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entitled 'Postal Service Employee Workers' Compensation Claims Not 
Always Processed Timely, but Problems Hamper Complete Measurement' 
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December 20, 2002:



The Honorable Stephen Horn:



Chairman, Subcommittee on Government Efficiency,



Financial Management, and Intergovernmental Relations:



Committee on Government Reform:



House of Representatives:



Subject: Postal Service Employee Workers’ Compensation Claims Not 

Always Processed Timely, but Problems Hamper Complete Measurement:



Dear Mr. Chairman:



In fiscal year 2000, U. S. Postal Service employees accounted for about 

one-third of both the federal civilian workforce and the $2.1 billion 

cost of the Federal Workers’ Compensation Program (WCP). During that 

same year, Postal Service employees submitted about 85,000 claims, or 

about one-half of all claims for new work-related injuries, to the 

Department of Labor’s (DOL) Office of Workers’ Compensation Program 

(OWCP), which is charged with administering the program. Because of 

complaints the subcommittee received from injured federal employees 

about the untimely receipt of WCP benefits and because Postal Service 

employees account for such a large portion of the WCP, you asked us to 

determine specifically whether Postal Service employees were receiving 

WCP benefits in a timely manner.



We provided an initial response to your request on December 21, 

2001,[Footnote 1] and testified on the matter during a hearing before 

the subcommittee on May 9, 2002.[Footnote 2] Among other things, we 

reported that during the period July 1, 1996, through June 30, 2000, 

about 7 percent of the Postal Service’s approximately 901,000 total 

employee workforce filed an average of about 82,600 WCP claims each 

year. Of these claims, about 88 percent were approved and about 12 

percent were denied each year. We also reported that OWCP’s automated 

file records indicated a wide variance in the time between the date of 

an employee’s injury and (1) the date of OWCP’s decision regarding the 

claimant’s entitlement to benefits[Footnote 3] and (2) the date OWCP 

authorized the first compensation or schedule award payment.[Footnote 
4] 

However, as we reported, the automated records we reviewed did not 
contain 

the specific information we needed to identify how long it took the 

injured employees, Postal Service supervisors, and OWCP claims 
examiners to 

submit and process WCP claims.



For our current review, we agreed to:



* determine the extent to which Postal Service employees provided all 
of 

the evidence required by OWCP regulations for determining the 

claimants’ eligibility for WCP benefits and:



* determine whether claims for WCP eligibility and WCP compensation 

payments for lost wages or schedule awards were submitted and processed 

within the time frames set forth in OWCP regulations or performance 

standards.[Footnote 5]



Before Postal Service employees can receive medical benefits or 

compensation for wage loss or schedule awards, OWCP must often first 

establish--based on the evidence provided by the applicant--that the 

applicant is eligible for workers compensation benefits due to the 

injury for which the benefits are claimed. Once the claimant is 

determined to be eligible, the claimant’s injury-related medical costs 

are paid directly by DOL to the medical provider. However, for wage 

loss or physical impairment due to the work-related injury, the 

employees must submit another WCP claim form specifically for 

compensation payments and provide evidence that the time away from work 

(wage loss) or impairment (schedule award) was directly related to the 

injury.



To meet our objectives, we randomly sampled 484 Postal Service employee 

WCP case files located at the 12 OWCP district offices throughout the 

country. Our sample cases included only those cases where Postal 

Service employees also filed claims for wage loss or schedule award 

compensation payments due to injuries that occurred or were recognized 

as job-related during the 12-month period beginning July 1, 1997. We 

selected the sample file records on the basis of the type of injury 

involved--traumatic or occupational[Footnote 6]--and on the basis of 

their approval or nonapproval for WCP benefits and compensation or 

schedule award payments. (See enc. III for more detail about our scope, 

methodology, and sampling plan.) Our results can be generalized to the 

entire group of Postal Service employees who applied for wage loss or 

schedule award compensation due to injuries occurring during the period 

covered by our review. (See enc. III for the confidence intervals for 

each part of the claims processing activities we measured.) We chose 

the period covered by the cases we reviewed because we believed it was 

current enough to reflect ongoing operations, yet historical enough for 

most, if not all, of the claims to have been decided upon. However, our 

work did not include an analysis of any time involved in the appeals 

process of any claim we reviewed, nor did we generally evaluate the 

appropriateness of OWCP’s decisions approving or denying the claims. 

Our scope did not include an overall assessment of the performance of 

the WCP. For example, we did not assess processing of claims solely for 

medical payments or for subsequent claims for compensation made after 

the initial payment was authorized. We performed our work from January 

through December 2002 in accordance with generally accepted government 

auditing standards and obtained comments on the results of our work 

from OWCP and the Postal Service.



Results in Brief:



On the basis of our analysis, we estimate that in about 99 percent of 

the cases involving Postal Service employees who (1) had work-related 

injuries during the 12-month period beginning July 1, 1997, and (2) 

filed claims for WCP benefits for lost wages or schedule awards due to 

these injuries, the employees eventually provided OWCP the evidence it 

required to make a determination on their eligibility for benefits. 

However, in about 69 percent of the cases, OWCP claims examiners had to 

request additional information because all of the required evidence 

needed to make a determination of WCP eligibility was not provided 

initially. As a result, claims for WCP eligibility were not always 

processed within the time frames set forth by OWCP.



On the basis of our analysis of available information, we estimate that 

Postal Service employees submitted about 95 percent of traumatic injury 

claims and about 49 percent of occupational disease claims to their 

respective Postal Service supervisors[Footnote 7] within the time 

frames set forth in OWCP regulations or performance standards. Postal 

Service supervisors then completed and submitted about 73 percent of 

the traumatic injury claims and about 64 percent of the occupational 

disease claims within OWCP’s time frames, and OWCP claims examiners 

processed about 71 percent of the traumatic injury claims and about 84 

percent of the occupational disease claims within OWCP’s time frames. 

However, the reliability of our estimates is compromised to some extent 

by data not required and not available from the claim forms in our 

sample cases, as well as mistakes made by OWCP in selecting and

processing traumatic injury short form closure (SFC) cases.[Footnote 8] 

Furthermore, because of the SFC case selection and processing problems 

we found, the SFC case process may not be achieving the results OWCP 

intended.



For those Postal Service employees in our sample cases who were 

determined to be eligible for WCP benefits and later filed claims for 

compensation for lost wages or schedule awards, we could not reliably 

estimate the percentage of claims for compensation that were processed 

within the time frames set forth by OWCP. This was because the dates we 

needed to “mark” the beginning and ending actions taken by the injured 

Postal Service employee and Postal Service supervisor to complete, 

submit, and forward the claims to OWCP were missing from the claim 

forms. Additionally, OWCP’s performance standards for OWCP claims 

examiners’ part in processing these claims do not cover compensation 

claims for schedule awards, or when applicable, consider the impact of 

the additional time associated with (1) processing corresponding WCP 

claims for eligibility or (2) OWCP requests for additional information 

from the employees, Postal Service supervisors, or medical providers.



Accordingly, we are recommending that the Secretary of Labor and the 

Postmaster General take certain actions to improve and monitor the 

preparation and processing of Postal Service employees’ WCP claims. In 

commenting on a draft of this report, the Postal Service said that it 

supported our recommendations and, in July 2002, had established a new 

goal for submitting claims to OWCP. Although OWCP disagreed with many 

aspects of our methodology, findings, and recommendations, it said it 

was undertaking a review of its business and data system, including its 

SFC case process, and that it would make changes where it felt 

appropriate. Overall, we continue to believe that our methodology, 

findings, and recommendations are appropriate, but we have made changes 

to our report to reflect OWCP’s concerns where appropriate. A complete 

discussion of the Postal Service’s and OWCP’s comments can be found 

near the end of this report.



Background:



Although OWCP is charged with administering the WCP, federal employing 

agencies, including the Postal Service, are responsible for paying 

normal salary and benefits, referred to as “continuation of pay (COP),” 

to those employees who miss work for up to 45 calendar days, during a 

1-year period, due to a work-related traumatic injury for which they 

have applied for WCP benefits. Additionally, at the end of each 12-

month period beginning on

July 1, referred to as a “charge back year,” employing agencies are to 

reimburse DOL for (1) each agency’s share of DOL administrative costs 

and (2) costs associated with the WCP benefits and services provided to 

their respective employees during the year. As shown below, Postal 

Service employees’ WCP claims for medical benefits and compensation for 

lost wages and schedule awards have greatly increased since fiscal year 

1998. (See table 1.):



Table 1: Postal Service’s Share of Selected WCP Costs Due to Injured 

Postal Service Employees for Fiscal Years 1998 through 2001 [A]:



[See PDF for image]



[A] Most current years for which costs were available at the time of 
our 

review.



[B] Outlay is the amount Postal Service reimburses DOL, which makes the 

payment on WCP claims.



Source: GAO analysis of Postal Service data.



