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93-655 PDF 2004

EXAMINING THE FEDERAL 

EMPLOYEES’ COMPENSATION 

ACT AND ITS BENEFITS FOR 

WORKERS

HEARING

BEFORE THE

SUBCOMMITTEE ON WORKFORCE PROTECTIONS

OF THE

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

May 13, 2004

Serial No. 108-59

Printed for the use of the Committee on Education and the Workforce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

or 

Committee address: http://edworkforce.house.gov 

(II)

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice Chairman 

Cass Ballenger, North Carolina 

Peter Hoekstra, Michigan 

Howard P. ‘‘Buck’’ McKeon, California 

Michael N. Castle, Delaware 

Sam Johnson, Texas 

James C. Greenwood, Pennsylvania 

Charlie Norwood, Georgia 

Fred Upton, Michigan 

Vernon J. Ehlers, Michigan 

Jim DeMint, South Carolina 

Johnny Isakson, Georgia 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Patrick J. Tiberi, Ohio 

Ric Keller, Florida 

Tom Osborne, Nebraska 

Joe Wilson, South Carolina 

Tom Cole, Oklahoma 

Jon C. Porter, Nevada 

John Kline, Minnesota 

John R. Carter, Texas 

Marilyn N. Musgrave, Colorado 

Marsha Blackburn, Tennessee 

Phil Gingrey, Georgia 

Max Burns, Georgia 

George Miller, California 

Dale E. Kildee, Michigan 

Major R. Owens, New York 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Ron Kind, Wisconsin 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Betty McCollum, Minnesota 

Danny K. Davis, Illinois 

Ed Case, Hawaii 

Rau ́l M. Grijalva, Arizona 

Denise L. Majette, Georgia 

Chris Van Hollen, Maryland 

Tim Ryan, Ohio 

Timothy H. Bishop, New York

Paula Nowakowski, Staff Director 

John Lawrence, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

CHARLIE NORWOOD, Georgia, Chairman

Judy Biggert, Illinois, Vice Chairman 

Cass Ballenger, North Carolina 

Peter Hoekstra, Michigan 

Johnny Isakson, Georgia 

Ric Keller, Florida 

John Kline, Minnesota 

Marsha Blackburn, Tennessee 

John A. Boehner, Ohio, ex officio 

Major R. Owens, New York 

Dennis J. Kucinich, Ohio 

Lynn C. Woolsey, California 

Denise L. Majette, Georgia 

Donald M. Payne, New Jersey 

Timothy H. Bishop, New York 

George Miller, California, ex officio 

(III)

C O N T E N T S 

Page

Hearing held on May 13, 2004 ............................................................................... 1

Statement of Members: 

Greenwood, Hon. James C., a Representative in Congress from the State 

of Pennsylvania ............................................................................................. 4

Norwood, Hon. Charlie, Chairman, Subcommittee on Workforce Protections, Committee on Education and the Workforce ................................... 2

Prepared statement of ............................................................................... 3

Owens, Hon. Major R., Ranking Member, Subcommittee on Workforce 

Protections, Committee on Education and the Workforce ......................... 4

Statement of Witnesses: 

Carney, Susan M., Human Relations Director, American Postal Workers 

Union, Washington, DC ................................................................................ 17

Prepared statement of ............................................................................... 19

Hallmark, Shelby, Director, Office of Workers’ Compensation Programs, 

Employment Standards Administration, U.S. Department of Labor, 

Washington, DC ............................................................................................ 5

Prepared statement of ............................................................................... 7

Hunt, Dr. H. Allan, Kalamazoo, MI ................................................................ 11

Prepared statement of ............................................................................... 13

Lewis, Elliot P., Assistant Inspector General for Audit, Office of the 

Inspector General, U.S. Department of Labor, Washington, DC .............. 22

Prepared statement of ............................................................................... 24

(1)

EXAMINING THE FEDERAL EMPLOYEES’ 

COMPENSATION ACT AND ITS BENEFITS 

FOR WORKERS 

Thursday, May 13, 2004

U.S. House of Representatives 

Subcommittee on Workforce Protections 

Committee on Education and the Workforce 

Washington, DC 

The Subcommittee met, pursuant to call, at 1:43 p.m., in room 

2175, Rayburn House Office Building, Hon. Charlie Norwood 

[Chairman of the Subcommittee] Presiding. 

Present: Representatives Norwood, Biggert, Owens, and Payne. 

Also Present: Representative Greenwood. 

Staff Present: Molly McLaughlin Salmi, Deputy Director of 

Workforce Policy; Donald McIntosh, Staff Assistant; Stacey Dion, 

Professional Staff Member; Kevin Frank, Professional Staff Member; Jim Paretti, Workforce Policy Counsel; Deborah L. Samantar, 

Committee Clerk; Todd Shriber, Communications Assistant; Kevin 

Smith, Communications Counselor; Ann Owens, Minority Clerk; 

Marsha Renwanz, Minority Legislative Associate for Labor; Peter 

Rutledge, Minority Senior Legislative Associate for Labor. 

Chairman NORWOOD. A quorum being present, the Subcommittee 

on Workforce Protections of the Committee of Education and the 

Workforce will come to order. 

We are meeting today—I apologize to you now, I have a little allergy. I am just going to say it once, I apologize. 

We are meeting today to hear testimony on examining the Federal Employees’ Compensation Act and its benefit for workers. 

Under the Committee Rule 12(b), opening statements are limited 

to the Chairman and the Ranking Minority Member of the Subcommittee. Therefore, if other Members have statements, they may 

be included in the hearing record. 

With that, I ask unanimous consent for the hearing record to remain open 14 days to allow Members’ statements and other extraneous material referenced during the hearing to be submitted in 

the official hearing record. 

Without objection, so ordered. 

2

STATEMENT OF HON. CHARLIE NORWOOD, CHAIRMAN, SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE 

ON EDUCATION AND THE WORKFORCE 

Chairman NORWOOD. The Subcommittee is meeting today to examine the Federal Employees’ Compensation Act, otherwise known 

as FECA, which is the comprehensive workers’ compensation Law 

for Federal Employees. 

I want to say up front, I view these types of hearings as a great 

opportunity for Members of Congress to learn. And that really is 

what this hearing is all about, for us to increase our knowledge. 

The law is designed to provide important benefits and services to 

Federal workers who have suffered economic hardship because of 

a work-related injury or death. 

Today’s hearing will allow us to examine the overall effectiveness 

of the FECA program and to look at whether the claims processing, 

communication, and payment procedures are effective in meeting 

the needs of injured workers and furthering the goals of this entire 

program. 

I would like to note that we are not here to propose any particular changes to the program at this point. I believe, and so does 

our Chairman believe, that that would be premature at this point. 

We need to learn more about how the program operates and its 

overall effectiveness on behalf of workers before considering any 

changes. 

We also need to discuss recent changes that have been made to 

the program, learn about the issues that have been identified by 

the Office of the Inspector General and see how the Office of Workers’ Compensation Programs is today addressing these issues. 

OWCP plays a very important function in administering the 

FECA program, providing wage-loss benefits and medical services 

to injured Federal workers and helping them return to productive 

work when they are medically able to do so. 

During the last FECA oversight hearing held in October 2000, 

this Subcommittee looked at how OWCP communicates with injured workers, employing agencies, and medical and other service 

providers who are involved in treating Federal workers. 

I know that the Office of the Inspector General previously made 

a number of recommendations on how OWCP could improve the 

program and enhance customer service. It is my understanding 

that OWCP has been receptive to many of these recommendations 

and has implemented changes that respond to the OIG’s concerns. 

Nonetheless, there is always room for improvement. 

The Subcommittee continues to hear complaints from claimants, 

medical providers and other congressional offices about the difficulty in communicating with OWCP. One of my colleagues from 

Texas recently forwarded a letter to me from a constituent who is 

a physician with experience in treating injured Federal workers. 

The physician pointed out that he has now stopped seeing new patients with Federal workers’ compensation claims, as have many of 

his colleagues, because of the repeated delays and denials for surgery requests. In his experience, the typical delays for surgery approvals run anywhere from 6 months to a full year. 

And if that is a fact and going on very much, that is just totally 

unacceptable. These kinds of delays can impact the entire system 

3

by significantly increasing the amount of time that workers remain 

off the job. While I know that the agency receives and processes a 

vast amount of mail, medical bills and phone calls each year, the 

program must continue to improve its performance in these areas 

to benefit workers who need these critical services. 

I would like to thank the witnesses for being available to share 

their expertise with us today. We look forward to your testimony. 

Finally, I would like to recognize my colleague from the Full 

Committee, Congressman Greenwood, who has had a long-standing 

interest in this program and is joining us today. 

Mr. Greenwood, we appreciate that. And I am going to yield Congressman Greenwood the remainder of my time. 

[The prepared statement of Chairman Norwood follows:]

Statement of Hon. Charlie Norwood, Chairman, Subcommittee on 

Workforce Protections, Committee on Education and the Workforce 

The Subcommittee is meeting today to examine the Federal Employees’ Compensation Act, otherwise known as FECA, which is the comprehensive workers’ compensation law for federal employees. 

The law is designed to provide important benefits and services to federal workers 

who have suffered economic hardship because of a work-related injury or death. 

Today’s hearing will allow us to examine the overall effectiveness of the FECA 

program and to look at whether the claims processing, communication, and payment 

procedures are effective in meeting the needs of injured workers and furthering the 

goals of the program. 

I would like to note that we are not here to propose any particular changes to 

the program. That would be premature. 

We need to learn more about how the program operates and its overall effectiveness on behalf of workers before considering any changes. 

We also need to discuss recent changes that have been made to the program, 

learn about the issues that have been identified by the Office of the Inspector General (OIG), and see how the Office of Workers’ Compensation Programs (OWCP) is 

addressing these issues. 

OWCP plays a very important function in administering the FECA program—providing wage loss benefits and medical services to injured federal workers and helping them return to productive work when they are medically able to do so. 

During the last FECA oversight hearing held in October 2000, this Subcommittee 

looked at how OWCP communicates with injured workers, employing agencies, and 

medical and other service providers who are involved in treating federal workers. 

I know that the Office of the Inspector General previously made a number of recommendations on how OWCP could improve the program and enhance customer 

service. 

It is my understanding that OWCP has been receptive to many of those recommendations and has implemented changes that respond to the OIG’s concerns. 

Nonetheless, there is still room for improvement. 

The Subcommittee continues to hear complaints from claimants, medical providers and other Congressional offices about the difficulty in communicating with 

OWCP. One of my colleagues from Texas recently forwarded a letter to me from a 

constituent who is a physician with experience in treating injured federal workers. 

The physician points out that he has now stopped seeing new patients with federal workers’ compensation claims, as have many of his colleagues, because of the 

repeated delays and denials for surgery requests. In his experience, the typical 

delays for surgery approvals run anywhere from six months to a full year. 

These kinds of delays can impact the entire system by significantly increasing the 

amount of time that workers remain off the job. While I know that the agency receives and processes a vast amount of mail, medical bills and phone calls each year, 

the program must continue to improve its performance in these areas to benefit 

workers who need these critical services. 

I would like to thank the witnesses for being available to share their expertise 

with us today. We look forward to your testimony. Finally, I would like to recognize 

my colleague from the Full Committee, Congressman Greenwood, who has had a 

long-standing interest in this program and is joining us today. 

4

STATEMENT OF HON. JAMES C. GREENWOOD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA 

Mr. GREENWOOD. Thank you, Mr. Chairman very much, both for 

the courtesy of allowing me to participate in this hearing and for 

the opportunity to make a brief statement. We were here 7 years 

ago. I was reviewing the record of that hearing from 1997, and I 

am very eager to see what has changed. 

This is a program that obviously can fail in one of two ways. One 

of those is to not adequately take care of Federal workers who have 

been injured and need help from the program to recover and to 

exist. 

And the other is to have Federal workers take advantage of the 

program and remain in the program where, in many instances, 

they can have more net take-home pay than they did when they 

were working and, without proper oversight and follow-through, 

can remain on the rolls for a lifetime and, in fact, can go out and 

get second employment. We all know that that happens. I don’t 

know that anybody has ever been able to successfully quantify the 

extent to which that happens, but we know that, anecdotally, it is 

a horrendous situation. 

