oversight

Audit of the Department's Management of the Federal Employees' Compensation Act Program.

Published by the Department of Education, Office of Inspector General on 2005-03-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

        Audit of the Department’s Management of the 

       Federal Employees’ Compensation Act Program 



                             FINAL AUDIT REPORT 





                                      ED-OIG/A19-D0008 

                                         March 2005





Our mission is to promote the efficiency,                  U.S. Department of Education
effectiveness, and integrity of the                        Office of Inspector General
Department’s programs and operations.                      Operations Internal Audit Team
                                                           Washington, DC
  Statements that managerial practices need improvements, as well as other 

                conclusions and recommendations in this report 

represent the opinions of the Office of Inspector General. Determinations of 

 corrective action to be taken will be made by the appropriate Department of 

                              Education officials. 



In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports 

   issued by the Office of Inspector General are available, if requested, to 

 members of the press and general public to the extent information contained 

               therein is not subject to exemptions in the Act. 

                            UNITED STATES DEPARTMENT OF EDUCATION

                                                    OFFICE OF INSPECTOR GENERAL




                                                       March 30, 2005

MEMORANDUM

TO:	            William Leidinger
                Assistant Secretary for Management
                Office of Management


FROM:	          Helen Lew /s/
                Assistant Inspector General for Audit

SUBJECT:	       Final Audit Report
                Audit of the Department’s Management of the Federal Employees’
                Compensation Act Program
                Control Number ED-OIG/A19-D0008

Attached is the subject final audit report that covers the results of our audit of the Department’s
management of the Federal Employees’ Compensation Act Program. An electronic copy has
been provided to you and your Audit Liaison Officer. We received your comments concurring
with the findings and providing proposed corrective actions for all of the recommendations. No
changes were made to the report as a result of the Department’s comments.

Corrective actions proposed (resolution phase) and implemented (closure phase) by your office
will be monitored and tracked through the Department’s Audit Accountability and Resolution
Tracking System. Department policy requires that you develop a final corrective action plan
(CAP) for our review in the automated system within 30 days of the issuance of this report. The
CAP should set forth the specific action items, and targeted completion dates, necessary to
implement final corrective actions on the findings and recommendations included in this final
audit report.

In accordance with the Inspector General Act of 1978, as amended, the Office of Inspector
General is required to report to Congress twice a year on the audits that remain unresolved six
months after the date of issuance.

In accordance with the Freedom of Information Act (5 U.S.C. §552), reports issued by the Office
of Inspector General are available to members of the press and general public to the extent
information contained therein is not subject to exemptions in the Act.

We appreciate the cooperation given us during the review. If you have any questions, please call
Michele Weaver-Dugan at (202) 245-6941.


                                         400 MARYLAND AVE., S.W. WASHINGTON, D.C. 20202-1510

                   Our mission is to ensure equal access to education and to promote educational excellence throughout the Nation
                               TABLE OF CONTENTS 




                                                                                                     Page


EXECUTIVE SUMMARY ...............................................................................1 


BACKGROUND ...............................................................................................3 


AUDIT RESULTS.............................................................................................5 


        Finding No. 1 –The Department Did Not Adequately Manage 

              its Workers’ Compensation Cases ................................................5 


                 Recommendations .........................................................................11 


        Finding No. 2 –The Department Did Not Process Workers’ 

              Compensation Claims Timely.......................................................11 


                 Recommendations.........................................................................14 


        Finding No. 3 –The Department Did Not Effectively Monitor 

              Continuation of Pay Benefits ........................................................14 


                  Recommendations ........................................................................16 


        Finding No. 4 –The Department Did Not Adequately Verify 

              Chargeback Reports ......................................................................16 


                 Recommendations.........................................................................18 


OBJECTIVES, SCOPE, AND METHODOLOGY……………………… ......19 


STATEMENT ON INTERNAL CONTROLS..................................................21 


ATTACHMENT 1 - Department of Education Response

                         EXECUTIVE SUMMARY 



The Federal Employees’ Compensation Act (FECA) provides compensation benefits to
civilian employees of the United States for disability due to personal injury or disease
sustained while in the performance of duty. The FECA program is administered by the
Office of Workers’ Compensation Programs (OWCP), a component of the Employment
Standards Administration within the United States Department of Labor. All workers’
compensation claims are adjudicated by OWCP. Within the Department of Education
(Department), the Office of Management’s Support Services Team is responsible for
processing compensation claims for Department employees, managing established cases,
and assisting employees back to work.

The objectives of our audit were to: (1) determine whether the Department has
adequately processed and documented workers’ compensation claims, and (2) assess the
appropriateness of selected claims.

Overall, we found improvements were needed in the Department’s management of the
workers’ compensation program. Our audit revealed the Department did not adequately
manage its workers’ compensation program. Specifically, we noted there was no formal
tracking system for cases, case files were unorganized, there was no comprehensive case
management plan, and there was a lack of follow-up on long-term workers’
compensation cases. In addition, our audit revealed workers’ compensation claims were
not always processed timely, Continuation of Pay benefits were not effectively
monitored, and workers’ compensation chargeback reports were not adequately verified.
This occurred because the Department does not have established policies and procedures
for the management of the workers’ compensation program, lacks an effective tracking
system for its claims and cases, and Department staff do not appear to fully understand
their FECA responsibilities. As a result, the Department may be paying benefits to
individuals that are not entitled to them, and may not be returning injured employees
back to work in the most expeditious timeframe possible, thereby consuming federal
resources that could otherwise be used elsewhere.

To correct the weaknesses we identified, we recommend the Department:

   • 	 Develop and distribute, to all affected parties, policies and procedures for the
       management of the workers’ compensation program, to include case management
       and file maintenance, claim processing, verification of chargeback reports, and
       monitoring of Continuation of Pay benefits.
   • 	 Implement an electronic case file management system to monitor timeliness of
       claim submission and maintain and track case status.
   • 	 Ensure appropriate training is provided to all Department workers’ compensation
       specialists, to include those in headquarters and the regional offices.



ED-OIG/A19-D0008 	                                                                Page 1
   • 	 Provide formal training to Department supervisors and managers on workers’
       compensation claim processing requirements and responsibilities.
   • 	 Update and distribute the Supervisor’s Guide to Workers’ Compensation to all
       supervisors, managers, and compensation specialists Department-wide and post a
       copy to the intranet.
   • 	 Update all current long-term files.
   • 	 Recoup Continuation of Pay benefits received by individuals with denied claims
       and those without established claims.
   • 	 Validate the most recent chargeback report against the Department’s personnel
       database to determine whether any individuals are not Department employees or
       had an injury date prior to their entry date with the Department.

