Postal Worker Sentenced to Prison and Ordered to Pay Almost $1.0 Million in Workers Comp Case

GREAT FALLS – The United States Attorney’s Office announced today that Deborah Joy Durand, a 55-year-old resident of Fruitland, Idaho, was sentenced to 15 months in prison, two years of supervised release, and ordered to pay $903,316.48 in restitution and forfeiture. U.S. District Court Judge Brian Morris Morris presided over the sentencing hearing. Continue reading

Postal worker convicted of comp fraud gets 21 months in prison

DALLAS — Tonya Evans, 52, a former U.S. Postal Service employee, was sentenced today by U.S. District Judge Sam A. Lindsay to 21 months in federal prison and ordered to pay $98,888.73 in restitution for participating in a scheme to defraud the Department of Labor’s (DOL) Office of Worker’s Compensation Program (OWCP), announced U.S. Attorney John Parker of the Northern District of Texas.
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Texas postal worker convicted of workers comp fraud gets 21 month prison term

DALLAS — McArthur Baker, 69, a former U.S. Postal Service employee, was sentenced today by U.S. District Judge Sam A. Lindsay to 21 months in federal prison for his role in a scheme to defraud the Department of Labor’s (DOL) Office of Worker’s Compensation Program (OWCP), announced U.S. Attorney John Parker of the Northern District of Texas. Continue reading

Ohio letter carrier indicted for worker’s compensation fraud

A federal grand jury returned a two-count indictment charging Nicole M. Gates of Wickliffe, with false statements and fraud to obtain federal employees’ compensation, said Carole S. Rendon, Acting United States Attorney for the Northern District of Ohio.

The indictment alleges that Gates, a mail carrier employed by the U.S. Postal Service, falsely represented her physical limitations in connection with her receipt of workers’ compensation benefits.

US-Department-Of-Justi_fmtAssistant United States Attorney Megan R. Miller is prosecuting the case following an investigation by the U.S. Postal Service Office of Inspector General.

If convicted, the court will determine the defendant’s sentence after a review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum. In most cases, it will be less than the maximum.

Maryland letter carrier pleads guilty to workers comp fraud

Greenbelt, Maryland – U.S. Postal Service employee Doreen Allen, age 51, of Temple Hills, Maryland, pleaded guilty today to theft of government property arising from a scheme to fraudulently obtain over $25,000 in worker’s compensation benefits.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Paul L. Bowman of the U.S. Postal Service, Office of Inspector General.

uspsoigAccording to her plea agreement, Allen was employed by the United States Postal Service as a city carrier at the Capital Heights, Maryland, Processing and Distribution Facility.  On September 27, 2002, Allen filed an injury claim which qualified her for Worker’s Compensation.  Allen began receiving benefits in November 2002 from the Office of Worker’s Compensation Programs (OWCP), including reimbursement for travel expenses for medical treatment related to her injury.

Between July 2012 and September 2015, Allen received reimbursement for travel expenses for medical care related to one of her injury claims.  This compensation was based on vouchers that Allen submitted for 721 trips to receive medical care.  Allen admitted that approximately 27 of those trips were for medical care, while the remaining 694 were unrelated.  Allen submitted numerous forms to OWCP falsely certifying that she had driven round trip from her home in Temple Hills to a doctor’s office in Laurel, Maryland for medical treatment related to her injury. As a result, Allen fraudulently received $27,639.10 in travel reimbursements.

Allen faces a maximum sentence of 10 years in prison.  U.S. District Judge Paula Xinis scheduled Allen’s sentencing for September 13, 2016, at 9:30 a.m.

OIG: Department of Labor’s lax handling of compounded prescription drugs costs USPS millions

Background

Enacted in 1916, the Federal Employees’ Compensation Act (FECA) provides medical, compensation, death, and vocational rehabilitation benefits to civilian federal employees who sustain injuries or disease. In fiscal years (FYs) 2014 and 2015, FECA provided over $1 billion in annual workers’ compensation benefits to U.S. Postal Service workers.

