Energy Employees Compensation: Obstacles Remain in Processing Cases Efficiently and Ensuring a Source of Benefit Payments
Published: 2004-03-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Energy (Energy) and its predecessor agencies and contractors have employed thousands of people in the nuclear weapons production complex. Some employees were exposed to toxic substances, including radioactive and hazardous materials, during this work, and many subsequently developed illnesses. Subtitle D of the Energy Employees Occupational Illness Compensation Program Act of 2000 allows Energy to help its contractor employees file state workers' compensation claims for illnesses determined by a panel of physicians to be caused by exposure to toxic substances in the course of employment at an Energy facility. Congress mandated that GAO study the effectiveness of the benefit program under Subtitle D of this Act. This testimony is based on GAO's ongoing work on this issue and focuses on four key areas: (1) the number, status, and characteristics of claims filed with Energy; (2) the extent to which Energy policies and procedures help employees file timely claims for these state benefits; (3) the extent to which there will be a "willing payer" of workers' compensation benefits, that is, an insurer who--by order from or agreement with Energy--will not contest these claims; and (4) a framework that could be used for evaluating possible options for changing the program.
section_title: What GAO Found
paragraphs: During the first 2 1/2 years of the program, ending December 31, 2003, Energy had completely processed about 6 percent of the more than 23,000 cases that had been filed. Energy had begun processing of nearly 35 percent of cases, but processing had not yet begun on nearly 60 percent of the cases. While Energy got off to a slow start in processing cases, it is now processing enough cases that there is a backlog of cases waiting for review by a physician panel. Energy has taken some steps intended to reduce this backlog, such as reducing the number of physicians needed for some panels. Nonetheless, a shortage of qualified physicians continues to constrain the agency's capacity to decide cases more quickly. Consequently, claimants will likely continue to experience lengthy delays in receiving the determinations they need to file workers' compensation claims. GAO estimates that more than half of the cases associated with Energy facilities in 9 states that account for more than three-quarters of all Subtitle D cases filed are likely to have a willing payer of benefits. Another quarter of the cases in these 9 states, while not technically having a willing payer, have workers' compensation coverage provided by an insurer that has stated that it will not contest these claims. However, the remaining 20 percent of cases lack willing payers and are likely to be contested, which means that many of these cases may be less likely to receive compensation. Because of data limitations, these percentages provide an order of magnitude estimate of the extent to which claimants will have willing payers. The estimates are not a prediction of actual benefit outcomes for claimants. In this testimony, GAO also provides a framework for evaluating potential options for changing the program to address the willing payer issue. This framework includes a range of issues that would help the Congress assess options if it chooses to change the current program. One of these issues in particular--the federal cost implications--should be carefully considered in the context of the current federal fiscal environment.

section_title: Letter
paragraphs: I am pleased to be here today to update the information we provided in  our November 21, 2003 testimony before you on our work regarding the  effectiveness of the benefit program under Subtitle D of the Energy  Employees Occupational Illness Compensation Program Act of 2000  (EEOICPA). This legislation was designed to provide assistance to  contractor employees in obtaining compensation for occupational  illnesses. Congress mandated that we study this issue and report to the  Senate Committees on Energy and Natural Resources and Appropriations  and the House Committees on Energy and Commerce and Appropriations.
For the last several decades, the Department of Energy (Energy) and its  predecessor agencies and contractors have employed thousands of  individuals in secret and dangerous work in the nuclear weapons  production complex. Over the years, employees were unknowingly  exposed to toxic substances, including radioactive and hazardous  materials, and studies such as one commissioned by the National  Economic Council have shown that many of these employees  subsequently developed serious illnesses. EEOICPA established two  programs to help secure compensation for employees who developed  occupational illnesses or for their survivors. Congressional Committees,   as well as individual Members of Congress, claimants, and advocates have  raised concerns regarding Energy’s processing of claims and the  availability of benefits once claims have been decided.
Enacted as title XXXVI of the Floyd D. Spence National Defense  Authorization Act for Fiscal Year 2001, which was signed into law on  October 30, 2000, this legislation has two major components. Subtitle B  provides eligible workers who were exposed to radiation or other toxic  substances and who subsequently developed illnesses such as cancer and  lung disease a one-time payment of up to $150,000 and covers future  medical expenses related to the illness. The Department of Labor  administers these benefits, payable from a compensation fund established  by the same legislation. Subtitle D allows Energy to help its contractor  employees file state workers’ compensation claims for illnesses  determined by a panel of physicians to be caused by exposure to toxic  substances in the course of employment at an Energy facility.
