Larry G.
Massanari
Acting Commissioner of Social Security
Inspector
General
The Social
Security Administration’s Management of Its Federal Employees’ Compensation
Act Program (A-13-99-91003)
The attached
finaldraft report presents the results of our audit. Our objective was to determine
the extent to which the Social Security Administration (SSA) implemented specific
recommendations from our 1995 audit report concerning its Federal Employees’
Compensation Act (FECA) program. We modified our objective to include the assessment
of SSA’s management of its FECA program.
Please comment
within 60 days from the date of this memorandum on corrective action taken or
planned on each recommendation. To provide you with the opportunity to present
your views relative to the validity of the facts and reasonableness of the recommendations
presented, we request that you provide written comments to each recommendation
within 30 days of the date of this memorandum. If you wish to discuss the finaldraft
report, please call me or have your staff contact Steven L. Schaeffer, Assistant
Inspector General for Audit, at (410) 965-9700.
James G. Huse, Jr.
Attachment
OFFICE
OF
THE
INSPECTOR GENERAL
SOCIAL
SECURITY ADMINISTRATION
THE
SOCIAL SECURITY
ADMINISTRATION’S
MANAGEMENT
OF ITS FEDERAL
EMPLOYEES’ COMPENSATION
ACT
PROGRAM
October
2001
A-13-99-91003
AUDIT
REPORT
Mission
We improve
SSA programs and operations and protect them against fraud, waste, and abuse
by conducting independent and objective audits, evaluations, and investigations.
We provide timely, useful, and reliable information and advice to Administration
officials, the Congress, and the public.
Authority
The Inspector
General Act created independent audit and investigative units, called the Office
of Inspector General (OIG). The mission of the OIG, as spelled out in the Act,
is to:
Conduct
and supervise independent and objective audits and investigations relating
to agency programs and operations.
Promote
economy, effectiveness, and efficiency within the agency.
Prevent
and detect fraud, waste, and abuse in agency programs and operations.
Review
and make recommendations regarding existing and proposed legislation and
regulations relating to agency programs and operations.
Keep
the agency head and the Congress fully and currently informed of problems
in agency programs and operations.
To ensure
objectivity, the IG Act empowers the IG with:
Independence
to determine what reviews to perform.
Access
to all information necessary for the reviews.
Authority
to publish findings and recommendations based on the reviews.
Vision
By conducting
independent and objective audits, investigations, and evaluations, we are agents
of positive change striving for continuous improvement in the Social Security
Administration's programs, operations, and management and in our own office.
Executive
Summary
OBJECTIVES
Our initial
objective was to determine the extent to which the Social Security Administration
(SSA) implemented specific recommendations from our 1995 audit report concerning
its Federal Employees’ Compensation Act (FECA) program. We modified
our objective to include the assessment of SSA’s management of its FECA program.
BACKGROUND
FECA (5
U.S.C. § 8101, et seq.) provides compensation benefits to civilian Federal
employees for disability due to personal injury sustained while performing official
duties or for a job-related disease. It provides payment as compensation for
lost wages, monetary awards for bodily impairment or disfigurement, medical
care, vocational rehabilitation, and survivor’s compensation. The Department
of Labor’s (DoL) Division of Federal Employees’ Compensation approves and adjudicates
FECA claims for all Federal agencies. With assistance from SSA management, DoL
administers FECA benefits for all SSA employees.
SSA is responsible
for continuing an employee’s regular wages and not charging annual or sick leave
for up to 45 days while the employee is recovering from a FECA- covered injury
or disease. Once 45 days have elapsed from the date of injury or the onset of
disease, DoL provides wage replacement benefits and pays for medical treatment
from the Employees’ Compensation Fund. These payments are in lieu of the employee’s
wages. Throughout the FECA process, SSA is responsible for monitoring the claimants’medical status and notifying them of their obligation to return to work
as soon as possible.
Costs DoL
incurs while providing FECA benefits are charged back to the claimant’s employing
agency. SSA reimburses the Employees’ Compensation Fund through SSA’s annual
operating appropriations. SSA reimbursed DoL about $17.2 million for chargeback
year (CBY) 1998 FECA program costs. From CBYs 1993 through 2000, SSA’s FECA
program costs totaled about $136 million.
RESULTS
OF REVIEW
Although
SSA now submits more timely FECA claims to DoL than when we conducted our initial
1995 audit, we found SSA was still not effectively managing its FECA program.
Specifically, the Agency continued to lack adequate internal controls related
to its chargeback reports, third-party liability processing, and case management.
Further, SSA did not use information technology that could increase FECA program
effectiveness and efficiency.
SSA Had
Inadequate FECA Program Internal Controls
SSA Had
Insufficient Guidance for Distribution, Review and Use of DoL Chargeback Reports
to Determine Appropriate FECA Charges
Generally,
Chargeback Reports Were Not Reviewed to Ensure Claimants Were SSA Employees
Third-Party
Processing Procedures Need to be Stressed
Medical
Status Was Not Adequately Monitored for Effective FECA Case Management
SSA Inefficiently
Managed FECA Program Information
Existing
Technology Was Not Used for Program Information Management
Automated
Information Can Be Useful in Identifying Cases for Review
CONCLUSIONS
AND RECOMMENDATIONS
Ineffective
program management resulted in the Agency paying at least $239,560 in program
costs for non-SSA employees in CBY 1998. This money has not been recovered.
If SSA does not address long-standing and recently identified program deficiencies,
it may continue to pay these and other unnecessary FECA program costs.
The Agency
lacks adequate internal controls related to its chargeback reports, third-party
liability processing, and case management. Further, SSA does not use information
technology that can increase FECA program effectiveness and efficiency. We believe
these deficiencies place SSA at risk for paying excessive and/or inaccurate
program costs. Based on prior costs, the Agency may expend approximately $233.7 million
over the next 10 years. Unless SSA improves the quality of its implementation
of the FECA program and record maintenance, SSA will not be able to ensure that
FECA program payments are proper and that transactions are accurately recorded.
Without effective program management, SSA is unable to determine whether its
FECA program is operating effectively and efficiently.
We recommend
that SSA take the following corrective actions to improve the management of
its FECA program.
Acknowledge
and identify SSA’s management of the FECA program as a reportable material
weakness under the Federal Managers’ Financial Integrity Act (see Appendix
C).
Designate
a program official to oversee the Agency-wide management of SSA’s FECA program,
including developing, implementing, and monitoring compliance with SSA-specific
FECA program policy and operational procedures.
Develop
and implement internal controls to address the timely distribution, review,
and use of chargeback reports. Provide appropriate training to ensure workers’
compensation specialists understand the chargeback report review process.
As the Agency further develops its guidance, SSA needs to effectively implement
the recommendations in our 1995 audit report, as previously agreed.
Verify
that all claimants for whom it is paying FECA program costs are actually SSA
employees.
Recover
all FECA program costs paid by the Agency for non-SSA employees.
Monitor
compliance with SSA’s guidance on third-party liability processing.
Implement
necessary policy and procedural changes to periodically verify Agency case
files for recent (within the last 6 months) medical evidence to substantiate
continuing disability, especially for cases over 1-year old.
Develop
and implement an information system that uses information technology to manage
and monitor FECA cases.
Use a
verification process similar to the Nonagenarian Project as a way to continue
ensuring FECA benefit payments are not made to deceased beneficiaries.
AGENCY COMMENTS
SSA generally
agreed with the intent of our Recommendations. However, SSA did not specifically
concur with all of our Recommendations. The Agency agreed with Recommendations
3, 4, 5, and 7. SSA also agreed with Recommendation 1, but reported it has been
in compliance with the Recommendationance since 1997. Regarding SSA Recommendation
2, SSAitbut reported it had already implemented certain that corrective actions
have been. Although SSA agreed with Recommendation 6, it commented that the
responsibility for the Recommendation rests with another Federal agency. Lastly,
SSA disagreed with the need for Recommendation 8. However, the Agency commented
it will identify and contact workers’ compensation recipients 100 years old
or older. The full text of SSA’s comments is included in Appendix C.
