oversight

Energy Employees Compensation: Case-Processing Bottlenecks Delay Payment of Claims

Published by the Government Accountability Office on 2003-12-06.

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

                               United States General Accounting Office

GAO                            Testimony
                               Before the Subcommittee on Energy,
                               Committee on Energy and Natural
                               Resources, U.S. Senate

For Release on Delivery
Expected at 9:00 a.m. CST
Saturday, December 6, 2003 	   ENERGY EMPLOYEES
                               COMPENSATION
                               Case-Processing
                               Bottlenecks Delay Payment
                               of Claims
                               Statement of Robert E. Robertson, Director,
                               Education, Workforce, and Income Security Issues




GAO-04-298T 

                                                December 2003


                                                ENERGY EMPLOYEES COMPENSATION

                                                Case-Processing Bottlenecks Delay
Highlights of GAO-04-298T, testimony            Payment of Claims
before the Subcommittee on Energy,
Committee on Energy and Natural
Resources, U.S. Senate




The Department of Energy                        As of June 30, 2003, Energy had completely processed only about 6 percent
(Energy) and its predecessor                    of the nearly 19,000 cases it had received. More than three-quarters of all
agencies and contractors have                   cases were associated with facilities in nine states. Processing had not begun
employed thousands of workers in                on over half of the cases and, of the remaining 40 percent of cases that were
the nuclear weapons production                  in processing, almost all were in the initial case development stage, as
complex. Some employees were
exposed to toxic substances,
                                                illustrated below.
including radioactive and
hazardous materials, during this                Case Status as of June 30, 2003
work and many subsequently
developed illnesses. Subtitle D of
the Energy Employees
Occupational Illness Compensation
Program Act of 2000 allows Energy
to help its contractor employees
file state workers’ compensation
claims for illnesses determined by
a panel of physicians to be caused
by exposure to toxic substances in
the course of employment at an
Energy facility. Energy began
accepting applications under this
program in July 2001, but did not
begin processing them until its final
regulations became effective on
September 13, 2002.

The Congress mandated that GAO                  While the majority of cases (86 percent) associated with major Energy
study the effectiveness of the                  facilities in nine states potentially have a willing payer of workers’
benefit program under Subtitle D of             compensation benefits, actual compensation is not certain. This figure is
this Act. This testimony is based on            based primarily on the method of workers’ compensation coverage used by
GAO’s ongoing work on this issue
                                                Energy contractor employers and is not an estimate of the number of cases
and focuses on three key areas:
(1) the number, status, and                     that will ultimately be paid. Since no claimants to date have received
characteristics of claims filed with            compensation as a result of their cases filed with Energy, there is no actual
Energy; (2) the extent to which                 experience about how contractors and state programs treat such claims.
there will be a “willing payer” of
workers’ compensation benefits,                 Claimants have been delayed in filing for state worker’s compensation
that is, an insurer who—by order                benefits because of two bottlenecks in Energy’s claims process. First, the
from, or agreement with Energy—                 case development process has not always produced sufficient cases to allow
will not contest these claims; and              the panels of physicians who determine whether the worker’s illness was
(3) the extent to which Energy                  caused by exposure to toxic substances to operate at full capacity. While
policies and procedures help                    additional resources may allow Energy to move sufficient cases through its
employees file timely claims for
                                                case development process, the physician panel process will continue to be a
these state benefits.
                                                second, more important, bottleneck. The number of panels, constrained by
www.gao.gov/cgi-bin/getrpt?GAO-04-298T.         the scarcity of physicians qualified to serve on panels, will limit Energy’s
To view the full product, including the scope
                                                capacity to decide cases more quickly, using its current procedures. Energy
and methodology, click on the link above.       officials are exploring ways that the panel process could be more efficient.
For more information, contact Robert E.
Robertson at (202) 512-7215 or
robertsonr@gao.gov..
Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss our work regarding the
effectiveness of the benefit program under Subtitle D of the Energy
Employees Occupational Illness Compensation Program Act of 2000
(EEOICPA) in assisting contractor employees in obtaining compensation
for occupational illnesses. Congress mandated that we study this issue and
report to the Senate Committees on Energy and Natural Resources and
Appropriations and the House Committees on Energy and Commerce and
Appropriations.

