Energy Employees Compensation: Even with Needed Improvements in  
Case Processing, Program Structure May Result in Inconsistent	 
Benefit Outcomes (28-MAY-04, GAO-04-515).			 
                                                                 
Subtitle D of the Energy Employees Occupational Illness 	 
Compensation Program Act of 2000 allows the Department of Energy 
(Energy) to help its contractors' employees file state workers'  
compensation claims for illnesses determined by a panel of	 
physicians to be caused by exposure to toxic substances while	 
employed at an Energy facility. Congress mandated that GAO study 
the effectiveness of the benefit program under Subtitle D. GAO	 
focused on four key areas: (1) the number, status, and		 
characteristics of claims filed with Energy; (2) the extent to	 
which Energy policies and procedures help employees file timely  
claims for these state benefits; (3) the extent to which there	 
will be a "willing payer" of workers' compensation benefits, that
is, an insurer that--by order from or agreement with Energy--will
not contest these claims; and (4) a framework that could be used 
for evaluating possible options for changing the program.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-515 					        
    ACCNO:   A10216						        
  TITLE:     Energy Employees Compensation: Even with Needed	      
Improvements in Case Processing, Program Structure May Result in 
Inconsistent Benefit Outcomes					 
     DATE:   05/28/2004 
  SUBJECT:   Claims processing					 
	     Compensation claims				 
	     Contractor personnel				 
	     Data collection					 
	     Health hazards					 
	     Insurance companies				 
	     Medical expense claims				 
	     Physicians 					 
	     Strategic planning 				 
	     Toxic substances					 
	     Workers compensation				 
	     Timeliness 					 

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GAO-04-515

United States General Accounting Office

                     GAO Report to Congressional Committees

May 2004

ENERGY EMPLOYEES COMPENSATION

 Even with Needed Improvements in Case Processing, Program Structure May Result
                        in Inconsistent Benefit Outcomes

                                       a

GAO-04-515

Highlights of GAO-04-515, a report to congressional committees

Subtitle D of the Energy Employees Occupational Illness Compensation
Program Act of 2000 allows the Department of Energy (Energy) to help its
contractors' employees file state workers' compensation claims for
illnesses determined by a panel of physicians to be caused by exposure to
toxic substances while employed at an Energy facility.

Congress mandated that GAO study the effectiveness of the benefit program
under Subtitle D. GAO focused on four key areas: (1) the number, status,
and characteristics of claims filed with Energy; (2) the extent to which
Energy policies and procedures help employees file timely claims for these
state benefits; (3) the extent to which there will be a "willing payer" of
workers' compensation benefits, that is, an insurer that-by order from or
agreement with Energy- will not contest these claims; and (4) a framework
that could be used for evaluating possible options for changing the
program.

Energy generally agreed with GAO recommendations that the agency take
additional steps to expedite the processing of claims through its
physician panels, enhance its communications with claimants, improve its
case management data and its capabilities to aggregate these data to
address program issues, and consider developing a legislative proposal to
address the willing payer issue.

www.gao.gov/cgi-bin/getrpt?GAO-04-515.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robert E. Robertson at (202)
512-7215 or [email protected].

May 2004

ENERGY EMPLOYEES COMPENSATION

Even with Needed Improvements in Case Processing, Program Structure May Result
in Inconsistent Benefit Outcomes

During the first 2  1/2 years of the program, ending December 31, 2003,
Energy had completely processed about 6 percent of the more than 23,000
cases that had been filed. Energy had begun processing nearly 35 percent
of the cases, but processing had not yet begun on nearly 60 percent of the
cases. Further, insufficient strategic planning and systems limitations
complicate the assessment of Energy's achievement of goals related to case
processing, as well as goals related to program objectives, such as the
quality of the assistance provided to claimants in filing for state
workers' compensation.

While Energy got off to a slow start in processing cases, it is now
processing enough cases that there is a backlog of cases waiting for
review by a physician panel. Energy has taken some steps intended to
reduce this backlog, such as reducing the number of physicians needed for
some panels. Nonetheless, a shortage of qualified physicians continues to
constrain the agency's capacity to decide cases more quickly.
Consequently, claimants will likely continue to experience lengthy delays
in receiving the determinations they need to file workers' compensation
claims. In the meantime, Energy has not kept claimants sufficiently
informed about the delays in the processing of their claims as well as
what claimants can expect as they proceed with state workers' compensation
claims.

GAO estimates that more than half of the cases associated with Energy
facilities in 9 states that account for more than three-quarters of all
Subtitle D cases filed are likely to have a willing payer of benefits.
Another quarter of the cases in these 9 states, while not technically
having a willing payer, have workers' compensation coverage provided by an
insurer that has stated that it will not contest these claims. However,
the remaining 20 percent of the cases in these 9 states lack willing
payers and are likely to be contested. This has created concerns about
program equity in that many of these cases may be less likely to receive
compensation. Because of data limitations, these percentages provide an
order of magnitude estimate of the extent to which claimants will have
willing payers. These estimates could change as better data become
available or as circumstances change, such as new contractors taking over
at individual facilities. The estimates are not a prediction of actual
benefit outcomes for claimants.

Various options are available to improve payment outcomes for the cases
that receive a positive physician panel determination, but lack willing
payers. While not recommending any particular option, GAO provides a
framework that includes a range of issues to help the Congress assess
options if it chooses to change the current program. One of these issues
in particular-the federal cost implications-should be carefully considered
in the context of the current and projected federal fiscal environment.

Contents

  Letter

Results in Brief
Background
Energy Has Processed Few Cases, and Insufficient Strategic

Planning and Data Collection Complicate Program Management

A Shortage of Qualified Physicians to Issue Determinations Delays Filing
of Workers' Compensation Claims and Claimants May Receive Inadequate
Information to Prepare Them to Pursue These Claims

While Workers' Compensation Claims for a Majority of Cases Are Not Likely
to Be Contested, Actual Compensation Is Not Certain Several Issues Could
Be Considered in Evaluating Options for

Improving the Likelihood of Willing Payers Conclusions Recommendations for
Executive Action Agency Comments and Our Evaluation

                                       1

                                      3 4

                                       7

12

16

21 29 30 31

Appendix I Scope and Methodology

Appendix II Comments from the Department of Energy

  Appendix III GAO Contacts and Staff Acknowledgments 39

GAO Contacts 39 Staff Acknowledgments 39

  Tables

Table 1: Extent to Which Cases Will Potentially Be Contested in 9 States
19 Table 2: Framework for Evaluating Options to Change the Subtitle D
Program 27

  Figures

  Figure 1: Energy's Claims Process 6 Figure 2: Case Status as of December 31,
                                     2003 8

Figure 3: Distribution of Cases by Employee's Last Energy Facility Worked
9

Abbreviations

CMS Case Management System

EEOICPA Energy Employees Occupational Illness Compensation Program Act

NIOSH National Institute for Occupational Safety and Health

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
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separately.

United States General Accounting Office Washington, DC 20548

May 28, 2004

The Honorable Ted Stevens, Chairman
The Honorable Robert C. Byrd, Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable Pete V. Domenici, Chairman
The Honorable Jeff Bingaman, Ranking Minority Member
Committee on Energy and Natural Resources
United States Senate

The Honorable C. W. Bill Young, Chairman
The Honorable David R. Obey, Ranking Minority Member
Committee on Appropriations
House of Representatives

The Honorable Joe Barton, Chairman
The Honorable John D. Dingell, Ranking Minority Member
Committee on Energy and Commerce
House of Representatives

For the last several decades, the Department of Energy (Energy) and its
predecessor agencies and contractors have employed thousands of
individuals in secret and dangerous work in the nuclear weapons
production complex. Over the years, employees were exposed to toxic
substances, including radioactive and hazardous materials, and studies
have shown that many of these employees subsequently developed serious
illnesses. The Energy Employees Occupational Illness Compensation
Program Act (EEOICPA) established two programs to help secure
compensation for employees who developed occupational illnesses or for
their survivors. Congressional Committees, as well as individual Members
of Congress, claimants, and advocates have raised concerns regarding
Energy's processing of claims and the availability of benefits once claims
have been decided.

Enacted as title XXXVI of the Floyd D. Spence National Defense
Authorization Act for Fiscal Year 2001, which was signed into law on
October 30, 2000, this legislation has two major components. Subtitle B
provides eligible workers who were exposed to radiation or other toxic
substances and who subsequently developed illnesses, such as cancer and

lung disease, with a one-time payment of up to $150,000 and covers future
medical expenses related to the illness. The Department of Labor
administers these benefits, payable from a compensation fund established
by the same legislation. Subtitle D allows Energy to help its contractor
employees file state workers' compensation claims for illnesses determined
by a panel of physicians to be caused by exposure to toxic substances
while employed at an Energy facility. Individuals may apply for and
receive benefits under both programs since benefits are not offset against
each other.

