United States v. Lorenzetti

Background

Paul B. Lorenzetti, a special agent for the FBI, was injured in a car accident while on duty and received FECA (federal workers’ compensation) payments for medical bills and lost wages. He later sued the other driver under Pennsylvania’s no-fault law and settled for $8,500, a sum the parties say represented only pain and suffering, not medical expenses or lost wages. The United States then sought reimbursement of the FECA payments from that settlement under 5 U.S.C. §8132.

Reasoning

The central question was whether the federal reimbursement statute requires repayment from any third-party recovery even when that recovery compensates only noneconomic losses like pain and suffering. The Court relied on the plain language of §8132 and related §8131, which together create a broad right to reimbursement when a third party is legally liable and the employee receives money in satisfaction of that liability. The Court rejected the view that the statute should be limited because state no-fault rules prevent recovery of economic losses, and noted Congress had not narrowed the statutory text. The United States therefore prevailed: the statute authorizes reimbursement from the settlement.

Real world impact

The ruling means the federal government can claim repayment of FECA benefits from any third-party award or settlement that satisfies liability, even if that award is for pain and suffering only. Employees retain the statutory protection of keeping one-fifth of the net recovery after fees and costs, but their overall recovery from third-party suits may be reduced. The Court emphasized that changes to soften this result would have to come from Congress, not the courts.