The U.S. Department of Labor (DOL) Office of Workers’ Compensation Program (OWCP) administers the FECA for the Postal Service and the federal government, including costs for medical treatment and drugs. The Postal Service reimburses the DOL for benefits paid out for a chargeback year (CBY) starting from July of the preceding year to June of the current year. The Postal Service pays about 39 percent of the federal government’s total workers’ compensation administrative expenses.

OWCP allows charges for compound drugs, which are created when licensed pharmacists, physicians, and others acting under the supervision of licensed pharmacists combine, mix, or alter ingredients of drugs to tailor them to individual patients. The Food and Drug Administration (FDA) does not monitor or approve compound drugs, or test their effectiveness or safety.

Our objective was to assess the Postal Service’s worker’s compensation compound drug costs.

What The OIG Found

The Postal Service’s workers’ compensation compound drug costs escalated to over $98.7 million for CBY 2015, a $68.6 million increase over CBY 2014. During the same period, the Postal Service’s administrative expenses for compound drugs increased to $5.1 million, a $3.6 million increase. The costs for compounds have continued to escalate. For the first 6 months of CBY 2016 (July 2015 through December 2015), the Postal Service has incurred $85.7 million in compound drug costs, with another $71 million forecasted through the end of the year. These unprecedented increases were due to the higher costs of compound drugs, the rising number of compound drug prescriptions, and fraud.

Generally, compound drugs are more costly than other drugs. In 2012, the National Council on Prescription Drug Programs permitted pharmacies to separately bill for each ingredient in a compound drug. Subsequently, more pharmacies began compounding drugs, which created shortages in ingredients and increased the cost. In CBY 2015, the total number of Postal Service employees with compound drug prescriptions increased to 50,204 — nearly three times the number in CBY 2011.

In response to the dramatic increase in compound drug costs nationwide, various government agencies and private entities began to examine these costs and implement best practices for managing them. The U.S. Department of Defense evaluated these costs and made an alarming discovery: Doctors were prescribing and charging for compound drugs without seeing patients. In a massive workers’ compensation scheme in California, doctors were paid to prescribe compound drugs that patients did not need. In one case, a 5-month-old baby died after coming in contact with a compound transdermal cream prescribed for his mother.

In 2015, TRICARE, the military health insurance program, restricted compound drugs in an effort to curtail fraud, reduce costs, and provide more consistent and safe drugs for its beneficiaries. Similarly, state and private entities have implemented restrictions such as: 1) reimbursement caps on prescriptions, 2) fee schedules for compound drugs, 3) mandatory use of pharmacy benefits managers, 4) formularies (lists of prescription drugs covered by prescription drug plans), and 5) pre-authorizations for payment.

The Postal Service experienced escalated compound drug related costs because the DOL did not implement best practices to manage these costs. As a result, we estimated the Postal Service incurred over $81.8 million in excessive compound drug costs and nearly $4.1 million in excessive administrative fees for FYs 2014 and 2015. We also estimated that if the DOL does not implement best practices to control compound drug costs, these costs and the related administrative fees could accumulate to over $1.2 billion and over $60.3 million, respectively, over the next 3 years.

Although the Postal Service has expressed that it would like to reduce and better manage compound drug costs, it is limited because it is mandated to use the DOL to handle workers’ compensation drug costs. For its part, the DOL has full authority to implement all of the best practices mentioned above. But, the DOL has no incentive to do so, and DOL officials have not been receptive to adopting these or other best practices. In addition, DOL stated if a doctor approves the compound drug they assume it is necessary and will reimburse the costs.

