[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE FEDERAL EMPLOYEES' COMPENSATION ACT AND ITS BENEFITS
FOR WORKERS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
of the
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
May 13, 2004
__________
Serial No. 108-59
__________
Printed for the use of the Committee on Education and the Workforce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
or
Committee address: http://edworkforce.house.gov
U.S. GOVERNMENT PRINTING OFFICE
93-655 WASHINGTON : 2004
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800;
DC area (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP,
Washington, DC 20402-0001
COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN A. BOEHNER, Ohio, Chairman
Thomas E. Petri, Wisconsin, Vice George Miller, California
Chairman Dale E. Kildee, Michigan
Cass Ballenger, North Carolina Major R. Owens, New York
Peter Hoekstra, Michigan Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon, Robert E. Andrews, New Jersey
California Lynn C. Woolsey, California
Michael N. Castle, Delaware Ruben Hinojosa, Texas
Sam Johnson, Texas Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania John F. Tierney, Massachusetts
Charlie Norwood, Georgia Ron Kind, Wisconsin
Fred Upton, Michigan Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan David Wu, Oregon
Jim DeMint, South Carolina Rush D. Holt, New Jersey
Johnny Isakson, Georgia Susan A. Davis, California
Judy Biggert, Illinois Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio Ed Case, Hawaii
Ric Keller, Florida Raul M. Grijalva, Arizona
Tom Osborne, Nebraska Denise L. Majette, Georgia
Joe Wilson, South Carolina Chris Van Hollen, Maryland
Tom Cole, Oklahoma Tim Ryan, Ohio
Jon C. Porter, Nevada Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia
Paula Nowakowski, Staff Director
John Lawrence, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
CHARLIE NORWOOD, Georgia, Chairman
Judy Biggert, Illinois, Vice Major R. Owens, New York
Chairman Dennis J. Kucinich, Ohio
Cass Ballenger, North Carolina Lynn C. Woolsey, California
Peter Hoekstra, Michigan Denise L. Majette, Georgia
Johnny Isakson, Georgia Donald M. Payne, New Jersey
Ric Keller, Florida Timothy H. Bishop, New York
John Kline, Minnesota George Miller, California, ex
Marsha Blackburn, Tennessee officio
John A. Boehner, Ohio, ex officio
------
C O N T E N T S
----------
Page
Hearing held on May 13, 2004..................................... 1
Statement of Members:
Greenwood, Hon. James C., a Representative in Congress from
the State of Pennsylvania.................................. 4
Norwood, Hon. Charlie, Chairman, Subcommittee on Workforce
Protections, Committee on Education and the Workforce...... 2
Prepared statement of.................................... 3
Owens, Hon. Major R., Ranking Member, Subcommittee on
Workforce Protections, Committee on Education and the
Workforce.................................................. 4
Statement of Witnesses:
Carney, Susan M., Human Relations Director, American Postal
Workers Union, Washington, DC.............................. 17
Prepared statement of.................................... 19
Hallmark, Shelby, Director, Office of Workers' Compensation
Programs, Employment Standards Administration, U.S.
Department of Labor, Washington, DC........................ 5
Prepared statement of.................................... 7
Hunt, Dr. H. Allan, Kalamazoo, MI............................ 11
Prepared statement of.................................... 13
Lewis, Elliot P., Assistant Inspector General for Audit,
Office of the Inspector General, U.S. Department of Labor,
Washington, DC............................................. 22
Prepared statement of.................................... 24
EXAMINING THE FEDERAL EMPLOYEES' COMPENSATION ACT AND ITS BENEFITS FOR
WORKERS
----------
Thursday, May 13, 2004
U.S. House of Representatives
Subcommittee on Workforce Protections
Committee on Education and the Workforce
Washington, DC
----------
The Subcommittee met, pursuant to call, at 1:43 p.m., in
room 2175, Rayburn House Office Building, Hon. Charlie Norwood
[Chairman of the Subcommittee] Presiding.
Present: Representatives Norwood, Biggert, Owens, and
Payne.
Also Present: Representative Greenwood.
Staff Present: Molly McLaughlin Salmi, Deputy Director of
Workforce Policy; Donald McIntosh, Staff Assistant; Stacey
Dion, Professional Staff Member; Kevin Frank, Professional
Staff Member; Jim Paretti, Workforce Policy Counsel; Deborah L.
Samantar, Committee Clerk; Todd Shriber, Communications
Assistant; Kevin Smith, Communications Counselor; Ann Owens,
Minority Clerk; Marsha Renwanz, Minority Legislative Associate
for Labor; Peter Rutledge, Minority Senior Legislative
Associate for Labor.
Chairman Norwood. A quorum being present, the Subcommittee
on Workforce Protections of the Committee of Education and the
Workforce will come to order.
We are meeting today--I apologize to you now, I have a
little allergy. I am just going to say it once, I apologize.
We are meeting today to hear testimony on examining the
Federal Employees' Compensation Act and its benefit for
workers. Under the Committee Rule 12(b), opening statements are
limited to the Chairman and the Ranking Minority Member of the
Subcommittee. Therefore, if other Members have statements, they
may be included in the hearing record.
With that, I ask unanimous consent for the hearing record
to remain open 14 days to allow Members' statements and other
extraneous material referenced during the hearing to be
submitted in the official hearing record.
Without objection, so ordered.
STATEMENT OF HON. CHARLIE NORWOOD, CHAIRMAN, SUBCOMMITTEE ON
WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE
Chairman Norwood. The Subcommittee is meeting today to
examine the Federal Employees' Compensation Act, otherwise
known as FECA, which is the comprehensive workers' compensation
Law for Federal Employees.
I want to say up front, I view these types of hearings as a
great opportunity for Members of Congress to learn. And that
really is what this hearing is all about, for us to increase
our knowledge.
The law is designed to provide important benefits and
services to Federal workers who have suffered economic hardship
because of a work-related injury or death.
Today's hearing will allow us to examine the overall
effectiveness of the FECA program and to look at whether the
claims processing, communication, and payment procedures are
effective in meeting the needs of injured workers and
furthering the goals of this entire program.
I would like to note that we are not here to propose any
particular changes to the program at this point. I believe, and
so does our Chairman believe, that that would be premature at
this point. We need to learn more about how the program
operates and its overall effectiveness on behalf of workers
before considering any changes.
We also need to discuss recent changes that have been made
to the program, learn about the issues that have been
identified by the Office of the Inspector General and see how
the Office of Workers' Compensation Programs is today
addressing these issues.
OWCP plays a very important function in administering the
FECA program, providing wage-loss benefits and medical services
to injured Federal workers and helping them return to
productive work when they are medically able to do so.
During the last FECA oversight hearing held in October
2000, this Subcommittee looked at how OWCP communicates with
injured workers, employing agencies, and medical and other
service providers who are involved in treating Federal workers.
I know that the Office of the Inspector General previously
made a number of recommendations on how OWCP could improve the
program and enhance customer service. It is my understanding
that OWCP has been receptive to many of these recommendations
and has implemented changes that respond to the OIG's concerns.
Nonetheless, there is always room for improvement.
The Subcommittee continues to hear complaints from
claimants, medical providers and other congressional offices
about the difficulty in communicating with OWCP. One of my
colleagues from Texas recently forwarded a letter to me from a
constituent who is a physician with experience in treating
injured Federal workers. The physician pointed out that he has
now stopped seeing new patients with Federal workers'
compensation claims, as have many of his colleagues, because of
the repeated delays and denials for surgery requests. In his
experience, the typical delays for surgery approvals run
anywhere from 6 months to a full year.
And if that is a fact and going on very much, that is just
totally unacceptable. These kinds of delays can impact the
entire system by significantly increasing the amount of time
that workers remain off the job. While I know that the agency
receives and processes a vast amount of mail, medical bills and
phone calls each year, the program must continue to improve its
performance in these areas to benefit workers who need these
critical services.
I would like to thank the witnesses for being available to
share their expertise with us today. We look forward to your
testimony.
Finally, I would like to recognize my colleague from the
Full Committee, Congressman Greenwood, who has had a long-
standing interest in this program and is joining us today.
Mr. Greenwood, we appreciate that. And I am going to yield
Congressman Greenwood the remainder of my time.
[The prepared statement of Chairman Norwood follows:]
Statement of Hon. Charlie Norwood, Chairman, Subcommittee on Workforce
Protections, Committee on Education and the Workforce
The Subcommittee is meeting today to examine the Federal Employees'
Compensation Act, otherwise known as FECA, which is the comprehensive
workers' compensation law for federal employees.
The law is designed to provide important benefits and services to
federal workers who have suffered economic hardship because of a work-
related injury or death.
Today's hearing will allow us to examine the overall effectiveness
of the FECA program and to look at whether the claims processing,
communication, and payment procedures are effective in meeting the
needs of injured workers and furthering the goals of the program.
I would like to note that we are not here to propose any particular
changes to the program. That would be premature.
We need to learn more about how the program operates and its
overall effectiveness on behalf of workers before considering any
changes.
We also need to discuss recent changes that have been made to the
program, learn about the issues that have been identified by the Office
of the Inspector General (OIG), and see how the Office of Workers'
Compensation Programs (OWCP) is addressing these issues.
OWCP plays a very important function in administering the FECA
program--providing wage loss benefits and medical services to injured
federal workers and helping them return to productive work when they
are medically able to do so.
During the last FECA oversight hearing held in October 2000, this
Subcommittee looked at how OWCP communicates with injured workers,
employing agencies, and medical and other service providers who are
involved in treating federal workers.
I know that the Office of the Inspector General previously made a
number of recommendations on how OWCP could improve the program and
enhance customer service.
It is my understanding that OWCP has been receptive to many of
those recommendations and has implemented changes that respond to the
OIG's concerns. Nonetheless, there is still room for improvement.
The Subcommittee continues to hear complaints from claimants,
medical providers and other Congressional offices about the difficulty
in communicating with OWCP. One of my colleagues from Texas recently
forwarded a letter to me from a constituent who is a physician with
experience in treating injured federal workers.
The physician points out that he has now stopped seeing new
patients with federal workers' compensation claims, as have many of his
colleagues, because of the repeated delays and denials for surgery
requests. In his experience, the typical delays for surgery approvals
run anywhere from six months to a full year.
These kinds of delays can impact the entire system by significantly
increasing the amount of time that workers remain off the job. While I
know that the agency receives and processes a vast amount of mail,
medical bills and phone calls each year, the program must continue to
improve its performance in these areas to benefit workers who need
these critical services.
I would like to thank the witnesses for being available to share
their expertise with us today. We look forward to your testimony.
Finally, I would like to recognize my colleague from the Full
Committee, Congressman Greenwood, who has had a long-standing interest
in this program and is joining us today.
______
STATEMENT OF HON. JAMES C. GREENWOOD, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF PENNSYLVANIA
Mr. Greenwood. Thank you, Mr. Chairman very much, both for
the courtesy of allowing me to participate in this hearing and
for the opportunity to make a brief statement. We were here 7
years ago. I was reviewing the record of that hearing from
1997, and I am very eager to see what has changed.
This is a program that obviously can fail in one of two
ways. One of those is to not adequately take care of Federal
workers who have been injured and need help from the program to
recover and to exist.
And the other is to have Federal workers take advantage of
the program and remain in the program where, in many instances,
they can have more net take-home pay than they did when they
were working and, without proper oversight and follow-through,
can remain on the rolls for a lifetime and, in fact, can go out
and get second employment. We all know that that happens. I
don't know that anybody has ever been able to successfully
quantify the extent to which that happens, but we know that,
anecdotally, it is a horrendous situation.