In the conference report for the 2003 appropriations for Energy, the
conferees directed that we study the effectiveness of the benefit program
under Subtitle D of EEOICPA in assisting employees of Energy's contractors
in obtaining compensation for occupational illnesses. The Chairman of the
Senate Committee on Finance also requested that we study this issue (see
GAO-04-516). We focused our work on four key areas: (1) the number,
status, and characteristics of claims filed with Energy; (2) the extent to
which Energy policies and procedures help employees file timely claims for
state workers' compensation benefits; (3) the extent to which there will
be a "willing payer" of workers' compensation benefits; that is, an
insurer that-by order from, or agreement with, Energy-will not contest
these claims; and (4) a framework that could be used for evaluating
possible options for changing the program to the extent that there may not
be willing payers of benefits.

To perform our review, we analyzed data extracted from Energy's Subtitle D
case management system for applications filed through June 30, 2003, and
again through December 31, 2003. We determined that the data we used were
sufficiently reliable for our purposes by performing electronic testing
for obvious errors in accuracy and completeness, reviewing available
documentation, and interviewing agency officials and contractors
knowledgeable about the data. We also reviewed the provisions of, and
interviewed officials with, the workers' compensation programs in 9
states, which accounted for more than three-quarters of Subtitle D cases
filed, and we interviewed the contractors operating the major facilities
in these states. In addition, we conducted site visits to three Energy
facilities in Oak Ridge, Tennessee, the state with facilities accounting
for the largest number of Subtitle D claims. We also interviewed key
program officials and other experts. We conducted our review from April
2003 through April 2004 in accordance with generally accepted government
auditing standards. For a more complete explanation of our methodology,
see appendix I.

  Results in Brief

During the first 2 1/2 years of the program, ending December 31, 2003,
Energy had fully processed about 6 percent of the more than 23,000 cases
received. Most of the fully processed cases had been found ineligible
because of either a lack of employment at an eligible facility or an
illness related to toxic exposure. Less than 1 percent of all cases had
received a determination by a physician panel, a document needed to pursue
a workers' compensation claim under this program. In addition, Energy had
not begun processing nearly 60 percent of the cases it has received.
Insufficient strategic planning and systems limitations complicate the
assessment of Energy's achievement of goals related to case processing, as
well as goals related to program objectives, such as the quality of the
assistance provided to claimants in filing for state workers'
compensation.

While Energy got off to a slow start in processing cases, it is now
processing enough cases that there is a backlog of cases waiting for
review by a physician panel. Energy has taken some steps intended to
reduce this backlog, such as reducing the number of physicians needed for
some panels. Nonetheless, a shortage of qualified physicians continues to
constrain the agency's capacity to decide cases more quickly.
Consequently, claimants will likely continue to experience lengthy delays
in receiving the determinations they need to file workers' compensation
claims. In the meantime, Energy has not kept claimants sufficiently
informed about the delays in the processing of their claims as well as
what claimants can expect as they proceed with state workers' compensation
claims.

More than half of the cases associated with Energy facilities in the 9
states that account for more than three-quarters of all Subtitle D cases
filed are likely to have a willing payer of benefits. Another quarter of
the cases for these 9 states, while not technically having a willing
payer, have workers' compensation coverage provided by an insurer that has
stated that it will not contest these claims. However, the remaining 20
percent of the cases in these 9 states lack willing payers and are likely
to be contested, which means that many of these cases may be less likely
to receive compensation. Because of data limitations, these percentages
provide an order of magnitude estimate of the extent to which claims will
have willing payers. The estimates are not a prediction of actual benefit
outcomes for claimants. Further, these estimates could change as better
data become available or as circumstances change, such as new contractors
taking over at individual facilities. For example, the contract for
environmental cleanup at a facility in Kentucky will expire on September
30, 2004, and it is unclear at this point how the subsequent contractor
will deal with the claims of employees of prior contractors. If the change
in contractors

results in these claims being contested, our overall estimate of the cases
that are likely to be contested could increase to 33 percent. For all
claimants, actual compensation is not certain because of additional
factors such as the rules in the state workers' compensation programs or
contractors' uncertainty on how to compute the benefit.

Various options are available to improve payment outcomes for the cases
that receive a positive physician panel determination, but lack willing
payers under the current program. If it were decided that the program
should be modified, the options for changing it range from adding a
federal benefit to the existing program for cases that lack a willing
payer to designing a completely new program. Congress would need to
examine these options in terms of several issues, including the source,
method, and amount of the federal funding required to pay benefits; the
length of time needed to implement changes; the criteria for determining
who is eligible; and the equitable treatment of claimants. In particular,
the federal cost implications of these options should be carefully
considered in the context of the current and projected federal fiscal
environment.

We are making several recommendations to Energy to help improve its
effectiveness in assisting Subtitle D claimants in obtaining compensation
for occupational illnesses. Specifically, we are recommending that Energy
take additional steps to expedite the processing of claims through its
physician panels, enhance the quality of its communications with
claimants, improve the quality of its case management data and its
capabilities to aggregate these data to address program issues, and
consider developing a legislative proposal to address the willing payer
issue. In commenting on a draft of this report, Energy indicated that the
agency had already incorporated several of our recommendations and will
aggressively tackle the remainder. However, Energy did not specifically
comment on each recommendation. In addition, Energy highlighted
initiatives either planned or underway that pertain to our
recommendations. Energy's comments are provided in appendix II.

Background 	Energy oversees a nationwide network of 40 contractor-operated
industrial sites and research laboratories that have historically employed
more than 600,000 workers in the production and testing of nuclear
weapons. In implementing EEOICPA, the President acknowledged that it had
been Energy's past policy to encourage and assist its contractors in

opposing workers' claims for state workers' compensation benefits based on
illnesses said to be caused by exposure to toxic substances at Energy
facilities.1 Under the new law, workers, or their survivors, could apply
for assistance from Energy in pursuing state workers' compensation
benefits, and if they received a positive determination from Energy, the
agency would direct its contractors to not contest the workers'
compensation claims or awards. Energy's rules to implement the new program
became effective in September 2002, and the agency began to process the
applications it had been accepting since July 2001, when the law took
effect.

Energy's claims process has several steps. First, claimants file
applications and provide all available medical evidence. Energy then
develops the claims by requesting records of employment, medical
treatment, and exposure to toxic substances from the Energy facilities
where the workers were employed. If Energy determines that the worker was
not employed by one of its facilities or did not have an illness that
could be caused by exposure to toxic substances, the agency finds the
claimant ineligible. For all others, once development is complete, a panel
of three physicians reviews the case and decides whether exposure to a
toxic substance during employment at an Energy facility was at least as
likely as not to have caused, contributed to, or aggravated the claimed
medical condition. The panel physicians are appointed by the National
Institute for Occupational Safety and Health (NIOSH) but paid by Energy
for this work. Claimants receiving positive determinations are advised
that they may wish to file claims for state workers' compensation
benefits. Claimants found ineligible or receiving negative determinations
may appeal to Energy's Office of Hearings and Appeals.

1Executive Order 13179, December 7, 2000.

Figure 1: Energy's Claims Process

                 Source: GAO analysis of Energy Claims Process.

Each of the 50 states and the District of Columbia has its own workers'
compensation program to provide benefits to workers who are injured on the
job or contract a work-related illness. Benefits include medical treatment
and cash payments that partially replace lost wages. Collectively, these
state programs paid more than $46 billion in cash and medical benefits in
2001. In general, employers finance workers' compensation programs.
Depending on state law, employers finance these programs through one of
three methods: (1) they pay insurance premiums to a private insurance
carrier, (2) they contribute to a state workers' compensation fund, or (3)
they set funds aside for this purpose as selfinsurance. Although state
workers' compensation laws were enacted in part as an attempt to avoid
litigation over workplace accidents, the

workers' compensation process is still generally adversarial, with
employers and their insurers tending to contest aspects of claims that
they consider not valid.

State workers' compensation programs vary as to the level of benefits,
length of payments, and time limits for filing. For example, in 1999, the
maximum weekly benefit for a total disability in New Mexico was less than
$400, while in Iowa it was approximately $950. In addition, in Idaho, the
weekly benefit for total disability would be reduced after 52 weeks, while
in Iowa benefits would continue at the original rate for the duration of
the disability. Further, in Tennessee, a claim must be filed within 1 year
of the beginning of incapacity or death. In contrast, in Kentucky, a claim
must be filed within 3 years of either the last exposure to most
substances or the onset of disease symptoms, but within 20 years of
exposure to radiation or asbestos.

