GAO-03-158R Postal Service Workers’ Compensation Claims

United States General Accounting Office

Washington, DC 20548

December 20, 2002

The Honorable Stephen Horn

Chairman, Subcommittee on Government Efficiency,

 Financial Management, and Intergovernmental Relations

Committee on Government Reform

House of Representatives

Subject: Postal Service Employee Workers’ Compensation Claims Not Always Processed

Timely, but Problems Hamper Complete Measurement

Dear Mr. Chairman:

In fiscal year 2000, U. S. Postal Service employees accounted for about one-third of both the

federal civilian workforce and the $2.1 billion cost of the Federal Workers’ Compensation

Program (WCP). During that same year, Postal Service employees submitted about 85,000

claims, or about one-half of all claims for new work-related injuries, to the Department of

Labor’s (DOL) Office of Workers’ Compensation Program (OWCP), which is charged with

administering the program. Because of complaints the subcommittee received from injured

federal employees about the untimely receipt of WCP benefits and because Postal Service

employees account for such a large portion of the WCP, you asked us to determine

specifically whether Postal Service employees were receiving WCP benefits in a timely

manner.

We provided an initial response to your request on December 21, 2001,1

 and testified on the

matter during a hearing before the subcommittee on May 9, 2002.2

 Among other things, we

reported that during the period July 1, 1996, through June 30, 2000, about 7 percent of the

Postal Service’s approximately 901,000 total employee workforce filed an average of about

82,600 WCP claims each year. Of these claims, about 88 percent were approved and about 12

percent were denied each year. We also reported that OWCP’s automated file records

indicated a wide variance in the time between the date of an employee’s injury and (1) the

date of OWCP’s decision regarding the claimant’s entitlement to benefits3

 and (2) the date

 1

U.S. General Accounting Office, Administration of the Workers’ Compensation Program by the

Postal Service and Department of Labor (DOL), (Washington, D.C.: Dec. 21, 2001).

2

U.S. General Accounting Office, U.S. Postal Service: Workers’ Compensation Benefits for Postal

Employees, GAO-02-729T (Washington, D.C.: May 9, 2002).

3

WCP provides for payment of several types of benefits, including compensation for wage loss,

schedule awards, medical and related benefits, and vocational rehabilitation services for conditions

resulting from injuries sustained or occupational disease or illness contracted in performance of duty

while in the service of the United States. WCP also provides for payment of monetary compensation

to specified survivors of an employee whose death results from work-related injury or disease and for

payment of certain burial expenses.
2 GAO-03-158R Postal Service Workers’ Compensation Claims

OWCP authorized the first compensation or schedule award payment.4 However, as we

reported, the automated records we reviewed did not contain the specific information we

needed to identify how long it took the injured employees, Postal Service supervisors, and

OWCP claims examiners to submit and process WCP claims.

For our current review, we agreed to

• determine the extent to which Postal Service employees provided all of the evidence

required by OWCP regulations for determining the claimants’ eligibility for WCP benefits

and

• determine whether claims for WCP eligibility and WCP compensation payments for lost

wages or schedule awards were submitted and processed within the time frames set forth

in OWCP regulations or performance standards.5

Before Postal Service employees can receive medical benefits or compensation for wage loss

or schedule awards, OWCP must often first establish—based on the evidence provided by the

applicant—that the applicant is eligible for workers compensation benefits due to the injury

for which the benefits are claimed. Once the claimant is determined to be eligible, the

claimant’s injury-related medical costs are paid directly by DOL to the medical provider.

However, for wage loss or physical impairment due to the work-related injury, the employees

must submit another WCP claim form specifically for compensation payments and provide

evidence that the time away from work (wage loss) or impairment (schedule award) was

directly related to the injury.

To meet our objectives, we randomly sampled 484 Postal Service employee WCP case files

located at the 12 OWCP district offices throughout the country. Our sample cases included

only those cases where Postal Service employees also filed claims for wage loss or schedule

award compensation payments due to injuries that occurred or were recognized as jobrelated during the 12-month period beginning July 1, 1997. We selected the sample file

records on the basis of the type of injury involved—traumatic or occupational6

—and on the

basis of their approval or nonapproval for WCP benefits and compensation or schedule

award payments. (See enc. III for more detail about our scope, methodology, and sampling

plan.) Our results can be generalized to the entire group of Postal Service employees who

 4

An injured employee can claim compensation as a (1) wage replacement benefit for lost wages,

(2) schedule award if the employee has a permanent impairment to a member or function of the body,

or (3) both.

5

OWCP regulations provide time frames for injured federal employees and employing agencies to

submit and process WCP-related forms; OWCP performance standards provide the annual operational

performance goals or time frames for which OWCP claims examiners are to process WCP-related

forms.

6

WCP allows for two types of work-related injuries for which benefits and services can be claimed:

“traumatic injury” and “occupational disease or illness.” Traumatic injury means a condition of the

body caused by a specific event or incidents, or series of events or incidents, within a single day or

work shift. Such condition must be caused by an external force, including stress or strain, which is

identifiable as to time and place of occurrence and member or function of the body affected.

Occupational disease or illness is a condition produced by the work environment over a period longer

than a single day or work shift.
3 GAO-03-158R Postal Service Workers’ Compensation Claims

applied for wage loss or schedule award compensation due to injuries occurring during the

period covered by our review. (See enc. III for the confidence intervals for each part of the

claims processing activities we measured.) We chose the period covered by the cases we

reviewed because we believed it was current enough to reflect ongoing operations, yet

historical enough for most, if not all, of the claims to have been decided upon. However, our

work did not include an analysis of any time involved in the appeals process of any claim we

reviewed, nor did we generally evaluate the appropriateness of OWCP’s decisions approving

or denying the claims. Our scope did not include an overall assessment of the performance

of the WCP. For example, we did not assess processing of claims solely for medical

payments or for subsequent claims for compensation made after the initial payment was

authorized. We performed our work from January through December 2002 in accordance

with generally accepted government auditing standards and obtained comments on the

results of our work from OWCP and the Postal Service.

Results in Brief

On the basis of our analysis, we estimate that in about 99 percent of the cases involving

Postal Service employees who (1) had work-related injuries during the 12-month period

beginning July 1, 1997, and (2) filed claims for WCP benefits for lost wages or schedule

awards due to these injuries, the employees eventually provided OWCP the evidence it

required to make a determination on their eligibility for benefits. However, in about 69

percent of the cases, OWCP claims examiners had to request additional information because

all of the required evidence needed to make a determination of WCP eligibility was not

provided initially. As a result, claims for WCP eligibility were not always processed within

the time frames set forth by OWCP.

On the basis of our analysis of available information, we estimate that Postal Service

employees submitted about 95 percent of traumatic injury claims and about 49 percent of

occupational disease claims to their respective Postal Service supervisors7

 within the time

frames set forth in OWCP regulations or performance standards. Postal Service supervisors

then completed and submitted about 73 percent of the traumatic injury claims and about 64

percent of the occupational disease claims within OWCP’s time frames, and OWCP claims

examiners processed about 71 percent of the traumatic injury claims and about 84 percent of

the occupational disease claims within OWCP’s time frames. However, the reliability of our

estimates is compromised to some extent by data not required and not available from the

claim forms in our sample cases, as well as mistakes made by OWCP in selecting and

 7

Federal employees with work-related injuries have up to 3 years to file their claims for compensation.

If the claim is not filed within 3 years, compensation may still be allowed if notice of the injury was

given within 30 days, or the employer had knowledge of the injury within 30 days following the actual

occurrence. In cases of latent disability, the time for filing a claim does not begin until the employee is

reasonably aware of the causal relationship between the disability and his/her employment.
4 GAO-03-158R Postal Service Workers’ Compensation Claims

processing traumatic injury short form closure (SFC) cases.8 Furthermore, because of the

SFC case selection and processing problems we found, the SFC case process may not be

achieving the results OWCP intended.

