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only proximately caused by tortious conduct; it must also be
directly causally related to personal injuries. Commissioner v.
Schleier, supra at 329-330; see also O’Gilvie v. United States,
519 U.S. 79 (1996). In other words, the mere fact that a
taxpayer suffers a “personal” injury from a defendant’s conduct
is insufficient to satisfy the “on account of personal injuries
or sickness” test; only recovery that is “attributable to” such
personal injury is excludable from gross income. Commissioner v.
Schleier, supra at 330-331. As interpreted by the Supreme Court,
the phrase “on account of” imposes a “stronger causal
connection,” thereby making section 104(a)(2) “applicable only to
those personal injury lawsuit damages that were awarded by reason
of, or because of, the personal injuries.” O’Gilvie v. United
States, supra at 83.
In the instant case, Mrs. Campbell’s only claim against OTS
was that OTS did not follow the RIF regulations in effecting her
reduction in grade (i.e., her demotion). On appeal to the MSPB,
her requested relief from OTS’s violation of the RIF regulations
was for OTS’s action reclassifying her position to be vacated and
for an award of compensatory damages including the lost wages and
benefits she would have been entitled to had she retained her
original position. The MSPB agreed with Mrs. Campbell and
ordered OTS to cancel Mrs. Campbell’s demotion and restore her to
her former position effective December 12, 1990, and to issue a
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