EEOICPA allows Energy, to the extent permitted by law, to direct its
contractors to not contest the workers' compensation claims filed by
Subtitle D claimant who received a positive determination from a physician
panel. In addition, the statute prohibits the inclusion of the costs of
contesting such claims as allowable costs under its contracts with the
contractors; however, Energy's regulations allow the costs incurred as the
result of a workers' compensation award to be reimbursed in the manner
permitted under the contracts. The Subtitle D program does not affect the
normal operation of state workers' compensation programs other than
limiting the ability of Energy or its contractors to contest certain
claims; Energy does not have authority to expand or contract the scope of
any of these state programs. Thus, actions taken by Energy or its
contractors will not make a worker eligible for compensation under a state
workers' compensation system if the worker is not otherwise eligible.

As of December 31, 2003, Energy had completely processed about 6 percent
of the more than 23,000 cases that had been filed, and the majority of all
cases filed were associated with facilities in 9 states. Energy had begun
processing on nearly 35 percent of cases, but processing had not begun on
nearly 60 percent of the cases. The assessment of Energy's achievement of
case processing goals is complicated by systems limitations. Further,
these limitations make it difficult to assess achievement of goals related
to program objectives, such as the quality of the assistance given to
claimants in filing for state workers' compensation.

  Energy Has Processed Few Cases, and Insufficient Strategic Planning and Data
  Collection Complicate Program Management

    About 6 Percent of Cases Have Been Fully Processed

During the first 2 1/2 years of the program, ending December 31 2003,
Energy had fully processed about 6 percent of the more than 23,000 cases
it received. The majority of these fully processed cases had been found
ineligible because of either a lack of employment at an eligible facility
or an illness related to toxic exposure. Of the cases that had been fully
processed, 150 cases-less than 1 percent of the more than 23,000 cases
filed-had received a final determination from a physician panel. More than
half of these determinations (87 cases) were positive. As of the end of
calendar year 2003, Energy had not yet begun processing nearly 60 percent
of the cases, and an additional 35 percent of cases were in various stages
of processing. As shown in figure 2, the majority of the cases being
processed were in the case development stage, where Energy requests
information from the facility at which the claimant was employed. About 2
percent of the cases in process were ready for physician panel review, and
an additional 3 percent were undergoing panel review.

Figure 2: Case Status as of December 31, 2003

95% In case development

2% Ready for physican panel review

3% Undergoing physican panel review

Source: GAO analysis of Energy data.

A majority of all cases were filed early during program implementation,
but new cases continue to be filed. More than half of all cases were filed
within the first year of the program, between July 2001 and June 2002.
However, between July 2002 and December 31, 2003, Energy continued to
receive an average of more than 500 cases per month. Energy officials
report that they continue to receive approximately 100 new cases per week.

Energy Facilities in 9 While cases filed are associated with facilities in
43 states or territories, States Account for More the majority of cases
are associated with Energy facilities in 9 states, as than 75 percent of
Cases shown in figure 3. Facilities in Colorado, Idaho, Iowa, Kentucky,

New Mexico, Ohio, South Carolina, Tennessee, and Washington account for
more than 75 percent of cases received by December 31, 2003. The largest
group of cases is associated with facilities in Tennessee.

Figure 3: Distribution of Cases by Employee's Last Energy Facility Worked

Source: GAO analysis of Energy data.

Note: Facility information is missing or unknown for 1,859 cases.

Workers filed the majority of cases, and cancer is the most frequently
reported illness. Workers filed more than 60 percent of cases, and
survivors of deceased workers filed about 36 percent of cases. In 2
percent of the cases, a worker filed a claim that was subsequently taken
up by a survivor. Cancer is the illness reported in nearly 60 percent of
the cases.

Diseases affecting the lungs accounted for an additional 15 percent of the
cases. Specifically, chronic beryllium disease and/or beryllium
sensitivity were reported in 7 percent of the cases, 8 percent reported
asbestosis, and less than 1 percent claimed chronic silicosis.

    Insufficient Strategic Planning and Data Collection Limit Energy's Ability
    to Determine whether Program Goals Are Being Met

Insufficient strategic planning regarding system design, data collection,
and tracking of outcomes has made it more difficult for Energy officials
to manage some aspects of the program and for those with oversight
responsibilities to determine whether Energy is meeting goals for
processing claims. The data system Energy uses to aid in case management
was developed by contractors without detailed specifications from Energy.
Furthermore, the system was developed before Energy established its
processing goals and did not collect sufficient information to track
Energy's progress in meeting these goals. While recent changes to the
system have improved Energy's ability to track certain information, these
changes have resulted in some recent status data being not completely
comparable with older status data. In addition, Energy will be unable to
completely track the timeliness of its processing for approximately
one-third of the cases that were being processed as of December 2003
because key data are not complete. For example, Energy established a goal
of completing case development within 120 days of case assignment to a
case manager. At least 70 percent of the cases for which case development
was complete were missing dates corresponding to either the beginning or
the end of the case development process-data that would allow Energy
officials to compute the time elapsed during case development.

Energy has not been sufficiently strategic in identifying and
systematically collecting certain data that are useful for program
management. For instance, Energy does not track the reasons why particular
cases were found ineligible in a format that can be easily analyzed.
Systematic tracking of the reasons for ineligibility would make it
possible to quickly identify cases affected by policy changes. For
example, when a facility in West Virginia was determined to be only a
Department of Energy facility and not also an atomic weapons employer, it
was necessary for Energy to identify which cases had been ruled ineligible
because of employment at the West Virginia facility. While some
ineligibility information may be stored in case narratives, this
information is not available in a format that would allow the agency to
quickly identify cases declared ineligible for similar reasons.
Ascertaining the reason for ineligibility would at best require review of
individual case narratives, and indeed, Energy officials report that it is
sometimes necessary to refer back to application forms to find the
reasons. As a result, if additional changes are made that change

eligibility criteria, Energy may have to expend considerable time and
resources determining which cases are affected by the change in policy.

In addition, because it did not adequately plan for the various uses of
its data, Energy lacks some of the data needed to analyze how cases will
fare when they enter the state workers' compensation systems.
Specifically, it is difficult for Energy to predict whether willing payers
of workers' compensation benefits will exist using case management system
data because the information about the specific employer for whom the
claimant worked is not collected in a format that can be systematically
analyzed. In addition, basic demographic data such as the age of employees
is not necessarily accurate due to insufficient edit controls- for
example, error checking that would prevent employees' dates of birth from
being entered if the date was in the future or recent past. Reliable age
data would allow Energy to estimate the proportion of workers who are
likely to have health insurance such as Medicare.

Insufficient tracking of program outcomes hampers Energy's ability to
determine how well it is providing assistance to claimants in filing
claims for state workers' compensation benefits. Energy has not so far
systematically tracked whether claimants subsequently file workers'
compensation claims or the decisions on these claims. However, agency
officials recently indicated that they now plan to develop this
capability. In addition, Energy does not systematically track whether
claimants who receive positive physician panel determinations file
workers' compensation claims, nor whether claims that are filed are
approved, or paid. Furthermore, unless Energy's Office of Hearings and
Appeals grants an appeal of a negative determination, which is returned to
Energy for further processing, Energy does not track whether a claimant
files an appeal. Lack of information about the number of appeals and their
outcomes may limit Energy's ability to assess the quality and consistency
of its decision making.

  A Shortage of Qualified Physicians to Issue Determinations Delays Filing of
  Workers' Compensation Claims and Claimants May Receive Inadequate Information
  to Prepare Them to Pursue These Claims

Energy was slow in implementing its initial case processing operation, but
it is now processing enough cases so that there is a backlog of cases
awaiting physician panel review. With panels operating at full capacity,
the small pool of physicians qualified to serve on the panels may
ultimately limit the agency's ability to produce more timely
determinations. Claimants have experienced lengthy delays in receiving the
determinations they need to file workers' compensation claims and have
received little information about claims status as well as what they can
expect from this process. Energy has taken some steps intended to reduce
the backlog of cases.

    Sufficient Cases Have Not Always Been Available for Physician Panel Review,
    but Energy Has Increased the Pace of Its Case Development Processing

Energy's case development process has not always produced enough cases to
ensure that the physician panels were functioning at full capacity, but
the agency is now processing enough cases to produce a backlog of cases
waiting for panel review. Energy officials established a goal of
completing the development of 100 cases per week by August 2003 to keep
the panels fully engaged. However, the agency did not achieve this goal
until several months later.

Energy was slow to implement its case development operation. Initially,
agency officials did not have a plan to hire a specific number of
employees for case development, but they expected to secure additional
staff as they were needed. When Energy first began developing cases, in
the fall of 2002, the case development process had about 8 case managers.
With modest staffing increases, the program quickly outgrew the office
space used for this function. Though Energy officials acknowledged the
need for more personnel by spring 2003, they delayed hiring until
additional space could be secured in August. By November 2003, Energy had
more than tripled the number of case managers developing cases, and since
that month the agency has continued to process an average of more than 100
cases per week to have them ready for physician panel review.

