Office of Workers' Compensation Programs: Further Actions Are Needed to Improve Claims Review
Released: 2002-05-09T00:00:00

Letter

Background

FECA (5 USC 8101, et seq.) authorizes federal civilian employees compensation for wage loss and medical and death benefits for treatment of injuries sustained or for diseases contracted during the performance of duty. OWCP is responsible for administering and adjudicating the federal workers’ compensation program. During fiscal year 2000, OWCP’s paid workers’ compensation totaled about $2.1 billion including wage loss, medical, and death benefits stemming from job-related injuries and OWCP received approximately 174,000 new injury claims.

A workers’ compensation claim is initially submitted to an OWCP district office and is evaluated by a claims examiner. The examiner must determine whether the claimant has met all of the following criteria for obtaining benefits: The claim must have been submitted in a timely manner. An original claim for compensation for disability or death must be filed within 3 years of the occurrence of the injury or death.

The claimant must have been an active federal employee at the time of injury.

The injury, illness, or death had to have occurred in a claimed accident.

The injury, illness, or death must have occurred in the performance of duty.

The claimant must be able to prove that the medical condition for which compensation or medical benefits is claimed is causally related to the claimed injury, illness, or death.

Since medical evidence is an important component in determining whether an accident described in a claim caused the claimed injury and if the claimed injury caused the claimed disability, workers’ compensation claims are typically accompanied by medical evidence from the claimant’s treating physician. Considerable weight is typically given to the treating physician’s assessment and diagnosis. However, should the OWCP claims examiner conclude that the claimant’s recovery period seems to be outside the norm or that a better understanding of the medical condition is needed to clarify the nature of the condition or extent of disability, the examiner may obtain a second medical assessment of the claimant’s condition. In such instances, a second opinion physician, who is selected by a medical consulting firm contracted by an OWCP’s district office, reviews the case, examines the claimant, and provides a report to OWCP.

If the second opinion physician’s reported determination conflicts with the claimant physician’s opinion regarding the injury or condition, the claims examiner determines if the conflicting opinions are of “equal value.” If the claims examiner considers the two conflicting opinions to be of equal value, OWCP appoints a third or “referee physician” to evaluate the claim and render an independent medical opinion.

Claims may be approved in full or part, or denied. For example, a claimant may be paid full wage loss benefits and provided physical and vocational rehabilitation services, but denied a request for a medical procedure. When all or part of a claim is denied the claimant has three avenues of recourse: (1) an oral hearing or a review of the written record by the Branch of Hearings and Review (BHR), (2) reconsideration of the claim decision by a different claims examiner within the district office, or (3) a review of the claim by the Employees Compensation Appeals Board (ECAB).

Under the first appeal option, the claimant can request an oral hearing or a review of the claim’s written record by a BHR hearing representative. At an oral hearing, the claimant can testify in person, be represented by a designated representative, or submit written evidence. The employing agency may attend but not participate unless invited to do so by the BHR hearing representative or the claimant. For either a hearing or review of the record, the hearing representative decides whether to affirm the initial decision, reverse the initial decision and administer benefits to the claimant, or remand the claim to the district office for a new decision.

A second option to the claimant is to request reconsideration of the decision at the district office. During reconsideration, the district office reevaluates its initial decision and the decision-making process to ensure that it properly considered all facets of the claim. This reconsideration is typically performed by a senior claims examiner who played no role in making the original decision. After the entire record and resulting decision are reevaluated, the claims examiner decides whether to affirm the initial decision denying all or part of the claim or to modify the initial decision.

Generally the final appeal available to the claimant is made to the ECAB. The ECAB consists of three members who are appointed by the secretary of labor. The board was created within DOL but outside OWCP to give federal employees the same administrative due process of law and appellate review that most nongovernment workers enjoy under workers’ compensation laws in most states. While regulations prohibit the claimant from submitting new evidence during this phase, the ECAB is not limited by previous “findings of fact” by the district office or BHR and can therefore reevaluate the evidence and determine if the law was appropriately applied. As with the other appeals levels, ECAB renders decisions that affirm the district office’s decision, remand all or part of the claimant’s appealed decision to the district office for additional review, or reverse the district office’s decision.

While OWCP regulations do not require claimants to exercise these three methods of appeal in any particular order, certain restrictions apply that, in effect, encourage claimants to file appeals in a specific sequence—first going to the BHR, then requesting another review at the OWCP district office, and finally involving the ECAB. For example, the regulations state that a claimant seeking a BHR hearing on a decision must not have previously requested reconsideration of that decision regardless of whether the earlier request was granted. However, the BHR director said that claimants may, and sometimes do, choose to request a district office reconsideration first because the decisions on claims appealed through reconsideration are made in a more timely manner. Not withstanding the regulatory provision, OWCP explained that a claimant may request a discretionary oral hearing by BHR after receiving a reconsideration decision and both OWCP procedures and ECAB precedent require OWCP to exercise its discretion in considering such a request.

