[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE MANAGEMENT OF THE OFFICE OF WORKERS' COMPENSATION
PROGRAMS: ARE THE COMPLAINTS JUSTIFIED?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,
FINANCIAL MANAGEMENT AND
INTERGOVERNMENTAL RELATIONS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
MAY 9, 2002
__________
Serial No. 107-191
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
86-344 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California PATSY T. MINK, Hawaii
JOHN L. MICA, Florida CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania THOMAS H. ALLEN, Maine
DAVE WELDON, Florida JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia ------
JOHN J. DUNCAN, Jr., Tennessee BERNARD SANDERS, Vermont
------ ------ (Independent)
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
James C. Wilson, Chief Counsel
Robert A. Briggs, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on Government Efficiency, Financial Management and
Intergovernmental Relations
STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky JANICE D. SCHAKOWSKY, Illinois
DAN MILLER, Florida MAJOR R. OWENS, New York
DOUG OSE, California PAUL E. KANJORSKI, Pennsylvania
ADAM H. PUTNAM, Florida CAROLYN B. MALONEY, New York
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. Russell George, Staff Director and Chief Counsel
Earl Pierce, Professional Staff Member
Justin Paulhamus, Clerk
David McMillen, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on May 9, 2002...................................... 1
Statement of:
Hallmark, Shelby, Director, Workers' Compensation Program,
Department of Labor........................................ 39
Heddell, Gordon S., Inspector General, U.S. Department of
Labor...................................................... 55
Henderson, Ronald E., Manager, Health and Resource
Management, U.S. Postal Service............................ 65
Stalcup, George H., Director, Strategic Issues, U.S. General
Accounting Office.......................................... 2
Ungar, Bernard L., Director, Physical Infrastructure, U.S.
General Accounting Office.................................. 18
West, Richard, General Counsel and Assistant Inspector
General for Congressional, Oversight and Legal Services,
U.S. Postal Service........................................ 78
Letters, statements, etc., submitted for the record by:
Hallmark, Shelby, Director, Workers' Compensation Program,
Department of Labor, prepared statement of................. 42
Heddell, Gordon S., Inspector General, U.S. Department of
Labor, prepared statement of............................... 57
Henderson, Ronald E., Manager, Health and Resource
Management, U.S. Postal Service, prepared statement of..... 68
Stalcup, George H., Director, Strategic Issues, U.S. General
Accounting Office, prepared statement of................... 5
Ungar, Bernard L., Director, Physical Infrastructure, U.S.
General Accounting Office, prepared statement of........... 20
West, Richard, General Counsel and Assistant Inspector
General for Congressional, Oversight and Legal Services,
U.S. Postal Service, prepared statement of................. 80
OVERSIGHT OF THE MANAGEMENT OF THE OFFICE OF WORKERS' COMPENSATION
PROGRAMS: ARE THE COMPLAINTS JUSTIFIED?
----------
THURSDAY, MAY 9, 2002
House of Representatives,
Subcommittee on Government Efficiency, Financial
Management and Intergovernmental Relations,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:03 a.m., in
room 2154, Rayburn House Office Building, Hon. Stephen Horn
(chairman of the subcommittee) presiding.
Present: Representative Horn.
Staff present: J. Russell George, staff director and chief
counsel; Bonnie Heald, deputy staff director; Earl Pierce,
professional staff member; Justin Paulhamus, clerk; Conn
Carroll, clerk of the Subcommittee on Criminal Justice, Drug
Policy and Human Resources; David McMillen, minority
professional staff member; and Jean Gosa, minority clerk.
Mr. Horn. A quorum being present, this hearing of the
Subcommittee on Government Efficiency, Financial Management and
Intergovernmental Relations will come to order.
Today the subcommittee is continuing its continuing
examination of the Office of Workers' Compensation Programs,
administered by the U.S. Department of Labor. This program was
established in 1916 under the Federal Employees Compensation
Act to handle compensation claims for injured Federal workers
and employees in a non-adversarial manner.
In fiscal year 2000, the program received approximately
174,000 new injury claims and paid out approximately $2.1
billion in medical and death benefits to nearly 273,000 Federal
employees who suffered work-related injuries. Despite the
laudable efforts of this office, the subcommittee has heard
countless complaints about the program, from lost case files
and long delays in the appeals process to unresponsive claims
examiners. This is the subcommittee's fourth hearing on this
subject.
Despite these hearings and numerous telephone calls and
letters from this subcommittee, injured workers and their
representatives say the problems continue. They say that case
files are still being lost, which has no excuse for that.
Telephone calls are still not being returned, and they're just
impossible. And cases are still unresolved. Meanwhile, these
Federal employees are without compensation and their medical
bills continue to mount.
In response to these complaints, the subcommittee requested
the General Accounting Office to conduct an examination of the
management practices and customer service at the Office of
Workers' Compensation Programs. Today we will discuss the
findings of that study and what changes may be needed to
improve this vital program. It is imperative that Federal
employees know that if they are injured on the job, they will
receive appropriate assistance from their employer, the Federal
Government, in a timely way.
I welcome each of our witnesses today and I look forward to
your testimony. As you know, these are investigating committees
and we do swear in all of the witnesses and any of your
assistants that will be whispering in your ear, please include
them. The clerk will note the names, for those at the table and
those behind the table. So if you will stand and raise your
right hands, and have your aides back there also, and the clerk
will get the names.
[Witnesses sworn.]
Mr. Horn. The clerk will note that the affirmation of the
oath has occurred.
We will now move with the U.S. General Accounting Office.
We have with us George S. Stalcup, Director, Strategic Issues;
and Bernard L. Ungar, Director, Physical Infrastructure, U.S.
General Accounting Office. We look forward to your summary, and
we will get into questions after all the witnesses have made
their presentation.
So Mr. Stalcup, go to it.
STATEMENT OF GEORGE H. STALCUP, DIRECTOR, STRATEGIC ISSUES,
U.S. GENERAL ACCOUNTING OFFICE
Mr. Stalcup. Thank you, Mr. Chairman. We appreciate the
opportunity to testify today on selected aspects of the Office
of Workers' Compensation Programs, which has been for a number
of years a particular focus of this subcommittee.
We're here today in response to your request that we
conduct two separate reviews; one to examine issues associated
with the claims adjudication process; and second, to assess
certain aspects of compensation claims submitted by Postal
Service employees. We have provided the committee with full
statements. Mr. Ungar and I would now like to briefly summarize
those statements, starting with my discussion of the
adjudication process, then Mr. Ungar will talk about the review
of Postal Service claims.
As requested, we focused on four primary dimensions of the
OWCP claims adjudication process. First, we looked at the rates
of initial claim decisions that, once appealed by the claimant,
are reversed or remanded back to the district office and
reasons why. Second, we looked at timeframes for notifying
claimants about the outcomes of hearings on their appeals.
