United States Department of Labor

Employees’ Compensation Appeals Board

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J.V., Appellant

and

DEPARTMENT OF THE AIR FORCE, 

AIR EDUCATION & TRAINING COMMAND, 

LACKLAND AIR FORCE BASE, TX, Employer

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Docket No. 18-1460

Issued: March 23, 2021

Appearances: Case Submitted on the Record

Appellant, pro se

Office of Solicitor, for the Director

DECISION AND ORDER

Before:

ALEC J. KOROMILAS, Chief Judge

JANICE B. ASKIN, Judge

PATRICIA H. FITZGERALD, Alternate Judge

JURISDICTION

On July 23, 2018 appellant filed a timely appeal from a January 31, 2018 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 OWCP properly determined that appellant received an 

overpayment of compensation in the amount of $7,094.17 for the period January 20, 2012 through 

April 29, 2017 because postretirement life insurance premiums were not properly deducted, for 

with appellant was without fault; (2) whether it properly denied appellant’s request for waiver of 

recovery of the overpayment; and (3) whether OWCP properly required recovery of the 

 

1 5 U.S.C. § 8101 et seq.
2

overpayment by deducting $300.00 from appellant’s continuing compensation payments every 28 

days.

FACTUAL HISTORY

On October 14, 2010 appellant, then a 58-year-old boiler plant equipment mechanic, filed 

a traumatic injury claim (Form CA-1) alleging that on September 28, 2010 he injured his back and 

lost feeling from the waist down after moving tanks while in the performance of duty. OWCP 

accepted appellant’s claim for displacement of lumbar intervertebral disc without myelopathy, and 

thoracic or lumbosacral neuritis/radiculitis. Appellant stopped work on January 19, 2011, and 

OWCP paid him wage-loss compensation benefits on the supplemental and periodic rolls 

commencing January 19, 2011.

In a payment memorandum dated October 4, 2011, OWCP indicated that appellant elected 

basic life insurance (BLI) and optional life insurance (OLI) under code N5. A Notification of 

Personnel Action form (Standard Form 50-B) indicates that appellant was removed from the 

employing establishment effective July 20, 2012 and also notes that he had elected BLI and OLI 

in the form of Option A, Option B (2x), and Option C (5x) under code N5. In a Continuation of 

Life Insurance Coverage form, signed on December 28, 2012, appellant elected to continue BLI 

coverage in “retirement/compensation” with no reduction.

In a September 22, 2016 letter, OWCP informed appellant that he had the option of 

continuing his Option B and Option C life insurance beyond age 65 as a “Post-65 Reduction 

Election.” It requested that appellant complete an attached form and submit it to the Office of 

Personnel Management (OPM) if he was interested in continuing his OLI coverage.

On December 2, 2016 OWCP received a November 6, 2016 letter in which OPM advised 

that, as a compensationer, appellant was eligible to continue Federal Employees’ Group Life 

Insurance (FEGLI) coverage for BLI with no reduction and OLI in the form of Option A, Option 

B (2x – no reduction), and Option C (5x -- no reduction). It further advised that appellant’s 

postretirement election was “no reduction” and requested that OWCP make deductions (under 

code N5) for the delineated BLI and OLI effective the “commencing date” of January 20, 2012. 

In its November 17, 2016 letter, OPM also requested that, effective January 1, 2017, OWCP freeze 

appellant’s OLI coverage in the form of Option B (2x -- no reduction) and Option C (5x -- no 

reduction) at its value as of age 65. On December 2, 2016 OWCP also received election forms, 

signed on November 8, 2016, in which appellant requested such a freeze of these types of OLI. 

On May 17, 2017 OWCP payment records showed the nondeduction of postretirement life 

insurance premiums from January 20, 2012 through April 29, 2017 and worksheets explaining the 

calculation of the overpayment amount were added to the case record. On May 23, 2017 an OWCP 

payment record indicating that postretirement life insurance premiums were being deducted from 

compensation commencing April 30, 2017 was also added to the case record. 

