September 11: Federal Assistance for New York Workers'		 
Compensation Costs (08-SEP-04, GAO-04-1013T).			 
                                                                 
In the aftermath of the September 11, 2001, terrorist attacks,	 
Congress appropriated $175 million for the New York State	 
Workers' Compensation Board (the Board) to assist with the	 
resulting workers' compensation claims. These claims were filed  
by workers or volunteers (or survivors) who were injured, became 
ill, or died as a result of the attacks and the recovery efforts.
Specifically, Congress provided federal funds to the U.S.	 
Department of Labor (DOL) for the Board in three earmarked	 
portions: $125 million for processing of claims, and $25 million 
each to reimburse the state Uninsured Employers Fund (UEF) for	 
benefits paid (1) for workers associated with uninsured employers
and (2) for volunteers. DOL transferred the funds to the Board	 
using a grant agreement. This testimony looks at the Board's use 
of the $175 million in federal funds and the status of September 
11 workers' compensation claims. The testimony addresses: (1) how
the federal funds have been used and (2) how many applications	 
for compensation have been received and their status. In	 
addition, we are continuing to gather information about whether  
the grant agreement and the appropriation act are consistent with
the Board's use of the funds.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-1013T					        
    ACCNO:   A12275						        
  TITLE:     September 11: Federal Assistance for New York Workers'   
Compensation Costs						 
     DATE:   09/08/2004 
  SUBJECT:   Compensation					 
	     Compensation claims				 
	     Employee survivors benefits			 
	     Federal funds					 
	     Grant monitoring					 
	     Grants						 
	     Terrorism						 
	     Victim compensation				 
	     Volunteer services 				 
	     Workers compensation				 
	     September 11th Victim Compensation Fund		 
	     of 2001						 
                                                                 

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GAO-04-1013T

United States Government Accountability Office

GAO	Testimony Before the Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives

For Release on Delivery

Expected at 10:00 a.m. EDT SEPTEMBER 11

Wednesday, September 8, 2004

          Federal Assistance for New York Workers' Compensation Costs

Statement of Robert E. Robertson, Director Education, Workforce, and Income
Security Issues

GAO-04-1013T

[IMG]

September 8, 2004

SEPTEMBER 11

Federal Assistance for New York Workers' Compensation Costs

  What GAO Found

As of June 30, 2004, of the $175 million in federal funds appropriated to
help pay workers' compensation expenses related to the September 11
attacks and recovery, the New York State Workers' Compensation Board had
used about $49 million. From the $125 million portion available for
processing of claims, the Board had used about $44 million to reimburse
two state entities-the New York State Crime Victims Board and the New York
State Insurance Fund-for benefits those entities had paid to September 11
victims (or survivors). In addition, the Board had used about $4.4 million
of the $125 million to prepare for responding to any future terrorist
attacks. For example, the Board paid for new computer backup systems and
new off-site storage contracts to ensure access to claims data in case of
a disaster. At the time of our review, the Board had not yet used any of
the $25 million that is available to reimburse the UEF for benefits the
UEF paid to workers associated with uninsured employers (or survivors).
However, the Board had used funds from the UEF to pay these benefits and
was first trying to recoup these funds from the uninsured employers before
drawing upon federal funds to reimburse for any unrecovered expense.
Finally, the Board had used about $456,000 of the $25 million that is
available to reimburse the UEF for benefits the UEF paid to volunteers (or
survivors).

The Board indicated that, as of mid-2004, it had received 10,182 claims
for workers' compensation and 588 volunteer claims related to the
September 11 attacks and recovery. Ninety percent of the workers'
compensation claims had been resolved, that is, the Board had resolved all
the issues that it could with the information available at that point. The
remaining 10 percent of claims were pending, as the Board was waiting for
additional information from claimants (such as medical evidence), hearings
were yet to be held, or claimants had not pursued their case after initial
filing. The Board officials noted that the status of claims was fluid: a
resolved claim could change to pending if more information becomes
available and the Board reopens the case. In addition, we were unable to
report approval and denial rates of claims because, according to Board
officials, the Board's core mission is to process individual claims and
not track outcomes of claims decisions. For 52 percent of workers'
compensation claims received, (1) a link had been established between the
September 11 disaster and the resulting death, injury, or illness and
benefits had been paid or were in the process of being paid, or (2) this
link had been established but the Board had not authorized paying
benefits. Of the 10,182 workers' compensation claims, 133 were associated
with workers whose employers were uninsured. The Board had resolved 89
percent of these 133 claims. Of the 588 volunteer claims received, the
Board had resolved 31 percent and 69 percent were pending. According to
the Board, many of the volunteer claims were pending because the claimants
were not actively pursuing their claims.