My testimony today reflects our ongoing review of the effectiveness of  Energy’s implementation of Subtitle D. Our work is focused on four key  areas: (1) the number, status, and characteristics of claims filed with  Energy; (2) the extent to which Energy policies and procedures help  employees file timely claims for state workers’ compensation benefits;   (3) the extent to which there will be a “willing payer” of workers’  compensation benefits; that is, an insurer who—by order from, or  agreement with, Energy—will not contest these claims; and (4) a  framework that could be used for evaluating possible options for changing  the program in the event that there may not be willing payers of benefits.
In summary, as of December 31, 2003, Energy had fully processed about   6 percent of the more than 23,000 cases received. Most of the fully  processed cases had been found ineligible because of either a lack of  employment at an eligible facility or an illness related to toxic exposure.  While Energy got off to a slow start in processing cases, it is now  processing enough cases that there is a backlog of cases waiting for review  by a physician panel. The agency has taken some steps to reduce this  backlog; nonetheless, a shortage of qualified physicians continues to  constrain Energy’s capacity to decide cases more quickly. In the  meantime, Energy has not kept claimants sufficiently informed about the  delays in the processing of their claims as well as what claimants can  expect as they proceed with state workers’ compensation claims.
While the workers’ compensation claims from about 80 percent of the  cases associated with major Energy facilities in 9 states are not likely to be  contested by employers or their insurers, actual compensation is not  certain. This figure is based primarily on the method of workers’  compensation coverage used by the Energy contractors and is not an  estimate of the number of cases that will ultimately be paid. Specifically,  slightly more than half the cases associated with facilities in the 9 states  are likely to have a willing payer of benefits and another quarter of the  cases, while not having willing payers, have workers’ compensation  coverage provided by an insurer that has stated that it will not contest the  claim for benefits. However, the remaining 20 percent of cases lack willing  payers and are likely to be contested, which means that many of these  cases may be less likely to receive compensation. Because of data  limitations, these percentages provide an order of magnitude estimate of  the extent to which claimants will have willing payers. The estimates are  not a prediction of actual benefit outcomes for claimants.
Various options are available to improve payment outcomes for the cases  that receive a positive physician panel determination, but lack willing  payers under the current program. If it were decided that the program  should be modified, the options for changing it range from adding a federal  benefit to the existing program for cases that lack a willing payer to  designing a completely new program. Congress would need to examine  these options in terms of several issues, including the source, method, and  amount of the federal funding required to pay benefits; the length of time  needed to implement changes; the criteria for determining who is eligible;  and the equitable treatment of claimants. In particular, the federal cost  implications of these options should be carefully considered in the context  of the current federal fiscal environment.
To perform our review, we analyzed data extracted from Energy’s Subtitle  D case management system for applications filed through June 30, 2003,  and again through December 31, 2003. We also reviewed the provisions of,  and interviewed officials with, the workers’ compensation programs in  nine states with Energy facilities accounting for more than three-quarters  of Subtitle D cases filed, and we interviewed the contractors operating the  major facilities in these states. In addition, we conducted site visits to  three Energy facilities in Oak Ridge, Tennessee, the state with facilities  accounting for the largest number of Subtitle D claims. We also  interviewed key program officials and other experts. Although our review  is continuing, we conducted our work for this testimony from April 2003  through March 2004 in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: Energy oversees a nationwide network of 40 contractor-operated  industrial sites and research laboratories that have historically employed  more than 600,000 workers in the production and testing of nuclear  weapons. In implementing EEOICPA, the President acknowledged that it  had been Energy’s past policy to encourage and assist its contractors in  opposing workers’ claims for state workers’ compensation benefits based  on illnesses said to be caused by exposure to toxic substances at Energy  facilities. Under the new law, workers or their survivors could apply for  assistance from Energy in pursuing state workers’ compensation benefits,  and if they received a positive determination from Energy, the agency  would direct its contractors to not contest the workers’ compensation  claims or awards. Energy’s rules to implement the new program became  effective in September 2002, and the agency began to process the  applications it had been accepting since July 2001, when the law took  effect.
Energy’s claims process has several steps. First, claimants file applications  and provide all available medical evidence. Energy then develops the  claims by requesting records of employment, medical treatment, and  exposure to toxic substances from the Energy facilities at which the  workers were employed. If Energy determines that the worker was not  employed by one of its facilities or did not have an illness that could be  caused by exposure to toxic substances, the agency finds the claimant  ineligible. For all others, once development is complete, a panel of three  physicians reviews the case and decides whether exposure to a toxic  substance during employment at an Energy facility was at least as likely as  not to have caused, contributed to, or aggravated the claimed medical  condition. The panel physicians are appointed by the National Institute for  Occupational Safety and Health (NIOSH) but paid by Energy for this work.  Claimants receiving positive determinations are advised that they may  wish to file claims for state workers’ compensation benefits. Claimants  found ineligible or receiving negative determinations may appeal to  Energy’s Office of Hearings and Appeals.
