CITY'S WORKER CLAIMS SOAR COMPENSATION PAYOUTS UP A THIRD IN L.A. SINCE 1997.

Byline: Alexa Haussler Staff Writer

Despite years of warnings about employee abuses and consultant studies on how to fix them, the city of Los Angeles' bill for workers' compensation claims has soared by nearly one-third since 1997, records show.

City officials - including Mayor Richard Riordan and the City Council's top budget watchdog, Mike Feuer - have been blind-sided by the skyrocketing cost of claims by employees hurt or sickened due to job-related factors, having budgeted for a modest increase believing they had gained a handle on the problem.

But halfway through the financial year ending June 30, the city already has had to funnel nearly $10 million extra into the workers' compensation fund. Officials hope to contain the final figure to $14 million more than budgeted - a total of nearly $100 million.

``Unfortunately there seems to be some backsliding on workers' compensation reform and there's always room for improvement,'' said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

``If there are existing studies showing that greater efficiency can be obtained, then those efficiencies should be pursued as quickly as possible to prevent harmful effects on the taxpayers.''

Two consultant reports since 1995 called for the city to overhaul its procedures for greater efficiency and cost savings; add more staff to process and review claims faster and improve oversight; and initiate programs to help workers return to work sooner.

But many of the reforms, which came on top of the state's overhaul of the system, have not been carried out.

In March 1995, the consulting firm Johnson and Higgins made several far-reaching reform suggestions that the firm estimated could save the city as much as $55 million.

In 1997, the consulting firm Coopers & Lybrand issued a study suggesting cost savings and stating that the city had made some improvements since the earlier study but that ``the City has not fully implemented several suggested reforms and has been unable to exploit others.''

Tab piling up

The increased workers' compensation tabs are piling up with other unexpected costs such as settlements of police scandal lawsuits and have prompted Riordan to urge city departments to step up efforts to contain costs.

Councilwoman Laura Chick, a candidate for city controller, has been in the forefront of calling for reforms and insists some real efforts have been made by city officials.

``When I have looked at how the city handles workers' compensation, I see here and there some good efforts on the part of good people,'' she said.

With former Councilwoman Jackie Goldberg - now a member of the state Assembly - Chick held a joint meeting of the council's Governmental Efficiency and Personnel committees in November 1999 at which they called for an aggressive program to improve worker safety programs and hold department heads responsible for reducing on-the-job injuries.

But even Chick admits that not enough has been done in more than a year's time.

``Overall, I see completely unsatisfactory progress made,'' Chick said. ``We need to stop sitting on our hands, watching escalating costs from new trends, and saying `Golly gee, it's costing us more money, now what do we do?' ''

Los Angeles poured $33.3 million into workers' compensation claims in the first four months of this fiscal year, which began July 1. If costs remain on that pace, the price tag will soar to nearly $100 million this budget year, higher than the $85.9 million budgeted.

Across industry lines, including government agencies across the state, workers' compensation costs are climbing. Experts attribute the rising costs to higher price tags for medical services and an increase in the number of services provided to each ill or injured worker.

Not more claims

Many businesses are struggling with increased premiums for workers' compensation insurance while government agencies, which generally are selnsured, are footing the rising bills themselves.

``In the end, those agencies and those companies that have good hiring and safety practices will not feel the burden of these benefit increases,'' said Sydney Kamlager, spokeswoman for the Employers Group, a nonprofit human resources organization.

Plus, state lawmakers have been grappling for several years with legislation to try to temper skyrocketing insurance premiums and medical costs.

Feuer, chairman of the City Council's Budget and Finance Committee, said the number of claims is not rising among city government employees, even though the cost per claim is increasing.

``The city is doing a better and better job every year of controlling worker-related accidents,'' Feuer said. ``But there are factors beyond the city's control that are undermining our ability to keep costs under control even as we are keeping claims under control.''

Deputy Mayor Peter Hidalgo defended Riordan's record, saying he has taken several steps to try to contain workers' compensation costs.

Under the new City Charter, the risk management department - which handles claims - in July was shifted into the mayor-controlled Department of Finance.

Plus, he said, the mayor beefed up risk management staff and launched a program to review all workers' compensation bills and refer possibly fraudulent cases to prosecutors.

``The mayor has a history of being a mayor who wants to focus on efficiency and to reduce those areas that we can control,'' Hidalgo said.

CAPTION(S):

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Chart: WORKERS' COMPENSATION PAYOUTS

SOURCE: City of Los Angeles