Appendix I contains a graphic presentation of OWCP’s claims adjudication process.

Scope and Methodology

We performed our work in Washington, D.C., from March 2001 through April 2002 in accordance with generally accepted government auditing standards. To assist us in addressing the objectives, we reviewed a statistical sample of more than 1,200 of the estimated 8,100 appealed claims for which a decision was rendered by OWCP’s BHR or DOL’s ECAB during the period from May 1, 2000, through April 30, 2001, to determine the following: (1) the primary reasons why appealed decisions were reversed or claims were remanded to the OWCP district offices for further development, (2) the amount of time OWCP took to inform claimants of hearing decisions, (3) whether OWCP used certified and licensed physicians whose areas of specialty were consistent with the injuries evaluated, and (4) the methods OWCP uses to identify customer satisfaction and potential claimant fraud. Additional information on the scope and methodology of our review and approaches for addressing these and other objectives is presented in appendix II and confidence intervals and other statistical information regarding our work are presented in appendix III.

Evaluation Problems, Case File Mismanagement, and New Evidence Are Reasons Appealed Claims Decisions Are Reversed or Remanded

From May 1, 2000, to April 30, 2001, decisions were rendered by BHR or ECAB on approximately 8,100 appealed claims. BHR or ECAB affirmed an estimated 67 percent of these initial decisions as being correct and properly handled by the district office, but reversed or remanded an estimated 31 percent of the decisions—25 percent because of questions or problems with OWCP’s review of medical and nonmedical information or management of claims files, and 6 percent because of additional evidence being submitted by the claimant after the initial decision.

The following figure characterizes the outcome of BHR and ECAB reviews of appealed claims. For those claims decisions that were reversed or remanded, the figure shows the reason, including (1) evaluation of evidence problems, (2) mismanagement of claims file problems, or (3) new evidence submitted by the claimant.

About One-fourth of the Appealed Claims Decisions Were Reversed or Remanded Due to OWCP Evaluation Problems or Claims File Mismanagement

Based on a statistical sample of appealed claims decisions made during the period May 1, 2000, through April 30, 2001, we estimate that 25 percent of the appealed claims decisions (approximately 2,000 of 8,100) were reversed or remanded because of questions about or problems associated with the initial decision by OWCP. These included problems with (1) the initial evaluation of medical evidence (e.g., physicians’ examinations, diagnoses, or x-rays) or nonmedical evidence (e.g., coworker testimonies) or (2) management of the claim file (e.g., failure to forward a claim file to ECAB in a timely manner). Problems in evaluating medical evidence frequently involved OWCP failing to properly identify medical conflicts between the conclusions of the claimant’s physician and OWCP’s second opinion physician, and therefore not appointing a referee physician as required by FECA. OWCP has interpreted the FECA requirement to apply only when the opinions of the two physicians involved are of equal value, that is, when both physicians have rendered comparably supported findings and opinions.

Other initial claims decisions were reversed or remanded when BHR or ECAB determined that nonmedical evidence had not been properly evaluated. One example of this involved the OWCP provision that when suitable work is found for the claimant, benefits will terminate. For example, based on its review of a job offer to a claimant who had work restrictions—such as not being able to lift over 50 pounds—an OWCP district office decided that the job represented suitable work and terminated the claimant’s compensation. However, when that decision was appealed by the claimant, BHR identified a flaw in the job offer. In order for OWCP to meet its burden of showing that an offered job is suitable for a claimant, both the duties and physical requirements of the job need to be fully described in the job offer. For this claim, the job offer had only set forth the duties, such as inputting social security numbers on a keyboard. The BHR representative decided that the offer did not describe the physical requirements associated with the job and thus, did not “allow the district office to properly determine whether the offered job was suitable work within the claimant’s work restrictions.” BHR concluded that the district improperly terminated the claimant’s compensation and directed that the claimant’s monetary compensation be reinstated. We estimate that 21 percent of appealed claims were remanded and reversed due to problems with evaluating medical or nonmedical evidence.

Some remands and reversals result from OWCP failing to administer claims files in accordance with FECA or OWCP guidance for claims management. The guidance includes (1) a description of the information that is to be maintained in the claim file and transmitted by OWCP to the requestor (i.e., BHR or ECAB) and (2) requires claims files to be transmitted within 60 days after a request is received. Failure to meet this 60-day requirement was one of the more common deficiencies in claims file management in our sample. For example, ECAB initially requested a claim file for one injured worker from OWCP on April 29, 2000. On December 19, 2000 (almost 8 months later), the Board notified OWCP that the claim file had not been transferred and that if the file was not received within 30 days, ECAB would issue orders remanding the case to the relevant district office for “reconstruction and proper assemblage of the record.” As of March 12, 2001—more than 10 months after the initial ECAB request —the claim file had still not been transferred and the claim was remanded back to the district office. We estimate that 4 percent of appealed claims were reversed or remanded by the BHR or ECAB for claims file management problems.