So I am eager to see how things have changed in the last 7 

years. Thank you, Mr. Chairman. 

Chairman NORWOOD. Thank you Mr. Greenwood. 

Now I yield to the distinguished Ranking Minority Member from 

New York, Mr. Owens, for whatever opening statement he wishes 

to make. 

STATEMENT OF HON. MAJOR OWENS, RANKING MEMBER, SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE 

ON EDUCATION AND THE WORKFORCE 

Mr. OWENS. Thank you, Mr. Chairman. I applaud the fact that 

you said this is an education process for Members of Congress as 

much as anything else. 

It is also an oversight hearing on the Federal Employees’ Compensation Act. As we know from the Department of Labor’s own 

Web site, FECA is an extremely vital program. It provides essential protections for Federal workers in the event of workplace injuries and illness. 

The devastating terrorist attack on Federal workers in Oklahoma 

City provided a case study of how pivotal this program is in assisting surviving relatives of workers killed on the job. Likewise, services provided under FECA to those Federal workers seriously injured in the Oklahoma City bomb attack made the difference between rapid recovery and dangerous setbacks. 

Under this program, nurses visited the injured workers in the 

hospital, arranged the prompt support for critical medical care and 

managed the coordination of other urgent services. Oklahoma City 

was a shining example of both the importance of this program and 

how seamlessly it can work. 

I am, by all means, open to hearing suggestions today about how 

to make improvements in what the Labor Department’s Web site 

already describes as a highly cost-effective self-insurance system. 

However, I would be strongly opposed to any effort to use this oversight hearing as a mechanism for putting FECA benefits on the 

5

chopping block. Oklahoma City taught us how the FECA program 

can at times literally mean the difference between life and death. 

Let us not forget that we have Federal civilian employees in 

harm’s way in Iraq and Afghanistan now. If injured or killed on the 

job, FECA will be central to them and their dependents. 

I look forward to hearing the witnesses at this hearing, Mr. 

Chairman. 

Chairman NORWOOD. Thank you, Mr. Owens. 

I want to assure you, this is not about a chopping block for anything. It is a time for us to see if we can improve and make the 

program better and find out what is going on. I appreciate your 

statement. 

And now I would like to begin with our panel of witnesses. To 

my colleagues here, I would like to introduce you to our witnesses. 

The first one is Mr. Shelby Hallmark, the director of the Office of 

Workers’ Compensation Programs at the Labor Department. 

Thank you folks being here. 

Dr. Alan Hunt, the assistant executive director of the Upjohn Institute for Employment Research. 

Dr. Hunt, thank you. 

Ms. Susan Carney, human resources director at the American 

Postal Workers Union. 

Ms. Carney, thank you for taking time. 

Mr. Elliot Lewis, the assistant inspector general for audit at the 

Labor Department’s Office of the Inspector General. 

Mr. Lewis, we appreciate you giving us this time. 

Before our witnesses begin their testimony, I would like to remind our Members that we will ask questions after the entire 

panel has testified. In addition, Committee Rule Two imposes a 5-

minute limit on all questions. 

For the panel, I bring your attention to the light that is in front 

of you. When that thing lights up yellow, that means red is pretty 

close by. I would be grateful if you would sort of cut it off at that 

point. It always embarrasses me to cut our guests off, and I don’t 

like to do that. So if you would help me with that, I would be very 

grateful. 

With that, Mr. Hallmark, I would like to recognize you now for 

5 minutes for your testimony. 

STATEMENT OF SHELBY HALLMARK, DIRECTOR, OFFICE OF 

WORKERS’ COMPENSATION PROGRAMS, EMPLOYMENT 

STANDARDS ADMINISTRATION, U.S. DEPARTMENT OF 

LABOR, WASHINGTON, DC 

Mr. HALLMARK. Thank you, Mr. Chairman, and Members of the 

Subcommittee. I appreciate the opportunity to come here today to 

talk about the measurable progress that we have made in administering the FECA program and also some of the challenges that 

we see to making it reach its potential as a world-class workers’ 

compensation system. 

FECA covers, as you have said, 3 million Federal workers. Last year, we paid $2.3 billion to about 280,000 individuals. We provided crucial and focused assistance for victims of the 9/11 and anthrax attacks, Oklahoma City and other tragedies and, most recently, to civilian employees in Iraq and elsewhere. 

6

Our goal is to provide that same level of high service to all of 

the 170,000 Federal workers who are injured each year. 

In the past decade, we have worked hard to transform ourselves 

from a bureaucratic organization focused on process, to a proactive 

service delivery organization that is looking at outcomes for customers as well as improving the service quality and containing 

costs for the program as a whole through careful measurement and 

accountability, improved administrative budgets, for which we 

thank the Congress. 

In creative case management strategies and increased cooperation with Federal agencies, we have made real progress toward 

those goals that we set out about 10 years ago. 

My written testimony will provide more details about the 

progress that we have made. And I can only touch on them in the 

time that is given to me today. But I will do a few examples. 

First of all, in the area of communications that you mentioned, 

Mr. Chairman, we have dramatically improved the accessibility 

and responsiveness of our offices to our customers. That was a particular problem in the past. We have established a wide range of 

very specific and challenging goals to address it and to improve 

work there. We know there are continuing problems, and we continue to work really hard. 

We have increased the number of injured workers that we return 

to work each year with assistance almost fourfold over the 10-year 

period. Working case-by-case, we have reduced the average time 

that a serious injury takes a person away from the Federal workplace by over a month in the past 8 years. And we have made a 

whole series of major technological enhancements, including a 

brand-new electronic case-management system, outsourcing and 

centralizing our mail and managing work and our medical bill process and a totally new support IT system, which is coming this summer. 

We have also worked very hard with our Federal counterparts 

with the employing agencies and doubled the speed that they have 

in filing OWCP claims with us. We have been very pleased that the 

President announced a Safety and Health and Return-to-Employment initiative this winter. That SHARE project will focus greatly 

the attention of the entire Federal establishment on these goals. 

All of that has allowed us to achieve almost all of our—achieving 

our different goals. 

As a result, OMB has evaluated the FECA program as moderately effective, the second best score that any Department of 

Labor agency has received. That, we think, is a fair rating for 

where we are right now. It shows some of our progress, and it also 

points us to the things that we need to further improve. 

We are proud of all these achievements, but despite them, the 

costs continue to go up in the FECA program, and return-to-work 

improvements are increasingly difficult. Of the two goals, GPRA 

goals that we did not meet last year were our most important lostproduction-day goals. We cannot make fundamental cuts in those 

goals without addressing the structural problems that are built 

into the statute. 

Return to work following injury, a very difficult task. It can require physical, mental and emotional accommodations. Some emVerDate 0ct 09 2002 10:55 Dec 20, 2004 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 H:\DOCS\93655 EDUWK PsN: NNIXON
7

ployees are so seriously impaired they cannot make that transition. 

But the overwhelming majority of FECA injuries can be overcome. 

When our system provides disincentives to return to work or encourages people to cling to a disability mindset, the difficult transition is slowed or it may not happen at all. And if that happens, if 

those delays occur, then everyone pays—costs to the taxpayers, lost 

productivity to the employing agency and for the workers themselves, and disrupted family lives and diminished self-esteem. All 

too often this happens in our system. And we think we should address that. 

Some of the disincentives that exist to return to work now in the 

FECA system are the following: One, it was mentioned, the augmentation of benefits for dependents, creates a 75 percent tax-free 

benefit that often exceeds take-home pay. No other State system 

provides this level. OPM retirement benefits are far less generous, 

and therefore, thousands of FECA beneficiaries are beyond their 

retirement age. Many believe they have retired on FECA. 

Return to work would mean giving up 75 percent FECA benefits, 

tax-free, at the risk or even the certainty, in some cases, of a lower 

OPM pension at eventual retirement. That gives a powerful disincentive to return to work and results in people staying on the 

rolls for the time that they do. 

The absence of an effective waiting period combined with our 

unique continuation-of-pay feature means that many minor injuries 

which would be excluded in State systems result in time lost from 

work in the FECA system. 

We have improved the administration of the FECA program, but 

we still have many major challenges, especially regarding returnto-work outcomes. We would like to put FECA on an even, more 

positive trajectory for the coming century so that it can provide the 

benefits that we all believe are important. 

The 2005 President’s budget proposes legislation to update benefit structures, strengthen return-to-work incentives and adopt best 

practices of State workers’ comp systems. Those changes combined 

with the administrative initiatives that I have mentioned will serve 

to reduce lost-production days and bring the program into the modern age while maintaining the world class benefit levels and employee-friendly processes and rules that we have now. With relatively modest changes to the system structure, FECA can become 

a model for other systems to emulate. 

I will be glad to answer questions. 

[The prepared statement of Mr. Hallmark follows:]

Statement of Shelby Hallmark, Director, Office of Workers’ Compensation 

Programs, Employment Standards Administration, U.S. Department of 

Labor, Washington, DC 

Chairman Norwood and Members of the Subcommittee: 

My name is Shelby Hallmark. I am the Director of the Office of Workers’ Compensation Programs (OWCP), a component of the Employment Standards Administration, within the Department of Labor. OWCP administers four workers’ compensation programs, of which the Federal Employees’ Compensation Act (FECA) is 

by far the largest. I appreciate the opportunity to discuss the real and measurable 

progress we have made in improving administration of FECA, and the challenges 

that must be addressed if the program is to reach its potential as a world-class 

workers’ compensation system. 

The FECA program covers nearly three million employees. It provides a variety 

of benefits for employees injured in the performance of duty, including payments for 

8

medical care, wage-loss compensation for total or partial disability, schedule awards 

for loss, or loss of use of certain body parts, and assistance in returning to work, 

including vocational rehabilitation. FECA also provides benefits to the survivors of 

Federal employees who die in performance of duty. In fiscal year 2003, the FECA 

program paid over $2.3 billion in benefits to about 280,000 individuals. 

In recent years, we have provided crucial and focused assistance to the victims 

of the September 11, 2001, and anthrax attacks, the bombings of our embassies in 

East Africa, the Oklahoma City tragedy, and most recently to civilian employees 

hurt or killed in Iraq. While most of the injuries we address are less dramatic, 

OWCP endeavors to provide the same high level of service to all injured Federal 

workers. 

Because this protection is critically important to Federal employees, OWCP 

strives to provide benefits to beneficiaries as quickly as possible. For the nearly 

170,000 workers who file notices of new injuries each year, we have maintained a 

consistent record of timely adjudication and prompt processing of wage-loss claims 

and medical bills since the 1980’s. 

The FECA program’s solid record of accomplishment is based on a strategic planning process that started even before the advent of the Government Performance 

and Results Act (GPRA). 

The Past 10 Years: Where We Are Now 

Since 1994, OWCP has focused on return to work, service to injured workers, fiscal integrity, and partnerships with stakeholders. OWCP set goals to move the 

FECA program beyond its traditional role of providing cash benefits, dedicating resources to improving the likelihood that injured workers will recover and return to 

duty as quickly as possible. 

When an employee covered by FECA becomes disabled due to a work-related injury or illness, the program is pledged to restore that worker to gainful employment 

as quickly and completely as is medically appropriate. New disability management 

strategies and strengthened vocational rehabilitation assistance that have been implemented since 1994 characterize this make-whole emphasis. We are especially 

proud of the high number of workers successfully returned to work with our assistance—over 9,200 of the 15,000 referred for intervention last year—nearly a four-fold 

increase over our results in 1994. We are also proud of the 18 percent reduction in 

time lost in serious new cases since 1996—in 2003, the average severe injury case 

resulted in 35 fewer lost . 

We also recognize our fiduciary responsibility to Federal employers and taxpayers. 

Innovative disability case management strategies and effective cost containment 

measures have enabled the program to hold the cost of the FECA program—both 

benefit outlays and administrative costs—to an annual average increase of 4.2 percent over the past ten years. 