OIG RESPONSE
We acknowledge
the many "program improvements/management controls" SSA reports it has
implemented. Further, throughout this report, we discuss actions the Agency
has taken. These actions were taken before we issued our draft report but after
our January 18, 2001 briefing with Agency staff regarding FECA program management
deficiencies. We agree that FECA-related program changes were made. However,
at this time, we cannot assess the effectiveness of these changes since we did
not independently audit the identified program improvements/management controls.
During our
audit, we found no evidence that there was a program official specifically responsible
for overseeing Agency-wide management of SSA’s FECA program (Recommendation
1). We reviewed information concerning the Project Management Staff’s functional
responsibilities. Within this information, the duties identified for this Staff
did not include Agency-wide management of SSA’s FECA program. We found that
the Project Management Staff within SSA’s Office of Personnel was responsible
for developing Agency policies, providing advice and assistance to employees,
and acting as the liaison between SSA and DoL. However, we found that this Staff
was not monitoring Agency-wide compliance with its policies and procedures or
overseeing the regional FECA compensation specialists’ activities. In addition,
we were informed that the Project Management Staff was limited to overseeing
activities of FECA compensation specialists’ located at SSA Headquarters.
The Agency
commented that the responsibility for Recommendation 6 rests with DoL. However,
DoL policy states the employing agencies (like SSA) can obtain medical information
from DoL or the injured employee as often as necessary, within regulations,
to assess the possibility of return to regular or light duty. Because Agency
funds are used to pay FECA benefits, SSA should monitor the employee’s medical
status to avoid improper payments. Accordingly, SSA reported it will issue a
reminder to all workers’ compensation specialists to ensure that an employee’s
medical status is closely monitored and that recent medical documentation is
contained in SSA case files. Such actions are aligned with our recommendation.
In its comments,
SSA disagreed with the need for Recommendation 8. The Agency commented that
our report did not indicate any findings that FECA benefits were paid to any
deceased beneficiaries. However, SSA reported it will identify any workers’
compensation recipient 100 years old or older and will contact the recipient
to ensure continued payment is appropriate. Such actions are aligned with our
Recommendation.
OTHER MATTERS
FECA Claimants
Opt for Continued FECA Benefits Rather Than Collecting Retirement Benefits
We believe
SSA’s FECA program has become, in effect, a retirement system for some employees.
SSA paid $4 million for FECA benefits to 146 claimants aged 65 and older in
CBY 1998. Because SSA and other Federal agencies incur significant annual FECA
costs, SSA should work with DoL to develop proposals for congressional consideration
in modifying the FECA program. A potential way to address this issue is to modify
FECA legislation. Specifically, FECA could be amended to require that Federal
employees apply for retirement benefits.
Table
of Contents Page
INTRODUCTION 1
RESULTS
OF REVIEW 7
SSA Had
Inadequate FECA Program Internal Controls 7
SSA
Had Insufficient Guidance for Distribution, Review and Use of DoL Chargeback
Reports to Determine Appropriate FECA Charges 7
Generally,
Chargeback Reports Were Not Reviewed to Ensure Claimants Were SSA Employees 8
Third-Party
Liability Processing Procedures Need to be Stressed 109
Medical
Status Was Not Adequately Monitored for Effective FECA Case Management 10
SSA
Inefficiently Managed FECA Program Information 11
Existing
Technology Was Not Used for Program Information
Management 11
Automated
Information Can Be Useful In Identifying Cases for Review 121
CONCLUSIONS
AND RECOMMENDATIONS 155
OTHER
MATTERS 187
APPENDICES
APPENDIX A – Prior
Office of the Inspector General Audit
APPENDIX B – Federal
Employees’ Compensation Act Payment Projections
APPENDIX C – SSA’s
CommentsExcerpts from Office of Management and Budget Circular A-123
APPENDIX
D – OIG Contacts and Staff Acknowledgments
Acronyms
CBY
Chargeback
Year
CDR
Continuing
Disability Review
CFR
Code
of Federal Regulations
CoP
Continuation
of Pay
COLA
Cost-of-Living
Adjustment
CSRS
Civil
Service Retirement System
DoL
Department
of Labor
FECA
Federal
Employees’ Compensation Act
FERS
Federal
Employees Retirement System
GAO
General
Accounting Office
HRMIS
Human
Resources Management Information System
IRS
Internal
Revenue Service
MBR
SSA
Master
Beneficiary Record
Social
Security Administration
SSR
VA
Supplemental
Security Record
Department
of Veterans Affairs
INTRODUCTION
OBJECTIVES
Our initial
objective was to determine the extent to which the Social Security Administration
(SSA) implemented specific recommendations from our 1995 audit report concerning
its Federal Employees’ Compensation Act (FECA) program. We modified
our objective to include the assessment of SSA’s management of its FECA program.
BACKGROUND
FECA (5
U.S.C. § 8101, et seq.) provides compensation benefits to civilian Federal
employees for disability due to personal injury sustained while performing official
duties or for a job-related disease. It provides compensation for lost wages,
monetary awards for bodily impairment or disfigurement, medical care, vocational
rehabilitation, and death benefits. The Department of Labor’s (DoL) Office of
Workers’ Compensation Programs administers the FECA program for all Federal
employees.
DoL’s
FECA Responsibilities
DoL approves
and adjudicates FECA claims for all Federal agencies. After 45 days have elapsed
from the date of a Federal employee’s injury or the onset of disease, DoL provides
wage replacement benefits and pays for medical treatment from the Employees’
Compensation Fund. DoL also provides case management services by assigning a
registered nurse to work with injured employees who cannot return to work soon
after an injury. When additional medical information is necessary or required,
injured employees must obtain a second opinion examination from a medical specialist.
If an employee cannot return to work at his/her employing agency or to his/her
previous job/occupation category, DoL provides vocational rehabilitation services.
Additionally, when the injury results in death, DoL pays related death benefits
to surviving dependents.
DoL sends
quarterly and annual "chargeback reports" for the employing agencies’
review to ensure correct DoL billing for costs charged to the Employees’ Compensation
Fund. SSA reimburses DoL for all of SSA’s FECA program costs. SSA reimbursements
occur about 2 years after DoL pays FECA costs from the Employees’ Compensation
Fund.
SSA’s FECA
Program
To avoid
disruption of an employee’s income, SSA continues to pay the employee’s regular
wages for up to 45 days while he/she is recovering from an injury. This
initial time frame is referred to as the Continuation of Pay (CoP)period. DoL begins paying FECA compensation benefits at the end of the CoP period
when a claimant can no longer be paid his/her regular wages. In addition, DoL
begins paying medical costs at the time of the injury or the onset of a job-related
disease.
Once a FECA
claim is filed, for the first 45 days following an injury, SSA is responsible
for the following.
Ensuring
appropriate Agency personnel, such as supervisors, understand their FECA responsibilities.
Notifying
the injured employees of their rights and obligations under FECA.
Initiating
the FECA claim and ensuring timely notification to DoL.
Controverting
(questioning) claims during initial processing.
Providing
and tracking CoP if employees are unable to work.
After the
first 45 days following an injury, SSA is responsible for the following.
Helping
employees return to work as soon as possible by providing light or modified
work duties.
Monitoring
the employee’s FECA case medical status until a physician states the employee
can return to work.
If an employee
can resume regular Federal work, he/she must do so. In addition, if an employee
cannot return to the job held at the time of injury due to partial disability
from the effects of the work-related injury but has recovered enough to perform
some type of work, he/she must seek work.
FECA program
management is decentralized within SSA. At SSA Headquarters, there are four
full-time FECA compensation specialists within the Office of Personnel who process
claims and manage cases for employees located at Headquarters. In each region,
an employee is designated as the regional FECA compensation specialist to handle
employee claim processing and case management. Generally, regional compensation
specialists’ duties are part-time.
SSA’s Office
of Personnel is responsible for overseeing the FECA program. This includes developing
Agency policies, providing advice and assistance to employees, and acting as
the liaison between SSA and DoL.