Third, we looked at whether physicians used by OWCP are board
certified, State licensed and hold appropriate medical
specialties. Last, we looked at how OWCP monitors customer
satisfaction and potential claimant fraud.
When a claim is denied, the claimant has three avenues of
recourse. They may request an oral hearing or review of the
written record by the Branch of Hearings and Review. They also
may request reconsideration by a different claims examiner
within the district office. Finally, they may ask for a review
by the Employees Compensation Appeals Board [ECAB].
We found that approximately 31 percent of the claims
decisions appealed by the claimants were either reversed or
remanded. Some reversals and remands were due to additional
evidence being submitted by the claimant. However most, 25
percent of all claims appealed, were a result of other reasons,
such as a question about or problem with the initial evaluation
of information or a problem with the management of the case
file. When a claim is initially denied but later upon appeal
determined to have been valid, the effect is a delay in the
benefits to the claimant. Further, the claimant may have to
incur additional expenses during the appeals process. It is
therefore important that improper denials be minimized.
OWCP takes a number of steps to monitor remands and
reversals. Among other things, they review ECAB decisions and
prepare periodic circulars and bulletins to claims examiners
with examples of problems and suggested corrective actions.
While such information is important, we believe there may be an
opportunity for OWCP to more systematically track reasons for
remands and reversals and their underlying causes. Such
information, coupled with the steps OWCP is already taking,
could help it identify actions that might reduce the frequency
of remands and reversals.
Regarding our second objective, the Federal Employee
Compensation Act [FECA] specifies that claimants will be
notified of hearing outcomes ``within 30 days of the hearing.''
In setting target timeframes for such notification, OWCP has
factored in time for producing hearing transcripts, for both
the claimant and the employing agency to comment, and for the
claimants to submit additional evidence. OWCP can also grant
extensions if necessary.
Considering these factors, OWCP has set a target of
notifying 96 percent of the claimants of hearing outcomes
within 110 days of the original hearing dates. We found they
notified 92 percent within this 110 day period.
For our third objective, we found that at least 94 percent
of second opinion physicians and 99 percent of referee
physicians were board certified. Similarly, we found that at
least 96 percent of second opinion physicians and 99 percent of
referee physicians were State licensed. We also estimate, that
98 percent of all physicians held appropriate specialties for
the injuries and illnesses they were evaluating.
To monitor customer satisfaction, OWCP has about annually
surveyed claimants by mail. More recently, they have also
conducted focus groups of employing agencies and, in 2001,
hired a contractor to perform a telephone survey of claimants.
OWCP has received mixed results on these written surveys,
higher in some areas, lower in others. The most recent written
survey results available to us, those for year 2000, showed a
52 percent customer satisfaction rate with the workers'
compensation program as a whole.
In monitoring potential fraud, the Labor Inspector General
relies on a number of sources. One source involves OWCP claims
examiners who look for certain indicators or red flags. The IG
will look at questionable cases and carry out the appropriate
investigation activity. From 1998 to 2001, the IG investigated
approximately 500 claims resulting in 212 indictments and 182
convictions of claimants and/or physicians.
This concludes my portion of the testimony.
[Note.--The report entitled, ``Office of Workers'
Compensation Programs, Further Actions Are Needed to Improve
Claims Review,'' may be found in subcommittee files.]
[The prepared statement of Mr. Stalcup follows:]
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Mr. Horn. Thank you very much for that.
Now Mr. Bernard Ungar is going to testify on a different
way. Mr. Ungar.
STATEMENT OF BERNARD L. UNGAR, DIRECTOR, PHYSICAL
INFRASTRUCTURE, U.S. GENERAL ACCOUNTING OFFICE
Mr. Ungar. Mr. Chairman, I'm pleased to be here today to
discuss Workers' Compensation Program benefits for Postal
Service Employees. I'm accompanied today by our team that
worked on this assignment and is continuing to do so: Sherrill
Johnson, Michael Rives, Fred Lyles, Melvin Horne, who's not
here, and John Vocino. They're going to help bail me out when
you give me the tough questions to answer, hopefully.
When we met with you last year, you expressed a great deal
of concern about the level of service that constituents were
receiving from the workers' compensation program. Since the
Postal Service constitutes such a large part of this program,
you asked us to focus on the Postal Service and determine to
what extent Postal Service employees were getting the service
to which they were entitled to. In response to that, we focused
on two questions during our review. One, whether USPS employees
are submitting the evidence required for an eligibility
determination, and second, the time required by the Postal
Service and the Department of Labor to make entitlement
decisions as well as decisions for compensation and schedule
awards.
Our work is still in progress. The results that we are
presenting today are preliminary. They are not yet complete, we
still have a great deal of analytical work to do, as well as
discussions with the Department of Labor and the Postal Service
officials.
In brief, we randomly sampled about 500 cases from all OWCP
districts for chargeback year 1998. We found that essentially
all the employees from the Postal Service did submit the
required evidence eventually.
Regarding the median processing times for establishing
entitlement and approving wage loss compensation payments,
there are two separate processes: one for entitlement and one
for compensation. The Postal Service supervisors in this case
met all the requirements in terms of the time requirements for
getting the claim information to OWCP.
For traumatic injuries, our preliminary data--and I want to
emphasize that this data is preliminary--indicates that the
median processing times for OWCP would appear to exceed the
performance standards for entitlement decisions and for
compensation decisions laid out in Labor's guide. We did not
determine, however, the extent to which our cases that we're
reporting on include those types of cases which aren't subject
to the performance standard. There are two types of cases--
administratively closed cases and schedule awards--that would
not be counted in the time processing period. Again, because of
the short time we had for the hearing, we did not have enough
timeframe to go back and determine the extent to which our
cases had those types of situations.
With respect to median processing times for entitlement and
compensation for wage loss decisions for occupational diseases,
our preliminary data indicate that OWCP met its standards for
entitlement decisions. However, it does not have a standard for
occupational disease claims for compensation.
It's important to point out, and I want to emphasize this,
that we are reporting the median times because of the shortness
of time that we had to analyze the results. That means that
half the cases would have exceeded the median time. Some of
these cases could have been beyond program requirements or
performance standards.
Finally, I'd like to mention that we have not yet had an
opportunity to determine the extent to which USPS employees may
have gone without income while they were waiting for payment.
We plan to do so, however, as we complete our review. From the
case files that we reviewed, it does appear that many have
continued working, received continuation of pay for up to 45
days, or gone on paid leave. Therefore, it would appear as
though many did not go without pay for the period of time they
were waiting. But this we hope to get to in greater detail as
we complete our review.
Mr. Chairman, that completes my summary.
[The prepared statement of Mr. Ungar follows:]
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Mr. Horn. Well, thank you very much for that. Did you find
any aspect of the Post Office not helping the people with the
forms or anything else? It seemed to look like, hey, if you
want to be in this organization, which is a corporation now,
you ought to not be seen as having too liberal? Was there any
truth to that?
