This audit assessed DOJ’s controls in place to effectively administer the FECA program, reduce opportunities for claimant fraud, and return employees back to work. The audit was conducted in accordance with the Government Auditing Standards. As required by the standards, we reviewed management processes and records to obtain reasonable assurance about DOJ’s compliance with laws and regulations that could have a material effect on operations. Compliance with laws and regulations applicable to DOJ’s FECA program is the responsibility of DOJ’s Deputy Assistant Attorney General for Human Resources and Administration.
Our audit included examining, on a test basis, evidence about laws and regulations. The specific laws and regulations against which we conducted our test are contained in:
- Federal Employees’ Compensation Act.
- DOJ Human Resources Order 1200.1, Chapter 6-1.
- OPM Regulation – Agencies authority to require medical examinations (i.e., second medical opinions), 5 C.F.R. § 339.301c (2008).
Our audit identified no areas where DOJ was non-compliant with the laws and regulations referred to above. With respect to those areas not reviewed, nothing came to our attention that caused us to believe that DOJ management was not in compliance with the laws and regulations cited above.
In planning and performing our audit, we considered DOJ’s internal controls for determining our audit procedures. This evaluation was not made for the purpose of providing assurance on the internal control structure as a whole. However, we noted certain matters that we consider to be reportable conditions under the Government Auditing Standards.
Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect DOJ’s ability to manage its FECA program. We found that DOJ:
- lacked policies to ensure FECA case files were maintained and consistently reviewed;
- provided no oversight for routinely monitoring chargeback reports; and
- established no review to ensure complete and accurate claim information was recorded for case data.
Because we are not expressing an opinion on DOJ’s internal control structure as a whole, this statement is intended solely for the information and use of DOJ in managing its FECA program. This restriction is not intended to limit the distribution of this report, which is a matter of public record.
The objective of this audit was to determine whether controls were in place to effectively administer the FECA program, reduce opportunities for claimant fraud, and return employees back to work.
Scope and Methodology
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
We conducted work at the Bureau of Alcohol, Tobacco, Firearms, and Explosives; Drug Enforcement Administration; Federal Bureau of Investigation; Federal Bureau of Prisons; Justice Management Division; and United States Marshals Service in Washington, D.C. We also conducted work at two federal prison complexes in Florence, Colorado, and Coleman, Florida, and two U.S. Marshals District Offices in the Southern District of New York and the Northern District of Texas. We also met with JMD, which is the liaison between the Department of Labor (DOL) and DOJ. We used judgmental sampling to select the sites that had the largest number of claims as of March 31, 2008. Since a non-statistical sampling method was used, the results cannot be projected to all sites.
We interviewed 22 officials within DOJ at JMD, the ATF, BOP, DEA, FBI, and USMS. The DOJ officials interviewed included the Director and Deputy Director of Workers’ Compensation; Director, Deputy Director, and Assistant Deputy Director of Finance; Director and Deputy Director of Internal Review; Director of Budget Operations; Budget Analysts; Supervisory Compensation Specialist and staff; Human Resource Specialist; Coordinator and Co-Coordinator of Operations and Safety; and Safety Specialists.
We conducted interviews with five FECA Specialists to obtain information on matters such as procedures, requirements, initiatives, training, and the overall responsibilities associated with the program, both internally and externally.
In addition to the interviews, we reviewed documents and records pertaining to the number of claims on file, number of injuries by type and location on the body, the total liability and expenditures, financial allocations for each DOJ component, DOJ Order 1200.1, and the Worker’s Compensation Annual Reports for Fiscal Years 2006-2008. We also reviewed information available on the DOL’s website pertaining to the program. We judgmentally selected 458 cases for review to obtain broad exposure to multiple facets of the cases, such as expense and age. We were able to review 389 cases to assist in determining the effectiveness of managing injury cases. Since a non-statistical sampling method was used, the results cannot be projected to all cases.
