Statements on Introduced Bills and Joint Resolutions

Floor Speech

Ms. COLLINS. Mr. President, I rise this evening to introduce the Federal Employees Compensation Reform Act of 2011. This bill would preserve the essential purpose of the Federal Workers' Compensation Program, which is to ensure income for injured Federal and postal workers, while at the same time it would protect the program from fraud and abuse.

The Federal Employees Compensation Act, which is known as FECA, provides benefits that serve as a safety net for Federal employees and postal employees who are injured on the job, providing income until the healing process and rehabilitation allowed them to return to work. Obviously, we want to support those employees until they can return to work. That is both humane and just.

Over the years, however, this program has unintentionally morphed into an alternative retirement program that is far more financially lucrative for recipients than the standard Federal retirement system. Because of the way the program is structured, for some individuals, FECA has become a gold-plated retirement system, tainted by unfairness, perverse incentives, and the potential for abuse and fraud.

This program pays monthly benefits to about 49,000 recipients. Those are recipients who have suffered a work-related injury and have been approved for workers' comp benefits.

In the past fiscal year, this program cost $2.78 billion. Of that amount, nearly $1.1 billion went to Postal Service employees receiving these benefits.

This program has become increasingly expensive and requires some commonsense reforms--reforms that many States have already implemented in their own workers' comp programs.

As it currently operates, FECA includes a perverse financial incentive that encourages older employees who otherwise would have retired to continue to receive workers' comp benefits.

Remember, these payments are designed as a bridge to help injured workers until they are able to return to work. That is the important phrase--``return to work.'' This program was never intended to serve as a higher paying alternative to the Federal retirement system.

Federal employees on FECA receive an average of 73 percent of their gross pay. Moreover, these workers' comp benefits are tax free--another substantial benefit.

By contrast, a Federal employee, with 30 years of service under the Civil Service Retirement System, would average slightly more than 56 percent of his or her gross pay as a retirement benefit, and these retirement benefits are taxed. It pays then to stay on workers' comp for as long as possible, since many recipients receive more money under that program than they would if they were to retire.

Let me again emphasize that these workers' comp payments are tax free--another big difference.

In fact, according to the numbers produced by the Department of Labor, nearly 30 percent of the current workers' comp recipients are age 66 and older, while the average retirement age for both Federal employees and postal workers is age 60.

With no mandatory Federal retirement age, FECA recipients are allowed to stay on workers' comp rolls for their entire lifetimes, even when there is no expectation that they will return to work because of their advanced age.

Some employees have continued to receive Federal workers' comp benefits into their hundreds. For the U.S. Postal Service alone, let's look at the statistics.

As we can see, there are more than 15,000 recipients in total. Of those, more than 2,000 recipients are age 70 or older; 927 recipients are age 80 or older; 132 recipients are age 90 or older; and astonishingly enough, 3 postal employees receiving workers' comp are age 98 or older.

Mr. President, it is obvious these workers are not going back to work. They clearly should be transitioned to the retirement system. I must ask the obvious question: Is there any likelihood at all these recipients are ever going to return to the workforce? No. Then why aren't they transitioning to the retirement system when they reach retirement age? Think how unfair that is to the worker who does retire, say, at age 65 and gets a lesser amount.

Right now, the way the system is structured it does not encourage people to go back to work or to transfer to retirement at an age when most of their fellow workers would have retired. To prevent this continued abuse, my bill would convert retirement-eligible postal and Federal employees on workers' compensation to the retirement system when they reach age 65.

Now, that is generous, Mr. President, because we know the average retirement age is actually 60. I would choose age 65. This is a commonsense change that would save millions of dollars that the Postal Service, the Federal Government, and the American taxpayer cannot afford to spend. It is also a matter of fairness, Mr. President. But we must also examine other elements of the FECA program to determine whether there are some additional improvements that are necessary.

Unlike many State programs, the Federal workers' compensation program has no cap nor time limits on benefits. Moreover, the Federal Department of Labor acknowledges a 2- to 3-percent fraud rate in the program. I suspect it may be even higher. We need to reduce this rate of fraud by examining whether the medical certification requirements and other internal controls should be strengthened. Are we doing medical reviews to see if these individuals could go back to work?

For example, a former postal worker was sentenced just a week or so ago to 5 months in jail after pleading guilty to workers' compensation fraud. The employee claimed he was unable to walk from his parked car to the post office. But at the same time he was receiving tax-free workers' compensation benefits, he was also operating a snow removal and lawn care business.

In addition, about 100 other claimants per year are prosecuted by the Department of Labor's Office of Inspector General because they received workers' compensation and their retirement pay. These are the so-called ``double-dippers.''

Mr. President, as part of my effort to strengthen oversight of this program, I have asked the Government Accountability Office, along with Senator Coburn and Senator McCaskill, to audit the FECA program and report on the length of time individuals remain on the program, the number of recipients who exceed the standard Federal retirement age, and how the Federal program compares to State workers' compensation best practices. I expect these findings will lead to additional reform proposals as the bill proceeds through the Senate.

I also intend to work with stakeholders to determine if changes in the Federal Employees Retirement System, the FERS system, as opposed to the old Civil Service Retirement System are necessary to make sure that workers' compensation recipients would be treated fairly when they are converted to FERS retirement benefits under this bill.

For example, this may require the Department of Labor to administer the Thrift Savings Plan contributions for recipients or to require Social Security contributions from workers' compensation recipients.

What is clear, however, is that this program is in need of urgent reform. The program is costing too much, injured workers are not being monitored sufficiently and helped to return to productive work, recipients who should be in the retirement system are instead receiving tax-free benefits, and some agencies have high claim rates, suggesting that safety improvements are needed.

For the sake of fairness and fiscal responsibility, we must reform this program now. Not doing so is an affront to the thousands of Federal employees who enter the retirement system. It is a disservice to those Federal and postal employees who truly need workers' compensation benefits, and it is an unnecessary burden on taxpayers.

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