Mr. Ungar. Mr. Chairman, we didn't quite look at that
issue. I think from the median timeframes, the Postal Service
supervisors, at least from the cases that we sampled, seemed to
process these fairly quickly. But we really didn't look at the
issue of to what extent the employees would be receiving help
or not receiving help from the Postal Service itself.
Mr. Horn. OK. We'll have a little more with that later.
And we will now go with Shelby Hallmark, the Director of
Workers' Compensation Programs for the Department of Labor. Mr.
Hallmark.
STATEMENT OF SHELBY HALLMARK, DIRECTOR, WORKERS' COMPENSATION
PROGRAM, DEPARTMENT OF LABOR
Mr. Hallmark. Thank you, Chairman Horn, for inviting us to
speak about the FECA program this morning. I'd ask that my
written testimony be made part of the record, I'll try to
summarize briefly this morning.
Mr. Horn. All of the written things automatically go in
when you start talking and summarizing.
Mr. Hallmark. Just as an overview, I believe we are making
progress in the FECA program to address a range of issues.
We've been pursuing a long-term strategic plan aimed at
transforming the program into a responsive customer focused
service delivery system. That transformation is not yet
complete, but many steps have been taken in the right
direction. We're moving to a paperless environment that will
reduce lost case files. We are implementing a comprehensive
communications redesign effort, which includes new phones, call
centers, improved surveying, etc. We are completely renovating
our computer support system, that should come online next year.
We are outsourcing our medical bill processing system, also
expect to do that next year. And we've raised the bar on our
quality index measure that is used to ensure that adjudications
are done right the first time.
While we are still in the midst of all these construction
projects, we hold ourselves accountable on a wide range of
performance measures for timeliness, quality and effectiveness
at the program and employee level. And we do that on a
continual basis, as well as carrying out challenging GPRA and
government-wide goals.
We've been able to maintain these performance levels during
the past year, despite the loss of staff to our new Energy
Employees Compensation Division, despite the impact of
September 11th and the anthrax attacks. The latter caused 2,000
claims to be filed by Federal employees, and renewed our focus
on the importance of this program.
We welcome the two GAO studies that have just been reported
on that followed from previous discussions of this
subcommittee. In general, these reports find confirmation of
our view of the areas that are reviewed. We're particularly
pleased with the finding regarding high quality medical
evaluations, that system is working and improving.
With regard to the study on timeliness in the postal area,
we are certainly very keen on further analysis of that type of
timeframe. One or two points I'd like to make that I've got
charts for this morning, and we may be able to discuss those
later on in the comment period. With respect to the
adjudication of new traumatic injuries, Mr. Stalcup mentioned
the question of our administrative closure. This chart shows
that 50th percent of the cases in the GAO study were completed
in 84 days. When the short form or limited approval status is
taken into consideration, that 50 percentile changes to 17
days. That's the way the system actually works. Bills are being
paid. We believe that is the true measure of timeliness in this
area.
Likewise on occupational disease cases, the 50 percentile
data that GAO arrived at was 136 days. That is influenced very
strongly by the day that the injured worker chooses as the
point at which the occupational exposure occurred. If you take
the date that we received the claim from Postal Service, the
50th percentile is now 59 days.
Perhaps most importantly, on the last chart here, when you
talk about timeliness of wage loss claims, the 50th percentile
GAO found was 49 days, clearly too long. But if you take out
the complicated schedule award cases, which often take quite a
long time to develop, the median time is 33 days for wage-loss
cases, and OWCP's portion of that time, once we get the claim,
is only 15 days, which is within our standard.
We believe that these things need to be studied further.
But one area that we'd like to comment on importantly is that
the Postal Service portion of this time is important to avoid
wage loss between continuation of pay and the beginning of OWCP
compensation.
The last report, which I'll try to summarize very quickly,
talks about the remand and reversal rate. We have concerns
about the findings of that report, which we've responded to
GAO. We believe it underestimates the percentage of cases that
result from new evidence having been produced, and therefore
over-estimates the number of remands that result from OWCP
errors. We also believe that the report under-estimates the
level of OWCP's monitoring of these issues at present.
We believe we have an effective appellate process, both at
the hearings and review level and the Employee Compensation
Appeals Board. We do not believe that the remand/reversal rate
of either of those bodies is excessive in light of the complex
nature of the matters being reviewed, and especially at the
hearings and review level in terms of the introduction of new
evidence and argument, which is the primary reason for that
entire process. We go into great detail in my written testimony
about our concerns about that issue and I would be glad to
answer further questions about it. But suffice it to say that,
in our view, the overwhelming reason for remands and reversals
is often the introduction of new evidence, as opposed to error
in the original decisions.
Nevertheless, we will continue to review and monitor the
cases that come out of our appellate process and to improve
that process as GAO has recommended, and to focus on our
quality index, which as I indicated before is intended to reach
a correct decision in the first place, whether or not the
claimant in fact appeals that decision. I would be glad to
answer questions later on.
[The prepared statement of Mr. Hallmark follows:]
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Mr. Horn. Thank you.
We will now move ahead to the Inspector General. That's the
Honorable Gordon S. Heddell, Inspector General, Department of
Labor. Please proceed.
STATEMENT OF GORDON S. HEDDELL, INSPECTOR GENERAL, U.S.
DEPARTMENT OF LABOR
Mr. Heddell. Good morning, Mr. Chairman. Thank you for
inviting me to testify in my capacity as the Inspector General
of the U.S. Department of Labor.
I am pleased to address some of the management and
operational concerns that my office has noted during the course
of our audit, investigation and evaluation activities involving
the Federal Employees Compensation Act program. I will
summarize my full statement and ask that it be entered into the
record.
Mr. Horn. They're automatically in once you are presented.
Mr. Heddell. Thank you.
Mr. Chairman, as you know, FECA is a large worker
disability compensation program that serves over 200,000
claimants each year. Not surprisingly, my office receives
complaints about this program from claimants, from other
agencies, and from Members of Congress regarding the
administration of this program. Typically, these concerns
include dissatisfaction with assigned physicians, disagreement
with appeals decisions, calls not being returned, and medical
bills not being paid promptly. We also receive information
about claimants and providers who abuse the system.
Over the years, the OIG has provided oversight of this
program and has identified a number of inefficiencies,
vulnerabilities, and customer service problems. It's important
to note, however, that OWCP management has been responsive to
our findings and that most of our recommendations to improve
the program have in fact been implemented.
Because of the size of the FECA program and its potential
for abuse by claimants and medical service providers, the OIG
has focused its attention on identifying and investigating
fraudulent claims. Over the last 4 fiscal years, for example,
we have opened 513 FECA investigations. Our investigations
during this same period resulted in 212 indictments, 183
convictions, and over $79 million in criminal, civil, and
administrative penalties. We currently have 401 open FECA
investigations.
Our audits and evaluations, on the other hand, have
generally been directed toward the program's internal controls,
customer service, and performance measures. For example, in
September 2000, my office issued an audit report on OWCP's
internal controls. As part of this audit, we conducted a cross-
match of FECA roles with Social Security Administration
earnings records and with State wage records to determine
whether FECA claimants earned wages while receiving benefits.
