At an April 13, 2011 hearing, the House Subcommittee on Federal Workforce, U.S. Postal Policy and Labor Policy heard testimony from four witnesses, each of whom called for reform of the Federal Employees' Compensation Act (FECA), which hasn't been reformed since 1974. Apparently FECA has turned into a retirement plan for thousands of disabled postal workers because it pays out better. Proposals were made to reduce the current compensation rate under FECA, to improve the claims process, and to get injured postal workers back to work sooner, among other things. Another witness went so far as to suggest that the US Postal Service run its own workers' compensation system. The following is a summary of the testimony:

David C. Williams, Inspector General, United States Postal Service, testified that "FECA is in need of significant reform." He noted that eligible disabled employees received 66 2/3 percent (or 75 percent with dependents) of their basic salary, tax free, plus medical-related expenses. Moreover, FECA places no age limit on receiving benefits. "This is substantially more than other employees receive when they retire. Though unintended, FECA has become a lucrative retirement plan." As of February 2011, the Postal Service had about 15,800 disabled employees. Over 8,700 were at least age 55, about 3,100 were at least age 65, and about 900 were between ages 80 and 98. > Read more

A U.S. Tax Court recently ruled that when a taxpayer's Social Security benefits were reduced by the amount of workers' compensation benefits received, that offset amount is treated as a Social Security benefit and is, therefore, taxable.

Click to read T.C. Summary Opinion 2011-44, Kevin Sherar v. Commissioner of Internal Revenue Service.

Commentary by Robert G. Rassp, Esq.:

1. It is well established that SSD benefits (and regular retirement benefits) are taxable if the household income is greater than $32,000.00.

2. I have seen the offset amounts become taxable because the IRS thinks the TTD or PD benefits substitute for what otherwise would have been SSD benefits.  This occurs in low wage cases, i.e., if the annual income is less than $30,000.00 because of the "80% Rule."

Larson's Spotlight reports noteworthy workers' comp cases each week. This list was compiled by Thomas A. Robinson, a staff writer for Larson's Workers' Compensation Law, the nation's leading authority on workers' compensation law. 

 

 

 

 > Read the summaries & court decisions.

 

1. PA: Suspension or Termination of Benefits Not Necessarily Required for Police Officer Convicted of Child Endangerment

 

2. SC: "Repo Driver" Was Employee for Purposes of Workers' Compensation Benefits-Not an Independent Contractor

 

3. MA: Penalty For Unreasonable Defense of Claim Inappropriate Where Alternative Evidence, if Believed, Might Have Defeated Claim

 

4. MO: Plaintiffs May Maintain Wrongful Death Action Against Uninsured Employer In Spite of Recovering Workers' Compensation Benefits from Separate Statutory Employer

 

5. OK: Artificial Lens Allowing Restoration of Sight Means No Award for Loss of Sight 

Democratic Senators Introduce Legislation to Prevent Payroll Fraud, Misclassification of Workers.

Inspector General of US Postal Service Calls on Congress to Reform Federal Disability Benefits System.  

He also set forth certain aspects of FECA that make it susceptible to fraud: the claimant's ability to change his or her story until his or her claim qualifies; the claimant's ability to hire a physician rather than use a plan physician to assess injuries and condition; the program, which is administered by the Department of Labor (DOL), gives DOL incentives to collect larger fees if it approves more claims, since it will lose budget dollars if claims are denied; the lack of effective DOL case management; and employers not being allowed to present or respond to evidence at hearings. He stated that the program lacked a clear delineation of responsibility between agencies (such as the Postal Service) and DOL in detecting fraud, and he noted that, on several scores, working with DOL is difficult. Finally, he argued that substantial cost savings would result if the Postal Service were permitted to have its own workers' compensation program.

Lisa M. McManus, President, CCS Holdings, L.P., Contract Claims Services, Inc., CCSI, L.P., CCS Consulting, L.P., made several comments on the existing FECA and recommendations for change identical to, or closely aligned with, those made by David C. Williams outlined in the preceding paragraph. Most fundamentally, she recommended sunsetting FECA and either combining its former functions with those governing workers' compensation benefits for non-appropriated federal employees under the Non-Appropriated Funds Instrumentalities Act (NAIFIA) or creating a new FECA with provisions similar to those found in NAIFIA. Since present benefits under FECA, i.e., 75 percent of the employee's average weekly wage, tax free, with an annual cost of living adjustment, may result in benefits greater than if the employee were working, she recommended reducing the benefit entitlement to 66 2/3 percent of the injured worker's average weekly wage. With respect to receipt of workers' compensation benefits after retirement, she recommended terminating disability payments except for employees deemed permanently and totally disabled, as defined by law. Noting many shortcomings in DOL's present protocols and procedures for workers' compensation case management and oversight, she recommended either allowing agencies the option of selecting a third party administrator (TPA) to handle its FECA claims or increasing DOL staffing to ensure case management that aligns with industry standards. She also recommended that "non-adversarial" verbiage in FECA, which lends itself to an attitude of "just pay, don't question" be removed, that agencies that manage their claims internally be required, as at present they are not, to create a standard set of procedures and policies, as well as standard performance goals and benchmarks, that return-to-work programs be mandated for all agencies, and that minimum industry standards for both government agencies and DOL be established for handling of FECA claims. Finally, she recommended three changes to DOL protocols: termination of disability payments when medical evidence demonstrates the ability return to work; discontinuance of "continuation of pay" entirely; case worker review and approval of all medical charges prior to payment.

Milagro Rodriguez, Occupational Health and Safety Specialist, American Federation of Government Employees, AFL-CIO, testified regarding the impact on government employees of the pending amendments to FECA. Above all, he stated, changes in the law should improve the claims process, enabling the employing agencies to promptly process claims and submit them to OWCP for adjudication. Additionally, he urged changes that would eliminate what he identified as duplicate requirements facing injured employees to provide information, e.g., medical information, to both OWCP and their employing agencies. Moreover, he argued, the entire premise of "putting employees to work" should be replaced by giving employing agencies incentives to improve health and safety in the workplace. The proposal to allow physicians' assistants and nurse practitioners to certify disability during the continuation-of-pay period was "an excellent idea," and he suggested that federal workers be allowed to use their services, not merely during the continuation-of-pay period, but throughout their claims. Similarly, the proposed creation of an assisted reemployment program, i.e., vocational rehabilitation, that would allow DOL to enter into agreements to reimburse an employing agency for an injured employee's salary for up to three years "seems to be a positive step." However, he was concerned that such a program not serve as a disincentive to agencies to make every effort to find suitable employment for their injured employees. He also opposed various aspects of the proposals that would lower employees workers' compensation benefits following retirement, eliminate higher benefits for employees with dependents, and limit compensation to the maximum rate of basic pay for GS-15 employees. By the same token, he opposed changes to the existing three-day waiting period before benefits may be received and the proposed sanctions for failure to cooperate with nurses. Finally, he suggested that the proposed increase in the amount payable for funeral expenses was insufficient.