Each of the 50 states and the District of Columbia has its own workers’  compensation program to provide benefits to workers who are injured on  the job or contract a work-related illness. Benefits include medical  treatment and cash payments that partially replace lost wages.  Collectively, these state programs paid more than $46 billion in cash and  medical benefits in 2001. In general, employers finance workers’  compensation programs. Depending on state law, employers finance these  programs through one of three methods: (1) they pay insurance premiums  to a private insurance carrier, (2) they contribute to a state workers’  compensation fund, or (3) they set funds aside for this purpose as self- insurance. Although state workers’ compensation laws were enacted in  part as an attempt to avoid litigation over workplace accidents, the  workers’ compensation process is still generally adversarial, with  employers and their insurers tending to contest aspects of claims that they  consider not valid.
State workers’ compensation programs vary as to the level of benefits,  length of payments, and time limits for filing. For example, in 1999, the  maximum weekly benefit for a total disability in New Mexico was less than  $400, while in Iowa it was approximately $950. In addition, in Idaho, the  weekly benefit for total disability would be reduced after 52 weeks, while  in Iowa benefits would continue at the original rate for the duration of the  disability. Further, in Tennessee, a claim must be filed within 1 year of the  beginning of incapacity or death. In contrast, in Kentucky a claim must be  filed within 3 years of either the last exposure to most substances or onset  of disease symptoms, but within 20 years of exposure to radiation or  asbestos.
section_title: Energy Has Processed Few Cases And Insufficient Strategic Planning And Data Collection Complicate Program Management
paragraphs: As of December 31, 2003, Energy had completely processed about 6  percent of the more than 23,000 cases that had been filed. Energy had  begun processing of nearly 35 percent of cases, but processing had not yet  begun on nearly 60 percent of the cases. Insufficient strategic planning and  systems limitations complicate assessment of Energy’s achievement of  case processing goals. Further, these limitations make it difficult to assess  achievement of other broader goals, related to program objectives, such as  the quality of the assistance given to claimants in filing for state workers’  compensation.
subsections: section_title: Energy Has Fully Processed about 6 Percent of Its Cases
paragraphs: During the first 2 ½ years of the program, ending December 31, 2003,  Energy had fully processed about 6 percent of the more than 23,000 claims  it received. The majority of the fully processed claims (about 5 percent of  all cases) had been found ineligible because of either a lack of  employment at an eligible facility or an illness related to toxic exposure. In  the last 6 months of 2003, Energy more than tripled the number of cases  receiving a final determination from a physician panel, from 42 to   150. These 150 cases represent less than 1 percent of the more than   23,000 cases filed.
While cases filed are associated with facilities in 43 states or territories,  the majority of cases are associated with Energy facilities in 9 states.  Facilities in Colorado, Idaho, Iowa, Kentucky, New Mexico, Ohio, South  Carolina, Tennessee, and Washington account for more than 75 percent of  cases received by December 31, 2003. The largest group of cases is  associated with facilities in Tennessee.
A majority of all cases were filed during the first year of program  implementation, but new cases continue to be filed. Nationwide, the  number of cases filed increased by 22 percent in the last 6 months of   2003 from fewer than 19,000 to more than 23,000. However, the rate of  increase in cases filed was not uniform across the 9 states with facilities  that account for more than three-quarters of all cases. For example, cases  associated with facilities in Washington increased by 8 percent during the  6-month period while cases in New Mexico increased by 34 percent and  cases in Ohio increased by 80 percent.
As of the end of calendar year 2003, Energy had not yet begun processing  nearly 60 percent of the cases, and an additional 35 percent of cases were  in processing. The majority of cases being processed were in the case  development stage, where Energy requests information from the facility at  which the claimant was employed. Of the cases still in processing, about   2 percent were ready for physician panel review and 3 percent were  undergoing panel review.
Energy reports that, in recent months, it has considerably accelerated the  rate at which it is completing the development of cases that are ready for  physician panel review. Since our testimony in November 2003, Energy’s  case development process has met the agency’s goal of completing the  development on 100 cases per week, which is considerably higher than the  average of about 30 cases per week it was completing in September 2003.  Moreover, since our prior testimony, Energy has also completed a  comprehensive review of its Subtitle D program that resulted in a plan that  identifies strategies for further accelerating its case processing.  This plan  sets a goal of eliminating the entire case backlog by the end of fiscal year  2006 and is dependent, in part, on Energy’s shifting additional funds into  this program.
section_title: Insufficient Strategic Planning and Data Collection Limit Energy’s Ability to Determine Whether Program Goals Are Being Met
paragraphs: Insufficient strategic planning regarding system design, data collection,  and tracking of outcomes has made it more difficult for Energy officials to  manage some aspects of the program and for those with oversight  responsibilities to determine whether Energy is meeting the goal of  providing assistance in filing for workers’ compensation. The data system  used by Energy to aid in case management was developed by contractors  without detailed specifications from Energy. Furthermore, the system was  developed before Energy established its processing goals, and the changes  Energy implemented to improve its ability to track certain information  have resulted in more recent status data being not completely comparable  with older status data.
