[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


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                      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?

                              ----------                              


                       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.]
    [Additional information submitted for the hearing record 
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