August 20, 2018

Management of the Workers’ Compensation Program at the Hanford Site

The Department of Energy uses operating contractors at the Hanford Site to cleanup hazardous and radioactive contamination left over from nuclear weapons production activities.  The Department is self-insured and is responsible for paying all costs associated with Hanford Site Workers’ Compensation claims for work related injuries and illnesses for contractors that are covered by the Memorandum of Understanding between the Department and Washington State’s Department of Labor and Industries (L&I).  The Department’s Richland Operations Office has a contract with Penser North America, Inc. (Penser) to act on the Department’s behalf as a third-party administrator to process all claims for employees of Hanford Site operating contractors designated in a Memorandum of Understanding.  On behalf of the Department, Penser makes the initial claim determination and makes a recommendation to allow or deny claims to L&I, who has the authority on allowing or denying Workers’ Compensations claims.

In a letter dated March 8, 2017, U.S. Senators Maria Cantwell and Patty Murray requested that the Office of Inspector General (OIG) perform a review of Workers’ Compensation issues at the Hanford Site.  This request (Appendix 5) identifies several areas of inquiry, including concerns about: possible intimidation of workers who file Workers’ Compensation claims, Departmental oversight of the Penser contract, qualifications of the medical providers for chemical exposure claims, whether Penser is providing all relevant documentation, and the number of denied claims with chemical exposure as the cause.  Our findings pertaining to these issues are incorporated into the main body of this report and are also summarized in Questions Posed in Senators’ Letter (Appendix 6).  Our objective was to assess the effectiveness of the Department’s processes, procedures, and controls related to the Workers’ Compensation Program at the Hanford Site.

We determined that the Department does not have effective processes, procedures, and controls over the Workers’ Compensation Program at the Hanford site.  We identified problems with: incomplete documentation packages sent to L&I, a major billing and payment discrepancy with the State of Washington L&I related to pension benefits costs, questioned costs relating to indemnity claims, and concerns with the letter of credit and payments processes.  Further, we observed issues with communication and trust relating to Workers’ Compensation claims at several levels.  The challenges associated with communication are exacerbated by a fragmented Hanford Site Workers’ Compensation process that workers find confusing.  

We concluded that efforts to strengthen communication, education, and advocacy throughout the Workers’ Compensation process, as well as additional transparency and documentation about the claim determinations, will serve to decrease conflict and reduce worker perceptions that claims are being mishandled.  Additionally, we concluded that the Department needs to dramatically increase its involvement in all aspects of the Workers’ Compensation process.  To this end, on April 2, 2018, the Department opened the Hanford Workforce Engagement Center, which will assist workers with the Workers’ Compensation Program and the other Hanford Site medical related programs.

We believe that improvements in communication, increased Federal involvement, and enhanced contract administration, together with the improvements that the Department has already begun, will serve to decrease frustration and perceptions of unfairness and, over time, increase trust.  To address the concerns identified in this report, we recommended that the Manager, Richland Operations Office: (1) develop a corrective action plan to address the concerns identified over contractual and financial issues, (2) develop a corrective action plan that addresses the identified concerns over operational aspects of the third-party administrator, and (3) develop a corrective action plan to address the communication concerns identified in this report.  Management concurred with the report’s findings and recommendations and indicated that corrective actions will be considered or are underway.