Energy Employees Compensation: GAO's Prior Work Has Identified Needed Improvements in Various Aspects of the Program
Published: 2006-12-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Energy Employees Occupational Illness Compensation Program Act (EEOICPA) was enacted in 2000 to compensate Department of Energy employees and contractors who developed work-related illnesses such as cancer and lung disease. Energy administered Subtitle D of the program. Subtitle B of the program is administered by the Department of Labor, which uses estimates of workers' likely radiation exposure to make compensation decisions. The estimates, known as dose reconstructions, are performed by the National Institute for Occupational Safety and Health (NIOSH) under the Department of Health and Human Services (HHS). The act specified that the President establish an Advisory Board on Radiation and Worker Health to review the scientific validity of NIOSH's dose reconstructions and recommend whether workers should be part of special exposure cohorts whose claimants can be compensated without dose reconstructions. A recent memorandum from the Office of Management and Budget (OMB) to Labor has raised concern about potential efforts to unduly contain the cost of benefits paid to claimants. This testimony presents GAO's past work on program performance and the work of the advisory board. It also highlights GAO's ongoing work relevant to issues raised by the OMB memorandum. GAO interviewed key officials and reviewed contract and other agency documents.
section_title: What GAO Found
paragraphs: GAO issued two reports in 2004 that focused on claims processing and program structure. The first report found that Energy got off to a slow start in processing Subtitle D claims and faced a backlog of cases. In addition, limitations in data systems made it difficult to assess Energy's performance. GAO recommended that Energy take actions to expedite claims processing, enhance communication with claimants, and improve case management data. The report also highlighted problems with program structure that could lead to inconsistent benefit outcomes and GAO presented various options for restructuring the program. Congress subsequently incorporated features of some of these options in enacting new legislation that dramatically restructured the program and transferred it from Energy to Labor. Labor has taken action to address the recommendations GAO made to Energy. The second report found that Labor and NIOSH faced a large backlog of claims awaiting dose reconstruction. To enhance program management and transparency, HHS implemented GAO's recommendation to establish time frames for completing profiles of Energy work sites, which are a critical element in efficiently processing claims that require dose reconstruction. GAO's February 2006 report found that the roles of two key NIOSH officials involved with the work of the advisory board may not have been sufficiently independent because these officials also represented the dose reconstruction program under review. In response, NIOSH replaced them with a senior official not involved in the program. Since credibility is essential to the advisory board's work, GAO concluded that ongoing diligence by HHS is required to avoid actual or perceived conflicts of roles when new candidates are considered for these roles. GAO also found that the board's work presented a steep learning curve, prompting adjustments to the work done by the contractor assisting the board. GAO recommended actions to provide the board with more comprehensive data on contractor spending levels compared to work actually completed, assist the board in reexamining its long-term plan for reviewing NIOSH's work, and better track agency actions taken in response to board and contractor findings. HHS has implemented these recommendations. One aspect of GAO's ongoing work especially relevant to the OMB memorandum is the extent to which Labor's concerns over potentially escalating benefit costs may have led the agency to be involved in activities tasked to NIOSH, the advisory board, or the contractor assisting the board. NIOSH agreed to provide Labor with draft versions of some of its evaluations of special exposure cohort petitions and other NIOSH technical documents before sending them for board review. Labor has commented on some of these draft documents. Labor officials told us that their reviews focus on changes needed to promote clarity and consistency in the adjudication of claims. As the review proceeds, GAO plans to obtain more information on key issues such as the timing, nature, and basis of Labor's activities in light of the program's design and assignment of responsibilities.

