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FEDERAL EMPLOYEES’ COMPENSATION ACT: A

FAIR APPROACH?

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

U.S. POSTAL SERVICE AND LABOR POLICY

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

APRIL 13, 2011

Serial No. 112–33

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, U.S. POSTAL SERVICE AND LABOR

POLICY

DENNIS A. ROSS, Florida, Chairman

JUSTIN AMASH, Michigan, Vice Chairman

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

TREY GOWDY, South Carolina

STEPHEN F. LYNCH, Massachusetts,

Ranking Minority Member

ELEANOR HOLMES NORTON, District of

Columbia

GERALD E. CONNOLLY, Virginia

DANNY K. DAVIS, Illinois

(III)

C O N T E N T S

Page

Hearing held on April 13, 2011 .............................................................................. 1

Statement of:

Steinberg, Gary, Acting Director, Office of Workers Compensation, U.S.

Department of Labor, accompanied by Douglas Fitzgerald, Director,

Division of Federal Employees Compensation; Bill Siemer, assistant

inspector general for investigations, U.S. Postal Service; Lisa

McManus, president, CCS Holdings, L.P.; and Milagro Rodriguez, occupational health and safety specialist, American Federation of Government Employees ............................................................................................ 4

McManus, Lisa .......................................................................................... 28

Rodriguez, Milagro .................................................................................... 37

Siemer, Bill ................................................................................................ 21

Steinberg, Gary ......................................................................................... 4

Letters, statements, etc., submitted for the record by:

McManus, Lisa, president, CCS Holdings, L.P., prepared statement of ..... 30

Rodriguez, Milagro, occupational health and safety specialist, American

Federation of Government Employees, prepared statement of ................. 39

Siemer, Bill, assistant inspector general for investigations, U.S. Postal

Service, prepared statement of Mr. Williams ............................................. 23

Steinberg, Gary, Acting Director, Office of Workers Compensation, U.S.

Department of Labor, prepared statement of ............................................. 7

(1)

FEDERAL EMPLOYEES’ COMPENSATION ACT:

A FAIR APPROACH?

WEDNESDAY, APRIL 13, 2011

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FEDERAL WORKFORCE, U.S. POSTAL

SERVICE AND LABOR POLICY, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 1:44 p.m., in room

2154, Rayburn House Office Building, Hon. Dennis A. Ross (chairman of the subcommittee) presiding.

Present: Representatives Ross, Amash, Lynch, Norton, Connolly,

and Davis.

Also present: Representative Issa.

Staff present: Ali Ahmad, deputy press secretary; Robert Borden,

general counsel; Molly Boyl, parliamentarian; John Cuaderes, deputy staff director; Gwen D’Luzansky, assistant clerk; Adam P.

Fromm, director of Member liaison and floor operations; Ryan Little, manager of floor operations; Justin LoFranco, press assistant;

James Robertson, professional staff member; James Peter Warren,

policy director; Kevin Corbin, minority staff assistant; Adam Miles

and William Miles, minority professional staff members.

Mr. ROSS. Good afternoon. Welcome. I would like to call the Subcommittee on Federal Workforce and U.S. Postal Service and Labor

Policy to order. Today’s hearing is on the Federal Employees’ Compensation Act: A Fair Approach?

Before we begin, I will state the Oversight Committee mission

statement, as we have done in the full committee and all subcommittees. We exist to secure two fundamental principles. First,

Americans have a right to know that the money Washington takes

from them is well spent. And second, Americans deserve an efficient, effective government that works for them. Our duty on the

Oversight and Government Reform Committee is to protect these

rights. Our solemn responsibility is to hold government accountable

to taxpayers because taxpayers have a right to know what they get

from their government. We will work tirelessly in partnership with

citizen watchdogs to deliver the facts to the American people, and

to bring genuine reform to the Federal bureaucracy. This is the

mission of the Oversight and Reform Committee.

I will now move into my opening statement. The Federal Employees’ Compensation Act [FECA], provides workers’ compensation

coverage for roughly 3 million Federal civilian workers who suffer

occupational injury or disease, including those in the U.S. Postal

Service. In fiscal year 2010, the cost was $2.86 billion to approxiVerDate 17-JUN-2003 12:34 Sep 22, 2011 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68215.TXT KATIE PsN: KATIE
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mately 251,000 claimants. Of that dollar amount, nearly half, or

$1.1 billion, went to U.S. Postal employees.

FECA was last significantly amended in 1974. Today, this committee will hear from a panel of witnesses who will discuss whether FECA continues to adequately provide workers’ compensation to

Federal employees who have suffered work force-related injuries.

Members of this committee recognize that FECA is an important

program that was intended to provide income to employees while

they recuperate prior to returning to work. Federal employees who

have been injured while performing their duties should be compensated fairly.

Under FECA, compensation benefits are paid at a rate as high

as 75 percent of salary, tax-free, for as long as the work-related injury continues or until death. Because FECA benefits typically exceed Federal retirement benefits, there exists a large incentive for

Federal workers to remain on FECA beyond the point when they

otherwise would have returned to work or retired.

The result is that FECA has become a retirement plan for thousands of Government employees because the payout is better.

FECA pays monthly benefits to about 49,000 Federal employees

who are on its ‘‘periodic’’ roll. Today, 14,500 Federal civilian employees continue to collect workers’ compensation after their retirement age. Of the 15,470 Postal employees receiving FECA benefits,

8,632 are age 55 and older, including 2,051 ages 70 and older, and

132 ages 90 and older.

FECA was never intended to be a retirement plan. Workers who

have been permanently disabled by their injuries and who will

never return to work should not be covered indefinitely by FECA.

They should receive a retirement annuity as other Federal workers

do.

According to a 2005 audit by the Office of Inspector General for

the Veterans’ Administration, converting the retirement-eligible

Postal and Federal employees on workers’ compensation to the Federal employee retirement system when they reach retirement age

will save taxpayers $500 million annually. Congress has an obligation to consider policy reforms that overhaul Federal workers’ compensation to reduce costs system-wide. It is my hope we can reach

bipartisan agreement on an equitable approach.

I thank the witnesses for appearing today, and I look forward to

their testimony.

I will now recognize the distinguished ranking member, Mr.

Lynch, for his opening statement.

Mr. LYNCH. Thank you, Mr. Chairman. I want to thank the witnesses for helping the committee with its work. I appreciate the

chairman holding this afternoon’s hearing, as it will afford us the

opportunity to examine the Federal Employees’ Compensation Act,

which as the chairman has pointed out has not been revisited or

significantly updated in over 30 years.

The Federal Employees’ Compensation Act [FECA], and I will try

to avoid using acronyms, as it is so commonly referred to, serves

as the safety net for thousands of Federal workers that are injured

while in the performance of their official duties. The Federal Employees Compensation Act benefits are also extended to Federal ciVerDate 17-JUN-2003 12:34 Sep 22, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68215.TXT KATIE PsN: KATIE
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vilian employees that may contract occupational diseases or illnesses as a result of their work environment.

Today’s hearing serves as a reminder that the Federal Government takes its responsibilities as an employer very seriously and

is committed to having in place effective systems and policies that

protect and assist the men and women of this great Nation who

have dedicated their professional career to public service.

The Federal Workers’ Compensation Program helps shield our

employees and their families from undue hardships, often during

times when they may be dealing with some challenging situations

and circumstances. Wage loss payments ensure that these employees can continue to make ends meet, while medical reimbursement

and vocational rehabilitation regularly mean the successful recovery and eventual return to work of these dedicated public servants.

