United States G&eraTAccounting Office Report to Congressional Requesters GAO March 1990 BLACK LUNG PROGRAM Further Improvements Can Be Made in Claims Adjudication GAO/HRD-90-75 United States GAO General Accounting Office Washington, D.C. 20648 Human Resources Division B-203632 a March 21, 1990 The Honorable Austin J. Murphy Chairman, Subcommittee on Labor Standards Committee on Education and Labor House of Representatives The Honorable Alan B. Mollohan House of Representatives The Honorable Frank McCloskey House of Representatives The Honorable Rick Boucher House of Representatives The Honorable George Miller House of Representatives This report responds to your requests for information about the Depart- ment of Labor’s Black Lung Disability Benefits Program. You raised con- cerns about possible difficulties miners were encountering in applying for benefits and asked that we provide information on several aspects of the application and approval process. In addition, you requested infor- mation on the program’s trust fund. The program, which the Congress established in 1969, provides compen- sation to coal miners or their survivors for total disability or death caused by black lung disease (pneumoconiosis or chronic respiratory dis- ease resulting from coal dust exposure). In fiscal year 1988,84,782 min- ers or their survivors were on the benefit rolls and were paid about $602 million in benefits under part C of the program (covering claims filed since 1973) (see app. I). Miners and their survivors apply to the Department of Labor (DOL) for black lung disability benefits. Mine operators who are determined responsible for the disease pay benefits. If DOL does not identify a responsible mine operator, the Black Lung Disability Trust Fund pays benefits out of revenues generated by an excise tax on coal sales. Dissat- isfied parties (usually miners or coal mine operators) may appeal initial decisions to administrative law judges (ALJS). Further appeals may be made to DOL'S Benefits Review Board (BRB) and the federal courts. Page 1 GAO/IlRL%W76 Be%ter Adjudication of Black Lung Chime Needed 5203632 . In response to your requests, we (1) determined the percentage of claims approved and denied, (2) discussed with experts the adequacy of the medical criteria DOL uses to determine black lung disease and total disa- bility, (3) identified the average time DOL takes to adjudicate claims, (4) evaluated the procedures used to collect overpayments of benefits, and (5) obtained data on the status of the Black Lung Disability Trust Fund. Using DOL automated data, we (1) determined the percentages of miner Methodology claims approved by DOL for each of the eligibility criteria and (2) identi- fied the average time DOL took to process claims. While we discussed this data with DOL officials, we did not determine the accuracy of the auto- mated data. We discussed the adequacy of DOL'S medical eligibility criteria with doc- tors considered black lung experts, DOL officials, and black lung associations. In reviewing DOL'S overpayment policies and procedures, we (1) held dis- cussions with DOL officials, (2) examined selected case files, and (3) com- pared the costs to collections of overpaid amounts during fiscal year 1988 and the first 3 quarters of fiscal year 1989. We summarized DOL'S statements reporting trust fund activity. For this analysis, our primary data source was DOL'S status of funds reports. However, we did not determine the accuracy of these reports. Our review began in October 1988 and concluded in August 1989. Except for the limitations discussed above, we carried it out in accord- ance with generally accepted government auditing standards. Except for claims filed] during a 2-year period (March 1978- Results in Brief March 1980) in which DOL used more liberal eligibility criteria, only a small percentage of miners have obtained black lung benefits. Excluding ‘Filed claims include previously denied claims that were required to be x-e-reviewed.This also includes claims pending when the new criteria went into effect. Page2 GAO/HlW9@76BetterAdjudic~xtionofBlackLm1gClaimsNeeded E-203632 that 2-year period, DOL’S approval rate between 1973 and 1988, includ- ing appeals, has been under 10 percent.’ Of all claims approved by JIOL, about 90 percent were adjudicated under criteria in effect during that 2-year period. The program’s current medical criteria for determining the existence of black lung disease and total disability were implemented in 1980 and 1981. Medical experts term the standards for interpreting tests and the instructions for performing the tests as reasonable. Claimants appealing DOL'S initial decisions have experienced lengthy delays while their cases awaited processing at the ALJ and BRB levels. Delays at the ALJ level should be reduced beginning in 1990, because the backlog of cases will be reduced. However, lengthy delays will continue at the BRB level unless additional steps are taken to reduce the backlog of cases there. DOL’S settlements of overpayments resulted in (1) substantially more dollars collected than dollars spent, and (2) consistent decisions in the three offices we visited. However, DOL'S initial overpayment notices to claimants do not fully explain the options available to them in having their overpayments forgiven. While the ratio of coal taxes to program costs has improved, the black lung trust fund continues to operate at a deficit. The deficit is covered by borrowing from the federal government’s general fund, to which it owed about $3 billion at the start of fiscal year 1989. Mainly, this is because liability for nearly all the claims approved under the liberalized criteria was assigned to the fund. Since 1986, several factors have reduced annual deficits from about 40 percent to about 10 percent of expenditures. These factors include increased coal tax revenues, a mora- torium on interest owed the general fund, and the low rate of claims approval. ‘We used the latest decision on each claim to compute the latest approval rate. At the time of our review, about 13,000 claims were pending an appeal. Depending on the results of these appeals, the approval rate could change. Page 3 GAO/HRDL)o76 Better Adjudication of Black Lung Claims Needed As experience was gained with the program,3 the Congress adjusted it Program Eligibility several times by changing financing provisions and revising eligibility Criteria Changed criteria. The Congress first amended the Black Lung Act in 1972. The Several Times amendments (1) broadened the definition of total disability, (2) extended coverage to surface miners, and (3) provided disability benefits for orphans of deceased miners. In 1977, dissatisfied with the low rate at which applications for benefits were approved, the Congress made further changes. It acted to remove certain restrictive provisions in the law that had prevented a large number of claimants from receiving benefits. Perhaps the most signifi- cant provision was the requirement for DOL to apply “interim” eligibility criteria until final criteria could be developed in consultation with the National Institute of Occupational Safety and Health (NIOSH). The Con- gress provided for the review of previously denied or pending black lung claims under the interim criteria, which were issued August 18, 1978.” In conjunction with NIOSH, DOL also developed permanent medical testing criteria for determining black lung disease and total disability. The 1980s saw the black lung program revert to more stringent eligibil- ity criteria. On April 1,1980, DOL introduced the permanent criteria. Under these criteria, miners had to demonstrate more severe disability than previously required to prove eligibility. In 1981, the Congress took additional actions to reduce eligibility. The Black Lung Benefits Amendments of 1981 (P.L. 97-l 19) l permitted DOL to get a second opinion on X-ray evidence, for claims filed on or after January 1, 1982, and l eliminated the presumption of eligibility for miners with 15 years of coal mine employment who had evidence of a totally disabling chronic pulmonary or respiratory condition. %rom the start of the program in 1969 through 1973, it was administered by the Social Security Administration (SSA). SSA continued to make benefit payments to miners whose claims were filed prior to July 1, 1973. DOL is responsible for processing claims filed after that date. 4The effective date of the 1977 