Department of Labor and Industry, Office of Vocational Rehabilitation
Review Report Summary
Approved for Public Release
The Pennsylvania Office of Inspector
General (OIG) conducted a Program Review of a district office of the Pennsylvania
Office of Vocational Rehabilitation (OVR) in the Pennsylvania Department of
Labor and Industry (Department). The
review was commenced in March of 2012. In
November of 2012, OIG issued an Interim Investigative Report to the Department,
identifying deficiencies in internal controls over the administration of OVR
funds. OIG identified four fictitious
OVR clients and direct payments to the clients in the total amount of almost $40,000
and purchases for the fictitious clients totaling almost $10,000. OIG’s Program Review included an examination
of expenditures authorized by a district office during a period of over five years
(2008-2012), and a review of a sampling of OVR client files. In October of 2013, OIG completed the Program
Review, which revealed additional systemic concerns at one OVR district office.
OVR is governed by federal law
through the Rehabilitation Act of 1973, as amended, and by state law through
the Vocational Rehabilitation Act, 43 P.S. § 682.1 et seq. OVR provides
vocational rehabilitation services to help persons with disabilities prepare for,
obtain, or maintain employment. OVR
counselors assist clients in selecting vocational goals, services, and service
providers, and are responsible for verifying the identity of the applicants, making
initial application and eligibility determinations, recommending services,
authorizing expenditures for the services, receiving and distributing purchased
items, approving invoices and payment for the services, deciding when services
are no longer necessary, and determining when a client has obtained a successful
After the issuance of the Interim
Investigation Report, OIG’s review continued at the district office which was
part of the initial review and also expanded to a second district office. OIG made the following findings following its
investigation at the first district office, which were communicated to the
Department with recommendations for improvements in the OVR program. The second district office received a
complimentary report with no additional findings.
The lack of appropriate
protocols for the approval of benefits and oversight of clients resulted in the
misappropriation and waste of OVR funds paid directly to or on behalf of OVR
In the case of one client who was
part of the Program Review, OIG found that benefits were approved for three
payments to the client totaling over $8,000, including almost $7,000 for
equipment related to the client’s career objective and approximately $1,500 for
costs associated with a lease payment. OIG
discovered the client did not rent the proposed space or pay any money to the
landlord. The client, who was
incarcerated at the time of OIG’s investigation, used the OVR funds largely for
child support and rent. The client also admitted
to OIG that he obtained illegal drugs with the proceeds from the sale of the equipment
originally purchased with OVR funds.
OIG also reviewed records for a
client who, at the time of filing for benefits, stated to the OVR district
office his desire to work from home. Payments
of OVR funds totaling almost $8,000 were approved for improvements at the client’s
residence to allow the client to more easily enter and exit the residence. OVR’s records revealed the client had not
sought employment and did not intend to do so in the future. Three years following the last contact
between OVR and the client, the client’s OVR file remained “open.”
The Program Review also revealed
that over $2,000 in payments from OVR funds were approved for a client who was also
a Commonwealth employee and, therefore, received employer-provided medical and
dental health coverage. OIG discovered
that OVR’s records did not list the employer-provided insurance, which may have
resulted in OVR benefits the client was not eligible to receive.
In the case of another client,
OIG found that payment of almost $15,000 of OVR funds was made to a local
employer for “on-the-job training” for the client, in spite of the fact that the
client had been in the position for well over a year and did not need
additional training. Further, the training
was to amount to 40 hours per week, but the client worked only between 20 and
30 hours per week. The employer
communicated the reduction in hours to the OVR counselor, but no changes were
made to OVR payments.
OIG also found that OVR benefits of
$10,000 were approved to assist another client in opening a business. Payment of those funds required the client
match the dollar amount and provide proof of how the money was to be spent;
however, OVR’s records did not clearly state whether the client matched the
$10,000 or what, if any, equipment was purchased with the funds. Further, OIG found that OVR’s records did not
reveal whether the client ever operated the business or whether any equipment
necessary for the business was purchased.
The client stated to OIG that the business had gone bankrupt and refused
to provide OIG with receipts for the equipment purchased with OVR funds.
OIG could not
verify that services were properly provided by an OVR vendor.
OVR approved a vendor to provide tutoring,
equipment, and transportation for OVR clients.
Payments of almost $60,000 were made to the vendor for services for at
least three OVR clients.