For the last several decades, the Department of Energy (Energy), and its
predecessor agencies and contractors have employed thousands of
individuals in secret and dangerous work in the nuclear weapons
production complex. Over the years, employees were unknowingly
exposed to toxic substances, including radioactive and hazardous
materials, and studies have shown that many of these employees
subsequently developed illnesses. The Energy Employees Occupational
Illness Compensation Program provides for compensation to these
employees who developed occupational illnesses and, where applicable, to
their survivors. Congressional Committees, as well as individual Members
of Congress, claimants, and advocates have raised concerns regarding
Energy’s processing of claims and the availability of benefits once claims
have been decided.

As title XXXVI of the Floyd D. Spence National Defense Authorization Act
for Fiscal Year 2001, which was signed into law on October 30, 2000, this
legislation has two major components. Subtitle B provides eligible
workers who were exposed to radiation or other toxic substances and
who subsequently developed illnesses such as cancer and lung disease a
one-time payment of up to $150,000 and covers future medical expenses
related to the illness. The Department of Labor administers these benefits,
payable from a compensation fund established by the same legislation.
Subtitle D allows Energy to help its contractor employees file state
workers’ compensation (WC) claims for illnesses determined by a panel of
physicians to be caused by exposure to toxic substances in the course of
employment at an Energy facility. The legislation did not set aside funding
for payment of benefits under Subtitle D.

My testimony today reflects our ongoing review of the effectiveness of
Energy’s implementation of Subtitle D. We focused our work on three key
areas: (1) the number, status, and characteristics of claims filed with
Energy; (2) the extent to which there will be a “willing payer” of workers’

Page 1                                                          GAO-04-298T
compensation benefits; that is, an insurer who—by order from, or
agreement with Energy—will not contest these claims; and (3) the extent
to which Energy policies and procedures help employees file timely claims
for state workers’ compensation benefits.

In summary, as of June 30, 2003, Energy had fully processed about
6 percent of the nearly 19,000 cases received, and more than three-quarters
of all cases were associated with facilities in nine states. Energy had not
begun processing over half of the cases received. While some other case
characteristics can be determined, such as illness claimed, systems
limitations prevent reporting on other case characteristics, such as the
reasons for ineligibility or basic demographics. While the majority of cases
(86 percent) associated with major Energy facilities in nine states
potentially have a willing payer of workers’ compensation benefits, actual
compensation is not certain. In certain states such as Ohio and Iowa, there
are likely to be many cases that lack willing payers, and in some instances
may be less likely to receive compensation than a comparable case with a
willing payer in a different state. The 86 percent figure reflects the number
of cases for which contractors and their insurers are likely to not contest a
workers’ compensation claim, rather than the number of cases that will
ultimately be paid. For all claimants, actual compensation is not certain
because of additional factors such as variations in state workers’
compensation programs or contractors’ uncertainty on how to compute
the benefit. Claims for workers’ compensation have been delayed by two
bottlenecks in Energy’s claims process. First, Energy’s case development
process has not always produced sufficient cases to keep physician panels
operating at full capacity. While additional resources may allow Energy to
move a sufficient number of cases through its case development process,
the physician panel process will continue to be a second and more
important bottleneck. The number of panels, constrained by the scarcity
of physicians qualified to serve on panels, will limit Energy’s capacity to
decide cases more quickly, using its current procedures. Energy officials
are exploring ways that the panel process could be made more efficient.

To perform our review, we analyzed data extracted from Energy’s Subtitle
D case management system for applications filed through June 30, 2003.1


1
 We collected data as of this date to enable us to assess the reliability of Energy’s data by
(1) performing electronic testing for obvious errors in accuracy and completeness, (2)
reviewing available documentation, and (3) interviewing agency officials and contractors
knowledgeable about the data. We determined that the data elements used were
sufficiently reliable for our purposes.



Page 2                                                                          GAO-04-298T
               We also reviewed the provisions of, and interviewed officials with, the
               workers’ compensation programs in nine states accounting for more than
               three-quarters of Subtitle D cases filed, and we interviewed the
               contractors operating the major facilities in these states. In addition, we
               conducted site visits to three Energy facilities in Oak Ridge, Tennessee,
               the state with facilities accounting for the greatest number of Subtitle D
               claims. We also interviewed key program officials and other experts. We
               conducted our review from April 2003 through October 2003 in
               accordance with generally accepted government auditing standards.


