A new client calls your office. He explains that he was injured on the job. You think, “Great, a new worker’s compensation case!” The client then tells you he works for the U.S. Postal Service (USPS). This means he is a federal employee. You immediately stop the conversation and tell the client you don’t handle federal worker’s compensation cases, and what’s more, you don’t know anyone who does. The client hangs up and is left on his own.

But why do so few lawyers handle federal worker’s compensation cases? There are 2.1 million nonmilitary federal employees. That is a huge potential client base, larger than the working-age population of 20 states! Employees of such federal agencies as the USPS, the Veterans Administration, the Transportation Security Administration, and the Department of Homeland Security are at a high risk of sustaining work-related injuries and are all covered under federal worker’s compensation.

In federal worker’s compensation cases, there are no court appearances. All proceedings are conducted by telephone and almost all documents are uploaded electronically. Because there are no state restrictions to practicing federal worker’s compensation law, lawyers from any state can represent clients all over the country, and in fact, all over the world.

Given these factors, there should be a lot of lawyers who handle federal worker’s compensation cases. But there aren’t. Why? This article explains the reasons. Afterward, it compares the federal worker’s compensation system to state worker’s compensation systems, pointing out the many similarities. Finally, it questions whether the federal system adequately meets its stated goal of protecting injured workers’ right to compensation.

Few Lawyers Handle Federal Worker’s Compensation Cases

Reasons for lawyers not handling worker’s compensation cases for federal employees include the following. First, there are no contingency fees in federal worker’s compensation cases. In fact, federal law makes it a misdemeanor to charge an injured federal worker a contingency fee. Therefore, all work for federal employees must be billed by the hour with detailed descriptions of the work performed and the time spent. Lawyers who practice state-law-based worker’s compensation and personal injury law are not accustomed to keeping track of time and billing clients. Additionally, lawyers who bill on a contingency basis will charge a percentage of the recovery, which is forbidden in federal cases.

Second, although being able to represent clients without regard to state boundaries increases the pool of potential clients, when it comes to collecting an unpaid fee for work performed, it is a serious limitation. The difficulties of suing people who do not pay your fee are multiplied if they live in states in which you’re not licensed and don’t regularly practice.

For this reason, most federal worker’s compensation lawyers charge an upfront retainer. Imagine being injured on the job, perhaps not being paid, and having to send a retainer to a lawyer to represent you in a worker’s compensation case. The contingency-fee tort system is designed to allow everyone access to the courthouse, regardless of economic means. In federal worker’s compensation cases, only those who pay their lawyers have representation.

Third, assume a client has paid a retainer and you have kept detailed billing records. You are not allowed to transfer the retainer to your operating account until the client has approved the bill. Yes, that is correct: you don’t get paid if the client disapproves of the bill, even if you do the work. In a contingency case, you take the risk that you might not win, and if a lawyer paid on a contingency basis fails to make a recovery, there is no fee. In federal worker’s compensation cases, you can do the work, and win or lose, you will not get paid if a client does not approve of your fee.

Fourth, any compensation received by an injured federal employee is sent directly to the worker, not his or her lawyer. In traditional contingency-fee practice, you immediately send a notice of attorney lien or letter of representation to protect your right to get paid. Usually, the settlement check is made payable to the lawyer and the client. Not in federal worker’s compensation cases. The check is made payable to the client and mailed directly to the client. As you can imagine, this severely hampers a lawyer’s ability to get paid and reinforces the need for a retainer. Because the check is mailed to the client, case loan companies will not provide a case advance to pay a retainer.

It should be obvious from the above discussion of federal worker’s compensation law why so few lawyers handle these cases. The federal government justifies these procedures by proclaiming the goal that the injured workers, not lawyers, receive as much of the recovery as possible. The prohibition against contingency fees is also meant to protect federal employees from being “overcharged” for legal services. The assurance that attorney fees and the claimant’s recovery are kept separate is part of that protection. But, as a result, lawyers are essentially cut out of the federal system and federal workers are deprived of the ability to have legal representation for their injuries.

Governing Law for Federal Worker’s Compensation

Like state worker’s compensation systems, federal worker’s compensation law is created by statute. Federal worker’s compensation law is governed by several sources. The Department of Labor is responsible for administering worker’s compensation claims for employees of the federal government and derives its authority and jurisdiction over federal-sector worker’s compensation claims from the Federal Employees’ Compensation Act (FECA).

The FECA¹ is a complex statutory scheme that provides for the payment of worker’s compensation benefits to civilian officers and employees of all branches of the U.S. government and individuals employed by the District of Columbia. The FECA provides for the payment of compensation for wage loss and for certain permanent bodily impairments incurred by employees as a result of injury, illness, or death sustained while in the performance of their duties. In addition to financial compensation, employees can receive reasonable medical and related services.

Just as state worker’s compensation systems are typically the sole recourse for workplace injuries, the FECA is the exclusive remedy for federal employees who are injured on the job.² The Department of Labor exercises this responsibility through its Office of Workers’ Compensation Programs (OWCP), which is responsible for the initial processing of claims, and through the Employees’ Compensation Appeals Board, which is responsible for appellate review of worker’s compensation claim decisions by the OWCP.