Although the Federal Workers Compensation may commonly be

lauded as a prime example of employee disability insurance, the

program is not without its share of problems, especially given the

fact that it has not been significantly reviewed in the past 30

years. For example, time and again we hear of how injured employees face delays in the processing of paperwork, they confront stringent time limits and encounter various difficulties when they are

seeking to change their physician or medical provider.

On the other hand, we see employees of the Office of Workers’

Compensation program having to deal with over 100,000 new

claims a year. And they interact with a myriad of different Federal

agencies and grapple with the case management expectations and

efficiencies, all in the face of recent budgetary cuts.

Further, with tens of thousands of Federal employees currently

serving overseas in zones of armed conflict, it is even more important now that we ensure the seamless medical care and efficient

processing of workers’ compensation claims upon the return of

these employees, who unlike their military counterparts often lack

an established medical rehab framework or agency personnel that

are dedicated to helping them navigate bureaucratic hurdles associated with filing claims for Federal workers’ compensation benefits.

To that end, I look forward to today’s proceedings to further the dialog on how best to update, modernize and improve the administration of the Federal Employees Compensation Act, with the goal of

making it more equitable for our employees and more manageable

for our agencies.

While I recognize that the various FECA-regulated reform proposals that have already been put forth this Congress attempt to

accomplish this goal, I am less than confident that any of these

proposals actually represents a truly fair approach to enhancing

the Federal Workers’ Compensation program going forward, as contemplated by the title of today’s hearing.

Mr. Chairman, I would also like to ask unanimous consent that

the statement of the National Active and Retired Federal Employees Association be included in the record.

And again, I thank our witnesses for appearing here before this

subcommittee this afternoon, and for helping us sort out what options may need to be considered to guarantee that injured Federal

employees and their family members are receiving the proper support and treatment they deserve from a grateful Nation.

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Thank you.

Mr. ROSS. Thank you, Mr. Lynch. And without objection, we will

show the report entered into the record.

Members may have 7 days to submit opening statements and extraneous material for the record.

We will now welcome our panel of witnesses. Mr. Gary Steinberg

is the Acting Director of the Office of Workers Compensation Programs at the U.S. Department of Labor. Mr. Douglas Fitzgerald is

the Director, Division of Federal Employees Compensation, at the

U.S. Department of Labor. Unfortunately, David Williams, the Inspector General of the U.S. Postal Service, could not be with us

today due to illness. However, Mr. Bill Siemer, the assistant inspector general for investigation, is here in his place.

We have next Ms. Lisa McManus, who is the president of CCS

Holdings, L.P. And we have another witness who is not with us

yet, Ms. Milagro Rodriguez, an occupational health and safety specialist with the American Federation of Government Employees.

What I would like to do, pursuant to committee rules, is ask you

to stand, raise your right hands and I will swear you in before you

testify.

[Witnesses sworn.]

Mr. ROSS. Thank you. Let the record reflect that all the witnesses answered in the affirmative.

Please be seated. In order to allow time for discussion, we are

going to ask you to keep your remarks brief. Your written statements, of course, have been submitted and are part of the record

of this hearing. At this time, I will now recognize Mr. Steinberg for

an opening.

STATEMENTS OF GARY STEINBERG, ACTING DIRECTOR, OFFICE OF WORKERS COMPENSATION, U.S. DEPARTMENT OF

LABOR, ACCOMPANIED BY DOUGLAS FITZGERALD, DIRECTOR, DIVISION OF FEDERAL EMPLOYEES COMPENSATION;

BILL SIEMER, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, U.S. POSTAL SERVICE; LISA McMANUS, PRESIDENT, CCS HOLDINGS, L.P.; AND MILAGRO RODRIGUEZ, OCCUPATIONAL HEALTH AND SAFETY SPECIALIST, AMERICAN

FEDERATION OF GOVERNMENT EMPLOYEES

STATEMENT OF GARY STEINBERG

Mr. STEINBERG. Thank you, Chairman Ross and committee members. I appreciate the opportunity to discuss the Federal Employees’ Compensation Act with you today.

On behalf of Secretary Solis, I would like to share a set of balanced proposals that would enhance the ability for us to assist

beneficiaries in returning to work, provide a more equitable array

of benefits and generally modernize the program.

Almost 95 years ago, Congress enacted FECA to provide workers’

compensation coverage to all Federal employees and their survivors

for disability and death due to work-related injuries and illnesses.

The basis of FECA includes the postal worker who is hurt when

his mail truck is hit while driving and delivering the mail, the FBI

agent who is injured or killed in the line of duty and the VA nurse

who hurts her back while lifting a patient.

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DOL’s Office of Workers Compensation Programs works hard to

administer the program fairly, objectively and efficiently. We seek

to continuously improve the quality and service delivery to our customers, enhance internal and external communications and reduce

the cost to the taxpayer. We have made major strides in disability

management, resulting in significant reductions in the average

number of work days lost from the most serious injuries. Over the

last 10 years, the average number of days lost due to serious injuries has declined by over 20 percent, producing an annual savings

of $53 million.

Our administration costs are only 5 percent of the total program

costs, far below the average of all State self-insurance programs,

which is over 11 percent.

To further improve FECA, we have made comprehensive recommendations to Congress. I wish to highlight some of the major

changes now.

To help injured employees return to work, we request the authority to start vocational rehabilitation activities without waiting until

an injury is deemed to be permanent in nature. We seek the mandate to develop a return to work plan with claimants early in the

rehabilitation process and the authority to develop an assisted reemployment program with Federal agencies, similar to the one that

we have successfully implemented with the private sector.

The proposed changes will also have a positive impact on the

Government’s ability to achieve the President’s Executive order on

hiring individuals with disabilities.

We also suggest changes to the benefit structure. For example,

the payment of schedule awards for a loss or loss of use of a limb

or sight or hearing is often complicated and thus often delayed. Although not intended to replace economic loss, payments are based

on the employee’s salary. So a letter carrier’s knee impairment is

compensated at less than half the rate of her GS–15 manager with

the same injury.

We think these awards should be paid by DOL concurrently with

wage loss compensation, more rapidly, and to be fair, they should

be calculated at a uniform level for all employees. We also recommend increases to burial benefits and benefits for facial

disfigurements.

Under current law, the majority of injured workers receive wage

replacement at 70 percent of their salary, tax-free and COLA. This

rate is higher than the take-home pay for most Federal employees

and at times can be an obstacle to the Department’s effort to encourage every worker to make the hard and sometimes painful effort to overcome their injuries and return to work. We therefore

recommend shifting the benefit level for the majority of claimants

to 70 percent rather than 75 percent.

To provide equity with other Federal employees, we also recommend establishing a lower conversion rate for beneficiaries beyond retirement age. This would more closely mirror OPM’s retirement rates. Both changes would be prospective.

In addition, elements of the statute need to be simplified so that

we can process more expeditiously. For example, the current statute increases the compensation rate for anyone with a dependent

beyond the standard 66 and two-thirds rate loss to 75 percent. PayVerDate 17-JUN-2003 12:34 Sep 22, 2011 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68215.TXT KATIE PsN: KATIE
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ing all non-retirement age beneficiaries at 70 percent would simplify the process by eliminating the continuing need to obtain and

validate documentation regarding dependent eligibility.