At the same time, greater resources have allowed the program to focus on several 

areas that needed attention. These initiatives have started at different times over 

the past decade, but are still in effect and subject to continuous reexamination and 

improvement. For example, careful case management, including the use of contract 

nurses, greatly expanded medical and vocational rehabilitation services, and contract medical scheduling brokers who arrange for second opinion medical examinations, have allowed the program to use its core staff more effectively. 

FECA also has improved its communication with its customers, including injured 

workers, medical providers, and Federal employers. The last time this subcommittee 

held a hearing on FECA there were a number of concerns about the quality of our 

communications with customers (U.S. General Accounting Office, ‘‘Goals and Monitoring Are Needed to Further Improve Customer Communications ,’’ GAO–REPORT 

01–72t, October 3, 2000). Since 2000, the program has undertaken a top-to-bottom 

renovation of its processes for communicating with customers and stakeholders. Investments in personnel and equipment reflect concerted efforts to standardize both 

the information provided and the methods of delivery, so that callers to our 12 district offices will receive clear, consistent and prompt answers to their inquiries. 

OWCP has also made information more readily available through automated means 

via telephone and the Internet, and that access is continually being expanded and 

improved. Later this year the Internet access to FECA case status information will 

be made directly available to our claimants for the first time, using OPM’s ‘‘Employee Express’’ portal. Customer satisfaction is routinely measured and tracked, to 

assess how well these communication and service improvements have worked. In 

2004, we added a GPRA goal to measure our success in this area. These enhancements have resulted in real improvements in accessibility and responsiveness. 

Several major administrative initiatives launched during the past few years have 

provided better support services for injured workers. One of these has been the esVerDate 0ct 09 2002 10:55 Dec 20, 2004 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 H:\DOCS\93655 EDUWK PsN: NNIXON
9

tablishment of a centralized mail operation in 2001, whereby all routine mail and 

bills for the FECA program are directed to a private contractor where the mail is 

scanned, categorized at a high level, and transmitted electronically to the district 

offices. This process has dramatically improved OWCP’s ability to control and manage incoming mail—previously a serious problem for the program. 

In 2003, the program consolidated its medical authorization and bill payment 

processes. Currently, a private contractor processes all medical bills and handles 

treatment authorizations for FECA medical providers and beneficiaries. Although 

there have been start-up problems in implementing this new bill payment system, 

it has already freed up resources in our district offices to better address injured 

workers’ needs and focus on quality adjudication, case management, and communications. When new service standards, programming changes and telephone service 

improvements are fully in place, the new centralized system will provide more consistent, better controlled, and more efficient bill payment services. 

We have also worked closely with employing agencies to encourage faster transmission of notices of injury and claims for compensation from the agencies to 

OWCP. Progress in submitting these forms more quickly yields faster adjudication 

and payment, and fewer customer service problems. More than a quarter of new 

claims are now received via Electronic Data Interchange from the Departments of 

Labor, Defense, Treasury, Transportation, Veterans Affairs, and Homeland Security, 

and that percentage is expected to grow in the future. 

In January, President Bush announced the Safety, Health and Return-to–Employment (SHARE) Initiative, which directs Federal agencies to set goals and track results in four areas: lowering workplace injury and illness case rates; lowering losttime injury and illness case rates; reporting injuries and illnesses in timely fashion; 

and reducing days lost from work injuries and illnesses. In partnership with the Occupational Safety and Health Administration, OWCP is working with agencies to 

develop new strategies for improving safety and health at sites with high injury 

rates, increasing the timeliness of reporting claims through electronic and other 

means, and providing suitable work—all of which will help achieve OWCP’s key 

goal: reducing lost production days. 

Finally, OWCP has made two improvements designed to make claims staff more 

efficient and effective in handling their caseloads. In discussing the central mail operation I mentioned that claims are now scanned and handled electronically. This 

has greatly improved our staff’s ability to quickly access and review new materials, 

and enabled multiple parties to share information quickly and without risk of losing 

files. 

Later this year, a second IT improvement will arrive in the form of iFECS, the 

Integrated Federal Employees’ Compensation System. This fully unified information 

support system will replace the disparate group of legacy programs that OWCP staff 

has used since the 1970’s to process claims actions, make payments, and track results. These legacy systems have required redundant and time-consuming data 

entry by claims examiners, and blocked implementation of critical enhancements 

and modern decision support technology. Together, the electronic case processing, 

central bill payment system, and the new iFECS support system will go a long way 

toward providing a truly state of the art environment for case adjudication and 

management that will expedite the handling of claims and dramatically improve 

productivity and customer service. 

While these initiatives are being implemented, OWCP continues to achieve significant progress toward its challenging GPRA goals. In 2003, the FECA program met 

four of its six GPRA goals, including: savings through management of long-term 

compensation payments (our ‘‘Periodic Roll Management’’ program); rehabilitation of 

Postal Service employees into private sector jobs when they cannot return to work 

at the Postal Service; medical cost containment; and setting a baseline for communication quality. These successes continued a tradition of strong GPRA performance 

by the program, and a commitment to achieving challenging real-world results. 

However, two critical GPRA goals have not been met. While our Quality Case 

Management program continues to be effective, with the average days lost in serious 

new injuries down by 18 percent since 1996, the program missed its two Lost Production Day targets (reducing overall lost production days for the Postal Service and 

for all other agencies). These goals were not met because the total number of new 

wage-loss claims, and days of ‘‘continuation of pay,’’ increased during fiscal year 

2003. OWCP’s disability management efforts, with the help of the employing agencies and the encouragement of the President’s ‘‘SHARE’’ initiative, should allow us 

to improve our performance against these critical lost days goals. 

10

Challenges remain 

Despite our progress to date, there are structural features in the FECA which create, in themselves and in their interplay with civil service retirement law, incentives 

for workers to enter and remain on the long term disability rolls long after they 

could be expected to return to work. Returning to work following a significant injury 

can be a difficult and lengthy process, requiring physical, mental and emotional adjustments for the employee. When a workers’ compensation system adds economic 

disincentives to the picture, that difficult transition occurs more slowly or not at all, 

creating higher costs to the taxpayers, lost productivity to the employing agency, 

and for workers themselves and their families, disrupted lives and diminished selfesteem. 

As currently structured, FECA creates direct disincentives to return-to-work in 

two significant ways. The first and most far-reaching is that while the basic rate 

of FECA compensation, 66 2/3%, is comparable to most state systems, the majority 

of Federal employees receive an augmented benefit, 75%, reflecting at least one dependent. Computed at 75% tax free, FECA benefits frequently exceed the employee’s 

pre-injury take home pay. Few state systems provide any augmentation for dependents, and none approaches the Federal level. 

A second major disincentive to an employee’s recovery and resumption of a Federal career is the disparity between retirement benefits provided by OPM and longterm FECA benefits. Under current law, the thousands of long-term FECA beneficiaries who are over normal retirement age have a choice between Federal retirement system benefits and FECA benefits, but they overwhelmingly elect the latter 

because FECA benefits are typically far more generous. Injured employees who do 

return to work risk the possibility that their retirement income will be less than 

it would have been had they stayed in the FECA system on total disability. Thus 

the FECA and retirement benefit structures intertwine to discourage employees 

from returning to work. 

Other features of FECA have an indirect effect on return to work and the monetary and personal costs of Federal workers’ compensation. For example ,FECA, like 

all state systems, has a waiting day provision whose original intent is to discourage 

the filing of workers’ compensation claims for minor injuries that resolve quickly. 

A waiting period before wage-loss compensation can be paid is virtually universal 

in state systems. In FECA, however, the waiting period is not applied until after 

the worker has received the full 45 days provided under FECA’s unique ‘‘continuation of pay’’ provision, thus defeating its very purpose. The delayed waiting period 

unnecessarily burdens program administration with numerous minor injuries and 

makes the program vulnerable to over-utilization. The figure below shows the 

growth of incoming injury reports after the 1974 amendments inserted the continuation of pay provision and effectively cancelled the impact of waiting days.

In closing, Mr. Chairman, I believe the FECA program is at a critical juncture. 

As I described at the beginning of my remarks, we have worked hard over the past 

decade to enhance service delivery, improve communications, control costs, and provide a prompt, reliable, and cost-effective workers’ compensation benefit for injured 

workers and their employers. Federal agencies have made significant strides toward 

the safety, return-to-work, and timely claim processing goals of the ‘‘SHARE’’ initiative. Overall, the program has made major progress, but we still have major challenges, especially in achieving appropriate return-to-work outcomes. 


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We would like to put the FECA program on an even more positive trajectory for 

the coming century. The fiscal year 2005 Budget’s reproposal of legislation to update 

the benefit structure, adopt best practices of state workers’ compensation systems, 

and strengthen return-to-work incentives will serve to reduce lost production days 

and bring the program into the modern age. With relatively modest changes to the 

system’s structure, FECA can become far more effective, and can be held up as a 

model for other systems to emulate. 

Chairman NORWOOD. Dr. Hunt, you are now recognized for 5 

minutes. 

STATEMENT OF DR. H. ALLAN HUNT, KALAMAZOO, MI 

Dr. HUNT. Thank you, Mr. Chairman. I just want to preface my 

remarks by saying that I speak from 29 years of experience in 

workers’ compensation research but, more specifically, from the experience of being a subject-matter expert in a study funded by the 

Employment Standards Administration last year called the Program Effectiveness Study of the FECA program. 

In my view, the FECA program operates predominantly like an 

exclusive State or provincial workers’ compensation fund for Federal workers. Therefore, I have compared FECA performance with 

both U.S. and Canadian workers’ compensation systems, in other 

words, both private and public workers’ compensation systems. 

I want to focus just on two performance measures here today, 

promptness of payment and disability duration. When workers are 

injured, maintaining an uninterrupted stream of income is obviously one of their major concerns. Figure 1 in my testimony shows 

the promptness of payments results for 12 U.S. States available 

from the Workers’ Compensation Research Institute. 

The typical elapsed time from date of injury to the first income 

replacement payments in those 12 States is 63 days or 2 months. 

Only about 45 percent of wage-loss claims see their first payment 

within 21 days. 

Figure 2 in my testimony shows the same measurement for Canadian provincial systems, promptness of payment ranges from 

about 22 days in Alberta, British Columbia, and Nova Scotia to 50 

days in Prince Edward Island. Average is around 30 to 35 days. 

Thus, the state-of-the-art in promptness of payment is not very 

good, certainly from the worker’s perspective. 

The situation under FECA in which Mr. Hallmark has already 

referred to is not directly comparable because of the continuationof-pay provisions. OWCP sets goals for adjudicating claims postCOP, which amount to 45 days, 90 percent adjudication of traumatic claims and more for non-traumatic, what they call extended 

claims. 

Generally speaking, they achieve those goals. But I don’t regard 

them as very ambitious. Unfortunately, we don’t have a measure 

of the distribution, so I can’t really compare promptness of payment. However, just in scoping out where we are, it appears to me 

that promptness of payments in the FECA system is roughly comparable to that in U.S. workers’ compensation systems. 

The other performance measure I want to mention is duration of 

disability. OWCP was not able to give us a precise statistic that enabled us to compare durations with other workers’ compensation 

systems, but they were able to give us a rough indicator of the 

12

number of long-term claims which matches Canadian measures 

that are available. 

Figure 4 shows that there is considerable variability among Canadian provincial systems in the number of claims that are receiving benefits at the end of the second calendar year following injury. 

As you will see from the graph, the range is from 1.4 percent in 

the province of Alberta to 6.5 percent in New Brunswick. 

Figure 5 shows a comparable statistic for FECA claims by district office. The percent of lost time claims that are receiving payments at the end of the second calendar year following the injury 

roughly comparable to Canadian ranking from 1.8 percent to 4.8 

percent. 

It is vital to mention that in neither case do we know if the 

claimant was continuously in payment status or in disability status 

since the injury. This is only a snapshot. However, it does not appear to me that FECA claims last significantly longer than those 

in Canadian workers’ compensation systems. Unfortunately, we do 

not have a comparable measure for U.S. systems. 