Among our findings was that 905 of the 27,050 claimants in our
sample had total earnings of $2.9 million and that almost 5
percent of the Social Security numbers were incorrect.
Unfortunately, because we did not have access to individual
earnings information on the claimants who showed income, it was
not possible to review their claims to determine whether the
earnings were reported or whether there was potential fraud or
over-payment.
Three years ago, the OIG conducted a review of the surveys
that OWCP uses to measure customer satisfaction. We concluded
that OWCP's survey procedures were flawed and did not provide
accurate and useful information. Our report made several
recommendations in the areas of survey design, customer service
measurement, sampling, response rate, and survey operations.
OWCP reported that our recommendations have been incorporated
into its customer satisfaction survey development process.
In another evaluation relative to customer service, the OIG
reviewed some specific allegations of anti-claimant bias
regarding the acceptance of initial claims for benefits,
determination of benefits, and the appeals process. Our review
did not confirm evidence of these allegations. Instead, we
found that the agency was committed to improving service to
claimants and ensuring the cost-effective administration of the
program. Our recent audit of the FECA program's performance
measures did in fact disclose needed improvements.
While we found that the Employment and Standards
Administration had developed and implemented a strategic annual
performance plan reflecting its mission, and that it had
outcome-based goals, we also found that ESA needed to develop a
system to identify the full cost of achieving reported
performance to provide a more comprehensive picture of program
accomplishments.
In my full statement, I also discuss our investigative work
and a number of legislative recommendations that we believe
would improve the administration of this program. In
conclusion, Mr. Chairman, we consider FECA to be an important
program that needs to operate as effectively and efficiently as
possible. We will continue to work with the Department and the
Congress to this end.
This concludes my testimony. I would be glad to answer any
questions that you may have. Thank you.
[The prepared statement of Mr. Heddell follows:]
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Mr. Horn. Thank you.
Just let me go with one question right now. Do you have
easy access to the Social Security numbers as an Inspector
General? Or is there some concern where Social Security doesn't
want its records made available? How does that process work for
you?
Mr. Heddell. Mr. Chairman, the Department in fact does not
currently have legislative authority to conduct what we call
routine cross-matches between wage data and FECA benefits.
Automated cross-matches with Federal and State wage records
could greatly assist OWCP in identifying potential claimant
fraud. The system as it exists right now, OWCP can only access
Social Security earnings information if granted permission by
the claimant themselves. Claimants who are defrauding the FECA
program by not reporting their outside employment income are
unlikely to willingly provide this authorization to OWCP,
because it could adversely affect them if they are doing
something that's illegal.
On the other hand, the policy is that denying this Social
Security information by the claimant doesn't jeopardize their
claim in any way at all. So yes, sir, it would be extremely
helpful to have legislation in this area that would allow the
Department access to Social Security Administration wage data.
Mr. Horn. Mr. Stalcup, does the General Accounting Office
think that's a good recommendation?
Mr. Stalcup. Our work was not focused on that specific
issue. I know that our office does have a position on that
which I can definitely provide.
Mr. Horn. It makes sense to me, and we ought to give the
Inspector General just that authority.
So we will now go on to our last two, and we thank you for
coming, because I know it was the last minute and we appreciate
your coming here. Ronald E. Henderson is Manager of the Health
and Resource Management of the U.S. Postal Service. With him is
Richard K. West, the General Counsel and Assistant Inspector
General for congressional oversight and legal service for the
U.S. Postal Service. Go ahead.
STATEMENT OF RONALD E. HENDERSON, MANAGER, HEALTH AND RESOURCE
MANAGEMENT, U.S. POSTAL SERVICE
Mr. Henderson. Good morning, Mr. Chairman and subcommittee
members. I appreciate this opportunity to share information
with you about the workers' compensation program as it affects
the U.S. Postal Service.
With one of the largest workforces in the United States,
comprising hundreds of thousands of employees working in a wide
variety of positions in post offices, mail processing
facilities, administrative offices and on virtually every
street in every neighborhood in the Nation, the Postal Service
well recognizes the value of the Federal Employees Compensation
Program managed by the Office of Workers' Compensation
Programs.
The men and women of the Postal Service have historically
worked through extreme weather conditions, including floods,
blizzards, earthquakes and other natural calamities to deliver
on the fundamental right of all Americans, no matter who, no
matter where, to affordable, universal mail service. As you
know, over the last 8 months, our people have been challenged
as never before. They have bravely faced the threat of
bioterrorism through the mail, and in the last week, the
extreme danger of pipe bombs placed in customer mail boxes
across several Midwestern States.
In administering the provisions of the act within the
Postal Service, it is our policy to ensure the prompt and
accurate processing of all workers' compensation claims for all
eligible employees. We maintain an active and far-reaching
program to accomplish this. Similarly, it is our goal to
provide meaningful and productive work within any medical
limitation to injured workers who are able to return to work.
We also work closely with the Office of Workers' Compensation
Programs to find suitable work outside the Postal Service, to
the extent possible, for injured employees who may not be able
to return to postal duties, but who are capable of returning to
the workforce in an active capacity.
While the cost of pain and suffering cannot be calculated
on a monetary scale, the benefits provided to employees who
become ill or injured as a result of their Postal Service
employment do come with specific costs. This fiscal year, we
project the compensation medical costs will reach approximately
$800 million. This figure represents an approximately 11
percent increase over last year. It is a figure that has been
steadily rising over the last 5 years.
It is important to place this figure in its proper
framework. Our rise in compensation costs does not track
similar to a rise in accidents. This fiscal year we expect that
our OSHA injury illness rate will decline by at least 10
percent below last year's figures. For the same period,
attrition will reduce our complement of career employees by
some 20,000. This comes on the heels of a reduction of almost
12,000 career employees in 2001 and 10,000 in fiscal year 2000.
A reduced accident rate involving fewer employees should reduce
workers' compensation costs.
The Postal Service is very clear in its understanding of
the relationship between a strong safety program and a healthy
workforce. Beyond our own efforts to reduce costs through
effective case management, we are grateful for the help of
others. We appreciate the significant and successful efforts by
the Postal Service Office of Inspector General to identify and
eliminate fraudulent practices and practices by healthcare
providers in connection with the workers' compensation program.
Similarly, the effects of the Postal Inspection Service in
pursuing fraud by claimants continues to protect the Postal
Service assets.
The work of both organizations is important to maintain the
integrity of a program that is so important to our employees,
their families and communities. Throughout their financial
recovery efforts, the Office of Inspector General and the
Postal Inspection Service are minimizing the costs of this
program to the households and businesses of America. After all,
it is the users of the mail who ultimately pay for the program
through their purchase of postal products and services.
