Federal Compensation Programs: Perspectives on Four Programs for 
Individuals Injured by Exposure to Harmful Substances (01-APR-08,
GAO-08-628T).							 
                                                                 
The U.S. federal government has played an ever-increasing role in
providing benefits to individuals injured as a result of exposure
to harmful substances. Over the years, it has established several
key compensation programs, including the Black Lung Program, the 
Vaccine Injury Compensation Program (VICP), the Radiation	 
Exposure Compensation Program (RECP), and the Energy Employees	 
Occupational Illness Compensation Program (EEOICP), which GAO has
reviewed in prior work. Most recently, the Congress introduced	 
legislation to expand the benefits provided by the September 11th
Victim Compensation Fund of 2001. As these changes are		 
considered, observations about other federal compensation	 
programs may be useful. In that context, GAO's testimony today	 
will focus on four federal compensation programs, including (1)  
the structure of the programs; (2) the cost of the programs	 
through fiscal year 2004, including initial cost estimates and	 
the actual costs of benefits paid, and administrative costs; and 
(3) the number of claims filed and factors that affect the length
of time it takes to finalize claims and compensate eligible	 
claimants. To address these issues, GAO relied on its 2005 report
on four federal compensation programs. As part of that work, GAO 
did not review the September 11th Victim Compensation Fund of	 
2001.								 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-628T					        
    ACCNO:   A81474						        
  TITLE:     Federal Compensation Programs: Perspectives on Four      
Programs for Individuals Injured by Exposure to Harmful 	 
Substances							 
     DATE:   04/01/2008 
  SUBJECT:   Compensation					 
	     Cost analysis					 
	     Cost control					 
	     Eligibility determinations 			 
	     Federal aid programs				 
	     Federal funds					 
	     Funds management					 
	     Hazardous substances				 
	     Health hazards					 
	     Program evaluation 				 
	     Program inventories				 
	     Program management 				 
	     Risk assessment					 
	     Risk management					 
	     Cost estimates					 
	     Program costs					 
	     Program goals or objectives			 
	     Black Lung Program 				 
	     Energy Employees Occupational Illness		 
	     Compensation Program				 
                                                                 
	     Radiation Exposure Compensation Program		 
	     Vaccine Injury Compensation Program		 

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GAO-08-628T

   

     * [1]Background
     * [2]The Structure of the Programs Varies Significantly
     * [3]Actual Costs of Benefits Paid Exceeded Initial Cost Estimate
     * [4]The Number of Claims Filed Generally Exceeded Initial Estima
     * [5]Conclusions
     * [6]GAO Contact and Staff Acknowledgments

          * [7]Order by Mail or Phone

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Testimony: 

Before Congressional Subcommittees, Committee on Judiciary, U.S. House 
of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EDT: 

Tuesday, April 1, 2008: 

Federal Compensation Programs: 

Perspectives on Four Programs for Individuals Injured by Exposure to 
Harmful Substances: 

Statement of Anne-Marie Lasowski, Acting Director, Education, 
Workforce, and Income Security Issues: 

Federal Compensation Programs: 

GAO-08-628T: 

GAO Highlights: 

Highlights of GAO-08-628T, a testimony to Congressional Subcommittees. 

Why GAO Did This Study: 

The U.S. federal government has played an ever-increasing role in 
providing benefits to individuals injured as a result of exposure to 
harmful substances. Over the years, it has established several key 
compensation programs, including the Black Lung Program, the Vaccine 
Injury Compensation Program (VICP), the Radiation Exposure Compensation 
Program (RECP), and the Energy Employees Occupational Illness 
Compensation Program (EEOICP), which GAO has reviewed in prior work. 

Most recently, the Congress introduced legislation to expand the 
benefits provided by the September 11th Victim Compensation Fund of 
2001. As these changes are considered, observations about other federal 
compensation programs may be useful. In that context, GAOï¿½s testimony 
today will focus on four federal compensation programs, including (1) 
the structure of the programs; (2) the cost of the programs through 
fiscal year 2004, including initial cost estimates and the actual costs 
of benefits paid, and administrative costs; and (3) the number of 
claims filed and factors that affect the length of time it takes to 
finalize claims and compensate eligible claimants. 

