Background Black lung benefit payments include both cash assistance and medical care. Maximum cash assistance payments ranged from about $670 to $1,340 per month in 2019, depending on a beneficiary’s number of dependents. Miners receiving cash assistance are also eligible for medical treatment of their black lung-related conditions, which may include hospital and nursing care, rehabilitation services, and reimbursement for drug and equipment expenses, according to DOL documentation. DOL estimates that the average annual cost for medical care in fiscal year 2019 was approximately $8,225 per miner. During fiscal year 2019, about 25,700 beneficiaries received black lung benefits (see fig. 1). The number of beneficiaries has decreased from about 174,000 in 1982 as a result of declining coal mining employment and an aging beneficiary population, according to DOL. Black lung beneficiaries could increase in the near term due to the rise in the occurrence of the disease in its most severe form, progressive massive fibrosis, particularly among Appalachian coal miners, according to the National Institute for Occupational Safety and Health (NIOSH). NIOSH reported that coal miners in central Appalachia are disproportionately affected; as many as 1 in 5 show evidence of black lung, which is the highest level recorded in 25 years. NIOSH has attributed the rise in occurrence of black lung to multiple factors, including increased exposure to silica. Black lung claims are processed by the Office of Workers’ Compensation Programs within DOL. Contested claims are adjudicated by DOL’s Office of Administrative Law Judges, which issues decisions that can be appealed to DOL’s Benefits Review Board. Claimants and mine operators may further appeal these DOL decisions to the federal courts. If an award is contested, claimants can receive interim benefits until their case is resolved, which are generally paid from the Trust Fund, according to DOL. In fiscal year 2019, about 33 percent of black lung claims were approved, according to DOL data. Final awards are either funded by mine operators—who are identified as the responsible employers of claimants—or the Trust Fund, when responsible employers cannot be identified or do not pay. Of the approximately 25,700 beneficiaries receiving black lung benefits in 2019, 13,335 were paid from the Trust Fund; 7,985 were paid by responsible mine operators; and 4,380 were receiving interim benefits, according to DOL data. DOL officials told us that the more common reasons that beneficiary claims are paid from the Trust Fund include operator insolvency and unclear employment history of miners, among other reasons (see fig. 2). The operator responsible for the payment of benefits is generally the operator that most recently employed the miner. Black Lung Insurance Federal law generally requires coal mine operators to secure their black lung benefit liability. A self-insured coal mine operator assumes the financial responsibility for providing black lung benefits to its eligible employees by paying claims as they are incurred. Operators are allowed to self-insure if they meet certain DOL conditions. For instance, operators applying to self-insure must obtain collateral in the form of an indemnity bond, deposit or trust, or letter of credit in an amount deemed necessary and sufficient by DOL to secure their liability. Operators that do not self-insure are generally required to purchase coverage from commercial insurance companies, state workers’ compensation insurance funds, or other entities authorized under state law to insure workers’ compensation. DOL regulations require commercial insurers to report each policy and federal black lung endorsement issued, canceled, or renewed in a form determined by DOL. DOL accepts electronic reporting of this information from insurers via their respective rating bureaus. DOL retains this information— insured company name, address, federal employer identification number, and policy and endorsement data—so that DOL staff can later research claims to determine which operator and insurer may be liable. As we have noted in prior reports, insurance companies are regulated primarily by the states with state law providing state regulators with the authority and funding to regulate insurance. State insurance regulation is designed to, among other things, help insurers remain solvent and able to pay claims when due. Effective insurer underwriting and risk management practices—such as reinsurance–serve a similar function. While insurer insolvency occurs infrequently, when it does state insurance commissioners are typically appointed as receiver and supervise the rehabilitation or liquidation of these insurers, and state guaranty funds may assume liability for paying covered claims of insolvent insurers that have liquidated. Some Self-Insured Operator Bankruptcies Shifted Liability to the Trust Fund, but Commercial Insurance Coverage Can Help Limit Trust Fund Exposure Self-Insured Operators Transferred About $865 Million in Estimated Liability to the Trust Fund, More than Double DOL’s Previous Estimate Of the eight coal mine operator bankruptcies we identified, three resulted in a transfer of estimated benefit liability from the coal operator to the Trust Fund and five did not, according to DOL. Using Bloomberg data, we identified coal mine operators that filed for bankruptcy from 2014 through 2016. Figure 3 shows how many operators were self-insured or commercially-insured at the time of bankruptcy, and if responsibility for benefits was shifted from the bankrupt operator to the Trust Fund. Three self-insured coal mine operator bankruptcies affected the Trust Fund. Specifically, the bankruptcies of Alpha Natural Resources (Alpha), James River Coal (James River), and Patriot Coal (Patriot) resulted in a transfer of benefit liability to the Trust Fund of an estimated $865 million, according to DOL. DOL officials said that the amount of collateral they required from these three operators to self-insure was inadequate to fully cover their estimated benefit liability. When this occurs, benefit liability in excess of the collateral can be transferred to the Trust Fund. For example, the collateral DOL required from Alpha was about $12 million and approximately $494 million of estimated benefit liability transferred to the Trust Fund, according to DOL’s estimate (see table 1). DOL estimates for how these three operator bankruptcies will affect the Trust Fund have more than doubled from what DOL had previously reported. In June 2019, we reported that DOL estimated that between $313 million to $325 million in benefit liabilities would transfer to the Trust Fund as a result of these bankruptcies. In January 2020, however, DOL provided updated estimates stating that $865 million in benefit liabilities would transfer to the Trust Fund as a result of these bankruptcies. According to DOL, their estimates increased to account for higher black lung benefit award rates that occurred from fiscal years 2016 through 2019; higher medical treatment cost inflation in recent years; and different discount rate assumptions. Additionally, DOL’s prior estimate for the Patriot bankruptcy did not account for future claims and the effect of those claims on the Trust Fund. The three other self-insured coal mine operator bankruptcies we identified did not affect the Trust Fund. Specifically, Arch Coal, Peabody Energy, and Walter Energy were also self-insured operators, but DOL officials said that their federal black lung benefit liabilities were assumed by a reorganized company or by a purchaser, and therefore did not transfer to the Trust Fund. DOL officials said that they take three key actions, as appropriate, to protect the financial interests of the Trust Fund during self-insured operator bankruptcies. 1. DOL officials said that they file a claim in every case with the bankruptcy court for the reimbursement of an operator’s full estimated federal black lung benefit liability. 