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USPS audit creates concerns over high work comp costs

In previous posts, we've discussed how there is a growing movement on Capitol Hill calling for widespread reform of the federal workers' compensation system following revelations of cost overruns and vast occurrences of employee fraud.

Interestingly, the U.S. Postal Service Office of Inspector General (OIG) recently released a report indicating that the cash-strapped federal agency could save upwards of $335 million a year in work comp expenses if it implemented some of the cost-saving measures used by the private sector, including a set time period for benefits and more of an emphasis on return-to-work programs.

Some of the more notable findings of the OIG report include:

  • Nearly 16,200 USPS employees were receiving long-term work comp benefits as of June 2011. Of these nearly 16,200 employees, 928 were 80 years of age or older, including one who was 99
  • Injured USPS employees are currently eligible to receive full reimbursement for brand name drugs. Here, the OIG found that limiting full reimbursement to generic equivalents could result in a savings of almost $9 million a year.
  • Many of the 150 work comp case files reviewed by the USPS lacked the necessary documentation, while officials with the Labor Department (the agency in charge of the federal work comp program) were found to be "not always responsive" to reported fraud

The OIG report was immediately commented upon by several key politicians - including Senator Susan Collins (R-Maine) - who have recently been calling for a reform of the federal work comp program.

(Federal employees are entitled to work comp benefits and medical rehabilitation costs and surviving dependents are entitled to benefits due to work-related fatalities under the Federal Employees' Compensation Act (FECA) of 1916. Currently, roughly 2.7 million federal workers and postal employees are covered under this legislation.)

"There is no excuse for postponing these changes," said Sen. Collins. "The reforms identified by the inspector general would also help crack down on fraud and ultimately benefit injured workers, who deserve efficient processing of their claims. Workers' compensation reforms must be part of any legislative package addressing the Postal Service's financial crisis."

While the USPS has indicated that it is open to some reform, it remains to be seen what - if any - changes will be made ...

Stay tuned for further developments in the area of workers' compensation defense law ...

Workers compensation fraud/employee fraud is a very serious crime. If you suspect that such a crime has been perpetrated against your organization, you should strongly consider speaking with an experienced workers' comp defense attorney.

This post was provided for informational purposes only and is not to be construed as legal advice.


The Federal Times, "Workers' comp costs Postal Service more than it should, IG finds" Oct. 11, 2011

The Hill, Audit: USPS needs private sector approach to workers' compensation" Oct. 14, 2011

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