To address these issues, GAO relied on its 2005 report on four federal 
compensation programs. As part of that work, GAO did not review the 
September 11th Victim Compensation Fund of 2001. 

What GAO Found: 

The four federal compensation programs GAO reviewed in 2005 were 
designed to compensate individuals injured by exposure to harmful 
substances. However, the structure of these programs differs 
significantly in key areas such as the agencies that administer them, 
their funding, benefits paid, and eligibility. For example, although 
initially funded through annual appropriations, the Black Lung Program 
is now funded by a trust fund established in 1978 financed by an excise 
tax on coal and supplemented with additional funds. In contrast, EEOICP 
and RECP are completely federally funded. Since the inception of the 
programs, the federal governmentï¿½s role has increased and all four 
programs have been expanded to provide eligibility to additional 
categories of claimants, cover more medical conditions, or provide 
additional benefits. 

As the federal role for these four programs has grown and eligibility 
has expanded, so have the costs. Total benefits paid through fiscal 
year 2004 for two of the programsï¿½the Black Lung Program and 
RECPï¿½significantly exceeded their initial estimates for various 
reasons. The initial estimate of benefits for the Black Lung Program 
developed in 1969 was about $3 billion. Actual benefits paid through 
1976ï¿½the date when the program was initially to have endedï¿½totaled over 
$4.5 billion and, benefits paid through fiscal year 2004 totaled over 
$41 billion. Actual costs for the Black Lung Program significantly 
exceeded the initial estimate for several reasons, including (1) the 
program was initially set up to end in 1976 when state workersï¿½ 
compensation programs were to have provided these benefits to coal 
miners and their dependents, and (2) the program has been expanded 
several times to increase benefits and add categories of claimants. For 
RECP, the costs of benefits paid through fiscal year 2004 exceeded the 
initial estimate by about $247 million, in part because the original 
program was expanded to include additional categories of claimants. In 
addition, the annual administrative costs for the programs varied, from 
approximately $3.0 million for RECP to about $89.5 million for EEOICP 
for fiscal year 2004. 

Finally, the number of claims filed for three of the programs 
significantly exceeded the initial estimates, and the structure of the 
programs affected the length of time it took to finalize claims and 
compensate eligible claimants. For the three programs for which initial 
estimates were available, the number of claims filed significantly 
exceeded the initial estimates. In addition, the way the programs were 
structured, including the approval process and the extent to which the 
programs allow claimants and payers to appeal claims decisions in the 
courts, affected how long it took to finalize the claims. Some of the 
claims have taken years to finalize. For example, it can take years to 
approve some EEOICP claims because of the lengthy process required for 
one of the agencies involved in the approval process to determine the 
levels of radiation to which claimants were exposed. In addition, 
claims for benefits provided by programs in which the claims can be 
appealed can take a long time to finalize. 

To view the full product, including the scope and methodology, click on 
[hyperlink,http://www.gao.gov/cgi-bin/getrpt?GAO-08-628T]. For more 
information, contact Anne-Marie Lasowski at (202) 512-7215 or 
[email protected]. 

[End of section] 

Chairs, Ranking Members, and Members of the Subcommittees: 

I am pleased to be here as you discuss important issues related to 
compensation for individuals injured as a result of the terrorist 
attack on the World Trade Center in 2001. After the collapse of the WTC 
buildings, nearly 3,000 people died, and an estimated 250,000 to 
400,000 people who lived, worked, or attended school in the vicinity 
were affected.[Footnote 1] An estimated 40,000 people responded to the 
attack, including New York City Fire Department personnel and other 
government and private-sector workers and volunteers from New York and 
other locations across the nation. These responders, as they took part 
in various rescue, recovery, and cleanup activities in the days, weeks, 
and months following the attack, were exposed to numerous physical 
hazards and environmental toxins. 

