Los Angeles County Grand Jury • 2002-2003

Final Report 2002 - 2003*

Published: June 12, 2003 392 pages Consolidated Report
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Findings 10 findings

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General In the course of interviews with employees from management down to linemen, Members of the Grand jury noted and observed the excitement about MTA's New Strategic Safety Management Plan.
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Safety a. The MTA management organization was realigned to emphasize safety and risk management. This reorganization of MTA management played a key role in the development of the safety management plan called Safety's First. b. MTA management developed and distributed a strategic Safety Management Plan requiring each department to develop and monitor their safety progress with individual Departmental Safety Action Plans. c. MTA management took a "personal and collective responsibility" for the administration of the workers' compensation program with emphasis on safety and prevention of accidents. d. MTA brought in Dupont Safety Resources (a division of Dupont Corporation) to assist in developing an overall strategic Safety Management Plan and then negotiated a performance-based contract. e. Dupont's role was also to implement a strong training component. All 9000 employees are to be trained by December 31, 2003. According to MTA management, as of March 1, 2003, 4500 employees have completed at least one phase of the training program. f. Extensive site visits and interviews with employees and supervisors confirmed MTA management's contention that workers generally have a positive attitude regarding the overall Safety Management Plan. Most employees feel that they are working in a safe environment with management taking the initiative in promoting safety. All supervisors interviewed were aware and involved in safety concerns. MTA line employees verified that executive management is visible and active in promoting this program. g. MTA's program is already showing significant improvement in costs and in reduction of lost workdays. The number of lost workdays per 100 employees declined 7.5% in the first two quarters of FY 2003 (p. 5, MTA Operations Committee Report, March 20, 2003).
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Risk Management Risk Management – Risk management covers a broad range of activities. The focus of the Grand Jury's investigation was confined to the workers' compensation program. a. MTA has reorganized its workers' compensation department. MTA is now self-insured and self-administered. In MTA's view, this provides a more efficient claims process. MTA has also implemented a case management system to facilitate solving problems and monitoring trends. b. MTA also has a new procedure to closely monitor long-term medical claims as well as the medical fee schedule and billing of medical providers. For example, in one month MTA saved half a million dollars using this new monitoring process. c. MTA is currently setting medical standards as guides for assessment of cases. The goal is to process cases more quickly. d. As an important component of the plan, MTA has implemented an aggressive Transitional Duty Program (TDP). This program provides for early assessment for vocational rehabilitation needs, staff to expedite return to work, and temporary work for employees who qualify while in their recovery stage. e. The MTA has established partnerships with the County Counsel and the District Attorney's office who provide specialized services. These agencies have provided assistance in monitoring legal services, establishing hiring standards for workers, providing seminars, identifying and prosecuting fraud, and development of legislation. f. Unions and MTA management mutually agreed to hire a neutral Injured Worker's Advocate (IWA) to assist workers in receiving and utilizing benefits and following proper procedures of the workers' compensation program. During the course of the Grand Jury investigation, this position was reassigned within the MTA organization to provide more visibility and accessibility. Conclusions
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Procedures have been created to insure that all systems connected to administering workers' compensation will be more closely monitored.
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MTA has created an innovative position called Injured Workers Advocate (IWA) to assist workers in the process of receiving workers' compensation benefits.
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The most recent data secured from MTA administrators and their written reports indicate that there has been a decrease in the cost of claims, number of accidents, and a significant reduction of lost workdays.
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We commend the MTA management for recognizing the need for change in policy and implementing their Safety's First program with the goal of achieving 100% safety awareness for all employees and reducing the accident and injury rate by 51% or greater in five years.
