[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
FEDERAL EMPLOYEES' COMPENSATION ACT: A FAIR APPROACH?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
U.S. POSTAL SERVICE AND LABOR POLICY
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
APRIL 13, 2011
__________
Serial No. 112-33
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy
DENNIS A. ROSS, Florida, Chairman
JUSTIN AMASH, Michigan, Vice STEPHEN F. LYNCH, Massachusetts,
Chairman Ranking Minority Member
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
JASON CHAFFETZ, Utah Columbia
CONNIE MACK, Florida GERALD E. CONNOLLY, Virginia
TIM WALBERG, Michigan DANNY K. DAVIS, Illinois
TREY GOWDY, South Carolina
C O N T E N T S
----------
Page
Hearing held on April 13, 2011................................... 1
Statement of:
Steinberg, Gary, Acting Director, Office of Workers
Compensation, U.S. Department of Labor, accompanied by
Douglas Fitzgerald, Director, Division of Federal Employees
Compensation; Bill Siemer, assistant inspector general for
investigations, U.S. Postal Service; Lisa McManus,
president, CCS Holdings, L.P.; and Milagro Rodriguez,
occupational health and safety specialist, American
Federation of Government Employees......................... 4
McManus, Lisa............................................ 28
Rodriguez, Milagro....................................... 37
Siemer, Bill............................................. 21
Steinberg, Gary.......................................... 4
Letters, statements, etc., submitted for the record by:
McManus, Lisa, president, CCS Holdings, L.P., prepared
statement of............................................... 30
Rodriguez, Milagro, occupational health and safety
specialist, American Federation of Government Employees,
prepared statement of...................................... 39
Siemer, Bill, assistant inspector general for investigations,
U.S. Postal Service, prepared statement of Mr. Williams.... 23
Steinberg, Gary, Acting Director, Office of Workers
Compensation, U.S. Department of Labor, prepared statement
of......................................................... 7
FEDERAL EMPLOYEES' COMPENSATION ACT: A FAIR APPROACH?
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WEDNESDAY, APRIL 13, 2011
House of Representatives,
Subcommittee on Federal Workforce, U.S. Postal
Service and Labor Policy,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:44 p.m., in
room 2154, Rayburn House Office Building, Hon. Dennis A. Ross
(chairman of the subcommittee) presiding.
Present: Representatives Ross, Amash, Lynch, Norton,
Connolly, and Davis.
Also present: Representative Issa.
Staff present: Ali Ahmad, deputy press secretary; Robert
Borden, general counsel; Molly Boyl, parliamentarian; John
Cuaderes, deputy staff director; Gwen D'Luzansky, assistant
clerk; Adam P. Fromm, director of Member liaison and floor
operations; Ryan Little, manager of floor operations; Justin
LoFranco, press assistant; James Robertson, professional staff
member; James Peter Warren, policy director; Kevin Corbin,
minority staff assistant; Adam Miles and William Miles,
minority professional staff members.
Mr. Ross. Good afternoon. Welcome. I would like to call the
Subcommittee on Federal Workforce and U.S. Postal Service and
Labor Policy to order. Today's hearing is on the Federal
Employees' Compensation Act: A Fair Approach?
Before we begin, I will state the Oversight Committee
mission statement, as we have done in the full committee and
all subcommittees. We exist to secure two fundamental
principles. First, Americans have a right to know that the
money Washington takes from them is well spent. And second,
Americans deserve an efficient, effective government that works
for them. Our duty on the Oversight and Government Reform
Committee is to protect these rights. Our solemn responsibility
is to hold government accountable to taxpayers because
taxpayers have a right to know what they get from their
government. We will work tirelessly in partnership with citizen
watchdogs to deliver the facts to the American people, and to
bring genuine reform to the Federal bureaucracy. This is the
mission of the Oversight and Reform Committee.
I will now move into my opening statement. The Federal
Employees' Compensation Act [FECA], provides workers'
compensation coverage for roughly 3 million Federal civilian
workers who suffer occupational injury or disease, including
those in the U.S. Postal Service. In fiscal year 2010, the cost
was $2.86 billion to approximately 251,000 claimants. Of that
dollar amount, nearly half, or $1.1 billion, went to U.S.
Postal employees.
FECA was last significantly amended in 1974. Today, this
committee will hear from a panel of witnesses who will discuss
whether FECA continues to adequately provide workers'
compensation to Federal employees who have suffered work force-
related injuries. Members of this committee recognize that FECA
is an important program that was intended to provide income to
employees while they recuperate prior to returning to work.
Federal employees who have been injured while performing their
duties should be compensated fairly.
Under FECA, compensation benefits are paid at a rate as
high as 75 percent of salary, tax-free, for as long as the
work-related injury continues or until death. Because FECA
benefits typically exceed Federal retirement benefits, there
exists a large incentive for Federal workers to remain on FECA
beyond the point when they otherwise would have returned to
work or retired.
The result is that FECA has become a retirement plan for
thousands of Government employees because the payout is better.
FECA pays monthly benefits to about 49,000 Federal employees
who are on its ``periodic'' roll. Today, 14,500 Federal
civilian employees continue to collect workers' compensation
after their retirement age. Of the 15,470 Postal employees
receiving FECA benefits, 8,632 are age 55 and older, including
2,051 ages 70 and older, and 132 ages 90 and older.
FECA was never intended to be a retirement plan. Workers
who have been permanently disabled by their injuries and who
will never return to work should not be covered indefinitely by
FECA. They should receive a retirement annuity as other Federal
workers do.
According to a 2005 audit by the Office of Inspector
General for the Veterans' Administration, converting the
retirement-eligible Postal and Federal employees on workers'
compensation to the Federal employee retirement system when
they reach retirement age will save taxpayers $500 million
annually. Congress has an obligation to consider policy reforms
that overhaul Federal workers' compensation to reduce costs
system-wide. It is my hope we can reach bipartisan agreement on
an equitable approach.
I thank the witnesses for appearing today, and I look
forward to their testimony.
I will now recognize the distinguished ranking member, Mr.
Lynch, for his opening statement.
Mr. Lynch. Thank you, Mr. Chairman. I want to thank the
witnesses for helping the committee with its work. I appreciate
the chairman holding this afternoon's hearing, as it will
afford us the opportunity to examine the Federal Employees'
Compensation Act, which as the chairman has pointed out has not
been revisited or significantly updated in over 30 years.
The Federal Employees' Compensation Act [FECA], and I will
try to avoid using acronyms, as it is so commonly referred to,
serves as the safety net for thousands of Federal workers that
are injured while in the performance of their official duties.
The Federal Employees Compensation Act benefits are also
extended to Federal civilian employees that may contract
occupational diseases or illnesses as a result of their work
environment.
Today's hearing serves as a reminder that the Federal
Government takes its responsibilities as an employer very
seriously and is committed to having in place effective systems
and policies that protect and assist the men and women of this
great Nation who have dedicated their professional career to
public service.
The Federal Workers' Compensation Program helps shield our
employees and their families from undue hardships, often during
times when they may be dealing with some challenging situations
and circumstances. Wage loss payments ensure that these
employees can continue to make ends meet, while medical
reimbursement and vocational rehabilitation regularly mean the
successful recovery and eventual return to work of these
dedicated public servants.