The federal government has played an increasing role in providing 
benefits to individuals injured as result of exposure to harmful 
substances since 1969 when the Congress established the Black Lung 
Program as a temporary federal program to provide benefits for coal 
miners disabled by pneumoconiosis (black lung disease). Although the 
Black Lung Program was initially designed to end in 1976 when state 
workers' compensation programs were to provide these benefits, it was 
amended to make it an ongoing federal program. Since that time, the 
Congress has established several compensation programs to provide 
benefits to individuals injured by exposure to hazardous substances 
such as radiation, and the role of the federal government in many of 
these programs has expanded over time. Most recently, legislative 
proposals have been introduced in the House that would expand the 
benefits provided by the September 11th Victim Compensation Fund of 
2001. 

My testimony is based on work GAO reported in November 2005 on four 
federal compensation programs: the Black Lung Program, the Vaccine 
Injury Compensation Program (VICP), the Radiation Exposure Compensation 
Program (RECP), and the Energy Employees Occupational Illness 
Compensation Program (EEOICP).[Footnote 2] My remarks will focus on (1) 
the structure of these programs; (2) the cost of the programs through 
fiscal year 2004, including initial cost estimates and the actual costs 
of benefits paid, and administration costs; and (3) claims, including 
the number of claims filed and factors that affect the length of time 
it takes the agencies to finalize claims and compensate eligible 
claimants. We did not review the September 11th Victim Compensation 
Fund of 2001 as part of this testimony. 

We examined information on the four programs from their inception 
through the end of fiscal year 2004. We obtained initial estimates of 
the anticipated costs of benefits, as available, and the actual costs 
of benefits paid from the date the programs were established through 
the end of fiscal year 2004. In addition, we obtained information on 
the total number of claims completed as of the end of fiscal year 2004 
and reviewed information on the time it took the agencies to finalize 
claims and compensate eligible claimants. That work was completed in 
accordance with generally accepted government auditing standards. 

In summary, in 2005 we reported that: 

* All four federal programs we reviewed were designed to compensate 
individuals injured by exposure to harmful substances. However, the 
structure of these programs differs significantly in key areas such as 
the agencies that administer them, their funding, benefits paid, and 
eligibility criteria. Since their inception, the federal role has 
increased and all four programs have expanded to provide eligibility to 
additional categories of claimants, cover more medical conditions, or 
provide additional benefits. 

* As the federal role for these four programs has grown and eligibility 
has expanded, so have the costs. Actual costs for benefits paid through 
fiscal year 2004 significantly exceeded the initial estimates for two 
of the programs: the Black Lung Program and RECP. In addition, the 
annual administrative costs for the four programs for fiscal year 2004 
ranged from approximately $3.0 million for RECP to about $89.5 million 
for EEOICP. 

* Finally, the number of claims filed through 2004 for the three 
programs for which initial estimates were available significantly 
exceeded the initial estimates. In addition, the structure of the 
programs, including the approval process and the extent to which the 
programs allow claimants and payers to appeal claims decisions in the 
courts, affected how long it took to finalize claims and compensate 
eligible claimants. In some cases, it took years for some of the 
agencies responsible for processing them to finalize the claims. 

Background: 

The four federal programs we examined were established from 1969 
through 2000 for various purposes. 

* The Black Lung Program was established in 1969 as a temporary federal 
program to provide benefits to coal miners disabled because of 
pneumoconiosis (black lung disease), and their dependents, until 
adequate state programs could be established. It has been amended 
several times, effectively restructuring all major aspects of the 
program and making it an ongoing federal program. 

* VICP was authorized in 1986 to provide compensation to individuals 
for vaccine-related injury or death. According to the Department of 
Health and Human Services (HHS), the agency that administers the 
program, it was established to help stabilize manufacturers' costs and 
ensure an adequate supply of vaccines. Concerns expressed by various 
groups contributed to the program's establishment, including concerns 
from parents about harmful side effects of certain vaccines, from 
vaccine producers and health care providers about liability, and from 
the public about shortages of vaccines. 

* RECP was established in 1990 to make partial restitution to on-site 
participants, uranium miners, and nearby populations who (1) were 
exposed to radiation from atmospheric nuclear testing or as a result of 
their employment in the uranium mining industry and (2) developed 
certain related illnesses. 

