1.) Examples of Improper Payments, Overlapping Benefits, and Potential Fraud Highlight the Importance of Data Sharing to Verify Benefit Eligibility

We found examples of improper payments, overlapping benefits, and  potential fraud in the FECA program, which could be attributed, in part, to  factors such as oversight and data-access issues. OWCP has taken  some steps to enhance oversight of the FECA program; however, Labor  lacks authority to directly access wage data, which limits its ability to  verify self-reported wage information. These individuals  continued to receive FECA compensation benefits without evidence that  their medical condition has not improved, which potentially could result in  an improper payment. Our review identified 2 out of our sample of 32 FECA claimants who did  not have evidence in their FECA file that OWCP reviewed their  employment activity annually, as required. In 2012, we reported that periodic reviews of FECA case  files are a promising practice and can be used to help increase program  officials’ awareness of potential fraudulent activities. Our review of a nongeneralizable sample of 32 individual cases identified  eight FECA claimants who had significantly underreported employment  wages in comparison to the wages reported in the state’s QW reports for  the same period. As part of this reform, OWCP sought authority to match SSA  wage data directly with FECA files. However, at this time, Labor does not have direct  access to the NDNH or SSA wage data. Some FECA Program Regulations and Policies Introduce Challenges to Identifying and Mitigating Potential Fraud and Waste

			FECA Program Requirements Allow Claimants to Receive Earnings and Earnings Increases without Necessarily Resulting in Adjustment of FECA Compensation

Because of case law and regulatory requirements, once OWCP  calculates an individual’s WEC, it remains in place unless the evidence  establishes that there is a material change in the nature and extent of the  injury-related condition; the claimant has been retrained, or otherwise  vocationally rehabilitated; or it is established that OWCP’s original  determination was erroneous. As a result, claimants could be earning  more money than they were originally determined capable of earning but  never have the WEC adjusted to account for the increase in wage earning  capacity. Of the 32 cases  we reviewed, we found five instances where an individual’s WEC was not  adjusted even though the individual earned substantially more (at least 25  percent) than what was originally calculated as their WEC. In addition, two FECA total-disability claimants continued to receive  private-employment salaries that were not subject to the WEC. Labor Lacks a Process to Identify Overlapping FECA and UI Benefits and Does Not Report FECA Claimant Information to States

			Overlapping Benefits

While FECA claimants can be eligible to receive state UI benefits in  addition to FECA benefits, Labor lacks a process to share the necessary  data with states to determine whether FECA claimants may be improperly  receiving overlapping benefits. In addition, certain states, for example four of the five  selected states in our review, require the offset of UI benefits against  certain workers’ compensation payments, including FECA. Our review of a nongeneralizable sample of 19 individual cases identified  claimants who received overlapping UI and FECA benefits totaling over  $1.3 million from January 2008 to June 2012. Four claimants who resided  in states that require UI payments to be offset received more income from  the combined UI and FECA benefits than they would have received from  their federal salary alone. While in certain circumstances receiving concurrent UI and  FECA benefits may be allowable, the cases we identified where claimants  received concurrent UI and FECA benefits without Labor’s knowledge  could be an indicator of improper payments. Matter for Congressional Consideration

Congress should consider granting Labor the additional authority it is  seeking to access wage data to help verify claimants’ reported income  and help ensure the proper payment of benefits. Recommendation for Executive Action

We recommend that the Secretary of Labor assess the feasibility of  developing a cost-effective mechanism to share FECA compensation  information with states, such as reporting information to NDNH, to help  identify whether claimants are inappropriately receiving overlapping UI  and FECA payments. Labor agreed with the recommendation to assess the  feasibility of developing a cost-effective mechanism to share FECA  compensation information with the states, such as reporting information to  NDNH, to help identify whether claimants are inappropriately receiving  overlapping UI and FECA payments. In addition, Labor stated that  one of our examples cited in our report—example 5—should not be  classified as an improper payment because FECA program procedures  allow a claimant to receive wages from two different employers and not  have those wages affect the claimant’s WEC or ability to receive FECA  benefits. Appendix I: Comments from the Department of Labor
Why GAO Did This Study