As we have seen, our accident rate is decreasing at the
same time that we are seeing a double digit increase in
workers' compensation costs. Considered within the context of
the overall financial condition of the Postal Service, this
trend is disturbing. This year, the Postal Service is
projecting net loss in the range of $1.5 billion, and this year
we project a mail volume decline of 6 billion pieces, the
largest in our history.
Congress and the Comptroller General of the United States,
recognizing the extremely difficult financial position of the
Postal Service, asked us to develop a comprehensive
transformation plan. This plan addresses the actions we can
take within the constraints of current legislation to protect
our ability to provide universal mail service to the Nation.
The plan also identified the short and long-term legislative
changes needed for the continuation of a successful national
postal system.
Ultimately, we believe that the American public will
benefit most from a postal service that is operated as a
commercial-government enterprise. While we've examined other
structural models, including privatization and a return to the
1960's model of a heavily subsidized government agency, we do
not believe these models best serve the interests of the Nation
or provide service at a cost they will be willing to pay.
Because our transformation plan is comprehensive, it does
not address in detail changes to our own internal practices and
potential changes to the administration of the Federal
Employees Compensation Act, though protecting interests and
rights of postal employees who suffer from job related injuries
and illnesses. At the same time, these changes can bring
considerable relief to the dramatic upward pressure we have
been experiencing in connection with program costs.
Our plan identifies the following strategies we believe can
reduce injury compensation costs. No. 1, expand the preferred
provider organizational program. Two, moving Federal Employees
Compensation Act recipients to a FECA annuity at age 65. Three,
encourage OWCP to revise regulations to permit the employer to
have direct contact with the treating physician.
Four, private sector out-placement of injured Postal
Service employees and the creation of new internal positions to
accommodate injured workers, such as the baggage checkers
positions with the Department of Transportation. Five, greater
interagency cooperation to attain organizational objectives.
In summary, the Postal Service supports the objectives of
the Federal Employees Compensation Act, yet we believe the
elements of the act as now administered result in unnecessary
costs that substantially contribute to the Postal Service's
deteriorating financial condition. We also believe that many of
these costs could be reduced with no harm to injured employees.
Mr. Chairman, I appreciate the opportunity to share these
proposals with you today. It is my hope that my comments
provide you and the members of the subcommittee with
understanding of the challenges faced by the Postal Service in
connection with workers' compensation costs. I'll be pleased to
answer any questions you might have.
[The prepared statement of Mr. Henderson follows:]
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Mr. Horn. Mr. West.
STATEMENT OF RICHARD WEST, GENERAL COUNSEL AND ASSISTANT
INSPECTOR GENERAL FOR CONGRESSIONAL, OVERSIGHT AND LEGAL
SERVICES, U.S. POSTAL SERVICE
Mr. West. Good morning, Chairman Horn. I appreciate the
opportunity to discuss the work of the Office of Inspector
General regarding the administration of the Postal Service's
Workers' Compensation Program.
In my statement, I will highlight our efforts to help the
Postal Service identify better ways to administer its program.
Our office is particularly interested in giving postal
employees the assistance they need and helping postal
management control costs. As you know, the Postal Service's
financial condition is getting worse. Since 1998, their
workers' compensation costs have increased by 29 percent.
Controlling these costs is a major concern, but so is the
health and safety of postal employees, particularly in light of
the recent anthrax attacks, where two postal employees died,
others were infected and thousands exposed. Concerns about this
threat continue, but as shown by the recent discovery of pipe
bombs in mail boxes, postal employees risk their health and
safety on a daily basis. Sadly, these injuries can result in
significant costs to both employees and the Postal Service.
Turning to the work we have performed since our inception
in 1997, we have already initiated over 100 investigations
involving healthcare fraud, as well as a number of audits of
Postal's efforts in the workers' compensation area. We also
have a hotline through which employees can report concerns
about the program.
Perhaps our biggest challenge in performing audits and
investigations in this area is the outdated, manually driven
processes used to track and manage the program. Until these
processes are automated and streamlined, it will be difficult
for us to perform effective oversight.
Generally, our work falls into two categories. The first is
program administration. As you would expect, with so many
employees in so many places, some managers and supervisor do
not handle workers' compensation claims appropriately,
regardless of senior management's best efforts.
For example, in response to a congressional request, we
found that an employee who was struck by a postal vehicle on
postal property and dragged outside that property was denied
the opportunity to file an injury compensation form until
approximately 1 year after her injury. Local postal management
originally refused to provide her with the form, stating that
they did not consider the accident to have occurred on postal
property. Fortunately, in the course of our work, postal
management provided her the necessary form and processed her
claim.
The second category of our work is in controlling costs.
One way to do so is to prevent and detect fraud by medical
providers. For example, we participated in a multi-agency
undercover investigation that resulted in the debarment of six
physicians from providing services to the Office of Workers'
Compensation Programs. Specifically we identified fraudulent
billing and payments for postal employees who were treated at
medical clinics operated by these physicians. This fraud also
involved billings for non-existent or ghost patients.
One of the most effective ways to reduce workers'
compensation claims is to ensure the health and safety of
postal employees. For example, one audit disclosed unsafe
conditions in a post office, including fire hazards and falling
debris. After viewing our video report, I could not imagine
anyone would ask an employee to work under these conditions.
When we showed this video report to senior management, they
took immediate corrective action.
To improve program administration, employees must feel free
to contact us to report fraud, waste, abuse or mismanagement
without fear of retaliation. Since our inception, we have
worked to improve protections because postal employees are not
covered by the Federal Whistleblower Act.
Finally, we are excited about our partnership with the
Department of Labor Office of Inspector General to look at ways
we can work together to address the crucial issues facing the
workers' compensation program. We believe our combined efforts
will result in program improvements at the Postal Service and
throughout the Federal Government.
Thank you for the opportunity to testify before the
subcommittee. And I welcome any questions.
[The prepared statement of Mr. West follows:]
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Mr. Horn. Well, thank you. I did see that 1 year bit in No.
7, I think, on your page. When that was discovered, did you
feel that the people in the regions that have responsibilities
for this, as well as the central aspect of administration, have
a lot of faith in the Postmaster General? I just couldn't
believe that somebody would get away with that. Don't give them
any forms. I mean, that's just crazy.
Do you feel that's now going through the administrative
hierarchy of the Postal Service? Did they get the message?
Mr. West. We found this to be an isolated example. We have
no indication that there's any kind of systemic problem. Like I
said in my testimony, whenever we bring issues to senior postal
management, we found them very responsive to take corrective
action.
Mr. Horn. Does the General Accounting Office, now that
they've heard all this, have any thoughts on it?
Mr. Stalcup. I would like to take a moment, Chairman Horn,
to talk about OWCP's disagreement with our report and
testimony. Again, in the aspect of the report with which they
disagree, one of their primary assertions was that we
overstated the number of cases that were remanded for reasons
other than new evidence, and therefore understated the amount
of remands and reversals related to new evidence being
introduced.
OWCP adds in its response to our report that the BHR
summary decisions that we looked at, as well as other
information, were not adequate for us to make that conclusion.
