The Office Of  Workers’ Compensation Programs has laid out several reforms for FECA. Below is the prepared testimony of Acting Director Gary Steinberg for April 13, 2011 House Subcommittee Hearing On FECA:

Prepared Testimony from Gary Steinberg, Acting Director, Office of Workers’ Compensation Programs (OWCP)

FECA Reform
As I have discussed, OWCP has made significant administrative and technical changes to improve the administration of FECA. These changes were legally permissible within the existing statutory framework and had a demonstrable effect in advancing our progress.

The current FECA reform proposal embodies certain reforms that can only be gained through statutory amendment that transforms FECA into a model twenty-first century workers’ compensation program, increasing equity and efficiency while reducing costs.
These amendments fall within three categories:
• Return to Work and Rehabilitation
• Updating Benefit Structures
• Modernizing and Improving FECA

Return to Work and Rehabilitation
The proposal that we have crafted for consideration would provide OWCP with enhanced
opportunities to facilitate rehabilitation and return-to-work while simultaneously
addressing several disincentives that may impact timely return to work by applying a new
set of benefit rates prospectively to new injuries and new claims for disability occurring
after enactment of the FECA amendments.

We propose additional statutory tools that would enhance OWCP’s ability to return
injured workers to productive employment. While FECA currently has the authority to
provide vocational rehabilitation services and to direct permanently injured employees to
participate in vocational rehabilitation, we suggest removing the permanency limitation
in the statute to make clear that such services are available to all injured workers and that
participation in such an effort is required. It is generally accepted and consistent with our
experience that the earlier the claimant is involved in a vocational rehabilitation and a
Return-to-Work program, the greater likelihood of a successful and sustained return to
work post injury.

The proposal would amend FECA to explicitly allow for vocational rehabilitation, where
appropriate, as early as six months after injury. It provides OWCP the authority to
require injured claimants unable to return to work within six months of their injury to
participate with OWCP in creating a Return–to-Work Plan where appropriate. The
Return-to-Work Plan would generally be implemented within a two-year period. This
provision would send a strong signal to all Federal workers, whether injured or not, that
the Federal government as a model employer is committed to doing everything it can to
return employees to work as early as possible.

Our proposal would also amend FECA to provide permanent authority for what we call
Assisted Reemployment. Assisted Reemployment is a subsidy designed to encourage
employers to choose qualified rehabilitated workers whom they might otherwise not
hire. As disabled Federal workers with skills transferable to jobs within the general labor
market may prove difficult to place due to economic factors, Assisted Reemployment is
designed to increase the number of disabled employees who successfully return to the
labor force by providing wage reimbursement to potential employers. Recent DOL
appropriations bills gave OWCP the authority to provide up to three years of salary
reimbursement to private employers who provide suitable employment for injured federal
workers. Our data from our currently limited private sector program shows that when we
enter into an Assisted Reemployment agreement with a private employer, the employee is
permanently hired by that employer at or beyond the 3 year period over 55% of the time.
Of the employees not working for the same employer, approximately half are working
with other employers. Because most Federal employees desire continued employment
with the Federal government, our proposal to expand this program to the Federal sector
would significantly increase its appeal and effectiveness. We are working closely with
OPM and our partner agencies to actively seek re-employment opportunities for Federal
workers who become disabled as a result of work related injuries or illnesses. These
provisions would assist with that effort and comport with and support the President’s
Executive Order 13548 to increase hiring of individuals with disability in the Federal
government. Under this proposal, OWCP would reimburse in part the salaries paid by
Federal agencies that hire workers with work-related injuries.

Return to work following an injury is often a difficult, painful process, requiring physical,
mental and emotional adjustments and accommodations. If a workers’ compensation
system contains disincentives to return to work, that difficult transition back to work will
occur more slowly, or in some cases, not at all. Where the medical evidence of ability to
work is ambiguous and returning to work would require an employee to overcome actual
physical limitations, these disincentives will exact a high price. That high price means a
more costly program, lost productivity to the employing agency, and, for the workers
themselves, disrupted lives and diminished self-esteem.

As currently structured, FECA creates direct disincentives to return-to-work in two
significant ways. The first and most far-reaching is that while the basic rate of FECA
compensation, 66 2/3%, is comparable to most state systems, the majority of Federal
employees receive an augmented benefit, 75%, reflecting at least one dependent.
Computed at 75% tax free, FECA benefits frequently exceed the employee’s pre-injury
take home pay. Few state systems provide any augmentation for dependents, and none
approaches the Federal level.

Since the 75% compensation rate can result in benefits greater than the injured worker’s
usual take home pay, we also suggest amending FECA to provide that all claimants
receive compensation at one uniform level of 70%. This compensation adjustment would
remove disincentive to return to work, respond to equity concerns, and significantly
simplify administration by greatly reducing documentation requirements for claimants
and eliminating potential overpayments that can occur due to changes in dependency
status. At this level compensation would remain quite adequate. A similar rate reduction
is also proposed in death claims.

Acting DOL Director SteinBerg Testimony On FECA