20 CFR § 10.712 - How much of any settlement or judgment must be paid to the United States?

§ 10.712 How much of any settlement or judgment must be paid to the United States?

The statute permits a FECA beneficiary to retain, as a minimum, one-fifth of the net amount of money or property remaining after a reasonable attorney's fee and the costs of litigation have been deducted from the third-party recovery. The United States shares in the attorney fees by allowing the beneficiary to retain, at the time of distribution, an amount equivalent to a reasonable attorney's fee proportionate to the refund due the United States. After the refund owed to the United States is calculated, the FECA beneficiary retains any surplus remaining, and this amount is credited, dollar for dollar, against future compensation including wage-loss compensation, schedule award benefits and medical benefits for the same injury, as defined in § 10.719. OWCP will resume the payment of compensation only after the FECA beneficiary has been awarded compensation which exceeds the amount of the surplus.

(a) The refund to the United States is calculated as follows, using the Statement of Recovery form approved by OMB:

(1) Determine the amount of the recovery of the FECA beneficiary as set forth in § 10.711 as follows:

(i) Set out the gross recovery which is the entire amount of the award;

(ii) Subtract the amount of award representing damage to real or personal property approved by OWCP or SOL (Subtotal A);

(iii) Multiply Subtotal A by the appropriate percentage in § 10.711(c), or if it is a contested verdict by the percentage allocated by the judge or jury, and subtract this amount from Subtotal A (Subtotal B);

(iv) If both a wrongful death action and survival action have been asserted, multiply Subtotal B by 65% to determine the amount allocated to the wrongful death case and multiply Subtotal B by 35% to determine the amount allocated to the survival action, or if it is a contested verdict, by the percentage allocated by the judge or jury. Separate Statements of Recovery must be completed for each cause of action. For the wrongful death action use the result of Subtotal B times 65% for Subtotal C and for the survival action use the result of Subtotal B times 35% for Subtotal C. If both a wrongful death and survival have not been asserted the amount in Subtotal B is used for Subtotal C;

(v) Subtotal C is the amount of recovery of the FECA beneficiary;

(2) Subtract the amount of attorney's fees actually paid, but not more than the maximum amount of attorney's fees considered by OWCP or SOL to be reasonable, from Subtotal C. This is calculated by first determining the attorney fee percentage which is determined by dividing the gross recovery into the amount of attorney's fees actually paid, but the attorney's fee amount must not be more than the maximum amount of attorney's fees considered to be reasonable by OWCP or SOL and must be approved by OWCP or SOL. Subtotal C is multiplied by the fee percentage and this amount is subtracted from Subtotal C (Subtotal D);

(3) Subtract the costs of litigation, as allowed by OWCP or SOL from Subtotal D (Subtotal E). If loss of consortium and/or wrongful death and survival actions are claimed, the costs of litigation are reduced first by the percentage used for loss of consortium and then by the percentage used for wrongful death or survival action as set forth in § 10.711;

(4) Multiply Subtotal E by 20% and subtract this amount from Subtotal E (Subtotal F);

(5) Compare Subtotal F and the refundable disbursements as defined in § 10.714. Subtotal G is the lower of the two amounts;

(6) Multiply Subtotal G by the percentage used for attorney's fees in paragraph (a)(2), to determine the Government's allowance for attorney's fees, and subtract this amount from Subtotal G. This is the amount of the refund.

(b) The credit against future benefits (also referred to as the surplus) is calculated as follows:

(1) If Subtotal F, as calculated according to paragraph (a)(4) of this section, is less than the refundable disbursements, as defined in § 10.714, there is no credit to be applied against future benefits (but the remainder of the unused disbursements must be applied to any future recovery for the same injury);

(2) If Subtotal F is greater than the refundable disbursements, the credit against future benefits (or surplus) amount is determined by subtracting the refundable disbursements from Subtotal F.