               Energy oversees a nationwide network of 40 contractor-operated
Background 	   industrial sites and research laboratories that have historically employed
               more than 600,000 workers in the production and testing of nuclear
               weapons. In implementing EEOICPA, the President acknowledged that it
               had been Energy’s past policy to encourage and assist its contractors in
               opposing workers’ claims for state workers’ compensation benefits based
               on illnesses said to be caused by exposure to toxic substances at Energy
               facilities.2 Under the new law, workers or their survivors could apply for
               assistance from Energy in pursuing state workers’ compensation benefits,
               and if they received a positive determination from Energy, the agency
               would direct its contractors to not contest the workers’ compensation
               claims or awards. Energy’s rules to implement the new program became
               effective in September 2002, and the agency began to process the
               applications it had been accepting since July 2001, when the law took
               effect.

               Energy’s claims process has several steps, as shown in Figure 1. First,
               claimants file applications and provide all available medical evidence.
               Energy then develops the claims by requesting records of employment,
               medical treatment, and exposure to toxic substances from the Energy
               facilities at which the workers were employed. If Energy determines that
               the worker was not employed by one of its facilities or did not have an
               illness that could be caused by exposure to toxic substances, the agency
               finds the claimant ineligible. For all others, once development is complete,
               a panel of three physicians reviews the case and decides whether
               exposure to a toxic substance during employment at an Energy facility
               was at least as likely as not to have caused, contributed to, or aggravated
               the claimed medical condition. The panel physicians are appointed by the


               2
               Executive Order 13179 of December 7, 2000.



               Page 3                                                          GAO-04-298T
National Institute for Occupational Safety and Health (NIOSH) but paid by
Energy for this work. Claimants receiving positive determinations are
advised that they may wish to file claims for state workers’ compensation
benefits. Claimants found ineligible or receiving negative determinations
may appeal to Energy’s Office of Hearings and Appeals.

Figure 1. Energy’s Claims Process


                                                 Claims sent                                            Claims received from 10
                                                   by mail                                                 Resource Centers




                                                                                                                Energy decides claim is
                            Records retrieval at                                Energy                             ineligible based on
                             Energy facilities                               develops claims                   non-covered employment or
                                                                                                                          illness



                                                                     Physician panel reviews
                                                                      case and recommends
                                                                       positive or negative
                                                                          determination



                                                                           Energy makes final
                                                                           determination and
                                                                            notifies applicant



             Energy notifies claimant
                                                             Positive                                                     Claimant may appeal
                     to submit                                                                Negative
                                                           determination                                               determination to Energy's
              claim to state workers'                                                       determination
                                                                                                                     Office of Hearings and Appeals
             compensation program



Source: GAO analysis of Energy Claims Process.




Each of the 50 states and the District of Columbia has its own workers’
compensation program to provide benefits to workers who are injured on
the job or contract a work-related illness. Benefits include medical
treatment and cash payments that partially replace lost wages.
Collectively, these state programs paid more than $46 billion in cash and
medical benefits in 2001. In general, employers finance workers’
compensation programs. Depending on state law, employers finance these
programs through one of three methods: (1) they pay insurance premiums
to a private insurance carrier, (2) they contribute to a state workers’
compensation fund, or (3) they set funds aside for this purpose as self­
insurance. Although state workers’ compensation laws were enacted in
part as an attempt to avoid litigation over workplace accidents, the
workers’ compensation process is still generally adversarial, with
employers and their insurers tending to challenge aspects of claims that
they consider not valid.


Page 4                                                                                                                            GAO-04-298T
                            State workers’ compensation programs vary as to the level of benefits,
                            length of payments, and time limits for filing. For example, in 1999, the
                            maximum weekly benefit for a total disability in New Mexico was less than
                            $400, while in Iowa it was approximately $950. In addition, in Idaho, the
                            weekly benefit for total disability would be reduced after 52 weeks, while
                            in Iowa benefits would continue at the original rate for the duration of the
                            disability. Further, in Tennessee, a claim must be filed within 1 year of the
                            beginning of incapacity or death. However, in Kentucky a claim must be
                            filed within 3 years of exposure to more substances, but within 20 years of
                            exposure to radiation or asbestos.


