the Department of Labor has repeatedly failed to conduct acceptable audits of cases for which the Postal Service has been billed. To focus the attention of the Department of Labor on this problem, the Postal Service has been forced to withhold a portion of its annual reimbursement for workers' compensation payments. We regret that past circumstances have compelled us to adopt this course, but we have been left with no other method to obtain the cooperation of the Department of Labor in this area.

In this regard, I should point out that we are heartened by the recent determination of the Department of Labor to overhaul its administration of workers' compensation programs, as evidenced by the report of the 1976 Labor Department FECA task force and the recent statements of Assistant Secretary Elisburg. We are eager to cooperate with the Department of Labor in bringing about major recommendations of the 1976 task force, such as the development of medical fee schedules to guide field offices processing claims, and the creation of an investigative staff and a system of internal audits to control fraud at the District level. We believe that modifications to the compensation system such as these will help resolve our problems with the rising number and cost of claims.

Mr. Chairman, this concludes my prepared statement. At this time I would be glad to answer your questions. [The exhibits referred to follow:]

Exhibit I

TOTAL U.S. POSTAL SERVICE
WORKERS COMPENSATION PAYMENTS
FY 1973 THRU FY 1977

MILLIONS OF S

*ESTIMATED BASED ON INTERIM DATA FOR FIRST HALF OF FY 1977

FY 1977*

Exhibit II

USPS ACCRUED LONG-TERM LIABILITY
FOR WORKERS INJURY COMPENSATION

FY 1972

FY 1973

FY 1974

FY 1975 FY 76 TQ

FY 1977 *DETERMINED BY MEANS OF ESTIMATION MODEL DEVELOPED IN COOPERATION WITH ACCOUNTING FIRM OF ERNST & ERNST (Does not include Continuation of Pay).

NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

Exhibit IV

NUMBER OF U.S. POSTAL SERVICE WORKERS COMPENSATION CLAIMS REPORTED BY THE DEPARTMENT OF LABOR

U.S. POSTAL SERVICE COST

FOR CONTINUATION OF PAY UNDER FECA
DECEMBER 7, 1974 (A/P 7) TO MARCH 25, 1977 (A/P 6)

Motor Vehicle accident reporting on January 1, 1973 Increased from $1.00 to $100.00,
the minimum for reportable accident. Reporting system charged by OSHA requirement
to make USPS compatible with other Federal agencies.

/oWCP regulations were liberalized November 6, 1974 to provide for 45 days continuation

of pay: