L.A. Pays Dearly for Late Claims

The city of Los Angeles paid nearly $800,000 in late penalties over the last year and a half because it failed to process workers’ compensation claims on time, a new city audit has found.

“Some delays occurred because the city legitimately had to take additional time to review the payment requests,” said City Controller Laura Chick, whose office performed the audit and released its findings Tuesday. But she added that 25% of the 33 cases sampled involved cases in which the late payments could have been avoided.

In a letter to the mayor and City Council on Tuesday, Chick called on officials to take immediate steps to fix the problem.

“Now more than ever, anything that could put more dollars in our general fund must be taken seriously,” Chick said.

The audit--one of many reviews of the city workers’ compensation program in recent years--underscores Los Angeles’ continuing difficulties in handling the claims of injured employees. An audit released earlier this year found that the city was spending more than $100 million annually to settle workers’ compensation cases.

Although some progress has been made to lower that amount, Chick said the Personnel Department must step up efforts to process claims more quickly to avoid late fees. She said her office found a “significant” number of payments were in danger of exceeding the state’s 60-day deadline.

Researching the period between July 1, 1999, and Feb. 28, 2001, Chick blamed the problem on “inadequate oversight” by the city Personnel Department. She said the department’s time-consuming, complicated process of analyzing claims also contributed to the delays.

“While we need due diligence when it comes to scrutinizing some of these claims, it still should be done within the time period that avoids penalties,” Chick said. “This is a huge use of general fund dollars that could be used to pay for all the services we provide to the public.”

A Personnel Department official said Tuesday that his office is working with Chick’s office to address the concerns.

“We completely agree that paying penalties is not what the city should be doing,” said Tom Coultas, assistant general manager of the Personnel Department.

But he said: “What needs to be added is this is [represents] a tenth of a percent of all the payments we make. While we completely agree, we need to put in context that we process over $100 million [in workers’ compensation claims] a year.”