[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]
REVIEWING WORKERS' COMPENSATION
FOR FEDERAL EMPLOYEES
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED TWELFTH CONGRESS
HEARING HELD IN WASHINGTON, DC, MAY 12, 2011
Serial No. 112-22
Printed for the use of the Committee on Education and the Workforce
Available via the World Wide Web:
Committee address: http://edworkforce.house.gov
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Dale E. Kildee, Michigan
Judy Biggert, Illinois Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania Robert E. Andrews, New Jersey
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Duncan Hunter, California Lynn C. Woolsey, California
David P. Roe, Tennessee Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania Carolyn McCarthy, New York
Tim Walberg, Michigan John F. Tierney, Massachusetts
Scott DesJarlais, Tennessee Dennis J. Kucinich, Ohio
Richard L. Hanna, New York David Wu, Oregon
Todd Rokita, Indiana Rush D. Holt, New Jersey
Larry Bucshon, Indiana Susan A. Davis, California
Trey Gowdy, South Carolina Raul M. Grijalva, Arizona
Lou Barletta, Pennsylvania Timothy H. Bishop, New York
Kristi L. Noem, South Dakota David Loebsack, Iowa
Martha Roby, Alabama Mazie K. Hirono, Hawaii
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
Barrett Karr, Staff Director
Jody Calemine, Minority Staff Director
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
TIM WALBERG, Michigan, Chairman
John Kline, Minnesota Lynn C. Woolsey, California,
Todd Rokita, Indiana Ranking
Larry Bucshon, Indiana Donald M. Payne, New Jersey
Trey Gowdy, South Carolina Dennis J. Kucinich, Ohio
Kristi L. Noem, South Dakota Timothy H. Bishop, New York
Dennis A. Ross, Florida Mazie K. Hirono, Hawaii
Mike Kelly, Pennsylvania George Miller, California
C O N T E N T S
Hearing held on May 12, 2011..................................... 1
Statement of Members:
Walberg, Hon. Tim, Chairman, Subcommittee on Workforce
Prepared statement of.................................... 3
Woolsey, Hon. Lynn, ranking minority member, Subcommittee on
Workforce Protections...................................... 3
Prepared statement of.................................... 4
Kelley, Colleen M., national president, National
Treasury Employees Union:
Prepared statement of............................ 56
Table: Periodic Roll Breakdown by Weekly Salary
and Age (a).................................... 58
Table: Periodic Roll Breakdown by Weekly Salary
and Age (b).................................... 59
List: Appropriated Fund Agencies in FECA Which Do
Not Reimburse for Administrative Costs......... 59
List: ``Fair Share'' Agencies Which Reimburse DOL
for Administrative Costs Under FECA............ 61
List: Mixed ``Fair Share'' and Appropriated Fund
Beaudoin, Joseph A., president, National Active and
Retired Federal Employees Association, prepared
statement of....................................... 61
Rodriguez, Milagro, occupational health and safety
specialist, American Federation of Government
Statement of Witnesses:
Bertoni, Daniel, Director, Education, Workforce, and Income
Security Issues, Government Accountability Office.......... 18
Prepared statement of.................................... 20
Carney, Sue, national human relations director, American
Postal Workers Union (AFL-CIO)............................. 32
Prepared statement of.................................... 34
Lewis, Elliot P., Assistant Inspector General for Audit,
Office of Inspector General, U.S. Department of Labor...... 40
Prepared statement of.................................... 42
Steinberg, Gary, Acting Director, Office of Workers'
Compensation Programs, U.S. Department of Labor............ 25
Prepared statement of.................................... 27
Szymendera, Scott, analyst in disability policy,
Congressional Research Service............................. 7
Prepared statement of.................................... 8
REVIEWING WORKERS' COMPENSATION
FOR FEDERAL EMPLOYEES
Thursday, May 12, 2011
U.S. House of Representatives
Subcommittee on Workforce Protections
Committee on Education and the Workforce
The subcommittee met, pursuant to call, at 10:06 a.m., in
room 2175, Rayburn House Office Building, Hon. Tim Walberg
[chairman of the subcommittee] presiding.
Present: Representatives Walberg, Kline, Rokita, Bucshon,
Woolsey, Payne, Kucinich, and Bishop.
Staff present: Katherine Bathgate, Press Assistant; Casey
Buboltz, Coalitions and Member Services Coordinator; Ed Gilroy,
Director of Workforce Policy; Barrett Karr, Staff Director;
Ryan Kearney, Legislative Assistant; Donald McIntosh,
Professional Staff Member; Krisann Pearce, General Counsel;
Molly McLaughlin Salmi, Deputy Director of Workforce Policy;
Linda Stevens, Chief Clerk/Assistant to the General Counsel;
Alissa Strawcutter, Deputy Clerk; Joseph Wheeler, Professional
Staff Member; Kate Ahlgren, Minority Investigative Counsel;
Aaron Albright, Minority Communications Director for Labor;
Tylease Alli, Minority Hearing Clerk; Daniel Brown, Minority
Junior Legislative Assistant; Brian Levin, Minority New Media
Press Assistant; Jerrica Mathis, Minority Legislative Fellow,
Labor; Richard Miller, Minority Senior Labor Policy Advisor;
Megan O'Reilly, Minority General Counsel; and Michele
Varnhagen, Minority Chief Policy Advisor and Labor Policy
Chairman Walberg. Good morning. A quorum being present, the
subcommittee will come to order.
Welcome to our witnesses, and thank you for taking the time
to be with us today. We appreciate you sharing your thoughts
and expertise on federal workers' compensation.
It has been nearly 100 years since the Federal Employees'
Compensation Act was signed into law by President Woodrow
Wilson. The law establishes a program for federal workers to
receive compensation for lost wages, medical care and
rehabilitation services resulting from injury or illness
incurred in a work-related activity.
In the event of a death from a work-related injury or
illness, survivor benefits are provided to the worker's
immediate family and loved ones. The law reflects our
commitment to support the men and women who serve our nation in
the federal workforce.
The program is administered by the Department of Labor's
Office of Workers' Compensation Programs. Claims for
compensation are received, processed and reviewed by OWCP
staff. While several avenues for appeal are available to
employees, decisions rendered by the Department of Labor are
final and not subject to review by any federal agency or court.
Today, roughly three million federal workers are eligible
to participate in the program. During fiscal year 2010, an
estimated $2.8 billion in compensation was paid to
beneficiaries. Yet, despite the size and cost of the program,
it has not been significantly updated or reformed in nearly 40
As with any federal program left unchecked, waste and
inefficiencies often emerge and can result in a program that
serves neither workers nor taxpayers well. This is
unacceptable. In recent years, the challenges facing the FECA
program have become more and more evident.
Workers in rural areas can have limited access to medical
care, undermining their ability to file a claim. The level of
compensation in many ways is outdated, such as providing
assistance for funeral expenses based on average costs that
existed in 1949. The law limits access to rehabilitation
services designed to help an employee return to work.
We have also seen some cases where employees can receive
compensation in excess of their total wages, creating a strong
disincentive for those employees to return to work. These are
just a few of the deficiencies that must be addressed. Toward
that end, the administration is to be commended for putting
together and forward a number of ideas to reform the FECA
The administration's proposal includes streamlining
compensation for lost wages for all beneficiaries and allowing
physician assistants and nurse practitioners to sign off on a
worker's initial claim. To address the accuracy of the program,
the administration's proposes allowing greater access to wage
information housed at the Social Security Administration.
The administration's proposals build upon the efforts of
previous administrations to modernize federal workers'
compensation. However, these ideas are not without question or
concerns, and that is why we are here today--to ask the tough
questions, discuss the concerns of members and interested
stakeholders and begin moving forward in a responsible way.
Especially during times of economic uncertainty and
trillion-dollar deficits, it is critical policymakers work to
ensure every taxpayer dollar is being well spent. Any
opportunity to better serve workers in need of assistance and
spend taxpayer dollars more efficiently should be encouraged.
I look forward to working with all of my colleagues in
advancing this shared goal.
And so, at this time, I would like to recognize my
colleague from California, Ms. Lynn Woolsey, the senior
Democrat member of the subcommittee, for her opening remarks.
[The statement of Mr. Walberg follows:]
Prepared Statement of Hon. Tim Walberg, Chairman,
Subcommittee on Workforce Protections
Good morning. Welcome to our witnesses, and thank you for taking
the time to be with us today. We appreciate you sharing your thoughts
and expertise on federal workers' compensation.
It has been nearly 100 years since the Federal Employees'
Compensation Act was signed into law by President Woodrow Wilson. The
law establishes a program for federal workers to receive compensation
for lost wages, medical care, and rehabilitation services resulting
from an injury or illness incurred in a work-related activity. In the
event of a death from a work-related injury or illness, survivor
benefits are provided to the worker's immediate family and loved ones.
The law reflects our commitment to support the men and women who serve
our nation in the federal workforce.
The program is administered by the Department of Labor's Office of
Workers' Compensation Programs. Claims for compensation are received,
processed, and reviewed by OWCP staff. While several avenues for appeal
are available to employees, decisions rendered by the Department of
Labor are final and not subject to review by any federal agency or
Today, roughly three million federal workers are eligible to
participate in the program. During fiscal year 2010, an estimated $2.8
billion in compensation was paid to beneficiaries. Yet, despite the
size and cost of the program, it has not been significantly updated or
reformed in nearly forty years.
As with any federal program left unchecked, waste and
inefficiencies often emerge and can result in a program that serves
neither workers nor taxpayers well. This is unacceptable. In recent
years, the challenges facing the FECA program have become more and more
Workers in rural areas can have limited access to medical care,
undermining their ability to file a claim. The level of compensation in
many ways is outdated, such as providing assistance for funeral
expenses based on average costs that existed in 1949. The law limits
access to rehabilitation services designed to help an employee return
to work. We have also seen some cases where employees can receive
compensation in excess of their total wages, creating a strong
disincentive for those employees to return to work.
These are just a few of the deficiencies that must be addressed.
Toward that end, the administration is to be commended for putting
forward a number of ideas to reform the FECA program.
The administration's proposal includes streamlining compensation
for lost wages for all beneficiaries and allowing physician assistants
and nurse practitioners to sign off on a worker's initial claim. To
address the accuracy of the program, the administration's proposes
allowing greater access to wage information housed at the Social
The administration's proposals build upon the efforts of previous
administrations to modernize federal workers' compensation. However,
these ideas are not without questions or concerns, and that's why we
are here today: to ask the tough questions, discuss the concerns of
members and interested stakeholders, and begin moving forward in a
Especially during times of economic uncertainty and trillion-dollar
deficits, it is critical policymakers work to ensure every taxpayer
dollar is being well-spent. Any opportunity to better serve workers in
need of assistance and spend taxpayer dollars more efficiently should
be encouraged. I look forward to working with all of my colleagues in
advancing this shared goal.
At this time, I would like to recognize my colleague from
California, Ms. Lynn Woolsey, the senior Democrat member of the
subcommittee, for her opening remarks.
Ms. Woolsey. Thank you, Mr. Chairman, and thank you for
calling this hearing today to discuss the Federal Employees'
Compensation Act, or FECA.
This committee has primary jurisdiction over workers'
compensation laws and has overseen and repeatedly improved FECA
since 1949. FECA has been the governing statute providing
benefits for federal civilian workers injured or killed on the
job since 1916.
Some of the key principles that underpin this law include
FECA benefits being made available to ensure that workers and
their families are no better off or no worse off than if the
worker had not been injured. Secondly, all federal civilian
workers, regardless of their employer, are eligible for the
Another underpinning is that claims for benefits are
administered on a no-fault basis. If workers give up the right
to bring tort claims for injuries, they need to be fairly
compensated in a timely manner with benefits administered in a
Consistent with these principles, Mr. Chairman, FECA
benefits include compensation for lost wages, medical care and
vocational rehabilitation. FECA ensures that injured workers
are not impoverished while they are claims are being processed
by providing their current income for 45 days following an
injury. FECA also provides a cost of living adjustment.
Today, we will be reviewing the administration's
legislative proposal. Some parts of it are straightforward. For
example, the proposal increases payments for funeral costs,
which have not been adjusted since 1949. It provides the
Department of Labor permanent authority to access Social
Security wage information in order to improve program
However, other aspects of the administration's proposal
warrant scrutiny, and that is what we should be talking about
today. For example, it cuts wage loss payments for injured
workers with dependents and reduces the maximum survivor's
death benefit. While these changes may simplify the FECA
program, we have to assess the impact on federal workers who
have been permanently disabled on the job.
The administration also argues that FECA unfairly allows
some injured workers to receive more from FECA after they reach
retirement age than if they had earned a retirement on the job.
The Inspector General has called for a redesign, but has not
actually specified what that redesign would be.
The administration's redesign cuts FECA benefits for
permanently disabled workers with dependents from 75 percent of
the average wage to 50 percent when they reach normal social
security eligibility age. Perhaps this decision was made on the
assumption that individuals leave the workforce and don't
pursue employment after age 66 but, you know, that is not true
anymore. So we have to take that into consideration.
Furthermore, this one-size-fits-all approach could result
in unfair treatment of injured workers whose wages were low in
the first place, and possibly violate a core principle of FECA
that no one should be economically worse off because of a work-
Before we make an across-the-board change, Mr. Chairman, we
will need to really better understand how the proposed changes
will impact the diverse pool of federal employees covered by
FECA. So I hope today's hearing will help us begin to answer
these questions, and I too, look forward to working with you on
I yield back.
[The statement of Ms. Woolsey follows:]
Prepared Statement of Hon. Lynn Woolsey, Ranking Minority Member,
Subcommittee on Workforce Protections
Chairman Walberg, thank you for calling this hearing today to
discuss the Federal Employees Compensation Act, or FECA. This Committee
has primary jurisdiction over workers' compensation laws, and has
overseen and repeatedly improved FECA since 1949. FECA has been the
governing statute providing benefits to federal civilian workers
injured or killed on the job since 1916.
I think it's important to list some of the key principles that
underpin this law:
FECA benefits are made available to ensure that workers
and their families are no better off, and no worse off, than if the
worker had not been injured.
All federal civilian workers, regardless of their
employer, are eligible for the same benefit.
Claims for benefits are administered on a no-fault basis.
If workers give up their right to bring tort claims for injuries, they
need to be fairly compensated in a timely manner, with benefits
administered in a non-adversarial way.
Consistent with these principles, FECA benefits include
compensation for lost wages, medical care, and vocational
rehabilitation. FECA ensures that injured workers are not impoverished
while their claims are being processed by providing their current
income for 45 days following an injury. FECA also provides a cost of
Today we will be reviewing the Administration's legislative
Some parts of it are straightforward: for example, the proposal
increases payments for funeral costs which have not been adjusted since
1949. It provides the Department of Labor permanent authority to access
Social Security wage information in order to improve program integrity.
However, other aspects of the Administration's proposal warrant
scrutiny. For example, it cuts wage loss payments for injured workers
with dependents, and reduces the maximum survivor's death benefit.
While these changes may simplify the FECA program, we need to assess
the impact on federal workers who have been permanently disabled on the
The Administration also argues that FECA unfairly allows some
injured workers to receive more from FECA after they reach retirement
age than if they had earned a retirement. The Inspector General has
called for a redesign, but has not specified how.
The Administration's ``redesign'' cuts FECA benefits for
permanently disabled workers with dependents from 75 percent of the
average wage to 50 percent when they reach ``normal'' social security
eligibility age. Perhaps this decision was made on the assumption that
individuals leave the workforce and don't pursue employment after age
66, which we know is not true anymore.
Furthermore, this one-size-fits-all approach could result in unfair
treatment of injured workers whose wages were low, and possibly violate
a core principal of FECA that no one should be economically worse off
because of a work related injury.
Before we make an across-the-board-change, we will need to better
understand how the proposed changes will impact the diverse pool of
federal employees covered by FECA.
I hope today's hearing can help us begin to answer these questions.
Chairman Walberg. I thank the gentlelady.
Pursuant to committee rule 7(c), all members will be
permitted to submit written statements to include in the
permanent record--hearing record, and without objection, the
hearing record will remain open for 14 days to allow questions
for the record, statements and extraneous material referenced
during the hearing to be submitted for the official hearing
It is now my pleasure to introduce our distinguished panel
of witnesses. Mr. Scott Szymendera is an analyst in disability
policy with the Congressional Research Service. Mr.
Szymendera's primary responsibilities with CRS include federal
workers safety and compensation programs.
Prior to his service with CRS, Mr. Szymendera was an
analyst for the Rutgers University Program for Disability
Research. Mr. Szymendera holds an MA and a Ph.D. in political
science from Michigan State University. Go green. Go white.
That is a paid commercial for Michigan. An undergraduate degree
in government and politics from the University of Maryland.
Mr. Daniel Bertoni is the director of Education, Workforce
and Income Security with the U.S. Government Accountability
Office in Washington, D.C.
Mr. Bertoni began his career with GAO in 1989 and, over the
course of his career, has led numerous management, operational
and program integrity reviews of the Department of Labor, the
Social Security Administration, the Internal Revenue Service,
and other federal agencies.
Mr. Bertoni holds a master's degree in political science
from the Rockefeller School of Public Affairs & Policy in
Albany, New York. Welcome.
Mr. Gary Steinberg is acting director of the Office of
Workers' Compensation Programs at the U.S. Department of Labor.
Mr. Steinberg has served the federal government in a variety of
positions throughout his career, including roles with the
Department of Health and Human Services, the Department of
Veteran's Affairs, and NASA.
Mr. Steinberg holds an undergraduate degree from the
University of Connecticut, and he received his MBA from the
University of Hartford.
Ms. Susan Carney is the director of Human Relations
Department with the American Postal Workers Union. Ms. Carney
has 22 years of experience serving the American Postal Workers
Union. In her current position as director of Human Relations,
Ms. Carney addresses inquiries related to community activities,
civil rights, employee assistance, and equal opportunity
employment, workplace violence and workplace injury
And, finally, Mr. Elliot Lewis is the assistant inspector
general for the audit with the U.S. Department of Labor's
Office of Inspector General. Mr. Lewis has been with the Office
of Inspector General since 1991, serving in a variety of
positions within the Office of Financial Management Audits.
Before joining the federal government, Mr. Lewis was a
partner at T.R. McConnell & Company, an accounting firm in
Columbia, South Carolina. Mr. Lewis holds an undergraduate
degree in accounting from the University of South Carolina.
Before I recognize each of you to provide your testimony,
let me briefly explain our lighting system. You will each have
approximately 5 minutes. Let's try to keep it under that if at
all possible to present your testimony.
When you begin, the light in front of you will turn green.
When one minute is left, the light will turn yellow, and when
your time has expired, the light will turn red, at which point,
if I am not excessively interested in what you have to say,
which is a problem for me, and I have a ranking member who will
help me on that--but nonetheless, your time will have expired,
and I will ask you to wrap it up. After everyone has testified,
members will each have 5 minutes to ask questions of the panel.
And so we will begin by recognizing Mr. Szymendera for your
testimony. Thank you.
STATEMENT OF SCOTT SZYMENDERA, CONGRESSIONAL RESEARCH SERVICE,
U.S. LIBRARY OF CONGRESS
Mr. Szymendera. Thank you. Chairman Walberg, Ranking Member
Woolsey, and members of the subcommittee, my name is Scott
Szymendera, and I am an analyst at the Congressional Research
Service. Thank you for inviting me to testify before the
Subcommittee on Workforce Protections on the Federal Employees'
Compensation Act, or FECA, and a complete statement has been
provided for the record.
This year marks the 100th anniversary of the grand bargain
of workers' compensation in the United States, in which
employees receive no-fault compensation for economic losses
associated with employment-related injuries, illnesses and
deaths while giving up their right to sue their employers for
damages associated with employment-related accidents and
One of the general principles of workers' compensation is
universal or near-universal coverage. Today, nearly 97 percent
of all workers covered by the unemployment insurance system are
also covered by workers' compensation. Workers' compensation
provides medical care for covered injuries and disability
benefits which are intended to replace a portion of a worker's
wages or wage-earning capacity lost due to a covered condition.
In most systems, disability benefits are based on a
standard benefit of two-thirds of the worker's pre-disability
wage. If a worker dies on the job, his or her survivors are
entitled to benefits to partially replace his or her capacity
to provide for the family. Pursuant to the Internal Revenue
Code, workers' compensation benefits are not subject to the
federal income tax.
The first workers' compensation laws for federal employees
were enacted in 1882 and 1908, did not provide for medical
coverage and only applied to the United States Lifesaving
Service and other hazardous activities, such as construction of
the Panama Canal.
In 1908, President Theodore Roosevelt called the lack of a
workers' compensation program for all federal employees quote--
``a matter of humiliation to the nation.'' The original FECA
act was enacted in 1916 and created a modern workers'
compensation system for nearly all federal employees. The 1916
legislation remains the basis for the workers' compensation
system for federal employees.
Amendments passed in 1949 created a schedule of benefits
for permanent partial disabilities and provided for augmenting
compensation in cases in which an injured worker had at least
one dependent. This augmented compensation brought the level of
FECA benefits for workers with dependents up to the current
level of 75 percent of the worker's pre-disability wage. The
benefit level for survivors was similarly increased.
The 1949 amendments also provided for a reduction of
benefits when employees reached the age of 70 to account for
age-related loss of earning capacity and establish that the
FECA program would be the exclusive remedy against the federal
government for federal workers with employment-related
Amendments passed in 1966 made two significant changes to
FECA that remain part of the program today. The use of the GS
scale as the basis for the maximum and minimum FECA benefit
levels with the maximum level set at 75 percent of the highest
rate of basic pay at the GS-15 level, and an annual cost of
living adjustment for FECA benefits.
The most recent major amendments to the FECA program came
in 1974 and provided for up to 45 days of continuation of pay
from a worker's employing agency in cases of traumatic
injuries, authorized employees to select their own treating
physicians rather than use doctors employed or selected by the
federal government, and removed the reduction of benefits at
Today's FECA program covers all civilians employed by the
federal government including employees in the executive,
legislative and judicial branches of the government and
provides full medical coverage from the employees chosen
doctor, up to 45 days of continuation of pay after traumatic
injuries, disability benefits of up to 75 percent of an
employees pre-disability wage, and benefits for the survivors
of a deceased employee. Benefits continue for the duration of
disability or until death.
Additional benefits are paid if attendant care is needed,
and an employee killed while working with the armed forces in a
contingency operation is entitled to an additional death
gratuity of up to $100,000. Vocational rehabilitation services
paid by the government are also available to assist FECA
beneficiary's return to the workforce. The FECA program is
administered by the Office of Workers' Compensation Programs at
the Department of Labor, and the cost of FECA benefits are
charged back to each beneficiary's host agency.
This concludes the testimony, and I welcome any questions
from the subcommittee.
[The statement of Mr. Szymendera follows:]
Prepared Statement of Scott Szymendera, Analyst in Disability Policy,
Congressional Research Service
Chairman Walberg, Ranking Member Woolsey, and Members of the
subcommittee, my name is Scott Szymendera and I am an analyst at the
Congressional Research Service. Thank you for inviting me to testify
before the Subcommittee on Workforce Protections on workers'
compensation for federal employees.
For nearly 100 years, members of America's civil service have been
protected from economic losses associated with employment-related
injuries and illnesses, and their families have been protected in cases
of employment-related deaths, by the Federal Employees' Compensation
Act, or FECA, a workers' compensation program administered by the
Department of Labor. In my testimony today, I will provide an overview
of workers' compensation in the United States, the original intent of
Congress when creating FECA, a legislative history of the FECA program,
and a plain-language summary of the features of the FECA program that
serves federal employees today.
Overview of Workers' Compensation
Origins of Workers' Compensation
This year marks the 100th anniversary of workers' compensation in
the United States.\1\ Prior to the advent of the modern workers'
compensation system, workers who were injured, became ill, or died on
the job could bring lawsuits against their employers to recover
economic and non-economic losses. However, while employers could be
held legally liable for losses associated with employment-related
injuries, illnesses, and deaths, they were armed with the common-law
defenses of ``contributory negligence,'' ``assumption of risk,'' and
the ``fellow-servant doctrine'' which often made it difficult for
workers to prevail in employment injury and illnesses cases.\2\ While
this system generally favored employers, employees who were successful
in suits against their employers could be awarded non-economic damages
that could prove costly to employers. In addition employers had to bear
the legal costs of defending themselves against suits from workers,
even if these suits ultimately proved unsuccessful.