The Department concurred with our findings and provided a proposed corrective action
plan addressing all of our recommendations. The full text of the Department’s response
is included as Attachment 1 to this audit report. The Department’s response does not
warrant any changes to the draft report.




ED-OIG/A19-D0008 	                                                               Page 2
                                BACKGROUND 


The Federal Employees’ Compensation Act (FECA) provides compensation benefits to
civilian employees of the United States for disability due to personal injury or disease
sustained while in the performance of duty. The FECA also provides for payment of
benefits to dependents if a work-related injury or disease causes an employee’s death.
Benefits provided under the FECA constitute the sole remedy against the United States
for work-related injury or death. Benefits include compensation for lost wages, monetary
awards for bodily impairment or disfigurement, medical care, and vocational
rehabilitation.

The FECA program is administered by the Office of Workers’ Compensation Programs
(OWCP), a component of the Employment Standards Administration within the United
States Department of Labor (DOL). All workers’ compensation claims are adjudicated
by OWCP. For OWCP to determine workers’ compensation eligibility, the injured
employee must provide medical and factual evidence to establish five basic elements: (1)
the claim was filed within the time limits set by the FECA; (2) the injured or deceased
person was an employee of the United States government at the time of injury; (3) the
injury, disease, or death did occur; (4) the employee was in the performance of duty when
the injury, disease, or death occurred; and (5) the medical condition found was causally
related to the claimed injury, disease, or death.

For OWCP to adjudicate a workers’ compensation claim the injured employee must give
notice of the injury to his/her supervisor within 30 days of the injury or the date the
employee realized the disease or illness was job-related. The supervisor is expected to
submit the completed form to the appropriate OWCP office within 10 workdays of
receiving the claim.

To avoid disruption of an employee’s income, the employee’s agency continues to pay
his/her regular wages for up to 45 days while he/she is recovering from an injury. This
initial timeframe is referred to as the Continuation of Pay (COP) period. An employee
may choose to use annual or sick leave to cover all or part of an absence due to injury.
OWCP begins paying FECA compensation benefits at the end of the COP period when a
claimant can no longer be paid his/her regular wages.

OWCP FECA costs are financed by the Employees’ Compensation Fund (Fund).
Workers’ compensation costs are assigned to employing agencies annually at the end of
the fiscal accounting period, which runs from July to June. Each year, OWCP furnishes
each agency with a “chargeback report” which is a statement of payments made from the
Fund on account of injuries to its employees. The agencies include these amounts in their
budget requests to Congress. The sums appropriated are deposited into the Fund.



ED-OIG/A19-D0008                                                                  Page 3
While OWCP has final authority with regard to approving and paying workers’
compensation claims, the agency also bears certain responsibilities, such as ensuring
appropriate agency personnel understand their FECA responsibilities; notifying injured
employees of their rights and obligations under FECA; initiating the claim and ensuring
timely notification to OWCP; providing and tracking COP; helping employees return to
work as soon as possible; and monitoring the employee’s medical status until a physician
states the employee can return to work.

Within the Department of Education (Department), there are two full-time workers’
compensation specialists within the Office of Management’s (OM) Support Services
Team who process claims and manage cases for employees located at Headquarters.
Each regional office has a part-time workers’ compensation coordinator that processes
and manages claims in their respective region. In addition, the Department also hired a
contractor to assist with the management of some of its Headquarters workers’
compensation cases. The contract expired in 2002.

From Chargeback Years (CBYs) 2001 through 2003, the Department’s FECA program
costs totaled approximately $4.6 million, with an average of 111 claimants per year
receiving benefits. Costs were noted as declining slightly in each of the three years.
Approximately 80 percent of the Department’s FECA costs are related to claimants with
injuries occurring 5 or more years ago that have not returned to work.




ED-OIG/A19-D0008                                                                  Page 4
                                 AUDIT RESULTS 


Overall, we found improvements were needed in the Department’s management of the
workers’ compensation program. Our audit revealed the Department did not adequately
manage its workers’ compensation program. Specifically, we noted there was no formal
tracking system for cases, case files were unorganized, there was no comprehensive case
management plan, and there was a lack of follow-up on long-term workers’
compensation cases. In addition, our audit revealed workers’ compensation claims were
not always processed timely, Continuation of Pay benefits were not effectively
monitored, and workers’ compensation chargeback reports were not adequately verified.

This occurred because the Department does not have established policies and procedures
for the management of the workers’ compensation program, lacks an effective tracking
system for its claims and cases, and Department staff do not appear to fully understand
their FECA responsibilities. As a result, the Department may be paying benefits to
individuals that are not entitled to them, and may not be returning injured employees
back to work in the most expeditious timeframe possible, thereby consuming federal
resources that could otherwise be used elsewhere.

The Department concurred with our findings and provided a proposed corrective action
plan addressing all of our recommendations. The full text of the Department’s response
is included as Attachment 1 to this audit report. The Department’s response does not
warrant any changes to the draft report.

______________________________________________________________________

Finding No. 1 -	       The Department Did Not Adequately Manage its
                       Workers’ Compensation Cases
________________________________________________________________________

The Department did not manage its workers’ compensation cases adequately. Our audit
revealed that the Department did not have a formal tracking system for cases; case files
were unorganized; there was no comprehensive case management plan; and there was a
lack of follow-up on long-term workers’ compensation cases.

Case Tracking System

We noted the Department had not utilized existing information technology in its
management of workers’ compensation program information. While the Department
developed its own electronic database to assist with case management in 2000, the
information contained in this database is limited, due to lack of staff availability to input
case information. This database does not interface with the OWCP, does not include


ED-OIG/A19-D0008 	                                                                     Page 5
information on cases predating the implementation of the database, and is not available to
regional workers’ compensation specialists. Support Services staff noted the system is
used more as a data warehouse than as a program management tool, even though it has
those capabilities. In actuality, cases are managed via paper files. Headquarters staff
have access to OWCP’s Automated Query System (AQS) to assist with basic case
management functions, however, none of the regional coordinators have been granted
access to AQS. Support Services staff recently indicated they are in the process of
implementing OWCP’s automated system- the Safety and Health Information
Management System (SHIMS)- which will provide automated case management
capabilities and the ability to transfer all forms to OWCP electronically.

File Maintenance and Documentation

We noted the Department’s paper-based case management system was inadequate. We
reviewed 53 case files and noted they were generally unorganized and/or incomplete,
information was included in the wrong individual’s case file, information for multiple
cases filed by the same individual was included in the same file, duplicate copies of
information were included in files, and some files were missing. While files were
generally kept in filing cabinets, several were stored on the filing room floor in boxes.
While some files had case tracking or log sheets included, others did not. Case tracking
sheets that were included were many times incomplete or outdated, making it difficult to
determine case status and follow-up activities. In general, we found little evidence in the
files indicating cases are actively managed or tracked to ensure that employees are
entitled to receive workers’ compensation benefits or to assist injured employees back to
work.