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We urge other public agencies to use MTA's program as a model for future planning to address similar problems associated with workers' compensation. Introduction MTA's workers' compensation costs historically were the highest of any transit agency in the nation. MTA averaged 176 industrial accidents per month. Their workers' compensation cost was $6,500 per employee, with a total cost of $58 million in FY 2001-2002. To address this growing problem, MTA's Board of Directors and the CEO implemented a strategic plan designed to reduce the accident and injury rate by 51% or greater in 5 years and insure 100% safety awareness by all employees. The management of MTA hired Dupont Safety Resources (a division of Dupont Corporation) to institute the awareness program, negotiated an innovative and groundbreaking performance-based contract with Dupont, and recruited and hired a nationally recognized leader in risk management administration. MTA management took a "personal and collective responsibility" for the administration of the workers' compensation program with emphasis on safety and prevention of accidents. In order to assess the effectiveness of the MTA's strategic plan, the Grand Jury interviewed MTA's administrators, visited work sites, interviewed various levels of employees at the work site and studied the numerous documents that incorporated MTA's philosophy: written procedures, training manuals, assessment tools, health and safety guides and guidelines, reporting procedures for accidents and injuries, job descriptions, and performance evaluations – to name a few. Site visits were designed to • Assess whether the work environment reflected management's safety concerns; • Assess employee awareness and involvement in the new safety plans; • Assess whether members of management were visible to the general employee population. Findings
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Lost days: Tracking lost days from work shows the effectiveness of the ERTW programs. County data are available for the last four years. Sheriff’s Department: During 1999, the total lost days were 83,670, or a rate of 6.4 days per employee. During 2002, the total lost days were 143,820, or a rate of 9.85 days per employee. However, the year 2002 shows a reduction in days and rate from the prior two years. County Fire Department: During 1999, the total lost days were 27,108, or a rate of 7.81 days per employee. During 2002, the total lost days were 35,111, or a rate of 9.04 days per employee. The County is required to file annual reports with the State of California, showing the number of reported claims for each of the last five years and the amounts paid and amounts forecast as reserves for those claims. This report is County-wide and not by department. Reported liability of each year’s claims over a five-year period illustrates reserve trending. For the year ending 1998, the County reported its total incurred liability (paid amounts plus future reserves) at about $83.7 million. One year later, those same incurred claims were reported at about $132 million, a 58% increase. At the end of the following year, incurred liability had increased to over $176 million, and by year ending 2002, the amount had increased to more than $225.5 million, a 169% increase from 1998. Incurred claims (paid amounts plus future reserves) for the year ending 1999 of $90.2 million rose to almost $152 million at year-end 2000 and more than $227 million at year-end 2002. This is a 152% increase in just three years. The year ending claims for 2000 of $103 million increased to $166 million in 2001 and to over $227 million in 2002, a 120% increase in just two years. The year ending 2001 claims of $118 million increased to over $176 million at year-end 2002, a 50% increase in just one year. This shows a consistent pattern of under reserving. If these trends remain consistent, at the end of the fourth year the 2001 claim year will be in the area of $300 million and year 2002 claims will increase to about $340 million. Analyses comparing costs with payroll or by claim or employee will be distorted unless these reserve trends are taken into account. This is why it is recommended that results be based upon actuarial analysis to estimate expected values. Historically the County has not performed regular actuarial analyses. The last report was completed in 1998. It is our understanding from the CAO that an actuarial analysis is now being competitively bid. We recommend that an actuarial analysis be performed every two or three years. Much more accurate forecasting and trending analysis can be developed upon completion of the actuarial study. City Data The City's claim-reporting system collects even less data than the County's system. Many key data components, such as claims in litigation, date claim was reported to TPA, date employee was treated by doctor, date of doctor's report, and lost days from work are not tracked in the system, making accurate and meaningful reporting impossible. The administration of the City Fire Department's claims is split between a TPA, which handles the sworn officers, and the City Personnel Department, which handles the civilian employees. While the sworn officers account for more than 90% of the employees and 95% of the losses, it is difficult to get consolidated Fire Department data out of the system. The bill-review vendor, Diversified, was able to provide similar bill-review savings reports as those received from the County, but not the medical-management statistics for lost-day savings. Those services are provided by Cambridge Risk Services (Cambridge). Cambridge is required to use the City's software system, which does not track the necessary lost-time data. The City does not integrate salary-continuance payments into the claims system, making those numbers unreliable. Like the County, the City is on an uninsured pay-as-you-go basis, with little emphasis on establishing accurate case reserves, although they are doing a better job of reserving than the County. The practice of under reserving distorts trending analysis based upon incurred losses. Given the City's limited data resources, we were able to analyze trending in the following areas:
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Improve accident investigations To implement this plan, Personnel must work closely with Risk Management in areas relating to risk identification, safety, and loss prevention, which are the responsibility of the Risk Management and Safety Division of the Finance Department. In addition, the Mayor's Office will have to issue new directives to City departments on the importance of loss-prevention and cost-containment issues, as well as give approval to consolidate all risk management functions in the department or office best suited to manage all aspects of risk management, including workers' compensation. The City is working to upgrade its computer software reporting and interfacing capabilities to better report, track, and trend work-related injuries. The system should be replaced with a state-of-the-art system. The cost of the new system will be offset by improved performance and efficiencies for the users and lower maintenance and upkeep costs for the software and hardware. Department Plans The Personnel Department and City Fire Department have expanded the communications process on workers' compensation issues with other City departments, the TPA, and law firms to obtain better claim outcomes. Joint meetings are now regularly scheduled to discuss claims and other open issues to achieve better program results. The City Fire Department is building a website to better track and investigate its injuries. It is studying the possibilities of better integrating computer-software systems currently in use to track the injuries with the claims system used by the TPA and the Personnel Department. It also is working to expand training on the current City claim-reporting system so that the Department can run its own management and trending reports. The City Fire Department is working to improve its medical panel, add network providers, and gain approval for implementing wellness-and-fitness programs. Problems associated with sports injuries are also under review. The City Fire Department also is working on more supervisory training and increasing communication with the TPA, City Attorney, and other City departments. We encourage pursuing these goals. Plans for City TPAs The TPA is being scheduled for additional computer training to allow it to run its own management and trending reports. Training in other areas is being scheduled and there is greater emphasis on communication and meetings between the Fire Department and the TPA personnel. The contract for TPA services is coming up for renewal, at which time additional options and programs will be explored. Plans for City Bill Review and Medical Management The City is working on improving the quality of providers in the network, expanding the use of network providers by adding frequently used out-of-network providers to the network, and expanding the range of providers into other areas such as specialists. They also are exploring the quick-pay option to reduce payments to non-network providers and ways to legally challenge more bills, especially surgery-center bills and other litigation-related bills. The bill-review and medical-management contracts are also up for renewal and the vendor should be selected based upon its ability to achieve lower program costs as opposed to lower fees. Plans for City Litigation Management The City Attorney's Office is responsible for the oversight of the outside law firms that represent the Fire Department's workers' compensation claims. The City needs to upgrade its oversight of the litigation process. Currently it does not have the resources necessary to closely monitor the outcomes of outside law firms. It is hindered in this process by an ineffective computer-software system. The City Attorney's Office has taken over responsibility from the Personnel Department and TPA for handling fraud claims against the City. It has expanded resources to work on cases and to refer appropriate cases to the District Attorney's Office for prosecution. The City Attorney is working to upgrade the computer-software system and access to the City claims system to increase communications with the TPA and the departments. Other planning required Plans for County The CAO Risk Management Branch is proceeding to complete the staffing and implementation of a new consolidated risk management structure. Concurrently with the reorganization it must address the following: upgrading the computer-software-reporting system to enhance report generation, claim tracking, and trending capabilities for all interested parties and includes the integration of the various systems into one reporting database. This enhancement will require the adding and upgrading of resources devoted to technology and forecasting issues. A key component of reorganization should be changing the role and direction of the CAO claim monitors. Although the monitors currently track the TPA's performance against contract standards, provide authority for procedures under established guidelines, and audit for violations from the standards, the monitors do not concentrate on achieving the best claim outcomes. Instead the claim monitors concentrate primarily on the underlying claim processes such as timeliness of payment, accuracy of payments and referral for legal representation. In cooperation with the TPAs and other vendors, the monitors should develop action plans for all lost-time injuries. The monitors should take over the settlement responsibilities from the attorneys and oversee activities of the attorneys and adjusters. The monitors should use their County experience to institute formal training programs for the departments, attorneys, and TPAs where needed. The monitors should work to develop new cost-savings programs in all areas including claim management, litigation, investigations (including fraud), subrogation, vocational rehabilitation, loss prevention, ERTW, bill review, and medical management. Although they should continue to maintain their claims oversight function, much of this activity can be part of the computer system upgrade process. Plans for Departments The departments need to make ERTW programs mandatory and to enforce these policies. Department heads should make it known that unit managers and supervisors will be held accountable for ERTW program results in their performance reviews, promotions, and disciplinary procedures. The new loss-prevention and safety programs will require the same commitment from the departments as the ERTW program. Making these programs work will require management commitment, the integration of the various County and department claim-tracking and accountability systems, and the expansion of the claim-trending and analysis-reporting system to help design effective programs. Programs that the departments are not effectively handling or do