So I am eager to see how things have changed in the last 7
years. Thank you, Mr. Chairman.
Chairman Norwood. Thank you Mr. Greenwood.
Now I yield to the distinguished Ranking Minority Member
from New York, Mr. Owens, for whatever opening statement he
wishes to make.
STATEMENT OF HON. MAJOR OWENS, RANKING MEMBER, SUBCOMMITTEE ON
WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE
Mr. Owens. Thank you, Mr. Chairman. I applaud the fact that
you said this is an education process for Members of Congress
as much as anything else.
It is also an oversight hearing on the Federal Employees'
Compensation Act. As we know from the Department of Labor's own
Web site, FECA is an extremely vital program. It provides
essential protections for Federal workers in the event of
workplace injuries and illness.
The devastating terrorist attack on Federal workers in
Oklahoma City provided a case study of how pivotal this program
is in assisting surviving relatives of workers killed on the
job. Likewise, services provided under FECA to those Federal
workers seriously injured in the Oklahoma City bomb attack made
the difference between rapid recovery and dangerous setbacks.
Under this program, nurses visited the injured workers in
the hospital, arranged the prompt support for critical medical
care and managed the coordination of other urgent services.
Oklahoma City was a shining example of both the importance of
this program and how seamlessly it can work.
I am, by all means, open to hearing suggestions today about
how to make improvements in what the Labor Department's Web
site already describes as a highly cost-effective self-
insurance system. However, I would be strongly opposed to any
effort to use this oversight hearing as a mechanism for putting
FECA benefits on the chopping block. Oklahoma City taught us
how the FECA program can at times literally mean the difference
between life and death.
Let us not forget that we have Federal civilian employees
in harm's way in Iraq and Afghanistan now. If injured or killed
on the job, FECA will be central to them and their dependents.
I look forward to hearing the witnesses at this hearing,
Mr. Chairman.
Chairman Norwood. Thank you, Mr. Owens.
I want to assure you, this is not about a chopping block
for anything. It is a time for us to see if we can improve and
make the program better and find out what is going on. I
appreciate your statement.
And now I would like to begin with our panel of witnesses.
To my colleagues here, I would like to introduce you to our
witnesses. The first one is Mr. Shelby Hallmark, the director
of the Office of Workers' Compensation Programs at the Labor
Department.
Thank you folks being here.
Dr. Alan Hunt, the assistant executive director of the
Upjohn Institute for Employment Research.
Dr. Hunt, thank you.
Ms. Susan Carney, human resources director at the American
Postal Workers Union.
Ms. Carney, thank you for taking time.
Mr. Elliot Lewis, the assistant inspector general for audit
at the Labor Department's Office of the Inspector General.
Mr. Lewis, we appreciate you giving us this time.
Before our witnesses begin their testimony, I would like to
remind our Members that we will ask questions after the entire
panel has testified. In addition, Committee Rule Two imposes a
5-minute limit on all questions.
For the panel, I bring your attention to the light that is
in front of you. When that thing lights up yellow, that means
red is pretty close by. I would be grateful if you would sort
of cut it off at that point. It always embarrasses me to cut
our guests off, and I don't like to do that. So if you would
help me with that, I would be very grateful.
With that, Mr. Hallmark, I would like to recognize you now
for 5 minutes for your testimony.
STATEMENT OF SHELBY HALLMARK, DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, EMPLOYMENT STANDARDS ADMINISTRATION,
U.S. DEPARTMENT OF LABOR, WASHINGTON, DC
Mr. Hallmark. Thank you, Mr. Chairman, and Members of the
Subcommittee. I appreciate the opportunity to come here today
to talk about the measurable progress that we have made in
administering the FECA program and also some of the challenges
that we see to making it reach its potential as a world-class
workers' compensation system.
FECA covers, as you have said, 3 million Federal workers.
Last year, we paid $2.3 billion to about 280,000 individuals.
We provided crucial and focused assistance for victims of the
9/11 and anthrax attacks, Oklahoma City and other tragedies
and, most recently, to civilian employees in Iraq and
elsewhere.
Our goal is to provide that same level of high service to
all of the 170,000 Federal workers who are injured each year.
In the past decade, we have worked hard to transform
ourselves from a bureaucratic organization focused on process,
to a proactive service delivery organization that is looking at
outcomes for customers as well as improving the service quality
and containing costs for the program as a whole through careful
measurement and accountability, improved administrative
budgets, for which we thank the Congress.
In creative case management strategies and increased
cooperation with Federal agencies, we have made real progress
toward those goals that we set out about 10 years ago.
My written testimony will provide more details about the
progress that we have made. And I can only touch on them in the
time that is given to me today. But I will do a few examples.
First of all, in the area of communications that you
mentioned, Mr. Chairman, we have dramatically improved the
accessibility and responsiveness of our offices to our
customers. That was a particular problem in the past. We have
established a wide range of very specific and challenging goals
to address it and to improve work there. We know there are
continuing problems, and we continue to work really hard.
We have increased the number of injured workers that we
return to work each year with assistance almost fourfold over
the 10-year period. Working case-by-case, we have reduced the
average time that a serious injury takes a person away from the
Federal workplace by over a month in the past 8 years. And we
have made a whole series of major technological enhancements,
including a brand-new electronic case-management system,
outsourcing and centralizing our mail and managing work and our
medical bill process and a totally new support IT system, which
is coming this summer.
We have also worked very hard with our Federal counterparts
with the employing agencies and doubled the speed that they
have in filing OWCP claims with us. We have been very pleased
that the President announced a Safety and Health and Return-to-
Employment initiative this winter. That SHARE project will
focus greatly the attention of the entire Federal establishment
on these goals. All of that has allowed us to achieve almost
all of our--achieving our different goals.
As a result, OMB has evaluated the FECA program as
moderately effective, the second best score that any Department
of Labor agency has received. That, we think, is a fair rating
for where we are right now. It shows some of our progress, and
it also points us to the things that we need to further
improve.
We are proud of all these achievements, but despite them,
the costs continue to go up in the FECA program, and return-to-
work improvements are increasingly difficult. Of the two goals,
GPRA goals that we did not meet last year were our most
important lost-production-day goals. We cannot make fundamental
cuts in those goals without addressing the structural problems
that are built into the statute.
Return to work following injury, a very difficult task. It
can require physical, mental and emotional accommodations. Some
employees are so seriously impaired they cannot make that
transition. But the overwhelming majority of FECA injuries can
be overcome.
When our system provides disincentives to return to work or
encourages people to cling to a disability mindset, the
difficult transition is slowed or it may not happen at all. And
if that happens, if those delays occur, then everyone pays--
costs to the taxpayers, lost productivity to the employing
agency and for the workers themselves, and disrupted family
lives and diminished self-esteem. All too often this happens in
our system. And we think we should address that.
Some of the disincentives that exist to return to work now
in the FECA system are the following: One, it was mentioned,
the augmentation of benefits for dependents, creates a 75
percent tax-free benefit that often exceeds take-home pay. No
other State system provides this level. OPM retirement benefits
are far less generous, and therefore, thousands of FECA
beneficiaries are beyond their retirement age. Many believe
they have retired on FECA.
Return to work would mean giving up 75 percent FECA
benefits, tax-free, at the risk or even the certainty, in some
cases, of a lower OPM pension at eventual retirement. That
gives a powerful disincentive to return to work and results in
people staying on the rolls for the time that they do.
The absence of an effective waiting period combined with
our unique continuation-of-pay feature means that many minor
injuries which would be excluded in State systems result in
time lost from work in the FECA system.
We have improved the administration of the FECA program,
but we still have many major challenges, especially regarding
return-to-work outcomes. We would like to put FECA on an even,
more positive trajectory for the coming century so that it can
provide the benefits that we all believe are important.
The 2005 President's budget proposes legislation to update
benefit structures, strengthen return-to-work incentives and
adopt best practices of State workers' comp systems. Those
changes combined with the administrative initiatives that I
have mentioned will serve to reduce lost-production days and
bring the program into the modern age while maintaining the
world class benefit levels and employee-friendly processes and
rules that we have now. With relatively modest changes to the
system structure, FECA can become a model for other systems to
emulate.
I will be glad to answer questions.
[The prepared statement of Mr. Hallmark follows:]
Statement of Shelby Hallmark, Director, Office of Workers' Compensation
Programs, Employment Standards Administration, U.S. Department of
Labor, Washington, DC
Chairman Norwood and Members of the Subcommittee:
My name is Shelby Hallmark. I am the Director of the Office of
Workers' Compensation Programs (OWCP), a component of the Employment
Standards Administration, within the Department of Labor. OWCP
administers four workers' compensation programs, of which the Federal
Employees' Compensation Act (FECA) is by far the largest. I appreciate
the opportunity to discuss the real and measurable progress we have
made in improving administration of FECA, and the challenges that must
be addressed if the program is to reach its potential as a world-class
workers' compensation system.
The FECA program covers nearly three million employees. It provides
a variety of benefits for employees injured in the performance of duty,
including payments for medical care, wage-loss compensation for total
or partial disability, schedule awards for loss, or loss of use of
certain body parts, and assistance in returning to work, including
vocational rehabilitation. FECA also provides benefits to the survivors
of Federal employees who die in performance of duty. In fiscal year
2003, the FECA program paid over $2.3 billion in benefits to about
280,000 individuals.
In recent years, we have provided crucial and focused assistance to
the victims of the September 11, 2001, and anthrax attacks, the
bombings of our embassies in East Africa, the Oklahoma City tragedy,
and most recently to civilian employees hurt or killed in Iraq. While
most of the injuries we address are less dramatic, OWCP endeavors to
provide the same high level of service to all injured Federal workers.
Because this protection is critically important to Federal
employees, OWCP strives to provide benefits to beneficiaries as quickly
as possible. For the nearly 170,000 workers who file notices of new
injuries each year, we have maintained a consistent record of timely
adjudication and prompt processing of wage-loss claims and medical
bills since the 1980's.
The FECA program's solid record of accomplishment is based on a
strategic planning process that started even before the advent of the
Government Performance and Results Act (GPRA).
The Past 10 Years: Where We Are Now
Since 1994, OWCP has focused on return to work, service to injured
workers, fiscal integrity, and partnerships with stakeholders. OWCP set
goals to move the FECA program beyond its traditional role of providing
cash benefits, dedicating resources to improving the likelihood that
injured workers will recover and return to duty as quickly as possible.
When an employee covered by FECA becomes disabled due to a work-
related injury or illness, the program is pledged to restore that
worker to gainful employment as quickly and completely as is medically
appropriate. New disability management strategies and strengthened
vocational rehabilitation assistance that have been implemented since
1994 characterize this make-whole emphasis. We are especially proud of
the high number of workers successfully returned to work with our
assistance--over 9,200 of the 15,000 referred for intervention last
year--nearly a four-fold increase over our results in 1994. We are also
proud of the 18 percent reduction in time lost in serious new cases
since 1996--in 2003, the average severe injury case resulted in 35
fewer lost .
We also recognize our fiduciary responsibility to Federal employers
and taxpayers. Innovative disability case management strategies and
effective cost containment measures have enabled the program to hold
the cost of the FECA program--both benefit outlays and administrative
costs--to an annual average increase of 4.2 percent over the past ten
years.
At the same time, greater resources have allowed the program to
focus on several areas that needed attention. These initiatives have
started at different times over the past decade, but are still in
effect and subject to continuous reexamination and improvement. For
example, careful case management, including the use of contract nurses,
greatly expanded medical and vocational rehabilitation services, and
contract medical scheduling brokers who arrange for second opinion
medical examinations, have allowed the program to use its core staff
more effectively.