The Grand Bargain
Workers' compensation is commonly referred to as ``the grand
bargain'' between employees and employers. Employees receive
compensation for economic losses associated with employment-related
injuries, illnesses, and deaths, without regard to fault. In exchange
for this no-fault coverage, workers are prohibited from suing their
employers for damages related to covered injuries, illnesses, or
deaths, giving employers protection from large judgments for non-
economic losses such as pain and suffering or punitive damages.
Principles of Workers' Compensation
Workers' compensation in the United States, including workers'
compensation provided to federal employees under FECA, is a no-fault
system. As a no-fault system, employees are compensated for covered
injuries, illnesses, and deaths regardless of who is at fault or
whether or not fault can be determined.\3\
Workers' compensation is an exclusive remedy for workplace
injuries, illnesses, and deaths. Employees are generally not permitted
to sue their employers for compensatory or punitive damages relating to
covered injuries, illnesses, and deaths. In some cases, suits by
employees may be brought against employers for intentional harms and
against third parties who may share in the liability for the covered
injury, illness, or death.
The exclusive remedy and no-fault coverage principles are intended
to create a workers' compensation system that is largely non-
adversarial. Many workers' compensation systems, including FECA, use
administrative rather than judicial proceedings to resolve disputes
over claims and benefits. However, despite the desire of the creators
of workers' compensation to remove cases involving work injuries from
the courts, the 100-year history of workers' compensation in the United
States has been marked by what historian Edward Berkowitz has termed a
``persistence of litigation'' as both employees and employers dispute
workers' compensation claims decisions or appeal the decisions of
administrative bodies to the courts.\4\ In nearly all states, but not
the FECA system, workers' compensation disputes and litigation can
result in lump-sum settlements that release employers from all future
responsibilities related to settled cases.
Universal Coverage of Employees
Workers' compensation systems generally do not exclude certain
classes of employees because of the dangerous nature of their jobs or
their increased risk of injury, illness, or death. While state workers'
compensation laws vary in exactly who is covered, one of the general
principles of workers' compensation systems is universal, or near-
universal, coverage. For example, several of the recommendations issued
in 1972 by the National Commission on State Workmen's Compensation Laws
created by the 1970 Occupational Safety and Health Act relate to
bringing states towards universal workers' compensation coverage of
public and private-sector employees, regardless of risk or size of
employer.\5\ The National Academy of Social Insurance estimates that
nearly 97% of all workers covered by the unemployment insurance system
are also covered by workers' compensation.\6\
Coverage of Employment-Related Injuries, Illnesses, and
Workers' compensation only provides compensation for injuries,
illnesses, and deaths that occur in the course of employment.
Generally, this means that an employee must be at a work site when the
injury, illness, or death was caused and the injury, illness, or death
must have been caused by a situation related to the employee's job.
Injuries, illnesses, and deaths that occur outside of work hours or
while commuting to or from work, or that are caused by acts unrelated
to employment, such as working on personal projects in the workplace,
are generally not covered by workers' compensation.\7\
Compensation for Medical Care
Workers' compensation provides all of the costs of medical care
associated with a covered injury or illness. Covered medical costs
include necessary treatments, procedures, and medications and in some
states and under FECA, certain costs associated with travelling to
receive medical services. Employees are not required to contribute to
the cost of this care through their own private insurance or through
deductibles or coinsurance. Medical coverage under workers'
compensation is limited only to the covered injury or illness and is
not intended to provide for the general healthcare needs of the worker.
Workers' compensation systems vary on the rights of workers to choose
their treating physicians.
Compensation for Disability and Death
Workers' compensation is intended to compensate workers for
economic losses associated with employment-related injuries and
illnesses and their families for economic losses associated with
employment-related deaths. This compensation is provided in the form of
cash disability benefits which are intended to replace a portion of a
worker's wages, or wage-earning capacity, lost due to a covered injury,
illness, or death. Total disability benefits are paid when a worker is
unable to work or otherwise totally disabled and in most systems are
based on a standard benefit of two-thirds of the worker's pre-
Benefits for partial disabilities may be based on statutory or
regulatory schedules which assign benefit amounts to specific
conditions, such as the loss of a limb, or on other measures of partial
disability such as wage-earning capacity, functional capacity, or
overall level of impairment.\8\ Disability benefits are generally
subject to system-specific minimum and maximum levels which are often
based on average wages in a state. Benefits generally last for the
duration of disability, however, some systems do limit the duration of
benefits or have age limits for the receipt of disability benefits.
If a worker dies on the job or from an employment-related injury or
illness, his or her survivors are entitled to benefits to partially
replace his or her capacity to provide for the family. Workers'
compensation systems often also provide benefits to partially cover the
costs of a workers' funeral.
Pursuant to Section 104(a)(1) of the Internal Revenue Code,
workers' compensation benefits are not subject to the federal income
Legislative History of FECA
The FECA program has its origins in a law from the late 1800's that
covered only the employees of a federal agency that has long since
ceased to exist on its own. The modern FECA system has its roots in
legislation enacted in 1916, and many of the basic provisions of this
original law, such as the basic rate of compensation, are still in
effect today. Congress passed major amendments to the 1916 legislation
in 1949, 1960, 1966, and most recently in 1974.\9\ While these
amendments made significant changes to the FECA program, the basic
framework of the program endures as does the overall intent of Congress
through the years to maintain a workers' compensation system for
federal employees that is in-line with the basic principles that have
governed workers' compensation in this country for a century.
Limited Workers' Compensation for the United States Life
Saving Service and Other Hazardous Federal
The first workers' compensation law for federal employees was
enacted in 1882 and provided up to two years of salary to any member of
the federal United States Life Saving Service disabled in the line of
duty and two years of salary to his or her survivors in case of a line
of duty death.\10\ In 1908, Congress passed a more comprehensive
workers' compensation law for federal employees engaged in certain
hazardous occupations such as laborers at federal manufacturing
facilities and arsenals or working on the construction of the Panama
Canal. This law provided workers with up to one year of salary, after a
15-day waiting period, if disabled due to an employment-related injury
and their survivors with up to a year of salary in case of death.
The 1882 and 1908 federal workers' compensation laws did not
provide universal coverage for all federal employees. It is estimated
that only one-fourth of the federal workforce was covered by the 1908
law and the law was clearly designed only to provide coverage for what
were seen to be the most hazardous jobs in the civil service.\11\
President Theodore Roosevelt recognized this shortcoming of the law he
would eventually sign as before the 1908 law's passage, he called on
Congress to pass a workers' compensation bill that would cover ``all
employees injured in the government service'' and stated that the lack
of such a comprehensive workers' compensation law was ``a matter of
humiliation to the nation.'' \12\
In addition to only covering a small portion of the federal
workforce, the 1882 and 1908 laws did not provide for medical benefits
for disabled workers, and the 1908 law only applied in cases of
disability or death arising from injuries and not illnesses.
The Federal Employees' Compensation Act of 1916
President Woodrow Wilson singed the Federal Employees' Compensation
Act, P.L. 64-267, into law on September 7, 1916, and in so doing
extended the protections of the modern workers' compensation system to
nearly all federal employees. This original FECA act remains the basis
for the workers' compensation system for the federal civil service.
The FECA act provided coverage for nearly all civilian employees of
the federal government injured or killed in line of duty. Coverage was
not provided for occupational illnesses.\13\ The law provided full
medical coverage for covered injuries provided by government physicians
and hospitals or private providers selected by the government.
Disability compensation was provided, after a three-day waiting period,
at a rate of two-thirds of the worker's wage for total disability, with
adjustments for partial disabilities. Disability benefits were subject
to minimum and maximum levels specified in the law and neither benefits
nor these levels were subject to any cost-of-living or other annual
adjustments. The survivors of an employee killed on the job were
entitled to cash benefits based on the worker's wage and were also
entitled to a benefit to help offset funeral costs.
The 1916 legislation created the Federal Employees' Compensation
Commission, with three members appointed by the President with the
advice and consent of the Senate, to administer the FECA program.
Benefit and administrative costs associated with the program were paid
out of the Employees' Compensation Fund created by the law and financed
with permanently authorized appropriations.
Bringing the federal system in line with the states
Congress had several clear intentions when drafting the FECA act in
1916. One such intention was to bring the protections offered to
federal employees in line with those being offered by a majority of the
states at the time, with the House Judiciary Committee reporting that
such state laws were ``working with most excellent results.'' \14\ In
addition, the committee reported that the schedule of compensation for
disability in the FECA act was ``in line with the best precedents found
in State compensation acts'' especially those in Massachusetts, New
York, and Ohio.\15\
Providing coverage to all federal employees
An additional intention of Congress was to provide workers'
compensation coverage to all federal employees regardless of
occupation, thus correcting what was seen as a shortcoming of the 1908
act. The House Judiciary Committee's report on the 1916 FECA
legislation criticizes the limited coverage of the 1908 law and states:
The present law, in denying compensation to an injured employee if
his occupation was not ``hazardous'' goes counter to the theory on
which all compensation acts are based, viz, that the industry shall
bear the burden of injuries caused by it.\16\
This criticism of the limited coverage provided by the 1908 act and
the intention of the FECA legislation to correct this shortcoming, was
echoed by the FECA legislation's sponsor in the Senate, Senator George
Sutherland. Senator Sutherland, in a Senate Judiciary Committee hearing
on the legislation, stated:
The theory upon which compensation laws are drawn is that you are
to compensate for the injury, not for the risk that the man ran in
bringing about the injury; and under modern thought there is no logical
reason for making distinction between what is hazardous and non-
Senator Sutherland reinforced his point with a rather graphic
example stating ``the clerk who has his leg cut off in his work about a
store is just as effectively deprived of his leg as if it was cut off
by a machine.'' \18\
Major FECA Amendments
Congress has passed major amendments to the FECA program in 1949,
1960, 1966, and most recently in 1974.
The Federal Employees' Compensation Act Amendments of 1949, P.L.
81-357, brought about the first set of significant changes to the FECA
program since its inception in 1916. The 1949 amendments, in the words
of the House Committee on Education and Labor, sought to ``modernize
and liberalize'' the FECA program, which, according to the Senate
Committee on Labor and Public Welfare provided ``only illusory security
for most workers or their families.'' \19\
Increased FECA coverage
The 1949 amendments expanded the scope of workers covered by the
FECA program to include those classified as ``officers'' of the United
States. The amendments also doubled the maximum disability benefit
level thus essentially providing FECA coverage to a larger portion of
federal employee wages.
In addition to better meeting the goal of universal coverage of all
employees, the inclusion of federal government officers was intended to
provide FECA protections to previously-excluded employees, such as
Foreign Service Officers, who may serve in dangerous overseas areas.
The increase in the maximum benefit level was necessary since, at the
time, it was estimated by the Department of Labor that 90% of FECA
cases involved workers with wages that were essentially not covered by
the program because of the low maximum benefit level.\20\
Increased FECA benefits
Several provisions of the 1949 amendments effectively increased
FECA benefits for workers and their survivors. The three-day waiting
period was eliminated in cases of disability lasting more than 21 days.
A schedule of benefits for permanent partial disabilities was created
for the first time which permitted partial disability benefits to be
paid without regard to actual impairment or wage loss. The elimination
of the waiting period and creation of a benefits schedule were intended
to bring the FECA program in line with state workers' compensation
programs and the federal Longshore and Harbor Workers' Compensation Act
The 1949 amendments provided for augmented compensation, in the
amount of 8.33% of a workers' pre-disability wage, in cases in which an
injured worker had at least one dependent. This augmented compensation,
along with the standard compensation rate of two-thirds of the workers'
wage brought the level of FECA benefits for workers with dependents up
to the current level of 75% of the worker's pre-disability wage. The
benefit level for survivors was similarly increased. The intent of the
augmented compensation provision was to better insure that disabled
workers and the survivors of workers killed on the job could provide
economically for their dependents. The two-thirds benefit level for
dependents was criticized by the House and Senate Committees which
reported the bill as ``not sufficient as to ensure reasonable economic
security to a family of a deceased worker where there is a large
family.'' \21\ Similar concerns over the adequacy of the two-thirds
benefit level were expressed at a House Committee on Education and
Labor hearing on the 1949 amendments.\22\
Reduced benefits at age 70
While the 1949 amendments generally increased the level of FECA
benefits, the amendments also required the FECA administrator to review
the amount of compensation paid to any person aged 70 or older. The
administrator was provided the authority to reduce the amount of such
benefits if it was determined that the worker's wage-earning capacity
had been reduced because of age, independent of his or her disability.
This provision was opposed by several representatives from federal
employee organizations who testified before the House Education and
Labor Committee that such a provision was inconsistent with the
mandatory federal employee retirement age of 70 in place at the time
and could cause undue hardships to workers who, because of their
disabilities, had not been able to reach their full earning potential
or who had reduced pensions because of many years of limited or no
Provisions for vocational rehabilitation
The 1949 amendments permitted the FECA program administrator to
send beneficiaries to receive vocational rehabilitation services at the
government's expense. The amendments also created a special
supplemental benefit for workers participating in vocational
rehabilitation programs. These provisions were intended to improve the
return-to-work prospects of FECA claimants which, it was thought, would
ultimately benefit both the employee through a return to earning wages
and the government through a reduction in FECA benefit costs.\24\
The exclusive remedy rule
The 1949 amendments established that the FECA program would be the
exclusive remedy against the federal government for federal workers
with employment-related injuries, illnesses, and deaths. This provision
prohibited employees from seeking to recover economic or non-economic
damages from the government for injuries, illnesses, and deaths covered
by FECA and brought the FECA program in line with one of the general
principles of workers' compensation which was already written into the
workers' compensation laws in the states.
When the FECA program was created, an exclusive remedy rule was
seen as unnecessary because of the general prohibition against suits
against the federal government. However, by 1949 three factors had
combined to result in significant numbers of federal employees choosing
to bring lawsuits against the federal government rather than file for
FECA benefits. First, the passage after 1916 of laws such as the
Federal Tort Claims Act which permitted some suits against the
government. Second, some injuries to federal employees occurred while
they worked for government corporations subject to lawsuits. Finally,
because FECA benefits are limited by statute to partial wage
replacement and medical benefits, employees felt that they could secure
greater financial benefits from the courts than from the FECA
The chargeback process
The Federal Employees' Compensation Act Amendments of 1960, P.L.
86-767, created the chargeback process in which the Secretary of Labor
is required to bill each federal agency for the costs of FECA benefits
provided to their employees in the previous fiscal year so that these
agency may reimburse the Employees' Compensation Fund. In addition,
these amendments required that government corporations also pay their
``fair share'' of FECA administrative costs to the government. The
chargeback process was intended by Congress to ``further the promotion
of safety'' among federal agencies by making the agencies ultimately
responsible for the costs of injuries, illnesses, and deaths of their
The Federal Employees' Compensation Act Amendments of 1966, P.L.
89-488, made two significant changes to the FECA program. These changes
continue to be in effect today.
Use of the GS scale to set minimum and maximum benefit
Prior to the enactment of the 1966 amendments, the maximum and
minimum levels of FECA benefits were set by statute and not subject to
any automatic adjustments. In 1966 FECA benefits were still subject to
levels enacted as part of the 1949 amendments. According to the Senate
Committee on Labor and Public Welfare, the statutory maximum provided
for full benefits for over 99% of claimants in 1949, but only 85% of
claimants by 1966.\27\ To address the difficulty inherent in using
statutory changes to keep pace with the growth in federal employees'
wages, the 1966 amendments provide for use of the general schedule (GS)
scale as the basis for the maximum and minimum FECA benefit levels with
the maximum level set at 75% of the highest rate of basic pay at the
Cost-of-living adjustment for benefits
The 1966 amendments provided for an annual cost-of-living
adjustment for FECA benefits.\28\ This annual adjustment is a unique
feature of the FECA program not found in other workers' compensation
The Federal Employees' Compensation Act Amendments of 1974, P.L.
93-416, made three major changes to the FECA program. These three
changes remain key elements of the program today.
Continuation of pay
The 1974 amendments provided for up to 45 days of continuation of
pay from a worker's employing agency in cases of traumatic injuries
covered by FECA. During this period, an injured employee may receive
his or her full pay rather than FECA compensation. Because continuation
of pay is considered income rather than a benefit, it is subject to the
federal income tax and is reduced by all standard payroll deductions.
Congress felt that 45 days of continuation of pay were needed
because of the time it often took for FECA claims to be processed and
compensation benefits to begin. In its report on the 1974 amendments,
the Senate Committee on Labor and Public Welfare cited a General
Accounting Office report that stated that the average processing time
for FECA claims was between 49 and 70 days, a delay that the committee
found ``creates economic hardship on the injured employee and his or
her family and causes difficult administrative problems for the
Secretary of Labor and the employing agencies.'' \29\
Employee choice of physician
The 1974 amendments authorized employees to select their own
treating physicians rather than use doctors employed or selected by the
federal government. The right of employees to have free choice over who
provides their medical care was one of the recommendations of the
National Commission on State Workmen's Compensation Laws in 1972 and
the this provision brought the FECA program in line with that
recommendation as well as some other workers' compensation systems.
Elimination of reduced benefits after age 70
The 1974 amendments removed the provision, enacted as part of the
1949 amendments, requiring that FECA benefits be reviewed and
permitting FECA benefits to be reduced after a claimant reached age 70
to account for the reduced earning capacity that may come with age
independent of any disability. In its report on the 1974 amendments,
the Senate Committee on Labor and Public Welfare provided the following
justification for eliminating the reduced benefit provision:
The Committee finds that such a review places an unnecessary burden
on both the employees receiving compensation and the Secretary.
Further, the fact that an employee reaches 70 has no bearing on his or
her entitlement to benefits and is considered discriminatory in the
Recent FECA Amendments
There have been no major amendments to the FECA program since 1974.
However, the 109th and 110th Congresses did make changes to FECA that
partially address two of the issues currently facing the program.
Change to the FECA Waiting Period for Postal Employees
Section 901 of the Postal Accountability and Enhancement Act, P.L.
109-435, changed the way the FECA three-day waiting period for
compensation is applied to employees of the United States Postal
Service. This provision requires that postal employees satisfy the
three-day waiting period before the continuation of pay period can
begin. All other federal employees continue to serve the three-day
waiting period after the conclusion of the continuation of pay period
and before FECA compensation benefits begin.
This provision was based on a recommendation of the President's
Commission on the United States Postal Service. The commission's
recommendation was part of a larger package of FECA reforms for postal
employees intended to reduce the Postal Service's workers' compensation
costs. Because of what the commission termed the ``unique businesslike
charter'' of the Postal Service, the commission recommended that the
service's workers' compensation system become more in line with the
state workers' compensation systems that provide coverage for most
Death Gratuity for Federal Employees Killed While Serving
Alongside the Armed Forces
American military operations in Iraq and Afghanistan have been
supported by an unprecedented number of civilian employees, some of
whom are serving in hostile areas alongside the armed forces. These
deployed civilian employees are covered by FECA, but concerns have been
raised about the adequacy of FECA benefits for those injured or killed
while serving in areas of combat, especially when compared to the
benefits available to members of the armed forces from the Departments
of Defense and Veterans Affairs.\32\
Section 1105 of the National Defense Authorization Act for Fiscal
Year 2008, P.L. 110-181, provides for a death gratuity of up to
$100,000 to be paid to the survivors of any federal employee, or
employee of a non-appropriated fund instrumentality, who ``dies of
injuries incurred in connection with the employee's service with an
Armed Force in a contingency operation.'' This death gratuity is paid
in addition to the regular FECA compensation for survivors, but is
offset by any other death gratuities paid by the federal government.
Overview of the FECA Program Today
This section of my testimony provides a plain-language overview of
the major features of the FECA program in effect today.
Statutory and Regulatory Authorities
The FECA program is authorized in statute at 5 U.S.C. Sec. Sec.
8101 et seq. Regulations implementing the FECA are provided at 20
C.F.R. Sec. Sec. 10.00-10.826. The FECA program is administered by the
Department of Labor, Office of Workers Compensation Programs (OWCP).
Benefits under FECA are paid out of the federal Employees'
Compensation Fund. This fund is financed by appropriations from
Congress which are used to pay current FECA benefits and which are
ultimately reimbursed by federal agencies through the chargeback
Each quarter OWCP provides to all federal agencies with employees
receiving FECA benefits an estimate of the cost of these benefits to
assist these agencies in preparing their budget requests. By August 15
of each year, OWCP sends each agency a statement of their FECA costs
for the previous fiscal year. Each agency must include in its next
budget request an appropriation to cover its FECA costs for the
previous fiscal year. Upon receiving this appropriation, or if a non-
appropriated entity of the government, by October 15, the agency must
reimburse the Employees' Compensation Fund for the costs of the FECA
benefits provided to its employees.
The administrative costs associated with the FECA program are
provided to the Department of Labor through the appropriations process.
In addition, the United States Postal Service and certain other
government corporations are required to pay for the ``fair share'' of
the costs of administering benefits for their employees.
Employees Covered by FECA
The FECA program covers all civilians employed by the federal
government, including employees in the executive, legislative, and
judicial branches of the government. Both full-time and part-time
workers are covered as are most volunteers and all persons serving on
federal juries. Coverage is also extended to certain groups including
state and local law enforcement officers acting in a federal capacity,
Peace Corps volunteers, students participating in Reserve Officer
Training Corps programs, and members of the Coast Guard Auxiliary and
Civil Air Patrol.
Conditions Covered by FECA
Under FECA, workers' compensation benefits are paid to any covered
employee for any disability or death caused by any injury or illness
sustained during the employee's work for the federal government. There
is no list of covered conditions nor is there a list of conditions that
are not covered. However, no injury, illness, or death may be
compensation by FECA if the condition was:
caused by the willful misconduct of the employee;
caused by the employee's intention to bring about the
injury or death of himself or another person; or
proximately caused by the intoxication of the employee.
In addition, any person convicted of a felony related to the
fraudulent application for or receipt of FECA benefits forfeits his or
her rights to all FECA benefits for any injury that occurred on or
before the date of conviction. The benefits of any person confined in
jail, prison, or an institution pursuant to a felony conviction are
suspended for the duration of the incarceration and may not be
FECA Claims Process
All FECA claims are processed and adjudicated by OWCP. Initial
decisions on claims are made by OWCP staff based on evidence submitted
by the claimant and his or her treating physician. The law also permits
OWCP to order a claimant or beneficiary to submit to a medical
examination from a doctor contracted to the federal government. An
employee dissatisfied with a claims decision may request a hearing
before OWCP or that OWCP review the record of its decision. A final
appeal can be made to the Employees' Compensation Appeals Board (ECAB).
The decision of the ECAB is final, cannot be appealed, and is not
subject to judicial review.
Time Limit for Filing a FECA Claim
In general, a claim for disability or death benefits under FECA
must be made within three years of the date of the injury or death. In
the case of a latent disability, such as a condition caused by exposure
to a toxic substance over time, the three-year time limit does not
begin until the employee is disabled and is aware, or reasonably should
be aware, that the disability was caused by his or her employment.
FECA Compensation Benefits
Continuation of Pay
In the case of a traumatic injury, an employee is eligible for
Continuation of Pay.\33\ Continuation of pay is paid by the employing
agency and is equal to 100% of the employee's rate of pay at the time
of the traumatic injury. Since continuation of pay is considered salary
and not compensation, it is taxed and subject to any deductions
normally made against the employee's salary. Any lost work time beyond
45 days, or lost time due to a latent condition, is considered either a
partial or total disability under FECA.
Employees of the United States Postal Service must satisfy a three-
day waiting period before becoming eligible for continuation of pay.
If an employee is unable to work full-time at his or her previous
job, but is able to work either part-time or at a job in a lower pay
category, then he or she is considered partially disabled and eligible
for the following compensation benefits:
if the employee is single, a monthly benefit equal to two-
thirds of the difference between the employee's pre-disability and
post-disability monthly wage; or
if the employee has at least one dependent, a monthly
benefit equal to 75% of the difference between the employee's pre-
disability and post-disability monthly wage.