2. If an operator plans to reorganize or if it is acquired by a purchaser, DOL officials said that they negotiate with the company or the purchaser, as appropriate, to help ensure benefit responsibility will be “passed through” to a reorganized operator or purchaser, rather than be discharged and become the responsibility of the Trust Fund. 3. If benefit liabilities are not “passed-through” to an operator, DOL officials said that they seek settlement agreements, whereby the Trust Fund receives an allowed general unsecured claim in an amount based on an operator’s estimated benefit liability. DOL officials said that during the bankruptcy of James River they negotiated a settlement agreement providing DOL with a general unsecured claim in an amount commensurate with its estimate of the operator’s benefit liability at the time of bankruptcy. However, these officials said that given the low priority under bankruptcy law for their general unsecured claim, the payout they received was only about $400,000, which was just a small portion of the estimated benefit liability that transferred to the Trust Fund. DOL officials said that during the bankruptcy of Alpha they negotiated both a “pass through” and a settlement agreement in which certain liabilities would be transferred to the Trust Fund, while other liabilities would be retained by Alpha. DOL officials said that they received a payout from Alpha of $7.4 million, although $494 million in estimated benefit liability transferred to the Trust Fund. Further, as a condition of the agreement, DOL officials said that they agreed to let Alpha self-insure after it emerged from bankruptcy. Since 2016, several other self-insured operators have also filed for bankruptcy, according to DOL officials, including Cambrian Coal, Cloud Peak Energy, Murray Energy, and Westmoreland Coal. DOL officials said that $17.4 million in estimated black lung benefit liability will transfer to the Trust Fund as a result of Westmoreland Coal’s bankruptcy. Given the uncertainty of the bankruptcy process in terms of whether liabilities will or will not transfer to the Trust Fund, however, DOL officials said that they could not speculate on how the other bankruptcies may affect the Trust Fund. State Insurance Regulation and Insurer Practices Help to Protect the Trust Fund from Assuming Responsibility for Paying Benefits of Commercially-Insured Operators Insurance contracts or policies to secure operators’ benefit liabilities are required by law to include a provision that insolvency or bankruptcy of an operator does not release the insurer from the obligation to make benefit payments. As previously discussed, state insurance regulation, insurer underwriting and risk management practices, and state guaranty funds also help to protect the Trust Fund from having to assume responsibility for paying black lung benefits on behalf of bankrupt coal operators. Thus, by being commercially insured, the two operator bankruptcies we identified that filed for bankruptcy between 2014 and 2016—Energy Future Holdings and Xinergy Ltd—did not affect the Trust Fund, according to DOL (see fig 3). State insurance commissioners monitor the financial health of insurers, including performing periodic examination of insurer financial statements. Further, rating agencies, such as Standard & Poor’s, Moody’s, and AM Best, issue insurer financial strength ratings, which represent the agencies’ opinions on insurers’ financial strength and ability to pay policy and contract obligations. Eight of the nine insurers that issued approximately 90 percent of the workers’ compensation policies with federal black lung coverage from 2016 through 2018, according to our review of DOL data, had at least an “A-” financial strength rating from AM Best (with the one remaining being a state insurer that was not rated). In deciding whether to provide federal black lung coverage, insurers we interviewed said they consider an operator’s historical black lung claim losses, financial condition, and mine location among other factors. However, insurance company officials identified various challenges in writing and pricing black lung coverage that produces an appropriate amount of premiums to cover expected losses. The challenges cited by these officials included the long latency period of black lung disease; changes in law regarding benefit eligibility and how the disease is defined; the ability of miners to refile claims indefinitely; and the inability of insurers and operators to settle claims. One official noted that there is much risk and little profit in black lung coverage. Insurance companies can use reinsurance to protect themselves from catastrophic losses that could threaten their solvency and ability to pay claims, and to reduce wide fluctuations in their annual losses. For example, workers’ compensation claims can take years to fully develop after premiums have been set, which in turn can adversely affect an insurer’s financial position if premiums have underestimated actual claims. Insurance company officials said that they reinsure their workers’ compensation coverage, but some said that their reinsurance policies either explicitly excluded occupational disease claims, including black lung, or cover black lung but have conditions and loss thresholds that would generally result in the exclusion of such claims. However, reinsurance, even if it does not explicitly cover federal black lung claims, can help manage the risk of workers’ compensation losses and losses in other lines of insurance that an insurer writes, thereby indirectly helping to ensure that the insurer can pay all types of claims, including federal black lung. If an insurer becomes insolvent, state guaranty funds reduce the potential for the Trust Fund to assume responsibility for paying claims. States have different rules for guaranty fund benefit coverage and limits. In the states we reviewed, state guaranty funds generally pay federal black lung benefits, although there may be certain limitations on the claims they will pay. For example, in West Virginia, there is no maximum claim limit that the state guaranty fund will pay on standard workers’ compensation claims; but in Kentucky, a state guaranty fund official told us that, in the guaranty fund’s opinion, state law limits federal black lung claims to $300,000. Also, a guaranty fund could reject a federal black lung claim, which could result in the Trust Fund having to assume responsibility for paying the claim. An official from one state guaranty fund that maintained data on rejected black lung claims said that the most common reason for rejection is that claims are filed after the date set by the bankruptcy court for receiving claims. DOL officials said it is very uncommon for the Trust Fund to assume responsibility for federal black lung claims of insolvent insurers. However, DOL does not maintain data to readily determine the extent to which this actually occurs, as discussed later in this report. DOL’s Limited Oversight Has Exposed the Trust Fund to Financial Risk, and Its New Self-Insurance Process Lacks Enforcement Procedures In overseeing coal mine operator self-insurance in the past, DOL did not estimate future benefit liability when setting collateral; regularly review operators to monitor their changing financial conditions; or always use enforcement tools available to protect the financial interests of the Trust Fund, such as by revoking an operator’s ability to self-insure, if warranted. In July 2019, DOL began implementing a new self-insurance process that, if implemented effectively, should help to address some of these past deficiencies. Specifically, DOL plans to consider an operator’s future benefit liability when setting collateral and to review self-insured operators more frequently. However, the new process still lacks procedures for self- insurance renewals