[End of table]



Employing agencies also provide the avenue through which injured 

federal employees prepare and submit their claim forms for WCP 

eligibility and claim forms for wage loss or schedule award 

compensation payments to OWCP. Specifically, OWCP regulations and 

performance standards in effect during the period covered by our review 

set forth the following:



For OWCP to determine WCP eligibility, applicants had to provide 

evidence to meet five requirements: (1) the claim was filed within the 

time limits specified by law; (2) the injured or deceased person was, 

at the time of injury or death, an employee of the U. S. government; 

(3) the injury, disease, or death did, in fact, occur; (4) the injury, 

disease, or death occurred while the employee was in the performance of 

duty; and (5) the medical condition for which compensation or medical 

benefits was claimed was causally related to the claimed job-related 

injury, disease, or death.[Footnote 9] 



For OWCP to process claims for WCP eligibility determination, OWCP 

regulations state that applicants are to give notice of the injury in 

writing[Footnote 10] to a Postal Service supervisor within 30 days of 

the injury or the date the employee realized the disease was job-

related for traumatic or occupational disease, respectively. OWCP 

regulations further state that Postal Service supervisors are to 

complete the agency portion of the form and submit it to OWCP within 

10 working days of receiving a claim.[Footnote 11] OWCP 

regulations do not identify the time frames for OWCP to perform its 

part of the claims processing activity. Instead, OWCP has developed 

operational performance standards that identify the percentage of 

claims it plans to process within certain time frames. Specifically, 

OWCP claims examiners are to decide on WCP eligibility for at least 

90 percent of the traumatic injury claims within 45 days of the claims’ 

receipt from the Postal Service and for at least 70 percent of the 

occupational disease claims within 6 months of the claims’ receipt.



For OWCP to process claims for compensation for wage loss or schedule 

award, OWCP regulations state that applicants--who were disabled by a 

work-related injury and lost wages for more than 3 days, or had a 

permanent impairment--are to submit a claim in writing[Footnote 12] to 

the employing agency within 10 days of the date pay stopped. Upon 

receipt of the claim, OWCP regulations state that Postal Service 

supervisors are to complete the agency portion of the form and as soon 

as possible, but not more than 5 working days, submit the form and any 

accompanying medical reports to OWCP. OWCP regulations do not identify 

the time frames for OWCP to perform its part of the claims processing 

activity. Instead, OWCP has developed operational performance standards 

that identify the percentage of claims it plans to process within 

certain time frames. Specifically, OWCP’s goal is for claims examiners 

to process all payable claims for traumatic injuries and occupational 

disease within 14 days of OWCP’s receipt of the claim from the Postal 

Service. OWCP considers the time that payment is authorized as the end 

of the processing activity.



Evidence Required to Determine WCP Eligibility Was Almost Always 

Provided by Postal Service Employees:



Overall, we estimate that for about 99 percent of the cases involving 

Postal Service employees who (1) had work-related injuries during the 

12-month period beginning July 1, 1997, and (2) filed claims for WCP 

benefits for lost wages or schedule awards due to these injuries, the 

employees provided to OWCP the evidence required to make a 

determination on their eligibility for benefits. Specifically, about 99 

percent of the traumatic injury claims filed by Postal Service 

employees contained evidence related to the five requirements set forth 

in OWCP regulations and only about 1 percent of the claims did not 

include all of the required evidence. For occupational disease claims, 

about 98 percent of the claims filed by Postal Service employees 

contained evidence related to the five requirements, while only about 2 

percent did not include all of the required evidence. Generally, the 

evidence not provided for both types of claims pertained to either (1) 

the employee’s status as a Postal Service employee or (2) whether the 

claims were filed within the time limits specified by law.



However, in about 69 percent of our sample cases--about 64 percent of 

the traumatic injury cases and about 77 percent of the occupational 

disease cases--OWCP claims examiners had to request and obtain 

additional information from the injured employee, Postal Service, or 

medical provider in order to make a determination of WCP eligibility.



Postal Service Employee Claims for Program Eligibility Are Not Always 

Processed Within Time Frames Set Forth by OWCP:



On the basis of our analysis, we found that Postal Service employees 

did not always submit, and Postal Service supervisors and OWCP claims 

examiners did not always process, WCP claims within the time frames set 

forth in OWCP regulations or performance standards for determining WCP 

eligibility. Specifically, we estimate that Postal Service employees 

met the time frames for submitting about 95 percent of traumatic injury 

claims and about 49 percent of the occupational disease claims to the 

Postal Service supervisors. (See table 2.) Once the Postal Service 

supervisors received the claims, we estimate that these supervisors 

completed the agency portion of the claim forms and forwarded about 73 

percent of the traumatic injury claim forms and about 64 percent 

occupational disease claim forms to OWCP within the time frames set 

forth by OWCP. We also estimate that OWCP claims examiners processed 

about 71 percent of the traumatic injury claims and about 84 percent of 

the occupational disease claims within the times frames set forth by 

OWCP. However, the time frames for OWCP to process both traumatic 

injury claims and occupational disease claims were affected by factors 

outside of OWCP’s control. In addition, our estimate of the processing 

times for traumatic injury claims were affected by OWCP’s mishandling 

of some SFC cases. As a result, claims for WCP eligibility were not 

always processed within the time frames set forth by OWCP.



According to OWCP officials, delays by OWCP in processing WCP claims 

are sometimes due to the employees’ failure to initially provide all of 

the information needed in order to determine WCP eligibility. As a 

result, and as discussed earlier in this report, additional processing 

time was sometimes needed for OWCP to request and receive the needed 

information before WCP eligibility could be determined. According to 

Postal Service officials, part of the delay in getting WCP forms 

submitted within the time frame set forth in OWCP regulations, 

especially for occupational disease claims, is because employees 

sometimes do not realize the severity of their injuries and do not file 

their WCP claims until the injuries get worse or start to affect their 

job performance. These officials also told us that Postal Service 

supervisors sometimes complete the agency part of the forms but may not 

promptly forward WCP claim forms. In commenting on a draft of this 

letter, the Postal Service told us that in July 2002, it had 

established a reporting goal that 90 percent of employee claims for 

traumatic injury and occupational disease are to be reported to OWCP 

within 14 days of receiving the claims from the employees.



Table 2: Length of Time to Process Claims to Determine Eligibility for 

WCP Benefits for Injuries during the Period July 1, 1997, through June 

30, 1998 [A]:



[See PDF for image]



[A] Our sample included only those cases where Postal Service employees 

also filed claims for wage loss or schedule award compensation payments 

due to injuries that occurred or were recognized as job-related during 

the 12-month period beginning July 1, 1997.



Source: GAO analysis of OWCP data.



[End of table]



Time Frame for Processing Traumatic Injury Claims for WCP Eligibility 

Are Affected by SFC Cases:



Initially, we had estimated that OWCP claims examiners processed only 

about 41 percent of the traumatic injury claims within the times frames 

set forth by OWCP. This percentage, however, did not take into 

consideration the “down time” associated with SFC cases.[Footnote 13]



According to OWCP, SFC cases are WCP claims that are accepted 

(approved) as eligible for WCP benefits upon receipt and allowed to 

incur up to $1,500 in medical bills--without formal adjudication--and 

are closed. Also, SFC cases are to remain closed--without any action 

taken on the part of claims examiners--unless one or more of the 

following actions occur on the claims: (1) medical expenses exceed 

$1,500, (2) the Postal Service later contests the claim, or (3) a wage 

loss claim is submitted to OWCP. If one of these events occurs, the 

case is to be reopened, processed, and adjudicated by an OWCP claims 

examiner. Thus, according to OWCP officials, we should not have 

considered as processing time the time frame between the date the SFC 

case was closed and the date that it was reopened.[Footnote 14]



Once we deducted the “down time” associated with the 188 cases 

identified by OWCP officials as SFC cases contained in our sample of 

280 traumatic injury cases, we determined that the percentage of 

traumatic injury claims that were processed within the time frame set 

forth in OWCP performance standards increased from our original 

estimate of about 41 percent to about 71 percent. However, we also 

found from our case file review that OWCP personnel did not always 

comply with OWCP’s SFC selection and processing guidelines. This 

problem precluded a complete and accurate assessment of OWCP’s 

processing time frames for eligibility determination and indicates that 

closer monitoring of OWCP’s claims examiners’ adherence to SFC 

processing guidelines may be needed.



Specifically, we found that 14 of the 188 SFC cases in our sample 

(about 7 percent) were designated as SFC cases but did not meet OWCP’s 

SFC case criteria: 6 cases involved third parties, 5 cases were 

initially contested by Postal Service officials, and 3 cases involved 

occupational disease claims. According to OWCP, traumatic injury claims 

that involve third parties or are initially contested or claims that 

involve occupational diseases normally require additional case 

development before a decision as to whether WCP eligibility can be 

made. Thus, these 14 cases should not have been selected as SFC cases. 

Initially, we had presented:



OWCP with 17 SFC cases in our sample that we believed did not meet the 

SFC case criteria. At that time, OWCP provided us with additional 

information that indicated that 3 of the 17:



cases were properly designated as SFC cases. However, in OWCP’s 

comments on a draft of this report, it stated that it had previously 

demonstrated to us that only 9 of the 17 cases were handled improperly. 

We disagree and still believe that 14 of our sample SFC cases were 

handled improperly by OWCP claims examiners. Nevertheless, whether 

there were 9 or 14 SFC cases that were handled improperly, the point is 

that OWCP claims examiners do not always select and process SFC cases 

properly.