Although the Federal Workers Compensation may commonly be
lauded as a prime example of employee disability insurance, the
program is not without its share of problems, especially given
the fact that it has not been significantly reviewed in the
past 30 years. For example, time and again we hear of how
injured employees face delays in the processing of paperwork,
they confront stringent time limits and encounter various
difficulties when they are seeking to change their physician or
medical provider.
On the other hand, we see employees of the Office of
Workers' Compensation program having to deal with over 100,000
new claims a year. And they interact with a myriad of different
Federal agencies and grapple with the case management
expectations and efficiencies, all in the face of recent
budgetary cuts.
Further, with tens of thousands of Federal employees
currently serving overseas in zones of armed conflict, it is
even more important now that we ensure the seamless medical
care and efficient processing of workers' compensation claims
upon the return of these employees, who unlike their military
counterparts often lack an established medical rehab framework
or agency personnel that are dedicated to helping them navigate
bureaucratic hurdles associated with filing claims for Federal
workers' compensation benefits. To that end, I look forward to
today's proceedings to further the dialog on how best to
update, modernize and improve the administration of the Federal
Employees Compensation Act, with the goal of making it more
equitable for our employees and more manageable for our
agencies.
While I recognize that the various FECA-regulated reform
proposals that have already been put forth this Congress
attempt to accomplish this goal, I am less than confident that
any of these proposals actually represents a truly fair
approach to enhancing the Federal Workers' Compensation program
going forward, as contemplated by the title of today's hearing.
Mr. Chairman, I would also like to ask unanimous consent
that the statement of the National Active and Retired Federal
Employees Association be included in the record.
And again, I thank our witnesses for appearing here before
this subcommittee this afternoon, and for helping us sort out
what options may need to be considered to guarantee that
injured Federal employees and their family members are
receiving the proper support and treatment they deserve from a
grateful Nation.
Thank you.
Mr. Ross. Thank you, Mr. Lynch. And without objection, we
will show the report entered into the record.
Members may have 7 days to submit opening statements and
extraneous material for the record.
We will now welcome our panel of witnesses. Mr. Gary
Steinberg is the Acting Director of the Office of Workers
Compensation Programs at the U.S. Department of Labor. Mr.
Douglas Fitzgerald is the Director, Division of Federal
Employees Compensation, at the U.S. Department of Labor.
Unfortunately, David Williams, the Inspector General of the
U.S. Postal Service, could not be with us today due to illness.
However, Mr. Bill Siemer, the assistant inspector general for
investigation, is here in his place.
We have next Ms. Lisa McManus, who is the president of CCS
Holdings, L.P. And we have another witness who is not with us
yet, Ms. Milagro Rodriguez, an occupational health and safety
specialist with the American Federation of Government
Employees.
What I would like to do, pursuant to committee rules, is
ask you to stand, raise your right hands and I will swear you
in before you testify.
[Witnesses sworn.]
Mr. Ross. Thank you. Let the record reflect that all the
witnesses answered in the affirmative.
Please be seated. In order to allow time for discussion, we
are going to ask you to keep your remarks brief. Your written
statements, of course, have been submitted and are part of the
record of this hearing. At this time, I will now recognize Mr.
Steinberg for an opening.
STATEMENTS OF GARY STEINBERG, ACTING DIRECTOR, OFFICE OF
WORKERS COMPENSATION, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY
DOUGLAS FITZGERALD, DIRECTOR, DIVISION OF FEDERAL EMPLOYEES
COMPENSATION; BILL SIEMER, ASSISTANT INSPECTOR GENERAL FOR
INVESTIGATIONS, U.S. POSTAL SERVICE; LISA McMANUS, PRESIDENT,
CCS HOLDINGS, L.P.; AND MILAGRO RODRIGUEZ, OCCUPATIONAL HEALTH
AND SAFETY SPECIALIST, AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES
STATEMENT OF GARY STEINBERG
Mr. Steinberg. Thank you, Chairman Ross and committee
members. I appreciate the opportunity to discuss the Federal
Employees' Compensation Act with you today.
On behalf of Secretary Solis, I would like to share a set
of balanced proposals that would enhance the ability for us to
assist beneficiaries in returning to work, provide a more
equitable array of benefits and generally modernize the
program.
Almost 95 years ago, Congress enacted FECA to provide
workers' compensation coverage to all Federal employees and
their survivors for disability and death due to work-related
injuries and illnesses. The basis of FECA includes the postal
worker who is hurt when his mail truck is hit while driving and
delivering the mail, the FBI agent who is injured or killed in
the line of duty and the VA nurse who hurts her back while
lifting a patient.
DOL's Office of Workers Compensation Programs works hard to
administer the program fairly, objectively and efficiently. We
seek to continuously improve the quality and service delivery
to our customers, enhance internal and external communications
and reduce the cost to the taxpayer. We have made major strides
in disability management, resulting in significant reductions
in the average number of work days lost from the most serious
injuries. Over the last 10 years, the average number of days
lost due to serious injuries has declined by over 20 percent,
producing an annual savings of $53 million.
Our administration costs are only 5 percent of the total
program costs, far below the average of all State self-
insurance programs, which is over 11 percent.
To further improve FECA, we have made comprehensive
recommendations to Congress. I wish to highlight some of the
major changes now.
To help injured employees return to work, we request the
authority to start vocational rehabilitation activities without
waiting until an injury is deemed to be permanent in nature. We
seek the mandate to develop a return to work plan with
claimants early in the rehabilitation process and the authority
to develop an assisted re-employment program with Federal
agencies, similar to the one that we have successfully
implemented with the private sector.
The proposed changes will also have a positive impact on
the Government's ability to achieve the President's Executive
order on hiring individuals with disabilities.
We also suggest changes to the benefit structure. For
example, the payment of schedule awards for a loss or loss of
use of a limb or sight or hearing is often complicated and thus
often delayed. Although not intended to replace economic loss,
payments are based on the employee's salary. So a letter
carrier's knee impairment is compensated at less than half the
rate of her GS-15 manager with the same injury.
We think these awards should be paid by DOL concurrently
with wage loss compensation, more rapidly, and to be fair, they
should be calculated at a uniform level for all employees. We
also recommend increases to burial benefits and benefits for
facial disfigurements.
Under current law, the majority of injured workers receive
wage replacement at 70 percent of their salary, tax-free and
COLA. This rate is higher than the take-home pay for most
Federal employees and at times can be an obstacle to the
Department's effort to encourage every worker to make the hard
and sometimes painful effort to overcome their injuries and
return to work. We therefore recommend shifting the benefit
level for the majority of claimants to 70 percent rather than
75 percent.
To provide equity with other Federal employees, we also
recommend establishing a lower conversion rate for
beneficiaries beyond retirement age. This would more closely
mirror OPM's retirement rates. Both changes would be
prospective.
In addition, elements of the statute need to be simplified
so that we can process more expeditiously. For example, the
current statute increases the compensation rate for anyone with
a dependent beyond the standard 66 and two-thirds rate loss to
75 percent. Paying all non-retirement age beneficiaries at 70
percent would simplify the process by eliminating the
continuing need to obtain and validate documentation regarding
dependent eligibility.
A single rate would be simpler, more equitable and would
produce a significant savings to the taxpayer. This change
alone would yield a 10-year savings of over $500 million.
