§ 5.16 Federal Employees' Compensation Act ("FECA") Claims

• Jurisdiction: Arizona

§ 5.16 - Federal Employees' Compensation Act ("FECA") Claims

The FECA, 5 U.S.C. §§ 8101 to 8193, provides workers' compensation benefits—often called disbursements—to various federal employees or their survivors for injury or death sustained while in the course and scope of employment. Although the FECA is generally administered by the Department of Labor's Office of Workers' Compensation Programs ("OWCP") and its Division of Federal Employees' Compensation ("DFEC"), the authority to administer third-party aspects of FECA claims is delegated to the Office of the Solicitor ("SOL"), Division of Federal Employees' and Energy Workers' Compensation ("FEEWC"). See DFEC PROCEDURE MANUAL, Claims (FECA Part 2), Chapter 2-1100-3 ("FECA Third Party Subrogation Guidelines") (Transmittal No. 06-02, 03/2006) ("DFEC PROCEDURE MANUAL").

a. The Scope of FECA Claims

The FECA provides the United States with both direct and subrogation rights to assert damages claims against third persons, 5 U.S.C. § 8131, as well as rights of reimbursement and a future credit in connection with any third-party recovery, 5 U.S.C. § 8132.

In fact, federal law actually mandates FECA beneficiaries prosecute claims against liable third parties. See 20 C.F.R. §§ 10.706-707. Prosecuting such actions is not optional and, absent a waiver from the OWCP or SOL, can result in denial of FECA benefits. 20 C.F.R. §§ 10.707 to 10.709. Likewise, federal law prohibits settling any third party action "for any amount less than the amount necessary to repay OWCP's refundable disbursements," without first receiving permission from the OWCP or SOL. 20 C.F.R. § 10.707(c).

Of course, to the extent a FECA beneficiary actually obtains any recovery from a third party, federal law requires the beneficiary "shall refund to the United States the amount of compensation paid by the United States and credit any surplus on future payments of compensation payable to him for the same injury." 5 U.S.C. § 8132. This is true regardless of the nature of the third-party recovery or whether state law allows a beneficiary to recover medical expenses or lost wages. United States v. Lorenzetti, 467 U.S. 167, 179 (1984).

As a practical matter, this means the FEEWC relies upon § 8132 to obtain refunds from FECA beneficiaries, rather than prosecuting such claims under § 8131. In addition, FECA refund claims may be brought long after the third-party matter has resolved, since the Ninth Circuit construed § 8132 rights as...