We found further that once selected, some SFC cases may not have been 

processed according to OWCP’s guidelines. Of the 188 SFC cases, we 

found that 70 cases (about 37 percent) were adjudicated the same day 

that OWCP claims examiners reopened the claim, which could indicate 

that contrary to OWCP’s SFC guidelines, claims examiners may have 

worked on or processed cases even though the cases were “technically” 

closed. Then, once the claims examiner decided to accept or reject the 

claims, the cases were reopened, adjudicated, and closed on the same 

day. Furthermore, in our case file review, we noted several instances 

in which OWCP claims examiners had requested additional claim 

information for closed SFC cases, indicating that processing was taking 

place but that was not being considered in OWCP’s processing time 

measurement.



In its comments on our draft report, OWCP said that we implied that SFC 

cases that are reopened and adjudicated on the same day are not 

processed in accordance with OWCP guidelines and that this is not the 

case. OWCP said that its examiners are in fact encouraged to adjudicate 

claims as quickly as possible; frequently, triggers such as a telephone 

call or a facsimile transmission will be sufficient basis to reopen and 

adjudicate a claim instantly. However, our case file review showed, and 

we were told by OWCP officials in both the Dallas and Washington, D.C., 

district offices, that contrary to SFC case processing guidelines, 

claims examiners frequently work on cases while they are officially 

closed in an effort to obtain relevant information from the claimant or 

the employer so that an immediate eligibility determination can be made 

when the case is reopened. Nevertheless, we revised our report to 

indicate that we are not implying that all such cases are improperly 

processed.



OWCP officials generally agreed that mistakes were made in the SFC 

screening process and operating procedures. They explained that the SFC 

selection process and operating procedures, as a whole, have never been 

evaluated since the initial pilot project was done in 1993. Because the 

SFC case process has never been evaluated, no one knows whether the 

process has achieved its intended objectives or maintained the pilot 

project’s estimated error rate of about 1 percent for improperly 

approved injury claims. Although we found that 2 of the 188 SFC cases 

in our sample (about a 1 percent error rate) involved erroneously paid 

medical benefits from OWCP and COP from the Postal Service, our review 

of SFC cases was not designed to be representative of all such 

cases.[Footnote 15] Furthermore, OWCP’s pilot study that led to its SFC 

case processing policy was limited to one district office, and OWCP has 

not evaluated the SFC case processing error rate since that time. Thus, 

neither OWCP nor we have sufficient data to determine the current SFC 

case processing error rate.



OWCP officials told us that they did not seek reimbursement from 

medical providers for costs paid prior to the time OWCP determined that 

the claimants were ineligible for WCP benefits. They said that there is 

no rule that precludes OWCP from seeking reimbursement for improperly 

paid medical costs from the employees. Once OWCP formally authorizes

medical services to be provided to employees, the Employees’ 

Compensation Appeals Board, which considers WCP appeals, takes the 

position that OWCP is contractually obligated to pay medical providers 

for services rendered in connection with the authorization, even if 

OWCP later decides to deny the claim. Postal Service officials, too, 

recognized that reimbursement of improperly awarded medical costs 

should not be sought from the medical providers. However, the Postal 

Service also said that, because it is difficult to recover improperly 

awarded medical costs from employees, changing OWCP’s regulations and 

the language in the authorization form to require employees or their 

insurance carriers to refund improper medical payments would make it 

easier for them to recover such amounts. Also, the Postal Service is 

required by statute to seek reimbursement from its employees for 

improperly awarded COP.



Percentage of Compensation Claims Processed Within Time Frames Set 

Forth by OWCP Could Not Be Reliably Estimated:



We could not reliably estimate the percentage of WCP claims for 

compensation payments for lost wages or schedule awards that were 

processed within the time frames set forth in OWCP regulations because 

OWCP did not require the dates needed to identify certain milestones in 

the claims processing activities to be recorded and the dates were not 

available from our sample case files. Also, OWCP’s performance 

standards do not cover a significant type of claim for compensation--

schedule awards--or, when applicable, consider the impact of the 

additional processing time associated with (1) processing the 

corresponding WCP claim for eligibility or (2) OWCP requests for 

additional information from injured employees, medical providers, or 

Postal Service supervisors.



Specifically, the dates needed to mark the beginning and ending actions 

taken by the injured Postal Service employee and Postal Service 

supervisor to complete, process, and submit, the claims for 

compensation to OWCP were not available. For example, for traumatic 

injuries, OWCP regulations state that an injured employee should submit 

a claim for compensation to the Postal Service supervisor within 10 

days from the date the employee’s pay stopped due to an absence from 

work caused by the work-related injury. However, we found that the date 

that the employee actually submits the form to the Postal Service 

supervisor is not required by OWCP to be recorded nor was it recorded 

on the claim form or available in the case files we reviewed. As a 

result, we could not reliably estimate whether the injured employees 

filed the claim forms within the time frame set forth by OWCP; nor 

could we reliably estimate the time frame for the Postal Service 

supervisors to complete and forward the claim form to OWCP after its 

receipt from the employees.



Although we estimated that OWCP claims examiners processed about 59 

percent of the traumatic injury and 63 percent of the occupational 

disease claims within OWCP’s 14-day performance standard (the standard 

covers the period between the date OWCP first received the claim form 

to the date OWCP authorized the first compensation payment), problems 

with OWCP’s performance standard itself reduced the reliability of the 

processing time estimates we derived for this claims processing 

activity. First, OWCP’s performance standard on which:



our estimate is based excludes both claims for leave buy-backs[Footnote 

16] and claims for schedule awards. According to OWCP, both types of 

claims normally take longer than the 14-day time frame standard to 
process. 

OWCP officials stated that it is appropriate not to have performance 

standards for processing employee claims for leave buy-back because 

the decision to grant leave buy-back ultimately rests with the 

employing agency, and the decision to actually repurchase leave 

rests with the claimant.



OWCP stated that it has not established processing standards for 

schedule awards because entitlement to a schedule award for permanent 

impairment requires an often prolonged process of determining whether 

the claimant has reached maximum medical improvement and a precise and 

often difficult determination of the degree of impairment. Accordingly, 

OWCP believes that applying meaningful timeliness standards to claims 

staff in these circumstances would be exceedingly difficult. However, 

we found that 43, or about 10 percent of our sample claims, were claims 

for schedule awards. We estimated that the median processing time for 

37 of these claims for which data were available was 115 days from the 

date that OWCP received the claim until the first check was issued to 

the injured employee. Further, we estimated that 90 percent of these 

claims were paid within 787 days. Therefore, because the number of 

schedule award claims is not insignificant and processing times appear 

quite lengthy, we believe that if a reasonable standard for processing 

these claims could be developed, it could provide claims examiners with 

incentive to process schedule award claims expeditiously and provide 

OWCP a management tool for overseeing and evaluating the process.



Second, OWCP’s existing standard for compensation claims does not 

consider the impact of delays caused by processing corresponding claims 

for eligibility or delays caused by OWCP’s need for additional 

information from the injured employee, employing agency, or medical 

provider. For example, OWCP’s performance standard for processing 

claims for compensation begins with OWCP’s receipt of the compensation 

claims forms, even though the claim for compensation cannot be decided 

upon or awarded until after WCP eligibility is determined. As a result, 

such compensation claims forms cannot be processed until WCP 

eligibility is determined, which could inadvertently result in claims 

being processed in greater than the 14-day processing time frame set 

forth in OWCP performance standards. In our sample cases, we found that 

compensation claims for about 23 percent of the traumatic injuries and 

about 12 percent of the occupational disease were received by OWCP 

before WCP eligibility was determined. According to OWCP officials, 

this indeed happens but there is little they can do about it using the 

current performance standard for processing claims for compensation, 

other than being aware that it is a possible reason for such claims 

exceeding the processing standard.



Moreover, we found that delays in processing claims frequently occur 

because injured employees do not always provide complete information at 

the time they submit WCP claims, nor is sufficient or competent 

information always provided to allow OWCP to determine WCP eligibility 

or decide on compensation awards. As a result, OWCP is to inform the 

claimant that additional evidence is needed and allow the claimant up 

to 30 days to submit the requested information before OWCP can deny the 

claim. In our analysis, we found that this happened quite often. In 

fact, for about 64 percent of the compensation claims stemming from 

traumatic injuries and about 77 percent of the claims stemming from 

occupational disease, OWCP requested additional information before 

making a decision on the claims. According to OWCP officials, delays 

created by having to request additional information is indeed a 

problem. They have tried to minimize these delays by taking such action 

as calling the employee or agency, when appropriate, to obtain the 

information instead of sending formal written requests. Regardless, 

according to these officials, under OWCP’s current performance 
standards, 

all claims examiners and district directors can do is monitor these 
delays 

and note their impact on the overall claims processing activity.