The Postal Service is so concerned about rising drug costs and DOL’s inaction that, in October 2015, it requested an adjustment and withheld $68.6 million in payment for its workers’ compensation chargeback bill. According to Postal Service officials, the $68.6 million represented compound drug cost increases potentially attributable to fraud and abuse that OWCP had a duty to prevent. In December 2015, the DOL denied the Postal Service’s request. While Postal Service officials disagreed with the DOL’s determination, they paid the outstanding $68.6 million.

Until the DOL implements best practices to manage drug costs and ensure safe drugs, the Postal Service will continue to incur excessive and unnecessary costs and injured workers could be at an increased risk of harm.

What The OIG Recommends

We recommend the chief human resources officer and executive vice president continue to coordinate with the DOL to identify and implement best practices for controlling compound drug costs and authorizing payments for only FDA approved drugs. In addition, we recommend Human Resources, in coordination with Government Relations, inform and educate Congress on the impact of DOL’s failure to address escalating compound drug costs on the Postal Service.

APWU: Expect More Attacks on Injured Workers

This article first appeared in the March-April 2016 issue of The American Postal Worker magazine.) 

Over the last decade, attacks on injured federal employees and postal workers, led primarily by Sen. Susan Collins (R-ME), have been relentless.

But she isn’t the only one who has tried to dismantle the comprehensive coverage provided by the Federal Employees Compensation Act (FECA).

apwulogoOver the years, proponents of cuts have become more cunning. They claim their proposals will minimize fraud, remove “disincentives” to return-to-work, and make benefits more equitable.

The Government Accounting Office (GAO) has demonstrated that their claims are meritless, but this has not deterred them from efforts to gut benefits.

Although President Obama’s fiscal year 2017 budget request excluded negative FECA measures, and Secretary of Labor Perez rejected proposals to slash FECA benefits, we fully expect Sen. Collins and her partners to wage future attacks on FECA.

What’s at Stake?

Proposals to amend FECA are expected to include cuts to wage loss compensation (WLC), reductions in benefits when claimants reach retirement age, a Fraud Task Force, more second opinion examinations (SecOps), and additional requirements for vocational rehabilitation.

According to the USPS Office of Inspector General (OIG), less than 1/6 of one percent of FECA claimants has been found guilty of fraud – including misdemeanor offenses. This is hardly evidence of a systemic problem warranting a task force.

Requiring claimants to get second opinions when fraud is virtually non-existent constitutes a witch hunt – one that comes with a $387 million price tag. OWCP already has the authority to order these exams as it deems necessary.

FECA dismantlers also want to reduce the current compensation rate for claimants with dependents, from 75 percent to as little as 66 2/3 percent. And when claimants reach a prescribed retirement age, they intend to reduce compensation to 50 percent, alleging the benefit is more generous than workers’ earnings or retirees’ annuities.

However, according to a July 2013 study by the Government Accountability Office (GAO), workers collecting WLC bring home 7.4 to 14.4 percent less than they would if they were working. Another GAO study revealed that the median FECA benefit package is significantly less than regular retirement benefits.

Under the ill-conceived proposals, FECA benefits would be 22 to 35 percent less than the median FERS retirement package. Keep in mind, those who receive compensation do not earn leave or contractual pay raises. Their benefits are locked in, based on the pay they earned when they were injured. They cannot contribute to their Thrift Savings Plan or receive matching funds.

Leonard Howie, director of the Office of Workers Compensation (OWCP) testified on May 20, 2015, before a House Committee that “less than 2 percent of the injured workforce covered by FECA remains on the long-term compensation rolls more than two years after sustaining their injury.” His statement clearly demonstrates that it’s unnecessary to require employees with temporary medical restrictions to participate in OWCP’s vocational rehabilitation program.

Changes to FECA will affect all of us, whether we’re injured or not. It will affect our family and friends. It will negatively affect state compensation programs. It will burden many health care and human services providers.

– See more at: http://www.apwu.org/news/deptdiv-news-article/expect-more-attacks-injured-workers#sthash.QDm5UbIa.dpufSource: Expect More Attacks on Injured Workers | APWU