section_title: Letter
paragraphs: I am pleased to be here today to discuss GAO’s completed and ongoing  work on the implementation of the Energy Employees Occupational  Illness Compensation Program Act (EEOICPA). For the last several  decades, the Department of Energy and its predecessor agencies and  contractors have employed thousands of individuals in secret and  dangerous work in the atomic weapons industry. This legislation was  enacted in 2000 to provide compensation to Energy employees and  contractors who were exposed to radioactive and hazardous materials and  who subsequently developed illnesses such as cancer and lung disease.  Subtitle B of the program is administered by the Department of Labor  (Labor) and provides for a one-time payment of $150,000 to eligible  workers or their survivors and coverage of future medical expenses  associated with their illnesses. From the program’s effective date in July  2001, through October 2006, Labor received 77,710 Subtitle B claims and  has made payments for 21,376 of these claims exceeding $1.7 billion.
The compensation act also called for the President to establish the  President’s Advisory Board on Radiation and Worker Health—composed  of scientists, physicians, and employee representatives—to advise the  Secretary of Health and Human Services (HHS) on its activities under the  act. The board is tasked with reviewing the scientific validity and quality  of the National Institute for Occupational Safety and Health’s (NIOSH)  “dose reconstructions.” These are estimates of the likely radiation levels to  which individual workers were exposed that Labor uses to determine  whether claimants will receive compensation. The board is also tasked  with making recommendations to the HHS Secretary on whether to  approve petitions for “special exposure cohort” status. Because certain  facilities are known to have exposed employees to radiation while keeping  few records of individuals’ exposure, their employees have been  designated under the law as members of the special exposure cohort and  their claims may be paid without individual dose reconstructions. The  board is assisted in its oversight work by a contractor.
Subtitle D of EEOICPA established a separate program that was  administered by Energy. This program allowed Energy to help its  contractors’ employees file state workers’ compensation claims for  illnesses determined by a panel of physicians to be caused by exposure to  toxic substances while employed at an Energy facility. In October 2004,  Congress amended the act to restructure the program and to transfer  responsibility from Energy to Labor under the newly created Subtitle E.
Over the last several years, GAO has issued reports identifying needed  improvements in various aspects of the EEOICPA program that can affect  compensation provided to claimants. In 2004, we issued two reports that  focused on claims processing and program structure. In February 2006,  we reported to you on the status of the advisory board’s review of the  scientific validity and quality of NIOSH’s dose reconstructions.
Since the issuance of our February 2006 report, a memorandum from the  Office of Management and Budget (OMB) to Labor has generated  considerable congressional concern about the potential for inappropriate  efforts to contain the cost of benefits paid to claimants. The memorandum  notes that Labor has identified the potential for a large expansion of  EEOICPA Part B benefits through the designation of special exposure  cohorts. The memorandum further states that the Administration planned  to convene a White House-led interagency workgroup to develop options  to contain growth in the costs of benefits provided by the program. The  memorandum specifically identifies five options, including more extensive  review of NIOSH’s special exposure cohort recommendations and  addressing any “imbalance” in advisory board membership. While it is  reasonable for OMB to have a role in overseeing the costs of federal  programs, some have raised concerns that certain options set forth in the  memorandum, if implemented, could result in decisions unduly based on  budgetary considerations rather than established scientific procedures for  compensating workers under this program. This Subcommittee held  several hearings in 2006 in response to such concerns.
GAO is currently conducting work requested by this Subcommittee to  examine a broad range of issues concerning implementation of Subtitle B.  A central focus of our ongoing work is on the reasons for increases in  costs for the contractors assisting NIOSH in performing dose  reconstructions and how effectively NIOSH has managed these  contractors. Our ongoing work also addresses other issues, including the  implementation of conflict of interest policies for NIOSH and its  contractors, options for further strengthening the independence of the  advisory board and the contractor assisting the board, and the extent, if  any, to which Labor is involved in Subtitle B activities that have been  tasked to NIOSH, the advisory board, or the contractor assisting the board,  as specified by statute, regulation, or contract. As agreed with your  Committee, we plan to issue a report on our ongoing work by the summer  of 2007.