SSA’s
FECA Program Costs
From
Chargeback Years (CBY) 1993 through 2000, SSA’s FECA program costs totaled about
$136 million. During this period, the number of SSA employees receiving FECA benefits
increased from about 2,700 to over 3,100. For these years, FECA program costs
rose from under $15 million to more than $19 million (see Figure 1). The
Agency pays program costs from its annual Limitation of Administrative Expenses
fund. Approximately 64.4 percent of the Limitation of Administrative Expenses
funding is from the Agency’s trust fund, and the remaining 35.6 percent is from
the Agency’s general fund (annual appropriation).
For
our audit, we reviewed CBYs 1993 through 1998, which had program costs totaling
$98 million.
Prior
Office of the Inspector General Audit
Our
1995 report discussed deficiencies in SSA’s management of its FECA program.
Specifically, we found SSA needed to improve its management of FECA claims;
review DoL chargeback reports to ensure correct billings; and ensure FECA
claimants with medical releases actually returned to work. Also, third-party
liability investigations were not conducted and recovery was not pursued (Appendix
A). SSA concurred with all recommendations and stated it had already begun
implementing corrective actions.
Other
Federal Agencies’ FECA Programs
The
Department of Veterans Affairs (VA) and the Internal Revenue Service (IRS)
developed comprehensive policies and procedures to operate their FECA programs
in 1999 and 1998, respectively. For CBY 1998, the VA incurred about $140 million
in FECA program costs for about 16,000 cases, and the IRS incurred about $54
million in program costs for about 2,300 cases. VA and IRS program guidance
includes instructions on case management techniques and return-to-work strategies.
In addition, the VA provides detailed instructions on FECA-related fraud detection
and referrals.
To
help manage and monitor FECA cases, the VA and IRS also use automated information
systems. By combining agency-specific personnel data with DoL Federal employees’
compensation case file information, these systems provide such management
information as (1) updated workers’ compensation case file information, (2)
claimants’ availability for rehabilitative services, (3) costs of benefits
provided to claimants, and (4) adjudication status of FECA claims.
This
information helps senior management reconcile medical services provided with
each claimant’s reported injury or disease, generate statistical analysis
of injury and illness trends, and verify the accuracy of FECA-related costs
for reimbursement to DoL.
SCOPE
AND METHODOLOGY
We
reviewed FECA-related laws, policies, and procedures. To better understand
the operation and cost of the FECA program, we interviewed personnel in SSAHeadquarters’ Offices of Finance, Assessment and Management and in the
Office of Human Resources. We also interviewed FECA program officials at DoL.
To better understand how other Federal agencies manage and monitor their FECA
programs, we visited the VA in Washington, D.C. and the IRS in Richmond, Virginia.
Because
SSA does not maintain comprehensive, centrally located FECA case file data,
we used DoL’s automated FECA data to assess SSA’s program management and claims
monitoring, as well as the validity of its FECA-related costs. To test the
reliability of DoL’s automated data, we compared selected data elements with
actual case file documentation obtained from SSA. The test results indicated
DoL’s automated data accurately reflected information contained in SSA’s FECA
case files. However, our audit revealed deficiencies related to the payment
of FECA program costs for non-SSA employees (see page 9). To further analyze
program costs, we stratified the FECA case file data by geographical region
and reviewed program expenditures incurred for CBYs 1993 through 1998. Also,
we used SSA’s Master Beneficiary Records (MBR) and Supplemental Security Records
(SSR) to determine whether claimants were receiving other benefits and whether
those benefits were appropriately offset against FECA benefits.
To
determine whether claimants were SSA employees, we did a computerized match
of claimants’ Social Security numbers listed on the 1998 chargeback report
with SSA’s Human Resources Management Information System (HRMIS). We also
analyzed DoL’s data for SSA’s 3,265 individual cases listed on the 1998 chargeback
report. On June 4, 1999, we identified and formally requested SSA provide
us with 43 Headquarters’ FECA case files. Twenty-six case files were
provided, and SSA could not locate 17 case files. SSA was unable to explain
why the files were missing. We limited our case file review to Headquarters
since it had the largest volume of FECA cases and had the most experience
with handling FECA cases. To identify FECA program management variations,
we used electronic surveys to gather data from regional compensation specialists.
We did not determine whether SSA took action regarding our prior recommendation
that the Agency maintain case files for 3 years after medical and compensation
services cease.
Initially,
our objective was to determine the extent to which SSA implemented specific
recommendations from our 1995 report. However, we modified our audit objective
to include the assessment of SSA’s FECA program management. In March 2000,
we notified SSA of this change. As a result, we performed additional field
work, which was conducted from November 1998 through October 2000.
The entity
reviewed was Headquarters, Office of Personnel within the Office of the Deputy
Commissioner for Human Resources. We conducted our audit in accordance with
generally accepted government auditing standards.
Results of Review
Although SSA was submitting more timely FECA claims to DoL than when we
conducted our initial 1995 audit, we found SSA was still not effectively managing
its FECA program. Specifically, the Agency continued to lack adequate internal
controls related to its chargeback reports, third-party liability processing,
and case management. Further, SSA did not use information technology that
could increase FECA program effectiveness and efficiency.
SSA Had Inadequate FECA Program Internal Controls
Office
of Management and Budget Circular A-123, Management Accountability and
Control Standards, states agencies must take systematic and proactive
measures to develop and implement appropriate cost-effective management controls.
Management controls (internal controls) are policies and procedures used to
reasonably ensure programs and resources are protected from waste, fraud,
and mismanagement. The Agency’s FECA program internal controls did not do
this. Specifically, SSA’s FECA program lacked sufficient controls related
to the chargeback reports and third-party liability processing.
We
reported in 1995 that SSA needed to improve its oversight of the management
of FECA claims. This audit found that SSA was processing FECA claims in a
more timely manner than previously reported. After reviewing DoL statistical
reports and FECA claim forms, we determined the Agency was processing claims
in accordance with regulatory processing time requirements. However, we found
the other deficiencies reported in 1995 still existed.
Quarterly
and annually, DoL provides each employing agency with chargeback reports containing
FECA cases and related charges. DoL sends the chargeback report to the SSA
Office of Personnel, which distributes the report to the regional FECA compensation
specialists. DoL instructs each agency to review the chargeback reports to
identify and correct errors to avoid annual billing errors. The chargeback
report is a useful tool to help compensation specialists identify cases for
review. It can also assist in verifying a claimant’s employment status and
identifying cases where the medical status should be examined because claimants
may not be totally disabled.
In
1995, we reported program deficiencies related to the distribution and use
of chargeback reports (Appendix A). SSA was not promptly distributing or analyzing
the chargeback reports. We found this condition still remained.
When
the chargeback reports are distributed, the FECA compensation specialists
rely on DoL’s guidance about reviewing and correcting errors. However, we
believe DoL’s guidance is limited since it offers general, not specific, instructions.
SSA senior management stated the development of FECA-related guidance had
not been completed because of limited staff resources. Regional FECA compensation
specialists also confirmed that SSA’s FECA-related guidance lacked detailed
instructions about review of chargeback reports.
Although
regional FECA compensation specialists reported receiving the chargeback reports,
half (5 of 10) said they did not review the reports. The Headquarters’ FECA
compensation specialists stated the chargeback reports were reviewed only
when management directed staff to do so. Compensation specialists stated they
did not routinely review the reports because they had other duties, such as
processing claims.
On
January 18, 2001, we briefed SSA’s Office of Personnel about the lack of SSA-specific
guidance regarding the review and use of chargeback reports. Subsequent to
this briefing, SSA’s Office of Personnel issued supplemental guidance on February
15, 2001. Although our review of the supplemental guidance found it provides
additional information, we believe it still needs to be more comprehensive.
DoL
policy states that the compensation specialists should review the quarterly
chargeback reports to ensure the agency is being charged correctly for its
FECA program costs. However, Headquarters FECA compensation specialists told
us they generally do not do this.
In
1995, we reported SSA did not review the chargeback reports to ensure claimants
were actually SSA employees (Appendix A). We found this same condition
is still a deficiency. We determined SSA was paying FECA compensation benefits
to non-SSA employees.
