EEOICPA BULLETIN NO.02-20
Issue
Date:
___________________________________________________________
Effective
Date:
___________________________________________________________
Expiration
Date:
___________________________________________________________
Subject:
Deducting payments received for final judgments or settlements from
EEOICPA benefits.
Background:
The Energy Employees Occupational Illness Compensation Program Act of
2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq., requires OWCP to “offset” or reduce the amount of EEOICPA
benefits it pays to a claimant by the amount of any payment received from
either a final judgment or a settlement in a lawsuit (except a lawsuit for
worker’s compensation) seeking damages for any occupational illness covered by
the EEOICPA. If the evidence in the case
file suggests that this type of payment may have been received, the Claims
Examiner (CE) will have to develop the case and determine if any EEOICPA
benefits that are payable to the claimant(s) must be reduced, and if so, by how
much.
Since a
payment received from either a final judgment or a settlement in a lawsuit can
be for multiple injuries and can be split among multiple parties, the actual amount
of the reduction of EEOICPA benefits will depend on how much of the payment was
for an occupational illness of a covered employee under the EEOICPA. It will also depend on much it cost the
claimant(s) to get the payment (attorney fees and other costs of the lawsuit)
since some of these costs can be applied against the payment to lower the
amount of the reduction of EEOICPA benefits.
Once these two figures are determined, any unpaid EEOICPA benefits must
be reduced on a dollar-for-dollar basis.
This guidance has been prepared to help the CE make these required
reductions.
References:
42 U.S.C. § 7385 and 20 C.F.R. § 30.505(b).
Purpose:
To explain how to make the required reduction of EEOICPA benefits.
Applicability: All staff.
Actions:
1. All claimants are asked to state if they have
received a payment from either a final judgment or a settlement in a lawsuit
seeking damages for an occupational illness covered by the EEOICPA. This question is currently asked on Form
EE/EN-15, so in many instances the CE will not see anything in the case file
that suggests that such a payment has been made before the claimant returns the
EN-15 to OWCP. Other claimants may state
that they received this type of payment in response to the questions about
civil lawsuits that are on the current version of Forms EE-1 and EE-2.
Once the case
file suggests that this type of payment has been made to any person (not just
the claimant), the CE must send a letter to the claimant asking for copies of
any complaint that was filed in court, any settlement agreement or sheet, and
an itemized list of any expenses or other deductions listed on any settlement
sheet. The claimant should be asked to
contact the attorney who represented him/her in the lawsuit to obtain this
evidence if the claimant does not have it.
The CE should ask for any further documents or explanations that may be
needed to determine the actual dollar amount of the payment(s) made for the
occupational illness covered by the EEOICPA, and to whom the payment(s) was
made.
2. EEOICPA benefits are not to be reduced if the
benefits awarded by the Department of Justice under section 5 of the Radiation
Exposure Compensation Act (RECA) were reduced by the full amount of the payment
received by the covered uranium employee or his or her survivor(s). In this type of case, the CE only needs to
document that the RECA benefits awarded were reduced by the Department of
Justice by the full amount of the payment.
However, if the amount of the payment exceeded the $100,000 that can be
awarded under section 5 of the RECA, the CE will have to reduce the claimant’s
EEOICPA benefits to account for the amount of the payment that exceeded
$100,000.
3. A settlement payment can include both an
initial cash payment and future payments.
These are called “structured” settlements. To determine the dollar value of a structured
settlement, the CE must combine the amount of any initial payment and the
present value of the future payments. If
the future payments are funded through an annuity, the CE may accept the
purchase price of the annuity as the present value of the future payments. If the claimant wants the CE to use a
different method of computing the present value, the claimant may make a written
request to the CE, but the claimant will have the burden to submit enough
evidence and analysis to allow the CE to decide if the different method should
be used.
4. Some settlements include payments that are
contingent on a future event that may or may not take place, such as the
diagnosis of an additional medical condition.
The CE should not attempt to put a dollar value on a contingent payment;
instead, any case that involves one of these must be referred to the National
Office.
5. Settlements may be reached with covered
employees that entitle them to payments for certain past medical expenses. In such cases, only payments for medical
expenses that would also be payable by OWCP are to be included in the amount of
the reduction of the claimant’s EEOICPA benefits. For example, medical expenses incurred prior
to the date of filing under EEOICPA would not be payable by OWCP and should not
be offset.
6. When a covered illness is aggravated by
medical malpractice, any payment on a final judgment or settlement relating to
the malpractice is an amount that must be reported to OWCP. However, no reduction of EEOICPA benefits is
required if the only payments received by a covered employee were for medical
treatment provided prior to the date the covered employee filed his or her
claim for EEOICPA benefits. In all other
claims involving a payment on a final judgment or settlement for medical
malpractice, the CE should refer the case to the National Office.
7. If a payment for a final judgment or
settlement has been made solely to a living covered employee, then the entire
payment (except for any part that is a payment for something other than an
occupational illness covered by the EEOICPA or for medical expenses for
services provided prior to the date the EEOICPA claim was filed) is a payment for
a covered illness.