My testimony today will focus on three specific areas. First, I will discuss  our 2004 reports on claims processing and program structure. Second, I  will provide an overview of key findings from our February 2006 report on  the work of the advisory board. Third, I will highlight an area of our  ongoing work that is especially relevant to issues raised by the OMB  memorandum to Labor. In performing this work, we interviewed key  officials, examined pertinent contract-related documents such as monthly  progress reports, and reviewed agency procedures and practices. Our  work is being conducted in accordance with generally accepted  government auditing standards.
In summary, our May 2004 report indicated that Energy got off to a slow  start in processing Subtitle D claims and faced a backlog of cases awaiting  review by a physician panel. We concluded that in the absence of changes  to expedite Energy’s review, many claimants would likely wait years to  receive the determination they needed from Energy to pursue a state  workers’ compensation claim, and in the interim their medical conditions  might worsen or they might even die. We recommended that Energy take  actions to expedite claims processing, enhance communications with  claimants, and improve case management data. Our report also highlighted  problems with the structure of the program that could lead to inconsistent  benefit outcomes for claimants. We identified various options for  restructuring the program and a framework of factors to consider in  evaluating these options that informed congressional deliberations in  enacting new legislation to dramatically restructure the program and  transfer it from Energy to Labor. Labor told us it has taken actions to  address each of the recommendations we made to the Secretary of Energy  in our report. For example, Labor has compiled a data base of the toxic  substances that may have been present at Energy facilities and linked  them to medical conditions to help expedite the processing of claims. In  addition, Labor rebuilt its case management system which tracks all  Subtitle E claims transferred from Energy and enhanced the system’s  performance and reliability.
Our September 2004 report focused on the Subtitle B program and found  that Labor and NIOSH faced a large backlog of claims awaiting dose  reconstruction. NIOSH had learned from its initial implementation  experience that completing site profiles—documents which describe the  layout, materials used, radiation sources, and other characteristics of work  sites—is a critical element for efficiently processing claims requiring dose  reconstruction. To enhance program management and promote greater  transparency with regard to the timeliness of completing dose  reconstructions, we recommended that the Secretary of HHS direct agency  officials to establish time frames for completing the remaining site  profiles, which HHS has done.
Our February 2006 report found that the roles of certain key federal  agency officials initially involved in the advisory board’s review of dose  reconstructions may not have been sufficiently independent, but that  actions were taken to replace these officials. Since credibility is essential  to the work of the advisory board, we concluded that continued diligence  is required by HHS in avoiding actual or perceived conflicts of roles when  new candidates are considered for the roles. We also found that the  advisory board’s review of site profiles and dose reconstructions  presented a steep learning curve and prompted the board to adjust the  contractor’s work to better meet the needs of the review. For example, the  board revised task orders for the contractor to reduce the number of  reviews to be completed or extend completion dates. Nonetheless, we  concluded that further improvements could be made to the oversight and  planning of the contracted review. We recommended that HHS provide the  board with more comprehensive data on contractor spending levels  compared to work actually completed, assist the board in reexamining its  long-term plan for reviewing NIOSH’s work, and improve tracking of  agency actions taken in response to board and contractor findings. HHS  has implemented these recommendations.
One aspect of our ongoing work on Subtitle B is especially relevant to  issues raised by the OMB memorandum to Labor. We are examining  whether Labor is involved in activities tasked to NIOSH, the advisory  board, or the contractor assisting the board, and if so, whether these  activities reflect an effort to constrain the cost of benefits. For example, in  some cases NIOSH has shared drafts of its special exposure cohort  petition evaluations as well as drafts of other NIOSH technical documents  with Labor before sending final versions to the advisory board, which is  tasked to review them. Labor has provided comments on some of these  draft documents. Labor officials told us that the basis of their involvement  is Labor’s designation as primary administrator of the program. Labor  officials added that their reviews of these documents focus on changes  needed to promote clarity and consistency in the adjudication of claims.  We are currently examining the extent, nature, and outcome of Labor’s  comments on various NIOSH documents. As our work proceeds, we plan  to obtain additional information on key issues such as the timing, nature,  and basis of Labor’s activities in light of the program’s design and  assignment of responsibilities.