When
we matched FECA claimants’ Social Security numbers on the 1998 chargeback
report with HRMIS data, we identified 153 employees with uncertain SSA employment
status. We asked the Office of Personnel to determine the employment status
for the 153 FECA claimants. The Office of Personnel reported that 14 were
SSA employees and 47 were not. At the time of this audit, the Office of Personnel
could not identify the employment status for the remaining 92 FECA claimants.
For
the 47 non-SSA employees, we determined SSA paid them $1.24 million in CBY 1998.
Additionally, we requested the appropriate chargeback reports for CBYs 1995
through 1997 to determine FECA program expenditures for these periods. As
a result of SSA’s inadequate recordkeeping procedures, the Agency could not
provide the reports or other needed information. However, based on CBY 1998
data, we estimate the Agency will pay approximately $6.7 million in FECA program
costs for these 47 claimants during CBYs 1999 through 2003.
Furthermore,
we determined that SSA paid $968,845 in CBY 1998 for FECA program costs for
the 92 FECA claimants with unknown employment status. SSA could not provide
information needed to determine the costs of program benefits provided to
these claimants during CBYs 1995 through 1997. If SSA does not take action
to determine the employment status of these 92 FECA claimants, we estimate
the Agency will pay approximately $5.2 million in FECA benefits during CBYs 1999
through 2003.
On
January 18, 2001, we initially briefed SSA’s Office of Personnel about the
$1.24 million paid in CBY 1998 to the 47 FECA claimants it originally
identified as non-SSA employees, and $968,845 to the 92 FECA claimants with
unknown employment status. Following to our final briefing with the Agency
on June 7, 2001, the Office of Personnel provided us with updated employment
status of the FECA claimants in question. Of the 47 originally identified
as non-SSA employees, the Office of Personnel determined that 41 FECA claimants
were SSA employees and 6 were non-SSA employees. Additionally, of the 92 FECA
claimants with unknown employment status, the Office of Personel determined
89 FECA claimants were SSA employees and 3 FECA claimants were non-SSA
employees.
For
the 9 claimants SSA determined were non-SSA employees, the Agency paid $239,560
in CBY 1998. This money has not, as yet, been recovered. If SSA does not take
a more proactive approach to remove claimants from the chargeback reports,
we estimate the Agency will pay approximately $1.28 million in FECA program
costs for these claimants during CBYs 1999 through 2003.
DoL
is responsible for investigating third-party liability. Although not required,
DoL encourages Federal agencies to investigate the third-party aspect of any
claim and submit this information to DoL. The potential third-party information
is documented on claim forms CA-1, Federal Employee’s Notice of Traumatic
Injury and Claim for Continuation of Pay/Compensation, and Form CA-2,
Notice of Occupational Disease and Claim for Compensation and submitted
to DoL.
We
found that SSA had limited guidance on determining whether a third party is
liable for an employee’s injury. SSA relied on DoL’s general instructions,
which is provided on the claim forms. Also, SSA’s workers’ compensation handbook
does not specifically discuss how SSA’s supervisors and workers’ compensation
staff should process third party claims. During our audit period, the Office
of Personnel informed us that development of supplemental third-party guidance
had not been completed because of limited staff resources.
On
January 18, 2001, we initially briefed SSA’s Office of Personnel about the
lack of specific guidance for processing third-party liability cases. Following
our final briefing on June 7, 2001, the Office of Personnel developed supplemental
guidance, which was issued it on June 13, 2001. However, we believe that,
in addition to this issuance, SSA needs to monitor compliance with this guidance
to ensure that the Agency is not placed at risk of paying FECA costs for which
it is not liable.
Regulations
governing the administration of the FECA program permit claimants’ medical
status to be monitored. The Code of Federal Regulations, title 20, part 10,
section 10.506, states the employing agency "may monitor the employee’s
medical progress and duty status by obtaining periodic medical reports."
To "aid in returning an injured employee to suitable employment,"
the injured employee’s doctor may be contacted in writing to discuss "work
limitations imposed by the effects of the injury and possible job assignments."
Also, DoL states the employing agencies can obtain medical information from
DoL or the injured employee as often as necessary, within regulations, to
assess the possibility of return to regular or light duty. Part of this information
can be obtained from results of a second opinion that DoL has directed an
employee to undergo to substantiate continuing disability.
In
1995, we reported Agency deficiencies in monitoring employees’ medical status
for timely return to work. We found this same deficiency remained. For each
of the 26 Headquarters’ FECA cases available for review, there was no
evidence of current medical information or that SSA had reviewed DoL’s files
to obtain claimants’ current medical status. Also, we could not locate any
SSA-specific FECA case management guidance for reviewing medical status after
initial processing. SSA needs this updated medical information to assist claimants
in returning to work and to decrease risk of fraudulent claims, which could
adversely impact FECA program costs.
SSA
Inefficiently Managed FECA Program Information
Information
management is an issue of continuing importance to all Federal agencies. The
Office of Management and Budget Circular A-130, Management of Federal Information
Resources, states information technology "can improve the effectiveness
and efficiency of program delivery." Further, it encourages Federalagencies to "seek opportunities to improve the effectiveness and
efficiency of government programs through the judicious application of information
technology." SSA’s 1997-2002 Strategic Plan, Keeping the Promise,
states that "accuracy of information and benefit payment, speed and
facility of claims processing, convenient access to service, and reduced fraud
are the primary benefits of information technology."
We
found SSA did not fully use existing information technology in its management
of FECA program information. For example, SSA does notthere was not have a
centralized information system. Each SSA region (including Headquarters) has
a separate information system to record, monitor, and track FECA claims. These
systems do not communicate or interact with each other. The information system
Headquarters FECA compensation specialists use is a "read-only"
system that does not allow comprehensive analysis of FECA program data. This
system does not enable the Agency to generate various management reports or
analyze FECA claims. As a result, Headquarters FECA compensation specialists
do not have a crucial management tool that could improve FECA program effectiveness
and efficiency.
SSA’s
Office of Personnel senior management stated the Office of Information Management
provided assistance in July 1999 to create a more efficient computer program
for capturing and analyzing FECA information on the chargeback reports. However,
at the time of this review, SSA had not requested a computer program that
allowed comprehensive analysis of FECA program data.
On
January 18, 2001, we initially briefed the SSA’s Office of Personnel about
the lack of information technology for FECA program management. Following
our final briefing on June 7, 2001, the Office of Personnel told us that staff
had since visited several Federal agencies to identify a case management and
tracking system capable of meeting the needs of SSA. From those visits, the
Office of Personnel identified such a system at the Department of Defense.
If funds become available, plans are to implement in a system in FY 2002 that
is similar to the one used by the Department of Defense.
To
demonstrate the usefulness of automated information for managing SSA’s program,
we analyzed data pertinent to the Agency’s FECA claimants. Using DoL’s information,
we constructed a data base of FECA case file data. We tested the reliability
of DoL’s automated data against SSA’s FECA case files. We concluded that DoL’s
automated data accurately reflected information contained in SSA’s FECA case
files. In addition, we analyzed data from SSA’s MBR and SSR systems.
Our
analyses identified cases that may warrant review to determine whether FECA
compensation should be continued. We used automated information to identify
cases whereby claimants had received FECA benefits for more than 1 year. In
addition, we identified FECA cases that had no medical-associated costs. We
identified these cases for analysis because it is reasonable to expect that
an injured and/or disabled person would require medical treatment and, therefore,
FECA benefits would include medical-associated costs.
Targeting
Cases over 1-Year-Old for Review. In general, the older a person is and
the longer a person remains out of the workforce, the less likely they are
to return to work. Table 1 shows the length of time the 3,265 SSA FECA claimants
have been receiving benefits. Eighty percent of the cases are more than 1-year-old.
Identifying these types of cases could help SSA target which ones need updated
medical review, which claimants are ready to return to work, and which cases
should be terminated.
