United States Department of Labor

Employees’ Compensation Appeals Board

__________________________________________

J.L., Appellant

and

DEPARTMENT OF HOMELAND SECURITY, 

U.S. COAST GUARD, Norfolk, VA, Employer

__________________________________________

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Docket No. 16-1888

Issued: November 6, 2017

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 September 26, 2016 appellant filed a timely appeal from a September 21, 2016 merit 

decision of the Office of Workers’ Compensation Programs (OWCP).1 Pursuant to the Federal 

Employees’ Compensation Act2(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 $36,113.59 for the period August 24, 2003 to November 14, 2015 as he received 

wage-loss compensation benefits for a period in which he had no loss of wages; and (2) whether 

OWCP properly denied waiver of recovery of the overpayment.

 

1 Appellant timely requested oral argument before the Board. By order dated September 1, 2017, the Board 

exercised its discretion and denied the request, finding that the issues could properly be adjudicated based on the 

evidence of record. Order Denying Request for Oral Argument, Docket No. 16-1888 (issued September 1, 2017).

2

5 U.S.C. § 8101 et seq.
2

FACTUAL HISTORY

OWCP accepted that on March 21, 2001 appellant, then a 42-year-old machinist, 

sustained an aggravation of back pain and cervical spondylosis without myelopathy while 

handling heavy tools. On March 26, 2001 he underwent authorized anterior cervical 

discectomies with fusion at C3-4 and C6-7. Following a period of recuperation during which he 

received compensation, appellant returned to work as a supply technician on October 20, 2002 

with permanent lifting restrictions preventing him from working as a machinist.

In a February 12, 2003 letter, OWCP adjusted appellant’s compensation effective 

October 20, 2002 to reflect his actual earnings as a supply technician. It noted that appellant’s 

date-of-injury machinist job paid $18.91 an hour, whereas the supply technician position paid 

$17.12 an hour.3

An August 24, 2003 notice of personnel action (Form SF-50) notes appellant’s change of 

position that day from a supply technician, earning $37,237.00 annually, to a purchasing agent, 

earning $41,380.00 annually or $795.77 weekly. As of August 24, 2003 appellant’s date-ofinjury position as a machinist paid $716.10 a week. The record indicates that appellant 

continued to receive wage-loss compensation. 

In a January 15, 2008 letter, appellant advised OWCP that his salary increased due to a 

promotion and that he should no longer be receiving wage-loss compensation. By January 17, 

2008 letter, OWCP advised him that “[b]ased on the regulations you are entitled to the 

continuing compensation you currently receive. Specifically, you have not been overpaid and 

this office does not anticipate declaring an overpayment on this issue.”

As of November 14, 2015 appellant continued work as a purchasing agent having 

received periodic increases in salary. OWCP calculated that from August 24, 2003 through 

November 14, 2015, appellant received $36,113.59 in wage-loss compensation as he no longer 

had any loss of wage-earning capacity. 

By merit decision dated November 19, 2015, OWCP retroactively adjusted appellant’s 

compensation effective August 24, 2003, finding that his actual earnings of $795.77 as a 

purchasing agent exceeded the $716.10 weekly wages of his date-of-injury machinist job. It

terminated appellant’s entitlement to continuing wage-loss compensation as his wages as a 

purchasing agent exceeded his salary of his date-of-injury position as a machinist. As appellant 

had no loss of wage-earning capacity as of August 24, 2003, he was no longer entitled to wageloss compensation after that date.

By notice dated November 19, 2015, OWCP informed appellant of its preliminary 

determination that an overpayment of compensation had been created in his case in the amount 

of $36,113.59 for the period August 24, 2003 through November 14, 2015. It made the 

preliminary finding that appellant was without fault in creating the overpayment. OWCP 

afforded appellant 30 days to submit information regarding his income, assets, and expenses or 

 

3 As the February 12, 2013 letter was an informal modification of benefits, and not a formal loss of wage-earning 

capacity determination, it did not include appeal rights.
3

to request a prerecoupment hearing, or request a conference. It enclosed an overpayment 

recovery questionnaire (Form OWCP-20).

In a November 27, 2015 letter, appellant requested a telephonic prerecoupment hearing, 

which was held July 11, 2016. During the hearing, he contested the fact of overpayment. 

Appellant contended that OWCP improperly modified his wage-earning capacity determination,

noting that he had not been vocationally rehabilitated, but instead had obtained the purchasing 

agent job on his own. He noted that he alerted OWCP numerous times that his salary increased 

due to the promotion. Appellant provided a copy of his November 2003 and January 2008 letters

to OWCP advising that he had been promoted and was no longer entitled to compensation. 

