Philip Arnow Award

Shelby Hallmark

Washington, DC Office of Workers’Compensation Programs

Mr. Shelby Hallmark has had a long and distinguished career as a member of the Senior Executive Service. After joining the Labor Department in 1980, he was appointed to the SES in January 1988 as the Director of the Employment Standards Administration’s Office of Management, Administration, and Planning, and has served as the Deputy Director and the Director of the Office of Workers’ Compensation Programs (OWCP).

Mr. Hallmark has made significant contributions to the accomplishment of the Department of Labor’s mission throughout his career, and has been previously recognized with the President’s Meritorious Executive Rank Award (2000) and the President’s Distinguished Executive Rank Award (2003).

The first award primarily recognized his achievements in leading change in OWCP, especially in developing innovative, results oriented strategic plans that caused that agency to break new ground in a number of key performance areas. For example, during the 1980’s the Federal Employees’ Compensation Act (FECA) program developed a huge and growing roll of long-term beneficiaries but had insufficient resources to adequately review and provide return-to-work services for those claimants. In fact, return-to-work was not perceived by the organization as a significant part of its responsibility, and hence many injured workers were simply carried on long-term disability rolls with little or no hope of returning to employment, despite being less than totally disabled for work. After examining evolving practice in workers’ compensation programs in the states and in other nations, Mr. Hallmark recognized that returning injured workers to employment as soon as possible was the optimal outcome for all parties – the employee, the employee’s family, the employer, and in the case of the FECA program, the US taxpayer. Yet that outcome was not even being targeted by OWCP. Mr. Hallmark led a process that resulted in a strategic plan for FECA for which the number one goal was early return to work for injured employees, and the establishment of detailed and accurate performance metrics to track accomplishment of the goal.

To make the outcome happen, Mr. Hallmark first set about acquiring additional budgetary resources to allow OWCP staff to tackle the big job of reviewing more than 50,000 ongoing disability claims. This required great creativity to overcome a decades’ long trend of underfunding administrative activities for FECA, despite the escalation in entitlement outlays caused by the lack of resources to manage these cases. He hit upon a unique strategy which gradually (over the period 1992-1999) obtained funding for the “Periodic Roll Management” project, ultimately resulting in savings to the taxpayers of more than $2.5 billion in compensation benefits avoided through return-to-work or other positive outcomes.

Additionally, he set in motion a second FECA initiative, dubbed “Quality Case Management,” aimed at avoiding the recreation of the backlog of unreviewed disability cases by helping newly injured workers return to the job as soon as medically feasible. This radical effort required the redirection of roughly a third of the 900 FECA employees to wholly new activities, the acquisition of more than 1,000 contract rehabilitation nurses, and an essentially complete reconceptualization of the job of the FECA claims examiner. Since its inception in the mid-1990’s, this effort, coupled with innovative performance measurement, has allowed OWCP to reduce “lost production days” due to serious workplace injuries by roughly 30%. Leading workers’ compensation academicians have cited OWCP’s primary performance metric, which Mr. Hallmark helped devise and refine, as a best practice in the field. His insistence on relying on robust performance data has allowed the program to understand its impact, compare results across offices and regions, and adjust tactics and strategies to achieve ever-improving results. With a very small input of resources (FECA administrative costs remain only 5% of total program costs), Mr. Hallmark has been able to create an essentially new service for the FECA program, with extremely positive results for injured workers, Federal employers, and the taxpayer.

Mr. Hallmark’s strong espousal of GPRA principles, and his success in carrying them out in actual practice, resulted in his being asked to chair the Department of Labor’s departmental strategic planning team in 1999. In that capacity he led the development of the first full-fledged GPRA strategic plan for DOL.

In the 2000’s Mr. Hallmark pursued Presidential initiatives to reduce Federal workplace injuries and speed return-to-work – variously titled “Federal Worker 2000” and “Safety, Health, and Return to Employment (SHARE)”. These exercises, the latter of which was ultimately extended over six years (2004-2009), established clear-cut and measurable multi-year goals for all Federal employing agencies. DOL (through a collaboration of OSHA and OWCP, in which Mr. Hallmark was a prime mover) catalyzed the effort by publishing quarterly results and using all available communication avenues to exhort agencies (and Federal employee unions). Notwithstanding the complete absence of enforcement controls involved in these efforts, they were highly successful, with all four of the SHARE goals being met government-wide over its six year scope, and the key lost production days measure being improved by more than 30%.