                 United States Government Accountability Office

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss New York State's use of federal
funds provided for workers' compensation expenses related to the September
11, 2001, terrorist attacks. In the aftermath of the terrorist attacks,
Congress appropriated $175 million for the New York State Workers'
Compensation Board (the Board) to assist with the resulting workers'
compensation claims.1 These claims were filed by workers or volunteers (or
their survivors) who were injured, became ill, or died as a result of the
attacks and the recovery efforts. Specifically, Congress provided federal
funds to the U.S. Department of Labor (DOL) for the Board in three
earmarked portions: $125 million for processing of claims and $25 million
each to reimburse the state Uninsured Employers Fund2 (UEF) for benefits
paid (1) for workers associated with uninsured employers and (2) for
volunteers.3 DOL transferred the funds to the Board using a grant
agreement. The federal funding provided to the Board is distinct from
several other federal efforts to provide assistance to victims and
survivors of the terrorist attacks. For example, Congress established the
September 11th Victim Compensation Fund of 2001 to provide compensation
for individuals (or their survivors) who were injured or killed as a
result of the terrorist attacks.4

My testimony today focuses on the Board's use of the $175 million in
federal funds and the status of September 11 workers' compensation claims.
Specifically, my testimony addresses: (1) how the federal funds have been
used and (2) how many applications for compensation have been received and
their status. My colleague's testimony addresses the

1The law appropriating these funds was Public Law 107-117 (approved, Jan.
10, 2002).

2New York State requires employers to provide workers' compensation
insurance. However, because some employers do not comply with this
requirement, the state maintains an Uninsured Employers Fund to provide
workers' compensation benefits for workers associated with uninsured
employers.

3The law refers to "first response emergency services personnel"; however,
for the purposes of this testimony we refer to these individuals as
volunteers, that is, not associated with an employer.

4Benefits paid from the September 11th Victim Compensation Fund of 2001
are paid after deducting collateral sources, including (1) workers'
compensation benefits received before filing for benefits with the Victim
Fund and (2) future workers' compensation benefits to be paid to the
children of the deceased.

health effects that have been observed in the aftermath of the September
11 terrorist attacks.5

We relied primarily on data provided by the Board to describe the use of
funds and the status of claims. However, we were unable to report approval
and denial rates of claims because, according to Board officials, the
Board's core mission is to process individual claims and not track
outcomes of claims decisions. In addition, the status of claims represents
a point-in-time assessment that could change in the future. The Board
officials told us that the status of claims was fluid: a "resolved" claim
(that is, the Board had resolved all issues it could with the information
available at the time) could change to a "pending" claim if more
information becomes available and the Board reopens the case to consider
the new information. To assess the reliability of the Board data we used,
we requested information on Board systems for aggregating and reporting
the data and Board policies for ensuring data quality. We reviewed the
responses to our requests and determined that the aggregate data the Board
had provided to us was sufficiently reliable for the purposes of providing
descriptive information in our testimony. In addition, we reviewed
relevant legislation, federal grant documents, and New York's policies and
procedures for filing and processing claims. We interviewed Board
officials, DOL officials, and representatives of selected worker and
volunteer groups who filed September 11 claims with the Board. We
conducted our review from February 2004 through August 2004 in accordance
with generally accepted government auditing standards.

