Overpayment, Waiver, and Recovery
I. "Overpayment" defined
A.
The regulation
The provisions at 20 C.F.R. § 725.522(c) (2000) and
§ 725.522(b) (2008) state that if benefit payments are commenced prior to the
final adjudication of the claim and it is later determined by an administrative
law judge, the Benefits Review Board ("Board"), or a court of appeals
that the claimant was ineligible to receive such payments, such payments shall
be considered overpayments pursuant to § 725.540 and may be recovered. Subsection
725.540(a) provides the following additional means by which an overpayment may
be created:
a) General. As used in this subpart, the term "overpayment"
includes:
(1) Payment where no amount is payable under this
part;
(2) Payment in excess of the amount payable under
this part;
(3) A payment under this part which has not been
reduced by the amounts required by the Act (see § 725.533);
(4) A payment under this part made to a resident
of a State whose residents are not entitled to benefits (see §§ 725.402 and
725.403);
(5) Payment resulting from a failure to terminate
benefits to an individual no longer entitled thereto;
(6) Duplicate benefits paid to a claimant on
account of concurrent eligibility under this part and Part 410 or 727 of this
title or as provided in § 725.309.
20
C.F.R. § 725.540(a) (2008).
B.
Oversight of recovery
efforts by OWCP
The amended regulations make clear that "[n]o
operator or carrier may recover, or make an adjustment of, an overpayment
without prior application to, and approval by, the Office which shall exercise
full supervisory authority over the recovery of or adjustment of all
overpayments." 20 C.F.R. § 725.547(b) (2008). Pursuant to 20 C.F.R. §
725.101(a)(21) (2008), the word "Office" refers to the Department of
Labor's Office of Workers' Compensation Programs.
II. Jurisdiction
A. Federal
Claims Collection Act
In Jones v. Director, OWCP, 14 B.L.R. 1‑80
(1990), the Board held that the administrative law judge and the Board had
subject matter jurisdiction over the issue of waiver and recovery of
overpayment. 33 U.S.C. §921(b); 20 C.F.R. §§ 725.450 and 725.481 (2000) and (2008).
The Board stated that the Federal Claims Collection Act's (FCCA) $20,000
ceiling on agency discretion with respect to the compromise and collection of
claims does not affect the jurisdiction of the Office of Administrative Law
Judges or Board to determine whether overpayments should be waived. The
provisions of the FCCA, as amended by the Debt Collection Act of 1982, are not
triggered until a collectible claim or debt to the government is found to
exist. An overpayment does not become a claim or debt within the meaning of
the Debt Collection Act until a determination that it will not be waived has
been made. The FCCA's $20,000 limitation
does not come into effect until the waiver process is complete; thus, it does
not affect the administrative law judge's or the Board's jurisdiction in waiver
determinations. See also Potisek v. Director, OWCP, 14
B.L.R. 1‑87 (1990).
B. Six
year statute of limitations inapplicable
A claim for recovery of an overpayment pursued by
the Director is not time-barred by the six-year statute of limitations. In Nelson
v. Director, OWCP, 21 B.L.R. 1-5 (1997), Claimant argued that a 1993
overpayment claim filed by the Department of Labor was untimely pursuant to the
six year statute of limitations contained at 28 U.S.C. § 2415(a). Claimant
argued that the Department had "enough information in 1979 to seek
recovery." The Board held, however, that the action to recover an
overpayment "is not an action for money damages within the meaning of § 2415(a)"
such that the claim was not time-barred.
III. Waiver of recovery of overpayment
Recovery of overpayments may be waived under
certain circumstances.
The regulations provide that there shall be no adjustment or recovery of an
overpayment in any case where an incorrect payment has been made with respect
to an individual: (a) who is without fault; and where (b) adjustment or
recovery would either: (1) defeat the purpose of title IV of the Act, or (2) be
against equity and good conscience. 20 C.F.R. § 725.542 (2008).