The last measure I want to mention is in Figure 5 because I 

think OWCP deserves some kudos for this. Under GPRA, the measurement of lost-production days is what I regard as the best outcome measure that I have encountered in my 29 years in the workers’ compensation world. It captures the desired outcome, namely, 

minimizing the work time lost due to occupational injuries and illnesses, in a single number. 

Figure 6 shows that OWCP has driven that lost-production day 

rate down by approximately one-third in the past decade through 

a disability management program called Quality Case Management. This does not represent the entire population, it is important 

to say, but it is a very significant improvement. 

During the course of this study, I was pleasantly surprised by 

the level of policy development, the commitment to the plan and 

the goal orientation of OWCP in administering FECA. I was particularly impressed with the field visits I made to the Dallas office. 

I was struck by the high level of understanding they had of the 

overall mission and their individual part in it. Their customer orientation was also, frankly, greater than I had expected beforehand. 

I also found that OWCP relies on their strategic plan and their 

annual performance plans in a way that would make the authors 

of GPRA proud. The plans are specific. Performance is measurable. 

And the goals are taken very seriously. 

So my conclusion is that OWCP is doing a very good job of administering FECA. 

Thank you. 

[The prepared statement of Dr. Hunt follows:]

13

Statement of Dr. H. Allen Hunt, Kalamazoo, MI


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Chairman NORWOOD. Ms. Carney, you are recognized for 5 minutes. 

STATEMENT OF SUSAN M. CARNEY, HUMAN RELATIONS DEPARTMENT DIRECTOR, AMERICAN POSTAL WORKERS 

UNION, WASHINGTON, DC 

Ms. CARNEY. Mr. Chairman and Members of the Subcommittee, 

I am the director of the Human Relations Department for the 

American Postal Workers Union AFL/CIO. 

I would also like to introduce Richard Boutwell, APWU Federal 

injury compensation specialist, who is here with me today to assist 

with some questions after my comments. 

On behalf of APWU, I would like to say that we appreciate the 

opportunity to present our views on behalf of the workers, regarding the Federal Employees’ Compensation Act and its administration by the Office of Workers’ Compensation Program. 

The impact of job-related injuries can be devastating to workers 

and their families in both their workplace and personal lives. Medical expenses and a loss of income often result in loss of property, 

damaged credit and consequential family problems. 

It is human nature to minimize the consequences or discount the 

effects of a medical condition until it strikes you or a close family 

member. I have a very different perception on the injured employee’s quality of life. You see, I suffer from Carpal Tunnel and Thoracic Outlet Syndromes causal to my employment with the United 

States Postal Service. 

The simple acts that we all take for granted aren’t so simple for 

me. Some examples are, driving, activities with my children, household chores. I am not even able to do my own hair without going 

to a salon because I can’t keep my arms up long enough. I am not 


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the same person I was before my injury. I am not the exception nor 

am I unique among the thousands of workers who are injured on 

the job each year. 

Federal workers’ lives are not favorably changed by the workplace injuries. Employees who receive wage-loss compensation are 

placed in a leave-without-pay status. They cannot accrue sick leave 

or annual leave and cannot make or receive contributions to their 

thrift savings plan for retirement purposes, benefits they would 

otherwise be entitled to if not for their on-the-job injury. 

Partially disabled employees who are not able to work to work 

full-time are, according to the Officer of Personnel Management, 

part-time employees even if their employment status is career, fulltime. Their base pay will be pro-rated, and the subsequent annuity 

reduction can be dramatic. 

Additionally, a disabled employee’s pay rate for wage-loss compensation is frozen as of the date of the injury or first disability 

and does not increase as a result of contractual pay raises and 

COLAs or step increases. 

It has been suggested that a reduction in the wage-loss compensation formula would serve as an incentive for all claimants to 

return to work. This would subject injured workers to additional financial hardship and possible re-injury. This would not be a substitute—this should not be a substitute for the cures that modern 

medicine has to offer. 

It should also be mentioned that if an injured employee qualifies 

for Social Security Act benefits that are paid for disability, then 

FECA benefits will be reduced by the Social Security Act benefits 

attributable to the employee’s Federal service. Continuation of pay 

is only paid for timely filed, traumatic injury claims, not occupational illnesses. 

According to the United States Postal Service statistics, the average COP usage is just 66.3 hours per traumatic injury. As for the 

argument that the 3-day waiting period, which I believe is what we 

have alluded to, would discourage frivolous or non-meritorious 

claims, this reasoning implies that it is permissible to penalize the 

worker whose injury was not severe enough. 

Non-meritorious claims are going to be denied by OWCP. When 

the claim is denied, the employee must reimburse the employer. 

Therefore, these non-meritorious claims are not a cost factor for the 

employer. And a 3-day waiting period is simply a pretext for an inequitable reduction of a reasonable wage-loss payment for the 

worker. 

We also hear arguments for creating a FECA retirement system. 

Compelling people to retire because they have reached a certain 

age is contrary to our national policy. As stated earlier, since injured employees are in a leave-without-pay status, for first employees, the maximum impact will result in their annuity funding being 

diminished by 15 percent of their basic pay and result in a loss of 

the accrued rate of the return on their TSP investment. 

Injured workers with disabilities are not able to earn supplemental income as so many healthy annuitants currently do. Disabled workers should not be held to a higher standard, singled out 

for financial hardship nor be expected to make do on a reduced annuity. 

19

Postal Service injury case rates have declined steadily, yet costs 

continue to rise due to medical fees. To cut costs, it is imperative 

to control the escalating prices of the medical industry. 

Less than 65 percent of the notice-of-injury/illness forms are received by OWCP from employing agencies within the time limits. 

We suggest that OWCP be granted enforcement powers regarding 

the employing agency’s obligations under the act. 

While we recognize that OWCP has made significant changes to 

improve services, there are still deficiencies. We think that more 

claim examiners would be beneficial in the adjudication process of 

the claim in order to get the individual medical attention to return 

them back to suitable work. 

Additionally, we suggest that OWCP make genuine oversight 

with all contracting companies. We found that some of their contract agencies are nonresponsive. There is not an ability to terminate the contract with them. Ergonomic injuries alone cost billions 

of dollars annually. Repealing the ergonomic standards to quell the 

costs, there must be employer accountability to ensure a safe working environment that is mindful of unsafe conditions and of ergonomic standards. 

The Federal Employees’ Compensation Act is a law based in equity. The employer gives up some of the defenses available under 

common law, and the employee similarly foregoes the full range of 

damages which would be awarded. It is a non-adversarial process 

designed to provide a predictable level of reliability for the employer and predictable level of benefits for the employee. 

To amend the law in a manner which upsets this balance would 

be a disservice to the overriding concept of fairness that is the 

law’s foundation. Unilaterally reducing benefits to the injured 

worker simply is an effort to lighten the financial liability of the 

employer and is not an equitable response to the increasing injury 

compensation costs. Injured workers already suffer losses, both financial and emotional, for which they can never be compensated. 

A reduction in benefits that were fairly established would unjustly 

increase the already substantial burden of their injuries and illnesses and literally add insult to injury. 

[The prepared statement of Ms. Carney follows:]

Statement of Susan M. Carney, Human Relations Director, American Postal 

Workers Union, Washington, DC 

Mr. Chairman and members of the subcommittee: 

I am Sue Carney, Director of the Human Relations Department of the American 

Postal Workers Union, AFL–CIO. I would also like to introduce Richard Boutwell, 

APWU Federal Injury Compensation Specialist and Assistant to the Human Relations Department. On behalf of APWU President William Burrus and our members 

I would like to say that we appreciate the opportunity to present our views regarding the Federal Employees’ Compensation Act (FECA) and its administration by the 

Department of Labor, Employment Standards Administration, Office of Workers’ 

Compensation Program (OWCP). 

The APWU is the largest postal union in the world, representing over 300,000 

postal workers in the clerk, maintenance, and motor vehicle service crafts. We are 

employed in approximately 38,000 sites throughout the country, providing a public 

service in every city, town and community in our nation. Workplace injuries and illnesses negatively impact a significant number of postal employees. In recognition 

of this, it is a priority function of the APWU Human Relations Department to provide guidance to our members regarding their rights and responsibilities, as well as 

the employer’s obligations to them under the Federal Employees’ Compensation Act. 

20

Overview 

Any analysis of federal injury compensation costs which focuses on the reduction 

of benefits runs counter to the sprit of FECA, and risks the creation of fundamental 

inequities for the injured worker. Any analysis which is based on the assumption 

that federal employees are somehow better off because they have become partially 

or totally disabled due to a workplace injury or illness is, at best, misguided. 

Before I discuss the FECA benefit structure, let me point to the very real losses 

suffered when a federal employee becomes partially or totally disabled due to an onthe- job injury or illness. The impact to injured workers and their families can be 

devastating in both their workplace and personal lives. Medical expenses and a loss 

of income often results in loss of property, damaged credit and consequential family 

problems. Regardless of the compassion you possess for the injured, or how fluent 

you are regarding various workers compensation programs, it is human nature for 

those who have never suffered a workplace injury to minimize the consequences or 

discount the effects of a medical condition until it strikes them or a close family 

member. Until then, diagnoses such as carpal tunnel syndrome, herniated discs, 

elbow tendonitis, rotator cuff tears, and closed-head injuries are just words on a 

page. Due to my personal experiences, I have a very different perception on the injured employee’s quality of life. I suffer from carpal tunnel and thoracic outlet syndromes causal to my employment with the United States Postal Service. I have impairments of 29% loss of use to my right arm and 15% loss of use to my left arm. 

The simple acts that we all take for granted aren’t so simple for me. Imagine not 

being able to drive for any real distance, or having difficulty turning the doorknob 

to enter your own home, missing out on activities with your kids, requiring assistance with household chores, and having to go to the salon because you can’t raise 

your arms long enough to style your own hair. My former husband has two herniated discs as a result of his employment with the USPS. Our family went months 

without his wage loss compensation benefit. It took five years for his back surgery 

to be approved. Our free time was spent in the doctor’s office three times a week 

for physical therapy, injections, routine follow-up visits, completing forms or obtaining medical reports. He is not the same person he was physically or psychologically 

before his injury. We are not the exception nor are we unique among the thousands 

of workers who are injured on the job each year. 

Any injury compensation policy analysis which implies that federal workers’ lives 

are favorably changed by their workplace injuries demonstrates a fundamental disconnect regarding the realities of life. 

Benefits Lost 

Totally disabled employees or partially disabled employees who return to work 

less than full-time, and receive wage loss compensation are placed in a leave without pay (LWOP) status. Employees in a LWOP status cannot accrue sick or annual 

leave and cannot make or receive contributions to their Thrift Savings Plan for retirement. Benefits they would otherwise be entitled to if not for their on the job injury. 

And while their LWOP will count as creditable service for retirement purposes, 

partially disabled employees who are not able to return to work full-time are, according to the Office of Personnel Management, part-time employees, even if their 

employment status is career full-time. Their base pay will be pro-rated when their 

annuity is computed. The subsequent annuity reduction can be dramatic. 

Additionally, a disabled employee’s pay rate for wage loss compensation is frozen 

as of the date of injury or first disability and does not increase as a result of contractual pay raises and COLAs, or step increases (a claimant will receive an OWCP 

COLA after receiving wage loss compensation for one year). 

Benefits 

FECA’s wage replacement rate is 66 2/3%, and if there is a dependent the rate 

is 75%. There is no income tax deduction from these injury compensation payments, 

but the employee’s health care and optional life insurance premiums are still deducted. The average Postal Service bargaining unit employee has a base pay of 

under $42,000. At this pay rate it is highly unlikely that the injured bargaining unit 

employee is going to receive a net pay increase as a result of a disabling injury. 

When comparing FECA to state wage loss compensation rates, it should be noted 

that an average bargaining unit employee’s weekly compensation of $538 would be 

less than the average maximum state wage weekly compensation of $559. It has 

been suggested that a reduction in the wage loss compensation formula would serve 

as an incentive for all claimants to return to work. Subjecting injured workers to 

additional financial hardship and possible re-injury should not be a substitute for 

the cures that modern medicine has to offer. It should also be mentioned that if an 

21

injured employee qualifies for Social Security Act (SSA) benefits that are paid for 

disability, then FECA benefits will be reduced by the SSA benefits attributable to 

the employee’s federal service. 