Conclusions:



Although nearly all Postal Service employees who filed claims for WCP 

benefits for work-related injuries sustained during the period July 1, 

1997, through June 30, 1998, eventually provided the evidence required 

by OWCP regulations to determine the employees’ eligibility for WCP 

benefits, many of these employees’ claims were not processed within the 

time frames set forth by OWCP. This is because (1) injured employees 

sometimes failed to submit claim forms in a timely manner after the 

date of injury or failed to initially provide all the needed 

information and (2) Postal Service supervisors did not always follow 

OWCP guidelines for forwarding the claims to OWCP. As a result, OWCP 

claims examiners frequently had to request and obtain additional 

information in order to determine the employees’ WCP eligibility. These 

factors may have contributed to delays that occurred in the overall 

claims processing activity. In addition, data not required to be 

captured on the claim forms and not available from the claim files as 

well as the handling of some SFC cases by OWCP claims examiners 

affected the reliability of performance measurements for determining 

WCP eligibility. Furthermore, this could indicate a need for OWCP to 

reevaluate the SFC case process. Moreover, problems with OWCP’s 

performance standards themselves made it impossible to reliably 

estimate the time required for processing compensation claims for lost 

wages. In addition, OWCP does not have performance standards for 

schedule awards even though about 10 percent of WCP claims in our 

sample were for schedule awards, and the processing times for these 

claims were generally quite lengthy.



Recommendations for Executive Action:



To help (1) improve measurement of WCP claims processing activity and 

(2) ensure the accuracy in awarding WCP benefits, we recommend that the 

Secretary of Labor direct the OWCP administrator to:



* reevaluate and modify as needed OWCP’s regulations and performance 

standards to better ensure that measurements reflect the time 

associated with the various specific components and parties involved in 

processing WCP claim forms up to the time WCP eligibility is determined 

and WCP compensation payments are authorized or denied, and reconsider 

whether reasonable performance standards for claims for schedule awards 

could and should be established, and whether SFC cases should be 

combined with other traumatic injury claims when measuring the 

timeliness of the eligibility determination process;



* establish a requirement that the dates needed to determine the 
various 

processing times covered by OWCP’s regulations or performance standards 

for all parties involved in processing WCP claims are recorded on the 

applicable claim forms;



* periodically (1) monitor employee compliance with SFC case selection 

and processing guidelines and (2) determine whether the SFC case 

process is achieving OWCP’s intended goals and maintaining a cost-

effective error rate regarding improperly awarded WCP benefits.



To help overcome the delays in processing WCP claim forms for 

eligibility determination and compensation for lost wages and schedule 

awards, we are also recommending that the Postmaster General

monitor and take appropriate actions to achieve its goal for the 

preparation and processing of Postal Service employee claims for WCP 

benefits and ensure that claims submitted to OWCP are as complete as 

practical.



Agency Comments and Our Evaluation:



We provided copies of a draft of this report to the Postmaster General 

and the Secretary of Labor for their review and comment. On December 6, 

2002, the Postal Service’s Vice President, Employee Resource 

Management, provided us with written comments stating that the Service 

supports our recommendations regarding OWCP’s administration of the 

program. (See enc. I.) He said that the Postal Service believes our 

recommendations will improve OWCP’s ability to effectively manage the 

program. With regard to our recommendation that OWCP and the Postal 

Service take action to improve and monitor the preparation and 

processing of WCP claims, he stated that the Postal Service has 

implemented such measures. He said that in July 2002, the Postal 

Service established a timeline reporting goal that 90 percent of 

employee claims for traumatic injury and occupational disease are to be 

reported within 14 days. He said that in order to achieve such a goal, 

field managers must establish a close working relationship with 

employees’ supervisors to ensure that claim forms are submitted 

promptly and accurately. He also pointed out that in regard to the 

discussion in our report relating to the collection of medical payments 

improperly made, the payments are difficult to recover if the claim is 

later denied. He said that if OWCP’s regulations and the language on 

the applicable form were revised to require the employees or their 

insurance carriers to refund medical payments improperly made, this 

would greatly increase the ability to collect these payments. Finally, 

he stated that the efforts of OWCP in continuing to improve program 

management and to identify ways to deliver good service to injured 

Postal Service employees are appreciated.



We believe that the recent goal established by the Postal Service to 

improve preparation and processing of Postal Service employees workers’ 

compensation claims should, if effectively implemented, help expedite 

the WCP claims eligibility determination and adjudication processes as 

long as the claims contain sufficient information for OWCP to process 

the claims. Accordingly, we have revised the recommendations in our 

report to reflect the Postal Service’s recently established claim 

submission goal.



By letter dated December 11, 2002, OWCP’s Director provided us general 

and technical comments on our draft report. His general comments, 

included as enclosure II, are discussed below and in those sections of 

the report where applicable. We considered his technical comments and 

made changes to the report where appropriate. Overall, OWCP disagreed 

with several aspects of our methodology, findings, and recommendations 

but said the data systems OWCP uses to measure its own and employing 

agencies’ performance are currently under review as part of a general 

system redesign and replacement effort.



Comments about Our Methodology and Findings:



OWCP stated in its comments that the operation of the workers’ 

compensation system remains a complex and intertwined set of 

activities, and that in its view, the report does not fully and 

accurately describe the overall performance of that system. OWCP 

specifically:



pointed to our approach to the SFC case process as misrepresenting 

OWCP’s handling of this large category of traumatic injury cases. Also, 

OWCP pointed out that with respect to the timeliness of wage-loss 

claims processing, our analysis focused only on the outcomes of claims 

for the first compensation payment. OWCP stated that its system reports 

on a larger universe--all payments generated from the receipt of a 

claim form, and multiple claims are frequently filed on the same case.



Our work was never intended to address the overall performance of the 

federal workers’ compensation program. We explain early in the report 

that our work focused on only Postal Service employees who filed claims 

for wage loss or schedule award compensation during a specified period 

of time. Because of our limited scope, we recognize that there would 

likely be differences between the results of our analysis and the 

results of OWCP’s systems for tracking its performance in processing a 

differing universe of WCP claims. We nevertheless believe that the 

results of our analysis of our sample postal employee claims are 

relevant for OWCP to consider as it redesigns its system.



OWCP pointed out that on the basis of our stratified sample of 484 

cases, we found that OWCP adjudicated traumatic injury claims within 

program standards 71 percent of the time and occupational disease 

claims 84 percent of the time. However, OWCP data systems capturing 

information on all cases processed within the measured categories show 

traumatic injury adjudication timeliness at better than 94 percent and 

occupational disease case adjudication timeliness at more than 90 

percent. OWCP said that the discrepancy between what we found and what 

its systems show regarding traumatic injury claim adjudication 

timeliness seriously distorts OWCP’s performance.



Specifically, OWCP said that our approach to the SFC case process 

misrepresents OWCP’s handling of this large category of traumatic 

injury cases. It said that its 94 percent measurement of timeliness 

much more fairly represents service to injured workers because it 

includes SFC cases as completed within the 45 day standard. It said 

that this approach is appropriate because the only benefit being 

claimed in such cases is payment of medical claims. Further, OWCP 

disagreed with our approach of excluding the down time associated with 

SFC cases because the vast majority of SFC cases are never reopened. 

Therefore, if our methodology were used, these cases would never be 

counted as processed even though up to $1,500 in medical bills may have 

been promptly paid on each of these claims. OWCP further stated that it 

has established a separate 45 day standard for SFC cases that are 

reopened, and its system is reporting that approximately 85 to 90 

percent of these reopened cases are adjudicated within the standard.



We believe that OWCP’s approach of combining SFC cases, which do not 

involve processing time by claims examiners, with cases that do require 

processing time by claims examiners does not provide an appropriate 

measurement of timeliness for processing traumatic injury claims. As 

OWCP points out, SFC cases are closed automatically and immediately if 

the case meets certain criteria and medical claims are paid 

automatically up to a preset limit. Combining these cases with cases 

that require examiners to make decisions does not provide the most 

appropriate or meaningful measure of the eligibility processing times 

for traumatic injury claims because it would be difficult for OWCP to 

identify and address any problems that may affect the actual processing 

times of claims that do require eligibility determination reviews. We 

believe our approach for determining eligibility processing time frames 

for SFC cases, which begins at such time the cases are reopened and 

ends when they are either approved or denied, is more meaningful 

because that is the period of time during which OWCP claims examiners 

are actively processing the cases.



Further, regarding OWCP’s concern that our approach to the SFC case 

process would mean that SFC cases that are not reopened would never be 

counted as processed, our analysis was intended to determine the 

processing time for those SFC cases that were reopened from the time of 

reopening through adjudication. OWCP could perform other analyses for 

its purposes, such as determining and reporting the number of SFC cases 

where medical payments were made but the cases were not reopened. We 

did not do a separate analysis of the processing times for the SFC 

cases in our sample after they were reopened; therefore, we do not know 

how the processing times for these cases would compare to OWCP’s 

statement that about 85 to 90 percent of all reopened SFC cases are 

adjudicated within the 45 day standard. We have added a recommendation 

in our final report that OWCP reconsider whether SFC cases should be 

combined with other traumatic injury claims when measuring the 

timeliness of the eligibility determination process.