amendments was March 1,1978. Page 4 GAO/HRIHO-76 Better Adjudication of Black Lung Claims Needed B-203632 Between July 1973 and the end of 1977, DOL approved about 8 percent Approval Rate in of miners’ claims. Then, however, the approval rate rose sharply. DOL 1980s Returns to approved about 50 percent of pending and previously denied claims Pre-1978 Levels filed under the interim criteria from March 1, 1978 to March 31, 1980. About 90 percent of all approvals made by LIOL through calendar year 1988 were claims filed during this period. When the program returned to more stringent criteria in the 198Os, the allowance rate reverted to pre-1978 levels. DOL approved about 9 per- cent of miners’ claims filed from April 1,1980, to December 30, 1988. Of these, two-thirds were approved initially and the remaining were approved on appeal at the ALJ level. Besides the tightened eligibility criteria, other factors, such as reduced dust levels in coal mines and improved health of coal miners, may have contributed to the lower approval rates. We did not determine the rela- tive effect of each of these factors nor the appropriateness of the more recent approval rate. On April 1, 1980, the Secretary of Labor, through regulations, estab- Standards Used to lished stringent new medical criteria for determining total disability due Interpret Medical to black lung disease. The new criteria (1) required a blood gas test, (2) Tests revised the values for the pulmonary function test, (3) included stan- dards for X-ray evidence and physical examination, (4) instructed doc- tors when to administer the exercise version of the blood gas test, and (5) provided new standards for interpreting test results. Medical experts told us that the standards DOL used to interpret medical tests performed on miners are reasonable. Also, the instructions to doc- tors performing the tests are reasonable to determine black lung disease and total disability. For example, when the pulmonary function test is interpreted, the new criteria require that miners demonstrate more loss of pulmonary function capability than previously required for a deter- mination of total disability. Additionally, the medical experts termed adequate DOL'S instructions to doctors performing the exercise version of the blood gas test on miners. According to DOL'S program director, this blood gas test may be danger- ous to about 10 percent of miners being tested. DOL instructs physicians not to administer this blood gas test when it may be harmful to the miner. Page 5 GAO/HRD9@76 Better Adjudication of Black Lung Claims Needed B-203622 During fiscal year 1988, backlogs of cases awaiting assignment to adju- Backlogs of Appeals to dicators prevented DOL from issuing timely decisions by ALJS and the ALJs and BRB Cause BRB. The backlog developed after large numbers of initial decisions made Lengthy Delays under the interim criteria were appealed. Mine operators, for example, appealed 75 percent of the approvals in which they were named. On the average, cases decided by ALJSduring fiscal year 1988 had been in the ALJ process more than 3 years. Cases decided by the BRB took, on the average, about 2-l/2 additional years. More than half of the elapsed time during appeals involved cases sitting in backlogs. Between fiscal years 1986 and 1990, DOL reduced the backlog of cases appealed to AI.&. JIOL hired new staff and contracted with ALJS employed by other federal agencies and retirees to increase productivity. The reduction should improve the timeliness of ALJ decisions beginning in fiscal year 1990. However, the time required to decide cases at the BRB level will continue to be lengthy because of a growing backlog of cases. With its current staff resources, BRB should be able to process about 800 cases more per year than the number of appeals expected to be received beginning in fiscal year 1991. Without an increase in these resources, we estimate that it would take the BRB about 10 years to dispose of the cur- rent backlog of cases (about 8,000). To eliminate the backlog of cases at the BRB within 3 years, we estimate that BRB temporarily needs about 35 additional attorneys (decision writ- ers). BRB also needs additional support staff, but we did not estimate the number needed. Other opportunities may exist for efficiency gains. Belief that BRB'S operations can be made more efficient was expressed by several LKIL officials and by DOL’S Inspector General (IG) in a 1986 report on BRB operations. Before increasing BRB'S resources, DOL should determine if other opportunities exist to achieve efficiencies. To accommodate the increase in decisions drafted by attorneys, addi- tional judges would be needed temporarily. Panels of three judges review draft decisions written by attorneys and issue BRB'S final deci- sions. The Longshoremen’s and Harbor Workers’ Compensation Act authorizes nine judges for the BRB, five permanent and four temporary.’ “DOL is required to follow certain procedural and other rules contained in the provisions of the Long- shoremen’s and Harbor Workers’ Compensation Act. The nine BRB judges decide both black lung and longshore cases. Page6 GAO/HRD~76BetterA4judicationofBlsckLungClaimsNeeded 8203632 The BRB may delegate its powers to panels of judges, two of whom must be permanent. Judges serve on panels on a rotating basis. Currently, the judges appear to be working at capacity and cannot handle the tempo- rarily increased workload. Black lung benefit payments begin subsequent to the initial approval. If DOL’s Collections entitlement is reversed on appeal, DOL may require the claimant to repay of Overpayments these benefits. When entitlement is sustained on appeal and a mining Exceed Costs company is named as responsible, DOL requires the mining company to reimburse any benefits paid on its behalf during the appeal. In deciding whether to collect overpayments from claimants, LIOL consid- ers (1) the relative costs and benefits of collection, (2) the financial con- dition of the claimant, and (3) whether collection is “against equity and good conscience. ” Overall, DOL'S collections exceeded costs. Also, when deciding repayment based on the claimants’ ability to repay, the DOL field offices we visited generally settled cases consistently. However, DOL'S initial overpayment notices to claimants did not adequately explain the options for having overpayments forgiven. Generally, the overpayment notices emphasized the option of having the debt waived only because of the claimant’s inability to pay. The notices did not explain waivers whose basis was against equity and good con- science. Without providing more information on what this constitutes, most claimants probably would not know how to use this option. As a minimum, DOL'S notice should include several of the examples that DOL uses in its guidelines to its claims examiners. One such example is that the claimant gave up a valuable right such as a job or other benefits to accept the black lung benefits. In 1978. the Congress established the Black Lung Disability Trust Fund Revenue From Coal to transfer liability for black lung disease to the coal industry. An excise Excise Taxes tax on the sales of coal production provided revenues for the trust fund. Inadequate to Cover The Congress intended that the revenues would cover the costs of black lung benefits in cases where no mining company could be held liable. Expenditures Since 1978, coal tax revenues have only paid about 60 percent of pro- gram expenditures. Most of the trust fund’s expenditures have been monthly cash payments to beneficiaries approved under the interim cri- teria. The trust fund borrowed from the general fund, to which it owed about $3 billion as of the beginning of fiscal year 1989. However, the Page 7 GAO/HRLW@75 Better Adjudication of Black Lung Claims Needed B-203622 trust fund has borrowed less from the general fund in recent years. Since fiscal year 1985, coal tax revenues have equaled about 90 percent of recorded costs. The primary reasons for the improvement have been (1) an annual increase in coal tax revenues since 1979, (2) a 5year mor- atorium on the accrual of interest on money owed to the general fund, and (3) the low percentage of claims approved in the 1980s. If the mora- torium is not extended past its 1990 ending date, interest on the debt alone could be about 50 percent of coal tax revenue in fiscal year 1991 *Ii The Secretary of Labor should focus management