Energy transferred nearly $10 million in fiscal year 2003 funds into this
program from other Energy accounts. Further, after completing a

comprehensive review of its Subtitle D program, the agency developed a
plan that identifies strategies for further accelerating its case
processing. This plan sets a goal of eliminating the entire case backlog
by the end of calendar year 2006 and depends in part on shifting an
additional $33 million into the program in fiscal year 2004, to quadruple
the caseprocessing operation. With additional resources, Energy plans to
complete the development of all pending cases as quickly as possible and
have them ready for the physician panels. However, this could create a
larger backlog of cases awaiting review by physician panels. Because a
majority of the claims filed so far are from workers whose medical
conditions are likely to change over time, building this backlog could
further slow the decision process by making it necessary to update medical
records before panel review.

    The Ability to Produce More Timely Decisions May Be Limited by the Small
    Pool of Qualified Physicians and Gaps in Information They Need to Quickly
    Decide Cases

Even though additional resources have allowed Energy to speed initial case
development, the limited pool of qualified physicians for panels may limit
Energy's capacity to decide cases more quickly. Under the rules Energy
originally established for this program that required that each case be
reviewed by a panel of 3 physicians and given the 130 physicians currently
available, it could have taken more than 13 years to process all cases
pending as of December 31, without consideration of the hundreds of new
cases the agency is receiving each month.2 However, in an effort to make
the panel process more efficient, Energy published new rules on March 24,
2004, that re-defined a physician panel as one or more physicians
appointed to evaluate these cases and changed the timeframes for
completing their review. Under the new rule, a panel composed of a single
physician will initially review each case, and if a positive determination
is issued, no further review is necessary. Negative determinations made by
a single physician panels will require review by one or more additional
single-physician panels. In addition to revising its rules, the agency
began holding a full-time physician panel in Washington, D.C., in January
2004, staffed by physicians who are willing to serve fulltime for a 2-or
3-week period.

Energy and NIOSH officials have taken steps to expand the number of
physicians who would qualify to serve on the panels and to recruit more

2This 13-year estimate assumes that none of the pending cases would be
determined ineligible on the basis of noncovered employment or illnesses
because we did not possess a sufficient basis for projecting the number of
pending cases that would be determined ineligible in the future.

physicians, including some willing to work full-time. While Energy has
made several requests that NIOSH appoint additional physicians to staff
the panels, such as requesting 500 physicians in June 2003, NIOSH
officials have indicated that the pool of physicians with the appropriate
credentials and experience is limited.3 The criteria NIOSH originally used
to evaluate qualifications for appointing physicians to these panels
included: (1) board certification in a primary discipline; (2) knowledge
of occupational medicine; (3) minimum of 5 years of relevant clinical
practice following residency; and (4) reputation for good medical
judgment, impartiality, and efficiency. NIOSH recently modified these
qualifications, primarily to reduce the amount of required clinical
experience so that physicians with experience in relevant clinical or
public health practice or research, academic, consulting, or private
sector work can now qualify to serve on the panels. NIOSH has revised its
recruiting materials to reflect this change and to point out that Energy
is also interested in physicians willing to serve on panels full-time.
However, a NIOSH official said that he was uncertain about the effect of
the change in qualifications on the number of available physicians. In
addition, the official indicated that only a handful of physicians would
likely be interested in serving full-time on the panels.

Energy officials have also explored additional sources from which NIOSH
might recruit qualified physicians, but they have expressed concerns that
the current statutory cap on the rate of pay for panel physicians may
limit the willingness of physicians from these sources to serve on the
panels. For example, Energy officials have suggested that physicians in
the military services might be used on a part-time basis, but the rate of
pay for their military work exceeds the current cap. Similarly, physicians
from the Public Health Service could serve on temporary full-time details
as panel physicians. To elevate the rate of pay for panel physicians to a
level that is consistent with the rate physicians from these sources
normally receive, Energy officials recently submitted to the Congress a
legislative proposal to eliminate the current cap on the rate of pay and
also expand Energy's hiring authority.

Panel physicians have also suggested methods to Energy for improving the
efficiency of the panels. For example, some physicians have said that more
complete profiles of the types and locations of specific toxic substances
at

3In March 2004, Energy requested additional physicians from NIOSH that
would result in tripling the number of full-time equivalent physicians in
2004 and increasing the number of full-time equivalent physicians by a
factor of 6 in 2005.

each facility would speed their ability to decide cases. While Energy
officials reported that they have completed facility overviews for most of
the major sites, specific site reference data are available for only a few
sites. Energy officials told us that, in their view, the available
information is sufficient for decision making by the panels. However,
based on feedback from the physicians, Energy officials are exploring
whether developing additional site information would be cost beneficial.

    Energy Has Not Sufficiently Informed Claimants about the Status of Their
    Claims and Subsequent Aspects of the Process

Energy has not always provided claimants with complete and timely
information about what they could achieve in filing under this program.
Energy officials concede that claimants who filed in the early days of the
program may not have been provided enough information to understand the
benefits they were filing for. As a consequence, some claimants who filed
under both Subtitle B and Subtitle D early in the program later withdrew
their claims under Subtitle D because they had intended to file only for
Subtitle B benefits or because they had not understood that they would
still have to file for state workers' compensation benefits after
receiving a positive determination from a physician panel. After the final
regulations were published in August 2002, Energy officials stated that
claimants had a better understanding of the benefits for which they were
applying.

Energy has not kept claimants sufficiently informed about the status of
their claims under Subtitle D. Until recently, Energy's policy was to
provide no written communication about claims status between the
acknowledgment letters it sent shortly after receiving applications and
the point at which it began to process claims. Since nearly half of the
claims filed in the first year of the program remained unprocessed as of
the December 31, 2003, these claimants would have received no information
about the status of their claims for more than 1 year. Energy recently
decided to change this policy and provide letters at 6-month intervals to
all claimants with pending claims. Although the first of these
standardized letters sent to claimants in October 2003 did not provide
information about individual claims status, it did inform claimants about
a new service on the program's redesigned Web site through which claimants
can check on the status of their claim. However, this new capability does
not provide claimants with information about the timeframes during which
their claims are likely to be processed and claimants would need to
re-check the status periodically to determine whether the status of the
claim has changed.

In addition, claimants may not receive sufficient information about what
they are likely to encounter when they file for state workers'
compensation benefits. For example, Energy's letter to claimants
transmitting a positive determination from a physician panel does not
always provide enough information about how they would go about filing for
state workers' compensation benefits. A contractor in Tennessee reported
that a worker was directed by Energy's letter received in September 2003
to file a claim with the state office in Nashville when Tennessee's rules
require that the claim be filed with the employer. The contractor reported
the problem to Energy in the same month, but Energy letters sent to
Tennessee claimants in October and December 2003 continued to direct
claimants to the state office. Finally, claimants are not informed as to
whether there is likely to be a willing payer of workers' compensation
benefits and what this means for the processing of that claim.
Specifically, advocates for claimants have indicated that claimants may be
unprepared for the adversarial nature of the workers' compensation process
when an insurer or state fund contests the claim.

Energy officials recently indicated that they plan to test initiatives to
improve communication with claimants. Specifically, they plan to conduct a
test at one Resource Center that would provide claimants with additional
information about the workers' compensation process and advice on how to
proceed after receiving a positive physician panel determination. In
addition, they plan to begin contacting individuals with pending claims
this summer to provide information on the status of their claims.

  While Workers' Compensation Claims for a Majority of Cases Are Not Likely to
  Be Contested, Actual Compensation Is Not Certain

Our analysis shows that a majority of cases associated with Energy
facilities in 9 states that account for more than three-quarters of all
Subtitle D cases filed are not likely to be contested. However, the
remaining 20 percent of cases lack willing payers and are likely to be
contested. These percentages provide an order of magnitude estimate of the
extent to which claimants will have willing payers and are not a
prediction of actual benefit outcomes for claimants.

    A Majority of Cases in 9 States Are Not Likely to Be Contested

The workers' compensation claims for the majority of cases associated with
major Energy facilities in 9 states4 are likely to have no challenges to
their claims for state workers' compensation benefits. Specifically, based
on analysis of workers' compensation programs and the different types of
workers' compensation coverage used by the major contractors, it appears
that slightly more than half of the cases will potentially have a willing
payer. In these cases, self-insured contractors will not contest the
claims for benefits as ordered by Energy. Another 25 percent of the cases,
while not technically having a willing payer, have workers' compensation
coverage provided by an insurer that has stated that it will not contest
these claims and is currently processing several workers' compensation
claims without contesting them. The remaining 20 percent of cases in the 9
states we analyzed are likely to be contested. Because of data
limitations, these percentages provide an order of magnitude estimate of
the extent to which claimants will have willing payers.5 The estimates are
not a prediction of actual benefit outcomes for claimants.