My written testimony outlines other important provisions
that would streamline and improve the program. In summary, FECA
is a model workers' compensation program. Yet, it has
limitations that need to be addressed, we all recognize that.
The reforms we suggest today are not new. They have been
proposed by both the current and previous administrations. They
are careful, they are balanced. We believe they reflect good
government, and they will bring the program into the 21st
century.
Thank you again for the opportunity to discuss the program
with you today. I will be prepared to answer any questions that
you may have.
[The prepared statement of Mr. Steinberg follows:]
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Mr. Ross. Thank you very much.
Next we will move on to Mr. Siemer for 5 minutes. You are
recognized.
STATEMENT OF BILL SIEMER
Mr. Siemer. Thank you, sir.
Mr. Chairman, Ranking Member Lynch and members of the
subcommittee, thank you for the opportunity to discuss workers'
compensation issues and reform.
The Federal Employees' Compensation Act [FECA], requires
Federal agencies to participate in Department of Labor's FECA
program. The Department of Labor bills each agency annually for
compensation paid and non-appropriated agencies also must pay
the Department of Labor an annual administrative fee. Eligible
disabled employees receive 66 and two-thirds percent, or 75
percent with dependents, of their basic salary tax-free, plus
medical related expenses. Also, FECA places no age limit on
receiving benefits. This is substantially more than other
employees receive when they retire. Though unintended, FECA has
become a lucrative retirement plan.
The Postal Service is the largest FECA participant, paying
more than $1 billion in benefits and $60 million in
administrative fees annually, creating a long-term liability of
$12.6 billion. As of February 2011, the Postal Service had
about 15,800 disabled employees. Over 8,700 were at least age
55; about 3,100 were at least age 65; and about 900 were
between age 80 and 98.
Certain aspects of the program make it susceptible to
fraud, including the claimant's ability to change their story
until their claim qualifies, the claimant's ability to hire a
physician, rather than use a plan physician to assess their
injuries and conditions. The program incentivizes DOL to
collect larger fees if they approve more claims, and lose
budget dollars if they deny them. The lack of effective DOL
case management, and employers not being allowed to present or
respond to evidence at hearings.
The Department of Labor has some fraud detection
responsibility, but it is unclear to what extent. They advise
agencies to actively manage their own programs while still
charging administrative fees. There is not a clear delineation
of responsibility between agency program managers and their
OIGs and DOL and its OIG in detecting fraud. Accordingly, there
is significant risk that program oversight will be duplicative
or not done.
Since October 2008, we have removed 476 claimants based on
disability fraud, recovered $83\1/2\ million in medical and
disability judgments, and halted significant future losses. In
one investigation, a fraudulent claimant received $142,000 in
benefits while she was working as a real estate agent. And we
had pictures of her hiking and bungee jumping. She even bought
a boat and named it Free Ride. Other investigations have found
fraudulent claimants working as martial arts instructors,
landscapers, hairdressers and mechanics.
Working with DOL can be difficult. They control needed
documents but are often not responsive when we investigate
cases. Additionally, they do not take timely action when told
that a claimant no longer qualifies for benefits. Even when a
claimant is convicted, DOL is slow to terminate benefits.
We gave the Department of Labor an investigative report in
2006, which found a claimant was exceeding his limitations.
Even though the employee was willing to return to work, the
Department of Labor did not reduce his benefits until 2011.
Fourteen months ago, we gave the Department of Labor an
investigative report containing evidence of fraud by a
disability claimant and a subsequent medical exam confirmed the
claimant was able to return to work with no restrictions.
Despite requests, DOL has taken no action and continues to pay
benefits. Over a 5-year period, one claimant submitted $190,000
in unsupported mileage reimbursements, and the Department of
Labor paid without question.
Stress claims in particular are at high risk for fraud. If
a doctor sees a correlation between stress and a claimant's
work, the claim is often approved. In one instance, a
claimant's emotional reaction to a change in work schedule was
enough for Department of Labor approval.
The OIG also investigates medical providers involved in
criminal matters, including disability fraud. And we have
recovered $78\1/2\ million since fiscal year 2009.
Unfortunately, the Department of Labor provides no standardized
billing guidelines for doctors, making it difficult to hold
them accountable for fraudulent billings. If the Department of
Labor instituted a system similar to Medicare's, prosecutors
would be more inclined to take these cases.
From our reviews, the Postal Service would benefit from
having its own workers' compensation program. Savings would be
in the areas of reduced administrative fees, accurate
assessment of claims by plan physicians, buy-out options,
mandatory retirements, immediate access to records and improved
accountability over case management.
FECA is in need of significant reform. Such reform could
reduce the substantial risk for fraud and improve program
efficiency and effectiveness while protecting reasonable
benefits for legitimate claimants. Thank you.
[The prepared statement of Mr. Williams follows:]
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Mr. Ross. Thank you.
Ms. McManus, you are recognized for 5 minutes.
STATEMENT OF LISA McMANUS
Ms. McManus. Thank you, Mr. Chairman, committee.
I believe I am the only individual speaking today from the
private sector, so I feel somewhat of a little bit at a
disadvantage. Nevertheless, let me explain how I even became
interested in the FECA.
We manage workers' comp for the non-appropriated funds'
instrumentalities. And because of that, we were asked to go
down to a Navy base in Corpus Christi to assist them in their
FECA program. That was in the early 1990's.
Since that time, we have been approached by several
agencies to assist them. And so we do have contracts with some,
the Department of Commerce, for example, some FECA agencies and
as such, have realized that there are so many nuances of the
law that foster abuse.
For example, not to be repetitive to both what the chairman
in his opening remarks or what has already been said, we feel
that the entire FECA law needs to be sunset and start over, and
to fashion a new law that would either compare or combine both
NAFE workers and FECA-appropriated fund workers. Along those
lines, reduce the average weekly wage of 75 percent to 66 and
two-thirds. Seventy-five percent of an average weekly wage tax-
free lends itself to abuse, because many times the worker
actually is making more on workers' comp than if they were
working.
Federal workers who are beyond the retirement age continue
to receive workers' comp. Under the current scenario, Federal
workers would continue to receive 75 percent of their average
weekly wage tax-free, with an annual cost of living increase,
versus 56 percent under a retirement plan. Again, this scenario
lends itself to abuse.
Afford appropriated workers the same benefit entitlement as
non-appropriated workers at the rate of 66 and two-thirds.
Offer retirement benefits under OWCP to only those employees
deemed to be permanently and totally, by legal definition,
disabled. Protocols within the Department of Labor are far
outside industry standards with regard to case management and
oversight. For example, in certain situations, a Department of
Labor case manager is only required to review a case file every
2 years. A lot happens in 2 years.
Perhaps change the law to allow a government agency the
option of seeking a third party administrator to handle its
FECA claims, or the Department of Labor. Or increase DOL
staffing that would ensure proper case management that closely
aligns with industry standards. The number of DOL full-time
equivalents used to administer newly created cases plus the
ongoing claims from previous years far exceeds standard used in
the private sector and industry standards.
Many agencies do not even have a centralized program, a key
element in measuring and managing overall performance goals.
Implement a requirement that if an agency manages its claims
internally, a standard set of protocols and policies, as well
as standard performance goals and benchmarks, must be used. The
OIG has performed many audits for various agencies. Most
findings indicate ineffective monitoring, a lack of return to
work initiatives, ineffective medical management, poor
monitoring of chargeback reports, and overall poor performance
by the agencies.