attention on the back- Recommendations to log of cases at the BRB. Efforts should be taken to eliminate this backlog the Secretary of Labor in a reasonable period of time. These efforts should include a manage- ment review of BRB'S operations to determine (1) the extent to which greater efficiencies can be achieved with existing staff and (2) the level of additional resources BRB may need to eliminate the backlog. The Secretary should revise the Department’s overpayment notices. These notices should include explanation of the “against equity and good conscience” option and how it can be used to obtain a waiver. If the Secretary of Labor adds resources to the BRB or takes other actions Recommendation to to eliminate the backlog of cases in a short period of time, additional the Congress judges will be needed at the BRB. The Congress should amend the Long- shoremen’s and Harbor Workers’ Compensation Act to allow for a tem- porary increase in the number of panel judges at the BRB. You asked that we not obtain written comments on this report. How- Agency Comments ever, we did discuss the results of our review with appropriate agency officials. Generally, the agency agreed with our observations and recom- mendations. This report was prepared under the direction of Franklin Frazier, Director of Income Security Issues (Disability and Welfare), who may be reached on 275-1793 if you or your staff have any questions. Other major contributors are listed in appendix VII. Unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after the date of this report. We “This assumes that fund benefit payments and coal tax revenues remain constant. Page8 GAO/HRD-90-76BetterAdjudicationofBlackLungClaimsNeeded B-202622 then will send copies to the Secretary of Labor and other interested parties. Lawrence H. Thompson Assistant Comptroller General Page 9 GAO/HRD9@75 Better Adjudication of Black Lung Claims Needed Contents Letter Appendix I Introduction Background Establishing Eligibility for Black Lung Benefits 12 13 Scope and Methodology 14 Appendix II 16 Approval Rate for Efforts by the Congress to Liberalize Eligibility in 1972 16 17 Restrictive Provisions Removed and New DOL Black Lung Claims Regulations Mandated Adjudicated by DOL Criteria Tightened in 1980 and 1981 18 Approval Rate in 1980 Returns to Pre- 1978 Levels 18 Appendix III 23 Medical Experts Call DOL’s Medical Criteria Reasonable Appendix IV 25 Claims Processing Initial Claims Processed Within 5 Months 25 25 Timeliness of ALJ Decisions Should Improve Times Lengthy, Backlog of Cases Awaiting Adjudication at BRB 26 Backlogs Significant at Benefits Review Board Appendix V 30 DOL’s Debt Collection Overpayment Collections Exceed Cost 30 Notices Received by Claimants Inadequate 31 Procedures Appendix -- VI 33 The Black Lung Trust Fund Made Liable for Most Approvals 34 Coal Tax Revenues Do Not Cover Costs 34 Disability Trust Fund Page 10 GAO/FIRDw)-75 Better Adjudication of Black Jang Clalma Needed Content.6 Appendix VII 36 Major Contributors to This Report Tables Table II. 1: Approval Rate for Applications by Miners for 19 Black Lung Benefits (Before and After Apr. 1,198O) Table IV.l: ALJ Case Activity (Fiscal Years 1982-89) 26 Table IV.2: Benefits Review Board Case Activity (Fiscal 27 Years 1982-89) Table V. 1: Collecting Overpayments From Claimants and 31 Mining Companies: Costs and Collections (Fiscal Years 1988-89) Table VI.l: Coal Tax Revenues (Fiscal Years 1979-88) 34 Figures Figure II. 1: DOL’s Reasons for Approval or Denial of Miners’ Claims Filed Before April 1, 1980 Figure 11.2:DOL’s Reasons for Approval or Denial of Miners’ Claims Filed After March 31, 1980 Figure 11.3:Applications for Black Lung Benefits Filed in Fiscal Years 1973-88 Figure VI. 1: Funds Borrowed by Black Long Disability 33 Trust Fund From the Treasury (Fiscal Years 1979- 88) Figure VI.2: Coal Tax Receipts Compared With Program 35 Costs (Fiscal Years 1979-88) Abbreviations AIJ Administrative Law Judge BRB Benefits Review Board DOL Department of Labor HHS Department of Health and Human Services IG Inspector General NIOSH National Institute of Occupational Safety and Health Office of Administrative Law Judges Social Security Administration Page 11 GAO/liRD9076 Better Adjudication of Black Lung Claims Needed xtion Miners sometimes develop black lung disease (pneumoconiosis or a chronic respiratory condition resulting from inhaling coal dust). Lung tissue is destroyed, resulting in the reduction of the lung’s ability to transfer oxygen to the blood. The Federal Coal Mine Health and Safety Act of 1969 (P.L. 91-173) established a program for compensating vic- tims of black lung disease and imposed environmental standards for dust levels in coal mines. The program pays monthly cash benefits to eligible miners or their survivors for disabling respiratory and pulmo- nary diseases resulting from miners’ exposure to dust during coal mine employment. Concern over the difficulties experienced by many miners with their claims for black lung benefits was expressed by Congressmen Alan B. Mollohan, Frank McCloskey, Rick Boucher, George Miller, and Austin J. Murphy. The latter is Chairman of the Subcommittee on Labor Stan- dards of the House Committee on Education and Labor. They requested that we review the Black Lung Disability Benefits Program. Among the specific issues identified for our examination were: (1) the percentage of applications approved and denied under the program, (2) the adequacy of the medical criteria used to adjudicate claims, (3) the average time it takes to adjudicate claims and reasons for processing delays, (4) the pro- cedures used to collect program overpayments, and (5) the status of the Black Lung Disability Trust Fund. The black lung program has two components, parts B and C. Only part C Background claims are discussed in this report. The parts differ as follows: l Under part B, benefits are payable only for claims filed before July 1, 1973 (December 31, 1973, for some survivors). Thus, no new benefi- ciaries can be added to the rolls for part B. In fiscal year 1988, about $980 million in benefits were paid under part B, which is administered by the Social Security Administration under the Department of Health and Human Services (HHS). Costs of the part B program are funded from the general revenues. . Under part C, administered by the Department of Labor, nearly one-half million persons have filed claims since 1973. As of September 1989, 84,782 claimants were receiving black lung benefits under part C. Costs are supported largely by excise taxes on sales of coal, borrowing from the U. S. Treasury, or direct payments from mine operators when they are determined responsible. Program expenditures during fiscal year 1988 included $602 million in benefits to claimants and $55 million in administrative costs. Page 12 GAO/HRD90-75 Better Adjudication of Black Lung Claims Needed Appemdix I Introduction Claimants file for benefits at an SSAor DOL office. SSAoffices route claims filed with them to the appropriate DOL office. At the DOL office, examin- ers arrange for medical testing, document employment history, identify liable mining companies, and make initial disability determinations. Parties (claimants or mine operators) dissatisfied with the initial deci- sion may appeal. The appeal process is adversarial. The mine operator may seek to prove that the miner does not meet the program’s eligibility criteria or that the mine operator is not the responsible employer. Con- ferences sometimes are held to try to resolve differences. If still dissatis- fied with the decision, any party may appeal to an administrative law judge. Further appeals may be made to DOL'S Benefits Review Board. BRB decisions may be appealed to a federal circuit court of appeals and sub- sequently to the U.S. Supreme Court. To be eligible for benefits, miners must prove they are totally disabled Establishing Eligibility from black lung disease arising out of coal mine employment. DOL gives for Black Lung each miner who files a claim for black lung benefits an opportunity to Benefits substantiate the claim by a complete pulmonary evaluation. This includes a physical examination, chest X-ray, pulmonary function test, and blood gas test. DOL uses the results of pulmonary function tests and blood gas tests to help determine whether the miner is totally disabled. Pulmonary func- tion tests permit the identification and measurement of any breathing