I am not sure how much control you actually have in this situation. It sounds like your manager is really slacking or knows something you don't (like the employee is covered by FMLA or ADA).

I would stop covering for this employee. Don't do work for him, don't double check his work more than you would anyone else. Let his mistakes stand so that other people start to bring this to management's attention. You are doing/have done all that you can really do by documenting this and bringing it to your manager's attention.