OWCP stated that with respect to the timeliness of wage-loss claim 

processing, it believes our sample is skewed. It pointed out we 

reported that OWCP claims examiners processed about 59 percent of the 

traumatic injury claims and about 63 percent of the occupational 

disease claims for the first compensation payment within OWCP’s 14 day 

time standard. However, the 85 percent figure reported by OWCP’s 

systems’ relates to a larger universe of all payments generated from 

the receipt of a claim form, including multiple claims filed on the 

same case. OWCP further pointed out that it agreed that the actions we 

cite in the report as contributing to delays would naturally occur most 

frequently in connection with the first payment on a particular case. 

However, according to OWCP, once these actions are complete, 

supplemental payments can generally be more prompt as reflected in the 

higher overall percentages of timely payments captured by OWCP’s 

system. We agree that by including all payments related to a claim 

instead of only the first payment the timeliness of processing all 

payments could be different from what we determined. However, because 

our objective was to determine how soon after injury workers received a 

compensation payment, we focused our review only on the first 

compensation payment. We further clarified our report to state that we 

did not review subsequent claims for compensation.



OWCP stated that the discrepancy for occupational disease case 

adjudication rates between what we found (84 percent timeliness) and 

what its system is reporting (90 percent) is very near the confidence 

interval we describe in our report and hence may be a statistical 

artifact. According to OWCP it is reasonable to assume that their 

measures are comparable with ours for this category. We agree with 

OWCP.



Comments about Our Recommendations:



OWCP also took issue with our recommendations. Specifically, OWCP 

questioned the focus on our inability to measure all segments of 

workers’ compensation claims filing and processing, stating that two of 

our three recommendations to OWCP related to this issue. OWCP points 

out that the data systems it uses to measure its own and employing 

agency performance were developed over many years and are currently 

under review as part of a general system redesign and replacement 

effort. It said that OWCP will take advantage of this review 

opportunity to sharpen its measures where it believes doing so would 

yield improved performance and transparency. However, it took exception 

with our concern that the current performance measurement system does 

not capture the date the claimant submits the claim form to his or her 

supervisor, thereby preventing a determination of whether the claimants 

were delaying the processing of the claims or whether the postal 

supervisors were holding the claims and thus delaying the process. OWCP 

defended its:



current system by stating that it places the burden of timeliness where 

OWCP believes it primarily belongs--on the employing agency, not on the 

injured worker.



We believe that capturing the date that the employee actually submits 

the injury claim form to the employing agency instead of the date the 

employee signs the claim form would allow the employing agencies and 

OWCP to better determine where delays may be occurring in the process 

so that remedial actions can be initiated. We do not believe that a 

requirement to capture the date that employees submit the claim form to 

the employing agency places any additional burden on injured workers; 

nor would it necessarily detract from OWCP’s efforts to encourage 

employing agencies to act on their own to initiate the filing of 

workers’ compensation claims. We believe that any general system 

redesign and replacement effort by OWCP should include an evaluation of 

the need to capture the date on which injured workers file their claims 

with the employing agencies. OWCP’s regulations address the date 

employing agencies actually receive the claim, which could be different 

from the date that employees sign the claim form. Having this 

information should allow OWCP to better determine the employees’ needs 

when submitting claims while allowing OWCP to identify actions the 

employing agencies could take to improve the process.



OWCP also disagreed with the implication of our first recommendation 

that OWCP’s system of measuring its timeliness in processing wage-loss 

claims should separate out claims for which the initial eligibility 

determination has not been made. OWCP maintains that by separating such 

claims, its claims examiners would have no incentive to try to quickly 

obtain any missing information needed to determine a claimant’s 

eligibility for the program, and thus more claims would encounter a 

much longer delay while in this “deferred” status. According to OWCP, 

the net effect of measuring such claims separately would be to 

increase, rather than reduce, the delays that claimants experience in 

receiving their benefits.



We agree that OWCP should be in a position to determine whether its 

claims examiners are trying to obtain missing eligibility information 

as quickly as possible. However, we believe that an effective 

performance measurement system should not hold claims examiners 

accountable for actions for which they have no control. Under the 

current process and standard, OWCP managers do not know when claims 

examiners are responsible for not meeting its standard for timeliness 

in processing wage-loss claims or whether the claim submitted did not 

provide the required information to determine eligibility. As mentioned 

earlier in this report, about 64 percent of the compensation claims for 

traumatic injury and 77 percent of the claims for occupational disease 

in our sample required OWCP to request additional information before 

making a decision. Again, we believe that any general system redesign 

and replacement effort by OWCP should include an assessment of whether 

its performance standard is appropriate with respect to missing 

information from the claimant, how to help claimants provide all 

appropriate information, and a measure for holding OWCP examiners 

accountable only for actions they control.



OWCP also disagreed with our recommendation that postal supervisors 

send only complete injured employee claim forms to OWCP. It said that 

if agencies hold on to initial claims to ensure that all possible 

information is compiled, OWCP’s initial receipt of the claim record may 

be delayed, which in turn leads to the denial of medical bills because 

there is no record of the worker or the injury in OWCP’s system. The 

intent of our recommendation, however, is that postal supervisors 

should work with injured employees to see that the claim forms are as 

complete as possible--we are not recommending that postal supervisors 

unreasonably delay submission of the claim forms to OWCP. Our 

recommendation is consistent with the initiative that the Postal 

Service implemented in July 2002 to have managers, supervisors, and

employees work together to ensure that claim forms are submitted 

promptly and accurately. Nonetheless we revised the wording of our 

recommendation to focus on the Service’s effective implementation of 

its new initiative.



OWCP disagreed with our initial conclusion that the SFC case process 

may result in greater than anticipated erroneous WCP payments and with 

our recommendation that OWCP reevaluate the SFC case process. OWCP said 

that it believes that our sample cases were not representative of the 

entire universe of SFC cases. Nevertheless, OWCP said that it is 

currently reviewing the precise rules and criteria used in implementing 

the SFC case process as part of its business and data system redesign 

and will continue to enhance the effectiveness of the process and 

ensure that it is properly executed.



We agree that our sample of SFC cases was not designed to be 

representative of the entire universe of SFC cases. We reviewed only 

SFC cases that were part of our overall sample. The purpose of our 

study was not to evaluate the overall SFC case process. We revised the 

report to make this point clearer and to emphasize that neither we nor 

OWCP has overall or generalizable current data on SFC case process 

error rates. OWCP’s pilot test for the SFC case process was conducted 

in 1993 at only one district office and has not since been revisited. 

We revised our conclusion but kept our recommendation because we 

believe that our findings with respect to these cases show that OWCP’s 

ongoing review of the SFC case process provides an excellent 

opportunity to make certain that the process is meeting OWCP’s intended 

goals and is maintaining a cost-effective error rate relative to any 

improperly awarded WCP benefits.



Finally, OWCP disagreed with our proposed recommendation that the 

Secretary determine whether processing standards should cover all types 

of claims. OWCP provided a good reason for not having such a standard 

for leave buy-back claims. It said that the decision to grant leave 

buy-back ultimately rests with the employing agency and that the 

decision to actually repurchase leave rests with the claimant. However, 

we do not believe that OWCP provided sufficient information for not 

having a performance standard for schedule awards. OWCP said that it 

does not believe that schedule award determinations can be made subject 

to strict processing standards because entitlement of a schedule award 

for permanent impairment requires a determination that the claimant has 

reached maximum medical improvement. OWCP said that applying meaningful 

timeliness standards to claims staff in these circumstances would be 

exceedingly difficult. We agree that there are numerous difficulties 

involved in adjudicating schedule awards claims. However, without such 

a standard, there appears to be no incentive for OWCP examiners to 

process schedule award claims as quickly as possible. Considering the 

proportion of lengthy processing times for schedule award claims in our 

sample, we believe that OWCP should explore the feasibility of 

developing a processing standard for schedule awards that considers all 

the difficulties that can arise in processing these claims. Having such 

a standard could act as an incentive for timely processing, help hold 

OWCP staff accountable for actions they can control, and serve as an 

impetus for identifying and addressing causes of delays or lengthy 

processing times. Accordingly, we modified our recommendation to focus 

specifically on exploring a standard for schedule awards.



As agreed with your office, unless you publicly announce the contents 

of this report earlier, we plan no further distribution until 14 days 

from the report date. At that time, we will send copies of this report 

to the Ranking Minority Member of your subcommittee; the Chairman and 

Ranking Minority Member, Senate Committee on Governmental Affairs; the 

Chairman and Ranking Minority Member, House Committee on Government 
Reform; 

the Chairman and Ranking Minority Member, Senate Committee on Health, 

Education, Labor, and Pensions; and the Chairman and Ranking Minority 

Member, House Committee on Education and the Workforce. Copies of this 

report will also be sent to the Director of the Office of Management 

and Budget, the Postmaster General/Chief Executive Officer of the 

United States Postal Service; the Chairman, Postal Rate Commission; the 

Secretary of Labor; and others on request. In addition, the report will 

be available at no charge on the GAO Web site at http://www.gao.gov.



If you have any questions, please contact me at (202) 512-2834 or 

ungarb@gao.gov. Key contributors to this report are listed in appendix 

IV.