Appellant submitted a completed Form OWCP-20 overpayment recovery questionnaire, a 

detailed financial narrative, and supporting documentation. He noted that he lived with his wife 

and had no other dependents. Appellant provided bills and receipts showing monthly expenses 

of $2,200.00 for mortgage, $800.00 for food, $150.00 for clothing, $644.00 for utilities, and 

$696.00 in miscellaneous expenses. Bank statements showed $3,434.00 in a checking account, 

$25,119.00 in a savings account, and stocks and bonds valued at $5,000.00. Appellant also 

confirmed his ownership of a rental property valued at $168,000.00. He submitted a federal 

income tax return showing a monthly household income of $8,675.00.

By decision dated September 21, 2016, an OWCP hearing representative finalized the 

preliminary finding of an overpayment in the amount of $36,113.59 for the period August 24, 

2003 through November 14, 2015. He found that appellant received wage-loss compensation for 

a period in which he had no loss of wage-earning capacity, as his actual earnings exceeded those 

of his date-of-injury position. The hearing representative found appellant without fault in 

creating the overpayment as OWCP had advised appellant on January 17, 2008 that he was 

entitled to continued wage-loss compensation and that there was no overpayment in his case. 

Based on the financial documentation provided by appellant, the hearing representative accepted 

$4,490.00 in allowable monthly expenses: rent or mortgage $2,200.00; food $800.00; clothing 

$150.00, utilities $644.00; miscellaneous expenses $696.00. The documents also established a 

monthly household income of $8,675.00. OWCP therefore denied waiver of recovery of the 

overpayment as he had an excess of $4,185.00 each month after expenses, significantly more 

than the $50.00 allowance under OWCP’s procedures. Additionally, appellant had over 

$33,000.00 in checking accounts, savings accounts, and bonds, as well as a rental property

valued at $168,000.00. This exceeded the asset base of $8,000.00 for waiver for an individual

with a spouse and no other dependents. The hearing representative directed appellant to repay 

the overpayment by paying $200.00 a month until the debt was collected in full.

LEGAL PRECEDENT -- ISSUE 1

Section 8102(a) of FECA 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 duty.4 Section 8116 of FECA defines the limitations on the right to receive 

compensation benefits. This section of FECA provides that while an employee is receiving 

compensation, he or she may not receive salary, pay or remuneration of any type from the United 

 

4

5 U.S.C. § 8102(a).
4

States, except in limited circumstances.5 OWCP regulations provide that compensation for wage 

loss due to disability is available only for any periods during which an employee’s work-related 

medical condition prevents him from earning the wages earned before the work-related injury.6 

OWCP procedures provide that an overpayment in compensation is created when a claimant 

returns to work with no loss of wage-earning capacity, but continues to receive wage-loss 

compensation.7

ANALYSIS -- ISSUE 1

Appellant was a machinist when he was injured. As of August 24, 2003, appellant began 

work at the employing establishment as a purchasing agent, earning $795.77 a week, which 

exceeded the current pay rate for his date-of-injury machinist position of $716.10 a week. At 

that time, appellant had no loss of wage-earning capacity and would no longer be eligible for 

wage-loss compensation. OWCP continued to pay $36,113.59 in wage-loss compensation 

benefits from August 24, 2003 through November 14, 2015. The $36,113.59 therefore 

constitutes an overpayment of compensation. 

On appeal appellant asserts that there is no overpayment of compensation in his case as 

OWCP had not modified his benefits. However, under OWCP procedures, wage-loss

compensation may be based on actual earnings, as in this case.

8

 As noted, OWCP regulations 

provide that compensation for wage loss due to disability is available only for any periods during 

which an employee’s work-related medical condition prevents him from earning the wages 

earned before the work-related injury.9 

LEGAL PRECEDENT -- ISSUE 2

Section 8129(a) of FECA provides that when an overpayment of compensation occurs 

because of an error of fact of law, adjustment or recovery shall be made by decreasing later 

payment to which the individual is entitled.10 The only exception to this requirement that an 

overpayment must be recovered is set forth in section 8129(b). 

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 FECA or would be against equity and good conscience. Thus, a finding 

that appellant was without fault is insufficient, in and of itself, for OWCP to waive the 

 

5

Id. at § 8116(a); see Danny E. Haley, 56 ECAB 393 (2005).

6

20 C.F.R. § 10.500(a).

7

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

6.200.2(a) (May 2004).

8

Id. at Part 2 -- Claims, Determining Wage-Earning Capacity Based on Actual Earnings, Chapter 2.815(3)(c) 

(June 2013).

9

See supra note 5.