not have adequate resources to perform properly should be returned to the CAO or to the TPA for handling. Plans for TPAs The TPA should be given incentives to create and implement new cost-savings programs. These changes should be reflected in a new agreement between the City and the TPA, which will be out to bid. With the changing role of County monitors, the TPAs must be given a more responsible role in generating better program outcomes. The TPAs should be given more authority for settling claims and resolving claim issues but still be held accountable for their decisions. They should be provided incentives to create and implement new cost savings programs. The TPAs need to begin a grading system for attorneys and other vendors. The grades should be communicated to County Counsel and the CAO for oversight. The inclusion or deletion of the firms from the approved panel should be based on the quality of their actual file-handling performance. The TPAs need to be held more accountable for claim-reserving practices and the early identification of serious injuries and high dollar claims. A formal review of future medical cases should be completed with the goal of settling or resolving as many cases as possible. The adding of special resources to this project should be considered. Improvement in the understanding and handling of subrogation and rehabilitation claims is needed. Plans for Bill Review and Medical Management The CAO needs to evaluate the effectiveness of the nurse case management program and consider changing the protocols to concentrate on resolving problem cases and the earlier identification of problem cases. Concentrating resources on problem cases is more effective than a policy of working all cases which may not need specialized nursing services. A more active policy to expand existing networks and to include TPA networks is required. Increases in network penetration rates should reduce both disability and medical costs. Part of the network evaluation process should be to weed out poor performing providers while adding more effective providers. Because the bill-review and medical-management vendor's software system has important data not captured in the claim software system, a better method of software integration is needed. This will allow for better analysis and cost trend forecasting. The bill-review firm should be able to negotiate quick-pay discounts to non-network providers which offer discounts when payments are received within a specified period. Savings can be as high as 10–20% compared to current practices that currently offer no discount. Although a quick-pay system requiring fast approval and turnaround of payment from the County Finance Department may not be possible using current procedures, it should be explored. Plans for Litigation Management With the concurrence of County Counsel, outside law firms that represent County on workers' compensation claims are paid on a flat-fee basis and given authority to settle claims up to 100% disability. This policy promotes a lack of aggressive defense work-up and creates an incentive to settle claims as quickly as possible. A prior study recommended a trial program to handle some claims on fee-for-service basis and compare the results with the current method of payment. While that program was not instituted, County Counsel is now considering a change to the way it compensates law firms. The legal software system needs to be interfaced with the other claim systems to generate better data and information to the affected parties. Cases of questionable origin or levels of disability are referred to outside investigation vendors by the TPA with County's approval from a County-approved list of vendors. Currently the investigators are assigned on a rotational basis without consideration of expertise, ability or geographical location, except for the Sheriff's Department which uses a limited number of investigation firms. Plans for City The City needs to change how the workers' compensation program is structured. Because workers' compensation program costs are the responsibility of the Personnel Department and not the operating units, the management and supervisors of the departments and units are not held accountable for their own program results. The City needs to implement a charge-back program wherein the costs of the workers' compensation program are identified and become the responsibility of the departments. Such charge-back system, if properly designed, will encourage the departments to better enforce workplace-safety rules, comply with the ERTW Program, and become more active participants in controlling costs and working with the Personnel Department and the Risk Management and Safety Division (Finance) to develop new cost-saving programs. Conclusions Organizational Issues All Units Although there was a relatively small increase in number of claims, employees, and available payroll for the departments studied, there has been a dramatic increase in paid benefits. The major contributors to these increases are skyrocketing medical costs, $4850 benefits escalation and abuse, and increases in permanent disability benefits. Many of these increases have been due to benefit increases passed by the legislature. Legislative changes are needed to stem the dramatic cost increases faced by the departments County The County recently reorganized its risk management functions to consolidate responsibilities for workers' compensation claims administration, safety/loss prevention, and all other risk-related functions under the jurisdiction of a newly created Risk Manager position reporting directly to the CAO. This organizational structure is expected to result in a more unified strategy for managing County's workers' compensation and other risk management programs. The CAO plays a support role for the departments in providing loss-prevention services and specialized cost-control programs unless the department elects to implement its own specialized program such as the Sheriff's Department does with ERTW. City Workers' compensation claims administration is the responsibility of the Personnel Department with city-wide risk-management and loss-prevention units (which serve in an advisory capacity to the departments) reporting to the Finance Department. Primary safety and loss-prevention activities are the responsibility of the individual departments. However, there is little independent oversight of any of these functions. This current structure does not support effective management of the overall