For those Postal Service employees in our sample cases who were determined to be eligible

for WCP benefits and later filed claims for compensation for lost wages or schedule awards,

we could not reliably estimate the percentage of claims for compensation that were

processed within the time frames set forth by OWCP. This was because the dates we needed

to “mark” the beginning and ending actions taken by the injured Postal Service employee and

Postal Service supervisor to complete, submit, and forward the claims to OWCP were missing

from the claim forms. Additionally, OWCP’s performance standards for OWCP claims

examiners’ part in processing these claims do not cover compensation claims for schedule

awards, or when applicable, consider the impact of the additional time associated with (1)

processing corresponding WCP claims for eligibility or (2) OWCP requests for additional

information from the employees, Postal Service supervisors, or medical providers.

Accordingly, we are recommending that the Secretary of Labor and the Postmaster General

take certain actions to improve and monitor the preparation and processing of Postal Service

employees’ WCP claims. In commenting on a draft of this report, the Postal Service said that

it supported our recommendations and, in July 2002, had established a new goal for

submitting claims to OWCP. Although OWCP disagreed with many aspects of our

methodology, findings, and recommendations, it said it was undertaking a review of its

business and data system, including its SFC case process, and that it would make changes

where it felt appropriate. Overall, we continue to believe that our methodology, findings, and

recommendations are appropriate, but we have made changes to our report to reflect

OWCP’s concerns where appropriate. A complete discussion of the Postal Service’s and

OWCP’s comments can be found near the end of this report.

Background

Although OWCP is charged with administering the WCP, federal employing agencies,

including the Postal Service, are responsible for paying normal salary and benefits, referred

to as “continuation of pay (COP),” to those employees who miss work for up to 45 calendar

days, during a 1-year period, due to a work-related traumatic injury for which they have

applied for WCP benefits. Additionally, at the end of each 12-month period beginning on

July 1, referred to as a “charge back year,” employing agencies are to reimburse DOL for (1)

each agency’s share of DOL administrative costs and (2) costs associated with the WCP

benefits and services provided to their respective employees during the year. As shown

 8

According to OWCP, SFC cases are WCP claims that are accepted (approved) as eligible for WCP

benefits upon receipt and allowed to incur up to $1,500 in medical bills—without formal

adjudication—and are closed. Originally, we estimated that only about 41 percent of the traumatic

injury claims were processed within the time frames set forth in OWCP performance standards.

However, according to OWCP officials, this estimate overstated the actual processing time because

many of these claims were treated as SFC cases, which were accepted as eligible for WCP benefits

upon their receipt by OWCP. Once we considered the effect of these SFC cases on our sample claims,

we found that about 71 percent of the traumatic injury claims were processed within the time frames

set forth by OWCP. However, we also found that on the basis of OWCP’s SFC case processing

guidelines, OWCP (1) incorrectly selected 14 of these cases as SFC cases (about 7 percent of the SFC

cases in our sample), (2) may have inappropriately processed some claims that had been

administratively closed, and (3) mistakenly approved 2 claims (about 1 percent of the SFC cases in our

sample) for WCP benefits.
5 GAO-03-158R Postal Service Workers’ Compensation Claims

below, Postal Service employees’ WCP claims for medical benefits and compensation for lost

wages and schedule awards have greatly increased since fiscal year 1998. (See table 1.)

Table 1: Postal Service’s Share of Selected WCP Costs Due to Injured Postal

Service Employees for Fiscal Years 1998 through 2001a

Fiscal year Administrative

Charge by DOL

Medical benefits paid Compensation for lost wages and

schedule awards

(thousands of $)

No. of

claims

Outlayb

 (thousands

of $)

No. of

claims

Outlays (thousands

of $)

1998 $21,000 108,677 $185,000 24,778 $361,000

1999 $20,000 111,383 $196,100 25,092 $368,700

2000 $20,000 119,942 $240,100 27,157 $397,800

2001 $33,000 125,375 $269,600 28,013 $424,600

a

Most current years for which costs were available at the time of our review.

b

Outlay is the amount Postal Service reimburses DOL, which makes the payment on WCP claims.

Source: GAO analysis of Postal Service data.

Employing agencies also provide the avenue through which injured federal employees

prepare and submit their claim forms for WCP eligibility and claim forms for wage loss or

schedule award compensation payments to OWCP. Specifically, OWCP regulations and

performance standards in effect during the period covered by our review set forth the

following:

• For OWCP to determine WCP eligibility, applicants had to provide evidence to meet five

requirements: (1) the claim was filed within the time limits specified by law; (2) the

injured or deceased person was, at the time of injury or death, an employee of the U. S.

government; (3) the injury, disease, or death did, in fact, occur; (4) the injury, disease, or

death occurred while the employee was in the performance of duty; and (5) the medical

condition for which compensation or medical benefits was claimed was causally related

to the claimed job-related injury, disease, or death.9

• For OWCP to process claims for WCP eligibility determination, OWCP regulations state

that applicants are to give notice of the injury in writing10 to a Postal Service supervisor

within 30 days of the injury or the date the employee realized the disease was job-related

for traumatic or occupational disease, respectively. OWCP regulations further state that

Postal Service supervisors are to complete the agency portion of the form and submit it to

 9

For wage loss benefits, the claimant must also submit medical evidence showing that the condition

claimed is disabling.

10For traumatic injuries, OWCP regulations required the use of Form CA-1, “Federal Employee’s Notice

of Traumatic Injury and Claim for Continuation of Pay/Compensation,” in order to claim WCP benefits.

To claim benefits for a disease or illness that the employee believed to be work-related, OWCP

regulations required the use of Form CA-2, “Notice of Occupational Disease and Claim for

Compensation.”
6 GAO-03-158R Postal Service Workers’ Compensation Claims

 OWCP within 10 working days of receiving a claim.11 OWCP regulations do not identify

the time frames for OWCP to perform its part of the claims processing activity. Instead,

OWCP has developed operational performance standards that identify the percentage of

claims it plans to process within certain time frames. Specifically, OWCP claims

examiners are to decide on WCP eligibility for at least 90 percent of the traumatic injury

claims within 45 days of the claims’ receipt from the Postal Service and for at least 70

percent of the occupational disease claims within 6 months of the claims’ receipt.

• For OWCP to process claims for compensation for wage loss or schedule award, OWCP

regulations state that applicants—who were disabled by a work-related injury and lost

wages for more than 3 days, or had a permanent impairment—are to submit a claim in

writing12 to the employing agency within 10 days of the date pay stopped. Upon receipt of

the claim, OWCP regulations state that Postal Service supervisors are to complete the

agency portion of the form and as soon as possible, but not more than 5 working days,

submit the form and any accompanying medical reports to OWCP. OWCP regulations do

not identify the time frames for OWCP to perform its part of the claims processing

activity. Instead, OWCP has developed operational performance standards that identify

the percentage of claims it plans to process within certain time frames. Specifically,

OWCP’s goal is for claims examiners to process all payable claims for traumatic injuries

and occupational disease within 14 days of OWCP’s receipt of the claim from the Postal

Service. OWCP considers the time that payment is authorized as the end of the

processing activity.

Evidence Required to Determine WCP Eligibility Was Almost Always Provided by

Postal Service Employees

Overall, we estimate that for about 99 percent of the cases involving Postal Service

employees who (1) had work-related injuries during the 12-month period beginning July 1,

1997, and (2) filed claims for WCP benefits for lost wages or schedule awards due to these

injuries, the employees provided to OWCP the evidence required to make a determination on

their eligibility for benefits. Specifically, about 99 percent of the traumatic injury claims filed

by Postal Service employees contained evidence related to the five requirements set forth in

OWCP regulations and only about 1 percent of the claims did not include all of the required

evidence. For occupational disease claims, about 98 percent of the claims filed by Postal

Service employees contained evidence related to the five requirements, while only about 2

percent did not include all of the required evidence. Generally, the evidence not provided for

both types of claims pertained to either (1) the employee’s status as a Postal Service

employee or (2) whether the claims were filed within the time limits specified by law.

However, in about 69 percent of our sample cases—about 64 percent of the traumatic injury

cases and about 77 percent of the occupational disease cases—OWCP claims examiners had

 11Claims are to be submitted to OWCP if the injury or disease was likely to result in (1) a medical

charge against OWCP, (2) disability for work beyond the day or shift of injury, (3) the need for more

than two appointments for medical examination or treatment on separate days leading to time lost

from work, (4) future disability, (5) permanent impairment, or (6) COP. If none of these conditions

exist, the employer is required to retain the forms as a permanent record in the Employee Medical

Folder in accordance with Office of Personnel Management guidelines.

12For both traumatic injury and occupational disease claims, OWCP regulations required the use of

Form CA-7, “Claim for Compensation Due to Traumatic Injury or Occupational Disease,” in order to

claim compensation for wage loss or schedule award.
7 GAO-03-158R Postal Service Workers’ Compensation Claims

to request and obtain additional information from the injured employee, Postal Service, or

medical provider in order to make a determination of WCP eligibility.

Postal Service Employee Claims for Program Eligibility Are Not Always Processed

Within Time Frames Set Forth by OWCP

On the basis of our analysis, we found that Postal Service employees did not always submit,

and Postal Service supervisors and OWCP claims examiners did not always process, WCP

claims within the time frames set forth in OWCP regulations or performance standards for

determining WCP eligibility. Specifically, we estimate that Postal Service employees met the

time frames for submitting about 95 percent of traumatic injury claims and about 49 percent

of the occupational disease claims to the Postal Service supervisors. (See table 2.) Once the

Postal Service supervisors received the claims, we estimate that these supervisors completed

the agency portion of the claim forms and forwarded about 73 percent of the traumatic injury

claim forms and about 64 percent occupational disease claim forms to OWCP within the time

frames set forth by OWCP. We also estimate that OWCP claims examiners processed about

71 percent of the traumatic injury claims and about 84 percent of the occupational disease

claims within the times frames set forth by OWCP. However, the time frames for OWCP to

process both traumatic injury claims and occupational disease claims were affected by

factors outside of OWCP’s control. In addition, our estimate of the processing times for

traumatic injury claims were affected by OWCP’s mishandling of some SFC cases. As a

result, claims for WCP eligibility were not always processed within the time frames set forth

by OWCP.

According to OWCP officials, delays by OWCP in processing WCP claims are sometimes due

to the employees’ failure to initially provide all of the information needed in order to

determine WCP eligibility. As a result, and as discussed earlier in this report, additional

processing time was sometimes needed for OWCP to request and receive the needed

information before WCP eligibility could be determined. According to Postal Service

officials, part of the delay in getting WCP forms submitted within the time frame set forth in

OWCP regulations, especially for occupational disease claims, is because employees

sometimes do not realize the severity of their injuries and do not file their WCP claims until

the injuries get worse or start to affect their job performance. These officials also told us that

Postal Service supervisors sometimes complete the agency part of the forms but may not

promptly forward WCP claim forms. In commenting on a draft of this letter, the Postal

Service told us that in July 2002, it had established a reporting goal that 90 percent of

employee claims for traumatic injury and occupational disease are to be reported to OWCP

within 14 days of receiving the claims from the employees.
8 GAO-03-158R Postal Service Workers’ Compensation Claims

Table 2: Length of Time to Process Claims to Determine Eligibility for WCP Benefits

for Injuries during the Period July 1, 1997, through June 30, 1998 a

Points in time to apply for and determine

entitlement to WCP benefits

Time frames set forth in

OWCP regulations or

performance standards

Estimated percentage of

sample cases processed

within time frames set forth

by OWCP

Traumatic injury

Date of traumatic injury to date Postal Service

supervisor received notice of injury form 95 30 days

Date Postal Service supervisor received notice of

injury form to date OWCP received form

10 working days 73

Date OWCP received notice of injury form to date

of notice that eligibility for WCP benefits has been

established

90 percent of the cases

processed within 45 days

71

Occupational disease

Date occupational disease was recognized as jobrelated to date Postal Service supervisor receives

notice of occupational disease form

Date Postal Service supervisor received notice of

occupational disease form to date OWCP

received form

Date OWCP received notice of occupational

disease form to date of notice that eligibility for

WCP benefits has been established

30 days

 10 working days

70 percent of the cases

processed within 6 months

49

64

84

a

Our sample included only those cases where Postal Service employees also filed claims for wage loss or schedule award

compensation payments due to injuries that occurred or were recognized as job-related during the 12-month period beginning

July 1, 1997.

Source: GAO analysis of OWCP data.
9 GAO-03-158R Postal Service Workers’ Compensation Claims

Time Frame for Processing Traumatic Injury Claims for WCP Eligibility Are Affected

by SFC Cases

Initially, we had estimated that OWCP claims examiners processed only about 41 percent of

the traumatic injury claims within the times frames set forth by OWCP. This percentage,

however, did not take into consideration the “down time” associated with SFC cases.13

According to OWCP, SFC cases are WCP claims that are accepted (approved) as eligible for

WCP benefits upon receipt and allowed to incur up to $1,500 in medical bills—without formal

adjudication—and are closed. Also, SFC cases are to remain closed—without any action

taken on the part of claims examiners—unless one or more of the following actions occur on

the claims: (1) medical expenses exceed $1,500, (2) the Postal Service later contests the

claim, or (3) a wage loss claim is submitted to OWCP. If one of these events occurs, the case

is to be reopened, processed, and adjudicated by an OWCP claims examiner. Thus, according

to OWCP officials, we should not have considered as processing time the time frame between

the date the SFC case was closed and the date that it was reopened.14

Once we deducted the “down time” associated with the 188 cases identified by OWCP

officials as SFC cases contained in our sample of 280 traumatic injury cases, we determined

that the percentage of traumatic injury claims that were processed within the time frame set

forth in OWCP performance standards increased from our original estimate of about 41

percent to about 71 percent. However, we also found from our case file review that OWCP

personnel did not always comply with OWCP’s SFC selection and processing guidelines. This

problem precluded a complete and accurate assessment of OWCP’s processing time frames

for eligibility determination and indicates that closer monitoring of OWCP’s claims

examiners’ adherence to SFC processing guidelines may be needed.

Specifically, we found that 14 of the 188 SFC cases in our sample (about 7 percent) were

designated as SFC cases but did not meet OWCP’s SFC case criteria: 6 cases involved third

parties, 5 cases were initially contested by Postal Service officials, and 3 cases involved

occupational disease claims. According to OWCP, traumatic injury claims that involve third

parties or are initially contested or claims that involve occupational diseases normally require

additional case development before a decision as to whether WCP eligibility can be made.

Thus, these 14 cases should not have been selected as SFC cases. Initially, we had presented

 13In April 1993, OWCP initiated a pilot project in the Cleveland district office implementing a

predefined screening process for handling “lost time” traumatic injury cases. A lost time injury is an

injury for which time is charged to leave, COP, or a wage loss claim is filed. Under this pilot program’s

screening process, a claim that was not contested by the agency, had no wage loss claim, and did not

have medical bills to exceed $1,500 would not be reviewed by a claims examiner. The purpose of this

was to relieve claims examiners of administrative work in adjudicating cases that involved workrelated disabilities that would likely be overcome during the 45-day COP period. According to OWCP

officials, on the basis of this pilot project (OWCP officials could not provide us a copy of this study.)

and its own past experience in handling these types of cases, OWCP concluded that only about 1

percent of all lost time cases closed through the SFC case process would be denied if actually

adjudicated by a claims examiner; and only $147,085 in medical payments would have been avoided if

all such cases were adjudicated. Additionally, OWCP estimated that the amount of time savings

realized as a result of the SFC process—in conjunction with other quality assurance efforts—could

amount to as much as $4,450,000 for fiscal year 1992. As a result, OWCP implemented the SFC case

process nationwide on October 3, 1993.