To achieve the audit’s objective, we used computer-processed DOL data contained in the Agency Query System (AQS) and the Veterans Administration (VA) Worker’s Compensation Occupational Safety and Health Management Information System (WC/OSH MIS), two databases that contain information on each federal employee who has filed an on-the-job injury claim. DOJ generally uses WC/OSH MIS to enter new claim information, which is verified against DOJ’s payroll information maintained by the National Finance Center. The WC/OSH MIS then takes new information and merges it into the AQS. We used the information provided on the quarterly chargeback reports printed from the WC/OSH MIS and verified attributes listed in the report to reference files being maintained by DOJ components.
We assessed the reliability of the DOL-provided data by comparing DOL’s chargeback report data to the reference case files maintained by DOJ components. Based on the results of our tests and information obtained, we concluded that the data were sufficiently reliable to achieve our audit objective.
The audit scope covered the period from July 1, 2005, through April 22, 2009.
|ATF||Bureau of Alcohol, Tobacco, Firearms and Explosives|
|AQS||Agency Query System|
|BOP||Federal Bureau of Prisons|
|DEA||Drug Enforcement Administration|
|DOJ||Department of Justice|
|DOL||Department of Labor|
|FBI||Federal Bureau of Investigation|
|FECA||Federal Employees’ Compensation Act|
|GAO||Government Accountability Office|
|JMD||Justice Management Division|
|OIG||Office of the Inspector General|
|OPM||Office of Personnel Management|
|OSHA||Occupational Safety and Health Administration|
|OWCP||Office of Workers Compensation Program|
|USMS||United States Marshals Service|
|WC/OSH MIS||Worker’s Compensation Occupational Safety and Health Management Information System|
Source: FECA Program Effectiveness Study, ICF Consulting, dated March 31, 2004, 23.
Office of Workers’ Compensation Program
|Location||Area of Responsibility|
|Boston, MA||Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont|
|New York, NY||New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands|
|Philadelphia, PA||Delaware, Pennsylvania, West Virginia, and Maryland for claimants with a residence zip code beginning with 21XXX|
|Jacksonville, FL||Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee|
|Cleveland, OH||Indiana, Michigan, Ohio, and all other areas outside the U.S.|
|Chicago, IL||Illinois, Minnesota, and Wisconsin|
|Kansas City, MO||Iowa, Kansas, Missouri, and Nebraska|
|Denver, CO||Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming|
|San Francisco, CA||Arizona, California, Hawaii, and Nevada|
|Seattle, WA||Alaska, Idaho, Oregon, and Washington|
|Dallas, TX||Arkansas, Louisiana, New Mexico, Oklahoma, and Texas|
|Washington, D.C.||District of Columbia, Virginia, and Maryland for claimants with residence zip code beginning other than 21XXX|
As of September 30, 2008
(Dollars in Thousands)
|1||United States Postal Service||$1,001,131|
|2||U.S. Department of the Navy||219,285|
|3||U.S. Department of Veteran Affairs||177,894|
|4||U.S. Department of Homeland Security||160,695|
|5||U.S. Department of the Army||140,861|
|6||U.S. Department of the Air Force||131,175|
|7||U.S. Department of Justice||102,131|
|8||U.S. Department of Defense – Other||101,450|
|9||U.S. Department of Transportation||98,999|
|10||U.S. Department of Agriculture||73,224|
|11||U.S. Department of the Interior||60,217|
|12||Tennessee Valley Authority||55,325|
|13||U.S. Department of the Treasury||53,465|
|14||Social Security Administration||25,872|
|15||U.S. Department of Health and Human Services||25,822|
|16||U.S. Department of Labor||25,184|
|17||U.S. Department of Commerce||15,929|
|18||General Services Administration||14,816|
|19||U.S. Department of Energy||9,385|
|20||U.S. Department of State||8,100|
|21||U.S. Department of Housing and Urban Development||7,583|
|22||National Aeronautics and Space Administration||6,856|
|23||Environmental Protection Agency||4,513|
|24||Agency for International Development||3,396|
|25||Small Business Administration||2,553|
|26||Office of Personnel Management||2,216|
|27||U.S. Department of Education||1,544|
|28||Nuclear Regulatory Commission||755|
|29||National Science Foundation||131|
|Total – All Agencies||$2,642,416|
of FECA Program Audits
|ISSUES IDENTIFIED||1. Department of Education||2. Department of Homeland Security –TSA45||3. Department of Commerce – Census Bureau||4. Department of Commerce – Office of the Secretary||5. Department of Agriculture||6. USAID46||7. U.S. Postal Service||Department of Justice|
|Lack of Monitoring||X||X||X||X||X|
|Lack of Policy and Procedure||X||X||X|
|Lack of Return to Work Efforts||X||X||X||X|
|No Department Oversight||X|
|Lack of Documentation in the Case File||X|
|Detecting and Reporting Fraud||X||X|
|Timeliness of Claim Form Submission||X||X||X|
|Coordination with Safety Office||X||X|
|Training for Supervisors||X||X||X|
|Develop Information System||X|
|Recovery of Improper Payments||X||X|
|Obtain Medical Updates||X|
|Review Chargeback Report||X|
FECA Program Audit Reports
- U.S. Department of Education Office of Inspector General, Audit of the Department’s Management of the Federal Employees’ Compensation Act Program, Audit Report A19-D0008 (March 2005), 1.
