OVERSIGHT HEARINGS ON THE FEDERAL Part 1 WEDNESDAY, JUNE 8, 1977 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMPENSATION, HEALTH AND SAFETY Washington, D.C. The subcommittee met, pursuant to recess, at 9 a.m., in Room 2257, Rayburn House Office Building, Hon. Joseph M. Gaydos (Chairman of the subcommittee) presiding. Members present: Representatives Gaydos, Murphy, Zeferetti, Myers, and Sarasin. Staff present: Bernard Mandella, staff director; James M. Stephens, assistant minority counsel; Marsha Gray, staff assistant. Mr. GAYDOS. The subcommittee on Compensation, Health and Safety will be in order. To establish a quorum, let the record show that Mr. Sarasin and Mr. Gaydos are here. Others are expected. We will recess for 3 minutes until the witness does appear. The committee will stand in recess. [Recess.] Mr. GAYDOS. On behalf of the committee, I would like to welcome you. Mr. Sarasin was here. He had a previous commitment. He did want to extend to you congratulations on your statement because he read it yesterday. Mr. WHITEHURST. Thank you. Mr. GAYDOS. He said he thought it was quite meaningful and would be helpful. Counsel is here representing Mr. Sarasin. He may have a question or two. I have a few questions. We are starting at 9 o'clock this morning and I appreciate your promptness because you aren't too late. Mr. WHITEHURST. I appreciate that, Mr. Chairman. I really do. STATEMENT OF THE HON. G. WILLIAM WHITEHURST, A REPRESENATATIVE IN CONGRESS FROM THE STATE OF VIRGINIA, ACCOMPANIED BY DONNA WOOTEN, CASE WORKER, OFFICE OF CONGRESSMAN WHITEHURST Mr. WHITEHURST. With your permission, I will begin. I appreciate very much having this opportunity to testify concerning the administration of the Labor Department's Office of Workers' Compensation Programs. I can think of no other program more in need of Congressional review, and the members of this subcommittee should be commended for holding these hearings and exercising your oversight authority. During my five terms in Congress, I have never encountered another Federal program which equals the unresponsiveness to the needs of the people it serves, the incompetence, and the general disarray of the OWCP. I am hopeful these hearings will spur improved management of the program and perhaps lead to legislation to remedy its blatant flaws and abuses. My district has a large number of Federal workers, most of whom are employed at industrial facilities, such as the Norfolk Naval Shipyard and the Norfolk Naval Air Rework Facility. I first became aware of the problems within OWCP early in 1975 when I began receiving a torrent of requests for help from workers at these installations unable to obtain payment for injuries incurred on the job. This flood of constituent complaints and requests has continued steadily ever since. Almost every case involved months and even years of delay in settling the claim. It is not at all uncommon for OWCP employees to fail to answer letters or return telephone calls, misplace case files for months at a time, and even lose the files entirely. At the present time, my office has 102 claims which have been pending with OWCP for a substantial period of time. One of these claims was actually filed in 1971, and several others were submitted in 1974 and 1975. The Federal installations in my district have tried to process the claims expeditiously. The blame for the delays rests squarely with OWCP. This OWCP incompetence has resulted in needless human suffering. Many of my constituents have been forced to borrow money and even resort to welfare for subsistence while their claims were pending. Others have been subjected to lawsuits for non-payment of bills. One of my constituents suffered a knee injury at the Norfolk Naval Shipyard in March, 1976. He required surgery to repair the damaged knee, and the hospital submitted bills to OWCP on four occasions between May, 1976, and March, 1977. Finally, the hospital threatened to sue the constituent, and he contacted my office for help. When my staff contacted OWCP, we were told that OWCP had no record of the hospital bills. My staff then asked the hospital to submit another bill, and OWCP received this fifth bill in April. Payment has still not been made, and the hospital has now asked its attorney to take legal action against my constituent. Another constituent filed a claim for asbestosis in June, 1975. This disease caused his death in January, 1976. To date, his widow has not received any compensation, although OWCP finally approved the claim in November, 1976. When OWCP approved the claim, the Civil Service Commission immediately stopped all retirement annuity payments. Consequently, the widow has received absolutely no income since December, 1976. She has been able to survive by using the savings she and her husband had set aside for the education of