* EEOICP was established in 2000 to provide payments to nuclear weapons 
plant workers injured from exposure to radiation or toxic substances, 
or their survivors. Initially, some qualifying workers were paid 
federal benefits and others were provided assistance in obtaining 
benefits from state workers' compensation programs. In 2004, the 
federal government assumed total responsibility for benefits paid under 
the program. 

The Structure of the Programs Varies Significantly: 

The purpose of the four federal compensation programs we examined is 
similar in that they all were designed to compensate individuals 
injured by exposure to harmful substances. However, how the programs 
are structured varies significantly, including who administers the 
program, how they are funded, the benefits provided, and who is 
eligible for benefits. For example: 

Administration: 

Several federal agencies are responsible for the administration of the 
programs: the Department of Labor (DOL) administers the Black Lung 
Program and EEOICP; the Department of Justice (DOJ) administers RECP 
and shares administration of VICP with HHS and the Court of Federal 
Claims. In addition, the National Institute for Occupational Safety and 
Health and DOJ provide support to DOL in administering EEOICP. 

Responsibility for administering two of the programs has changed since 
their inception. Specifically, claims for the Black Lung Program were 
initially processed and paid by the Social Security Administration but, 
as designed, DOL began processing claims in 1973 and took over all 
Black Lung Program claims processing in 1997. In 2002, the Congress 
officially transferred all legal responsibility and funding for the 
program to DOL. In addition, administration of EEOICP was initially 
shared between the Departments of Energy and DOL but, in 2004, DOL was 
given full responsibility for administering the program and paying 
benefits. 

Funding: 

Funding of the four programs varies. Although initially funded through 
annual appropriations, the Black Lung Program is now funded by a trust 
fund established in 1978 that is financed by an excise tax on coal and 
supplemented with additional funds. The tax, however, has not been 
adequate to fund the program; at the time of our review, the fund had 
borrowed over $8.7 billion from the federal treasury. For the VICP, 
claims involving vaccines administered before October 1, 1988, were 
paid with funds appropriated annually through fiscal year 1999. Claims 
involving vaccines administered on or after October 1, 1988, are paid 
from a trust fund financed by a per dose excise tax on each vaccine. 
For example, the excise tax on the measles, mumps, and rubella vaccine 
at the time of our review was $2.25.[Footnote 3] EEOICP and RECP are 
completely federally funded. Although RECP was initially funded through 
an annual appropriation, in 2002 the Congress made funding for RECP 
mandatory and provided $655 million for fiscal years 2002 through 2011. 
EEOICP is funded through annual appropriations. 

Benefits: 

Benefits also vary among the four programs. Some of the benefits they 
provide include lump sum compensation payments and payments for lost 
wages, medical and rehabilitation costs, and attorney's fees. For 
example, at the time of our review, when claims were approved, VICP 
paid medical and related costs, lost earnings, legal expenses, and up 
to $250,000 for pain and suffering for claims involving injuries, and 
up to $250,000 for the deceased's estate, plus legal expenses, for 
claims involving death. The Black Lung Program, in contrast, provided 
diagnostic testing for miners; monthly payments based on the federal 
salary scale for eligible miners or their survivors; medical treatment 
for eligible miners; and, in some cases, payment of claimants' attorney 
fees. 

Eligibility: 

The groups who are eligible for benefits under the four federal 
programs and the proof of eligibility required for each program vary 
widely. The Black Lung Program covers coal miners who show that they 
developed black lung disease and are totally disabled as a result of 
their employment in coal mines, and their survivors. Claimants must 
show that the miner has or had black lung disease, the disease arose 
out of coal mine employment, and the disease is totally disabling or 
caused the miner's death. VICP covers individuals who show that they 
were injured by certain vaccines and claimants must show, among other 
things, that they received a qualifying vaccine. RECP covers some 
workers in the uranium mining industry and others exposed to radiation 
during the government's atmospheric nuclear testing who developed 
certain diseases. Claimants must show that they were physically present 
in certain geographic locations during specified time periods or that 
they participated on-site during an atmospheric nuclear detonation and 
developed certain medical conditions. Finally, EEOICP covers workers in 
nuclear weapons facilities during specified time periods who developed 
specific diseases. 