The compensation benefits paid for partial disability are capped at
75% of the maximum basic pay at rate GS-15, are not subject to federal
taxation, and are subject to an annual cost-of-living adjustment.
If an employee's actual wages do not accurately represent his or
her true wage-earning capacity, or if he or she has no wages, then his
or her partial disability benefit is based on his or her wage-earning
capacity as determined by OWCP using a combination of vocational
factors and ``degree of physical impairment.''
In cases in which an employee suffers a permanent partial
disability, such as the loss of a limb, he or she is entitled to a
scheduled benefit. The scheduled benefit is in addition to any other
partial or total disability benefits received and an employee may
receive a scheduled award even if he or she has returned to full-time
work.\34\ If an employee suffers a disfigurement of the face, head or
neck that is of such severity that it may limit his or her ability to
secure or retain employment, the employee is entitled to up to $3,500
in additional compensation.
If an employee is unable to work at all, then he or she is
considered totally disabled and eligible for the following compensation
if the employee is single, a monthly benefit equal to two-
thirds of the employee's pre-disability monthly wage; or
if the employee has at least one dependent, a monthly
benefit equal to 75% of the employee's pre-disability monthly wage.
The compensation benefits paid for total disability are capped at
75% of the maximum basic pay at rate GS-15, are not subject to federal
taxation, and are subject to an annual cost-of-living adjustment.
Benefits are payable until it is determined that the employee is no
longer totally disabled and may continue until the employee's death.
If an employee dies on the job or from a latent condition caused by
his or her employment, the employee's survivors are eligible for the
following compensation benefits:
if the employee's spouse has no children, then the spouse
is eligible for a monthly benefit equal to 50% of the employee's
monthly wage at the time of death;
if the employee's spouse has one or more children, then
the spouse is eligible for a monthly benefit equal to 45% of the
employee's monthly wage at the time of death and each child is eligible
for a monthly benefit equal to 15% of the employee's monthly wage at
the time of death, up to a maximum family benefit of 75% of the
employee's monthly wage at the time of death.
Special rules apply in cases in which an employee dies without a
spouse or children or with only children.
If a spouse remarries before age 55, then he or she is entitled to
a lump-sum payment equal to 24 months of benefits, after which all
benefits cease. If a spouse remarries at age 55 or older, benefits
continue for life. A child's benefits end at age 18, or age 23 if the
child is still in school. A child's benefits continue for life if the
child is disabled and incapable of self-support.
The compensation benefits paid for death are capped at 75% of the
maximum basic pay at rate GS-15, are not subject to federal taxation,
and are subject to an annual cost-of-living adjustment.
Additional death benefits
The personal representative of the deceased employee is entitled to
reimbursement, up to $200, of any costs associated with terminating the
deceased employee's formal relationship with the federal government.
The personal representative of the deceased employee is also entitled
to a reimbursement of funeral costs up to $800 and the federal
government will pay any costs associated with shipping a body from the
place of death to the employee's home. An employee killed while working
with the military in a contingency operation is also entitled to a
special gratuity payment of up to $100,000 payable to his or her
FECA Medical Benefits
Under FECA, all medical costs, including medical devices, therapies
and medications, associated with the treatment of a covered injury or
illness are paid for, in full, by the federal government. A FECA
beneficiary is not responsible for any coinsurance or any other costs
associated with his or her medical treatment and does not have to use
any personal insurance for any covered medical costs. Generally, a
beneficiary may select his or her own medical provider and is
reimbursed for the costs associated with transportation to receive
A FECA beneficiary who is blind, paralyzed, or otherwise disabled
such that he or she needs constant personal attendant care may receive
an additional benefit of up to $1,500 per month.
The Secretary of Labor may direct any FECA beneficiary to
participate in vocational rehabilitation, the costs of which are paid
by the federal government. While participating in vocational
rehabilitation, the beneficiary may receive an additional benefit of up
to $200 per month. However, any beneficiary who is directed to
participate in vocational rehabilitation and fails to do so may have
his or her benefit reduced to a level consistent with the increased
wage earning capacity that likely would have resulted from
participation in vocational rehabilitation.
\1\ The first general workers' compensation law in the United
States was the Federal Employers' Compensation Act, P.L. 16-176,
enacted in 1908. This law will be discussed later in my testimony. New
York passed a workers' compensation law in 1910, but it was ruled
unconstitutional by the state's courts in 1911. In 1911, Wisconsin
enacted a workers' compensation law that is now generally considered to
be the first such law in the United States.
\2\ For a detailed discussion of these common-law defenses see
Edward M. Welch, Employer's Guide to Workers' Compensation (Washington:
Bureau of National Affairs, Inc., 1994), pp. 30-31.
\3\ Employees are covered even if they are at fault in the
accident. However, if the injury, illness, or death was caused by the
willful misconduct of the employee or if the employee was under the
influence of drugs or alcohol at the time of the incident, then the
injury, illness, or death may not be covered by workers' compensation.
\4\ Edward D. Berkowitz, Disabled Policy: America's Programs for
the Handicapped (New York: Cambridge University Press, 1987), pp. 21-
\5\ National Commission on State Workmen's Compensation Laws, The
Report of the National Commission on State Workmen's Compensation Laws,
Washington, DC, July 1972, Chapter 2.
\6\ Ishita Sengupta, Virginia Reno, and John F. Burton, Jr.,
Workers' Compensation: Benefits Coverage, and Costs, 2008, National
Academy of Social Insurance, Washington, DC, September 2010, p. 8.
\7\ Employees travelling for the purposes of work, such as driving
a delivery truck or attending a conference, are covered by workers'
\8\ How workers' compensation systems determine levels of partial
disability benefits and specifically the use of the sixth edition of
the American Medical Association's Guides to the Evaluation of
Impairment, was the subject of a hearing before this subcommittee on
November 17, 2010 (U.S. Congress, House Committee on Education and
Labor, Subcommittee on Workforce Protections, Developments in State
Workers' Compensation Systems, hearing, 111th Cong., 2nd sess.,
November 17, 2010 (Washington: GPO, 2010)).
\9\ This section of my testimony does not discuss minor, technical,
or administrative amendments.
\10\ Act of May 4, 1882, ch. 117, 22 Stat. 55 (1882). In 1915 the
United States Life Saving Service was merged with the Revenue Cutter
Service to form the United States Coast Guard.
\11\ Willis J. Nordlund, ``The Federal Employees' Compensation
Act,'' Monthly Labor Review, September 1991, p. 5, hereafter cited as
\12\ U.S. Congress, House Committee on Education and Labor,
Subcommittee on Safety and Compensation, Amendments to Federal
Employees' Compensation Act, hearings on H.R. 1196 and other bills to
amend the Federal Employees' Compensation Act, 86th Cong., 2nd sess.,
February 10, 23, 24 and March 8, 23, 24, 1960 (Washington: GPO, 1960),
\13\ Coverage for occupational illnesses was added to the FECA
program in 1924 by P.L. 68-195.
\14\ U.S. Congress, House Committee on the Judiciary, Compensation
of Government Employees Suffering Injuries While on Duty, report to
accompany H.R. 15316, 64th Cong., 2nd sess., May 11, 1916, H. Rept. 64-
678 (Washington: GPO, 1916), p. 7.
\15\ Ibid., p. 9.
\16\ Ibid., p. 8.
\17\ U.S. Congress, Senate Committee on the Judiciary, Accident
Compensation to Government Employees, hearing on S. 2846, 64th Cong.,
1st sess., February 26, 1916 (Washington: GPO, 1916), p. 27.
\19\ U.S. Congress, House Committee on Education and Labor,
Amendments to Federal Employees' Compensation Act, report to accompany
H.R. 3141, 81st Cong., 1st sess., June 6, 1949, H. Rept. 81-729
(Washington: GPO, 1949), p. 23, hereafter cited as H. Rept. 81-729; and
U.S. Congress, Senate Labor and Public Welfare, Amendments to Federal
Employees' Compensation Act, report to accompany H.R. 3141, 81st Cong.,
1st sess., August 4, 1949, S. Rept. 81-836 (Washington: GPO, 1949), p.
29, hereafter cited as S. Rept. 81-836.
\20\ Nordlund 1991, p. 10.
\21\ H. Rept. 81-279, p. 11; and S. Rept. 81-836, p. 20.
\22\ U.S. Congress, House Committee on Education and Labor, Special
Subcommittee, Federal Employees' Compensation Act Amendments of 1949,
hearing on H.R. 3191 and companion bills, 81st Cong., 1st sess., April
11-13 and May 2, 1949.
\24\ H. Rept. 81-279, p. 16; and S. Rept. 81-836, p. 24.
\25\ H. Rept. 81-279, p. 14; and S. Rept. 81-836, p. 23.
\26\ U.S. Congress, House Committee on Education and Labor, Federal
Employees' Compensation Act Amendments of 1960, report to accompany
H.R. 12383, 86th Cong., 2nd sess., June 2, 1960, H. Rept. 86-1743
(Washington: GPO, 1960), p. 3; and U.S. Congress, Senate Committee on
Labor and Public Welfare, Federal Employees' Compensation Act
Amendments of 1960, report to accompany H.R. 12383, 86th Cong., 2nd
sess., August 27, 1960, S. Rept. 86-1924 (Washington: GPO, 1960), p. 3.
\27\ U.S. Congress, Senate Committee on Labor and Public Welfare,
Federal Employees' Compensation Act Amendments of 1966, report to
accompany H.R. 10721, 89th Cong., 2nd sess., June 16, 1966, S. Rept.
89-1285, p. 3.
\28\ The current cost-of-living adjustment is based on changes in
the Consumer Price Index (all items-United States city average).
\29\ U.S. Congress, Senate Committee on Labor and Public Welfare,
Federal Employees' Compensation Act of 1970, report to accompany H.R.
13781, 93rd Cong., 2nd sess., August 8, 1974, S. Rept. 93-1081
(Washington: GPO, 1974), pp. 3-4, hereafter cited as S. Rept. 93-1081;
and U.S. General Accounting Office, Need for a Faster Way to Pay
Compensation Claims to Disabled Federal Employees, B-157593, November
21, 1973, p. 1.
\30\ S. Rept. 93-1081, p. 7.
\31\ President's Commission on the United States Postal Service,
Embracing the Future: Making the Tough Choices to Preserve Universal
Mail Service, Report of the President's Commission on the United States
Postal Service, July 31, 2003, p. 134.
\32\ See for example: U.S. Congress, House Committee on Oversight
and Government Reform, Subcommittee on Federal Workforce, Post Office,
and the District of Columbia, A Call to Arms: A Review of Benefits for
Deployed Federal Employees, hearing, 111th Cong., 1st sess., September
16, 2009; and U.S. Congress, Senate Committee on Homeland Security and
Governmental Affairs, Subcommittee on Oversight of Government
Management, the Federal Workforce, and the District of Columbia,
Deployed Federal Civilians: Advancing Security and Opportunity in
Afghanistan, hearing, 111th Cong., 2nd sess., April 14, 2010.
\33\ Certain groups, including federal jurors, Peace Corps
volunteers, and Civil Air Patrol members, are not eligible for
continuation of pay.
\34\ The list of FECA scheduled benefits are provided in statute at
5 U.S.C. Sec. 8107(c) and in regulation at 20 C.F.R. Sec. 10.40(a).
Chairman Walberg. Thank you, Mr. Szymendera, and thank you
for the promptness. I appreciate that.
I recognize Mr. Bertoni.
STATEMENT OF DANIEL BERTONI, DIRECTOR OF EDUCATION, WORKFORCE,
AND INCOME SECURITY, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Bertoni. Mr. Chairman, Ranking Member Woolsey, members
of the subcommittee, good morning.
I am pleased to discuss issues related to potential changes
to the Federal Employees' Compensation Act, or FECA, which
provides critical wage loss compensation and other benefits to
federal employees who are unable to work due to injuries
sustained on the job.
Concerns have been raised that federal employees on FECA
receive benefits that can be more generous than under the
traditional federal retirement system, and that the program may
incentivize individuals to remain on the rolls well beyond
Over the past 30 years, there have bee numerous proposals
to change FECA, and more recent options for revising the
program for older beneficiaries are similar to those that we
have discussed in prior work.
My statement discusses stakeholder views surrounding
previous proposals for change and policy questions and issues
that still merit consideration today in crafting legislation to
change benefits for older beneficiaries.
In 1996, we reported that a perception among many that
older FECA beneficiaries were receiving overly generous
benefits generated two proposals to change benefits once
individuals reach retirement age. The first would convert FECA
benefits to federal retirement benefits at age 65 with certain
protections, such as making adjustments for regular pay
increases over time.
A bill recently introduced in the Congress includes a
similar approach requiring FECA recipients to retire upon
reaching social security retirement age. A second proposal we
reviewed involved converting FECA wage loss benefits to an
annuity and reducing benefits 2 years after a beneficiary reach
civil service retirement age.
More recently, the Department of Labor proposed a similar
change that would reduce FECA benefits for retirement age
recipients to 50 percent of their salary at the time of injury.
In our past work, we have noted that proponents for change felt
that reforms were necessary to control escalating costs and
ensure benefit equity.
Those in opposition were concerned that benefit reductions
would cause economic hardships and reduce incentives for
employers to manage claims or develop safer work environments.
In soliciting views from various experts and stakeholders, we
identified a number of issues that merit consideration in
crafting legislation to change benefits for older FECA
And going forward, Congress may wish to consider the
following questions as it assesses current reform proposals:
First, how would benefits be computed? For some proposals, as
in the annuity option, calculating this FECA benefit may be
fairly simple. For others, consideration of more complex
adjustments may be necessary to address expended time out of
the workforce and other variables.
Second, which FECA beneficiaries would be affected and
should some workers be exempt under some proposals, such as
those already on the rolls or those who are ineligible for
federal retirement. Third, what criteria would initiate a
benefit change? Would age or retirement eligibility alone
trigger events, or would secondary criteria be needed such as a
delayed transition period for those at or near retirement age
at the time of enactment.
And fourth, how would other benefits be treated, such as
survivor and medical benefits under a reformed system? And
lastly, the critical question of how will benefits be funded?
Depending on the proposal, funding alternatives may be needed.
In particular, we note in our 1996 report that if
beneficiaries were converted to federal retirement,
alternatives may be necessary. While the annuity option would
likely remain funded under the traditional FECA charge back
In conclusion, FECA continues to play a vital role in
providing compensation to federal employees who are unable to
work because of injuries sustained while performing their
duties. Prior and current reform proposals continue to raise a
number of important issues with implications for both
beneficiaries and federal agencies responsible for
administering the program.
While not exhaustive, the analytical framework in questions
posed in our prior work are still relevant today and can help
all stakeholders and interested parties better understand
program complexities and key issues to consider as they move
forward in assessing specific proposals for change.
As you may know, we have recently begun a new review of the
FECA program, which will include an analysis of the
characteristics of the beneficiary population as well as how
potential changes to the program could impact cost and
benefits, and we look forward to working with Labor as we move
forward with this analysis.
Mr. Chairman, this concludes my statement. I am happy to
answer any questions that you or other members of the
subcommittee may have. Thank you, very much.
[The statement of Mr. Bertoni follows:]
Prepared Statement of Daniel Bertoni, Director, Education, Workforce,
Income Security Issues, Government Accountability Office
Chairman Walberg, Ranking Member Woolsey and Members of the
Committee: I am pleased to be here today to comment on issues related
to possible changes to the Federal Employees' Compensation Act (FECA)
program, a topic that we have reported on in the past. At the end of
chargeback year 2010, the FECA program, administered by the Department
of Labor (Labor) paid more than $1.88 billion in wage-loss
compensation, impairment, and death benefits, and another $898.1
million for medical and rehabilitation services and supplies.\1\
Currently, FECA benefits are paid to federal employees who are unable
to work because of injuries sustained while performing their federal
duties, including those who are at or older than retirement age.
Concerns have been raised that federal employees on FECA receive
benefits that could be more generous than under the traditional federal
retirement system and that the program may have unintended incentives
for beneficiaries to remain on the FECA program beyond the traditional
retirement age. Over the past 30 years, there have been various
proposals to change the FECA program to address this concern. Recent
policy proposals to change the way FECA is administered for older
beneficiaries share characteristics with past proposals we have
discussed in prior work. In August 1996, we reported on the issues
associated with changing benefits for older beneficiaries.\2\ Because
FECA's benefit structure has not been significantly amended in more
than 35 years, the policy questions raised in our 1996 report are still
relevant and important today.
My statement today will focus on (1) previous proposals for
changing FECA benefits for older beneficiaries and (2) questions and
associated issues that merit consideration in crafting legislation to
change benefits for older beneficiaries. This statement is drawn
primarily from our 1996 report in which we solicited views from
selected federal agencies and employee groups to identify questions and
associated issues with crafting benefit changes. In that report, we
also reviewed relevant laws and analyzed previous studies and
legislative proposals that would have changed benefits for older FECA
beneficiaries. For purposes of this testimony, we did not conduct a
legal analysis to update the results of our prior work, but instead
relied upon secondary sources such as the Congressional Research
Service (CRS). The work on which this testimony was based was conducted
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
In summary, we have reported that the perception that many
retirement-age beneficiaries were receiving more generous benefits on
FECA had generated two alternative proposals to change benefits once
beneficiaries reach the age at which retirement typically occurs: (1)
converting FECA benefits to retirement benefits and, (2) changing FECA
wage-loss benefits by establishing a new FECA annuity. We also
discussed a number of issues to be considered in crafting legislation
to change benefits for older beneficiaries. Going forward, Congress may
wish to consider the following questions in assessing current proposals
for change: (1) How would benefits be computed? (2) Which beneficiaries
would be affected? (3) What criteria, such as age or retirement
eligibility, would initiate changed benefits? (4) How would other
benefits, such as FECA medical and survivor benefits, be treated and
administered? (5) How would benefits, particularly retirement benefits,
FECA is administered by Labor's Office of Workers' Compensation
Programs (OWCP) and currently covers more than 2.7 million civilian
federal employees from more than 70 different agencies. FECA benefits
are paid to federal employees who are unable to work because of
injuries sustained while performing their federal duties. Under FECA,
workers' compensation benefits are authorized for employees who suffer
temporary or permanent disabilities resulting from work-related
injuries or diseases. FECA benefits include payments for (1) loss of
wages when employees cannot work because of work-related disabilities
due to traumatic injuries or occupational diseases; (2) schedule awards
for loss of, or loss of use of, a body part or function; (3) vocational
rehabilitation; (4) death benefits for survivors; (5) burial
allowances; and (6) medical care for injured workers. Wage-loss
benefits for eligible workers with temporary or permanent total
disabilities are generally equal to either 66\2/3\ percent of salary
for a worker with no spouse or dependent, or 75 percent of salary for a
worker with a spouse or dependent. Wage-loss benefits can be reduced
based on employees' wage-earning capacities when they are capable of
working again. OWCP provides wage-loss compensation until claimants can
return to work in either their original positions or other suitable
positions that meet medical work restrictions.\3\ Each year, most
federal agencies reimburse OWCP for wage-loss compensation payments
made to their employees from their annual appropriations. If claimants
return to work but do not receive wages equal to that of their prior
positions--such as claimants who return to work part-time--FECA
benefits cover the difference between their current and previous
salaries.\4\ Currently, there are no time or age limits placed on the
receipt of FECA benefits.
With the passage of the Federal Employees' Compensation Act of
1916, members of Congress raised concerns about levels of benefits and
potential costs of establishing a program for injured federal
employees.\5\ As Congress debated the act's provisions in 1916 and
again in 1923, some congressional members were concerned that a broad
interpretation threatened to make the workers' compensation program, in
effect, a general pension. The 1916 act granted benefits to federal
workers for work-related injuries. These benefits were not necessarily
granted for a lifetime; they could be suspended or terminated under
certain conditions. Nevertheless, the act placed no age or time
limitations on injured workers' receipt of wage compensation. The act
did contain a provision allowing benefits to be reduced for older
beneficiaries. The provision stated that compensation benefits could be
adjusted when the wage-earning capacity of the disabled employee would
probably have decreased on account of old age, irrespective of the
While the 1916 act did not specify the age at which compensation
benefits could be reduced, the 1949 FECA amendments established 70 as
the age at which a review could occur to determine if a reduction were
warranted.\6\ In 1974, Congress again eliminated the age provision.\7\
Federal Retirement Systems
Typically, federal workers participate in one of two retirement
systems which are administered by the Office of Personnel Management
(OPM): the Civil Service Retirement System (CSRS), or the Federal
Employees' Retirement System (FERS). Most civilian federal employees
who were hired before 1984 are covered by CSRS. Under CSRS, employees
generally do not pay Social Security taxes or earn Social Security
benefits. Federal employees first hired in 1984 or later are covered by
FERS. All federal employees who are enrolled in FERS pay Social
Security taxes and earn Social Security benefits. Federal employees
enrolled in either CSRS or FERS also may contribute to the Thrift
Savings Plan (TSP); however, only employees enrolled in FERS are
eligible for employer matching contributions to the TSP.
Under both CSRS and FERS, the date of an employee's eligibility to
retire with an annuity depends on his or her age and years of service.
The amount of the retirement annuity is determined by three factors:
the number of years of service, the accrual rate at which benefits are
earned for each year of service, and the salary base to which the
accrual rate is applied.\8\ In both CSRS and FERS, the salary base is
the average of the highest three consecutive years of basic pay. This
is often called ``high-3'' pay.
According to CRS, an injured employee cannot contribute to Social
Security or to the TSP while receiving workers' compensation because
Social Security taxes and TSP contributions must be paid from earnings,
and workers' compensation payments are not classified as earnings under
either the Social Security Act or the Internal Revenue Code. As a
result, the employee's future retirement income from Social Security
and the TSP may be reduced. Legislation passed in 2003 increased the
FERS basic annuity from 1 percent of the individual's high-3 average
pay to 2 percent of high-3 average pay while an individual receives
workers' compensation, which would help replace income that may have
been lost from lower Social Security benefits and reduced income from
Proposals to Change Benefits for Older Beneficiaries
Concerns that beneficiaries remain in the FECA program past
retirement age have led to several proposals to change the program.
Under current rules, an age-eligible employee with 30 years of service
covered by FERS could accrue pension benefits that are 30 percent of
their average high-3 pay and under CSRS could accrue almost 60 percent
of their high-3 average pay. Under both systems benefits can be taxed.
\10\ FECA beneficiaries can receive up to 75 percent of their preinjury
income, tax-free, if they have dependents and 66\2/3\ percent without
dependents. Because returning to work could mean giving up a FECA
benefit for a reduced pension amount, concerns have been raised by some
that the program may provide incentives for beneficiaries to continue
on the program beyond retirement age.
In 1996, we reported on two alternative proposals to change FECA
benefits once beneficiaries reach the age at which retirement typically
occurs: (1) converting FECA benefits to retirement benefits, and (2)
changing FECA wage-loss benefits to a newly established FECA annuity.
The first proposal would convert FECA benefits for workers who are
injured or become ill to regular federal employee retirement benefits
at retirement age. In 1981, the Reagan administration proposed
comprehensive FECA reform, including a provision to convert FECA
benefits to retirement benefits at age 65. The proposal included
certain employee protections, one of which was calculating retirement
benefits on the basis of the employee's pay at time of injury (with
adjustments for regular federal pay increases). According to
proponents, this change would improve agencies' operations because
their discretionary budgets would be decreased by FECA costs, and, by
reducing caseload, it would allow Labor to better manage new and
existing cases for younger injured workers. A bill recently introduced
in Congress includes a similar provision, requiring FECA recipients to
retire upon reaching retirement age as defined by the Social Security
The second proposal, based on proposals that several agencies
developed in the early 1990s, would convert FECA wage-loss compensation
benefits to a FECA annuity benefit. These agency proposals would have
reduced FECA benefits by a set percentage two years after beneficiaries
reached civil service retirement eligibility. Proponents of this
alternative noted that changing to a FECA annuity would be simpler than
converting FECA beneficiaries to the retirement system, would result in
consistent benefits, and would allow benefits to remain tax-free.
