United States Department of Labor

Employees’ Compensation Appeals Board

__________________________________________

E.K., Appellant

and

U.S. POSTAL SERVICE, POST OFFICE, 

Forest Hills, NY, Employer

__________________________________________

)

)

)

)

)

)

)

)

Docket No. 18-0599

Issued: February 26, 2020

Appearances: Case Submitted on the Record

Appellant, pro se

Office of Solicitor, for the Director

DECISION AND ORDER

Before:

CHRISTOPHER J. GODFREY, Deputy Chief Judge

JANICE B. ASKIN, Judge

PATRICIA H. FITZGERALD, Alternate Judge

JURISDICTION

On January 26, 2018 appellant filed a timely appeal from a July 31, 2017 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 

consider 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 $12,652.79 for the period February 16 to July 12, 

2017; and (2) whether OWCP properly determined that appellant was at fault in the creation of the 

overpayment of compensation thereby precluding waiver of recovery of the overpayment.

 

1 5 U.S.C. § 8101 et seq.
2

FACTUAL HISTORY

On July 26, 2011 appellant, then a 58-year-old mail carrier, filed a traumatic injury claim 

(Form CA-1) alleging that on July 22, 2011 she injured both knees when she tripped on uneven 

pavement when trying to deliver mail while in the performance of duty. She stopped work on 

July 27, 2011 and returned to intermittent limited duty on July 31, 2011. Appellant was placed on 

disability retirement effective January 13, 2014. 

On November 28, 2011 OWCP accepted appellant’s claim for bilateral knee and lower leg

contusions and contusion of the bilateral wrists and hands. 

On May 22, 2012 Dr. Mark S. McMahon, a Board-certified orthopedist, performed a right 

knee arthroscopy and diagnosed right knee torn medial meniscus with degenerative joint disease, 

partial tear of the medial collateral ligament and chondromalacia of the patella. 

On December 4, 2012 OWCP expanded the acceptance of appellant’s claim to include the 

additional conditions of bilateral chondromalacia patellae, bilateral tear of the medial meniscus of 

the knee, and right lower leg osteoarthrosis unspecified.

On January 28, 2014 Dr. Frank DiMaio, a Board-certified orthopedist, performed a 

cemented right total knee replacement and diagnosed traumatic arthritis of the right knee.

Appellant was placed on the periodic rolls effective May 4, 2014. On May 28, 2014 she

elected FECA benefits.

In a letter dated July 21, 2014, OWCP advised appellant’s then-counsel that a third party

may be liable for her work-related injury. It informed her to promptly take action to seek damages 

and to contact OWCP if there was a recovery against a third party. OWCP requested that appellant

respond to an attached questionnaire.

On June 2, 2015 appellant’s then-counsel advised the Department of Labor that he 

represented appellant in a third-party claim for bodily injury arising out of her July 22, 2011 workrelated injury. He indicated that the defendant wished to discuss settlement and therefore he was 

requesting a printout of the employing establishment charges against any recovery or judgement 

obtained. 

In a letter dated June 8, 2015, OWCP advised appellant’s then-counsel that a Form 

CA-1108 must be filed once appellant received a settlement. The purpose of the form is to 

calculate the refund owed to the United States.

In a September 29, 2015 letter, OWCP informed counsel that $132,860.46 in wage-loss 

compensation and $54,965.32 in medical benefits had been paid in connection with the claim, for 

a total of $187,825.78 in payments issued to appellant as of that date.

On November 25, 2015 her then-counsel indicated that appellant agreed to accept the thirdparty’s settlement offer in the amount of $600,000.00. He attached a copy of the November 14, 

2015 settlement agreement.
3

In a December 1, 2015 letter, OWCP informed appellant’s then-counsel that on that date 

$138,756.46 in wage-loss compensation and $54,965.32 in medical benefits had been paid in 

connection with the claim, for a total of $193,721.78 in payments issued to appellant. 

In a letter dated December 2, 2015, her then-counsel again advised the Department of 

Labor that appellant had received a third-party settlement as a result of the injury. He enclosed a 

completed Form CA-1108 dated December 14, 2015. The gross recovery noted was $600,000.00.

After deducting attorney fees ($199,980.00), court costs ($4,852.30), and an additional 20 percent 

($79,033.54), the remainder was $316,134.16. The amount of benefits paid by the government 

was noted as $193,721.78 and the government’s allowable portion attorney fees was noted as 

$64,567.47. The form indicated that a refund of $129,154.31 was owed to the Department of 

Labor. It also noted that the credit against future benefits (surplus) was $122,412.38. 

In a letter dated December22, 2015, OWCP informed appellant’s then-counsel of the 

approval of the Form CA-1108 which had been submitted. It noted the United States

Government’s statutory right to a refund of compensation benefits in the amount of $129,154.31

and provided repayment instructions. 