Because it did not adequately plan for the various uses of its data, Energy  lacks some of the information needed to analyze how cases will fare when  they enter the state workers’ compensation systems or to track their  outcomes. Specifically, it is difficult for Energy to predict whether willing  payers of workers’ compensation benefits will exist using case  management system data because the information about the specific  employer for whom the claimant worked is not collected in a format that  can be systematically analyzed. Since employers are liable for workers’  compensation coverage, specific employer information is important in  determining whether a willing payer exists. In addition, while Energy has  not been systematically tracking whether claimants subsequently file  workers’ compensation claims or the decisions on these claims, Energy  now plans to develop this capability.
section_title: A Shortage of Qualified Physicians To Issue Determinations Delays Filing of Workers’ Compensation Claims And Claimants May Receive Inadequate Information To Prepare Them To Pursue These Claims
paragraphs: Energy was slow in implementing its initial case processing operation, but  it is now processing enough cases so that there is a backlog of cases  awaiting physician panel review. With panels operating at full capacity, the  small pool of physicians qualified to serve on the panels may ultimately  limit the agency’s ability to produce more timely determinations.  Claimants have experienced lengthy delays in receiving the determinations  they need to file workers’ compensation claims and have received little  information about claims status as well as what they can expect from this  process. Energy has taken some steps intended to reduce the backlog of  cases.
subsections: section_title: The Ability to Produce More Timely Decisions May Be Limited by the Small Pool of Qualified Physicians and Gaps in Information They Need to Quickly Decide Cases
paragraphs: Additional resources have allowed Energy to speed initial case  development, and it has been processing enough cases to produce a  backlog of cases waiting for physician panel review. However, the limited  pool of qualified physicians for panels may continue to prevent significant  improvements in processing time. Under the rules Energy originally  established for this program that required that each case be reviewed by a  panel of 3 physicians and given the 130 physicians currently available, it  could have taken more than 13 years to process all cases pending as of  December 31, without consideration of the hundreds of new cases the  agency is receiving each month. However, in an effort to make the panel  process more efficient, Energy published new rules on March 24, 2004,  that re-defined a physician panel as one or more physicians appointed to  evaluate these cases and changed the timeframes for completing their  review. In addition, the agency began holding a full-time physician panel in  Washington, D.C. in January 2004, staffed by physicians who are willing to  serve full-time for a 2- or 3-week period.
Energy and NIOSH officials have taken steps to expand the number of  physicians who would qualify to serve on the panels and to recruit more  physicians, including some willing to work full-time. While Energy has  made several requests that NIOSH appoint additional physicians to staff  the panels, such as requesting 500 physicians in June 2003, NIOSH officials  have indicated that the pool of physicians with the appropriate credentials  and experience is limited. The criteria NIOSH originally used to evaluate  qualifications for appointing physicians to these panels included: (1) board  certification in a primary discipline; (2) knowledge of occupational  medicine; (3) minimum of 5 years of relevant clinical practice following  residency; and (4) reputation for good medical judgment, impartiality, and  efficiency. NIOSH recently modified these qualifications, primarily to  reduce the amount of required clinical experience so that physicians with  experience in relevant clinical or public health practice or research,  academic, consulting, or private sector work can now qualify to serve on  the panels. NIOSH has revised its recruiting materials to reflect this  change and to point out that Energy is also interested in physicians willing  to serve on panels full-time. However, a NIOSH official indicated that only  a handful of physicians would likely be interested in serving full-time on  the panels.
Energy officials have also explored additional sources from which NIOSH  might recruit qualified physicians, but they have expressed concerns that  the current statutory cap on the rate of pay for panel physicians may limit  the willingness of physicians from these sources to serve on the panels.  For example, Energy officials have suggested that physicians in the  military services might be used on a part-time basis, but the rate of pay for  their military work exceeds the current cap. Similarly, physicians from the  Public Health Service could serve on temporary full-time details as panel  physicians. To elevate the rate of pay for panel physicians to a level that is  consistent with the rate physicians from these sources normally receive,  Energy officials plan to develop a legislative proposal that will modify the  current cap on the rate of pay and would also expand Energy’s hiring  authority.
