Who could have imagined in 2013, when the Los Angeles Department of Water and Power rolled out a new but badly flawed billing system, that the city would still be mired in controversy about it six years later? And that the victims in the whole debacle — the ratepayers, some of whom were hit with wildly inaccurate bills — would get stuck holding the bag?
Yet that’s what appears to be happening. Last week, Los Angeles City Atty. Mike Feuer dropped a lawsuit against the consulting firm that oversaw the launch of the billing software, abandoning the effort to recoup as much as tens of millions of dollars blown on the faulty rollout.
The city had sued PricewaterhouseCoopers in 2015, alleging that the firm misrepresented its ability to do the job. Later, Feuer’s office expanded the lawsuit to add allegations that managers at the firm inflated time records to earn payments for work never performed, and then spent the money on prostitutes, hotels and liquor in Las Vegas.
But PricewaterhouseCoopers denied the allegations and chose to fight back. Lawyers for the firm say they uncovered evidence of fraud and double dealing by attorneys hired by Feuer.
Specifically, they accused lawyers hired by the city of orchestrating a class-action lawsuit by ratepayers against the DWP as part of a scheme to quickly settle customer complaints without further investigation, so the city could focus on the PricewaterhouseCoopers lawsuit. If indeed it was the city’s legal team that instigated the lawsuit, as alleged, without the knowledge of the lead plaintiff, that would be a violation of legal ethics. There are also allegations of kickbacks and questionable contracts awarded to lawyers hired by Feuer’s office, though Feuer has denied wrongdoing and commissioned an ethics investigation of his office.
In July, FBI agents raided the DWP headquarters and the city attorney’s office looking for evidence of bribery, extortion or other possible crimes involving the class-action lawsuit settlement. There have been no charges filed and no arrests made.
Feuer said he had no choice but to drop the case against PricewaterhouseCoopers when key witnesses — including former DWP General Manager David Wright, who stepped down after the FBI raid — invoked their 5th Amendment right against self-incrimination.
Attorneys for the consulting firm immediately said they would pursue monetary sanctions against the city for litigation misconduct in an effort to recoup some of the company’s legal expenses. And who would likely get stuck paying that expense? Quite possibly the ratepayers, again.
The DWP billing system has been a case study in botched decision-making and government bungling, starting with the software glitches that hit ratepayers with enormous bills and continuing up to the present, with allegations of fraud and misconduct hanging over the city. Dropping the PricewaterhouseCoopers lawsuit won’t end the scrutiny of Feuer’s office, the DWP or city leaders. Too much money has been squandered.