Agency employees involved in handling or oversight of FECA
claims would be required to have 15 hours or more of continuing
education each year covering FECA laws, claims management and
benchmarking. Many agencies have no standard return to work
program in place for injured workers who may be able to return
to the work force once maximum medical improvement has been
achieved. Mandate a program for all agencies to at least
attempt to bring workers back to work.
Regarding continuation of pay, and that's the first 45 days
of disability, to my knowledge there is no other jurisdiction
that allows a 45-day continuation of pay where an employee
receives 100 percent of their salary. Our suggestion would be
to eliminate that in its entirety.
[The prepared statement of Ms. McManus follows:]
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Mr. Ross. Thank you, Ms. McManus.
Ms. Rodriguez, welcome. I understand you had some
transportation delays getting here. We are pleased to have you
here.
The only thing you missed was the swearing-in part, so if
you don't mind, stand and raise your right hand and I will
swear you in.
[Witness sworn.]
Mr. Ross. Thank you. Let the record reflect that the
witness answered in the affirmative. And again, Ms. Rodriguez,
thank you very much for being here. You are recognized for 5
minutes.
STATEMENT OF MILAGRO RODRIGUEZ
Ms. Rodriguez. Thank you, Mr. Chairman.
On behalf of the members of AFGE, which represents more
than 600,000 Federal employees, including the claims examiners
who adjudicate workers' compensation claims, I thank you for
the opportunity to testify today on the proposed changes to the
Federal Workers Compensation Act.
We wish we were here offering our views on how to improve
the Federal Workers' Compensation Program and how to save the
Government money. Although the proposed changes are described
as modernizing and improving FECA, they basically amount to
reducing benefits for injured or ill employees in order to save
money. The changes we would like to see are the changes that
improve the claims process, the changes that would result in
employees getting the medical attention they need sooner, the
changes that would give employees the time they need to recover
and get well sooner, the changes that would ensure that
employing agencies meet their FECA responsibilities. Also, the
changes that would compel agencies to improve health and safety
so workers do not get hurt or become ill in the first place.
First, I have some general comments about the proposal. The
language in the proposal that implies that injured employees do
not want to get back to work is unfortunate. Words like
incentivize lead one to believe that employees are injuring
themselves so they can be paid by OWCP so they don't have to
work and eventually retire on workers' compensation benefits.
That is an unfair characterization. It does not take into
account the diminished work life that many injured employees
face. It does not take into account the physical pain employees
must endure and the psychological pain they have to deal with
when their life starts spiraling into debt because OWCP
payments take so long or because their cases are denied.
In our experience, most workers wish they had never been
hurt. Most want to go back to work when it is safe for them to
do so. And most wish they did not have to deal with the
workers' compensation process at all.
Next, I would like to address some specific changes that
are being proposed. The proposal to create an assisted re-
employment program seems to be a positive step. However, we are
concerned that this program would serve as a disincentive to
agencies to make every effort to find suitable jobs for their
injured employees. It would potentially create a rush to get
the employee into the program and the worker may be forced to
return to work before it is medically advisable.
AFGE is also concerned about what happens after the 3-year
period. For example, a TSA worker is injured and cannot do his
TSA job, but he can do a Social Security job. So for 3 years,
he works at SSA and DOL reimburses SSA for his salary. But if
he cannot go back to his job at TSA and SSA will not keep him
without the subsidy, what alternative does the employee have?
We are also concerned about how OWCP will address the needs
of workers who do not find employment after the vocational
rehabilitation program is completed. We think agencies will use
this to get rid of their injured employees. We see this
happening already at TSA.
AFGE does not believe claimants should be forced to choose
between a lower disability retirement than they would have if
they had continued to work, or having their benefits reduced
through the proposed conversion. To make this change more
equitable and fair to claimants, the amount of the reduced
benefit should be higher than the proposed 50 percent.
The proposal would eliminate the increased percentage for
claimants with dependents, making the basic compensation rate
70 percent of monthly pay for all claimants. We do not see this
as a matter of increasing compensation because a worker has
dependents, but of providing injured workers with compensation
comparable to what would be their take-home pay before their
injury or illness.
The proposal would place the 3-day waiting period
immediately after the employment injury and prior to the 45-day
continuation of pay period. So if a worker is injured or made
ill on the job, the worker already suffers a loss of income or
is forced to use his or her own leave. Other than penalizing
employees for becoming sick or injured on the job, we do not
see any reason to change the way this is currently done.
The proposal to include sanctions for non-cooperation with
nurses is too harsh and does not include any due process
considerations. In our experience, the primary reason claimants
sometimes resist their nurse's intervention is that some nurses
exceed their authority by adversely influencing the treating
physician's opinions or reports to OWCP. If there are to be
sanctions, there needs to be a forum for the claimant to state
his or her position and to be heard.
In closing, the Federal Workers' Compensation program
should strive to be the best, the model program. It should not
be competing with the States in a race to the bottom by
lowering benefits to the States' levels. We urge the
subcommittee to direct the Officer of Workers' Compensation
Programs to propose changes that save money by improving the
workers' compensation process and not simply by reducing the
benefits available to employees injured or made ill by their
jobs when they most need them.
That concludes my statement. I would be happy to respond to
your questions.
[The prepared statement of Ms. Rodriguez follows:]
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Mr. Ross. Thank you, Ms. Rodriguez.
We will now move into questions. And I will begin by
recognizing the full committee chairman, the distinguished
gentleman from California, Chairman Issa.
Mr. Issa. Thank you, Mr. Chairman. Although your questions
will be better trained and insightful, I will try to get the
easy ones out of the way.
Ms. Rodriguez, since you spoke last, you probably are most
freshly in my mind. If I heard you correctly, your objections
are based on mostly abuses or potential abuses, wouldn't that
be a fair characterization of some of the areas that you were
saying, including that nurses may not be fair, that employers
may dump their employees to another entity of Government and so
on? Can you show me any example in the private sector where
there is a system that looks like the system that you would
modify our thoughts to? In other words, where in the private
sector would the current system be paralleled? Who, for
example, like the Post Office, and I don't pick on the Post
Office lightly, but their system allows two 98 year old people
to continue getting full pay years and years after they should
have retired.
Now, postal workers don't like this any better, it is just
part of the legacy system that has thousands who are past
retirement age but still not disabled and retired in any way,
shape or form. So are you saying that you like some parts of
this proposal? And if so, what parts do you like?
Ms. Rodriguez. There are some areas that would be
beneficial to employees, things like the streamlining. I know
we are all about cutting costs and I think comparing----
Mr. Issa. No, we are not necessarily all about cutting
costs, although we certainly do want to make the system world
class. Let me go through a couple of questions. Do you believe
that if someone is unable to do one job but able to do another
job, they should be able to do that job during their short or
long-term disability?
Ms. Rodriguez. Yes. And we often struggle with agencies to
provide those positions for them, yes.
