	Background

The FECA program covers over 2.7 million civilian federal and postal  employees in more than 70 agencies, providing wage-loss compensation  and payments for medical treatment to employees injured while  performing their federal duties. Every year, employing agencies reimburse  OWCP for the amounts paid to their employees in FECA compensation  during the previous year. Certain government corporations and USPS  also make payments to Labor for program administrative fees. Claims examiners at OWCP’s  12 FECA district offices determine applicants’ eligibility for FECA benefits  and process claims for wage-loss payments. The  elements include evidence that the claim was filed within FECA’s  statutory time requirements, that the employee was, at the time of injury,  disease, or death, an employee of the United States, and that the  employee was injured while on duty, and that the condition resulted from  the work-related injury. Observations from Preliminary Work Identify Promising Practices and Potential Vulnerabilities

		Promising Practices

We have identified several promising practices that employing agencies  and Labor have implemented that may help to reduce fraudulent FECA  claims. GAO’s Standards for Internal Control in the  Federal Governmentcompetent personnel are a key element to an effective control   also specifically mentions that appropriate,  environment. According to agency staff:
Labor requires long-term claimants to submit updated claim  documentation about wages earned and dependent status for annual  reviews. Similar to the periodic reviews  previously discussed, these controls fall within the monitoring component  of GAO’s fraud-prevention framework and could help to validate  claimants’ self-reported income and medical-condition information. The investigation and effective prosecution of claimants  fraudulently receiving benefits is a key element in GAO’s fraud-prevention  framework. Examples of the effective integration of  investigative resources provided by these employing agencies include the  following:
The Air Force discussed its plan to hire staff in early fiscal year 2012  to conduct background investigations and surveillance of claimants to  determine whether they are entitled to receive FECA benefits. The USPS IG reported that since October 2008 it identified and  facilitated terminating benefits for 476 claimants who were committing  workers’ compensation fraud, and recovered over $83 million in  medical and disability judgments. Potential Vulnerabilities

Our preliminary observations also identified potential vulnerabilities in the  FECA program fraud-prevention controls that could increase the risk of  claimants receiving benefits they are not entitled to. We found that management of the FECA program could be affected by  limited access to necessary data. For example, Labor does not have authority to  compare private or public wage data with FECA wage-loss compensation  information to identify potential fraud. Prior reports by us and  Labor’s IG have shown that relying on claimant-reported data could lead  to overpayments. Labor agreed with the findings of this report. We found this could  result in essential processes within the FECA program operating without  reviews by physicians selected by the government. Officials at multiple employing agencies covered in our work to date  stated that they faced difficulties successfully investigating and  prosecuting fraud. GAO’s Plans to Further Assess Controls and Perform Data Analysis as Part of Ongoing Work

We plan to follow up on these promising practices and potential  weaknesses as part of our ongoing review of FECA fraud-prevention  controls. However, HHS has denied  access to the NDNH database because they assert that we do not have  authority to obtain NDNH data, despite the fact that we have a broad right  of access to all federal agency records.slowed the progress of this engagement reviewing federal beneficiary  fraud and abuse and has limited our ability to assess the potential  vulnerability of the FECA program to fraud and abuse at a national level. HHS’ denial of access has  In addition to our fraud-prevention work in the FECA program, we are  conducting two other program-related engagements. Those engagements  focus largely on issues related to retirement-age FECA beneficiaries. Labor and the employing agencies  generally agreed with the preliminary findings and provided technical  comments, which were incorporated into the statement. Those findings  and associated technical comments are included in this report.
Why GAO Did This Study

According to the Department of Labor (Labor), in fiscal year 2010 about 251,000 federal and postal employees and their survivors received wage-loss compensation, medical and vocational rehabilitation services, and death benefits through the Federal Employees Compensation Act (FECA) program. Administered by Labor, the FECA program provides benefits to federal employees who sustained injuries or illnesses while performing their federal duties. Employees must submit claims to their employing agency, which are then reviewed by Labor. For those claims that are approved, employing agencies reimburse Labor for payments made to their employees, while Labor bears most of the programs administrative costs. Wage-loss benefits for eligible workersincluding those who are at, or older than, retirement agewith total disabilities are generally 66.67 percent of the workers salary (with no spouse or dependent) or 75 percent for a worker with a spouse or dependent. FECA wage-loss compensation benefits are tax free and not subject to time or age limits.
Labors Office of Workers Compensation Programs (OWCP) estimated that future actuarial liabilities for governmentwide FECA compensation payments to those receiving benefits as of fiscal year 2011 would total nearly $30 billion (this amount does not include any costs for workers added to the FECA rolls in future years). In 2010, the United States Postal Service (USPS) Inspector General (IG) reported that USPS alone had more than $12 billion of the $30 billion in estimated actuarial FECA liabilities. In April 2011, the USPS IG testified that USPS had removed 476 claimants from the program based on disability fraud since October 2008 and recovered more than $83 million in judgments. Given the significant projected outlays of the governmentwide FECA program and prior USPS IG findings of fraud, Congress asked us to provide preliminary observations on our ongoing work examining FECA fraud-prevention controls and discuss related prior work conducted by us and other federal agencies.

What GAO Found

Our work to this point has identified several promising practices that could help to reduce the risk of fraud within the FECA program. The promising practices link back to fraud-prevention concepts contained in GAOs Fraud Prevention Framework and Standards for Internal Control in the Federal Government, and include agencies use of full-time staff dedicated to the FECA program, periodic reviews of claimants continued eligibility, data analysis for potential fraud indicators, and effective use of investigative resources. These promising practices have already resulted in successful investigations and prosecutions of FECA-related fraud at some agencies, and could help to further enhance the programs fraud-prevention controls. However, our preliminary work has also identified several potential vulnerabilities in the programs design and controls that could increase the risk for fraud. Specifically, we found that limited access to necessary data is potentially reducing agencies ability to effectively monitor claims and wage-loss information. In addition, agencies reliance on self-reported data related to wages and dependent status, lack of a physician selected by the government throughout the process, and difficulties associated with successful investigations and prosecutions all potentially reduce the programs ability to prevent and detect fraudulent activity. Labor and employing agencies generally agreed with the preliminary findings presented in this report and provided technical comments, which were incorporated into this report. We plan to follow up on the promising practices and potential vulnerabilities as part of our ongoing work, although our progress has been slowed by difficulties in accessing certain databases.