A single rate would be simpler, more equitable and would

produce a significant savings to the taxpayer. This change alone

would yield a 10-year savings of over $500 million.

My written testimony outlines other important provisions that

would streamline and improve the program. In summary, FECA is

a model workers’ compensation program. Yet, it has limitations

that need to be addressed, we all recognize that.

The reforms we suggest today are not new. They have been proposed by both the current and previous administrations. They are

careful, they are balanced. We believe they reflect good government, and they will bring the program into the 21st century.

Thank you again for the opportunity to discuss the program with

you today. I will be prepared to answer any questions that you may

have.

[The prepared statement of Mr. Steinberg follows:]

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Mr. ROSS. Thank you very much.

Next we will move on to Mr. Siemer for 5 minutes. You are recognized.

STATEMENT OF BILL SIEMER

Mr. SIEMER. Thank you, sir.

Mr. Chairman, Ranking Member Lynch and members of the subcommittee, thank you for the opportunity to discuss workers’ compensation issues and reform.

The Federal Employees’ Compensation Act [FECA], requires Federal agencies to participate in Department of Labor’s FECA program. The Department of Labor bills each agency annually for compensation paid and non-appropriated agencies also must pay the

Department of Labor an annual administrative fee. Eligible disabled employees receive 66 and two-thirds percent, or 75 percent

with dependents, of their basic salary tax-free, plus medical related

expenses. Also, FECA places no age limit on receiving benefits.

This is substantially more than other employees receive when they

retire. Though unintended, FECA has become a lucrative retirement plan.

The Postal Service is the largest FECA participant, paying more

than $1 billion in benefits and $60 million in administrative fees

annually, creating a long-term liability of $12.6 billion. As of February 2011, the Postal Service had about 15,800 disabled employees. Over 8,700 were at least age 55; about 3,100 were at least age

65; and about 900 were between age 80 and 98.

Certain aspects of the program make it susceptible to fraud, including the claimant’s ability to change their story until their claim

qualifies, the claimant’s ability to hire a physician, rather than use

a plan physician to assess their injuries and conditions. The program incentivizes DOL to collect larger fees if they approve more

claims, and lose budget dollars if they deny them. The lack of effective DOL case management, and employers not being allowed to

present or respond to evidence at hearings.

The Department of Labor has some fraud detection responsibility, but it is unclear to what extent. They advise agencies to actively manage their own programs while still charging administrative fees. There is not a clear delineation of responsibility between

agency program managers and their OIGs and DOL and its OIG

in detecting fraud. Accordingly, there is significant risk that program oversight will be duplicative or not done.

Since October 2008, we have removed 476 claimants based on

disability fraud, recovered $831⁄2 million in medical and disability

judgments, and halted significant future losses. In one investigation, a fraudulent claimant received $142,000 in benefits while she

was working as a real estate agent. And we had pictures of her

hiking and bungee jumping. She even bought a boat and named it

Free Ride. Other investigations have found fraudulent claimants

working as martial arts instructors, landscapers, hairdressers and

mechanics.

Working with DOL can be difficult. They control needed documents but are often not responsive when we investigate cases. Additionally, they do not take timely action when told that a claimant

22

no longer qualifies for benefits. Even when a claimant is convicted,

DOL is slow to terminate benefits.

We gave the Department of Labor an investigative report in

2006, which found a claimant was exceeding his limitations. Even

though the employee was willing to return to work, the Department of Labor did not reduce his benefits until 2011. Fourteen

months ago, we gave the Department of Labor an investigative report containing evidence of fraud by a disability claimant and a

subsequent medical exam confirmed the claimant was able to return to work with no restrictions. Despite requests, DOL has taken

no action and continues to pay benefits. Over a 5-year period, one

claimant submitted $190,000 in unsupported mileage reimbursements, and the Department of Labor paid without question.

Stress claims in particular are at high risk for fraud. If a doctor

sees a correlation between stress and a claimant’s work, the claim

is often approved. In one instance, a claimant’s emotional reaction

to a change in work schedule was enough for Department of Labor

approval.

The OIG also investigates medical providers involved in criminal matters, including disability fraud. And we have recovered $781⁄2

million since fiscal year 2009. Unfortunately, the Department of

Labor provides no standardized billing guidelines for doctors, making it difficult to hold them accountable for fraudulent billings. If

the Department of Labor instituted a system similar to Medicare’s,

prosecutors would be more inclined to take these cases.

From our reviews, the Postal Service would benefit from having

its own workers’ compensation program. Savings would be in the

areas of reduced administrative fees, accurate assessment of claims

by plan physicians, buy-out options, mandatory retirements, immediate access to records and improved accountability over case management.

FECA is in need of significant reform. Such reform could reduce

the substantial risk for fraud and improve program efficiency and

effectiveness while protecting reasonable benefits for legitimate

claimants. Thank you.

[The prepared statement of Mr. Williams follows:]

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Mr. ROSS. Thank you.

Ms. McManus, you are recognized for 5 minutes.

STATEMENT OF LISA McMANUS

Ms. MCMANUS. Thank you, Mr. Chairman, committee.

I believe I am the only individual speaking today from the private sector, so I feel somewhat of a little bit at a disadvantage.

Nevertheless, let me explain how I even became interested in the

FECA.

We manage workers’ comp for the non-appropriated funds’ instrumentalities. And because of that, we were asked to go down to

a Navy base in Corpus Christi to assist them in their FECA program. That was in the early 1990’s.

Since that time, we have been approached by several agencies to

assist them. And so we do have contracts with some, the Department of Commerce, for example, some FECA agencies and as such,

have realized that there are so many nuances of the law that foster

abuse.

For example, not to be repetitive to both what the chairman in

his opening remarks or what has already been said, we feel that

the entire FECA law needs to be sunset and start over, and to

fashion a new law that would either compare or combine both

NAFE workers and FECA-appropriated fund workers. Along those

lines, reduce the average weekly wage of 75 percent to 66 and twothirds. Seventy-five percent of an average weekly wage tax-free

lends itself to abuse, because many times the worker actually is

making more on workers’ comp than if they were working.

Federal workers who are beyond the retirement age continue to

receive workers’ comp. Under the current scenario, Federal workers

would continue to receive 75 percent of their average weekly wage

tax-free, with an annual cost of living increase, versus 56 percent

under a retirement plan. Again, this scenario lends itself to abuse.

Afford appropriated workers the same benefit entitlement as

non-appropriated workers at the rate of 66 and two-thirds. Offer

retirement benefits under OWCP to only those employees deemed

to be permanently and totally, by legal definition, disabled. Protocols within the Department of Labor are far outside industry standards with regard to case management and oversight. For example,

in certain situations, a Department of Labor case manager is only

required to review a case file every 2 years. A lot happens in 2

years.

Perhaps change the law to allow a government agency the option

of seeking a third party administrator to handle its FECA claims,

or the Department of Labor. Or increase DOL staffing that would

ensure proper case management that closely aligns with industry

standards. The number of DOL full-time equivalents used to administer newly created cases plus the ongoing claims from previous

years far exceeds standard used in the private sector and industry

standards.

Many agencies do not even have a centralized program, a key

element in measuring and managing overall performance goals. Implement a requirement that if an agency manages its claims internally, a standard set of protocols and policies, as well as standard

performance goals and benchmarks, must be used. The OIG has

29

performed many audits for various agencies. Most findings indicate

ineffective monitoring, a lack of return to work initiatives, ineffective medical management, poor monitoring of chargeback reports,

and overall poor performance by the agencies.