Proponents also argued that a FECA annuity would keep the changed
benefit within the FECA program, thereby avoiding complexities
associated with converting FECA benefits under CSRS and FERS. For
example, converting to retirement benefits could be difficult for some
employees who currently are not participating in a federal retirement
plan. Also, funding future retirement benefits could be a problem if
the FECA recipient has not been making retirement contributions. Labor
recently suggested a change to the FECA program that would reduce wage-
loss benefits for Social Security retirement-aged recipients to 50
percent of their gross salary at the date of injury, but would still be
tax-free. \12\ Labor's proposal would still keep the changed benefit
within the FECA program.
In our 1996 report, however, we identified a number of issues with
both alternative proposals. For example, some experts and other
stakeholders we interviewed noted that age discrimination posed a
possible legal challenge and that some provisions in the law would need
to be addressed with new statutory language.\13\ Others noted that
benefit reductions would cause economic hardships for older
beneficiaries. Some noted that without the protections of the workers'
compensation program, injured employees who have few years of service
or are ineligible for retirement might suffer large reductions in
benefits. Moreover, opponents to change also viewed reduced benefits as
breaking the workers' compensation promise. Another concern was that
agencies' anticipation of reduced costs for workers' compensation could
result in fewer incentives to manage claims or to develop safer working
Questions and Issues to Consider if Crafting FECA Changes
We also discussed in our 1996 report a number of issues that merit
consideration in crafting legislation to change benefits for older
beneficiaries. Going forward, Congress may wish to consider the
following questions as it assesses and considers current reform
proposals: (1) How would benefits be computed? (2) Which beneficiaries
would be affected? (3) What criteria, such as age or retirement
eligibility, would initiate changed benefits? (4) How would other
benefits, such as FECA medical and survivor benefits, be treated and
administered? (5) How would benefits, particularly retirement benefits,
How Would Benefits Be Computed?
The retirement conversion alternative raises complex issues,
arising in part from the fact that conversion could result in varying
retirement benefits, depending on conversion provisions, retirement
systems, and individual circumstances. A key issue is whether or not
benefits would be adjusted. The unadjusted option would allow for
retirement benefits as provided by current law. The adjusted option
would typically ensure that time on the FECA rolls was treated as if
the beneficiary had continued to work. This adjustment could (1) credit
time on FECA for years of service or (2) increase the salary base (for
example, increasing salary from the time of injury by either an index
of wage increases or inflation, assigning the current pay of the
position, or providing for merit increases and possible promotions
missed due to the injury).
Determining the FECA annuity would require deciding what percentage
of FECA benefits the annuity would represent. Under previous proposals
benefits would be two-thirds of the previous FECA compensation
benefits. Provisions to adjust calculations for certain categories of
beneficiaries also have been proposed. Under previous proposals,
partially disabled individuals receiving reduced compensation would
receive the lesser of the FECA annuity or the current reduced benefit.
FECA annuity computations could also be devised to achieve certain
benchmarks. For example, the formula for a FECA annuity could be
designed to approximate a taxable retirement annuity. One issue
concerning a FECA annuity is whether it would be permanent once set, or
whether it would be subject to adjustments based on continuing OWCP
reviews of the beneficiary's workers' compensation claim.
Which Beneficiaries Would Be Affected?
Currently most federal employees are covered by FERS, but
conversion proposals might have to consider differences between FERS
and CSRS participants, and participants in any specialized retirement
systems. \14\ Other groups that might be uniquely affected include
injured workers who are not eligible for federal retirement benefits,
individuals eligible for retirement conversion benefits, but not
vested; and individuals who are partially disabled FECA recipients but
active federal employees. With regard to vesting, those who have
insufficient years of service to be vested might be given credit for
time on the FECA rolls until vested. There is also the question of
whether changes will focus on current or future beneficiaries.
Exempting current beneficiaries delays receipt of full savings from
FECA cost reductions to the future. One option might be a transition
period for current beneficiaries. For example, current beneficiaries
could be given notice that their benefits would be changed after a
certain number of years.
What Criteria Would Initiate Changed Benefits?
Past proposals have used either age or retirement eligibility as
the primary criterion for changing benefits. If retirement eligibility
is used, consideration must be given to establishing eligibility for
those who might otherwise not become retirement eligible. This would be
true for either the retirement conversion or the annuity option. At
least for purposes of initiating the changed benefit, time on the FECA
rolls might be treated as if it counted for service time toward
retirement eligibility. Deciding on the criteria that would initiate
change in benefits might require developing benchmarks. For example, if
age were the criteria, it might be benchmarked against the average age
of retirement for federal employees, or the average age of retirement
for all employees. Another question is whether to use secondary
criteria to delay changed benefits in certain cases. The amount of time
one has received FECA benefits is one possible example of secondary
criteria. Secondary criteria might prove important in cases where an
older, injured worker may face retirement under the retirement
conversion option even when recovery and return to work is almost
How Would Other Benefits, Such As FECA Medical Benefits Or
Survivor Benefits, Be Treated and Administered?
In addition to changing FECA compensation benefits, consideration
should be given to whether to change other FECA benefits, such as
medical benefits or survivor benefits. For example, the 1981 Reagan
administration proposal would have ended survivor benefits under FECA
for those beneficiaries whose benefits were converted to the retirement
system. Another issue to consider is who will administer benefits if
program changes shift responsibilities--OPM administers retirement
annuity benefits for federal employees, and Labor currently administers
FECA benefits. Although it may be advantageous to consolidate case
management in one agency, such as OPM, if the retirement conversion
alternative were selected, the agency chosen to manage the case might
have to develop an expertise that it does not currently possess. For
example, OPM might have to develop expertise in medical fee schedules
to control workers' compensation medical costs.
How Would Benefits, Particularly Retirement Benefits, Be
For the retirement conversion alternative, another issue is the
funding of any retirement benefit shortfall. Currently, agencies and
individuals do not make retirement contributions if an individual
receives FECA benefits; thus, if retirement benefits exceed those for
which contributions have been made, retirement funding shortfalls would
occur. Retirement fund shortfalls can be funded through payments made
by agencies at the time of conversion or prior to conversion. First,
lump-sum payment could be made by agencies at the time of the
conversion. This option has been criticized because the start-up cost
was considered too high. Second, shortfalls could be covered on a pay-
as-you-go basis after conversion. In this approach, agencies might make
annual payments to cover the shortfall resulting from the conversions.
Third, agencies' and employees' contributions to the retirement fund
could continue before conversion, preventing shortfalls at conversion.
Proposals for the FECA annuity alternative typically keep funding under
the current FECA chargeback system. This is an annual pay-as-you-go
system with agencies paying for the previous year's FECA costs.
In total, these five questions provide a framework for considering
proposals to change the program.
In conclusion, FECA continues to play a vital role in providing
compensation to federal employees who are unable to work because of
injuries sustained while performing their duties. However, continued
concerns that the program provides incentives for beneficiaries to
remain on the program at, and beyond, retirement age have led to calls
for the program to be reformed. Although FECA's basic structure has not
significantly been amended for many years, there continues to be
interest in reforming the program. Proposals to change benefits for
older beneficiaries raise a number of important issues, with
implications for both beneficiaries and federal agencies. These
implications warrant careful attention to outcomes that could result
from any changes.
Mr. Chairman, this concludes my prepared statement. I would be
pleased to respond to any questions that you or other members of the
committee may have at this time.
\1\ FECA benefits are paid out of the Employees' Compensation Fund
and most are charged back to the employee's agency. Labor's chargeback
year for FECA agency billing purposes ends June 30, 2010.
\2\ GAO, Federal Employees' Compensation Act: Issues Associated
With Changing Benefits for Older Beneficiaries, [hyperlink, http://
www.gao.gov/products/GGD-96-138BR (Washington, D.C.: Aug. 14, 1996).
\3\ Employees eligible for FECA benefits could also be eligible for
retirement disability benefits from the Office of Personnel Management
or Social Security Disability Insurance benefits from the Social
Security Administration. Depending on which benefits employees are
entitled to, employees might have to make an election between them. In
many cases in which individuals receive benefits from different
programs simultaneously, one benefit would likely be offset against the
\4\ The maximum monthly FECA compensation payment cannot exceed 75
percent of the basic monthly pay for a GS-15, step 10 employee ($129,
517 per year as of Jan. 2, 2011). In general, OWCP continues to pay
claimants the difference between their current salary and the salary
they were earning at the time of their injury for as long as this
difference exists and their medical work restrictions remains the same.
(FECA benefits are indexed to the cost of living.) OWCP would not
continue to pay this difference for claimants who quit their job
without good cause (for example, if they quit because they did not like
their work hours).
\5\ 39 Stat. 742.
\6\ 63 Stat. 854.
\7\ Public Law No. 93-416. 88 Stat. 1143. According to Senate
Report 93-1081, the Committee on Labor and Public Welfare stated that
(1) the provision requiring the review of compensation was an
unnecessary burden on both the injured employees and the Secretary of
Labor (who had the authority to conduct the review); (2) age 70 had no
bearing on one's entitlement to benefits; and (3) such a provision was
discriminatory. FECA currently does not include a provision to change
benefits based on retirement age.
\8\ Under CSRS, a worker with at least 30 years of service can
retire at the age of 55; a worker with at least 20 years of service can
retire at the age of 60; and a worker with 5 or more years of service
can retire at the age of 62. The FERS minimum retirement age for an
employee with 30 or more years of service is 55 for workers born before
1948. A worker who has reached the minimum retirement age and has
completed at least 30 years of service can retire with an immediate,
unreduced annuity. A worker with 20 or more years of service can retire
with an unreduced annuity at age 60, and a worker with at least 5 years
of service can retire at age 62 with an unreduced annuity.
\9\ Pub. L. No. 108-92, 117 Stat. 1160 (2003).
\10\ The replacement rate for a federal worker who retires with 30
years of service under CSRS is 56.25 percent. FERS accrual rates are
lower than the accrual rates under CSRS because employees under FERS
pay Social Security payroll taxes and earn Social Security retirement
benefits. Estimating replacement rates under FERS is complicated by the
fact that income from two of its components--Social Security and the
TSP--will vary depending on the individual's work history,
contributions to the TSP, and the investment performance of his or her
\11\ Federal Employees' Compensation Reform Act of 2011, S. 261,
112TH Cong. (2011).
\12\ According to CRS, an injured employee cannot contribute to
Social Security or to the TSP while receiving workers' compensation
because Social Security taxes and TSP contributions must be paid from
earnings, and workers' compensation payments are not classified as
earnings under either the Social Security Act or the Internal Revenue
\13\ Some argued that changing benefits for older beneficiaries
violates protections against age discrimination contained in federal
law by forcing them into accepting retirement benefits or a reduced
annuity at a certain age.
\14\ One conversion decision concerns whether to exempt injured
workers who are ineligible for federal retirement benefits. Ineligible
workers include, for instance, those without 5 years of federal service
under CSRS, those who have withdrawn retirement contributions,
temporary workers, and state and local police covered under special
Chairman Walberg. Mr. Bertoni, thank you.
Now I recognize Mr. Steinberg for your testimony.
STATEMENT OF GARY A. STEINBERG, ACTING DIRECTOR OF THE OFFICE
OF WORKERS' COMPENSATION PROGRAMS, U.S. DEPARTMENT OF LABOR
Mr. Steinberg. Thank you, Chairman Walberg, Ranking Member
Woolsey, and committee members.
I appreciate the opportunity to discuss the Federal
Employees' Compensation Act today. On behalf of Secretary
Solis, I would like to share a set of balanced proposals that
would enhance our ability to assist beneficiaries to return to
work, provide a more equitable array of benefits, and generally
modernize the program.
Almost 95 years ago, Congress enacted FECA to provide
workers' compensation coverage to all federal employees and
their survivors for disabilities or death due to work-related
injuries or illnesses.
The faces of FECA include the postal worker who is hurt
when his truck is hit while delivering the mail; the FBI agent
who is killed or injured in the line of duty; and the VA nurse
who hurts her back while lifting a patient.
DOL's Office of Workers' Compensation Programs works hard
to administer the program fairly, objectively and efficiently.
We seek to continuously improve the quality and service
delivery to our customers, enhance internal and external
communication, and reduce costs to the taxpayer.
We have made major strides in disability management that
have resulted in significant reduction in the average number of
days lost from the most serious injuries. Over the last 10
years, the average number of days lost due to serious injuries
has declined 20 percent, producing an annual savings of $53
Our administrative costs are only 5 percent of total
program costs, far below the average of all state self-
insurance programs, which is over 11 percent. To further
improve FECA, we have made comprehensive recommendations to
Congress, and I wish to highlight some of the major
To help injured employees return to work, we request
authority to start vocational rehabilitation activities without
waiting until an injury is deemed permanent in nature. We seek
a mandate to develop a return to work plan with the claimants
early in the rehabilitation process and the authority to deploy
an assisted re-employment program with the federal agencies
similar to the program that we have successfully implemented
with the private sector.
The proposed changes will also have a positive impact on
the government's ability to achieve the president's executive
order on hiring individuals with disabilities, which we believe
is extremely important.
We also suggest changes to the benefit structure. For
example, the payment of schedule awards for loss or loss of the
use of a limb, one's sight, one's hearing, is often very
complicated and that is often delayed. Although not intended to
replace economic loss, payments are based on the individual
So a letter carrier's knee injury is compensated at less
than half the rate of her GS-15 manager with the same injury.
We think these awards should be paid by DOL concurrently with
wage loss compensation, made more rapidly, and to be fair, they
should be calculated at a uniform level for all employees.
We also propose increases to the benefit levels for burial
expenses and for facial disfigurement. Under current law, the
majority of injured workers receive wage replacement at 75
percent of their salary, tax free and COLA. This rate is higher
than the take-home pay for many federal workers and can serve
as an obstacle to the department's effort to encourage every
worker to make the hard and sometimes painful effort to
overcome their injuries and go back to work.
We, therefore, recommending shifting the benefit for the
majority of claimants to 70 percent rather than 75 percent. To
provide equity for other federal employees, we also recommend
establishing a lower conversion rate for beneficiaries beyond
retirement age, which would more closely mirror OPM's
Both of these changes we propose as prospective in nature.
In addition, elements of the statute need to be simplified to
enable us to further reduce processing time. For example, the
current statute increases the compensation rate for anyone with
a dependent from the standard 66 and two-thirds wage loss rate
to 75 percent. Paying all non-retirement age beneficiaries at
70 percent would simplify the process by eliminating the
continuing need to obtain and validate documentation regarding
A single rate would be simpler, more equitable, and would
produce a significant savings to the taxpayer. This change
alone would yield a 10-year savings of over $500 million. My
testimony also outlines other important provisions that would
streamline and improve the program.
In summary, while FECA is a model workers' compensation
system and 95 years old, it has limitations that need to be
addressed. The reforms that we suggest today, they are not new.
They have been proposed by both the current and previous
administrations. They are careful. They are balanced. We
believe that they are reflective of good government, and they
will help bring the program into the 21st century.
Thank you again for the opportunity to meet with you today
to discuss FECA reform, and I will be pleased to answer any
questions as we continue on.
[The statement of Mr. Steinberg follows:]
Prepared Statement of Gary Steinberg, Acting Director,
Office of Workers' Compensation Programs, U.S. Department of Labor
Chairman Tim Walberg, Ranking Member Lynn Woolsey, and Members of
the Subcommittee: My name is Gary Steinberg, and I am the Acting
Director of the Department of Labor's (DOL) Office of Workers'
Compensation Programs (OWCP). OWCP administers a number of workers'
compensation programs, including the Federal Employees' Compensation
Act (FECA), which covers 2.7 million Federal and Postal workers and is
one of the largest self-insured workers' compensation systems in the
I appreciate the opportunity to discuss legislative reforms to FECA
that would enhance our ability to assist FECA beneficiaries to return
to work, provide a more equitable array of FECA benefits, and generally
modernize the program and update the statute. Almost 95 years ago, on
September 7, 1916, Congress enacted FECA to provide comprehensive
Federal workers' compensation coverage to all Federal employees and
their survivors for disability or death due to an employment injury or
illness. FECA's fundamental purpose is to provide compensation for wage
loss and medical care, facilitate return to work for employees who have
recovered from their injuries, and pay benefits to survivors. The faces
of FECA include the Postal worker whose mail truck is hit while
delivering mail, the Federal Bureau of Investigation (FBI) agent
injured or killed in the line of duty, the Department of Veterans'
Affairs nurse who hurts her back while lifting patients, and the
Federal employee injured in the recovery efforts in Japan. All of these
employees will receive benefits provided by this Act.
Since FECA has not been significantly amended in over 35 years,
there are areas where the statute could be improved. Thus we have
developed a number of proposals to reform and maintain FECA as the
model workers' compensation program for the twenty-first century. In
the 2012 Budget we estimated 10-year savings of around $400 million,
but we think the potential savings are likely higher. After briefly
discussing the current status of the FECA program, I am pleased to
outline possible changes to the statute for consideration.
Many of the proposals are based on the results of studies by the
program, the Government Accountability Office (GAO), the Inspectors
General, as well as discussions with stakeholder organizations over the
past 20 years. Recently, we have shared these proposed changes with
staff of this and other Congressional committees and various outside
parties such as representatives of Federal employee unions and members
of the disability community.
Benefits under the FECA are payable for both traumatic injuries
(injuries sustained during the course of a single work shift) and
occupational disease due to sustained injurious exposure in the
workplace. If OWCP's review of the evidence determines that a covered
employee has sustained a work-related medical condition, the FECA
program provides a wide variety of benefits including payment for all
reasonable and necessary medical treatment; compensation to the injured
worker to replace partial or total lost wages (paid at two-thirds of
the employees' salary or at three-fourths if there is at least one
dependent); a monetary award in cases of permanent impairment of limbs
or other parts of the body; medical and vocational rehabilitation
assistance in returning to work as necessary; and benefits to survivors
in the event of a work related death.
FECA benefits are based upon an employee's inability to earn pre-
injury wages with no time limit on wage loss benefit duration as long
as the work-related condition or disability continues; the amount of
compensation is based upon the employee's salary up to a maximum of GS-
15 Step 10. More than 70% of FECA claimants are paid at the augmented
(three-fourths) level. As workers' compensation benefits, they are tax
free; long-term benefits are escalated for inflation after the first
year of receipt.
FECA is a non adversarial system administered by OWCP. While
employing agencies play a significant role in providing information to
OWCP and assisting their employees in returning to work, the
adjudication of FECA claims is exclusively within the discretion given
to the Secretary of Labor by statute and is statutorily exempt from
court review. Claimants are provided avenues of review within OWCP
through reconsideration and hearing as well as an appellate forum, the
Employees' Compensation Appeals Board (ECAB), a quasi-judicial
appellate board within the DOL, completely independent of OWCP.
FECA benefits are paid out of the Employees' Compensation Fund and
most are charged back to the employee's agency. During the 2010
chargeback year, which ended on June 30, 2010, the Fund paid more than
$1.88 billion in wage-loss compensation, impairment, and death benefits
and another $898.1 million to cover medical and rehabilitation services
and supplies. (These totals include outlays for non-chargeable costs
for war risk hazards that total $86.2 million, primarily for overseas
Federal contractor coverage under the War Hazards Compensation Act
(WHCA). Benefits paid have remained relatively stable at these levels
for the past 10 years, with the exception of war risk hazard payments.
In addition, the administrative costs to manage the program have
consistently averaged a very modest 5% of total outlays.
Although the program is almost 95 years old, OWCP's administration
of FECA is by no means antiquated. All new claims are electronically
imaged into a sophisticated paperless claims management system. Video
and teleconferencing options are available to claimants to expedite the
OWCP appeals process. Electronic Data Interchange capabilities are
utilized by many of the program's agency partners. A secure, web-based
electronic document-filing portal is currently under development; this
new access will be deployed later this year and for the first time will
be available to all system stakeholders, including injured workers and
their physicians. This new tool will further reduce reliance on paper
documents and shrink data input and imaging costs while speeding claim
processing and reducing administrative costs.
Maintaining Program Integrity
OWCP actively manages the FECA program so that benefits are
properly paid. After a case is accepted as covered, OWCP monitors
medical treatment for consistency with the accepted condition--if more
than a very brief disability is involved, OWCP often assigns a nurse as
part of our early nurse intervention program to assist with the
worker's recovery and facilitate the return-to-work effort. If
disability is long-term, but the claimant can work in some capacity, a
vocational rehabilitation counselor may be assigned to the case.
Once a claim is accepted for ongoing, periodic payments, injured
workers are required to submit medical evidence to substantiate
continued disability (either annually or on a two or three year
schedule for those less likely to regain the ability to work). Injured
workers must cooperate with OWCP-directed medical examinations and
vocational rehabilitation, accept suitable employment if offered and
annually report earnings and employment (including volunteer work) as
well as the status of their dependents and any other government
benefits. OWCP claims staff carefully review these submissions and can
require claimants to be examined by outside medical physicians to
resolve questions on the extent of disability or appropriateness of
medical treatment such as surgery. OWCP also conducts monthly computer
matches with the Social Security Administration (SSA) to identify FECA
claimants who have died so that payments can be terminated to avoid
In addition, OWCP has conducted program evaluation studies to
identify areas for process and policy improvements. I noted earlier
some of our case processing improvements. Based on the resulting
recommendations and our claims experience, we have also improved how
the program approaches disability management and return to work. The
program's early nurse intervention and quality case management
initiatives are particularly noteworthy as the program evolves to
reflect a renewed focus on return to work We have partnered with the
Occupational Safety and Health Administration (OSHA) and our federal
agencies to improve timely filing of claims and reduce lost production
days. As result of these efforts, the average number of days lost as a
result of the most serious injuries each year has declined from 195
days in 1996 to 156 in 2010. By speeding the average time to return to
work in these cases, OWCP saves the government millions of dollars just
in the first year of the injury; this also helps to avoid long term
disability that can last for years thereafter.
A History of Performance
Under most circumstances FECA claims are submitted by employees to
their employing agency, which completes the agency information required
on the form and forwards the claim to OWCP. Over the past 5 years, an
average of 133,000 new injury and illness claims were filed annually
and processed by OWCP. The acceptance rate for new injury claims was
85%. Eighty-four percent (84%) were submitted within program timeliness
standards of 10 working days and approximately 95% were processed by
OWCP within program timeliness standards which vary depending on the
complexity of the injury. Fewer than 15,000 of the accepted claims per
year involve a significant period of disability. Eighty-five percent
(85%) of claimants return to work within the first year of injury and a
total of 89% return to work by the end of the second year. Due in part
to OWCP's efforts to return injured employees to work, less than 2% of
all new injury cases remain on the long-term compensation rolls two
years after the date of injury. Currently, approximately 45,000 injured
workers have long term ongoing disability benefits for partial or total
wage loss, which they receive every 4 weeks. Some 15,000 are 66 years
of age or older. (It should be noted however, that of this 15,000, over
7,000 have been determined to have no return-to-work potential, largely
because of the substantial nature of their disability.)
As I have discussed, OWCP has made significant administrative and
technical changes to improve the administration of FECA. These changes
were legally permissible within the existing statutory framework and
had a demonstrable effect in advancing our progress. The current FECA
reform proposal embodies certain reforms that can only be gained
through statutory amendment that transforms FECA into a model twenty-
first century workers' compensation program, increasing equity and
efficiency while reducing costs. These amendments fall within three
Return to Work and Rehabilitation
Updating Benefit Structures
Modernizing and Improving FECA
Return to Work and Rehabilitation
The proposal that we have crafted for consideration would provide
OWCP with enhanced opportunities to facilitate rehabilitation and
return-to-work while simultaneously addressing several disincentives
that may impact timely return to work by applying a new set of benefit
rates prospectively to new injuries and new claims for disability
occurring after enactment of the FECA amendments.
We propose additional statutory tools that would enhance OWCP's
ability to return injured workers to productive employment. While FECA
currently has the authority to provide vocational rehabilitation
services and to direct permanently injured employees to participate in
vocational rehabilitation, we suggest removing the permanency
limitation in the statute to make clear that such services are
available to all injured workers and that participation in such an
effort is required. It is generally accepted and consistent with our
experience that the earlier the claimant is involved in a vocational
rehabilitation and a Return-to-Work program, the greater likelihood of
a successful and sustained return to work post injury.
The proposal would amend FECA to explicitly allow for vocational
rehabilitation, where appropriate, as early as six months after injury.