Also, the provisions at 20 C.F.R. § 410.561h
require waiver of adjustment or recovery of an overpayment under 20 C.F.R. § 410.561e(a),
(b), and (c), and 410.561f. Pursuant to 20 C.F.R. § 725.543 (2000), the
standards for determining the applicability of the criteria of § 725.542 (2000)
shall be the same as those applied by the Social Security Administration under
§ 410.561‑410.561h.
However, the amended version of 20 C.F.R. § 725.543
(2008) provides that the standards utilized by the Social Security
Administration at 20 C.F.R. §§ 404.506 - 404.512 are to be applied instead of
the standards found at §§ 410.561 - 410.561h. In its comments to the
regulatory amendment, the Department noted that Part 404 better reflected the
current state of the law as the Part 410 criteria had not been revised since
1972. 65 Fed. Reg. 80,016 (Dec. 20, 2000).
NOTE:
At the time of printing of this edition of the Benchbook, there were no published
Board or circuit court cases interpreting the amended overpayment regulations.
The provisions at 20 C.F.R. § 404.506 provide that "there shall be no
adjustment or recovery in any case where an overpayment under title II has been
made to an individual who is without fault if adjustment or recovery would
either defeat the purpose of title II of the Act, or be against equity and good
conscience." The standards under Parts 404 and 410 (i.e.
determining whether the claimant is without fault and assessing whether
recovery would be defeat the purpose of title IV or be against equity and good
conscience) are the same. As a result, citations to Part 410, and case law
interpreting those provisions, remain.
A. Entitlement to
a hearing
If a claimant seeks waiver of the recovery of an
overpayment that was paid by the Trust Fund, s/he is entitled to request and
receive a hearing prior to the Director, OWCP being authorized to commence
recoupment of the amount paid. See Jones, supra; Potisek,
supra.
In Nelson v. Director, OWCP, 21 B.L.R. 1-5
(1997), the Board reiterated that "prior to the recovery of an
overpayment, a (claimant) has a right to an oral hearing on the issues of fault
and whether recovery would defeat the purpose of the Act or be against equity
and good conscience." Because no hearing had been held with regard to
these issues, the claim was remanded.
B. "Without
fault" defined
If the fact-finder concludes that the claimant is
at fault, there is no need to consider whether recovery would be against equity
and good conscience or defeat the purpose of the Act, as waiver would be
prohibited. 20 C.F.R. § 725.542 (2008). The amended regulations make
reference to 20 C.F.R. § 404.507 to define "fault."
1. Honest mistake
A finding of "without fault" does not
necessarily involve a finding of no bad faith or misrepresentation on claimant's
part, as "fault" can be the result of an honest mistake. Barone
v. Bowen, 869 F.2d 49 (2nd Cir. 1989); Morgan v. Finch,
423 F.2d 551 (6th Cir. 1970). Further, the Board held that actions
of the government are not relevant in determining whether claimant is "without
fault" under 20 C.F.R. § 410.561(b). Valente v. Secretary of Health
& Human Services, 733 F.2d 1037 (2nd Cir. 1984); Morgan,
supra; Jones v. Director, OWCP, 14 B.L.R. 1‑80 (1990). See
also Hampton v. Director, OWCP, 11 B.L.R. 1‑118 (1988) (the
Board affirmed an administrative law judge's finding that claimant was at fault
when she remarried and failed to inform the Department of Labor even though
uncontradicted testimony established that employees at the Social Security
Administration misinformed her and asserted that her remarriage would not
affect her eligibility for black lung benefits).
2. Erroneous information
a. Prior to
applicability of
20 C.F.R. Part 725 (2008)
Erroneous information supports waiver
Under § 410.561h, an adjustment or recovery of an
overpayment will be waived if a claimant relies on "erroneous information"
as described in § 410.561f. If the claimant relies on erroneous information, s/he
will be without fault and will not have to undergo further analysis under § 410.561a.
