Workers’ Comp Savings Sought
by Thomas MacMillan | Mar 31, 2014 4:09 pm
Posted to: City Hall, City Budget
(UPDATED: 4:15 p.m.) A trial lawyer who makes his living collecting workers compensation from cities found himself on the other side of the table—looking for a way New Haven can pay less than $9 million per year on employee injury claims.
The lawyer, Michael Stratton, found himself in that position at a recent meeting of the Board of Alders Finance Committee, to which he belongs as the newly elected alder for Newhallville/Prospect Hill.
At the Finance Committee meeting, Stratton expressed alarm at the amount the city has been paying for workers’ compensation claims, over $9 million gross annual expenses since 2009. He asked the Finance Department to consider contracting with a different claim administration company, to cut costs.
On Monday, city spokesman Laurence Grotheer responded to news of Stratton’s criticisms by issuing a press release stating that other cities in Connecticut pay the same or more for workers’ comp than New Haven. Bridgeport, for example has paid over $11 million each year for the last six years. Hartford has a workers’ comp budget for the current fiscal year that is half a million less than New Haven’s.
“We will continue to push for more savings,” city Controller Daryl Jones said in Grotheer’s release. “We’re on a path that is controlling costs while continuing to provide protection from injury for our police, fire, and other city employees. We’re not sure exactly where Alder Stratton is looking that he thinks these costs are ‘extraordinary’, but it’s definitely not the cities in Connecticut that face New Haven’s challenges.”
Mayor Toni Harp’s proposed $511 million budget includes a 3.8 percent tax increase. The budget is currently under consideration by the Finance Committee, which is expected to try to whittle away or eliminate the tax hike before the full Board of Alders votes on the budget at the end of May.
At its most recent hearing with heads of city departments, alders had the most questions for representatives from finance officials, who were last to testify.
“That’s a lot of money,” Stratton (pictured) said, as he looked at a year-to-year breakdown of workers’ compensation costs provided by budget chief Joe Clerkin. The gross claims expenses added up to $9.2 million last fiscal year, and are expected to hit $9.5 million this year. That total is offset somewhat by money the city can reclaim by, for example, billing someone’s insurance if he hits a city worker with his car. It’s also offset by grant money set aside to pay for injuries sustained by people working under grants to the city, and by catastrophic stop-loss insurance if a workers comp claim costs enormous amounts of money.
New Haven officials have tried for years, with some success, to cut workers’ comp costs. The issue flared up in last fall’s mayoral campaign, when a principals of a prominent firm booted for lying about a worker’s condition funneled money to the Harp campaign. Click here to read about that.
By the 2009-2010 fiscal year, annual workers’ compensation claims had doubled in under a decade. A City Hall working group succeeded in lowering that rate of increase since then and is continuing to target fraud. It is also pursuing a policy of finding more light-duty assignments for employees with physical injuries rather than have them remain out of work altogether.
The DeStefano administration offered different numbers than were presented Thursday night. Last year, city officials said workers’ compensation claims cost the city $11.4 million in that peak 2009-10 fiscal year, according to the city. The figure dropped to $9.6 million in the fiscal year that ended last July.
“Have we contracted this out? Or are we doing it in house?” Stratton asked Clerkin at last Thursday’s hearing.
The city contracts with CIRMA as a “third party administrator” that manages “case intake,” Clerkin (pictured) said. CIRMA processes, verifies, and follows up on all of New Haven’s workers’ compensation claims. And one person in the Finance Department oversees CIRMA’s work for the city.
“Do they stay on the history of claims?” Stratton asked. Do they visit people in the hospital and follow up on their allegations of sickness or injury?
Yes, Clerkin replied.
“These are very extraordinary workers’ comp numbers,” Stratton said. “I can’t imagine anybody paying much more than what we pay.”
Stratton said that, as a lawyer, he has seen workers’ compensation settlements decrease in recent years, while New Haven seems to be paying more.
If the city has a third-party administrator, why are city staff also working on it? Stratton asked.
Workers’ comp claims are “extraordinarily complicated,” Clerkin said. Because of the complexity and the long duration of the claims, the city needs to have a single person overseeing compensation. “He’s worth his weight in gold.”
