OVERSIGHT HEARINGS ON THE FEDERAL Part 1 TUESDAY, JULY 19, 1977 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMPENSATION, HEALTH AND SAFETY Washington, D.C. The subcommittee met, pursuant to recess, at 9:00 a.m., in room 2261, Rayburn House Office Building, Hon. Joseph M. Gaydos (chairman of the subcommittee) presiding. Members present: Representatives Gaydos, Sarasin, Le Fante, and Zeferetti. Staff present: Paul F. Dwyer, counsel; Marsha A. Gray, staff assistant; and James M. Stephens, assistant minority counsel. Mr. GAYDOs. The committee will be in order. This is a continuation of the oversight hearings on the Federal Employees' Compensation Act. The first witness today is the Honorable James V. P. Conway, Senior Assistant Postmaster General, Employee and Labor Relations, U.S. Postal Service. Mr. Conway. STATEMENT OF JAMES V. P. CONWAY, SENIOR ASSISTANT POSTMASTER GENERAL, EMPLOYEE AND LABOR RELATIONS, U.S. POSTAL SERVICE, ACCOMPANIED BY JOHN GENTILE, ASSISTANT POSTMASTER GENERAL, FINANCE, U.S. POSTAL SERVICE Mr. CONWAY. I am accompanied by John Gentile, our Assistant Postmaster General, Finance. Mr. GAYDOS. Let the record show the gentleman is accompanying you. Mr. CONWAY. Mr. Chairman and members of the subcommittee, my name is James V. P. Conway, and I am Senior Assistant Postmaster General for Employee and Labor Relations, U.S. Postal Service. I appreciate the opportunity to testify this morning on the experience of the Postal Service with the administration of the Federal Employees' Compensation Act. The Postal Service supports the objective of the act to protect the income of any employee who suffers a job-related traumatic injury or occupational disease. We also believe it is important that employees receive the benefits and services to which they are entitled. Workers' compensation is a significant part of the total employee benefits package, which includes both sick leave and health insurance. However, since the enactment of the 1974 amendments to the Federal Employees' Compensation Act, we have experienced some serious problems with certain aspects of the statute as well as its administration. Moreover, the amended Federal Employees' Compensation Act (FECA) has had a serious financial impact on the Postal Service. As shown in Exhibit I, our total workers' compensation payments have nearly quadrupled since FY 1973, from $46.8 million to an estimated $180.5 million in FY 1977. This increase reflects growing medical costs, increased postal salaries, and an ever rising number of claims. Part of this increase is due to inflation-the continuing costs for postal workers injured before postal reorganization have increased from $26.1 million to $35.4 million, despite the steady attrition of individuals eligible for those benefits. In respect to those benefits, the Postal Service is reimbursed through appropriations for these benefits, which are treated as liabilities of the former Post Office Department. The greatest increase in compensation costs has occurred as a result of claims paid to employees since reorganization. Exhibit I shows that these expenses have jumped from $20.7 million in FY 1973 to an estimated $120 million in FY 1977. Finally, our continuation of pay (COP) costs since the amendments to the act became effective in November 1974 have steadily grown from $7.1 million in FY 1975 to 25.1 million in FY 1977. It must be realized that unlike other Federal agencies which are reimbursed for compensation costs through appropriations, the Postal Service must pay the compensation costs for Postal Service employees out of the funds supplied by postal ratepayers. This obligation places a huge financial burden on the Postal Service and its customers, not only because injury claims and costs are rising each year but also because the liability for carried-over compensation benefits accumulates from year-to-year. The cumulative financial impact of these costs on the Postal Service is little short of staggering. As shown in Exhibit II, our accrued long-term liability for workers' injury compensation costs has been climbing steeply since the adoption of the 1974 amendments to FECA. We estimate that in FY 1977 this liability, which includes the estimated future costs for all active compensation cases, will reach the $1 billion mark for the first time. The consistent increase in the number of workers' compensation claims since the 1974 amendments to the FECA is reflected in Exhibit III. In FY 1974 there were 52,738 claims reported to the Department of Labor. In FY 1975 this number went up to 65,517, an increase of 24 percent. In FY 1976 the number of claims rose another 26 percent to 88,435. The trend is continuing, and we anticipate over 100,000 claims in FY 1977. An interesting phenomenon is the yearly drop in claims during the November-December Christmas mailing season, when an increased number of accidents would be expected