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DATE: June 16, 1995
CASE NO.: 94-DCA-8
IN THE MATTER OF
VIRGINIA B. MONTEZ,
Petitioner,
v.
UNITED STATES DEPARTMENT OF LABOR,
Respondent.
Appearances
Gordon J. Finwall, Esquire
Morgan Law Offices
1501 The Alameda
San Jose, California 95126
For the Petitioner
Catherine P. Carter, Esquire
Division of Employee Benefits
Office of the Solicitor
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
For the Respondent
Before: Paul A. Mapes
Administrative Law Judge
DECISION AND ORDER DENYING SETOFF
This case arises under the Federal Employee's Compensation
Act ("FECA"), 5 U.S.C. §8101 etseq., and the
Debt Collection Act of 1982 ("DCA"), 5 U.S.C. §5514. Both
parties have waived their opportunity to participate in a formal
evidentiary hearing and requested that all issues be resolved on
the basis of their written submissions.
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BACKGROUND
The Petitioner, Virginia B. Montez, is employed as a mail
carrier by the United States Postal Service. While delivering mail
in San Jose, California, on April 4, 1990, Ms. Montez was
confronted by a dog and accidently fell over backwards. As a
result, she sustained injuries to her right shoulder and neck.
Thereafter, Ms. Montez received various forms of medical treatment
and $2,766.50 was paid for that treatment by the Government
pursuant to the provisions of the FECA. Subsequently, Ms. Montez
settled a lawsuit against the owner of the dog for a total of
$8,000. After paying an attorney's fee of $2,666.67 and litigation
expenses of ,071.43, Ms. Montez's net recovery was $4,261.90.
From this net recovery Ms. Montez's attorney remitted to the
Government a total of ,845.26, an amount which represented the
costs of the medical care received by Ms. Montez minus the
Government's pro rata share of her attorney's fees.
In response, the Department of Labor informed Ms. Montez's
attorney that he should have submitted an additional $427.75.
According to the Department, such an additional payment was
required in order to partially compensate the Government for
$1140.00 that it had paid to Dr. Michael Butcher, a physician who
examined Ms. Montez at the Government's request pursuant to the
provisions of 5 U.S.C. §8123, and $320 that the Government
paid to Ms. Montez's treating physician for fulfilling its request
for status reports concerning his treatment of Ms. Montez. Ms.
Montez's attorney subsequently refused to submit the additional
$427.75 and, as a result, the Department of Labor initiated
procedures for a salary offset under the provisions of the DCA.
After receiving notice of the proposed salary setoff, Ms. Montez
made a timely request for a hearing pursuant to the provisions of
29 C.F.R. §20.81.
ANALYSIS
Ms. Montez offers two arguments for not allowing the $427.75
salary setoff proposed by the Government. First, she contends, the
FECA only authorizes the Government to recoup charges for medical
treatment, not charges for medical reports and evaluations that are
not part of such treatment. Second, she contends, the Department
of Labor delayed its collection efforts for so long that it has in
effect "waived" any right of recovery.
1. Applicability of FECA to the Expenses in Issue
Ms. Montez's first argument is that the charges for Dr.
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Butcher's medical examination and the charges for the reports of
her treating physician are not recoverable under FECA because the
services underlying those charges were not compensation or benefits
to her, but were instead administrative costs inherent in the
administration of the FECA program. In response, the Government
appears to concede that the disputed medical charges were incurred
solely for administrative reasons, but contends that "payments to
examining physicians for medical reports necessary for the
development and adjudication of claims are ... 'made under the Act'
and are properly included in the government's lien." Respondent's
Exhibit 6 (June 4, 1991 letter from Thomas M. Markey, Director for
Federal Employees' Compensation).
The FECA provision governing recoupment of medical expenses
is set forth at 5 U.S.C. §8132. It provides that if an
injured Government worker recovers damages for his or her injury
from a third-party tortfeasor, the worker must reimburse the
Government for the value of any "compensation paid by the United
States" as a result of the injury, less certain deductions for
attorney's fees and litigation expenses. 5 U.S.C. §8132. The
term "compensation" is defined in the FECA as including any money
allowance payable to an employee or his dependents and "any other
benefits paid for from the Employees' Compensation Fund...." 5
U.S.C. §8101(12). The Department of Labor regulation which
implements these provisions is set forth at 20 C.F.R.
§10.503(c). It specifies that if an injured worker has
recovered damages from a third-party tortfeasor, there shall be
remitted to the Government "the benefits which have been paid on
account of the injury including payments made on account of medical
treatment, transportation costs, funeral expenses, and any other
payments made under the Act on account of the injury or death...."
It appears that this case has arisen because the Director of
Federal Employee Compensation Programs ("the Director") interprets
the language of 20 C.F.R. §10.503(c) as allowing the
Government to recoup not only the cost of any "benefits" provided
to an injured employee, but also "any other payments" made under
the Act as a result of tortuous injuries to Government employees.
Careful review of subsection 10.503(c) indicates that its language
is ambiguous and that such language can be interpreted to either
allow or disallow recovery of payments that do not constitute
"benefits." Hence, it is arguable that the Director's
interpretation is valid and should be followed. However, such a
conclusion would directly conflict with the fact that the express
language of the FECA only authorizes the recoupment of expenses
which constitute
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"compensation" or "benefits." For this reason, therefore, I
conclude that the Director's interpretation of subsection 10.503(c)
clearly conflicts with the intent of Congress and that the
provisions of that subsection must be interpreted as precluding
recovery of any payments which do not constitute FECA "benefits."
It is also clear that expenses incurred by the Government for
independent medical examinations or periodic treatment reports are
incurred solely for the Government's administrative purposes and in
no way compensate or profit an injured worker. Indeed, at least
one court has explicitly held in a closely analogous situation that
such services are neither "compensation" nor "medical benefits" as
those terms are used in the Longshore and Harbor Workers'
Compensation Act. 33 U.S.C. §901 etseq.Castro v. Maher Terminals, Inc., 710 F. Supp. 573 (D. N.J.
1989). Accordingly, I conclude that the medical services in
dispute in this case cannot be considered either "compensation" or
"benefits" as those terms are used in the FECA and that therefore
the Government is not entitled to recoup the costs of such services
under the provisions of 5 U.S.C. §8132. For this reason, I
also conclude that the proposed salary setoff in this case is not
based on a legally valid claim and that it must therefore be
denied.
2. Waiver of the Government's Right of Recovery
Since it has been determined that there is no legally valid
basis for the proposed salary setoff, it is unnecessary to consider
the contention that the Government has somehow waived its rights.
ORDER
The Petitioner, Virginia B. Montez, has fully discharged her
obligations under 5 U.S.C. §8132 and therefore the proposed
setoff against her salary shall not be permitted.
_____________________________
Paul A. Mapes
Administrative Law Judge
Date:
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San Francisco, California