Agency employees involved in handling or oversight of FECA

claims would be required to have 15 hours or more of continuing

education each year covering FECA laws, claims management and

benchmarking. Many agencies have no standard return to work

program in place for injured workers who may be able to return to

the work force once maximum medical improvement has been

achieved. Mandate a program for all agencies to at least attempt

to bring workers back to work.

Regarding continuation of pay, and that’s the first 45 days of disability, to my knowledge there is no other jurisdiction that allows

a 45-day continuation of pay where an employee receives 100 percent of their salary. Our suggestion would be to eliminate that in

its entirety.

[The prepared statement of Ms. McManus follows:]

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Mr. ROSS. Thank you, Ms. McManus.

Ms. Rodriguez, welcome. I understand you had some transportation delays getting here. We are pleased to have you here.

The only thing you missed was the swearing-in part, so if you

don’t mind, stand and raise your right hand and I will swear you

in.

[Witness sworn.]

Mr. ROSS. Thank you. Let the record reflect that the witness answered in the affirmative. And again, Ms. Rodriguez, thank you

very much for being here. You are recognized for 5 minutes.

STATEMENT OF MILAGRO RODRIGUEZ

Ms. RODRIGUEZ. Thank you, Mr. Chairman.

On behalf of the members of AFGE, which represents more than

600,000 Federal employees, including the claims examiners who

adjudicate workers’ compensation claims, I thank you for the opportunity to testify today on the proposed changes to the Federal

Workers Compensation Act.

We wish we were here offering our views on how to improve the

Federal Workers’ Compensation Program and how to save the Government money. Although the proposed changes are described as

modernizing and improving FECA, they basically amount to reducing benefits for injured or ill employees in order to save money.

The changes we would like to see are the changes that improve the

claims process, the changes that would result in employees getting

the medical attention they need sooner, the changes that would

give employees the time they need to recover and get well sooner,

the changes that would ensure that employing agencies meet their

FECA responsibilities. Also, the changes that would compel agencies to improve health and safety so workers do not get hurt or become ill in the first place.

First, I have some general comments about the proposal. The

language in the proposal that implies that injured employees do

not want to get back to work is unfortunate. Words like incentivize

lead one to believe that employees are injuring themselves so they

can be paid by OWCP so they don’t have to work and eventually

retire on workers’ compensation benefits. That is an unfair characterization. It does not take into account the diminished work life

that many injured employees face. It does not take into account the

physical pain employees must endure and the psychological pain

they have to deal with when their life starts spiraling into debt because OWCP payments take so long or because their cases are denied.

In our experience, most workers wish they had never been hurt.

Most want to go back to work when it is safe for them to do so.

And most wish they did not have to deal with the workers’ compensation process at all.

Next, I would like to address some specific changes that are

being proposed. The proposal to create an assisted re-employment

program seems to be a positive step. However, we are concerned

that this program would serve as a disincentive to agencies to

make every effort to find suitable jobs for their injured employees.

It would potentially create a rush to get the employee into the proVerDate 17-JUN-2003 12:34 Sep 22, 2011 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68215.TXT KATIE PsN: KATIE
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gram and the worker may be forced to return to work before it is

medically advisable.

AFGE is also concerned about what happens after the 3-year period. For example, a TSA worker is injured and cannot do his TSA

job, but he can do a Social Security job. So for 3 years, he works

at SSA and DOL reimburses SSA for his salary. But if he cannot

go back to his job at TSA and SSA will not keep him without the

subsidy, what alternative does the employee have?

We are also concerned about how OWCP will address the needs

of workers who do not find employment after the vocational rehabilitation program is completed. We think agencies will use this to

get rid of their injured employees. We see this happening already

at TSA.

AFGE does not believe claimants should be forced to choose between a lower disability retirement than they would have if they

had continued to work, or having their benefits reduced through

the proposed conversion. To make this change more equitable and

fair to claimants, the amount of the reduced benefit should be higher than the proposed 50 percent.

The proposal would eliminate the increased percentage for claimants with dependents, making the basic compensation rate 70 percent of monthly pay for all claimants. We do not see this as a matter of increasing compensation because a worker has dependents,

but of providing injured workers with compensation comparable to

what would be their take-home pay before their injury or illness.

The proposal would place the 3-day waiting period immediately

after the employment injury and prior to the 45-day continuation

of pay period. So if a worker is injured or made ill on the job, the

worker already suffers a loss of income or is forced to use his or

her own leave. Other than penalizing employees for becoming sick

or injured on the job, we do not see any reason to change the way

this is currently done.

The proposal to include sanctions for non-cooperation with nurses

is too harsh and does not include any due process considerations.

In our experience, the primary reason claimants sometimes resist

their nurse’s intervention is that some nurses exceed their authority by adversely influencing the treating physician’s opinions or reports to OWCP. If there are to be sanctions, there needs to be a

forum for the claimant to state his or her position and to be heard.

In closing, the Federal Workers’ Compensation program should

strive to be the best, the model program. It should not be competing with the States in a race to the bottom by lowering benefits

to the States’ levels. We urge the subcommittee to direct the Officer

of Workers’ Compensation Programs to propose changes that save

money by improving the workers’ compensation process and not

simply by reducing the benefits available to employees injured or

made ill by their jobs when they most need them.

That concludes my statement. I would be happy to respond to

your questions.

[The prepared statement of Ms. Rodriguez follows:]

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Mr. ROSS. Thank you, Ms. Rodriguez.

We will now move into questions. And I will begin by recognizing

the full committee chairman, the distinguished gentleman from

California, Chairman Issa.

Mr. ISSA. Thank you, Mr. Chairman. Although your questions

will be better trained and insightful, I will try to get the easy ones

out of the way.

Ms. Rodriguez, since you spoke last, you probably are most freshly in my mind. If I heard you correctly, your objections are based

on mostly abuses or potential abuses, wouldn’t that be a fair characterization of some of the areas that you were saying, including

that nurses may not be fair, that employers may dump their employees to another entity of Government and so on? Can you show

me any example in the private sector where there is a system that

looks like the system that you would modify our thoughts to? In

other words, where in the private sector would the current system

be paralleled? Who, for example, like the Post Office, and I don’t

pick on the Post Office lightly, but their system allows two 98 year

old people to continue getting full pay years and years after they

should have retired.

Now, postal workers don’t like this any better, it is just part of

the legacy system that has thousands who are past retirement age

but still not disabled and retired in any way, shape or form. So are

you saying that you like some parts of this proposal? And if so,

what parts do you like?

Ms. RODRIGUEZ. There are some areas that would be beneficial

to employees, things like the streamlining. I know we are all about

cutting costs and I think comparing——

Mr. ISSA. No, we are not necessarily all about cutting costs, although we certainly do want to make the system world class. Let

me go through a couple of questions. Do you believe that if someone is unable to do one job but able to do another job, they should

be able to do that job during their short or long-term disability?

Ms. RODRIGUEZ. Yes. And we often struggle with agencies to provide those positions for them, yes.

Mr. ISSA. So assuming for a moment that there were a neutral

third party, and I am trying to find a yes here, I am fishing for

it, if there were a neutral third party that arbitrated, in other

words, an agency couldn’t arbitrarily get rid of somebody, refuse to

take somebody, and for that matter, if you will, the disabled would

be fairly allocated to agencies where they could perform the job. If

we did that, and I did not say with a subsidy, but if we did that

so that the person would be able to go to a part of government

which they could still perform, this is very much like our disabled

veterans who so often find usable and worthwhile jobs in the Post

Office where they get a preference, if in fact we develop that system and had safeguards so the agencies themselves were not arbitrary, would you approve of a change like that?

