United States Department of Labor 

Employees’ Compensation Appeals Board 

__________________________________________ 

T.G., Appellant 

and 

U.S. POSTAL SERVICE, POST OFFICE, 

North Attleboro, MA, Employer 

__________________________________________ 

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Docket No. 15-566 

Issued: June 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 January 21, 2015 appellant filed a timely appeal from the November 13, 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 to review the merits of this case. 

ISSUES 

The issues are: (1) whether appellant received a $1,116.47 overpayment of compensation 

from February 23 through November 16, 2013; and (2) whether he was at fault in creating this 

overpayment. 

FACTUAL HISTORY 

On January 17, 2012 appellant, then a 56-year-old postal clerk, filed an occupational 

disease claim alleging that his cervical laminectomy and myelopathy were causally related to the 

 1

 5 U.S.C. § 8101 et seq.
2

lifting and bending he performed in his federal employment. During the week of December 25, 

2011, he felt a tingling and numbness down his arms and into his fingers. Then, on 

December 30, 2011, appellant got out of bed to go to the bathroom and could hardly walk. 

OWCP accepted appellant’s claim for cervical spondylosis with myelopathy at C3-T2 

and thoracic spondylosis with myelopathy at T2. It also accepted intervertebral disc disorder 

with myelopathy, cervical region. Appellant received compensation for temporary total 

disability on the periodic rolls beginning October 21, 2012. Deductions were made for basic and 

optional life insurance. OWCP paid compensation through direct deposit. 

On May 6, 2013 appellant completed and signed an SF-2818, Continuation of Life 

Insurance Coverage form as an annuitant or compensationer. He elected to receive basic life 

insurance in retirement/compensation at no reduction. OWCP did not deduct premiums for this 

coverage until November 17, 2013. The Office of Personnel Management (OPM) advised 

OWCP on November 5, 2013 that appellant had elected coverage at no reduction and that the 

commencement date for deductions was February 23, 2013. 

OWCP made a preliminary determination that appellant received a $1,116.47 

overpayment of compensation as it had failed to deduct premiums for so-called postretirement 

basic life insurance. It stated that premiums for the period February 23 through November 16, 

2013 amounted to $1,116.47. OWCP further found that appellant was at fault in creating the 

overpayment, as he was aware or should have been aware that premiums for the coverage he 

elected were not being deducted from his compensation payments. It quoted from 

correspondence sent to him on “November 27, [sic] 2012” advising him that if he had optional 

life insurance coverage, but no deduction for it was shown, he was to contact OWCP 

immediately: “You are still responsible for these premiums.” 

Appellant contested the fault finding. He explained that he renewed his life insurance policy 

over the telephone with Human Resources Shared Services: “I told him to keep everything the 

same. Appellant told me what to check off and I was told that everything would stay the same 

including my paycheck.” He noted that OWCP’s November 7, 2012 correspondence made no 

mention of postretirement basic life insurance, and he added that he had not retired. 

In a decision dated November 13, 2014, OWCP finalized its preliminary determination. It 

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

$1,116.47, as he was aware or should have been aware that premiums for the postretirement 

basic life insurance coverage he elected were not being deducted. 

Appellant argues on appeal that he informed OPM during a telephone call on July 23, 2012 

that he did not want any changes to his life insurance policy. He states that he was led to believe 

that life insurance forms were being filled out as he intended with no additions such as 

postretirement life insurance. Appellant expressed surprise when he was notified in 

November 2013 that deductions were supposed to be made as of February 2013, as his paycheck 

never changed. “So I thought OPM did their job correct but in fact ‘they did not.’” 
3

LEGAL PRECEDENT -- ISSUE 1 

Under the Federal Employees’ Group Life Insurance (FEGLI) program, most civilian 

employees of the Federal Government are eligible to participate in basic life insurance and one 

or more of the options.2 The coverage for basic life insurance is effective unless waived,3 and 

the premiums for basic and optional life coverage are withheld from the employee’s pay.4 At 

separation from the employing establishment, the FEGLI insurance will either terminate or be 

continued under “compensationer” status. If the compensationer chooses to continue basic and 

optional life insurance coverage, the schedule of deductions made while the compensationer was 

an employee will be used to withhold premiums from his compensation payments.5 When an 

under withholding of life insurance premiums occurs, the entire amount is deemed an 

