Hahn, Other Officials Call for Fixes in Workers’ Comp Laws

Worried about an escalating expense that is cutting into spending for police, libraries and road repair, Mayor James K. Hahn joined state and county officials Tuesday to call for revamping workers’ compensation laws.

At an afternoon news conference, the officials urged passage of state legislation that would curb workers’ comp costs by paring medical bills and rooting out fraud.

“This system is going to be a major problem for the economy of California -- causing companies to lay off workers and causing public employers such as the city of Los Angeles, the county, and the MTA and school district to lay off teachers and employees,” said California Insurance Commissioner John Garamendi. “It will drive the economy further into the tank.”

When it comes to workers’ comp, governments have little latitude. Hahn can scale back tree trimming and road paving in the face of tight budgets. But when workers’ comp bills come due, the city has no choice -- it must pay.

In 1998-99, City Hall spent $76 million on workers’ comp; next year, the figure is expected to climb to $142 million. Over the same period, the county’s workers’ comp budget has surged from $157 million to $352 million.

In the city, the number of claims filed each year has hovered at about 9,000. The county caseload has jumped from about 15,500 in 1994-95 to nearly 23,000 this fiscal year.

Keeping up with the paperwork can be a task in itself. In Los Angeles, bloated case files are stored in Room 210 of the city Personnel Department -- on rows of shelves that reach 8 feet high and 12 feet deep.

“I don’t normally take people back here, because it’s frightening,” said Tom Coultas, assistant general manager in the Personnel Department.

When the city installed new shelves to hold upward of 15,000 files, he said, “A structural engineer had to come in to do the calculations to see if the floor could support the weight.”

The drain on local budgets mirrors larger trends in the state. California pays the highest workers’ comp insurance premiums in the nation, though benefits compare poorly to those in other states. Last month, Gov. Gray Davis called for passage of legislation that would dampen medical costs while improving benefits and shoring up a state workers’ comp insurance fund that serves more than half the employers in California.

No fewer than 16 bills aimed at improving workers’ comp are moving through the Legislature, officials said Tuesday.

A bill by state Sen. Richard Alarcon, a San Fernando Valley Democrat who attended the news conference, would create a schedule of medical fees in an effort to shave costs.

Hahn said legislative reforms now under consideration could save the city $20 million a year -- enough to pay for 200 more police officers.

“That’s a lot of money that you hate to see go down the drain,” Hahn said.

Many employers would welcome an overhaul of the state’s $15-billion-a-year system. Sylvia Fogelman, who heads a 16-person Los Angeles nonprofit organization devoted to foster care and adopted children, will pay more than $10,000 this year for workers’ comp insurance, a hike of more than 20% over last year. In its nine-year existence, she said, the Southern California Foster Family and Adoption Agency has not had to pay a single workers’ comp claim.

Were the money not lost to higher premiums, she said, “we would be spending those funds on other things that might benefit the children of foster care.”

Within Los Angeles, a split is emerging about what is driving the expense and how best to staunch the losses.

To date, Hahn has largely blamed rising medical bills. City Atty. Rocky Delgadillo, though, has emphasized a different cause, one that the city is in a position to attack directly.

Delgadillo says as much as 30% of workers’ comp claims may be bogus. He sought $450,000 from the mayor’s office to assemble a team to investigate fraudulent claims, but Hahn did not include the money in his proposed 2003-04 budget.

Combating fraud, the mayor said in an earlier interview, “is not going to solve your budget problem. The big problem is escalating medical costs and changes the Legislature made in the law over the years.”

Still, the City Council set aside money for Delgadillo’s anti-fraud program in the budget it approved last week.

Delgadillo contends that finding fraud won’t be too difficult. His office referred one such case for prosecution last year. A city gardener said he had injured his back and shoulder on the job in 1996.

Surveillance later caught him skateboarding, gardening on his own property, fixing his car, building a fence and carrying hefty ladders. He was sentenced to six months in jail and ordered to pay more than $61,000 in restitution, according to the city attorney.