United States Department of Labor 

Employees’ Compensation Appeals Board 

__________________________________________ 

V.D., Appellant 

and 

U.S. POSTAL SERVICE, OLD CHELSEA 

STATION, New York, NY, Employer 

__________________________________________ 

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Docket No. 16-0578 

Issued: November 3, 2016 

Appearances: Case Submitted on the Record

Appellant, pro se

Office of Solicitor, for the Director 

DECISION AND ORDER 

Before: 

CHRISTOPHER J. GODFREY, Chief Judge 

COLLEEN DUFFY KIKO, Judge 

VALERIE D. EVANS-HARRELL, Alternate Judge 

JURISDICTION 

On February 1, 2016 appellant filed a timely appeal from a November 30, 2015 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 appellant received an overpayment of compensation in the 

amount of $2,979.42 for the period November 11, 2013 through January 11, 2014; (2) whether 

OWCP properly found that he was at fault in creating the overpayment and thus not entitled to 

waiver of recovery; and (3) whether it properly determined that it would recover the 

overpayment by deducting $255.00 from continuing compensation payments. 

 1

 5 U.S.C. § 8101 et seq. 
2

FACTUAL HISTORY 

On November 15, 2004 appellant, then a 42-year-old driver/carrier, filed a traumatic 

injury claim (Form CA-1) alleging that he injured his back on November 8, 2004 in the 

performance of duty. He stopped work on November 9, 2004. OWCP accepted the claim for 

acquired spondylolisthesis and paid appellant compensation for total disability beginning 

December 30, 2004. In May 2012, it referred him for vocational rehabilitation and on 

November 11, 2013 he began working in private employment. 

On November 16, 2013 OWCP paid compensation for total disability through electronic 

funds transfer for the period October 20 through November 16, 2013. On December 14, 2013 it 

paid compensation for the period November 17 through December 14, 2013 and on January 11, 

2014 it paid compensation for the period December 15, 2013 through January 11, 2014. 

OWCP informally reduced appellant’s compensation benefits on June 12, 2014 based on 

his earnings in private employment as a user support analyst with weekly wages of $461.54.2 It 

applied the formula set forth in Albert C. Shadrick3 and determined that he had the capacity to 

earn 42 percent of his previous wages. Beginning June 13, 2014 OWCP paid compensation 

retroactive to January 12, 2014 based on his wage-earning capacity in his position in private 

employment. 

In a worksheet dated February 10, 2015, OWCP calculated appellant’s wage-earning 

capacity based on his part-time actual earnings for the period November 12, 2013 to 

January 11, 2014. It divided his actual earnings of $461.54 per week by the current pay rate of 

the position he held when injured of $1,097.56 per week to find a 42 percent wage-earning 

capacity. OWCP multiplied the pay rate at the time of injury of $882.81 by the 42 percent wageearning capacity percentage. The resulting amount of $370.78 was subtracted from appellant’s 

date-of-injury pay rate of $882.81, which provided a loss of wage-earning capacity of $512.03 

per week. OWCP multiplied this amount by the appropriate compensation rate of three-fourths 

to find $384.02, which after adjustments yielded a compensation rate of $1,902.00 every four 

weeks. It concluded that it owed appellant gross compensation of $4,122.80 for the period 

November 12, 2013 to January 11, 2014. OWCP deducted premiums for health and life 

insurance to find a net amount owed for the period of $2,278.86. It noted that the monies 

appellant received for the applicable period was $5,197.20. 

OWCP notified appellant on February 25, 2015 of its preliminary determination that he 

received an overpayment of compensation in the amount of $2,918.34 for the period 

November 12, 2013 through January 11, 2014 because he returned to work, but continued to 

receive compensation for total disability. The overpayment arose because, as noted, it paid him 

$5,197.20 for that period when he was only entitled to $2,278.86 based on his loss of wage-

 2

 On June 12, 2014 appellant advised OWCP that he had obtained another position at a higher salary. On 

August 18, 2014 OWCP notified him of its proposed reduction of his compensation to zero based on his earnings as 

a user support analyst. On September 23, 2014 it advised that it was reconsidering the proposed reduction of 

compensation. 

3

 5 ECAB 376 (1953); codified by regulation at 20 C.F.R. § 10.403. 
3

earning capacity. OWCP further notified appellant of its preliminary determination that he was 

at fault in creating the overpayment. It requested that he complete the enclosed overpayment 

recovery questionnaire and submit supporting financial documents. Additionally, OWCP 

notified appellant that, within 30 days of the date of the letter, he could request a telephone 

conference, a final decision based on the written evidence, or a prerecoupment hearing. 

On March 18, 2015 appellant requested a prerecoupment hearing. He challenged the 

existence and amount of the overpayment and requested waiver of recovery. Appellant asserted 

that OWCP, had based the overpayment on incorrect calculations. In an accompanying 

March 12, 2015 statement, he related that he notified OWCP and his rehabilitation counselor 10 

days before he began work. Appellant asserted, “OWCP’s breakdown of any statements and 

calculations, have been so confusing to me, throughout the 10 years that I have been receiving 

benefits, that the only time that I have questioned any amount, was when payments stopped for 

six months.” He maintained that he did not know that he had received an incorrect payment and 

that the rehabilitation counselor told him that nothing would change for 60 days. Appellant also 

noted that the government shut down in October 2013 resulted in communication issues. He 

completed an overpayment recovery questionnaire and provided his income and expenses. 