Mr. Issa. So assuming for a moment that there were a
neutral third party, and I am trying to find a yes here, I am
fishing for it, if there were a neutral third party that
arbitrated, in other words, an agency couldn't arbitrarily get
rid of somebody, refuse to take somebody, and for that matter,
if you will, the disabled would be fairly allocated to agencies
where they could perform the job. If we did that, and I did not
say with a subsidy, but if we did that so that the person would
be able to go to a part of government which they could still
perform, this is very much like our disabled veterans who so
often find usable and worthwhile jobs in the Post Office where
they get a preference, if in fact we develop that system and
had safeguards so the agencies themselves were not arbitrary,
would you approve of a change like that?
Ms. Rodriguez. Yes, I think that would benefit employees.
Mr. Issa. And would it be fair to say that the difference
between two jobs could again be arbitrated by some sort of a
panel that would determine whether or not that change was
directly related to their disability and as such, there should
be some supplemental compensation and obviously, on a yearly
basis, monitoring it to see if as they progressed in their new
job essentially they phased out of that subsidy?
Ms. Rodriguez. Certainly. And I think our only concern
would be positions that would be medically suitable to the
employee. Otherwise, the situation that you are describing
would be fine.
Mr. Issa. OK, but isn't it true that virtually every State
in the Union that has workers' comp, State workers' comp, you
don't get to choose your doctor to get the opinion you want,
you get, for the most part, assigned to doctors who evaluate
your fitness, and they do so as agents of the government, not
agents of the injured? Isn't that true?
Ms. Rodriguez. I can only speak to my experience with the
Federal Government. I cannot compare with the States. I have
not worked in workers' compensation with the States. I cannot
answer that.
Mr. Issa. OK. Mr. Steinberg, I think I will go to you. If
you are looking at trying to eliminate waste, fraud and abuse,
and you are trying to find those very few, and they are few,
who ride the system, who have a football accident over the
weekend and somehow turn it into an injury that they never work
again and they get all these benefits, we all know there are
some of these, as few as there might be. Wouldn't it be true
that the Government should obviously consider outside opinions
contrary to the Government's, but shouldn't the Government have
a medical review board that works on behalf of a fair
interpretation of the Government, not incentivized to take
people off disability, but paid to do an evaluation for
fitness?
Mr. Steinberg. Yes. That would certainly eliminate a lot of
the potential for fraud by claimants that are trying to abuse a
good system. Because when they can pick their own doctors,
there is the implied ability for them to have a biased opinion
on their side.
Mr. Issa. We are trying to get to a fair and expeditious
system, fair to the employee but expeditious to the process. Do
you believe that the Government should act, maybe not
everything that Ms. Rodriguez wants to do or doesn't want to
do, but do you believe the system, whether it is the Post
Office or other Federal employees right now needs reform?
Mr. Steinberg. Absolutely.
Mr. Issa. Thank you.
Mr. Chairman, I told you I wouldn't have the best
questions, but thank you for letting me have the first.
Mr. Ross. Very good questions. Thank you, Mr. Chairman.
I will now recognize the ranking member of the
subcommittee, the distinguished gentleman from Massachusetts,
Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman, I appreciate that.
Again, I thank the witnesses for helping us with our work.
Mr. Siemer, I was surprised by some of your numbers,
especially regarding the older employees who remain on the FECA
disability system as opposed to retirement. I want to go back
to your numbers. You had, I think it was like 4,000 employees
over age 80.
Mr. Siemer. We had 900 employees over 80, we had 3,100
employees over the age of 65. And we had 8,700 employees that
are over the age of 55.
Mr. Lynch. I will take the latter two categories there, so
about 4,000, in other words, 900 and 3,100?
Mr. Siemer. Yes, sir.
Mr. Lynch. And those are all over 80 years old?
Mr. Siemer. Over 65.
Mr. Lynch. Oh, over 65. And there was a small group, 900,
between 80 and 98?
Mr. Siemer. Actually, sir, the 900 is a subset of the
3,100.
Mr. Lynch. OK. You don't combine them into all one. But
still, that is a pretty big number.
Mr. Siemer. Yes, sir.
Mr. Lynch. Does the Inspector General track the success
rate we have for folks over 80 years old that actually get
rehabbed and come back to work?
Mr. Siemer. The Postal Service may have that information.
The Inspector General's office does not.
Mr. Lynch. I am just curious, because it would seem to me
to be a--any of the panelists have an indication of how many
people who are injured and over 80 actually return to work?
Mr. Steinberg. We can't tell you over 80, sir. What we can
tell you is that on average, over 500 individuals are removed
from our long-term rolls on an annual basis. Over the last 10
years, it has been close to 10,000. So there are individuals
who move on for a variety of reasons, sir.
Mr. Lynch. I am really focusing on that, we are trying to
devise some reforms here. That would be good information for me
to have.
Mr. Steinberg. We can provide that for the record, sir.
Mr. Lynch. That would be great. So Mr. Steinberg, are you
going to provide that or Mr. Siemer?
Mr. Steinberg. We will provide that, sir. We provide that
for the Government.
[The information referred to follows:]
[Note.--The information referred to was not provided to the
committee.]
Mr. Lynch. OK, that would be great.
So anybody over 80 years old, maybe you can give me
coordinates like 70, 80, 90. It would just seem to me, look, I
am just looking at this as an average person, not an actuary.
But it would seem to me that it would be a pretty slim chance
that someone age 90 or 98 is coming back to work after an
occupational injury. I am just trying to save the Government
some money here. So maybe we could take a whack at that.
Mr. Siemer, again, I probably toot my own horn here, I
filed legislation along with Ranking Member Cummings, I
introduced H.R. 1351, the U.S. Postal Service Retirement
Pension Obligation Recalculation and Restoration Act--title
just kind of rolls off your tongue--a couple of weeks ago.
[Laughter.]
Contained in my legislation is a proposal to use a portion,
we have a portion of the U.S. Postal Service's FERS, the
Federal Employee Retirement System, we have a surplus of $6.9
billion. And what we tried to do is move some of that money
over, I think it was about $1.2 billion, to pay some of the on-
budget costs of the workers' compensation system. Do you have
any comments on the wisdom or lack of wisdom that I might have
in trying to do that?
Mr. Siemer. Certainly any move to use that surplus in the
FERS retirement system to pay bills that we would otherwise,
the Postal Service would otherwise have to pay out of revenue
this year is a good thing. So applying it to those normal costs
that are occurring this year is a good thing.
Mr. Lynch. Thank you.
Mr. Steinberg, any comment on that?
Mr. Steinberg. No, sir, I can't speak for the Postal
Service and the use of their revenues.
Mr. Lynch. OK. I realized my time is short here. I realize
we have to do more than just sort of pay as you go. We have
some real reforms here that we have to tackle, and I appreciate
that and your help in doing so.
But in the meantime, I think it is fair, given there is a
surplus owed to the Postal Service, that we pay for some of the
costs going forward.
I have 12 seconds I will yield back. Thank you, Mr.
Chairman.
Mr. Ross. Thank you, Mr. Lynch.
A couple of questions I have. For lump sum settlement
purposes, Federal employees and the Federal Government cannot
settle the exposure in a case, can they, Mr. Steinberg?
Mr. Steinberg. No, sir, we do not do that at this point in
time.
Mr. Ross. But wouldn't that be a good idea for both sides?
In other words, if you knew what your exposure was, and State
workers' compensation programs, for example, allow that. It
would allow for the injured worker to get on with their life,
to be able to have benefits in lump sum fashion, and then
actually have the benefits survive them by way of an annuity.