or pulmonary capacity impairment. Blood gas tests permit the identifica- tion and measurement of impairments involving the lung’s efficiency in exchanging oxygen and carbon dioxide. When these test results, based on criteria established by the Secretary of Labor, demonstrate the miner’s inability to do usual coal mine employment or other comparable gainful employment, the miner is considered totally disabled. The primary method of establishing the existence of black lung disease is through X-ray evidence. If X-rays identify scar tissue in the miner’s lungs, a physician reading the X-ray determines whether the miner is suffering from complicated black lung (large lesions usually more than 1 centimeter in diameter) or simple black lung (small lesions). Claims for benefits cannot be denied, however, on the basis of a negative chest X- ray alone. The act provides that a physician can use other medical tests to make a determination of the existence of black lung disease. Page 13 GAO/HRlMO-75 Better Adjudication of Black Lung Claims Needed Appendix I Introduction The act currently contains two major presumptions for claimants filing after 1981-one rebuttable and one ix-rebuttable-to assist claimants in establishing their eligibility for black lung benefits.’ Irrebuttable Presumption If it is established that a miner suffers or suffered at death from “com- of Total Disability From plicated” black lung disease, there is a presumption that the miner is totally disabled by, or that death was due to, the disease, or that the Black Lung Disease miner was totally disabled by the disease at the time of death. If this presumption can be established, it cannot be rebutted by contrary evi- dence thereby allowing miners to meet a basic eligibility criterion of being totally disabled or of having died from black lung disease. Presumption of If a miner who is suffering or suffered from black lung disease was Relationship to employed in a coal mine or mines for 10 years or more, there is a rebut- table presumption that the disease arose out of coal mine employment. Employment in Mines Unlike the presumption described above, this one may be rebutted by contrary evidence to show that there is no connection between the dis- ease and the claimant’s coal mine employment. JIOL provided us with automated data on approvals and denials of claims Scope and (including reasons for denials) for fiscal years 1973-88. For our analysis, Methodology we used the latest decision of record including decisions made on appeal by ALJS or the BRB. Additionally, we analyzed DOL’S reasons for approval or denial of claims at the initial level of the process. We discussed DOL’S medical eligibility criteria with seven medical doctors with an expertise in black lung disease. Others with whom we met or spoke included l representatives from the United Mine Workers Union; l DOL district office officials in Johnstown (Pennsylvania), Columbus (Ohio), and Lakewood (Colorado); l -4~s in San Francisco, Pittsburgh, Camden (New Jersey), Cincinnati, and Washington, D.C.; ’ The availability and use of presumptions has not remained constant over the life of the black lung program. as the Congress and DOL have several times w-examined the eligibility requirements of the program. Page 14 GAO/HID-90-75 Better Adjudication of Black Lung Claims Needed Appendix I Introduction l the National Black Lung Association and its West Virginia and Virginia chapters; and . DOL officials in the Mine Safety and Health Administration. With medical experts,’ we discussed the criteria used to interpret medi- cal tests performed on miners and compared them with those used for interpreting similar medical tests in claims for state workers’ compensa- tion programs. We compared criteria used for X-rays, pulmonary func- tion tests, and blood gas tests. Using DOL’S automated data, we identified average case processing times at each level of the adjudicative process and identified stages at which delays occurred. In reviewing DOL’S overpayment collection policies and procedures, we discussed them with DOL officials at headquarters and in six district offices. Also, we compared the costs to collections. We judgmentally selected cases in three district offices to determine how consistently these field office personnel applied DOL’S collection policies and procedures. Concerning information on the trust fund, we (1) identified revenues and disbursements using DOL’S status of funds reports and (2) deter- mined whether DOL is more frequently naming responsible mine operators. Our review began in October 1988 and concluded in August 1989. We did not verify the accuracy of DOL’S automated data or determine the accuracy of DOL’S financial statements reporting trust fund activity. Except for these limitations, we carried out this review in accordance with generally accepted government auditing standards. ‘The medical experts included four officials from NIOSH. a faculty member from West Virginia IkC- versny’s medIcal school, a physician noted for his expertise with blood gas tests, and a physician noted for his expertise in interpreting X-ray evidence. Page 15 GAO/HRD9@75 Better Adjudication of Black Lung Claims Needed Approval Rate for Black Lung Claims Adjudicated by DOL About 90 percent of all approvals of miners’ black lung claims were made using temporary criteria in effect during a 2-year period from March 1,1978 to March 3 1,198O. Fewer than 10 percent of miners’ claims adjudicated under part C before and after this period were approved.’ Since DOL began administering the Black Lung Disability Benefits Pro- gram, it has adjudicated miners’ claims under three different sets of eli- gibility criteria. In 1972, the Congress liberalized the criteria in an effort to increase the approval rate. However, under these criteria, DOL approved only about 8 percent of miners’ claims. In 1978, dissatisfied with the low approval rate, the Congress (1) amended the act to remove certain restrictive provisions in the law that had prevented a large number of claimants from receiving benefits and (2) mandated that DOL develop criteria for medical tests to evaluate a claim of total disability. Using interim regulations, DOL approved about 60 percent of claims filed between March 1, 1978 and March 31,198O. In 1980, DOL introduced more stringent criteria and the Congress further tightened eligibility in 1982. Since March 31, 1980, DOL approved about 9 percent of the miners’ claims filed. We did not determine the appropri- ateness of the approval rate. An account of the program’s eligibility criteria and claims approval rates under DOL follows. In an effort to increase the program’s approval rate, the Congress Efforts by the amended part C of the Black Lung Act in 1972. The amendments Congress to Liberalize (1) broadened the definition of total disability, (2) extended coverage to Eligibility in 1972 surface miners, and (3) added a rebuttable presumption of eligibility for miners with 15 years of coal mine employment who demonstrated symp- toms of black lung disease. Instead of requiring that miners be unable to engage in substantial gainful employment to qualify for total disability, the standard up to that time, the amendments required only that miners be unable to perform jobs requiring them to use their coal mine skills. This permitted miners to work in less demanding, noncoal-mine employ- ment and remain eligible for black lung benefits. The rebuttable pre- sumption of eligibility for miners with 15 years of coal mine ’ We do not include survivors’ claims KI our analysis. Page 16 GAO/HRD-90-76 Better Adjudication of Black Lung Claims Needed Appendix II Approval Rate for Black Lung Claims Adjudicated by DOL employment and evidence of black lung disease was added to ease evi- dentiary burdens. However, only about 8 percent of miner claims decided under the criteria were approved. Also, according to DOL, the medical standards being applied were quite stringent. Under liberalized “interim criteria” mandated by the Congress in 1978, Restrictive Provisions approvals of miner claims increased to about 50 percent. Most of these Removed and New approvals were made administratively at one of DOL’S district offices DOL Regulations and did not involve appeals. Only about 1 percent of the approvals resulted from an appeal. Mandated The 1977 amendments removed from the law active provisions that had prevented a large number of miners from receiving