- U.S. Department of Homeland Security Office of Inspector General, The Transportation Security Administration’s Management of its Federal Employees’ Compensation Act Program, Audit Report OIG-07-45 (May 2007), 6.
- U.S. Department of Commerce Office of Inspector General, Preparing for Census 2010: Follow-up Review of the Workers’ Compensation Program at the Census Bureau Reveals Limited Efforts to Address Previous OIG Recommendations, Inspection Report IPE-18592 (September 2007), 4-5.
- U.S. Department of Commerce Office of Inspector General, Management of Commerce’s Workers’ Compensation Program Needs Significant Improvements, Inspection Report IPE-17536 (March 2006), 11-15.
- U.S. Department of Agriculture Office of Inspector General, Management Oversight of Federal Employees’ Compensation Act Operations within the U.S. Department of Agriculture, Audit Report 50601-2-Hy (August 2005), 4-7.
- U.S. Agency International Development Office of Inspector General, Audit of the Management of USAID’s Federal Employees’ Compensation Act Program, Audit Report 9-000-07-003-P (December 2006), 1.
- U.S. Postal Service Office of Inspector General, Postal Service’s Injury Compensation Program’s Controversion and Challenge Process in Selected Areas, Audit Report HM-AR-06-004 (May 2006), 4-8.
- Injured worker files a FECA claim. OWCP evaluates and makes determination of payment. Payment is made to injured worker.
- OWCP provides quarterly chargeback reports of claim payments to each Agency. This provides preliminary indication of costs as well as gives the Agency a chance to dispute any costs attributed to that Agency.
- By August 15 of each year, OWCP is required to send an Annual Statement (made up of the quarterly reports and any changes) and a bill summarizing the total FECA costs attributable to the Agency under the prior chargeback year (July 1 to June 30).
- Upon receipt of the bill, the Agency must include the amount shown on the chargeback bill in its budget for the following fiscal year (Agency’s fiscal year).
- Congress approves the budget request.
- Agency reimburses/pays OWCP for the charges assessed to the Agency for the prior chargeback year in October (approximately 15 months from the bill).
EXAMPLE: A bill sent to an Agency on August 15, 2001, could cover the period July 1, 2000, through June 30, 2001 (OWCP’s chargeback year). The Agency must then include that amount on their budget request for FY 2003, which begins October 1, 2002 and ends on September 30, 2003. The chargeback bill is paid on October 1, 2002.
to Draft Audit Report, July 30, 2009
|MEMORANDUM FOR|| RAYMOND J. BEAUDET
ASSISTANT INSPECTOR GENERAL FOR AUDIT
|FROM:||Lee J. Lofthus
Assistant Attorney General
|SUBJECT:||Draft Audit Report – The Department of Justice’s
Management of the Federal Employees’ Compensation
The Justice Management Division (JMD) has reviewed the subject draft report which was provided by your office on July 8, 2009. The purpose stated in your draft report for conducting the inspection was to determine whether the Department of Justice (DOJ) and its components have established and implemented adequate effective controls to administer the Federal Employees Compensation Act (FECA) Program; whether DOJ management has implemented controls to prevent improper payments and opportunities for claimant fraud; and whether effective initiatives and practices exist for reducing the cause and duration of extended leave related to occupational injury.