A major focus of Mr. Hallmark’s attention since 1999 was the establishment of an entirely new compensation program for nuclear weapons workers. Working initially with Clinton Administration Department of Energy officials who first acknowledged that workers were made ill in the DOE complex, he led DOL’s response to the development of a new program, including coordination with Congressional staff in drafting legislation. Making use of his long experience with the existing Federal workers’ compensation programs, including the similar Black Lung Benefits program for coal miners, he worked hard to ensure that the new program was designed so as to be administrable and understandable by the target population – goals that were imperfectly achieved in the legislation that emerged from Congress in 2000. Nevertheless, Mr. Hallmark worked to convince the new Bush Administration that his organization could administer its part (Part B) of the new Energy Employees Occupational Illness Compensation Program Act (EEOICPA), and proceeded to demonstrate that capacity over the next three years. The new program was effectively launched under his leadership in 2001, and a day-one backlog of nearly 30,000 claims was resolved within the Department of Labor as rapidly as possible. His success in standing up this new organization and brand new entitlement program was recognized as the primary basis for his nomination for the 2003 Distinguished Executive Rank Award.

Having successfully implemented DOL’s portion of Part B of EEOICPA, OWCP was tasked by Congress in 2004 with taking over a new Part E of that program, work that had previously been delegated to the Department of Energy under a different program that was not successful. This new legislation created yet another complex new entitlement program, and an instant backlog of more than 26,000 claims, most of which had been pending with the Department of Energy for four years. Mr. Hallmark again organized the massive effort to stand up a new operation to address the new Part E, eventually bringing the combined Federal staffing of his Energy division to more than 600 FTE and OWCP to more than 1,800. OWCP issued the first benefit check under the new program within two months of passage of the Part E legislation; regulations were again promulgated within the extremely tight statutory deadline; and the inherited backlog of cases was processed within the shortest feasible period.

By 2009 both new nuclear weapons workers programs were at steady state – no backlogs and meeting all timeliness goals for Department of Labor functions. Under Mr. Hallmark’s leadership DOL had paid out more than $5 billion in EEOICPA benefits to almost 40,000 families, nearly double the cost estimates for the programs produced by the Congressional Budget Office.

The EEOICPA program remains controversial, primarily because of the highly complex “dose reconstruction” process required by the statute to prove cancer causation by radiation, and because of the extraordinary secrecy surrounding all aspects of the nuclear weapons complex, including toxic exposures. Mr. Hallmark has worked continually make the programs as understandable as possible to the claimant/recipient population, notwithstanding their inescapable complexity and scientific ambiguity. He has continued to work to address inherent problems in the program, both via administrative improvements to make decisions faster and with higher quality, and in developing potential reform proposals based on OWCP’s experience with the structure of the programs.

As the director of programs that make nearly $5 billion in entitlement payments each year and handle millions of medical bills and telephone inquiries, Mr. Hallmark is equally skillful in production management and policy leadership arenas. He has a complete understanding of the role of the SES civil servant, both in implementing the policy established by the political leadership of the Executive Branch and the Congress, and in terms of the need to develop and present informed input on policy matters to the political decision makers. He has pursued good government policy improvements in all of the programs for which he is responsible, in some cases for many years and across several presidential administrations. To cite just a few examples, he has championed a series of rational reforms for the FECA program which have been presented to OMB and the White House under the Clinton, Bush, and now Obama Administrations; he pursued reform/refinancing of the Black Lung Disability Trust Fund debt for over a decade before its eventual enactment in 2009; he pursued for nearly a decade and finally achieved in 2003 full consolidation within OWCP of the Black Lung programs previously separately administered by SSA and DOL; and he is currently pursuing reform in the FECA program, the EEOICPA program, and the Defense Base Act (which provides workers’ compensation for contractor employees overseas). While fully cognizant of the civil servant’s obligation to faithfully implement the law and policy as presented to him, Mr. Hallmark believes that the SES role must include this active policy advisory capacity, without which the evaluation and evolution of public programs would be impoverished.

This commitment to carrying out the full SES role is particularly critical during Presidential Transition periods. Mr. Hallmark has always welcomed the challenge and opportunity to step up during the absence of political appointees to provide assistance to a new Administration and the continuity of leadership expected of the career SES corps. As the most senior career executive in the Employment Standards Administration (ESA), during 2009 he was designated by President Obama to serve as Acting Assistant Secretary of that entity, the largest bureau of the Department of Labor.