Agency misinformation
Where a claimant is initially found entitled to
benefits, receives interim benefits, and then the claim is finally denied, such
initial determination of entitlement does not constitute "erroneous
information." Potisek v. Director, OWCP, 14 B.L.R. 1‑87
(1990) (the Board held that claimant did not rely on "erroneous
information" under 20 C.F.R. § 410.561(f) where Department of Labor failed
to advise claimant of possibility that she would have to repay interim benefits
if claim was ultimately denied; § 410.561(f) contemplates situation where
agency official provides misinformation, not a failure to provide information).
See also Bracher v. Director, OWCP, 14 F.3d 1157 (7th Cir.
1994); McConnell v. Director, OWCP, 993 F.2d 1454, 1458 (10th
Cir. 1993); Napier v. Director, OWCP, 999 F.2d 1032, 1035 (6th
Cir. 1993).
Stipulations
The Board holds that a stipulation that the
claimant is "without fault" in the creation of the overpayment under
20 C.F.R. § 410.461(b) is not a concession that the claimant is without fault
by relying on "erroneous information" within the meaning of 20 C.F.R.
§ 410.561f. Freedline v. Director, OWCP, BRB No. 89‑0329 BLA
(Sept. 20, 1991)(unpub.).
Change in award status
In Weiss v. Director, OWCP, 16 B.L.R. 1‑56
(1990), the Board held that an initial determination of entitlement is not the
sort of "erroneous information" to which § 410.561f is referring.
The Board noted that § 410.561f refers to erroneous information "with
respect to the interpretation of a pertinent provision of the Act or
regulations," not a factual finding regarding claimant's entitlement to
benefits under the Act. See generally Potisek, supra;
McConnell v. Director, OWCP, 993 F.2d 1454 (10th Cir. 1993).
In Bracher v. Director, OWCP, 14 F.3d 1157
(7th Cir. 1994), the Seventh Circuit agreed with the Tenth Circuit's
holding in McConnell v. Director, OWCP, 993 F.2d 1454, 1458 (10th
Cir. 1993) that the district director's initial award of benefits does not
constitute the type of "erroneous information" contemplated in the
Act in determining whether to waive an overpayment. In this vein, the Bracher
court held that interim black lung payments to a miner, who is ultimately found
to not be entitled to benefits, are recoverable under the overpayment and
recoupment provisions of the Act. See also Benedict v. Director, OWCP,
29 F.3d 1140 (7th Cir. 1994).
Remand overpayment claim for consideration of
autopsy evidence
In Napier v. Director, OWCP, 999 F.2d 1032
(6th Cir. 1993), the Sixth Circuit remanded an overpayment claim to
permit the widow to offer an autopsy report indicating that the miner died due
to pneumoconiosis. The court determined that it would be inequitable "to
require his estate to disgorge the money" if the record supports
entitlement to benefits.
b. After
applicability of
20 C.F.R. Part 725 (2008)
Final award later modified, recovery waived
Under certain circumstances, the amended
regulations provide that an overpayment shall not be subject to collection
where the claimant is without fault. The language at § 725.310(d) reads as
follows:
An order issued following the conclusion of
modification proceedings may terminate, continue, reinstate, increase or
decrease benefit payments or award benefits. Such order shall not affect any
benefits previously paid, except that an order increasing the amount of
benefits payable based on a finding of a mistake in a determination of fact may
be made effective on the date from which benefits were determined payable by
the terms of an earlier award. In the case of an award which is decreased, no
payment made in excess of the decreased rate prior to the date upon which the
party requested reconsideration under paragraph (a) of this section shall be
subject to collection or offset under subpart H of this part, provided the
claimant is without fault as defined by § 725.543. In the case of an award
which is decreased following the initiation of modification by the district
director, no payment made in excess of the decreased rate prior to the date
upon which the district director initiated modification proceedings under
paragraph (a) shall be subject to collection or offset under subpart H of this
part, provided the claimant is without fault as defined by § 725.543. In the
case of an award which has become final and is thereafter terminated, no
payment made prior to the date upon which the party requested reconsideration
under paragraph (a) shall be subject to collection or offset under subpart H of
this part. In the case of an award which has become final and is thereafter
terminated following the initiation of modification by the district director,
no payment made prior to the date upon which the district director initiated
modification proceedings under paragraph (a) shall be subject to collection or
offset under subpart H of this part.