overpayment of compensation because OWCP must pay the full premium to OPM upon 

discovery of the error.6

The basic life insurance benefit will reduce at a rate of 2 percent per month until it 

reaches 25 percent of its original value, unless the postretirement no deduction option has been 

elected. The claimant must elect the coverage when he separates from federal employment, 

usually after 12 months of leave without pay. The coverage takes effect immediately, regardless 

of age, and premiums are paid until time of death. If postretirement is elected prior to age 65, 

premiums for both postretirement and basic life insurance are paid until age 65, at which time 

basic life insurance premiums stop. A premium is charged for the “no reduction” option, which 

retains the full value of the basic life insurance coverage after age 65, without reduction. The 

claimant must pay a premium for this coverage from the date of the election. OPM will notify 

OWCP of this coverage if it applies, and OWCP is responsible for deducting premiums when 

advised to do so by OPM.7

OWCP should provide a clearly written statement explaining how the overpayment was 

calculated.8

 2

 5 U.S.C. § 8702(a). 

3 Id. at § 8702(b). 

4 Id. at § 8707. 

5 Id. at § 8706(b). 

6 Id. at § 8707(d); see James Lloyd Otte, 48 ECAB 334 (1997). 

7

 Federal (FECA) Procedure Manual, Part 5 -- Benefit Payments, Life Insurance, Chapter 5.401.4.a, 4.b 

(August 2004). OPM must advise OWCP of the coverage, and will provide the effective date and the per annum 

salary. Id., Exhibit 2 (postretirement basic life insurance p. 2). Premiums are calculated using the “BASE” pay on 

which compensation is computed. This amount is rounded-up to the nearest even $1,000 and an additional $2,000 is 

added. Id., Exhibit 2 (basic life insurance p. 1). 

8 Id. at Part 6 -- Debt Management, Initial Overpayment Actions, Chapter 6.200.4.a (June 2009). 
4

ANALYSIS -- ISSUE 1 

Appellant received wage-loss compensation on the periodic rolls beginning 

October 21, 2012. From this compensation OWCP deducted premiums for basic and optional 

life insurance. On May 6, 2013, however, appellant completed and signed a Form SF-2818 

electing to continue basic life insurance at “no reduction” while in receipt of compensation. As 

the instructions for completing the Form SF-2818 make clear: “You pay an extra premium for 

this choice.” Although OWCP should have deducted the extra premium for this coverage from 

appellant’s periodic compensation, OWCP took no action until November 17, 2013. Appellant 

thus received an overpayment of compensation. 

As OPM advised that the commencement date for appellant’s formal election was 

February 23, 2013, the period of the overpayment was February 23 through November 16, 2013. 

This was the period during which appellant received full, unreduced coverage for basic life 

insurance without the extra premium for this coverage being deducted from his compensation 

payments. Accordingly, the Board will affirm OWCP’s November 13, 2014 decision on the 

issue of fact of overpayment. 

The amount of the overpayment is simply the premium that should have been deducted 

from February 23 through November 16, 2013 in accordance with appellant’s formal election. 

OWCP stated in its preliminary determination that the overpayment totaled $1,116.74 at his final 

salary. However, it did not clearly explain to appellant how it calculated that amount. OWCP 

did not establish how it rounded his final salary or added $2,000.00 to obtain the basic insurance 

amount. It did not disclose the compensationer premium rate to be withheld every four weeks 

for each $1,000 of the basic insurance amount before age 65. OWCP did not explain why 

appellant’s May 6, 2013 election was effective on February 23, 2013, and it did not indicate how 

many four-week periods there were from February 23 through November 16, 2013. The Board 

finds that, as it did not provide a clearly written statement explaining how the overpayment was 

calculated, such that he could reasonable understand that the calculation was correct, this case is 

not in posture for decision on the amount of the overpayment. Accordingly, the Board will set 

aside OWCP’s November 13, 2014 decision as to amount of the overpayment. 

