Federal workers' comp program remains vulnerable to fraud

The federal workers’ compensation program remains vulnerable to fraud, mostly due to a limited access to data, according to the Government Accountability Office.

GAO studied a handful of federal agencies, including the Labor Department, and their oversight of the 1916 Federal Employees’ Compensation Act, which provides benefits to about 251,000 feds injured on the job and their survivors. The watchdog’s report praised agencies for employing experienced staff to handle claims and conducting regular reviews to corroborate the validity of compensation claims, but there are still too many risk factors in the system, GAO said.

“Specifically, we found that limited access to necessary data is potentially reducing agencies’ ability to effectively monitor claims and wage-loss information,” the report stated. In addition, agencies’ overreliance on self-reported data from claimants, the frequent use of physicians not employed or selected by the government, and the expense involved in conducting investigations and prosecutions have stymied efforts to stamp out fraud. GAO noted that investigations are the “most costly and least effective” way to reduce fraud, but the ability to prosecute those who cheat the system is a valuable deterrent.

The Federal Employees' Compensation Act provides compensation for wage loss and medical care for those injured or killed on the job, helps employees return to work and pays benefits to survivors. It covers 2.7 million federal employees and postal workers, and paid out $1.9 billion in wage-loss compensation, impairment and death benefits, and $898 million in medical and rehabilitation services and supplies during the 2010 chargeback year, which ended on June 30, 2010. The funds come out of the Employees' Compensation Fund, and most agencies repay the money.

Restrictions on accessing claimants’ employment and wage data are a major problem in combating federal workers’ comp fraud, GAO found. The Labor Department, which administers FECA, does not have the authority to compare private or public wage data with FECA wage-loss compensation information to uncover fraud. “This prevents agencies from verifying key eligibility criteria submitted by claimants, such as income,” the report stated. In some instances, poor coordination and information-sharing among agencies are to blame, but legal interpretations and privacy concerns are more of a roadblock, according to the report.

For example, GAO is trying to obtain access to the National Directory of New Hires database, which includes employment and wage information. The Health and Human Services Department maintains the directory but has told GAO that it does not have authority to access the records. “HHS’ denial of access has slowed the progress of this engagement reviewing federal beneficiary fraud and abuse and has limited our ability to assess the potential vulnerability of the FECA program to fraud and abuse at the national level,” the report stated.

Legislation is pending in both chambers that would ensure GAO’s access to the data.

Under FECA, employees disabled on the job can receive 66 2/3 percent -- or 75 percent for those with dependents -- of their basic salary tax-free, plus medical-related expenses. The 66 2/3 percent rate is comparable to most state systems, but many federal recipients, including those past retirement age, receive the 75 percent compensation rate. Claimants cannot receive FECA benefits and certain other federal disability or retirement benefits at the same time, or they must have benefits reduced to eliminate any duplicate payments. There is no age limit for receiving FECA benefits.

Many have criticized FECA, saying it is too generous and should be reformed so that employees receive lower benefits and return to work faster. The law has not been amended since 1974.

The House in November passed legislation that aims to provide greater support for some feds injured on the job and to make the workers' compensation program more accountable. The bipartisan bill would streamline the claims process for those workers who sustain a traumatic injury in a designated armed conflict zone, label injuries sustained due to terrorism as war-risk hazards, and provide $6,000 in benefits for funeral expenses and $50,000 in compensation for facial disfiguration. It also would permit physician assistants and nurse practitioners to certify disability for traumatic injuries and ensure that they are reimbursed for their services. In addition, it would allow the Labor Department, which administers workers' compensation, to verify federal employees' salaries against Social Security Administration data and to collect administrative fees from employing agencies. On the Senate side, the Homeland Security and Governmental Affairs Committee approved a postal reform bill in November that includes provisions related to FECA. One measure, taken from legislation Sen. Susan Collins, R-Maine, introduced in February, would convert employees on workers' compensation to the appropriate retirement system when they reach retirement age. It also sets the maximum compensation rate at 66 2/3 percent in most instances. Labor has recommended a uniform compensation rate of 70 percent for all claimants.

Agencies have recovered sizable amounts of money by rooting out fraud in the program, according to GAO’s report. For example, the Postal Service’s inspector general has found 476 claimants since 2008 committing fraud and recovered $83 million in medical and disability judgments. The Navy uncovered a claimant who fraudulently received benefits while working. That employee was sentenced to 18 months in prison, three years supervised probation, and $302,380 in restitution for lying to obtain FECA benefits.

Labor and the other agencies included in the report (Defense, Homeland Security, the Postal Service and Veterans Affairs) agreed with GAO’s findings.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download

When you download a report, your information may be shared with the underwriters of that document.