Long-Term Case Management and Follow-Up

As part of our audit, we reviewed all 14 long-term cases assigned to Headquarters to
determine the extent of case management and follow-up. Long-term cases were defined
as cases appearing on the chargeback reports with a designation code of “P” for periodic
payroll, with claimants that have not returned to work that have been receiving benefits
for five or more years. These cases comprised 40 percent, or $1,844,750, of the
Department’s workers’ compensation costs for the CBYs in our review. We specifically
looked for medical updates and inquiries on these cases. Two case files were unable to
be located. Two case files had been transferred to regional offices. In 1 of the 10 cases
that were available for review (10 percent), we noted no medical updates or inquiries in
the file. We noted medical inquiries in three other files in the last three to six years, but
no resulting updates. For the other 6 cases, we determined 1 case was last updated over
10 years ago, 3 cases were updated between 5 and 10 years ago, and 2 cases were
updated between 1 and 5 years ago. For these 6 cases, we noted an average of 5 years
since medical updates had been obtained. For the 10 files that were available for review,
we noted an average of 4 years since any type of case action was noted in the file.

While Support Services staff indicated they send periodic letters to OWCP inquiring
about the current case status of Department claimants on the periodic payroll, we noted



ED-OIG/A19-D0008                                                                      Page 6
that this consists of one general letter sent to each regional OWCP office with a listing of
the applicable claimants attached. Letters are not specific to issues related to individual
cases. The letter requests such information as claimant rehabilitation status and changes
in medical status, noting the Department’s hope to reduce costs by returning employees
to work. We noted this to be an inappropriate inquiry for some individuals, and OWCP’s
resulting frustrations. We noted correspondence from OWCP in one particular case
asking the Department to stop inquiring about a particular claimant, as OWCP had been
informing them for years that the particular claimant had been deceased since 1978. The
Department should have been specifying its letter to inquire about the status of any
beneficiaries in this case.

Support Services staff stated sometimes OWCP responds to the letters and sometimes
they do not. We noted the OWCP responses that were received were maintained in one
accordion-type file. This file contained responses to 22 individual cases, with
correspondence dating back to 1999. Support Services staff responded by stating that
they are kept in an accordion file because the person that was responsible for filing them
in the appropriate case files is no longer with the Department. Some of the
correspondence contained in this file pertained to issues other than medical or
rehabilitation status and to cases other than long-term/periodic payroll cases. Some
responses were copies of letters of inquiry sent by OWCP to a claimant or claimant’s
physician requesting follow-up information, which provided no definitive answer on
claimant status.

Other information we noted in the individual long-term case files reviewed caused us to
question whether the Department followed-up on issues that could call into question the
validity of continued payment of certain claims, as follows:

• 	 One claimant has a medical evaluation from his doctor dated April 2000, where the
    doctor notes that the individual’s disability at this point in time relates more to mental
    conditions than physical issues related to his back injury. The doctor notes the
    claimant could perform some work activities if it were not for his mental condition.
    The claimant’s mental condition referred to was not accepted as being compensable
    under the workers’ compensation program, only his back condition. In addition, an
    OWCP claims examiner note dated in February 2000 indicates there was no evidence
    that the claimant sought medical treatment for his back condition for the previous five
    years and had been treated conservatively for it in years prior to that. There were no
    additional medical evaluations noted in the file after April 2000. The Department’s
    workers’ compensation contractor had been requesting updates from OWCP during
    2001 and 2002 until their contract expired, without success. There is no evidence of
    follow-up by the Department after that even though the information suggests reasons
    for the Department to call into question continued payment of the claim. The
    Department paid $48,307 to this claimant during CBYs 2001-2003. The claimant’s
    date of injury was 1984.

• 	 The last medical update noted in the file for one individual was dated November
    1997, consisting of an OWCP letter to the claimant stating the last medical report


ED-OIG/A19-D0008 	                                                                    Page 7
   received by them was dated October 6, 1993. OWCP also noted no bills had been
   recently submitted for any kind of treatment related to her condition. No further
   information was contained in the Department’s file noting follow-up with the
   claimant or with OWCP to determine whether payment should continue. The
   Department paid $113,909 to this claimant during CBYs 2001-2003. The claimant’s
   date of injury was 1975.

• 	 There were no medical updates or requests for medical information noted in one
    claimant’s file. During CBYs 2001-2003, the Department paid $162,695 for this
    claimant. The date of injury for this individual was 1988.

• 	 One individual’s case file indicated she had resigned from the Department after
    sustaining an injury, later returned to a position at the Department, and was
    subsequently involuntarily terminated during a probationary period. There is no
    indication that the Department notified OWCP of this situation to review whether the
    individual should continue to be entitled to benefits upon her termination. During
    CBYs 2001-2003, the Department paid $239,275 for this claimant. The claimant’s
    date of injury was 1966.

• 	 The last request for one individual’s medical status was in 1998, per a letter from
    OWCP, noting they had no current evidence in their file to establish entitlement to
    continuing benefits. We noted no other medical information in this file and no
    medical bills processed for the period under our review. During CBYs 2001-2003,
    the Department paid $135,483 for this claimant. The claimant’s date of injury was
    1988.

• 	 One individual was noted as having had restrictions placed on work duties by her
    physician until she had surgery. The individual refused to have the surgery that may
    have enabled her to return to work. In addition, the case file noted a DOL OIG
    investigation that stated the individual was working at another job during this time.
    There is no apparent follow-up noted by the Department questioning the continuation
    of benefits to this individual under the circumstances. During CBYs 2001-2003, the
    Department paid $146,707 in workers’ compensation benefits for this claimant. The
    claimant’s date of injury was 1984.

• 	 One file included a letter from OWCP to the claimant stating that she was impeding
    rehabilitation efforts and the result could be termination of benefits. The claimant is
    noted as stating that even if she completed the rehabilitation program, she was not
    returning to work. We noted nothing that would suggest the Department followed up
    on this to determine OWCP’s subsequent actions. For CBYs 2001-2003, the
    Department paid $128,984 in workers’ compensation benefits for this claimant. The
    claimant’s date of injury was 1987.




ED-OIG/A19-D0008 	                                                                  Page 8
20 CFR § 10.506 states: 1

           The employer may monitor the employee’s medical progress and duty status by
           obtaining periodic medical reports… To aid in returning an injured employee to
           suitable employment, the employer may also contact the employee’s physician in
           writing concerning the work limitations imposed by the effects of the injury and
           possible job assignments… The employer may also contact the employee at
           reasonable intervals to request periodic medical reports addressing his or her
           ability to return to work.