20
C.F.R. § 725.310(d) (2008).
In its comments, the Department noted that
subsection (d) was revised "with the stated purpose of prohibiting the
recovery, by either the Trust Fund or a responsible operator, of benefits paid
pursuant to a final award of benefits that is later modified." 65 Fed.
Reg. 79,975 (Dec. 20, 2000). The Department also made it clear that the
district director must initiate a modification proceeding in order to preclude
collection of any payments made pursuant to the prior final award. 65 Fed.
Reg. 79,975 (Dec. 20, 2000).
Waiver against responsible operator and carrier
The amended regulations provide that the waiver
provisions at 20 C.F.R. §§ 725.541-725.544 are applicable to overpayments made
by responsible operators as well as payments made from the Trust Fund. 20 C.F.R.
§ 725.547(a) (2008). In its comments, the Department stated the following:
The Department concluded that the opportunity to
obtain a waiver or adjustment of a debt should be made available to all
claimants regardless of their benefits' source.
. . .
The Department also rejected the position that
waiver of an overpayment owed an operator amounted to the unconstitutional
deprivation of property, citing caselaw upholding overpayment recoveries under
the more restrictive Longshore and Harbor Workers' Compensation Act (LHWCA), 33
U.S.C. § 914(j), 922, as incorporated by 30 U.S.C. § 932(a).
65
Fed. Reg. 80,016 (Dec. 20, 2000).
C. "Defeat
the purpose of title IV of the Act" defined
1.
Generally
The provisions at § 410.561c state that the phrase "defeat
the purpose of title IV" means to "deprive a person of income
required for ordinary and necessary living expenses." Similarly, the
provisions at 20 C.F.R. § 404.508, (which are referenced in the amended
regulations) define the phrase as "to deprive a person of income required
for ordinary and necessary living expenses." The regulation further
provides that "[t]his depends upon whether the person has an income or
financial resources sufficient for more than ordinary and necessary needs, or
is dependent upon all of his current benefits for such needs." 20 C.F.R.
§ 404.508(a). The regulation sets forth examples of expenses that should be
considered, including fixed living expenses (such as food, clothing, rent,
mortgage, health insurance), medical hospitalization, and expenses for support
of others for whom the claimant is legally responsible. 20 C.F.R. § 404.508(a)(1)
- (4).
2.
Prospective expenses excluded
In Keiffer v. Director, OWCP, 18 B.L.R. 1-35
(1993), the Board held that the overpayment regulation does not "provide
for consideration of prospective expenses"; rather, "the
administrative law judge's decision and order must be based on the evidence of
[current income and] current expenses in the record before him, 20 C.F.R. § 725.477(b),
not on what could happen in the future." Thus, the fact that the miner's
wife will someday need full-time nursing care cannot be considered. However,
the Board noted that the claimant may seek modification at any time based upon
a change in financial circumstances. See also Rosimos v. Director, OWCP,
BRB No. 89‑2527 BLA (Apr. 30, 1991)(unpub.) (claimant's age and
unexpected medical costs relating to the claimant's health are not properly
considered).
3.
Spouse's income
considered
In McConnell v. Director, OWCP, 993 F.2d
1454 (10th Cir. 1993), the court held that the income of a claimant's
wife could be considered in determining whether recovery of overpayment would
defeat the purpose of the Act, despite arguments that the income was the wife's
property.
4.
Installment and credit
card payments
considered
In Gordon v. Director, OWCP, 14 B.L.R. 1‑60
(1990), the Board held that "installment payments" under § 410.561c(a)(1),
as incorporated into the regulations at 20 C.F.R. § 725.543, include department
store credit card accounts and are thus, "ordinary and necessary expenses."