Actual Costs of Benefits Paid Exceeded Initial Cost Estimates for Two 
Programs and Annual Administrative Costs Varied: 

At the time of our review, total benefits paid for two of the programs-
-the Black Lung Program and RECP--significantly exceeded their initial 
estimates. An initial cost estimate was not available for VICP. The 
initial estimate of benefits for the Black Lung Program developed in 
1969 was about $3 billion. Actual benefits paid through 1976--the date 
when the program was initially to have ended--totaled over $4.5 billion 
and benefits paid through fiscal year 2004 totaled over $41 billion. 
For RECP, the costs of benefits paid through fiscal year 2004 exceeded 
the initial estimate by about $247 million. 

Table 1 shows the initial program estimates and actual costs of 
benefits paid through fiscal year 2004 for the four programs. 

Table 1: Initial Estimates and Actual Benefits Paid as of September 30, 
2004: 

Program: Black Lung; 
Initial Estimate (billion): $2.980; 
Actual Benefits Paid as of September 30, 2004 (billion): $41.039. 

Program: VICP[A]; 
Initial Estimate (billion): Not available; 
Actual Benefits Paid as of September 30, 2004 (billion): $1.440. 

Program: RECP; 
Initial Estimate (billion): $0.540; 
Actual Benefits Paid as of September 30, 2004 (billion): $0.787. 

Program: EEOICP (Part B only); 
Initial Estimate (billion): $0.951; 
Actual Benefits Paid as of September 30, 2004 (billion): $0.952. 

Source: Initial estimates: DOL Black Lung) and Congressional Budget 
Office (RECP and EEOICP). Actual benefits paid: DOL (Black Lund and 
EEOICP), HHS (VICP), and DOJ (RECP). 

[A] An initial estimate for VICP was not available. 

[End of table] 

Actual costs for the Black Lung Program have significantly exceeded the 
initial estimate for several reasons, including (1) the program was 
initially set up to end in 1976 when state workers' compensation 
programs were to have provided these benefits to coal miners and their 
dependents, and (2) the program has been expanded several times to 
increase benefits and add categories of claimants. The reasons the 
actual costs of RECP have exceeded the initial estimate include the 
fact that the original program was expanded to provide benefits to 
additional categories of claimants, including uranium miners who worked 
above ground, ore transporters, and mill workers. 

Although the costs of EEOICP benefits paid through fiscal year 2004 
were close to the initial estimate, these costs were expected to rise 
substantially because of changes that were not anticipated at the time 
the estimate was developed. For example, payments that were originally 
supposed to have been made by state workers' compensation programs are 
now paid by the federal government. In addition, at the time of our 
review, a large proportion of the claims filed (45 percent) had not 
been finalized.[Footnote 4] 

At the time of our review, the annual administrative costs of the four 
programs varied. For fiscal year 2004, they ranged from approximately 
$3.0 million for RECP to about $89.5 million for EEOICP (see table 2). 

Table 2: Annual Administrative Costs for Fiscal Year 2004: 

Program: Black Lung; 
Annual Costs (million): $55.8. 

Program: VICP; 
Annual Costs (million): $10.5. 

Program: RECP; 
Annual Costs (million): $3.0. 

Program: EEOICP (Part B only); 
Annual Costs (million): $89.5. 

Source: DOL (Black Lung Program and EEOICP), HHS (VICP) and DOJ (RECP). 

[End of table] 

The Number of Claims Filed Generally Exceeded Initial Estimates and 
Program Structure Affected the Time It Took to Finalize Claims: 

The number of claims filed for the three programs for which initial 
estimates were available significantly exceeded the initial estimates 
and the structure of the programs, including the approval process and 
the extent to which the programs allow claimants and payers to appeal 
claims decisions in the courts, affected the amount of time it took to 
finalize claims and compensate eligible claimants. The number of claims 
filed through fiscal year 2004 ranged from about 10,900 for VICP to 
about 960,800 for the Black Lung Program. The agencies responsible for 
processing claims have, at various times, taken years to finalize some 
claims, resulting in some claimants waiting a long time to obtain 
compensation. 