For claims that were initially denied and then the decisions were reversed by the BHR or ECAB due to problems identified with the initial evaluation of evidence or mismanagement of claims files, there are delays in claimants receiving benefits to which they were entitled. According to OWCP, the average amount of time that elapsed from the date an appeal was filed with BHR or ECAB until a decision was rendered was 7 months and 18 months, respectively, in fiscal year 2000. Thus, while claimants are provided benefits retroactively to the date of the initial decision when a claim is reversed, they may be forced to go without benefits for what can be extended periods and may have to incur additional expenses, such as representatives’ fees, during appeals that are not reimbursable.

New Evidence Submitted after OWCP Rendered Decision Also Resulted in Reversals and Remands

We also found that 6 percent of appealed claims decisions were reversed or remanded because of new evidence being submitted by the claimant after the initial decision was made. OWCP regulations allow claimants to submit new evidence to support their claims at any time from the rendering of the initial claim decision until 30 days—or more with an extension—after the BHR hearing or review of the record occurs. Additional evidence could include medical reports from different physicians or new testimonial evidence from coworkers that in some significant way were expected to modify the circumstances concerning the injury or its treatment and make the previous decision by OWCP now inappropriate. Upon appeal of the earlier district office decision, the BHR representative determines whether the new evidence is sufficient to remand the claim back to the district office for further review, or to reverse the initial decision.

OWCP Has Taken Some Actions to Identify and Address the Causes of Reversals and Remands

OWCP monitors remands and reversals by the BHR and ECAB to identify certain trends in appeals decisions. Steps OWCP says it takes include reviewing ECAB decisions and preparing an advisory calling claims examiners’ attention to selected ECAB decisions which may represent a pattern of district office error or are otherwise instructive. Where more notable problems are identified through ECAB reviews, a bulletin describing the correct procedures may be issued or training might be provided. While OWCP similarly monitors reasons for BHR reversing and remanding claims decisions, this information, or any suggested corrective actions are not disseminated to claims examiners in as systematic a manner as is done for ECAB decisions.

Clearly, these actions are providing some information on remands and reversals, which might be helpful to OWCP and its district offices. However, this information is not fostering a full understanding of the underlying reasons for remands and reversals occurring at their current rates and what other actions might be taken to address those factors. For example, OWCP might detect that a district office is failing to appoint referee physicians when required. OWCP might then notify district offices that such a problem was occurring, but with the information currently available, it would not be able to identify how frequently the problem was occuring or the underlying reasons— (1) are inexperienced claims examiners not sufficiently aware of the requirement for a referee physician when a conflict of medical opinions of equal value occurs, or (2) are examiner’s experiencing difficulty in determining whether two physicians’ opinions were of equal value? Without such information on causes, it would be difficult to address these problems.

We believe that OWCP needs to examine the steps now being taken to determine whether more can be done to identify and track specific reasons for claims decision remands and reversals. With such information, OWCP may be able to act to address those underlying causes and in so doing, reduce remand and reversal rates.

OWCP officials told us that they have not conducted such an overall examination of its current process. Instead OWCP said they continue to adjust their monitoring and communication process (circulars and bulletins) based on available information. Finally, OWCP indicated that the rate of OWCP remands and reversals was similar to that of other compensation organizations. They provided us a comparison of four organizations whose rates were similar or greater than theirs; the four were DOL’s Black Lung Program, the Social Security Administration’s Disability Program, and the North Dakota and Washington states’ workers’ compensation programs. Except for the SSA program, no information was provided nor do we have information concerning how comparable the programs are; thus we cannot determine the validity of such a comparison. Regarding SSA, their reversal rate may not be comparable to OWCP’s because of considerable emphasis on SSA physicians’ testimony for initial claims decisions and the claimants’ and their physicians’ testimony during adjudication hearings, resulting in high reversal rates.

OWCP Has Established a Hearing Standard That Allows 110 Days for Claimant Notification

FECA requires that OWCP notify claimants in writing of hearing decisions “within 30 days after the hearing ends.” OWCP’s interpretation of the hearing process allows up to 110 days before almost all claimants are to be notified of decisions.