Panel physicians have also suggested methods to Energy for improving the  efficiency of the panels. For example, some physicians have said that more  complete profiles of the types and locations of specific toxic substances at  each facility would speed their ability to decide cases. While Energy  officials reported that they have completed facility overviews for about  half the major sites, specific site reference data are available for only a few  sites. Energy officials told us that, in their view, the available information  is sufficient for decision making by the panels.  However, based on  feedback from the physicians, Energy officials are exploring whether  developing additional site information would be cost beneficial.
section_title: Energy Has Not Sufficiently Communicated Case Status and Expectations about the Process to Claimants
paragraphs: Energy has not always provided claimants with complete and timely  information about what they could achieve in filing under this program.  Energy officials concede that claimants who filed in the early days of the  program may not have been provided enough information to understand  the benefits they were filing for. As a consequence, some claimants who  filed under both Subtitle B and Subtitle D early in the program later  withdrew their claims under Subtitle D because they had intended to file  only for Subtitle B benefits or because they had not understood that they  would still have to file for state workers’ compensation benefits after  receiving a positive determination from a physician panel. After the final  regulations were published in August 2002, Energy officials said that  claimants had a better understanding of the benefits for which they were  applying.
Energy has not kept claimants sufficiently informed about the status of  their claims under Subtitle D. Until recently, Energy’s policy was to  provide no written communication about claims status between the  acknowledgement letters it sent shortly after receiving applications and  the point it began to process claims. Since nearly half of the claims filed in  the first year of the program remained unprocessed as of December 31,  2003, these claimants would have received no information about the status  of their claims for more than 1 year. Energy recently decided to change  this policy and provide letters at 6-month intervals to all claimants with  pending claims. Although the first of these standardized letters sent to  claimants in the fall of 2003 did not provide information about individual  claims status, it did inform claimants about a new service on the program’s  redesigned Web site through which claimants can check on the status of  their claim. However, this new capability does not provide claimants with  information about the timeframes during which their claims are likely to  be processed and claimants would need to re-check the status periodically  to determine whether the status of the claim has changed.
Claimants may not be given sufficient information as to what they are  likely to encounter when they file for state workers’ compensation  benefits. Energy’s letter to claimants transmitting a positive determination  from a physician panel does not always provide enough information about  how they would go about filing for state workers’ compensation benefits.  For example, a contractor in Tennessee reported that a worker was  directed by Energy’s letter received in September 2003 to file a claim with  the state office in Nashville when Tennessee’s rules require that the claim  be filed with the employer. The contractor reported the problem to Energy  in the same month, but Energy letters sent to Tennessee claimants in  October and December 2003 continued to direct claimants to the state  office. Finally, claimants are not informed as to whether there is likely to  be a willing payer of workers’ compensation benefits and what this means  for the processing of that claim. Specifically, advocates for claimants have  indicated that claimants may be unprepared for the adversarial nature of  the workers’ compensation process when an insurer or state fund contests  the claim.
section_title: Workers’ Compensation Claims For a Majority of Cases Are Not Likely to be Contested
paragraphs: The workers’ compensation claims for the majority of cases associated  with major Energy facilities in 9 states are likely to have no challenges to  their claims for state workers’ compensation benefits. Specifically, based  on additional analysis of workers’ compensation programs and the  different types of workers’ compensation coverage used by the major  contractors, it appears that slightly more than half of the cases will  potentially have a willing payer—that is, contractors that will not contest  the claims for benefits as ordered by Energy. Another 25 percent of the  cases, while not technically having a willing payer, have workers’  compensation coverage provided by an insurer that has stated that it will  not contest these claims and is currently processing several workers’  compensation claims without contesting them. The remaining 20 percent  of cases in the 9 states we analyzed are likely to be contested. Because of  data limitations, these percentages provide an order of magnitude estimate  of the extent to which claimants will have willing payers. The estimates  are not a prediction of actual benefit outcomes for claimants.
As shown in table 1, the contractors for four major facilities in these states  are self-insured, which enables Energy to direct them to not contest claims  that receive a positive medical determination. In such situations where  there is a willing payer, the contractor’s action to pay the compensation  consistent with Energy’s order to not contest a claim will override state  workers’ compensation provisions that might otherwise result in denial of  a claim, such as failure to file a claim within a specified period of time.  Similarly, the agreement by the commercial insurer for the workers at the  two facilities that constitute 25 percent of the cases to pay the workers  compensation claims will mostly likely also supercede such state  provisions. However, since the insurer is not bound by Energy’s orders  and it does not have a formal agreement with either Energy or the  contractors to not contest these claims, there is nothing to guarantee that  the insurer will continue to process claims in this manner.