subsections: section_title: Background
paragraphs: Several different federal agencies are involved with the implementation of  the Subtitle B program, including Labor, HHS, and Energy. However,  Labor has primary responsibility for administering the program. Labor  receives the claims, determines whether the claimant meets the eligibility  requirements, and adjudicates the claim. When considering the  compensability of certain claims, Labor relies on dose reconstructions  developed by NIOSH, under HHS. To avoid gathering similar information  for each claim associated with a particular facility, NIOSH compiles  facility-specific information in “site profiles,” which assist NIOSH in  completing the dose reconstructions. NIOSH contracted with Oak Ridge  Associated Universities and the Battelle Corporation to develop site  profiles and draft dose reconstructions. Energy is responsible for  providing Labor and NIOSH with employment verification, estimated  radiation dose, and facility-wide monitoring data.
Labor does not refer all claims to NIOSH for dose reconstruction. For  example, reconstructions are not needed for workers in the special  exposure cohort. For special exposure cohort claimants, Labor verifies the  employment and illness, and develops a recommended compensability  decision that is issued to the claimant. The act specified that classes of  workers from four designated locations would constitute the special  exposure cohort and authorized the Secretary of HHS to add additional  classes of employees. Classes of workers may petition HHS to be added to  the cohort. A class of employees is generally defined by the facility at  which they worked, the specific years they worked, and the type of work  they did. NIOSH collects and evaluates the petitions and gives the results  of its evaluations to the advisory board for review. The board, in turn,  submits a recommendation to the Secretary of HHS to accept or deny the  petition. To date, 13 classes of workers have been approved at 10 sites,  and petitions from 9 additional sites have been qualified for evaluation. A  petition from one site has been evaluated and denied.
section_title: GAO’s Prior Work Identified Problems with Case Processing and Program Structure
paragraphs: Our May 2004 report identified various problems with Energy’s processing  of Subtitle D cases. Energy got off to a slow start in processing cases but  had taken some steps to reduce the backlog of cases waiting for review by  a physician panel. For example, Energy took steps to expand the number  of physicians who would qualify to serve on the panels and recruit more  physicians. Nonetheless, a shortage of qualified physicians continued to  constrain the agency’s capacity to decide cases more quickly. Further,  insufficient strategic planning and systems limitations made it difficult to  assess Energy’s achievement of goals relative to case processing and  program objectives, such as the quality of the assistance provided to  claimants in filing for state workers’ compensation. We concluded that in  the absence of changes that would expedite Energy’s review, many  claimants would likely wait years to receive the determination they  needed from Energy to pursue a state workers’ compensation claim, and  in the interim their medical conditions might worsen or they might even  die. We made several recommendations to Energy to help improve its  effectiveness in assisting Subtitle D claimants in obtaining compensation.  Specifically, we recommended that Energy take additional steps to  expedite the processing of claims through its physician panels, enhance  the quality of its communications with claimants, and develop cost- effective methods for improving the quality of case management data and  its capabilities to aggregate these data to address program issues. Energy  generally agreed with these recommendations.
Our May 2004 report also identified structural problems that could lead to  inconsistent benefit outcomes for claimants whose illness was determined  by a physician panel to be caused by exposure to toxic substances while  employed at an Energy facility. Our analysis of cases associated with  Energy facilities in nine states indicated that a few thousand cases would  lack a “willing payer” of workers’ compensation benefits; that is, they  would lack an insurer that—by order from, or agreement with, Energy— would not contest these claims. As a result, in some instances, these cases  may have been less likely to receive compensation than cases for which  there was a willing payer. We identified various options for restructuring  the program to improve payment outcomes and presented a framework of  issues to consider in evaluating these options. Congress subsequently  enacted legislation that dramatically restructured the program, transferred  it from Energy to Labor, and incorporated features of some of the options  we identified. Labor told us it has taken actions to address each of the  recommendations we made to the Secretary of Energy in our report. For  example, Labor has compiled a data base of the toxic substances that may  have been present at Energy facilities and linked them to medical  conditions to help expedite the processing of claims. In addition, Labor  has rebuilt its case management system which tracks all Subtitle E claims  transferred from Energy and enhanced the system’s performance and  reliability.