(c) Examples of how these calculations are made follows:

(1) In this example, a Federal employee sues another party for causing injuries for which the employee has received $22,000 in benefits under the FECA, subject to refund. The suit is settled and the injured employee receives $100,000, all of which was for his injury. The injured worker paid attorney's fees of $25,000 and costs for the litigation of $3,000.

(i) Gross Recovery $100,000.00
(ii) Amount of Property Damage $0.00
(iii) Subtotal A (Line a minus Line b) $100,000.00
(iv) Amount Allocated for Loss of Consortium 0% of Line c $0.00
(v) Subtotal B (Line c minus Line d) $100,000.00
(vi) Amount Allocated for Wrongful Death 0% of Line e $0.00
(vii) Amount Allocated for Survival Action 0% of Line e $0.00
(viii) Subtotal C - If Wrongful Death use Line f, if survival action use Line g, otherwise use Subtotal B $100,000.00
(ix) Attorney's Fees 25% (Line h × .25) $25,000.00
(x) Subtotal D (Line h minus Line i) $75,000.00
(xi) Court costs $3,000.00
(xii) Subtotal E (Line j minus Line k) $72,000.00
(xiii) One-fifth of Subtotal E (Line l × .20) $14,400.00
(xiv) Subtotal F (Line l minus Line m) $57,600.00
(xv) Refundable Disbursements $22,000.00
(xvi) Subtotal G (lower of Subtotal F or refundable disbursements) $22,000.00
(xvii) Government's allowance for attorney's fees (attorney's fees percentage used to determine Subtotal D multiplied by Subtotal G) $5,500.00
(xviii) Refund to the United States (Line p minus Line q) $16,500.00
(xix) Credit against future benefits (If Subtotal F greater than refundable disbursements, Line n minus Line o) $35,600.00

(2) In this example, a Federal employee who is married sues another party for causing injuries as a result of car accident where she was driving her personally owned vehicle on approved travel and the employee received $75,000 in disbursements. The suit includes a claim for loss of consortium which is permitted under the state law and for damage to her vehicle (documented at $50,000.00). A joint settlement is reached where the injured employee and her spouse receive $250,000 for all their claims. Attorney's fees were $83,325 and there were $25,000 in approved court costs.

(i) Gross Recovery $250,000.00
(ii) Amount of Property Damage $50,000.00
(iii) Subtotal A (Line a minus Line b) $200,000.00
(iv) Amount Allocated for Loss of Consortium (25% of Line c) $50,000.00
(v) Subtotal B (Line c minus Line d) $150,000.00
(vi) Amount Allocated for Wrongful Death 0% of Line e $0.00
(vii) Amount Allocated for Survival Action 0% of Line e $0.00
(viii) Subtotal C - If Wrongful Death Use Line f, if survival action use Line g, otherwise use Subtotal B $150,000.00
(ix) Attorney's Fees 33.33% (line h × .3333) $49,995.00
(x) Subtotal D (Line h minus Line i) $100,005.00
(xi) Court costs are reduced by the amount allocated for the loss of consortium (in this example, $25,000 − ($25,000 × .25)) $18,750.00
(xii) Subtotal E (line j minus Line k) $81,255.00
(xiii) One-fifth of Subtotal E (Line l × .20) $16,251.00
(xiv) Subtotal F (Line l minus Line m) $65,004.00
(xv) Refundable Disbursements $75,000.00
(xvi) Subtotal G (lower of Subtotal F or refundable disbursements) $65,004.00
(xvii) Government's allowance for attorney's fees (attorney's fees percentage used to determine Subtotal D multiplied by subtotal G) $21,665.83
(xviii) Refund to the United States (Line p minus Line q) $43,338.17
(xix) Credit against future benefits (If Subtotal F is greater than refundable disbursements, Line n minus Line o) $0.00

(3) In this example, a Federal employee who is married with two minor children is killed in the performance of duty. A suit for wrongful death and survival is filed which includes claims for loss of consortium all of which is permitted under state law. A joint settlement is reached for all claims and all parties in the amount of $1,000,000. There were court costs of $48,000 and attorney's fees of $300,000. Two Statements of Recovery are completed: One for the wrongful death claim and the other for the survival action. Disbursements in this case were $30,000 for the deceased employee and $100,000 for the surviving spouse and children.