On January 4, 2016 appellant, through counsel, submitted a check to OWCP in the amount 

of $129,154.31. 

In a letter dated January 20, 2016, appellant elected to terminate wage-loss compensation 

benefits under FECA and instead collect from a disability annuity under the Federal Employees 

Retirement System. 

On February 16, 2016 OWCP confirmed the refund had been received. It advised counsel 

that a surplus remained in appellant’s case in the amount of $122,412.38. OWCP advised him that 

until the surplus had been exhausted, she was not entitled to further wage-loss compensation or 

medical benefits under FECA. It indicated that it would resume compensation payments only after 

the amount of the surplus had been absorbed. 

Appellant continued to receive compensation payments under FECA. She received 

compensation in the amount of $1,527.16, representing her wage-loss compensation for the period 

February 16 to March 5, 2016; $2,259.40, representing her wage loss for each 28-day period from

March 6 to June 25, 2016; $1,371.78, representing her wage-loss compensation for the period 

June 26 to July 12, 2016; and medical payments in the amount of $716.25. The total amount of 

the overpayment was $12,652.79. 

In an election form dated July 13, 2016, appellant elected to receive benefits from the 

Office of Personnel Management (OPM) effective July 13, 2016.
4

In a letter dated July 26, 2016, OWCP informed OPM that appellant elected to receive 

retirement benefits from OPM in lieu of FECA compensation benefits.2 

On April 5, 2017 OWCP issued a preliminary determination of an overpayment of 

compensation in the amount of $12,652.79 for the period February 16 to July 12, 2016 because 

she received wage-loss compensation during a period of a third-party surplus. It found that 

appellant was at fault in the creation of the overpayment because she knowingly accepted payments 

which she knew or reasonably should have known were incorrect. The preliminary determination 

provided an explanation of the calculation of the overpayment. OWCP requested that appellant

complete the enclosed overpayment recovery questionnaire (Form OWCP-20) and submit 

supporting financial documentation. Additionally, it notified her that, within 30 days of the date 

of the letter, she could request a telephone conference, a final decision based on the written 

evidence, or a prerecoupment hearing.

In a letter dated May 11, 2017, appellant responded to OWCP’s preliminary determination 

and indicated that she was unaware of a surplus in her claim. She indicated that counsel provided 

her with letters dated January 4 and February 11, 2016 from OWCP, but they had not mentioned

a surplus. Appellant explained that nobody had explained to her that a surplus existed and thus 

she believed that the error was not of her own fault. She submitted argument and supportive 

correspondence and other paperwork in her response. Appellant also submitted bank statements, 

tax forms, annuities, monthly expenses, investment statements, and grocery receipts. She 

completed an overpayment action request form and requested OWCP make a decision based on 

the evidence in the file. Appellant indicated that her monthly income was $2,367.35 and her 

monthly expenses were $4,498.69. She indicated that she had $338,784.13 at her disposal. 

By decision dated July 31, 2017, OWCP finalized its determination that appellant received 

an overpayment of compensation in the amount of $12,652.79 and that she was with fault in the 

creation of the overpayment. It required that she forward payment for the full amount of 

$12,652.79 within 30 days.

LEGAL PRECEDENT -- ISSUE 1

Section 8102 of FECA provides that the United States shall pay compensation for the 

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

duty.3 Section 8132 of FECA outlines that where an injury or death for which compensation is 

payable is caused under circumstances creating a legal liability in a person other than the United 

States to pay damages and a beneficiary entitled to compensation from the United States for that 

injury or death receives money or other property in satisfaction of that liability as a result of suit 

or settlement by him or her in his or her behalf, the beneficiary, after deducting there from the 

costs of suit and a reasonable attorney’s fee, shall refund to the United States the amount of 

compensation paid by the United States and credit any surplus on future payments of compensation 

 

2 OWCP indicated that appellant’s compensation benefits had ceased on July 23, 2016. It requested that OPM 

forward $932.42 as reimbursement for the period July 13 to 23, 2016. On December 27, 2016 OWCP received a 

check in the amount of $932.42 from OPM as reimbursement for compensation paid from July 13 to 23, 2016.

3

Id. at § 8102. 
5

to him or her for the same injury.4 The applicable regulations reiterate that, after the refund owed 

to the United States is calculated, FECA beneficiary retains any surplus remaining and this amount 

is credited, dollar for dollar, against future compensation for the same injury.5 OWCP will resume 

the payment of compensation only after FECA beneficiary has been awarded compensation which 

exceeds the amount of the surplus.6 Where a beneficiary who has received a third-party recovery 

has made the required refund, but subsequent events result in payment of compensation benefits, 

including medical benefits, this may result in an overpayment of compensation.7

ANALYSIS -- ISSUE 1

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

of compensation in the amount of $12,652.79 for the period February 16 to July 12, 2017.