                            As of June 30, 2003, Energy had completely processed about 6 percent of
Energy Has Fully            the nearly 19,000 cases that had been filed, and the majority of all cases
Processed Few Cases,        filed were associated with facilities in nine states. Forty percent of cases
                            were in processing, but more than 50 percent remained unprocessed.
and Systems                 While some case characteristics can be determined, such as illness
Limitations                 claimed, systems limitations prevent reporting on other case
                            characteristics, such as the reasons for ineligibility or basic demographics.
Complicate Program
Management

About 6 Percent of Cases    During the first 2 years of the program ending June 30 2003, Energy had
Have Been Fully Processed   fully processed about 6 percent of the nearly 19,000 claims it received. The
                            majority of these claims had been found ineligible due to either a lack of
                            employment at an eligible facility or an illness related to toxic exposure.
                            Of the cases that had been fully processed, 42 cases—less than one third
                            of one percent of the nearly 19,000 cases filed—had a final determination
                            from a physician panel. More than two thirds of these determinations (30
                            cases) were positive. At the time of our study, Energy had not yet begun
                            processing more than half of the cases, and an additional 40 percent of
                            cases were in processing (see fig. 2). The majority of cases being
                            processed were in the case development stage, where Energy requests
                            information from the facility at which the claimant was employed. Fewer
                            than 1 percent of cases in process were ready for physician panel review
                            and an additional 1 percent were under panel review.




                            Page 5                                                           GAO-04-298T
                            Figure 2. Case Status as of June 30, 2003




                            A majority of cases were filed early during program implementation, but
                            new cases continue to be filed. Nearly two-thirds of cases were filed
                            within the first year of the program, between July 2001 and June 2002.
                            However, in the second year of the program—between July 2002 and June
                            30, 2003—Energy continued to receive more than 500 cases per month.
                            Energy officials report that they currently receive approximately 100 new
                            cases per week.


Energy Facilities in Nine   While cases filed are associated with facilities in 38 states or territories,
States Account for More     the majority of cases are associated with Energy facilities in nine states
than 75 percent of Cases    (see fig. 3).3 Facilities in Colorado, Idaho, Iowa, Kentucky, New Mexico,
                            Ohio, South Carolina, Tennessee, and Washington account for more than
                            75 percent of cases received by June 30, 2003. The largest group of cases is
                            associated with facilities in Tennessee.




                            3
                             See Energy’s website at: http://tis.eh.doe.gov/advocacy/index.html for more information on
                            the current distribution of cases across facilities and states.



                            Page 6                                                                      GAO-04-298T
Figure 3. Distribution of Cases by Employee’s Last Energy Facility Worked




         Washington                                                                                Ohio
              1,707                                                                                723

                    Idaho                                                                          Iowa
                      764                                                                          598

             Colorado                                                                              South Carolina
                1,539                                                                              2,876

         New Mexico                                                                                Kentucky
              1,193                                                                                1,957

                                                                                                   Tennessee
               Nine states with most cases (N=14,862)                                              3,505
               Other states and territories with cases (N=2,456)
               States and territories with no cases

Source: GAO analysis of Energy data.



                                             Workers filed the majority of cases, and cancer is the most frequently
                                             reported illness. Workers filed about 60 percent of cases, and survivors of
                                             deceased workers filed about 36 percent of cases. In about 1 percent of
                                             cases, a worker filed a claim that was subsequently taken up by a survivor.
                                             Cancer is the illness reported in more than half of the cases. Diseases
                                             affecting the lungs accounted for an additional 14 percent of cases.
                                             Specifically, chronic beryllium disease is reported in 1 percent of cases,
                                             and beryllium sensitivity, which may develop into chronic beryllium
                                             disease, is reported in an additional 5 percent. About 7 percent of cases
                                             report asbestosis, and less than 1 percent claimed silicosis.


Systems Limitations                          Systems limitations prevent Energy officials from aggregating certain
Complicate Program                           information important for program management. For example, the case
Management                                   management system does not collect information on the reasons that
                                             claimants had been declared ineligible or whether claimants have


                                             Page 7                                                         GAO-04-298T
                        appealed decisions. Systematic tracking of the reasons for ineligibility
                        would make it possible to identify other cases affected by appeal decisions
                        that result in policy changes. While Energy officials report that during the
                        major systems changes that occurred in July 2003, fields were added to the
                        system to track appeals information, no information is yet available
                        regarding ineligibility decisions. In addition, basic demographic data such
                        as age and gender of claimants are not available. Gender information was
                        not collected for the majority of cases. Further, insufficient edit controls—
                        for example, error checking that would prevent claimants’ dates of birth
                        from being entered if the date was in the future—prevent accurate
                        reporting on claimants’ ages.