It provides OWCP the authority to require injured claimants unable to
return to work within six months of their injury to participate with
OWCP in creating a Return--to-Work Plan where appropriate. The Return-
to-Work Plan would generally be implemented within a two-year period.
This provision would send a strong signal to all Federal workers,
whether injured or not, that the Federal government as a model employer
is committed to doing everything it can to return employees to work as
early as possible.
Our proposal would also amend FECA to provide permanent authority
for what we call Assisted Reemployment. Assisted Reemployment is a
subsidy designed to encourage employers to choose qualified
rehabilitated workers whom they might otherwise not hire. As disabled
Federal workers with skills transferable to jobs within the general
labor market may prove difficult to place due to economic factors,
Assisted Reemployment is designed to increase the number of disabled
employees who successfully return to the labor force by providing wage
reimbursement to potential employers. Recent DOL appropriations bills
gave OWCP the authority to provide up to three years of salary
reimbursement to private employers who provide suitable employment for
injured federal workers. Our data from our currently limited private
sector program shows that when we enter into an Assisted Reemployment
agreement with a private employer, the employee is permanently hired by
that employer at or beyond the 3 year period over 55% of the time. Of
the employees not working for the same employer, approximately half are
working with other employers. Because most Federal employees desire
continued employment with the Federal government, our proposal to
expand this program to the Federal sector would significantly increase
its appeal and effectiveness. We are working closely with OPM and our
partner agencies to actively seek re-employment opportunities for
Federal workers who become disabled as a result of work related
injuries or illnesses. These provisions would assist with that effort
and comport with and support the President's Executive Order 13548 to
increase hiring of individuals with disability in the Federal
government. Under this proposal, OWCP would reimburse in part the
salaries paid by Federal agencies that hire workers with work-related
Return to work following an injury is often a difficult, painful
process, requiring physical, mental and emotional adjustments and
accommodations. If a workers' compensation system contains
disincentives to return to work, that difficult transition back to work
will occur more slowly, or in some cases, not at all. Where the medical
evidence of ability to work is ambiguous and returning to work would
require an employee to overcome actual physical limitations, these
disincentives will exact a high price. That high price means a more
costly program, lost productivity to the employing agency, and, for the
workers themselves, disrupted lives and diminished self-esteem.
As currently structured, FECA creates direct disincentives to
return-to-work in two significant ways. The first and most far-reaching
is that while the basic rate of FECA compensation, 66\2/3\%, is
comparable to most state systems, many Federal employees receive an
augmented benefit, 75%, if they have at least one dependent. Computed
at 75% tax free, FECA benefits often exceed the employee's pre-injury
take home pay. Few state systems provide any augmentation for
dependents, and none approaches the Federal level.
Since the 75% compensation rate can result in benefits greater than
the injured worker's usual take home pay, we also suggest amending FECA
to provide that all claimants receive compensation at one uniform level
of 70%. This compensation adjustment would remove disincentive to
return to work, respond to equity concerns, and significantly simplify
administration by greatly reducing documentation requirements for
claimants and eliminating potential overpayments that can occur due to
changes in dependency status. At this level compensation would remain
quite adequate. A similar rate reduction is also proposed in death
A second significant disincentive to return to work is created by
the disparity that exists between the level of retirement benefits,
provided by the OPM, received by most Federal employees and the level
of long-term FECA benefits for retirement age FECA recipients. Under
current law, the thousands of long-term FECA beneficiaries who are over
normal retirement age have a choice between Federal retirement system
benefits and FECA benefits, but they overwhelmingly elect the latter
because FECA benefits are typically far more generous. OPM informs us
that the average Federal employee retiring optionally on an immediate
annuity under the Civil Service Retirement System will receive about
60% of their ``high-three'' average salary, most of which is taxable,
compared to a tax free 75% or 66.66% FECA benefit. The newer Federal
Employees' Retirement System is designed to provide a comparable level
of retirement replacement income from the three parts of its structure.
Because returning to work could mean giving up a FECA benefit in favor
of a lower OPM pension amount at eventual retirement, injured workers
may have an incentive to consciously or unconsciously resist
rehabilitation and instead, in certain cases, may cling to the self-
perception of being ``permanently disabled.'' In any event, the
considerable difference between FECA benefits and OPM retirement
benefits results in certain FECA claimants receiving far more
compensation in their post retirement years than if they had completed
their Federal careers and received normal retirement benefits like
their colleagues. This disparity also suggests that a statutory remedy
This proposal provides claimants with a ``Conversion Entitlement
Benefit'' upon reaching regular Social Security retirement age (and
after receiving full benefits for at least one year) that would reduce
their wage-loss benefits to 50% of their gross salary at date of injury
(with cost of living adjustments), but would still be tax free. This
benefit more closely parallels a regular retirement benefit, as opposed
to a full wage-loss benefit, so that FECA recipients are not overly
advantaged in their retirement years compared to their non-injured
counterparts on OPM retirement. An injured worker receiving this
retirement level conversion benefit would no longer be subject to
several of the sanction provisions outlined in the FECA, such as
forfeiture for failure to report earnings or the requirement to seek/
accept suitable employment or participate in vocational rehabilitation.
Even at this reduced rate, however, an injured worker would still be
required to substantiate continuing injury-related disability or face
suspension of compensation benefits.
Updating Benefit Structures
We also propose a number of changes to the current FECA benefit
structure. One relates to the schedule award provision, which is
designed to address the impact of impairment on an individual's life
function, such as the loss of vision, hearing, or a limb. Impairment is
permanent, assessed when an individual reaches maximum medical
improvement, and is based upon medical evidence that demonstrates a
percentage of loss of the affected member. Each member, extremity or
function is assigned a specific number of weeks of compensation and the
employee's salary is used to compute his or her entitlement to a
schedule award. This payment structure results in considerable
disparities in compensation: for example, a manager is paid far more
than a letter carrier for loss of a leg even though the impact on the
letter carrier may in reality be far more severe. In that instance, a
GS-15 would receive twice what a GS-7 receives for the same loss of
ability to get around, engage in recreational activities, etc., for
this permanent impairment. Paying all schedule awards at the rate of
70% of $53,630 (the equivalent of the annual base salary of a GS 11
step 3) adjusted annually for inflation would certainly be more
Similarly, allowing injured workers to receive FECA schedule award
benefits in a lump sum concurrently with FECA wage loss benefits for
total or partial disability would provide a more equitable benefits
structure for claimants. The current process is complicated and
convoluted, often leaving injured workers frustrated and confused. It
also can generate substantial unnecessary administrative burdens, as
schedule award payments cannot be paid concurrently with FECA wage-loss
benefits. To avoid the concurrent receipt prohibition some eligible
claimants may elect OPM disability or retirement benefits, which they
are allowed to receive for the duration of a schedule award. When the
schedule award expires, they may elect to return to the more
advantageous FECA wage-loss benefits. While they are collecting OPM
benefits, OWCP and employing agency efforts to assist the employee in
returning to work are stymied. In addition to switching to OPM benefits
during the period of a schedule award, claimants can also switch back
and forth between benefit programs over the life of a claim. As a
result of these overly complex provisions and benefit streams,
claimants sometimes do not return to work as early or as often as they
could. By allowing concurrent receipt of these benefits, the claimant
is timely compensated for the loss to the scheduled member and
switching back and forth between OPM and OWCP benefits for this reason
is eliminated. This allows a return-to-work or vocational
rehabilitation effort to continue uninterrupted, thereby improving the
chances of a successful return to employment.
Finally, this proposal increases benefit levels for funeral
expenses and facial disfigurement, both of which have not been
significantly updated since 1949, to bring FECA in line with increases
in other workers' compensation statutes.
Modernizing and Improving FECA
Because FECA has not been amended in over 35 years, updates are
needed to modernize and improve several provisions of the statute. One
such change was made several years ago but only applied to workers
employed by the U. S. Postal Service (USPS). In order to discourage the
filing of claims for minor injuries that resolve very quickly, state
workers' compensation programs generally impose a waiting period before
an injured worker is entitled to wage-loss compensation. Because of the
way in which the 1974 amendments to FECA adding the ``Continuation of
Pay'' provisions were drafted, the waiting period under FECA for
traumatic injuries was effectively moved after the worker has received
45 days of ``Continuation of Pay,'' thus defeating the purpose of a
waiting period. The Postal Enhancement and Accountability Act of 2006
amended the waiting period for Postal employees by placing the three-
day waiting period immediately after an employment injury; we suggest
placing the three-day waiting period immediately after an employment
injury for all covered employees.
Another longstanding concern addressed by the proposal relates to
the application of FECA subrogation provisions to claims. Workers'
compensation systems generally provide that when a work-related injury
is caused by a negligent third party the worker who seeks damages from
that third party must make an appropriate refund to the workers'
compensation system. As a result of the way in which the 1974
``Continuation of Pay'' provision was drafted, OWCP cannot include
amounts paid for Continuation of Pay in calculating the total refund to
OWCP when a recovery is received by a FECA beneficiary from a third
OWCP also seeks the authority to match Social Security wage data
with FECA files. While the SSA collects employment and wage information
for workers, OWCP presently does not have authority to match that data
to identify individuals who may be working while drawing FECA benefits.
OWCP currently is required to ask each individual recipient to sign a
voluntary release to obtain such wage information. Direct authority
would allow automated screening to ensure that claimants are not
receiving salary, pay, or remuneration prohibited by the statute or
receiving an inappropriately high level of benefits.
This proposal would also increase the incentive for employing
agencies to reduce their injury and lost time rates. Currently the USPS
and other agencies not funded by appropriations must pay their ``Fair
Share'' of OWCP administrative expenses, but agencies funded by
appropriations are not required to do so. Amending FECA to allow for
administrative expenses to be paid out of the Employees' Compensation
Fund and included in the agency chargeback bill, would increase Federal
agencies' incentive to reduce injuries and more actively manage return
to work when injuries do occur.
To improve access to medical care, we suggest a provision that
would increase the authority and use of Physicians' Assistants or Nurse
Practitioners. We suggest amending FECA to allow Physicians' Assistants
and Nurse Practitioners to certify disability during the Continuation
of Pay period so that case adjudication is not delayed and treatment
can be provided more rapidly. The provision allowing Physicians'
Assistants and Nurse Practitioners to certify disability during the
Continuation of Pay period would also reduce the burden of disability
certifications in war zone areas because access to a physician may be
even more limited in these circumstances.
To further address injuries sustained in a designated zone of armed
conflict, FECA should be amended to provide Continuation of Pay for
wage loss up to 135 days for such injuries. This increase from the
standard 45 days would allow additional flexibility for claims handling
in these challenging areas and is an outgrowth of a cooperative effort
with OPM, the Department of State and the Department of Defense to
address the needs of deployed civilian employees.
This proposal provides a fair and reasonable resolution to the
disincentives and inadequacies that have arisen within the current FECA
statute. Since any FECA reform should be prospective only, it would
apply to new injuries and new claims of disability after enactment.
Injured workers currently in receipt of disability benefits would see
no changes in their benefit level. This will allow all federal
employees and federal agencies to embrace and adopt a more pro-active
and progressive attitude about return to work and disability
employment, and avoid any unfair interruption of benefits. Even with
this prospective approach, the ten-year cost savings are estimated to
be around $400 million, or potentially even higher.
We believe that our proposals, if adopted, would allow all Federal
employees and Federal agencies to embrace and adopt a more pro-active
and progressive attitude about return to work and disability
employment, and avoid any unfair interruption of existing benefit
The FECA program is at a critical juncture. We have done our best
to keep the program current and responsive to the changing world we
live in through administrative, technological and procedural
innovations and investments. Without these statutory reforms, OWCP's
best efforts may yield some further gains. However, we cannot overcome
the fundamental disincentives in the current law and achieve the
breakthrough improvements that we know are possible within the FECA
program which will allow FECA to maintain its status as a model of
workers' compensation programs.
The federal workforce comprises dedicated, hard working women and
men that are committed to serving the public. OWCP is fully committed
to ensuring that all injured workers receive the medical care and
compensation they deserve, as well as the assistance needed to return
to work when able to do so. FECA reform will enable OWCP to achieve
those goals more effectively.
Mr. Chairman, I would be pleased to answer any questions that you
or the other members of the Committee may have.
Chairman Walberg. Thank you, Mr. Steinberg.
Now I recognize Ms. Carney for your testimony.
STATEMENT OF SUSAN CARNEY, HUMAN RELATIONS DIRECTOR, AMERICAN
POSTAL WORKERS UNION
Ms. Carney. Mr. Chairman, Madam Woolsey, and members of the
subcommittee, we appreciate the opportunity to share our views
regarding the Federal Employees' Compensation Act and its
If we are to achieve the true objective of FECA, we must
acknowledge there are various facets of the Act that need
improvement. The reform proposals being suggested address a
small portion of them. Sadly, however, there are many aspects
of this reform that will negatively affect public servants and
Injured workers do not lack motivation to return to work,
nor do they reap greater benefits. To the contrary, their
losses are monumental. They suffer losses to leave, to TSP, to
their Family Medical Leave balances. They miss out on pay
increases. They are separated for disability, lose credible
service time, and in some cases, health benefits and life
Vocational rehabilitation efforts cause a loss or reduction
to compensation even when workers are unable to obtain other
employment. This enables employers to escape a large portion of
their chargeback and motivates them to refuse or withdraw
suitable work. This has happened in cataclysmic proportions
within the Postal Service.
Thousands of injured workers ready, willing and able to
work who are injured on the job, many of whom are veterans,
have been refused work or have had their work withdrawn. FECA's
supposed to be non-adversarial, yet many workers and their
physicians would disagree.
These proposals, in many ways, will compound the adversity
forcing employees with temporary medical restrictions into voc-
rehab programs and creates additional disincentives for
employers to return employees to work, and would interfere with
employees' prescribed recovery processes, or force employees to
exceed, or feel the need to exceed, their physical capacities.
With only 2 percent of new claimants remaining on the
compensation rolls beyond 2 years, which often is a normal
recovery period for a given injury, there is little need to add
additional expensive rehabilitation costs to the program.
We are gravely concerned that re-employment efforts would
result in a reduction of compensation benefits because there is
no mechanism to reinstate compensation when subsidized
employment ends, and a reduction or a loss in compensation
would occur even when the worker is unsuccessful in procuring
one of these positions.
Since federal jobs can't be used as a basis to determine
wage earning capacities, the Division of Federal Employees'
Compensation has advised it will look to comparable private
sector positions for this purpose. As has happened in the
Postal Service, employers would be motivated to refuse their
employees rather than to restore them.
To support their continuing work-related disabilities,
compensationers are required to provide medical documentation
on a fairly regular basis in order to remain on the OWCP rolls.
Regardless of their age, they are subjected to OWCP-directed
medical examinations, and if their medical documentation
illustrates they are able to work, they too are subject to voc-
rehab programs, which means an employee is not staying on
workers' comp because they have self-certified themselves to be
It is a flawed comparison to measure annuitants who are
able to achieve a 30-year career and obtain a true high three
against compensationers whose wage loss is not augmented with
employer pay increases. Fifty-six percent of a high versus 50
percent of a low--employees who are the greater majority are
barred from building their retirement savings. Compensationers
cannot contribute to social security and cannot receive credit
for substantial earnings. Unlike their coworker annuitants,
compensationers can't supplement their income if they are
Under these circumstances, any reduction would be an unfair
reduction and discriminatory. Of all of the proposed changes,
this is one of our top priorities. Changing wage loss
compensation to 70 percent in our opinion lacks equity. Wage
earners with dependents net more than single earners. Wage
earners are able to recoup tax withholdings by filing annual
tax returns. Compensationers cannot.
APWU is opposed to any change that would burden families or
penalize workers because they are married or have children.
Shrouding harmful changes as modernization, return to work and
administration simplification is simply and, frankly,
We have enumerated our additional concerns in our written
testimony and have provided for your review viable reasonable
alternatives which are conducive to the President's executive
order, improving workplace safety, restoring injured workers to
their place of employment, and significantly reducing costs.
Although we are disappointed with the Offices recent
actions, most specifically its apparent desire to appease
agencies while stripping workers of benefits as demonstrated
through these proposals and its recent proposed rule changes,
APWU still believes the Department of Labor remains the best
means available to handle the claims process for all federal
and postal workers; although, there is vast room for
We would implore the committee to carefully consider our
recommendations and exhaust all options and avenues to avoid
bringing harm to injured workers and their families. We further
recommend taking legislative measures to prevent the Office
from making rule changes without legislative review.
In closing, as we examine our options, we should be mindful
not to regress, but progress. Before we consider passing
legislative changes, we must ensure they are meaningful changes
and examine how the consequences of our actions will impact
workers and their families.
Thank you, and I am available for questions to the
[The statement of Ms. Carney follows:]
Prepared Statement of Sue Carney, National Human Relations Director,
American Postal Workers Union (AFL-CIO)
Mr. Chairman and Members of the Subcommittee, my name is Sue
Carney, and I am the National Human Relations Director for the American
Postal Workers Union, AFL-CIO. The American Postal Workers Union is the
world's largest postal union, representing more than 220,000 postal
employees in the clerk, maintenance, and motor vehicle divisions and in
support services; 50, 000 of which are veterans. We are employed in
approximately 32,000 sites throughout the country, providing a public
service in every city, town and community in our nation.
Workplace injuries, illnesses and deaths negatively impact a
significant number of postal employees so we appreciate the opportunity
to share our views regarding the Federal Employees Compensation Act
(FECA) and the Department of Labor's proposed Federal Injured Employees
Re-employment Act (FIERA). We believe various aspects of FECA and
FIERA, if adopted as written, are disparaging and will negatively
affect public servants and their families.
Furthermore, we would like to add that during a DOL briefing, the
unions were adamantly advised that our concerns and objections would
not be considered. Seemingly DOL used the occasion to gauge our
response, rather than consider the validity of our concerns,
consequently amending some of their ``marketing strategies'' to make
the proposal appear more equitable. Additionally, they claim their
reform proposals will ``produce potential cost savings of approximately
$400 million over a 10-year period for the American taxpayer.'' To our
understanding the Office has not shared how it derived this figure, nor
produced documentation to support it. It's noteworthy to point out that
not all of the costs related to workplace injuries are borne by
taxpayers. Also significant, wage loss compensation and death benefit
costs have remained stable since 2001; however war risk hazard payments
and escalating costs for medical and rehabilitation services and
supplies brought a combined $367.3 million increase to the program.\1\
It's our understanding that this figure includes all OWCP directed
\1\ War risk hazard payment $86.2 million(WHCA); increase cost for
medical services $281.1 million
The FECA represents a longstanding covenant that our government
made with federal workers. Each side gave up something to make it
equitable and fair to both parties. Its primary purpose is to shield
injured federal employees and their families from loss while limiting
the employers' liabilities. ``The employer relinquished the defenses
enjoyed under the common law, but this loss was offset by a known level
of liability for work-place injuries and deaths. The employee gave up
the opportunity for large settlements provided under the common law,
but receives the advantage of prompt payment of compensation and
medical bills. These tradeoffs make the federal workers' compensation
system fair and equitable to both parties. However, where either party
does not receive the benefits of this covenant, the system becomes
unacceptable. When FECA was amended in 1974, Congress stated it is
essential that injured or disabled employees of all covered departments
and agencies, including those of the United States Postal Service, be
treated in a fair and equitable manner. The Federal Government should
strive to attain the position of being a model employer''.\2\
\2\ Excerpt from Joseph Perez's statement when appearing before The
House Government Reform and Oversight Committee Government Management,
Information and Technology Subcommittee on July 6, 1998. Perez is a
former OWCP DFEC Claims Examiner and currently practices law.
As we begin, it is important to point out that postal and federal
workers are injured on the job because of the circumstances they
encounter in performing a public service. These employees are victims
of traumatic injuries such as slips and falls, muscle tears and
herniated disc injuries. They are victims of poor ergonomic working
conditions, like those that cause repetitive stress disease, making it
difficult to perform simple tasks that involve grasping, holding and
reaching. They suffer motor vehicle accidents, sustain injuries caused
by faulty equipment and are innocent victims of unforeseeable, heinous
crimes. Workplace injuries and diseases change lives; in many cases
forever. No one ever goes to work wanting it to be the day they are
injured or the day they will not return home to their family.
Injured workers do not reap greater benefits, nor do they lack
motivation to return to work when capable, as some have wrongfully
implied. In addition to the physical, mental and emotional pain that
workplace injuries bring, it is important to understand the losses
compensationers presently suffer before we consider asking more of
these workers. They do not earn annual or sick leave. They are not able
to contribute to the Thrift Savings Plan nor can they receive matching
funds; this, in and of itself, causes a substantial loss for injured
federal workers.\3\ Their compensation rate remains locked at their
date of injury (or first disability) pay rate. These employees do not
receive the ``employer pay increases'' they would otherwise be entitled
to had it not been for their injury; only a COLA based on the Consumer
Price Index (CPI), which has averaged just 2.1% annually over the last
decade. Their lost workdays erode their Family Medical Leave balance,
and they are often separated because of their disabilities. If
separated prior to achieving the retention of health benefits and life
insurance, these benefits are lost. When placed in the OWCP's
vocational rehabilitation program they can expect to have their wage
loss compensation reduced whether they are successful in obtaining
employment or not.\4\ In our opinion, these Division of Federal
Employees Compensation (DFEC) procedures motivate and enable employers
to refuse or withdrawal medically suitable work in order to escape a
large portion of their chargeback liabilities; leaving injured workers
with a significantly reduced or eliminated source of income.
\3\ The TSP Calculator illustrates that an employee who is earning
$40,000 annually, contributing 10% and receiving the employer's maximum
5% contribution over the span of a 30 year career, and who is earning
an average of 5% interest is estimated to realize more than$416,000
towards his/her retirement savings
\4\ Division of Federal Employees Compensation Procedure Manual
Part 2 Chapter 0814 Sections 7 and 8. These actions are known as loss
wage earning capacity (LWEC) determinations. In basic terms, a LWEC is
a comparison between wages of actual or potential earnings against
wages at the time of injury. The difference is what the claimant is
entitled to receive in wage loss compensation. For example, a worker
was making $20 hr when injured. They normally would receive $15 in WLC
if they have dependents, but if the Office finds a potential job that
pays $18 hourly, the employee is then only entitled to receive 75% of
the difference, which in this scenario would be $1.50 hourly, even when
the employee was an unsuccessful applicant. And if the employee
procured the job but subsequently the job was withdrawn, the employee
would still only be entitled to $1.50 per hour in WLC.
FECA is supposed to be a non-adversarial, yet many workers and
their physicians would disagree. In addition to the losses that were
previously presented, let me share just a few examples of the
adversarial scrutiny they are often subjected to. Physicians are
frustrated. OWCP requires an extraordinary amount of paperwork from
them and pays poorly for medical services; just 5% over the Medicare
fee schedule. It is not enough for treating physicians to give their
expert-medical opinion, confirming that a condition is work-related
based on their examinations, testing and findings; their medical
narratives are often rejected by claims examiners who have no medical
background stating the doctor's opinion is not good enough because the
doctor failed to share his or her reasoning. Prescribed medical
treatment is often delayed or denied. In recent testimony presented by
OWCP, the Acting Director stated ``overcoming actual physical
limitations exact a high price'', which ``means a more costly
program''. Taken in context, he seemed to imply that the Program will
forgo the expense of medical treatment if it won't clearly result in a
Additionally, claimants are subjected to second opinions, and
independent medical examinations, rather than trusting the opinion of
the claimant's treating physician who understands the extent of the
disability and is responsible for prescribing medical treatment. All of
this needlessly adds to the cost of the program. These factors have
made it difficult for claimants to find and keep doctors. When
claimants do find doctors that are willing to treat them, claimants
have been barred from using them if they are located further than 25
miles away. To the contrary, the Office regularly finds it acceptable
to send claimants more than 100 miles away for their directed exams.
DFEC also refuses to adjudicate questionable job offers for
suitability; rather a claimant is required to refuse a job offer and
risk going without income while the program takes months to make a
suitability determination. These factors, coupled with the Office's
recent and sweeping Proposed Rulemaking changes\5\ and portions of the
FIERA, all bring additional favor to employing agencies; cause
unnecessary harm, in some cases irreparable harm, to injured workers
and their families and do little to promote the non-adversarial program
FECA is intended to be. They should not be permitted to stand.