and coal operator appeals, which could hinder DOL from taking enforcement actions to protect the Trust Fund as needed. Additionally, DOL does not monitor whether operators that do not self- insure maintain adequate and continuous commercial insurance coverage as required by law. DOL Did Not Estimate Future Benefit Claims When Setting Collateral and Regularly Review Self-Insured Operators Agency regulations require DOL to obtain collateral from coal mine operators applying to self-insure in an amount deemed by DOL to be necessary and sufficient to secure the payment of the operators’ liability. To determine collateral amounts under the former process, agency procedures stated that DOL first assess an operator’s net worth by reviewing, among other factors, the operator’s audited financial statement and black lung claims information. DOL then determined the amount of collateral equal to 3, 5, or 10 years of the operator’s annual black lung benefit payments made at the time of the operator’s self-insurance application, depending on its net worth. Specifically, if net worth was $1 billion or greater, agency procedures stated that DOL set collateral equal to 3 years of benefit payments. If net worth ranged from $500 million to $1 billion, DOL set collateral equal to 5 years of benefit payments. If net worth ranged from $10 million to $500 million, DOL set collateral equal to 10 years of benefit payments. Agency procedures did not permit operators with net worth less than $10 million to self-insure. DOL’s former process for determining collateral did not routinely consider potential future claims for which an operator could be responsible. DOL had periodically reauthorized coal operators to self-insure, by reviewing an operator’s most recent audited financial statement and claims information, among other things. DOL prepared memos documenting these reviews and communicated with coal operators about whether their financial circumstances warranted increasing or decreasing their collateral. Estimating future costs based on sound actuarial practice is essential to the integrity of the insurance and the risk financing system and is key to fulfilling the promises embodied in insurance contracts, according to Actuarial Standards Board standards. Additionally, in three of the four states we contacted, state insurance officials said that they used actuarial methods to assess an operator’s future estimated benefit liability when considering how much collateral should be required to self- insure. The remaining state, Wyoming, did not allow coal mine operators to self-insure. Table 2 provides information on the 22 operators that were self-insured under DOL’s former process, including the date of each operator’s last DOL reauthorization; the amount of DOL-required collateral; and the operator’s estimated black lung benefit liability, if available. Agency regulations state that DOL may adjust the amount of collateral required from self-insured operators when experience or changed conditions so warrant, but DOL did not regularly monitor these operators to reauthorize their ability to self-insure. In reviewing DOL’s most recent reauthorization memos for each of the 22 self-insured operators, we found that while some of these operators had been reauthorized more recently, others had not been reauthorized by DOL in decades. One operator in particular had not been reauthorized by DOL since 1988. DOL officials stated that from 2009 to 2012, six employees handled coal operator reauthorizations and associated work actions. Due to attrition, however, this number dropped at times to three employees, according to DOL officials. Additionally, DOL had no written procedures that specified how often reauthorizations should occur after an operator’s initial 18- month reauthorization. In contrast, in two of the four states we contacted, state insurance officials were required to review self-insured employers at least annually. DOL Did Not Always Use Enforcement Tools to Protect the Trust Fund Revoking an operator’s ability to self-insure, fining mine operators for operating without insurance, and placing liens on operator assets are tools DOL has available to mitigate financial losses to the Trust Fund. Based on our review of DOL documentation, however, we found instances when DOL did not use these tools to protect the Trust Fund, or was hindered from doing so because of an operator’s ongoing appeal or bankruptcy. In September 2001, DOL required $5 million in additional collateral from James River, which would have increased its collateral from $0.4 million to $5.4 million. Although DOL did not receive the additional collateral, it did not revoke the operator’s authority to self-insure, which is a potential option under agency regulations. Further, DOL had not reauthorized James River at any point from August 2001 until it filed for bankruptcy in April 2014. If DOL had revoked James River’s ability to self-insure, it could have potentially prevented the Trust Fund from being responsible for claims based on a miner’s employment from 2001 through 2016, when James River liquidated. Additionally, if the operator had been unable to obtain commercial insurance, DOL could have potentially fined the operator for each day it operated without insurance. Instead, DOL took no action during these years and estimated benefit liability of $141 million was shifted to the Trust Fund, according to DOL. DOL officials stated that they do not have records explaining why James River did not provide the additional collateral or why they did not revoke its authority to self-insure. In August 2014, DOL required $65 million in collateral from Patriot, increasing its collateral from $15 million to $80 million. Patriot appealed this decision and, in the 8 months that followed before Patriot filed for bankruptcy in May 2015, DOL did not obtain additional collateral, or revoke Patriot’s ability to self-insure because the appeal was still pending. DOL officials said they would not typically revoke an operator’s authority to self-insure during an ongoing appeal. As a result, DOL was hindered from using this enforcement tool. Liens on operator assets can be an effective tool to protect the Trust Fund if an operator defaults on its benefit liabilities, but DOL officials said that they are hindered from using this tool if an operator files for bankruptcy. DOL can place a lien on a coal operator’s assets under federal law if they refuse the demand to pay the black lung benefit payments for which they are liable. In the event of bankruptcy or insolvency, federal law states that the lien imposed shall be treated in the same manner as a lien for taxes due and owing to the United States under certain laws. However, DOL officials said that operators rarely stop paying benefits until after they file for bankruptcy. Once a bankruptcy occurs, DOL officials said that they are generally prevented by the court from placing a lien and taking an operator’s assets in lieu of payment of current and future benefit liabilities. Under bankruptcy law, DOL officials said that they have no special status over other creditors with outstanding financial claims. Instead, DOL officials said that obtaining sufficient collateral is a better way to protect the Trust Fund. DOL Has Implemented a New Self-Insurance Process, but It Lacks Procedures to Help Ensure Enforcement Actions In July 2019, DOL began implementing a new process for coal mine operator self-insurance that should help to address some past deficiencies if implemented effectively. Specifically, DOL is to consider an operator’s future benefit liability when setting collateral and plans to more frequently review self-insured operators (see text boxes). Under the new process, DOL officials plan to assess the risk of operator bankruptcy using various financial metrics related to profitability and solvency. As a result, DOL officials said that the amount of