We disagree with that. To determine the specific reasons, as we
were asked to do by you, for remands and reversals, we
carefully reviewed decision summaries for BHR appeal decisions
and published decisions by the ECAB. These documents are those
that are used to notify the claimants of the reasons for the
remands and reversals. Those reasons were very clear to us upon
our examination.
For example, when an item was reversed or remanded because
of new evidence being introduced, the common phrase used was
``because claimant submitted relevant and pertinent evidence
not previously considered by this office.'' This occurred in 6
percent of the cases that we reviewed. The reasons for other
reversals and remands were equally clear, and it was for other
than new evidence being introduced.
OWCP also believes that we inappropriately completed our
analysis of remands and reversals. Again, we disagree. Our
report distinguishes clearly between a remand, which may or may
not result in a reversal, and a reversal, which is actually a
changed decision. In categorizing reasons for all remands and
reversals, as we were requested to do, using such a combined
indicator is entirely appropriate.
A couple other quick points. OWCP states that we have
concluded that their process is inadequate. That's not the
case. OWCP is doing a number of things well. We offer some
ideas that we believe they might consider in determining
whether additional information can be identified that would
better enable them to address the current remand and reversal
rate and get at some of those underlying causes.
Finally, OWCP points out that the BHR process is an
effective protection of claimant rights. We couldn't agree
more. Our concern is the appeals process becoming a point of
reliance on their part to ultimately arrive at a correct
decision.
Mr. Horn. Mr. Ungar.
Mr. Ungar. Mr. Chairman, I'd just like to point out that
from the Postal Service's perspective, and this certainly
probably applies to other agencies, although maybe not to the
same extent as was indicated by the Postal Service witnesses,
the Postal Service is in a very difficult financial situation,
with increasing losses over the last couple of years. And it
faces very significant liabilities.
With respect to the Workers' Compensation Programs, we were
surprised the other day to hear that while the total program
costs for the Postal Service was about $1 billion last year,
this year they're estimating it could go as high as $1\1/2\
billion, which is a huge increase.
So the Postal Service, as well as other agencies, has this
balancing act to, on the one hand, assure that the employees
get the services to which they are entitled, and on the other
hand, to make sure that the program costs are controlled. So to
the extent that issues are raised in terms of the framework for
the program and the ability of agency officials like Inspector
Generals to have access to the necessary information to do
thorough reviews, I think we would certainly support those
kinds of assessments and action where appropriate on those
kinds of issues.
Mr. Horn. Well, I would think that the whole purpose for
the workers' compensation in labor is to get it in one place
for the whole executive branch and should we change it? In
other words, if you have so many problems in the Postal Service
or Defense or wherever, which is where I think most of them
are, where should they be?
And that would probably have much more attention if some of
the larger departments had to put their own budget and get a
nick out of it to pay these claims. Have you taken a look at
that thought?
Mr. Ungar. Well, they do pay the claims, Mr. Chairman. The
agencies reimburse the Department of Labor for the cost of the
program as well as for the administrative costs. So it's not a
question of the agencies not paying. Because they do do that.
It's a question, I think, of making sure that only those people
who are entitled, are actually receiving the benefits and maybe
even taking a look at the benefit structure to determine
whether, given what the situation is today, it's still
appropriate in all cases.
Mr. Horn. Well, how about it, Mr. West, Mr. Henderson?
Would you like to have the whole program in the Postal Service?
Mr. Henderson. That appears to be my question, I suspect.
Would we like to run our own program, Mr. Horn?
Mr. Horn. Right. You were made as independent as we could.
Mr. Henderson. I think we would welcome the challenge and
the opportunity if it was presented to us. However, that
shouldn't be construed as an indictment against the present
administration at OWCP. Because I believe that they are running
the program at a highly professional level, given the structure
and the laws that they're running within.
Mr. Horn. OK. Any other thoughts, Mr. West?
Mr. West. It probably would give us some more work, but
other than that, we have not looked at the issue. So we really
don't have any comment on it.
Mr. Horn. Well, take a look at it, and we'll have a little
space in the hearing record to see what you think about it.
Mr. West. We will do that.
Mr. Horn. OK. Now, Mr. Hallmark, you've heard all the
testimony. Would you like to add something to the record as to
whether you don't like what you heard or did like what you
heard. [Laughter.]
Mr. Hallmark. As I said earlier, we are appreciative of
GAO's investigating these issues, because they are complex and
deserving of study. I think in both cases the reports were
undertaken and completed in a very short timeframe. There are
reasons why that becomes a difficulty that leads to some of, I
think, the disagreement issues.
If I could just respond very briefly to Mr. Stalcup's
comment. I think we do have an underlying disagreement with
regard to the methodology they used in evaluating especially
our hearing and review cases. They looked at the decisions, as
he's indicated, they read the decision with respect to the
reasoning presented in the decision for an overturn, for a
remand or reversal.
But the writer of those decisions is not focused on making
a determination as to what the cause necessarily was in terms
of whether it was OWCP's original error or a reinterpretation
of the evidence or new evidence. They may specify, as in some
cases, apparently 6 percent of the sample, that there was new
evidence presented.
But in every hearing case, there is always a fuller record,
because the individual claimant has a right to go and persuade
the hearing representative about the evidence that's already
before him or her. That interpretation of what the claimant
presents in terms of, for example, credibility, is something
that goes into the hearing representative's decisionmaking.
While there may or may not have been new evidence adduced in
that particular case, the hearing representative is in fact
influenced by what has been presented by the claimant directly.
That's why we have the process.
So we would argue that even though the decision itself
might not say the reason why this case is being remanded is
because I believe, on hearing what the claimant's argument is,
that the district office didn't fully interpret the claimant's
position properly, in fact, that is what's going on in many of
these decisions. So the 25 percent number that Mr. Stalcup has
presented we believe is just not accurate.
But in general, I would say that especially with regard to
the timeliness measures that Mr. Ungar reported on, we think
it's very important that those issues be addressed and that the
full timeframe from when the individual is injured to when the
process is completed be looked at and analyzed in all its
different parts. We look at our data, including the data I
presented in my chart, we look at that data very, very closely.
If I could point out, the data that GAO is reporting on is
a 500 case sample. The data I have presented is every single
case presented by the Postal Service during the year that was
being studied. So in the case of traumatic injuries, that was
64,688 cases. We capture every single event. That's the level
of detail we go to, because we are very, very focused on making
this thing happen quickly.
Mr. Horn. Could you explain that in the title up there, the
CA-7, is that California something?
Mr. Henderson. I know that is your home State, sir. That is
a claim form number which dates probably from around 1960. I'm
not sure exactly what the CA stands for. But the CA-7 is the
form that's filed by the individual once they have a need for
wage loss compensation, after, typically they have been
receiving continuation of pay from the Postal Service. This is
the point at which interruption of income can occur.
