COUNTY REINS IN COSTS $50 MILLION SAVED AS WORKERS' COMP PAYOUT DROPS FOR FIRST TIME.

Byline: Troy Anderson Staff Writer

After watching its workers' compensation and lawsuit costs soar for years, Los Angeles County officials on Monday boasted they are making progress in getting the problem under control, saving taxpayers more than $50 million in the past fiscal year.

The county paid out $362 million in fiscal 2004-05 for legal judgments and settlements, workers' compensation claims and related costs, down 12 percent from a record $413 million the previous year, a report released Monday says.

``At first blush, it looks really good,'' said Roxane Marquez, spokeswoman for Supervisor Gloria Molina, who spearheaded efforts to reduce the county's costs. ``I guess what taxpayers are getting is the knowledge that their money is being spent efficiently and effectively.''

The report reflects a number of changes implemented by Risk Manager Rocky Armfield who was hired by the Board of Supervisors in 2003 and ordered to help reduce costs.

The county's largest expense was workers' compensation, which fell from a high of $324 million in 2003-04 to $273 million last fiscal year.

``This was the first reduction ever,'' Armfield said in an interview. ``We cannot find anywhere in the county's history of its trust fund for workers' compensation where the costs decreased from one year to the next.''

The workers' compensation costs had been expected to reach more than $1 billion by 2010-11 without state and county reforms, but are now projected to reach about $400 million that year.

``What we can say now is that it's likely in 2011 we'll have saved the county comfortably $600 million a year,'' Armfield said.

In addition to the impact of Gov. Arnold Schwarzenegger's reforms in reducing costs, the county has taken a number of steps to rein in its workers' compensation costs, including a crackdown on fraud.

Since 2001, 10 county employees have been convicted of workers' compensation fraud and ordered to pay $506,200 in restitution. Those convictions are expected to save taxpayers $2.1 million in future costs.

``We aggressively go after individuals in county government committing workers' compensation fraud and work with the entities involved to send a message to employees that this type of conduct will not be tolerated,'' said Lance Wong, head deputy of the district attorney's Health Care Fraud Division.

Armfield said any good fraud effort is going to serve as a significant deterrent.

``It's very difficult to measure that,'' Armfield said. ``How do you measure a claim that didn't occur? It's a good message to send. It's not punishment, but a word of caution that we are dedicated to rooting out fraud and prosecuting it as appropriate.''

In the report, Armfield noted that one area of continued concern involves public-safety employees who file several workers' compensation claims during their careers - especially in the year preceding retirement - in an effort to maximize disability pensions.

Law enforcement officers and firefighters can receive their full salary for a year - tax free - by filing a workers' compensation claim under a specific labor code.

Those types of claims cost the county $44 million in the past fiscal year.

``What we are doing is putting safety employees in a position of making economic decisions for their families to their benefit,'' Armfield said. ``They are able to receive 120 percent of their salary, rather than a net paycheck, for not working. In other words, you can make more money by staying home.''

Armfield had proposed legislation to remove the incentive to file those claims by only paying employees 80 percent of their salary while off work, but none of the county's representatives in Sacramento was interested in sponsoring the legislation.

The amount the county paid in judgments and settlements dropped from $30 million in 2003-04 to $27 million last fiscal year, according to the County Counsel's Office. That's down from a high of $63 million in 2001-02.

The percentage of cases dismissed without county payment increased from 44 percent to 57 percent and the percentage of cases tried in which the county prevailed increased from 71 percent to 83 percent.

The amount the office paid for outside counsel dropped slightly from $37.8 million in 2003-04 to $37.2 million last fiscal year. That's down from a high of $51 million in 2002-03.

Troy Anderson, [phone]

troy.anderson(at)dailynews.com