City Could Save Millions on Claims, Task Force Says

The city of Los Angeles could reduce by nearly a third the $140.5 million it pays annually to settle lawsuits and workers’ compensation claims if it handled the cases more like private businesses and some other public agencies, a private task force said Monday.

Los Angeles suffers a much higher rate of claims for workers’ injuries than other cities and counties and does insufficient investigation before paying most of the demands, the task force concluded.

The study by a group of attorneys, accountants, insurers and consultants, was made at the behest of Mayor Richard Riordan and City Atty. James K. Hahn.

The City Risk Management Task Force said the most significant reform in reducing the city’s legal and workers’ compensation bills would be holding city department heads responsible for the expenses their agencies run up, said attorney Terry Christensen, who chaired the task force.

Top bureaucrats would do more to reduce payouts if the city took the money out of their departmental budgets, instead of from a general reserve account, the task force reasoned. That, in turn, would force them to reduce the number of workers’ compensation claims. About 15% of Los Angeles city employees file such claims, compared to an average of 11% for other government agencies nationwide, Christensen said.

Many of the claims are demands that go mostly unchecked before they are paid, the task force said. The group also said the city’s expenses might be driven up by policies that allow some employees to make more money on disability than they do if they work.

About $32 million could be saved on workers’ compensation if the city’s rate of claims were reduced to the national average, the report said. Another $7.5 million could be saved by imposing a litigation reduction program like that used by the parent company of the Southern California Gas Co., the task force added.

Riordan’s office already has proposed installing a computer system in the city attorney’s office and providing bonus pay for city lawyers who succeed in reducing litigation costs.