Table 3 shows the initial estimates of the number of claims anticipated 
and the actual number of claims filed for each program through fiscal 
year 2004. 

Table 3: Initial Estimates and Actual Number of Claims Filed as of 
September 30, 2004: 

Program: Black Lung; 
Initial Estimate of Number of Claims Anticipated (thousand): 520.0; 
Actual Number of Claims Filed as of September 30, 2004 (thousand): 
960.8. 

Program: VICP[A]; 
Initial Estimate of Number of Claims Anticipated (thousand): Not 
available; 
Actual Number of Claims Filed as of September 30, 2004 (thousand): 
10.9. 

Program: RECP; 
Initial Estimate of Number of Claims Anticipated (thousand): 13.0; 
Actual Number of Claims Filed as of September 30, 2004 (thousand): 
20.6. 

Program: EEOICP (Part B only); 
Initial Estimate of Number of Claims Anticipated (thousand): 13.4; 
Actual Number of Claims Filed as of September 30, 2004 (thousand): 
59.5. 

Source: The initial estimate for the Black Lung Program is from DOL, 
the estimate for RECP is from DOJ and includes claims expected through 
2012, and the estimate for EEOICP is from the Congressional Budget 
Office and included claims expected through 2010. The actual numbers of 
claims filed are from DOL (Black Lung Program and EEOICP), HHS (VICP), 
and DOJ (RECP). 

[A] An initial estimate for VICP was not available. 

[End of table] 
Factors that affected the amount of time it took the agencies to 
finalize claims include statutory and regulatory requirements for 
determining eligibility, changes in eligibility criteria that increase 
the volume of claims, the agency's level of experience in handling 
compensation claims, and the availability of funding. For example, in 
fiscal year 2000, when funds appropriated for RECP were not sufficient 
to pay all approved claims, DOJ ceased making payments until the 
following fiscal year when funds became available. 

The approval process and the extent to which programs allow claimants 
and payers to appeal claims decisions also affected the time it took to 
process claims. For example, it can take years to approve some EEOICP 
claims because of the lengthy process required for one of the agencies 
involved in the approval process to determine the levels of radiation 
to which claimants were exposed. In addition, claims for benefits 
provided by programs in which the claims can be appealed can take a 
long time to finalize. For example, claimants whose Black Lung Program 
claims are denied may appeal their claims in the courts. At the time of 
our review, a Department of Labor official told us that it took about 9 
months to make an initial decision on a claim and at least 3 years to 
finalize claims that were appealed. 

Conclusions: 

The federal government has played an important and growing role in 
providing benefits to individuals injured by exposure to harmful 
substances. All four programs we reviewed have been expanded to provide 
eligibility to additional categories of claimants, cover more medical 
conditions, or provide additional benefits. As the programs changed and 
grew, so did their costs. Initial estimates for these programs were 
difficult to make for various reasons, including the difficulty of 
anticipating how they would change over time and likely increases in 
costs such as medical expenses. Decisions about how to structure 
compensation programs are critical because they ultimately affect the 
costs of the programs and how quickly and fairly claims are processed 
and paid. 

This concludes my prepared statement. I would be pleased to respond to 
any questions that you or the Members of the Subcommittees may have. 

GAO Contact and Staff Acknowledgments: 

For further information, please contact Anne-Marie Lasowski at (202) 
512-7215. Individuals making key contributions to this testimony 
include Revae Moran, Cady Panetta, Lise Levie, and Roger Thomas. 

[End of section] 

Footnotes: 

[1] See GAO, September 11: Monitoring of World Trade Center Health 
Effects Has Progressed, but Not for Federal Responders, GAO-05-1020T 
(Washington, D.C. Sept. 10, 2005). 

[2] See GAO, Federal Compensation Programs: Perspectives on Four 
Programs, GAO-06-230, (Washington, D.C.: Nov. 18, 2005). 

[3] Three doses were required and the excise tax on each dose was 
$0.75. 

[4] This figure includes only claims filed under Part B of EEOICP. 

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