FECA also has improved its communication with its customers,
including injured workers, medical providers, and Federal employers.
The last time this subcommittee held a hearing on FECA there were a
number of concerns about the quality of our communications with
customers (U.S. General Accounting Office, ``Goals and Monitoring Are
Needed to Further Improve Customer Communications ,'' GAO-REPORT 01-
72t, October 3, 2000). Since 2000, the program has undertaken a top-to-
bottom renovation of its processes for communicating with customers and
stakeholders. Investments in personnel and equipment reflect concerted
efforts to standardize both the information provided and the methods of
delivery, so that callers to our 12 district offices will receive
clear, consistent and prompt answers to their inquiries. OWCP has also
made information more readily available through automated means via
telephone and the Internet, and that access is continually being
expanded and improved. Later this year the Internet access to FECA case
status information will be made directly available to our claimants for
the first time, using OPM's ``Employee Express'' portal. Customer
satisfaction is routinely measured and tracked, to assess how well
these communication and service improvements have worked. In 2004, we
added a GPRA goal to measure our success in this area. These
enhancements have resulted in real improvements in accessibility and
responsiveness.
Several major administrative initiatives launched during the past
few years have provided better support services for injured workers.
One of these has been the establishment of a centralized mail operation
in 2001, whereby all routine mail and bills for the FECA program are
directed to a private contractor where the mail is scanned, categorized
at a high level, and transmitted electronically to the district
offices. This process has dramatically improved OWCP's ability to
control and manage incoming mail--previously a serious problem for the
program.
In 2003, the program consolidated its medical authorization and
bill payment processes. Currently, a private contractor processes all
medical bills and handles treatment authorizations for FECA medical
providers and beneficiaries. Although there have been start-up problems
in implementing this new bill payment system, it has already freed up
resources in our district offices to better address injured workers'
needs and focus on quality adjudication, case management, and
communications. When new service standards, programming changes and
telephone service improvements are fully in place, the new centralized
system will provide more consistent, better controlled, and more
efficient bill payment services.
We have also worked closely with employing agencies to encourage
faster transmission of notices of injury and claims for compensation
from the agencies to OWCP. Progress in submitting these forms more
quickly yields faster adjudication and payment, and fewer customer
service problems. More than a quarter of new claims are now received
via Electronic Data Interchange from the Departments of Labor, Defense,
Treasury, Transportation, Veterans Affairs, and Homeland Security, and
that percentage is expected to grow in the future.
In January, President Bush announced the Safety, Health and Return-
to-Employment (SHARE) Initiative, which directs Federal agencies to set
goals and track results in four areas: lowering workplace injury and
illness case rates; lowering lost-time injury and illness case rates;
reporting injuries and illnesses in timely fashion; and reducing days
lost from work injuries and illnesses. In partnership with the
Occupational Safety and Health Administration, OWCP is working with
agencies to develop new strategies for improving safety and health at
sites with high injury rates, increasing the timeliness of reporting
claims through electronic and other means, and providing suitable
work--all of which will help achieve OWCP's key goal: reducing lost
production days.
Finally, OWCP has made two improvements designed to make claims
staff more efficient and effective in handling their caseloads. In
discussing the central mail operation I mentioned that claims are now
scanned and handled electronically. This has greatly improved our
staff's ability to quickly access and review new materials, and enabled
multiple parties to share information quickly and without risk of
losing files.
Later this year, a second IT improvement will arrive in the form of
iFECS, the Integrated Federal Employees' Compensation System. This
fully unified information support system will replace the disparate
group of legacy programs that OWCP staff has used since the 1970's to
process claims actions, make payments, and track results. These legacy
systems have required redundant and time-consuming data entry by claims
examiners, and blocked implementation of critical enhancements and
modern decision support technology. Together, the electronic case
processing, central bill payment system, and the new iFECS support
system will go a long way toward providing a truly state of the art
environment for case adjudication and management that will expedite the
handling of claims and dramatically improve productivity and customer
service.
While these initiatives are being implemented, OWCP continues to
achieve significant progress toward its challenging GPRA goals. In
2003, the FECA program met four of its six GPRA goals, including:
savings through management of long-term compensation payments (our
``Periodic Roll Management'' program); rehabilitation of Postal Service
employees into private sector jobs when they cannot return to work at
the Postal Service; medical cost containment; and setting a baseline
for communication quality. These successes continued a tradition of
strong GPRA performance by the program, and a commitment to achieving
challenging real-world results.
However, two critical GPRA goals have not been met. While our
Quality Case Management program continues to be effective, with the
average days lost in serious new injuries down by 18 percent since
1996, the program missed its two Lost Production Day targets (reducing
overall lost production days for the Postal Service and for all other
agencies). These goals were not met because the total number of new
wage-loss claims, and days of ``continuation of pay,'' increased during
fiscal year 2003. OWCP's disability management efforts, with the help
of the employing agencies and the encouragement of the President's
``SHARE'' initiative, should allow us to improve our performance
against these critical lost days goals.
Challenges remain
Despite our progress to date, there are structural features in the
FECA which create, in themselves and in their interplay with civil
service retirement law, incentives for workers to enter and remain on
the long term disability rolls long after they could be expected to
return to work. Returning to work following a significant injury can be
a difficult and lengthy process, requiring physical, mental and
emotional adjustments for the employee. When a workers' compensation
system adds economic disincentives to the picture, that difficult
transition occurs more slowly or not at all, creating higher costs to
the taxpayers, lost productivity to the employing agency, and for
workers themselves and their families, disrupted lives and diminished
self-esteem.
As currently structured, FECA creates direct disincentives to
return-to-work in two significant ways. The first and most far-reaching
is that while the basic rate of FECA compensation, 66 2/3%, is
comparable to most state systems, the majority of Federal employees
receive an augmented benefit, 75%, reflecting at least one dependent.
Computed at 75% tax free, FECA benefits frequently exceed the
employee's pre-injury take home pay. Few state systems provide any
augmentation for dependents, and none approaches the Federal level.
A second major disincentive to an employee's recovery and
resumption of a Federal career is the disparity between retirement
benefits provided by OPM and long-term FECA benefits. Under current
law, the thousands of long-term FECA beneficiaries who are over normal
retirement age have a choice between Federal retirement system benefits
and FECA benefits, but they overwhelmingly elect the latter because
FECA benefits are typically far more generous. Injured employees who do
return to work risk the possibility that their retirement income will
be less than it would have been had they stayed in the FECA system on
total disability. Thus the FECA and retirement benefit structures
intertwine to discourage employees from returning to work.
Other features of FECA have an indirect effect on return to work
and the monetary and personal costs of Federal workers' compensation.
For example ,FECA, like all state systems, has a waiting day provision
whose original intent is to discourage the filing of workers'
compensation claims for minor injuries that resolve quickly. A waiting
period before wage-loss compensation can be paid is virtually universal
in state systems. In FECA, however, the waiting period is not applied
until after the worker has received the full 45 days provided under
FECA's unique ``continuation of pay'' provision, thus defeating its
very purpose. The delayed waiting period unnecessarily burdens program
administration with numerous minor injuries and makes the program
vulnerable to over-utilization. The figure below shows the growth of
incoming injury reports after the 1974 amendments inserted the
continuation of pay provision and effectively cancelled the impact of
waiting days.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
In closing, Mr. Chairman, I believe the FECA program is at a
critical juncture. As I described at the beginning of my remarks, we
have worked hard over the past decade to enhance service delivery,
improve communications, control costs, and provide a prompt, reliable,
and cost-effective workers' compensation benefit for injured workers
and their employers. Federal agencies have made significant strides
toward the safety, return-to-work, and timely claim processing goals of
the ``SHARE'' initiative. Overall, the program has made major progress,
but we still have major challenges, especially in achieving appropriate
return-to-work outcomes.
We would like to put the FECA program on an even more positive
trajectory for the coming century. The fiscal year 2005 Budget's
reproposal of legislation to update the benefit structure, adopt best
practices of state workers' compensation systems, and strengthen
return-to-work incentives will serve to reduce lost production days and
bring the program into the modern age. With relatively modest changes
to the system's structure, FECA can become far more effective, and can
be held up as a model for other systems to emulate.
______
Chairman Norwood. Dr. Hunt, you are now recognized for 5
minutes.
STATEMENT OF DR. H. ALLAN HUNT, KALAMAZOO, MI
Dr. Hunt. Thank you, Mr. Chairman. I just want to preface
my remarks by saying that I speak from 29 years of experience
in workers' compensation research but, more specifically, from
the experience of being a subject-matter expert in a study
funded by the Employment Standards Administration last year
called the Program Effectiveness Study of the FECA program.
In my view, the FECA program operates predominantly like an
exclusive State or provincial workers' compensation fund for
Federal workers. Therefore, I have compared FECA performance
with both U.S. and Canadian workers' compensation systems, in
other words, both private and public workers' compensation
systems.
I want to focus just on two performance measures here
today, promptness of payment and disability duration. When
workers are injured, maintaining an uninterrupted stream of
income is obviously one of their major concerns. Figure 1 in my
testimony shows the promptness of payments results for 12 U.S.
States available from the Workers' Compensation Research
Institute.
The typical elapsed time from date of injury to the first
income replacement payments in those 12 States is 63 days or 2
months. Only about 45 percent of wage-loss claims see their
first payment within 21 days.
Figure 2 in my testimony shows the same measurement for
Canadian provincial systems, promptness of payment ranges from
about 22 days in Alberta, British Columbia, and Nova Scotia to
50 days in Prince Edward Island. Average is around 30 to 35
days. Thus, the state-of-the-art in promptness of payment is
not very good, certainly from the worker's perspective.
The situation under FECA in which Mr. Hallmark has already
referred to is not directly comparable because of the
continuation-of-pay provisions. OWCP sets goals for
adjudicating claims post-COP, which amount to 45 days, 90
percent adjudication of traumatic claims and more for non-
traumatic, what they call extended claims.
Generally speaking, they achieve those goals. But I don't
regard them as very ambitious. Unfortunately, we don't have a
measure of the distribution, so I can't really compare
promptness of payment. However, just in scoping out where we
are, it appears to me that promptness of payments in the FECA
system is roughly comparable to that in U.S. workers'
compensation systems.
The other performance measure I want to mention is duration
of disability. OWCP was not able to give us a precise statistic
that enabled us to compare durations with other workers'
compensation systems, but they were able to give us a rough
indicator of the number of long-term claims which matches
Canadian measures that are available.
Figure 4 shows that there is considerable variability among
Canadian provincial systems in the number of claims that are
receiving benefits at the end of the second calendar year
following injury. As you will see from the graph, the range is
from 1.4 percent in the province of Alberta to 6.5 percent in
New Brunswick.
Figure 5 shows a comparable statistic for FECA claims by
district office. The percent of lost time claims that are
receiving payments at the end of the second calendar year
following the injury roughly comparable to Canadian ranking
from 1.8 percent to 4.8 percent.
It is vital to mention that in neither case do we know if
the claimant was continuously in payment status or in
disability status since the injury. This is only a snapshot.
However, it does not appear to me that FECA claims last
significantly longer than those in Canadian workers'
compensation systems. Unfortunately, we do not have a
comparable measure for U.S. systems.
The last measure I want to mention is in Figure 5 because I
think OWCP deserves some kudos for this. Under GPRA, the
measurement of lost-production days is what I regard as the
best outcome measure that I have encountered in my 29 years in
the workers' compensation world. It captures the desired
outcome, namely, minimizing the work time lost due to
occupational injuries and illnesses, in a single number.