The Office of Workers’ Compensation Programs Publication CA-810, Injury
Compensation for Federal Employees, Chapter 9, Section 9-3, states:

           A. Training. Ensure that sufficient training in technical and managerial skills is
           given to staff that routinely handle compensation claims and that resource
           materials are available to those who handle them infrequently.

           B. Administration. Establish a record-keeping system that will enable the agency
           to maintain copies of claim forms, medical reports, correspondence with OWCP,
           and other materials related to each compensation claim in an orderly fashion.

           D. Medical Information. Obtain medical information from OWCP or the injured
           employees as often as necessary (within OWCP and OPM regulations) to assess
           potential return to regular, light or limited duty. Advise physicians of any light-
           duty assignments available and their specific requirements. The agency can use
           the information thus gathered to monitor the claimant’s medical care and notify
           OWCP if it appears that the care is inadequate.

           E. Reemployment. Stay in touch with injured employees while they are receiving
           compensation, identify jobs suitable for them, and take steps to reemploy
           recovered or recovering employees as soon as the medical evidence shows that
           this is possible.

The Office of Workers’ Compensation Programs Publication CA-810, Injury
Compensation for Federal Employees, Chapter 8, Section 8-9, Separation from
Employment, Part B, Removal for Cause, states that an employee who is separated for
misconduct and whose removal is wholly unconnected to the work-related injury is not
entitled to further compensation benefits. Section 8-5, Vocational Rehabilitation
Services, Part D, Penalties, states that an employee who refuses to participate in an
OWCP rehabilitation program may have his or her compensation reduced or terminated.
Section 8-3, Nurse Services, Part D, Penalties, states that an employee who refuses to
make a good faith effort to obtain reemployment may have his or her benefits reduced or
terminated.



1
    Unless otherwise specified, all regulatory citations are to the April 1, 2003 volume.


ED-OIG/A19-D0008                                                                            Page 9
The Department does not have established policies and procedures for case file
maintenance and management, and staff do not appear to fully understand their FECA
responsibilities. With regard to long-term case monitoring procedures, Support Services
staff referred to the periodic letters they send to OWCP as their efforts on monitoring,
returning and/or rehabilitating claimants. Support Services staff also stated that OWCP
makes the decision to evaluate claimants and their assumption is OWCP sends out any
correspondence it feels is needed. Support Services staff stated the Department does not
do this, because it is not within the scope of their responsibilities. Support Services staff
stated their belief that once an employee is removed from the Department’s employment
role, the Department is no longer responsible for the case and they are barred from
contacting the employee.

The Department does not have a formal system in place to maintain and track case
information and status. We noted more active case management of cases that had
previously been assigned to a contractor that had been utilized to assist with some of the
Department’s workers’ compensation cases. Under this contractor, we noted appropriate
inquiries into medical updates, along with persistent follow-up when no responses were
received.

In addition, Department staff responsible for managing workers’ compensation cases do
not receive adequate formal training. Of the seven regional workers’ compensation
coordinators we interviewed, none of them have received formal workers’ compensation
coordinator training within the last four years. They indicated they rely on on-the-job
training. Those that had attended formal training did so on their own initiative.

If the Department does not develop comprehensive case management policies and
procedures, employees that are injured may not return to work in the most expeditious
time frame, thereby consuming federal resources that could otherwise be used elsewhere.
Claimants may continue to receive benefits when they may no longer be entitled to
receive them. As cases get older, the likelihood of returning employees to work
decreases, thereby increasing the need for active case management. Had these cases been
more actively managed earlier on in the case, the Department’s long-term costs could
have been less than they currently are.

Inconsistencies between regional and headquarters specialists will persist due to a lack of
clear policies on case and program management. Incomplete, inadequate, and
unorganized files may also hinder effective case management.

Without effective program management, the Department cannot determine whether its
workers compensation program is operating efficiently and effectively. Without
appropriate training of workers’ compensation staff, the Department may not be doing all
it can to ensure the program is less prone to fraud and abuse.




ED-OIG/A19-D0008                                                                     Page 10
Recommendations

We recommend the Assistant Secretary for Management:

1.1 	   Develop and distribute case management and file maintenance policies and
        procedures, to include:
           o 	Annual reviews of cases exceeding one year where the employee has not
              returned to work to determine appropriate follow-up actions.
           o 	Obtaining annual medical updates.
           o 	Maintaining appropriate contact with claimants to assist in returning them
              to work and monitoring status.
           o 	Documenting case files with all case actions and updates, including
              periodic AQS inquiries.
           o 	Notifying OWCP of information requiring follow-up, such as terminations
              of rehabilitated employees.
           o 	Monitoring updates and requesting additional medical opinions or further
              review within OWCP on questionable cases.

1.2 	   Implement an electronic case file management system to maintain and track case
        status. The system should include reminders for appropriate follow-up actions.

1.3 	   Ensure regional specialists have access to the electronic file management system
        and OWCP’s AQS.

1.4 	   Update all current long-term files.

1.5 	   Ensure appropriate training is provided to all Department workers’ compensation
        specialists, to include those in headquarters and the regional offices. For
        example, we noted several courses available from the OWCP listed on its website
        and in its publication, Injury Compensation for Federal Employees.

_______________________________________________________________________

Finding No. 2 -	        The Department Did Not Process Workers’
                        Compensation Claims Timely
________________________________________________________________________

The Department did not always process workers’ compensation claims timely. We
reviewed 43 workers’ compensation cases. We determined 32 of the cases had complete
information available in the file from which we could analyze the timeliness of claim
processing in accordance with federal regulations. Our analysis revealed the following:

    • 	 Four claims (13 percent) were not submitted to the employee’s supervisor within
        30 days of the date of injury. These claims were submitted between 9 and 62
        days late.



ED-OIG/A19-D0008 	                                                               Page 11
   • 	 Fourteen claims (44 percent) were not submitted to OWCP within 10 working
       days (14 calendar days) after the supervisor’s receipt of notice of injury. These
       claims were submitted between 2 and 84 days late.

In addition, we identified 26 of the 43 cases as having information available from which
we could analyze timeliness of processing in accordance with Departmental policy. We
noted 25 of the 26 cases (96 percent) did not have a workers’ compensation claim
submitted to the Department’s Support Services Team within a 72-hour period from the
employee’s date of injury. These claims were submitted between 1 and 134 days late.