Mr. Steinberg. Let me address that from two different
perspectives. As I mentioned in my testimony, we do propose a
lump sum payment for a scheduled award. And again, that is
associated with a permanent functional disability, and there is
that form of compensation. That can serve as, if you will, an
investment for retirement for an individual who may have a
lifetime disability.
In terms of a lump sum payment associated with a wage loss,
we believe that should be a continued payment. We continue to
hope that individuals will be able to return to work. And as we
continue to provide the wage loss supplement, we can work with
them in terms of vocational rehabilitation, looking for
opportunities for them to come back either to their original
job or to other jobs, preferably within the Federal Government.
We believe that is the most prudent approach. It allows us to
maintain a relationship with them as they continue to go
through, if you will, a recovery stage.
Mr. Ross. Thank you.
Ms. Rodriguez, would you agree that employees should have
the option of whether they want to lump sum settle a permanent
disability case?
Ms. Rodriguez. Yes, if they have the option. And I think in
the way that Mr. Steinberg has described it, I would agree with
that.
Mr. Ross. Good, thank you.
With regard to third party recoveries, in a case where
third party action has caused the injury which is compensable
under the Federal Employees Compensation Act, there is no
recovery, is there? There are no lien rights for the Federal
Government against a third party tort feasor, is there?
Mr. Steinberg. At this point, that is one of the things we
are asking for.
Mr. Ross. And in any such fashion, do you have any ideas,
percentage-wise, or just look at lien rights?
Mr. Steinberg. We think it is going to be relatively small,
but we can provide additional information on that for you, sir.
Mr. Ross. Thank you. And Mr. Steinberg, with regard to
medical, because medical drives these cases. As we know, the
medical opinions are what dictates what type of disability a
person may have. If somebody goes to their physician and their
physician takes the case and continues to treat them, are there
any medical fee reimbursement schedules? Or do you pay usual
and customary? What does the Federal Government pay in terms of
medical?
Mr. Steinberg. We pay based on the AMA codes. We have the
codes, that is what we follow. We monitor that, obviously, in
terms of our central bill pay processing to ensure that the
bills are at the proper level. We also look for situations
where they may be over, or there may be an issue. So as the
Postal Service IG has suggested, we do monitor that. We do
monitor that closely, and we contact the IGs if we see that
there are issues associated with payment, sir.
Mr. Ross. The AMA fee reimbursement, how does that compare
to Medicare reimbursement? Is that less or more? Mr.
Fitzgerald.
Mr. Fitzgerald. Yes, we have a medical fee schedule that is
tied to Medicare payment fee schedule. And on average, it is
about 5 percent over that Medicaid pay schedule in order to
attract more physicians to the program.
Mr. Ross. OK, good, thank you.
Let me make sure I understand the legal classifications of
benefits. You give temporary total disability benefits,
temporary partial disability benefits, then once maximum
improvement is reached, then you have either wage loss or
permanent total disability. What is the legal definition of
permanent total disability?
Mr. Fitzgerald. It is the inability to perform any work,
particularly work that is associated with the date of entry
job. But if there is no ability to perform any work as
determined by medical evaluation and verification, then that is
total disability. It is an economic construct, sir.
Mr. Ross. So if there is no work available within a
geographic area, does that constitute total permanent
disability benefits?
Mr. Fitzgerald. No, it does not.
Mr. Ross. So it is not uninterrupted light duty work, it is
just no work at all.
Mr. Fitzgerald. What I am trying to say is, the ability to
work is the determining factor whether or not compensation is
paid, not the availability of a job. If someone has a wage-
earning capacity, we will not pay benefits to them.
Mr. Ross. How is that determined? Is it through vocational
rehabilitation testimony as to whether they have wage-earning
capacity?
Mr. Fitzgerald. It is an evaluation done by medical
professionals and voc rehab specialists in----
Mr. Ross. OK. With regard to fraud----
Mr. Fitzgerald. Excuse me, in conjunction with our claims
examiners.
Mr. Ross. OK. Mr. Siemer, you talked about in your
testimony about somebody bungee jumping and doing all this. Is
there any adjudication process that can determine whether
somebody has committed fraud in the receipt of workers'
compensation benefits?
Mr. Siemer. Any time we investigate a claimant that appears
to be defrauding the system, we present that to a prosecutor
for prosecution. We count on feedback from the Department of
Labor if they encounter fraud, but we have never received a
referral from them.
Mr. Ross. And one last question, because I am a little bit
over my time here. If there is a determination or an
adjudication of fraud and they are found guilty, does that in
any way affect their receipt of workers' compensation benefits?
Mr. Siemer. Yes, if they are convicted of FECA fraud or
health care fraud related to their current injury, the benefits
for that injury are immediately terminated. However, that
conviction does not prevent them from claiming a new injury in
the future if they continue to be an employee.
Mr. Ross. Thank you very much. My time is expired.
I recognize the distinguished gentleman from Virginia, Mr.
Connolly.
Mr. Connolly. Thank you, Mr. Chairman.
If I could just pick up on that last thing, Mr. Siemer. You
mean somebody convicted of fraud would still be on the Federal
payroll?
Mr. Siemer. If they remain an employee.
Mr. Connolly. No, no, that's not what I'm asking. Somebody
convicted of fraud can still remain a Federal employee?
Mr. Siemer. Yes.
Mr. Connolly. How is that possible?
Mr. Siemer. We have instances where some of the employees,
not for medical fraud, have been convicted or pled guilty in
court, and through arbitration at the Postal Service, they have
gotten their old job back.
Mr. Connolly. So they don't go to jail?
Mr. Siemer. No, that person did not that I am thinking of.
Mr. Connolly. Right. But that is up to the courts, not the
Postal Service or the Department of Labor.
Mr. Siemer. About whether they go to jail?
Mr. Connolly. If they are convicted of fraud in a court of
law, it is up to the court to decide their sentence?
Mr. Siemer. Yes.
Mr. Connolly. Not the Federal agency?
Mr. Siemer. Correct.
Mr. Connolly. OK. I just wanted to be clear about that.
Mr. Steinberg, do I understand that, of the Federal
Employee Compensation Act, overhead is just 4 percent of
benefits?
Mr. Steinberg. Overhead is actually 5 percent, sir. And it
has remained at that level for years.
Mr. Connolly. And Federal workers' compensation costs are
1.8 percent of total Federal and Postal payrolls?
Mr. Steinberg. I believe so, yes.
Mr. Connolly. And that compares to 2.3 percent for private
insurance and State funds?
Mr. Steinberg. I can't speak to the private sector or the
State funds, sir.
Mr. Connolly. Well, I am actually reading, I think, from
your Web site. But if that were true, that would compare
favorably?
Mr. Steinberg. Yes, sir.
Mr. Connolly. And do I also understand that we actually
save some money because disputes of claims are resolved
administratively rather than through litigation? Is that
correct?
Mr. Steinberg. We think that is the hallmark of the system.
It is a non-adversarial system. We are unbiased. We are looking
at the situation, we are required to review medical evidence.
That is the basis for our adjudication. It is important to
point out that 85 percent of the claims we receive we accept,
but 15 percent of the claims we do reject. And those are cases
where we determine it is not a work-related injury.
