The Subcommittee on Workforce Protections held a hearing on May 20 to review the Department of Labor’s (DOL) proposal that would cut workers’ compensation benefits for some federal workers who have been disabled due to job-related injuries.
Democratic committee members rejected the proposal, claiming it would leave most workers considerably worse off than if they had not incurred the injury. Rep. Robert C. (Bobby) Scott of Virginia, a ranking member of the full committee, and Rep. Frederica Wilson of Florida, a ranking member of the subcommittee, emphasized how essential the Federal Employees’ Compensation Act (FECA) is to federal workers and their families.
“I am disappointed that the Department of Labor would come forward for the third time in the past five years with a proposal to cut benefits for injured workers that is not evidence-based, and whose justification has been completely debunked by the Government Accountability Office,” said Scott. “I find it incomprehensible that we are now considering whether to take $500 million from middle class workers – and their families – who have suffered a disabling work-related injury while doing their jobs in service to the American people.”
The Department of Labor’s proposal would reform FECA by making changes to, among other things:
- Wage replacement benefits for injured workers;
- Benefits for widow(ers) and children of those killed on the job; and
- Up to 33 percent of benefits for all permanently disabled workers at the time they reach retirement age.
“We cannot make budget cuts on the backs of injured federal workers and families who have lost a loved one,” said Wilson. “As regrettable as it is, workplace injuries and deaths do occur. When they do, we must ensure that the workers who have committed themselves to federal service are honored by a system that does not leave them and their families financially worse off than if the injury or death had not occurred.”
Republicans on May 20 proposed adopting some or all of the cuts as part of their budget reconciliation package. Among those affected by the cuts are several etter carriers and the widow of a federal prison guard who attended the hearing.
OSHA: Injured Workers Suffer Financial Losses
Currently, claimants who have dependents to support receive wage-loss compensation of 75 percent. DOL has proposed reducing that to 70 percent and increasing the wage-loss compensation for claimants without dependents from 66.66 percent to 70 percent. Some proposals have suggested reducing wage-loss compensation for all injured workers to 66.66 percent. Proponents claim that a 75 percent wage-loss compensation creates a disincentive for workers to return to work.
Ironically, back in March, OSHA issued a report, “Adding Inequality to Injury: The Costs of Failing to Protect Workers on the Job,” that noted the heavy costs work injuries and illnesses impose on workers, families and the economy, stating, “Statistics are people with the tears washed off.”
The report from OSHA notes that on average, a worker who is seriously injured will earn 15 percent less over a 10-year period and will bear 50 percent of the costs associated with that injury.
“The costs of workplace injuries are borne primarily by injured workers, their families, and taxpayer-supported components of the social safety net,” wrote Dr. David Michaels, assistant secretary of Labor for Occupational Safety and Health, in the report. “These injuries and illnesses add to the pressing issue of income inequality because they force working families out of the middle class and into poverty, and keep the families of lower-wage workers from ever getting out.”
Leonard Howie, director of the Office of Workers’ Compensation Programs (OWCP); Scott Dahl, inspector general (DOL); Andrew Sherrill, director of Education, Workforce & Income Security, Government Accountability Office (GAO); and Ron Watson, director of retired members, National Association of Letter Carriers, all testified at the May 20 Congressional hearing.
Several injured mail carriers and their family members accompanied Watson to the hearing. He told the committee members some of their stories. Dan Hohenstein, for example, was a letter carrier in Arvada, Colo. In January 2011, he was crushed by an oncoming vehicle as he was sorting mail at the rear of his postal vehicle. He suffered multiple fractures in his legs, a torn artery and muscle and ligament damage, according to Watson.
Hohenstein returned to part-time work in July 2012 and full-time work in August 2014. Medical reports in his file reflect that his surgeons “repeatedly expressed astonishment at his return to work,” Watson testified.
According to Watson, Hohenstein’s case supports the contention that workers’ compensation only partially covers the costs experienced by injured workers and their families.
In order to receive wage-loss compensation, a worker like Hohenstein must be in a leave without pay (LWOP) status, said Watson. Upon placement in an LWOP status by the employing agency, the injured worker loses the Thrift Savings Plan (TSP) 5 percent matching funds, the financial benefit of sheltering income in the TSP, credit towards their Social Security benefits, overtime opportunities, promotion prospects and other pay-increase opportunities.
Had Hohenstein not suffered that catastrophic injury in January 2011, during the period beginning with his injury until he returned to full-time work in 2014, “he would have earned tens of thousands of dollars in overtime. He would have received thousands of dollars in matching TSP funds from the Postal Service. He would have banked thousands of dollars of value in sick and annual leave,” said Watson. “He lost all of those benefits and more, solely because he suffered an on-the-job injury.”
In other words, the current 75 percent wage-loss compensation doesn’t begin to cover the financial loss suffered by injured employees, said Watson. “The argument that the 75 percent wage-loss compensation rate is so high that it constitutes a disincentive to return to work founders in the absence of evidentiary support and in the presence of LWEC reductions and significant loss of benefits."
DOL: Program Paid Nearly $3 Billion in 2014
DOL Inspector General Scott Dahl testified that DOL administers several programs and statutes designed to provide and protect the benefits of workers. FECA is a comprehensive workers’ compensation law covering almost 3 million federal and postal workers around the world. FECA provides wage-loss compensation, payment for medical treatment, return-to-work assistance and vocational rehabilitation to civilian employees of the federal government injured at work and to other certain designated groups. In the event of death, FECA also provides ongoing monetary compensation to dependents.
“FECA benefits are paid from the Employees’ Compensation Fund, which is primarily funded through chargebacks to the federal agency that employs the injured or ill worker,” Dahl testified. “Therefore, the FECA program affects the budgets of all federal agencies and quasi-federal agencies, such as the United States Postal Service. For chargeback year 2014, the FECA program provided almost $2.9 billion in compensation for work-related injuries or illnesses.”
Dahl noted issues with the integrity of the program – such as an inability to verify if claimants were employed during the time they were receiving benefits – that contributed to fraud. In one such case, he noted, “one of our investigations identified that a licensed vocational nurse who was supposedly injured and unable to work failed to disclose to OWCP that for more than three years she had earned income working for several health care providers. As a result, the nurse received more than $98,000 in FECA benefits to which she was not entitled. In another case,” said Dahl, “we identified a food inspector with the U.S. Department of Agriculture, who failed to notify OWCP of her employment at a high school. For more than five years she fraudulently collected more than $52,000 in benefits to which she was not entitled.”
If Social Security wage information was available to OWCP and the inspector general’s office, it is possible that the fraud would have been detected and addressed sooner and perhaps prevented, theorized Dahl.
Currently, the department only can access Social Security earnings information if the injured worker gives it permission to do so. “Obviously, Mr. Chairman, claimants who are defrauding the FECA program are unlikely to willingly grant OWCP the authority to access information about their earnings,” Dahl testified.
Border patrol agents, mail carriers and other federal workers “deserve fair compensation benefits for disability due to injuries sustained while in the performance of their duty. The federal government should also pay for their rehabilitation, medical, surgical and other necessary medical expenses,” Dahl noted. However, the Department of Labor “must also strive to ensure that compensation benefits are only paid to those who are truly injured and unable to work, and medical benefits are paid for necessary services that were actually provided.”
