

 Employees' Compensation Appeals Board 

 

 James A. Haynes, Alternate Judge 

 Employees' Compensation Appeals Board