Audit raises questions about agency's practices

By Karen Blakeman
Advertiser Staff Writer

Despite questionable practices within the Department of Labor and Industrial Relations' Disability Compensation Division, a state audit has found that the division's reimbursement rates have not curtailed injured employees' access to medical care.

The Legislature asked State Auditor Marion M. Higa to examine whether the division's practice of tying medical reimbursements to a Medicare fee schedule made it difficult for a patient to get proper medical care.

The audit found the use of Medicare reimbursement rates worked well for Hawai'i and was widely accepted by other states.

But according to information released by Higa's office, the disability compensation division does suffer from a number of other ills that, if left untreated, could permit fraud to go undetected.

Among the problems, according to the auditor's press release, is a lack of policy concerning the waiver of penalties for violations of worker compensation laws. During a two-year period, the division administrator had waived $950,000 of more than $1.2 million in penalties without approval of the director.

Division employees often did tasks not included in their job descriptions and some tasks were completed by workers outside the division.

A new computer system, recently purchased by the division for $750,000, does not integrate well with division goals and strategies, Higa found. Because of this, much of the division's financial reporting is maintained manually.

Finally, a survey of division employees showed that 60 percent of those responding did not trust the administrator, 41 percent said morale within the division was poor and 35 percent said their own morale was low. Seventy percent of division employees responded to the survey.

The auditor recommended that the director of the Department of Labor remedy the problems.