Audit Finds Mismanagement of Workers Comp Claims in Los Angeles

According to a recently released audit, mismanagement of workers compensation claims in Los Angeles by the City Attorney’s Office could be costing taxpayers millions of dollars.

The Daily News was reporting that the audit — which former City Attorney Rocky Delgadillo tried to stop by suing then-City Controller Laura Chick — discovered that during his administration, the Workers Compensation Division referred only 4 percent of claims to fraud investigators when the industry standard is 17-21 percent.

The lack of oversight could be costing the city $5.4 million a year in benefits that should never have been transferred, according to the audit.

The division was also cited for collecting only 6 percent of the claims to which the city was entitled, potentially keeping the city from approximately $3 million in revenue each year.

Another $1-2 million is potentially going without collection due to a practice of adjusting disability payments to mask errors committed by the Personnel Department, according to the audit.

Finally, the audit discovered that the division used some 5.8 years to resolve cases, when the industry standard is a year or two. One case had been open for more than 20 years before being closed, according to the audit. The delay was attributed in part to the division being understaffed.

The auditors reported that the City Attorney’s Office persuaded the City Council to hire lawyers and investigators to handle workers comp cases, but actually had them undertake other duties.

©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.