MONTPELIER — State Auditor Doug Hoffer says Vermont isn’t doing enough to prevent the workplace injuries that have cost taxpayers nearly $40 million over the past five years.
A 55-page audit unveiled by Hoffer’s office on Monday details a host of shortcomings at the Office of State Employee Workers’ Compensation and Injury Prevention, the 15-person shop that oversees workers’ comp issues for the more than 6,000 state workers.
From poor record collecting to a failure to review the underlying causes of many workers’ comp claims, Hoffer said the state is squandering opportunities to minimize injuries that expose taxpayers to medical costs and employee compensation.
“State government’s most important asset is its workers, and they deserve a safe workplace,” Hoffer said. “In addition, taxpayers have a right to expect the state to make the investments necessary to reduce workforce injuries and related costs.”
Hoffer blamed understaffing at the Workers’ Compensation and Injury Prevention office for a flawed system in which as many as a quarter of claims never get sufficient review. Even when cases are reviewed, and recommendations made to prevent the recurrence of similar injuries, Hoffer said, only about two-thirds of those plans are fully implemented by the departments at which they’re directed.
One likely reason for the problem, he said, is “ineffectual communication” between the workers’ comp office and the departments in which incidents actually occurred. Recommendations for workplace improvements, according to the audit, are often sent to the Department of Human Resources. However, Hoffer said those reports don’t always find their way to the shop managers who would be able to install the proposed fixes.
“Nearly every incident represents an opportunity to implement a safer work environment and reduce claims,” the audit found. “The results of the statistical sample indicate that (the Office of State Employee Workers’ Compensation and Injury Prevention) is missing significant opportunities to identify and recommend safety fixes.”
Secretary of Administration Jeb Spaulding said he appreciates Hoffer’s report and mostly agrees with its findings. He said the audit has already spawned overdue reforms, including heightened internal controls over access to sensitive data.
“I think we run a good program in our workers’ comp office, but there’s always room for improvement,” Spaulding said.
The audit found that six government entities — the Agency of Transportation, Department of Corrections, Vermont Veterans’ Home, Department of Buildings and General Services, Department of Public Safety and the now-closed Vermont State Hospital — accounted for more than three-quarters of the 4,825 workers’ comp incidents reported between fiscal years 2008 and 2012.
Hoffer said the costs associated with workplace improvements are a primary barrier to their implementation. He said those up-front costs, however, will yield future savings on payroll expenses.
The Workers’ Compensation and Injury Prevention office “appears to be hamstrung by limited resources,” Hoffer said. “As we know, prudent investments in prevention pay dividends over time, both for employees and the employer.”
Hoffer said adding more safety coordinators would be a good first step. The state workers’ comp office currently employs only two coordinators, half the number it had in 2010 and a quarter the staffing level recommended in a 2003 loss prevention study conducted by an outside consultant.
Spaulding said the state will consider beefing up staffing and will conduct a cost-benefit analysis before deciding whether to do so.
Hoffer said the state also needs to improve vastly its record-keeping system, flaws in which prevented his office from getting baseline data on the types of injuries most responsible for workers’ comp costs.
Hoffer said a lack of internal controls has also heightened the risk for abuse or fraud. At the time the audit was conducted, more than a quarter of the 46 people authorized to use the database had “unfettered access” to every aspect of the system — access Hoffer said could abet malfeasance by people looking to conceal fraudulent claims. Hoffer said his audit did not examine the system for evidence of abuse or fraud.
According to the audit, 10 contractors had been granted the ability to authorize individual payments and claim reserve amounts of up to $1 million. The program’s manager has since restricted access levels for many of the people on the system, but Hoffer said the potential for problems persists.
“The weak system access controls coupled with the lack of compensating controls means that WCP is at high risk that inappropriate actions (intentionally or unintentionally) could be taken by users,” the audit said.
Hoffer said lawmakers may want to consider undoing a state law that imposes a hard cap on safety-related expenditures. The law limits investments in prevention to no more than 6 percent of annual workers’ comp claims, or about $480,000 annually, based on a rolling average of claims over the past five years.
Hoffer said workers’ comp protocols differ state to state, making it difficult to see how Vermont’s expenses compare with other jurisdictions.
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