In establishing guidelines for meeting this provision of the act, the BHR director told us that the hearing record is not closed until two separate but concurrent processes are completed. 1. Printing and reviewing of hearing transcript: The time needed to print and review the hearing transcript could range from as few as 25 days to as many as 47 calendar days from the hearing date. A contractor prints the hearing transcript, which generally takes from 5 to 7 calendar days. The claimant and the claimant’s employing agency then review the transcript of the hearing for up to 20 calendar days. If the employing agency provides comments, OWCP provides the claimant with the agency's comments and an additional 20 calendar days to respond to those comments. 2. Submitting new evidence: OWCP gives the claimant 30 calendar days from the date of the hearing to submit additional medical evidence. If the claimant needs additional time to provide more medical evidence, the regulations allow the OWCP hearing representatives to use their discretion to grant a claimant a one-time extension period, that may be for up to several months. OWCP officials stressed the importance of all the evidence being considered before a decision is made since if the decision is appealed to ECAB any subsequent review by the ECAB is limited to the evidence in the claim record at the time of the preceding decision.

Given the potentially wide variance in the number of days before OWCP can close a hearing record, an OWCP official said they have attempted to establish realistic standards for notifying claimants of hearing decisions. OWCP has established two goals for the timing of notifying claimants of final hearing decisions: (1) notifying 70 to 85 percent of the claimants within 85 calendar days, and (2) informing 96 percent of claimants within 110 calendar days following the date of the hearing. Based upon our review of the applicable legislation, we determined that OWCP has the authority to interpret the FECA requirement for claimant notification in this manner.

Of an estimated 2,945 appealed claims for which BHR rendered a decision on a hearing during our review period, notification letters for an estimated 2,256 (or 77 percent) were signed by OWCP officials within 85 days of the date of the hearing and an estimated 2,716 (or 92 percent) of the claims were signed within 110 days of the hearing date. OWCP officials signed an estimated 158 (or 5 percent) of the claimants’ notification letters from 111 to 180 days after the hearing date and 70 claims (or 2 percent) from 181 to more than 1 year after the hearing date.

OWCP’s Physicians Were Board Certified, Licensed, and Had Specialties Consistent with the Injuries Examined

Our review showed that OWCP referee physicians were board certified and licensed in their specialties. In addition, we found that OWCP’s second opinion and referee physicians had specialties that were appropriate for claimant injuries in nearly all the cases we examined.

Most of OWCP’s Physicians Were Board Certified and Had State Medical Licenses

Although neither FECA nor OWCP’s procedures manual require second opinion physicians to be board certified, the procedures manual states that OWCP should select physicians from a roster of “qualified” physicians and “specialists in the appropriate branch of medicine.” The manual further requires that for referee physicians “the services of all available and qualified board-certified specialists will be used as far as possible.” The manual allows for using a noncertified physician in special situations, stating “a physician who is not board-certified may be used if he or she has special qualifications for performing the examination,” but the OWCP medical official making that decision must document the reasons for the selection in the case record.

Based on our statistical sample, we estimate that at least 94 percent of OWCP’s contracted second opinion physicians and at least 99 percent of the contracted referee physicians were board certified. In making these determinations, we used information from the American Board of Medical Specialties (ABMS), the umbrella organization for the approved medical specialty boards in the United States. In addition, OWCP provided documentation verifying certifications of some of the physicians in our sample. For the remaining 6 and 1 percent of the second opinion and referee physicians in our sample, respectively, we lacked information to determine whether they were or were not certified.

Although neither FECA nor OWCP regulations specifically require either second opinion or referee physicians to be licensed by the state in which they practice, OWCP officials stated that OWCP expects that all physicians will have state medical licenses. Based on our sample of physicians, we estimated that at least 96 percent of the second opinion physicians and at least 99 percent of the referee physicians had current state medical licenses. For the 4 and 1 percent of the remaining physicians respectively, we did not have sufficient information to determine whether or in what state they were licensed.

Second Opinion and Referee Physicians Had Specialties That Were Relevant to Injuries Evaluated

An estimated 98 percent of OWCP’s second opinion and referee physicians appeared to have specialties relevant to the types of claimant injuries they evaluated. While there is no requirement for referee physicians to have specialties relevant to the types of injuries evaluated, OWCP officials told us that a directory is used to select referee physicians—with appropriate specialties—to examine the type of injury the claimant incurred. For the remaining physicians in our sample, that is the remaining 2 percent, the conclusion was that they had specialties which were not appropriate for the type of injuries examined. For example, a cardiologist—acting as a second opinion physician—examined a claimant for residuals of hypertension that were aggravating the claimant’s kidney disease. The claimed injury appeared to be associated with kidney rather than heart disease. Therefore, it would have been appropriate for the claimant to be treated by a nephrologist (kidney specialist).

For assistance in reviewing relevancy of physician specialties, we contracted with a Public Health Service (PHS) physician. With that assistance, we were able to review our sample of claimants’ injuries and the board specialties of the physician(s) who evaluated them to determine if the knowledge possessed by physicians with a specific specialty would allow them to fully understand the nature and extent of the type of injury evaluated.

