City of Los Angeles guilty of overpaying workers’ comp claims

City of Los Angeles guilty of overpaying workers’ comp claims

Want more evidence that our state’s worker’s comp system is defunct? Los Angeles City Controller Wendy Greuel released a statement in April saying the city has maintained a poor record when it comes to tracking and paying out workers’ compensation claims. The loss of control has led to millions of dollars of overpayments.

After the city conducted an audit  of its workers’ compensation program, Greuel said the city spends about $5.2 million dollars more in workers’ comp payments than other proportionate cities. The city has experienced a 52 percent increase in claims according to the news source, with firefighters and police officers making the majority of workers’ comp filings.

Greuel recommended the city negotiate with employer unions to help make sense of the burgeoning workers’ comp claims in the city. She further added that better on-the-job training could be one way the city could reduce its workers’ comp claims while reducing injury.

“In light of the city’s budget situation, now is the time to begin discussions, as part of future labor agreements, regarding changes to workers’ compensation payments and incentivizing employees to return to work,” Greuel said.

Several loopholes in the workers’ comp system in Los Angeles have raised some eyebrows. From the Daily News Los Angeles:

The city pays workers their full salary for the first year they are injured; the state provides its workers payments of 70 percent of salary up to a maximum of $1,067 per week.

And, because disability payments are exempt from taxation, the workers could end up earning more while off-duty than they would by working, Greuel said.

Auditors assessed the situation and made a recommendation for Los Angeles to tighten its system to avoid the possibility of overpayments in their first year. The audit also produced an interesting yet concerning fact: workers comp payments have increased from $12.9 million to more than $19 million in the year 2012 alone. With such a rising rate of workers’ comp claims, city officials are scrambling for a solution to the workers’ comp dilemma.

“This increase is most likely a result of employees receiving payments for a longer period of time, rather than an increase in the number of employees receiving payments,” Greuel said.