LEGAL PRECEDENT -- ISSUE 2 

OWCP may consider waiving an overpayment only if the individual to whom it was 

made was not at fault in accepting or creating it. Each recipient of compensation benefits is 

responsible for taking all reasonable measures to ensure that payments he or she received from 

OWCP are proper. The recipient must establish 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).9

 9

 20 C.F.R. § 10.433(a). 
5

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 

individual’s capacity to realize that he is being overpaid.10

ANALYSIS -- ISSUE 2 

OWCP found that appellant was at fault in creating the overpayment because he accepted 

a payment which he knew or should have known to be incorrect. However, the compensation 

payments appellant received prior to his May 6, 2013 election were correct at the time they were 

directly deposited into his account, at least insofar as no extra premiums were deducted for full, 

unreduced basic life insurance. He cannot be found at fault for accepting payments that were 

correct at the time of deposit. 

This is consistent with the Board’s line of cases regarding overpayments arising from a 

retroactive election of retirement benefits.11 The third standard of fault relates to the overpaid 

individual’s knowledge at the time he accepted a FECA payment in question. It does not relate 

to the claimant’s knowledge that an election of benefits will retroactively cause an overpayment. 

In its preliminary determination, OWCP noted correspondence sent to appellant on 

November 27, 2012 advising him that, if he had optional life insurance coverage, but no 

deduction for it was shown and he was to contact OWCP immediately. The record establishes 

no such correspondence. That correspondence did not ask appellant to review whether 

deductions were properly being shown for optional life insurance. The Board notes that similar 

correspondence dated November 13, 2014 did contain the language that OWCP quoted, but this 

postdated the period of the overpayment and could not have put appellant on notice that 

deductions were not being made for his “no reduction” election. 

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

on the circumstances of the overpayment. The circumstances here do not support OWCP’s 

finding that appellant was at fault in accepting compensation payments covering the entire period 

from February 23 through November 16, 2013. Appellant was not at fault for accepting 

payments prior to his May 6, 2013 election. He was not at fault for accepting the first incorrect 

payment after the May 6, 2013 election because, under the principle explored in Tammy Craven, 

Docket No. 05-249 (issued July 24, 2006) (order granting petition for reconsideration and 

reaffirming prior Board decision), one of the consequences of electronic fund transfers is that in 

many cases the requisite knowledge is lacking at the time of deposit. Whether appellant was at 

fault for accepting later payments through November 16, 2013 depends on whether and when he 

 10 Id. at § 10.433(b). 

11 D.M., Docket No. 14-548 (issued February 20, 2015) (reversing a finding of fault as the claimant was entitled 

to FECA benefits at the time she accepted the payments prior to her retroactive election of OPM benefits); M.R., 

Docket No. 14-844 (issued November 21, 2014) (as there was no evidence that the claimant should have known that 

the September 21, 2013 compensation payment was incorrect when he accepted that payment, the Board found that 

the record did not support OWCP’s finding of fault). But see L.S., Docket No. 14-1690 (issued December 5, 2014) 

(a claimant who makes an election of benefits between FECA and OPM may be charged with knowledge that 

subsequent dual payments are incorrect). 
6

had the required knowledge. OWCP made no distinction in its finding. Accordingly, the Board 

finds that this case is not in posture on the issue of fault. The Board will set aside its 

November 13, 2014 decision on that issue and remand the case for further necessary 

development and a de novo decision. 

After reviewing the chain of events and exhibits appellant submitted on appeal, the Board 

notes that “postretirement” basic life insurance can be a confusing name because it applies not 

only to those who have retired but also to those who have been separated from the employment 

rolls and placed on the periodic compensation rolls of OWCP and wish to continue basic life 

insurance. The first are known as annuitants, the second are known as compensationers. When 

appellant made his election on May 6, 2013, he did so as a compensationer. Even so, the 

premium he was required to pay for his continuation of basic life insurance after separation is 

commonly referred to as postretirement basic life insurance. Thus the confusion for claimants 

who owe the premium but who have not retired. 

CONCLUSION 

The Board finds that OWCP has established the fact of overpayment of compensation 

due to an under withholding of life insurance premiums. The Board finds that this case is not in 

posture for decision on the amount of the overpayment because OWCP did not provide a clearly 

written statement explaining how the overpayment was calculated. The Board further finds that 

this case is not in posture on the issue of fault. The circumstances of the overpayment do not 

fully support OWCP’s finding of fault. 
7

ORDER 

IT IS HEREBY ORDERED THAT the November 13, 2014 decision of the Office of 

Workers’ Compensation Programs is affirmed on the issue of fact of overpayment and is 

otherwise set aside. The case is remanded for further action. 

Issued: June 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