OWCP Uses Several Methods to Identify Customer Concerns and Assists DOL’s IG in Addressing Potential Claimant Fraud

OWCP uses surveys of randomly selected claimants and focus groups to monitor the extent of customer satisfaction with several dimensions of the claims program, including responsiveness to telephone inquiries. OWCP claims examiners and employing agencies serve as primary information sources for identifying potentially fraudulent claims. When such potential fraud is detected, DOL’s IG investigates the circumstances and, if appropriate, prosecutes the claimants and others involved.

Customer Satisfaction with the Claims Process

OWCP obtains information concerning customer satisfaction with the handling of claims through surveys of claimants and conducting focus groups with employing agencies. Since 1996, OWCP has used a contractor to conduct customer satisfaction surveys via mail about once each year to determine claimants’ perceptions on several aspects of the implementation of the workers’ compensation program, including overall service, for example, whether claimants knew their rights when notified of claims decisions and the timeliness of written responses to claimants’ inquiries. The questionnaires did not include questions specific to the appealed claims process, but some of the respondents may have based their responses on experiences encountered when appealing claims.

In the 2000 survey, customers indicated a 52 percent satisfaction rate with the overall workers compensation program, and a 47 percent dissatisfaction rate. The level of claimant satisfaction indicated in their responses for specific issues in the surveys have been largely mixed (i.e., more positive responses for some questions and more negative responses for other questions). For example, survey responses in fiscal year 1998 showed that 34 percent of the respondents were satisfied with the timeliness of responses to their written questions to OWCP concerning claims, while 63 percent were not, and 35 percent were satisfied with the promptness of benefit payments, while 26 percent were not satisfied. Based on these and previous survey results, OWCP took actions including creating a committee to address several customer satisfaction issues, such as determining if the timeliness of written responses could be improved.

In fiscal year 2001, OWCP took two additional steps to measure customer satisfaction. First, OWCP used another contractor to conduct a telephone survey of 1,400 claimants focused on the quality of customer service provided by the district offices. As of March 25, 2002, a contractor was still evaluating the results of this survey. Second, OWCP held focus group meetings with employing agency officials in the Washington, D.C., and Cleveland, Ohio, district offices’ jurisdictions. An OWCP official stated that this effort provided an open forum for federal agencies to express concerns with all aspects of OWCP service. In the Washington D.C. focus group, employing agency officials expressed their belief that some of the claims approved by OWCP did not have merit. The report on that meeting did not specify whether this concern applies to appealed claims decisions. The report documenting the Cleveland focus group effort indicated that employing agencies were frustrated about not being informed of OWCP claims decisions and several agencies said they continued to put through medical bills only to be told by the employees that their claims had been denied.

OWCP Examiners and the DOL IG Monitor Claimant Fraud

The DOL’s IG—using information from claims examiners and other sources—monitors, investigates, and prosecutes fraudulent claims made by federal workers. The IG’s office provides guidance to claims examiners for identifying and reporting claimant fraud, including descriptions of situations or “red flags” that could be potentially fraudulent claims. Red flags include such items as excessive prescription drug requests and indications of unreported income. DOL’s Audits and Investigations Manual requires claims examiners and other employees to report all allegations of wrongdoing or criminal violations—including the submission of false claims by employees—to the IG’s office.

Once a potentially fraudulent claim is identified, the IG will review information submitted by the claimant, coworkers, physicians, and others. The IG may also conduct additional investigations of claimants and medical providers suspected of defrauding the program, such as surveillance of claimants and undercover operations aimed at determining if a physician is knowingly participating in fraudulent claims. For example, an IG agent— wearing a transmitter—might pose as a postal worker and visit a doctor who has been identified as providing supporting opinions for OWCP claimants with questionable injuries. The agent could then tell the doctor that the claim of injury is in fact false but that they need time off for personal reasons, for example to get married. If the doctor agrees to support such a false claim, the doctor would then be charged with fraud. Of approximately 600,000 workers’ compensation claims filed with district offices from fiscal years 1998 through 2001, the IG opened 513 investigations involving potential fraud. Of these, 212 led to indictments and 183 resulted in convictions against claimants and physicians.

Conclusions

One out of four OWCP initial claims decisions (approximately 25 percent) was either reversed or remanded upon appeal because of questions about or problems with either OWCP’s evaluation of medical and nonmedical evidence or improper management of claims files. For the appealed claims that were eventually reversed because of problems with the initial decision, benefits to which claimants were entitled are delayed. While benefits are usually granted retroactively in such cases, going without those deserved benefits for what might be extended periods might create hardships for claimants. Further, representatives’ fees and some other additional expenses that claimants might incur during the appeals process are generally not reimbursed by OWCP.