benefits and man- dated that DOL develop regulations to implement the revised law. Going beyond the medical definition of pneumoconiosis,’ the Congress again broadened the statutory definition of black lung disease to include respiratory and pulmonary impairments arising out of coal mine employment. Also, the amendments expanded coverage to individuals employed in or around a coal mine in the extraction, preparation, or transportation of coal. Standards applicable to medical tests were relaxed by (1) restrict- ing DOL’S authority to use a second opinion on X-ray readings provided by claimants as evidence of their disease and (2) prohibiting the devel- opment of additional medical or other evidence if the evidence on file was sufficient to approve a claim. But the most significant provision in the amendments was the require- ment that DOL develop new eligibility criteria in regulations. The amend- ments mandated that DOL apply interim criteria in reviewing previously denied or pending black lung claims. DOL also was required to consult with the National Institute of Occupational Safety and Health in devel- oping permanent medical testing criteria for more accurate diagnosis of black lung disease and total disability. DOL issued interim eligibility criteria on August 18, 1978.3 Using pre- sumptions contained in the act, DOL developed an “interim presump- tion.” Generally, the new criteria presumed eligibility for miners with at ‘A lung disease produced by the deposition of coal dust and the lungs’ response to the retained coal dust. “The promsions of the 1977 amendments applied to claims beginning March 1, 1978. Page 17 GAO/HRD9@75 Better Adjudication of Black Lung Claims Needed Appendix II Approval Rate for Black Lug claims AdJudicat.4 by DOL least 10 years of coal mine employment and evidence of totally disabling respiratory or pulmonary disease. These new criteria remained in effect for claims filed prior to March 31,198O. The claims approval rate was lowered for claims filed after March 31, Criteria Tightened 1980. This was the effective date of permanent, more detailed, and in 1980 and 1981 stringent standards that DOLdeveloped in consultation with IZIOSH. Amendments in 1981 further tightened eligibility criteria by eliminating a series of provisions that had been enacted previously to help particu- lar groups of miners or survivors obtain entitlement. The permanent regulations implemented a more comprehensive medical testing procedure. They required miners to conclusively prove black lung disease and total disability through the results of medical tests. Miners also had to demonstrate more loss of pulmonary function capa- bility than previously required for eligibility. In 1981, the Congress also took steps to reduce eligibility. The Black Lung Benefits Amendments of 1981 (P.L. 97-l 19) eliminated a restric- tion on DOL'S authority to use a second opinion on X-rays that might show the absence of black lung disease, for claims filed on or after Janu- ary 1, 1982. The amendments also eliminated the presumption of eligi- bility for miners with 15 years of coal mine employment who had evidence of a totally disabling chronic pulmonary or respiratory disease. The approval rate returned to levels prior to the 1977 amendments Approval Rate under part C. DOL approved about 9 percent of miner claims filed from in 1980 Returns April 1, 1980, to December 30, 1988, about one-third of these on appeal. to Pre-1978 Levels (See table II. 1.) Page 18 GAO/HRMJ@75 Better Adjudication of Black Lung Claims Needed Approval Bate for Black Lung Claims Adjudicated by DOL Table 11.1:Approval Rate for Applications by Miners for Black Lung Benefits (Before Claims filed and After Apr. 1, 1980) Before Apr. 1,199O After Mar. WI1980 Status of claims No. Percent No. Percent Totals decided 186.538 - 66.177 - Approved: On initial decision 87,285 47a 4,219 6’ On appeal (to ALJ) 2,075b 1 1 ,867b 3 On appeal to BRB 71c d 6 d Totals approved 99,431 48 6,092 9 Note: Initial approvals from Apnl 1, 1980, through December 31, 1981, were 11 percent. Srnce Decem- ber 31, 1981, when the Congress agarn changed elrgibility, the Initial approval rate has been about 4 percent. aThe approval rate through 1977 was 8 percent bRepresents the difference between approvals and denrals of appealed initial decisions changed by ALJs. ‘Represents the difference between approvals and dentals of appealed ALJ decrsrons changed by the BRB dThe effect of BRB reversals on the approval rate was neglrgible In initial decisions, DOL approved about 4 percent of the miners’ claims filed during fiscal year 1988. We did not try to determine whether the current approval rate is reasonable or not. Also, we were unable to determine the effect, independently or collectively, of certain factors on the approval rate. Such factors included the tightened eligibility criteria and adjudicative process, the decline in applications for black lung bene- fits, the improved health of coal miners, and reduced dust levels in coal mines. Tightened Eligibility We compared claims filed before April 1, 1980, with claims filed under Criteria current criteria. Most of the increase in denials involved miners’ failure to meet medical rather than nonmedical criteria. In most denied cases. the miners could not demonstrate either of the two basic medical crite- ria, total disability or black lung disease. However, the percentage of denied miners who proved either black lung or total disability, also increased significantly. (See figs. II.1 and 11.2.) The number of miners denied for nonmedical reasons did not change sig- nificantly. The nonmedical category includes claims not filed on time, claimants not considered coal miners, and miners who failed to provide evidence or were uncooperative. Page 19 GAO/HB.D9@75 Better A~udication of Black Lang Chime Needed Appendix II Approval Rate for Black Lung Claims Adjudicated by DOL or Denial of Miners’ Claims Filed Before April 1, 1980 1% approved: complicated black lung 6% denied: proved either black lung or total disability 3% other approvals 3% other denials approved: simple black lung denied: non-medical denied: no black lung or total disability Note These are mtlal dIscussIons only Applications Decrease The number of miners applying for benefits significantly declined dur- in 1980s ing the 1980s. Applications peaked during 1978, when the most liberal eligibility criteria were in effect. Since then, the numbers of applications have declined, reaching the lowest level in the program’s history during fiscal year 1988, at 3,104 applications. (See fig. 11.3.) Also, a decrease in the number of underground miners may have contributed to the decline in applications. DOL reported that 79,000 miners worked in underground mines in 1988, down from 102,000 in 1970. Page 20 GAO/HBDW75 Better Adjudication of Black Lung Claims Needed Appendix II Approval Rate for Black Lung Claims Adjudicated by DOL Figure 11.2: DOL’s Reasons for Approval or Denial of Miners’ Claims Filed After denied: proved either black lung or total March 31,199O ( disability denied: non-medical 5% approved: simple Ma& lung A denied: no black lung or total disability Note: These are mltlal dlscusslons only Coal Miners’ Health Seven black lung medical experts with whom we spoke suggested that Improves fewer miners today suffer from totally disabling respiratory conditions. The primary reason cited was improved coal mine environmental condi- tions resulting from the imposition of dust standards. Also, the experts said that most cases of black lung found today are usually marginal (simple black lung), making diagnosis very difficult. A 1969 study performed by the Department of Interior’s Bureau of Mines (before dust standards) showed that dust levels in a sample of 29 underground mines averaged 5.6 milligrams per cubic meter. In 1988, DOL inspectors found that the average dust level in underground coal mines was less than 1.3 milligrams per cubic meter. The 1969 act ini- tially required the average concentration of respirable dust in the work area to be no more than 3.0 milligrams of dust per cubic meter of air beginning in June 1970. As of December 30, 1972, the standard required a reduction in the dust level to 2.0 milligrams per cubic meter. Before these standards, dust levels in coal mines were unregulated. Page 21 GAO,/HRD9@76 Better Adjudication of Black Lung Claims Needed - Appendix II Approval Rate for Black Lung