Table
1. FECA Cases for CBY 1998
Age
of Case Based on Date of Injury
Number
of Total Cases
Percentage
of Total Cases
Number
of Cases With Claimants Ages < 65
Number
of Cases With Claimants Ages ³ 65 to 79
Number
of Cases With Claimants Ages >79
<=1
Year
640
20
618
22
0
>1
to 4 Years
1,945
60
1,887
56
2
>4
to 7 Years
245
7
229
16
0
>7
to 10 Years
151
4
135
15
1
>10
Years
284
9
161
98
25
Totals
3,265
100
3,030
207
28
Identifying
Older FECA Claimants. Of the 3,265 FECA cases in CBY 1998, 28 claimants
were 80 years old and older. One of the 28 claimants is a 102-year-old woman
who continues to receive FECA benefits.
In Fiscal
Year 1999, SSA conducted the Nonagenarian Project, which focused on preventing
the payment of benefits to deceased beneficiaries. The Nonagenarian Project
involves SSA field offices contacting and verifying the status of all beneficiaries
who attain ages 98 through 100. Although we found no indication that any FECA
benefits were paid to deceased beneficiaries, we believe a similar type of verification,
as the Nonagenarian Project could be beneficial for SSA. This could be a way
for SSA to continue ensuring FECA benefits are not paid to deceased beneficiaries.
Identifying
Cases Having No Medical Payments. According to DoL policy, each FECA
claimant receiving compensation payments without medical-associated costs should
be re-evaluated to determine whether there is a continuing disability. If medical
payments are not made for continued/periodic treatment or physician examinations,
we believe it is reasonable to question whether the claimant’s continuing disability
is valid. We found 202 FECA claimants receiving compensation with no medical-associated
costs (see Figure 2). The following are examples of such cases (see Appendix B).
Contusion-related
claim, no medical-associated costs: In CBY 1998, a 47-year-old employee
who filed in 1985 received $25,782 in annual FECA compensation payments. We
estimate SSA paid this claimant approximately $290,816 in FECA compensation
payments from CBY 1985 through 1998. In addition, we project the Agency will
pay approximately $297,938 over the next 10 CBYs if the claimant continues
to receive FECA compensation payments.
Respiratory-related
claim, no medical-associated costs: In CBY 1998, a 52-year-old employee
who filed in 1988 received $33,670 in annual FECA compensation payments. We
estimate SSA paid this claimant approximately $313,682 in FECA compensation
payments from CBY 1988 through 1998. In addition, we project the Agency will
pay approximately $389,093 over the next 10 CBYs if the claimant continues
to receive FECA compensation payments.
Contusion-related
claim, no medical-associated costs: In CBY 1998, a 58-year-old who
filed in 1989 received $26,120 in annual FECA compensation payments. We estimate
SSA paid this claimant approximately $217,580 in FECA compensation payments
from CBY 1989 through 1998. In addition, we project the Agency will pay approximately
$301,844 over the next 10 CBYs if the claimant continues to receive FECA
compensation payments.
Mental
Disorder-related claim, no medical-associated costs: In CBY 1998,
a 53-year-old employee who filed in 1993 received $51,614 in annual FECA compensation
payments. We estimate SSA paid this claimant approximately $284,501 in FECA
compensation payments from CBY 1993 through 1998. In addition, we project
the Agency will pay approximately $596,455 over the next 10 CBYs if the
claimant continues to receive FECA compensation payments.
As shown
in Figure 2, these cases can also be analyzed by geographic distribution to
identify potential regional differences. Providing data by geographic location
allows focusing of program and operational actions to enhance service delivery,
such as returning FECA claimants to work.
Figure 2.
Cases Receiving Compensation with no Medical Payments by SSA Region (N = 202)
Legend:
Region
I
Region II
Region III
Region IV
Region V
Region
VI
Region VII
Region
VIII
Region
IV
Region X
Region
XI
Conclusions
and Recommendations
Although
SSA now submits more timely FECA claims to DoL than it did in 1995, we found
SSA was still not effectively managing its FECA program. SSA’s failure to institute
adequate internal controls to govern and guide its multimillion dollar FECA
program and its inaction to correct previously reported program deficiencies
cast doubt on the Agency’s ability to properly develop and manage its FECA program.
Ineffective program management resulted in the Agency paying at least $239,560
in program costs for non-SSA employees in CBY 1998. This money has not, as yet,
been recovered. If SSA does not address long-standing and recently identified
program deficiencies, it may continue to pay these and other unnecessary FECA
program costs.
The Agency
lacked adequate internal controls related to its chargeback reports, third-party
liability processing, and case management. Further, SSA did not use information
technology that could increase FECA program effectiveness and efficiency. We
believe these deficiencies place SSA at risk for paying excessive and/or inaccurate
program costs. Based on prior costs, the Agency may expend approximately $233.7 million
over the next 10 CBYs for FECA program costs. Unless SSA improves
the quality of its implementation of the FECA program and record maintenance,
SSA will not be able to ensure that FECA program payments are proper and that
transactions are accurately recorded. Without effective program management,
SSA cannot determine whether its FECA program is operating effectively and efficiently.
We recommend
that SSA take the following corrective actions to improve the management of
its FECA program.
Acknowledge
and identify SSA’s management of the FECA program as a reportable material
weakness under the Federal Managers Financial Integrity Act (see Appendix
C).
Designate
a program official to oversee the Agency-wide management of SSA’s FECA program,
including developing and implementing, and monitoring compliance with SSA-specific
FECA program policy and operational procedures.
Develop
and implement internal controls to address the timely distribution, review,
and use of chargeback reports. Provide appropriate training to ensure workers’
compensation specialists understand the chargeback review process. As the
Agency develops its controls, SSA needs to effectively implement the recommendations
in our 1995 audit report, as previously agreed.
Verify
that all claimants for whom it is paying FECA program costs are actually SSA
employees.
Recover
all FECA program costs the Agency paid for non-SSA employees.
Monitor
compliance with SSA’s guidance on third-party liability processing.
Implement
necessary policy and procedural changes to periodically verify Agency case
files for recent (within the last 6 months) medical evidence to substantiate
continuing disability, especially for cases over 1-year old.
Develop
and implement an information system that uses information technology for the
management and monitoring of FECA cases.
Use a
verification process similar to the Nonagenarian Project as a way to continue
ensuring FECA benefit payments are not made to deceased beneficiaries.
AGENCY COMMENTS
SSA generally
agreed with the intent of our Recommendations. However, SSA did not specifically
concur with all of our Recommendations. The Agency agreed with Recommendations
3, 4, 5, and 7. SSA also agreed with Recommendation 1, but reported it has been
in compliance with the Recommendation since 1997. Regarding Recommendation 2,
SSA reported it had already implemented certain corrective actions. Although
SSA agreed with Recommendation 6, it commented that the responsibility for the
Recommendation rests with another Federal agency. Lastly, SSA disagreed with
the need for Recommendation 8. However, the Agency commented it will identify
and contact workers’ compensation recipients 100 years old or older. The full
text of SSA’s comments is included in Appendix C.
OIG RESPONSE
We acknowledge
the many "program improvements/management controls" SSA reports it has
implemented. Further, throughout this report, we discuss actions the Agency
has taken. These actions were taken before we issued our draft report but after
our January 18, 2001 briefing with Agency staff regarding FECA program management
deficiencies. We agree that FECA-related program changes were made. However,
at this time, we cannot assess the effectiveness of these changes since we did
not independently audit the identified program improvements/management controls.
During our
audit, we found no evidence that there was a program official specifically responsible
for overseeing Agency-wide management of SSA’s FECA program (Recommendation
1). We reviewed information concerning the Project Management Staff’s functional
responsibilities. Within this information, the duties identified for this Staff
did not include Agency-wide management of SSA’s FECA program. We found that
the Project Management Staff within SSA’s Office of Personnel was responsible
for developing Agency policies, providing advice and assistance to employees,
and acting as the liaison between SSA and DoL. However, we found that this Staff
was not monitoring Agency-wide compliance with its policies and procedures or
overseeing the regional FECA compensation specialists’ activities. In addition,
we were informed that the Project Management Staff was limited to overseeing
activities of FECA compensation specialists’ located at SSA Headquarters.
