requirements so lax that some employees were prone to be dishonest in their claim. OWCP became a conduit to disperse Navy funds without rationale or fiscal responsibility. When naval shipyards and concerned citizens began to complain, OWCP became more frugal, so much so that the average payment to each claimant has been reduced from $14,300 to $7,600. In addition, the number of hearing loss claims being filed each month at this shipyard have also been drastically reduced from 250 in October 1974 to only 3 in December 1977. In fact, a few employees have withdrawn their hearing loss claims probably due to the publicity in our local newspapers.

During the trial, it was correctly inferred by Judge Clarke that the (root) problem is that the government makes the money too easily obtainable by ineptly processing claims and not having adequate checks and balances to ensure that fraudulent claims are not paid. Judge Clarke's statements "the government almost strew gold in his path so that he could pick it up without any trouble," "just because the government is stupid, you're not supposed to steal from them," and that "the government couldn't care less" appear to be true, at least on the surface.

As of 1 January 1978, employees at the Norfolk Naval Shipyard have been paid $22,196,516 which is the equivalent of a complex overhaul and modernization of a guided missile destroyer. Claims at all naval shipyards add up to approximately $100 million dollars. These funds have been siphoned away from the Navy's needs to provide a modern defense against the Soviet threat. I would like to quote from the October 6, 1976 report of the House Subcommittee of the Committee on Government Operations, ** current trends in the scheduled award program pose the danger of long-term liability for the compensation fund. Scheduled awards for loss of bodily functions which are paid even when the worker's ability to earn a living is not impaired are sometimes improperly viewed as a bonus program as evidenced by the hearing loss claims. Present hearing loss criteria suggest a proclivity on the part of OWCP to extend the scope of compensation. The test measurements, the formula for computing loss, and test administration, all indicate tendency toward selecting those criteria that increase the award without due regard for persuasive evidence to the contrary. Studies of approved claims show that too many claimants are being compensated and that they generally are being compensated at a rate higher than that provided by any other compensation program

In November 1974, the Federal Employees' Compensation Act (FECA) was amended to ensure that workers received fair compensation for time lost as a result of a bona fide occupational injury. Please note, however, that these 1974 amendments have created a system that severly abuses the FECA. In particular, I refer to the amendment authorizing 45 days of continuation of pay.

It is evident that present laws governing FECA are too loose to permit stringent application. As it is today, it invites malingering. Moreover, OWCP has not shown competence in administering the compensation progam. On July 19, 1977, my safety director appeared before the Subcommittee on Compensation, Safety and Health of the Committee on Education and Labor. During this appearance, he made the following recommendations that need to be adopted if the compensation progam is ever going to be controlled and badly needed defense dollars are not to be given away needlessly:

Reestablish the three day waiting period before an employee qualifies for 45 days of continuation of pay (COP). Since this waiting period was removed, the number of COP cases at this shipyard alone have increased at least by 25 percent. The hardship of using three days of sick leave does not justify overloading the system with minor cases. This effort would better be spent on truly serious injuries. Furthermore, it serves as an incentive for employees to have minor injuries treated at the shipyard clinic rather than by their private physician.

Clarify the definition of a traumatic injury so that employees with known arthritic conditions and degenerative disc do not qualify for COP. În 1977, out of 1,086 COP cases at this shipyard, 591 were due to back/muscle strain injuries.

The activity paying the 45 days of COP should be able to controvert an employee's claim. Presently, this shipyard can only recommend that a claim be controverted then OWCP either sustains or overrules the controversion. At the very least, the activity should be able to challenge OWCP's ruling.

OWCP should write a manual on compensation. This would minimize the confusion now rampant throughout the system.

The employer be permitted to have an injured employee examined by an impartial physician (specialist) in questionable cases without being accused of harassment. Two audiograms be required from different specialists on each hearing loss claim filed. If a glaring difference occurs between audiograms, then a third audiogram should be required.

Unquestionably, the majority of shipyard employees are fully honest, and their claims for compensation due to occupational related injuries are justifiable. We do not question these claims but feel obligated to provide assistance to ensure that every benefit to which employees are entitled is obtained to the extent possible within our ability and authority.

At the same time, I feel obligated to the Navy and also as a taxpayer to guard against fraudulent claims. In the past, many employees mistakenly believed that the hearing loss situation is a big giveaway program and since the money comes from the government it doesn't cost anyone, and therefore, they are entitled to get on the gravy train. For example, 5,312 shipyard employees (or former employees) have filed a claim for a hearing loss. Of these 2,891 have collected from $142 to $37,065. Yet some of these employees are able to continue to work and support themselves at the shipyard.