\5\ RIN 1240-AA03
Examining FIERA Proposals
We agree measures should be taken to help all injured workers
return to suitable employment when their treating physician states that
they are physically capable; however, granting authority to place
employees with temporary medical restrictions into OWCP's vocational
rehabilitation program is an objectionable approach. It would serve as
further disincentive to employers who believe workers with disabilities
are crippling their production. Currently, only employees with
permanent medical restrictions can be voc-rehabbed. It's been our
experience that employers regularly refuse work to these employees
because they can escape chargeback through OWCP's vocational
rehabilitation program due to loss wage earning capacity
determinations. Comparatively, employers are more compelled to return
employees with temporary restrictions to employment because they cannot
be voc-rehabbed. In addition, premature vocational rehabilitation could
interfere with the employees' prescribed recovery process or force
employees to exceed their physical capacities. Recently, a Jacksonville
OWCP District Office rehab counselor required a worker, who was only
capable of working four hours a day, to interview for fifty jobs by the
end of the week.
Additionally, the Office has not disclosed the specifics of its new
Return-To-Work Plan for employees who are physically unable to be voc-
rehabbed, nor has it shared if the employee's treating physician will
be partnered into the process. According to figures provided by OWCP,
only a mere 2% of all new injury claims remain on the long-term
compensation rolls for more than two years. This demonstrates there is
little need to compound the Program with additional rehabilitation
To accomplish the goal of returning injured workers more readily to
employment, we recommend that OWCP be more prompt in authorizing all
recommended medical treatment, including physical therapy and surgeries
which are often denied or delayed for extended periods of time.
Assisted Reemployment Program
The APWU can appreciate the Office's efforts to subsidize federal
employment opportunities where suitable work does not actually exist
within the worker's own employing agency; however, we are gravely
concerned that such efforts would result in a reduction of compensation
benefits. Again, the problem lies within the Office's LWEC procedures.
DFEC procedure permits a reduction to wage loss compensation based on
actual earnings. This alone is not objectionable, but, when the
subsidized employment ends and residual disabilities remain there is no
mechanism to reinstate the compensation that was eliminated. Another
DFEC procedure permits LWECs based on constructed positions.
Essentially, this permits a reduction in compensation even when the
worker is unsuccessful in procuring a position. How is this fair and
We recognize that federal work cannot be used as a basis for making
LWEC determinations, but the reality is, DFEC has advised it will look
to comparable private sector positions to LWEC these employees. The
Office has offered its Private-Sector Assisted Reemployment Program as
an indicator of potential success for its Federal Assisted Reemployment
Program. Interestingly, the Office has not disclosed how many private-
sector program candidates they successfully placed in the program, nor
has it advised how many LWEC's were issued as a result of the program,
but we do know, based on figures provided by OWCP, that 45% of the
employees who secured private--sector subsidized employment were not
hired at or beyond the 3 year agreement period; consequently leaving
many injured workers and their families at a deficit.
We recommend employers be required to provide compelling evidence
when they assert that do not have medically suitable work for partially
recovered employees and prove that they have taken all mandated
measures to make reasonable accommodations for their disabled workers,
before these workers are sent looking for work with other employers. In
our opinion, the ``Federal'' Assisted Reemployment Program would only
be favorable if changes were made to reinstate lost compensation when
employment stops and if constructed LWECs were eliminated. These
actions would aid in facilitating employer cooperation, they are
conducive to the President's Executive Order 13548, and would compel
employers to retain their injured employees. On the surface, this
proposal with all of its employer incentives could appear to inspire
employers to hire injured workers; however, when you examine the
existing procedures it would trigger, failure to incorporate our
recommended changes creates the potential to bring irreparable harm to
Conversion to Reduced Benefits for Total and Partial
Disability at Retirement Age
To put matters into proper perspective, we should point out that
regulations and procedures are so stringent it is virtually impossible
to ``milk'' the system as is often implied. This is evidenced in OIG's
recent Semiannual Report to Congress where only twenty-three
convictions for medical provider and claimant fraud were reported.\6\
Compensationers are required to provide medical documentation on a
fairly regular basis to support their disabilities in order to remain
on the OWCP rolls. Compensationers aren't permitted to self-certify so
it is meaningless for anyone to assert that injured workers may have an
incentive ``to cling to the self-perception of being permanently
disabled.'' Even if they had that perception, it wouldn't be enough to
keep them on the rolls. Furthermore, compensationers are regularly
subjected to OWCP directed second opinion and independent medical
examinations. Additionally, there is the existing and unforgiving OWCP
Vocational Rehabilitation Program, so we must presume that many of the
long-term compensationers are permanently and totally disabled;
otherwise regardless of age, they would have been placed in OWCP's
Vocational Rehabilitation Program to seek alternate employment.
\6\ April 1--September 30, 2010
It is wrong to infer that OWCP is a lucrative retirement program
marked by disincentives that preclude employees from returning-to-work,
as some have stated. It is also misleading and inequitable to compare
annuitants who are able to achieve a 30 year career and obtain a true
high three to compensationers who stop earning creditable service when
they are separated for disability.\7\ Compensationers do not receive
the same salary increases their uninjured coworkers do. As we
previously mentioned, their compensation is locked at their date of
injury pay rate. It is disingenuous to cite CSRS as comparable. The
federal retirement system converted to FERS in 1983. Since that was 28
years ago, and since FIERA is supposed to be prospective, the greatest
majority of workers will fall under FERS. In either case,
compensationers are not able to TSP, and are ineligible to receive
matching contributions. Compensationers cannot contribute to Social
Security and cannot receive credit for substantial earnings. Unlike
their uninjured coworkers who can work after retirement to supplement
their income, totally disabled compensationers are incapable of
performing any work. The loss injured workers sustain by comparison is
monumental. To reduce their compensation to 50% at a pre-selected and
arbitrary age on the basis that CSRS annuitants receive a slightly
higher but taxable percentage than that which is being proposed, is
unfounded. To assume any age a ``normal'' retirement age would be
unjust, age discriminatory and presumptive. To the contrary, the Bureau
of Labor Statistics reports more senior employees are opting to work
well into their golden years to stay active and because they cannot
afford to retire.\8\ Do we really want to penalize seniors with work-
related medical restrictions because of their age?
\7\ Employers are permitted and generally do separate employees who
are collecting wage loss compensation for one continuous year.
\8\ The Bureau of Labor Statistics indicates that as of 2007, 56.3%
of workers age 65 and older have opted for fulltime employment over
part-time employment. That employment of workers ages 65 and over has
increased 101 % between 1977 and 2007: men rose by 75%; women climbed
by 147%; while workers 75 and over had the most dramatic gain,
increasing by 172%. There is also an apparent failure to acknowledge
that projected growth in the labor force for workers between the ages
of 65 and 74 is predicted to soar by 83.4 percent between 2006 and
2016. The number of workers age 55-64 is expected to climb by 36.5
percent. By 2016, workers age 65 and over are expected nearly double
its participation in the total labor force from that of 2006.
We would be remiss in assuming that our senior compensationers
would have retired had they not been injured. We have to presume, based
on existing OWCP procedures, that these employees are incapable of
working otherwise OWCP would be derelict in performing its duties. For
those who have temporary medical restrictions, it's important that we
recognize they may be capable of working in the future once OWCP
approves all prescribed treatment and the employee is given appropriate
recovery time consistent with the nature of their injury. It would be
punitive to reduce their wage loss compensation based on age and the
time spent on the rolls. Recovery for extensive injuries can often take
longer than a year.
Several measures can be taken to make FECA more fair and equitable.
Laws could be changed to allow TSP withholdings and matching
contributions; or a retirement fund, comparable to TSP could be created
for compensationers that would permit employee withholdings and mandate
employer contributions. Compensationers could be afforded the option to
elect retirement based on an estimation of what their high-three would
have been had they been able to continue their federal career. As it
currently stands, employing agencies are the only benefactor.
Currently workers with dependents receive 75% of their pay, while
workers without dependents receive 66\2/3\%. DOL originally offered its
proposal to convert all compensationers to 70% on the premise that
workers with dependents do not earn more than those without. They also
state the change would ease entitlement calculations for its claims
examiners. Although it is true that workers with dependents do not earn
more, tax deductions for these workers are less. This creates a larger
net check to better support their families; workers without dependents
net less. As to DOL's newer argument that FECA benefits frequently
exceed the employee's pre-injury tax-home pay; there is no equity in
being locked in at a rate that does not allow your usual pay increases.
Additionally, uninjured coworkers are able to recoup tax withholdings
by filing annual tax returns to add to their income; compensationers
cannot. It is a ridiculous notion that claims examiners are being
challenged by wage loss calculations with the technology that is
available. The installation of a computer program or the use of a
calculator would resolve the nuisance without going to the extreme of
reducing benefits of worker families. APWU is opposed to any change
that would burden families, or penalize workers because they are
married and /or have children.
Our primary objection to this proposal is based upon the change in
pay rate percentages. It is our opinion that claimants should continue
to receive their benefits based on their dependent status (75%
dependents, 66\2/3\% no dependents) for reasons we offered under
augmentation. Moreover, we object to the GS 11 Step 3 rate ($53,
639.00) being used to calculate the value of scheduled awards.
Historically, the employee's actual pay rate, at time of injury or
first disability, whichever is greater, has been used to calculate
scheduled awards. Today, this change would result in an increase for
some claimants but a decrease for others. In the future however, it is
likely that the GS-11 Step 3 rate would be even less reflective of the
actual pay rates for some workers. Coupled with the DOL's recent
adoption of the AMA Guide Sixth Edition, which significantly reduces
impairment ratings and in turn considerably reduces the value of
scheduled awards, the utilization of the GS 11 Step 3 rate would be a
double-blow to compensationers who suffer a permanent loss of use.
In order to be equitable and fair the APWU recommends that
scheduled awards remain based on the employee's pay rate. We strongly
urge the DOL to convert back to using the AMA Guide Fifth Edition, in
order to facilitate a more accurate means to rate impairments. There
are no regulations that require DOL to use the latest edition of the
AMA. In fact, AMA Guides Task Force Member, Matthew Dake, reports the
AMA Sixth Edition is a flawed process that produces flawed results.
Our objection to this proposal is based upon the change in pay rate
percentages. It is our opinion that survivors should continue to
receive their benefits based on the historic compensatory rate of 75%.
A reduction does little more than swipe income from the spouses and
children of federal workers who died providing a public service to our
Definition of New Claim for Disability
APWU has strong objections to this proposal. This is a veiled
attempt to corral all compensationers, even those with existing
approved claims into the FIERA. Passage would gather individuals
submitting short-lived disability claims caused by a need to recover
from physical therapy, spinal injection, surgery or other intermittent
medical treatment. It would net claimants that experience a spontaneous
worsening of an already accepted medical condition, and would also
capture claimants who have medically suitable job offers withdrawn by
employers, as is happening within the Postal Service in cataclysmic
proportion. This is perhaps the slyest of all the DOL proposals. The
DOL leaves many with the impression that FIERA is prospective as it
will only affect individuals with ``new'' claims, but in reality DOL is
attempting to change the understood definition of what is ``new''.
Passage of this proposal would afford employing agencies even greater
favor by burdening a significantly greater number of injured workers
and their families. All Compensation Act submissions require
adjudication but traditionally only two are considered new claims. The
definition of a new claim should remain limited to traumatic injuries
and occupational disease.
This update is long overdue; however APWU would suggest the benefit
be more reflective of actual final expenses. According to the National
Funeral Directors Association, the average cost in 2009 was $7,755.00.
Computation of Pay
Workplace injuries are not supposed to cause loss to workers.
Therefore, compensation is purposeful in including all of the pay
factors that an employee would have been entitled to had they not been
injured. Traditionally, compensation is based on an employee's salary,
including night differential, Sunday premium pay and holiday pay, and
for some workers includes overtime. Quite simply, APWU objects to
compensation being paid at any rate other than the employee's actual
pay rate at time of injury or first disability, inclusive of all usual
entitlements to Sunday premium, night differential, holiday pay and
where appropriate overtime pay. It should not be based or capped on an
arbitrarily selected GS rating, which would create a pay increase for
some employees and a decrease for others. It is neither fair nor
equitable to generate savings for employers off the backs of injured
workers. Furthermore, we will restate that it is a ridiculous notion
that claims examiners are being challenged by wage loss calculations
with the technology that is available.
Continuation of Pay, its very spirit is stated in its name. It is
in place to ensure employees and their families have an income while
OWCP adjudicates their claim. Despite OWCP's testimony, it often takes
60--120 days for claims to be approved and for wage loss compensation
to begin. The APWU is opposed to federal employees being subjected to a
three-day waiting period. All workplace injuries are real; even minor
ones. This fact does not make them frivolous. Employees are subjected
to the same scrutiny and requirements for minor injuries. They still
need to meet the same five requirements to achieve claim approval, one
of which includes a medical narrative with medical reasoning. A three
day waiting period has been unjustly imposed upon Postal Workers in
order to save money for the employer. The same should not be imposed
upon federal workers. APWU would request the three day waiting period
be removed from COP for postal workers. This action would satisfy the
stated goal of uniformity and enable COP to fulfill its intended
Sanction for Non-Cooperation with Nurses
To impose sanctions for non-cooperation with nurses means to
eliminate eligibility for wage loss compensation and scheduled awards.
The nurse intervention program is already fraught with overzealous
nurses who attempt to impede or redirect the prescribed medical
treatment of the claimant's treating physician, and who impose
themselves in private examinations and doctor patient discussions. APWU
is opposed to giving these nurses the authority to have sanctions
initiated without first giving claimants access to due process.
Compensation for Foreign Nationals
Upgrades to this provision are long overdue. However, since these
foreign nationals are performing a public service for our country, APWU
believes they should be compensated using the same percentage ratings
that apply to our claimants (75% dependents, 66\2/3\% no dependents).
Although we are very disappointed with portions of FECA, many of
the FIERA proposals, and some of the Office's action, we still believe
the Department of Labor is the best means available to handle the
claims process for all federal and postal workers. APWU feels strongly
that the Federal Workers Compensation Program (OWCP DFEC) should
continue to strive to be a model program, not work to be comparable to
insufficient state programs. To help OWCP meet its burden, it is our
opinion that more claims examiners are needed. To eliminate some of the
erratic decisions claimants are receiving all claims examiners should
be required to receive, on a regular basis, more comprehensive training
regarding regulations, procedures and precedent setting Employees
Compensation Appeals Board decisions.
We also believe efforts should be made to recreate the non-
adversarial atmosphere that the Program is intended to be. To help
accomplish this we recommend more substantive outreach to employee
representatives and more meaningful technical assistance to treating
physicians and claimants who are often confused by the processes.
Efforts should be made to make the Program more palatable for doctors.
Many forgo treating claimants because of the extraordinary
reporting requirements and low reimbursement rate for services. It is
our opinion that OWCP should be granted moderate enforcement authority
to compel employers, who have been skirting return-to-work obligations
and other responsibilities to comply. We would also implore the
Committee to work to create more meaningful safety and health mandates
to protect workers, and provide better mechanisms to enforce them.
These initiatives alone could reduce the overall cost of workplace
injuries and disease.
Bending policy and recreating procedures to favor agencies do
little to maintain a fair and equitable atmosphere. Shrouding them as
``modernization, return-to-work and administration simplification'' is
disingenuous. As we examine the history presented by the Congressional
Research Service, we would request that we be mindful not to regress
but rather progress. Before we consider passing legislative changes, we
must ensure they are meaningful changes and examine how the
consequences of our actions will impact workers and their families.
We thank you for your time and consideration regarding this
paramount issue. I am available to answer any questions you may have to
further clarify your understanding of the compensation processes and of
Chairman Walberg. Thank you, Ms. Carney.
I recognize Mr. Lewis for your testimony. Thank you.
STATEMENT OF ELLIOT P. LEWIS, ASSISTANT INSPECTOR GENERAL FOR
AUDIT, U.S. DEPARTMENT OF LABOR'S OFFICE OF THE INSPECTOR
Mr. Lewis. Good morning, Mr. Chairman, and members of the
subcommittee. Thank you for inviting me to testify on the work
of the Department of Labor Office of Inspector General
regarding the FECA program.
Over the years, the OIG has conducted numerous audits and
investigations related to the FECA program. Our audits have
identified opportunities for program administration
improvements related to eligibility, determination of re-
employment status and customer service.
Moreover, our investigations have focused on FECA claimants
who work while continuing to receive benefits and all medical
or other service providers who bill the program for services
As a result of our work and observations, for more than a
decade, the OIG has been recommending changes to strengthen the
FECA program with respect to the 3-day waiting period, benefit
payments beyond the federal or social security retirement age,
and access to federal data basis to aid in fraud detection.
The OIG has recommended that the benefit structure be
examined to determine whether a change in benefit rate should
occur at some point at or near the normal federal or social
security retirement age. FECA program benefits currently do not
change once a beneficiary reaches the federal or social
security retirement age.
While the overwhelming majority of beneficiaries return to
work within the first couple of years of their injury, a small
percentage remain on FECA for life. According to OWCP, tax-free
FECA benefits, which are set at 66 and two-thirds percent or 75
percent, are typically more generous in federal retirement.
We are aware the administration is considering a proposal
to reduce tax-free FECA wage loss benefits to 50 percent at the
normal social security retirement age. As the department begins
to consider changes, careful consideration is needed to ensure
that the percent of benefits that may ultimately be established
will have the desired effect, while ensuring fairness to
injured workers, especially those who will never be able to
return to work.
We have also recommended that the department be granted
statutory access to social security wage information in a
national directory of new hires. Information from these wage
and employment data bases would enable the department to
identify FECA beneficiaries who are working while receiving
wage loss benefits.
In addition to our recommendations, Mr. Chairman, there are
a couple of related issues under review by the administration
that are of interest given OIG's prior work. The department is
considering a proposal to set a 70 percent level of benefits
for all claimants regardless of whether they have dependents.
The department indicates that this change will reduce over
payments and documentation requirements. While we defer to OWCP
as to the benefits structure level and what it should be, it is
important to note that our prior audit work found that
obtaining documentation on dependents has been a challenge for
For example, in 13 percent of FECA claims we reviewed
during a 2007 audit, we found that compensation payments were
continued even though claimants had provided--had not provided
required evidence of dependent's continued eligibility. We also
found that compensation payments had not been reduced for
claimants who had provided evidence indicating a reduction was
Therefore, as reforms are considered, it is important to
examine the challenges posed by dependent eligibility
documentation requirements given that FECA's a wage loss
compensation program. The department is also planning
improvements in its return-to-work process, another area which
we have previously identified weaknesses.
In 2009, we looked at FECA's claimants on the period roll
whose re-employment or wage-earning capacity had not yet been
determined. In other words, these claimants were receiving
regular monthly wage loss compensation but OWCP had not
determined whether these claimants could return to work in some
At the time of our audit, their re-employment status had
not been determined for more than 20,000 claimants, and almost
3,000 had been in the temporary status for 15 years or longer.
Thank you for the opportunity to testify on our work. I
would be pleased to answer any questions that you or members of
the subcommittee may have.
[The statement of Mr. Lewis follows:]
Prepared Statement of Elliot P. Lewis, Assistant Inspector General for
Audit, Office of Inspector General, U.S. Department of Labor
Good morning, Mr. Chairman and Members of the Subcommittee. Thank
you for inviting me to testify on the work of the Office of Inspector
General (OIG), U.S. Department of Labor (DOL), in the Federal
Employees' Compensation Act (FECA) program. My name is Elliot Lewis,
and I am the Assistant Inspector General for Audit in the OIG. Today I
will discuss the OIG's recommendations for improvement in this
important program. As you know, the OIG is an independent agency within
the Department of Labor, and the views expressed in my testimony are
based upon the independent observations and recommendations of the OIG,
and are not intended to reflect the Department's position.
DOL administers several programs and statutes designed to provide
and protect the benefits of workers. FECA is a comprehensive workers'
compensation law covering some three million Federal and Postal workers
around the world with work-related injuries or occupational diseases.
FECA benefits include payment of medical expenses and compensation for
lost wages. In the case of work-related deaths, survivor benefits are
payable to family members.
The Office of Workers' Compensation Programs (OWCP) is responsible
for administering the FECA program and ensuring that it serves injured
workers in an efficient and effective manner. It is important to note
that FECA benefits constitute Federal workers' sole remedy for a work-
related injury or death, as employees or surviving dependents are not
entitled to sue the government to recover damages. Therefore, it is
incumbent on OWCP to promptly adjudicate claims, pay medical bills and
compensation in accepted cases, and do everything possible to help
employees return to work. It is also important to note that the
overwhelming majority of injured workers return to work within the
first year of injury.
FECA benefits are paid from the Employees' Compensation Fund, which
is principally funded through chargebacks to the Federal agency that
employs the injured or ill worker. Therefore, the FECA program affects
the budgets of all Federal agencies and quasi-Federal agencies such as
the United States Postal Service. For the Chargeback Year ending June
30, 2010, the FECA program provided almost $2.8 billion in compensation
to approximately 250,000 workers and survivors for work-related
injuries or illnesses.
Over the years, the OIG has conducted numerous audits and
investigations related to the FECA program. Our audits have identified
opportunities for program administration improvements related to
eligibility, determination of reemployment status, and customer
service. Moreover, our investigations have focused on FECA claimants
who work while continuing to receive benefits, and on medical or other
service providers who bill the program for services not rendered. We
also process hundreds of complaints through our hotline from
dissatisfied claimants. These complaints generally involve
disagreements with OWCP's adjudication of claims. As a result of our
work and observations, for more than a decade the OIG has been
recommending changes to strengthen the FECA program with respect to:
the 3-day waiting period, benefit payments beyond the Federal or Social
Security retirement age, and access to Federal databases to aid in
Recommendations to Improve the FECA Program
Changing the 3-Day Waiting Period
FECA currently has a provision that allows employees who sustain
work-related injuries to receive continuation of pay (COP) for a period
not to exceed 45 calendar days. The intent of this provision is to
eliminate interruption of the employee's income while OWCP is
processing the claim. The FECA legislation provides for a 3-day waiting
period which is intended to discourage frivolous claims. However, as
currently written, the legislation places the 3-day waiting period at
the end of the 45-day COP period; therefore negating the purpose of the
3-day waiting period. In 2006, the legislation was amended to require
that the 3-day waiting period for Postal workers precede the 45-day
continuation of pay period. We continue to recommend moving the 3-day
waiting period to the beginning of the 45-day continuation of pay
period for all injured Federal employees.
Reviewing the Benefit Structure for Retirement Age
As currently designed, FECA program benefits do not change once a
beneficiary reaches the Federal or Social Security retirement age.
While the overwhelming majority of FECA beneficiaries return to work
within the first couple of years of their injury, a small percentage
remain on FECA for life. According to OWCP, tax-free FECA benefits
which are set at 66\2/3\ percent (or 75 percent if the claimant has
dependents) are typically more generous than Federal retirement. The
OIG recommends that this benefit structure be examined to determine
whether a change in benefit rate(s) should occur at some point at or
near the normal Federal or Social Security retirement age.
We are aware that the Administration is considering a proposal to
reduce tax-free FECA wage loss benefits to 50 percent at the normal
Social Security retirement age. As the Department begins to consider a
change to the benefit structure, careful consideration is needed to
ensure that the percent of benefits ultimately established will have
the desired effect while ensuring fairness to injured workers,
especially those who have been determined to be permanently impaired
and thus unable to return to work.
Accessing Earnings Information
Our third recommendation has been for the Department to be granted
statutory authority to access Social Security wage information and the
National Directory of New Hires (New Hire Directory), which is
maintained by the Department of Health and Human Services. Information
from these wage and employment databases would enable the Department of
Labor to identify FECA beneficiaries who are working while receiving
wage loss benefits. If it is determined that a claimant has unreported
outside employment or income, any inappropriately paid benefits can be
reduced or withdrawn, and criminal remedies may be pursued. Currently,
the Department can only access Social Security wage information if the
claimant gives it permission to do so. Obviously Mr. Chairman,
claimants who are defrauding the FECA program are unlikely to willingly
grant OWCP or the OIG the authority to access information about their
earnings. Likewise, access to the New Hire Directory, which contains
employer-reported information on newly hired individuals, is not
available to OWCP or the OIG. Congressional action would be required
for OWCP and OIG to have access to Social Security data and the New
As previously indicated, Mr. Chairman, the OIG investigates FECA
claimant fraud, as well as fraud committed against the program by
medical and other service providers. Whether it is a mechanic for the
Navy who receives total disability benefits while operating his own
business, or a Smithsonian security guard who fails to disclose his
employment with a private security firm, our case work demonstrates the
need for OWCP and OIG to have access to these databases.