During our review we also noted the DOL publishes timeliness statistics by agency, by
Fiscal Year (FY) quarter. For FY 2003, the Department was noted as having submitted
43.6 percent of its claims on time, ranking 11th out of 18 agencies with timeliness
statistics noted. Through the third quarter of FY 2004, the Department was noted as
having submitted 37.5 percent of its claims on time, ranking 5th out of 6 agencies with
timeliness statistics noted.

20 CFR § 10.100, states:

       (a) To claim benefits under the FECA, an employee who sustains a work-related
           traumatic injury must give notice of the injury in writing on Form CA-1,
           which may be obtained from the employer or from the Internet at
           www.dol.gov./dol/esa/owcp.htm. The employee must forward this notice to
           the employer. Another person, including the employer, may give notice of
           injury on the employee’s behalf. The person submitting a notice shall include
           the Social Security Number (SSN) of the injured employee.
       (b) For injuries sustained on or after September 7, 1974, a notice of injury must
           be filed within three years of the injury…
               (1) If the claim is not filed within three years, compensation may still be
                   allowed if notice of injury was given within 30 days or the employer
                   had actual knowledge of the injury or death within 30 days after
                   occurrence. This knowledge may consist of written records or verbal
                   notification. An entry into an employee’s medical record may also
                   satisfy this requirement if it is sufficient to place the employer on
                   notice of a possible work-related injury or disease.

20 CFR § 10.110 states:

       (a) The employer shall complete the agency portion of Form CA-1 (for traumatic
           injury) or CA-2 (for occupational disease) no more than 10 working days after
           receipt of notice from the employee…

The Office of Workers’ Compensation Programs Publication CA-810, Injury
Compensation for Federal Employees, Appendix A: Basic Forms, states:

       Form CA-1: Federal Employee’s Notice of Traumatic Injury and Claim for



ED-OIG/A19-D0008 	                                                                Page 12
       Continuation of Pay/Compensation should be submitted by the employee within
       30 days (but will meet statutory time requirements if filed no later than three
       years after the injury) and by the supervisor within 10 workdays following
       receipt of the form from the employee. The completed form should be sent to the
       supervisor by the employee and then to the appropriate OWCP office by the
       supervisor.

       Form CA-2: Notice of Occupational Disease and Claim for Compensation should
       be submitted by the employee within 30 days (but will meet statutory time
       requirements if filed no later than three years after the injury) and by the
       supervisor within 10 workdays after receipt of the form from the employee. The
       completed form should be sent to the supervisor by the employee and then to the
       appropriate OWCP office by the supervisor.

The Office of Workers Compensation Programs Publication CA-550, Federal
Employees’ Compensation Act (FECA): Questions and Answers, Part B, Notices of
Injury, Illness, And Death, states:

       Form CA-1 should be filed within 30 days of the injury, and Form CA-2 should
       be filed within 30 days of the date the employee realized the disease or illness was
       caused or aggravated by the employment. The forms may be obtained from the
       employer or from OWCP. The employer is expected to submit the completed
       form to OWCP within 10 workdays.

Department of Education Supervisor’s Guide For Workers’ Compensation, April 1996,
Employees’ Responsibility, states:

       The employee has the responsibility to initiate a written notice of injury (CA-1) or
       disease (CA-2). The form must then be given to the supervisor or designated
       representative, and submitted to the Compensation Specialist in the Health and
       Environmental Safety Group. In the regions, the form needs to be submitted to
       the Regional Personnel Specialist. The CA-1 must be submitted to HESG within
       72 hours of the date of injury. This is a requirement by Education.

The Department lacks sufficient policies and procedures to ensure claims are tracked and
handled on a timely basis. The Department also lacks sufficient information and training
for supervisors and employees on the time requirements to process workers compensation
claim forms. The Department’s guide for supervisors on workers’ compensation has not
been updated since 1996 and is not distributed unless specifically requested. Supervisors
and managers have no means by which they would be made aware of the existence of this
publication. Three of the six regional workers’ compensation specialists interviewed
were even unaware that this guide existed.

According to the DOL, there is a direct relationship between submitting workers’
compensation claims and returning an injured employee to work. The earlier the DOL
becomes involved in a case, the sooner a nurse can be assigned to the case or a case



ED-OIG/A19-D0008                                                                  Page 13
determination can be made, and the sooner the injured employee can return to work,
resulting in less benefits paid by the Department. Late claim submissions can also result
in delays in compensation benefits, medical bill payments, and possibly an interruption to
a claimant’s income.

Recommendations

We recommend the Assistant Secretary for Management:

2.1 	   Provide formal training to Department supervisors and managers on workers’
        compensation claim processing requirements and responsibilities.

2.2 	   Update and distribute the Supervisor’s Guide to Workers’ Compensation to all
        supervisors, managers, and compensation specialists Department-wide and post a
        copy to the intranet.

2.3 	   Establish a formal tracking system to monitor timeliness of claim submission.

________________________________________________________________________

Finding No. 3 -	      The Department Did Not Effectively Monitor
                      Continuation of Pay Benefits
________________________________________________________________________

The Department did not effectively monitor Continuation of Pay (COP) benefits.
We reviewed the seven employees in our universe that were identified as having their
workers’ compensation cases denied who had initially elected to receive COP benefits.
We found that two of these individuals (29 percent) actually received COP and that
neither of these employees had been requested to reimburse the Department for these
benefits. These two employees received a total of 85 calendar days of COP benefits
totaling $12,592. We also noted that one of these employees received four days more
than the maximum allowable amount of COP. In addition, we noted one employee in our
universe who had his case denied and had initially elected not to receive COP, but
actually did receive COP in the amount of $1,060. This individual has not reimbursed
the Department.

We also identified three Department employees that received COP benefits totaling $714
but for which no workers’ compensation claim had been filed.

20 CFR § 10.200 (a) states:

        For most employees who sustain a traumatic injury, the FECA provides that the
        employer must continue the employee’s regular pay during any periods of
        resulting disability, up to a maximum of 45 calendar days. This is called
        continuation of pay, or COP. The employer, not OWCP, pays COP. Unlike wage



ED-OIG/A19-D0008 	                                                                Page 14
       loss benefits, COP is subject to taxes and all other payroll deductions that are
       made from regular income.

20 CFR § 10.205 (a)(1) states:

       To be eligible for COP, a person must have a “traumatic injury” as defined at
       § 10.5(ee) which is job-related and the cause of the disability, and/or the cause of
       the lost time due to the need for medical examination and treatment.

20 CFR § 10.224 states:

       Where OWCP finds that the employee is not entitled to COP after it has been
       paid, the employee may choose to have the time charged to annual or sick leave,
       or considered an overpayment of pay under 5 U.S.C. 5584.