their children. I will not belabor the subcommittee with a long list of "horror stories" resulting from OWCP's failure to meet its responsibilities. But, I would emphasize that my files are filled with cases of similar hardships caused by OWCP's mismanagement. After my initial experience with the difficulties encountered by deserving Federal workers in obtaining settlement of their claims, I learned of another possible effect of OWCP's incompetence. Federal workers began informing me that some of their co-workers were abusing the program by exaggerating or feigning hearing loss and other disabilities. Hearings conducted last fall by the House Government Operations Committee and a recent network television program seem to confirm these abuses. Fraudulent claims result in a significant waste of taxpayers' dollars, have a corrosive effect on Federal employee morale, and clog the system, contributing to the lengthy delays in settlement of needy and deserving workers' claims. If it is determined that widespread abuse exists, Congress must take all posible action to root it out. In my view, the responsibility for the deterioration of the Federal workers' compensation program lies with the Labor Department officials. For years, they ignored clear signs of impending disaster. In fiscal year 1970, benefit payments totalled $128 million. By 1976, payments had jumped to $475 million, with the Labor Department itself projecting a yearly cost of $1 billion by 1980. The number of new claims increased from 17,795 in 1970 to 35,398 in 1975. The number of backlogged claims skyrocketed from 15,677 in 1971 to 62,945 by the end of 1975. Yet, despite this dramatic increase in workload, the number of employees to administer the program increased only marginally-from 441 in 1971 to 473 in 1975. Moreover, there has been no training program for claims examiners, no investigative personnel, and few medical personnel. Furthermore, the recruitment program for the crucial claims examiner positions has been too narrowly focused on promotion from within the ranks. The result has been an organization filled with individuals not competent to perform the difficult tasks required of them. The lack of preparation and training of these OWCP personnel has led to their discontent and, unfortunately, their propensity for taking out their frustration on needy Federal workers. After receiving strong criticism from individual members of Congress, a Congressional committee, the General Accounting Office, and the news media, the Department of Labor has belatedly taken initial steps to improve the program's operation. In April, 1976, a Hearing Loss Task Force was implemented to clear up the horrendous backlog of hearing loss claims. In June of last year, a task force began a major study of OWCP. The report was completed in December and it contains 33 worthy recommendations. Two weeks ago, I received, along with the members of this subcommittee and other interested members, a letter from Secretary Marshall pledging to implement quickly these improvements. In addition, the Department of Labor finally requested 123 additional personnel earlier this year, and this request has now been granted by the Congress. While these actions, hopefully, represent a turning point in the OWCP performance, it is important to remember that there has been no tangible evidence of improvement as yet. Consequently, we must continue to oversee the program to insure that the plans for better recruitment and training of personnel, computerizing of the case handling process, and other proposals are effectively implemented. In addition, several reforms could require further legislative action. For example, it is quite likely that even the 123 additional personnel will not be sufficient to deal with the mammoth caseload, and we might have to appropriate additional funds for more manpower. This would be money well spent if it resulted in a lessening of the human suffering and apparent fraud which are now plaguing the program. There has been considerable support for an adjustment to the 45day continuation of pay provision included in the 1974 amendments. This provision was adopted with the valid purpose of mitigating the impact on the Federal worker of the long time lag between the filing of a claim and its processing by OWCP. However, it now appears that continuation of pay is being abused by some workers who are taking 45 days paid leave for relatively minor injuries. One way to help resolve this difficulty is to reinstate the 3day waiting period before compensation payments begin. Under this system, a worker would lose 3 days wages when he first claims a disability. If the disability lasts 2 or 3 weeks, he would regain the 3 days of lost wages. This system is common to all State workers' compensation programs, and it would help discourage the