As shown in table 1, the contractors for four major facilities in these
states are self-insured, and Energy's direction to them to not contest
claims that receive a positive physician panel determination will be
adhered to. In such situations where there is a willing payer, the
contractor's action to pay the compensation consistent with Energy's order
to not contest a claim could result in a payment that might otherwise have
resulted in a denial of a claim, for reasons such as failure to file a
claim within a specified period of time. Similarly, the informal agreement
by the commercial insurer with the contractors at the two facilities that
constitute 25 percent of the cases to pay the workers compensation claims
will more likely result in payment, despite potential grounds to contest

4The cases in these 9 states represent more than three-quarters of the
cases filed nationwide. The results of our analysis cannot necessarily be
applied to the remaining 25 percent of the cases filed nationwide.

5Because of data limitations, we assumed that: (1) all cases filed would
receive a positive determination by a physician panel; (2) all workers
lost wages because of the illness and were not previously compensated for
this loss; and (3) in all cases, the primary contractor rather than a
subcontractor at the Energy facility employed the worker. While we believe
that the first two assumptions would not affect the proportions shown in
each category, the third assumption could result in an underestimate of
the proportion of cases lacking willing payers to the extent that some
workers may have been employed by subcontractors that used commercial
insurers or state funds for workers' compensation coverage. Some
subcontractors use these methods of workers' compensation coverage because
they may not employ enough workers to qualify for self-insurance under
some state workers' compensation programs.

under state law. However, since this insurer is not bound by Energy's
orders and it does not have a formal agreement with either Energy or the
contractors to not contest these claims, there is nothing to guarantee
that the insurer will continue to process claims in this manner.

About 20 percent of cases in the 9 states we analyzed are likely to be
contested. Therefore, in some instances, these cases may be less likely to
receive compensation than a comparable case for which there is a willing
payer, unless the claimant is able to overcome challenges to the claim. In
addition, contested cases can take longer to be resolved. For example, one
claimant whose claim is being contested by an insurer was told by her
attorney that because of pretrial motions filed by the opposing attorney,
it would be 2 years before her case was heard on its merits. Specifically,
the cases that lack willing payers involve contractors that (1) have a
commercial insurance policy, (2) use a state fund to pay workers'
compensation claims, or (3) do not have a current contract with Energy. In
each of these situations, Energy maintains that its orders to contractors
would have a limited effect. For instance, an Ohio Bureau of Workers'
Compensation official said that the state would not automatically approve
a case with a positive physician panel determination, but would evaluate
each workers' compensation case carefully to ensure that it was valid and
thereby protect its state fund. Furthermore, although the contractor in
Colorado with a commercial policy attempted to enter into agreements with
prior contractors and their insurers to not contest claims, the parties
have not yet agreed and several workers' compensation claims filed with
the state program are currently being contested.

    Table 1: Extent to Which Cases Will Potentially Be Contested in 9 States
                    Contests are not likely Contests likely

                                                  Number of 
            Willing                                cases as 
Likely    payer     Types of Workers Comp.   reported in   Percentage of   
outcome available? coverage Energy facility,                               
                                state           Energy data cases in category

     Yes Self-insurance     Paducah Gaseous Diffusion Plant,            
                                                       aKentucky 2,133  
                         Los Alamos National Lab, New Mexico     1,380  
                         Oak Ridge K-25, X-10, and Y-12 Plants,         
                                                       Tennessee 4,115  
                                        Hanford Site, Washington 1,798  
                                                        Subtotal 9,426   55 % 

        Nob        Commercial policy,  Idaho National Engineering        
                              insurer                  Lab, Idaho        
             will follow contractors'                                    
            instructions to not                                    849   
            contest                                                      
                                       Savannah River Site, South 3,375  
                                                         Carolina        
                                                         Subtotal 4,224  25 % 
Subtotal                                                       13,650 80 % 

         No     Commercial policy       Rocky Flats Plant, Colorado 1,630 
         No            State fund      Portsmouth Gaseous Diffusion  862  
                                                             Plant,       
                                                               Ohio       
                                  Feed Materials Production Center,  286  
                                  Ohio                                    
                                                  Mound Plant, Ohio  91   
         No No current contractor         Iowa Ordnance Plant, Iowa  645  
Subtotal                                                         3,514 20% 

Source: GAO analysis of Energy data and interviews with current
contractors and state officials.

Note: The table includes the cases from the facilities in these states
with the largest number of cases filed but does not include the remaining
693 cases (4 percent) from other facilities in these states.

aA total of 2,370 cases have been filed for the Paducah Gaseous Diffusion
Plant, which has been operated since July 1998 by a private entity that
leases the facility. Energy recently decided that workers who have only
been employed by this private entity, and not by the prior contractors who
operated the facility, will not be eligible for the program. An Energy
contractor performing environmental cleanup at the site also employs
workers at the facility. This contractor is responsible for the workers'
compensation claims filed by its employees as well as those filed by
employees of the contractors who operated the facility prior to July 1998.
We apportioned 90 percent of the cases filed for the Paducah facility
(2,133) to the cleanup contractor because the facility was run by the
prior contractors for about 90 percent of its years in operation. We
apportioned the remaining 10 percent of the cases (237) to the private
entity and do not show these cases in the table, due to Energy's decision
that claims filed by the entity's workers would be ineligible for the
program. However, this apportionment involves some uncertainty because the
clean up contractor has not had an opportunity to analyze the effects of
Energy's policy decision.

bThis insurer is technically not a willing payer since it is not bound by
Energy's orders and it does not have a formal agreement with either Energy
or the contractors to not contest these claims for workers' compensation.
However, the insurer has stated that it will follow contractors'
instructions to not contest these claims.

These estimates could change as better data become available or as
circumstances change, such as new contractors taking over at individual
facilities. For example, the contractor currently performing environmental
cleanup at the Paducah Gaseous Diffusion Plant will not re-compete for
this work when its contract ends on September 30, 2004. Energy is
soliciting proposals for a new contract to continue the cleanup work and
has indicated that the new contractors will not be required to take on the
responsibility for the workers' compensation claims filed by employees of
former contractors. While Energy has proposed that the current clean up
contractor continue to handle the claims of their employees and those of
prior contractors under another of its contracts with the agency, it is
unclear at this point whether the current contractor will be able to
arrange for continuing coverage of these claims without securing workers'
compensation coverage through commercial insurance. Unless the current
contractor can continue to self-insure its workers' compensation coverage
for these claims, the Paducah cases shown in table 1 would have to be
moved to the category in which contests are likely. As a result of this
single change in contractors, the proportion of cases for which contests
are likely could increase from 20 to 33 percent.

    Multiple Factors Make Compensation Not Certain

In contrast to Subtitle B provisions that provide for a uniform federal
benefit that is not affected by the degree of disability, various factors
may affect whether a Subtitle D claimant is paid under the state workers'
compensation program or how much compensation will be paid. Beyond the
differences in the state programs that may result in varying amounts and
length of payments, these factors include the demonstration of a loss
resulting from the illness and contractors' uncertainty on how to compute
compensation.

Even with a positive determination from a physician panel and a willing
payer, claimants who cannot demonstrate a loss, such as loss of wages or
unreimbursed medical expenses, may not qualify for compensation. On the
other hand, claimants with positive determinations but not a willing payer
may still qualify for compensation under the state program if they show a
loss and can overcome all challenges to the claim raised by the employer
or the insurer.

Contractors' uncertainty about how to compute compensation may also cause
variation in whether or how much a claimant will receive in compensation.
While contractors with self-insurance told us that they plan to comply
with Energy's directives to not contest cases with positive
determinations, some contractors were unclear about how to actually
determine the amount of compensation that a claimant will receive. For
example, one contractor raised a concern that no guidance exists to inform
contractors about whether they can negotiate the degree of disability, a
factor that could affect the amount of the workers' compensation benefit.
Other contractors will likely experience similar situations, as Energy has
not issued written guidance on how to consistently compute compensation
amounts.

While not directly affecting compensation amounts, a related issue
involves how contractors will be reimbursed for claims they pay. Energy
uses several different types of contracts to carry out its mission, such
as operations or cleanup, and these different types of contracts affect
how workers' compensation claims will be paid. For example, a contractor
responsible for managing and operating an Energy facility was told to pay
the workers' compensation claims from its current operating budget. The
contractor said that this procedure may compromise its ability to conduct
its primary responsibilities. On the other hand, a contractor cleaning up
an Energy facility under a cost reimbursement contract was told by Energy
officials that its workers' compensation claims would be reimbursed and,
therefore, paying claims would not affect its ability to perform cleanup
of the site.

Various options are available to improve payment outcomes for the cases
that receive a positive determination from Energy, but lack willing payers
under the current program. If it chooses to change the current program,
Congress would need to examine these options in terms of several issues,
including the source, method, and amount of the federal funding required
to pay benefits; the length of time needed to implement changes; the
criteria for determining who is eligible; and the equitable treatment of
claimants. In particular, the cost implications of these options for the
federal government should be carefully considered in the context of the
current and projected federal fiscal environment.

