Follow-Up Audit of VHA's Workers' Compensation Case Management

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. We recommended the Acting Under Secretary for Health ensure clear oversight, standard guidance, adequate staffing, and fraud detection procedures to improve VHA’s WCP case management. The Acting Under Secretary for Health concurred with our findings and recommendations and plans to complete all corrective actions by May 29, 2015.