The Agency
commented that the responsibility for Recommendation 6 rests with DoL. However,
DoL policy states the employing agencies (like SSA) can obtain medical information
from DoL or the injured employee as often as necessary, within regulations,
to assess the possibility of return to regular or light duty. Because Agency
funds are used to pay FECA benefits, SSA should monitor the employee’s medical
status in order to avoid improper payments. Accordingly, SSA reported it will
issue a reminder to all workers’ compensation specialists to ensure that an
employee’s medical status is closely monitored and that recent medical documentation
is contained in SSA case files. Such actions are aligned with our recommendation.
In its comments,
SSA disagreed with the need for Recommendation 8. The Agency commented that
our report did not indicate any findings that FECA benefits were paid to any
deceased beneficiaries. However, SSA reported it will identify any workers’
compensation recipient 100 years old or older and will contact the recipient
to ensure continued payment is appropriate. Such actions are aligned with our
Recommendation.
Other
Matters
FECA Claimants
Opt for Continued FECA Benefits Rather than Collecting Retirement Benefits
If claimants
are concurrently eligible for FECA and retirement benefits, employees must choose
between the two, but the choice is not irrevocable. Claimants have the right
to elect the most advantageous monetary benefit. However, at retirement age,
a claimant must apply for retirement benefits even if s/he chooses to collect
FECA in lieu of retirement benefits.
In 1996,
the General Accounting Office (GAO) reported that older FECA beneficiaries comprise
a high percentage of cases on the long-term rolls and account for a substantial
portion of the FECA benefits paid for long-term compensation. In fact, 26,400
(60 percent) of the approximately 44,000 long-term beneficiaries receiving compensation
benefits in June 1995 were 55 years of age or older.
GAO reported
that critics of Federal employees’ benefits argue that FECA benefits should
not, in effect, be a substitute for retirement benefits because replacing take-home
pay creates an incentive for some beneficiaries to "retire" on the
FECA rolls. Because FECA benefits are often more generous and are exempt from
Federal taxes, the lifetime benefits create a long-term costly liability for
the Government.
SSA Paid
$4 Million for FECA Benefits to 146 Claimants Aged 65 and Older in CBY 1998
We believe
SSA’s FECA program has become a retirement system for some employees. We identified
235 SSA employees aged 65 and older. Over half (146 of 235) received FECA
benefits rather than retirement benefits. Of the $17.2 million paid to
DoL in CBY 1998, approximately $4 million was related to these 146 claimants.
Furthermore, 16 of the 146 claimants started receiving FECA benefits at age
65 or older.
Because
SSA and other Federal agencies incur annual FECA costs, SSA should work with
DoL to develop proposals for congressional consideration in modifying the FECA
program. A potential way to address this issue is to modify FECA legislation.
Specifically, FECA could be amended to require Federal employees apply for retirement
benefits. If an employee is eligible for retirement benefits, the employee should
be compelled to accept such benefits and FECA benefits should be terminated.
This would shift costs from FECA programs to the appropriate Federal employee
retirement programs.
On January
18, 2001, we initially briefed SSA’s Office of Personnel about developing such
a legislative proposal to modify the FECA program. Following our final briefing
on June 7, 2001, the Office of Personnel provided documentation dated December
5, 2000 showing it submitted a similar recommendation to the Federal Managers
Association concerning FECA program changes.
Appendices
Appendix
A – Prior Office of the Inspector General Audit
Appendix
B – Federal Employee’s Compensation Act Payment Projections
Appendix
C – SSA’s Comments
Appendix
D – OIG Contacts and Staff Acknowledgments
Appendix
A
Prior
Office of the Inspector General Audit
In 1995,
the Office of the Inspector General (OIG) issued the audit Social Security
Administration’s Management of Claims Filed Under the Federal Employees’ Compensation
Act (FECA) (A-13-92-00236). The objectives of this review were to:
Review
the Social Security Administration’s (SSA) procedures for verifying the accuracy
of FECA billings.
Determine
whether employees were returned to work as soon as possible.
Evaluate
the timeliness of claims processing.
Review
the coordination of FECA data with SSA’s safety program activities.
Determine
whether third-party liabilities were being investigated.
The audit
indicated that SSA needed to improve its oversight of the management of FECA
claims. Specifically, SSA did not:
Analyze
the Department of Labor (DoL) chargeback reports; therefore, it was not verifying
the charges for SSA employees were correct. In addition, SSA did not review
the chargeback report to ensure claimants were actually SSA employees.
Disseminate
the chargeback reports to the Department of Health and Human Services (HHS)
regions for their review and analysis.
Monitor
the employees’ medical status to return them to work, as required by the HHS
guidelines. Additionally, medical evidence, signed by the employee’s physician
in 26 cases, indicated the employees made sufficient recovery to return to
work. However, there was no indication the employees returned to work.
Establish
procedures requiring a periodic review of cases to determine whether an employee
could return to work.
Adopt
procedures to ensure FECA claims were handled on a timely basis.
Implement
procedures requiring that accident or injury reports be investigated when
there are indications a third person was responsible.
We recommended
that SSA (1) review each chargeback report to ensure all claimants were SSA
employees at the time of the injury and the charges are correct, (2) maintain
case files for 3 years after medical and compensation services cease, (3) review
cases to return employees to gainful employment as soon as possible, and (4)
review all cases for potential third-party liability and track recoveries of
overpayments by DoL.
SSA concurred
with all recommendations and stated it had already begun implementing the corrective
actions.
Appendix
B
Federal
Employees’ Compensation Act Payment Projections
The Federal
Employees’ Compensation Act (FECA) (5 U.S.C. § 8146a) states that compensation
payable due to disability or death occurring more than 1 year before March 1
of each year shall be annually increased. Using cost-of-living adjustment (COLA)
information provided by the Department of Labor, we conducted deflator/inflator
analysis.
Based on
this analysis, we developed two estimates for the four claimants with no medical-associated
costs (see page 13 of this report). For these claimants, we calculated
estimates for the value of payments received from the date the FECA claim was
filed through Chargeback Year (CBY) 1998 and the value of payments for CBYs
1999 through 2008.
To determine
the value of payments received through CBY 1998, we deflated the CBY 1998
figure by the COLA adjustment to estimate the prior year’s base payment. We
repeated this calculation until we reached the date the claim was filed, and
then we totaled the amounts. For the first year that benefits were paid, all
four claimants did not collect benefits during the entire year. Therefore, we
divided their estimated first year benefit amount by 12 to estimate the monthly
amount of benefits paid. We multiplied this monthly estimate by the actual number
of months the claimant received FECA benefits for their first year.
To estimate
the total value of payments from CBYs 1999 through 2008, we used the actual
COLAs from CBYs 1999 and 2000. We determined the average of the COLAs increases
from CBY 1991 through CBY 2000 (2.86 percent) and applied the average to the
CBY 2000 figure to determine the estimated CBY 2001 base figure. We repeated
this calculation through CBY 2008 and totaled the amounts.
Table 1
shows payment projections for the four FECA claimants from the date the claims
were filed through CBY 2008.
Table
1. FECA Payment Projections
Nature of Injury
Year
Claim Filed
Payment Received in CBY 1998
Prior
FECA Payments
Projected FECA Payments
Contusion-Related
Claim
1985
$25,782
$290,816
$297,938
Respiratory-Related
Claim
1988
$33,670
313,682
389,093
Contusion-Related
Claim
1989
$26,120
217,580
301,844
Mental-Related
Claim
1993
$51,614
284,501
596,455
Totals
$1,106,579
$1,585,330
To estimate
the total value of payments for future FECA program costs from CBY 2001 through
2010, we used the average of COLAs for CBY 1991 through 2000 (2.86 percent).
We applied this average to CBY 2000 to determine the estimated base figure
for CBY 2001. We repeated this calculation through CBY 2010 and totaled the
amounts.