The Board further held that the different subsections under § 410.561a are
separate categories and must be considered independently of each other.
5.
Gifts to others
The Board has held that the payments need not be
for someone for whom the claimant is legally responsible. As an example, gifts
to claimant's granddaughter were "ordinary and necessary expenses." See
also Smith v. Director, OWCP, BRB No. 89‑3561 BLA (Feb. 26,
1991) (unpub.) (the Board cited the Tenth Circuit's Gordon decision, but
upheld administrative law judge's finding that annual expenses for gifts,
landscaping, and restaurant meals "perhaps went beyond those costs which
are considered as ordinary and necessary expenses under the Act").
6.
Child support,
considered
only if legally required
In McConnell v. Director, OWCP, 993 F.2d
1454 (10th Cir. 1993), the court held that expenses paid by the
claimant's wife in support of her 43 year old daughter and other children could
not be considered in absence of evidence that the claimant and his wife were
legally responsible for such support.
D. "Against
equity and good conscience" defined
1.
Generally
Section 410.561d states that it is "against
equity and good conscience" when a claimant relinquishes a valuable right
or changes his or her position for the worse based on notice that a payment
would be made or by reason of an incorrect payment. A claimant must
demonstrate that the money was spent in such a manner that would not have
occurred but for receipt of the overpayment.
Similarly, the amended regulations make reference
to 20 C.F.R. § 404.509, which sets forth the same standard. There are several
useful examples where recovery of an overpayment would be "against equity and
good conscience" listed in the regulation. 20 C.F.R. § 404.509.
2.
Factors to be considered
a.
Financial circumstances irrelevant
Section 410.561d specifically states that the
claimant's financial circumstances are irrelevant in determining whether
recovery would be against equity and good conscience. See also 20
C.F.R. § 404.509(b); Hervol v. Director, OWCP, 16 B.L.R. 1‑53
(1990).
b.
Extended vacation, no waiver
McConnell v. Director, OWCP, 993 F.2d 1454 (10th Cir. 1994) (money spent on
extended vacation could not be recovered).
c.
Resignation prior to
receipt of benefits,
no waiver
In Strickland v. Director, OWCP, BRB No. 89‑2963
BLA (Sept. 24, 1991) (unpub.), the Board held that recovery of an overpayment
is not against equity and good conscience where the claimant, expecting to
receive benefits, resigns from employment six years prior to the award
of interim benefits. The Board concluded that claimant did not relinquish a
valuable right or change his position for the worse in reliance on an
overpayment pursuant to § 410.561d since he resigned prior to a determination
that he was entitled to benefits.
d.
Purchase camper, no waiver
Smith v. Director, OWCP, BRB No. 89‑3561 BLA (Feb. 26,
1991)(unpub.)(overpayment should not be waived on the basis of detrimental
reliance where the claimant purchased items like a camper vehicle and the
evidence failed to establish that the "claimant would not have been able
to undertake those financial obligations without the income from the benefits").
e.
Relinquish savings
for lump sum
payment, no waiver
In Benedict v. Director, OWCP, 29 F.3d 1140
(7th Cir. 1994), the court held that lump sum recovery of an
overpayment was not against equity and good conscience as:
Benedict admits that he neither relinquished a
valuable right nor changed his position for the worse because of the
overpayment. Instead he argues that recovery of the overpayment would simply
be unfair because it would force him and his wife to relinquish a large portion
of their savings accumulated over the course of their lives. While we are not
unsympathetic to Benedict's position, we also recognize that Benedict's receipt
of the interim benefits enabled him, at a minimum, to maintain his high level
of savings. Had Benedict not received the interim benefits, he may well have
spent whatever savings he accumulated in precisely the same way that he spent
the interim benefits, thus reducing his life savings by a corresponding amount.