In summary, as of June 30, 2004, of the $175 million in federal funds
appropriated to help pay workers' compensation expenses related to the
September 11 attacks and recovery, the New York State Workers'
Compensation Board had used about $49 million. From the $125 million
portion available for processing of claims, the Board had used about $44
million to reimburse two state entities-the New York State Crime Victims
Board (CVB) and the New York State Insurance Fund (SIF)-for benefits those
entities had paid to September 11 victims (or their survivors). In
addition, the Board had used about $4.4 million of the $125 million to
prepare for responding to any future terrorist attacks. We are continuing
to gather information about whether the grant agreement's statement of
work and the appropriation act are consistent with these uses

5GAO, September 11: Health Effects in the Aftermath of the World Trade
Center Attack, GAO-04-1068T (Washington, D.C.: Sept. 8, 2004).

of the funds. At the time of our review, the Board had not yet used any of
the $25 million that is available to reimburse the Uninsured Employers
Fund (UEF) for benefits the UEF paid to workers associated with uninsured
employers (or their survivors). At the time of our review, the Board had
used funds from the UEF to pay these benefits and was first trying to
recoup these funds from the uninsured employers before drawing upon
federal funds to reimburse for any unrecovered expense. Finally, the Board
had used about $456,000 of the $25 million that is available to reimburse
the UEF for benefits the UEF paid to volunteers (or their survivors).

The Board indicated that, as of mid-2004, it had received 10,182 claims6
for workers' compensation and 588 volunteer claims related to the
September 11 attacks and recovery. Ninety percent of the workers'
compensation claims had been resolved, that is, the Board had resolved all
the issues that it could with the information available at that point. The
remaining 10 percent of claims were pending, as the Board was waiting for
additional information from claimants (such as medical evidence), hearings
were yet to be held, or claimants had not pursued their case after initial
filing. For 52 percent of workers' compensation claims received, (1) a
link had been established between the September 11 disaster and the
resulting death, injury, or illness and benefits had been paid or were in
the process of being paid, or (2) this link had been established but the
Board had not authorized paying benefits. Of the 10,182 workers'
compensation claims, 133 were associated with workers whose employers were
uninsured. The Board had resolved 89 percent of these 133 claims. Of the
588 volunteer claims received, the Board had resolved 31 percent and 69
percent were pending. According to the Board, many of the volunteer claims
were pending because the claimants were not actively pursuing their
claims.

The Board provided oral comments on a draft of GAO's findings. GAO
incorporated these comments as appropriate.

Background 	The New York State Workers' Compensation Board administers the
state workers' compensation program and processes claims for workers'

6In addition to these 10,182 claims, the Board received and cancelled 674
claims. The Board cancelled these claims for a variety of reasons,
including the case had been entered into the claims database twice in
error or the case was not related to the events of the September 11
disaster.

compensation benefits. These benefits go to workers who are injured at
work or become ill because of workplace conditions and to survivors of
workers who die because of their work-related injury or illness. New York
State requires employers to provide workers' compensation insurance-
either from the State Insurance Fund (SIF), a private insurance carrier,
or self-insurance-to pay cash and/or provide medical benefits for workers
who qualify for coverage.7 Because some employers do not comply with this
requirement, the state maintains a UEF to provide workers' compensation
benefits for workers associated with uninsured employers. To administer
the state workers' compensation program, the Board reviews claims to
determine whether a worker is eligible to receive workers' compensation
benefits. In simplified form, the workers' compensation claims process
includes the following steps:

o  An individual files a claim.

o  	An insurer can challenge the claim if it questions the validity of the
claim.

o  	The Board resolves some cases without a hearing, while for others the
Board holds a hearing or a series of hearings before a Workers'
Compensation Administrative Law Judge with interested parties present,
such as claimants, employers, and insurance carriers.

o  	The Board makes a final decision whether or not benefits are to be
awarded to the claimant. For claims approved, insurance carriers,
selfinsured employers, or the UEF makes direct payments to the claimant.

o  	Either the claimant or insurer can appeal this decision. The appeal
process involves successively higher levels of appeal; the highest level
is the New York State Court of Appeals.

As a result of the September 11 terrorist attacks, Congress appropriated
$175 million in federal funds to assist the New York State Workers'
Compensation Board with the resulting workers' compensation claims.
Specifically, the law provided the funds in three earmarked portions:

7New York exempts the following businesses from the requirement to carry
workers' compensation insurance: (1) a business owned by one individual
with no employees that is not a corporation, (2) a business partnership
under New York State law that has no employees, and (3) a business
corporation owned by one or two individuals who own all of the stock and
hold all of the offices and that has no employees.