(i) For the wrongful death claim the calculation is as follows:

(A) Gross Recovery $1,000.000.00
(B) Amount of Property Damage $0.00
(C) Subtotal A (Line a minus Line b) $1,000,000.00
(D) Amount Allocated for Loss of Consortium (25% (15% for spouse, 5% for each child) of Line c) $250,000.00
(E) Subtotal B (Line c minus Line d) $750,000.00
(F) Amount Allocated for Wrongful Death 65% of Line e $487,500.00
(G) Amount Allocated for Survival Action 35% of Line e $262,500.00
(H) Subtotal C - If Wrongful Death Use Line f, if survival action use Line g, otherwise use Subtotal B $487,500.00
(I) Attorney's Fees 30% (Line h × .30) $146,250.00
(J) Subtotal D (Line h minus Line i) $341,250.00
(K) Court costs are reduced by the amount allocated for the loss of consortium (in this example, .25 × $48,000 = 12,000) and then by the amount allocated for survivor action, [(48,000 − 12,000) × .35 = 12,600], [48,000 − 12,000 − 12,600]) $23,400.00
(L) Subtotal E (Line j minus Line k) $317,850.00
(M) One-fifth of Subtotal E (Line l × .20) $63,570.00
(N) Subtotal F (Line l minus Line m) $254,280.00
(O) Refundable Disbursements $100,000.00
(P) Subtotal G (lower of Subtotal F or refundable disbursements) $100,000.00
(Q) Government's allowance for attorney's fees (attorney's fees percentage used to determine Subtotal D multiplied by subtotal G) $30,000.00
(R) Refund to the United States (Line p minus Line q) $70,000.00
(S) Credit against future benefits (If Subtotal F is greater than refundable disbursements, Line n minus Line o) $154,280.00

(ii) For the survival claim the calculation is as follows:

(A) Gross Recovery $1,000.000.00
(B) Amount of Property Damage $0.00
(C) Subtotal A (Line a minus Line b) $1,000,000.00
(D) Amount Allocated for Loss of Consortium (25% (15% for spouse, 5% for each child) of Line c) $250,000.00
(E) Subtotal B (Line c minus Line d) $750,000.00
(F) Amount Allocated for Wrongful Death 65% of Line e $487,500.00
(G) Amount Allocated for Survival Action 35% of Line e $262,500.00
(H) Subtotal C - If Wrongful Death Use Line f, if survival action use Line g, otherwise use Subtotal B $262,500.00
(I) Attorney's Fees 30% (line h × .30) $78,750.00
(J) Subtotal D (Line h minus Line i) $183,750.00
(K) Court costs are reduced by the amount allocated for the loss of consortium (in this example, .25 × $48,000 = 12,000) and then by the amount allocated for wrongful death, [(48,000 − 12,000) × .65 = 23,400], [48,000 − 12,000 − 23,400]) $12,600.00
(L) Subtotal E (Line j minus Line k) $171,150.00
(M) One-fifth of Subtotal E (Line l × .20) $34,230.00
(N) Subtotal F (Line l minus Line m) $136,920.00
(O) Refundable Disbursements $30,000.00
(P) Subtotal G (lower of Subtotal F or refundable disbursements) $30,000.00
(Q) Government's allowance for attorney's fees (attorney's fees percentage used to determine Subtotal D multiplied by subtotal G) $9,000.00
(R) Refund to the United States (Line p minus Line q) $21,000.00
(S) Credit against future benefits (If Subtotal F is greater than refundable disbursements, Line n minus Line o) $106,920.00