Appellant received a third-party recovery of $600,000.00. She was properly provided, 

through her then-counsel of record, a December 14, 2015 Form CA-1108 which provided the 

calculations of the amount that needed to be refunded directly to the United States Government, 

as well as any surplus funds that would offset future compensation benefit payments. After 

appropriate deductions for the costs of the third-party suit and attorney fees, a surplus was created 

against future compensation in the amount of $122,412.38. Future compensation payments are to 

be charged against a surplus until it has been exhausted.8

For the period February 16 to March 5, 2016, appellant received benefits in the amount of 

$12,652.79 in her FECA claim. This amount was required to be credited against the remaining 

surplus rather than paid to her.

9

 Therefore, the Board finds that OWCP properly found an 

overpayment of compensation in the amount of $12,652.79. 

LEGAL PRECEDENT -- ISSUE 2

Section 8129(a) of FECA provides that, when an overpayment of compensation has been 

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

which an individual is entitled. The only exception to this requirement is when an incorrect 

payment has been made to an individual who is without fault and when adjustment or recovery 

 

4

Id. at § 8132. See also T.D., Docket No. 16-0565 (issued May 5, 2016). 

5 20 C.F.R. § 10.712. 

6

Id.

7 Federal (FECA) Procedure Manual, Part 2 -- Claims, FECA Third-Party Subrogation Guidelines, Chapter 

2.1100.10 (March 2006). 

8 20 C.F.R. § 10.712. 

9 See B.G., Docket No. 14-0850 (issued September 17, 2014).
6

would defeat the purpose of FECA or be against equity and good conscience.10 No waiver of 

payment is possible if appellant is with fault in helping to create the overpayment.11

In determining whether an individual is at fault, section 10.433(a) of OWCP’s regulations 

provides in relevant part: 

“An individual is with fault in the creation of an overpayment who--

Made an incorrect statement as to a material fact which he or she knew or 

should have known to be incorrect; or 

Failed to provide information which he or she knew or should have known 

to be material; or accepted a payment which he or she knew or should have 

known to be incorrect.”

12

ANALYSIS -- ISSUE 2

The Board finds that OWCP properly determined that appellant was at fault in the creation 

of the overpayment of compensation, thereby precluding waiver of recovery of the overpayment.

OWCP found that appellant was at fault in the creation of the overpayment because she 

accepted payments she knew or should have known were incorrect. In a letter dated February 16, 

2016, it informed appellant’s then-counsel of record that she had a surplus in the amount of 

$122,412.38 as a result of her third-party settlement. The letter also informed her then-counsel

that, until the surplus had been exhausted, appellant was not entitled to further wage-loss 

compensation or medical benefits, but her compensation payments would resume after the amount 

of the surplus had been absorbed. Following receipt of the February 16, 2016 letter, appellant 

received payments for wage-loss compensation and reimbursement for medical payments in the 

amount of $12,652.79.

Although OWCP may have erred in not applying the third-party surplus when issuing the 

wage-loss compensation and medical reimbursement payments, this does not relieve appellant 

from her obligation to repay the overpayment. Fault can be established if the circumstances show 

that the claimant accepted a payment she should have known was incorrect.13 It has been 

established that OWCP provided a specific explanation regarding the nature of the nature and 

amount of the surplus and the resultant impact on appellant’s entitlement to further compensation

payments until the surplus had been absorbed. Therefore, appellant should have known that the 

wage-loss compensation benefits and medical reimbursements were incorrect.14 Thus, OWCP 

 

10 5 U.S.C. § 8129(b). 

11 Robert W. O Brien, 36 ECAB 541, 547 (1985). 

12 20 C.F.R. § 10.433(a). 

13 P.B., Docket No. 17-1046 (issued January 2, 2018); B.G., Docket No. 14-850 (issued September 17, 2014).

14 Id. 
7

properly found her at fault in the creation of the overpayment, thereby precluding waiver of 

recovery of the overpayment.

CONCLUSION

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

of compensation in the amount of $12,652.79 for the period February 16 to July 12, 2017 and that 

appellant was at fault in the creation of the overpayment of compensation thereby precluding 

waiver of recovery of the overpayment.

ORDER

IT IS HEREBY ORDERED THAT the July 31, 2017 decision of the Office of Workers’

Compensation Programs is affirmed.

Issued: February 26, 2020

Washington, DC

Christopher J. Godfrey, Deputy Chief Judge

Employees’ Compensation Appeals Board

Janice B. Askin, Judge

Employees’ Compensation Appeals Board

Patricia H. Fitzgerald, Alternate Judge

Employees’ Compensation Appeals Board