Appendix
C
Agency
CommentsExcerpts from Office of Management and Budget Circular A-123
COMMENTS
ON THE OFFICE OF THE INSPECTOR GENERAL (OIG) DRAFT REPORT, "SSA’s MANAGEMENT
OF ITS FEDERAL EMPLOYEES’ COMPENSATION ACT (FECA) PROGRAM "
(A-13-99-91003)
We appreciate
OIG’s efforts in conducting this review and the opportunity to comment on the
draft report. However, we do not believe the report represents a complete and
accurate assessment of the Agency’s involvement in the FECA program as it exists
today. Specifically, the report fails to consider many of the program improvements/management
controls that were implemented prior to the issuance of this draft report. Following
are our comments on the recommendations.
Recommendation
1
Designate
a program official to oversee the Agency-wide management of SSA’s FECA program,
including developing, implementing, and monitoring compliance with SSA-specific
FECA program policy and operational procedures.
Comment
We agree
and have complied with this recommendation since 1997. The director of the Project
Management Staff, Office of Personnel, DCHR will continue to be the program
official overseeing Agency-wide management of the FECA program. SSA has already
developed guidance in all areas of workers’ compensation and will ensure that
the responsible program officials continue to place greater emphasis on monitoring
compliance of the SSA-specific FECA program policy/operational procedures.
Specific
improvements and internal controls that have been implemented in workers’ compensation
include, but are not limited to, the following. SSA:
Issued
national workers’ compensation policy in January 2000 to all SSA managers
and supervisors. The policy was also distributed in Braille format.
Began
sending periodic issuances in November 1999 to the field offices to provide
them with technical instructions, information and reminders. The issuances
included subjects such as how to review chargeback listings, third-party liability,
and MTAS codes to be used for workers’ compensation claimants.
Reduced
both workers’ compensation case processing time and lost production days.
Resolved
chargeback listing issues with the DOL to ensure SSA receives chargeback listings
timely and electronically (a proper format on a CD-ROM), in addition to a
hard copy, for identification purposes. We developed a centralized internal
control to electronically match DOL data with the Human Resource Management
Information System (HRMIS) data to distinguish SSA from non-SSA employees
who appear on the chargeback listing. (Refer to our comments regarding Recommendations
3, 4, and 5.)
Developed
an internal control process to notify DOL and SSA’s Office of Finance of any
non-SSA employees. This is to ensure that DOL removes non-SSA personnel from
future chargeback listings and notifies the Office of Finance to not remit
payment for those non-SSA personnel. (Refer to our comments regarding Recommendations
3, 4, and 5.)
Provided
each Servicing Personnel Office (SPO) with its specific chargeback listing
on CD-ROM using the data received from DOL for review, appropriate actions,
and to assist the SPO in returning to duty employees on long-term workers’
compensation.
Worked
with DOL to ensure that the most current workers’ compensation forms were
accessible on its website, while removing many obsolete forms. We have included
all the latest workers’ compensation forms on the SSA, Office of Personnel,
Intranet web site.
Developed
a customer satisfaction comment card for employees who receive assistance
from our workers’ compensation staff. Feedback thus far has been highly favorable.
Developed
the workers’ compensation web page that currently provides access on workers’
compensation policy, forms and frequently asked questions. In the near future,
the SSA workers’ compensation handbook will be available via the web page.
Recommendation
2
Develop
and implement internal controls to address the timely distribution, review,
and use of the chargeback reports. Provide appropriate training to ensure workers’
compensation specialists understand the chargeback report review process. As
the Agency further develops its guidance, SSA needs to effectively implement
the recommendations in our 1995 audit report, as previously agreed.
Comment
SSA has
already implemented an effective timeliness and accurate chargeback listing
process with DOL. The new process requires DOL to provide the chargeback information
to SSA on a CD-ROM. SSA matches the items from the DOL CD-ROM to the Human Resource
Management Information System (HRMIS) to ensure that all claimants are SSA employees.
(If a
non-SSA
employee is identified, SSA reports this information to DOL and instructs SSA’s
Office of Finance to not pay DOL for this individual). A CD-ROM is created for
each region with detailed instructions on how to review the information. SSA
will continue to routinely distribute chargeback listings on CD-ROM to regional
workers’ compensation staffs and require that each region report back to headquarters
within a specific timeframe on the outcome of the review.
The guidance
issued with each chargeback report is sufficient to ensure that workers’ compensation
specialists are aware of their role and responsibilities in reviewing the chargeback
listings. The guidance specifically points to publication CA-810, subchapter
9-4, issued February 1994, for detailed instructions on reviewing the chargeback
listings and procedures to report and correct billing errors. Also, SSA has
developed specific instructions for reviewing chargeback listings and will ensure
that these instructions accompany all chargeback listings when distributed to
the regions.
Many of
the audit report recommendations are the same as in the 1995 OIG audit report.
As indicated in our comments, the recommendations have either already been implemented
or are in the process of being implemented.
Recommendation
3
Verify that
all claimants for whom it is paying FECA program costs are actually SSA employees.
Comment
We agree
with this recommendation and, as stated in our response to recommendation 3,
we have a system in place that will ensure that FECA program costs are only
paid to SSA employees and/or their heirs/dependents, as appropriate.
Recommendation
4
Recover
all FECA program costs paid by the Agency for non-SSA employees.
Comment
We agree.
As previously mentioned in our response to recommendations 2 and 3, SSA notified
DOL and SSA’s Office of Finance to recover any monies paid to the nine non-SSA
employees identified on the chargeback listing for 1998. In addition, SSA has
notified DOL to remove those nine non-SSA employees from future chargeback listings.
The DOL has notified the Agency that the chargeback listing for chargeback year
2001 reflects credits based on our identification of non-SSA employees. However,
it is important to note that while SSA has notified DOL to remove those non-SSA
claimants from the chargeback listings, both at the regional and central level,
DOL continues to include them on chargeback listings.
Recommendation
5
Monitor
compliance with SSA’s guidance on third-party liability processing.
Comment
We agree
and will continue to closely monitor compliance with SSA guidance on third-party
liability processing. Although we have made further improvements to our existing
section on third-party claims in our workers’ compensation handbook/processing
manual, we issued supplemental guidance on this issue on June 13, 2001. The
workers’ compensation handbook will be on our workers’ compensation web page
once labor relation obligations are met. A reminder will be issued to all regional
workers’ compensation staff on the importance of identifying third-party claims
and the procedures for doing so.
Recommendation
6
Implement
necessary policy and procedural changes to periodically verify Agency case files
for recent (within the last 6 months) medical evidence to substantiate continuing
disability, especially for cases over 1-year old.
Comment
We agree.
However, the responsibility for this recommendation rests with DOL, whose regulations
assume responsibility to monitor the employees’ medical evidence and require
updated medical evidence to continue to award benefits for workers’ compensation.
In
January
2000, SSA requested that DOL amend their regulations to require that all workers’
compensation claims be submitted to DOL through the appropriate Federal Agency
(e.g., SSA). The DOL denied our request and reiterated its policy from Title
20, Code of Federal Regulations, Section 10.10, Custody of Records Relating
to Federal Compensation Act Matters, "All records, medical and other reports,
statements of witnesses and other papers relating to the injury…are the official
records of the Office and are not records of the agency…" Thus, if an employee
submits his/her medical documentation directly to DOL, SSA will not have a record
of the most current medical documentation. In an effort to address this concern
at the Agency level, we will issue a reminder to all workers’ compensation specialists
to ensure that an employee’s medical status is closely monitored and that recent
medical documentation is contained in SSA case files. However, this documentation
must be requested from the employee or DOL.
Recommendation
7
Develop
and implement an information system that uses information technology to manage
and monitor FECA cases.
Comment
We agree
and since 1997 have taken significant steps to evaluate and obtain a comprehensive
workers’ compensation case management and tracking system. In 1997 we starting
meeting with other Federal agencies (e.g., United States Postal Service, Internal
Revenue Service, Department of Agriculture, Veterans Administration and the
Department of Defense) to discuss their case management and tracking systems
and to determine if their systems would meet the needs of SSA. After a thorough
evaluation of those systems, we determined in August 2000 that the Department
of Defense (DOD) system, which is real-time, would allow for efficient case
management and tracking as well as management information reports.