because of the increased urgency of postal operations, the greater utilization of overtime, the employment of casual or part-time employees, and the frequent inclement weather conditions. The drop in claims during the Christmas season is even more remarkable when contrasted with the annual spurt in claims during January and February, when operating conditions are closer to normal and less overtime is available to employees. Exhibit IV presents another view of the steady increase in workers' compensation claims from November 1974, the effective date of the FECA amendments. This chart also reflects the annual jump in claims activity following the Christmas period. As I mentioned, our costs for continuation of pay during the first 45 days after an injury have increased steadily since the 1974 amendments. Exhibit V traces this figure from December 7, 1974, to March 25, 1977. The immediate increase in COP payments in the first few months following the amendments to the Act may be attributed to increased employee awareness of available benefits. However, a trend of increasing payments over a longer period may also indicate abuse of the liberalized benefits available under the new provisions. The nature of the injuries reported by postal employees makes it difficult to determine clearly from those injuries whether there is significant abuse of the amended Act. As shown in the figures for calendar year 1975 presented in Exhibit VI, most claimed injuries are to the back area (25.9 percent), fingers and hands (9.8 percent), or lower extremities (31.8 percent). I would note that injuries to these areas are not easily verified, and may give rise to unjustified or inflated claims for benefits. The House Committee on Government Operations addressed this problem in its October 6, 1976, report on the administration of FECA, House Document 94-1757. The report pointed out that most of the growth of claims was due to lower back strains and similar soft tissue injuries which often could not be confirmed by objective medical findings. It further suggested that in the absence of other factors an increase in lower back complaints might spring from greater worker awareness of compensation benefits. Exhibit VII, a companion to Exhibit VI, relates injuries to type of event. Manualhandling of material (29.8 percent), falls (13.4 percent), striking against material or equipment (13.4 percent), and slips without falls (10.7 percent) account for a heavy percentage of claimed injuries. In contrast, vehicle accidents, which generally involve witnesses and objective evidence, account for only 2.7 percent of injury claims. Exhibit VIII shows the use of the new continuation of pay provisions in the amended Act by group of employees. The greatest number of COP hours per 100 work hours are used by those employees who are exposed to lifting, slips, and falls. In the first six accounting periods of FY 1977, mailhandlers utilized .66 COP hours per 10 work hours, carriers used .62 COP hours, and vehicle maintenance personnel used .52 COP hours. In contrast, clerks used only .22 COP hours, and casual employees of all crafts combined used only .25 COP hours per 100 work hours. My somewhat extended discussion of the types of injuries claimed by postal personnel, the types of events causing those injuries, and 94-539 - 78 - 21 the groups of employees susceptible to those injuries is not intended to impugn broadly the honesty of postal employees. However, our field managers and our employees are increasingly advising us of claims which are at best questionable. Every fraudulent or questionable claim which results in the award of unjustified benefits has a corrosive effect on the morale of the vast majority of postal employees, supervisors, and managers who are doing an excellent job. Moreover, since the 1974 amendments to FECA it is becoming increasingly difficult to relate data concerning safety and accidents in the Postal Service to injury and compensation statistics. It is axiomatic that an unsafe working environment would result in more accidents or at least expose more employees to dangerous situations. There should be a close relationship between exposure, accidents, and injuries. However, as shown in Exhibit IX, this is not the case in the Postal Service. The fact is that the Postal Service is progressively becoming a safer place to work, with declining hours of exposure and numbers of accidents, yet the numbers of disabling injuries and lost work days are climbing. The number of accidents has declined from 84,290 in FY 1970 to 55,467 in FY 1976, and the number of manhours of exposure has declined from 1.40 billion to 1.26 billion. In sharp contrast, in the same period the number of injuries has more than doubled from 16,838 in FY 1970 to 35,282 in FY 1976. Similarly, the number of lost workdays per million hours has risen from 12 to 28. The exception to this disturbing trend