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This week, Veterans Affairs released a report about its Workers Compensation program, which documented mismanagement of the Workers’ Compensation program similar to other programs administered by the VA. The VA’s Workers’ Compensation Program (WCP) provides compensation and medical rehabilitation for injured VA employees.

The Department of Labor (DOL) Office of Workers’ Compensation Programs (OWCP) administers the WCP for all Federal agencies. After claims adjudication, OWCP uses its Employees’ Compensation Fund to pay the claimants’ medical expenses and compensation benefits. Then it bills each agency annually through a chargeback report. Employing agencies manage all cases listed on the chargeback report.

Within VA, the Assistant Secretary for Human Resources and Administration has broad responsibility for WCP policy development and oversight. VHA workers’ compensation specialists execute the policy by initiating claims and managing cases from the time of employee injury up to the point of claims adjudication by OWCP. Upon claims adjudication, the specialists maintain WCP case files, assess medical evidence, and make job offers to return employees to work when possible.

Oversight summarized in this most current report revealed that over 60% of all claims evaluated were not monitored properly. VA lacked a fraud detection process, which is surprising in light of VA’s perpetual focus on veterans potentially defrauding the disability compensation program. Apparently its own workers get a pass for fraud. OIG concluded VA could save over $92 million if it improves management of the program.

The report goes on to say that “In five prior audits, we reported enhanced case management could reduce VA’s WCP costs and risks for fraud and abuse. In our two most recent reports, Follow-Up Audit of Department of Veterans Affairs Workers’ Compensation Program Costs (Report No. 02-03056-182, August 13, 2004) and Audit of Workers’ Compensation Case Management (Report No. 10-03850-298, September 30, 2011), VA inaccurately initiated claims and missed opportunities to make job offers. VA lacked the medical evidence necessary to support continuation of benefits to employees. We also identified instances of potential fraud. We recommended VA increase its oversight processes, dedicate resources, and take actions to reduce fraud risk.”

In this report “We determined whether VHA improved Workers’ Compensation Program (WCP) case management to better control costs in chargeback year 2012, which represented the most current audit data available at the time we began work. We identified issues with claims initiation and monitoring similar to those disclosed in our 2004 and 2011 audit reports. Specifically, WCP case files lacked initial or sufficient medical evidence to support connections between claimed injuries and medical diagnoses. We estimated VHA inaccurately initiated about 56 (7 percent) of 793 WCP claims. WCP claims also were not consistently monitored to timely return employees to work. VHA WCP specialists did not make job offers or take actions to detect fraud. We projected 489 (61.7 percent) of 793 active claims were inadequately monitored.”

“These issues occurred because VHA still lacked standard guidance and a clear chain of command to ensure compliance with WCP statutory requirements and VA policy. VHA also lacked a fraud detection process. Overall, we estimated VHA can reduce WCP costs over the next 5 chargeback years by $11.9 million through improved claims initiation and $83.3 million by increasing efforts to return medically able staff to work. In total, opportunities exist for VHA to reduce WCP costs by about $95.2 million with improved claims management. We also identified $2.3 million in unrecoverable payments due to VHA’s lack of oversight to return medically able employees to work”