V. Amount of the overpayment
In calculating the amount of the overpayment, 20
C.F.R. § 725.535(d) (2000) and (2008) provides an exclusion for legal, medical,
or related expenses incurred in connection with a state or federal claim for
black lung benefits.
A.
Federal overpayment
reduced due to expenses
incurred for pursuit of state award
In Pickens v. Director, OWCP, 19 B.L.R.
1-116 (1995), the claimant was found liable for an overpayment of Black Lung
benefits because he received a concurrent state award for permanent total
disability, 15% of which was due to pneumoconiosis. The claimant paid $7,600
in attorney's fees in order to obtain the state award.
The Board held that in determining the extent to
which the overpayment should be reduced in light of the legal expenses incurred
in connection with the state award as required by 20 C.F.R. § 725.535(d), the
burden is on the claimant to establish the amount of legal expenses that are
related to obtaining that portion of the state award attributable to
pneumoconiosis. Mere submission of payment receipts, without any indication
that the time charged was spent obtaining the pneumoconiosis portion of the
state award is insufficient. The Board concluded that, in the absence of more
specific evidence supplied by a claimant, the percentage of the state award due
to pneumoconiosis is an acceptable form of "other evidence" under § 725.535(d)
in determining the portion of attorney's fees to be excluded from the amount of
the overpayment.
B.
Lump sum state award, apportionment of
Depending on how fees or expenses are apportioned,
the regulatory exclusion can provide a significant reduction in the amount of
the overpayment for which the claimant is liable. For example, in Cadle v.
Director, OWCP, 19 B.L.R. 1-56 (1994), the Board set forth the method for apportioning
legal fees and medical expenses incurred in connection with the state claim
where the attorney's fees and costs are awarded by the state in a lump sum
without any mandate for their disbursement.
If the state award is in a lump sum, it is divided
into monthly payments. Then, the monthly state award is credited toward the
claimant's legal fees and expenses thereby delaying the reduction of claimant's
federal monthly benefits on account of his concurrent state award until he has
received an amount of state benefits equal to the attorney's fees and costs. See
also Director, OWCP v. Barnes and Tucker Co., 969 F.2d 1524 (3d Cir.
1992).
In Cadle, the Board overruled Scuilli v.
Bethlehem Mines Corp., 8 B.L.R. 1-206 (1985) to the extent it is inconsistent
with Cadle. In Scuilli, the Board held that attorney's fees and
expenses should be spread evenly over the life of a benefit award on a monthly
basis and then subtracted on a monthly basis from the state monthly benefit;
the net state benefit amount is then used to determine the offset. Since most
state benefit awards are more generous than federal awards, the effect of this pro
rata method would have eliminated any exclusion for attorney's fees and
expenses from the amount of the overpayment.
VI. Recovery of the overpayment
A. Entitlement to
a hearing
Citing to Califano v. Yamasaki, 442 U.S. 682
(1979), the Board held that, in cases where the waiver of recovery of
overpayment is not an issue, the district director may begin recoupment
prior to a hearing and decision concerning the amount of the overpayment. Burnette
v. Director, OWCP, 14 B.L.R. 1‑152 (1990).
B. Repayment
amount and schedule
If it is determined that the overpayment cannot be
waived (in the case of a responsible operator under the pre-January 2001
amendments to the regulations) or will not be waived (in the case of the
Director, OWCP or responsible operator under the amended regulations), then
there are two issues presented regarding the overpayment: (1) the actual
overpayment amount that the claimant received, and (2) the amount that may be
recovered by the Director, OWCP or employer.