Sincerely yours,



Bernard L. Ungar, Director:



Physical Infrastructure Issues:



Signed by Bernard L. Ungar:



Enclosure I:



Comments from the United States Postal Service:



DEWITT O. HARRIS VICE PRESIDENT EMPLOYEE RESOURCE MANAGEMENT:



UNITED STATES POSTAL SERVICE:



December 6, 2002:



Bernard L. Ungar:



Director, Physical Infrastructure Issues United States General 

Accounting Office Washington, DC 20548-0001:



Dear Mr. Ungar:



Thank you for the opportunity to comment on the draft report entitled, 

Federal Workers’ Compensation Program: Postal Service Claims Not Always 

Processed Timely But Missing Data and Other Problems Hamper Complete 

Measurement (GAO-03-158).



We have reviewed the report and offer the following comments. We 

support GAO’s recommendations regarding the Office of Workers’ 

Compensation Program’s (OWCP) administration of the program. We believe 

these recommendations will improve OWCP’s ability to effectively manage 

the program.



With regard to GAO’s recommendation that the Secretary of Labor and 

Postmaster General take action to improve and monitor the preparation 

and processing of Postal Service Workers’ Compensation Program (WCP) 

claims, we have implemented such measures. During July of 2002 we 

established a timeline reporting goal that 90 percent of all CA-1s and 

CA-2s are to be reported within 14 days. In order to achieve such a 

goal, field managers must establish a close working relationship with 

employees’ supervisors to ensure claim forms are submitted promptly and 

accurately.



As a point of clarification to the discussion on page 13 regarding the 

collection of medical payments improperly made, we offer the following 

comment. In the case of a traumatic injury claim, the employing agency 

issues a Form CA-16 that authorizes medical care. If OWCP later denies 

the claim, the payment made for the medical care authorized under the 

CA-16 is difficult to recover from the employee. If OWCP’s regulations 

and the CA-16 language were revised to require employees or their 

insurance carriers to refund medical payments made improperly, this 

would greatly increase our ability to collect these payments.



The efforts of OWCP in continuing to improve program management and to 

identify ways to deliver good service to our injured employees are 

appreciated.



Again, we thank you for the opportunity to comment on this draft.



Sincerely, 



DeWitt O. Harris:



Signed by DeWitt O. Harris::



475 L’ENFANT PLAZA SW Room 9840 WASHINGTON DC 20260-4200 (202) 268-

3783:



FAx: (202) 268-3803 W W W.USPS.COM:



[End of section]



Enclosure II:



Comments from the U.S. Department of Labor:



U.S. Department of Labor:



DEC 11 2002:



Employment Standards Administration Washington, D.C. 20210:



Reply to the Attention of:



Bernard L. Ungar:



Director, Physical Infrastructure Issues United States General 

Accounting Office Washington, D.C. 20548:



Dear Mr. Ungar:



I am in receipt of your proposed report entitled, Federal Workers’ 

Compensation Program: Postal Service Claims Not Always Processed Timely 

But Missing Data and Other Problems Hamper Complete Measurement (GAO-

03-158). On behalf of the Office of Workers’ Compensation Programs 

(OWCP), I offer the following comments.



OWCP appreciates the GAO’s interest in determining the various factors 

that impact on the timeliness of Federal Employees’ Compensation Act 

(FECA) claims filing and processing. OWCP continually stresses the 

importance of timely submission of initial claim forms and claims for 

wage loss benefits by all Federal agencies, and we track agency 

performance on our public website. We have been able to report 

considerable progress in obtaining government-wide improvements in 

submission timeliness during the past several years. The inauguration 

of electronic submission of claims by several departments has assisted 

greatly in this effort. The United States Postal Service has been among 

the most successful agencies in filing timely notices of injury/

disease, and it has set very challenging goals for itself in FY 2003 to 

improve upon that performance.



Most importantly from our own perspective, OWCP has long held itself 

strictly accountable for processing cases in a timely manner once 

received. We use a wide range of measures, calculated at the program, 

district office, and individual claims examiner levels, to ensure 

prompt handling at each of the various stages through which a claim can 

pass. OWCP has made numerous efforts through the years, including the 

implementation of electronic claims processing and maintenance, to 

improve the accuracy, reliability, and speed of case processing. 

However, the operation of a workers compensation system like FECA 

remains a complex and intertwined set of activities, and, 

unfortunately, the report does not fully and accurately describe the 

overall performance of that system.



Notably, based on its stratified sample of 484 cases, the GAO report 

finds that OWCP staff adjudicated traumatic injury claims within our 

program standards 71 % of the time, and occupational disease claims 84% 

of the time. For roughly the same time period as that covered by the 

GAO sample, OWCP data systems capturing information on all cases 

processed within the measured categories reported traumatic injury 

adjudication timeliness at better than 94%, and occupational disease 

case adjudication at more than 90%. Similarly, the report asserts OWCP 

staff processed claims for wage-loss replacement within our standard 

59% of the time for traumatic injuries and 63% of the time for 

occupational disease cases.During that time period, OWCP’s timely 

payment tracking system reported performance (for traumatic and disease 

cases together) at better than 85%.



The reasons for these statistical discrepancies are complex and 

multiple. Of greatest concern to OWCP is the finding regarding initial 

traumatic adjudication timeliness. We believe that statistic seriously 

distorts OWCP’s performance.



The team’s approach to the so-called “short form closure” (SFC) process 

misrepresents OWCP’s handling of this large category of traumatic 

injury cases, and holds the program to a standard that is irrelevant to 

this category of cases. OWCP’s 94+% measurement of traumatic 

adjudication timeliness much more fairly represents the degree of 

promptness of service to the injured workers in question, since it 

includes SFC cases as completed within the 45 day standard. That is 

appropriate, since the only benefit being claimed in such cases is 

payment of medical claims. Once a case is “short form closed” - which 

happens automatically and immediately if the case meets a set of pre-

determined criteria - payment of such medical claims is automatic up to 

a pre-set limit. GAO’s 71 rating is largely driven by its apparent 

application of a standard of its own making to the short form closure 

cases - apparently computed by subtracting out the “down time” (GAO’s 

term for the period of time such a case is in SFC status) and then 

adding the time before and after the closure period to measure against 

the 45 day standard. This approach is inappropriate for several 

reasons, but primarily because the vast majority of SFC cases never 

reopen, and hence using the GAO methodology would never be counted as 

processed, despite the fact that up to $1500 in medical bills may be 

promptly paid on each such claim. In 1999 OWCP established a separate 

measure for adjudicating SFC cases once one of the triggers requiring 

formal adjudication occurs. Since then, approximately 85-90% of such 

“reopened” cases are adjudicated within this separate 45 day standard. 

We believe our statistics are valid, and fairly represent the actual 

level of service being provided.



The discrepancy on occupational disease case adjudication (GAO - 84%; 

OWCP - 90%) is very near the confidence interval described in the GAO 

report, and hence may be a statistical artifact. Since the SFC process 

does not apply to disease cases, it is reasonable to assume the GAO and 

OWCP measures are comparable for this category.



With respect to the timeliness of wage-loss claim processing, we 

believe the GAO sample is skewed. The report indicates that the 59%/63% 

outcomes were for claims for “the first compensation payment.” The OWCP 

system reported 85% relates to a larger universe - all payments 

generated from the receipt of a claim form, and multiple claims are 

frequently filed on the same case. This difference in the universe of 

cases measured likely explains at least the majority of the discrepancy 

between the OWCP and GAO figures. The issues cited in the report as 

contributing to delay - need to make an initial eligibility 

determination and the need to request additional information - would 

naturally occur most frequently in connection with the first payment on 

a particular case. However, once these actions are complete, 

supplementary payments can generally be done more promptly, as 

reflected in the higher overall percentages of timely payments captured 

by our system.



The findings of the report focus heavily on the inability of GAO’s team 

to measure all segments of FECA claims filing and processing based on 

the data collected by OWCP. Two of the three recommendations for OWCP 

relate to this issue. (The third deals with the so-called “short form 

closure process, which I will address later.) The data systems OWCP 

uses to measure its own and employing agency performance were developed 

over many years and are currently under review as part of a general 

system redesign and replacement effort. OWCP will take advantage of 

this review opportunity to sharpen our measures where we believe that 

would yield improved performance and transparency. However, several 

important observations should be kept in mind in assessing these 

measurement systems.



First, the report suggests that many, perhaps most, delays in FECA case 

processing stem from the failure of the injured worker to file the 

claim timely or to submit all the needed information at the time of 

filing (see Conclusions, page 16). While claimant delays may sometimes 

be the root cause of the overall delay, it is the responsibility of 

OWCP and the employing agency, acting as partners, to ensure that 

injury claims are processed as timely as possible. Cases delayed by the 

claimant’s own inaction are, in effect, their own reward; but delays 

engendered by the employing agency or OWCP are precisely what those two 

parties should be focused on avoiding. Accordingly, OWCP’s performance 

tracking systems are directed at its own activities and those of the 

employing agency, since those are the areas where management has 

responsibility and where management improvements can be expected to be 

effective. We believe this is the appropriate approach; attempting to 

focus on speeding the actions of injured workers, who are typically 

filing a claim for the first and only time, is likely to be fruitless 

and may actually be counterproductive.