Mr. Connolly. The point is, we save taxpayers a lot of
money by avoiding litigation in the system?
Mr. Steinberg. Yes, sir, we do.
Mr. Connolly. All right, thank you.
Mr. Siemer, you talked, and Ms. McManus, I want to come to
you as well, in fact, let me start with you, Ms. McManus, if I
understood your testimony, you called for the complete sunset
of the program on two bases. One was that somebody might
actually in compensation get more money than they would
otherwise get in, for example, a pension situation. And
therefore we were rewarding people for being injured. And
second, somebody might game the system, commit fraud. Is that
correct?
Ms. McManus. Partially, sir. That is not the only reason we
would recommend sunsetting the FECA law. Those are just a few
examples.
Mr. Connolly. Let me ask you a question. Do people game
private insurance? For example, do people game building
insurance or auto insurance?
Ms. McManus. I think it is safe to say yes.
Mr. Connolly. Do you think those two systems, for example,
ought to be completely sunsetted and we all start over again to
create some new insurance system that somehow avoids that?
Ms. McManus. No, sir.
Mr. Connolly. So why would we do it for FECA, other than it
happens to be a Federal program?
Ms. McManus. By comparison to other workers' compensation
laws, and if you look at sheer numbers, it is vastly greater
than any other comparable workers' compensation law as far as
the benefit entitlement.
Mr. Connolly. So why not reform it? There are lots of
reforms on the table. The administration has one, Susan Collins
in the Senate has one, we have several here.
Ms. McManus. That would be a great alternative.
Mr. Connolly. That is all I was trying to get at.
Sunsetting the entire program is a fairly draconian measure.
And I have 53 seconds left. Mr. Siemer, you gave us an
example of somebody who named her boat, obviously fairly
successfully having gamed the system. And while that is
certainly a juicy tidbit, hopefully you didn't mean to suggest
that gaming characterized the whole system and that everybody
was sort of gaming. You meant to illustrate how it could be
abused in the extreme?
Mr. Siemer. That is exactly correct.
Mr. Connolly. And you would agree that abuse of a system,
compensation system such as this, is not limited to the Federal
Government, it also occurs in the private sector?
Mr. Siemer. I would imagine so.
Mr. Connolly. Is there any reason to believe that it is
more, that it occurs more often in this program than it does in
fact in the private sector?
Mr. Siemer. I have no idea, sir.
Mr. Connolly. Thank you. My time is up.
Mr. Ross. Thank you, Mr. Connolly. I now recognize the Vice
Chair of the subcommittee, the distinguished gentleman from
Michigan, Mr. Amash.
Mr. Amash. Thank you, Mr. Chairman, and thank you all for
your testimony.
Mr. Steinberg, the President's Commission on the Postal
Service argued the Postal Service should be given relief from
the provisions of FECA that create costs and unintended
consequences. Do you agree and why or why not?
Mr. Steinberg. I believe that we should work closely with
the Postal Service to address the requirements of the program.
I believe we have an opportunity to work in partnership to
address many of the issues that were discussed today. I think
we share in a responsibility to help their injured workers
return to work and to provide wage loss compensation while they
are injured.
Mr. Amash. What is the level of overpayment in FECA?
Mr. Steinberg. Improper payments?
Mr. Amash. Yes.
Mr. Siemer. It is 0.1 percent. As measured by our Office of
the Chief Financial Officer for the past several years.
Mr. Amash. Would the conversion from FECA to retirement
allow broader survivor benefits?
Mr. Steinberg. The conversion to, if you will, from FECA to
FERS, for example, would not expand the survivor's benefit. It
would create some challenges between us an obviously the Office
of Personnel Management. That is why we suggest the conversion
to a 50 percent level, which more closely relates to the
retirement benefits from OPM.
Mr. Amash. Your testimony, Mr. Steinberg, states that less
than 2 percent of all new injury cases remain on the periodic
roll 2 years after the date of injury. How does this compare to
the private sector and State programs?
Mr. Steinberg. That is something we will research for you,
sir.
Mr. Amash. Thank you. And what percentage of time does OWCP
staff devote to the management of new FECA disability cases
versus screening long-term disability cases, and is it an
appropriate mix?
Mr. Steinberg. We have evolved that over time. When the
program began, there was a major focus on review, adjudication
to payment. Over the last many years, as I talked about, we
have been able to impact the return to work rate significantly.
And that is because we have applied a more balanced approach to
dealing with the front end of the process, but also the return
to work. We have made significant improvements in that arena,
sir.
Mr. Amash. In Ms. Rodriguez's written testimony, she
indicates that many Federal employees are going into debt due
to DOL rejecting a claim or taking too long to process it. Do
you have statistics on the 15 percent of claims that are
rejected in a given year?
Mr. Steinberg. Sir, if you could clarify the nature--the 15
percent, those are claims that we reviewed, have been
determined to be non-work related injuries, and we gain that
through the evidence and through the discussions with the
claimant themselves.
Mr. Amash. So is it a fair accusation that the accepted
claims are not processed in a timely manner?
Mr. Steinberg. No, I believe that the accepted claims are
processed in a timely manner. We can submit for the record data
that shows the timeliness associated with our claim submission.
On average, the average claim is processed within 16 days.
Ninety-four percent of our claims are processed within 1 month.
These beat the standards that we have established with OMB, yet
we will continue to try to push to lower those numbers.
Mr. Amash. Thank you. If you could submit the information
on the timeliness, we would appreciate that.
Ms. Rodriguez, do you think it is appropriate that some
Federal employees continue to receive FECA benefits while past
retirement age, in some cases at the age of 98?
Ms. Rodriguez. I think there is room for some improvement
in that area. Certainly people who would retire normally, I
just think our basic concern here is making things more
equitable and not having the worker suffer a loss if they would
have continued to work. So something that is more equitable to
what they would have been receiving in retirement would be
acceptable.
I know some of the proposals have looked at what OPM would
do. We think 50 percent is not the right amount. People who
continue to work would have access to higher, their higher
three average salaries would be higher than when they stopped
working. They would have had the opportunity to contribute to
their thrift savings programs. Things like that other people
who are not injured would have access to. We don't want to
shortchange the people who did get hurt and were not able to
continue to make those contributions into retirement.
Mr. Amash. You offered several suggestions in your written
testimony on how to improve DOL's FECA reform proposal. Do you
have any cost estimates on your reforms?
Ms. Rodriguez. No, I do not.
Mr. Amash. OK, thank you, Mr. Chair. I yield back.
Mr. Ross. Thank you. We have been called to vote. We have
11 minutes and 30 seconds and two questioners, and I will
recognize the distinguished gentlelady from the District of
Columbia, Ms. Norton, for 5 minutes.
Ms. Norton. Very quickly. I have a question, I guess it
would be for Mr. Siemer, for the IG report. I always find the
examples anecdotally striking. But they immediately raise
questions for me: how typical and what does the data show. For
example, most of the cases of the kind, $142,000 lady who was
working as a real estate agent who was caught bungee jumping,
most of those cases frankly I read about in the States. That a
cop, for example, who has been off duty for 2 years and is out
hiking or doing something worse. One who make the newspaper. In
other words, I have seen these a lot.
So my first question is, really goes to how bad the system
really is. You say we have removed 476 claimants based on
disability fraud. Out of how many?