  Several Issues Could Be Considered in Evaluating Options for Improving the
  Likelihood of Willing Payers

Options for Changing the We identified four possible options for improving
the likelihood of willing

Current Program 	payers, some of which have been offered in proposed
legislation. While not exhaustive, the options range from adding a federal
benefit to the

existing program for cases that lack a willing payer to addressing the
willing payer issue as part of designing a new program that would allow
policymakers to decide issues such as the eligibility criteria and the
type and amount of benefits without being encumbered by existing program
structures. A key difference among the options is the type of benefit that
would be provided.

Option 1-State workers' compensation with federal back up. This option
would retain state workers' compensation structure as under the current
Subtitle D program but add a federal benefit for cases that receive a
positive physician panel determination but lack a willing payer of state
workers' compensation benefits. For example, claims involving employees of
current contractors that self-insure for workers' compensation coverage
would continue to be processed through the state programs. However, claims
without willing payers such as those involving contractors that use
commercial insurers or state funds likely to contest workers' compensation
claims could be paid a federal benefit that approximates the amount that
would have been received under the relevant state program.

Option 2-Federal workers' compensation model. This option would move the
administration of the Subtitle D benefit from the state programs entirely
to the federal arena, but would retain the workers' compensation concept
for providing partial replacement of lost wages as well as medical
benefits. For example, claims with positive physician panel determinations
could be evaluated under the eligibility criteria of the Federal Employees
Compensation Act6 and, if found eligible, could be paid benefits
consistent with the criteria of that program.

Option 3-Expanded Subtitle B program that does not use a workers'
compensation model. Under this option, the current Subtitle B program
would be expanded to include the other illnesses resulting from radiation
and toxic exposures that are currently considered under the Subtitle D
program. The Subtitle D program would be eliminated as a separate program
and, if found eligible, claimants would receive a lumpsum payment and
coverage of future medical expenses related to the workers' illnesses,
assuming they had not already received benefits under Subtitle B. The
Department of Labor would need to expand its regulations

6The Federal Employees' Compensation Act (5 U.S.C. 8101, et seq.) provides
workers' compensation coverage for federal and postal employees, who are
not covered by the state programs.

to specify which illnesses would be covered and the criteria for
establishing eligibility for each of these illnesses. In addition, since
the current programs have differing standards for determining whether the
worker's illness was related to his employment,7 it would have to be
decided which standard would be used for the new category of illnesses.

Option 4-New federal program that uses a different type of benefit
structure. This option would address the willing payer issue as part of
developing a new program that involves moving away from the workers'
compensation and Subtitle B structures and establishing a new federal
benefit administered by a structure that conforms to the type of the
benefit and its eligibility criteria. This option would provide an
opportunity to consider anew the purpose of the Subtitle D provisions. As
a starting point, policymakers could consider different existing models
such as the Radiation Exposure Compensation Act, designed to provide
partial restitution to individuals whose health was put at risk because of
their exposure even when their illnesses do not result in ongoing
disability. But, they could also choose to build an entirely new program
that is not based on any existing model.

    Various Issues Should Be Considered in Deciding Whether Changes Are Needed
    and Assessing the Options

In deciding whether and how to change the Subtitle D program to ensure a
source of benefit payments for claims that would be found eligible if they
had a willing payer, policymakers will need to consider the trade-offs
involved. Table 2 arrays the relevant issues to provide a framework for
evaluating the range of options in a logical sequence. We have constructed
the sequence of issues in this framework in terms of the purpose and type
of benefit as being the focal point for the evaluation, with consideration
of the other issues flowing from that first decision. For example,
decisions about eligibility criteria would need to consider issues
relating to withinstate and across-state equity for Subtitle D claimants.
The framework would also provide for decisions on issues such as the
method of federal funding-trust fund or increased appropriations-and the
appropriate federal agency to administer the benefit. For each of the
options, the type of benefit would suggest which agency should be chosen
to administer the

7Under Subtitle B, an individual with specified types of cancer shall be
determined to have sustained that condition in the performance of duty if
the cancer was at least as likely as not related to employment at a
specified facility. Under Subtitle D, a physician panel must decide
whether it is at least as likely as not that exposure to a toxic substance
in the course of employment was a significant factor in aggravating,
contributing to, or causing the illness or death of the worker.

benefit and would depend, in part, on an agency's capacity to administer a
benefit program. In examining these issues, the effects on federal costs
would have to be carefully considered. Ultimately, policymakers will need
to weigh the relative importance of these issues in deciding whether and
how to proceed.

    Purpose and Type of Benefit

In evaluating how the purpose and type of benefit now available under
Subtitle D could be changed, policymakers would first need to focus on the
goals they wish to achieve in providing compensation to this group of
individuals. If the goal is to compensate only those individuals who can
demonstrate lost wages because of their illnesses, a recurring cash
benefit in an amount that relates to former earnings might be in order and
a workers' compensation option, either a state benefits with a federal
back up or a federal workers' compensation benefit, would promote this
purpose. If, on the other hand, the goal is to compensate claimants for
all cases in which workers were disabled because of their employment-even
when workers continue to work and have not lost wages-the option to expand
Subtitle B would allow a benefit such as a flat payment amount not tied to
former earnings.

For consideration of a new federal program option, it might be useful to
also consider other federal programs dealing with the consequences of
exposure to radiation as a starting point. For example, the Radiation
Exposure Compensation Act was designed to provide partial restitution to
individuals whose health was put at risk because of their exposure.
Similar to Subtitle B, the act created a federal trust fund, which
provides for payments to individuals who can establish that they have
certain diseases and that they were exposed to radiation at certain
locations and at specified times. However, this payment is not dependent
on demonstrating ongoing disability or actual losses resulting from the
disease.

    Eligibility Criteria and Equity of Outcomes

The options could also have different effects with respect to eligibility
criteria and the equity of benefit outcomes for current Subtitle D
claimants based on these criteria. By equity of outcomes, we mean that
claimants with similar illnesses and circumstances receive similar benefit
outcomes. The current program may not provide equity for all Subtitle D
claimants within a state because a claim that has a willing payer could
receive a different outcome than a similar claim that does not have a
willing payer, but at least three of the options could provide
within-state equity. With respect to across-state equity, the current
program and the option to provide a federal back up to the state workers'
compensation programs

would not achieve equity for Subtitle D claimants in different states. In
contrast, the option based on a federal workers' compensation model as
well as the expanded Subtitle B option would be more successful in
achieving across-state equity.8

Regardless of the option, changes made to Subtitle D could also
potentially result in differing treatment of claims decided before and
after the implementation of the change. In addition, changing the program
to remove the assistance in filing workers' compensation claims may be
seen as depriving a claimant of an existing right. Further, any changes
could also have implications beyond EEOICPA, to the extent that the
changes to Subtitle D could establish precedents for federal compensation
to private sector employees in other industries who were made ill by their
employment.

                                 Federal Costs

Effects on federal costs would depend on the generosity of the benefit in
the option chosen and the procedures established for processing claims for
benefits. Under the current program, workers' compensation benefits that
are paid without contest will come from contract dollars that ultimately
come from federal sources-there is no specific federal appropriation for
this purpose. Because all of the options are designed to improve the
likelihood of payment for claimants who meet all other criteria, it is
likely that federal costs would be higher for all options than under the
current program. Specifically, federal costs would increase for the option
to provide a federal back up to the state workers' compensation program
because it would ensure payment at rates similar to the state programs for
the significant minority of claimants whose claims are likely to be
contested and possibly denied under the state programs. Further, the
federal costs of adopting a federal workers' compensation option would be
higher than under the first option because all claimants-those who would
have been paid under the state programs as well as those whose claims
would have been contested under the state programs-would be eligible for a
federal benefit similar to the benefit for federal employees. In general,
federal workers' compensation benefits are more generous than state
benefits because they replace a higher proportion of the worker's salary
than many states and the federal maximum rate of wage replacement is
higher than all the state maximum rates.

8An additional within-state equity issue involves the comparative
treatment of Subtitle D claimants and all other workers' compensation
claimants in the same state.

For either of the two options mentioned earlier, a decision to offset the
Subtitle D benefits against the Subtitle B benefit could lessen the effect
of the increased costs, given reports by Energy officials that more than
90 percent of Subtitle D claimants have also filed for Subtitle B
benefits.9 However, the degree of this effect is difficult to determine
because many of the claimants who have filed under both programs may be
denied Subtitle B benefits. The key distinction would be whether workers
who sustained certain types of illnesses based on their Energy employment
should be compensated under both programs as opposed to recourse under
only one or the other. If they were able to seek compensation from only
one program, the claimant's ability to elect one or the other based on
individual needs should be considered.

