Trutanich overhauls workers’ comp unit

City Atty. Carmen Trutanich announced a series of reforms to his office’s workers’ compensation unit on Wednesday in response to an audit that found that the unit took too long to settle cases and failed to collect millions of dollars it was due.

Trutanich, who said the program “was in disarray” when he took office last year, has reassigned seven attorneys to the unit and established a new peer review process.

The announced reforms were among the recommendations in City Controller Wendy Greuel’s audit, which looked at the performance of the unit during the term of previous City Atty. Rocky Delgadillo.

During Delgadillo’s tenure, the audit found, the unit failed to recover millions from third parties responsible for employee injuries, referred only 4%of claims to fraud investigators and took an average of 5.8 years to settle cases — much longer than the industry best practice of one year.

“During that time the program was a mess,” Greuel said at a news conference with Trutanich on the steps of City Hall.

In person, the two stood side by side and smiled, and at one point even embraced. But in court, they are locked in a fierce legal battle begun by their predecessors two years ago.

In 2008, when then-Controller Laura Chick tried to conduct an audit on the workers’ compensation program, Delgadillo refused to give her access. When Chick issued subpoenas to six of Delgadillo’s employees, he filed a lawsuit to try to block her.

Delgadillo argued that the City Charter does not give the controller authority to conduct performance audits — assessing the efficiency of city operations — on programs housed in the offices of elected officials.

When Trutanich took office last year, he invited Greuel, who had just been elected controller, to his office and told her to proceed with the audit.

Then a judge ruled in favor of Delgadillo, and Greuel appealed the decision, saying that it is important that the city controller have the power to launch inquiries into all city programs.

When the case is heard by the Court of Appeal, possibly early next year, Trutanich will be left to defend Delgadillo’s position.

The court battle was not the focus of Wednesday’s announcements, in which Trutanich praised Greuel.

“Quite frankly, her audit has been very kind,” he said.

His office, he said, has a huge backlog of unsettled workers’ compensation cases, including some that are 30 to 40 years old.

Reached on Wednesday, Delgadillo said he too had inherited the mess — and his budget requests for more funding were denied.

“From Day 1 I knew it was broken,” Delgadillo said. “I hope now that they’ve found the error of their ways. I hope the mayor and the City Council can get together to support this program.”

The city faces about 8,400 workers’ compensation claims each year. Between 500 to 1,000 of those cases are opened for litigation.

The audit found that under Delgadillo’s direction, the city attorney’s office had used fewer attorneys than authorized in the budget. Trutanich said he hoped to ease caseloads and change the culture of the division.

“In the past, nobody wanted to go to workers’ comp,” Trutanich said. “It was sort of like going to hell. The work was hard, the caseloads were gigantic, and there was no recognition.”

Now, each new hire in the city attorney’s office will begin with a two-year stint in the workers’ compensation division, Trutanich said.

In 2008-2009, the city spent more than $129 million on workers’ compensation claims. It has an outstanding claims liability of more than $1.5 billion.

Trutanich said part of his reenergized staff’s mission would be to vigorously investigate fraudulent claims.

“Let’s make sure that those people filing compensation cases aren’t waterskiing on Lake Havasu on a Saturday,” he said.

kate.linthicum@latimes.com