While OWCP monitors certain information on BHR and ECAB remands and reversals to identify problems in district office decisions, and distributes much of this information to district offices, that information does not fully identify underlying causes of the problems. An examination of the monitoring steps OWCP is currently taking and a determination of what other information could help OWCP and its district offices to address underlying causes could result in a reduction of the rate of remands and reversals.

Recommendation for Executive Action

We recommend that the secretary of labor require the director of OWCP to examine the steps now being taken to determine whether more can be done to identify and track specific reasons for remands and reversals— including improper evaluation of evidence and mismanagement of claim files—and address their underlying causes.

Agency Comments and Our Evaluation

We obtained comments on this report from the Assistant Secretary for Employment Standards, Department of Labor. The Assistant Secretary agreed with our conclusions regarding the timing of notifying claimants on hearing results; physician certification, licensing and specialties; and processes used by OWCP to monitor customer satisfaction and potential claimant fraud. The Assistant Secretary raised concerns, however, with our conclusions related to the frequency of and reasons for reversals and remands of initial OWCP claims decisions when appealed by the claimant. Following is a presentation of key comments from the Assistant Secretary and our responses to those comments.

A principal comment regarding the report and its conclusions relates to the use of BHR and ECAB decision summaries to determine the rate of remands and reversals due to (a) introduction of new information, (b) mismanagement of case files and (c) district office problems in evaluating claim evidence. In short, OWCP asserts that BHR and ECAB summary decisions are inadequate to make such determinations. The Assistant Secretary also expresses the belief that a “large portion” of decisions that our review showed were reversed or remanded because of questions about or problems with the initial decision (as opposed to new evidence being submitted), were in fact reversed or remanded because of new evidence being submitted.

We disagree. Decision summaries we reviewed clearly indicated specific reasons for each reversal or remand and our analysis fully accounted for remands and reversals that were ordered by the BHR and ECAB due to the introduction of new information by the claimant. For example, in the summary of one decision remanded by the ECAB due to an evidence evaluation problem, the BHR had originally decided that a claimant was not entitled to benefits. The BHR decision was based on a second opinion physician’s report and several reports from the claimant’s two physicians’ all of which preceded the BHR decision. The BHR “representative found that the opinions of the (claimants) attending physicians could not be afforded any great weight as their opinions were based on the fact that the (claimant) was performing duties requiring repetitive shoulder movements, and this was not true.” In remanding the decision, ECAB determined that there were “discrepancies between the opinions of the (claimant’s physicians) and the (second opinion physician) that there is a conflict in the medical opinion evidence as to the cause of the (claimant’s) current condition and, therefore, the case will be remanded” for the appointment of a referee physician. An example of a decision where new evidence was submitted, was an ECAB decision summary that stated that the decision was remanded back to the OWCP district office “because (claimant) submitted relevant and pertinent evidence not previously considered by the office.”

Cases are frequently reviewed by claims examiners on arrival and may be remanded if late arriving evidence is sufficient to meet the claimant’s burden of proof. These claims examiner remands prior to hearing are frequently based on the review of evidence not available to the district office examiner. It appears that the GAO investigators entirely excluded these cases from their sample.

OWCP is incorrect. Our sample, as indicated in our report, was drawn from all appealed case decisions made during a 1-year period and therefore encompassed all affirmations, remands and reversals that were made before hearings, after hearings and those for the record during that 12 month period.

The percent of appeals reversed or remanded by the ECAB may be the purest indicator of district office oversight or error.

We note that, based on our sample, the rate of ECAB remands and reversals was approximately 23 percent, which closely approximates the composite remand and reversal rate for both BHR and ECAB of 25 percent.

The report also conflates its analysis of remands and reversals. Remands and reversals must be distinguished. A remand does not reverse the denial of a claim and direct the examiner to pay the denied benefit. It may, for example, direct the examiner to ask further questions of the reporting physician, after which the district office issues a new decision that considers the doctor’s further response. The new decision may reinstate the original denial or award the benefit.

We have added wording to our report to make the distinction clear. However, because our analysis focused on the same issue for both, i.e. questions about or problems with initial claims decisions made at OWCP district offices, we believe it is appropriate to use reversals and remands as a combined indicator.

In summary, the report’s presentation of the ratio of remands and reversals caused by new evidence, as opposed to “errors” in the original decision, is seriously flawed. We have attached a chart that provides the actual outcomes from the two appeal bodies for FY 2001. Following the actual procedures we have described, we believe that all (BHR) decisions in which a hearing was held reflect new information to some degree. As for the other categories, our experience is that half the remands/reversals prior to hearing and most of the remands/reversals following reviews on the record are based on the submission of new evidence. This analysis yields the conclusion that well over half of the (BHR) remands/decisions reflect the consideration of new evidence or new argument.