The Department has not developed any written policies and procedures on the
management of COP benefits, and does not have an effective tracking system in place to
monitor COP usage. While Support Services staff received COP reports from Human
Resources Services, reports were not reconciled with case files to determine eligibility.
According to Support Services staff, individual Principal Offices (PO) are responsible for
inputting time and attendance records and are responsible for monitoring the injured
employees’ leave situations and obtaining reimbursement for COP benefits if a case is
denied.

Support Services staff prepared a guide for supervisors several years ago outlining their
reporting responsibilities relative to injury/illness compensation procedures involving the
Department’s employees. However, it does not state whose responsibility it is to manage
COP benefits, and this guide has never been widely distributed or publicized to
Department supervisors. Workers’ compensation guidance provided on OM’s intranet
site also does not cover management of COP benefits.

In subsequent follow-up with Support Services staff on the specific employees identified
in our review, we were informed that all of the employees are currently appealing their
cases to the DOL and COP would not be recouped until all appeals were exhausted. We
noted that one of these employees had appealed her case twice before and was issued the
second denial notice on March 13, 2003. We were informed that another individual is
currently requesting reconsideration. His case was denied in 2002. Per CFR § 10.607,
applications for reconsideration must be sent within one year of the date of the OWCP
decision for which review is sought, indicating that appeal rights expired in March 2004
for the one individual and 2003 for the other. Support Services staff stated the other
individual had her appeal previously submitted several times, however the DOL could
not find it or had lost it.

With regard to employees noted as receiving COP without having an associated workers
compensation claim, Support Services staff stated that in one case there was an




ED-OIG/A19-D0008                                                                   Page 15
administrative error, which should have been corrected by now, and they were unable to
identify approved claims for the other two individuals.

If the Department does not develop policies and procedures on the management of COP
benefits and an effective tracking system to monitor COP usage, the Department may end
up paying for benefits for employees that are not entitled to them. Without established
controls in place, the Department will not be aware of the employees who: (1) are not
entitled to COP benefits, (2) should reimburse the Department for COP benefits if the
case is denied, and (3) exceed the maximum 45-days of COP benefits.

Recommendations

We recommend the Assistant Secretary for Management:

3.1 	   Develop policies and procedures for monitoring and tracking of COP benefits and
        distribute to all affected parties to ensure awareness of responsibilities.

3.2 	   Recoup the COP benefits received by the individuals identified above with denied
        claims and those without established claims.

_____________________________________________________________________

Finding No. 4 - The Department Did Not Adequately Verify
                Chargeback Reports
_____________________________________________________________
The Department did not adequately verify workers’ compensation chargeback reports.
We identified individuals with workers’ compensation claims filed or benefits received
for CBYs 2001-2003. We matched these individuals against the Department’s personnel
database. We subsequently identified 15 out of 284 individuals for which a match was
not found. Upon follow-up with the Office of Personnel Management, we identified one
individual with questionable charges totaling $1,485 for the period of our review. This
individual was never an employee of the Department of Education, but had his benefits
paid by the Department in two of the three CBYs included in our review.

We also noted several individuals listed on the chargeback reports that were coded under
the incorrect Departmental PO or were included under an “Other” office listing. POs
with individual appropriations are charged with their portion of workers’ compensation
costs through the Department’s common support process based on information from the
chargeback reports.

The Office of Workers’ Compensation Programs Publication CA-810, Injury
Compensation for Federal Employees, Chapter 9, Section 9-5, Chargeback, states:

        The FECA program is financed by the Employees’ Compensation Fund, which
        consists of monies appropriated by Congress or contributed by certain agencies


ED-OIG/A19-D0008 	                                                               Page 16
       from operating revenues. The chargeback system is the mechanism by which the
       costs of compensation for work-related injuries and deaths are assigned to
       employing agencies annually at the end of the fiscal accounting period, which
       runs from July to June for this purpose. Each year OWCP furnishes each agency
       with a statement of payments made from the Fund on account of injuries to its
       employees. The agencies include these amounts in their budget requests to
       Congress. The sums appropriated or obtained from operating revenues are
       deposited in the Fund.

       C. Quarterly Chargeback Report.
       Each agency receives a quarterly report which lists all cases and costs for which
       charges will appear on the yearly chargeback bill. This report can be used to
       identify and correct errors before the agency is billed for them. When an agency
       believes that a case appearing on its chargeback report does not belong on its
       account, it should check current personnel and payroll records as well as search
       the service record file and/or send an inquiry to the Federal Records Center.
       Agency personnel may also review case files at the district office to resolve such
       discrepancies.

       E. Adjustments to the Chargeback Bill.
       When an adjustment to the yearly chargeback bill is desired, the agency must send
       the request directly to the OWCP National Office. If another agency should have
       been charged, OWCP will so advise that agency and a debit will appear on its
       next bill. Credits or debits will be made only for charges appearing on the
       agency’s most recent bill.

The Office of Workers’ Compensation Programs Publication CA-810, Injury
Compensation for Federal Employees, Chapter 9, Section 9-3, Managing Compensation
Programs, F, Financial Records, states agencies are to monitor chargeback billings and
arrange to charge costs to the lowest organizational level practicable to make managers
more aware of costs.

We found that the Department did not have any policies or procedures indicating who is
responsible for verifying the reports, when the verification should be performed, and how
the verification should be accomplished. Chargeback reports were not routinely sent to
the regional specialists or applicable POs for review and verification. OM staff indicated
the in-house case management database that was developed had the capability to match
chargeback reports with personnel data, but they did not really use that capability.

As a result, the Department inappropriately paid workers’ compensation benefits. These
costs should have been charged to another agency. Per OWCP guidance cited above, the
Department may not be able to recoup the costs associated with this individual from prior
chargeback reports. Costs being charged to individual POs may be under or overstated
since the claimants are not always listed under the correct PO. Without an effective
verification process in place, the Department continues to run the risk of paying costs that
are inappropriate.



ED-OIG/A19-D0008                                                                   Page 17
Recommendations

We recommend the Assistant Secretary for Management:

4.1 	   Notify OWCP of the need to remove the individual identified above from the
        Department’s chargeback report and recoup the associated costs if allowable.

4.2 	   Validate the most recent chargeback report against the Department’s personnel
        database to determine whether any additional individuals are not Department
        employees or had an injury date prior to their entry date with the Department.

4.3 	   Develop and distribute policies and procedures addressing the verification of
        chargeback reports, to include who is responsible, how frequently chargeback
        reports are verified, and how the verification should be performed.

4.4 	   Ensure all knowledgeable parties, including regional specialists and applicable
        POs, are provided with copies of the chargeback reports to review and verify,
        including verification that individuals are listed under the appropriate PO. POs
        should also identify applicable individuals currently listed under the “Other”
        category and ensure they are moved to the appropriate PO listing.