$125 million "for payment to the New York State Workers' Compensation
Review (sic) Board, for the processing of claims related to the terrorist
attacks"; $25 million "for payment to the New York State Uninsured
Employers Fund, for reimbursement of claims related to the terrorist
attacks"; and $25 million "for payment to the New York State Uninsured
Employers Fund, for reimbursement of claims related to the first response
emergency services personnel who were injured, were disabled, or died due
to the terrorist attacks." The legislation provided no further explanation
regarding the use of the federal funds. The law appropriating the funds
gave DOL responsibility for distributing the funds. After researching
various methods of transferring the funds, DOL provided the funds to the
Board in the form of a grant.

Consistent with normal grant practices, before the funds were made
available to the Board, DOL required the Board to complete a grant
application that consisted of a statement of work, budget information, and
other documents related to use of the funds. DOL approved the Board's
grant application without making any changes. DOL awarded the grant to the
Board and made the funds available for 4 years.8 The grant agreement and
the provisions of the underlying appropriation act together provide the
legal framework for using the funds.

The grant agreement's statement of work, prepared by the Board,

o  	set out three broad categories of activities to be carried out: (1)
administration, (2) mitigation-efforts to help mitigate the effects of
future disasters, and (3) claims reimbursements to the Uninsured Employers
Fund;

o  	requested flexibility to "transfer funds amongst the three pools of
money," that is, the $125 million and the two $25 million portions;9 and

8According to DOL, the Board can apply for an extension to use the funds
beyond the 4year limit.

9In the statement of work, the Board requested that the $50 million for
reimbursements be transferred to the Board in its entirety. However,
according to DOL officials, the Department of Health and Human Services'
Payment Management System-which manages grant payments for DOL and other
federal agencies-declined to make a $50 million advance payment, noting
that the statute specified that the funds were available for
"reimbursement." This action prevented the co-mingling of the $125 million
with the other funds.

o  	listed the Board's intention "to use a portion of the disaster funds
to assist other entities by creating a contingency account within [the
Board's] funding structure that will allow the State to respond
effectively to any unexpected needs as they arise, both in administrative
and in mitigation efforts."

The following timeline summarizes the flow of federal funds to the Board:

o  	Early January 2002: Congress appropriated $175 million to DOL for the
New York State Workers' Compensation Board.

o  	Mid-January 2002: The Board first contacted the New York State
Department of Labor (NYDOL) and DOL's New York regional office for
guidance about using the funds. NYDOL and DOL's New York regional office
referred the Board to DOL headquarters for guidance.

o  	April 2002: DOL had determined that a federal grant agreement was the
appropriate vehicle for providing funds to the Board. DOL notified the
Board that the Board needed to submit a one-to-two page statement of work
describing its proposed use of the funds before a grant could be awarded.

o  	October 2002: The Board submitted its complete grant application
paperwork, including the statement of work, to DOL after consulting with
the New York State Division of Budget.

o  	November 2002: DOL notified the Board of its decision to approve the
grant, thereby allowing the Board to draw down funds to conduct activities
consistent with the statement of work.

o  May 2003: The Board made its first draw down of the funds.

As is the case with federal grants in general, DOL requires the Board to
regularly submit reports to DOL for review. These reports specify the
amount of federal funds the Board spent during the previous quarter of the
year. These reports do not require the Board to indicate specifically how
it had used the funds. In addition to these quarterly reports, DOL can
access reports on funds the Board had drawn down but not yet spent.

