August 29, 2013

The Federal Employees’ Compensation Act (FECA) provides benefits to civilian federal employees, including U.S. Postal Service employees sustaining an injury or occupational disease as a result of their employment. The U.S. Department of Labor administers, implements, and enforces this act. The Postal Service manages efforts to return injured employees to work through its Injury Compensation Program. One of the duties of the Office of Inspector General (OIG) is to investigate workers’ compensation fraud involving Postal Service employees. Such investigations protect Postal Service funds by detecting, deterring, and reducing health care fraud.

We assessed the Postal Service’s administration of workers’ compensation claims to identify opportunities to reduce these costs by implementing best practices. For the 2012 billing period, the Postal Service incurred more than $1.3 billion in workers’ compensation costs and paid more than $68 million in administrative fees―an increase of more than 25 and 23 percent, respectively, since the 2009 billing period. We found that management did not consistently determine staffing levels and has reduced the number of staff significantly since 2009. Some health and resource management personnel were used for collateral duties, and nurses were not fully used in case management. Further, specific performance measures did not exist nor did personnel receive adequate training.

During our audit, we contacted three federal agencies, four private sector and commercial companies, two commercial insurance companies, two workers’ compensation third-party administrators, and one monopolistic state workers’ compensation fund. We also obtained insight from six recognized workers’ compensation experts. As a result of these efforts, we identified industry best practices for administering workers’ compensation claims that could provide benefits to the Postal Service’s injury compensation program and reduce associated costs.

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