ED-OIG/A19-D0008 	                                                                Page 18
         OBJECTIVES, SCOPE, AND METHODOLOGY 


The objectives of our audit were to:

   1. 	 Determine whether the Department has adequately processed and documented
        workers' compensation claims.
   2. 	 Assess the appropriateness of selected claims.

To accomplish our objectives, we obtained an understanding of the controls in place over
the workers’ compensation program. We reviewed applicable laws, regulations, and
Department of Education and DOL policies and guidance. We conducted interviews with
OM staff responsible for the administration of the workers’ compensation program within
the Department. We also conducted interviews with staff and management from DOL’s
OWCP to obtain an understanding of the workers’ compensation program and the roles
and responsibilities of agency personnel. We reviewed other agencies’ audit reports,
policies and guidance to determine related findings in this area and to identify any best
practices.

We limited our review to cases that had established workers’ compensation claims or had
benefits paid during CBYs 2001, 2002 and 2003. We identified 284 cases compiled from
data obtained from DOL chargeback reports, DOL’s AQS, and Department of Education
COP reports. To test the reliability of DOL’s automated data, we compared selected data
elements with actual case file hardcopy documentation in DOL and Department of
Education files. To assess completeness of the automated system, we pulled hardcopy
files and determined whether these cases were included in the system. Based on these
tests and assessments, we concluded the data were sufficiently reliable to be used in
meeting the audit's objectives.

We further limited our case review and analysis to those cases that were located and
processed in the Washington, D.C. Headquarters office. This office processed 64 percent
of the cases in our universe and had the most experience handling workers’ compensation
cases. To identify program management variations within the Department, we
telephonically surveyed six regional workers’ compensation specialists.

We judgmentally selected 34 of the 182 Headquarters cases based upon high-risk criteria,
including employees with multiple cases, employees associated with the management of
the workers’ compensation program, and employees receiving a high dollar amount of
compensation benefits. We judgmentally selected 9 additional files from the
Department’s file room. We reviewed case files to assess the Department’s timeliness in
processing claims and evaluate the appropriateness of the claims. In addition, we
identified all Headquarters cases appearing on the chargeback reports with a designation
code “P” for periodic payroll, indicating long-term cases receiving continuous payroll


ED-OIG/A19-D0008 	                                                              Page 19
benefits. We identified 14 of these cases and analyzed them for overall case management
activities and appropriateness of the claims.

To determine whether claimants were actually Department employees at the time of
injury, we compared the entire workers’ compensation universe as determined above to
the Department’s personnel database. We subsequently compared any individuals in
question to Office of Personnel Management employment records to determine their
Federal employment history. We also compared chargeback reports with Department
records to determine if employees were appropriately coded to the correct PO.

To perform an analysis of COP benefits, we identified all claimants within our universe
that had received COP benefits, as reflected in Department COP reports. We further
identified all claimants that had received COP benefits and had their cases denied by
DOL, individuals for which no workers’ compensation claim could be identified, and
individuals receiving a high-dollar amount of COP benefits. We analyzed associated
time and attendance records for these individuals to determine whether individuals had
received in excess of the maximum allowable amount of COP benefits, and whether COP
benefits were recouped for individuals with denied cases.

We performed our fieldwork at applicable Department of Education and Department of
Labor offices in Washington, D.C., from August 2003 through August 2004. We held an
exit conference with Department management on November 9, 2004. Our audit was
performed in accordance with generally accepted government auditing standards
appropriate to the scope of the review as described above.




ED-OIG/A19-D0008                                                               Page 20
             STATEMENT ON INTERNAL CONTROLS 



As part of our review, we assessed the system of internal controls, policies, procedures,
and practices applicable to the Department’s administration of the workers’ compensation
program. Our assessment was performed to determine the level of control risk for
determining the nature, extent, and timing of our substantive tests to accomplish the audit
objectives.

For the purpose of this report, we assessed and classified the significant controls into the
following categories:

   •   Case management
   •   Claim processing

Because of inherent limitations, a study and evaluation made for the limited purpose
described above would not necessarily disclose all material weaknesses in the internal
controls. However, our assessment disclosed significant internal control weaknesses that
adversely affected the Department’s ability to administer the workers’ compensation
program. These weaknesses and their effects are fully discussed in the AUDIT
RESULTS section of this report.




ED-OIG/A19-D0008                                                                    Page 21
                                                                             Attachment 1
                                                                               Page 1 of 5

TO:    	      Helen Lew
              Assistant Inspector General for Audit
              Office of Inspector General

FROM: 	       William J. Leidinger
              Assistant Secretary for Management and Chief Information Officer

SUBJECT: 	 DRAFT AUDIT REPORT- Audit of the Department’s Management of the
           Federal Employees’ Compensation Act Program (ED-OIG/A19-D0008)

Thank you for your draft audit report, Audit of the Department’s Management of the
Federal Employees’ Compensation Act Program, ED-OIG/A 19-D0008 dated January 7,
2005. The Office of Management (OM) concurs with all of the four findings, specifically:

       -	 Finding # 1- The Department Did Not Adequately Manage its Workers’
          Compensation Cases
       -	 Finding # 2- The Department Did Not Process Workers’ Compensation
          Claims Timely
       -	 Finding # 3- The Department Did Not Effectively Monitor Continuation of
          Pay Benefits
       -	 Finding # 4- The Department Did Not Adequately Verify Chargeback Reports

The following is our proposed corrective action to address the 14 recommendations your
office has provided related to the above findings.

Finding Number 1- The Department did not adequately manage its workers’
compensation cases:

Recommendation 1. - Develop and distribute case management and file maintenance
policies and procedures to include:

       1.1.a. Annual reviews of cases exceeding one year where the employee has not
       returned to work to determine appropriate follow-up actions
       1.1.b. Obtaining annual medical updates
       1.1.c. Maintaining appropriate contact with claimants to assist in returning them
       to work and monitoring status
       1.1.d. Documenting case files with all case actions and updates, including
       periodic AQS inquiries
       1.1.e. Notifying OWCP of information requiring follow-up, such as terminations
       of rehabilitated employees
       1.1.f. Monitoring updates and requesting additional, medical opinions or further
       review within OWCP on questionable cases.
                                                                             Attachment 1
                                                                               Page 2 of 5

Proposed Corrective Actions. OM is scheduled to implement a Safety and Health 

Information Management System (SHIMS), which will maintain all workers’ 

compensation files electronically and track progress of claims. SHIMS will also 

electronically submit workers’ compensation claims and provide OM with data on 

injuries/illnesses. SHIMS will provide OM with quicker and efficient case management 

for the Workers’ Compensation Program. Additionally, OM will contract to provide 

periodic reviews of long-term cases and track/obtain required annual medical updates. 