Figure 6 shows that OWCP has driven that lost-production
day rate down by approximately one-third in the past decade
through a disability management program called Quality Case
Management. This does not represent the entire population, it
is important to say, but it is a very significant improvement.
During the course of this study, I was pleasantly surprised
by the level of policy development, the commitment to the plan
and the goal orientation of OWCP in administering FECA. I was
particularly impressed with the field visits I made to the
Dallas office. I was struck by the high level of understanding
they had of the overall mission and their individual part in
it. Their customer orientation was also, frankly, greater than
I had expected beforehand.
I also found that OWCP relies on their strategic plan and
their annual performance plans in a way that would make the
authors of GPRA proud. The plans are specific. Performance is
measurable. And the goals are taken very seriously.
So my conclusion is that OWCP is doing a very good job of
administering FECA.
Thank you.
[The prepared statement of Dr. Hunt follows:]
Statement of Dr. H. Allen Hunt, Kalamazoo, MI
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
------
Chairman Norwood. Ms. Carney, you are recognized for 5
minutes.
STATEMENT OF SUSAN M. CARNEY, HUMAN RELATIONS DEPARTMENT
DIRECTOR, AMERICAN POSTAL WORKERS UNION, WASHINGTON, DC
Ms. Carney. Mr. Chairman and Members of the Subcommittee, I
am the director of the Human Relations Department for the
American Postal Workers Union AFL/CIO.
I would also like to introduce Richard Boutwell, APWU
Federal injury compensation specialist, who is here with me
today to assist with some questions after my comments.
On behalf of APWU, I would like to say that we appreciate
the opportunity to present our views on behalf of the workers,
regarding the Federal Employees' Compensation Act and its
administration by the Office of Workers' Compensation Program.
The impact of job-related injuries can be devastating to
workers and their families in both their workplace and personal
lives. Medical expenses and a loss of income often result in
loss of property, damaged credit and consequential family
problems.
It is human nature to minimize the consequences or discount
the effects of a medical condition until it strikes you or a
close family member. I have a very different perception on the
injured employee's quality of life. You see, I suffer from
Carpal Tunnel and Thoracic Outlet Syndromes causal to my
employment with the United States Postal Service.
The simple acts that we all take for granted aren't so
simple for me. Some examples are, driving, activities with my
children, household chores. I am not even able to do my own
hair without going to a salon because I can't keep my arms up
long enough. I am not the same person I was before my injury. I
am not the exception nor am I unique among the thousands of
workers who are injured on the job each year.
Federal workers' lives are not favorably changed by the
workplace injuries. Employees who receive wage-loss
compensation are placed in a leave-without-pay status. They
cannot accrue sick leave or annual leave and cannot make or
receive contributions to their thrift savings plan for
retirement purposes, benefits they would otherwise be entitled
to if not for their on-the-job injury.
Partially disabled employees who are not able to work to
work full-time are, according to the Officer of Personnel
Management, part-time employees even if their employment status
is career, full-time. Their base pay will be pro-rated, and the
subsequent annuity reduction can be dramatic.
Additionally, a disabled employee's pay rate for wage-loss
compensation is frozen as of the date of the injury or first
disability and does not increase as a result of contractual pay
raises and COLAs or step increases.
It has been suggested that a reduction in the wage-loss
compensation formula would serve as an incentive for all
claimants to return to work. This would subject injured workers
to additional financial hardship and possible re-injury. This
would not be a substitute--this should not be a substitute for
the cures that modern medicine has to offer.
It should also be mentioned that if an injured employee
qualifies for Social Security Act benefits that are paid for
disability, then FECA benefits will be reduced by the Social
Security Act benefits attributable to the employee's Federal
service. Continuation of pay is only paid for timely filed,
traumatic injury claims, not occupational illnesses.
According to the United States Postal Service statistics,
the average COP usage is just 66.3 hours per traumatic injury.
As for the argument that the 3-day waiting period, which I
believe is what we have alluded to, would discourage frivolous
or non-meritorious claims, this reasoning implies that it is
permissible to penalize the worker whose injury was not severe
enough.
Non-meritorious claims are going to be denied by OWCP. When
the claim is denied, the employee must reimburse the employer.
Therefore, these non-meritorious claims are not a cost factor
for the employer. And a 3-day waiting period is simply a
pretext for an inequitable reduction of a reasonable wage-loss
payment for the worker.
We also hear arguments for creating a FECA retirement
system. Compelling people to retire because they have reached a
certain age is contrary to our national policy. As stated
earlier, since injured employees are in a leave-without-pay
status, for first employees, the maximum impact will result in
their annuity funding being diminished by 15 percent of their
basic pay and result in a loss of the accrued rate of the
return on their TSP investment.
Injured workers with disabilities are not able to earn
supplemental income as so many healthy annuitants currently do.
Disabled workers should not be held to a higher standard,
singled out for financial hardship nor be expected to make do
on a reduced annuity.
Postal Service injury case rates have declined steadily,
yet costs continue to rise due to medical fees. To cut costs,
it is imperative to control the escalating prices of the
medical industry.
Less than 65 percent of the notice-of-injury/illness forms
are received by OWCP from employing agencies within the time
limits. We suggest that OWCP be granted enforcement powers
regarding the employing agency's obligations under the act.
While we recognize that OWCP has made significant changes
to improve services, there are still deficiencies. We think
that more claim examiners would be beneficial in the
adjudication process of the claim in order to get the
individual medical attention to return them back to suitable
work.
Additionally, we suggest that OWCP make genuine oversight
with all contracting companies. We found that some of their
contract agencies are nonresponsive. There is not an ability to
terminate the contract with them. Ergonomic injuries alone cost
billions of dollars annually. Repealing the ergonomic standards
to quell the costs, there must be employer accountability to
ensure a safe working environment that is mindful of unsafe
conditions and of ergonomic standards.
The Federal Employees' Compensation Act is a law based in
equity. The employer gives up some of the defenses available
under common law, and the employee similarly foregoes the full
range of damages which would be awarded. It is a non-
adversarial process designed to provide a predictable level of
reliability for the employer and predictable level of benefits
for the employee.
To amend the law in a manner which upsets this balance
would be a disservice to the overriding concept of fairness
that is the law's foundation. Unilaterally reducing benefits to
the injured worker simply is an effort to lighten the financial
liability of the employer and is not an equitable response to
the increasing injury compensation costs. Injured workers
already suffer losses, both financial and emotional, for which
they can never be compensated. A reduction in benefits that
were fairly established would unjustly increase the already
substantial burden of their injuries and illnesses and
literally add insult to injury.
[The prepared statement of Ms. Carney follows:]
Statement of Susan M. Carney, Human Relations Director, American Postal
Workers Union, Washington, DC
Mr. Chairman and members of the subcommittee:
I am Sue Carney, Director of the Human Relations Department of the
American Postal Workers Union, AFL-CIO. I would also like to introduce
Richard Boutwell, APWU Federal Injury Compensation Specialist and
Assistant to the Human Relations Department. On behalf of APWU
President William Burrus and our members I would like to say that we
appreciate the opportunity to present our views regarding the Federal
Employees' Compensation Act (FECA) and its administration by the
Department of Labor, Employment Standards Administration, Office of
Workers' Compensation Program (OWCP).
The APWU is the largest postal union in the world, representing
over 300,000 postal workers in the clerk, maintenance, and motor
vehicle service crafts. We are employed in approximately 38,000 sites
throughout the country, providing a public service in every city, town
and community in our nation. Workplace injuries and illnesses
negatively impact a significant number of postal employees. In
recognition of this, it is a priority function of the APWU Human
Relations Department to provide guidance to our members regarding their
rights and responsibilities, as well as the employer's obligations to
them under the Federal Employees' Compensation Act.
Overview
Any analysis of federal injury compensation costs which focuses on
the reduction of benefits runs counter to the sprit of FECA, and risks
the creation of fundamental inequities for the injured worker. Any
analysis which is based on the assumption that federal employees are
somehow better off because they have become partially or totally
disabled due to a workplace injury or illness is, at best, misguided.
Before I discuss the FECA benefit structure, let me point to the
very real losses suffered when a federal employee becomes partially or
totally disabled due to an on-the- job injury or illness. The impact to
injured workers and their families can be devastating in both their
workplace and personal lives. Medical expenses and a loss of income
often results in loss of property, damaged credit and consequential
family problems. Regardless of the compassion you possess for the
injured, or how fluent you are regarding various workers compensation
programs, it is human nature for those who have never suffered a
workplace injury to minimize the consequences or discount the effects
of a medical condition until it strikes them or a close family member.
Until then, diagnoses such as carpal tunnel syndrome, herniated discs,
elbow tendonitis, rotator cuff tears, and closed-head injuries are just
words on a page. Due to my personal experiences, I have a very
different perception on the injured employee's quality of life. I
suffer from carpal tunnel and thoracic outlet syndromes causal to my
employment with the United States Postal Service. I have impairments of
29% loss of use to my right arm and 15% loss of use to my left arm. The
simple acts that we all take for granted aren't so simple for me.
Imagine not being able to drive for any real distance, or having
difficulty turning the doorknob to enter your own home, missing out on
activities with your kids, requiring assistance with household chores,
and having to go to the salon because you can't raise your arms long
enough to style your own hair. My former husband has two herniated
discs as a result of his employment with the USPS. Our family went
months without his wage loss compensation benefit. It took five years
for his back surgery to be approved. Our free time was spent in the
doctor's office three times a week for physical therapy, injections,
routine follow-up visits, completing forms or obtaining medical
reports. He is not the same person he was physically or psychologically
before his injury. We are not the exception nor are we unique among the
thousands of workers who are injured on the job each year.
Any injury compensation policy analysis which implies that federal
workers' lives are favorably changed by their workplace injuries
demonstrates a fundamental disconnect regarding the realities of life.
Benefits Lost
Totally disabled employees or partially disabled employees who
return to work less than full-time, and receive wage loss compensation
are placed in a leave without pay (LWOP) status. Employees in a LWOP
status cannot accrue sick or annual leave and cannot make or receive
contributions to their Thrift Savings Plan for retirement. Benefits
they would otherwise be entitled to if not for their on the job injury.
And while their LWOP will count as creditable service for
retirement purposes, partially disabled employees who are not able to
return to work full-time are, according to the Office of Personnel
Management, part-time employees, even if their employment status is
career full-time. Their base pay will be pro-rated when their annuity
is computed. The subsequent annuity reduction can be dramatic.
Additionally, a disabled employee's pay rate for wage loss
compensation is frozen as of the date of injury or first disability and
does not increase as a result of contractual pay raises and COLAs, or
step increases (a claimant will receive an OWCP COLA after receiving
wage loss compensation for one year).
Benefits
FECA's wage replacement rate is 66 2/3%, and if there is a
dependent the rate is 75%. There is no income tax deduction from these
injury compensation payments, but the employee's health care and
optional life insurance premiums are still deducted. The average Postal
Service bargaining unit employee has a base pay of under $42,000. At
this pay rate it is highly unlikely that the injured bargaining unit
employee is going to receive a net pay increase as a result of a
disabling injury. When comparing FECA to state wage loss compensation
rates, it should be noted that an average bargaining unit employee's
weekly compensation of $538 would be less than the average maximum
state wage weekly compensation of $559. It has been suggested that a
reduction in the wage loss compensation formula would serve as an
incentive for all claimants to return to work. Subjecting injured
workers to additional financial hardship and possible re-injury should
not be a substitute for the cures that modern medicine has to offer. It
should also be mentioned that if an injured employee qualifies for
Social Security Act (SSA) benefits that are paid for disability, then
FECA benefits will be reduced by the SSA benefits attributable to the
employee's federal service.