I also want to assure you that the Navy has taken action to reduce/control noisy operations unique to shipyards. The following is only a partial list:

NAVSEA has approved a noise engineering study to be conducted by the Envrionmental Protection Agency at the Charleston Naval Shipyard. This study, scheduled to be completed this year, will determine if practical engineering solutions can be developed.

NAVSEA, when programming Milcon projects, conducts an Advanced Industrial Engineering Study (AIES) which includes noise abatement.

Noise standards are specified to be below 85 dBA when procuring industrial production equipment.

The Navy's hearing conservation program of wearing approved hearing defenders in noisy work areas is strictly enforced.

Maximize efforts in isolating noisy operations with noise absorbing materials or relocate noisy operations to low occupany areas.

When practical, known noisy operations are scheduled for weekends or nights. Medical personnel and audiometric equipment are being upgraded so that audiograms taken by the shipyard will meet OWCP standards, thereby permitting us the capability of controverting suspected fraudulent claims.

It is anticipated that it is only a matter of time before other ailments will elevate themselves to a level of a national scandal. I refer to the October 1976 Reader's Digest article "Workers Compensation-A License To Steal?" and "CBS 60 Minutes." Both described how government employees abused the system and literally ripped-off Uncle Sam because of liberal attitudes and lax laws. Presently, the naval shipyards are on another threshold-asbestos-that is beginning to attract national attention. Also the number of claims for back/muscle injuries at this shipyard alone have increased from 28 in 1974 to 591 in 1977. Of course, physicians are unable to confirm or deny if an employee has a legitimate back injury. And so it goes. I cannot over-emphasize my sense of urgency concerning the flagrant disregard and abuse that is prevalent in administering the compensation program for government workers. Congressman Joseph M. Gaydos and his Subcommittee on Compensation, Health and Safety are considering legislation to rescind and/or modify the FECA so that further abuses will be minimal and at the same time preserve the rights to workers who legitimately deserve the benefits of the compensation program. I urge you and your colleagues to support this effort.

As always, we would be pleased to have you visit us as your busy schedule permits.

Sincerely yours,

A. KURZENHAUSER, Captain, USN, Shipyard Commander.

[From Virginian-Pilot, Dec. 2, 1977]

WELDER CONVICTED OF FALSE HEARING-LOSS CLAIM

(By Bert Rohrer)

NORFOLK.-In the first of what may be numerous cases, a shipyard welder was convicted Thursday evening of defrauding the federal government by submitting a false hearing-loss claim.

A U.S. District Court jury deliberated less than 40 minutes before returning a guilty verdict against welder Percy Warren Jones, 57, of the 5000 block of Roosevelt Boulevard in Portsmouth. When he appears before Judge J. Calvitt Clarke Jr. for sentencing Dec. 20, Jones could be imprisoned for up to five years and fined as much as $10,000.

33-532 O 79 (Pt. 2) - 21

Clarke also could order Jones to repay more than $29,000 he has received from the U.S. Labor Department in disability compensation since the award was made in 1975. Assistant U.S. Atty. Jack Kane, who prosecuted Jones, said the conviction means that he will seek additional indictments against hearing-loss claimants from the naval shipyard in Portsmouth. He said federal investigators are pursuing some questionable claims, but he was unsure exactly how many.

Since 1973, more than 5,000 hearing-loss claims have come from the Portsmouth yard, which employees about 10,000. During the same period, the Department of Labor has paid $20 million to the yard's employees.

The government has appointed a task force to tighten up the claims procedure, which came under judicial fire during Jones' trial Thursday.

A Norfolk ear-nose-throat surgeon, Dr. Donald Sly, testified that he examined Jones before his claim was approved and that he wrote the Labor Department that the results of his test were cause for suspicion.

He recommended that the government have Jones submit to a skin-response audio test, a technique akin to polygraphy (lie detector testing), so that it could be determined absolutely whether Jones was faking his threshold of hearing.

But Paul L. Prewitt, a Labor Department supervisor, said the claim was processed without consideration to Dr. Sly's letter because of "a clerical error." He noted that "there is a discrepancy in this report and the other one," referring to a doctor's report showing Jones did, indeed, suffer from profound hearing loss.

"You (the government) had notice of the problem before you ever started paying him." Clarke told Kane out of the jury's presence. "You all have just given him an absolute, outright gift."