These corrective actions will resolve all recommendations noted from 1.1.a through 1.1.f 

as stated in Recommendation 1. 

Proposed Completion Date: September 30, 2006 


Recommendation 1.2 Implement an electronic case file management system to maintain 

and track case status. The system should include reminders for appropriate follow-up 

actions. 

Proposed Corrective Action: SHIMS will maintain and track the status of cases. 

Reminders for follow-up actions will be built into the system. 

Proposed Completion Date: September 30, 2006 


Recommendation 1.3. Ensure regional specialists have access to the electronic file 

management system and OWCP’s and AQS (Agency Query System)?

Proposed Corrective Action: Since SHIMS is a web-based system, Regional Specialists 

will have access to the system. Training on SHIMS will be provided to HQ and Regional 

Specialists who have Workers’ Compensation responsibilities. 

Proposed Completion Date: September 30, 2006 


Recommendation 1.4. Update all current long-term files. 

Proposed Corrective Action: OM will use a contractor to update all current long-term 

files for OWCP. 

Proposed Completion Date: March 30, 2006 


Recommendation 1.5 Ensure appropriate training is provided to all Department workers’ 

compensation specialists, to include those in headquarters and the regional offices. For 

example, we noted several courses available from the OWCP listed on the website and in 

its publication, Injury Compensation for Federal Employees. 

Proposed Corrective Action: SHIMS will contain a training session within the system. 

OM will provide an additional on-line training package separate from the SHIMS, which 

would be required by all ED workers’ compensation specialists both in HQ and in the 

regions. Regional offices may also contact Department of Labor for additional formal 

workers’ compensation training. This training is free of charge. 

Proposed Completion Date: September 30, 2006 

                                                                            Attachment 1
                                                                              Page 3 of 5

Finding # 2- The Department Did Not Process Workers’ Compensation Claims
Timely

Recommendation 2.1 Provide formal training to Department supervisors and managers
on workers’ compensation claim processing requirements and responsibilities.
Proposed Corrective Action: As stated in the corrective action for Recommendation
1.5, OM will implement an on-line Intranet training program for all supervisors and
managers. Claims processing requirements and responsibilities will be included in the
training session. Additionally, OM will notify supervisors and managers about optional
training available with the U.S. Department of Labor. This DOL training is free of
charge.
Proposed Completion Date: September 30, 2005

Recommendation 2.2 Update and distribute the Supervisor’s Guide to Workers’
Compensation to all supervisors, managers, and compensation specialists Department-
wide and post a copy to the intranet.
Proposed Corrective Action: OM will revise and update the Supervisor’s Guide for
Workers’ Compensation and will make this document accessible to all supervisor’s and
managers on the Department’s Intranet.
Proposed Completion Date: September 30, 2005

Recommendations 2.3 Establish a formal tracking system to monitor timeliness of claim
submission.
Proposed Corrective Action: SHIMS will maintain and electronically track the status of
cases as well as provide reminders for appropriate follow-up actions. SHIMS will
electronically submit workers’s compensation claims, which will in aid the timely
submission of workers’ compensation claims to the U.S. Department of Labor.
Proposed Completion Date: September 30, 2006

Finding # 3- The Department Did Not Effectively Monitor Continuation of Pay
Benefits

Recommendation 3.1 Develop policies and procedures for monitoring and tracking COP
benefits and distribute to all affected parties to ensure awareness of responsibilities.
Proposed Corrective Action: OM will develop a new Administrative Communications
Systems (ACS) policy document on the Workers Compensation Program. OM will
include a section on “monitoring and tracking COP benefits” in the actual policy
document. OM has been in contact and is currently benchmarking with other federal
agencies while gathering existing policy documents pertaining to the Workers’
Compensation Program.
Proposed Completion Date: March 30, 2006

Recommendation 3.2 Recoup the COP benefits received by the individuals identified in
the audit with denied claims and those without established claims.
                                                                             Attachment 1
                                                                               Page 4 of 5

Proposed Corrective Action: There are now only two individuals that now fall into the
categories mentioned above. The third individual’s previously denied claim has since
been approved. OM has taken the appropriate actions to recoup the COP benefits for the
two individuals identified in the report.
Completed: Provide date action done.

Finding # 4- The Department Did Not Adequately Verify Chargeback Reports

Recommendation 4.1 Notify OWCP of the need to remove the individual identified 

above (Stephen Allen) from the Department’s chargeback report and recoup the 

associated costs if allowable. 

Proposed Corrective Action: OM has notified OWCP to remove the individual 

identified in the draft audit report and he was removed from the chargeback roster. As per 

DOL regulations, ED is not allowed to recoup the minimal associated costs with this 

case. 

Completed: Provide date action done. 


Recommendation 4.2 Validate the most recent chargeback report against 

the Department’s personnel database to determine whether any additional individuals are 

not Department employees or had an injury prior to their entry date with the Department. 

Proposed Corrective Action: OM will validate the most recent chargeback report 

against the Department’s personnel database and review for accuracy. 

Proposed Completion Date: March 30, 2005


Recommendation 4.3 Develop and distribute policies and procedures addressing the 

verification of chargeback reports, to include who is responsible, how frequently 

chargeback reports are verified, and how the verification should be performed. 

Proposed Corrective Action: OM will develop a new Administrative Communications 

Systems (ACS) policy document on the Workers Compensation Program. OM will 

include a section on “verification of chargeback reports” in the actual policy document. 

OM has been in contact and is currently benchmarking with other federal agencies while 

gathering existing policy documents pertaining to the Workers’ Compensation Program. 

Proposed Completion Date: March 30, 2006 


Recommendation 4.4 Ensure all knowledgeable parties, including regional specialists 

and applicable POs, are provided with copies of the chargeback reports to review and 

verify, including verification that individuals are listed under the appropriate PO. POs 

should also identify applicable individuals currently listed under the “Not Specified” 

category and ensure they are moved to the appropriate PO listing. 

Proposed Corrective Action: OM will develop a new transmittal document and send on 

chargeback reports to Regional Specialists and to Principal Offices on a regular basis. 

The document will only contain information for the specific region or Principal Office. 

                                                                        Attachment 1
                                                                          Page 5 of 5

This process will be performed and coordinated manually by a HQ Workers’ 

Compensation Specialist or contractor. 

Proposed Completion Date: March 30, 2005 



Please contact Ms. Carmen Merriweather or Fred Green if you have any questions on 

theseresponses. Ms. Merriweather may be reached on 202-401-0449 and Mr. Green may 

be reached on 202-401-5931.