If the Postal Service is paying continuation of pay, we are
meanwhile paying medical benefits. If the person's disability
lasts longer than 45 days, then they need to submit that CA-7,
the Postal Service needs to process it and get it to us. If
there's a delay in that process, then the individual doesn't
have a check coming in from Postal Service nor do they have one
coming from the OWCP. And when that period is elongated,
clearly these individuals are not being well served, and those
cases become very difficult and very problematic for the reason
that we can all understand.
We think that it needs to be worked very, very closely from
both sides. We think our side of the process is working pretty
well. Oftentimes we don't have enough push from the agency, and
this is not a Postal Service problem particularly, they are in
the middle of all the pack of agencies, but there's not enough
push on the agency to say, OK, COP is getting close to end,
let's get that CA-7 in hand so there won't be an interruption
of income.
That's something I think that the Postal Service is aware
of and is working on. But it's a complex issue. And it's one
that we have to continue to struggle with.
Mr. Horn. Let me ask the Inspector General of Labor, Mr.
Heddell. You mentioned this fraud case in Texas that involved
millions of dollars. How unusual is this type of fraud? Do you
have much fraud like that, or was this the biggest case you've
ever had?
Mr. Heddell. Mr. Chairman, we in fact receive allegations
of fraud and misconduct regarding the FECA program on a fairly
regular basis. As I indicated, we currently have 401 cases
under active investigation. I can tell you that our hot line
receives several calls per week. Many of those calls involve
allegations of fraud and/or misconduct.
Many of those calls, of course, are from claimants who
simply have received an adverse decision. They provide us with
information either because they don't feel that their claim has
been handled as they would have liked it to have been handled,
or in some cases, it's information directly alleging some kind
of fraud, whether it's against the individuals at OWCP making
the decision or, in the case of the true criminal
investigation, such as the one you've referred to, we may
receive documented evidence.
Where we receive documented evidence of possible criminal
activity, we refer that to my Office of Investigations. And
we're very active in that area, and do a considerable amount of
work.
Mr. Horn. Was that because doctors were committing fraud or
the consumer?
Mr. Heddell. There's actually three general categories that
fraud normally would fall into. One would be the area of
claimant fraud, where an employee claims to be injured when in
reality he or she is not. There are instances where a claimant
has in fact been injured and has received medical treatment and
is no longer injured, but continues to claim an injury. There
are claimants who in fact claim injury and are working,
receiving compensation for work but not advising OWCP, so that
an adjustment can be made.
And then there are medical service providers such as
doctors, pharmacists, or clinics, who provide medical
equipment, for instance, and other medical services, and who
defraud the system by code violations. For instance, they may
change the code on a medical form to reflect a treatment for a
particular patient that would bring in a greater revenue to
that physician or they may have a patient for whom they
prescribe aggregate diagnoses or treatment, versus let's say
one particular code.
So they will design or modify the medical coding system in
such a way as to reap the greatest amount of financial benefit
to themselves in an illegal manner.
Mr. Horn. Mr. Heddell, and to the presenters, you've made
some interesting proposals in terms of legislative
recommendations. One was return the 3-day waiting period before
FECA benefits can start to the beginning of the 45-day
continuation of pay process. This would require employees to
use any accrued sick leave, annual leave, or leave without pay
for that 3-day waiting period before the FECA benefits could
begin. Should the claim be approved by the OWCP, any leave used
during this 3-day waiting period would be restored.
Then there's an earlier, pre-1974 procedure, that would
help to discourage the filing of so many minor claims. Under
the current process, the waiting period is at the end of the
claims process, which provides no disincentive to file a claim.
Then the second to last, current FECA beneficiaries are not
required to retire at any age. Instead, beneficiaries may
remain on the disability rolls until they die. Indeed, there is
a strong incentive to remain on the rolls, since FECA's tax-
free benefits may be greater than either their taxed earnings
from work or their Federal retirement benefits would be.
And thus, you note we recommend a statutory change that
would move long-term disability claimants into a form of
retirement such as through an OWCP-administered annuity program
after claimants reach a predetermined age. Anything you want to
add to that? Because then I want everybody to tell me whether
they like the idea or don't like the idea. So do you want to
add any to this?
Mr. Heddell. I certainly would like to, Mr. Chairman. The
OIG strongly supports the concept of Congress reinstating a 3-
day waiting period before the continuation of pay period
begins. Clearly, in our opinion, this would discourage
frivolous claims.
In terms of beneficiaries remaining on the OWCP rolls for
long periods of time, we would also recommend that the Congress
establish a retirement age for beneficiaries, whereby at a
particular age benefits would be adjusted, and some form of
annuity, probably administered by the OWCP, would kick in.
Mr. Horn. OK. Any thoughts on this, Mr. Henderson, Mr.
West?
Mr. Henderson. The Postal Service also agrees that a 3-day
waiting period would be beneficial financially. And also to
reduce the number of claims that probably wouldn't be filed
otherwise. It would also put us much on par with many State
programs.
In terms of an annuity, that would be beneficial, because
at this time, for some people it's actually much more
beneficial to be on compensation than to take a retirement. And
we don't think that being on compensation should be an
advantage, it should be equal to an employee who works 30 years
but was fortunate enough not to be injured. We'd like those to
be leveled out at the retirement age.
Mr. Horn. Mr. West, anything else?
Mr. West. No.
Mr. Horn. You mean a lawyer that says no? [Laughter.]
Mr. West. It's hard to get that short answer out of a
lawyer.
Mr. Horn. That's right.
Mr. West. We just feel that our mission is to monitor the
Postal Service. This is really a Department of Labor program,
so it would not be appropriate for us weigh in on this issue.
Mr. Horn. You are independent. You don't have to worry
about anybody.
OK, let's ask GAO. Do you see any light in some of Mr.
Heddell's proposals?
Mr. Ungar. Yes, Mr. Chairman. We think they should be
considered. And particularly as they affect the cost of the
program.
One other issue that I don't think was specifically
mentioned, although it may be in a written statement, is that
we have reported over the years on workers' compensation
programs. Some of the reports deal with the retirement issue
and whether eligibility should continue afterward. Another
issue is the percent of pay that's reimbursed, either two-
thirds or 75 percent.
So another issue that might be worthwhile looking at is the
additional percent of reimbursed pay due to whether an
individual has dependents or not. I'm not suggesting that they
definitely be changed, but at least they ought to be looked at
in the context of possible legislative changes to the program.
Mr. Horn. Now, Mr. Hallmark, you've had people on one side
and the other. What do you think on this?
Mr. Hallmark. As it happens, the administration is on
record as being prepared to present a FECA legislation proposal
that would address both of the issues that Mr. Heddell has
recommended, as well as possibly other features. It's being
considered now, that package is under review in the
administration.
So those are, I believe there will be legislative proposals
shortly in those areas.
Mr. Horn. Great. Glad to hear it. So it's over in OMB being
circulated around the executive branch.
Mr. Hallmark. That's right, sir.
Mr. Horn. To see if it conforms with the program of the
President. Good. That will be progress.
