Reports indicate federal workers' comp long overdue for update

Monday - 4/30/2012, 9:51pm EDT

Andrew Sherill, director of education, workforce and income security, GAO

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The federal workers' compensation program has long been targeted by agency inspectors general, who have cited the program's lack of oversight and susceptibility to improper payments

Some members of Congress also argue the program's benefit structure, which hasn't been meaningfully updated since the mid-1970s, has led to widespread inefficiencies.

In a new report to lawmakers, the Government Accountability Office compiled some of the longstanding issues with the Federal Employees Compensation Act (FECA) program, which paid out nearly $3 billion to injured federal employees in 2010.

FECA, which is administered by the Labor Department, pays out tax-free cash and medical benefits to federal employees injured on the job. Under the program, employees can receive as much as 75 percent of their pre-injury salary.

GAO combed through 65 previous reports on FECA, from Labor's annual performance audits to individual agency IG reports. All told, IGs across the federal government have made some 200 recommendations to improve FECA since 1994.

Lack of oversight

About 80 percent of the reports GAO reviewed cited a lack of oversight, said Andrew Sherrill, the director of education, workforce and income security at GAO, in an interview on In Depth with Francis Rose.

At many agencies, monitoring the program was not a full-time job. In a 2007 report, an IG found staff members spent as little as 10 percent of their time managing FECA cases, "because managing these cases was not viewed as a priority at that department," according to GAO's report.

And the lack of oversight or even attention to the program can carry a hefty pricetag. In 2011, one agency reported as much as $41 million in avoidable and unnecessary costs, due to insufficient program oversight, Sherrill said.

Reports also found confusion and a lack of guidance over the various roles assigned to agencies and those taken up by Labor, Sherrill said.

IT challenges

Despite the complexity of the process, too often, agencies are using paper files to manage hundreds of cases, according to the reports GAO reviewed. The "deficient" IT resources have led to problems processing claims from injured workers in a timely manner or even, according to one IG report, knowing the status of a case.

"In part, this is because of the cost of IT systems," Sherrill said. "Relatively few departments and agencies are able to develop and maintain their own systems for this program."

But despite the challenges, IT has recently become one of the "points of progress," Sherrill said. This year, Labor rolled out a new Web-based claims-filing system, the Employees' Compensation Operations and Management Portal.

Congressional action

A handful of the previous reports identified by GAO suggested nothing short of "comprehensive reform" through congressional action would be necessary to shore up the program's inefficiencies.

"This program has not been significantly reformed in decades," Sherrill said. "So, some of these IG reports highlighted areas where they felt reform was really needed."

For example, FECA currently has no limits on the length of time for which an employee can collect benefits under the program and no standardized format to move rehabilitated workers back to work. A 2011 U.S. Postal Service IG report noted the lack of these measures could cost the agency as much as $335 million each year.

For their part, both houses of Congress have initiated FECA reforms.

In November, the House approved a bipartisan bill allowing Labor to cross-check federal employees' earnings with data stored by the Social Security Administration to find unreported earnings.

The postal reform legislation passed by the Senate last week would cut benefits for retirement-age FECA recipients to 50 percent. Beneficiaries under age 65 would be limited to 66.67 percent of their pre-injury salary, regardless of dependents.

In the end, legislative action may be needed. Of the more than 200 recommendations issued over the last decade and half, most of them have been addressed, GAO found, even as more recent reports continue to indicate a lack of progress on some of the most deep-rooted issues.

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