In Keiffer v. Director, OWCP, 18 B.L.R. 1-35
(1993), the Board held that the administrative law judge must consider the "financial
circumstances of the entire household, including the combined income and
expenses of both claimant and spouse as well as jointly and separately owned
assets in determining claimant's ability to repay and (the amount of)
overpayment." The Board further held that the administrative law judge
should "discuss the impact of depletion of an income-producing asset on
claimant's future monthly income relative to his monthly expenses as well as
how claimant's other assets would enhance is repayment ability. In the event
that the claimant's financial circumstances change, the Board noted that he or
she may seek modification:
[T]he purpose of the formal hearing is to establish
the existence of the debt, not how it will be paid. (citations omitted). The
administrative law judge's inquiry is merely whether claimant is in a financial
position to assume repayment of the debt created by the overpayment. Once the
debt is established as owing, and collection efforts begin . . . claimant has
the right to seek modification if his financial circumstances change, see
4 C.F.R. § 104.2(b); 20 C.F.R. § 725.310.
Id.
See also Ashe v.
Director, OWCP, 16 B.L.R. 1-109 (1992) (the Board held that it is within
the administrative law judge's discretion to consider assets of the claimant's
spouse in determining the repayment amount and schedule); McConnell, supra.
After issuance of Keiffer, the
Board issued an unpublished decision in Jennings v. Director, OWCP, BRB
No. 97-1537 BLA (May 27, 1998) and upheld an administrative law judge's finding
that, because Claimant's monthly income exceeded his monthly expenses, "recovery
of the overpayment would not deprive claimant of funds needed to meet ordinary
and necessary living expenses."
The Board further affirmed the
administrative law judge's conclusion that Claimant was entitled to a partial
waiver of the overpayment amount upon finding that Claimant had "changed
his position for the worse and relinquished a valuable right by both paying . .
. toward his daughter's college tuition and by paying . . . for house
repairs." However, the Board then held that an administrative law judge
does not have the authority to determine a repayment schedule in a case
involving a claim for repayment of overpayment. Rather, the administrative law
judge is limited to determining the amount of the overpayment and whether the
overpayment should be partially or totally waived. The Board cited to its
decision in Kieffer v. Director, OWCP 18 B.L.R. 1-35 (1993) and
concluded that "[t]he purpose of the formal hearing is to establish the
existence of debt, not how it will be repaid."
C. Offset of a
state benefit award
Often an overpayment stems from the fact that the
claimant is receiving benefits both from a state award as well as a federal
award. The regulations provide that federal benefits be offset by any state
benefits awarded to the claimant. 30 U.S.C. § 932(g); 20 C.F.R. § 725.535 (2008).
See O'Brockta v. Eastern Assoc. Coal Co., 18 B.L.R. 1-71 (1994), aff'd.,
54 F.3d 141 (3rd Cir. 1995). Subsection 725.535(b) provides that
only concurrent state awards may offset federal awards and it precludes offset
of a prior state award against subsequent federal black lung benefits as the
state award covers benefits for a period ending before a claimant becomes
entitled to federal benefits. 20 C.F.R. § 725.535(b) (2008). See also Harmon
Mining Co. v. Director, OWCP, 826 F.2d 1388 (4th Cir. 1987).
One example of offset is Lucas v. Director, OWCP,
14 B.L.R. 1-112 (1990). Here, the Board determined that because the State of West
Virginia found that 15% of the claimant's disability was due to pneumoconiosis,
then only 15% of the state award was attributable to the disease for the
purposes of determining the amount of overpayment and offset. See Burnette,
supra.
In Director, OWCP v. Hamm, 113 F.3d 23 (4th
Cir. 1997), the court noted that offset provisions under the Act are "designed
to supplement, but not duplicate, state benefits for pneumoconiosis." As
a result, it concluded that the Board's determination that Claimant's "federal
benefits . . . be offset by only 20 percent of his total state benefits because
only 20 percent of those benefits could be attributable to pneumoconiosis,"
was in error. In this vein, the Fourth Circuit stated the following:
Hamm receives lifetime benefits from West Virginia
for total disability. Prior to obtaining his total disability award, Hamm
received a number of permanent partial disability (PPD) awards from the state.
In 1974, 1977, and 1988, he obtained PPD awards of 15, 15, and 20 percent
respectively for pneumoconiosis. His second and third awards were based on
increases in his total impairment due to pneumoconiosis to 30 percent and
finally 50 percent.
