Office of Workers' Compensation Programs
Further Actions Are Needed to Improve Claims Review Gao ID: GAO-02-725T May 9, 2002The Department of Labor's Office of Workers' Compensation Programs (OWCP) paid $2.1 billion in medical and death benefits and received 174,000 new injury claims during fiscal year 2000. GAO found that (1) one in four appealed claims' decisions are reversed or remanded to OWCP district offices for additional consideration and a new decision because of questions about or problems with the initial claims decision; (2) OWCP set a goal of informing 96 percent of claimants within 110 days of the date of the hearing; (3) nearly all doctors used by OWCP to provide opinions on injuries claimed were board certified and state licensed and were specialists in areas consistent with the injuries they evaluated; and (4) OWCP has used mailed surveys, telephone surveys, and focus groups to measure customer satisfaction. The Labor inspector general is monitoring fraud within OWCP's workers compensation program and using the claims examiners as one source to identify potentially fraudulent claims. This testimony is based on a May report (GAO-02-637).
GAO-02-725T, Office of Workers' Compensation Programs: Further Actions Are Needed to Improve Claims Review
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United States General Accounting Office:
GAO:
Testimony:
Before the Subcommittee on Government Efficiency, Financial Management
and Intergovernmental Relations, Committee on Government Reform, House
of Representatives:
For Release on Delivery At 10:00 a.m. EDT:
Thursday, May 9, 2002:
Office Of Workers' Compensation Programs:
Further Actions Are Needed to Improve Claims Review:
Statement of George H. Stalcup:
Director, Strategic Issues:
GAO-02-725T:
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to testify today on issues regarding the
Department of Labor's Office of Workers' Compensation Programs (OWCP).
During fiscal year 2000, OWCP paid compensation totaling about $2.1
billion in medical and death benefits and received approximately
174,000 new injury claims. Issues related to OWCP have been, for a
number of years, a particular focus of this subcommittee. I am here
today in response to your request that the we examine selected issues
associated with OWCP's claims' adjudication process, which has been
the subject of previous hearings before your subcommittee. We believe
the report we are issuing to you today and our testimony will provide
a further understanding of the federal government's employee
compensation program.
As you requested, we looked at selected aspects of OWCP's process for
adjudicating claims appeals. In summary, we found the following:
* Approximately one in four appealed claims' decisions are reversed or
remanded to OWCP district offices for additional consideration and a
new decision because of questions about or problems with the initial
claims decision.
* In response to the Federal Employees Compensation Act's (FECA)
requirement on the timing for informing claimants of hearing
decisions, OWCP has established a goal of informing 96 percent of
claimants within 110 days of the date of the hearing. Our sample
showed that it provides notification to 92 percent of claimants within
this period.
* Nearly all physicians used by OWCP to provide opinions on injuries
claimed were board certified and state licensed, and were specialists
in areas that appeared to be consistent with the injuries they
evaluate.
* OWCP has used mailed surveys and more recently telephone surveys and
focus groups, to measure customer satisfaction. Those efforts have
shown mixed results. Finally, the Labor inspector general is primarily
responsible for monitoring potential fraud within OWCP's workers
compensation program and uses the claims examiners as one source in
identifying potentially fraudulent claims.
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 the Branch of Hearings and Review (BHR) or the
Employees Compensation Appeals Board (ECAB) during the period from May
1, 2000, through April 30, 2001.
How the Claims Process Works:
As you know, FECA[Footnote 1] authorizes federal civilian employees
compensation for lost wages and medical expenses for treatment of
injuries sustained or for diseases contracted during the performance
of duty. A worker's compensation claim is initially submitted through
the employee's agency to an OWCP district office and is evaluated by a
claims examiner. The examiner must first determine whether the
claimant has met each of the following five 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.
Because 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 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 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, the claims
examiner determines if the conflicting opinions are of "equal value."
[Footnote 2] 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. When all or part of
a claim is denied the claimant has three avenues of recourse for
appeal: (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). 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.
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. We found that BHR and
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[Footnote
3]--25 percent because of questions or problems with OWCP's review of
medical and nonmedical information or management of claims files, and
the remaining 6 percent because of additional evidence being submitted
by the claimant after the initial decision.
About one-fourth of the appealed claims decisions were reversed or
remanded due to OWCP evaluation problems or claims file mismanagement:
We found that about one in four appealed claims decisions during our
period of review were reversed or remanded because of questions about
or problems associated with the initial decision by the OWCP district
office. 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, for
example, an OWCP district office 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 for referee physicians to apply only when the opinions of
the claimant's and second-opinion physicians are of equal value, that
is, when both physicians have rendered comparably supported findings
and opinions.
