SETTLEMENTS MUST BE CUT, MAYOR SAYS DOG-FOOD CASE, OTHER CLAIMS PROMPT ORDER.

Byline: RICK ORLOV Staff Writer

Seeking to reduce claims and exorbitant liability payouts, such as the $2.7 million recently proposed for a former firefighter fed dog food in a prank, Mayor Antonio Villaraigosa ordered all city agencies Wednesday to develop strict risk-management systems.

Villaraigosa said city agencies will each be required to designate a risk manager to track and file reports on all claims and to spell out steps being taken to reduce future liabilities.

He said he also will require quarterly reports to his office on claims and litigation, and department heads will be held accountable for reducing payouts.

``Every dollar paid out in lawsuits is money that could otherwise go to critical city services,'' Villaraigosa said at a City Hall news conference.

The move comes about a month after the City Council upheld the mayor's veto of a $2.7 million payout to Los Angeles firefighter Tennie Pierce, who filed a harassment claim after colleagues put dog food in his spaghetti as a prank.

The incident raised questions about whether city officials are doing enough to prevent claims.

In the past 14 years, city government has spent about $800 million to settle liability lawsuits and claims, although annual claims and payouts have been declining since 2001.

After 2001, when city government paid out $60.1 million for various claims, payouts dropped by 38 percent to $37.2 million last fiscal year, Villaraigosa said. The number of claims during that period dropped by 26 percent, to 3,531.

``We are doing a good job, but we can do better,'' Villaraigosa said. ``A significant portion of these lawsuits can be avoided through better management practices.''

He said the Los Angeles Police Department, the Recreation and Parks Department and the Bureau of Sanitation have successfully reduced claims and payouts by having risk managers review cases after they are filed and take corrective actions.

``Before we can discuss long-term solutions to improving the way we manage risk, we have to ensure all the appropriate accountabilities are in place,'' the mayor said.

New strategy needed

City Controller Laura Chick, who has acknowledged city government's failures in averting potential lawsuits, said she and her staff will evaluate how agencies are managing legal risks, then help to develop a better long-term strategy.

``What I want to do is look at what we are doing, what other jurisdictions are doing, and what we can put into effect as best practices to deal with these issues,'' Chick said.

``I remember one case when I was on the City Council where we had a big payout because the city had failed to put up signs and a road was in horrible condition. A year and a half after the accident, I asked what had been done to correct the problems. The answer was nothing. That's where we can make changes.''

Before Villaraigosa's new executive order, City Attorney Rocky Delgadillo had wanted a risk-management team to be created in his office.

Different approach

He had proposed spending $400,000 to hire staff to audit departments and evaluate the potential for legal liability.

Delgadillo has deputy city attorneys who advise city departments, but the lawyers don't have the authority to investigate or identify potential liability problems.

``Today, City Hall embraced the comprehensive, common-sense, risk-management program I have been calling for since 2001,'' Delgadillo said. ``Since 2001, my office has saved the city $257 million in general-fund liability payouts. But I've long believed a solid risk-management program could save us millions more in taxpayer dollars.''

Villaraigosa said his plan, however, would improve risk management without adding to the city bureaucracy. He said he will hold agencies responsible for reporting directly to him on risk-management issues, and he also will require general managers of the departments with the highest payouts to develop specific reduction goals and to attain them.

``We can do this without creating an expensive bureaucracy,'' he said.

rick.orlov(at)dailynews.com

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Liability claims

City agencies with the highest liability claims:

Police -- $19.9 million

Street Services -- $6.3 million

Fire -- $5.5 million

Engineering -- $1.3 million

Sanitation -- $1.1 million

Source: L.A. Mayor's Office, fiscal year 2005-06

CAPTION(S):

box, chart

Box:

Liability claims (see text)

Chart:

L.A.'s liabilities

SOURCE: Los Angeles Mayor's Office

Gregg Miller/Staff Artist