  The Board Used $49 Million for Benefits and Mitigation Efforts

As of June 30, 2004, of the $175 million in federal funds to help pay
expenses related to the September 11 attacks and recovery, the New York
State Workers' Compensation Board had used about $49 million. The Board
had used about $44 million of the $125 million available for "processing
of claims" (activities that the Board described in its statement of work
as "administration" and "mitigation") to reimburse two state entities for
payment of benefits those entities had made to individuals (or their
survivors) who were injured, killed, or became ill as a result of the
September 11 terrorist attacks. Specifically, the Board had spent about
$28 million to reimburse the New York State CVB and $16 million to
reimburse the New York SIF for benefit payments they each made to
September 11 victims (or their survivors). The Board also had used about
$4.4 million on mitigation efforts to prepare for responding to any future
terrorist attacks. The Board had not yet used any of the $25 million
available to reimburse the UEF for benefits the UEF paid to workers with
uninsured employers (or their survivors). However, the Board had used
funds from the UEF to pay these benefits and was first trying to recoup
these funds from the uninsured employers before drawing upon federal funds
to reimburse for any unrecovered expense. Finally, the Board had used
about $456,000 of the second $25 million to reimburse the UEF for benefits
the UEF paid to volunteers (or their survivors) who provided assistance
under the direction of an authorized rescue entity.

The Board Had Used a Sizable Portion of the $125 Million for Benefits
Reimbursements and Mitigation Efforts

The Board paid about $28 million of the $125 million to reimburse the
CVB-a state agency that compensates crime victims-for payments in
connection with individuals who were injured or killed during the
September 11 attacks. The state determined that the September 11 attacks
were a crime that qualified for benefits under the state Crime Victim
Compensation Act.10 According to Board officials, New York State
temporarily designated the CVB as the first source of benefit payments for
September 11 victims because state officials believed that this would be
the most efficient way to deliver benefits.11 Within a month of the
attacks, the Governor issued two formal decisions suspending limits on the
benefit amounts payable by the CVB and identifying individuals who would
be

10NY Exec. Law 621 et seq. (McKinney 2004).

11For non-September 11 claims, the CVB is a payor of last resort and would
pay only after payments from other sources, such as workers' compensation
or Social Security, are deducted from the final award amount.

eligible for benefit payments from the CVB.12 According to the Board, the
reimbursement agreement between the Board and the CVB was established and
approved by the New York State Assembly, the New York State Senate, and
the Governor. Based on this agreement, the Board reimbursed the CVB after
receiving documentation describing the nature and amounts of payments that
the CVB had previously made to victims. The CVB requested reimbursement
from the Board for payments to victims related to loss of earnings and
support, loss of essential personal property, funeral and burial expenses,
and medical expenses. According to the Board, the New York State
Comptroller authorized the payments, and the New York State Division of
the Budget reviewed and approved these payments. The Board said it did not
anticipate the need to provide additional reimbursements beyond the $28
million already provided to the CVB because individual claimants are now
going directly to the Board and not to the CVB.

The Board paid about $16 million of the $125 million to reimburse the SIF
for workers' compensation benefits the SIF paid to September 11 victims
employed by the state (or their survivors). The SIF-held by the New York
State Department of Labor-is a fund that provides workers' compensation
insurance to public entities and private employers who elect this
coverage. Specifically, the Board reimbursed the SIF for workers'
compensation benefits paid to state employees (or their survivors) who
were injured or killed during the September 11 disaster. After the SIF
provided documentation to the Board on benefits paid, the Board reimbursed
the SIF to cover both payments already made to state employees (or their
survivors) and projections of future benefit payments for these employees.
These reimbursement payments were reviewed and approved by the New York
State Division of the Budget. The Board did not expect to reimburse the
SIF for many more September 11 claims because the deadline for filing had
passed for injury and death claims. However, the Board indicated that the
SIF might ask for reimbursement for a few new claims from state workers
who become ill in the future, because such workers may file a claim when
symptoms of a disease appear.13

12Executive Order 113.5, September 12, 2001, and Executive Order 113.31,
October 10, 2001.

13New York workers' compensation law requires a claimant to file within 2
years after the accident or injury, or within 2 years after the death of
an employee from a work-related accident or injury, whichever is later.
For an occupational disease, the claim must be filed within 2 years after
the disablement or after the claimant knew or should have known that the
disease is due to the nature of the employment, whichever is the later
date.

The Board used a significant part of the $125 million available for
processing claims to reimburse the CVB and the SIF for benefit payments
those entities made to victims. We are continuing to gather information
about whether these reimbursements were authorized in the grant
agreement's statement of work and whether the $125 million appropriation
earmarked for "the processing of claims" was available for reimbursements
of benefits paid. We are pursuing this matter further and will notify the
committee of our findings.