We note that the report memorandum indicates that a copy of the draft report was also provided to Agency contacts with injury and disability program responsibility for their review and that they were advised to direct any comments to you directly.
The following are JMD’s comments on the findings and recommendations contained in the report.
Develop a procedure to ensure each DOJ component establishes and maintains on site a readily available case file for the respective FECA cases listed in each component’s annual chargeback report.
The report indicates that 15 percent of active DOJ FECA case files selected for review were unavailable. Although various reasons were brought forth by the components to explain the deficiency, your position is that cases listed on the chargeback report should be maintained and easily available to allow effective monitoring.
As required by the Office of Workers’ Compensation Program (OWCP), DOJ components are required to maintain a copy of the Compensation Act (CA) Form initially filed for the claim, complete with all of the required signatures. These records are to be maintained and secured at the employer’s location. The documents in the file may include: medical reports, copies of letters and decisions by OWCP, the employer and the employee and/or his/her representative and any other material which is part of the case file, regardless of its source.
JMD concurs with the recommendation to develop procedures that will ensure that all DOJ components establish and maintain on site a readily available case file for FECA cases listed on their respective chargeback report. JMD recognizes the importance of maintaining CA Forms along with other important case file information and is currently working to establish and provide written procedures which will include information on quarterly internal “cross over” case file reviews that will ensure the availability and maintenance of CA Forms in the case file. JMD will coordinate all efforts associated with the internal “cross over” case file reviews to include: coordinating the scheduling of the reviews, designating component personnel to conduct the reviews, providing the random sample listing of case files, reviewing the written findings and providing a collective report to all of the components with recommendations for corrective measures where needed.
Establish minimum criteria by which each DOJ FECA Specialist should complete periodic case file reviews.
We concur with this recommendation and will set a high priority for the development of detailed, written procedures for periodic case file reviews. The procedures and criteria for reviewing case files are currently being written for inclusion in the Standard Operating Procedures Guide for the Department’s Workers’ Compensation Program.
FECA requires, at a minimum, annual medical documentation to determine if a claimant is still entitled to benefits under this provision. Medical documentation is used by the Compensation Specialist to determine if a light duty assignment can be offered to the employee. In order to make a job offer, the agency must conduct active case file monitoring and obtain medical evidence that would otherwise describe the injured workers’ medical restrictions.
OWCP encourages active management of workers’ compensation programs by agency personnel. JMD recognizes the importance of devoting the time and effort necessary to ensure that claims are processed in a timely fashion, that complete and accurate files are maintained, and that constant monitoring and periodic reviews of claims is conducted to facilitate return to work efforts.
Ensure that periodic medical updates are obtained and evaluated for reemployment opportunities for all DOJ employees on the chargeback report and second medical opinions are pursued when necessary.
The report recommends that instituting a more proactive case monitoring approach, including case file reviews, obtaining second opinions (SECOP) and medical updates, establishing return to work policies, and more consistent monitoring of chargeback reports, could reduce the long-term costs of DOJ’s FECA cases.
We concur with this recommendation to obtain periodic medical updates that will assist Compensation Specialists with return to work efforts. We will provide written procedures to the Compensation Specialists which will require that all long-term disability cases be reviewed on
an annual basis (at a minimum) for medical documentation that would support a continued entitlement to compensation benefits. This requirement is applicable to those cases where the case status indicates that updated medical documentation should be obtained.
The Department can only make a written request to OWCP for SECOP evaluations. At various stages of a claim, the claims examiner may determine that there is a need for a medical opinion beyond the opinion of the claimant’s treating physician. In most cases, the attending physician is the primary source of medical evidence. Further, the Compensation Specialist will only make a written request to OWCP for a SECOP where medical evidence is conflicting. Authorizations for and approvals of SECOP’s rest solely with OWCP; however, we will ensure in written Department procedures that components are aware of their right and responsibility to request SECOP’s.