Continuation of pay (COP) is paid only for timely filed traumatic
injury claims. It is not paid for occupational illness claims.
According to USPS statistics the average COP usage is just 66.3 hours
per traumatic injury. Implementing a three-day waiting period would
impose a 37% slash to the worker's pay that if not for the workplace
injury they would be earning. As for the argument that the three-day
waiting period would discourage ``frivolous'' or ``non-meritorious''
claims, this reasoning implies it's permissible to penalize the worker
whose injury was not severe enough; the waiting period could prove to
be counter productive. Putting it plainly, non-meritorious claims are
going to be denied by OWCP. When the claim is denied the employee must
reimburse the employer either by substituting leave for the COP, or by
paying out of pocket. Therefore, these non-meritorious claims are not a
cost factor for the employer, and a three-day waiting period is simply
a pretext for an inequitable reduction of a reasonable wage loss
payment for the worker.
We also hear arguments for creating a ``FECA Retirement System,''
maintaining that a totally disabled person should be forced into OPM
retirement at a certain age. We would argue that compelling people to
retire because they have reached a certain age is contrary to national
policy and implies that injured employees chose to become totally
disabled in order to gain some financial advantage. Additionally, there
is no equity in terminating wage loss compensation when an injured
employee reaches some arbitrary age. Many people are working well
beyond ``normal'' retirement age because they simply cannot afford to
retire. As stated earlier, since injured employees are in a LWOP
status, neither they nor their employing agency may make contributions
to TSP. For FERS employees, the maximum impact would result in their
annuity funding being diminished by 15% of their basic pay and the
accrued rate of return on their TSP investment. Additionally, injured
workers who continue to have disability causal to their employment
would not be able to earn supplemental income to their annuity as so
many healthy annuitants currently do. Disabled workers should not be
held to a higher standard, singled out for financial hardship, nor be
expected to make do on a reduced annuity.
Medical Costs
Statistics from the Department of Labor indicate that Postal
Service injury case rates have declined steadily since fiscal year
2000, and continue to decline in fiscal year 2004, yet their federal
injury compensation costs continue to rise. One major cost driver is
the continuing increase in total amounts billed for medical services.
In any efforts to cut costs, it is imperative to control the escalating
prices of this powerful industry rather than reduce benefits to injured
employees.
FECA Changes
Department of Labor submission timeliness reports establish that
less than 65% of notice of injury or illness forms (CA-1s/CA-2s) are
received by OWCP from the employing agencies within the federally
mandated time limits (ten working days), and less than 48% of wage loss
compensation claim forms (CA-7s) are received by OWCP in a timely
manner (five working days). These delays have a significant impact on
timely adjudication of entitlement to benefits. Until OWCP receives
these claim forms, they cannot begin the claim adjudication process.
They are unable to initiate the process of evaluating the merits of the
claim, to monitor both the medical treatment and the employee's return
to medically suitable work. OWCP's internal analysis has demonstrated
that the delayed submission of the forms for notice of injury and claim
for wage loss compensation make a significant difference in the length
of time an injured worker remains off the job, even when injuries and
working conditions are similar.
Under the current FECA, OWCP does not have any enforcement powers.
They can only attempt to persuade and cajole federal agencies to submit
claim forms within the time limits mandated by federal regulation. We
suggest that OWCP be granted enforcement powers in regards to
addressing the entire experience of injured workers, from the day of
injury to their return to work. This is a change which would benefit
the injured employee, the employer, and OWCP.
Ergonomic injuries alone cost taxpayers, businesses and workers
billions of dollars annually. OSHA estimates that each year, 1.8
million workers suffer from musculoskeletal disorders and that 600,000
people miss work because of them. The Labor Department estimated that
``new safety rules'' for employers would prevent injury to about
300,000 workers annually and save the U.S. economy $9 billion.
Repealing the Ergonomic Standards may have relieved business groups of
the financial burden to correct workplace safety violations, but it did
nothing to quell the costs of injuries that they or U.S. taxpayers
encounter because of them. The latter is a far greater burden than the
cost of addressing the unsafe conditions. Therefore, if in fact the
Safety, Health and Return-to-Employment Initiative and this committee
are genuine in their goal of reducing the costs of injury, then there
must be more than initiative goals beyond that of job performance.
There must be employer accountability to ensure a safe work environment
that is mindful of unsafe conditions and of ergonomic standards.
Finally, we recognize OWCP has made efforts to improve services.
They have made technological improvements in order to process claims
more efficiently, which provides claims examiners with more immediate
access to imaged records and reduces delays in claim processing. The
implementation of a centralized mailroom that services all OWCP
District Offices has reduce routing time to responsible claims staff,
and reduced record-misplacement occurrences. Although OWCP has relieved
its claims examiners of some clerical duties, claims examiners are
still in short supply to adequately adjudicate claims in a timely
manner. These shortages cause delays in prompt medical treatment, which
results in prolonged recovery for claimants and hardships for both
claimants and the employers.
In another effort to expedite service, OWCP recently contracted
with a single company, ACS, to approve all medical services requiring
prior authorization and to handle its bill payment processes.
Contracting out, however, has created some new problems. Claims
examiners are no longer available to discuss medical bills,
reimbursements and authorizations with claimants, their
representatives, or their physicians. ACS representatives are not
responsive, nor do they demonstrate consistency in applying the
regulations, which has resulted in unnecessary delays. We suggest that
when duties are contracted out that there be a Statement of Work
Agreement that specifies obligations and includes relief to OWCP of the
contract when a vendor fails to meet the terms of the agreement.
Additionally, we suggest that OWCP maintain genuine oversight with all
contracted companies.
Conclusion
The Federal Employees' Compensation Act is a law based in equity.
The employer gives up some of the defenses available under common law,
and the employee similarly forgoes the full range of damages which
could be awarded. It is a non-adversarial process designed to provide a
predictable level of liability for the employer, and a predictable
level of benefits for the employee. To amend the law in a manner which
upsets this balance would be a disservice to the overriding concept of
fairness that is the law's foundation. Unilaterally reducing benefits
to the injured worker simply in an effort to lighten the financial
liability of the employer is not an equitable response to the
increasing injury compensation costs. Injured workers already suffer
loses, both financial and emotional, for which they can never be
compensated. A reduction in benefits that were fairly established would
unjustly increase the already substantial burden of their injuries and
illnesses, and literally add insult to injury.
Thank you for this opportunity to address these important issues.
______
Chairman Norwood. Mr. Lewis, you are now recognized for 5
minutes.
STATEMENT OF ELLIOT P. LEWIS, ASSISTANT INSPECTOR GENERAL FOR
AUDIT, OFFICE OF THE INSPECTOR GENERAL, U.S. DEPARTMENT OF
LABOR, WASHINGTON, DC
Mr. Lewis. Good afternoon, Mr. Chairman, and Members of the
Subcommittee. Thank you for the opportunity to testify on the
work of the Office of Inspector General, U.S. Department of
Labor in the Federal Employees' Compensation Act Program.
Today, I will highlight some of our recent audit and
investigative work in FECA and outline legislative
recommendations for improvement of this important program.
I am accompanied by Stephen Cossu, the assistant inspector
general who oversees investigations related to the program. I
request that my written statement be included in the hearing
record.
Effective and efficient management of the FECA program
works to the benefit of every claimant, Federal agency, and
taxpayer. Through our oversight of the program, we have
highlighted several challenges regarding internal controls and
procedures. Weaknesses in internal controls increase the risk
of improper payments to FECA claimants across the Federal
Government and medical providers who serve them.
Over the years, we have made recommendations for
improvement in the areas of customer service and program
integrity. And OWCP has recognized the need to implement
changes in response to our concerns.
However, we continue to identify weaknesses in several
areas in the program. For example, during our audit of the
Department's 2003 financial statements, we found that OWCP is
not ensuring that claimants submit medical evidence to support
continuing eligibility for compensation and medical benefits.
This appeared to be due to OWCP's failure to comply with its
own procedures rather than a lack of responsiveness on the part
of the claimant. The ineffectiveness of this control increases
the susceptibility of this multibillion dollar program to fraud
and overpayments.
Another area of concern involves the use of Social Security
data. Use of this data is integral to the effective operation
of the FECA program. In a September 2000 audit, we reviewed the
potential use of cross-matching FECA data and Social Security
wage data to combat fraud and overpayments within the program.
As a result of our cross-match, we identified and referred for
investigation 33 cases that showed a potential cost savings of
$7 million to the FECA program. We believe that legislation
allowing OWCP access to Social Security wage data could provide
a cost-effective tool to identify and remove dishonest
claimants who is conceal their earnings.
We have long been concerned with OWCP's customer service.
In OIG reports in 1999 and 2002, we recommended the Department
improve its goal-setting and measurement of customer
satisfaction. We are looking into the Department's
implementation of our recommendations as part of a current
evaluation on customer service.
The OIG receives complaints, via our hotline, that cover a
variety of matters and allegations. During FY 2003, the OIG
hotline received 116 complaints related to OWCP and the FECA
program. These complaints involved allegations of poor customer
service, unfair practices, privacy concerns, mismanagement and
fraud. Individual complaints are either addressed by the OIG or
referred to OWCP.
In further response to hotline complaints received and as a
follow-up to our past work, we have initiated the following
work in the FECA program: We are currently evaluating OWCP's
handling of complaints of poor customer service. We are
assessing the extent to which data-mining techniques can be
used by the OIG and the Department to identify patterns of
improper FECA payments, fraud and abuse. Our financial
statement audit work for 2004 will specifically look at FECA's
new medical bill payment system. And finally, we are reviewing
the accuracy and validity of FECA-reported performance data.
From an investigation point of view, the OIG investigates
FECA fraud, such as claimants who have jobs that are
incompatible with their disability and fraud committed against
the FECA program by service providers. In 2003, the OIG opened
154 cases, had 59 indictments, 49 convictions, and over $14
million in monetary results in the FECA program area.
In the past, the OIG has made recommendations to strengthen
the program. These have included addressing the 3-day waiting
period, addressing the move from FECA to some form of
retirement benefit, and granting access to Social Security wage
records and a national directory of new hires in order to
identify claimants defrauding the program.
In conclusion, Mr. Chairman, our findings and
recommendations have focused on helping to make the FECA
program operate more effectively and efficiently while ensuring
the integrity of the program.
This concludes my statement. Mr. Cossu and I will be
pleased to answer any questions you or other Members of the
Subcommittee may have. Thank you.
[The prepared statement of Mr. Lewis follows:]
Statement of Elliot P. Lewis, Assistant Inspector General for Audit,
Office of the Inspector General, U.S. Department of Labor, Washington,
DC
Good afternoon Mr. Chairman and members of the Subcommittee. Thank
you for the opportunity to testify on the work of the Office of
Inspector General (OIG), U.S. Department of Labor (DOL), in the Federal
Employees' Compensation Act (FECA) program. My name is Elliot Lewis and
I am the Assistant Inspector General for Audit at the OIG. Today I will
highlight some of our recent audit and investigative work in FECA and
outline legislative recommendations for improvement of this important
program. I am accompanied by Stephen J. Cossu, Assistant Inspector
General for Labor Racketeering and Fraud Investigations, who oversees
investigations related to the program. He and I will be available to
answer any questions the Subcommittee may have regarding the OIG's work
in the FECA program.