In a May 26, 2017 letter, OWCP advised appellant of its preliminary determination that he 

received an overpayment of compensation in the amount of $7,094.17 for the period January 20, 

2012 through April 29, 2017 because postretirement life insurance premiums were not properly 

deducted from his compensation benefits for this period. It also made a preliminary determination 

that appellant was without fault in the creation of the overpayment. OWCP advised appellant of 
3

his right to request a telephone conference with the district office, a final decision based on the 

written evidence, or a prerecoupment hearing before a representative of OWCP’s Branch of 

Hearings and Review, and requested that he complete and submit an overpayment recovery 

questionnaire form (OWCP Form-20) regarding his finances. OWCP afforded him 30 days to 

respond.

On June 12, 2017 appellant requested a prerecoupment hearing and, on June 20, 2017, 

OWCP received an OWCP Form-20 which he had completed on June 16, 2017. During the 

prerecoupment hearing held on November 16, 2017, he testified that he had not been aware that 

postretirement life insurance premiums had to be deducted commencing January 20, 2012. 

Appellant provided additional information about his monthly income and expenses. In a 

November 20, 2017 letter, he further discussed his financial circumstances.

By decision dated January 31, 2018, OWCP’s hearing representative finalized the 

preliminary determination that appellant had received an overpayment of compensation in the 

amount of $7,094.17 for the period January 20, 2012 through April 29, 2017 because

postretirement life insurance premiums were not properly deducted from his compensation 

benefits for this period. She further found appellant without fault in the creation of the 

overpayment, but denied waiver of recovery of the overpayment because his monthly income 

exceeded his monthly expenses by more than $50.00. The hearing representative required 

recovery of the overpayment by deducting $300.00 from appellant’s continuing compensation 

payments every 28 days.

LEGAL PRECEDENT -- ISSUE 1

Under the FEGLI Program, most civilian employees of the federal government are eligible 

to participate in BLI and one or more forms of OLI.2 The coverage for BLI is effective unless 

waived,3and premiums for BLI coverage are withheld from the employee’s pay.4 Upon retirement 

or upon separation from the employing establishment or being placed on the FECA periodic 

compensation rolls, an employee may choose to continue BLI and OLI coverage, in which case 

the schedule of deductions made will be used to withhold premiums from his or her annuity or 

compensation payments.5 BLI coverage shall be continued without cost to an employee who 

retired or began receiving compensation on or before December 31, 1989,

6 but the employee is 

 

2 Supra note 1 at § 8702(a).

3

Id. at § 8702(b).

4

Id. at § 8707.

5

Id. at § 8706.

6

Id. at § 8707(b)(2).
4

responsible for payment of premiums for OLI coverage which is accomplished by authorizing 

withholdings from his or her compensation.7

A 1980 amendment of 5 U.S.C. § 8706(b)(2) provided that an employee receiving 

compensation under FECA could elect continuous withholdings from his or her compensation, so 

that his or her life insurance coverage could be continued without reduction. 5 C.F.R. § 870.701 

(December 5, 1980) provided that an eligible employee had the option of choosing no life 

insurance; Option A -- basic coverage (at no additional cost) subject to continuous withholdings 

from compensation payments that would be reduced by two percent a month after age 65 with a 

maximum reduction of 75 percent; Option B -- basic coverage (at an additional premium) subject 

to continuous withholdings from compensation payments that would be reduced by one percent a 

month after age 65 with a maximum reduction of 50 percent; or Option C -- basic coverage subject 

to continuous withholdings from compensation payments with no reductions after age 65 (at a 

greater premium).8

Each employee must elect or waive Option A, Option B, and Option C coverage, in a 

manner designated by OPM, within 60 days after becoming eligible unless, during earlier 

employment, he or she filed an election or waiver that remains in effect.9 An employee who does 

not file a Life Insurance Election with his or her employing office, in a manner designated by 

OPM, specifically electing a type of optional insurance, is considered to have waived it and does 

not have that type of optional insurance.10 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.11

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.12 When 

an overpayment has been made to an individual because of an error of fact or law, adjustment shall 

be made under regulations prescribed by the Secretary of Labor by decreasing later payments to 

which the individual is entitled.13

OWCP’s procedures provide that, once an overpayment is identified, it is responsible for 

determining whether the claimant was with fault or without fault, issuing a preliminary finding, 

 

7

Id. at § 8706(b)(3)(B). See B.B., Docket No. 17-1733 (issued March 26, 2018); S.B., Docket No. 16-1795 (issued 

March 2, 2017).