During his nearly nine month stewardship of this previously Presidentially Appointed Senate confirmed position, Mr. Hallmark provided effective guidance to his fellow career executives who were running the four subordinate organizations within the bureau for much of that time. He also made substantial contributions to the transitioning in of political heads for three of those components as they were appointed, and worked closely with Departmental leadership to ensure that the initial policy concerns of the Obama Administration and Department of Labor Secretary Solis were fully carried out. This included work on regulations implementing early Presidential Executive Orders on employee rights notification, right of first refusal on Federal contract conversions, project labor agreements, and similar matters, as well as working to ensure that the new Secretary’s vision and outcome goals were reflected in the myriad operational and policy decisions being made at all levels of the organization, and in the day-to-day activities of more than 4,000 of her frontline employees.

Early in his ESA tenure, three of ESA’s components were tasked with activities (and received approximately $30 million in funding) under the American Recovery and Reinvestment Act (ARRA). This required him to manage the start-up of urgent, highly critical functions needed to clear the way for effective implementation of the President’s stimulus plan. Mr. Hallmark worked closely with the Wage and Hour Division in addressing complexities and controversies of the application of the Davis-Bacon Act to ARRA funded construction projects; with the Office of Labor-Management Standards in building an expedited review process for employee protections under transit grants; and with the Wage and Hour Division and the Office of Federal Contract Compliance Programs on developing specialized enforcement strategies to address the urgent requirements of the ARRA. The Davis-Bacon Act issues were particularly thorny, and resulted in the need for months of debate and delicate discussions with officials of contracting and granting agencies, OMB, the White House, and stakeholders. Although the process was arduous, the outcome was that the goals of the ARRA and the Davis-Bacon Act – the provision of well-paid construction and especially weatherization jobs which accurately reflect prevailing wages – were achieved.

Mr. Hallmark also managed a delicate downsizing effort with respect to one of the ESA components, at the same time two other components were being dramatically increased in size. These shifts derived from sharp policy emphasis changes as a result of the change in Administration, and could have resulted in both internal and external recriminations. Instead, Mr. Hallmark took the initiative to direct approximately 20 investigators from the shrinking entity to the two growing programs, thereby assisting the latter’s hiring efforts and positioning these employees in “growth sectors” within the agency. He took other aggressive steps to ensure that the downsizing unit accomplished an overall 17% reduction in staff with no negative impact on any employee and with a minimum of friction, impact on program performance, or negative publicity for the Department.

A major aspect of Mr. Hallmark’s stewardship of ESA was the determination to abolish the extra organizational layer it itself constituted. Its four constituent programs were distinct and not synergistic, and experience had shown over its 38 year history that the ESA Assistant Secretary position and the administrative structure around it sometimes slowed decision-making on critical and fast-breaking policy issues. Mr. Hallmark developed the reorganization plan to eliminate the umbrella organization and the Assistant Secretaryship, helped obtain approval, and guided its implementation. Again, this was achieved with no negative impact on any of the 100 or so affected employees, minimal disruption of operations, and little or no external criticism. This significant streamlining of the Department of Labor structure left the four constituent entities (OWCP, Wage and Hour, the Office of Federal Contract Compliance Programs, and the Office of Labor-Management Standards) as newly independent agencies reporting to the Secretary, accomplished some administrative savings, and was carried out on schedule on November 8, 2009. The Department will function more nimbly and more effectively for years to come as a result of this rapidly and cleanly executed de-layering effort.

Following his return to the office of Director of OWCP, Mr. Hallmark served as the only career head of a major operating agency reporting to the Secretary and Deputy Secretary of Labor. He became a vocal and influential member of the Secretary’s leadership team, the culmination of 20 years of continuously growing effectiveness and impact as a senior executive.

Mr. Hallmark’s drive to improve government performance extended beyond the Department of Labor. Since 2003 he has served as an elected member of the Senior Executives Association’s Board of Directors, and since 2006 has served as its Chairman. He strongly espouses the good government efforts of this professional association, which works to strengthen the Senior Executive Service Corps throughout the federal establishment.

As demonstrated by the recognition of his many accomplishments above, Mr. Hallmark is a fitting recipient of the Department’s prestigious Philip Arnow Award.

PHILIP ARNOW AWARD RECIPIENTS

This prestigious DOL award of $10,000 and an engraved plaque is granted annually to one DOL employee in recognition of superior accomplishments and service to the department. The award was named after Philip Arnow, an extremely talented, dedicated and loyal DOL official who joined the Department in 1939. He held increasingly responsible positions until his retirement in 1969, including Assistant Commissioner of BLS, Deputy Assistant Secretary for Policy, Planning and Research, and Director, Office of Policy Planning and Research. After retiring, he returned to DOL to do consulting work. His contributions toward improving the lives of American workers were many.