Background--Federal Employees' Compensation Act
The U.S. Department of Labor (DOL) administers several programs and
statutes designed to provide and protect the benefits of workers. FECA
is a comprehensive workers' compensation law covering some 3 million
Federal and Postal employees. It is designed to provide medical
benefits, income replacement, and certain supportive services to
Federal employees with work-related injuries or, in the case of deaths,
survivor benefits to family members. The Office of Worker Compensation
Programs (OWCP), which is within the Employment Standards
Administration (ESA), is responsible for making eligibility
determinations and for the initial reconsideration if a claim is
denied. Benefits are paid from the Employees' Compensation Fund, which
is principally funded through chargebacks to the Federal agency that
employs the injured worker. Therefore, the FECA program affects the
budgets of all Federal agencies, and quasi-Federal agencies such as the
United States Postal Service.
Recognizing the need to improve this program, this past January the
Administration launched a Government-wide initiative to improve
workplace safety and health and reduce the costs of injuries to workers
and taxpayers. Known as the SHARE (Safety, Health, and Return-to-
Employment) initiative, it calls for all Departments to establish goals
to lower workplace injury and illness case rates; lower lost-time
injury and illness case rates; improve the timeliness of reporting
injuries and illnesses; and reducing lost productivity days due to work
injuries and illnesses. The Secretary of Labor has been designated to
lead the initiative in terms coordinating the development of goals for
each Department and measuring their performance. The OIG is encouraged
by the goals of this initiative.
OIG Activities Relating to FECA
Mr. Chairman, effective and efficient management of the FECA
program works to the benefit of every claimant, Federal agency, and
taxpayer. Through our oversight of the program, we have highlighted
several challenges regarding internal controls and procedures. Our
concerns have been included in our Annual Management Challenges Report
for several years. Weaknesses in internal controls increase the risk of
improper payments to FECA claimants across the Federal government, and
medical providers who serve them. Over the years, we have made
recommendations to OWCP for improvement in the areas of customer
service and program integrity and OWCP has recognized the need to
implement changes in response to our concerns.
Financial Statements Audits
However, Mr. Chairman, we continue to identify weaknesses in
several areas in the program. For example, during our audit of the
fiscal year 2003 DOL Financial Statements, we found that OWCP is not
ensuring that claimants submit medical evidence to support continuing
eligibility for compensation and medical benefits. Claims Examiners are
required to obtain and review medical evidence on a periodic basis to
determine continuing claimant eligibility. Our audit found the lack of
current medical evidence in 18 percent of sampled cases, which appeared
to be due to OWCP's failure to comply with its own procedures rather
than a lack of responsiveness on the part of the claimant. The
ineffectiveness of this control increases the susceptibility of this
multi-billion dollar program to fraud and overpayments.
Social Security Data
Another area of concern involves the use of Social Security
Administration (SSA) data. Use of this data is integral to the
effective operation of the FECA program. In a September 2000 audit, we
reviewed the potential use of crossmatching FECA data and SSA data to
combat fraud and overpayments within the program. As a result of our
crossmatch, we identified and referred for investigation, 33 cases that
showed a potential cost recovery and cost avoidance of $7 million over
10 years for the FECA program. We believe that legislation allowing
OWCP access to SSA wage data could provide a cost-effective tool to
identify and remove dishonest claimants who conceal their earnings.
Customer Service
Our 1999 evaluation of OWCP's FECA customer service surveys
revealed the existence of methodological flaws in several areas,
including survey design, measurement of customer service, sampling,
response rate, and survey operations. As a result, we made a number of
recommendations to enhance the accuracy of the data by improving the
survey methodology and thus helping OWCP judge and improve the quality
of customer service provided. The agency agreed with most of our
recommendations and incorporated them in its subsequent survey.
However, OWCP has conducted no written survey since 2000, focusing
instead on telephone surveys.
A 2002 OIG report on FECA performance measures recommended, and the
Department agreed, to establish a performance goal for customer
satisfaction. We are looking at the Department's implementation of our
recommendation as part of our current evaluation of FECA customer
service, which I will address in a moment.
Hotline
The OIG receives complaints via our hotline that cover a variety of
matters and allegations. During fiscal year 2003, the OIG Hotline
received 116 complaints related to OWCP and the FECA program. These
complaints involved allegations of poor customer service, unfair
practices, privacy concerns, mismanagement by OWCP, and fraud against
the program. Some complaints are referred to OWCP for action and those
dealing with allegations of fraud remain with the OIG.
Current Work
In further response to hotline complaints received and as a follow-
up to our past work, we have several current work projects underway in
the FECA program:
Customer Service Evaluation--In this on-going review we
are evaluating OWCP's handling of claimant complaints of poor customer
service. Our objectives are to determine:
The extent to which one OWCP district office
responded to and resolved complaints;
If employing agencies are satisfied with OWCP
customer service; and
If OWCP telephone surveys provide an adequate
indication of customer satisfaction.
We would be pleased to share the results of our work upon its
completion.
Data Mining--We are currently assessing the extent to
which data mining techniques can be used by the OIG and the Department
to identify patterns of improper FECA payments, fraud, and abuse.
Financial Statement Audit--The FECA program has
implemented a new medical bill-processing system during fiscal year
2003. Our DOL financial statement audit work for fiscal year 2004 will
look at payments generated by the new system.
FECA Data Validation--We are reviewing the accuracy and
validity of Government Performance and Results Act performance data
reported by the Department with respect to FECA.
Fraud
From an investigations point of view, the OIG investigates claimant
fraud and fraud committed against the FECA program by service
providers. In fiscal year 2003, the OIG opened 154 cases, had 59
indictments, 49 convictions, and over $14 million in monetary results
in the FECA program area. We also closed 153 cases from fiscal year
2003 and prior years.
The following cases are representative of the types of fraud we
regularly investigate:
A former Department of Army employee was sentenced to six
months' home confinement, 100 hours of community service, two years of
supervised probation, and ordered to pay more than $150,000 in
restitution for receiving benefits for an employment-related injury
while he sold hay and livestock and, for a fee, delivered topsoil and
gravel.
A former Postal worker was sentenced to six months' home
detention and five years' probation and ordered to pay $101,206 in
restitution after pleading guilty to charges of making false statements
to obtain Federal workers' compensation benefits. He was operating a
tax business and a limousine business and not reporting this to OWCP as
required. This investigation was conducted jointly with the U.S. Postal
Inspection Service.
An orthopedic clinic specializing in sports medicine
agreed to pay $2.65 million to settle allegations of overbilling by 17
of its physicians. This investigation, also conducted jointly with the
U.S. Postal Inspection Service, was the result of a qui tam action
filed by an employee who alleged that the clinic and its physicians
knowingly overbilled government healthcare programs, including $110,000
in overcharges to DOL's FECA program.
Recommendations to Improve the FECA Program
In the past, the OIG has made recommendations to strengthen the
program. These include:
Changing the Continuation of Pay (COP) Period
FECA currently has a provision that allows employees who sustain
disabling job-related traumatic injuries to receive continuation of
their regular pay for a period not to exceed 45 calendar days after the
injuries. Currently, a three-day waiting period, before FECA benefits
could begin, is at the end of the COP period, which does not serve to
discourage frivolous claims. We recommend returning the three-day
waiting period (before FECA benefits can start) to the beginning of the
45-day continuation-of-pay period. This would require employees to use
any accrued sick leave, annual leave, or leave-without-pay for that
three-day waiting period, before their FECA benefits could begin.
(Should the claim be approved by OWCP, any leave used during this
three-day waiting period would be restored.)
Establishing a Retirement Age for Beneficiaries
Currently, FECA beneficiaries are not required to retire at any
age. Therefore, beneficiaries may remain on disability for life. This
results in a strong incentive to continue to receive FECA benefits,
since the tax-free benefits are much greater than any retirement
earnings would be. The OIG recommends that a suitable retirement age be
established under the Act for FECA claimants. Once the beneficiaries
reach the specified retirement age, their retirement benefits would be
adjusted downward to a specified level; however, medical benefits could
still be paid by OWCP.
Accessing Earning Information
Accessing Social Security wage information and the National
Directory of New Hires, which is maintained by the Department of Health
and Human Services, could be used by OWCP to document whether a
claimant has outside employment. If it is determined that the claimant
has unreported outside employment or income, any inappropriately paid
benefits can be reduced or withdrawn. Access to Social Security wage
information would also be useful to verify the validity of any Social
Security numbers provided by the claimants. Unfortunately, OWCP can
only access Social Security wage information if the claimant gives OWCP
permission to do so. A refusal to grant such authorization has no
adverse impact on the claim. Also the National Directory of New Hires,
which contains employer-reported information on newly hired
individuals, is not currently available to OWCP. Claimants who are
defrauding the FECA program are unlikely to willingly grant OWCP or the
OIG the authority to access information about their earnings.
Provisions in law would be required for OWCP and the OIG to have access
to Social Security data and the National Directory of New Hires,
similar to the access already provided to several other Federal
agencies.
Conclusion
In conclusion Mr. Chairman, our findings and recommendations have
focused on helping to make the FECA program operate more effectively
and efficiently, while ensuring the integrity of the program. This
concludes my written statement; Mr. Cossu and I would be pleased to
answer any questions you or the other members of the Subcommittee may
have.
______
Chairman Norwood. Thank you very much, Mr. Lewis.
To begin our questioning, I will call on Mrs. Biggert for 5
minutes.
Mrs. Biggert. Thank you, Mr. Chairman.
And thank you all for coming today.
Mr. Hallmark, has the use of private contractors for
administrative processing made the program more efficient?
Mr. Hallmark. Yes, I believe it has. We have used
contractors for different parts of the FECA program for many
years. And it has allowed us to expand and leverage our staff
resources to accomplish the really labor-intensive aspects of
this program.
We have--as Mr. Lewis mentioned, we started a medical bill
pay contract this past September. And that contract is still in
the development stage. We are continuing to have fairly serious
problems. Although, we believe they are on the road to
improvement at the present moment.
But as a principle, we find that contracting out for
commercial aspects of what we do to be a successful strategy
for the program.
Mrs. Biggert. Does it make it more expensive?
Mr. Hallmark. It is not cheap to do the work that we are
accomplishing through the contractor. And part of the issue
that we have, and Elliot mentioned it as well, and I think also
Sue that we need to do a better job of administering those
contracts to ensure that we do have the most efficient process.
And that is something we are also working on.
Mrs. Biggert. Have you had to let some of the contractors
go because they weren't doing their job then?
Mr. Hallmark. We literally have thousands of contractors.
We contract for vocational rehabilitation services on an
individual counselor basis, for nurse rehabilitation on an
individual nurse basis, and large contracts for----
Mrs. Biggert. So it is not a big company all the time that
comes in?
Mr. Hallmark. No. It is a whole range, from one-person
operations to multi--our contract for medical services is with
Lockheed Martin, fairly large entity. In some cases, we have
had to deal with contractors and take actions to shift from one
source to another. And that is just the nature of that
business.
Mrs. Biggert. Then, Mr. Hallmark, Ms. Carney noted in her
testimony that OWCP has real power to compel agencies to submit
claim forms within the time limit that has been mandated by
Federal regulation. So how do you handle that, currently,
particularly in a situation where an agency has failed
repeatedly to submit claim forms in a timely manner?
Mr. Hallmark. The FECA statute provides for a criminal
penalty which, to my knowledge, has never been implemented.