                        Insufficient strategic planning regarding data collection and tracking have
                        made it difficult for Energy officials to completely track case progress and
                        determine whether they are meeting the goals they have established for
                        case processing. For example, Energy established a goal of completing
                        case development within 120 days of case assignment to a case manager.
                        However, the data system developed by contractors to aid in case
                        management was developed without detailed specifications from Energy
                        and did not originally collect sufficient information to track Energy’s
                        progress in meeting this 120-day goal. Furthermore, status tracking has
                        been complicated by changes to the system and failure to consistently
                        update status as cases progress. While Energy reports that changes made
                        as of July 2003 should allow for improved tracking of case status, it is
                        unclear whether these changes will be applied retroactively to status data
                        already in the system. If they are not, Energy will still lack complete data
                        regarding case processing milestones achieved prior to these changes.


                        Our analysis shows that a majority of cases associated with major Energy
While A Majority of     facilities in nine states4 will potentially have a willing payer of worker’s
Cases Potentially       compensation benefits. This finding reflects the number of cases for which
                        contractors and their insurers are likely to not contest a workers’
Have A Willing Payer,   compensation claim, rather than the number of cases that will ultimately
Actual Compensation     be paid. The contractors considered to be willing payers are those that
                        have an order from, or agreement with, Energy to not contest claims.
Is Not Certain          However, there are likely to be many claimants who will not have a willing


                        4
                         The nine states are Colorado, Idaho, Iowa, Kentucky, New Mexico, Ohio, South Carolina,
                        Tennessee, and Washington. The cases in these states represent more than three-quarters
                        of the cases filed nationwide. The results of our analysis cannot necessarily be applied to
                        the remaining 25 percent of the cases filed nationwide.



                        Page 8                                                                        GAO-04-298T
                              payer in certain states, such as Ohio and Iowa. For all claimants,
                              additional factors such as state workers’ compensation provisions or
                              contractors’ uncertainty on how to compute the benefit may affect
                              whether or how much compensation is paid.


A Majority of Cases in Nine   A majority of cases in nine states will potentially have a willing payer of
States Potentially Have a     workers’ compensation benefits, assuming that for all cases there has been
Willing Payer                 a positive physician panel determination and the claimant can
                              demonstrate a loss from the worker’s illness that has not previously been
                              compensated. Specifically, based on our analysis of worker’s
                              compensation programs and the different types of workers compensation
                              coverage used by the major contractors, it appears that approximately 86
                              percent of these cases will potentially have a willing payer—that is,
                              contractors and their insurers who will not contest the claims for benefits.
                              It was necessary to assume that all cases filed would receive a positive
                              determination by a physician panel because sufficient data are not
                              available to project the outcomes of the physician panel process. More
                              specifically, there are indications that the few cases that have received
                              determinations from physician panels may not be representative of all
                              cases filed, and sufficient details on workers’ medical conditions were not
                              available to enable us to independently judge the potential outcomes. In
                              addition, we assumed that all workers experienced a loss that was not
                              previously compensated because sufficient data were not available to
                              enable us to make more detailed projects on this issue.

                              As shown in table 1, most of the contractors for the major facilities in
                              these states are self-insured, which enables Energy to direct them to not
                              contest claims that receive a positive medical determination.5 In addition,
                              the contractor in Colorado, which is not self-insured but has a commercial
                              policy, took the initiative to enter into an agreement with Energy to not
                              contest claims. The contractor viewed this action as being in its best
                              interest to help the program run smoothly. However, it is unclear whether
                              the arrangement will be effective because no cases in Colorado have yet
                              received compensation. In such situations where there is a willing payer,
                              the contractor’s action to pay the compensation consistent with Energy’s


                              5
                               EEOICPA allows Energy, to the extent permitted by law, to direct its contractors not to
                              contest such WC claims. Energy’s regulations prohibit the inclusion of the costs of
                              contesting such claims as allowable costs under the contract, but allow the costs incurred
                              as the result of a WC award as reimbursable costs to the full extent permitted under the
                              contract.