Finally, the Board had spent about $4.4 million of the $125 million on
mitigation efforts to help position the Board to respond to any future
disasters. These funds were used for a multiyear project to ensure the
Board has the ability to maintain operations, including access to all
claims data, in case the Board's main data system fails. The Board used
the funds to upgrade, purchase, and/or install computer systems; pay
salaries and fringe benefits of staff working on the project; and cover
travel expenses. For example, the Board paid for new tape and disk backup
systems, new off-site storage contracts, and new image storage systems to
ensure viability of Board data and operations. Finally, to enhance
information security, the Board developed a security awareness program for
all Board staff, and planned to test vulnerability of its systems. While
these mitigation activities were undertaken to position the Board to
recover more quickly from another disaster if one should occur, the Board
acknowledged that these investments have benefited current operations as
well. We are continuing to gather information on whether the $125 million
earmarked for claims processing was available for these mitigation
efforts.

The Board Had Not Used any of the $25 Million Available for Workers with
Uninsured Employers

The Board had not used any of the $25 million federal funds available to
reimburse the UEF for benefits the UEF paid to workers with uninsured
employers (or their survivors). Congress appropriated these funds for the
Board to reimburse the UEF-a fund maintained by the state that provides
workers' compensation benefits for workers associated with uninsured
employers-for payments made to September 11 victims. However, the Board
had used funds from the UEF to pay these benefits and was first trying to
recoup these funds from the uninsured employers before drawing down
federal funds to reimburse the UEF for any unrecovered expense.

The Board Had Used Some The Board had used about $456,000 of the $25
million available to of the $25 Million Available reimburse the UEF for
benefits the UEF paid to volunteers (or their for Volunteers survivors)
who were injured or killed as a result of the September 11

attacks. Congress appropriated the $25 million for "first response

emergency services personnel" and, according to Board staff, these funds
were intended for individuals who had served as volunteers associated with
the September 11 attacks. However, the New York workers' compensation law
in existence prior to September 2001 did not include the term "first
response emergency services personnel" and did not extend coverage to
volunteers. To overcome this issue, the Chair of the New York State
Workers' Compensation Board issued an official order that defined "first
response emergency services personnel" as "[a]ll persons who, serving
without compensation or remuneration, and serving under the direction of
an authorized rescue entity or volunteer agency, provided services to deal
with the emergency situation created by the September 11, 2001 terrorist
attack on the World Trade Center."14 This order also identified the types
of groups that the Board would consider to be an authorized rescue entity
and volunteer agency (including groups associated with the New York City
police and fire departments) and thus designated which volunteers were
eligible for benefits that can be reimbursed from the $25 million in
federal funds.15 Notably, volunteers are not covered by the state workers'
compensation program because they have no employer and, thus, are not
considered "employees." Therefore, compensation available to September 11
volunteers is limited to the $25 million appropriated by the Congress for
reimbursement to the UEF.

As of mid-2004, 90 percent of September 11-related workers' compensation
claims had been resolved, that is, the Board had resolved all the issues
that it could with the information available at that point. For the subset
of claims associated with workers whose employers were uninsured, the
Board had resolved 89 percent. In addition to the September 11 claims for
workers' compensation, the Board had resolved 31 percent of the volunteer
claims received and 69 percent of these claims were pending.

  While Most September 11 Claims Had Been Resolved, Many of Those from
  Volunteers Were Pending

14Order of the Chair #967, July 22, 2003.

15The Board did not establish a deadline for volunteers (or their
survivors) to file September 11 claims.

Ninety Percent of September 11 Claims for Workers' Compensation Had Been
Resolved

As of mid-2004, most September 11-related workers' compensation claims
had been resolved, that is, the Board had resolved all the issues that it
could with the information available at that point.16 Specifically, 90
percent
of the 10,182 claims received17 by the Board had been resolved. Among the
9,124 resolved claims, 24 percent were death claims, while 76 percent were
claims for an injury or illness. (For September 11 claims data provided by
the Board, see table 1.)

