Sacks & Zolonz, LLP class=
Serving California
Toll Free : 800-461-0268

Audit Reveals Widespread Mismanagement of Work Comp Claims

Yesterday, Los Angeles City Controller Wendy Greuel released the results of a long awaited (and long delayed) audit of the Workers' Compensation Division of the Los Angeles City Attorney's Office. The results? Systemic mismanagement of workers' compensation benefits and a host of other errors that potentially cost the city millions of dollars.

"The audit found that the City Attorney's Office management of its workers' compensation program was plagued with poor oversight, a lack of budgetary accountability and had the potential for millions lost to the city each year," said City Controller Greuel.

Specifically, the audit found the following:

• The Workers' Comp Division submitted only 4 percent of all claims to fraud investigators for further review (the industry standard for submitting claims to fraud investigators is 17-21 percent of all claims).This failure to properly investigate claims cost the city roughly $5.4 million a year in fraudulent workers' compensation benefits.

• The Workers' Comp Division collected reimbursement from third parties in only 6 percent of its cases, a practice that resulted in the potential loss of nearly $3 million in revenue for the city each year.

• The Workers' Comp Division took an average of 5.8 years to close cases (the industry standard for closing cases is 1-2 years).

It is worth noting that a previous audit attempt was successfully blocked by former City Attorney Rocky Delgadillo in 2008. Delgadillo claimed that then-City Controller Laura Chick did not have the requisite authority to audit an elected official and took the matter to court, where the judge ruled in his favor. (The decision is currently being appealed.)

However, current Los Angeles City Attorney Carmen Trutanich agreed to let the audit of the Workers' Comp Division proceed despite the previous ruling by the trial court.

"The Charter does not authorize this type of audit, but for me, I welcome it, because if you have two heads thinking about something, you come up with a solution," said Trutanich.

Trutanich also promised decisive action in the wake of the audit.

"We are restructuring the office organization and the Workers' Compensation Division to increase accountability and efficiency," he said. "We have also reassigned more attorneys to the division ... to reduce the backlog of cases."

Stay tuned for further other developments in the area of workers' compensation defense ...

This post was provided for informational purposes only and is not to be construed as legal advice.

Related Resources:
• Audit: City Attorney's Office Mismanaged Workers' Comp Claims (Los Angeles Daily News)
• Audit: Delgadillo's Workers' Comp Mismanagement Cost L.A. $3m (Contra Costa Times)
• Performance Audit of the Los Angeles City Attorney's Workers' Compensation and Subrogation Program (The City of Los Angeles: L.A. City Controller)

No Comments

Leave a comment
Comment Information

Sacks & Zolonz, LLP
638 North Eckhoff Street
Orange, CA 92868

Toll Free: 800-461-0268
Orange Law Office Map

Sacks & Zolonz, LLP
400 Corporate Pointe, Suite 800
Culver City, CA 90230

Toll Free: 800-461-9246
Phone: 310-216-7778
Fax: 310-216-9552
Culver City Law Office Map