At the telephone hearing, held on September 30, 2015, appellant related that he did not 

understand how OWCP calculated his benefits. He asked OWCP many times how returning to 

work would affect his benefits, but was only told that there was a formula. Appellant advised 

that he resumed work on November 11, 2013 and believed that OWCP would adjust his 

compensation later if it made an overpayment. He submitted financial information with 

supporting documentation. 

In a decision dated November 30, 2015, an OWCP hearing representative determined that 

appellant had received an overpayment of compensation in the amount of $2,979.42. She 

modified the period of the overpayment as he had returned to work on November 11, 2013 rather 

than November 12, 2013. The hearing representative calculated that, for the 62 days from 

November 11, 2013 through January 11, 2014, appellant had received net compensation of 

$5,282.40, but due to the wage-earning capacity decision was only entitled to receive net 

compensation of $2,302.98, which yielded an overpayment of $2,979.42. She found that he 

received three disability payments after returning to work covering the period November 12 

to 16, and November 17 to December 14, 2013, and December 15, 2013 to January 11, 2014. 

The hearing representative determined that appellant was at fault in creating the overpayment as 

he accepted a payment that he reasonably should have been aware he was not entitled. She 

found that OWCP should recover the overpayment by deducting $255.00 per month from 

continuing compensation. 

On appeal appellant argues that he did not know that he had received an overpayment 

because he did not understand how OWCP calculated the formula to determine the amount of his 

compensation. He notes that the amount changed numerous times over the years and that he 

advised OWCP of his return to work two weeks before he started. Appellant maintains that he 

submitted evidence showing that his expenses were more than his income and requests waiver of 

recovery of the overpayment. 
4

LEGAL PRECEDENT -- ISSUE 1 

Section 8102(a) of FECA provides that the United States shall pay compensation as 

specified by this subchapter for the disability or death of an employee resulting from personal 

injury sustained while in the performance of duty.4 A claimant, however, is not entitled to 

receive temporary total disability and actual earnings for the same period.5 OWCP procedures 

provide that an overpayment in compensation is created when a claimant returns to work, but 

continues to receive wage-loss compensation.6

 

Section 8106(a) provides in pertinent part, “If the disability is partial, the United States 

shall pay the employee during the disability monthly monetary compensation equal to 66 2/3 

percent of the difference between his monthly pay and his monthly wage-earning capacity after 

the beginning of the partial disability, which is known as his basic compensation for partial 

disability.7 

ANALYSIS -- ISSUE 1 

The Board finds that OWCP properly determined that appellant received an overpayment 

of compensation for the period November 11, 2013 through January 11, 2014 because he had 

actual earnings during a period in which he received compensation for total disability. When an 

employee has earnings from employment, he is not entitled to receive temporary total disability 

benefits and actual earnings for the same time period.8 Under these circumstances, OWCP 

offsets actual earnings pursuant to the Shadrick formula.9

 

In determining the amount of the overpayment, OWCP found that appellant’s actual 

earnings for the period November 12, 2013 through January 11, 2014 were $461.54 per week. 

Using the Shadrick formula, it found that he was entitled to net compensation of $2,278.86 

during this period based on his actual earnings. OWCP subtracted the amount of compensation 

owed appellant, $2,278.86, from the amount of net compensation received, $5,197.20, to find an 

overpayment of $2,918.34. OWCP’s hearing representative modified the period of overpayment 

as he returned to work on November 11, 2013 rather than November 12, 2013, and 

correspondingly adjusted the amount of the overpayment to $2,979.42. Appellant has not 

submitted any evidence challenging fact or amount of the overpayment. 

 4

 5 U.S.C. § 8102(a). 

5 Danny E. Haley, 56 ECAB 393 (2005). 

6

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

6.200.2(a) (May 2004). 

7

 5 U.S.C. § 8106(a). 

8 See Daniel Rendard, 51 ECAB 466 (2000); 20 C.F.R. § 10.403(c). 

9 See supra note 3. 
5

LEGAL PRECEDENT -- ISSUE 2 

Section 8129(b) of FECA10 provides that “[a]djustment 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.” Section 10.433 of OWCP’s implementing regulations11

provides that in determining whether a claimant is at fault, it will consider all pertinent 

circumstances. An individual is with fault in the creation of an overpayment who: 

“(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.” 