We agree that new evidence is submitted and considered in many cases throughout the life of a claim, which may involve a number of separate appeals. However, our review of decision summaries clearly showed the reasons for remand or reversal of initial claims decisions when appealed. Those reasons, which also were provided to claimants in explaining why the decision on their claim was being remanded or reversed, included (1) questions about or problems with the availability or consideration of evidence at the time of the initial decision, or (2) problems with case file management; and (3) new evidence or information being introduced. The chart provided by OWCP does not present any information on such specific reasons for remands and reversals. In fact, in response to our request for such specific information at the end of our review, we were told by OWCP officials that OWCP did not have such information.

The report characterizes four percent of cases as due to “mismanagement of claim files.” This phrase is not defined and only one example is offered. With no definition and only one example, the phrase “mismanagement” appears to be unsupported.

We believe the discussion concerning “mismanagement of claim files” adequately defines the issue. In addition, the example provided is for illustrative purposes.

GAO’s recommendation appears to be based on (1) the substantial overestimation of the contribution of OWCP errors to the remand/reversal rate and (2) a generalization that no systematic study of the “underlying causes” of remands and reversals has been undertaken by OWCP. OWCP explained its many and varied approaches to decision monitoring and quality improvement to the GAO team, and we do not understand the basis for this generalization. In fact, OWCP does react to data showing trends from ECAB decisions and hearing decisions, provides appropriate training to claims examiners, and is fully committed to continuing to monitor the outcomes of appeals.

While we agree that OWCP takes a number of actions to monitor decision reversals and remands, and in fact we recognize many of these in our report, our estimates of the rates and reasons for remands and reversals are statistically valid. Our recommendation is based upon (1) the importance of ensuring that claimants receive benefits to which they are entitled as promptly as possible; (2) the level of initial claims decision remands and reversals upon appeal; and (3) our conclusion that there may be opportunities for OWCP to better identify the reasons for and address the underlying causes of remands and reversals.

GAO acknowledged the basis for OWCP’s application of a hearing standard which allows for 110 days for hearing decision notification, including time for the claimant’s review of testimony and opportunity to comment.

Our report describes how OWCP has interpreted the FECA requirement and established a target of notifying most claimants of the decision on their appeal within 110 days of the date of the hearing. We did not assess whether this is an appropriate target.

Finally, DOL indicated that, consistent with our recommendation, they would review and enhance their systems for monitoring results of its claims adjudication process “to better achieve improvements in our claims review.”

DOL also provided technical comments which we incorporated in the report as appropriate. DOL’s comments are reprinted in appendix IV.

As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after the date of this letter. At that time, we will send copies to the ranking minority member and to the secretary of labor. We will also make copies available to others on request at that time.

Major contributors to this report were Boris Kachura, Assistant Director; Thomas Davies Jr., Project Manager; Ellen Grady, Senior Analyst; Chad Holmes, Analyst; and Karen Bracey, Senior Operations Research Analyst.

OWCP’s Claims Process

Based on interviews with OWCP officials and reviews of OWCP operational guidance, when a federal employee is injured at work and becomes disabled, the employee files a claim with the employing federal agency. All claims that involve medical expenses or lost work time or both are then forwarded by the agency to 1 of OWCP’s 12 district offices. Figure 2 characterizes OWCP’s claims process, including the claims adjudication process.

Scope and Methodology

In your March 2001 letter, you asked GAO to examine several issues related to OWCP’s workers’ compensation claims adjudication process. To meet this objective, we reviewed a probability sample of over 1,200 decision summaries from about 8,100 ECAB and BHR claims appeal decisions made between May 1, 2000, and April 30, 2001, on claimant appeals.

As part of our review of the decisions made by BHR and ECAB on appeals, we first categorized the decisions in our sample into three groups: (1) affirmed (the decision made on the initial claim was not changed), (2) remanded (the claim was sent back by either ECAB or the BHR to the cognizant district office for additional review or action and a new decision), or (3) reversed (the initial decision made on the claim by the district office or BHR was determined by BHR or ECAB to be incorrect and was therefore changed—in most cases a claim or portion of a claim that had been denied was changed to an approval). For each claim that had been remanded or reversed, we then analyzed the decision summaries to determine the basis for the BHR or ECAB decision.

To determine the extent to which OWCP was complying with FECA’s requirements that (1) a referee physician be appointed to resolve conflicts in medical opinions between claimant physicians and OWCP’s second opinion physicians and (2) claimants be informed of the outcome of hearings in a timely manner, we performed several steps.

For the first of these two objectives, we reviewed FECA legislation and OWCP regulations and interviewed OWCP officials to identify the specific requirements related to referee physicians. From our statistical sample of claims appeal decisions, we then identified decisions in which at some point during the history of the claim, there had been a conflict in the medical opinions between the claimant’s attending physician and an OWCP second opinion physician. For this subset, we relied upon the decisions of the BHR and ECAB as reflected in decision summaries to determine the extent to which referee physicians were appointed as required. In addition, we identified the frequency that claims were remanded or reversed by the BHR and ECAB because a referee physician should have been but was not appointed.