collateral they will require from operators to self-insure going forward will be based on both an estimate of an operator’s current and future black lung liability and the risk of default due to insolvency. As of October 2019, DOL officials said that most self-insured operators had submitted their application and supporting documentation and that they were reviewing this information to decide whether these operators should continue to be self-insured. DOL’s New Self-Insurance Process Will Include Estimates of Future Benefit Liability Coal mine operators applying to DOL to self-insure will be required to submit: a completed application; a certified consolidated financial statement for each of the 3 years prior to its application; recent black lung claims information; and a certified actuarial report on the operator’s existing and future black lung benefit liabilities. DOL plans to use the information submitted by coal mine operators to assess the insolvency risk of each operator using various financial metrics related to profitability and solvency. Depending on the results of their analysis, DOL plans to categorize the risk-level of each applicant as low, medium, or high. DOL will then set the amount of collateral required to self-insure by linking the operator’s risk category to a corresponding percentage of the operator’s actuarial estimated benefit liability. DOL policies state that they would require a high-risk operator to secure with collateral 90 percent of estimated benefit liability, a medium-risk operator to secure 45 percent, and a low-risk operator to secure 15 percent. However, in February 2020, DOL officials said they plan to revise these percentages to 100 percent, 85 percent, and 70 percent for high-risk, medium-risk, and low-risk operators, respectively. DOL’s New Self-Insurance Process Will Require More Frequent Coal Mine Operator Reviews Coal mine operators that are already authorized to self-insure will be required to submit: DOL plans to use the information self-insured operators submit to update their insolvency risk analysis. If an operator’s risk category changes (e.g., from low-to medium-risk), DOL plans to send a form to the operator requiring an additional amount or type of collateral. Upon receiving the completed form, and proof that the collateral has been obtained, DOL stated that they will notify the operator that its a self-insurance renewal application (annually); a financial summary (quarterly); a certified consolidated financial statement (annually); black lung claims information (annually); and actuarial estimate of benefit liability (to be submitted every three years). authority to self-insure has been reauthorized. DOL’s new self-insurance process made important changes, but overlooked other key internal control improvements that are needed to protect the financial interests of the Trust Fund. DOL’s new requirements for setting collateral and for the annual and quarterly review of self- insured operators are key components of internal controls, which call for agency management to implement control activities through policy. However, DOL’s new self-insurance process lacks procedures that could help to prevent past oversight deficiencies from reoccurring. Among other things, DOL’s procedures do not specify (1) the duration of an operator’s self-insurance authority, (2) the time frames for submitting renewal applications and supporting documentation, and (3) the conditions under which an operator’s self-insurance authority would not be renewed. Without such procedures, DOL has no basis to take enforcement action should an operator not submit its self-insurance renewal application and supporting documentation. DOL staff are also hindered from taking enforcement action during an operator’s ongoing appeal, as previously mentioned. DOL policies state that an operator may request reconsideration if its self-insurance application has been denied or if it believes the collateral required by DOL is too high to secure its benefit liabilities. However, DOL lacks procedures that specify, among other things, the length of time that operators have to submit supporting information. Further, DOL does not specify a goal for how much time DOL appeals decisions should take. For example, in October 2015, DOL recommended revoking Murray Energy’s (Murray) authority to self-insure due to deteriorating financial conditions. Murray appealed this decision, and DOL officials said they postponed responding to the appeal until their new self-insurance process was implemented so that they could evaluate Murray under its new process along with the other self-insured operators. However, Murray filed for bankruptcy in October 2019 and DOL had not revoked its authority to self-insure or requested additional collateral because Murray’s appeal was still pending and DOL was still evaluating how much collateral it would require from the operator under its new self-insurance process. DOL Does Not Monitor Whether Coal Mine Operators Maintain Commercial Insurance Coverage DOL does not monitor coal mine operators that do not self-insure and, thus, must commercially insure their federal black lung liabilities to make certain they maintain adequate and continuous coverage as required by law. DOL previously monitored operators' compliance with the program's insurance requirements by annually sending letters to a selection of operators seeking confirmation that they had maintained adequate coverage, but discontinued the process once the agency began receiving NCCI policy data. In order to use the policy data for the purpose of identifying operators that have not maintained coverage, DOL would, as a starting point, have to maintain a record of all employers that operate a coal mine. However, DOL officials explained that they do not currently maintain such a record. In the absence of effective DOL monitoring of operator compliance, we evaluated the potential risk that uninsured operators could pose to the Trust Fund. Specifically, in examining the 13 largest coal operators that were not approved to self-insure their federal black lung liabilities and, therefore, had to obtain commercial coverage, we found that some insurers erred in reporting endorsements and in one instance an operator did not have adequate coverage. We found six operators (parent or subsidiary) that were not insured for the entire 3 year period from 2016 through 2018, according to our review of DOL data. When we discussed our findings with DOL, agency officials had to research each operator individually and in some cases contact the operator or their insurer to find out whether or not they had been covered. DOL concluded that these entities were insured. However, the insurers had not properly reported the federal black lung endorsement on new policies or subsequent renewals, in addition to other reporting issues. One of these six operators also had, inadvertently, not maintained adequate commercial coverage for its mining operations in Texas, and had not self-insured those operations. In this instance, the operator obtained an excess loss policy that only pays claims once they exceed a high threshold and, therefore, is not sufficient by itself to secure the payment of the operator’s benefit liabilities. DOL data does not include information on excess loss policies and, while the data NCCI provides on standard workers’ compensation policies with federal black lung endorsements lists operators’ addresses, they do not provide the specific states for which endorsements apply. Designing processes to achieve agency objectives and respond to risks is a principle of effective internal controls. Without a process to monitor operator compliance with program insurance requirements, DOL risks not identifying a lapse or cancellation of operator coverage. This could result in the Trust Fund having to assume responsibility for paying benefits that would otherwise have been paid by an