For 42 percent of claims received, the Board had determined that a link
had been established between the September 11 disaster and the resulting
death, injury, or illness and benefits had been paid or were in the
process
of being paid. 18 For an additional 10 percent of claims received, the
Board
had determined that a link had been established between the
September 11 disaster and the resulting death, injury, or illness, but had
not authorized paying benefits. According to the Board, one of the reasons
that benefits had not yet been paid, even though a link had been
established, was that these employees had not missed more than 7 days of
work on account of their injury or illness.

Ten percent of the claims received by the Board were pending. These
claims were pending for a variety of reasons, including that the claimant
was waiting for his or her hearing to take place; that no causal link had
been established between the death, injury, or illness and the workplace;
or claimants had not pursued their case after filing.

Some September 11 claims were challenged after initial filing and some
were appealed after a decision had been made. An insurance carrier
and/or employer can challenge a claim after a claim is submitted if they
dispute the evidence provided by the claimant. For September 11 claims,
insurers/employers challenged a higher proportion of injury or illness
claims than death claims. Specifically, insurers/employers challenged

16The Board provided data on (1) the status of all September 11 claims
(which do not include volunteer claims) and the time to process these
claims as of July 5, 2004, (2) the status of September 11 claims for
workers with uninsured employers and volunteers as of August 6, 2004, and
(3) the time to process claims for workers with uninsured employers and
volunteers as of May 14, 2004.

17The 10,182 claims received does not include September 11 claims for
volunteers.

18While the Board conducted a special inquiry on this information for the
purposes of our study, the Board does not aggregate information that would
provide insights on the type of benefit received (i.e., medical or cash
benefits) or the type of claim (i.e., death, injury, or illness).

about 27 percent of injury or illness claims compared with about 2 percent
of death claims. According to the Board, with illness claims, symptoms can
develop over time, and sufficient medical evidence may not exist at the
time of filing to establish a link between the illness and workplace
conditions. Independent of whether a claim is challenged, either the
claimant or the insurer/employer can appeal a decision after the Board has
resolved a claim. Of the resolved September 11 claims, 5 percent of the
death claims were appealed and 6 percent of injury or illness claims were
appealed.

Of the resolved September 11 claims, 36 percent were resolved with a
hearing(s) and 64 percent were resolved without a hearing(s).19 Of those
claims with a hearing(s), 11 percent were death claims and 89 percent were
injury or illness claims. The time to process claims with a hearing was as
follows: 43 percent took less than 6 months, 22 percent took between 6
months and 1 year, and 35 percent took over 1 year. Of those claims
without a hearing(s), 30 percent were death claims and 70 percent were
injury or illness claims. The time to process claims without a hearing was
as follows: 69 percent took less than 6 months, 21 percent took between 6
months and 1 year, and 10 percent took over 1 year.

Table 1: Status and Number of September 11 Workers' Compensation Claims
(excluding volunteers), mid-2004

                                                  Death Injury-illness  Total 
                                          Status claims         claims claims 
                                 Claims received  2,195          7,987 10,182 
                                 Claims resolved  2,149          6,975  9,124 
                                  Claims pending     46          1,012  1,058 
          Claims challenged after initial filing     33          2,121  2,154 
                                    by claimanta                       
            Claims appealed after Board made its     99            422    521 
                                        decision                       

Source: New York State Workers' Compensation Board.

Note: Data are current as of July 5, 2004.

aClaims challenged may be included in either claims resolved or claims
pending.

19This does not include 26 individual claims that were resolved using a
waiver agreement for which processing time was not available. In the case
of a waiver agreement, a claimant has waived his or her rights to file a
claim for workers' compensation and has entered into an agreement
regarding his or her benefits.

Most September 11 Claims for Workers with Uninsured Employers Had Been
Resolved

The majority (89 percent) of September 11 claims for workers with
uninsured employers had been resolved. Most of these worker claims were
resolved with a hearing(s) and took between 3 and 9 months to resolve.
However, nearly a third of these claims took over a year to resolve. For
those worker claims resolved without a hearing, most took less than 6
months to resolve. Eleven percent of claims from workers with uninsured
employers were still pending. Common reasons that these claims were
pending included that the claimant was waiting for his or her hearing to
take place and that no causal link had been established between the death,
injury, or illness and the workplace.