The DOD
system is populated with weekly and/or biweekly downloads from DOL and can be
tied into SSA’s payroll system and HRMIS. The system will ultimately have the
capacity to allow the electronic processing of workers’ compensation cases and
provide a centralized workers’ compensation case management and tracking system
that would be populated with real time data on all SSA cases nationwide. This
would obviate the need for SSA’s regions and headquarters to maintain their
own tracking systems. However, at the time this system was previewed in August
2000, it did not meet SSA’s need for real-time data. The system was a disk-based
system that required the mailing of disks/CDs from DOL to DOD and then SSA,
and subsequently, to the SSA regions. In January 2001, the Internet-based system
became available,
and this
version met our operational needs. However, before the Agency can pursue funding
of
this system,
it must be modified for compliance with section 508 of the Rehabilitation Act.
We are currently working with DOD on the necessary modifications.
Recommendation
8
Use a verification
process similar to the Nonagenarian Project as a way to continue ensuring that
FECA benefit payments are not made to deceased beneficiaries.
Comment
We disagree
with the need for this recommendation. The subject audit report did not indicate
any findings that FECA benefits were paid to any deceased beneficiaries. However,
as part of the review of the chargeback listings, we will identify any workers’
compensation recipient
100 years
old or older, and will contact the recipient to ensure that continued payment
is appropriate.
Technical
Comments
Under the
Other Matters section, OIG presents a belief that FECA claimants opt for continued
FECA benefits rather than collect retirement benefits. OIG posits that SSA’s
FECA program has become a retirement program for some employees and cites that
SSA paid $4 million to
146 claimants
aged 65 and older in chargeback year 1998. OIG also suggested that, to resolve
this situation, SSA should work with DOL to develop legislative proposals for
congressional consideration in modifying the FECA program.
While we
are in agreement with OIG concerns, it is important to note that the 146 employees
identified by OIG were legally entitled to the workers’ compensation benefits
they received. Until the statute is changed to require employees to retire and
accept retirement benefits instead of workers’ compensation benefits, many injured
employees of retirement age will continue to collect workers’ compensation benefits,
since they are more generous than retirement benefits. However, because we share
this concern, in December 2000, we submitted a similar recommendation to the
Federal Managers Association, at its request, as a way in which the FECA program
could be modified.
Appendix
D
OIG Contacts
and Staff Acknowledgments
OIG
Contacts
Shirley
E. Todd, Director, General Management Audit Division (410) 966-9365
Carolyn Neuwirth, Deputy Director, General Management (410) 966-1404
Acknowledgements
In
addition to those named above:
Tracey
Edwards, Senior Auditor
Brennan Kraje, Statistician
Kim Beauchamp, Writer-Editor, Policy, Planning and Technical Services
For
additional copies of this report, please visit our web site at www.socialsecurity.gov/oig
or contact the Office of the Inspector General’s Public Affairs Specialist
at (410) 966-1375. Refer to Common Identification Number A-13-99-91003.
DISTRIBUTION
SCHEDULE
Commissioner
of Social Security 1
Management Analysis and Audit Program Support Staff, OFAM 10
Inspector General 1
Assistant Inspector General for Investigations 1
Assistant Inspector General for Executive Operations 3
Assistant Inspector General for Audit 1
Deputy Assistant Inspector General for Audit 1
Director, Systems Audit Division 1
Director, Financial Management and Performance Monitoring Audit Division 1
Director, Operational Audit Division 1
Director, Disability Program Audit Division 1
Director, Program Benefits Audit Division 1
Director, General Management Audit Division 1
Issue Area Team Leaders 25
Income Maintenance Branch, Office of Management and Budget 1
Chairman, Committee on Ways and Means 1
Ranking Minority Member, Committee on Ways and Means 1
Chief of Staff, Committee on Ways and Means 1
Chairman, Subcommittee on Social Security 2
Ranking Minority Member, Subcommittee on Social Security 1
Majority Staff Director, Subcommittee on Social Security 2
Minority Staff Director, Subcommittee on Social Security 2
Chairman, Subcommittee on Human Resources 1
Ranking Minority Member, Subcommittee on Human Resources 1
Chairman, Committee on Budget, House of Representatives 1
Ranking Minority Member, Committee on Budget, House of Representatives 1
Chairman, Committee on Government Reform and Oversight 1
Ranking Minority Member, Committee on Government Reform and Oversight 1
Chairman, Committee on Governmental Affairs 1
Ranking Minority Member, Committee on Governmental Affairs 1
Chairman, Committee on Appropriations, House of Representatives 1
Ranking Minority Member, Committee on Appropriations,
House of Representatives 1
Chairman, Subcommittee on Labor, Health and Human Services, Education
and Related Agencies, Committee on Appropriations,
House of Representatives 1
Ranking Minority Member, Subcommittee on Labor, Health and Human
Services, Education and Related Agencies, Committee on Appropriations,
House of Representatives 1
Chairman, Committee on Appropriations, U.S. Senate 1
Ranking Minority Member, Committee on Appropriations, U.S. Senate 1
Chairman, Subcommittee on Labor, Health and Human Services, Education
and Related Agencies, Committee on Appropriations, U.S. Senate 1
Ranking Minority Member, Subcommittee on Labor, Health and Human
Services, Education and Related Agencies, Committee on Appropriations,
U.S. Senate 1
Chairman, Committee on Finance 1
Ranking Minority Member, Committee on Finance 1
Chairman, Subcommittee on Social Security and Family Policy 1
Ranking Minority Member, Subcommittee on Social Security and Family Policy 1
Chairman, Senate Special Committee on Aging 1
Ranking Minority Member, Senate Special Committee on Aging 1
Vice Chairman, Subcommittee on Government Management Information
and Technology 1
President, National Council of Social Security Management Associations,
Incorporated 1
Treasurer, National Council of Social Security Management Associations,
Incorporated 1
Social Security Advisory Board 1
AFGE General Committee 9
President, Federal Managers Association 1
Regional Public Affairs Officer 1
Total
97
Overview
of the Office of the Inspector General
Office
of Audit
The Office
of Audit (OA) conducts comprehensive financial and performance audits of the
Social Security Administration’s (SSA) programs and makes recommendations to
ensure that program objectives are achieved effectively and efficiently. Financial
audits, required by the Chief Financial Officers Act of 1990, assess whether
SSA’s financial statements fairly present the Agency’s financial position, results
of operations, and cash flow. Performance audits review the economy, efficiency,
and effectiveness of SSA’s programs. OA also conducts short-term management
and program evaluations focused on issues of concern to SSA, Congress, and the
general public. Evaluations often focus on identifying and recommending ways
to prevent and minimize program fraud and inefficiency.
Office
of Executive Operations
OEO supports
the OIG by providing information resource management; systems security; and
the coordination of budget, procurement, telecommunications, facilities and
equipment, and human resources. In addition, this office is the focal point
for the OIG’s strategic planning function and the development and implementation
of performance measures required by the Government Performance and Results
Act. OEO is also responsible for performing internal reviews to ensure that
OIG offices nationwide hold themselves to the same rigorous standards that we
expect from SSA, as well as conducting investigations of OIG employees, when
necessary. Finally, OEO administers OIG’s public affairs, media, and interagency
activities, coordinates responses to Congressional requests for information,
and also communicates OIG’s planned and current activities and their results
to the Commissioner and Congress.
Office
of Investigations
The Office
of Investigations (OI) conducts and coordinates investigative activity related
to fraud, waste, abuse, and mismanagement of SSA programs and operations. This
includes wrongdoing by applicants, beneficiaries, contractors, physicians, interpreters,
representative payees, third parties, and by SSA employees in the performance
of their duties. OI also conducts joint investigations with other Federal, State,
and local law enforcement agencies.
Counsel
to the Inspector General
The Counsel
to the Inspector General provides legal advice and counsel to the Inspector
General on various matters, including: 1) statutes, regulations, legislation,
and policy directives governing the administration of SSA’s programs; 2) investigative
procedures and techniques; and 3) legal implications and conclusions to be drawn
from audit and investigative material produced by the OIG. The Counsel’s office
also administers the civil monetary penalty program.
For
our audit, we reviewed CBYs 1993 through 1998, which had program costs totaling
$98 million.