“He really does a lot of work,” said Controller Jones (pictured). “I work 10 or 11 hours a day and he’s always there.”
“As well as he may be doing, the numbers are extraordinary,” Stratton said.
He asked Clerkin and Jones to see what other cities are paying for workers’ compensation, and to get alders a breakdown of exactly how much the city is paying the third-party administrator.
Stratton said after the meeting that he’s “very worried” by the city’s workers’ comp costs.
He said the city should find a workers’ comp company that would root out malingerers. “When you’re really aggressive, people just want to go back to work.”
More aggressiveness would be better for workers in the long run, he said. People who are out on workers’ comp for less than rock-solid reasons end up getting unnecessary operations and get addicted to painkillers, Stratton said.
The city needs to protect people who really are legitimately injured, however, Stratton said. “They shouldn’t be hassled.” And they should be fully compensated.
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What is the departmental breakdown for worker’s comp cases? In previous research, a source indicated some of the same people file and refile each year for workers’ comp. There has to be a better way to manage the risk. That is the single best way to lower the cost.
When I first read this my instinct was that the workers comp line should be spiking up and down but generally trending with inflation; that’s about 27% compounded from 2001-2011. But then you look at the Kaiser Foundations numbers for per capita healthcare costs and they plot about a 78% increase in roughly the same time frame (2000-2008). In light of that national trend (as sucky as it seems) there isn’t anything as dramatic as a 100% increase. Nevertheless, a 20% increase is pretty steep if one assumes city employees haven’t been engaging in riskier behavior. There are only two reasons left over…
1) Dumb $#!t luck. (possible I don’t think you’d see such a constant trend line).
2) Nebulous claims. (given the claim-fraud scandal mentioned in this article, this seems more likely….still scratching my head at the Harp campaign donation acceptance and wondering how this will all play out.)
Would be useful to have a total # of claims as well as total $ value of claims, to understand trends here.
Why don’t the numbers for 2009-10 match DeStefano’s $11.4 million figure? Is someone cooking the books? Did the city get a massive reimbursement from somewhere? The difference is too substantial to ignore and accept without question. Another question is how the per employee cost compares to other cities, which raises yet another question: are the BOE’s work comp costs hidden in these numbers too? Keep asking questions, Mike Stratton!
I agree with Noteworthy. A spread sheet of which dept.s and also seeing if there are repeated claims by certain individuals is something to look into. Work comp can happen but it can be abused. The abusers should at the least be brought to light.
Without seeing the details, the numbers DO look large. $9.6 million translates into 128 employees earning $75,000 per year. So, if you assume the average annual salary is $75,000 and that on average a worker is out only 6 months, then that means that 256 city workers were out on workers comp for 6 months. Pure conjecture but that seems very high. And according to the people who testified, this is the result AFTER the City has made strides to reduce workers comp costs. Does anyone know what sort of details are available and how we can get them? You really need the details in order to perform a proper analysis.
The reason the numbers made no sense to me is that the city pays the board of Ed comp as well. This is not in the budget. Workers comp is the board of eds responsibility for its employees. Yet we have been paying for 3300 employees of boe without any disclosure to board of alders or the public.btge budget says we give the board of Ed 18m and that’s it. This is the approved budget. In fact the mayor is paying well in excess of the approved allocation by commingling board of Ed workers comp, healthcare, pension, and several other items into the city “non education budget”. You would never know looking at city budget or the boe budget or union contracts that this was occurring. The city says that they didn’t have to disclose it because the municipal employee relations state law requires these payments. But read the statute. Please read it. Teachers, administrators and other board of Ed employees are specifically excluded. The city has no duty and it has no permission. Under charter the mayor and controller are liable personally for payments in excess of approval. 32% of our city money given away secretly. This is a major scandal. Stay tuned. No wonder I was shocked orders conp covers not just 1300 city employees it covers 3400 board of Ed ones too. Now the number makes sense but the fraud is outrageous. Why did they do this? Because by hiding the city payment of comp, health etc they could demand cash to meet the state cost sharing match requirement. And the boe is not subject to city audit. Unaccountable in the extreme.