During fiscal year 2006, OWCP made  over $1.8 billion in wage-loss-compensation payments to injured federal  employees (“claimants”) and processed approximately 20,000 new wage  loss claims. OWCP Lacks an Effective Strategy for Managing the Risks of Improper FECA Compensation Payments

OWCP has not established an effective strategy for managing improper  FECA payments. The agency does not sufficiently emphasize preventing,  detecting, and recovering improper payments. OWCP Does Not Emphasize Preventing, Detecting, or Recovering Improper Payments

For the past 5 years, none of the national goals established for the FECA program  have addressed improper payments but have focused primarily on improving  service delivery. Labor estimated that the FECA program made $703,000 in improper  payments in fiscal year 2006 based on a review of claims files for a sample  of all payments made during the year and determined that the program  had a low risk of improper payments because this estimate did not exceed  $10 million and 2.5 percent of program payments—the threshold that  federal guidance defines as high risk. However, these data provide comprehensive  information on the FECA program’s risk of improper payments that is  useful in managing the program. In addition, overpayments occurred because OWCP’s  administrative payment processing deadlines prevented claims examiners  from quickly canceling some payments after being notified of changes in  claimants’ eligibility status. OWCP Relies on Claimants to Provide Key Eligibility Information

The FECA program is vulnerable to improper payments because it relies  on claimants to report key eligibility information, such as when they  return to work at their agencies or earn wages from other employment,  and does not verify that the data are timely or accurate. From our review of  claims files from a sample of the overpayments identified by OWCP in  2006, we estimated that about 11 percent of all of OWCP’s 2006  overpayments occurred because claimants did not immediately notify  OWCP when they returned to work. At present, OWCP does not have legislative authority to  access the database. In our reviews of OWCP’s 2006 improper payments, we found  that both overpayments and underpayments were caused by inaccurate  pay rate information provided by claimants’ employing agencies. OWCP Does Not Ensure the Recovery of FECA Overpayments

OWCP does not sufficiently ensure the timely recovery of FECA  overpayments and misses some opportunities for recovering them. We also recommend that the Secretary direct OWCP to take steps to  reduce common causes of improper payments, such as  requiring agencies to report to OWCP when a FECA claimant returns to  work and provide incentives for agencies to notify OWCP quickly;    ensuring that its data match with SSA’s death records is conducted  regularly and consistently and that it includes individuals who are  receiving survivor death benefits;  taking steps to ensure that wage-loss-compensation payments for  claimants covered by the current federal retirement system are  appropriately reduced by the amount of their SSA benefits that are  attributable to their federal service;    considering ways to reduce the time it takes to process automated    determining what additional training claims examiners may need to  improve payment accuracy; and    exploring options for improving information sharing between OWCP  and employing agencies so that OWCP can make accurate payments  and agencies can help identify payment errors. These reviews are conducted on a district office basis,  with samples drawn from each office’s universe of claims files. 1. 3. Without such data matches, Labor cannot begin to  identify overpayments made when claimants do not report earnings.
Why GAO Did This Study

In fiscal year 2006, the Federal Employees' Compensation Act (FECA) program paid over $1.8 billion in wage loss compensation to federal employees who were unable to work after being injured on the job. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO examined (1) how effectively the Department of Labor's (Labor) Office of Workers' Compensation Programs (OWCP) manages the risk of improper FECA compensation payments; (2) what vulnerabilities to improper payments, if any, exist in OWCP's procedures for making FECA wage loss payments; and (3) how well OWCP ensures the recovery of identified FECA overpayments. To address these issues, GAO reviewed OWCP documents, analyzed data obtained from OWCP, reviewed a random and projectable sample of FECA claims files, visited five OWCP district offices, and interviewed OWCP headquarters and district officials.

What GAO Found

OWCP has not established an effective strategy for managing improper payments in the FECA program. The agency does not sufficiently emphasize preventing, detecting, and recovering improper payments. None of the performance goals for the program addresses improper payments. Further, OWCP does not collect the information it needs to accurately assess the FECA program's risk of improper payments, such as information on their magnitude and causes. Without such data, it cannot focus on the most vulnerable areas. The FECA program is vulnerable to improper payments for several reasons. First, OWCP relies on unverified, self-reported information from claimants that is not always timely or correct. From a review of a sample of claims files for overpayments identified by OWCP in 2006, GAO found that many occurred because claimants did not inform OWCP in a timely manner when they returned to work. Further, because OWCP generally does not require claimants' self-reported earnings to be verified and does not systemically match its data on FECA claimants with earnings data from other federal agencies, it may fail to identify cases of unreported earnings. An obstacle to conducting such matches, however, is that OWCP does not have the legal authority to access the database maintained by another federal agency with the most current earnings data. In addition, from GAO's file reviews, GAO found that both overpayments and underpayments were caused by OWCP errors and that many overpayments occurred when OWCP's payment-processing deadlines prevented payments from being quickly canceled when claimants returned to work or died. Finally, OWCP does not ensure that overpayments are collected in a timely manner and misses some opportunities for recovering overpayments, such as deducting them from claimants' subsequent FECA payments.