10 Id. at § 8129(a).
5

overpayment. OWCP must exercise its discretion to determine whether recovery of the 

overpayment would defeat the purpose of FECA or would be against equity and good 

conscience, pursuant to the guidelines provided in the implementing federal regulations. 

Section 10.436 of the implementing regulations11 provides that recovery of an 

overpayment will defeat the purpose of FECA if recovery would cause hardship to a currently or 

formerly entitled beneficiary such that: (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 the 

resource base of $4,800.00 for an individual or $8,000.00 for an individual with a spouse or one 

dependent, plus $960.00 for each additional dependent.

12

 An individual is deemed to need 

substantially all of his or her current income to meet current ordinary and necessary living 

expenses if monthly income does not exceed monthly expenses by more than $50.00. In other 

words, the amount of monthly funds available for debt repayment is the difference between 

current income and adjusted living expenses (i.e., ordinary and necessary living expenses plus 

$50.00).13 

Recovery of an overpayment is 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 position for the worse.14 Conversion of the 

overpayment into a different form, such as food, consumer goods, real estate, etc., from which 

the claimant derived some benefit, is not to be considered a loss.15 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 FECA or be against equity and good conscience. This 

information will also be used to determine the repayment schedule, if necessary.16 

ANALYSIS -- ISSUE 2

OWCP found that appellant was not at fault in creating the overpayment of compensation 

and considered whether he was entitled to waiver of recovery. Waiver is only possible if 

recovery would defeat the purpose of FECA or would be against equity and good conscience. In 

order to establish that repayment of the overpayment would defeat the purpose of FECA, 

appellant must show that he requires substantially all of his income to meet current ordinary and 

 

11 20 C.F.R. § 10.436.

12 Supra note 7 at Chapter 6.200.6.a(1)(b) (June 2009).

13 Id.

14 20 C.F.R. § 10.437(b).

15 See supra note 7 at Chapter 6.200.6.b(3) (October 2004). C.P., Docket No. 14-975 (issued 

September 11, 2014).

16 20 C.F.R. § 10.438(a); Ralph P. Beachum, Sr., 55 ECAB 442 (2004).
6

necessary living expenses and that his assets do not exceed the established limit as determined by 

OWCP’s procedures.17 

Appellant submitted a Form OWCP-20 and submitted documents that included bank 

statements, utility bills, and a federal tax return. The initial question is whether recovery of the 

overpayment would defeat the purpose of FECA. The Board notes that appellant acknowledged 

that he had over $33,000.00 in bank accounts and bonds and owned a rental property valued at 

$168,000.00. Therefore, the evidence of record indicates that appellant’s assets exceed the 

resource base of $8,000.00 for a claimant with a spouse and no other dependents, and recovery 

would not defeat the purpose of FECA. 

In addition OWCP reviewed the financial evidence submitted and provided a list of 

income and expenses. The expenses included housing, food, clothing, utilities, mortgage, and 

miscellaneous expenses, totaling $4,490.00 a month. Appellant documented a household income 

of $8,675.00. He therefore had excess income of $4,185.00 above his ordinary and necessary 

living expenses, far exceeding the $50.00 allowance. The Board therefore finds that OWCP 

properly found that recovery of the overpayment would not defeat the purpose of FECA.18

Appellant has not shown that he gave up a valuable right or changed his position for the 

worse in reliance on compensation payments. The Board finds that the evidence of record does 

not establish that recovery of the overpayment would defeat the purpose of FECA, or be against 

equity and good conscience. Therefore, OWCP properly denied waiver of recovery of the 

overpayment in this case. 

On appeal appellant requests waiver of recovery due to financial hardship, emphasizing 

that he was without fault. The fact that a claimant is without fault in creating an overpayment 

does not preclude OWCP from recovering all or part of the overpayment.19 Also, as set forth 

above, appellant provided extensive financial information demonstrating that recovering the 

overpayment would not create significant hardship.

With regard to recovery of the overpayment, the Board’s jurisdiction is limited to 

reviewing those cases where OWCP seeks recovery from continuing compensation under 

FECA.20 Appellant is not in receipt of continuing compensation under FECA. 

CONCLUSION

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

of $36,113.59 for the period August 24, 2003 to November 14, 2015. The Board further finds 

that OWCP properly denied waiver of recovery of the overpayment.

 

17 20 C.F.R. § 10.436.

18 Supra note 14.

19 See George A. Rodriguez, 57 ECAB 224 (2005); Joyce O. Diaz, 51 ECAB 124 (1999). 

20 Judith A. Cariddo, 55 ECAB 348 (2004).
7

ORDER

IT IS HEREBY ORDERED THAT the decision of the Office of Workers’

Compensation Programs dated September 21, 2016 is affirmed.

Issued: November 6, 2017

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