                              Page 9                                                                       GAO-04-298T
order to not contest a claim will override state workers’ compensation
provisions that might otherwise result in denial of a claim, such as failure
to file a claim within a specified period of time. However, since no
claimants to date have received compensation as a result of their cases
filed with Energy, there is no actual experience about how contractors and
state workers’ compensation programs treat such cases.

About 14 percent of cases in the nine states we analyzed may not have a
willing payer. Therefore, in some instances these cases may be less likely
to receive compensation than a comparable case for which there is a
willing payer, unless the claimant is able to overcome challenges to the
claim. Specifically, these cases that lack willing payers involve contractors
that (1) have a commercial insurance policy, (2) use a state fund to pay
workers’ compensation claims, or (3) do not have a current contract with
Energy. In each of these situations, Energy maintains that it lacks the
authority to make or enforce an order to not contest claims. For instance,
an Ohio Bureau of Workers’ Compensation official said that the state
would not automatically approve a case, but would evaluate each workers’
compensation case carefully to ensure that it was valid, and thereby
protect its state fund.




Page 10                                                          GAO-04-298T
Table 1. Extent to Which Cases in 9 States Will Potentially Have Willing Payers

                                                                                                                                                     Number of Cases
                                                                                                                                                       as reported in
 Types of Workers Compensation Coverage                                                    Energy Facility, State                                        Energy data
 Cases That Will Potentially Have a Willing Payer
 Self-insurance                                                                            Idaho National Engineering Lab, Idaho
                                                                                           Paducah Gaseous Diffusion Plant, Kentuckya                                 724
                                                                                           Los Alamos National Lab, New Mexico                                        978
                                                                                           Savannah River Site, South Carolina                                      1,043

                                                                                           Oak Ridge K-25, X-10, and Y-12 Plants,                                   2,873
                                                                                           Tennessee                                                                3,325
                                                                                           Hanford Site, Washington                                                 1,664
 Commercial policy, agreement with Energy not to contest claims Rocky Flats Plant, Colorado                                                                         1,488
 Subtotal of cases with a Willing Payer                                                                                                                   86% or 12,095
 Cases That May Not Have a Willing Payer
                                                                                                                                              a
 Commercial Policy, no agreement with Energy to not contest                                Paducah Gaseous Diffusion Plant, Kentucky
 claims; leases Energy facility                                                                                                                                       977
 State Fund                                                                                Portsmouth Gaseous Diffusion Plant, Ohio                                   506
 No Current Contractor                                                                     Iowa Ordnance Plant, Iowa                                                  563
 Subtotal of cases without a Willing Payer                                                                                                                 14% or 2,046
Source: GAO analysis of Energy data and interviews with current contractors.

                                                                  Note: Table includes the cases from the facilities in these states with the largest number of cases filed
                                                                  but does not include the remaining 721 cases (5 percent) from other facilities in these states.
                                                                  a
                                                                   While an Energy contractor previously operated the Paducah Gaseous Diffusion Plant, the plant is
                                                                  currently operated by a private entity that leases the facility. In addition, an Energy contractor is
                                                                  currently performing environmental clean-up at the facility. We split the cases filed for the Paducah
                                                                  facility evenly between the current operator and the clean-up contractor, based on discussions with
                                                                  the clean-up contractor.


                                                                  Concerns about the extent to which there will be willing payers of benefits
                                                                  have led to various proposals for addressing this issue. For example, the
                                                                  state of Ohio proposed that Energy designate the state as a contractor to
                                                                  provide a mechanism for reimbursing the state for paying the workers’
                                                                  compensation claims. However, Energy rejected this proposal on the
                                                                  grounds that EEOICPA does not authorize the agency to establish such an
                                                                  arrangement. In a more wide-ranging proposal, legislation introduced in
                                                                  this Congress6 proposes to establish Subtitle D as a federal program with
                                                                  uniform benefits administered by the Department of Labor.



                                                                  6
                                                                      H.R. 1758, sponsored by Representative Ted Strickland, was introduced on April 10, 2003.



                                                                  Page 11                                                                                 GAO-04-298T
Multiple Factors Make      In contrast to Subtitle B provisions that provide for a uniform federal
Compensation Not Certain   benefit that is not affected by the degree of disability, various factors may
                           affect whether a Subtitle D claimant is paid under the state workers’
                           compensation program, or how much compensation will be paid. Beyond
                           the differences in the state programs that may result in varying amounts
                           and length of payments, these factors include the demonstration of a loss
                           resulting from the illness and contractors’ uncertainty on how to compute
                           compensation.