If private industry handled workmen's compensation claims so sloppily, the judge said. "There wouldn't be a solvent insurance company in the United States today." However, he rejected defense lawyer Berry D. Willis Jr.'s motions for a directed verdict or a mistrial, saying, "Just because the government is stupid, you're not supposed to steal from them. You can't take candy from a baby, either, although it may be mighty easy."

Prosecution witnesses testified that Jones, who has worked off and on at the Navy yard since the beginning of World War II had normal hearing when he last rejoined the work force in 1966.

In April 1974, records showed, he took an audiograph (hearing test) that showed he was normal and the same day filed a hearing-loss claim.

He was examined by a veteran Norfolk specialist, Dr. Cullen M. McCoy, who administered, at the government's request, a simple hearing test that requires the patient to signal when a tone reaches a volume that he can hear.

That test, according to Dr. McCoy, showed that Jones had lost about 70 percent of his hearing.

Several months later the government wrote Dr. Sly's office, asking that he be reexamined. Sly's audiologist, Mrs. Brenda Ryals, conducted a series of tests, some of which don't rely on the patient's cooperation, and found the results to be "very inconsistent."

Sly testified that he was convinced at the time that Jones suffered from "no more than a very mild hearing loss," and that he had so informed the Department of Labor.

Jones continued to show a near-deaf reading on the unsophisticated, patientresponse machine similar to the one McCoy had used, several doctors testified, while the more sophisticated test showed otherwise.

That pattern continued until the summer of 1976, when a shipyard physician declared him too disabled to work in high-noise areas and ordered him assigned to quieter jobs.

There were none, so Jones was laid off. Subsequently, at the request of a union steward, he was re-examined. For the first time since April 1974, the simple test showed his hearing to be normal-the same finding the more sophisticated examination had revealed all along.

Kane called it "a miraculous recovery" in his final argument, saying the scheme was "backfiring" on Jones because it was creating a situation in which "he couldn't get a job anywhere else."

Doctors and others testified throughout the trial that when they had spoken with the defendant between 1974 and now, they; could coverse in normal tones, even with their backs turned to avoid any possibility of lip-reading.

Willis called only Jones, his wife, and several character witnesses in his client's behalf.

As for the discrepancy in the test results and the apparent reversal of his condition in 1976, he said, "I really don't know how it worked out that way."

Jones wore a hearing aid behind each ear during the two-day trial, and his examination and cross-examination were carried out in shouts, both Jones and from attorneys.

But he appeared to speak normally with his wife and with others in the corridors between court sessions.

When he was called to the stand and the oath administered to him, he failed to respond. Clarke, with the jury out of the room, snapped at him, "Let's hear you, Mr. Jones. Every time that door (the courtroom door, which was behind Jones) opens, you turn around to see who's coming in."

Kane said that Jones never bought the hearing aids until after he was charged with fraud, calling the noisy examination "a charade."

In his closing argument, Willis said that Jones had never been in trouble before and had worked hard all his life. "He's never been to jail, he's an honest man,' Willis said.

He criticized the government for its handling of the claim and its ignoring of Sly's letter, adding. "The government couldn't care less, they said."

[From the Ledger-Star Dec. 20, 1977]

SHIPYARD WORKER SENTENCED TO 179 DAYS

(By Bill Burke)

NORFOLK.-A 58-year-old Norfolk Naval Shipyard worker, convicted earlier this month of defrauding the government by filing a false hearing-loss claim, today was sentenced to 179 days in prison.

Percy Warren Jones, of the 500 block of Roosevelt Blvd., Portsmouth, also was ordered by U.S. District Judge J. Calvitt Clarke Jr. to make full restitution of the more than $29,000 he received in benefits.

Clarke sentenced Jones to five years in prison-the maximum sentence-but suspended all but about six months of the sentence.

Clarke also issued a stern admonition to others who may have tried to cheat on the federal hearing-loss program, saying he will not be so lenient on future offend

ers.

"Certainly your fellow workers are now on notice," said Clarke, "that the Navy and this court don't condone" such fraud.

"No one else need expect to get treated as lightly when they come into this court on the same charge." Had Jones been convicted of obtaining the same sum of money during a bank robbery. Clarke said he would not have hesitated to pronounce a stiff sentence.

"You in a sense have done something worse than that (rob a bank)," Clarke said. "Time after time, you have marched into the doctor's office and have given fraudulent information."

During his jury trial Nov. 30 and Dec. 1, Jones appeared to have difficulty hearing from the witness stand, despite voluminous medical testimony that his hearing was normal or near-normal.