workers' compensation program because responsibilities for various elements of the program are fragmented. Workers' compensation costs are the responsibility of the Personnel Department and not the individual departments. There is no accountability of departmental management for workers' compensation performance. Workers' compensation claims administration and loss-prevention programs have not been a priority item for the Mayor and department heads. Implementing the Personnel Department's cost-containment plans will require close cooperation with the Risk Management and Safety Division of Finance and the Mayor should communicate the importance of loss-prevention and cost-containment issues to the City departments. Because of current fragmentation of functions, we support consolidation of workers' compensation, safety, risk analysis, insurance, and all other risk management functions with organizational placement in the most influential City department or office. There is no City policy or procedure to identify and allocate specific workers' compensation costs back to the departments. Appropriately designed charge-back (cost-allocation) systems are important because they encourage the departments to place far greater emphasis on workplace safety rules, to comply with ERTW program goals, and to become more active participants in controlling costs and working to develop new cost-saving programs. Work Culture Most sworn officers pride themselves in performing high-risk, high-stress emergency-service jobs, with many officers shrugging off minor injuries in favor of continuing to work. When officers are seriously injured and unable to perform their normal duties, some officers resist ERTW positions. Because of the favorable nature of the workers' compensation laws toward disability benefits and presumptions of injuries due to medical conditions such as cancers and internal disease, some injured officers seek to extend benefits in preparation for retirement or to protest policies or procedures they do not want to follow, such as performing light-duty jobs under ERTW programs. All the three departments reviewed would benefit by attempting to change the work cultures and attitudes toward workers' compensation through more aggressive education of the purpose of workers' compensation, department policies, goals, rules, and programs. Because it is easier to educate and train new employees than longer-tenured employees whose work ethics and culture have already formed, an opportunity to change the culture is in developing new programs for the recruits. ERTW Programs All three departments would benefit from more aggressive leadership in the administration of the ERTW programs. The Fire Department Chiefs and the Sheriff should place greater emphasis on enforcing mandatory ERTW programs, making it clear that unit managers and supervisors will be held accountable for ERTW program results in their performance reviews, promotions, and disciplinary procedures. Claim Administration General The City and County are legally uninsured and operate on a pay-as-you-go basis. Although the City appears to be doing an acceptable job in setting claim reserves, County has consistently understated each year's claim reserves as they develop over time. County It is our understanding that an actuarial analysis will be conducted soon after a vendor is selected. There is no recent actuarial analysis available to assist in trending payments and reserves. Trends from the data we were provided revealed that workers' compensation program expexpenses for County Fire and Sheriff's departments continue to increase at high levels in excess of increases in payroll, employment, and other inflation factors. These workers' compensation cost increases come primarily from increases in $4850 benefits, medical benefits, permanent disability benefits and in the costs to defend claims. The CAO TPA's incentive results are offset by County's overemphasis on the penalties and excess costs charged to the TPAs and not on claim outcomes and developing a positive relationship with the TPAs. The TPAs are not encouraged to develop cost-control programs for which they could share in County savings and where any added TPA fees would be out of additional savings to County. The TPAs are not financially challenged to do their own trending analysis to identify new or potential problem areas and are not developing programs to counteract the trends. Although financial audits are performed to determine if payment guidelines are followed, and CAO claim monitors review TPA activities, there is little independent oversight of what the CAO is doing at County or what the Personnel Department is doing at the City level. The level of independent oversight and tracking of data from the software systems is inadequate. The best-run workers' compensation programs involve all participants working together as a team to achieve the best outcomes on each individual case. An area adversely affecting this is the CAO TPA contracts that have created disputes between County and the TPAs as to responsibility for penalty and claim-error issues. Attempts to resolve these disputes continue, but all parties have been diverting much time and resources away from obtaining beneficial claim outcomes. The CAO needs to expand the cooperation between the departments that handle and oversee workers' compensation claims, the operating departments, the TPAs, and County Counsel with regularly scheduled meetings. The CAO needs to work on increasing cooperation between the staff that handle and oversee workers' compensation claims and those that handle other disability and benefit programs, such as short- and long-term disability and healthcare benefits. More coordination is needed regarding overlapping fraud and abuse issues as well as methods for applying medical-management cost-control principles to the other programs. The structure of the workers' compensation system, which rewards time off from work and provides for disability salary continuance for permanent residuals based upon the employee's objective and subjective complaints, creates opportunities for claim abuse. Because §4850 benefits allow injured sworn officers to receive their full salary tax-free for up to one-year post injury, there is an incentive for staying off work on disability rather than returning to regular or limited duty, especially for employees with work-performance issues or who are approaching retirement age. To obtain additional or prolonged benefits requires the approval of the treating doctor, leading