About 20 percent of cases in the 9 states we analyzed are likely to be  contested. Therefore, in some instances, these cases may be less likely to  receive compensation than a comparable case for which there is a willing  payer, unless the claimant is able to overcome challenges to the claim. In  addition, contested cases can take longer to be resolved. For example, one  claimant whose claim is being contested by an insurer was told by her  attorney that because of discovery and deposition motions by the  opposing attorney, it would be two years before her case was heard on its  merits. Specifically, the cases that lack willing payers involve contractors  that (1) have a commercial insurance policy, (2) use a state fund to pay  workers’ compensation claims, or (3) do not have a current contract with  Energy. In each of these situations, Energy maintains that it lacks the  authority to make or enforce an order to not contest claims. For instance,  an Ohio Bureau of Workers’ Compensation official said that the state  would not automatically approve a case, but would evaluate each workers’  compensation case carefully to ensure that it was valid and thereby  protect its state fund. Further, although the contractor in Colorado with a  commercial policy attempted to enter into agreements with prior  contractors and their insurers to not contest claims, the parties have not  yet agreed and several workers’ compensation claims filed with the state  program are currently being contested.
section_title: Several Issues Should Be Considered in Evaluating Options for Improving the Likelihood of Willing Payers
paragraphs: Various options are available to improve payment outcomes for the cases  that receive a positive determination from Energy, but lack willing payers  under the current program. If it chooses to change the current program,  Congress would need to examine these options in terms of several issues,  including the source, method, and amount of the federal funding required  to pay benefits; the length of time needed to implement changes; the  criteria for determining who is eligible; and the equitable treatment of  claimants. In particular, the cost implications of these options for the  federal government should be carefully considered in the context of the  current federal fiscal environment.
subsections: section_title: Options for Changing the Current Program
paragraphs: We identified four possible options for improving the likelihood of willing  payers, some of which have been offered in proposed legislation. While  not exhaustive, the options range from adding a federal benefit to the  existing program for cases that lack a willing payer to addressing the  willing payer issue as part of designing a new program that would allow  policymakers to decide issues such as the eligibility criteria and the type  and amount of benefits without being encumbered by existing program  structures. A key difference among the options is the type of benefit that  would be provided.
Option 1—State workers’ compensation with federal back up. This  option would retain state workers’ compensation structure as under the  current Subtitle D program but add a federal benefit for cases that receive  a positive physician panel determination but lack a willing payer of state  workers’ compensation benefits. For example, claims involving employees  of current contractors that self-insure for workers’ compensation coverage  would continue to be processed through the state programs. However,  claims without willing payers such as those involving contractors that use  commercial insurers or state funds likely to contest workers’  compensation claims could be paid a federal benefit that approximates the  amount that would have been received under the relevant state program.
Option 2—Federal workers’ compensation model. This option would  move the administration of the Subtitle D benefit from the state programs  entirely to the federal arena, but would retain the workers’ compensation  concept for providing partial replacement of lost wages as well as medical  benefits. For example, claims with positive physician panel determinations  could be evaluated under the eligibility criteria of the Federal Employees  Compensation Act and, if found eligible, could be paid benefits consistent  with the criteria of that program.
Option 3—Expanded Subtitle B program that does not use a  workers’ compensation model. Under this option, the current Subtitle B  program would be expanded to include the other illnesses resulting from  radiation and toxic exposures that are currently considered under the  Subtitle D program. The Subtitle D program would be eliminated as a  separate program and, if found eligible, claimants would receive a lump- sum payment and coverage of future medical expenses related to the  workers’ illnesses, assuming they had not already received benefits under  Subtitle B. The Department of Labor would need to expand its regulations  to specify which illnesses would be covered and the criteria for  establishing eligibility for each of these illnesses. In addition, since the  current programs have differing standards for determining whether the  worker’s illness was related to his employment, it would have to be  decided which standard would be used for the new category of illnesses.
Option 4—New federal program that uses a different type of  benefit structure. This option would address the willing payer issue as  part of developing a new program that involves moving away from the  workers’ compensation and Subtitle B structures and establishing a new  federal benefit administered by a structure that conforms to the type of the  benefit and its eligibility criteria. This option would provide an opportunity  to consider anew the purpose of the Subtitle D provisions. As a starting  point, policymakers could consider different existing models such as the  Radiation Exposure Compensation Act, designed to provide partial  restitution to individuals whose health was put at risk because of their  exposure even when their illnesses do not result in ongoing disability. But  they could also choose to build an entirely new program that is not based  on any existing model.