Obviously, if we are aware of--and we have been advised
from time to time through history--of a situation where just a
flat-out failure to report has occurred, and in those cases we
would work with the agency and, if need be, with law
enforcement officials to address the issue. And we have used
the IG and the agency IGs to address those kinds of egregious
situations.
But by far, the more common situation is just the simple
lack of promptness. And our approach to that has been, and I
think it has been very successful, has basically been to work
with the agencies and to build cooperation to make clear
measurements and targets for improvement which we, for example,
post on our Web site by agency. So we, in effect, use the power
of publicity to encourage agencies to get better.
And I can say, as I said in my opening remarks, since 1994
or so, when we started really focusing on this, the agencies
have gotten twice as good as they were. Now, they were horrible
in 1994, to be honest. They are now, as Sue indicated, the
average is about 65, 66, 67 percent timely. That is within 2
weeks. That is not good enough. But I would say that the trend
is very much positive. And the Postal Service, for example, has
made incredible strides, and they are now up near their target
of 90 percent, which they deserve credit for.
Ms. Carney. While the Postal Service may have made some
strides, it is a serious recurring problem. And I would like to
also point to the Attorney General's Office as the person that
we are supposed to go to when we file these complaints for
noncompliance. And, as Mr. Hallmark has said, that has never
happened because, of course, in the grand scale of things, we
are certainly at the bottom of the food chain for such--when
you compare terrorists versus the claim form didn't get there,
obviously, we don't get the attention that----
Mrs. Biggert. It is hard to tell you, it was lost in the
mail.
Ms. Carney. But in any case, and within OWCP's own--
Department of Labor's own study, it is a fact that, if we get
the claims in to OWCP and processed in a timely fashion, then
those employees recover more quickly because they are getting
their claim adjudicated. They are getting medical services. And
then they return to suitable work in a much more timely fashion
than the person that has maybe the same condition but didn't
get the claim, the receipt of claim. It is not an isolated
problem with the Postal Service. It is widespread, and it has
definitely----
Mrs. Biggert. Let me ask Mr. Hallmark again, usually when
some people are prompt, some people are early and some people
are late, it just seems like human nature. Is that true of the
agencies? Is it always the same agency that has the problem
with getting the forms in on time?
Mr. Hallmark. There are definitely patterns. If you look at
our Web site, you can clearly see, there are some agencies that
have not made progress, others that, as I say, have made
dramatic progress. Several of the agencies have come to us and
worked with the Department of Labor to, for example, transmit
their claims electronically so that it cuts out lost in the
mail. And we would like the Postal Service to do that, too, but
they are resistant. That makes a big difference. Those agencies
have moved ahead.
One thing we have in our favor at this point--we don't have
a criminal or a penalty kind of process that is really
effective--but we do have the President's SHARE initiative,
which sets goals not only to reduce the number of injuries that
have occurred or will occur but also to process the FECA claims
that do occur more rapidly. And each agency has a specific
target for improving each year for the next 3 years in that
area. And I think that will have an impact on the kind of
issues that Ms. Carney is talking about.
Chairman Norwood. Thank you, Mrs. Biggert.
I wouldn't hold my breath, Mr. Hallmark, to get the Postal
Service to start sending their claims in electronically.
I would now like to recognize Major Owens for 5 minutes for
questions.
Mr. Owens. Talk about conflicts of interest here.
Ms. Carney, what types of special difficulties would you
see lower-income injured workers having facing--see them facing
in the event that FECA benefits are terminated after age 65 in
favor of some sort of retirement annuity?
Ms. Carney. What difficulty?
Mr. Owens. What kind of problems do you see them facing?
Ms. Carney. First off, I don't think it is fair to even
make a comparability issue between the FECA programs and the
State programs. One of the issues is that, depending on where
you live, the cost of living is substantially higher than other
areas. The way FECA is currently set, with a slight increase
for those that have dependents, addresses that. So I think that
the compensation wage-loss would be of greater significance.
There is also not a formality within State programs, State
comp programs. As Federal employees, that is one of the
benefits we all have: We are supposed to have formal--you know,
common benefits.
Mr. Owens. You mentioned carpal tunnel syndrome, the
personal problem.
Ms. Carney. Yes. Thoracic Outlet Syndrome and Carpal
Tunnel.
Mr. Owens. Could you describe a little bit how that was
allowed as a legitimate claim when----
Ms. Carney. How did I get it?
Mr. Owens. No. No, not how you got it. When the new
Administration came into power here, the President, along with
the Republican majority in the Congress and the Senate, wiped
out the ergonomic standards that we had spent 10 years laboring
on. I want to know, how is your complaint legitimatized if we
don't have those standards in place?
Ms. Carney. Well, the machines that I worked on were
certainly the culprit in my medical conditions. They are not
ergonomically set for the human body to work on. And the
functions that I did, had they been taken care of through the
OSHA ergonomic standards, if I didn't have to do those
particular functions, if I did them on a machine that was built
more for the human being body type, as opposed to what we had
to go through, I wouldn't be suffering.
I would like to say, too, you know, my former husband--you
want to talk about--we addressed time issues, my former husband
also a Postal employee, also a back injury, two herniated
discs, 5 years to get his back surgery approved.
Mr. Owens. Thank you.
Dr. Hunt, how many State workers' compensation systems
remove retirement-age injured workers from their workers'
compensation programs? Is there any State that is currently
considering this?
Dr. Hunt. I didn't catch the last part of that. Could you
repeat that?
Mr. Owens. Is there any State that is currently considering
removing retirement-age injured workers from their workers'
compensation programs?
Dr. Hunt. I don't know if there are any that are currently
doing it. I don't know the exact number. I can submit that for
the record.
[The information referred to follows:]
Retirement Offsets in State WC Systems
I have briefly reviewed the OWCP publication State Workers'
Compensation Laws and estimate that there are about 15 states that
reduce wc benefits for receipt of SS retirement and/or employer pension
payments. Usually this amounts to an offset of the employer contributed
proportion only. The states that have some such offset include: AK, AR,
CO, CT, FL, LA, ME, MI, ND, PA, RI, TN, UT, WA, WV.
H. Allen Hunt, Ph.D.
Assistant Executive Director
Upjohn Institute for Employment Research
Kalamazoo, MI
______
Dr. Hunt. There are a number that have either a step-down
or other arrangement at age 65, at the traditional retirement
age. I don't know if it is comparable to what you are thinking
about for FECA or not.
Mr. Owens. Would you say one-half the States are doing it
or one-fourth of the States?
Dr. Hunt. I would think maybe a third of the States would
be my ballpark guess.
Mr. Owens. Mr. Hallmark, if the retirement age recipients
are to be assimilated into a defined benefit plan such as FERS
or CSRS, how would their number of service years and salary at
retirement be estimated?
Mr. Hallmark. Well, with great difficulty, I believe. The
issue of how one would construct a provision to address the
question of comparability between FECA benefits and OPM
retirement benefits is an extremely complicated one. GAO
studied it in the early 1990's and did a report laying out the
difficulties with respect to the proposal that I think you are
pointing to, which was that people actually be moved from the
FECA rolls and into the OPM pension structure.
And the complexities that you are alluding to, of where
their salaries were in the non-funded nature of that kind of a
shift, were pointed to with some clarity in that report. The
provision that is part of the President's proposal in the 2005
budget would not move individuals from the FECA roles to OPM
but would simply create a different benefit level within the
FECA structure and thereby eliminate those background
complexities.
Mr. Owens. My time is up. Thank you very much.
Chairman Norwood. Mr. Kline, you are recognized for 5
minutes.
Mr. Kline. Thank you, Mr. Chairman. Thank you, gentlemen
and lady, for being here today.
I took very much to heart the Chairman's comments earlier
that it is an educational experience. It certainly is for me.
And I very much appreciate your testimony and the answers to
the questions.
I have so many here in front of me, I am not sure exactly
where to start, except that I am trying to understand the issue
of Social Security numbers and access to them and medical
records. So let me start with a few for you, Mr. Lewis. We will
see how my time holds up if I get in as many as I can.
As I understand in your testimony, you state that OWCP does
not always ensure that claimants submit medical evidence to
support continuing eligibility for compensation of medical
benefits. Do you have an estimate of the amount of overpayment
made as a result?
Mr. Lewis. I do not have an estimate of what the total
amount could be as a result of that. We identify each year in
our audit in how many cases where there should have been a
request for follow-up medical evidence that either the request
wasn't made or the evidence wasn't submitted. In our most
recent work, we had looked at a random sample of 145 claims
that fit that category. And I think it was 27 that were not
compliant.
Mr. Kline. Fifteen percent or so. Mental arithmetic is
always a little risky for me.
Let me see if I understand then the issue with Social
Security records. Without access to Social Security records,
how is it that OWCP would be able to identify and remove any
dishonest claimants that there might be?
Mr. Lewis. Well, there is self-reporting and certification
in terms of any income that is earned and dependent status.
There is also a voluntary authorization from claimants to
confirm with Social Security on a one-time basis, and then
leads or referrals that we may get, say, in our IG or in other
agency IGs.
Mr. Kline. Do I understand that you are recommending that
OWCP have access to Social Security?
Mr. Lewis. Yes, to the wage information to verify if
someone begins working and has unreported wages.
Mr. Kline. In your judgment, would this access to this
information significantly reduce the cost of the program?
Mr. Lewis. Well, as I said in the testimony, in our last
look at that, we identified 33 cases that totaled $7 million.
So we think that is a much more efficient approach than trying
to tackle it person-by-person.
Mr. Kline. OK.
Mr. Hallmark, you mentioned, in response to an earlier
question and I think in your testimony, the SHARE program.
Could you just take another minute or so I have left and kind
of elaborate on that a little bit and tell us what follow-up
procedures are in place to ensure that the agencies are making
progress toward meeting the goals?
Mr. Hallmark. The SHARE initiative was announced in January
of 2004 by the President. It incorporates goals set for each of
the Federal agencies to reduce injuries that occur within their
workplaces, to speed the filing of FECA forms and also to
reduce lost-production days which is the measure that Dr. Hunt
was referring to.
All three--all of those goal areas are established by
agency for 2004, 2005 and 2006. The Department of Labor,
specifically OWCP and OSHA, will be working with each of the
agencies to monitor their activities, give them the technical
assistance to ensure that they are moving ahead along these
goal paths. And we will be publishing results of their
performance on a quarterly basis on our Web site. And we will
be reporting to the President annually to indicate how well we
see the whole program working.
Mr. Kline. OK. Thank you very much.
I see my time is about to expire. I have got one more,
getting back to the medical evidence, medical records issue and
again for you, Mr. Hallmark, what is OWCP doing now to improve
the process of periodically getting the medical evidence?
Mr. Hallmark. The finding of OIG was localized for the most
part in one of our district offices. We have 12 offices. That
office had the procedural breakdown.
The good news is that we have the new IT system that I
mentioned in my remarks is going into place this summer. That
system will provide prompts to claims examiners and to workers
automatically, instead of it having to be found. Those cases
will pop up on their computer screen, and they will be guided
through the process of ensuring that that data and evidence is
procured as needed.
Mr. Kline. OK. I understand now. Thank you very much.
Chairman Norwood. Thank you, Mr. Kline.
Mr. Greenwood, we are delighted to have you with the
Subcommittee today, and you are now recognized.
Mr. Greenwood. Thank you, Mr. Chairman.
Mr. Hallmark, is there any requirement that beneficiaries
re-certify periodically? Annually, do they have to recertify,
both as to their medical status? And does that have to be
signed off by a physician? How does that work?
Mr. Hallmark. There is an annual recertification process
with regard to employment and earnings and sort of basic status
of the individual. The medical--the reevaluation of medical
that Mr. Lewis was referring to is gradated depending on the
status of the claimant.