Our September 2004 report on the Subtitle B program found that in the  first 2½ years of the program, Labor and NIOSH had fully processed only   9 percent of the more than 21,000 claims that were referred to NIOSH for  dose reconstruction. NIOSH officials reported that the backlog of dose  reconstruction claims arose because of several factors, including the time  needed to get the necessary staff and procedures in place for performing  dose reconstructions and to develop site profiles. NIOSH learned from its  initial implementation experience that completing site profiles is a critical  element for efficiently processing claims requiring dose reconstructions.  To enhance program management and promote greater transparency with  regard to timeliness, we recommended that the Secretary of HHS direct  agency officials to establish time frames for completing the remaining site  profiles, which HHS has done.
section_title: GAO’s Prior Work Also Highlighted Issues of Advisory Board Independence and Oversight of the Contractor Supporting the Board
paragraphs: Our February 2006 report discussed the roles of certain federal agency  officials involved in the advisory board’s review of NIOSH’s dose  reconstructions and site profiles that raised concerns about the  independence of this review. The project officer who was initially assigned  responsibility for reviewing the monthly progress reports and monitoring  the technical performance of the contractor reviewing NIOSH’s dose  reconstruction activities for the advisory board was also a manager of the  NIOSH dose reconstruction program. In addition, the person assigned to  be the designated federal officer for the advisory board, who is  responsible for scheduling and attending board meetings, was also the  director of the dose reconstruction program being reviewed. In response  to concerns about the appearance of conflicting roles, the director of  NIOSH replaced both of these officials in December 2004 with a senior  NIOSH official not involved in the program. The contractor and members  of the board told us that implementation of the contract improved after  these officials were replaced. Since credibility is essential to the work of  the advisory board and the contractor assisting the board, we concluded  that continued diligence by HHS is required to prevent such problems  from recurring when new candidates are considered for these roles. With  regard to structural independence, we found it appropriate that the  contracting officers managing the contract on behalf of the advisory board  were officials from the Centers for Disease Control and Prevention,  NIOSH’s parent agency, who do not have responsibilities for the NIOSH  program under review and are not accountable to its managers. In  addition, advisory board members helped facilitate the independence of  the contractor’s work by playing the leading role in developing and  approving the initial statement of work for the contractor and the  independent government cost estimate for the contract.
Our February 2006 report identified further improvements that could be  made to the oversight and planning of the advisory board’s contracted  review of NIOSH’s dose reconstructions and site profiles. We found that  this review presented a steep learning curve for the various parties  involved. In the first 2 years, the contractor assisting the board had spent  almost 90 percent of the $3 million that had been allocated to the contract  for a 5-year undertaking. In addition, the contractor’s expenditure levels  were not adequately monitored by the agency in the initial months and the  contractor’s monthly progress reports did not provide sufficient details on  the level of work completed compared to funds expended. The advisory  board had made mid-course adjustments to the contractor’s task orders  and review procedures, such as by revising task orders to reduce the  number of reviews to be completed or extend completion dates. However,  the board had not comprehensively reexamined its long-term plan for the  overall project to determine whether the plan needed to be modified in  light of knowledge gained over the past few years. Finally, without a  system to track the actions taken by NIOSH in response to the findings  and recommendations of the advisory board and contractor, there was no  assurance that needed improvements were being made.