The effects on federal cost of an expanded Subtitle B option or a new
federal program option are more difficult to assess. In many cases, the
Subtitle B benefit of up to $150,000 could exceed the cost of the lifetime
benefit for some claimants under either of the workers' compensation
options, resulting in higher federal costs. However, the extent of these
higher costs could be mitigated by the fact that many of the claimants who
would have filed for both benefits in the current system would be eligible
for only one cash benefit regardless of the number or type of illnesses.
The degree of cost or savings would be difficult to assess without
additional information on the specific claims outcomes in the current
Subtitle B program. The effects on federal costs for the new federal
program option would depend on the type and generosity of the benefit
selected.

9Under the current Subtitle B and Subtitle D programs, benefits are not
offset against each other.

Table 2: Framework for Evaluating Options to Change the Subtitle D Program

                 Option 1-State                                   
                         workers'   Option 2-Federal    Option 3- 
                compensation with           workers'     Expanded      Option 
                                                         Subtitle       4-New 
        Current                                                   federal     
        program   federal back-up compensation model    B program benefit     

Purpose and Varies by state, but Same as under

type of benefit 	generally includes current state medical treatment
programs. and cash payments that partially replace lost wages.

Still a workers' compensation benefit, generally includes medical
treatment and cash payments that partially replace lost wages.

Same as for current Subtitle B- coverage of future medical treatment and a
one-time payment of up to $150,000 as compensation for disability or death
because of exposure to radiation or toxic substance.

Open for consideration.

                Vary by       For            Uses Same as for                 
  Eligibility  state, but   federal   criteria of current         Open for
                            back-up      workers'              
criteria    generally   benefit,  compensation Subtitle B   consideration- 
                apply to   should be program      claimants    
               workers who  similar  for federal   who worked   should flow   
                  contract    to     employees.       for           from      
                           criteria                            
                         a   under                Energy              type of 
              work-related  current               contractors.    benefit and 
                   illness   state                             
              and who lose                                     the nature of  
                  work     programs.                                the       
              time because                                     population it  
                 of the                                              is       
                illness.                                        designed to   
                                                                compensate.   

Interaction with Benefits are not offset Open for Subtitle B against each
other. consideration.

Open for consideration.	No interaction issues. Claimants would be eligible
for only one payment regardless of number of illnesses. Because there is a
large overlap in claimants filing under both programs, this could
potentially reduce the total number of claims that would remain to be
processed once combined.

Open for consideration. Depends on the nature of the benefit.

                 Option 1-State                                   
                         workers'   Option 2-Federal    Option 3- 
                compensation with           workers'     Expanded      Option 
                                                         Subtitle       4-New 
        Current                                                   federal     
        program   federal back-up compensation model    B program benefit     

Equity of Outcomes within Subtitle D

Within states	Similar cases in the same state could receive differing
benefits, depending on willing payer.

Across states 	Similar cases in different states could receive differing
compensation.

             Similar cases in the Similar cases in the Similar       Open for 
                                  cases in the                 
                 same state could  same state could same state consideration. 
                                                         could 
                  receive similar     receive similar benefits 
                                               receive similar 
                                  regardless of employer.      
           benefits regardless of benefits regardless          
                        employer.                 of employer. 
                 Similar cases in   Similar cases in different                
                                              Similar cases in       Open for
           different states could         states could receive consideration. 
                                              different states 
                                   similar compensation. could 
                receive differing                      receive 
                    compensation.           similar            
                                                 compensation. 

Funding source Most eligible cases Same as current Would need new federal
Trust fund already Open for

for benefits	with willing payers will program for cases source.
established by consideration- be paid by with willing payer, but Section
3612 of appropriations or contractors from would need a source EEOICPA.
trust fund. contract funds from for federal back-up federal sources.
benefit.

                                For               Department                  
      Federal    Energy.    federal Department of     of         Open for
                           benefit,                           
administrator         selection  Labor/Office  Labor-same  consideration-  
                          criteria  of Workers'       as      
                             should                 current   depends on type 
                            include Compensation  Subtitle B               of 
                                how                           
                            quickly  administers                     benefit, 
                             agency    current                     experience 
                              could                program.   
                          implement program; also                   in        
                            and how                            administering  
                            well it                                           
                                was  administers              benefit         
                           situated  Subtitle B               program,
                                 to                           
                          process   program.                      and funding 
                          and pay   Energy would                      source. 
                             cases. still need to             
                             Energy    secure                 
                              would                           
                         still need   records.                
                         to secure                            
                            records                           
                            for all                           
                              cases                           
                                and                           
                            process                           
                             claims                           
                            with                              
                          willing                             
                          payers.                             

Timeframe for Program is

implementation 	implemented, but few cases have been completely processed.

Relatively short to implement since it is based on existing program.
Infrastructure would have to be established and rules developed to provide
for federal benefits that mirror those of the state programs.

Longer than Option 1. Infrastructure in place, but regulations for
existing federal workers' compensation program would need to be expanded
to cover new benefit.

Longer than Option 1- structure in place to administer existing Subtitle B
program-new rules need to be developed for evaluating additional
illnesses.

Potentially longest of all options. Depends on administrator and whether
infrastructure exists or would need to be built. In either event, need to
publish rules and establish procedures.

                 Option 1-State                                   
                         workers'   Option 2-Federal    Option 3- 
                compensation with           workers'     Expanded      Option 
                                                         Subtitle       4-New 
        Current                                                   federal     
        program   federal back-up compensation model    B program benefit     

Federal cost  For cases that are not Federal costs                Open for 
                                 could                  
                  contested, benefits increase since           consideration- 
                 that are paid will benefits for cases     Depends on type of 
                 ultimately come from without willing             benefit and 
                                payers                  
                  contract dollars from would be paid   eligibility criteria. 
                               directly                 
                 federal sources. from federal funds.   

Federal costs could be greater than for current program since benefits
would be based on the often more generous workers' compensation program
for federal workers.

To the extent that the option would ensure a source of benefits, could
increase federal costs. However, the extent of these higher costs could be
mitigated because many of the claimants who would have filed for Subtitle
B and D benefits in the current system would be eligible for only one cash
benefit.

Source: GAO analysis.

Conclusions 	More than 3 years after the passage of EEOICPA, few claimants
have received state workers' compensation benefits as a result of
assistance provided by Energy. While Energy has eliminated the bottleneck
in its claims process that it encountered early in program
implementation-the initial development of cases-in doing so it has created
a growing backlog of cases awaiting review by a physician panel. In the
absence of changes that would expedite this review, many claimants will
likely wait years to receive the determination they need to pursue a state
workers' compensation claim. In the interim, their medical conditions may
worsen, and claimants may even die before they receive consideration by a
state program. While Energy has taken some steps designed to reduce the
backlog of cases for the physician panels, it is too early to assess
whether these initiatives will be sufficient to resolve this growing
backlog.

Whether they ultimately receive positive or negative determinations,
claimants deserve complete and timely information about what they could
achieve in filing under this program, what the claims process entails, the
status of their claims, and what they are likely to encounter when they
file for state workers' compensation benefits. Without complete
information, claimants are unable to weigh the benefits and risks of
pursuing the process to its conclusion. Indeed, given that the majority of
claimants have also filed for benefits under Subtitle B and many may have
already received decisions on those claims, some claimants may not be
aware that

they still have a Subtitle D claim pending. Further, given the limited
communication from Energy since their claims were filed, some claimants
may be unaware that resources are being expended developing their claims.
Finally, because Energy does not currently communicate to claimants what
they are likely to encounter when they file for state benefits, claimants
may be unprepared for what may be a difficult and protracted pursuit of
state benefits.

Energy may be hindered in its ability to improve its claims process and
evaluate the quality of the assistance it is providing to claimants in
this program using the data it currently collects. Energy may also be
unprepared to provide the analysis needed to inform policymakers as they
consider whether changes to the program are needed because it does not
systematically track the outcomes of cases that are appealed or the
outcomes of claims that are filed with state workers' compensation
programs. Finally, Energy will be limited in its ability to provide
complete and accurate information to claimants regarding the status and
outcomes of their claims without good data.

Even if all claimants were to receive timely physician panel
determinations stating that the workers' illnesses had likely been caused
by their employment with Energy, some may never receive state workers'
compensation benefits. The lack of a willing payer may delay the receipt
of benefits for some claimants as insurers and state fund officials
challenge various issues aspects of the claim. For other claimants, the
challenges raised in the absence of willing payers may ultimately result
in denial of benefits based on issues such as not filing the claim within
the time limits set by the state program-issues that would not be
contested by willing payers. This disparity in potential outcomes for
Subtitle D claimants may warrant the consideration of changes to the
current program to ensure that eligible claims are paid without undue
delay and that there is a willing payer for all claimants who would
otherwise be eligible.

