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Date:12/10/11

Workers' comp costs Postal Service more than it should, IG finds

The U.S. Postal Service could save at least $335 million on its yearly workers' compensation tab if the federal government adopted some of the cost-cutting techniques used by private companies, the agency's inspector general concludes in a new report.

Disabled postal employees, for example, can receive full reimbursement for the cost of brand-name drugs. Limit that reimbursement to the cost of generic equivalents and the Postal Service could save some $9 million per year, the audit found. Other economies could be found by limiting benefits to a set period of time and doing more to put injured postal employees back to work.

As of June, some 16,200 disabled USPS employees — or about one-third of the total for the federal workforce — were on workers' comp. Of those, 928 were aged 80 or older. One was 99.

By one benchmark, workers' comp claims are costing the mail carrier 35 percent more than in the private sector, according to figures cited by the inspector general in the audit. That figure, which is at the conservative end of a range used by the inspector general, is the basis of the $335 million in estimated possible savings.

Like other feds hurt on the job, postal workers are covered by the Federal Employees' Compensation Act, which is run by the Labor Department. The Postal Service is the program's largest participant.

The $335 million in possible annual savings are about one-quarter of the $1.2 billion the Postal Service this week is due to reimburse the Labor Department for workers' comp costs. As recently as August, postal officials suggested that they might not have the cash to cover that installment, but a spokesman confirmed Tuesday that the money will be paid.

Along with recommending changes to the structure of the workers' comp program, the inspector general also found room for management improvements.

Out of 150 case files reviewed in the Postal Service's Chicago, Philadelphia and Seattle offices, more than two-thirds lacked claims forms, medical documentation or correspondence, the audit said.

The Labor Department "is not always responsive" to reported fraud, while departmental officials are reluctant to provide information during investigations, auditors wrote. After one USPS recipient was found fit to return to work with no restrictions, the Labor Department waited about 14 months before taking action to cut off the employee's benefits, according to the audit.



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