We made three recommendations to HHS to address these shortcomings.  First, we recommended that HHS provide the board with more integrated  and comprehensive data on contractor spending levels compared with  work actually completed, which HHS has done. Second, we recommended  that HHS consider the need for providing HHS staff to collect and analyze  pertinent information to help the advisory board comprehensively  reexamine its long-term plan for assessing the NIOSH site profiles and  dose reconstructions. HHS is considering the need for such action. Third,  we recommended that the Director of NIOSH establish a system to track  actions taken by the agency in response to the board and contractor’s  findings and recommendations. NIOSH now tracks agency actions to  resolve the board and contractor’s comments.
section_title: GAO’s Ongoing Work Includes Focus on Labor’s Involvement in Certain Subtitle B Program Activities
paragraphs: As part of our ongoing work, we are examining to what extent, if any,  Labor is involved in certain Subtitle B activities. While the director of  Labor’s Office of Workers’ Compensation Programs stated that Labor has  not taken any actions to implement the options outlined in the OMB  memorandum, Labor’s internal correspondence reflects major concerns  about the potential for rapidly expanding costs in Subtitle B benefits  resulting from adding new classes of workers to the special exposure  cohort. One aspect of our ongoing work is determining whether Labor is  involved in activities that have been tasked to NIOSH, the advisory board,  or the contractor assisting the board, and if so, whether these activities  reflect an effort to constrain the costs of benefits. Our work in this area is  still ongoing and we have not drawn any conclusions. Nonetheless, we  would like to briefly highlight the types of issues we will be analyzing as  our work proceeds.
NIOSH has, in some cases, shared draft versions of key documents with  Labor before finalizing and sending them to the advisory board for review.  For example, NIOSH has shared draft special exposure cohort petition  evaluations with Labor. Similarly, NIOSH has agreed to allow Labor to  review and comment on drafts of various technical documents such as site  profiles, technical basis documents, or technical information bulletins, all  of which are used to help perform dose reconstructions. Labor has  provided comments on some of these draft documents. Labor officials told  us that the basis of their involvement is Labor’s designation as lead agency  with primary responsibility for administering the program. Labor officials  added that their reviews of these documents focus on changes needed to  promote clarity and consistency in the adjudication of claims. In addition,  Labor has reviewed individual dose reconstructions completed by NIOSH.  Labor officials told us that they review all NIOSH dose reconstructions  and return them for rework if, for example, they find errors in factual  information or in the way the dose reconstruction methodology was  applied. We are currently examining the extent, nature, and outcome of  Labor’s comments on these various documents. As our review proceeds,  we plan to obtain more information on key issues such as the timing,  nature, and basis of Labor’s activities in light of the program’s design and  assignment of responsibilities.
Mr. Chairman, this concludes my prepared remarks. I will be pleased to  answer any questions you or other Members of the Subcommittee may  have.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information regarding this testimony, please contact me at  (202) 512-7215. Key contributors to this testimony were Claudia Becker,  Meeta Engle, Robert Sampson, Andrew Sherrill, and Charles Willson.
section_title: Related GAO Products
paragraphs: Department of Energy, Office of Worker Advocacy: Deficient Controls  Led to Millions of Dollars in Improper and Questionable Payments to  Contractors. GAO-06-547. Washington, D.C.: May 31, 2006.
Energy Employees Compensation: Adjustments Made to Contracted  Review Process, but Additional Oversight and Planning Would Aid the  Advisory Board in Meeting Its Statutory Responsibilities. GAO-06-177.  Washington, D.C.: Feb. 10, 2006.
Energy Employees Compensation: Many Claims Have Been Processed,  but Action Is Needed to Expedite Processing of Claims Requiring  Radiation Exposure Estimates. GAO-04-958. Washington, D.C.: Sept. 10,  2004.
Energy Employees Compensation: Even with Needed Improvements in  Case Processing, Program Structure May Result in Inconsistent Benefit  Outcomes. GAO-04-516. Washington, D.C.: May 28, 2004.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. It may be reproduced and distributed in its entirety without further  permission from GAO. However, because this work may contain copyrighted images or  other material, permission from the copyright holder may be necessary if you wish to  reproduce this material separately.