In some cases, where the individual has been on the rolls
for a longer time period and has been judged to be in a more
stable situation, we don't get a medical report every year. But
there is a 1- or 2- or 3-year cycle whereby we would go back to
that individual's physician to re-verify that the disability
from the work injury is continuing and justifies the continuing
payments.
Mr. Greenwood. When there is fraud, in cases of fraud, why
doesn't that periodical medical re-certification catch the
fraud?
Mr. Hallmark. Well, a number of reasons. One is that an
individual may have a condition--and the vast majority of
injuries that occur, the 170,000 that occur every year are
genuine injuries. It is very rare that someone comes forward
with a completely fraudulent case that doesn't exist.
So when we go back to an individual who is on benefits now,
they may very well have an injury. They may have a continuing
condition that a physician will indicate, yes, that condition
remains. However, the individual may still be able and may be,
in fact, working in some situations that we are not aware of
and failing to report it in the annual----
Mr. Greenwood. So it is more the double-dipping that causes
the fraud than just sort of malingering, if you will?
Mr. Hallmark. Well, certainly fraud, if you sign the
document saying you are not working and don't have any earnings
and, in fact, you are working and do have earnings, that is the
nature of the fraud that the IG finds.
Mr. Greenwood. That is the nature, but that there is a
continuing injury--what I am trying to understand here is, I go
to my doctor--and I am required to re-certify. The doctor says,
``Yes, the person is still injured.'' then the person is
actually working another job and falsely reports that he is
not. Did he pull one over on the doctor? I mean----
Mr. Hallmark. The doctor is not aware of any----
Mr. Greenwood. Not that he has got the other income, but
that he is well enough to work.
Mr. Hallmark. Most of the concerns that we are talking
about here are complex. And they are not of the kind that
typically are, yes, this person obviously is never going to
work again or, no, this person can go right back to work. They
are in the gray area. That is the nature of these injuries,
many of which are musculoskeletal injuries and subject to a lot
of variability and subjective findings.
That is why I was referring to the whole issue of
disincentives to return to work. The question many times is
that the transition to going back to work, there is--it is
rare, it is really quite rare that people are being fraudulent
and drawing the benefit and being off somewhere working at
another job. That happens, but I think the IG prosecutes 100
cases a year out of the 50,000 long-term roll cases we have.
Much more common is people who are continuing to draw that
benefit, not working, not engaging in fraud, but the question
is whether or not they shouldn't be back at work. And that is
the gray area.
Mr. Greenwood. If I am doing a manual labor, and I am
injured so that I can't do manual labor, do I--am I--is the
Federal Government able to compel that person on condition of
continuing to receive the benefit to do another kind of labor
that is less taxing on their physical body?
Mr. Hallmark. There are sections in FECA for participating
in a vocational rehabilitation program. So, yes, if an
individual is a blue-collar worker who cannot do the craft, one
of the things that we will do in our return-to-work effort is
identify possible alternative employment and----
Mr. Greenwood. One of the things that strikes me there is a
shortage of claims managers, right?
Didn't you say that, Ms. Carney, in your testimony? There
is a shortage of claims managers.
Ms. Carney. In my opinion.
Mr. Greenwood. I wonder how many people are receiving FECA
benefits who couldn't be claims managers. How hard a job does
that have to be? How much training does it take to become a
FECA claims manager?
Mr. Hallmark. I think our claims examiners would indicate
it is a very difficult job.
Mr. Greenwood. I am sure it is, but you don't have to go to
college for 9 years to learn how to do that, do you?
Mr. Hallmark. It is a complex business, but, yes, we do
have claims examiners who are former recipients of benefits who
got involved and learned the program through that avenue. And
that is fine.
We do look for all kinds of different employment where
people can be in that situation. But the big issue, the most--
the greatest difficulty in vocational rehabilitation is
employee motivation.
Mr. Greenwood. Nothing like taking away their benefits to
get their motivation going, in my opinion.
Mr. Hallmark. That is one of the avenues, but it is not
dispositive at all times.
Mr. Greenwood. Thank you, Mr. Chairman.
Chairman Norwood. Thank you, Mr. Greenwood.
I would like to ask the panel, all of us have a lot of
questions for which there is not enough time to ask. And we
will submit questions in writing, if we could. Perhaps that
will help us a little bit. But I will recognize myself to sort
of finish up.
Ms. Carney, have you had surgery for your Carpal Tunnel?
Ms. Carney. No. In my particular case, I have not. That is
because my surgeon thought it was too life threatening. But----
Chairman Norwood. Life threatening for Carpal Tunnel?
Ms. Carney. Thoracic Outlet Syndrome gets too close to the
jugular, too close to the spinal. They would have to cut me
through the breast and through the stomach.
Chairman Norwood. I am talking about the Carpal Tunnel.
Ms. Carney. There is no point in fixing my Carpal Tunnel
because of my Thoracic Outlet. They go, pardon the expression,
hand in hand.
Chairman Norwood. I am going to take my time with one
question, Mr. Hallmark. I think it will take you the 5 minutes.
I would like for to you walk me through what happens when a
patient is injured. That point we know that a Federal employee
is injured and sustains an injury, is that employee first seen
by an OWCP doctor? Is that the first step? Are there deadlines
for filing a claim with an employer? Just how would a typical
claim proceed?
Mr. Hallmark. I don't know if there is a typical claim, but
basically the process is an individual's hurt on the job.
Typically the--someone is aware of it. They may be referred
immediately to--taken to an emergency room to address the
traumatic injury that has occurred if it is a slip-and-fall or
a vehicle accident, of which we get thousands. That individual
would be treated by a physician, whoever was available in an
emergency situation.
The claim form would be compiled by the employing agency,
signed off by the individual when they are able to come back to
work and do that, and signed off by the supervisor in the shop.
The employer then, if they are the Postal Service, mails us
their claims form within 14 days of the date of injury. That is
the goal. And as I said earlier, the Postal Service is pretty
good about that.
Chairman Norwood. How rigid are you with the 14 days?
Mr. Hallmark. Well, the 14 days is a regulatory
requirement. As I have indicated the current average for
meeting that goal is about 67 percent governmentwide. And as
Ms. Carney indicates, we don't have a regulatory penalty to
apply.
Chairman Norwood. So if you get it on the 21st day?
Mr. Hallmark. We get it when we get it, and we start
working as soon as we do. And as Ms. Carney indicates quite
accurately----
Chairman Norwood. So we need to take the 14 days out and
just say turn it in when you are ready.
Mr. Hallmark. Well, it is our goal for those forms to be
sent to us as soon as possible, because as she indicates, if we
don't know the claim has been filed, then when the medical bill
is forwarded to us, we won't be able to process it. We will
send it back to the doctor, and we get into the round of
unhappiness and delays that creates the big problem.
So what happens when the individual is injured, the claim
comes to us. If the injury is very serious, we will assign a
nurse, vocational nurse, to the case to try to help that
individual understand what needs to be done medically to
recover and then eventually get--work with the employing agency
to go back to work.
If they are off work for more than 45 days of continuation
of pay, we would then start compensation under the FECA. The
claimant and the agency would need to file what's called a CA-7
form asking for wage replacement, and that should be done at
the time that the continuation of pay is finished.
Chairman Norwood. So what if medical treatment is going on
during all of this time? Yes, you are out of the emergency
room, but you are still having to go back and forth to your
physician. Is that physician--anybody in private practice can
do that?
Mr. Hallmark. Yes. The claimant has the right to choose
their physician, and that is a fundamental principle in the
FECA program.
Chairman Norwood. And the physician says, geez, I think you
need this surgery for that carpal tunnel. Does that physician
have to ask your permission to do that surgery?
Mr. Hallmark. Yes.
Chairman Norwood. So you have to preauthorize every case
before the physician can go ahead and do the treatment.
Mr. Hallmark. Not every medical procedure is required to be
preauthorized, but invasive surgeries, the main purpose for
that preauthorization--well, there is really two. One is to
ensure that the procedure is, in our view, connected to the
injury, because obviously these things could be complicated,
and a surgery might be about something else. And the other is
to ensure that it is an appropriate medical procedure for that
individual, because the surgery, once it is conducted, might
have consequences itself. And if we have authorized it, then
those consequential injuries are now payable as part of the
person's FECA claim.
Chairman Norwood. So you actually--you think probably the
doc won't tell you if this surgery is needed according to the
injury. You all have to step in and make sure.
Mr. Hallmark. Well, the doctor--typically the doctor is
aiming to try to do what they think is best for the patient.
That may or may not be something that we feel is appropriate
for the Federal Government to pay for. So the request comes to
us in--99 percent of the time in very good faith. But we have
to make the determination does this particular surgery fall
within our purview, and if it does, is it appropriate for this
particular individual? So in perhaps two-thirds of surgery
situations, we ask for a second opinion to ensure that it is
safe and that it is appropriate.
Chairman Norwood. How long does that take, to go between--a
patient going to the physician, physician sending in a
preauthorization to you saying we need the surgery, from there
to a second opinion? How much time have we spent now?
Mr. Hallmark. Well, it should take less than a week for the
decision to be made by our claims examiner that, yes, this does
need a second opinion or, no, it doesn't. And if it is a minor
kind of procedure that is exploratory and one that is not
particularly invasive, our contractor can sometimes do that on
the phone or immediately. But if it is a substantial surgery,
then within a week our claims examiner ought to have decided
yes or no with regard to a second opinion.
And then we have a different set of contractors who
schedule the second opinions. I believe those--our goal is for
those to occur as quickly as possible. I think it is probably
typical to be a matter of 2 or 3 months by the time you
schedule the examination and then get a report back from the
physician. And obviously, if it is complex, it could be longer
than that.
Chairman Norwood. My time is expired. Let me just say I am
going to explore this a little bit in writing with you. The
people I have been hearing from in Texas are people I do
respect, and when they tell me it takes 6 months, up to a year
to have the preauthorization on surgery, it makes--it just
makes a lot of questions come to mind.
How much information do you have in your agency? Do you
know how many requests for surgery you had in 2003?
Mr. Hallmark. I don't know whether that particular number
is available to me, but I will certainly look for it and get it
to you.
[The information referred to has been retained in the
Committee's official files.]
Chairman Norwood. Well, I am going to ask you that. And
then I am going to ask you out of all of those surgeries that
were requested in 2003, what percent of them received a denial
the first time? Some people say 100 percent.
Mr. Hallmark. Well, if that is the case--if it is 100
percent, then people are not following procedures, because we
have specific procedures that allow for approval without second
opinion of exploratory arthroscopies and that sort of
procedure. So there are fairly substantial categories of
surgeries that we do intend at least to approve without review.
Chairman Norwood. Well, I am not being critical. I am
curious. I am trying to see what really does happen. Is my pal
down in Texas just having a particular problem in his area, or
is this something going on?
Mr. Owens, would you like to----
Mr. Owens. I just have one off-the-record question. Mr.
Hallmark, one of our colleagues here asked you is it possible
to train claimants to become claim managers? I will ask you is
it possible to train claimants to become Congresspersons? Thank
you.
Chairman Norwood. Well, I can't close with that. It appears
to me anybody can be a Congressman, training or not.
Thank all of you for your time. I really do appreciate your
testimony and your willingness to be here with us today, and
participation and Mr. Lewis. I am going to have a bunch of
questions for you, too, in writing. And if there is no further
business, the Subcommittee stands adjourned.
[Whereupon, at 2:52 p.m., the Subcommittee was adjourned.]