further increase in claims for insignificant injuries. I would like to mention one item of particular concern to methe tremendous proliferation of hearing loss claims. A Norfolk newspaper recently reported that $20 million in hearing loss claims have been filed by workers at the Norfolk Naval Shipyard since 1973. Similar huge payments have been made at other Federal installations throughout the country, especially at Navy shipyards. At the present time, there are approximately $67 million in pending hearing loss claims at OWCP. The Federal hearing loss payments far outstrip payments made by States to private shipyard employees. A major reason for this is the extremely liberal standards applied by OWCP until quite recently. Under pressure from the GAO, OWCP has reverted to the formula approved by the American Medical Association and used by all States and the Veterans Administration. The GAO has estimated that adoption of the AMA formula will result in a savings of $9 million in borderline claims now pending. Another action which might be taken to eliminate questionable claims is to require testing by more than one specialist. It has been demonstrated that two tests of a single claimant can show considerable variation in hearing loss. Thus, the awards should not be based on a single examination. In addition, more detailed information should be required on the claimant's exposure to noise. Occasional exposure to loud noise is not sufficient to cause a hearing loss. Thus, evidence of exposure is valuable in determining whether the hearing loss is work related or is caused by aging or normal noise exposure. Let me make clear my strong belief that most of the hearing loss claims are valid. The most effective way to reduce these claims is to insure that Federal agencies require safety precautions such as wearing ear protection and rotation of employees away from noise areas. However, it also appears that OWCP has not taken adequate precautions to guard against payment of unwarranted claims, and its hearing loss procedures should be tightened. Mr. Chairman, the abysmal failure of the Labor Department to manage the Federal workers' compensation program properly has resulted in two major problems. First, thousands of needy and deserving Federal employees have been denied compensation for extended periods of time. Second, there is a strong possibility that Labor's sloppy procedures have allowed the payment of unwarranted claims. Both the Federal workers and the American taxpayers deserve better. I am hopeful these hearings will shed light on the management problems and will lead to the high standard of efficiency and competency which we should expect from Federal programs which relate so directly to the welfare of the American people. Mr. Chairman, I am grateful to you for the opportunity to submit this statement. I might add that I have had no experience in dealing with constituent cases which have caused me greater aggravation than these. My staff has called. I have called, and the sense of frustration all of us have felt has just been unparalleled by any other problem we have had involving casework. Mr. GAYDOS. Congressman, on behalf of the committee, and personally, I would like to thank you for a statement that is most meaningful, well prepared, and right to the point. I think it is one of the better statements we have had before the committee. Mr. WHITEHURST. I have been waiting for a long time for somebody to hear it. Mr. GAYDOS. Let me ask you this: I notice you say on page 3 of your statement, you emphasize that "The files are filled with cases of similar hardships caused by mismanagement." Would those be made available to the committee should we desire? Mr. WHITEHURST. Absolutely. I would be pleased to submit those. Mr. GAYDOS. I am very glad to hear that you have no hesitation and I assure you that they will be used properly. Mr. WHITEHURST. Yes, sir. Mr. GAYDOS. We have to have that documentation because we must respond when we have the administration in. We must respond. I presume their manner of defense will be to name names and case files, along those lines. Mr. WHITEHURST. If you will have your staff contact my office, we would be pleased to submit those to you. In fact many more than just the two cases I mentioned. Mr. GAYDOS. Congressman, you suggest on the 45-day continuation of pay provisions that if we had a hiatus in there of, say, 3 days, that it might have some effect. Could you explain that a little more? I am doubtful myself about that because they are going to get those 3 days later on. Mr. WHITEHURST. The States use this, and the States find that it is fairly successful in preventing frivolous claims being submitted. If somebody feels that he is going to be out of pocket for a while, he will perhaps be discouraged from submitting a claim like this. |