Consequently,
the court determined that the aggregate prior awards resulted in a State
determination "that Hamm suffers 50 percent permanent disability on
account of pneumoconiosis" such that his federal benefits "should be
offset by 50 percent of the amount of his second injury award."
1. The "up-front"
method; attorney fees
In Director, OWCP v. Barnes & Tucker Co.,
969 F.2d 1524 (3rd Cir. 1992), the Third Circuit upheld the Director's
interpretation of the method of offset under 20 C.F.R. § 725.535 to allow the
"up-front" method of calculating offset. The Court upheld the
Director's determination of the amount of offset through using the "up-front
method," which assumes that the claimant will use as much of his or her
initial benefit payments as is necessary to pay attorney fees; thus, federal
benefits are not offset until the claimant's state attorney's fees are paid. In
so holding, the Court reasoned that the Director, as the policymaker under the
Black Lung Benefits Act, was entitled to deference as long as the
interpretation is neither unreasonable nor inconsistent with the regulations.
2. Survivors'
benefits
In Carbon Fuel Co. v. Director, OWCP, 20
F.3d 120 (4th Cir. 1994), the court held that Section 932(g) of the
Act requires an offset of state workers' compensation benefits, which are
conditioned on "death or disability due to pneumoconiosis,"
such that the "survivor's federal black lung benefits must be offset by a
state workers' compensation award where both awards depended upon a showing
that the decedent had been totally disabled due to pneumoconiosis, although
pneumoconiosis was not the cause of death."
D. The Federal
Employees Compensation Act
In Sammons v. Wolf Creek Collieries, 19
B.L.R. 1-24 (1994), the Board held that, in the event benefits are awarded, an
employer was not entitled to offset for Federal Employee Compensation Act
(FECA) benefits received by a claimant-federal mine inspector, which totaled $
1,500.00 a month, because the miner's FECA award was for his accidental death
and not for total disability due to pneumoconiosis.
In Consolidation Coal Co. v. Borda, 171 F.3d
175 (4th Cir. 1999), the court held that Claimant, who worked as a
federal employee, was not required to "seek recourse against the federal
government under FECA before seeking recourse against a private employer under
the Black Lung Benefits Act." The court reiterated that "if an
individual were entitled to benefits both from his private employer under the
Black Lung Benefits Act and from the federal government under FECA, the FECA
benefits would offset the amount owed by the private employer." The court
concluded that the miner was "free" to choose to pursue benefits
under both FECA and the Black Lung Benefits Act or to "seek compensation
first, or even exclusively, under the more generous (black lung) statutory
scheme."
E.
Collection and reimbursement,
no
jurisdiction to consider
In Director, OWCP v. Peabody Coal Co., 330
F.3d 830 (6th Cir. 2003), the Sixth Circuit held that the administrative
law judge has "decision-making authority over the determination of whether
a black lung benefits claim exists," but jurisdiction for the enforcement
of agency orders lies in the district courts pursuant to 30 U.S.C. § 934(B)(4)(A).
Under the facts of the case, the miner was overpaid black lung benefits during
his lifetime as the result of falsifying his receipt of state benefits. Upon
his death, his spouse was automatically entitled to survivor's benefits. The
survivor and Employer negotiated an agreement "to the effect that any
future survivor's benefits owed (to the spouse) by Peabody Coal would be setoff
against the amount of overpayment . . .." The district director
subsequently reinstated survivor's benefits and Employer objected to the
payment of these benefits.
The claim was subsequently referred to this Office
for adjudication, but the judge determined that he was without jurisdiction to
decide the matter of "collection and reimbursement." The court
agreed stating that Employer did not challenge the survivor's entitlement to
benefits; rather, Employer sought enforcement of the negotiated agreement,
which provided that survivor's benefits would be offset by the amount of
overpaid benefits in the living miner's claim.