Ms. RODRIGUEZ. Yes, I think that would benefit employees.

Mr. ISSA. And would it be fair to say that the difference between

two jobs could again be arbitrated by some sort of a panel that

would determine whether or not that change was directly related

to their disability and as such, there should be some supplemental

compensation and obviously, on a yearly basis, monitoring it to see

54

if as they progressed in their new job essentially they phased out

of that subsidy?

Ms. RODRIGUEZ. Certainly. And I think our only concern would

be positions that would be medically suitable to the employee. Otherwise, the situation that you are describing would be fine.

Mr. ISSA. OK, but isn’t it true that virtually every State in the

Union that has workers’ comp, State workers’ comp, you don’t get

to choose your doctor to get the opinion you want, you get, for the

most part, assigned to doctors who evaluate your fitness, and they

do so as agents of the government, not agents of the injured? Isn’t

that true?

Ms. RODRIGUEZ. I can only speak to my experience with the Federal Government. I cannot compare with the States. I have not

worked in workers’ compensation with the States. I cannot answer

that.

Mr. ISSA. OK. Mr. Steinberg, I think I will go to you. If you are

looking at trying to eliminate waste, fraud and abuse, and you are

trying to find those very few, and they are few, who ride the system, who have a football accident over the weekend and somehow

turn it into an injury that they never work again and they get all

these benefits, we all know there are some of these, as few as there

might be. Wouldn’t it be true that the Government should obviously consider outside opinions contrary to the Government’s, but

shouldn’t the Government have a medical review board that works

on behalf of a fair interpretation of the Government, not

incentivized to take people off disability, but paid to do an evaluation for fitness?

Mr. STEINBERG. Yes. That would certainly eliminate a lot of the

potential for fraud by claimants that are trying to abuse a good

system. Because when they can pick their own doctors, there is the

implied ability for them to have a biased opinion on their side.

Mr. ISSA. We are trying to get to a fair and expeditious system,

fair to the employee but expeditious to the process. Do you believe

that the Government should act, maybe not everything that Ms.

Rodriguez wants to do or doesn’t want to do, but do you believe the

system, whether it is the Post Office or other Federal employees

right now needs reform?

Mr. STEINBERG. Absolutely.

Mr. ISSA. Thank you.

Mr. Chairman, I told you I wouldn’t have the best questions, but

thank you for letting me have the first.

Mr. ROSS. Very good questions. Thank you, Mr. Chairman.

I will now recognize the ranking member of the subcommittee,

the distinguished gentleman from Massachusetts, Mr. Lynch.

Mr. LYNCH. Thank you, Mr. Chairman, I appreciate that.

Again, I thank the witnesses for helping us with our work.

Mr. Siemer, I was surprised by some of your numbers, especially

regarding the older employees who remain on the FECA disability

system as opposed to retirement. I want to go back to your numbers. You had, I think it was like 4,000 employees over age 80.

Mr. SIEMER. We had 900 employees over 80, we had 3,100 employees over the age of 65. And we had 8,700 employees that are

over the age of 55.

55

Mr. LYNCH. I will take the latter two categories there, so about

4,000, in other words, 900 and 3,100?

Mr. SIEMER. Yes, sir.

Mr. LYNCH. And those are all over 80 years old?

Mr. SIEMER. Over 65.

Mr. LYNCH. Oh, over 65. And there was a small group, 900, between 80 and 98?

Mr. SIEMER. Actually, sir, the 900 is a subset of the 3,100.

Mr. LYNCH. OK. You don’t combine them into all one. But still,

that is a pretty big number.

Mr. SIEMER. Yes, sir.

Mr. LYNCH. Does the Inspector General track the success rate we

have for folks over 80 years old that actually get rehabbed and

come back to work?

Mr. SIEMER. The Postal Service may have that information. The

Inspector General’s office does not.

Mr. LYNCH. I am just curious, because it would seem to me to

be a—any of the panelists have an indication of how many people

who are injured and over 80 actually return to work?

Mr. STEINBERG. We can’t tell you over 80, sir. What we can tell

you is that on average, over 500 individuals are removed from our

long-term rolls on an annual basis. Over the last 10 years, it has

been close to 10,000. So there are individuals who move on for a

variety of reasons, sir.

Mr. LYNCH. I am really focusing on that, we are trying to devise

some reforms here. That would be good information for me to have.

Mr. STEINBERG. We can provide that for the record, sir.

Mr. LYNCH. That would be great. So Mr. Steinberg, are you going

to provide that or Mr. Siemer?

Mr. STEINBERG. We will provide that, sir. We provide that for the

Government.

[The information referred to follows:]

[NOTE.—The information referred to was not provided to the

committee.]

Mr. LYNCH. OK, that would be great.

So anybody over 80 years old, maybe you can give me coordinates

like 70, 80, 90. It would just seem to me, look, I am just looking

at this as an average person, not an actuary. But it would seem

to me that it would be a pretty slim chance that someone age 90

or 98 is coming back to work after an occupational injury. I am just

trying to save the Government some money here. So maybe we

could take a whack at that.

Mr. Siemer, again, I probably toot my own horn here, I filed legislation along with Ranking Member Cummings, I introduced H.R.

1351, the U.S. Postal Service Retirement Pension Obligation Recalculation and Restoration Act—title just kind of rolls off your

tongue—a couple of weeks ago. [Laughter.]

Contained in my legislation is a proposal to use a portion, we

have a portion of the U.S. Postal Service’s FERS, the Federal Employee Retirement System, we have a surplus of $6.9 billion. And

what we tried to do is move some of that money over, I think it

was about $1.2 billion, to pay some of the on-budget costs of the

workers’ compensation system. Do you have any comments on the

wisdom or lack of wisdom that I might have in trying to do that?

56

Mr. SIEMER. Certainly any move to use that surplus in the FERS

retirement system to pay bills that we would otherwise, the Postal

Service would otherwise have to pay out of revenue this year is a

good thing. So applying it to those normal costs that are occurring

this year is a good thing.

Mr. LYNCH. Thank you.

Mr. Steinberg, any comment on that?

Mr. STEINBERG. No, sir, I can’t speak for the Postal Service and

the use of their revenues.

Mr. LYNCH. OK. I realized my time is short here. I realize we

have to do more than just sort of pay as you go. We have some real

reforms here that we have to tackle, and I appreciate that and your

help in doing so.

But in the meantime, I think it is fair, given there is a surplus

owed to the Postal Service, that we pay for some of the costs going

forward.

I have 12 seconds I will yield back. Thank you, Mr. Chairman.

Mr. ROSS. Thank you, Mr. Lynch.

A couple of questions I have. For lump sum settlement purposes,

Federal employees and the Federal Government cannot settle the

exposure in a case, can they, Mr. Steinberg?

Mr. STEINBERG. No, sir, we do not do that at this point in time.

Mr. ROSS. But wouldn’t that be a good idea for both sides? In

other words, if you knew what your exposure was, and State workers’ compensation programs, for example, allow that. It would allow

for the injured worker to get on with their life, to be able to have

benefits in lump sum fashion, and then actually have the benefits

survive them by way of an annuity.