Some remands and reversals resulted 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. 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), ECAB 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 claim
decision 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 decision was remanded back to the district
office. We estimate that 4 percent of appealed decision were reversed
or remanded by BHR or ECAB because of claim file management problems.
For claims that were initially denied at a district office and then
decisions were reversed by 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, when an initial claims decision is reversed upon appeal,
while claimants are provided benefits retroactively to the date of the
initial decision, claimants may be forced to go without benefits for
what can be extended periods and may have to incur additional expenses
during the appeals process, such as representatives' fees, that are
not reimbursable.
New Evidence Submitted After OWCP Rendered Decision Also Result 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 decisions were made.
OWCP regulations allow claimants to submit new evidence to support
their claims at any time up until 30 days-”or more with an extension”-
after the BHR hearing or review of the record occurs.[Footnote 4]
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 any new evidence is
sufficient to remand the decision 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 officials told us that several actions are taken to monitor
remands and reversals. For example, ECAB decisions are reviewed and
advisories are prepared to call claims examiners' attention to select
ECAB decisions which represent a pattern of district office error or
are otherwise instructive. Where more notable problems are identified
through ECAB reviews, OWCP informed us that a bulletin describing
correct procedures may be issued or training might be provided. While
OWCP similarly monitors reasons for BHR reversing and remanding claims
decisions, this information is not as routinely disseminated to claims
examiners as is done for information on ECAB decisions.
Clearly, these actions are providing some information on reasons for
remands and reversals. However, this information is not providing a
full picture of the underlying reasons for remands and reversals
occurring at their current rates and what actions might be taken to
address those factors. For example, OWCP might detect that district
offices are failing to appoint referee physicians when required. OWCP
might then notify district offices that such a problem was occurring.
However, with the information currently available, it would not be
able to identify the nature or frequency of specific underlying
reasons, such as (1) how often are inexperienced claims examiners not
sufficiently aware of the requirement for a referee physician when a
conflict of equal value occurs or (2) how often are examiners
experiencing difficulty in determining whether two physicians'
opinions are of equal value? Not knowing the frequency with which
reasons for remands and reversals are occurring, or the specific
underlying causes, it would be difficult for OWCP to identify actions
that might be taken to address the problem.
We believe that OWCP should examine the steps it currently takes to
determine whether more can be done to identify and track remands and
reversals”including improper evaluation of evidence and mismanagement
of claim files”and address their underlying causes.
OWCP officials told us that they have not conducted such an overall
examination of its current process, adding that they instead rely on
adjustments to their current monitoring and communication process
(circulars and bulletins) based on available information.
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." In interpreting
this provision of the act, OWCP has allowed time for certain actions
to take place, such as claimant and employing agency reviews of and
comment on hearing transcripts. Accordingly, in setting guidelines,
the BHR director told us that the hearing record is not closed until
two separate but concurrent processes are completed: (1) printing of
the hearing transcript and review of the transcript by both the
employee and the employee's agency, which can take from as few as 25
days to as many as 47 calendar days or more from the hearing date and
(2) opportunity for the claimant to submit new evidence for 30 days
following the date of the hearing, and longer if the claimant needs
additional time (regulations allow the OWCP hearing representatives to
use their discretion to grant a claimant a one-time extension period,
which may be for up to several months).
Considering these factors, 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 (77 percent) were signed by OWCP officials
within 85 days of the date of the hearing and an estimated 2,716 (92
percent) of the claims were signed within 110 days of the hearing
date.[Footnote 5] OWCP officials signed an estimated 158 (5 percent)
of the claimants' notification letters from 111 to 180 days after the
hearing date and 70 claims (2 percent) from 181 days to more than 1
year after the hearing date.[Footnote 6]
OWCP's Physicians Were Board Certified, Licensed, and had Specialties
Consistent with the Injuries Examined:
OWCP referee physicians in our sample were nearly all board certified
and state licensed. We also found that OWCP's second opinion and
referee physicians had specialties that were appropriate for claimant
injuries examined.
Most of OWCP's Physicians were Board Certified and Have State Medical
Licenses:
Although neither FECA nor OWCP's procedures manuals require second-
opinion physicians to be board certified, the procedures manual
provides 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.
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.[Footnote 7]
In making these determinations, we relied primarily on information
from the American Board of Medical Specialties (ABMS), the umbrella
organization for the approved medical specialty boards in the United
States. For the remaining 6 and 1 percent of the second-opinion and
referee physicians in our sample, respectively, information we
reviewed was not sufficient 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 has the
expectation that all physicians will have valid 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 their licensing
status.
