Federal Employees' Compensation Act

Under the Federal Employees' Compensation Act, injured workers received more than $1 billion in compensation for lost wages during fiscal year 1990. However, the act also created a vocational rehabilitation program, involving counseling, training, and job placement, to get disabled employees back into the work force. Research shows and the Department of Labor's Office of Workers' Compensation Programs agrees that injured workers are much more likely to be successfully returned to work if rehabilitation efforts begin soon after injury. Of the cases GAO reviewed, however, less than 17 percent were referred for rehabilitation within seven months; many were not referred for two years or longer. The Department of Labor is attempting to expedite the screening and referral of injured workers for rehabilitation services. The Office of Workers' Compensation Programs has relied extensively on contracts with private counselors to provide rehabilitation services. GAO believes that the Office should look into the possibility of increasing the use of state and in-house staffs to do some work now done by contract counselors. Opportunities also exist to increase the re-employment of injured workers. Closer coordination between counselors and injured workers' previous employers could help identify available training and jobs.

GAO found that: (1) studies show that initiating vocational rehabilitation services within 6 months after injury increases the likelihood that injured workers will be able to return to work; (2) in the districts reviewed, the Office of Workers' Compensation Programs (OWCP) often took years to refer injured workers for any rehabilitative services; (3) because heavy caseloads are a primary cause of untimely referrals, OWCP has started hiring temporary staff under a 4-year initiative to deal with the existing case backlog and to free existing staff to intervene earlier with new cases; (4) in response to a GAO suggestion, OWCP made a procedural change to allow initial rehabilitation services unless claimants were permanently unable to work at least 4 hours a day; (5) if the review teams OWCP is establishing to expedite the screening and referral of cases for rehabilitation services are effective, it may exacerbate the OWCP work-load problem by increasing the rehabilitation specialists' workload; (6) although OWCP has attempted to deal with its work-load problem by contracting with private vocational rehabilitation counselors, it has not evaluated the cost-effectiveness of this approach; (7) in fiscal year 1990, the $10 million that OWCP paid in contract counselor fees could have funded nearly twice as many in-house specialists as counselors; (8) factors that prevent workers' return to jobs after vocational rehabilitation include changes in the workers' health, a poor job market, a lack of coordination between OWCP and pre-injury employers, and the length of time between the injuries and referral for rehabilitation; and (9) OWCP lacks adequate internal controls to ensure that FECA and Longshore and Harbor Workers' Compensation Act (LHWCA) funds pay their appropriate shares of rehabilitation program expenses.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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