Develop a process to routinely monitor and update FECA case files that will further DOJ’s efforts in returning employees back to work or to a light or modified duty assignment.
JMD concurs with the recommendation to develop a process to routinely monitor and update cases files for the purpose of returning employees back to work. This is a key element for the effective monitoring and management of case files.
When an employee has partially or fully overcome an injury or disability, the components will be responsible for making every effort toward assigning the employee to limited duty consistent with the employee’s medically defined work limitation. The duty assignment can be developed for part-time or full-time work.
Managers, supervisors, injured workers, and Compensation Specialists will all be required to work together to develop light/limited duty and temporary duty assignments. There may also be a need to coordinate this effort with Human Resources to clarify issues related to grade, pay, qualifications and other Federal benefits.
Components will be encouraged to monitor cases by using their quarterly chargeback reports, the Department’s Workers’ Compensation Occupational Safety and Health Management Information System to obtain various case information and analysis reports, and the case file information on hand at their location.
JMD will include procedures for monitoring case files to identify those employees who are capable to returning to work, as evidenced and documented in medical reports in the Standard Operating Procedures Guide which is currently being developed.
Establish a procedure to ensure each DOJ component reviews the quarterly chargeback reports, identifies all possible errors, and reports errors to the OWCP for corrective action.
Chargeback data is provided to DOJ by OWCP on a quarterly basis via storage media. The chargeback period runs from July to June and chargeback data is available and provided to DOJ on a quarterly basis. OWCP bills DOJ annually for paid compensation benefits, to include medical care and costs associated with wage loss.
JMD concurs that there are no written procedures to ensure that each DOJ component conducts routine reviews of their chargeback reports and report errors for corrective measure; however, DOJ components are tasked quarterly by JMD with reviewing their chargeback reports. There have been a number of credits and adjustments made to DOJ over past years due to proactive monitoring of quarterly chargeback reports.
DOJ components currently review the chargeback reports to verify proper ownership of all cases for which the respective component is currently paying. The Federal Bureau of Investigation and the Bureau of Prisons work independently to identify such errors and report them to OWCP for handling. Each quarter, JMD provides an electronic copy of the chargeback report to all other DOJ components and bureaus to include: Alcohol, Tobacco, Firearms and Explosives, Drug Enforcement Administration, Executive Office for the United States Attorneys, U.S. Marshals Service and Headquarters Components. The components are currently required to review their chargeback report to verify that the claimants identified are or were a DOJ employee at the time of their injury and report any discrepancies to JMD within two weeks of the report being delivered. JMD will forward a collective report of all discrepancies to OWCP’s National Office for handling. The National Office will follow-up with JMD on their findings and report all corrections and future credits to JMD accordingly. JMD will notify components of any corrections, adjustments or future credits.
Components are now required to provide a written response to JMD that they have reviewed their chargeback report and indicate their findings. These quarterly responses will be maintained and filed by JMD.
In an effort to enforce and control quarterly chargeback report reviews, all components will be given written instructions on how chargeback report reviews should be conducted and reported. JMD will perform a collective analysis of the Department’s concurrence with this new control. It is with this process in mind, that DOJ will be able to correct chargeback reporting errors before the agency is actually billed, alleviating the task of processing credits and adjustments.
We appreciate the opportunity to respond to your report and are confident that the implementation of these reported recommendations will assist Compensation Specialists and management with addressing those challenges with respect to claims review, claims management, return to work efforts, and erroneous payments, thereby reducing the Department’s overall chargeback costs and opportunities for fraud.
If you have any questions regarding the above planned initiatives, please contact Edward Hamilton, Director, Facilities and Administrative Services Staff, at (202) 616-2995.
of Actions Necessary to Close the Report
The OIG provided a draft audit report to the components involved in this review. Because many of the issues we identified involved all DOJ components and because JMD is charged with implementing DOJ-wide FECA policies, we directed our recommendations to JMD, which concurred with all of our recommendations. JMD’s response to our recommendations is included as Appendix XI of this report. The following provides the OIG’s analysis of JMD’s response and a summary of actions necessary to close the report.
