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Witnesses and members spar over outsourcing, managed care, and use of AI in federal workers' compensation
Summary
Witnesses called for improvements to FECA-era programs, Ohio officials described measurable gains from managed care and AI, and a heated exchange focused on contractor Sedgwick's past state penalties and the accountability of private vendors.
A House Education and Labor subcommittee hearing on the Department of Labor's Office of Workers' Compensation Programs featured bipartisan testimony about modernizing federal workers' compensation and a pointed exchange about private contractors' accountability.
Christopher Godfrey, director of research at the Workers' Injury Law and Advocacy Group, warned that "replacing accountable federal employees with private vendors does not reduce costs. It reduces accountability," arguing that outsourcing can create administrative barriers that drive physicians from the program and shift costs to other payers.
Ohio Bureau of Workers' Compensation CEO Stephanie McCloud described Ohio's managed-care model and technology-driven tools that state officials say improved performance metrics: she said Ohio reduced the average filing time to about 17 days and now makes nearly 46% of determinations within two weeks after adopting managed care and related process changes. McCloud also described AI applications used by Ohio—auto adjudication for low-severity claims, auto indexing of documents, an internal policy chatbot and a "data chat" tool—to free staff to focus on complex claims while preserving appeal rights and human review.
Members pressed witnesses on fraud and contractor oversight. Ranking Member Omar cited state-level penalties and settlements involving Sedgwick and asked Robert Johnson, Sedgwick's president, why the company had been sanctioned; Johnson replied he could not comment on the specifics of those cases without review and emphasized Sedgwick's everyday operations serving injured workers.
Panelists offered a range of possible federal reforms: strengthening access to care, preserving worker choice of physician under 5 U.S.C. 8103A, improving administrative processes to prevent long delays in schedule awards, investing in federal claim-administration capacity, and designing performance metrics and quality incentives for managed-care organizations.
No formal actions or votes were taken. Members said they would continue oversight and collect additional written materials while the hearing record remained open for 14 days.