In the case of one client, the client
disclosed to OIG that all equipment purchased with OVR funds was shipped to the
vendor’s location, but was not tagged or inventoried by OVR. The client was not hired by the vendor at the
conclusion of the program due to the downturn in the economy and earned a total
of only approximately $500 since finishing the vendor’s program five years
before OIG’s investigation. The client’s
file was considered by the OVR district office as a successful employment
A total of over $20,000 in payments to
the vendor were approved for services to a second client; however, OVR’s
records documented expenditures only in the amount of approximately $3,000. The client disclosed he purchased equipment
totaling approximately $7,500 and OVR reimbursed the client for approximately
$4,500 of that amount. The client also
stated OVR purchased approximately $5,000 in other equipment for the
client. The vendor provided no
textbooks, certifications, or diplomas for completing the program. The client was paid $10 an hour by the vendor
to run an excavator on the vendor’s property, which was not related to the area
of employment in which the vendor was to train the client. The client had the equipment purchased with
OVR funds, but did not have the training to use the equipment.
Payments to the vendor for a third
client in the amount of over $13,000 were also approved, but no certification
or diploma was issued by the vendor, and invoices in OVR’s records did not indicate
what equipment was purchased with the OVR funds.
An OVR counselor engaged
in activity which may be a conflict of interest or have the appearance of a
conflict of interest.
OVR routinely provided tuition and
educational fees to a school for training for OVR clients. An OVR counselor was in a relationship with an
employee of the school and assisted that individual in obtaining the job with
the school, which included the recruitment of students for the school and
obtaining funding for those students.
OVR was the primary referral source for the school and the counselor was
the primary individual responsible for those referrals. The OVR district office referred over 75
clients to the school and the OVR counselor oversaw benefits for almost 40 of
for reporting case closures revealed potential inconsistencies and deviations
from applicable program requirements.
The U.S. Department of Education’s
Office of Special Education and Rehabilitative Services Administration (RSA)
monitors and evaluates OVR’s ability to meet or exceed standard performance
measures. RSA requires that OVR, as a
minimum performance level, assist the same number or more eligible individuals
to achieve employment as met the prior year.
OVR’s receipt of a federal Vocations Rehabilitation grant award depends,
in part, upon OVR meeting or exceeding this standard performance measure.
OIG received information that district
offices were instructed to hold successful case closures once a fiscal year
goal was met, in an effort to “stockpile” successful case closures for the
following fiscal year. OIG analyzed
monthly successful case closures for five fiscal years and found a significant
disparity between percentage of total cases closed in the first month of the
fiscal year (October) and percentage of cases closed in the last month of the fiscal year (September), as depicted
Based on the
findings in its extended review, the OIG recommended
reimbursement of OVR funds improperly allocated to clients and the OVR vendor,
appropriate action regarding its OVR counselors.
whether federal requirements prohibit the “stockpiling” of cases and, if so,
take appropriate action to make necessary corrections.
counselors to attempt to contact each client on a definitive schedule, as
established by the Department, in an attempt to ensure that services are being
properly rendered and clients are meeting their employment goals.
a limit on the time a case can remain in an “open” status without contact with
a client or progress updates toward an employment goal.
and inventory all non-fungible tools and equipment valued above a set dollar
amount and attempt to recover and reuse the equipment if the client fails to
The Department is committed to
ensuring that OVR’s resources are used appropriately and was an open and
transparent partner during the investigation. Based on the OIG’s Program Review, OVR
convened a multi-disciplinary team to address the identified concerns and
recommendations. Significant changes were made to the systems used by OVR to
ensure efficient and reliable procurement of services, approval of vendors,
distribution of equipment, and oversight of OVR cases.
district office was significantly restructured and numerous changes were made
to the systems used by OVR to ensure the efficient and reliable procurement of
services, approval of vendors, distribution of equipment, and oversight of OVR
cases. Best-practices identified from the second district office were implemented
statewide for the review and approval of all fiscal expenditures through a
fiscal review committee. Additionally,
OVR implemented new processes to require the verification of the identity of
applicants for services, including validation of social security numbers. Direct payments to customers are rare, but
necessary to meet the needs of customers with disabilities. These payments, when necessary, now require
several additional layers of review and approval. Overall stringent fiscal controls were
implemented to help ensure fraud would not again occur.
OVR addressed the
concerns discovered during the Program Review and continues to monitor areas of
risk to ensure the additional issues do not occur in the future. OVR is committed to being stewards of
Commonwealth resources to serve individuals with disabilities in achieving
their academic and employment goals.