In addition to our recommendations, Mr. Chairman, there are a
couple of related issues under review by the Administration that are of
interest to the OIG based on our prior audit work. As you know,
currently OWCP requires that claimants receiving payments at the 75
percent rate periodically verify their marital status and the
eligibility of dependent children. Beneficiaries in death cases are
required to annually submit a report regarding their marital status and
continuing eligibility of dependent children. A beneficiary is required
to submit proof of continuing eligibility for children over the age of
18 who are students or who are physically or mentally incapable of self
support. We are aware that the Department is considering a proposal to
set a 70 percent level of benefits for all claimants regardless of
whether they have dependents. The Department indicates that this change
will reduce overpayments and documentation requirements. While we defer
to OWCP as to what the benefit structure and level should be, it is
important to note that prior audit work found that obtaining
documentation on dependents has been a challenge for OWCP. For example,
in 13 percent of FECA claims we reviewed during our 2007 audit of
OWCP's largest FECA district office in Jacksonville, Florida, we found
that compensation payments were continued even though claimants had not
provided required evidence of their continuing eligibility. We also
found that compensation payments had not been reduced on claims for
which claimants had provided evidence indicating a reduction was
warranted. Therefore, as reforms are considered, it is important to
examine the challenges posed by dependent eligibility documentation
requirements given that FECA is a wage-loss compensation program.
The Department is also planning improvements in its return-to-work
processes and incentives that do not require legislative action. This
is another area for which we believe improvements are needed based on
our prior-audit findings. Specifically, in 2009 we looked at FECA
claimants whose reemployment or wage-earning capacity had not yet been
determined. The audit, which examined cases from OWCP's Jacksonville
and New York District Offices, found that in 11 percent of the cases
reviewed, claims examiners did not perform critical required activities
such as referring claimants for nursing and vocational rehabilitation
to determine if claimants could return to work in some capacity. We
also found lax monitoring of cases. For example, in 34 percent of cases
reviewed, claims examiners did not take timely actions on referrals for
second opinions or independent medical examinations, and/or had not
acted on completed medical examinations. Furthermore, we noted at the
time that the reemployment status had not been determined for 37
percent of claimants (20,236 out of 54,674) and that 2,860 claimants
had been in this temporary status for 15 years or longer.
In conclusion, Mr. Chairman, our work and recommendations have
focused on improving the operation and integrity of the program. Our
work continues to this end. For example, we are currently looking at
the Department's efforts to comply with recently-enacted improper
payments legislation, as well as whether OWCP has adequate controls to
prevent improper durable medical equipment and medical travel payments.
Mr. Chairman, this concludes my written statement; I would be pleased
to answer any questions you or the other members of the Subcommittee
Chairman Walberg. Thank you, Mr. Lewis.
And we thank the full panel.
And, members of the subcommittee, I think we have a high
standard to reach up to in the brevity efficiency of their
testimonies in keeping, generally, to the time limit and
Let me begin the questioning. Asking Mr. Steinberg, one of
the challenges associated with modernizing workers'
compensation is transitioning individuals from collecting FECA
benefits to retirement benefits.
Many long-term beneficiaries may find themselves in
situations where they have substantial gaps in contributions to
retirement plans. Has there been any discussion on allowing
individuals receiving workers' compensation benefits to
contribute a portion of these funds to a retirement account?
Mr. Steinberg. No, sir. There have not been those
discussions. We have been in the discussions with OPM with
regards to the proposal to move individuals to the OPM
retirement program, if you will. We see complications
associated with that, both from a management as well as from an
I think it has been pointed out. One of our key tenets is
to try to ensure opportunities for return to work, and if we
are able to keep individuals on the FECA program, then even
after retirement age, we do have the opportunity to find work
positions for them and return them to work.
So, again, we have not had discussions about that type of
contribution. That is something that would be complicated and
an unfunded mandate at this point.
Chairman Walberg. Would be complicated, but if there were
provisions that--even voluntarily with the compensated
individual to be able to contribute a portion to a retirement
account and not be caught in a trap at the end of their
compensation period and in retirement years with nothing to
show for it, nothing available wouldn't that be a direction
that would be good to go?
Mr. Steinberg. That is certainly, sir, something that can
be complicated--contemplated. It is an issue that should also
be discussed with OPM, who really is the expert in terms of
retirement compensation and pensions.
Chairman Walberg. Okay. Thank you.
Mr. Lewis? In your testimony, you recommended the OWCP be
granted access to social security wage information and the
national directory for new hires. How would access to this
information benefit FECA, and is this in the Department of
Mr. Lewis. Yes, I believe it is their proposal--access to
the social security records. I am not sure that the National
Directory of New Hires is in the proposal. It would be a more
efficient way for them to focus in on claimants who may have
underreported or not reported earnings--claimants we find in
our investigations that have returned to work that they have
not reported that to OWCP. Currently, that is a self-
OWCP really has no way to verify if what the claimants are
reporting is correct. An automated match would allow them to
more efficiently focus in on the claimants that they need to
Chairman Walberg. Okay. Thank you.
Mr. Bertoni, in 1996, the GAO reported two proposals for
addressing benefit changes for current FECA beneficiaries once
they reach retirement age. How would reforms safeguard
employees' retirement? Secondly, what types of calculations and
considerations would be used to determine retirement benefits?
And then, finally, what affects would this have on
agencies' budgets in regards to paying FECA costs? I would be
glad to go through those three questions again.
Mr. Bertoni. How would reform help? The second one was?
Chairman Walberg. Reform safeguard employee's retirement.
What types of calculations and considerations would be used to
determine retirement benefits, and then, thirdly, what affects
would this have on agencies' budgets in regards to paying FECA
Mr. Bertoni. I think the short answer is, we don't know.
Based on the prior work that we did--I guess the questions that
we surfaced with that is exactly what you really want to do
when you are starting to go down the road of thinking about
We tried to tease out the issues that you need to consider
as you develop these proposals and you think about
implementation. So how would it help? I think, from just a
strictly budgetary standpoint, the agency has to look at if we
cut benefits by 50 percent, what is the upside in terms of cost
But I do believe an important issue or consideration is to
know where the inequities might occur also to assess the data,
look at where at some point who may be worse off--how big that
population is, and then it is a policy question as to what you
want to do about that.
Chairman Walberg. Thank you.
I recognize the gentlelady from California, Ranking Member
Ms. Woolsey. Thank you, Mr. Chairman.
Mr. Steinberg? Just following on the question between the
chairman and Mr. Bertoni, you and we are going to stay on, I
believe, this recommendation in your testimony that FECA
benefits are cut from 75 to 50 percent at retirement age
providing that the average worker is the comparable.
You don't address what happens to the lower income workers
under this scenario. I am wondering did you work that out? Do
you know who wins and who loses? Mr. Bertoni said they weren't
sure about that. I mean, what happens to the lower income
Mr. Steinberg. It is difficult to segregate between the
lower income worker, the average income worker, the high income
worker. What we look at is, in essence, the way that the
program is implemented and, I think, has been discussed. The
program has an annual increase. I would suggest that this year
reflects the advantage of the program, where using the CPI
index, an individual is receiving a cost of living increase,
whereas the normal federal employee is not receiving an
increase this year.
Ms. Woolsey. Well, I would like to suggest that there is
modern 21st century technology. I would think there could be a
program set up easy pie and figure out who wins and who loses
when you make a cut to that degree. I mean, that is 25 percent.
So I hope we can do that before we can buy into a program
that saves a lot of money for the federal government, but on
whose back is our question.
Mr. Steinberg. You make a very good point, and we will
research that further.
Ms. Woolsey. Thank you, very much.
Ms. Carney. The department's testimony implies that workers
have a disincentive to return to work once they are healed, and
that we should cut the replacement benefits to encourage return
One, I would like you to comment on do you see this as
being something that actually happens with the workforce? And,
two, they also have a great recommendation, I believe, but you
comment on it also, to put in place a plan to help workers re-
enter the workforce and be, you know, with them throughout the
incidents of their injury.
So would you respond to both of those?
Ms. Carney. Yes, and you might have to help me with the
reminder on the second part----
Ms. Woolsey. Okay.
Ms. Carney [continuing]. When I get through with the
Ms. Woolsey. I will.
Ms. Carney [continuing]. Part, but as I mentioned, you
know, I think the losses that I have listed out already
demonstrate that there isn't a disincentive for employees not
to return to work. To the contrary, if they return to work,
they would be getting, you know--kick in their pay increases
again. It would start bringing up their family medical leave,
and they would be able to contribute since the greatest
majority are FERS employees in TSP.
And let me just say on the TSP, you know, the average
worker giving 10 percent with a matching contribution from the
employer of 5 percent over a course of 30 years--these folks
that are out on compensation extended periods: $416,000 in
retirement savings lost. So there is a great incentive for them
to get back to work.
I also spoke on the national reassessment programs that the
Postal Service has. When I said thousands, I mean thousands of
postal workers have come back to work following compensable
injury, and thousands of them were put back out of work under
these programs. So I think that is----
Ms. Woolsey. Explain to me what you mean by that.
Ms. Carney. It is a complicated program, but----
Ms. Woolsey [continuing]. And then what happens.
Ms. Carney. But basically, the national reassessment
program--you know, there is job offers when you come back to
work. That happens before the NRP was in place, and then the
employer decided, well, you know, we need to look and see if we
really have work for these workers.
And while the work still existed--and that was the premise
of the program--they actually took those workers that were
offered those job offers--that were conducive to their medical
restrictions and said, sorry, that is not there anymore and
they have got other workers, you know, working in behind them.
So the work was withdrawn, or if somebody was newly
injured, it was just not offered, but there is work there. So,
okay, so to answer the second part of the question, and you
will have to remind me.
Ms. Woolsey. Well, the department's suggesting a plan where
the manager works with the employee, I would assume, the
Ms. Carney. You are talking about the federal
reemployment--our concern with the subsidy really lies wholly
with procedures that are called loss wage earning capacity
determinations. And this is where, you know, an employee who is
collecting wage loss compensation--if they are employed--would
have their wage loss compensation reduced.
We have no objection with that, but when the subsidized
employment ends, there is no mechanism--and it is likely to
end, because it is subsidized--there is no mechanism to
reinstate that wage loss compensation, and we have to assume
those jobs are going to be available, and if they don't get one
of those positions, they also can have their wage loss
compensation reduced because the job was available but the
employee didn't obtain it through no fault of their own.
Now, the department will tell you can't use federal jobs to
do wage earning capacity determinations, but as I said in my
earlier testimony, they will look to private sector jobs for
that purpose to reduce the wages, and this is how they will
achieve savings on the back of injured workers for their
And while I think it is a great idea to get workers back
into employment, I think we have to make this favorable by
eliminating the LWEC procedures first.
Ms. Woolsey. Thank you.
Chairman Walberg. Thank you.
And I want to recognize the chairman of the full committee,
gentleman from Minnesota, and especially today since you
finished up our markup at 2:30 this morning in another
committee, and ended up being the first one to arrive to this
committee. I am delighted to introduce you before you fall
Mr. Kline. You know me too well. Thank you, Mr. Chairman.
Thank all of the witnesses for being here today, for your
testimony, for engaging in this issue, and educating us in this
Mr. Steinberg, the administration has a plan, which you
have been talking about. Are you going to formally introduce
legislation to the Congress. And, if so, when might we expect
Mr. Steinberg. No, sir.
Mr. Kline. No.
Mr. Steinberg. We are here to provide technical assistance.
We have a number of proposals that we are anxious to talk with
you about, but a formal legislative proposal will not be
Mr. Kline. Okay. Thank you.
I want to pick up on a couple of things we have already
talked about. One, let's go to the--and I guess I will stay
with you, Mr. Steinberg, since you have the plan out there and
you are dealing with this all the time--on the issue of social
security records, which was discussed earlier, you would like
the ability to have direct access to those records.
As I understand, it would simplify your ability to process
claims and make the job easier if you had direct access.
Mr. Steinberg. Yes, sir. That is correct.
Mr. Kline. So what is happening now? You can ask for the
information, correct, on a routine basis, or do you have OWCP
going up to employees and they are refusing to give the
information--what happens now?
Mr. Steinberg. You characterized it correctly. On an annual
basis, we ask for information about medical, about wages, about
dependent status and so forth. If we don't receive the
information, or if we believe that there are issues associated
with the information, on a case-by-case basis, we contact
Social Security, and obviously, it is a time-consuming process
in terms of interacting with the individuals, getting the
information, making sure that the information is complete.
What we would like to be able to do is to have, if you
will, ongoing access to all files associated with our claimants
so that any point of time, we can access the information, and
we can verify the accuracy of the information.
Or, if we see that there are issues, then we will share it
with the IG or with the IG of the employing organization. So,
again, it is a matter of increased efficiency for us.
Mr. Kline. I am not at all sure that I am opposed to that,
but I am just trying to understand the scale of--or scope of
the problem. Is this something that happens two or three times
a year, hundreds of times a year, thousands of times a year
where you are just having difficulty getting the information.
Mr. Steinberg. It happens hundreds of times a year. So,
again, it is time consuming for our claims examiners. It delays
the process at times and, again, we think that this would
improve the situation both for the claimants as well as for us
so that we can reinvest our time into reemployment type of
Mr. Kline. Okay. Thank you. I want to stay with you, if I
might, because I, like Ms. Woolsey, am interested in this
putting people back to work part of the program.
Right now, according to your testimony, there are
limitations in the areas of vocational rehabilitation and the
return to work process. And you touched on that in testimony,
but can you take a little bit of time here and expand on what
is in the way here?
Mr. Steinberg. Certainly. There are a few different aspect
of this. One is the timing. As we know--and I worked at the
Department of Veterans Affairs for 9 years and worked closely
with the medical community and learned from them the earlier
that we can get an individual diagnosed and into
rehabilitation, the more likely it is that we are going to have
a timely opportunity for return to work.
So being able to accelerate that process when we know that
an individual is most likely permanently disabled, we would
like to begin that process. The next stage is working with the
claimant and working with their physicians to develop a
rehabilitation plan, and that is a plan that would look at the
issue, the injury--look at the opportunities for employment and
then work through, if you will, the rehabilitation process.
The last phase of that is the assisted reemployment where
right now we work with private sector firms and, granted, the
universe of claims that we have actually placed is less than
200. But in this circumstance, we would be able to subsidize
the payment and, again, this is cost neutral, because we
already collect the information in terms of chargeback.
This is the wage replacement, and it would be used to
subsidize the employment. It is a great opportunity for us to
help people get back to work, and I have to emphasize that that
is really our primary issue and focus is returning people to
Mr. Kline. The light has turned yellow here, and I want to
just make sure I understand this assisted reemployment piece.
So far, you have only been able to place the individual with
the private sector, or can you--have you been able--only to the
private sector not another federal agency?
Mr. Steinberg. That is correct. We only have permission to
do it in the private sector. We are asking for the ability to
do it in the federal government. We think it is very promising.
Mr. Kline. Okay. Thank you, very much.
I will yield back, Mr. Chairman.
Chairman Walberg. Thank you.
I recognize the gentleman from New Jersey, Mr. Payne?
Mr. Payne. Thank you, very much.
Ms. Carney, the DOL testimony implies that workers lack
motivation, sort of, as the other questioners--to return to
work when capable and, thus, wage replacement benefits should
be cut to create incentives to force them to return to work.
Could you address this or give me your opinion on this matter?
Ms. Carney. On the motivation?
Mr. Payne. Yes, or do you agree with the DOL that----
Ms. Carney [continuing]. Partially addressed it with
Ranking Member Woolsey, but let me suggest--because we talked
about the national reassessment process and the Postal Service
not letting those employees come in and those losses, but one
of the points I didn't get to--so I can build on what we have
already spoke about is my recommendations on how to correct
And I would recommend that legislation be considered to
eliminate the loss wage earning capacities on those constructed
positions, which is what we talked about--constructed positions
is when it is--you didn't actually get it. You know, because
that is what motivates the employers--hey, if I can get
people--you know, not take them back to work and rather dump
them on another employing agency, I don't get hit with the
chargeback. In the meantime, it is on the back of the injured
So those wage earning capacity determinations really
motivate employers not to return their injured workers--at
least in the case of the Postal Service, and it was, like I
said, cataclysmic in that case, not to return their injured
workers to employment. Or when they did, it was just for a
brief period of time, because the regulation says if you have
been returned back to work for 60 days and they put you out,
you know, then they can LWEC you too, because you no longer
have a loss in wage earning capacity.
So I think we really have to spend some time--I know I am
getting a little into the weeds--but as we look at this
focusing on that. The other thing, I think, that would be
helpful is when an employing agency says there is no work
available--right now, there is no measures in place for the
Department of Labor to challenge that.
They have to take them at their word, and I think there
should be mechanisms put in place where the employing agencies
would actually have to prove that, you know, they truly don't
have work available before these employees are pushed off onto
another agency and, you know, subsidy's going to cost
something. You don't want to burden the program with anything
else. I hope that addresses part of your concerns.
Mr. Payne. Yes. I have another question in regard--in 1998
OSHA became involved in the Postal Service, and since OSHA
coverage began at that time, do you have any kind of
verification that there has been a noticeable reduction in
workplace injuries since OSHA has come in and, I assume, makes
suggestions and so forth?
Ms. Carney. Since OSHA came in, there has been a huge
reduction with postal employee claims being filed. You know,
that was in 1998. I came into office in 2000--I know, one, the
reports had said there were like 84,000 postal workers that
filed claims. We are now at 40,500.
Now, part of that, obviously, is because we have had a
reduction in employee population, but it is not that vast
considering the cut in half. And also, there is people that are
just scared to death to file claims at this point because of
the national reassessment process. But you can't discount OSHA
has had a very positive impact on safety on the workforce,
whether it is because of their programs or because of
And where we see the best progress is when there is these
voluntary programs where management and unions can participate.
And, of course, you have got to get management to, you know,
buy into that program. But, yes, it has been successful.
Mr. Payne. Thank you. Thank you, very much.
Mr. Lewis, in your testimony, you said ``careful
consideration'' needs to be given to DOL proposal to reduce
FECA benefits at retirement age from 75 percent to 50 percent.
What are the questions that should be asked, in your opinion,
to ensure ``careful consideration'' is given as this is being
Mr. Lewis. Well, I think a lot of those have been raised
this morning through Ms. Carney's testimony and GAO's but, we
would advise to look at, you know, are you paying a benefit
that is fair and equitable and that you are not--you don't have
an adverse impact that you are putting someone in a worse
situation than they would have been in.
So to look at those issues of where were they at their
career when they became injured. You know, what has happened to
them since then? What would have happened to them? What
position would they have been in that kind of analysis.
So I think it is, you know, it is certainly worthwhile to
look at this and reassess it, but I think as GAO, particularly,
has brought out in their report there, there are a lot of
issues that need to be addressed to make sure you don't have an
Mr. Payne. Thank you, very much.
Yield back the balance of my time.
Chairman Walberg. Thank the gentleman.
Now I turn to recognize the gentleman from Indiana. Dr.
Mr. Bucshon. Good morning, and thank you for testifying in
front of our committee.
Thank you, Mr. Chairman.
I was a practicing physician prior to being in Congress. So
I have some questions related to the assessment of the
disability in the first place and ongoing disability. In
circumstances that are not otherwise obvious--there is obvious
disabilities and--so, Mr. Steinberg, do you think we have an
adequate program for the federal government to assess the
disability of our workers initially or as an ongoing process?
Mr. Steinberg. Yes, sir, I believe we do. Again, one of the
key components, I believe, of the program is the right to first
choice, if you will, for our patients to choose their
We think this is core. We think it is extremely important
in terms of having a comfortable dialogue, and so forth. We
believe that the physicians provide a good and reasonable
assessment of the circumstance.
As I talk about in terms of the rehabilitation plan, I
think, again, that provides a forum--an opportunity for
continued dialogue between the department, the claimant and the
physician in terms of the progress that is being made and when
the individual will be ready to return to work and in what
capacity they can return to work.
So, again, I think we have a good program, and I think we
have an opportunity to improve the interaction with the
Mr. Bucshon. Great. That is good to know because, as a
physician, I can tell you the subjectivity involved in
assessing a worker's ongoing disability is very, very
difficult. And I was in cardiovascular surgery, but if you are
in a special that deals with back injuries, for example, like
orthopedics or neurosurgery, it is very difficult and partially
subjective process, and I am glad to hear that you feel that
the government has an adequate program to assess that.
Ms. Carney, I am interested in just a--would you be opposed
to a reduction in benefits or compensation that the DOL's
proposing in any circumstance? Because it seems like that with
your testimony under whatever circumstance that might be in-
place that would decrease any reimbursement for anyone, you
would be opposed to.
And, if not, I would like to know under which circumstances
that you feel would be appropriate that might result in
decreasing compensation even though that compensation would
bring these folks in line with what is fair and--in regards to
the rest of our federal workers who are not disabled.
Ms. Carney. Well, first let me say, if something is fair
and equitable, certainly receptive to embracing it. The problem
I am having with these proposals isn't I am being contrary for
the sake of being contrary, it is because I don't believe in my
heart of hearts that it is fair and equitable.
You know, when these employees--you are saying 70 percent--
Mr. Bucshon. Let me say, for example, the proposal that
would bring in line where people who are disabled are--continue
to get disability benefits after retirement age when those are
clearly exceeding what if they were--if they had continued to
work as a federal worker and then retired, their benefits would
be slightly less than that.
Ms. Carney. Okay, you are making the comparison with the 56
percent of the----
Mr. Bucshon. Well, I mean, I am just trying to determine
the circumstances which you have--which you feel like that a
decrease in compensation would be--under their proposal----
Ms. Carney. It would be favorable if and when we could put
something in place to substitute the fact that these folks have
no means to contribute to their Thrift Savings Plan or receive
matching funds. Now, I am not--you know, that is one way. We
could create another type retirement fund but, again, you know,
you got to remember under TSP, and the majority of these folks
are actually FERS not CSRS.
You know, it was put in place in, what, 1983 or 1984, so
you are talking 27 or 28 years ago. So at this point, and if we
are being prospective, we are going to be talking about FERS in
And then we also have to keep in mind--because you brought
up, like, wage loss compensation--that those folks aren't
getting their pay increases. I mean, so these things as they
are currently--the 75 percent--is comparable as far as the
We would be amenable to, you know, but you have got to make
up for the loss somehow, and the way it is just a reduction
just because of your age--I don't think it is a very fair and
an equitable comparison. Fifty-six percent of somebody that
actually got to go through the Postal Service for 30 years or
the federal government for 30 years, and they get, you know,
granted, you get the COLAs, the CPI COLAs, which have only
averaged 2.1 percent over the last 10 years, but what happened
to their step increases and all the other increases that they
were supposed to be getting along the years.
The annuitants have gotten that, and that is, that makes it
a true high three, where the compensationers don't. They
haven't gotten those pay increases. They don't have a true high
three. They are still down here. So 50 percent to 56 percent
really isn't even a equitable comparison, and that is a CSRS
thing anyway, and we really should be looking at FERS at this
point, because that is where we are at or going.
Mr. Bucshon. Thank you.
I yield back.
Chairman Walberg. I thank the gentleman.
And I recognize the gentleman from Indiana. Mr. Rokita?
Mr. Rokita. Thank you, Mr. Chairman.
I appreciate the witnesses as well.
My first question is to Mr. Szymendera. Am I pronouncing
Mr. Szymendera. Szymendera.
Mr. Rokita. Szymendera?
Mr. Szymendera. Yes.
Mr. Rokita. You are not Polish, are you?
Mr. Szymendera. I am.
Mr. Rokita. Okay. With a name like Rokita, I get to ask
those kind of questions, okay? And anytime you see a ``z'' and
a ``y'' together, you start wondering if you are a member of my
tribe. So welcome.