Summary of Actions Necessary Close the Report
- Resolved. JMD concurred with our recommendation to develop procedures that will ensure each DOJ component establishes and maintains on site a readily available case file for FECA cases listed on each component’s annual chargeback report. JMD stated in its response that it will coordinate quarterly case file reviews to be performed by DOJ components and reviewed by JMD.
- Resolved. JMD concurred with our recommendation to establish criteria by which each DOJ FECA Specialist should complete periodic case file reviews. JMD indicated that new procedures and criteria that will provide detailed instructions for periodic case file reviews are being written for inclusion in the Standard Operating Procedures Guide for the Department’s Workers’ Compensation Program.
- Resolved. This recommendation is resolved based on JMD’s concurrence with the intention of the recommendation that periodic medical updates are obtained and evaluated and that second medical opinions are pursued when necessary. However, JMD’s response stated that “the Department can only make a written request to OWCP for [second medical opinion] evaluations.” We agree with JMD that DOJ officials must work through OWCP to request second medical opinions for the purposes of disputing conflicting medical evidence. However, we disagree with JMD’s broader interpretation of regulations that “authorizations for and approvals of [second medical opinions] rest solely with OWCP.”
- Resolved. JMD concurred with this recommendation to develop a process to routinely monitor and update case files to further DOJ’s efforts in returning employees back to work or to a light or modified duty assignment. JMD acknowledged that DOJ components are responsible for making every effort to assign the employee to limited duty consistent within the medical condition and defined work limitations. JMD plans to include procedures in the Standard Operating Procedures Guide for monitoring case files to identify employees who are capable of returning to work, as evidenced and documented in medical reports.
- Resolved. JMD concurred with this recommendation to ensure that each DOJ component reviews the quarterly chargeback reports, identifies all possible errors, and reports errors to the OWCP for corrective action. JMD plans to develop written instructions on how to perform chargeback report reviews and report errors. DOJ components are now required to provide a written response to JMD confirming their review of chargeback reports and describing any findings. The results will be maintained and filed by JMD each quarter.
This recommendation can be closed when JMD provides evidence that the new procedures have been implemented and consistent compliance to these procedures is being applied within all DOJ components.
This recommendation can be closed when JMD provides us with a copy of the new procedures and evidence that periodic case file reviews are being conducted by each DOJ component.
OPM regulations specifically state that “an agency may require an employee who has applied for or is receiving continuation of pay or compensation as a result of an on-the-job injury or disease to report for an examination to determine medical limitations that may affect placement decisions.”47 OWCP has interpreted this provision to authorize agencies “to arrange for examination of any employee who files a compensation claim by a physician of the agency’s choice, at the agency’s expense . . . in order to determine if the employee can work in some capacity, thereby facilitating return to work.”48
Therefore, we conclude that DOJ officials may directly require a claimant to submit to a medical exam with a physician of DOJ’s choice at DOJ expense in order to monitor the claimant’s ability to return to work.
This recommendation can be closed when JMD provides us with documentation that it has: (1) implemented procedures to obtain periodic medical updates for all long-term cases listed on the annual DOJ chargeback report and (2) either provided DOJ components with adequate procedural guidelines for directly arranging for second medical opinions when necessary, or alternatively, provided us with a reasonable explanation for why this is not possible.
This recommendation can be closed when JMD provides evidence that the new procedures have been implemented.
This recommendation can be closed when JMD provides written evidence that DOJ components have reviewed the quarterly chargeback reports in accordance with the written instructions provided by JMD and reported any errors or findings to OWCP in a timely manner.
- Department of Homeland Security’s Transportation Security Administration (TSA).
- U.S. Agency for International Development (USAID)
- 5 C.F.R. § 339.301(c).
- U.S. Department of Labor Employment Standards Administration, Injury Compensation for Federal Employees, Publication CA-810 (January 1999), http://www.dol.gov/esa/owcp/dfec/regs/compliance/dfecfolio/agencyhb.pdf, (Accessed August 14, 2009), 49.