14Because our sample cases included only WCP cases containing claims for compensation for lost

wages or schedule awards, all of the SFC cases in our sample would have been reopened after the

initial closure.
10 GAO-03-158R Postal Service Workers’ Compensation Claims

OWCP with 17 SFC cases in our sample that we believed did not meet the SFC case criteria.

At that time, OWCP provided us with additional information that indicated that 3 of the 17

cases were properly designated as SFC cases. However, in OWCP’s comments on a draft of

this report, it stated that it had previously demonstrated to us that only 9 of the 17 cases were

handled improperly. We disagree and still believe that 14 of our sample SFC cases were

handled improperly by OWCP claims examiners. Nevertheless, whether there were 9 or 14

SFC cases that were handled improperly, the point is that OWCP claims examiners do not

always select and process SFC cases properly.

We found further that once selected, some SFC cases may not have been processed

according to OWCP’s guidelines. Of the 188 SFC cases, we found that 70 cases (about 37

percent) were adjudicated the same day that OWCP claims examiners reopened the claim,

which could indicate that contrary to OWCP’s SFC guidelines, claims examiners may have

worked on or processed cases even though the cases were “technically” closed. Then, once

the claims examiner decided to accept or reject the claims, the cases were reopened,

adjudicated, and closed on the same day. Furthermore, in our case file review, we noted

several instances in which OWCP claims examiners had requested additional claim

information for closed SFC cases, indicating that processing was taking place but that was

not being considered in OWCP’s processing time measurement.

In its comments on our draft report, OWCP said that we implied that SFC cases that are

reopened and adjudicated on the same day are not processed in accordance with OWCP

guidelines and that this is not the case. OWCP said that its examiners are in fact encouraged

to adjudicate claims as quickly as possible; frequently, triggers such as a telephone call or a

facsimile transmission will be sufficient basis to reopen and adjudicate a claim instantly.

However, our case file review showed, and we were told by OWCP officials in both the Dallas

and Washington, D.C., district offices, that contrary to SFC case processing guidelines, claims

examiners frequently work on cases while they are officially closed in an effort to obtain

relevant information from the claimant or the employer so that an immediate eligibility

determination can be made when the case is reopened. Nevertheless, we revised our report

to indicate that we are not implying that all such cases are improperly processed.

OWCP officials generally agreed that mistakes were made in the SFC screening process and

operating procedures. They explained that the SFC selection process and operating

procedures, as a whole, have never been evaluated since the initial pilot project was done in

1993. Because the SFC case process has never been evaluated, no one knows whether the

process has achieved its intended objectives or maintained the pilot project’s estimated error

rate of about 1 percent for improperly approved injury claims. Although we found that 2 of

the 188 SFC cases in our sample (about a 1 percent error rate) involved erroneously paid

medical benefits from OWCP and COP from the Postal Service, our review of SFC cases was

not designed to be representative of all such cases.15 Furthermore, OWCP’s pilot study that

led to its SFC case processing policy was limited to one district office, and OWCP has not

evaluated the SFC case processing error rate since that time. Thus, neither OWCP nor we

have sufficient data to determine the current SFC case processing error rate.

OWCP officials told us that they did not seek reimbursement from medical providers for

costs paid prior to the time OWCP determined that the claimants were ineligible for WCP

 15We initially believed that 6 of the 188 SFC cases we reviewed indicated erroneously paid benefits.

However, in commenting on a draft of this report, OWCP provided additional explanations that

appeared to us to be reasonable for 4 of the 6 cases.
11 GAO-03-158R Postal Service Workers’ Compensation Claims

benefits. They said that there is no rule that precludes OWCP from seeking reimbursement

for improperly paid medical costs from the employees. Once OWCP formally authorizes

medical services to be provided to employees, the Employees' Compensation Appeals Board,

which considers WCP appeals, takes the position that OWCP is contractually obligated to pay

medical providers for services rendered in connection with the authorization, even if OWCP

later decides to deny the claim. Postal Service officials, too, recognized that reimbursement

of improperly awarded medical costs should not be sought from the medical providers.

However, the Postal Service also said that, because it is difficult to recover improperly

awarded medical costs from employees, changing OWCP's regulations and the language in

the authorization form to require employees or their insurance carriers to refund improper

medical payments would make it easier for them to recover such amounts. Also, the Postal

Service is required by statute to seek reimbursement from its employees for improperly

awarded COP.

Percentage of Compensation Claims Processed Within Time Frames Set Forth by

OWCP Could Not Be Reliably Estimated

We could not reliably estimate the percentage of WCP claims for compensation payments for

lost wages or schedule awards that were processed within the time frames set forth in OWCP

regulations because OWCP did not require the dates needed to identify certain milestones in

the claims processing activities to be recorded and the dates were not available from our

sample case files. Also, OWCP’s performance standards do not cover a significant type of

claim for compensation—schedule awards—or, when applicable, consider the impact of the

additional processing time associated with (1) processing the corresponding WCP claim for

eligibility or (2) OWCP requests for additional information from injured employees, medical

providers, or Postal Service supervisors.

Specifically, the dates needed to mark the beginning and ending actions taken by the injured

Postal Service employee and Postal Service supervisor to complete, process, and submit, the

claims for compensation to OWCP were not available. For example, for traumatic injuries,

OWCP regulations state that an injured employee should submit a claim for compensation to

the Postal Service supervisor within 10 days from the date the employee’s pay stopped due to

an absence from work caused by the work-related injury. However, we found that the date

that the employee actually submits the form to the Postal Service supervisor is not required

by OWCP to be recorded nor was it recorded on the claim form or available in the case files

we reviewed. As a result, we could not reliably estimate whether the injured employees filed

the claim forms within the time frame set forth by OWCP; nor could we reliably estimate the

time frame for the Postal Service supervisors to complete and forward the claim form to

OWCP after its receipt from the employees.

Although we estimated that OWCP claims examiners processed about 59 percent of the

traumatic injury and 63 percent of the occupational disease claims within OWCP’s 14-day

performance standard (the standard covers the period between the date OWCP first received

the claim form to the date OWCP authorized the first compensation payment), problems with

OWCP’s performance standard itself reduced the reliability of the processing time estimates

we derived for this claims processing activity. First, OWCP’s performance standard on which
12 GAO-03-158R Postal Service Workers’ Compensation Claims

 our estimate is based excludes both claims for leave buy-backs16 and claims for schedule

awards. According to OWCP, both types of claims normally take longer than the 14-day time

frame standard to process. OWCP officials stated that it is appropriate not to have

performance standards for processing employee claims for leave buy-back because the

decision to grant leave buy-back ultimately rests with the employing agency, and the decision

to actually repurchase leave rests with the claimant.

OWCP stated that it has not established processing standards for schedule awards because

entitlement to a schedule award for permanent impairment requires an often prolonged

process of determining whether the claimant has reached maximum medical improvement

and a precise and often difficult determination of the degree of impairment. Accordingly,

OWCP believes that applying meaningful timeliness standards to claims staff in these

circumstances would be exceedingly difficult. However, we found that 43, or about 10

percent of our sample claims, were claims for schedule awards. We estimated that the

median processing time for 37 of these claims for which data were available was 115 days

from the date that OWCP received the claim until the first check was issued to the injured

employee. Further, we estimated that 90 percent of these claims were paid within 787 days.