You testified that under the Internal Revenue Code,
workers' compensation benefits are not subject to federal
income tax. Is this true with state plans as well?
Mr. Szymendera. Yes. The federal income tax does not apply
to any workers' compensation benefits paid whether it is under
a state plan, whether it is under FECA, or whether it is under
the other federal workers' compensation plan, which is
Longshore and Harbor Workers' Compensation Act.
Mr. Rokita. What is the rationale?
Mr. Szymendera. Workers' compensation benefits have never
been treated as earnings or income. And so if you go all the
way back, as I said, this is--we are in the 100th year of
workers' compensation--there has always been a sense that
workers' compensation benefits are different than income, and
because they are different, they are treated differently--not
taxed, as I think Ms. Carney has said, for example, you know,
not eligible for TSP and things like, things of that nature.
Mr. Rokita. Fair enough. Thank you, very much.
Mr. Bertoni, your testimony stated that if FECA
beneficiaries at retirement age are converted to the federal
retirement system, an agency such as OPM would have to develop
an expertise that it currently doesn't have. Can you elaborate
on that, and why is that such a hurdle?
Mr. Bertoni. Just both FECA and OPM have done different
things for many years. So if you start putting--melding two
systems, I am not--not to say that it is not possible, but you
are now asking an organization that, perhaps, has dealt with
the retirement and--and benefits side of retirement to become
case managers and case workers involved in the rehabilitation
of the recipient.
So it is not impossible. It is just consideration when you
meld the two systems together, they are going--who is going to
do what and when?
Mr. Rokita. That doesn't sound that difficult.
Mr. Bertoni. It is not impossible. It is just----
Mr. Rokita. Okay.
Mr. Bertoni [continuing]. Consideration as we throw that
out there, there are simpler ways to do things and there are
more complex ways to do things. And it is just--on the
continuum, it is somewhere in the middle.
Mr. Rokita. Okay. Thank you. Appreciate that.
And then, Ms. Carney, in your written testimony, you
mentioned a number of factors that make it difficult for
claimants to find and keep doctors. And you talked about the
rule example and how you--that person might be limited to a
physician's assistant or nurse practitioner.
Have you reviewed the administration's proposal to allow
for the limited utilization of physician's assistants and nurse
practitioners, and do you have a----
Ms. Carney. No objection there. We think it is long over
due, especially because it is so difficult, you know, because
of a lot of other reasons, but it is so difficult to find
physicians that are willing to participate in the plan.
It may look like a lot, you know, on paper, but if you
Mr. Rokita. Right.
Ms. Carney. To answer your question, no. No problem.
Mr. Rokita. Okay. Maybe I misunderstood your testimony. I
just wanted to clear that up.
Ms. Carney. Okay.
Mr. Rokita. I yield back, Mr. Chairman. Thank you.
Chairman Walberg. I thank the gentleman.
And I think the panel for shedding on this subject.
And before making closing remarks, I would turn to the
ranking member, Ms. Woolsey, for closing remarks.
Ms. Woolsey. Thank you, Mr. Chairman. I would like to
submit two statements for the record. One is from the National
Treasury Employees' Union. The other is from the National
Active and Retired Federal Employees' Association.
Chairman Walberg. Without objection, so ordered, and I
believe we have copies already and additional ones now, thank
Ms. Woolsey. Now you have two.
Chairman Walberg. We always can use more, huh?
Ms. Woolsey. Mr. Chairman, I want to be very clear that
when I was supporting the Department of Labor's--what I
thought--effort in assisting in returning employees, I meant
returning to their original or comparable to their original
employment. I am not talking about sending them off to some
school to give them start over employment after they have
become experts in what they were doing for the federal
I mean, there is a way to do this. It really does make a
difference in employees feeling welcome back, getting back
sooner, maybe restrictive duties--absolutely, but not punished
for it. And I just would like to see us work together it sounds
like we have got a system that in the long run doesn't work out
Thank you, witnesses. I think you have been very
informative. There are many, many questions, I think, that
still remain about the impacts to beneficiaries, whether
employing agencies can do more to hire injured workers, whether
there are opportunities to prevent accidents that cause
workplace injuries in the first place.
, I was a human resources professional for 20 years, and I
am telling you, anytime we worked with workers' comp, brought
them into the plant and they gave us ideas and suggestions, our
workers' comp claims went way down, because they knew what was
going wrong. And I think that is something we ought to be
thinking about and then training our managers and training the
employees. Prevent workers' comp claims in the first place.
The testimony from the Government Accountability Office,
Mr. Chairman, identified a list of questions that merit more
consideration before we legislate any changes, I believe, to
this very, very complex program. Because it impacts so many
workers, and once we change something in our lifetime, it won't
get changed again.
So I would like to suggest if we could that we would--and I
would welcome the opportunity to work with you to gain
assistance in securing more information from GAO in a valid way
and assessing these administrative proposals and how it
impacts--permanently impacts injured workers and have some case
studies, maybe, involved.
So thank you for today, and thank all of you.
Chairman Walberg. I thank the gentlelady.
And, again, thank you to the panel. This is a subject of
great importance in a time of economic challenge in this
country, in a time when there is a, in some sense, a general
feeling that government employees don't earn their pay, should
be challenged and castigated.
Ms. Carney, you are smiling, and I appreciate the fact when
I talked to you earlier saying it would be terrible if nobody
came to the party when we hosted one, and you said, there is
only a party when I am here. And I appreciate your input today.
But, you know, I think whether we be Democrat or
Republican, we must admit that employees of federal government,
when asked to do the job--a job that has been offered to them--
do that job and deserve the respect, consideration as they
perform that job, and the respect and consideration when
unexpected and undesired injuries take place or other
subsequent problems that bring on a need for compensation.
And so, if we are going to have that in place--which we
ought to--it ought to be a program that works for both sides
and for the taxpayer.
And so, Ms. Woolsey, I would tend to agree with you that
probably one of the next steps in going further with the taste-
testing this morning--the teaser on information, there is
plenty more to come up with, and a GAO study may be the
direction we need to go.
I would encourage the Department of Labor to continue to be
part of the solution here. I guess I was under a lack of
understanding in thinking that you had some proposals that you
were going to be putting forward for legislation.
I think it is something we ought to consider to make sure
that it works. This subcommittee is certainly open and desirous
of caring through that process. So we will be looking toward
that and--in the coming days, and I think sooner rather than
So thank you. We do want to applaud the work that is done
by our federal employees. We want to not only suggest that we
do all do consideration to make sure that they are provided for
but the deficiencies that can be built on the whole system
including this, that ultimately produces quality of care, is
something that we must consider with due diligence.
So having nothing more to present in this subcommittee
hearing, I call the committee to adjournment.
[Additional submissions of Ms. Woolsey follow:]
Prepared Statement of Colleen M. Kelley, National President,
National Treasury Employees Union
Chairman Walberg, Ranking Member Woolsey and Members of the
Subcommittee on Workforce Protections, the National Treasury Employees
Union (NTEU) appreciates the opportunity to offer this statement to the
Subcommittee as it considers the important matter of Workers'
Compensation in the federal sector. NTEU represents over 155,000
federal employees at 31 agencies. Our members perform every type of
work for the American public from Customs and Border Protection
Officers, to Transportation Security Officers, and Food and Drug
Administration scientists working in laboratories at home or on
assignment inspecting products in India and Mainland China. These
public servants show up for work each day expecting to perform their
important duties diligently and professionally in service to their
country and then safely return home to their families. Nevertheless,
some will suffer workplace injuries that make it impossible for them to
return to work for short or long periods of time and, regrettably, in
some cases to never be able to return to work at all due to permanent
injury or even death.
This year, the nation celebrates the centennial of Workers'
Compensation laws. One hundred years ago this month (May, 1911) the
first Workers Compensation program was enacted into law by the state of
Wisconsin, following on workplace injury insurance programs adopted in
Germany and Great Britain. Nine other states followed this progressive
initiative that same year and by 1948 all states had laws covering
private and state workers. Workers' Compensation insurance is a
recognition of the responsibility of employers and society to take care
of those injured in the workplace. It was our nation's first social
insurance program. Today, Workers' Compensation stands as an important
protection for the benefit of all Americans. Almost 98% of the
workforce is covered by workers' compensation insurance.
Five years after Wisconsin led the nation on this, Congress moved
to insure the federal government's own employees as well as railway,
longshoremen and other harbor workers. The Kern-McGillicudy Act
developed the program we now know as the Federal Employees Compensation
FECA is one of the most important programs for federal workers.
This program provides federal employees with workers' compensation
coverage for injuries and diseases sustained while performing their
duties. The program seeks to provide adequate benefits to injured
federal workers while at the same time limiting the government's
liability strictly to workers compensation payments. Payments are to be
prompt and predetermined to relieve employees and agencies from
uncertainty over the outcome of court cases and to eliminate wasteful
litigation. Efficient government is advanced by a civil service that is
expected to have the highest levels of professionalism and competency
and in turn is fairly compensated and treated with dignity and respect.
There is no greater disrespect to human dignity than to have to suffer
injury from an unsafe workplace or from employer negligence.
NTEU welcomes a review of the FECA program, while always keeping in
mind this is an issue of human dignity. We believe such a review should
be broad and comprehensive. By that, we mean that it should never start
or be rigidly limited to benefit payments. Instead the first principle
should be making the federal workplace safe by actions to move us
towards the goal where no worker need come to work with the possibility
it will be his last day on the job because of a workplace injury. NTEU
has worked with Republican and Democratic administrations on this goal
and we are ready to continue those efforts.
However, I want to state our strong opposition to insurance benefit
cuts, particularly for those employees who came to work one day ready
to serve their country but suffered a workplace injury that resulted in
them never being able to return. We are most concerned about proposals
for a forced retirement provision. An employee who is injured on the
job and unable to work receives FECA payments equal to 67% of wages at
the time of injury (a slightly higher amount if he has family
obligations). This reduction in income makes it impossible for an
injured employee to fund a retirement plan. Once workplace injured
workers are on FECA, they receive no further retirement credits or
contribution matches, nor are they able to make elective contributions
to the Thrift Savings Plan. This holds true for Social Security as well
as the federal retirement programs. Forcing a worker at retirement age
to give up regular FECA benefits and live on the income from retirement
savings put aside up until his or her worklife was interrupted by an on
the job injury would cause grave economic hardship to many disabled
NTEU would also oppose elimination of the family benefit that is
now a feature of FECA. Because FECA benefits are not taxed, the family
allowance does little more than create some equity between the after
tax income a worker with dependents and one without would have if not
Let me close by stating that NTEU very much wants to work with this
subcommittee or any other policymaker to find ways to reduce the costs
of the FECA program. As I have said, our belief is the best way to do
so is not by reducing benefits or denying claims but by preventing the
occurrence of injuries. NTEU is committed to a safe and healthy federal
workplace where employees are less likely to ever suffer the injuries
that lead to FECA claims. Our union has also been one of the strongest
forces for innovation in the federal workplace, often working with
management on bold new programs and sometimes dragging management
forward over their reluctance. We have received reports from our
members about management resistance or disinterest in light duty
assignments, alternative worksites, disability accommodations and other
actions that could allow FECA recipients to return to work. A change in
management practices and culture is needed. I don't expect this is
something Congress can legislate, but the first step is to end the myth
that able bodied workers are receiving FECA payments and accept the
fact that many injured workers would like to return to work and could
do so with opened minded and innovative agency practices. Further, NTEU
is willing to work with policymakers to improve program integrity
methods. For example, the Office of Worker Compensation Programs (OWCP)
currently matches FECA claimants with Social Security Administration
(SSA) data to determine if claimants have died. However, they do not
match with SSA data to see if they are receiving wages that would make
them ineligible for FECA benefits. We strongly believe these are the
types of reforms that should be explored before Congress moves to cut
these social insurance benefits to injured federal workers.
Thank you for this opportunity to present NTEU's views.
PERIODIC ROLL BREAKDOWN BY WEEKLY SALARY AND AGE (a)
[Based upon 4/9/2011 check cycle; excludes fatal cases; including only cases with DOI in calendar year 2008 in order to get current weekly wage data]
$500 to $1000 to $1500 to $2000 to $2500 to $3000 to $3500 to $4000 to
Under $500 $999.99 $1499.99 $1999.99 $2499.99 $2999.99 $3499.99 $3999.99 $4499.99
up to $26,000 to $52,000 to $78,000 to $104,000 to $130,000 to $156,000 to $182,000 to $208,000 to
$25,999 $51,999 $77,999 $103,999 $129,999 $155,999 $181,999 $207,999 $233,999
Age group: All
0-20...................................................... ........... ........... ........... ........... ........... ........... ........... ........... ........... 0
21-25..................................................... 2 4 ........... ........... ........... ........... ........... ........... ........... 6
26-30..................................................... 11 20 2 2 ........... ........... ........... ........... ........... 35
31-35..................................................... 15 61 10 3 ........... ........... ........... ........... ........... 89
36-40..................................................... 14 81 34 2 1 ........... ........... ........... ........... 132
41-45..................................................... 25 87 62 5 2 4 ........... ........... ........... 185
46-50..................................................... 30 128 145 12 5 4 1 1 ........... 326
51-55..................................................... 30 132 174 15 5 ........... 1 2 ........... 359
56-60..................................................... 25 96 134 10 7 5 ........... ........... ........... 277
61-65..................................................... 14 65 92 12 1 1 ........... 1 ........... 186
66-70..................................................... 4 15 20 3 4 ........... ........... ........... ........... 46
71-75..................................................... 3 4 7 1 ........... ........... ........... ........... ........... 15
76+....................................................... 2 2 ........... ........... ........... ........... ........... ........... ........... 4
Totals.................................................. 175 695 680 65 25 14 2 4 0 1660
Note: Although the weekly salaries listed include income over $182,000, the 1966 amendments to the FECA provide that compensation can not exceed 75% of the monthly salary of a GS-15, step 10.
Proposed Average Schedule Award Rate = $53,639 (GS11/3 in FY11).
Approx. number of people with annual salaries BELOW the new SA rate: 870.
Approx. number of people with annual salaries ABOVE the new SA rate: 790.
Source: U.S. DOL.
PERIODIC ROLL BREAKDOWN BY WEEKLY SALARY AND AGE (b)
[Based upon 4/9/2011 check cycle; excludes fatal cases]
Age group -----------------------------------------------------
OP PN PR PS PW All
0-20...................................................... 0 0 6 0 0 6
21-25..................................................... 0 2 47 3 5 57
26-30..................................................... 1 3 153 16 32 205
31-35..................................................... 5 9 387 41 91 533
36-40..................................................... 10 55 854 69 237 1225
41-45..................................................... 28 98 1546 125 457 2254
46-50..................................................... 67 309 3127 224 1018 4745
51-55..................................................... 79 641 4304 388 1586 6998
56-60..................................................... 102 1026 4382 464 2001 7975
61-65..................................................... 115 1561 3581 434 1825 7516
66-70..................................................... 118 1339 1813 149 1131 4550
71-75..................................................... 61 1528 1005 49 788 3431
76+....................................................... 52 4332 964 41 1264 6653
Totals:............................................. 638 10903 22169 2003 10435 46148
PR: Entitled to payment on periodic roll.
PN: Entitled to payment on periodic roll; determined to have no wage earning-capacity or re-employment potential
for indefinite future.
PW: Entitled to payment on periodic roll at a reduced rate, reflecting a partial wage-earning capacity or actual
PS: Entitled to payment for schedule award.
OP: On the Periodic Roll, but an overpayment exists and is being deducted from compensation
Source: U.S. DOL
Appropriated Fund Agencies in FECA Which
Do Not Reimburse for Administrative Costs
Department of Labor
Department of Health & Human Services
Department of State
Department of Housing & Urban Development
Department of Defense Agencies
Department of the Army
Department of the Air Force
Department of the Navy
Department of Homeland Security
Department of Education
Department of the Interior
Executive Office of the President
Social Security Administration
Corporation for National & Community Service
American Battle Monuments Commission
African Development Foundation
Architect of the Capitol
U.S. Commission of Fine Arts
Federal Communications Commission
Farm Credit Administration
Federal Mine Safety & Health Review Commission
Federal Trade Commission
Government Accountability Office
U.S. Government Printing Office
Federal Mediation & Conciliation Service
Library of Congress
Federal Labor Relations Authority
Institute of Museum & Library Services
Office of Special Counsel
National Archives & Records Administration
National Capital Planning Commission
National Labor Relations Board
National Mediation Board
National Science Foundation
Railroad Retirement Board
Office of Government Ethics
Securities & Exchange Commission
Selective Service System
Federal Energy Regulatory Commission
Office of Personnel Management
Broadcasting Board of Governors
International Trade Commission
Panama Canal Commission
Commission on Civil Rights
U.S. House of Representatives
Int'l Boundary & Water Commission/US & Mexico
Armed Forces Retirement Home
Consumer Product Safety Commission
Equal Employment Opportunity Commission
U.S. Tax Court
Office of Navajo & Hopi Indian Relocation
Merit Systems Protection Board
National Endowment for the Arts
National Endowment for the Humanities
Occupational Safety & Health Review Commission
U.S. Holocaust Memorial Council
National Transportation Safety Board
Nuclear Regulatory Commission
Commodity Futures Trading Commission
Congressional Budget Office
Federal Election Commission
U.S. Institute of Peace
U.S. Botanic Garden
Federal Maritime Commission
U.S. Arms Control & Disarmament Agency
Postal Regulatory Commission
U.S. Agency for International Development
Legal Services Corporation
U.S. Court of Veterans' Appeals
U.S. Capitol Police
General Services Administration
National Aeronautics & Space Administration
Environmental Protection Agency
Government Printing Office
Central Intelligence Agency
William Howard Taft Memorial Site
Valles Caldera Trust
State Justice Institute
Public Defender Service for the District of Columbia
National Indian Gaming Commission
Marine Mammal Commission
Morris K. Udall Foundation
Millennium Challenge Corporation
Interagency Council on Homelessness
Institute of American Indian Arts
Defense Nuclear Safety Facility Board
US Election Assistance Commission
US Chemical Safety Hazard Investigation Board
Committee for Purchase/Blind or Severely Disabled
Appalachian Regional Commission
Administrative Conference of the United States
US Access Board
Court Services & Offender Supervision Agency
``Fair Share'' Agencies Which Reimburse DOL for
Administrative Costs Under FECA
United States Postal Service
Federal Home Loan Bank Board
Small Business Administration
Overseas Private Investment Corporation
Board of Governors/Federal Reserve System
Federal Housing Finance Agency
Federal Deposit Insurance Corporation
Federal Retirement Thrift Investment Board
National Credit Union Administration
Resolution Trust Corporation
Pension Benefit Guaranty Corporation
Mixed ``Fair Share'' and Appropriated Fund Agencies
Department of Agriculture
Department of Commerce
Department of Energy
Department of Transportation
Department of Treasury
Department of Veterans Affairs
Department of Justice
Tennessee Valley Authority
Source: US DOL.
Prepared Statement of Joseph A. Beaudoin, President,
National Active and Retired Federal Employees Association
Mr. Chairman and members of the Committee, I am Joseph A. Beaudoin,
President of the National Active and Retired Federal Employees
Association (NARFE). NARFE, one of America's oldest and largest
associations, was founded in 1921 with the mission of protecting the
earned rights and benefits of America's active and retired federal
workers. The largest federal employee/retiree organization, NARFE
represents the retirement interests of approximately 4.6 million
current and future federal annuitants, spouses, and survivors.
I am submitting testimony today, for the record, on behalf of those
4.6 million federal workers and annuitants. I appreciate the
opportunity to share our concerns about legislative proposals that
would reduce Federal Employees' Compensation Act (FECA) benefits for
retirement age recipients.
FECA reforms should focus on saving money by improving the workers'
compensation process and structure and not by reducing benefits
available to employees injured or made ill by their jobs. There have
been numerous proposals to reform FECA by improving the number of
employees rehabilitated who can return to work to changing the
structure of payments for schedule awards to establishing waiting
periods and more, none of which reduce the basic compensation paid to
Unfortunately, both the Administration and Senator Susan Collins
have made specific proposals which would reduce benefits paid to FECA
recipients at retirement age. These proposals do not adequately take
into account the disadvantages faced by those employees unfortunate
enough to suffer a debilitating injury or illness as a result of their
The Administration proposes to reduce FECA recipients' basic
compensation benefit to 50 percent of their gross salary at the date of
injury, still tax-free, when they reach full Social Security retirement
age. While this proposal provides a retirement level income much closer
to that of current retirees,\1\ it still does not fully account for
disadvantages faced by FECA recipients. Notably, FECA recipients (1)
lose the ability to increase their salary through raises and
promotions, (2) they have a reduced ability to save because (a) they
are not receiving a full replacement of income pre-retirement, and (b)
FERS-covered employees are not able to contribute to the Thrift Savings
Plan and receive matching contributions, and (3) they may have a
reduced Social Security benefit because FERS employees covered by
Social Security are unable to earn credit for and increase monthly
earnings used to calculate those benefit payments.
\1\ According to OPM, the average federal employee retiring
optionally on an immediate annuity under CSRS will receive about 60% of
their ``high-three'' average salary.
While the framework of the Administration's proposal offers more
economic security than S. 261's, it still short-changes FECA
S. 261, Federal Employees' Compensation Reform Act
Senator Collins' bill would move FECA recipients to the retirement
system at full Social Security retirement age (between 65 and 67,
depending on year of birth). Instead of receiving 66.67 percent of
monthly pay (or 75% for recipients with dependents) tax-free, former
FECA recipients would receive a taxable annuity computed by multiplying
the average of their highest three years of salary times years of
service times an accrual rate (1 or 1.1% for FERS-covered employees or
1.5 to 2% for CSRS-covered employees). This presents multiple issues.
First, there is no provision to adjust upwards the average highest
three years of salary to account for wage inflation. FECA recipients
will also have lost the ability to increase their salary through raises
and promotions. At the very least, they should receive an adjustment
based on the Employment Cost Index or other wage inflation indicator to
the average highest three years of salary for purposes of computing
Second, unless the FECA recipient is covered by FERS and applied
for a disability retirement annuity within 12 months of their injury or
illness, s/he likely would not receive credit for years of service for
the time between when s/he became injured or ill and when s/he turns 62
years of age.\2\
\2\ Under CSRS, a disability retirement annuitant, someone unable
to perform their job due to a injury or illness that is not necessarily
work related, is guaranteed a minimum benefit that equals the lesser of
40 percent of the high-three average salary or the regular annuity
obtained after increasing years of service for the time between the
disability and age 60. Thus, credit for years of service actually acts
to reduce the minimum annuity under CSRS. Under FERS, disability
retirement annuitants receive credit for years of service for the years
between the injury or illness and age 62.
Third, FERS-covered FECA recipients lose the ability to invest a
portion of their payments into the Thrift Savings Plan (TSP) and
receive matching contributions from their agencies.
Finally, FERS-covered employees may have a reduced Social Security
benefit because they are unable to earn credit for and increase monthly
earnings used to calculate those benefit payments.
The net effect of the transition to the retirement system would be
a substantial and unfair reduction in benefits for many FECA
recipients. However, Senator Collins has consulted NARFE on S. 261 and
we are working with her to improve the legislation.
Other FECA reform proposals save money by helping bring FECA
recipients back into the work force, eliminating inefficiencies in the
process, allowing for full reimbursement from liable third parties, or
reducing improper payments and fraud. But unlike those proposals,
reductions in retirement age benefits will take money away from
individuals who are irrefutably unable to work because they were
injured or became ill as a result of their service for the federal
government. If they had the choice, they would be healthy and working
and preparing for a retirement of choice rather than necessity.
Thus, I urge you to seriously consider the significant financial
implications that proposed reductions to FECA benefits could have on
disabled public servants who have lost the ability to earn income to
adjust their financial situation to new circumstances. These federal
employees include FBI agents who have been shot in the line of duty, or
federal firefighters injured while saving someone's life. We need to
treat these public servants with respect and gratitude, not
Mr. Chairman and subcommittee members, I urge you to do so, and
thank you for receiving this testimony.
[Whereupon, at 11:20 a.m., the subcommittee was adjourned.]