A method and apparatus performing fault management in an optical communications system including a polarization mode dispersion (PMD) compensator. The method and apparatus utilizes a controller receiving notifications indicative of PMD in the system, as well as at least one indicator from a system device providing an indication of an attribute of the communication system. Such system devices include a receiver providing a Q factor and a bit error rate (BER) of an optical signal, and a signal-to-noise ratio meter providing an SNR of the optical signal. The method intelligently provides fault management by correlating the PMD notifications and system indicators to distinguish between fiber failure, PMD-related degradations, and failure of monitoring equipment itself.