Clarke said he took Jones' age and work record-he has been employed as a welder at the shipyard off and on since World War II-in suspending most of the

sentence.

According to testimony during the two-day trial, Jones received $29,409.60 from the Labor Department for a hearing-loss claim filed July 6, 1974.

A medical test filed with the claim showed that Jones had a 68 percent hearing loss, later computed by the Labor Department to be 88 percent.

Assistant U.S. Atty. John F. Kane, who prosecuted the case, produced during the trial several medical experts who had examined Jones. Their consenses was that the defendant had no hearing impairment.

Testimony also indicated that the Labor Department was careless in processing Jones' claim, and except for the carelessness, the claim might not have been paid at all.

Clarke said during the trial that because of the sloppiness, the Labor Department "helped him (Jones) and urged him along" in his pursuit of medical benefits. Said Clarke today: "The government almost strew the gold in his path so that he could just pick it up without any trouble."

The judge ordered Jones to make restitution in $100-a-month payments.

It was the first conviction on a hearing-loss fraud charge, said federal prosecutors. Kane said other suspect cases are being investigated, and additional indictments may follow.

Federal authorities for months have been investigating cases of apparent hearingloss fraud at the shipyard, where more than $20 million in benefits were paid between 1973 and spring of this year.

PREPARED TESTIMONY SUBMITTED BY HON. J. KENNETH ROBINSON, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. Chairman and members of this Subcommittee: I wish to submit a statement at these oversight hearings on the Federal Employees' Compensation Act in order to bring to your attention the shocking delays of the Labor Department's District 25 Office of Workers' Compensation Programs in processing claims of workers injured on their jobs and seeking help.

At the rate this particular office is proceeding, the only service it may conceivably be able to render to my constituents will be to clip the grass over their final resting places. Indeed, the motto of the District 25 Office seems to be: 'Rest in Peace." I would like to detail the unconscionable length of time it is taking for my constituents to obtain decisions on their claims for compensation. I represnt a constituent in Front Royal, Va., who has been waiting 22 months for a determination on his claim; a constituent in Mechanicsville, Va., who has been waiting 30 months; a constituent in Graves Mill, Va., who has been waiting 28 months; a constituent in Hartwood, Va., who has been waiting 21 months, and a constituent in Fredericksburg, Va., who has been waiting 36 months.

Even more unfortunate, we have found that once this office acts favorably on claims cases, constituents so benefitted face another interminable delay in receiving payments.

We have repeatedly contacted District 25 personnel in an effort to expedite decisions, and we have had a representative at two separate meetings over recent months to try to find ways to overcome the bottlenecks. So far, nothing has worked. We have been advised by one source that of some 33 employees in claims processing in the District 25 Office, only about three are competent to perform the work, and this may account for the sorry situation there.

Whatever the reason, it is hoped this Subcommittee will insist upon a thorough investigation forthwith in the District 25 Office, in order to improve its efficiency and effectiveness in serving the public.

The District 25 Office is supposed to be serving the people of Virginia, Maryland, and the District of Columbia-with a combined population approaching 10 million people. Sadly, at this time it cannot even seem to locate these jurisdictions, much less serve them.

Thank you.

TESTIMONY SUBMITTED BY HON. MARILYN LLOYD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mr. Chairman and members of the Subcommittee: I appreciate this opportunity to testify at this hearing regarding the problems which many of my constituents have been experiencing with the Workmen's Compensation program.

In the past several months, it has come to my attention that there are serious delays in both the authorization of treatment for individuals as well as the payment of claims caused by administrative and operational problems in the Jacksonville office. I contacted the Administration in early May to express my concerns about these delays and received a reply which indicated that the Department of Labor was taking steps to correct the situation. However, this situation is much more serious than either Labor officials here in Washington or in Jacksonville realize. Hospitals in my District are now unable to treat persons covered by FECA due to the inordinate length of time it takes the Jacksonville office to process a claim and grant approval for admittance. The health and well-being of thousands of citizens, not only in my District but across the whole southern areas serviced by the Jacksonville office, is in jeopardy as a result of these delays. I would like to emphasize to the Members of this Subcommittee that this situation demands immediate remedy. There are three major hospitals in Chattanooga alone which will no longer take Workmens Compensation cases. Erlanger Hospital in Chattanooga will only take them because it is a county hospital and is required to do so. Most doctors in my District are reluctant to take on Workmens Compensation cases and many are