insurer. DOL officials said the Trust Fund infrequently pays claims on behalf of uninsured operators due to the civil penalties that it can impose on operators and certain company officers. These officials also said that operators that do not maintain insurance coverage typically employ few miners and are out of business by the time a claim is filed and, thus, cannot be held liable for benefit claims. However, DOL officials acknowledged that they do not track how often claims are paid by the Trust Fund on behalf of uninsured operators that should have been insured. We attempted to examine the extent to which claims were paid by the Trust Fund in fiscal year 2018 on behalf of uninsured operators that should have been insured. We found that DOL’s black lung claimant and payment system does not identify whether potentially responsible operators should have had commercial insurance coverage. The data on responsible operators and insurers, as well as the basis on which an operator was determined to be responsible, were not consistently recorded. DOL officials said that the data fields that identify responsible operators and their insurers should reflect the information collected from DOL’s initial determination. DOL officials said that in some cases, after an adjudication decision determined the Trust Fund was responsible for paying benefits, claim examiners may have deleted the previously recorded responsible operator and insurer data, creating potential inconsistencies in the data. DOL officials acknowledged that its processes and guidance for recording information on responsible operators and the basis for those decisions resulted in inconsistent and potentially inaccurate recording of claim and benefit data. As a result, DOL issued preliminary guidance in February 2019 to field supervisors and claims examiners. However, the revised guidance does not include how to identify potentially responsible operators that should have had commercial coverage but did not. Monitoring agency internal control systems and evaluating the results of those activities is a principle of effective internal control. Without complete and consistently recorded information on potentially responsible operators and insurers, and the basis for determination decisions, DOL is not able to effectively evaluate the financial impact claims paid on behalf of uninsured operators have on the Trust Fund. Determining the financial impact of these claims would be important to DOL’s evaluation of the effectiveness of a process for monitoring operator compliance with black lung program insurance requirements. Conclusions The Black Lung Disability Trust Fund faces financial challenges, and DOL’s limited oversight of coal mine operator insurance has further strained Trust Fund finances by allowing operator liabilities to transfer to the federal government. DOL’s new self-insurance process may help to address past deficiencies in setting collateral and reviewing self-insured operators if implemented effectively. However, DOL still lacks procedures on self-insurance renewals and coal operator appeals that could help to ensure that DOL staff will take enforcement actions when needed. Establishing clear self-insurance renewal procedures could better position DOL to take action to protect the Trust Fund should an operator not submit its renewal application and supporting documentation, or comply with DOL’s collateral requirements. Procedures that identify time lines for self-insured operators to submit documentation supporting their appeals, and that identify a goal for how much time DOL should take to make appeals decisions could help to ensure that DOL is able to revoke an operator’s ability to self-insure, when warranted. Commercially-insured federal black lung liabilities can limit the Trust Fund’s exposure to financial risk, but only if operators maintain adequate and continuous coverage as required. Currently, DOL does not identify lapses or cancellations in coverage among commercially-insured operators until after a claim is filed. Establishing a process to identify lapses and cancellations in coverage before claims get filed could help prevent the Trust Fund from becoming responsible for these claims. Recommendations for Executive Action We are making the following three recommendations to the Department of Labor: The Director of the Office of Workers’ Compensation Programs should develop and implement procedures for coal mine operator self- insurance renewal that clarifies how long an operator is authorized to self-insure; when an operator must submit its renewal application and supporting documentation; and the conditions under which an operator’s self-insurance authority would not be renewed. (Recommendation 1) The Director of the Office of Workers’ Compensation Programs should develop and implement procedures for self-insured coal mine operator appeals that identify time lines for self-insured operators to submit documentation supporting their appeals and that identify a goal for how much time DOL should take to make appeals decisions. (Recommendation 2) The Director of the Office of Workers’ Compensation Programs should develop and implement a process to monitor operator compliance with commercial insurance requirements and periodically evaluate the effectiveness of this process. This process should be designed to detect errors and omissions in reporting insurance coverage using complete, accurate, and consistently recorded data. (Recommendation 3) Agency Comments and Our Evaluation We provided a draft of this report to the Department of Labor (DOL) for review and comment. Their written comments are reproduced in appendix I. DOL also provided technical comments and clarifications, which we have incorporated, as appropriate. DOL agreed with our three recommendations and said it is acting to implement them to achieve further improvements in ensuring the effective oversight of coal mine operator insurance. DOL acknowledged the importance of improving oversight of coal mine operator insurance and commented that it made major oversight improvements in recent years. DOL commented that it began developing a new coal mine operator self-insurance process in 2015, before GAO began its review, and DOL formally approved this process in 2017. In July 2019, DOL stated that its new process was finalized when the Office of Management and Budget (OMB) approved the forms to collect financial and other information from coal mine operators. DOL stated that it is now reviewing information obtained from coal mine operators, and expects to set the amount of collateral required to self-insure under its new process in the first half of 2020. We commend DOL’s efforts to address the deficiencies of its past self-insurance process. However, we remain concerned about continuing coal operator bankruptcies and the looming unsecured black lung benefit liabilities that still threaten the Trust Fund. DOL commented that adopting GAO’s recommendations would further improve its oversight of coal mine operator insurance going forward. Specifically, DOL reported that it will (1) ensure letters granting or renewing self-insurance authority will inform operators that their authorization expires in one year and that they must submit renewal information three months in advance of the expiration date, (2) ensure letters denying self-insurance will inform operators that they have a 30- day appeal period (limited to one extension) and that DOL has set a goal of resolving all appeals within 90 days of the denial letter, and (3) modify existing computer systems to identify lapses or cancellations of commercial insurance coverage, and require operators identified as having lapsed or cancelled coverage to obtain or provide proof of coverage within 30 days. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of Labor, and other interested parties. In addition, the report will be available at no charge on GAO’s web site at http://www.gao.gov. If you or your staffs should have any questions about this report, please contact Cindy Brown Barnes at (202) 512-7215 or brownbarnesc@gao.gov, or Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Comments from the U.S. Department of Labor Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contacts named above, Blake Ainsworth (Assistant Director), Patrick Ward (Assistant Director), Justin Dunleavy (Analyst-in- Charge), Monika Gomez, Courtney LaFountain, Rosemary Torres Lerma, and Scott McNulty made key contributions to this report. Also contributing to this report were James Bennett, Nancy Cosentino, Caitlin Cusati, John Forrester, Alex Galuten, Ellie Klein, Emei Li, Corinna Nicolaou, Almeta Spencer, Curtia Taylor, and Shana Wallace.