Mr. Siemer. We investigated, since the beginning of fiscal
year 2009, we have investigated a little over 2,000 allegations
that claimants were defrauding the system.
Ms. Norton. So this is in 2008 alone?
Mr. Siemer. Since the beginning of fiscal year 2009. So,
October 1, 2008 to the present; 2\1/2\ years.
Ms. Norton. So you would call that high in relation, for
example, to the States, or to the private sector?
Mr. Siemer. I have no idea how that data compares.
Ms. Norton. I am having a hard time understanding what
would be a fair number, frankly. If you are a member of the
public, any number looks awful. But I can't tell, unless I
compare it with something. Mr. Steinberg, do you have any at
least comparative numbers?
Mr. Steinberg. I certainly do, ma'am. If you put into
perspective we receive 130,000 cases a year, based on our
information and our discussions with our IG, there are less
than 100 convictions per year. So it is a very minute portion
of the percent. Those are prosecutions.
Ms. Norton. So are you in touch with that data, Mr. Siemer?
Mr. Siemer. No, I am not certain how that data compares to
the universe of cases we have investigated. However----
Ms. Norton. How was your universe chosen?
Mr. Siemer. Just from the cases that we worked.
Ms. Norton. Oh, it was random?
Mr. Siemer. No, it was the health care fraud cases we
worked over the last 2\1/2\ years. In that body of work 116 of
those employees were arrested. And a subset of those were
convicted.
Ms. Norton. So you chose those because those were really
problematic. That category.
Mr. Siemer. Well, it just pertained to the testimony. I
brought in the universe of work that seemed appropriate.
Ms. Norton. But that is, by all measures, a particularly
problematic category.
Mr. Siemer. We investigate allegations for a variety of
reasons. Clearly, it is a very small subset of the total number
of legitimate claims.
Ms. Norton. What do you think of Mr. Steinberg's number?
Mr. Siemer. The relative number of convictions I don't
think has a direct bearing on how many people are getting
benefits and shouldn't be.
Ms. Norton. Well, how many people are getting benefits that
shouldn't be of those 130,000?
Mr. Siemer. Well, a quarter of the people that we
investigated were removed or retired or resigned.
Ms. Norton. So you are saying a quarter of the people?
Mr. Siemer. That we investigated.
Ms. Norton. But obviously that isn't my question. You
investigated a particular slice. And we are being told the
program needs a complete overhaul. Therefore, it is fair to
ask, how typical is your slice of the program?
Mr. Siemer. Well, we, I believe, represent half of all of
the benefits that are paid out through the OWCP program in the
Postal Service. This past year, we had 15,000 people, 800 on
the long-term periodic rolls. In a given year, it looks like we
have 200 people that are removed from those rolls. So that is
the percentage that we see.
Ms. Norton. Now, considering Mr. Steinberg, that we are
talking also about Federal employees, and there is a
recommendation that the Postal Service ought to be separated
out, does the whole panel think the Postal Service ought to be
separated out?
Mr. Steinberg. No, ma'am. We believe that we have the
skills, the experience, the capabilities to do this. We have
individuals who are trained, this is our core mission. We don't
believe that is the core mission of the Postal Service. As I
indicated earlier, we are looking forward to working with the
Postal Service to try to address their issues and to try to
improve the program.
Ms. Norton. Well, does Mr. Siemer's data reflect accurately
on the full complement of disabilities that you look at, claims
that you look at?
Mr. Steinberg. Well, again, as pointed out, the Postal
Service is 40 percent of our customer base. I think as you have
suggested, by looking at the numbers, there is a very small
cadre of individuals who commit fraud. And I think as
suggested, an even smaller group of individuals who are
ultimately convicted of fraud. I oversaw the program for a
number of years at the Department of Veterans Affairs. We found
very similar type of information, where we had over 15,000
individuals who were on the roll. When we did a complete
review, we found that less than half of 1 percent were
individuals that we referred to the IG.
So it was a very small number.
Mr. Ross. Thank you, Mr. Steinberg. I am afraid the time
has expired.
I will recognize the gentleman from Illinois, Mr. Davis,
for 5 minutes.
Mr. Davis. Thank you very much, Mr. Chairman.
Mr. Steinberg, the AFGE's testimony focused a great deal on
problems that individuals have with agency processing of
claims. Obviously this is a big source of consternation. Do you
think that the agencies could improve the time that it often
takes to get a claim processed, so that individuals know the
result and they can get back to work?
Mr. Steinberg. Mr. Davis, that is an excellent question.
And I can speak to my experience overseeing the Department of
Veterans Affairs. I believe Mr. Lynch referred to the IG study
of 2005. And there were a number of issues that were
identified. We did a major planning exercise and a major
transformational activity that focused on improving our
process. One of the key elements of that was improving
communication between the agency and the Department of Labor.
We set up quarterly review meetings where we would talk about
cases, we would focus on particular problem cases. This
significantly helped improve the processing and improve the
situation.
We also did extensive training within the department of
Veterans Affairs to educate both the employee and the
supervisors in terms of the process. We also changed the
culture in terms of return to work.
One of the reasons that I was so honored to join the
Department of Veterans Affairs was to take those types of
success stories and share those with other departments and
agencies. And I am committed to doing that, sir.
Mr. Davis. Thank you. I represent an area that has a large
number of postal workers. I come from Chicago, Cook County,
5\1/2\ million people. We have a lot of postal workers. And
there seems to be a great deal of controversy surrounding what
qualifies for a duty change, where physical requirements have
had to be met, relative to the acquisition of the job. Are we
making headway in determining what really constitutes the
ability to move from one level or one piece of work to another
as a result of injury or something comparable?
Mr. Steinberg. I am prepared to address the positive aspect
of that. Over the years we have worked very closely with the
Postal Service to monitor the status of their employees as they
go through rehabilitation and to look for opportunities for
either full-time placement or light duty positions. And over
the years, we have been successful in that.
We hope to continue to have that type of focus. And again,
that is a partnership, as I indicated earlier, between the
Department, DOL, the claimant and their physician. And we all
work together in partnership to try to look for the right
opportunities. So we have experienced success in the past.
Mr. Davis. Anyone else have any thoughts about that?
Mr. Siemer. I would only add, sir, that I think an area
that remains an opportunity is making that claims examination
process or that feedback by DOL in managing the case toward a
point where a limited duty offer can be presented can certainly
be enhanced or improved.
Mr. Davis. Go ahead, please.
Mr. Fitzgerald. I just wanted to add that part of the
proposals we put forward includes a provision called assisted
re-employment, which would help Postal Service workers in
particular, we think, because it basically uses the
compensation payments they are receiving to help subsidize
employment within Federal agencies. So we just think that is
another alternative to be looked at in this process.
Mr. Davis. Well, I hope we would continue, because many of
the individuals are often told that there is no light duty in
their environment, or that there is nothing else that can be
done. And of course, it frustrates them, it frustrates me,
because I don't know what to tell them once they get beyond
that.
Thank you very much, Mr. Chairman, and I yield back.
Mr. Ross. Thank you, Mr. Davis, and I would like to thank
our witnesses for testifying today. Mr. Lynch did have another
question, but he is going to submit that in writing.
There being no further business, the committee will stand
adjourned. Thank you.
[Whereupon, at 2:48 p.m., the committee was adjourned.]
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