Mr. STEINBERG. Let me address that from two different perspectives. As I mentioned in my testimony, we do propose a lump sum

payment for a scheduled award. And again, that is associated with

a permanent functional disability, and there is that form of compensation. That can serve as, if you will, an investment for retirement for an individual who may have a lifetime disability.

In terms of a lump sum payment associated with a wage loss, we

believe that should be a continued payment. We continue to hope

that individuals will be able to return to work. And as we continue

to provide the wage loss supplement, we can work with them in

terms of vocational rehabilitation, looking for opportunities for

them to come back either to their original job or to other jobs, preferably within the Federal Government. We believe that is the most

prudent approach. It allows us to maintain a relationship with

them as they continue to go through, if you will, a recovery stage.

Mr. ROSS. Thank you.

Ms. Rodriguez, would you agree that employees should have the

option of whether they want to lump sum settle a permanent disability case?

Ms. RODRIGUEZ. Yes, if they have the option. And I think in the

way that Mr. Steinberg has described it, I would agree with that.

Mr. ROSS. Good, thank you.

With regard to third party recoveries, in a case where third party

action has caused the injury which is compensable under the Federal Employees Compensation Act, there is no recovery, is there?

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There are no lien rights for the Federal Government against a

third party tort feasor, is there?

Mr. STEINBERG. At this point, that is one of the things we are

asking for.

Mr. ROSS. And in any such fashion, do you have any ideas, percentage-wise, or just look at lien rights?

Mr. STEINBERG. We think it is going to be relatively small, but

we can provide additional information on that for you, sir.

Mr. ROSS. Thank you. And Mr. Steinberg, with regard to medical,

because medical drives these cases. As we know, the medical opinions are what dictates what type of disability a person may have.

If somebody goes to their physician and their physician takes the

case and continues to treat them, are there any medical fee reimbursement schedules? Or do you pay usual and customary? What

does the Federal Government pay in terms of medical?

Mr. STEINBERG. We pay based on the AMA codes. We have the

codes, that is what we follow. We monitor that, obviously, in terms

of our central bill pay processing to ensure that the bills are at the

proper level. We also look for situations where they may be over,

or there may be an issue. So as the Postal Service IG has suggested, we do monitor that. We do monitor that closely, and we

contact the IGs if we see that there are issues associated with payment, sir.

Mr. ROSS. The AMA fee reimbursement, how does that compare

to Medicare reimbursement? Is that less or more? Mr. Fitzgerald.

Mr. FITZGERALD. Yes, we have a medical fee schedule that is tied

to Medicare payment fee schedule. And on average, it is about 5

percent over that Medicaid pay schedule in order to attract more

physicians to the program.

Mr. ROSS. OK, good, thank you.

Let me make sure I understand the legal classifications of benefits. You give temporary total disability benefits, temporary partial

disability benefits, then once maximum improvement is reached,

then you have either wage loss or permanent total disability. What

is the legal definition of permanent total disability?

Mr. FITZGERALD. It is the inability to perform any work, particularly work that is associated with the date of entry job. But if there

is no ability to perform any work as determined by medical evaluation and verification, then that is total disability. It is an economic

construct, sir.

Mr. ROSS. So if there is no work available within a geographic

area, does that constitute total permanent disability benefits?

Mr. FITZGERALD. No, it does not.

Mr. ROSS. So it is not uninterrupted light duty work, it is just

no work at all.

Mr. FITZGERALD. What I am trying to say is, the ability to work

is the determining factor whether or not compensation is paid, not

the availability of a job. If someone has a wage-earning capacity,

we will not pay benefits to them.

Mr. ROSS. How is that determined? Is it through vocational rehabilitation testimony as to whether they have wage-earning capacity?

Mr. FITZGERALD. It is an evaluation done by medical professionals and voc rehab specialists in——

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Mr. ROSS. OK. With regard to fraud——

Mr. FITZGERALD. Excuse me, in conjunction with our claims examiners.

Mr. ROSS. OK. Mr. Siemer, you talked about in your testimony

about somebody bungee jumping and doing all this. Is there any

adjudication process that can determine whether somebody has

committed fraud in the receipt of workers’ compensation benefits?

Mr. SIEMER. Any time we investigate a claimant that appears to

be defrauding the system, we present that to a prosecutor for prosecution. We count on feedback from the Department of Labor if

they encounter fraud, but we have never received a referral from

them.

Mr. ROSS. And one last question, because I am a little bit over

my time here. If there is a determination or an adjudication of

fraud and they are found guilty, does that in any way affect their

receipt of workers’ compensation benefits?

Mr. SIEMER. Yes, if they are convicted of FECA fraud or health

care fraud related to their current injury, the benefits for that injury are immediately terminated. However, that conviction does not

prevent them from claiming a new injury in the future if they continue to be an employee.

Mr. ROSS. Thank you very much. My time is expired.

I recognize the distinguished gentleman from Virginia, Mr.

Connolly.

Mr. CONNOLLY. Thank you, Mr. Chairman.

If I could just pick up on that last thing, Mr. Siemer. You mean

somebody convicted of fraud would still be on the Federal payroll?

Mr. SIEMER. If they remain an employee.

Mr. CONNOLLY. No, no, that’s not what I’m asking. Somebody

convicted of fraud can still remain a Federal employee?

Mr. SIEMER. Yes.

Mr. CONNOLLY. How is that possible?

Mr. SIEMER. We have instances where some of the employees, not

for medical fraud, have been convicted or pled guilty in court, and

through arbitration at the Postal Service, they have gotten their

old job back.

Mr. CONNOLLY. So they don’t go to jail?

Mr. SIEMER. No, that person did not that I am thinking of.

Mr. CONNOLLY. Right. But that is up to the courts, not the Postal

Service or the Department of Labor.

Mr. SIEMER. About whether they go to jail?

Mr. CONNOLLY. If they are convicted of fraud in a court of law,

it is up to the court to decide their sentence?

Mr. SIEMER. Yes.

Mr. CONNOLLY. Not the Federal agency?

Mr. SIEMER. Correct.

Mr. CONNOLLY. OK. I just wanted to be clear about that.

Mr. Steinberg, do I understand that, of the Federal Employee

Compensation Act, overhead is just 4 percent of benefits?

Mr. STEINBERG. Overhead is actually 5 percent, sir. And it has

remained at that level for years.

Mr. CONNOLLY. And Federal workers’ compensation costs are 1.8

percent of total Federal and Postal payrolls?

Mr. STEINBERG. I believe so, yes.

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Mr. CONNOLLY. And that compares to 2.3 percent for private insurance and State funds?

Mr. STEINBERG. I can’t speak to the private sector or the State

funds, sir.

Mr. CONNOLLY. Well, I am actually reading, I think, from your

Web site. But if that were true, that would compare favorably?

Mr. STEINBERG. Yes, sir.

Mr. CONNOLLY. And do I also understand that we actually save

some money because disputes of claims are resolved administratively rather than through litigation? Is that correct?

Mr. STEINBERG. We think that is the hallmark of the system. It

is a non-adversarial system. We are unbiased. We are looking at

the situation, we are required to review medical evidence. That is

the basis for our adjudication. It is important to point out that 85

percent of the claims we receive we accept, but 15 percent of the

claims we do reject. And those are cases where we determine it is

not a work-related injury.

Mr. CONNOLLY. The point is, we save taxpayers a lot of money

by avoiding litigation in the system?

Mr. STEINBERG. Yes, sir, we do.