Continuation of pay (COP) is paid only for timely filed traumatic injury claims. 

It is not paid for occupational illness claims. According to USPS statistics the average COP usage is just 66.3 hours per traumatic injury. Implementing a three-day 

waiting period would impose a 37% slash to the worker’s pay that if not for the 

workplace injury they would be earning. As for the argument that the three-day 

waiting period would discourage ‘‘frivolous’’ or ‘‘non-meritorious’’ claims, this reasoning implies it’s permissible to penalize the worker whose injury was not severe 

enough; the waiting period could prove to be counter productive. Putting it plainly, 

non-meritorious claims are going to be denied by OWCP. When the claim is denied 

the employee must reimburse the employer either by substituting leave for the COP, 

or by paying out of pocket. Therefore, these non-meritorious claims are not a cost 

factor for the employer, and a three-day waiting period is simply a pretext for an 

inequitable reduction of a reasonable wage loss payment for the worker. 

We also hear arguments for creating a ‘‘FECA Retirement System,’’ maintaining 

that a totally disabled person should be forced into OPM retirement at a certain 

age. We would argue that compelling people to retire because they have reached a 

certain age is contrary to national policy and implies that injured employees chose 

to become totally disabled in order to gain some financial advantage. Additionally, 

there is no equity in terminating wage loss compensation when an injured employee 

reaches some arbitrary age. Many people are working well beyond ‘‘normal’’ retirement age because they simply cannot afford to retire. As stated earlier, since injured 

employees are in a LWOP status, neither they nor their employing agency may 

make contributions to TSP. For FERS employees, the maximum impact would result 

in their annuity funding being diminished by 15% of their basic pay and the accrued 

rate of return on their TSP investment. Additionally, injured workers who continue 

to have disability causal to their employment would not be able to earn supplemental income to their annuity as so many healthy annuitants currently do. Disabled workers should not be held to a higher standard, singled out for financial 

hardship, nor be expected to make do on a reduced annuity. 

Medical Costs 

Statistics from the Department of Labor indicate that Postal Service injury case 

rates have declined steadily since fiscal year 2000, and continue to decline in fiscal 

year 2004, yet their federal injury compensation costs continue to rise. One major 

cost driver is the continuing increase in total amounts billed for medical services. 

In any efforts to cut costs, it is imperative to control the escalating prices of this 

powerful industry rather than reduce benefits to injured employees. 

FECA Changes 

Department of Labor submission timeliness reports establish that less than 65% 

of notice of injury or illness forms (CA–1s/CA–2s) are received by OWCP from the 

employing agencies within the federally mandated time limits (ten working days), 

and less than 48% of wage loss compensation claim forms (CA–7s) are received by 

OWCP in a timely manner (five working days). These delays have a significant impact on timely adjudication of entitlement to benefits. Until OWCP receives these 

claim forms, they cannot begin the claim adjudication process. They are unable to 

initiate the process of evaluating the merits of the claim, to monitor both the medical treatment and the employee’s return to medically suitable work. OWCP’s internal analysis has demonstrated that the delayed submission of the forms for notice 

of injury and claim for wage loss compensation make a significant difference in the 

length of time an injured worker remains off the job, even when injuries and working conditions are similar. 

Under the current FECA, OWCP does not have any enforcement powers. They can 

only attempt to persuade and cajole federal agencies to submit claim forms within 

the time limits mandated by federal regulation. We suggest that OWCP be granted 

enforcement powers in regards to addressing the entire experience of injured workers, from the day of injury to their return to work. This is a change which would 

benefit the injured employee, the employer, and OWCP. 

Ergonomic injuries alone cost taxpayers, businesses and workers billions of dollars 

annually. OSHA estimates that each year, 1.8 million workers suffer from musculoskeletal disorders and that 600,000 people miss work because of them. The Labor 

Department estimated that ‘‘new safety rules’’ for employers would prevent injury 

to about 300,000 workers annually and save the U.S. economy $9 billion. Repealing 

the Ergonomic Standards may have relieved business groups of the financial burden 

to correct workplace safety violations, but it did nothing to quell the costs of injuries 

22

that they or U.S. taxpayers encounter because of them. The latter is a far greater 

burden than the cost of addressing the unsafe conditions. Therefore, if in fact the 

Safety, Health and Return-to–Employment Initiative and this committee are genuine in their goal of reducing the costs of injury, then there must be more than initiative goals beyond that of job performance. There must be employer accountability 

to ensure a safe work environment that is mindful of unsafe conditions and of ergonomic standards. 

Finally, we recognize OWCP has made efforts to improve services. They have 

made technological improvements in order to process claims more efficiently, which 

provides claims examiners with more immediate access to imaged records and reduces delays in claim processing. The implementation of a centralized mailroom that 

services all OWCP District Offices has reduce routing time to responsible claims 

staff, and reduced record-misplacement occurrences. Although OWCP has relieved 

its claims examiners of some clerical duties, claims examiners are still in short supply to adequately adjudicate claims in a timely manner. These shortages cause 

delays in prompt medical treatment, which results in prolonged recovery for claimants and hardships for both claimants and the employers. 

In another effort to expedite service, OWCP recently contracted with a single company, ACS, to approve all medical services requiring prior authorization and to handle its bill payment processes. Contracting out, however, has created some new 

problems. Claims examiners are no longer available to discuss medical bills, reimbursements and authorizations with claimants, their representatives, or their physicians. ACS representatives are not responsive, nor do they demonstrate consistency 

in applying the regulations, which has resulted in unnecessary delays. We suggest 

that when duties are contracted out that there be a Statement of Work Agreement 

that specifies obligations and includes relief to OWCP of the contract when a vendor 

fails to meet the terms of the agreement. Additionally, we suggest that OWCP maintain genuine oversight with all contracted companies. 

Conclusion 

The Federal Employees’ Compensation Act is a law based in equity. The employer 

gives up some of the defenses available under common law, and the employee similarly forgoes the full range of damages which could be awarded. It is a non-adversarial process designed to provide a predictable level of liability for the employer, 

and a predictable level of benefits for the employee. To amend the law in a manner 

which upsets this balance would be a disservice to the overriding concept of fairness 

that is the law’s foundation. Unilaterally reducing benefits to the injured worker 

simply in an effort to lighten the financial liability of the employer is not an equitable response to the increasing injury compensation costs. Injured workers already 

suffer loses, both financial and emotional, for which they can never be compensated. 

A reduction in benefits that were fairly established would unjustly increase the already substantial burden of their injuries and illnesses, and literally add insult to 

injury. 

Thank you for this opportunity to address these important issues. 

Chairman NORWOOD. Mr. Lewis, you are now recognized for 5 

minutes. 

STATEMENT OF ELLIOT P. LEWIS, ASSISTANT INSPECTOR 

GENERAL FOR AUDIT, OFFICE OF THE INSPECTOR GENERAL, U.S. DEPARTMENT OF LABOR, WASHINGTON, DC 

Mr. LEWIS. Good afternoon, Mr. Chairman, and Members of the 

Subcommittee. Thank you for the opportunity to testify on the 

work of the Office of Inspector General, U.S. Department of Labor 

in the Federal Employees’ Compensation Act Program. 

Today, I will highlight some of our recent audit and investigative 

work in FECA and outline legislative recommendations for improvement of this important program. 

I am accompanied by Stephen Cossu, the assistant inspector general who oversees investigations related to the program. I request 

that my written statement be included in the hearing record. 

Effective and efficient management of the FECA program works 

to the benefit of every claimant, Federal agency, and taxpayer. 

23

Through our oversight of the program, we have highlighted several 

challenges regarding internal controls and procedures. Weaknesses 

in internal controls increase the risk of improper payments to 

FECA claimants across the Federal Government and medical providers who serve them. 

Over the years, we have made recommendations for improvement 

in the areas of customer service and program integrity. And OWCP 

has recognized the need to implement changes in response to our 

concerns. 

However, we continue to identify weaknesses in several areas in 

the program. For example, during our audit of the Department’s 

2003 financial statements, we found that OWCP is not ensuring 

that claimants submit medical evidence to support continuing eligibility for compensation and medical benefits. This appeared to be 

due to OWCP’s failure to comply with its own procedures rather 

than a lack of responsiveness on the part of the claimant. The ineffectiveness of this control increases the susceptibility of this multibillion dollar program to fraud and overpayments. 

Another area of concern involves the use of Social Security data. 

Use of this data is integral to the effective operation of the FECA 

program. In a September 2000 audit, we reviewed the potential use 

of cross-matching FECA data and Social Security wage data to 

combat fraud and overpayments within the program. As a result of 

our cross-match, we identified and referred for investigation 33 

cases that showed a potential cost savings of $7 million to the 

FECA program. We believe that legislation allowing OWCP access 

to Social Security wage data could provide a cost-effective tool to 

identify and remove dishonest claimants who is conceal their earnings. 

We have long been concerned with OWCP’s customer service. In 

OIG reports in 1999 and 2002, we recommended the Department 

improve its goal-setting and measurement of customer satisfaction. 

We are looking into the Department’s implementation of our recommendations as part of a current evaluation on customer service. 

The OIG receives complaints, via our hotline, that cover a variety 

of matters and allegations. During FY 2003, the OIG hotline received 116 complaints related to OWCP and the FECA program. 

These complaints involved allegations of poor customer service, unfair practices, privacy concerns, mismanagement and fraud. Individual complaints are either addressed by the OIG or referred to 

OWCP. 

In further response to hotline complaints received and as a follow-up to our past work, we have initiated the following work in 

the FECA program: We are currently evaluating OWCP’s handling 

of complaints of poor customer service. We are assessing the extent 

to which data-mining techniques can be used by the OIG and the 

Department to identify patterns of improper FECA payments, 

fraud and abuse. Our financial statement audit work for 2004 will 

specifically look at FECA’s new medical bill payment system. And 

finally, we are reviewing the accuracy and validity of FECA-reported performance data. 

From an investigation point of view, the OIG investigates FECA 

fraud, such as claimants who have jobs that are incompatible with 

their disability and fraud committed against the FECA program by 

24

service providers. In 2003, the OIG opened 154 cases, had 59 indictments, 49 convictions, and over $14 million in monetary results 

in the FECA program area. 

In the past, the OIG has made recommendations to strengthen 

the program. These have included addressing the 3-day waiting period, addressing the move from FECA to some form of retirement 

benefit, and granting access to Social Security wage records and a 

national directory of new hires in order to identify claimants defrauding the program. 

In conclusion, Mr. Chairman, our findings and recommendations 

have focused on helping to make the FECA program operate more 

effectively and efficiently while ensuring the integrity of the program. 

This concludes my statement. Mr. Cossu and I will be pleased to 

answer any questions you or other Members of the Subcommittee 

may have. Thank you. 

[The prepared statement of Mr. Lewis follows:]

Statement of Elliot P. Lewis, Assistant Inspector General for Audit, Office 

of the Inspector General, U.S. Department of Labor, Washington, DC 

Good afternoon Mr. Chairman and members of the Subcommittee. Thank you for 

the opportunity to testify on the work of the Office of Inspector General (OIG), U.S. 

Department of Labor (DOL), in the Federal Employees’ Compensation Act (FECA) 

program. My name is Elliot Lewis and I am the Assistant Inspector General for 

Audit at the OIG. Today I will highlight some of our recent audit and investigative 

work in FECA and outline legislative recommendations for improvement of this important program. I am accompanied by Stephen J. Cossu, Assistant Inspector General for Labor Racketeering and Fraud Investigations, who oversees investigations 

related to the program. He and I will be available to answer any questions the Subcommittee may have regarding the OIG’s work in the FECA program. 

BACKGROUND—FEDERAL EMPLOYEES’ COMPENSATION ACT

The U.S. Department of Labor (DOL) administers several programs and statutes 

designed to provide and protect the benefits of workers. FECA is a comprehensive 

workers’ compensation law covering some 3 million Federal and Postal employees. 