The Board has held that an employee who receives payments from OWCP in the form of 

direct deposit may not be at fault the first time incorrect funds are deposited into his account, as 

the acceptance of the resulting overpayment lacks the requisite knowledge.12 The Board has also 

held in cases involving a series of incorrect payments, where the requisite knowledge is 

established by a letter or telephone call from OWCP or simply with the passage of time and a 

greater opportunity for discovery, the claimant will be at fault for accepting the payments 

subsequently deposited.13 Previous cases have held that receiving one or two erroneous direct 

deposit payments does not necessarily create the requisite knowledge to find that a claimant was 

at fault in the creation of the overpayment.14 

ANALYSIS -- ISSUE 2 

OWCP found that appellant was at fault in creating the overpayment of compensation 

because he accepted payments that he knew or should have known were incorrect. Appellant 

returned to work in private employment on November 11, 2013 with a loss of wage-earning 

capacity. OWCP paid compensation for total disability through electronic funds transfer on 

November 16, 2013 for the period October 20 through November 16, 2013, on December 14, 

2013 for the period November 17 through December 14, 2013, and on January 11, 2014 for the 

period December 15, 2013 through January 11, 2014. 

 10 5 U.S.C. § 8129(b). 

11 20 C.F.R. § 10.433. 

12 Tammy Craven, 57 ECAB 689 (2006), Order Granting Petition for Reconsideration and Reaffirming Prior 

Decision (issued July 24, 2006). 

13 Id. 

14 See D.B., Docket No. 15-0258 (issued February 1, 2016); V.S., Docket No. 13-1278 (issued October 23, 2013); 

W.P., 59 ECAB 514 (2008). 
6

As discussed, in cases where a claimant receives compensation through direct deposit, 

OWCP must establish that at the time he received the direct deposit in question he knew or 

should have known that the payment was incorrect.15 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 

account since the acceptance of the overpayment, at the time of receipt of the direct deposit, 

lacks the requisite knowledge.16 One of the consequences of electronic fund transfers is that the 

claimant lacks the requisite knowledge at the time of the first incorrect payment.17 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.18 It is not appropriate, 

however, to make a finding that a claimant has accepted an overpayment via 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 documentation 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.19 

On appeal appellant contends that he did not understand how OWCP calculated his 

compensation and thus was not aware of the overpayment. The Board finds that OWCP failed to 

establish that, at the time he accepted the payment of compensation on November 16, 2013, 

covering the period October 20 through November 16, 2013, he knew or should have known that 

the payment was incorrect. There is no documentation or other evidence to demonstrate that 

appellant had clear knowledge at the time he accepted this payment that it was incorrect or that a 

reasonable period of time had passed during which he could have reviewed bank statements or 

been informed of the incorrect payment.20 Additionally, appellant was entitled to some wageloss compensation for the periods in question and thus the circumstances surrounding the 

overpayment were more complex than usual.21 

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.22 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.23 

By the time of the second and third payments dated December 14, 2013 and January 11, 2014, 

 15 See C.K., Docket No. 12-0746 (issued May 1, 2012). 

16 See supra note 12; see also George A. Hirsch, 47 ECAB 520 (1996). 

17 Id. 

18 Id.; see also K.D., Docket No. 13-0451 (issued April 12, 2013). 

19 See K.H., Docket No. 06-191 (issued October 30, 2006). 

20 See D.B., Docket No. 15-0258 (issued February 1, 2016). 

21 See W.B., Docket No. 09-1440 (issued April 12, 2010). 

22 See C.G., Docket No. 15-0701 (issued December 9, 2015). 

23 Id. 
7

appellant should have known that he was not entitled to the same amount of wage-loss 

compensation as he had received prior to his return to work on November 11, 2013. As he was 

at fault in creating the overpayment for these periods, he is not eligible for waiver of recovery 

with respect to the portion of the overpayment from November 17, 2013 through 

January 11, 2014. 

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 period November 11 through 16, 2013. The Board 

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

of the overpayment created for this period. After such further development as necessary, OWCP 

shall issue a de novo appropriate decision.24

On appeal appellant contends that he advised OWCP of his return to work. Even if an 

overpayment resulted from negligence by OWCP, however, this does not excuse the employee 

from accepting a payment which he knew or should have known was incorrect.25

CONCLUSION 

The Board finds that OWCP properly determined that appellant received an overpayment 

of compensation in the amount of $2,979.42 for the period November 11, 2013 through 

January 11, 2014 because he returned to work, but continued to receive compensation for total 

disability. The Board further finds that OWCP improperly found that he was at fault for the 

period of the overpayment from November 11 through 16, 2013 and properly found that he was 

at fault for the overpayment created from November 17, 2013 through January 11, 2014. The 

case will be remanded for consideration of waiver of recovery of the overpayment from 

November 11 through 16, 2013. 

 24 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. 

25 See Diana L. Booth, 52 ECAB 370 (2001). 
8

ORDER 

IT IS HEREBY ORDERED THAT the November 30, 2015 decision of the Office of 

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

remanded for further proceedings consistent with this opinion of the Board. 

Issued: November 3, 2016 

Washington, DC 

 

 Christopher J. Godfrey, Chief Judge 

 Employees’ Compensation Appeals Board 

 

 Colleen Duffy Kiko, Judge 

 Employees’ Compensation Appeals Board 

 

 Valerie D. Evans-Harrell, Alternate Judge 

 Employees’ Compensation Appeals Board