Mr. CONNOLLY. All right, thank you.

Mr. Siemer, you talked, and Ms. McManus, I want to come to

you as well, in fact, let me start with you, Ms. McManus, if I understood your testimony, you called for the complete sunset of the

program on two bases. One was that somebody might actually in

compensation get more money than they would otherwise get in,

for example, a pension situation. And therefore we were rewarding

people for being injured. And second, somebody might game the

system, commit fraud. Is that correct?

Ms. MCMANUS. Partially, sir. That is not the only reason we

would recommend sunsetting the FECA law. Those are just a few

examples.

Mr. CONNOLLY. Let me ask you a question. Do people game private insurance? For example, do people game building insurance or

auto insurance?

Ms. MCMANUS. I think it is safe to say yes.

Mr. CONNOLLY. Do you think those two systems, for example,

ought to be completely sunsetted and we all start over again to create some new insurance system that somehow avoids that?

Ms. MCMANUS. No, sir.

Mr. CONNOLLY. So why would we do it for FECA, other than it

happens to be a Federal program?

Ms. MCMANUS. By comparison to other workers’ compensation

laws, and if you look at sheer numbers, it is vastly greater than

any other comparable workers’ compensation law as far as the benefit entitlement.

Mr. CONNOLLY. So why not reform it? There are lots of reforms

on the table. The administration has one, Susan Collins in the Senate has one, we have several here.

Ms. MCMANUS. That would be a great alternative.

Mr. CONNOLLY. That is all I was trying to get at. Sunsetting the

entire program is a fairly draconian measure.

And I have 53 seconds left. Mr. Siemer, you gave us an example

of somebody who named her boat, obviously fairly successfully havVerDate 17-JUN-2003 12:34 Sep 22, 2011 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\68215.TXT KATIE PsN: KATIE
60

ing gamed the system. And while that is certainly a juicy tidbit,

hopefully you didn’t mean to suggest that gaming characterized the

whole system and that everybody was sort of gaming. You meant

to illustrate how it could be abused in the extreme?

Mr. SIEMER. That is exactly correct.

Mr. CONNOLLY. And you would agree that abuse of a system,

compensation system such as this, is not limited to the Federal

Government, it also occurs in the private sector?

Mr. SIEMER. I would imagine so.

Mr. CONNOLLY. Is there any reason to believe that it is more,

that it occurs more often in this program than it does in fact in the

private sector?

Mr. SIEMER. I have no idea, sir.

Mr. CONNOLLY. Thank you. My time is up.

Mr. ROSS. Thank you, Mr. Connolly. I now recognize the Vice

Chair of the subcommittee, the distinguished gentleman from

Michigan, Mr. Amash.

Mr. AMASH. Thank you, Mr. Chairman, and thank you all for

your testimony.

Mr. Steinberg, the President’s Commission on the Postal Service

argued the Postal Service should be given relief from the provisions

of FECA that create costs and unintended consequences. Do you

agree and why or why not?

Mr. STEINBERG. I believe that we should work closely with the

Postal Service to address the requirements of the program. I believe we have an opportunity to work in partnership to address

many of the issues that were discussed today. I think we share in

a responsibility to help their injured workers return to work and

to provide wage loss compensation while they are injured.

Mr. AMASH. What is the level of overpayment in FECA?

Mr. STEINBERG. Improper payments?

Mr. AMASH. Yes.

Mr. SIEMER. It is 0.1 percent. As measured by our Office of the

Chief Financial Officer for the past several years.

Mr. AMASH. Would the conversion from FECA to retirement

allow broader survivor benefits?

Mr. STEINBERG. The conversion to, if you will, from FECA to

FERS, for example, would not expand the survivor’s benefit. It

would create some challenges between us an obviously the Office

of Personnel Management. That is why we suggest the conversion

to a 50 percent level, which more closely relates to the retirement

benefits from OPM.

Mr. AMASH. Your testimony, Mr. Steinberg, states that less than

2 percent of all new injury cases remain on the periodic roll 2 years

after the date of injury. How does this compare to the private sector and State programs?

Mr. STEINBERG. That is something we will research for you, sir.

Mr. AMASH. Thank you. And what percentage of time does

OWCP staff devote to the management of new FECA disability

cases versus screening long-term disability cases, and is it an appropriate mix?

Mr. STEINBERG. We have evolved that over time. When the program began, there was a major focus on review, adjudication to

payment. Over the last many years, as I talked about, we have

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been able to impact the return to work rate significantly. And that

is because we have applied a more balanced approach to dealing

with the front end of the process, but also the return to work. We

have made significant improvements in that arena, sir.

Mr. AMASH. In Ms. Rodriguez’s written testimony, she indicates

that many Federal employees are going into debt due to DOL rejecting a claim or taking too long to process it. Do you have statistics on the 15 percent of claims that are rejected in a given year?

Mr. STEINBERG. Sir, if you could clarify the nature—the 15 percent, those are claims that we reviewed, have been determined to

be non-work related injuries, and we gain that through the evidence and through the discussions with the claimant themselves.

Mr. AMASH. So is it a fair accusation that the accepted claims are

not processed in a timely manner?

Mr. STEINBERG. No, I believe that the accepted claims are processed in a timely manner. We can submit for the record data that

shows the timeliness associated with our claim submission. On average, the average claim is processed within 16 days. Ninety-four

percent of our claims are processed within 1 month. These beat the

standards that we have established with OMB, yet we will continue to try to push to lower those numbers.

Mr. AMASH. Thank you. If you could submit the information on

the timeliness, we would appreciate that.

Ms. Rodriguez, do you think it is appropriate that some Federal

employees continue to receive FECA benefits while past retirement

age, in some cases at the age of 98?

Ms. RODRIGUEZ. I think there is room for some improvement in

that area. Certainly people who would retire normally, I just think

our basic concern here is making things more equitable and not

having the worker suffer a loss if they would have continued to

work. So something that is more equitable to what they would have

been receiving in retirement would be acceptable.

I know some of the proposals have looked at what OPM would

do. We think 50 percent is not the right amount. People who continue to work would have access to higher, their higher three average salaries would be higher than when they stopped working.

They would have had the opportunity to contribute to their thrift

savings programs. Things like that other people who are not injured would have access to. We don’t want to shortchange the people who did get hurt and were not able to continue to make those

contributions into retirement.

Mr. AMASH. You offered several suggestions in your written testimony on how to improve DOL’s FECA reform proposal. Do you

have any cost estimates on your reforms?

Ms. RODRIGUEZ. No, I do not.

Mr. AMASH. OK, thank you, Mr. Chair. I yield back.

Mr. ROSS. Thank you. We have been called to vote. We have 11

minutes and 30 seconds and two questioners, and I will recognize

the distinguished gentlelady from the District of Columbia, Ms.

Norton, for 5 minutes.

Ms. NORTON. Very quickly. I have a question, I guess it would

be for Mr. Siemer, for the IG report. I always find the examples

anecdotally striking. But they immediately raise questions for me:

how typical and what does the data show. For example, most of the

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cases of the kind, $142,000 lady who was working as a real estate

agent who was caught bungee jumping, most of those cases frankly

I read about in the States. That a cop, for example, who has been

off duty for 2 years and is out hiking or doing something worse.

One who make the newspaper. In other words, I have seen these

a lot.

So my first question is, really goes to how bad the system really

is. You say we have removed 476 claimants based on disability

fraud. Out of how many?