It is designed to provide medical benefits, income replacement, and certain supportive services to Federal employees with work-related injuries or, in the case of 

deaths, survivor benefits to family members. The Office of Worker Compensation 

Programs (OWCP), which is within the Employment Standards Administration 

(ESA), is responsible for making eligibility determinations and for the initial reconsideration if a claim is denied. Benefits are paid from the Employees’ Compensation 

Fund, which is principally funded through chargebacks to the Federal agency that 

employs the injured worker. Therefore, the FECA program affects the budgets of all 

Federal agencies, and quasi–Federal agencies such as the United States Postal 

Service. 

Recognizing the need to improve this program, this past January the Administration launched a Government-wide initiative to improve workplace safety and health 

and reduce the costs of injuries to workers and taxpayers. Known as the SHARE 

(Safety, Health, and Return-to–Employment) initiative, it calls for all Departments 

to establish goals to lower workplace injury and illness case rates; lower lost-time 

injury and illness case rates; improve the timeliness of reporting injuries and illnesses; and reducing lost productivity days due to work injuries and illnesses. The 

Secretary of Labor has been designated to lead the initiative in terms coordinating 

the development of goals for each Department and measuring their performance. 

The OIG is encouraged by the goals of this initiative. 

OIG ACTIVITIES RELATING TO FECA 

Mr. Chairman, effective and efficient management of the FECA program works 

to the benefit of every claimant, Federal agency, and taxpayer. Through our oversight of the program, we have highlighted several challenges regarding internal controls and procedures. Our concerns have been included in our Annual Management 

Challenges Report for several years. Weaknesses in internal controls increase the 

25

risk of improper payments to FECA claimants across the Federal government, and 

medical providers who serve them. Over the years, we have made recommendations 

to OWCP for improvement in the areas of customer service and program integrity 

and OWCP has recognized the need to implement changes in response to our concerns. 

Financial Statements Audits 

However, Mr. Chairman, we continue to identify weaknesses in several areas in 

the program. For example, during our audit of the fiscal year 2003 DOL Financial 

Statements, we found that OWCP is not ensuring that claimants submit medical 

evidence to support continuing eligibility for compensation and medical benefits. 

Claims Examiners are required to obtain and review medical evidence on a periodic 

basis to determine continuing claimant eligibility. Our audit found the lack of current medical evidence in 18 percent of sampled cases, which appeared to be due to 

OWCP’s failure to comply with its own procedures rather than a lack of responsiveness on the part of the claimant. The ineffectiveness of this control increases the 

susceptibility of this multi-billion dollar program to fraud and overpayments. 

Social Security Data 

Another area of concern involves the use of Social Security Administration (SSA) 

data. Use of this data is integral to the effective operation of the FECA program. 

In a September 2000 audit, we reviewed the potential use of crossmatching FECA 

data and SSA data to combat fraud and overpayments within the program. As a 

result of our crossmatch, we identified and referred for investigation, 33 cases that 

showed a potential cost recovery and cost avoidance of $7 million over 10 years for 

the FECA program. We believe that legislation allowing OWCP access to SSA wage 

data could provide a cost-effective tool to identify and remove dishonest claimants 

who conceal their earnings. 

Customer Service 

Our 1999 evaluation of OWCP’s FECA customer service surveys revealed the existence of methodological flaws in several areas, including survey design, measurement of customer service, sampling, response rate, and survey operations. As a result, we made a number of recommendations to enhance the accuracy of the data 

by improving the survey methodology and thus helping OWCP judge and improve 

the quality of customer service provided. The agency agreed with most of our recommendations and incorporated them in its subsequent survey. However, OWCP 

has conducted no written survey since 2000, focusing instead on telephone surveys. 

A 2002 OIG report on FECA performance measures recommended, and the Department agreed, to establish a performance goal for customer satisfaction. We are 

looking at the Department’s implementation of our recommendation as part of our 

current evaluation of FECA customer service, which I will address in a moment. 

Hotline 

The OIG receives complaints via our hotline that cover a variety of matters and 

allegations. During fiscal year 2003, the OIG Hotline received 116 complaints related to OWCP and the FECA program. These complaints involved allegations of 

poor customer service, unfair practices, privacy concerns, mismanagement by 

OWCP, and fraud against the program. Some complaints are referred to OWCP for 

action and those dealing with allegations of fraud remain with the OIG. 

Current Work 

In further response to hotline complaints received and as a follow-up to our past 

work, we have several current work projects underway in the FECA program: 

• Customer Service Evaluation—In this on-going review we are evaluating 

OWCP’s handling of claimant complaints of poor customer service. Our objectives are to determine: 

• The extent to which one OWCP district office responded to and resolved 

complaints; 

• If employing agencies are satisfied with OWCP customer service; and 

• If OWCP telephone surveys provide an adequate indication of customer 

satisfaction. 

We would be pleased to share the results of our work upon its completion. 

• Data Mining—We are currently assessing the extent to which data mining techniques can be used by the OIG and the Department to identify patterns of improper FECA payments, fraud, and abuse. 

• Financial Statement Audit—The FECA program has implemented a new medical bill-processing system during fiscal year 2003. Our DOL financial statement 

26

audit work for fiscal year 2004 will look at payments generated by the new system. • FECA Data Validation—We are reviewing the accuracy and validity of Government Performance and Results Act performance data reported by the Department with respect to FECA. 

Fraud 

From an investigations point of view, the OIG investigates claimant fraud and 

fraud committed against the FECA program by service providers. In fiscal year 

2003, the OIG opened 154 cases, had 59 indictments, 49 convictions, and over $14 

million in monetary results in the FECA program area. We also closed 153 cases 

from fiscal year 2003 and prior years. 

The following cases are representative of the types of fraud we regularly investigate: 

• A former Department of Army employee was sentenced to six months’ home 

confinement, 100 hours of community service, two years of supervised probation, and ordered to pay more than $150,000 in restitution for receiving benefits 

for an employment-related injury while he sold hay and livestock and, for a fee, 

delivered topsoil and gravel. 

• A former Postal worker was sentenced to six months’ home detention and five 

years’ probation and ordered to pay $101,206 in restitution after pleading guilty 

to charges of making false statements to obtain Federal workers’ compensation 

benefits. He was operating a tax business and a limousine business and not reporting this to OWCP as required. This investigation was conducted jointly with 

the U.S. Postal Inspection Service. 

• An orthopedic clinic specializing in sports medicine agreed to pay $2.65 million 

to settle allegations of overbilling by 17 of its physicians. This investigation, 

also conducted jointly with the U.S. Postal Inspection Service, was the result 

of a qui tam action filed by an employee who alleged that the clinic and its physicians knowingly overbilled government healthcare programs, including 

$110,000 in overcharges to DOL’s FECA program. 

RECOMMENDATIONS TO IMPROVE THE FECA PROGRAM

In the past, the OIG has made recommendations to strengthen the program. 

These include: 

Changing the Continuation of Pay (COP) Period 

FECA currently has a provision that allows employees who sustain disabling jobrelated traumatic injuries to receive continuation of their regular pay for a period 

not to exceed 45 calendar days after the injuries. Currently, a three-day waiting period, before FECA benefits could begin, is at the end of the COP period, which does 

not serve to discourage frivolous claims. We recommend returning the three-day 

waiting period (before FECA benefits can start) to the beginning of the 45-day continuation-of-pay period. This would require employees to use any accrued sick leave, 

annual leave, or leave-without-pay for that three-day waiting period, before their 

FECA benefits could begin. (Should the claim be approved by OWCP, any leave used 

during this three-day waiting period would be restored.) 

Establishing a Retirement Age for Beneficiaries 

Currently, FECA beneficiaries are not required to retire at any age. Therefore, 

beneficiaries may remain on disability for life. This results in a strong incentive to 

continue to receive FECA benefits, since the tax-free benefits are much greater than 

any retirement earnings would be. The OIG recommends that a suitable retirement 

age be established under the Act for FECA claimants. Once the beneficiaries reach 

the specified retirement age, their retirement benefits would be adjusted downward 

to a specified level; however, medical benefits could still be paid by OWCP. 

Accessing Earning Information 

Accessing Social Security wage information and the National Directory of New 

Hires, which is maintained by the Department of Health and Human Services, could 

be used by OWCP to document whether a claimant has outside employment. If it 

is determined that the claimant has unreported outside employment or income, any 

inappropriately paid benefits can be reduced or withdrawn. Access to Social Security 

wage information would also be useful to verify the validity of any Social Security 

numbers provided by the claimants. Unfortunately, OWCP can only access Social 

Security wage information if the claimant gives OWCP permission to do so. A refusal to grant such authorization has no adverse impact on the claim. Also the National Directory of New Hires, which contains employer-reported information on 

27

newly hired individuals, is not currently available to OWCP. Claimants who are defrauding the FECA program are unlikely to willingly grant OWCP or the OIG the 

authority to access information about their earnings. Provisions in law would be required for OWCP and the OIG to have access to Social Security data and the National Directory of New Hires, similar to the access already provided to several 

other Federal agencies. 

CONCLUSION

In conclusion Mr. Chairman, our findings and recommendations have focused on 

helping to make the FECA program operate more effectively and efficiently, while 

ensuring the integrity of the program. This concludes my written statement; Mr. 

Cossu and I would be pleased to answer any questions you or the other members 

of the Subcommittee may have. 

Chairman NORWOOD. Thank you very much, Mr. Lewis. 

To begin our questioning, I will call on Mrs. Biggert for 5 minutes. 

Mrs. BIGGERT. Thank you, Mr. Chairman. 

And thank you all for coming today. 

Mr. Hallmark, has the use of private contractors for administrative processing made the program more efficient? 

Mr. HALLMARK. Yes, I believe it has. We have used contractors 

for different parts of the FECA program for many years. And it has 

allowed us to expand and leverage our staff resources to accomplish 

the really labor-intensive aspects of this program. 

We have—as Mr. Lewis mentioned, we started a medical bill pay 

contract this past September. And that contract is still in the development stage. We are continuing to have fairly serious problems. Although, we believe they are on the road to improvement at 

the present moment. 

But as a principle, we find that contracting out for commercial 

aspects of what we do to be a successful strategy for the program. 

Mrs. BIGGERT. Does it make it more expensive? 

Mr. HALLMARK. It is not cheap to do the work that we are accomplishing through the contractor. And part of the issue that we 

have, and Elliot mentioned it as well, and I think also Sue that we 

need to do a better job of administering those contracts to ensure 

that we do have the most efficient process. And that is something 

we are also working on. 

Mrs. BIGGERT. Have you had to let some of the contractors go because they weren’t doing their job then? 

Mr. HALLMARK. We literally have thousands of contractors. We 

contract for vocational rehabilitation services on an individual 

counselor basis, for nurse rehabilitation on an individual nurse 

basis, and large contracts for——

Mrs. BIGGERT. So it is not a big company all the time that comes 

in? 

Mr. HALLMARK. No. It is a whole range, from one-person operations to multi—our contract for medical services is with Lockheed 

Martin, fairly large entity. In some cases, we have had to deal with 

contractors and take actions to shift from one source to another. 

And that is just the nature of that business. 

Mrs. BIGGERT. Then, Mr. Hallmark, Ms. Carney noted in her testimony that OWCP has real power to compel agencies to submit 

claim forms within the time limit that has been mandated by Federal regulation. So how do you handle that, currently, particularly 

28

in a situation where an agency has failed repeatedly to submit 

claim forms in a timely manner? 

Mr. HALLMARK. The FECA statute provides for a criminal penalty which, to my knowledge, has never been implemented. 

Obviously, if we are aware of—and we have been advised from 

time to time through history—of a situation where just a flat-out 

failure to report has occurred, and in those cases we would work 

with the agency and, if need be, with law enforcement officials to 

address the issue. And we have used the IG and the agency IGs 

to address those kinds of egregious situations. 

