Workers' comp transfer could cost local company millions

The defense authorization bill passed by Congress doles out billions of dollars to America’s defense contractors — but it could cost one local company a few million.

Lawmakers attached language to the bill that puts the Labor Department in charge of a workers’ compensation program that critics say has been slow to hand out dough to former federal workers at nuclear-weapons facilities who got sick from their jobs.
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Louisiana Sen. Mary Landrieu helped beat back efforts to transfer the program.

The Department of Energy (DoE) had managed the program since Congress created it in 1999. That federal agency then hired Science & Engineering Associates (SEA), which has since merged with another company to form Apogen Technologies, based in McLean, Va., to process the claims.

Both DoE and the company, which was based in New Orleans until the merger, soon came under criticism from lawmakers with sick workers as constituents and analysts at public watchdog groups such as the Government Accountability Project (GAP) who said the two were in over their heads.

The inspector general of the General Services Administration found that the contract award to SEA, which was no-bid, was outside the scope of an original contract the company held with the Navy that led to its work on the workers’ comp program.

On the defensive, SEA hired the C2 Group and the Livingston Group to help fight efforts last year to transfer the program to the Labor Department, which has more experience managing workers’ compensation programs than DoE.

Louisiana Sens. Mary Landrieu and John Breaux, both Democrats, helped beat back efforts to transfer the program. But a lingering backlog of unprocessed claims caused lawmakers, led by Sens. Jeff Bingaman (D-N.M.) and Jim Bunning (R-Ky.), to streamline the program and turn it over to the Labor Department under the defense authorization bill.

According to a statement from Bingaman’s office, DoE has spent $95 million on administrative costs for the program but less than 8 percent of the 23,000 claims have been decided. Only 31 workers had received payments under the program as of August.

The Government Accountability Office has estimated it would take DoE seven years to work through the backlog.

The transfer to the Labor Department, which already manages a separate compensation program, would “have a positive impact on the lives of thousands of these former workers and their families,” Bingaman said in a statement.

Apogen could lose its contract, which some have estimated would bring in as much as $40 million, in the switch. In a letter sent a year ago, Breaux and Landrieu had argued the switch would adversely affect a key employer in their state.

The company said in a statement, however, that it was “confident that Congress and the administration share our interest in continuing to aggressively gather relevant claims data and package those claims for quick decisions by the Department of Labor.”

Mike Smith, a spokesman for the company, said that more than 10,000 claims have been processed so far and that Apogen expected to finish the rest over the next year.

The company could be completed with its work before the transfer takes place, he said. Some work may remain at DoE, said Bingaman spokesman Bill Wicker. The department has announced a new competition for the claims work.

Under growing pressure from Capitol Hill, Apogen hired 200 new employees in the past few months to accelerate claims processing.

After the company processes a claim, which is basically entering relevant information into a computer database, a panel of physicians then reviews the merits of the case. A third step determines who should pay the claim.

The program was set up in 1999 to help states identify workers who were not covered by a federal workers’ compensation program but who may still be eligible for state aid.

GAP, which beat the drums the loudest for the transfer, called the DoE program broken and heralded the changes brought by the defense authorization bill.

Under the measure, Labor not only takes over management of the program but will also be responsible for paying the claims. That means sick workers won’t have to file through either DoE or state workers’ comp programs in an effort to speed the claims processing.

Greg Watchman, GAP executive director and former head of the Occupational Safety and Health Administration during the Clinton administration, called the move a “tremendous victory” for thousands of nuclear industry workers.