Mr. SIEMER. We investigated, since the beginning of fiscal year

2009, we have investigated a little over 2,000 allegations that

claimants were defrauding the system.

Ms. NORTON. So this is in 2008 alone?

Mr. SIEMER. Since the beginning of fiscal year 2009. So, October

1, 2008 to the present; 21⁄2 years.

Ms. NORTON. So you would call that high in relation, for example, to the States, or to the private sector?

Mr. SIEMER. I have no idea how that data compares.

Ms. NORTON. I am having a hard time understanding what

would be a fair number, frankly. If you are a member of the public,

any number looks awful. But I can’t tell, unless I compare it with

something. Mr. Steinberg, do you have any at least comparative

numbers?

Mr. STEINBERG. I certainly do, ma’am. If you put into perspective

we receive 130,000 cases a year, based on our information and our

discussions with our IG, there are less than 100 convictions per

year. So it is a very minute portion of the percent. Those are prosecutions.

Ms. NORTON. So are you in touch with that data, Mr. Siemer?

Mr. SIEMER. No, I am not certain how that data compares to the

universe of cases we have investigated. However——

Ms. NORTON. How was your universe chosen?

Mr. SIEMER. Just from the cases that we worked.

Ms. NORTON. Oh, it was random?

Mr. SIEMER. No, it was the health care fraud cases we worked

over the last 21⁄2 years. In that body of work 116 of those employees were arrested. And a subset of those were convicted.

Ms. NORTON. So you chose those because those were really problematic. That category.

Mr. SIEMER. Well, it just pertained to the testimony. I brought

in the universe of work that seemed appropriate.

Ms. NORTON. But that is, by all measures, a particularly problematic category.

Mr. SIEMER. We investigate allegations for a variety of reasons.

Clearly, it is a very small subset of the total number of legitimate

claims.

Ms. NORTON. What do you think of Mr. Steinberg’s number?

Mr. SIEMER. The relative number of convictions I don’t think has

a direct bearing on how many people are getting benefits and

shouldn’t be.

Ms. NORTON. Well, how many people are getting benefits that

shouldn’t be of those 130,000?

Mr. SIEMER. Well, a quarter of the people that we investigated

were removed or retired or resigned.

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Ms. NORTON. So you are saying a quarter of the people?

Mr. SIEMER. That we investigated.

Ms. NORTON. But obviously that isn’t my question. You investigated a particular slice. And we are being told the program needs

a complete overhaul. Therefore, it is fair to ask, how typical is your

slice of the program?

Mr. SIEMER. Well, we, I believe, represent half of all of the benefits that are paid out through the OWCP program in the Postal

Service. This past year, we had 15,000 people, 800 on the long-term

periodic rolls. In a given year, it looks like we have 200 people that

are removed from those rolls. So that is the percentage that we see.

Ms. NORTON. Now, considering Mr. Steinberg, that we are talking also about Federal employees, and there is a recommendation

that the Postal Service ought to be separated out, does the whole

panel think the Postal Service ought to be separated out?

Mr. STEINBERG. No, ma’am. We believe that we have the skills,

the experience, the capabilities to do this. We have individuals who

are trained, this is our core mission. We don’t believe that is the

core mission of the Postal Service. As I indicated earlier, we are

looking forward to working with the Postal Service to try to address their issues and to try to improve the program.

Ms. NORTON. Well, does Mr. Siemer’s data reflect accurately on

the full complement of disabilities that you look at, claims that you

look at?

Mr. STEINBERG. Well, again, as pointed out, the Postal Service is

40 percent of our customer base. I think as you have suggested, by

looking at the numbers, there is a very small cadre of individuals

who commit fraud. And I think as suggested, an even smaller

group of individuals who are ultimately convicted of fraud. I

oversaw the program for a number of years at the Department of

Veterans Affairs. We found very similar type of information, where

we had over 15,000 individuals who were on the roll. When we did

a complete review, we found that less than half of 1 percent were

individuals that we referred to the IG.

So it was a very small number.

Mr. ROSS. Thank you, Mr. Steinberg. I am afraid the time has

expired.

I will recognize the gentleman from Illinois, Mr. Davis, for 5 minutes.

Mr. DAVIS. Thank you very much, Mr. Chairman.

Mr. Steinberg, the AFGE’s testimony focused a great deal on

problems that individuals have with agency processing of claims.

Obviously this is a big source of consternation. Do you think that

the agencies could improve the time that it often takes to get a

claim processed, so that individuals know the result and they can

get back to work?

Mr. STEINBERG. Mr. Davis, that is an excellent question. And I

can speak to my experience overseeing the Department of Veterans

Affairs. I believe Mr. Lynch referred to the IG study of 2005. And

there were a number of issues that were identified. We did a major

planning exercise and a major transformational activity that focused on improving our process. One of the key elements of that

was improving communication between the agency and the Department of Labor. We set up quarterly review meetings where we

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would talk about cases, we would focus on particular problem

cases. This significantly helped improve the processing and improve the situation.

We also did extensive training within the department of Veterans Affairs to educate both the employee and the supervisors in

terms of the process. We also changed the culture in terms of return to work.

One of the reasons that I was so honored to join the Department

of Veterans Affairs was to take those types of success stories and

share those with other departments and agencies. And I am committed to doing that, sir.

Mr. DAVIS. Thank you. I represent an area that has a large number of postal workers. I come from Chicago, Cook County, 51⁄2 million people. We have a lot of postal workers. And there seems to

be a great deal of controversy surrounding what qualifies for a duty

change, where physical requirements have had to be met, relative

to the acquisition of the job. Are we making headway in determining what really constitutes the ability to move from one level

or one piece of work to another as a result of injury or something

comparable?

Mr. STEINBERG. I am prepared to address the positive aspect of

that. Over the years we have worked very closely with the Postal

Service to monitor the status of their employees as they go through

rehabilitation and to look for opportunities for either full-time

placement or light duty positions. And over the years, we have

been successful in that.

We hope to continue to have that type of focus. And again, that

is a partnership, as I indicated earlier, between the Department,

DOL, the claimant and their physician. And we all work together

in partnership to try to look for the right opportunities. So we have

experienced success in the past.

Mr. DAVIS. Anyone else have any thoughts about that?

Mr. SIEMER. I would only add, sir, that I think an area that remains an opportunity is making that claims examination process or

that feedback by DOL in managing the case toward a point where

a limited duty offer can be presented can certainly be enhanced or

improved.

Mr. DAVIS. Go ahead, please.

Mr. FITZGERALD. I just wanted to add that part of the proposals

we put forward includes a provision called assisted re-employment,

which would help Postal Service workers in particular, we think,

because it basically uses the compensation payments they are receiving to help subsidize employment within Federal agencies. So

we just think that is another alternative to be looked at in this

process.

Mr. DAVIS. Well, I hope we would continue, because many of the

individuals are often told that there is no light duty in their environment, or that there is nothing else that can be done. And of

course, it frustrates them, it frustrates me, because I don’t know

what to tell them once they get beyond that.

Thank you very much, Mr. Chairman, and I yield back.

Mr. ROSS. Thank you, Mr. Davis, and I would like to thank our

witnesses for testifying today. Mr. Lynch did have another question, but he is going to submit that in writing.

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There being no further business, the committee will stand adjourned. Thank you.

[Whereupon, at 2:48 p.m., the committee was adjourned.]

[Additional information submitted for the hearing record follows:]

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