Claims Adjudicated by DOL Figure 11.3:Applications for Black Lung Benefits Filed in Fiscal Years 1973-88 1973 1974 1975 1916 1977 1976 1979 1980 lSE1 1982 1983 1984 1985 1996 1987 1988 FiscaI Yun Based on the date of appkatlon as prowded by DOL Page 22 GAO/HRD9@75 Better Adjudication of Black Lung Claims Needed Appendix III Medical Experts Call DOL’s Medical Criteria Reasonable On April 1, 1980, DOL implemented its new medical criteria for determin- ing whether miners are totally disabled from black lung disease. The new criteria required a blood gas test, revised the values for the pulmo- nary function test, and included standards for X-ray evidence and phys- ical examination. The revised values used for interpreting these tests were more stringent than standards previously used. Existence of black lung disease is established primarily through X-rays used to identify whether coal dust concentrations exist in the miner’s lungs. When coal dust is found, X-ray evidence permits a determination of whether the concentrations are large (signifying complicated black lung disease) or small (simple black lung disease). Claims for benefits cannot be denied, however, on the basis of a negative chest X-ray alone. A physician can make a determination of the existence of black lung disease based on other medical tests. Total disability is determined through pulmonary function tests and blood gas tests, Pulmonary function tests permit the identification and measurement of any breathing or pulmonary capacity impairment. Blood gas tests permit the identification and measurement of impair- ments involving the lung’s efficiency in exchanging oxygen and carbon dioxide. When these test results, judged by criteria established by the Secretary of Labor, demonstrate the miner’s inability to perform usual coal mine tasks, the miner is considered totally disabled. The new criteria require miners to demonstrate a pulmonary function capability of 60 percent or less of normal compared with the 80 percent or less previously required for a determination of total disability. Doc- tors considered experts in pulmonary diseases with whom we discussed the new standards called them reasonable. State workers’ compensation programs in Kentucky and West Virginia generally required miners seeking benefits under the programs to demonstrate more evidence of total disability than did DOL for black lung benefits. For example, as stated above, DOL regards a miner as totally disabled if the miner has 60 percent or less of normal pulmonary func- tion capability. Under West Virginia’s workers’ compensation program, a miner must have 50 percent or less to be considered totally disabled. Under Kentucky’s program, a miner must have 55 percent or 1ess.l ‘State workers’ compensation programs generally defiie total disability in broader terms than those contained in federal criteria. Most states define total disability as the inability to engage in any gain- ful employment. Also, state programs provide for partial disability benefits. Page 23 GAO/HRIMO-75 Better Adjudication of Black Lung Claims Needed Appendix III Medical Ekperra call DOL’S Medical Criterb~ Reasonable According to DOL’S program director, the exercise version of the blood gas test can be hazardous to about 10 percent of miners tested. DOL'S guidance to doctors who administer such tests instructs them not to administer the test if it imposes a hazard to the health of the miner. The seven medical experts that we consulted concerning the guidance said that the instructions are adequate. Page 24 GAO/HftDsQ75 Better Adjudication of Black Lung Claims Needed Appendix: I!’ Ckms ProcessingTimes Lengthy, Backlogs Significant at Benefits Review Board Processing times for initial decisions on claims for black lung benefits during fiscal year 1988 appeared reasonable, but there were lengthy delays in both the administrative law judge and Benefits Review Board decision processes. Timeliness of the ALJ decision process should improve beginning in fiscal year 1990, when the backlog of cases will be eliminated. Processing times at the BRB will continue to be excessive, however, because there is a backlog of cases waiting to be processed. At the initial and AU levels, our analysis of claims processing involved only black lung cases. At the BRB however, our analysis included black lung and longshore cases. As required by law, DOL applies provisions of the Longshoremen’s and Harbor Workers Compensation Act to process appeals of both black lung and longshore cases. DOL processed initial claims within about 5 months during fiscal year Initial Claims 1988. This surpassed its processing goal of 6 months. Claims examiners Processed Within we interviewed said that most of their time was spent obtaining medical 5 Months tests and identifying responsible mine operators. We did not identify opportunities to shorten this process. About 30 percent of initial decisions on black lung claims usually result Timeliness of in a hearing before an AIJ. ALJS consider all evidence previously submit- ALJ Decisions ted for the initial decision along with any new evidence. For ALJ deci- Should Improve sions made in fiscal year 1988, over 3 years elapsed on average between the filing of an appeal and the decision and order by an ALJ. DOL'S Chief ALJ believes that the entire process, beginning with the request for a hearing and ending with an AIJ decision, should take about 1 year. Most of the time (21 months) to process cases at the AIJ level resulted from a backlog of cases awaiting assignment to ALJS because of the 1977 amendments. That legislation required the re-review of all previously denied and pending claims. DOL'S Office of Administrative Law Judges (OALJ) reduced the backlog of cases awaiting an AJJ decision from more than 22,000 at the beginning of fiscal year 1986 to 4,901 at the begin- ning of fiscal year 1990 (see table IV.1). OAU increased the annual number of black lung cases disposed of by about 25 percent during fiscal years 1987 and 1988. This was accomplished primarily by increasing the number of ALJSthrough new hires and contracting with retired AWS. During the same period, the numbers of cases appealed to OAIJ decreased about 28 percent. Page 25 GAO,/HRD!W76 Better Adjudication of Black Lung C1a.h~ Needed Appendix N Claims Processing Times Lengthy, Backlogs Siguifbnt at Benefits Review Board Table IV.l: ALJ Case Activity (Fiscal Years 1982-89) Undecided Undecided cases cases at beginning of Appeals at end of Fiscal year fiscal year received Dispositions fiscal year 1982 13.876 6.140 7.220 12.796 1983 12,796 7,779 4,883 15,692 1984 15,692 10,286 5,425 20,553 1985 20,553 8,412 6,848 22,117 1986 22,117 5.892 8.196 19.813 1987 19,813 4,527 10,063 14,277 1988 14,277 3,905 10,292 7,890 1989 7,890 3,153 6,142 4,901 Source OALJ Reductions in the backlog of cases should improve processing time at the CLUJ.With the backlog reduced to 4,901 cases on September 30, 1989, the Chief ALJ told us that it is at a manageable level. He said this should enable them to process all appeals within their goal of 1 year. The remaining 17 months involve case transmittal and the AIJ decision process. About 10-l/2 months were spent in the ALI decision process. The remaining time (about 6-l/2 months) involved delays in sending cases from the district offices to the OALJ in Washington, D.C. Since these cases were initially decided, however, DOL changed its procedures for sending cases from the district offices to the OAIJ. From fiscal year 1987 through December 1989, district offices took 56 days on average to send cases to OALJ. Cases decided by the BRB during fiscal year 1988 took on average about Backlog of Cases 2-l/2 years. More than half of the elapsed time during these appeals Awaiting Adjudication involved cases sitting in backlogs. at BRB The BRB adjudicates appeals of AU decisions made under the black lung program and the Longshore and Harbor Workers’ Compensation Pro- gram. About 80 percent of BRB'S workload involves black lung cases. When dissatisfied parties appeal ALJ decisions, the BRB reviews the com- plaint and decides whether substantial evidence supports the finding of the ALJ. Attorneys perform the initial analysis of the complaints and draft decisions. After review by supervisory attorneys, the draft deci- sions are forwarded to panels of judges for a decision. Page 26 GAO/HR.D-9@76 Better Adjudication of Black Luug Claims Needed Appemdix N claims