section_title: Various Issues Should Be Considered in Deciding Whether Changes Are Needed and Assessing the Options
paragraphs: In deciding whether and how to change the Subtitle D program to ensure a  source of benefit payments for claims that would be found eligible if they  had a willing payer, policymakers will need to consider the trade-offs  involved. Table 2 arrays the relevant issues to provide a framework for  evaluating the range of options in a logical sequence. We have constructed  the sequence of issues in this framework in terms of the purpose and type  of benefit as being the focal point for the evaluation, with consideration of  the other issues flowing from that first decision. For example, decisions  about eligibility criteria would need to consider issues relating to within- state and across-state equity for Subtitle D claimants. The framework  would also provide for decisions on issues such as the source of federal  funding—trust fund or increased appropriations—and the appropriate  federal agency to administer the benefit. For each of the options, the type  of benefit would suggest which agency should be chosen to administer the  benefit and would depend, in part, on an agency’s capacity to administer a  benefit program. In examining these issues, the effects on federal costs  would have to be carefully considered.  Ultimately, policymakers will need  to weigh the relative importance of these issues in deciding whether and  how to proceed.
section_title: Purpose and Type of Benefit
paragraphs: In evaluating how the purpose and type of benefit now available under  Subtitle D could be changed, policymakers would first need to focus on  the goals they wish to achieve in providing compensation to this group of  individuals. If the goal is to compensate only those individuals who can  demonstrate lost wages because of their illnesses, a recurring cash benefit  in an amount that relates to former earnings might be in order and a  workers’ compensation option, either a state benefits with a federal back  up or a federal workers’ compensation benefit, would promote this  purpose. If, on the other hand, the goal is to compensate claimants for all  cases in which workers were disabled because of their employment—even  when workers continue to work and have not lost wages–the option to  expand Subtitle B would allow a benefit such as a flat payment amount not  tied to former earnings.
For consideration of a new federal program option, it might be useful to  also consider other federal programs dealing with the consequences of  exposure to radiation as a starting point. For example, the Radiation  Exposure Compensation Act was designed to provide partial restitution to  individuals whose health was put at risk because of their exposure. Similar  to Subtitle B, the act created a federal trust fund, which provides for  payments to individuals who can establish that they have certain diseases  and that they were exposed to radiation at certain locations and at  specified times. However, this payment is not dependent on demonstrating  ongoing disability or actual losses resulting from the disease.
section_title: Eligibility Criteria and Equity of Outcomes
paragraphs: The options could also have different effects with respect to eligibility  criteria and the equity of benefit outcomes for current Subtitle D claimants  based on these criteria. By equity of outcomes, we mean that claimants  with similar illnesses and circumstances receive similar benefit outcomes.   The current program may not provide equity for all Subtitle D claimants  within a state because a claim that has a willing payer could receive a  different outcome than a similar claim that does not have a willing payer,  but at least three of the options could provide within-state equity.  With  respect to across-state equity, the current program and the option to  provide a federal back up to the state workers’ compensation programs  would not achieve equity for Subtitle D claimants in different states. In  contrast, the option based on a federal workers’ compensation model as  well as the expanded Subtitle B option would be more successful in  achieving across-state equity.
Regardless of the option, changes made to Subtitle D could also  potentially result in differing treatment of claims decided before and after  the implementation of the change. In addition, changing the program to  remove the assistance in filing workers’ compensation claims may be seen  as depriving a claimant of an existing right. Further, any changes could  also have implications beyond EEOICPA, to the extent that the changes to  Subtitle D could establish precedents for federal compensation to private  sector employees in other industries who were made ill by their  employment.
section_title: Federal Costs
paragraphs: Effects on federal costs would depend on the generosity of the benefit in  the option chosen and the procedures established for processing claims  for benefits. Under the current program, workers’ compensation benefits  that are paid without contest will come from contract dollars that  ultimately come from federal sources – there is no specific federal  appropriation for this purpose. Because all of the options are designed to  improve the likelihood of payment for claimants who meet all other  criteria, it is likely that federal costs would be higher for all options than  under the current program. Specifically, federal costs would increase for  the option to provide a federal back up to the state workers’ compensation  program because it would ensure payment at rates similar to the state  programs for the significant minority of claimants whose claims are likely  to be contested and possibly denied under the state programs. Further, the  federal costs of adopting a federal workers’ compensation option would  be higher than under the first option because all claimants – those who  would have been paid under the state programs as well as those whose  claims would have been contested under the state programs – would be  eligible for a federal benefit similar to the benefit for federal employees. In  general, federal workers’ compensation benefits are more generous than  state benefits because they replaces a higher proportion of the worker’s  salary than many states and the federal maximum rate of wage  replacement is higher than all the state maximum rates.
