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check to Mrs. Campbell for the appropriate amount of backpay and
interest on the backpay. There is no evidence in the record that
Mrs. Campbell alleged to OTS or to the MSPB that she suffered any
personal injuries or sickness as a result of OTS’s violation of
the RIF regulations in effecting her demotion, nor is there any
evidence that the MSPB awarded her damages attributable to such
personal injuries or sickness. Accordingly, we cannot say that
the MSPB awarded Mrs. Campbell backpay and interest thereon “by
reason of, or because of, * * * personal injuries.” O’Gilvie v.
United States, supra at 83.
We recognize that, in some cases, damages measured by lost
wages can satisfy the second prong of the test in Commissioner v.
Schleier, supra, because they are awarded “on account of”
personal injuries or sickness. For example, if a taxpayer was
out of work for a time as a direct result of injuries, the
economic damages received to replace the wages lost during that
time would be excludable. Commissioner v. Schleier, supra at
329-331. This, however, is not the case for Mrs. Campbell. The
MSPB did not compensate Mrs. Campbell for wages she lost as a
result of missing work due to any personal injuries or sickness.
Rather, the award of backpay and interest on backpay ordered by
the MSPB replaced the pay and benefits Mrs. Campbell lost due to
her demotion without the benefit of the RIF regulations. As
such, the award of backpay and interest on backpay was not
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