                           Even with a positive determination from a physician panel and a willing
                           payer, claimants who cannot demonstrate a loss, such as loss of wages or
                           medical expenses, may not qualify for compensation. On the other hand,
                           claimants with positive determinations but not a willing payer may still
                           qualify for compensation under the state program if they show a loss and
                           can overcome all challenges to the claim raised by the employer or the
                           insurer.

                           Contractors’ uncertainty on how to compute compensation may also cause
                           variation in whether or how much a claimant will receive in compensation.
                           While contractors with self-insurance told us that they plan to comply with
                           Energy’s directives to not contest cases with positive determinations,
                           some contractors were unclear about how to actually determine the
                           amount of compensation that a claimant will receive. For example, one
                           contractor raised a concern that no guidance exists to inform them about
                           whether they can negotiate the degree of disability, a factor that could
                           affect the amount of the workers’ compensation benefit. Other contractors
                           will likely experience similar situations, as Energy has not issued guidance
                           on how to consistently compute compensation amounts.

                           While not directly affecting compensation amounts, a related issue
                           involves how contractors will be reimbursed for claims they pay. Energy
                           uses several different types of contracts to carry out its mission, such as
                           operations or cleanup, and these different types of contracts impact how
                           workers’ compensation claims will be paid. For example, a contractor
                           responsible for managing and operating an Energy facility was told to pay
                           the workers’ compensation claims from its operating budget. The
                           contractor said that this procedure may compromise its ability to conduct
                           its primary responsibilities. On the other hand, a contractor cleaning up an
                           Energy facility was told by Energy officials that its workers’ compensation
                           claims would be reimbursed under its contract, and therefore paying
                           claims would not affect its ability to perform cleanup of the site.




                           Page 12                                                          GAO-04-298T
                            As a result of Energy’s policies and procedures for processing claims,
Bottlenecks In              claimants have experienced lengthy delays in receiving the determinations
Energy’s Claims             they need to file workers’ compensation claims. In particular, the number
                            of cases developed during initial case processing has not always been
Process Delay Filing        sufficient to allow the physician panels to operate at full capacity.
Of Workers                  Moreover, even if these panels were operating at full capacity, the small
                            pool of physicians qualified to serve on the panels would limit the agency’s
Compensation Claims         ability to produce more timely determinations. Energy has recently
                            allocated more funds for staffing for case processing, but is still exploring
                            methods for improving the efficiency of its physician panel process.


Sufficient Cases Have Not   Energy’s case development process has not consistently produced enough
Always Been Available for   cases to ensure that the physician panels are functioning at full capacity.
Physician Panel Review      To make efficient use of physician panel resources, it is important to
                            ensure that a sufficient supply of cases is ready for physician panel review.
                            Energy officials established a goal of completing the development of 100
                            cases per week by August 2003 to keep the panels fully engaged. However,
                            as of September 2003, Energy officials stated that the agency was
                            completing development on only about 40 cases a week. Further, while
                            agency officials indicated that they typically assigned 3 cases at a time to
                            be reviewed within 30 days, several panel physicians indicated that they
                            received fewer cases, some receiving a total of only 7 or 8 during their first
                            year as a panelist.

                            Energy was slow to implement its case development operation. Initially,
                            agency officials did not have a plan to hire a specific number of employees
                            for case development, but they expected to hire additional staff as they
                            were needed. When Energy first began developing cases, in the fall of
                            2002, the case development process had a staff of about 14 case managers
                            and assistants. With modest staffing increases, the program quickly
                            outgrew the office space used for this function. Though Energy officials
                            acknowledged the need for more personnel by spring 2003, they delayed
                            hiring until additional space could be secured in August. As of August
                            2003, Energy had more than tripled the number of employees dedicated to
                            case development to a about 50, and Energy officials believe that they will
                            now be able to achieve their goal of completing development of 100 cases
                            a week that will be ready for physician panel review. Energy officials cited
                            a substantial increase in the number of cases ready for physician panel
                            review during October 2003, and reported preparing more than a hundred
                            cases for panel review in the first week of November 2003.