Now, let me just go through a few of these things to get a
decent record here one way or the other. To all of the
participants, let's see, Mr. Ungar, in your report, you
mentioned numerous times that you were not given enough time to
complete your report. How long has the General Accounting
Office been working on this project, and when do you expected
to complete your work and issue a report?
Mr. Ungar. We started in January, sir. As I indicated, this
was a random sample that involved all district offices in OWCP.
So I think we would like to propose to have our work completed
in September. What I'd like to do though is emphasize that our
results are preliminary now, as we indicated. I think Mr.
Hallmark has raised some very good issues. We did not have an
opportunity, because of the speed of getting our data collected
and analyzed, to exclude the types of cases that he's
mentioning.
One in particular, on the administratively closed cases,
I'd just like to make a few points there very briefly. One,
when we went to the hard file cases, it was not clear which of
those cases, from the information we saw, were administratively
closed. So we're going to have to work with his people to
really identify those in the next several weeks.
Second, I'm not sure that the statistical population
information that's there is comparable to the sample that we're
taking in terms of what it represents. So we'll have to work
with his folks on that. Third, I presume that he's dealing with
the automated data when he's using the entire population. We
did find during our review that there were a number of errors
in the automated system compared to the hard file records that
we reviewed. So we didn't want to rely too heavily on the
automated files.
So we would like to have enough time to make sure that we
square away with the OWCP folks on making sure we have accurate
data and understanding of what these timeframes are. So I would
think in September we'd be able to get you a final report, if
that's reasonable in your view.
Mr. Horn. Do you have enough data today to accurately
comment on the Postal Service's role in the Office of Workers'
Compensation Programs?
Mr. Ungar. Mr. Chairman, I believe that when we have enough
time to analyze the data we have, we will be able to be more
precise as to what particular steps are taking the most time
and whether it's in the Department of Labor or whether it's at
the Postal Service.
Mr. Horn. In your testimony you mention that there is in
some cases a dramatic variance in the time it takes for the
OWCP to process claims. What do you attribute this to?
Mr. Ungar. Well, that's what we'll try to find out. Of
course, a lot of these cases----
Mr. Horn. So you're saying it's a matter of time?
Mr. Ungar. Yes, we need time to analyze it. All of these
cases are of varying complexity, from very simple to very
complex. But in terms of what stages of the process may be
bottlenecks, that's what we hope to identify as we further
analyze the data, and then get with both Postal Service and
OWCP folks to iron that out and try to develop definitive
information on that.
Mr. Hallmark. If I could interject, Chairman Horn.
Mr. Horn. Sure.
Mr. Hallmark. In the area, for example, of wage-loss
claims, the CA-7, if a case involves a schedule award, that
schedule award would be for permanent impairment and we would
need to get an assessment of exactly what the degree of
impairment is. That usually requires that the employee get a
new medical evaluation that says, OK, the shoulder impairment
is 12 percent or 20 percent or 50 percent. That has to occur
after the individual has reached what we call maximum medical
improvement. And that in fact could be a matter of months or
even years after the individual files that claim.
So the claim could run from a matter of being doable within
a week or a few days to a matter of months or years, depending
on the complexity of the issues at hand. That is unfortunately
the nature of this kind of program.
Mr. Horn. OK. Any other thoughts anybody's like to--I'm
going to try one more here with the preferred provider
organization program. The Postal Service believes that
significant cost reductions can be achieved by expanding the
preferred provider organization program with the First Health
throughout the organization. First Health, through its hospital
and physician network, is able to reduce medical fees below
those of OWCP's schedule fees.
This effective relationship is now operating in areas
served by four of the OWCP's 12 district offices. It presently
reaches 50 percent of our injured employees. The program will
be expanded nationwide on July 1, 2002. This is a powerful
example of the results that can be achieved through joint
cooperation with OWCP.
How do you feel about that? Do you agree with them?
Mr. Hallmark. Are you asking me, sir?
Mr. Horn. Yes.
Mr. Hallmark. Yes, we have been working with the Postal
Service for about a year on the particular project that is
being referred to there with the PPO. We are, I think, very
close in our conversations with the Postal Service to further
expanding that program. I believe our next step will be to
expand to all the rest of the eight sites that are not
currently operating in this fashion. Ione of several
cooperative projects OWCP runs, works with Postal Service on.
I would say, in response to a comment that Mr. Ungar made
earlier, Postal Service more than any other agency is keenly
aware of the costs of these kinds of cases. They work harder, I
think, than all the other agencies because of that economic
concern. And in that respect, they are often our most
cooperative partner in a whole range of activities associated
with FECA cases.
Mr. Horn. Moving Federal Employees Compensation Act
recipients to FECA annuity at age 65, just on a yes or no, you
like the idea, right?
Mr. Henderson. Yes.
Mr. Horn. OK. Anybody not want that? OK, we'll assume
they're all yeses.
We have a vote on the Floor, so we're going to have to
break this up. But we would, when you get back in your taxi or
whatever to get back to the executive branch, if you have some
good ideas, just send them to us. We'll put it at this point in
the record.
I want to thank our witnesses. This subcommittee has been
examining this problem for more than 5 years. And I'm uncertain
that much progress has been made to improve the situation for
hundreds of Federal workers who deserve better. When workers
who have been injured on the job seek the assistance they are
entitled to, they should be given the best service possible.
The Federal Government should be setting the highest standard.
Undoubtedly, new computers and new telephone systems will
help resolve some of these problems. But all the technology in
the world doesn't force OWCP employees to treat injured
employees, regardless of the merit of their claims,
courteously, respectfully and in a timely manner. This is
clearly a management problem that has been allowed to fester.
I think that sort of sums it up, and I'll wait for the rest
of the GAO on the case studies.
I want to thank the people that helped put this hearing
together. The gentleman on my left will not be on our staff,
and we wish he could, but this will be his last hearing as a
member of the professional staff of our subcommittee. He's
leaving to join the staff of the American University School of
Law, as well as becoming a student there. More lawyers.
[Laughter.]
Earl, good luck. You're a great guy.
And J. Russell George, the Staff Director and Chief
Counsel, is right behind there. President Bush has nominated
him and he's just waiting for the Senate to call.
Bonnie Heald, the Deputy Staff Director, is right next to
him. And next to her is my chief of staff, Mr. Bartell. And the
majority clerk, he has, I hope, the NCAA basket height, and
that's our hard working majority clerk, Justin Paulhamus. Conn
Carroll, majority clerk, Subcommittee on Criminal Justice, Drug
Policy and Human Resources also helped in this. And Clair
Buckels, our fellow on our staff from the American Political
Science Association.
Minority staff, right back here, is Jean Gosa, the clerk,
and David McMillen, minority professional staff. And if you
want to file a statement, we'll clean that one up.
Court Reporter, Mary Ross. Thank you, Mary. We appreciate
it.
With that, I wish you well.
[Whereupon, at 11:57 a.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
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