Prixesslng Times LengtbY, Backlogs Signifkant at Benefits Review Board Most of the over 2 years it took for cases to be decided by BRB during fiscal year 1988 involved cases sitting in backlogs awaiting assignment to attorneys. Cases sat in backlogs more than 15 months on average. The remaining time involved (1) about 2-l/2 months for BRB to receive the case folder from a district office, (2) about 7 months for the filing of complaints and any responses, and (3) about 2 months for BRB to issue decisions after the assignment of the case. Productivity at the BRB has not kept pace with increased appeals over recent years, as shown in table IV.2. The backlog of cases awaiting review increased to about 8,000 by the end of fiscal year 1989. To increase productivity and subsequently reduce processing time, DOL tem- porarily may need to increase attorney and judge resources at the BRB. However, DOL should first closely examine BRB'S organization and opera- tions to see if other opportunities exist to achieve productivity gains. ~ -~ ~~~ Table IV.2: Benefits Review Board Case Activity (Fiscal Years 1982-89) Undecided Undecided cases cases at beginning of Appeals at end of Fiscal year fiscal year received Dispositions fiscal year 1982 2,763 2,556 1,011 4,308 1983 4.308 3.057 1.319 6,046 1984 6,046 2,892 2,317 ___- 6,621 1985 6,621 3,131 2,394 7.358 1986 7,358 3,172 3,607 6,961 1987 6.961 3.567 3.516 7,123 1988 7,123 4,526 4,101 7,548 1989 7,548 4,459 4,021 7,986 Source BRB Added Staff May Be DOL officials believe that the number of appeal receipts will sharply Neededto Eliminate decline in 1991 and may continue to decline in future years. BRB gave us estimates of the number of appeals it expects to receive in fiscal years Backlog 1990 and 1991. It is difficult, however, to make reliable predictions of the number of receipts beyond 1991. For fiscal year 1990, BRB currently is operating at 74 attorney staff years for writing decisions. Supervisory attorneys who review draft decisions account for about 22 percent of BRB'S total attorney staffing. This level of staffing should dispose of about 4,000 cases, about the number it expects to receive this year, BRB officials said. This still would leave a backlog of about 8,000 cases at the end of fiscal year 1990. BRB assumes each attorney staff year accounts Page 27 GAO/HID-9@76 Better Adjudication of Black Lmng Claims Needed Appendix IV CIaims Processing Time6 Lengthy, Backiogs SigniflcantatBenefitaReviewBoard for 53.65 case dispositions yearly. Using this productivity level, it would take an additional 149 attorney staff years to process this backlog of CaSeS. Because BRB'S future receipts are expected to be below 1990 levels, cur- rent staff at the BRB will be able to reduce the backlog further. For example, if there are only about 3,200 appeals received in 1991 (BRB estimated 3,194 for its 1991 budget), current staffing (74 attorney staff years) could dispose of about 800 backlogged cases. If annual receipts and attorney (nonsupervisory) staffing remained at about 3,200 cases and 74 staff years, respectively, it would take about 10 years to dispose of the backlog. We analyzed the possible effects of adding staff temporarily to reduce the backlog. To illustrate the probable effects of adding temporary staff for a 3-year period beginning in 199 1, we assumed that annual receipts would be about 3,200 cases, and current staffing could dispose of 4,000 cases. If staffing remained at 74 attorneys, this would leave an estimated backlog of about 5,600 cases at the end of the 3-year period. An additional 104 attorney staff years, or about 35 per year for 3 years, would be needed to eliminate this remaining backlog. If attorney staff are added, BRB would need some increase in other aspects of its operations, such as support staff. We did not consider these in our projections. Other Opportunities for Several DOL officials told us they believe BRB'S operations can be made Productivity Gains more efficient. This also was stated by DOL'S Inspector General (IG) in a 1986 report on BRB'S operations. Before increasing BRB'S resources as we projected above, DOL should determine if other opportunities exist to achieve efficiencies. The multilevel review process cases generally go through before final disposition was one area cited by the IG . While the BRB adopted some of the IG’S recommendations, it still retains many lay- ers of supervisory review. We identified many cases that did not seem to require the levels of review currently being performed. We discussed our conclusions with BRB'S Chief Counsel, who generally agreed that fur- ther efficiencies can be achieved in the review process. Also, as stated above, about 22 percent of BRB'S attorney staff are super- visors and do not write decisions on cases. While an increase in staffing appears to be the only way to eliminate the backlog in a relatively short period of time, DOL management may want to examine the ratio of about Page 28 GAO/HRD9075 Better Adjudication of Black Lung Claims Needed AppendixIV clainu3 Pnxessing TimeE Lengthy, Bac.kloga SignifhntatBenefltsReviewBoard one supervisor for every four staff attorneys to determine if it is war- ranted. Placing some of these supervisors temporarily in the “line” to write decisions may increase case dispositions and further streamline the review process. In our closing discussions with WL officials, we discussed the possible need for a detailed management review of BRB'S operations and sug- gested such a review may be desirable before resources are added to BRB. The officials agreed with this approach and indicated they plan to begin such a review in the near future. Number of BRB Decisions Panels of three judges review draft decisions written by attorneys and Limited by Availability issue DOL'S final decisions. The Longshore and Harbor Workers’ Compen- sation Act authorizes nine judges -five permanent and four temporary. of Judges The BRB may delegate its powers to panels of three judges, two of whom must be permanent. Judges serve on panels on a rotating basis. The nine judges should be expected to issue between 4,000 and 4,350 final decisions per year, BRB officials told us. They believe it would be unwise to expect the judges to exceed this level. If BRB is going to eliminate the backlog sooner than the 10 years we discuss on page 28, it will have to increase the number of judges. For example, to eliminate the backlog in 3 years beginning in fiscal year 1991, the panels of judges must dispose of almost 5,900 cases yearly. The current number of judges would not be able to handle this increased workload. To accommodate the increased workload, additional judges would be needed temporarily. Page29 Appendix V DOL’sDebt CollectionProcedures Collections by the Department of Labor of overpayments exceeded costs even though DOL collected only about one out of every three dollars set- tled. Also, when deciding repayment based on the claimants’ ability to repay, the three offices we visited were generally consistent. However, the initial overpayment notices did not fully explain the options availa- ble to the claimants in handling their debt. DOL collects money owed the trust fund by mine operators and claim- ants. Generally, these debts result from appeals by mine operators. In about 75 percent of the initial approvals involving a responsible mine operator, the mine operator appeals the decision. Until all appeals are completed, claimants receive benefits from the trust fund. If the original decisions remain unchanged, responsible mine operators must reimburse the trust fund for the benefits paid to claimants on their behalf. If the initial decision is later reversed, any benefits received during this period are considered overpayments to the claimants and DOL may require repayment. DOL pursues collection of all overpayments owed by mine operators. For claimants, however, DOL bases its decision on whether to collect on (1) the cost benefit of collection, (2) the financial condition of the claim- ant, or (3) whether collection is against equity and good conscience. Amounts collected significantly exceeded the costs of black lung pro- Overpayment gram overpayment collection (see table V.1 for costs, and collections). Collections The amounts collected from claimants alone in fiscal year 1988 were Exceed Cost more than the total costs of all black lung program debt collection activi- ties In fiscal year 1988, DOL