8. If a joint payment is made to both a living
covered employee for a covered illness and to the spouse (or other family
members) for “loss of consortium,” the payment must be allocated between the
parties, since only the amount of the joint payment allocated to the covered
employee will be the amount of the payment for the covered illness. If a judge or jury specified how to allocate
the joint payment between the parties, the CE should usually accept that
allocation if it appears reasonable. In
any other case involving a joint payment, the CE will allocate 75% of the
payment to the covered employee as the payment for the covered illness, with
the remaining 25% representing the claim of the spouse or other family members
for loss of consortium. The covered
employee may accept this standard allocation or demonstrate good cause for a
different one. Whether to make a
different allocation is at the discretion of the CE. However, a different allocation cannot be
made unless the claimant can establish that a cause of action for loss of
consortium was actually asserted, and that such a cause of action is recognized
by state law.
9. Where the claimant(s) is the survivor of a
covered employee who received a payment for a covered illness under the EEOICPA
while he or she was still alive, the CE should follow the directions described
above in Items 7 and 8 to determine the amount of the payment for the covered
illness. This means that any payment the
covered employee received for his or her covered illness is the amount used to
reduce the EEOICPA benefits paid to the survivor(s).
10. Where the claimant(s) is the survivor of a
deceased covered employee and the claimant received a payment for a final
judgment or settlement in a lawsuit where he or she did not seek damages for
his/her own injuries, the payment the claimant received is actually for the
deceased covered employee’s covered illness and the CE should follow the
directions in Item 7 to determine the amount of the payment for the covered
illness.
11. If a covered employee dies while a lawsuit is
pending and the surviving claimant(s) is also a plaintiff in the same lawsuit,
a payment received from a final judgment or a settlement may include amounts
received for the claimant’s own cause of action. If a judge or jury specified how to allocate
a joint payment between the parties, the CE should usually accept that
allocation if it appears reasonable. In
any other case, the CE will allocate 50% of the joint payment to the deceased
covered employee as payment for the covered illness, with the remaining 50%
allocated to the spouse or other family members for loss of consortium and
wrongful death. The claimant(s) may
either accept this standard allocation or demonstrate good cause for a different
one. Whether to make a different
allocation is at the discretion of the CE, and a different one will not be made
unless it can be established that causes of action for loss of consortium or
wrongful death were actually asserted in the lawsuit, and that such causes of
action are recognized by state law.
12. After the CE has determined the amount of the
payment for a covered illness, reasonable attorney fees and costs of the
lawsuit may be deducted from this figure to arrive at the net amount of the required
reduction of EEOICPA benefits. To
determine the deduction for attorney fees, the CE should first divide the total
amount of attorney fees that were actually paid by the total payments received
due to the final judgment or settlement to arrive at the percentage of the
total payments that is represented by the total fees. In general, any fee that exceeds 40% of the
total payments will be deemed unreasonable and the amount allowed for attorney
fees will be reduced to that percentage.
To determine the amount of attorney fees to be deducted from the payment
for the covered illness, the payment for the covered illness should be
multiplied by the lower of the actual attorney fees percentage as calculated
above, or 40%. If the attorney fee
percentage exceeds 40%, the claimant should be informed and given an
opportunity to establish that an attorney fee in excess of 40% is reasonable.
13. Only some of the costs of bringing a lawsuit
may be deducted from the amount of the payment for the covered illness. Costs that are allowable are any out-of-pocket
expenditures that are not part of the normal overhead of a law firm’s
operation, such as filing fees, travel expenses, record copy services, witness
fees, court reporter costs for transcripts of hearings and depositions,
postage, and long distance telephone calls.
Costs that are considered normal overhead costs of a firm will be
disallowed, such as in-house record copying, secretarial or paralegal services,
and co-counsel fees. THESE COSTS MUST BE
ITEMIZED WHEN SUBMITTED TO THE CE FOR CONSIDERATION. Any costs that are not itemized will be
disallowed. The costs of a lawsuit with
multiple parties should be allocated among the parties in the same way that the
total judgment or settlement is allocated.
In any case in which costs are disallowed, the claimant should be given
an opportunity to establish that such costs are reasonable and should be
allowed.
14. These calculations will determine how much
OWCP must reduce the amount of any unpaid EEOICPA benefits to which the
claimant is entitled, beginning with the lump-sum payment. If the amount of the lump-sum payment is less
than the amount of the required reduction (i.e.,
a “surplus” remains), ongoing EEOICPA medical benefits payable in the future
will be reduced up to the amount of the remaining surplus. This means that OWCP will stop paying medical
benefits and will apply the amount it would otherwise pay to reimburse a
covered employee for ongoing EEOICPA medical treatment to the remaining surplus
until it is exhausted. Covered employees
should be encouraged to submit reimbursement requests for medical treatment,
even though they will not be reimbursed, because the amounts they paid will
reduce the surplus and shorten the time during which medical benefits cannot be
paid.
15. During any period when medical benefits are
not being paid because of the required reduction of EEOICPA benefits, and if
the CE finds it necessary in the course of normal case management to obtain a
second opinion examination, a referee examination, or a medical file review,
the costs for these procedures will be directly paid by OWCP and any reasonable
expenses incurred by the covered employee will be reimbursed without being
added to the surplus.
Disposition:
Retain until incorporated in the Federal (EEOICPA) Procedure Manual
PETER M.
TURCIC
Director,
Division of Energy Employees
Occupational
Illness Compensation
Distribution
List No. 1: Claims Examiners, Supervisory Claims Examiners, Technical
Assistants, Customer Service Representatives, Fiscal Officers, FAB District
Managers, Operation Chiefs, Hearing Representatives, District Office Mail &
File Sections