But by far, the more common situation is just the simple lack of 

promptness. And our approach to that has been, and I think it has 

been very successful, has basically been to work with the agencies 

and to build cooperation to make clear measurements and targets 

for improvement which we, for example, post on our Web site by 

agency. So we, in effect, use the power of publicity to encourage 

agencies to get better. 

And I can say, as I said in my opening remarks, since 1994 or 

so, when we started really focusing on this, the agencies have gotten twice as good as they were. Now, they were horrible in 1994, 

to be honest. They are now, as Sue indicated, the average is about 

65, 66, 67 percent timely. That is within 2 weeks. That is not good 

enough. But I would say that the trend is very much positive. And 

the Postal Service, for example, has made incredible strides, and 

they are now up near their target of 90 percent, which they deserve 

credit for. 

Ms. CARNEY. While the Postal Service may have made some 

strides, it is a serious recurring problem. And I would like to also 

point to the Attorney General’s Office as the person that we are 

supposed to go to when we file these complaints for noncompliance. 

And, as Mr. Hallmark has said, that has never happened because, 

of course, in the grand scale of things, we are certainly at the bottom of the food chain for such—when you compare terrorists versus 

the claim form didn’t get there, obviously, we don’t get the attention that——

Mrs. BIGGERT. It is hard to tell you, it was lost in the mail. 

Ms. CARNEY. But in any case, and within OWCP’s own—Department of Labor’s own study, it is a fact that, if we get the claims 

in to OWCP and processed in a timely fashion, then those employees recover more quickly because they are getting their claim adjudicated. They are getting medical services. And then they return to 

suitable work in a much more timely fashion than the person that 

has maybe the same condition but didn’t get the claim, the receipt 

of claim. It is not an isolated problem with the Postal Service. It 

is widespread, and it has definitely——

Mrs. BIGGERT. Let me ask Mr. Hallmark again, usually when 

some people are prompt, some people are early and some people 

are late, it just seems like human nature. Is that true of the agencies? Is it always the same agency that has the problem with getting the forms in on time? 

Mr. HALLMARK. There are definitely patterns. If you look at our 

Web site, you can clearly see, there are some agencies that have 

not made progress, others that, as I say, have made dramatic 

progress. Several of the agencies have come to us and worked with 

29

the Department of Labor to, for example, transmit their claims 

electronically so that it cuts out lost in the mail. And we would like 

the Postal Service to do that, too, but they are resistant. That 

makes a big difference. Those agencies have moved ahead. 

One thing we have in our favor at this point—we don’t have a 

criminal or a penalty kind of process that is really effective—but 

we do have the President’s SHARE initiative, which sets goals not 

only to reduce the number of injuries that have occurred or will 

occur but also to process the FECA claims that do occur more rapidly. And each agency has a specific target for improving each year 

for the next 3 years in that area. And I think that will have an 

impact on the kind of issues that Ms. Carney is talking about. 

Chairman NORWOOD. Thank you, Mrs. Biggert. 

I wouldn’t hold my breath, Mr. Hallmark, to get the Postal Service to start sending their claims in electronically. 

I would now like to recognize Major Owens for 5 minutes for 

questions. 

Mr. OWENS. Talk about conflicts of interest here. 

Ms. Carney, what types of special difficulties would you see 

lower-income injured workers having facing—see them facing in 

the event that FECA benefits are terminated after age 65 in favor 

of some sort of retirement annuity? 

Ms. CARNEY. What difficulty? 

Mr. OWENS. What kind of problems do you see them facing? 

Ms. CARNEY. First off, I don’t think it is fair to even make a comparability issue between the FECA programs and the State programs. One of the issues is that, depending on where you live, the 

cost of living is substantially higher than other areas. The way 

FECA is currently set, with a slight increase for those that have 

dependents, addresses that. So I think that the compensation 

wage-loss would be of greater significance. 

There is also not a formality within State programs, State comp 

programs. As Federal employees, that is one of the benefits we all 

have: We are supposed to have formal—you know, common benefits. 

Mr. OWENS. You mentioned carpal tunnel syndrome, the personal 

problem. 

Ms. CARNEY. Yes. Thoracic Outlet Syndrome and Carpal Tunnel. 

Mr. OWENS. Could you describe a little bit how that was allowed 

as a legitimate claim when——

Ms. CARNEY. How did I get it? 

Mr. OWENS. No. No, not how you got it. When the new Administration came into power here, the President, along with the Republican majority in the Congress and the Senate, wiped out the ergonomic standards that we had spent 10 years laboring on. I want 

to know, how is your complaint legitimatized if we don’t have those 

standards in place? 

Ms. CARNEY. Well, the machines that I worked on were certainly 

the culprit in my medical conditions. They are not ergonomically 

set for the human body to work on. And the functions that I did, 

had they been taken care of through the OSHA ergonomic standards, if I didn’t have to do those particular functions, if I did them 

on a machine that was built more for the human being body type, 

as opposed to what we had to go through, I wouldn’t be suffering. 

30

I would like to say, too, you know, my former husband—you 

want to talk about—we addressed time issues, my former husband 

also a Postal employee, also a back injury, two herniated discs, 5 

years to get his back surgery approved. 

Mr. OWENS. Thank you. 

Dr. Hunt, how many State workers’ compensation systems remove retirement-age injured workers from their workers’ compensation programs? Is there any State that is currently considering this? 

Dr. HUNT. I didn’t catch the last part of that. Could you repeat 

that? 

Mr. OWENS. Is there any State that is currently considering removing retirement-age injured workers from their workers’ compensation programs? 

Dr. HUNT. I don’t know if there are any that are currently doing 

it. I don’t know the exact number. I can submit that for the record. 

[The information referred to follows:]

Retirement Offsets in State WC Systems 

I have briefly reviewed the OWCP publication State Workers’ Compensation Laws 

and estimate that there are about 15 states that reduce wc benefits for receipt of 

SS retirement and/or employer pension payments. Usually this amounts to an offset 

of the employer contributed proportion only. The states that have some such offset 

include: AK, AR, CO, CT, FL, LA, ME, MI, ND, PA, RI, TN, UT, WA, WV.

H. Allen Hunt, Ph.D. 

Assistant Executive Director 

Upjohn Institute for Employment Research 

Kalamazoo, MI 

Dr. HUNT. There are a number that have either a step-down or 

other arrangement at age 65, at the traditional retirement age. I 

don’t know if it is comparable to what you are thinking about for 

FECA or not. 

Mr. OWENS. Would you say one-half the States are doing it or 

one-fourth of the States? 

Dr. HUNT. I would think maybe a third of the States would be 

my ballpark guess. 

Mr. OWENS. Mr. Hallmark, if the retirement age recipients are 

to be assimilated into a defined benefit plan such as FERS or 

CSRS, how would their number of service years and salary at retirement be estimated? 

Mr. HALLMARK. Well, with great difficulty, I believe. The issue of 

how one would construct a provision to address the question of 

comparability between FECA benefits and OPM retirement benefits is an extremely complicated one. GAO studied it in the early 

1990’s and did a report laying out the difficulties with respect to 

the proposal that I think you are pointing to, which was that people actually be moved from the FECA rolls and into the OPM pension structure. 

And the complexities that you are alluding to, of where their salaries were in the non-funded nature of that kind of a shift, were 

pointed to with some clarity in that report. The provision that is 

part of the President’s proposal in the 2005 budget would not move 

individuals from the FECA roles to OPM but would simply create 

31

a different benefit level within the FECA structure and thereby 

eliminate those background complexities. 

Mr. OWENS. My time is up. Thank you very much. 

Chairman NORWOOD. Mr. Kline, you are recognized for 5 minutes. 

Mr. KLINE. Thank you, Mr. Chairman. Thank you, gentlemen 

and lady, for being here today. 

I took very much to heart the Chairman’s comments earlier that 

it is an educational experience. It certainly is for me. And I very 

much appreciate your testimony and the answers to the questions. 

I have so many here in front of me, I am not sure exactly where 

to start, except that I am trying to understand the issue of Social 

Security numbers and access to them and medical records. So let 

me start with a few for you, Mr. Lewis. We will see how my time 

holds up if I get in as many as I can. 

As I understand in your testimony, you state that OWCP does 

not always ensure that claimants submit medical evidence to support continuing eligibility for compensation of medical benefits. Do 

you have an estimate of the amount of overpayment made as a result? 

Mr. LEWIS. I do not have an estimate of what the total amount 

could be as a result of that. We identify each year in our audit in 

how many cases where there should have been a request for followup medical evidence that either the request wasn’t made or the evidence wasn’t submitted. In our most recent work, we had looked 

at a random sample of 145 claims that fit that category. And I 

think it was 27 that were not compliant. 

Mr. KLINE. Fifteen percent or so. Mental arithmetic is always a 

little risky for me. 

Let me see if I understand then the issue with Social Security 

records. Without access to Social Security records, how is it that 

OWCP would be able to identify and remove any dishonest claimants that there might be? 

Mr. LEWIS. Well, there is self-reporting and certification in terms 

of any income that is earned and dependent status. There is also 

a voluntary authorization from claimants to confirm with Social Security on a one-time basis, and then leads or referrals that we may 

get, say, in our IG or in other agency IGs. 

Mr. KLINE. Do I understand that you are recommending that 

OWCP have access to Social Security? 

Mr. LEWIS. Yes, to the wage information to verify if someone begins working and has unreported wages. 

Mr. KLINE. In your judgment, would this access to this information significantly reduce the cost of the program? 

Mr. LEWIS. Well, as I said in the testimony, in our last look at 

that, we identified 33 cases that totaled $7 million. So we think 

that is a much more efficient approach than trying to tackle it person-by-person. 

Mr. KLINE. OK. 

Mr. Hallmark, you mentioned, in response to an earlier question 

and I think in your testimony, the SHARE program. Could you just 

take another minute or so I have left and kind of elaborate on that 

a little bit and tell us what follow-up procedures are in place to enVerDate 0ct 09 2002 10:55 Dec 20, 2004 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 H:\DOCS\93655 EDUWK PsN: NNIXON
32

sure that the agencies are making progress toward meeting the 

goals? 

Mr. HALLMARK. The SHARE initiative was announced in January of 2004 by the President. It incorporates goals set for each of 

the Federal agencies to reduce injuries that occur within their 

workplaces, to speed the filing of FECA forms and also to reduce 

lost-production days which is the measure that Dr. Hunt was referring to. 

All three—all of those goal areas are established by agency for 

2004, 2005 and 2006. The Department of Labor, specifically OWCP 

and OSHA, will be working with each of the agencies to monitor 

their activities, give them the technical assistance to ensure that 

they are moving ahead along these goal paths. And we will be publishing results of their performance on a quarterly basis on our 

Web site. And we will be reporting to the President annually to indicate how well we see the whole program working. 

Mr. KLINE. OK. Thank you very much. 

I see my time is about to expire. I have got one more, getting 

back to the medical evidence, medical records issue and again for 

you, Mr. Hallmark, what is OWCP doing now to improve the process of periodically getting the medical evidence? 

Mr. HALLMARK. The finding of OIG was localized for the most 

part in one of our district offices. We have 12 offices. That office 

had the procedural breakdown. 

The good news is that we have the new IT system that I mentioned in my remarks is going into place this summer. That system 

will provide prompts to claims examiners and to workers automatically, instead of it having to be found. Those cases will pop up on 

their computer screen, and they will be guided through the process 

of ensuring that that data and evidence is procured as needed. 

Mr. KLINE. OK. I understand now. Thank you very much. 

Chairman NORWOOD. Thank you, Mr. Kline. 

Mr. Greenwood, we are delighted to have you with the Subcommittee today, and you are now recognized. 

Mr. GREENWOOD. Thank you, Mr. Chairman. 

Mr. Hallmark, is there any requirement that beneficiaries re-certify periodically? Annually, do they have to recertify, both as to 

their medical status? And does that have to be signed off by a physician? How does that work? 

Mr. HALLMARK. There is an annual recertification process with 

regard to employment and earnings and sort of basic status of the 

individual. The medical—the reevaluation of medical that Mr. 

Lewis was referring to is gradated depending on the status of the 

claimant. 