For example, the report notes that OWCP’s CA-7 form, claim for wage 

loss benefits, does not capture the date the claimant submits the form 

to his or her supervisor, and the team therefore reported it was 

unable to determine if claimants were unduly delaying the processing of 

their own claims. OWCP has explained that we strongly encourage 
employing 

agencies to act on their own responsibility to initiate the CA-7 filing 

process when they become aware that a claimant will likely continue to 
be 

disabled beyond the 45 day continuation of pay (COP) period. We believe 

that collecting data to emphasize the claimant’s own responsibility for 

timely filing in this circumstance would actually encourage agencies to 

wait for the claimant to submit the CA-7, instead of initiating the 

process before the end of the COP period as they should and as provided 

in OWCP’s guidelines. By measuring the agencies’ performance starting 

from the date the claimant signs the CA-7 form, OWCP is placing the 

burden of timeliness where it primarily belongs - on the employing 

agency personnel, not on the injured worker.



Similarly, the report concludes - and apparently recommends - that 

OWCP’s system of measuring its own timeliness in processing wage-loss 

claims should separate out claims for which an initial eligibility 

determination has not been made. OWCP’s performance tracking system 

holds its staff responsible for meeting the 14-day timeliness standard 

in traumatic cases which have not been adjudicated, even though the 

examiner often must request additional information and therefore may 

not be able to meet the standard. The GAO recommendation is apparently 

that OWCP should not “start the clock” on such wage-loss claims until 

the initial eligibility or other determination is completed, so that 

the Office can be assured that the 14-day standard for CA-7 processing 

will be met, once all the necessary antecedent information and 

decisions are in place. However, in practice this would mean that 

claims examiners would have no incentive to try to quickly obtain the 

missing eligibility information, and a greater percentage of these 

claims would encounter a much longer delay while in this “deferred” 

stage. The net effect of applying the recommended change would be to 

increase, rather than reduce, delays claimants experience in receiving 

their benefits.



As noted, the operation of a workers compensation system like FECA 

entails complex and intertwined processes, and changes made in one 

stage can have significant impact on later activities. The report 

emphasizes that in about 69% of the cases reviewed, OWCP claims 

examiners were obliged to go back to the employing agency and/or 

claimant for more information - resulting in delays for the overall 

process. Accordingly, the report recommends that USPS encourage injured 

workers to submit complete information with their claims, and USPS 

supervisors to submit “only complete WCP claim forms....” OWCP 

certainly would endorse the idea of eliminating extra steps through 

improving the completeness and accuracy of initial submissions. But 

while completeness is a virtue, in many cases it simply can’t be 

achieved within a reasonable time. If agencies hold on to initial 

claims to ensure that all possible information is compiled, OWCP’s 

initial receipt of the claim record may be delayed, which in turn 

leads to the denial of payable medical bills because there is no 

record of the injured worker or the injury in OWCP’s system, which 

in turn leads to disgusted medical providers and frustrated injured 

workers.



Short Form Closure Process:



As a separate matter, your report concludes that the “short form 

closure” process may result in “greater than anticipated erroneous WCP 

payments” and recommends that OWCP monitor and review the 

appropriateness of the process. In brief, this process entails 

authorization of the prompt payment of medical treatment for minor, 

uncontested injuries without the investment of valuable claims staff 

time. OWCP determined that a majority of simple, non-controversial 

injury cases never involve anything more than medical benefits, and 

hence need only be placed in a status allowing for such benefits to be 

paid without a complete review and formal determination of eligibility. 

The SFC procedure was adopted in 1993 as a means of re-directing scarce 

staff resources to more critical and productive adjudication, 

compensation payment and case management activities.



Here again, OWCP believes that the sample of cases the GAO team 

reviewed was not representative of the entire universe of SFC cases. 

The 188 cases reviewed were limited to postal claims which contain a 

CA-7 claim for wage loss benefits and/or a schedule award for 

compensation based on permanent partial impairment. Because these 

claims therefore involve wage loss and impairment, they by definition 

entail more serious injuries, exactly the category of claims the SFC 

process was not designed for. A study of SFC cases created in FY 2001 

demonstrated that 74.4% of these claims remain in a closed status more 

than one year after the injury. The GAO sample was exclusively drawn 

from cases that would fall within the 26% that do “reopen” when the 

claim for wage-loss or schedule award is received, and totally ignores 

the 74% for which the procedure was designed. Accordingly, we do not 

believe this sample is appropriate for making inferences about the 

effectiveness or accuracy of the overall administrative closure 

process.



The report asserts that 3% of SFC cases reviewed were ineligible for 

benefits based on the fact that they were ultimately denied, and based 

on this finding suggests that the whole procedure needs to be 

reassessed. We do not concur with the team’s findings on four of the 

six cases labeled as erroneous. Our reasoning on each of the cases is 

specified in the enclosed appendix. Notwithstanding the skewed sample, 

the corrected error rate of 1 % parallels the findings of our 1993 

pilot test. Thus we disagree that the GAO study has identified “greater 

than anticipated erroneous WCP payments.”:



Nevertheless, OWCP is currently reviewing the precise rules and 

criteria used in implementing the administrative closure process as 

part of our business and data system redesign. While we remain 

convinced that the administrative closure process enables us to 

promptly and effectively serve the majority of federal injured 

employees with minimal administrative costs and delay, we will continue 

to work to enhance its effectiveness and ensure that it is properly 

executed.



The enclosed appendix identifies specific comments/corrections 

regarding the text of the draft report, including specific comments 

regarding the six SFC cases cited as ultimately denied.



Thank you for the opportunity to provide comments on this study.



Sincerely, 



SHELBY HALLMARK Director, Office of Workers’ Compensation Programs:



Signed by SHELBY HALLMARK:



Enclosure:



[End of section]



Enclosure III:



Objectives, Scope, Methodology, and Sampling Plan:



To provide information requested by Chairman Horn, our objectives were 

to determine:



* the extent to which Postal Service employees provided all of the 

evidence required by Office of Workers’ Compensation Program (OWCP) 

regulations for determining eligibility for WCP benefits and:



* whether claims for WCP eligibility and WCP compensation payments for 

lost wages or schedule awards were submitted and processed within the 

time frames set forth in OWCP regulations or performance 

standards.[Footnote 17]



We reviewed a statistically valid sample of Workers’ Compensation 

Program (WCP) case files to determine whether U.S. Postal Service 

claimants submitted the evidence required for eligibility 

determinations, as well as to determine the time required by the 

claimants, the Postal Service, and OWCP to process claims and make 

entitlement and compensation award decisions. Specifically, our review 

was designed to obtain information on (1) when employees reported their 

injuries and the related evidence to prove the sufficiency of their 

claims, (2) the amount of time that Postal Service supervisors and 

officials took to process employees’ claims and forward them to OWCP, 

and (3) the amount of time that OWCP took to process the claims and 

determine eligibility for benefits. Additionally, we analyzed the 

impact that OWCP’s Short Form Closure (SFC) case program had on the 

eligibility determination processing times associated with our sample 

traumatic injury cases. Our work did not include an analysis of any 

time involved in the appeals process of any claim we reviewed; nor did 

we evaluate the appropriateness of OWCP’s decisions on the claims or 

make an assessment of all types of claims involved in the WCP. We 

performed our work from January through December 2002 in accordance 

with generally accepted government auditing standards and obtained 

comments on the results of our work from OWCP and the Postal Service.



Workers’ Compensation Case File Review Development and Design:



We randomly sampled 484 Postal Service employee WCP case files at the 

12 OWCP district offices located throughout the country. For the 12-

month period beginning July 1, 1997, we obtained case file records for 

injuries that occurred or were recognized as job-related during this 

period. We chose this period of time because we believed that it was 

current enough to reflect ongoing operations, yet historical enough for 

most, if not all, of the claims to have been decided upon. The cases we 

reviewed were randomly selected on the basis of the type of injury 

involved--traumatic or occupational--as well as on the basis of their 

approval or nonapproval for WCP benefits and compensation or schedule 

award payments.



We developed a data collection instrument to capture all the 

appropriate information from OWCP’s case files and OWCP forms used to 

file a claim for WCP benefits and compensation payments for lost wages 

and schedule awards, along with any relevant information from OWCP or 

Postal Service officials. We visited each of the OWCP district offices 

to review each selected case file individually, compiling the claims 

information directly into our automated data collection instrument. 

In addition, we interviewed OWCP and Postal Service officials in 

Washington, D.C., as well as the district office directors in 
Washington, 

D.C., and Dallas, Texas, to discuss and collect pertinent program 

information regarding the processing of employees’ claims for WCP 

eligibility and for compensation for lost wages and schedule awards.



Sampling Methodology:



The population from which we selected our sample reflects Postal 

Service employees who, as of June 30, 2001, submitted claims for 

compensation for lost wages or schedule awards for injuries that 

occurred, or were recognized as job-related, during the 12-month period 

beginning July 1, 1997. In order to report results for traumatic injury 

and occupational disease claims, and to report results on claims of 

both types whether compensation was paid or not, we stratified our 

population into the following four strata on the basis of information 

from the sample frame:



1. The employee filed a “Federal Employee’s Notice of Traumatic Injury 

and Claim for Continuation of Pay/Compensation” form (Form CA-1) and 

received payment for compensation for lost wages or a schedule award.