For either of the two options above, a decision to offset the Subtitle D  benefits against the Subtitle B benefit could lessen the effect of the  increased costs, given reports by Energy officials that more than 90  percent of Subtitle D claimants have also filed for Subtitle B benefits.  However, the degree of this effect is difficult to determine because many  of the claimants who have filed under both programs may be denied  Subtitle B benefits. The key distinction would be whether workers who  sustained certain types of illnesses based on their Energy employment  should be compensated under both programs as opposed to recourse  under only one or the other. If they were able to seek compensation from  only one program, the claimant’s ability to elect one or the other based on  individual needs should be considered.
The effects on federal cost of an expanded Subtitle B option or a new  federal program option are more difficult to assess. In many cases, the  Subtitle B benefit of up to $150,000 could exceed the cost of the lifetime  benefit for some claimants under either of the workers’ compensation  options, resulting in higher federal costs. However, the extent of these  higher costs could be mitigated by the fact that many of the claimants who  would have filed for both benefits in the current system would be eligible  for only one cash benefit regardless of the number or type of illnesses. The  degree of cost or savings would be difficult to assess without additional  information on the specific claims outcomes in the current Subtitle B  program. The effects on federal costs for the new federal program option  would depend on the type and generosity of the benefit selected.
Same as under current  state programs.
Still a workers’  compensation benefit,  generally includes  medical treatment and  cash payments that  partially replace lost  wages.
Same as for current  Subtitle B— coverage of future  medical treatment  and a one-time  payment of up to  $150,000 as  compensation for  disability or death  because of  exposure to  radiation or toxic  substance.
Open for  consideration.
For federal back-up  benefit, should be  similar to criteria under  current state  programs.
Uses criteria of workers’  compensation program  for federal employees.
Same as for current  Subtitle B claimants  who worked for  Energy contractors.
Open for  consideration— should flow from  type of benefit and  the nature of the  population it is  designed to  compensate.
Open for  consideration.
Open for consideration.   No interaction  issues. Claimants  would be eligible for  only one payment  regardless of  number of illnesses.   Because there is a  large overlap in  claimants filing  under both  programs, this  could potentially  reduce the total  number of claims  that would remain  to be processed  once combined.
Open for  consideration.  Depends on the  nature of the  benefit.
Similar cases in the  same state could  receive similar benefits  regardless of  employer.
Similar cases in the  same state could receive  similar benefits  regardless of employer.
Similar cases in the  same state could  receive similar  benefits regardless  of employer.
Open for  consideration.
Similar cases in  different states could  receive differing  compensation.
Similar cases in different  states could receive  similar compensation.
Same as current  program for cases with  willing payer, but  would need a source  for federal back-up  benefit.
Trust fund already  established by  Section 3612 of  EEOICPA.
Open for  consideration— Appropriations or  trust fund.
For federal benefit,  selection criteria  should include how  quickly agency could  implement and how  well it was situated to  process and pay  cases. Energy would  still need to secure  records for all cases  and process claims  with willing payers.
Department of  Labor/Office of Workers’  Compensation  administers current  program; also  administers Subtitle B  program. Energy would  still need to secure  records.
Department of  Labor—same as  current Subtitle B  program.
Open for  consideration— depends on type of  benefit, experience  in administering  benefit program,  and funding source.
Program is  implemented, but few  cases have been  completely processed.
Relatively short to  implement since it is  based on existing  program. Infrastructure  would have to be  established and rules  developed to provide  for federal benefits  that mirror those of the  state programs.
Longer than Option 1.  Infrastructure in place,  but regulations for  existing federal workers’  compensation program  would need to be  expanded to cover new  benefit.
Longer than Option  1– structure in  place to administer  existing Subtitle B  program—new  rules need to be  developed for  evaluating  additional illnesses.
Potentially longest  of all options.  Depends on  administrator and  whether  infrastructure exists  or would need to be  built. In either  event, need to  publish rules and  establish  procedures.
Federal costs could  increase since benefits  for cases without  willing payers would  be paid directly from  federal funds.
Federal costs could be  greater than for current  program since benefits  would be based on the  often more generous  workers’ compensation  program for federal  workers.
To the extent that  the option would  ensure a source of  benefits, could  increase federal  costs. However, the  extent of these  higher costs could  be mitigated  because many of  the claimants who  would have filed for   Subtitle B and D  benefits in the  current system  would be eligible for  only one cash  benefit regardless  of the number or  type of illnesses.
Open for  consideration— Depends on type of  benefit and  eligibility criteria.
Mr. Chairman, this completes my prepared statement. I would be happy to  respond to any questions you or other Members of the Committee may  have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For information regarding this testimony, please contact Robert E.  Robertson, Director, or Andrew Sherrill, Assistant Director, Education,  Workforce, and Income Security, at (202) 512-7215. Individuals making  contributions to this testimony include Amy E. Buck, Melinda L. Cordero,  and Beverly Crawford.
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.