Therefore, because the number of schedule award claims is not insignificant and processing

times appear quite lengthy, we believe that if a reasonable standard for processing these

claims could be developed, it could provide claims examiners with incentive to process

schedule award claims expeditiously and provide OWCP a management tool for overseeing

and evaluating the process.

Second, OWCP’s existing standard for compensation claims does not consider the impact of

delays caused by processing corresponding claims for eligibility or delays caused by OWCP’s

need for additional information from the injured employee, employing agency, or medical

provider. For example, OWCP’s performance standard for processing claims for

compensation begins with OWCP’s receipt of the compensation claims forms, even though

the claim for compensation cannot be decided upon or awarded until after WCP eligibility is

determined. As a result, such compensation claims forms cannot be processed until WCP

eligibility is determined, which could inadvertently result in claims being processed in greater

than the 14-day processing time frame set forth in OWCP performance standards. In our

sample cases, we found that compensation claims for about 23 percent of the traumatic

injuries and about 12 percent of the occupational disease were received by OWCP before

WCP eligibility was determined. According to OWCP officials, this indeed happens but there

is little they can do about it using the current performance standard for processing claims for

compensation, other than being aware that it is a possible reason for such claims exceeding

the processing standard.

Moreover, we found that delays in processing claims frequently occur because injured

employees do not always provide complete information at the time they submit WCP claims,

nor is sufficient or competent information always provided to allow OWCP to determine

WCP eligibility or decide on compensation awards. As a result, OWCP is to inform the

claimant that additional evidence is needed and allow the claimant up to 30 days to submit

the requested information before OWCP can deny the claim. In our analysis, we found that

this happened quite often. In fact, for about 64 percent of the compensation claims stemming

from traumatic injuries and about 77 percent of the claims stemming from occupational

 16Leave buy-backs are claims for compensation for lost wages or schedule awards wherein the

claimant requests reinstatement of annual leave or sick leave for the time absent from work in lieu of a

cash payment. OWCP officials stated that the decision to grant leave buy-back ultimately rests with

the federal agency and the decision to repurchase the leave rests with the claimant.
13 GAO-03-158R Postal Service Workers’ Compensation Claims

disease, OWCP requested additional information before making a decision on the claims.

According to OWCP officials, delays created by having to request additional information is

indeed a problem. They have tried to minimize these delays by taking such action as calling

the employee or agency, when appropriate, to obtain the information instead of sending

formal written requests. Regardless, according to these officials, under OWCP’s current

performance standards, all claims examiners and district directors can do is monitor these

delays and note their impact on the overall claims processing activity.

Conclusions

Although nearly all Postal Service employees who filed claims for WCP benefits for workrelated injuries sustained during the period July 1, 1997, through June 30, 1998, eventually

provided the evidence required by OWCP regulations to determine the employees’ eligibility

for WCP benefits, many of these employees’ claims were not processed within the time

frames set forth by OWCP. This is because (1) injured employees sometimes failed to submit

claim forms in a timely manner after the date of injury or failed to initially provide all the

needed information and (2) Postal Service supervisors did not always follow OWCP

guidelines for forwarding the claims to OWCP. As a result, OWCP claims examiners

frequently had to request and obtain additional information in order to determine the

employees’ WCP eligibility. These factors may have contributed to delays that occurred in

the overall claims processing activity. In addition, data not required to be captured on the

claim forms and not available from the claim files as well as the handling of some SFC cases

by OWCP claims examiners affected the reliability of performance measurements for

determining WCP eligibility. Furthermore, this could indicate a need for OWCP to reevaluate

the SFC case process. Moreover, problems with OWCP’s performance standards themselves

made it impossible to reliably estimate the time required for processing compensation claims

for lost wages. In addition, OWCP does not have performance standards for schedule awards

even though about 10 percent of WCP claims in our sample were for schedule awards, and

the processing times for these claims were generally quite lengthy.

Recommendations for Executive Action

To help (1) improve measurement of WCP claims processing activity and (2) ensure the

accuracy in awarding WCP benefits, we recommend that the Secretary of Labor direct the

OWCP administrator to:

• reevaluate and modify as needed OWCP’s regulations and performance standards to

better ensure that measurements reflect the time associated with the various specific

components and parties involved in processing WCP claim forms up to the time WCP

eligibility is determined and WCP compensation payments are authorized or denied, and

reconsider whether reasonable performance standards for claims for schedule awards

could and should be established, and whether SFC cases should be combined with other

traumatic injury claims when measuring the timeliness of the eligibility determination

process;

• establish a requirement that the dates needed to determine the various processing times

covered by OWCP’s regulations or performance standards for all parties involved in

processing WCP claims are recorded on the applicable claim forms;

• periodically (1) monitor employee compliance with SFC case selection and processing

guidelines and (2) determine whether the SFC case process is achieving OWCP’s intended
14 GAO-03-158R Postal Service Workers’ Compensation Claims

goals and maintaining a cost-effective error rate regarding improperly awarded WCP

benefits.

To help overcome the delays in processing WCP claim forms for eligibility determination and

compensation for lost wages and schedule awards, we are also recommending that the

Postmaster General

• monitor and take appropriate actions to achieve its goal for the preparation and

processing of Postal Service employee claims for WCP benefits and ensure that claims

submitted to OWCP are as complete as practical.

Agency Comments and Our Evaluation

We provided copies of a draft of this report to the Postmaster General and the Secretary of

Labor for their review and comment. On December 6, 2002, the Postal Service’s Vice

President, Employee Resource Management, provided us with written comments stating that

the Service supports our recommendations regarding OWCP’s administration of the program.

(See enc. I.) He said that the Postal Service believes our recommendations will improve

OWCP’s ability to effectively manage the program. With regard to our recommendation that

OWCP and the Postal Service take action to improve and monitor the preparation and

processing of WCP claims, he stated that the Postal Service has implemented such measures.

He said that in July 2002, the Postal Service established a timeline reporting goal that 90

percent of employee claims for traumatic injury and occupational disease are to be reported

within 14 days. He said that in order to achieve such a goal, field managers must establish a

close working relationship with employees’ supervisors to ensure that claim forms are

submitted promptly and accurately. He also pointed out that in regard to the discussion in

our report relating to the collection of medical payments improperly made, the payments are

difficult to recover if the claim is later denied. He said that if OWCP’s regulations and the

language on the applicable form were revised to require the employees or their insurance

carriers to refund medical payments improperly made, this would greatly increase the ability

to collect these payments. Finally, he stated that the efforts of OWCP in continuing to

improve program management and to identify ways to deliver good service to injured Postal

Service employees are appreciated.

We believe that the recent goal established by the Postal Service to improve preparation and

processing of Postal Service employees workers’ compensation claims should, if effectively

implemented, help expedite the WCP claims eligibility determination and adjudication

processes as long as the claims contain sufficient information for OWCP to process the

claims. Accordingly, we have revised the recommendations in our report to reflect the

Postal Service’s recently established claim submission goal.

By letter dated December 11, 2002, OWCP’s Director provided us general and technical

comments on our draft report. His general comments, included as enclosure II, are discussed

below and in those sections of the report where applicable. We considered his technical

comments and made changes to the report where appropriate. Overall, OWCP disagreed

with several aspects of our methodology, findings, and recommendations but said the data

systems OWCP uses to measure its own and employing agencies’ performance are currently

under review as part of a general system redesign and replacement effort.
15 GAO-03-158R Postal Service Workers’ Compensation Claims

Comments about Our Methodology and Findings

OWCP stated in its comments that the operation of the workers’ compensation system

remains a complex and intertwined set of activities, and that in its view, the report does not

fully and accurately describe the overall performance of that system. OWCP specifically

pointed to our approach to the SFC case process as misrepresenting OWCP’s handling of this

large category of traumatic injury cases. Also, OWCP pointed out that with respect to the

timeliness of wage-loss claims processing, our analysis focused only on the outcomes of

claims for the first compensation payment. OWCP stated that its system reports on a larger

universe—all payments generated from the receipt of a claim form, and multiple claims are

frequently filed on the same case.