In some cases, where the individual has been on the rolls for a 

longer time period and has been judged to be in a more stable situation, we don’t get a medical report every year. But there is a 1- 

or 2- or 3-year cycle whereby we would go back to that individual’s 

physician to re-verify that the disability from the work injury is 

continuing and justifies the continuing payments. 

Mr. GREENWOOD. When there is fraud, in cases of fraud, why 

doesn’t that periodical medical re-certification catch the fraud? 

Mr. HALLMARK. Well, a number of reasons. One is that an individual may have a condition—and the vast majority of injuries that 

33

occur, the 170,000 that occur every year are genuine injuries. It is 

very rare that someone comes forward with a completely fraudulent case that doesn’t exist. 

So when we go back to an individual who is on benefits now, 

they may very well have an injury. They may have a continuing 

condition that a physician will indicate, yes, that condition remains. However, the individual may still be able and may be, in 

fact, working in some situations that we are not aware of and failing to report it in the annual——

Mr. GREENWOOD. So it is more the double-dipping that causes 

the fraud than just sort of malingering, if you will? 

Mr. HALLMARK. Well, certainly fraud, if you sign the document 

saying you are not working and don’t have any earnings and, in 

fact, you are working and do have earnings, that is the nature of 

the fraud that the IG finds. 

Mr. GREENWOOD. That is the nature, but that there is a continuing injury—what I am trying to understand here is, I go to my 

doctor—and I am required to re-certify. The doctor says, ‘‘Yes, the 

person is still injured.’’ then the person is actually working another 

job and falsely reports that he is not. Did he pull one over on the 

doctor? I mean——

Mr. HALLMARK. The doctor is not aware of any——

Mr. GREENWOOD. Not that he has got the other income, but that 

he is well enough to work. 

Mr. HALLMARK. Most of the concerns that we are talking about 

here are complex. And they are not of the kind that typically are, 

yes, this person obviously is never going to work again or, no, this 

person can go right back to work. They are in the gray area. That 

is the nature of these injuries, many of which are musculoskeletal 

injuries and subject to a lot of variability and subjective findings. 

That is why I was referring to the whole issue of disincentives 

to return to work. The question many times is that the transition 

to going back to work, there is—it is rare, it is really quite rare 

that people are being fraudulent and drawing the benefit and being 

off somewhere working at another job. That happens, but I think 

the IG prosecutes 100 cases a year out of the 50,000 long-term roll 

cases we have. 

Much more common is people who are continuing to draw that 

benefit, not working, not engaging in fraud, but the question is 

whether or not they shouldn’t be back at work. And that is the 

gray area. 

Mr. GREENWOOD. If I am doing a manual labor, and I am injured 

so that I can’t do manual labor, do I—am I—is the Federal Government able to compel that person on condition of continuing to receive the benefit to do another kind of labor that is less taxing on 

their physical body? 

Mr. HALLMARK. There are sections in FECA for participating in 

a vocational rehabilitation program. So, yes, if an individual is a 

blue-collar worker who cannot do the craft, one of the things that 

we will do in our return-to-work effort is identify possible alternative employment and——

Mr. GREENWOOD. One of the things that strikes me there is a 

shortage of claims managers, right? 

34

Didn’t you say that, Ms. Carney, in your testimony? There is a 

shortage of claims managers. 

Ms. CARNEY. In my opinion. 

Mr. GREENWOOD. I wonder how many people are receiving FECA 

benefits who couldn’t be claims managers. How hard a job does 

that have to be? How much training does it take to become a FECA 

claims manager? 

Mr. HALLMARK. I think our claims examiners would indicate it 

is a very difficult job. 

Mr. GREENWOOD. I am sure it is, but you don’t have to go to college for 9 years to learn how to do that, do you? 

Mr. HALLMARK. It is a complex business, but, yes, we do have 

claims examiners who are former recipients of benefits who got involved and learned the program through that avenue. And that is 

fine. 

We do look for all kinds of different employment where people 

can be in that situation. But the big issue, the most—the greatest 

difficulty in vocational rehabilitation is employee motivation. 

Mr. GREENWOOD. Nothing like taking away their benefits to get 

their motivation going, in my opinion. 

Mr. HALLMARK. That is one of the avenues, but it is not dispositive at all times. 

Mr. GREENWOOD. Thank you, Mr. Chairman. 

Chairman NORWOOD. Thank you, Mr. Greenwood. 

I would like to ask the panel, all of us have a lot of questions 

for which there is not enough time to ask. And we will submit 

questions in writing, if we could. Perhaps that will help us a little 

bit. But I will recognize myself to sort of finish up. 

Ms. Carney, have you had surgery for your Carpal Tunnel? 

Ms. CARNEY. No. In my particular case, I have not. That is because my surgeon thought it was too life threatening. But——

Chairman NORWOOD. Life threatening for Carpal Tunnel? 

Ms. CARNEY. Thoracic Outlet Syndrome gets too close to the jugular, too close to the spinal. They would have to cut me through 

the breast and through the stomach. 

Chairman NORWOOD. I am talking about the Carpal Tunnel. 

Ms. CARNEY. There is no point in fixing my Carpal Tunnel because of my Thoracic Outlet. They go, pardon the expression, hand 

in hand. 

Chairman NORWOOD. I am going to take my time with one question, Mr. Hallmark. I think it will take you the 5 minutes. I would 

like for to you walk me through what happens when a patient is 

injured. That point we know that a Federal employee is injured 

and sustains an injury, is that employee first seen by an OWCP 

doctor? Is that the first step? Are there deadlines for filing a claim 

with an employer? Just how would a typical claim proceed? 

Mr. HALLMARK. I don’t know if there is a typical claim, but basically the process is an individual’s hurt on the job. Typically the—

someone is aware of it. They may be referred immediately to—

taken to an emergency room to address the traumatic injury that 

has occurred if it is a slip-and-fall or a vehicle accident, of which 

we get thousands. That individual would be treated by a physician, 

whoever was available in an emergency situation. 

35

The claim form would be compiled by the employing agency, 

signed off by the individual when they are able to come back to 

work and do that, and signed off by the supervisor in the shop. The 

employer then, if they are the Postal Service, mails us their claims 

form within 14 days of the date of injury. That is the goal. And as 

I said earlier, the Postal Service is pretty good about that. 

Chairman NORWOOD. How rigid are you with the 14 days? 

Mr. HALLMARK. Well, the 14 days is a regulatory requirement. As 

I have indicated the current average for meeting that goal is about 

67 percent governmentwide. And as Ms. Carney indicates, we don’t 

have a regulatory penalty to apply. 

Chairman NORWOOD. So if you get it on the 21st day? 

Mr. HALLMARK. We get it when we get it, and we start working 

as soon as we do. And as Ms. Carney indicates quite accurately——

Chairman NORWOOD. So we need to take the 14 days out and 

just say turn it in when you are ready. 

Mr. HALLMARK. Well, it is our goal for those forms to be sent to 

us as soon as possible, because as she indicates, if we don’t know 

the claim has been filed, then when the medical bill is forwarded 

to us, we won’t be able to process it. We will send it back to the 

doctor, and we get into the round of unhappiness and delays that 

creates the big problem. 

So what happens when the individual is injured, the claim comes 

to us. If the injury is very serious, we will assign a nurse, vocational nurse, to the case to try to help that individual understand 

what needs to be done medically to recover and then eventually 

get—work with the employing agency to go back to work. 

If they are off work for more than 45 days of continuation of pay, 

we would then start compensation under the FECA. The claimant 

and the agency would need to file what’s called a CA–7 form asking 

for wage replacement, and that should be done at the time that the 

continuation of pay is finished. 

Chairman NORWOOD. So what if medical treatment is going on 

during all of this time? Yes, you are out of the emergency room, 

but you are still having to go back and forth to your physician. Is 

that physician—anybody in private practice can do that? 

Mr. HALLMARK. Yes. The claimant has the right to choose their 

physician, and that is a fundamental principle in the FECA program. 

Chairman NORWOOD. And the physician says, geez, I think you 

need this surgery for that carpal tunnel. Does that physician have 

to ask your permission to do that surgery? 

Mr. HALLMARK. Yes. 

Chairman NORWOOD. So you have to preauthorize every case before the physician can go ahead and do the treatment. 

Mr. HALLMARK. Not every medical procedure is required to be 

preauthorized, but invasive surgeries, the main purpose for that 

preauthorization—well, there is really two. One is to ensure that 

the procedure is, in our view, connected to the injury, because obviously these things could be complicated, and a surgery might be 

about something else. And the other is to ensure that it is an appropriate medical procedure for that individual, because the surgery, once it is conducted, might have consequences itself. And if 

36

we have authorized it, then those consequential injuries are now 

payable as part of the person’s FECA claim. 

Chairman NORWOOD. So you actually—you think probably the 

doc won’t tell you if this surgery is needed according to the injury. 

You all have to step in and make sure. 

Mr. HALLMARK. Well, the doctor—typically the doctor is aiming 

to try to do what they think is best for the patient. That may or 

may not be something that we feel is appropriate for the Federal 

Government to pay for. So the request comes to us in—99 percent 

of the time in very good faith. But we have to make the determination does this particular surgery fall within our purview, and if it 

does, is it appropriate for this particular individual? So in perhaps 

two-thirds of surgery situations, we ask for a second opinion to ensure that it is safe and that it is appropriate. 

Chairman NORWOOD. How long does that take, to go between—

a patient going to the physician, physician sending in a 

preauthorization to you saying we need the surgery, from there to 

a second opinion? How much time have we spent now? 

Mr. HALLMARK. Well, it should take less than a week for the decision to be made by our claims examiner that, yes, this does need 

a second opinion or, no, it doesn’t. And if it is a minor kind of procedure that is exploratory and one that is not particularly invasive, 

our contractor can sometimes do that on the phone or immediately. 

But if it is a substantial surgery, then within a week our claims 

examiner ought to have decided yes or no with regard to a second 

opinion. 

And then we have a different set of contractors who schedule the 

second opinions. I believe those—our goal is for those to occur as 

quickly as possible. I think it is probably typical to be a matter of 

2 or 3 months by the time you schedule the examination and then 

get a report back from the physician. And obviously, if it is complex, it could be longer than that. 

Chairman NORWOOD. My time is expired. Let me just say I am 

going to explore this a little bit in writing with you. The people I 

have been hearing from in Texas are people I do respect, and when 

they tell me it takes 6 months, up to a year to have the 

preauthorization on surgery, it makes—it just makes a lot of questions come to mind. 

How much information do you have in your agency? Do you know 

how many requests for surgery you had in 2003? 

Mr. HALLMARK. I don’t know whether that particular number is 

available to me, but I will certainly look for it and get it to you. 

[The information referred to has been retained in the Committee’s official files.] 

Chairman NORWOOD. Well, I am going to ask you that. And then 

I am going to ask you out of all of those surgeries that were requested in 2003, what percent of them received a denial the first 

time? Some people say 100 percent. 

Mr. HALLMARK. Well, if that is the case—if it is 100 percent, then 

people are not following procedures, because we have specific procedures that allow for approval without second opinion of exploratory 

arthroscopies and that sort of procedure. So there are fairly substantial categories of surgeries that we do intend at least to approve without review. 

37

Chairman NORWOOD. Well, I am not being critical. I am curious. 

I am trying to see what really does happen. Is my pal down in 

Texas just having a particular problem in his area, or is this something going on? 

Mr. Owens, would you like to——

Mr. OWENS. I just have one off-the-record question. Mr. Hallmark, one of our colleagues here asked you is it possible to train 

claimants to become claim managers? I will ask you is it possible 

to train claimants to become Congresspersons? Thank you. 

Chairman NORWOOD. Well, I can’t close with that. It appears to 

me anybody can be a Congressman, training or not. 

Thank all of you for your time. I really do appreciate your testimony and your willingness to be here with us today, and participation and Mr. Lewis. I am going to have a bunch of questions for 

you, too, in writing. And if there is no further business, the Subcommittee stands adjourned. 

[Whereupon, at 2:52 p.m., the Subcommittee was adjourned.]

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