Regarding the length of time taken by OWCP to notify claimants about hearing outcomes, we reviewed the relevant FECA requirement and OWCP’s guidelines and goals and interviewed OWCP officials. We limited our review on this objective to claims decisions rendered by BHR, because ECAB decision summaries did not contain the dates needed for our analysis. Accordingly, we selected a subset of BHR cases from our sample, and calculated the number of days between the date of the hearing and the date of the final hearing decisions. In making our calculation, we used the date of the BHR decision letter as the claimant notification date.

To determine whether the physicians involved in reviewing claims were board certified, we used another subset of claims appeal decisions from our sample, and relied on information from the American Board of Medical Specialties’ (ABMS) website (www.abms.org). ABMS is the umbrella organization for approved medical specialty boards in the United States. We compared the names and specialties of the second opinion and referee physicians to the database to determine whether these physicians were board certified. We looked for an exact or close match of names while allowing for obvious spelling errors in the name or other minor discrepancies, such as missing initials. Although most of the board certification verifications were done by querying the ABMS website and printing copies of the certifications, when necessary we also contacted ABMS by telephone to obtain verbal verification on board certifications or used ABMS’ directory book for calendar year 2002. For those physicians whose certifications we were not able to readily verify, we asked OWCP to provide documentation of the board certifications, which they did for a number of physicians.

In determining whether second opinion and referee physicians used by OWCP had state licenses, we used the same sample subset as we used in verifying board certifications. In making the state license determinations, we generally focused on the state in which the employee resided for BHR decisions, and the state in which the employing agency was located in for ECAB decisions. We relied on a variety of resources in that search, including www.docboard.org (a public service site) and individual state medical board web sites for printed documentation. We also phoned staff in various state medical board offices for verbal confirmation for some physicians. We again looked for an exact or close match of name while allowing for spelling and other minor differences. In addition, since physicians are required to have state medical licenses in order to become board certified, any physicians whom we could not verify as licensed through state sources were considered to be licensed if we had determined the physicians were board certified. Also, while the dates of physician involvement on individual cases could have taken place anytime during or even preceding the May 1, 2000, through April 30, 2001 period of our review, we made our determinations for state licenses as of December 31, 2001.

We also determined whether second opinion and referee physicians contracted for by OWCP possessed the appropriate medical specialty to evaluate and fully understand the nature and extent of the claimant’s particular illness or injury. To do this, we drew another subset of the appealed claims decisions for which we could determine that a second or referee physician was involved, and that we could identify the nature of the claimant’s injury and the physician’s medical specialty. We contracted with a Public Health Service (PHS) physician to review the injuries of the claimants in this sample and determine whether the board specialties of the physician(s) who evaluated those injuries were appropriate.

To determine how OWCP identifies problems with its appeals process, levels of customer satisfaction, and potential claimant fraud, we interviewed OWCP officials—including the deputy director and director of BHR—and reviewed documentation provided by OWCP, including reports from several annual customer (claimant) surveys and focus groups of federal agencies. In addition, we interviewed officials in DOL’s IG, analyzed IG guidance on detecting and investigating potential fraudulent activity, and reviewed IG annual reports that discussed the identification and prosecution of claimant fraud.

We did our work in Washington, D.C., from March 2001 through April 2002. Our work was done in accordance with generally accepted government auditing standards.

Sampling and Estimation Methods and Sampling Errors

To help accomplish some of our objectives we reviewed a probability sample of over 1,200 ECAB and BHR decisions issued between May 1, 2000, and April 30, 2001. This appendix describes how we selected decisions for review and provides the sampling error of estimates presented in this report that we made from our sample.

ECAB and BHR cases were sampled separately. We obtained a list of ECAB decisions issued between May 1, 2000, and April 30, 2001. The listed decisions were classified as either remands or nonremands and a simple random sample of each of the two classifications was selected. BHR decision files covering the period of our review were stored in folders in three filing cabinets. Each folder was divided into two compartments. We took separate systematic samples from the front and back compartments of the folders in the cabinets. Since the file cabinets contained some decisions that fell outside our review period, we estimated, based on our sample, the number of decisions in the three filing cabinets that were issued between May 1, 2000, and April 30, 2001.

Using these sampling methods described above, we obtained a sample of over 1,200 decisions. Each sampled decision was weighted in our analysis to account statistically for all appealed claims decisions issued between May 1, 2000, and April 30, 2001, including those that were not sampled. The estimates we made from our sample and the sampling errors associated with these estimates are given in the table below.

Comments from the Department of Labor

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