Our work was never intended to address the overall performance of the federal workers’

compensation program. We explain early in the report that our work focused on only Postal

Service employees who filed claims for wage loss or schedule award compensation during a

specified period of time. Because of our limited scope, we recognize that there would likely

be differences between the results of our analysis and the results of OWCP’s systems for

tracking its performance in processing a differing universe of WCP claims. We nevertheless

believe that the results of our analysis of our sample postal employee claims are relevant for

OWCP to consider as it redesigns its system.

OWCP pointed out that on the basis of our stratified sample of 484 cases, we found that

OWCP adjudicated traumatic injury claims within program standards 71 percent of the time

and occupational disease claims 84 percent of the time. However, OWCP data systems

capturing information on all cases processed within the measured categories show traumatic

injury adjudication timeliness at better than 94 percent and occupational disease case

adjudication timeliness at more than 90 percent. OWCP said that the discrepancy between

what we found and what its systems show regarding traumatic injury claim adjudication

timeliness seriously distorts OWCP’s performance.

Specifically, OWCP said that our approach to the SFC case process misrepresents OWCP’s

handling of this large category of traumatic injury cases. It said that its 94 percent

measurement of timeliness much more fairly represents service to injured workers because it

includes SFC cases as completed within the 45 day standard. It said that this approach is

appropriate because the only benefit being claimed in such cases is payment of medical

claims. Further, OWCP disagreed with our approach of excluding the down time associated

with SFC cases because the vast majority of SFC cases are never reopened. Therefore, if our

methodology were used, these cases would never be counted as processed even though up to

$1,500 in medical bills may have been promptly paid on each of these claims. OWCP further

stated that it has established a separate 45 day standard for SFC cases that are reopened, and

its system is reporting that approximately 85 to 90 percent of these reopened cases are

adjudicated within the standard.

We believe that OWCP’s approach of combining SFC cases, which do not involve processing

time by claims examiners, with cases that do require processing time by claims examiners

does not provide an appropriate measurement of timeliness for processing traumatic injury

claims. As OWCP points out, SFC cases are closed automatically and immediately if the case

meets certain criteria and medical claims are paid automatically up to a preset limit.

Combining these cases with cases that require examiners to make decisions does not provide

the most appropriate or meaningful measure of the eligibility processing times for traumatic
16 GAO-03-158R Postal Service Workers’ Compensation Claims

injury claims because it would be difficult for OWCP to identify and address any problems

that may affect the actual processing times of claims that do require eligibility determination

reviews. We believe our approach for determining eligibility processing time frames for SFC

cases, which begins at such time the cases are reopened and ends when they are either

approved or denied, is more meaningful because that is the period of time during which

OWCP claims examiners are actively processing the cases.

Further, regarding OWCP’s concern that our approach to the SFC case process would mean

that SFC cases that are not reopened would never be counted as processed, our analysis was

intended to determine the processing time for those SFC cases that were reopened from the

time of reopening through adjudication. OWCP could perform other analyses for its

purposes, such as determining and reporting the number of SFC cases where medical

payments were made but the cases were not reopened. We did not do a separate analysis of

the processing times for the SFC cases in our sample after they were reopened; therefore, we

do not know how the processing times for these cases would compare to OWCP’s statement

that about 85 to 90 percent of all reopened SFC cases are adjudicated within the 45 day

standard. We have added a recommendation in our final report that OWCP reconsider

whether SFC cases should be combined with other traumatic injury claims when measuring

the timeliness of the eligibility determination process.

OWCP stated that with respect to the timeliness of wage-loss claim processing, it believes our

sample is skewed. It pointed out we reported that OWCP claims examiners processed about

59 percent of the traumatic injury claims and about 63 percent of the occupational disease

claims for the first compensation payment within OWCP’s 14 day time standard. However,

the 85 percent figure reported by OWCP’s systems’ relates to a larger universe of all

payments generated from the receipt of a claim form, including multiple claims filed on the

same case. OWCP further pointed out that it agreed that the actions we cite in the report as

contributing to delays would naturally occur most frequently in connection with the first

payment on a particular case. However, according to OWCP, once these actions are

complete, supplemental payments can generally be more prompt as reflected in the higher

overall percentages of timely payments captured by OWCP’s system. We agree that by

including all payments related to a claim instead of only the first payment the timeliness of

processing all payments could be different from what we determined. However, because our

objective was to determine how soon after injury workers received a compensation payment,

we focused our review only on the first compensation payment. We further clarified our

report to state that we did not review subsequent claims for compensation.

OWCP stated that the discrepancy for occupational disease case adjudication rates between

what we found (84 percent timeliness) and what its system is reporting (90 percent) is very

near the confidence interval we describe in our report and hence may be a statistical artifact.

According to OWCP it is reasonable to assume that their measures are comparable with ours

for this category. We agree with OWCP.

Comments about Our Recommendations

OWCP also took issue with our recommendations. Specifically, OWCP questioned the focus

on our inability to measure all segments of workers’ compensation claims filing and

processing, stating that two of our three recommendations to OWCP related to this issue.

OWCP points out that the data systems it uses to measure its own and employing agency

performance were developed over many years and are currently under review as part of a

general system redesign and replacement effort. It said that OWCP will take advantage of

this review opportunity to sharpen its measures where it believes doing so would yield
17 GAO-03-158R Postal Service Workers’ Compensation Claims

improved performance and transparency. However, it took exception with our concern that

the current performance measurement system does not capture the date the claimant

submits the claim form to his or her supervisor, thereby preventing a determination of

whether the claimants were delaying the processing of the claims or whether the postal

supervisors were holding the claims and thus delaying the process. OWCP defended its

current system by stating that it places the burden of timeliness where OWCP believes it

primarily belongs—on the employing agency, not on the injured worker.

We believe that capturing the date that the employee actually submits the injury claim form

to the employing agency instead of the date the employee signs the claim form would allow

the employing agencies and OWCP to better determine where delays may be occurring in the

process so that remedial actions can be initiated. We do not believe that a requirement to

capture the date that employees submit the claim form to the employing agency places any

additional burden on injured workers; nor would it necessarily detract from OWCP’s efforts

to encourage employing agencies to act on their own to initiate the filing of workers’

compensation claims. We believe that any general system redesign and replacement effort by

OWCP should include an evaluation of the need to capture the date on which injured workers

file their claims with the employing agencies. OWCP’s regulations address the date

employing agencies actually receive the claim, which could be different from the date that

employees sign the claim form. Having this information should allow OWCP to better

determine the employees’ needs when submitting claims while allowing OWCP to identify

actions the employing agencies could take to improve the process.

OWCP also disagreed with the implication of our first recommendation that OWCP’s system

of measuring its timeliness in processing wage-loss claims should separate out claims for

which the initial eligibility determination has not been made. OWCP maintains that by

separating such claims, its claims examiners would have no incentive to try to quickly obtain

any missing information needed to determine a claimant’s eligibility for the program, and

thus more claims would encounter a much longer delay while in this “deferred” status.

According to OWCP, the net effect of measuring such claims separately would be to increase,

rather than reduce, the delays that claimants experience in receiving their benefits.