Second-Opinion and Referee Physicians had Specialties that were
Relevant to Injuries Evaluated:
We also estimated that 98 percent of OWCP's second-opinion and referee
physicians had specialties that appeared to be relevant to the types
of claimant injuries they evaluated. While there is no specific
requirement related to physician specialties, 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 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.[Footnote 8]
Several Methods Are Used to Identify Customer Concerns and 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.
Claims examiners and employing agencies are among the inspector
general's (IG) primary information sources for identifying potentially
fraudulent claims. When such potential fraud is detected, the IG will
investigate the circumstances and, if appropriate, prosecute 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. For example, the
surveys ask claimant's about their satisfaction with overall service,
as well as questions about selected aspects of the program, such as
whether claimants knew their rights when notified of claims decisions,
and whether or not they receive written responses to claimants'
inquiries in a timely manner.[Footnote 9] Because the questionnaires
we reviewed did not include questions specific to the appealed claims
process, it was not clear whether any respondents 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.[Footnote 10] The level of claimant satisfaction
indicated in their responses for selected aspects of the program 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. Based on these and previous
survey results, OWCP created a committee to address several customer
satisfaction issues, including determining if the timeliness of
written responses could be improved.[Footnote 11]
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, while in the Cleveland, Ohio focus group,
employing agencies expressed frustration about not being informed of
OWCP claims decisions.
The DOL IG Monitors Potential Claimant Fraud:
The Department of Labor'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
indicate 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. If appropriate, based on this review, the IG will also conduct
additional investigations. According to the Office of the Inspector
General, approximately 600,000 workers' compensation claims were filed
with district offices from fiscal years 1998 through 2001. During this
time, the IG opened 513 investigations of claims that involved
potential fraud. Of these, 212 led to indictments and 183 resulted in
convictions against claimants and/or physicians.[Footnote 12]
In summary, based on our sample, one out of four initial claims
decisions were 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.
While OWCP monitors and disseminates some information on BHR and ECAB
remands and reversals, we believe that OWCP should examine the steps
it is now taking to determine whether more can be done to identify and
track specific reasons for remands and reversal and in so doing better
address underlying causes. OWCP comments and our related responses are
detailed in our report.
Mr. Chairman, this concludes my prepared remarks. I would be pleased
to answer any questions you or other subcommittee members may have.
[End of section]
Footnotes:
[1] 5 USC 8101, et seq.
[2] OWCP's procedures manual state that to determine if the medical
evidence is of equal value, each physician's opinion is to be
considered against the following factors: (1) whether the physician
involved in the case is a specialist in the appropriate field relevant
to the claimant's injury or illness, (2) whether the physicians'
opinions are based upon a complete and accurate medical and factual
history, (3) the nature and extent of findings on examination of the
claimant, (4) whether the physicians' opinions are rationalized, and
(5) whether the physicians' opinions are stated unequivocally and
without speculation.
[3] The remaining 2 percent of the decision summaries we examined did
not include information regarding what decision was reached on the
claimant's appeal or the rationale for the decision.
[4] Most reversals and remands resulting from claimants submitting new
evidence were made by BHR.
[5] Our analysis reflects only appeals for which necessary dates were
available in the claim decision files. We estimate that the dates we
used to determine the length of time required to provide decision
information to a claimant were available in the decision files for 95
percent of the BHR appeals with hearings.
[6] The percentages of claim decision notifications signed within 110,
111 to 180, and 181 days or more of the hearing date do not total 100
percent due to rounding.
[7] We were only able to search for board certification and licensing
for”and consequently only included in our sample”those physicians for
whom we could identify a first and last name and an area of medical
specialty from the appealed claims decisions summaries. Our estimates
regarding board certification and licensing cover about 63 percent of
second-opinion and 85 percent of referee physicians.
[8] We were not able to attempt to evaluate the appropriateness of the
physician's specialty in comparison to the injury for some claims
because the claims decisions summaries did not contain the type of
injury or the physician's specialty. We estimate that the information
needed to evaluate the appropriateness of the specialty was available
in the appealed claims decision summaries we used for an estimated 61
percent of second-opinion physicians and 83 percent of referee
physicians.
[9] The claimants were selected on a random sample basis and the
surveys were conducted in 1996, 1997, 1998, and 2000.
[10] The remaining 1 percent did not provide information on overall
satisfaction level.
[11] Prior GAO testimony, U.S. General Accounting Office, Office of
Workers' Compensation Programs: Goals and Monitoring Are Needed to
Further Improve Customer Communications, [hyperlink,
http://www.gao.gov/products/GAO-01-72T], (Washington D.C.: Oct. 3,
2000) addresses deficiencies in the goals OWCP set for customer
satisfaction and the evaluative data collected for measuring progress
in improving customer satisfaction.
[12] A number of the cases involved more than one claimant or
physician.