Recommendations for To improve Energy's effectiveness in assisting
Subtitle D claimants in obtaining compensation for occupational illnesses,
we recommend that Executive Action the Secretary of Energy:

o  	in order to reduce the backlog of cases waiting for review by a
physician panel, take additional steps to expedite the processing of
claims though its physician panels and focus its efforts on initiatives
designed to allow the panels to function more efficiently. For example,
Energy should pursue the completion of site reference data to provide
physicians with more

complete information about the type and degree of toxic exposures that may
have occurred at each Energy facility.

o  	in order to provide claimants with more complete information, expand
and expedite its plans to enhance communications with claimants. These
plans should focus on providing more complete information describing the
assistance Energy will provide to claimants, the timeframes for claims
processing, the status of claims, and the process that claimants will
encounter when they file claims for state workers' compensation benefits.

o  	in order to facilitate program management and oversight, develop
costeffective methods for improving the quality of the data in its case
management system and increasing its capabilities to aggregate these data
to address program issues. In addition, Energy should develop and
implement plans to track the outcomes of cases that progress through the
state workers' compensation systems and use this information to evaluate
the quality of the assistance it provides to claimants in the Subtitle D
program. Such data could also be used by policy makers to assess the
extent to which this program is achieving its goals and purposes.

o  in order to reduce disparities in potential outcomes between claimants

  Agency Comments
  and Our Evaluation

with and without willing payers, consider developing a legislative
proposal for modifying the EEOICPA statute to address the willing payer
issue. When assessing different options, several issues such as those
discussed in this report should be considered, including the purpose and
type of benefit, eligibility criteria and equity of benefit outcomes, and
effects on federal costs.

We provided a draft of this report to Energy for comment. In commenting on
the draft report, Energy indicated that the agency had already
incorporated several of our recommendations and will aggressively tackle
the remainder. However, Energy did not specifically comment on each
recommendation. In addition, the comments highlighted several initiatives
either planned or underway that are designed to improve the Subtitle D
program. Several of these initiatives address issues raised in our report
for which we recommended changes. In particular, Energy agreed with our
findings regarding problems with communications with Subtitle D claimants
and outlined the steps the agency has planned to correct these problems.
Further, Energy agreed with our finding that there was not a system in
place to track the outcomes of workers' compensation claims filed with the
state programs and indicated that the agency has recently initiated such a
system, as we recommended. Finally, the comments provide more recent
information about the agency's progress in processing Subtitle D claims
and reiterate the agency's plan for eliminating

the backlog of claims by 2006. Energy's comments are provided in appendix
II. Energy also provided technical comments, which we have incorporated as
appropriate.

Copies of this report are being sent to the Secretary of Energy,
appropriate congressional committees, and other interested parties. The
report will also be made available at no charge on GAO's Web site at
http://www.gao.gov. If you have any questions about this report, please
contact me at (202) 512-7215. Other contacts and staff acknowledgments are
listed in appendix III.

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

                       Appendix I: Scope and Methodology

To determine the number of cases filed under Subtitle D, the status of
these cases and characteristics of claimants, we used administrative data
from Energy's Case Management System (CMS). Energy does not publish
standardized data extracts from this system, so we requested that Energy
query the system to provide customized extracts for our analysis. The
first extract contained data on the status and characteristics of cases
filed between July 2001 and June 30, 2003. The second extract was obtained
as an update and contained data related to cases filed between July 2001
and December 31, 2003.

Because multiple claims can be associated with a single case, Energy's
system contains data at two levels-the case level and the claim level. For
example, if both the widow and child of a deceased Energy employee file
claims, both claims will be associated with a single case, which is linked
to the Energy employee. At the case level, the system contains information
about the Energy employee, such as date of birth and date of death (if
applicable), the facilities at which the employee worked, and their dates
of employment and the status of the case as it moves through the
development process in preparation for physician panel review. At the
claim level, CMS contains information related to the individual claimants,
such as the date the claim was signed and the claimant's relationship to
the Energy employee.

The extracts provided by Energy contain case-level data, for the most
part. Data elements that are collected at the claim level were reported at
the case level in our files. For example, the system includes a claim
signature date for each claim. In our case-level file, Energy provided the
earliest signature date, so that we would know when the first claim was
signed. Illness data are also collected at the claim level. In our
case-level file, Energy provided all the illnesses claimed by all
claimants. We then aggregated the illness data to determine which
illnesses were claimed on each case.

We interviewed key Energy officials and contractors and reviewed available
system documentation, such as design specifications and system update
documents. Once the first data extract was received from Energy, we tested
the data set to determine that it was sufficiently reliable for our
purposes. Specifically, we performed electronic testing to identify
missing data or logical inconsistencies and reviewed determination letters
for cases that had physician panel determinations. We then computed
descriptive statistics, including frequencies and cross-tabulations, to
determine the number and status of cases received as of June 30, 2003.

Appendix I: Scope and Methodology

When we received the second data extract, containing data through the end
of calendar year 2003, we matched it to the first one to determine how
many additional cases had been received between July 1, 2003, and December
31, 2003, and to determine if any cases were missing. We determined that
some cases (less than 2 percent) that had been in the first extract were
missing from the second file. We consulted with Energy contractors and
determined that one case had been accidentally omitted from the query
results and that the remaining cases had been dropped from CMS because
they were duplicate cases or had been determined to be non-Subtitle D
cases. This is possible because the Resource Centers use the CMS system to
document incoming cases for both Subtitle B and Subtitle D. Energy
contractors provided a replacement file that included the case that had
been inadvertently dropped. They also reported that there were still a
small number of duplicate cases identified in CMS, and hence in our data
extract, but that Energy had not yet decided which cases to retain. Since
Energy officials had not yet decided which case records to retain and
which to delete at the time of our extract, we decided to leave the cases
identified as duplicates in our analysis file.

We reviewed available system documentation, performed electronic testing
and reviewed determination letters for cases that had physician panel
determinations to determine that the data contained in the second extract
was sufficiently reliable for our purposes. During our electronic testing,
we discovered a discrepancy between the December 31, 2003, status
information included in our file and the December 31, 2003, status
information reported by Energy on its Web site. On further discussion with
Energy officials and contractors, we determined that when running the
query, Energy contractors had calculated the December 31, 2003, status
information using the wrong field in the database. Energy contractors gave
us a third data file containing the correct status information that we
then appended to the analysis file. We then computed additional
descriptive statistics, including frequencies and cross-tabulations to
determine the number and status of cases received as of December 31, 2003.

To determine the extent to which Energy policies and procedures help
employees file timely claims for state workers' compensation benefits, we
reviewed Energy's regulations, policies, procedures, and communications
with claimants. In addition, we interviewed key Energy officials and
contractors at Energy facilities. We also interviewed panel physicians and
contractors responsible for case development. In addition, we interviewed
advocates, claimants, and officials at the National Institute for
Occupational Safety and Health. Finally, we conducted site visits to three

Appendix I: Scope and Methodology

Energy facilities in Oak Ridge, Tennessee-the state accounting for the
largest number of Subtitle D cases.

To estimate the number of claims for which there will not be willing
payers of workers' compensation benefits, we reviewed the provisions of
workers' compensation programs in the 9 states that account for more than
three-quarters of the cases filed. The 9 states are: Colorado, Idaho,
Iowa, Kentucky, New Mexico, Ohio, South Carolina, Tennessee, and
Washington. The results of our analysis cannot necessarily be applied to
the remaining 25 percent of the cases filed nationwide. Because of data
limitations, we assumed that: (1) all cases filed would receive a positive
determination by a physician panel; (2) all workers lost wages because of
the illness and were not previously compensated for this loss; and (3) in
all cases, the primary contractor rather than a subcontractor at the
Energy facility employed the worker. While we believe that the first two
assumptions would not affect the proportions shown in each category, the
third assumption could result in an underestimate of the proportion of
cases lacking willing payers to the extent that some workers may have been
employed by subcontractors that used commercial insurers or state funds
for workers' compensation coverage. Some subcontractors use these methods
of workers' compensation coverage because they may not employ enough
workers to qualify for self-insurance under some state workers'
compensation programs. We also interviewed Energy officials, key state
workers' compensation program officials, workers' compensation experts,
private insurers, and the contractors operating the major facilities in
each of the states to determine the method of workers' compensation
coverage these facilities used.

Finally, we took several steps to identify possible options for changing
the program in the event that there may not be willing payers of benefits.
We reviewed existing laws, regulations, and programs; analyzed pending
legislation; and considered characteristics of existing federal and state
workers' compensation programs. We also identified the issues that would
be relevant for policy makers to consider in implementing these options.

Appendix II: Comments from the Department of Energy

Appendix II: Comments from the Department of Energy

Appendix II: Comments from the Department of Energy

Appendix III: GAO Contacts and Staff Acknowledgments

GAO Contacts

  Staff Acknowledgments

(130270)

Andrew Sherrill (202) 512-7252 Beverly Crawford (202) 512-4474

In addition to the above contacts, Melinda L. Cordero, Mary Nugent, and
Rosemary Torres Lerma made significant contributions to this report. Also,
Luann Moy and Elsie Picyk assisted in the study design and analysis;
Margaret Armen provided legal support; and Amy E. Buck assisted with the
message and report development.

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