In fiscal year 2012, the FECA program made more than $2.1 billion in wageloss compensation payments to claimants. FECA provides benefits to federal employees who sustained injuries or illnesses at work.
GAO was asked to examine whether examples of improper payments, potential fraud, or overlapping benefits could be found in the FECA program. This report identifies examples of these issues, what factors may contribute to these issues, and how, if at all, Labor could address them. GAO matched QW and unemployment files from five selected states with FECA payment files for the period of July 2009 to June 2010. GAO identified 530 individuals who received concurrent FECA compensation payments and wages of at least $5,000 between July 2009 and June 2010. GAO also identified 50 individuals who received concurrent FECA compensation and UI benefits of at least $5,000 each during the same period. GAO randomly selected up to seven recipients from each state for an in-depth review, for a total of 32 QW and 19 UI cases, respectively. These examples cannot be generalized beyond those presented. GAO also reviewed Labor's policies, guidelines, and procedures for managing claims.

What GAO Found

GAO found examples of improper payments and indicators of potential fraud in the Federal Employees' Compensation Act (FECA) program, which could be attributed, in part, to oversight and data-access issues. GAO found examples of claimants' receiving overlapping FECA and unemployment insurance (UI) benefits, which may be allowable under certain circumstances, but could also be erroneous. GAO also found that FECA program requirements allow claimants to receive earnings, and earnings increases, without necessarily resulting in adjustment of FECA compensation. For example, of the 32 FECA case files reviewed, GAO found five instances where an individual's wage-earning capacity (WEC), which is used to determine FECA benefits, was not adjusted even though the individual earned substantially more than the wage that was originally used to calculate the WEC. In addition, two FECA claimants continued to receive privateemployment salaries that were not subject to their WEC calculation. This is because, as currently written, program procedures allow claimants to receive increases in earnings, in certain circumstances, without adjustments to FECA compensation, and current law allows for claimants' earnings from dissimilar concurrent private employment at the time of injury to be exempt when determining FECA compensation. As discussed below, GAO identified challenges related to oversight and data access, which could result in improper payments or overlapping benefits.
GAO found that the Department of Labor (Labor) did not conduct a timely review of the medical activity reports of 4 of the 32 FECA claimants and did not complete a timely review of the employment activity reports of 2 claimants, which could potentially result in an improper payment or be an indicator of potential fraud in one case where a claimant did not respond to repeated Labor requests for the employment activity reports. Labor has taken some steps to enhance oversight of the program, such as developing measures to improve the periodic review of claimants' documentation.
GAO found that 8 out of 32 claimants underreported employment wages in comparison to the state's quarterly wage (QW) reports. Labor does not have authority to directly access Social Security Administration (SSA) wage data to verify claimants' reported income; consequently, it relies on periodic selfreporting of income. GAO has previously identified this as a potential vulnerability that could increase the risk of claimants receiving benefits they are not entitled to. To address this, Labor proposed legislation allowing the agency to match SSA wage data with FECA files, but the proposal is still pending.
GAO identified 19 cases where claimants were receiving overlapping UI and FECA benefits totaling over $1.3 million. Four of these 19 claimants received more income from combined UI and FECA benefits than they would have received from their federal salary alone. Four of the five selected states in our review require the offset of UI benefits against FECA compensation payments. Because Labor does not have a process to share necessary data with states to identify overlapping FECA and UI payments, a mechanism to share FECA information with the states would help provide reasonable assurance that payments are being made properly.

What GAO Recommends

GAO recommends that the Secretary of Labor develop an effective mechanism to share FECA compensation information with states to help identify whether claimants are inappropriately receiving overlapping UI and FECA payments. In addition, Congress should consider granting Labor the additional authority it is seeking to access wage data to help verify claimants reported income and help ensure the proper payment of benefits. Labor agreed to study the feasibility of sharing compensation information with the states.