Introduction Beginning with the campaign to eradicate smallpox in the 1960s, the United States has been interested in the eradication of vaccine-preventable diseases (VPDs) in children worldwide, as well as vaccine research and development. The success of the smallpox eradication campaign led to the establishment of the World Health Organization's Expanded Programme on Immunization in 1974. Since then, global vaccination campaigns have been broadened and garnered near universal international support. Today, the U.S. government is a leading donor to global vaccination campaigns ( Figure 3 ). In FY2019, Congress appropriated $290 million in foreign aid for the Global Alliance for Vaccines and Immunization (GAVI, now called GAVI, the Vaccine Alliance) and $226 million for Department of Health and Human Services (HHS) to support child vaccine campaigns abroad. The authorization, appropriation, and oversight of U.S. funding for global child vaccination is thus an ongoing area of concern for many in Congress, as is the extent of donor coordination and burden-sharing for such efforts. Additional potential issues include the extent to which global child vaccination promotes U.S. foreign policy, development, and domestic health security (i.e., pandemic preparedness) goals. Donor-backed child vaccination campaigns have reduced mortality in poor countries, though occasionally they have faced setbacks. In the early 1990s, U.S. foreign assistance for large-scale vaccination campaigns led by the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF), and with significant U.S. funding and technical support, contributed to an approximately 80% immunization rate for three doses of the diphtheria, tetanus, and pertussis vaccine (DTP3). Progress, as measured by vaccination rates, stalled on certain vaccinesânotably the diphtheria, tetanus, pertussis, and measles vaccinesâin the late-1990s for a variety of reasons, including management of vaccine stocks, effective vaccine delivery, and cost of vaccinations. In 2000, a public-private partnership, the Global Alliance for Vaccines and Immunization (GAVI) was launched to address both declining global momentum for child immunization campaigns and declining funding for these programs. Since its inception, GAVI has supported the immunization of 700 million children. As a founding member of GAVI, the United States holds a rotating seat on GAVI's board and provides it with funding (see " U.S. Role and Funding "). Vaccinations are considered one of the most cost-effective ways to prevent infectious disease and associated morbidity and mortality. WHO recommends that all children receive 10 vaccines ( Table 1 ). Receiving the recommended childhood vaccinations can protect the recipient from illness and death associated with VPDs, and can reduce infectious disease spread. According to UNICEF, these immunizations save around 3 million lives per year. Globally, coverage of recommended childhood vaccines vary, with VPDs causing high levels of morbidity (illness) and mortality (death), primarily in certain low- and middle-income countries that have had limited success in achieving universal coverage. Recently, some high-income countries, for example France and the United States, have seen exponential increases in cases of VPDs, due primarily to vaccine hesitancy. Global Vaccine Coverage According to GAVI, from 2000 through 2018, more than 760 million children worldwide were immunized against VPDs, including 66 million children in 2018. Approximately 100 million children are immunized each year. At the end of 2018, 20 million infants and children worldwide had not received the full schedule of recommended vaccines. According to GAVI, full vaccination coverage could prevent one in seven deaths in under-5 children. Over 1.5 million children die every year from VPDs. Nearly 60% of these children live in 10 countries: Angola, Brazil, DRC, Ethiopia, India, Indonesia, Nigeria, Pakistan, the Philippines, and Vietnam. From 1990 to 2017, overall child deaths fell from 12.7 million to 5.8 million, largely due to gains made by global immunization campaigns and expanded national immunization programs. For example, from 2000 to 2017, scaled-up measles vaccination coverage averted an estimated 15.6 million deaths from the disease. Global coverage for several recommended vaccines has continued to climb over the past decade (see Figure 1 ); however, progress in expanding the number of children vaccinated with DTP3 (a three-dose diphtheria, tetanus and pertussis vaccine) has stagnated in recent years, though its coverage remains higher than coverage for other required vaccinations (see Figure 2 ). GAVI reports recent stagnation in coverage is due to "acute problems that a small number of previously high performing countries have faced." Diphtheria, tetanus and pertussis are particularly fatal to neonates, new mothers, and pregnant women. Maternal and neonatal tetanus (MNTE) has been almost eliminated globally, and since 2000 there has been an 85% reduction in newborn deaths from tetanus. As of March 2019, MNTE remains present in 14 countries. In 2018, 86% of children under the age of one received all three doses of the DTP3 vaccine. As global uptake of childhood vaccines improves, an increasing proportion of child deaths are concentrated in sub-Saharan Africa and Southern Asia: four out of every five under-5 child deaths occur in these regions. Figure 2 displays geographical immunization coverage for three doses of the DTP3 vaccine. DTP3 immunization coverage is used as a proxy indicator to estimate the proportion of children vaccinated within their first year of life. Global Efforts to Decrease VPDs Among Children In 2015, U.N. member states adopted the Sustainable Development Goals (SDG) as a common agenda to help alleviate global poverty, improve health and education, reduce inequality, and spur economic growth by 2030. SDG Goal 3 is to end preventable deaths of newborns and under-5 children by 2030, with a targeted reduction of under-5 mortality to 25 per 1,000 live births in every country. (According to 2018 figures, 80 countries worldwide have under-5 mortality rates that are higher than 25 per 1,000 live births.) International efforts to decrease vaccine-preventable deaths among children younger than five years are led by international organizations such as WHO, UNICEF, and GAVI, with significant U.S. support (detailed in the section on U.S. role and funding). Several multilateral initiatives and commitments frame these efforts. UNICEF. UNICEF supports immunization programs globally and is the biggest single global purchaser of vaccines. The organization focuses on providing vaccinations, monitoring and improving vaccine supply and quality (e.g., ensuring that vaccines are consistently stored at an appropriate temperature, known as "the cold chain"), vaccine innovation (e.g., research and development), and disease eradication and elimination programs. UNICEF has a permanent seat on GAVI's board and procures all vaccines for GAVI-supported programs to ensure a reliable supply of high-quality and affordable vaccines. UNICEF's immunization goals align