8 See C.A., Docket No. 18-1284 (issued April 15, 2019); James J. Conway, Docket No. 04-2047 (issued 

May 20, 2005).

9 5 C.F.R. § 870.504(a)(1).

10 Id. at § 870.504(b).

11 Supra note 1 at § 8707(d); see also B.B., supra note 7.

12 Supra note 1 at § 8102(a).

13 Id. at § 8129(a).
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and unless a hearing is requested, OWCP is responsible for issuing a final decision.14 These 

procedures note that, if the claimant is determined to be without fault, a preliminary overpayment 

determination must be released along with a Form OWCP-20 within 30 days of the date the 

overpayment is identified. Both the reason that the overpayment occurred and the reason for the 

finding of without fault must be clearly stated. A preliminary overpayment determination informs 

the claimant of the right to submit evidence and the right to a prerecoupment hearing on the issues 

of: (a) fact and amount of overpayment; and (b) waiver of recovery of the overpayment. Along 

with the preliminary overpayment determination, OWCP should provide a clearly written 

statement explaining how the overpayment was created.15

ANALYSIS -- ISSUE 1

The Board finds that OWCP improperly determined that appellant received an 

overpayment in the amount of $7,094.17 for the period January 20, 2012 through April 29, 2017.

As noted, 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.16 On December 2, 2016 an overpayment of compensation was 

identified in connection with OWCP’s failure to deduct postretirement life insurance premiums 

from appellant’s compensation benefits commencing effective January 20, 2012. On December 2, 

2016 OWCP had received a document from OPM advising it that premium deductions for life 

insurance, including postretirement life insurance, needed to be made commencing effective 

January 20, 2012.17 It was not until May 26, 2017, however, that OWCP issued a preliminary 

determination finding an overpayment in the amount of $7,094.17 had been created for the period 

January 20, 2012 through April 29, 2017, i.e., the period of nondeduction of postretirement life 

insurance. By decision dated January 31, 2018, OWCP’s hearing representative finalized the 

preliminary overpayment determination and found appellant without fault in the creation of the 

$7,094.17 overpayment, but denied waiver of recovery of the overpayment. The hearing 

representative required recovery of the overpayment by deducting $300.00 from appellant’s 

continuing compensation payments every 28 days.

The Board finds that OWCP failed to follow its procedures in issuing the January 31, 2018 

overpayment decision. As noted, OWCP’s procedures provide that a preliminary overpayment 

determination must be released along with a Form OWCP-20 within 30 days of the date the 

overpayment is identified.18 In this case, OWCP first identified the overpayment of compensation 

 

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

6.200.4(a)(2) (May 2004).

15 Id.; see also L.P., Docket No. 18-0095 (issued March 12, 2020).

16 See supra note 13.

17 See generally P.D., Docket No. 18-0557 (issued January 22, 2020); J.N., Docket No. 17-1890 (issued 

November 26, 2019); M.L., Docket No. 19-0035 (issued November 4, 2019).

18 See supra note 15. 
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on December 2, 2016, but it did not, however, issue a preliminary notice regarding the 

overpayment until May 26, 2017, i.e., more than 30 days later.

The Board thus finds that OWCP failed to follow its established procedures in determining 

that appellant received an overpayment of compensation in the amount of $7,094.17 for the period 

January 20, 2012 through April 29, 2017.19

CONCLUSION

The Board finds that OWCP improperly determined that appellant received an 

overpayment of compensation in the amount of $7,094.17 for the period January 20, 2012 through 

April 29, 2017.

ORDER

IT IS HEREBY ORDERED THAT the January 31, 2018 decision of the Office of 

Workers’ Compensation Programs is reversed.

Issued: March 23, 2021

Washington, DC

Alec J. Koromilas, Chief Judge

Employees’ Compensation Appeals Board

Janice B. Askin, Judge

Employees’ Compensation Appeals Board

Patricia H. Fitzgerald, Alternate Judge

Employees’ Compensation Appeals Board

 

19 Based on the Board’s disposition of whether an overpayment of compensation was created, the issues of waiver 

and recovery are moot.