We agree that OWCP should be in a position to determine whether its claims examiners are

trying to obtain missing eligibility information as quickly as possible. However, we believe

that an effective performance measurement system should not hold claims examiners

accountable for actions for which they have no control. Under the current process and

standard, OWCP managers do not know when claims examiners are responsible for not

meeting its standard for timeliness in processing wage-loss claims or whether the claim

submitted did not provide the required information to determine eligibility. As mentioned

earlier in this report, about 64 percent of the compensation claims for traumatic injury and 77

percent of the claims for occupational disease in our sample required OWCP to request

additional information before making a decision. Again, we believe that any general system

redesign and replacement effort by OWCP should include an assessment of whether its

performance standard is appropriate with respect to missing information from the claimant,

how to help claimants provide all appropriate information, and a measure for holding OWCP

examiners accountable only for actions they control.

OWCP also disagreed with our recommendation that postal supervisors send only complete

injured employee claim forms to OWCP. It said that if agencies hold on to initial claims to

ensure that all possible information is compiled, OWCP’s initial receipt of the claim record

may be delayed, which in turn leads to the denial of medical bills because there is no record

of the worker or the injury in OWCP’s system. The intent of our recommendation, however,
18 GAO-03-158R Postal Service Workers’ Compensation Claims

is that postal supervisors should work with injured employees to see that the claim forms are

as complete as possible—we are not recommending that postal supervisors unreasonably

delay submission of the claim forms to OWCP. Our recommendation is consistent with the

initiative that the Postal Service implemented in July 2002 to have managers, supervisors, and

employees work together to ensure that claim forms are submitted promptly and accurately.

Nonetheless we revised the wording of our recommendation to focus on the Service’s

effective implementation of its new initiative.

OWCP disagreed with our initial conclusion that the SFC case process may result in greater

than anticipated erroneous WCP payments and with our recommendation that OWCP

reevaluate the SFC case process. OWCP said that it believes that our sample cases were not

representative of the entire universe of SFC cases. Nevertheless, OWCP said that it is

currently reviewing the precise rules and criteria used in implementing the SFC case process

as part of its business and data system redesign and will continue to enhance the

effectiveness of the process and ensure that it is properly executed.

We agree that our sample of SFC cases was not designed to be representative of the entire

universe of SFC cases. We reviewed only SFC cases that were part of our overall sample.

The purpose of our study was not to evaluate the overall SFC case process. We revised the

report to make this point clearer and to emphasize that neither we nor OWCP has overall or

generalizable current data on SFC case process error rates. OWCP’s pilot test for the SFC

case process was conducted in 1993 at only one district office and has not since been

revisited. We revised our conclusion but kept our recommendation because we believe that

our findings with respect to these cases show that OWCP’s ongoing review of the SFC case

process provides an excellent opportunity to make certain that the process is meeting

OWCP’s intended goals and is maintaining a cost-effective error rate relative to any

improperly awarded WCP benefits.

Finally, OWCP disagreed with our proposed recommendation that the Secretary determine

whether processing standards should cover all types of claims. OWCP provided a good

reason for not having such a standard for leave buy-back claims. It said that the decision to

grant leave buy-back ultimately rests with the employing agency and that the decision to

actually repurchase leave rests with the claimant. However, we do not believe that OWCP

provided sufficient information for not having a performance standard for schedule awards.

OWCP said that it does not believe that schedule award determinations can be made subject

to strict processing standards because entitlement of a schedule award for permanent

impairment requires a determination that the claimant has reached maximum medical

improvement. OWCP said that applying meaningful timeliness standards to claims staff in

these circumstances would be exceedingly difficult. We agree that there are numerous

difficulties involved in adjudicating schedule awards claims. However, without such a

standard, there appears to be no incentive for OWCP examiners to process schedule award

claims as quickly as possible. Considering the proportion of lengthy processing times for

schedule award claims in our sample, we believe that OWCP should explore the feasibility of

developing a processing standard for schedule awards that considers all the difficulties that

can arise in processing these claims. Having such a standard could act as an incentive for

timely processing, help hold OWCP staff accountable for actions they can control, and serve

as an impetus for identifying and addressing causes of delays or lengthy processing times.

Accordingly, we modified our recommendation to focus specifically on exploring a standard

for schedule awards.
19 GAO-03-158R Postal Service Workers’ Compensation Claims

- - - -

As agreed with your office, unless you publicly announce the contents of this report earlier,

we plan no further distribution until 14 days from the report date. At that time, we will send

copies of this report to the Ranking Minority Member of your subcommittee; the Chairman

and Ranking Minority Member, Senate Committee on Governmental Affairs; the Chairman

and Ranking Minority Member, House Committee on Government Reform; the Chairman and

Ranking Minority Member, Senate Committee on Health, Education, Labor, and Pensions;

and the Chairman and Ranking Minority Member, House Committee on Education and the

Workforce. Copies of this report will also be sent to the Director of the Office of

Management and Budget, the Postmaster General/Chief Executive Officer of the United

States Postal Service; the Chairman, Postal Rate Commission; the Secretary of Labor; and

others on request. In addition, the report will be available at no charge on the GAO Web site

at http://www.gao.gov.

If you have any questions, please contact me at (202) 512-2834 or ungarb@gao.gov. Key

contributors to this report are listed in appendix IV.

Sincerely yours,

Bernard L. Ungar, Director

Physical Infrastructure Issues
Enclosure I

20 GAO-03-158R Postal Service Workers’ Compensation Claims

Comments from the United States Postal Service
Enclosure II

Comments from the U.S. Department of Labor

21 GAO-03-158R Postal Service Workers’ Compensation Claims
Enclosure II

22 GAO-03-158R Postal Service Workers’ Compensation Claims
Enclosure II

23 GAO-03-158R Postal Service Workers’ Compensation Claims
Enclosure II

24 GAO-03-158R Postal Service Workers’ Compensation Claims
Enclosure II

25 GAO-03-158R Postal Service Workers’ Compensation Claims
Enclosure II

26 GAO-03-158R Postal Service Workers’ Compensation Claims
Enclosure III

27 GAO-03-158R Postal Service Workers’ Compensation Claims

Objectives, Scope, Methodology,

and Sampling Plan

To provide information requested by Chairman Horn, our objectives were to determine

• the extent to which Postal Service employees provided all of the evidence required by

Office of Workers’ Compensation Program (OWCP) regulations for determining eligibility

for WCP benefits and

• whether claims for WCP eligibility and WCP compensation payments for lost wages or

schedule awards were submitted and processed within the time frames set forth in OWCP

regulations or performance standards.17

We reviewed a statistically valid sample of Workers’ Compensation Program (WCP) case files

to determine whether U.S. Postal Service claimants submitted the evidence required for

eligibility determinations, as well as to determine the time required by the claimants, the

Postal Service, and OWCP to process claims and make entitlement and compensation award

decisions. Specifically, our review was designed to obtain information on (1) when

employees reported their injuries and the related evidence to prove the sufficiency of their

claims, (2) the amount of time that Postal Service supervisors and officials took to process

employees’ claims and forward them to OWCP, and (3) the amount of time that OWCP took

to process the claims and determine eligibility for benefits. Additionally, we analyzed the

impact that OWCP’s Short Form Closure (SFC) case program had on the eligibility

determination processing times associated with our sample traumatic injury cases. Our work

did not include an analysis of any time involved in the appeals process of any claim we

reviewed; nor did we evaluate the appropriateness of OWCP’s decisions on the claims or

make an assessment of all types of claims involved in the WCP. We performed our work

from January through December 2002 in accordance with generally accepted government

auditing standards and obtained comments on the results of our work from OWCP and the

Postal Service.