with WHO targets outlined in the Global Vaccine Action Plan (GVAP) 2011-2020; to reach 90% of children under the age of one with routine immunization, and achieve 80% immunization coverage for every country district by 2020. WHO . The WHO launched its first 10-year strategic framework on vaccines in 2005. The Global Immunization Vision and Strategy Immunization was intended to extend immunization achievements and to continue encouraging governments to maintain a commitment to protect their populations from VPDs. The GVAP for 2011-2020 was released in 2010 to build on the 2005 strategic framework. The GVAP aligns with the WHO's 2015-2030 strategic goals, which include promoting the development of new vaccines and vaccine delivery technologies to meet public health priorities, establishing norms and standards for vaccines and vaccine delivery technology, and ensuring quality. The WHO also develops evidence-based immunization policy recommendations for member states through an independent advisory group, the Strategic Advisory Group of Experts on Immunization (SAGE). SAGE meets biannually to develop recommendations based on available evidence on immunization and vaccines. It also convenes on an emergency basis to discuss disease outbreaks and vaccine-related concerns (e.g., experimental Ebola vaccines). GAVI , the Vaccine Alliance. GAVI is a multilaterally funded public-private partnership. It was founded in 2000 by the United States, the WHO, the United Nations, the World Bank, and the Bill and Melinda Gates Foundation to expand global access to vaccines and prevent deaths from VPDs. GAVI is guided by five year strategic plans, the Phase IV strategy for 2015-2020 aligns with the goals outlined in the GVAP. In 2019, GAVI set the overall goal to immunize 300 million children by 2025, and save 5-6 million lives in the long term. For more information on GAVI, see the section under U.S. Funding for Multilateral Initiatives. Factors Affecting Immunization Coverage Various factors affect global immunization coverage, including vaccine hesitancy and stigma, geographic location, inadequate country capacity, and poverty and socioeconomic status. Vaccine hesitancy and stigma. Recently, a resurgence of certain VPDs has caused concern among public health officials and drawn attention to the challenges of vaccine hesitancy and stigma. For example, polio continues to elude global eradication, and in 2019 some middle- and high-income countries experienced a resurgence of measles, due to a variety of factors, including reluctance among some individuals and religious communities to vaccinate their children. In April 2019, the WHO reported a 300% increase in global measles cases compared to the same period in 2018, with the greatest surges in cases in the Americas, the Middle East, and Europe. Prompted in part by this resurgence, the WHO listed "vaccine hesitancy" as one of the 10 biggest global public health threats. Corruption, authoritarian governance, and social or political discrimination can fuel vaccine hesitancy by undermining citizens' trust in authority figures (including government officials and health workers involved in vaccine campaigns). For example, Nigeria was close to eliminating polio for many years but did not do so until recently. Vaccination campaign efforts were hampered in part by conspiracy theories, "vaccine stigma," as well as by ethical concerns about government regulations and pharmaceutical industry practices. Vaccine stigma, for its part, arises when a community normalizes vaccine denial. Geographic location . Geographical distance from health centers negatively impacts vaccination coverage. Underserved populations within any given country often shoulder a heavier burden of disease, and they may lack access to basic medical care. Notably, vaccine coverage disparities between children in urban and rural areas persist throughout the world, and commonly exacerbate disease spread within a certain geographical area. For example, according to the WHO, in some countries (e.g., Nigeria and Indonesia), coverage of the measles vaccine in rural areas is 33% lower than in urban areas. Poverty, s ocioeconomic status , and social determinants of health. Vaccination coverage in low-income countries (41%) lags behind coverage in high-income countries (90%). Medical systems in many low-income countries are often underfunded and unable to vaccinate enough children to stop a virus's spread even with donor aid. In addition, researchers have found that inequities in vaccination coverage are associated with individual socioeconomic determinants, such as a family's income level and the educational status of a child's mother. Children born into poverty are almost twice as likely to die before the age of five as those from wealthier families, and researchers suggest that unequal access to vaccines is a key factor. Vaccine coverage for the richest fifth of the population in some countries is up to 58% higher than for the poorest fifth. Fragile and conflict settings . UNICEF reports that 40% of unvaccinated children live in countries affected by armed conflict or other humanitarian challenges. Often, already fragile health care infrastructure is further crippled by armed conflict, which can hinder health workers in carrying out vaccinations and interfere with proper disease treatment and containment. Humanitarian settings such as refugee and internal displacement camps can also foster conditions (e.g., poor nutrition, overcrowding, and unsanitary conditions) conducive to the rapid spread of infectious diseases. According to UNICEF estimates, as of 2015, half of the 10 countries that had under 50% diphtheria, tetanus, and pertussis vaccine coverageâthe Central African Republic, Somalia, South Sudan, Syria, and Ukraineâhad experienced conflicts or other humanitarian emergencies. Other conflict-affected countries have seen spikes in VPD cases, such as a 2019 surge in measles cases in the Democratic Republic of Congo (DRC), which has killed more people than the ongoing Ebola outbreak in that country. U.S. Role and Funding Congress has historically supported global child vaccination programs, both as a component of U.S. foreign assistance and as part of efforts to eradicate infectious diseases that might affect Americans at home or abroad. Through annual appropriations for the Department of Health and Human Services and the Department of State and Foreign Operations (SFOPS), Congress funds global immunization activities through the Centers for Disease Control (CDC), the United States Agency for International Development (USAID), and the Global Alliance for Vaccines and Immunization (GAVI, now called GAVI, the Vaccine Alliance). The U.S. Agency for International Development (USAID) and the Centers for Disease Control and Prevention (CDC) are the primary U.S. federal agencies involved in international vaccination provision and immunization campaigns. These campaigns support the 2016-2020 Strategic Framework for Global Immunization and the WHO's 2011-2020 Global Vaccine Action Plan , the agencies work with country governments to strengthen immunization programs by bolstering infectious disease surveillance, increasing laboratory capacity, and strengthening public health workforce capacity. The efforts of both agencies align with the 2010 HHS National Vaccine Plan, the Global Health Security Agenda, and the U.N.'s 2030 Sustainable Development Goals. CDC and USAID also support routine immunizations worldwide through enhanced supply chain management and product procurement assistance. Related efforts are implemented bilaterally and through international partnerships with the WHO, UNICEF, the World Bank, and others. In addition, CDC, along with the Department of Defense, finances the research and development of new vaccines. Centers for Disease Control and Prevention (CDC) The CDC has played a central role in controlling vaccine-preventable diseases since