is the pattern of motor vehicle accidents-again usually involving witnesses and objective evidence-which have decreased every year from 21.4 per million miles driven in FY 1970 to 7.5 in FY 1976. A further indication of the improving safety record of the Postal Service is contained in statistics compiled by the Occupational Safety and Health Administration (OSHA) for calendar year 1975. These OSHA statistics, contained in Exhibit X, show that in 1975 the Postal Service, with 25.9 percent of all civilian employees, accounted for 28.6 percent of the injuries and 16.7 percent of the fatalities. In contrast, the Defense Department, with 34.4 percent of civilian employees, sustained 47.2 percent of the injuries; and the Department of the Interior, with 2.7 percent of the employees, accounted for 20.4 percent of the fatalities. As shown in Exhibit XI, the same OSHA report indicates that the injury incident rate for the Postal Service declined from 6.8 injuries per 100 full-time employees in calendar year 1973 to 6.4 in calendar 1975. In the same period the overall Federal injury rate rose from 4.4 per 100 employees to 5.3. In connection with these figures, it should be noted that the work performed by postal employees is not generally comparable to the administrative, clerical, or technical tasks of the typical Federal employee. Postal employees work in a light industrial setting, or outdoors, and are exposed to many unique occupational hazards, such as dog bites and bee stings. Viewed in this perspective, the Postal Service safety record is quite good. I hasten to add that doesn't mean we don't continually strive to improve it. We believe that the increasing numbers of injury claims and spiraling costs I have discussed are attributable to two major factors the liberalized provisions of the amended Act, and the manner in which OWCP is administering the statute. We believe that some of the problems we are facing can be alleviated by statutory and administrative changes. First, we advocate the return of the 3-day waiting period to the beginning of the continuation of pay period. We belive that moving this waiting period to the end of the 45-day COP period has exposed the claims system to an overload of cases which had previously been handled either by, in the case of a minor injury, immediate treatment and return to work, or the injured party's use of sick leave. In most cases, we believe the use of up to 3 days' sick leave is not a significant hardship. Certainly the minimal burden that this requirement places on an injured employee does not balance the effects of burdening the compensation system with a host of minor cases which severely impair its capacity to deal with serious injuries. In a word, the system is overburdened with a lot of claims which should not be there. Second, we believe the statute should be amended to allow the employer, as well as the employee, to challenge the determinations of an OWCP District Office. In most cases an OWCP determination is not subject to serious dispute. However, as matters now stand, unless the District determination is adverse to the employee, there is no right of review at the national level to insure uniformity of adjudication standards. At the very least, simple equity demands that OWCP regulations be revised to permit the employer to submit additional evidence and argument, and receive a clear statement of the basis for the award, in any review of an OWCP District determination initiated by an employee or by the Secretary of Labor. There are other important improvements which could be made simply by revising OWCP regulations and standards. We believe it is essential to establish more precise standards for determining whether an injury is job-related. The problem of establishing causation is especially acute if the injury claim is based on the aggravation of a pre-exisiting condition. The fact that throughout the population, disease and disability exist entirely apart from work-association must be recognized and defined to permit administrative distinction from those conditions clearly related to the work environment and under employer control. Similarly, the definition of traumatic injury needs to be nailed down to a greater degree. Although we do not wish to burden the subcommittee with a recitation of "horror stories", our files contain numerous examples of awards which we believe are completely unjustified under any common sense interpretation of the facts. As recommended in the 1976 report of the Committee on Government Operations, OWCP should afford employers a reasonable opportunity to examine and verify the records on which compensation payments are based. The Postal Service has been engaged in a 2-year battle with OWCP over the accuracy of the annual chargeback billing for postal employees' compensation payments. Despite the demonstrable inaccuracy of the billings to the Postal Service, |