2. The employee filed a “Federal Employee’s Notice of Traumatic Injury 

and Claim for Continuation of Pay/Compensation” form (Form CA-1) and 

did not receive payment for compensation for lost wages or a schedule 

award.



3. The employee filed a “Notice of Occupational Disease and Claim for 

Compensation” form (Form CA-2) and received payment for compensation.



4. The employee filed a “Notice of Occupational Disease and Claim for 

Compensation” form (Form CA-2) and did not receive payment for 

compensation.



The size of the population in each of these four strata was 3,872; 

1,232; 2,967; and 873, respectively. The number of sample cases 

obtained from each of the four strata was 198, 106, 143, and 96, 

respectively. We initially selected somewhat higher numbers of sample 

cases. If we were not able to obtain the file for a particular sample 

case, we substituted cases from the additional randomly sampled cases.



Sampling Results and Confidence Interval of Estimates:



We followed a sampling procedure designed to draw 543 cases from the 

agency’s files. Of these 543 cases, we located and reviewed 484 (180, 

96, 128, and 80 in each strata, respectively). A sampling error 

indicates how closely we can reproduce from a sample the results we 

would have obtained if we had reviewed every OWCP case file. By adding 

the sampling error to and subtracting it from the estimate, we can 

develop upper and lower bounds for each estimate. This range is called 

the confidence interval. Sampling errors and confidence intervals are 

stated at a certain confidence level--in this case, 95 percent. The 95 

percent confidence interval for proportion estimates of the total 

population was no greater than plus or minus 5 percentage points. The 

95 percent confidence interval for proportion estimates applied to 

individual strata was no greater than plus or minus 10 percentage 

points. Confidence levels for other types of estimates, such as 

averages, medians, and totals, depended on the variability of the 

sample values. We used SUDAAN software to make population projections. 

Table 3 lists the confidence intervals for selected information from 

our case file review.



Table 3: Sampling Results:



[See PDF for image]



Source: GAO analysis of OWCP data.



[End of table]



[End of section]



Enclosure IV: 



GAO Contacts and Staff Acknowledgments:



GAO Contacts:



Bernard L. Ungar (202) 512-2834:



Sherrill Johnson (214) 777-5699:



Acknowledgments:



In addition to those named above, Michael Rives, Frederick Lyles, Jr., 

Melvin Horne, John Vocino, Jerry Sandau, Brandon Haller, Jill Sayre, 

and Donna Leiss made key contributions to this report.



FOOTNOTES



[1] U.S. General Accounting Office, Administration of the Workers’ 

Compensation Program by the Postal Service and Department of Labor 

(DOL), (Washington, D.C.: Dec. 21, 2001).



[2] U.S. General Accounting Office, U.S. Postal Service: Workers’ 

Compensation Benefits for Postal Employees, GAO-02-729T (Washington, 

D.C.: May 9, 2002).



[3] WCP provides for payment of several types of benefits, including 

compensation for wage loss, schedule awards, medical and related 

benefits, and vocational rehabilitation services for conditions 

resulting from injuries sustained or occupational disease or illness 

contracted in performance of duty while in the service of the United 

States. WCP also provides for payment of monetary compensation to 

specified survivors of an employee whose death results from work-

related injury or disease and for payment of certain burial expenses.



[4] An injured employee can claim compensation as a (1) wage 

replacement benefit for lost wages, 

(2) schedule award if the employee has a permanent impairment to a 

member or function of the body, or (3) both.



[5] OWCP regulations provide time frames for injured federal employees 

and employing agencies to submit and process WCP-related forms; OWCP 

performance standards provide the annual operational performance goals 

or time frames for which OWCP claims examiners are to process WCP-

related forms. 



[6] WCP allows for two types of work-related injuries for which 

benefits and services can be claimed: “traumatic injury” and 

“occupational disease or illness.” Traumatic injury means a condition 

of the body caused by a specific event or incidents, or series of 

events or incidents, within a single day or work shift. Such condition 

must be caused by an external force, including stress or strain, which 

is identifiable as to time and place of occurrence and member or 

function of the body affected. Occupational disease or illness is a 

condition produced by the work environment over a period longer than a 

single day or work shift.



[7] Federal employees with work-related injuries have up to 3 years to 

file their claims for compensation. If the claim is not filed within 3 

years, compensation may still be allowed if notice of the injury was 

given within 30 days, or the employer had knowledge of the injury 

within 30 days following the actual occurrence. In cases of latent 

disability, the time for filing a claim does not begin until the 

employee is reasonably aware of the causal relationship between the 

disability and his/her employment. 



[8] According to OWCP, SFC cases are WCP claims that are accepted 

(approved) as eligible for WCP benefits upon receipt and allowed to 

incur up to $1,500 in medical bills--without formal adjudication--and 

are closed. Originally, we estimated that only about 41 percent of the 

traumatic injury claims were processed within the time frames set forth 

in OWCP performance standards. However, according to OWCP officials, 

this estimate overstated the actual processing time because many of 

these claims were treated as SFC cases, which were accepted as eligible 

for WCP benefits upon their receipt by OWCP. Once we considered the 

effect of these SFC cases on our sample claims, we found that about 71 

percent of the traumatic injury claims were processed within the time 

frames set forth by OWCP. However, we also found that on the basis of 

OWCP’s SFC case processing guidelines, OWCP (1) incorrectly selected 14 

of these cases as SFC cases (about 7 percent of the SFC cases in our 

sample), (2) may have inappropriately processed some claims that had 

been administratively closed, and (3) mistakenly approved 2 claims 

(about 1 percent of the SFC cases in our sample) for WCP benefits. 



[9] For wage loss benefits, the claimant must also submit medical 

evidence showing that the condition claimed is disabling.



[10] For traumatic injuries, OWCP regulations required the use of Form 

CA-1, “Federal Employee’s Notice of Traumatic Injury and Claim for 

Continuation of Pay/Compensation,” in order to claim WCP benefits. To 

claim benefits for a disease or illness that the employee believed to 

be work-related, OWCP regulations required the use of Form CA-2, 

“Notice of Occupational Disease and Claim for Compensation.” 



[11] Claims are to be submitted to OWCP if the injury or disease was 

likely to result in (1) a medical charge against OWCP, (2) disability 

for work beyond the day or shift of injury, (3) the need for more than 

two appointments for medical examination or treatment on separate days 

leading to time lost from work, (4) future disability, (5) permanent 

impairment, or (6) COP. If none of these conditions exist, the employer 

is required to retain the forms as a permanent record in the Employee 

Medical Folder in accordance with Office of Personnel Management 

guidelines.



[12] For both traumatic injury and occupational disease claims, OWCP 

regulations required the use of Form CA-7, “Claim for Compensation Due 

to Traumatic Injury or Occupational Disease,” in order to claim 

compensation for wage loss or schedule award.



[13] In April 1993, OWCP initiated a pilot project in the Cleveland 

district office implementing a predefined screening process for 

handling “lost time” traumatic injury cases. A lost time injury is an 

injury for which time is charged to leave, COP, or a wage loss claim is 

filed. Under this pilot program’s screening process, a claim that was 

not contested by the agency, had no wage loss claim, and did not have 

medical bills to exceed $1,500 would not be reviewed by a claims 

examiner. The purpose of this was to relieve claims examiners of 

administrative work in adjudicating cases that involved work-related 

disabilities that would likely be overcome during the 45-day COP 

period. According to OWCP officials, on the basis of this pilot project 

(OWCP officials could not provide us a copy of this study.) and its own 

past experience in handling these types of cases, OWCP concluded that 

only about 1 percent of all lost time cases closed through the SFC case 

process would be denied if actually adjudicated by a claims examiner; 

and only $147,085 in medical payments would have been avoided if all 

such cases were adjudicated. Additionally, OWCP estimated that the 

amount of time savings realized as a result of the SFC process--in 

conjunction with other quality assurance efforts--could amount to as 

much as $4,450,000 for fiscal year 1992. As a result, OWCP implemented 

the SFC case process nationwide on October 3, 1993.



[14] Because our sample cases included only WCP cases containing claims 

for compensation for lost wages or schedule awards, all of the SFC 

cases in our sample would have been reopened after the initial closure. 



[15] We initially believed that 6 of the 188 SFC cases we reviewed 

indicated erroneously paid benefits. However, in commenting on a draft 

of this report, OWCP provided additional explanations that appeared to 

us to be reasonable for 4 of the 6 cases.



[16] Leave buy-backs are claims for compensation for lost wages or 

schedule awards wherein the claimant requests reinstatement of annual 

leave or sick leave for the time absent from work in lieu of a cash 

payment. OWCP officials stated that the decision to grant leave buy-

back ultimately rests with the federal agency and the decision to 

repurchase the leave rests with the claimant.



[17] OWCP regulations specify the time frames during which injured 

federal employees and federal agencies are to submit and process WCP-

related forms; OWCP performance standards provide the annual 

operational performance goals or time frames during which OWCP claims 

examiners are to process WCP-related forms.