Workers’ Compensation Case File Review Development and Design

We randomly sampled 484 Postal Service employee WCP case files at the 12 OWCP district

offices located throughout the country. For the 12-month period beginning July 1, 1997, we

obtained case file records for injuries that occurred or were recognized as job-related during

this period. We chose this period of time because we believed that it was current enough to

reflect ongoing operations, yet historical enough for most, if not all, of the claims to have

been decided upon. The cases we reviewed were randomly selected on the basis of the type

of injury involved—traumatic or occupational—as well as on the basis of their approval or

nonapproval for WCP benefits and compensation or schedule award payments.

We developed a data collection instrument to capture all the appropriate information from

OWCP’s case files and OWCP forms used to file a claim for WCP benefits and compensation

payments for lost wages and schedule awards, along with any relevant information from

OWCP or Postal Service officials. We visited each of the OWCP district offices to review

each selected case file individually, compiling the claims information directly into our

 17OWCP regulations specify the time frames during which injured federal employees and federal

agencies are to submit and process WCP-related forms; OWCP performance standards provide the

annual operational performance goals or time frames during which OWCP claims examiners are to

process WCP-related forms.
Enclosure III

28 GAO-03-158R Postal Service Workers’ Compensation Claims

automated data collection instrument. In addition, we interviewed OWCP and Postal Service

officials in Washington, D.C., as well as the district office directors in Washington, D.C., and

Dallas, Texas, to discuss and collect pertinent program information regarding the processing

of employees’ claims for WCP eligibility and for compensation for lost wages and schedule

awards.

Sampling Methodology

The population from which we selected our sample reflects Postal Service employees who, as

of June 30, 2001, submitted claims for compensation for lost wages or schedule awards for

injuries that occurred, or were recognized as job-related, during the 12-month period

beginning July 1, 1997. In order to report results for traumatic injury and occupational

disease claims, and to report results on claims of both types whether compensation was paid

or not, we stratified our population into the following four strata on the basis of information

from the sample frame:

1. The employee filed a “Federal Employee’s Notice of Traumatic Injury and Claim for

Continuation of Pay/Compensation” form (Form CA-1) and received payment for

compensation for lost wages or a schedule award.

2. The employee filed a “Federal Employee’s Notice of Traumatic Injury and Claim for

Continuation of Pay/Compensation” form (Form CA-1) and did not receive payment

for compensation for lost wages or a schedule award.

3. The employee filed a “Notice of Occupational Disease and Claim for Compensation”

form (Form CA-2) and received payment for compensation.

4. The employee filed a “Notice of Occupational Disease and Claim for Compensation”

form (Form CA-2) and did not receive payment for compensation.

The size of the population in each of these four strata was 3,872; 1,232; 2,967; and 873,

respectively. The number of sample cases obtained from each of the four strata was 198, 106,

143, and 96, respectively. We initially selected somewhat higher numbers of sample cases. If

we were not able to obtain the file for a particular sample case, we substituted cases from the

additional randomly sampled cases.

Sampling Results and Confidence Interval of Estimates

We followed a sampling procedure designed to draw 543 cases from the agency’s files. Of

these 543 cases, we located and reviewed 484 (180, 96, 128, and 80 in each strata,

respectively). A sampling error indicates how closely we can reproduce from a sample the

results we would have obtained if we had reviewed every OWCP case file. By adding the

sampling error to and subtracting it from the estimate, we can develop upper and lower

bounds for each estimate. This range is called the confidence interval. Sampling errors and

confidence intervals are stated at a certain confidence level—in this case, 95 percent. The 95

percent confidence interval for proportion estimates of the total population was no greater

than plus or minus 5 percentage points. The 95 percent confidence interval for proportion

estimates applied to individual strata was no greater than plus or minus 10 percentage points.

Confidence levels for other types of estimates, such as averages, medians, and totals,

depended on the variability of the sample values. We used SUDAAN software to make

population projections. Table 3 lists the confidence intervals for selected information from

our case file review.
Enclosure III

29 GAO-03-158R Postal Service Workers’ Compensation Claims

Table 3: Sampling Results

Description

(Agency performance measures listed in italics)

Percentage of

sample cases,

except where

noted

 95 percent

confidence interval

From To

Length of time to process claims to determine WCP eligibility-- traumatic injury

Date of traumatic injury to date Postal Service supervisor received notice

of injury form (OWCP Form CA-1) (within 30 calendar days)

94.69 91.30 97.10

Date Postal Service supervisor received notice of injury form (OWCP

Form CA-1) to date OWCP received form (within 10 working days)

73.11 67.70 78.50

Date OWCP received notice of injury form (OWCP Form CA-1) to date of

notice that eligibility for WCP benefits has been established (90 percent of

the cases processed within 45 days)

41.26 34.90 47.60

Date OWCP received notice of injury form (OWCP Form CA-1) to date of

notice that eligibility for WCP benefits has been established. [Estimate

considers effect of SFCs] (90 percent of the cases processed within 45

days)

70.56 64.70 76.40

Total processing time for 25 percent of cases: date of injury to date

eligibility for WCP benefits established. (Estimate deducts down time

associated with SFCs)

46.73 days 41.20 58.18

Total processing time for 90 percent of cases: date of injury to date

eligibility for WCP benefits is established. (Estimate deducts down time

associated with SFCs)

380.88 days 260.55 464.55

Length of time to process claims to determine eligibility -- occupational disease

Date occupational disease was recognized as job-related (OWCP Form

CA-2) to date Postal Service supervisor receives notice of occupational

disease form (within 30 calendar days)

48.51 41.00 56.10

Date Postal Service supervisor received notice of occupational disease

form (OWCP Form CA-2) to date OWCP received form (within 10 working

days)

64.12 56.70 71.50

Date OWCP received notice of occupational disease form (OWCP Form

CA-2) to date of notice that eligibility for WCP benefits has been

established (70 percent of the cases processed within 6 months)

84.16 77.80 89.30

Total processing time for 25 percent of cases: date disease recognized as

job-related to date of notice that eligibility for WCP benefits is established

77.88 days 68.19 92.24

Total processing time for 90 percent of cases: date disease recognized as

job-related to date of notice that eligibility for WCP benefits is established

577.44 days 447.34 666.68

Length of time to process claims for compensation for injuries – traumatic injury

Date OWCP received claim for compensation to date of claim processed

for first payment. (OWCP Form CA-7) (80 percent of claims processed

within 14 days of receipt)

58.63 50.2 67.1

Length of time to process claims for compensation for injuries – occupational disease

Date OWCP received claim for compensation to date of claim processed

for first payment. (OWCP Form CA-7) (80 percent of claims processed

within 14 days of receipt)

63.14 52.8 73.5

Additional estimates

Percentage of claims with COP requested 55.64 52.0 59.2

Percentage of claims with annual or sick leave requested 11.09 8.3 14.5

Overall: Percentage of claims for which OWCP requested additional

information

68.72 64.20 73.30

Percentage of claims for which OWCP requested additional information–

traumatic injury

63.60 57.50 69.70

Percentage of claims for which OWCP requested additional informationoccupational disease76.51 68.90 83.00

Overall: Percentage of claims with evidence that met all five OWCP

required elements

98.74 97.30 99.50
Enclosure III

30 GAO-03-158R Postal Service Workers’ Compensation Claims

Percentage of claims with evidence that met all five required elements –

traumatic injury

99.08 97.10 99.80

Percentage of claims with evidence that met all five required elements–

occupational disease

98.25 95.40 99.60

Source: GAO analysis of OWCP data.
Enclosure IV

31 GAO-03-158R Postal Service Workers’ Compensation Claims

GAO Contacts and Staff Acknowledgments

GAO Contacts

Bernard L. Ungar (202) 512-2834

Sherrill Johnson (214) 777-5699

Acknowledgments

In addition to those named above, Michael Rives, Frederick Lyles, Jr., Melvin Horne, John

Vocino, Jerry Sandau, Brandon Haller, Jill Sayre, and Donna Leiss made key contributions to

this report.

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