Some claims from workers with uninsured employers were challenged after
initial filing and some were appealed after a decision by the Board had
been made. Specifically, about 26 percent of these claims were challenged.
Independent of whether a claim was challenged, 17 percent of the resolved
claims were appealed after a decision had been made. For two claims for
workers with uninsured employers, the claimants had received medical or
cash benefits paid from state funds, and for one of these claims, the
claimant was receiving continuing cash benefits. (For data on September 11
claims filed for workers with uninsured employers, see table 2.)

Table 2: Status and Number of September 11 Workers' Compensation Claims
Filed for Workers with Uninsured Employers, mid-2004

                                                 Death  Injury-illness  Total 
                                          Status claims         claims claims 
                                 Claims received     17            116    133 
                                 Claims resolved     15            103    118 
                                  Claims pending      2             13 
          Claims challenged after initial filing      2             32 
                                    by claimanta                       
            Claims appealed after Board made its      3             17 
                                        decision                       
            Claims that received medical or cash      0              2 
                                        benefits                       
                Claims receiving continuing cash                              
                                        benefits      0              1      1

Source: New York State Workers' Compensation Board.
Note: Data are current as of August 6, 2004.
aClaims challenged may be included in either claims resolved or claims
pending.

Most September 11 Claims for Volunteers Were Pending

While the majority of all September 11 workers' compensation claims had
been resolved, 69 percent of volunteer claims were pending.20 According to
Board officials, a high portion of the volunteer claims were pending
because (1) sufficient medical evidence had not been provided to establish
the link between the September 11 volunteer activities and the death,
injury, or illness and (2) claimants had not pursued their case after
filing. Board officials believe that some volunteers may not have pursued
their case further because they had filed a claim before developing
symptoms and, therefore, had little, if any, medical evidence to provide.
According to Board officials, such volunteers had filed a claim so that
they could pursue benefits at a later date if symptoms were to develop.
(For data on September 11 claims filed for volunteers, see table 3.)

Table 3: Status and Number of September 11 Workers' Compensation Claims
Filed for Volunteers, mid-2004

                                                  Death Injury-illness  Total 
                                          Status claims         claims claims 
                                 Claims received      1            587    588 
                                 Claims resolved      0            185    185 
                                  Claims pending      1            402    403 
          Claims challenged after initial filing      0             14 
                                    by claimanta                       
            Claims appealed after Board made its      0              0 
                                        decision                       
            Claims that received medical or cash      0             85 
                                        benefits                       
                Claims receiving continuing cash                       
                                        benefits      0             23 

Source: New York State Workers' Compensation Board.

Note: Data are current as of August 6, 2004.

aClaims challenged may be included in either claims resolved or claims
pending.

Ninety percent of the resolved volunteer claims did not require a hearing.
The majority of these claims were resolved within 3 to 9 months of filing
for benefits. The time it took to resolve the seven volunteer claims that
required a hearing(s) ranged from less than 3 months to more than 6
months. A few volunteer claims were challenged after initial filing: while
there is no insurer involved with a volunteer claim, the Board itself
challenged 2 percent of these claims. The Board challenged these claims
because, for example, it did not believe that a claimant had met the
criteria

20The number of volunteer claims is not included in the total number of
September 11 claims identified in table 1.

for being considered a September 11 volunteer or had sufficient evidence
to support the claim. There have been no appeals regarding volunteer
claims. For 85 volunteer claims, the claimants had received medical or
cash benefits, and for 23 of these claims, the claimants were receiving
continuing cash benefits.

  GAO Contacts and Staff Acknowledgments

(130359)

Mr. Chairman, this concludes my prepared statement. I will be happy to
respond to any questions you or other Members of the Subcommittee may
have.

For information regarding this testimony, please contact Robert E.
Robertson, Director, or Brett S. Fallavollita, Assistant Director,
Education, Workforce, and Income Security at (202) 512-7215. Individuals
making contributions to this testimony include Linda L. Siegel, Kenneth J.
Adams, Tonnye Conner-White, Margie Armen, and Amy Buck.

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