collected about seven dollars for every dol- lar spent on collection efforts. Page30 GAO/HRD9@76Better Adjudication of Black Lung Claima Needed Appendix V DOL’s Debt Collection Pmcedms ‘able V.l: Collecting Overpayments :rom Claimants and Mining Companies: Dollars in thousands Zests and Collections (Fiscal Years 1988- Amount collected 19) Collection category 1988 198P Mining companies: Reimbursement of benefits oaid $17,718 $16,360 Interest 4,079 6,747 Totals collected $21,797 $23,107 Claimants: Overpayments settled: 21,066 19,548 Write-offsb ( 4,307) (4,700) Waivers (10,117) (9,338) Totals collected s6,642 $5,510 Totals. all collections $28,439 $28,617 Costs to collect: Estimated costsc 4,272 4,935 Difference between collections and costs $24,167 $23,683 aAmounts recorded by DOL through the third quarter bUsuallyoccur when an overpaid miner dies before the account IS settled CBasedon the estimated time the district offlces and the national offices spend on debt collection active- ties. DOL pursues collection of all overpayments owed by mine operators. For claimants, however, DOL provides guidance to its district office staff on deciding whether to initiate or stop collection actions. The guidance pro- vides that designated officials, on a case-by-case basis, may take antici- pated costs of required administrative actions into consideration when determining whether to collect or end collection action on debts. This guidance is in accordance with Federal Claims Collection Standards. DOL’S initial overpayment notices to claimants do not adequately explain Notices Received by the options available to have overpayments forgiven. Claimants may 2laimants Inadequate apply for waiver of their uoL-declared debt if they prove (1) they are unable to pay or (2) that repayment is against equity and good con- science.’ Generally, the notices emphasize the option of having the debt waived because of the inability to pay. The notices do not provide an explanation of waiver based on being against “equity and good con- science.” Without more information, most claimants probably would not know how to use this option. As a minimum, we believe DOL’S notice ‘In assessingability to pay, DOLexaminesthe miners’income,assets,expenses,and dependents. Assetssuch asthe miner’s homeand car are not considered. Page 31 GAO/HlUM@75 Better Adjudication of Black L.ung Cldma Needed Appendix V DOL’s Debt Cdlection Procedurea should include several of the examples that DOL uses in its guidelines to its claims examiners. When deciding waivers based on repayment being against equity and good conscience, DOL considers whether the claimant (1) gave up a valu- able right (e.g., a job that he or she cannot get back) to accept black lung benefits; (2) changed his or her position for the worse (e.g., a dependent child had been able to attend college because of the monthly benefits); and (3) depended on erroneous information in acceptance of the benefits (e.g., he or she was not informed that the benefits might have to be repaid). After reviewing a judgmentally selected sample of folders in three dis- trict offices for cases in various payment and nonpayment status, we found that LKJL made waiver decisions consistently in most cases. Page 32 GAO/HRIMO-75 Better Adjudication of Black Lung claims Needed Ppe %rhuzk Lung Disability Trust Fund The Congress established the Black Lung Disability Trust Fund to trans- fer the costs of the black lung program to the coal industry. The trust fund pays program administrative costs and monthly disability benefits when no coal mine operator is assigned liability for an approved claim. Most of the trust fund’s expenditures are the result of congressional actions in 1977 and 1981 that assigned the fund liability for several groups of beneficiaries. The trust fund is financed primarily through an excise tax on the sale of coal. However, if the tax revenue is insufficient to cover expenditures, the Secretary of Labor can borrow from the federal government’s gen- eral fund. Each year (from 1979 through 1988), coal taxes have been inadequate to cover program expenditures. The trust fund borrowed nearly $3 billion dollars from the Treasury during that time (see fig. VI. 1). Figure VI.1: Funds Borrowed by Black Long Disability Trust Fund From the so0 DousninYHHoN Treasury (Ftscal Years 1979-66) 1979 la0 198l lssz 1989 1984 1065 1986 1967 lsw Fbcal Ym The trust fund’s need to borrow from the general fund has been reduced over recent years. Yearly coal tax receipts are now about 90 percent of administrative and benefit costs. Over the life of the program, they have equaled about 60 percent. Also, the Congress imposed a moratorium on the accrual of interest on money borrowed from the general fund. The current moratorium on accrual of interest expires at the end of fiscal Page 33 GAO/HBD9076 Better Adjudication of Black Lung Claima Needed Appendix VI The Bhck Lung Disability Trust F’und year 1990. If the Congress does not act to extend the moratorium or increase coal taxes, interest on the debt alone could be again about 50 percent of coal tax revenue in fiscal year 1991. Liability for about 91 percent of miner claims filed before April 1, 1980, Trust Fund Made has been assigned to the trust fund. The 1977 amendments assigned to Liable for Most the trust fund liability for claims in which the miner’s last coal mine Approvals employment was before 1970.’ Because coal companies and their agents generally opposed accepting liability for approvals of claims readjudi- cated under the “interim criteria,” the Congress forgave them liability in the 1981 amendments. The rate at which mining companies are named as liable, however, increased to 38 percent for claims filed since March 31, 1980. For initial decisions made during 1988, the liability for about 52 percent of approv- als was assigned to mining companies. The Congress has increased the coal tax rate twice since 1977. The Coal Tax Revenues yearly amount of coal excise taxes collected increased from $232 million Do Not Cover Costs in 1979 to $601 million in 1988, shown in table VI.l. Table W-1: Coal Tax Revenues (Fiscal Years 1979-88) Dollars in thousands Coal tax Fiscal year revenues 1979 $232.056 1980 251,288 1981 237,097 1982 426,620 1983 490.731 1984 525,422 1985 548,356 1986 561 158 1987 574.769 1988 601,279 But the tax revenues have been insufficient to cover program expendi- tures. Through the end of fiscal year 1988, the trust fund has borrowed ‘Prior to these amendments, DOL reported to the Congress that responsible operators were named in 32 percent of the cases adjudicated Page 34 GAO/HRDW76 Better Adjudication of Black Long Claims Needed Appendix VI The Black Lung Disability Trust Fund about $3 billion. More recently, however, tax revenues have covered about 90 percent of the trust fund costs, as figure VI.2 shows. Figure Vl.2: Coal Tax Receipts Compared With Program Costs (Fiscal Years lQo0 1979-88) so0 so0 700 so0 so0 400 300 200 100 COdTaX I Program Costs I The Congress prohibited the charging of interest on amounts owed by the trust fund to the general fund during fiscal years 1986 through 1990. The estimated cost of this 5-year moratorium is about $2 billion. Page 36 GAO/ERD9076 Better Adjudication of Black Lung Claims Needed Appendix VII Major Contributors to This Report Human1Resources Cameo A. Zola, Assignment Manager Division, Regg Hatcher, Evaluator-in-Charge Washington, D.C. Ann V. White, Evaluator C. Robert DeRoy, Evaluator (Computer Science) Virginia T. Douglas, Reports Analyst Joyce W. Smith, Secretary Cincinnati Regional Vern Nieporte, Evaluator Office (106338) Page 36 GAO/HUD-s(I-75 Better Adjudication of Black Lung Claima Needed Requests for copies of GAO reports should he sent to: U.S. General Accounting Office Post Office Box 6015 Gaithersburg, Maryland 20877 Telephone 202-275-6241 The first five copies of each report are free. Additional copies are $2.00 each. There is a 25% discount on orders for 100 or more copies mailed. to a single address. Orders must be prepaid by cash or by check or money order made out to the Superintendent of Documents. United States General Accounting Office Washington, D.C. 20548 Official Business Penalty for Private Use $300
Black Lung Program: Further Improvements Can Be Made in Claims Adjudication
Published by the Government Accountability Office on 1990-03-21.
Below is a raw (and likely hideous) rendition of the original report. (PDF)