Similarities Between State and Federal Systems

Setting aside lawyers’ ability to get paid, the federal worker’s compensation system is quite similar to state worker’s compensation systems. Like state worker’s compensation commissions, in the federal system, “[t]he Office of Workers’ Compensation Programs administers disability compensation programs which provide wage replacement benefits, medical treatment, vocational rehabilitation, and other benefits to certain employees who experience work-related injury or occupational disease.”³

Claims must be timely filed and injuries must arise within the performance of duty. There must be both a factual and a medical basis to the claim. Finally, there must be a causal connection between the work and the injury. The injured federal worker has the burden of proof on each of these elements. Federal law covers traumatic injuries and occupational illness that occurs over time, such as toxic exposure and repetitive injuries.

Just as state worker’s compensation systems are typically the sole recourse for workplace injuries, the FECA is the exclusive remedy for federal employees who are injured on the job.

Injured federal employees are entitled to a schedule award for certain permanent medical impairments. The OWCP uses the AMA Guides to the Evaluation of Permanent Impairment, 6th Edition exclusively. When an injured federal worker reaches maximum medical improvement, he or she can obtain an impairment rating, which will serve as the basis of the schedule award. This is the same as some state worker’s compensation systems, while other state systems allow for a variety of factors to determine the level of permanent impairment.

Unfortunately, there is no entitlement under federal law to a schedule award for mental-health conditions nor for injuries to the head, brain, or back. Many state worker’s compensation systems cover these injuries as “person as a whole” or “non-scheduled injuries,” but under some states’ systems as well as the federal system, injuries to these body parts do not entitle an injured worker to a schedule award. However, if an injury to the head, brain, or back causes permanent impairment to an extremity (arm or leg), the injured worker may be entitled to a schedule award for that region or body part. A schedule award is calculated using a formula that includes the AMA impairment rating and the rate of pay of the injured federal employee. Schedule awards are paid over a period of weeks, except in exceptional circumstances when they can be paid in a lump sum.

Differences Between State and Federal Systems

The biggest difference between state and federal worker’s compensation systems is the role of neutral adjudicator. Under state law, there is typically a neutral arbitrator or commissioner who decides disputed issues and has the authority to enter an award for a compensable injury. A claims adjuster, respondent’s attorney, or both are paid by an employer or insurance company and are adversarial to the interests of an injured worker.

The OWCP employs claims examiners. A claims examiner is an adjuster and arbitrator rolled into one. The claims examiner deals directly with the injured worker like an adjuster. But the claims examiner also has the authority to determine compensability, benefits, and ultimately the amount of the award. If an injured federal worker is unhappy with a decision of an OWCP claims examiner, the remedy is to file an appeal.

The statute that created the federal worker’s compensation system explicitly states the system is meant to be nonadversarial. “The mission of the OWCP is to protect the interests of workers who are injured or become ill on the job, their families and their employers by making timely, appropriate and accurate decisions on claims, providing prompt payment of benefits and helping the injured worker return to gainful employment as early as is feasible.”⁴

State worker’s compensation laws typically contain similar such platitudes. But, state worker’s compensation systems are premised on an adversarial model, with neutral adjudicators. The federal system is not, and thus, claims examiners have a dual role.

As a practical matter, an injured federal worker is at the mercy of a claims examiner, with an appeal being the only remedy for a disagreement with the examiner’s determination. Appeals are governed by rigid procedural rules and take a long time to be resolved. In the case of an adverse determination by a claims examiner, his or her decision is often the final word. Compound this with the fact that most injured federal employees represent themselves, and the scale of the injustice is obvious.

Although federal worker’s compensation law has many similarities to its state counterparts, the role of the injured worker’s lawyer is quite different. The vast number of injured federal workers either can’t afford to hire a federal worker’s compensation lawyer or don’t see the value in paying a lawyer a retainer. Many potential clients are surprised lawyers cannot charge a contingency fee and shocked that they must pay a lawyer themselves. Only 10 percent of injured federal employees who contact my office retain the firm for representation. If federal compensation lawyers were able to charge a contingency fee and have the check mailed to their office, that number would be closer to 90 percent.

Effects on Workers of Federal System

It’s a very sad system, and it is heartbreaking to hear the stories of these workers. Too often, people come to us because they tried to appeal on their own and now are losing their house because they have gone so long without any kind of a paycheck. They finally borrow money from a relative so that we can help them and we are successful, but when they receive their back pay that they should have received all along, it is without interest or any penalties. Also, they do not receive attorney fees when they win.

While the system is flawed and the workers are at a disadvantage, we are here to help them fight for what they deserve. These are people who got hurt doing their job. They should be compensated while they heal and for any permanent injury they suffer. These cases are often easily fixed with the help of a physician and a lawyer, but the claims examiner denies them and most people cannot fight them alone.

If an injured federal worker contacts your office, you have a few choices. First, you can refer the person to a lawyer who handles federal worker’s compensation, with the caveat that the person will need to pay a retainer. Second, you can handle the case yourself, either with or without a retainer. Third, you can handle the matter pro bono. If you handle it yourself without a retainer, you may be handling it pro bono anyway for the reasons set forth above. But, injured federal workers deserve legal representation.

Endnotes

¹ 5 U.S.C. §§ 8101-8193.

² 5 U.S.C. § 8116(c).

³ www.dol.gov/owcp/.

⁴ www.dol.gov/owcp/owcpmisvisgols.htm.