it established the CDC Smallpox Eradication Program in January 1966. The Global Immunization Division of the CDC's Center for Global Health is responsible for coordinating CDC's global immunization activities. To support these activities, the CDC provides scientific and public health expertise in infectious disease epidemiology and surveillance by building laboratory capacity and helping to implement evidence-based prevention strategies. CDC also carries out clinical trials and epidemiologic studies. Funding for the CDC's Global Immunization Program is detailed in Table 2 . The majority of CDC's efforts are focused on polio, with smaller funding allocations for measles and other VPDs. Global vaccination campaigns against polio have lowered the worldwide incidence of polio by 99% compared with that of 1988, and in 2018 only two countries recorded wild polio cases: Afghanistan and Pakistan. Vaccine-derived poliovirus continues to be detected in Nigeria, but as of August 21, 2019, no cases had been confirmed there in three years. The CDC's programming is based on its 2016-2020 Strategic Framework for Global Immunization , which builds on three previous strategic frameworks and outlines five goals: 1. Control, eliminate, or eradicate vaccine-preventable diseases to reduce death and disability globally. 2. Strengthen country ownership, policy and practices, and partnerships. 3. Ensure quality of vaccination delivery to achieve high and equitable coverage. 4. Strengthen surveillance and immunization information to prevent, detect, and respond to vaccine-preventable diseases. 5. Conduct and promote research, innovation, and evaluation. To implement the strategic framework, the CDC works with USAID, UNICEF, GAVI, and other stakeholders. The strategy is aligned with the HHS National Vaccine Plan 2010, the Global Health Security Agenda, and the WHO Global Vaccine Action Plan 2011-2020. In FY2019, Congress appropriated more funding for CDC global immunization programs than the Trump Administration sought and more than was appropriated in prior years ( Table 2 ). The Administration's FY2019 and FY2020 budget requests would have reduced funding for global immunization activities and proposed that the CDC "focus its global immunization activities to continue progress towards polio eradication, as well as measles and rubella elimination in countries with the highest disease burden." To strengthen routine immunization campaigns and community-based disease surveillance, USAID works with foreign countries' ministries of health and provides funding to GAVI. These actions are part of the agency's strategy to prevent child and maternal deaths, which it also supports through capacity building for foreign health systems. For example, in Ethiopia, the agency works with Ethiopia's Ministry of Health to train community volunteers to identify symptoms of vaccine-preventable diseases (e.g., paralysis due to polio) and track "vaccine defaulters" (individuals who do not receive the full schedule of immunizations) to keep them on schedule. U.S. Funding for Multilateral Initiatives The United States, through contributions to international organizations and GAVI, provides significant support for multilateral immunization and vaccination programs ( Figure 3 ). Such support is intended to complement U.S. bilateral efforts in this arena while enabling the United States to expand its reach and provide opportunities for collaboration and burden sharing. GAVI, the Vaccine Alliance GAVI is a multilaterally funded public-private partnership. It was founded in 2000 by the United States, the WHO, the United Nations, the World Bank, and the Bill and Melinda Gates Foundation to expand global access to vaccines and prevent deaths from VPDs. The United States played a central role in the creation of GAVI and continues to be involved in GAVI's governance, strategic planning, and funding. U.S. support of GAVI is intended to accelerate access to vaccines, strengthen vaccine delivery platforms, and work with country governments to sustain immunization programs. U.S. Contributions to GAVI The United States is GAVI's third largest donor, having provided nearly $2 billion of the $21 billion donated to GAVI since its founding ( Figure 3 ). Congress appropriates U.S. funding for GAVI via USAID's Global Health Programs (GHP) account in annual SFOPS appropriations measures. In turn, the United States holds a seat on GAVI's board, as do the WHO and UNICEF, which also receive U.S. funding ( Figure 4 ). Table 3 details U.S. budget requests and enacted appropriations for GAVI from FY2015 to FY2020. During the Obama Administration, congressional appropriators met the Administration's requests to increase funding for GAVI year on year. In line with the Trump Administration's broad calls for cuts to foreign assistance, the Administration proposed $250 million for GAVI in FY2019 and in FY2020, a $40 million decrease from the FY2018-enacted level. In FY2019, Congress appropriated $290 million for GAVI, the same level as in FY2018. Outlook and Issues for Congress Congress has continued to demonstrate interest in supporting child vaccinations for VPDs overseasâfor example, by appropriating increasing levels of funding for related programs. However, numerous global outbreaks of VPDs have raised concerns about whether the progress made in preventing and eradicating communicable diseases can be maintained. In light of recent events, and in the context of the FY2020 appropriations process (and beyond), Congress may examine a few additional issues. One area that could be explored is the effectiveness of global vaccination campaigns as a tool of domestic pandemic preparedness. U.S. government public health officials have argued that the global resurgence of certain vaccine-preventable diseases, particularly measles and mumps, may threaten U.S. public health. Recent outbreaks of vaccine-preventable diseases in the United States have been traced to travelers from Europe and abroad, and the CDC reports that these travelers, coupled with domestic vaccine hesitancy, are the main cause of outbreaks in the United States. In March 2019, the full Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing to discuss the reasons behind preventable disease outbreaks, including imported cases of vaccine-preventable diseases linked to international travelers. As these outbreaks continue, Congress may continue to consider its oversight of, and federal government involvement in, issues surrounding vaccines, such as misinformation campaigns and their role in vaccine hesitancy. Another core area of interest relates to U.S. funding, foreign policy objectives, and foreign aid programs supporting immunization. The U.S. government has long-included vaccination as a core component of foreign policy, and as a foreign aid priority. Recently, the Trump Administration requested cuts to global health funding, including for U.S. agencies involved in global vaccination campaigns. The Administration contends that the funding requests will not affect programs and that "the reduction reflects the Administration's intent to further focus funds on countries, populations, and programs where resources will have the greatest public health impact ... [and] CDC will focus its global immunization activities to continue progress towards polio eradication, as well as measles and rubella elimination in the countries with the highest disease burden." Some experts argue that stagnation in vaccination coverage and the resurgence of some vaccine-preventable diseases are "alarm bells," and have expressed concern about flat support for global vaccine campaigns leading to a continued resurgence of vaccine-preventable diseases. These issues raise questions about burden sharing and the role of other high-income country donors in global immunization funding, as well as factors affecting the efficacy of global campaigns to increase vaccination rates.