                            Page 13                                                          GAO-04-298T
                           Energy shifted nearly $10 million from other Energy accounts into this
                           program in fiscal year 2003, and plans to shift an additional $33 million
                           into the program in fiscal year 2004, to quadruple its case-processing
                           operation. With additional resources, Energy plans to complete the
                           development of all pending cases as quickly as possible and have them
                           ready for the physician panels. However, this would create a large backlog
                           of cases awaiting review by physician panels. Because most claims filed so
                           far are from workers whose medical conditions are likely to change over
                           time, creation of such a backlog could further slow the decision process
                           by making it necessary to update medical records before panel review.


The Ability to Produce     Even if additional resources allow Energy to speed initial case
More Timely Decisions      development, the limited pool of qualified physicians7 for panels will likely
May Be Limited By Small    prevent significant improvements in processing time. Currently,
                           approximately 100 physicians are assigned to panels of 3 physicians. In an
Pool Of Qualified          effort to improve overall processing time, Energy has requested that
Physicians and Gaps in     NIOSH appoint an additional 500 physicians to staff the panels. NIOSH has
Information They Need to   indicated that the pool of physicians with the appropriate credentials and
Quickly Decide Cases       experience (including those already appointed) may be limited to about
                           200. Even if Energy were able to increase the number of panel physicians
                           to 200, with each panel reviewing 3 cases a month, the panels would not
                           be able to review more than 200 cases in any 30-day period given current
                           procedures. Thus, even with double the number of physicians currently
                           serving on panels, it would take more than 7 years to process all cases
                           pending as of June 30, 2003, without consideration of the hundreds of new
                           cases the agency is receiving each month.8

                           Energy officials are exploring ways that the panel process could be made
                           more efficient. For example, the agency is currently planning to establish
                           permanent physician panels in Washington, DC. Physicians who are
                           willing to serve full-time for a 2 or 3-week period would staff these panels.
                           In addition, the agency is considering reducing the number of physicians


                           7
                            The criteria NIOSH uses to evaluate qualifications for appointing physicians to these
                           panels include: (1) board certification in a primary discipline; (2) knowledge of
                           occupational medicine; (3) minimum of 5 years of relevant clinical practice following
                           residency; and (4) reputation for good medical judgment, impartiality, and efficiency.
                           8
                            This 7-year estimate assumes that none of the pending cases would be determined
                           ineligible on the basis of non-covered employment or illnesses because we did not possess
                           a sufficient basis for projecting the number of additional cases that would be determined
                           ineligible in the future.



                           Page 14                                                                       GAO-04-298T
                  serving on each panel—for example, initially using one physician to review
                  a case, assigning a second physician only if the first reaches a negative
                  determination, and assigning a third physician if needed to break a tie.
                  Energy staff are currently evaluating whether such a change would require
                  a change in their regulations.

                  Agency officials have also recommended additional sources from which
                  NIOSH might recruit qualified physicians and are exploring other potential
                  sources. For example, the physicians in the military services might be used
                  on a part-time basis. In addition, physicians from the Public Health Service
                  serve on temporary full-time details as panel physicians.

                  Panel physicians have also suggested methods to Energy for improving the
                  efficiency of the panels. For example, some physicians have stated that
                  more complete profiles of the types and locations of specific toxic
                  substances at each facility would speed their ability to decide cases. In
                  addition, one panel physician told us that one of the cases he reviewed
                  received a negative determination because specific documentation of
                  toxic substances at the worker’s location was lacking. While Energy
                  officials reported that they have completed facility overviews for about
                  half the major sites, specific data are available for only a few sites. Agency
                  officials said that the scarcity of records related to toxic substances and a
                  lack of sufficient resources constrain their ability to pursue building-by­
                  building profiles for each facility.


                  Mr. Chairman, this completes my prepared statement. I would be happy to
                  respond to any questions you or other Members of the Committee may
                  have at this time.


                  For information regarding this testimony, please contact Robert E.
Contacts and      Robertson, Director, or Andrew Sherrill, Assistant Director, Education,
Acknowledgments   Workforce, and Income Security at (202) 512-7215. Individuals making
                  contributions to this testimony include Amy E. Buck, Melinda L. Cordero,
                  Beverly Crawford, Patrick DiBattista, Corinna A. Nicolaou, Mary Nugent,
                  and Rosemary Torres Lerma.




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                  Page 15                                                          GAO-04-298T
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