to abuse of the medical system with requests for more treatment, testing and medical aids required for industrial injuries than for non-industrial injuries. Too many claims are left open for future medical treatment or unresolved medical issues. State-mandated benefit increases will drive up the cost of 100% permanent disability claims, making them an attractive target for applicant attorneys. The CAO needs to strengthen procedures to defend these claims. The CAO monitors are not responsible for the resolution of litigated claims nor do they oversee the activities of the attorneys. The monitors do not have a formal training program for the departments, attorneys, and TPAs. The monitors have not developed enough new cost-savings programs in all program areas, including claim management, litigation, investigations (including fraud), subrogation, vocational rehabilitation, loss prevention, return to work, bill review, and medical management. Although the monitors should maintain their oversight function, much of this activity can be generated from enhanced computer reporting, which should be part of the computer system upgrade process. The TPAs do not have a responsible role in generating better program outcomes. The TPAs lack authority over settling claims and resolving claim issues . The CAO does not provide adequate oversight of the litigation program. The lack of a grading system for attorneys by the TPAs or the monitors has led to the inclusion or deletion of the panel firms not being based solely on their file-handling performance. TPAs are not held accountable for claim-reserving practices and the early identification of serious injuries and high-dollar claims. Lack of formal review of future medical cases has resulted in too many claims requiring extensive medical payments in future years that could have been resolved more reasonably and much earlier. The TPAs lack a complete understanding of handling subrogation and rehabilitation claims. They need more training and an incentive program. Because the Sheriff's Department is not doing an adequate job of handling vocational rehabilitation claims, the program should be handled by the CAO. Analysis of data given to us reveals that workers' compensation costs for the Sheriff's and Fire departments continue to increase far in excess of increases in payroll, employment, and other inflation factors. The workers' compensation department units, the TPA staff, and County Counsel give department personnel special training classes on a variety of workers' compensation-related matters, but such training is inadequate. City Because the TPA is not offered incentives to pursue subrogation collection, the TPA adjusters are not aggressively pursuing subrogation recoveries. There are no incentives now in the City TPA contracts for meeting negotiated claim-handling objectives. The City TPA should be encouraged to develop cost-control programs for which they can share in the savings with the City. Trends from the data we were provided revealed that workers' compensation program costs for the City Fire department continue to increase at significant levels in excess of increases in payroll, employment, and other inflation factors. Medical Management All Organizations Medical case management is needed on selected cases where the injured employee is not returning to work in a reasonable amount of time or whose injury has the potential for significant medical treatment or expenses. The three departments' methods of providing case management for specific types of injuries or cases that exceed a set period of disability from work needs to be changed. Only claims that are potential problem cases or claims that are not within accepted disability and treatment protocols should be addressed. Savings from case-management efforts are difficult to measure because they result from the actions of the claims adjuster from the TPA, County monitors, and the departments' own ERTW staff including the nurses. This overlap of services and contacts can lead to a duplication of work effort and confusion of providers and employees as to whom they are to report. The departments do not have effective working relationships with many treating physicians. Some of the panel doctors need to be trained on the departments' ability to provide modified jobs under the ERTW program and on the disability and treatment protocols to be followed. The departments are inconsistent in enforcing the use of medical-treatment panels as allowed by statute. Not all providers on the medical panels are in the PPO networks. The departments are not removing providers that are not following the ERTW or other protocols from the approved medical panel. Surgery centers are not subject to the state fee schedule. Additional cost savings are possible by implementing a discounted, quick-pay program for non-network providers and by contesting more medical liens not supported by the medical evidence. County Vendors should be evaluated on their ability to generate cost savings for County, on their ability to create additional cost-savings programs, and not solely on their fees for services. City The bill-review and medical-management vendor's software system has important data not captured in the City claim software system. The bill-paying process is inefficient. The bill-review and medical-management contracts do not include cost-savings incentives. Litigation Management County The departments often take a passive role in the litigation process. Litigated cases are not now subject to regularly scheduled meetings among the departments, counsel, the TPAs, and the monitors to develop case strategy and settlement solutions. County Counsel has assigned in-house attorneys as liaisons with outside firms and with the TPAs to resolve litigation, communication, and procedural issues. Although this practice is an improvement over past practices, there still is insufficient oversight of the litigation process. County's method of paying outside law firms a flat fee promotes a lack of aggressive defense work-up and an incentive to settle claims too quickly. Attorneys are not being held accountable by the departments, the CAO, or the TPAs for the outcome of the cases. With County Counsel's concurrence the attorney's settlement authority, without any oversight or approval of the TPA or the CAO required, allows the attorneys to agree to awards of up to 100% disability. This authority should be given to CAO monitors and the TPAs. This transfer of authority will require expanding the authority and responsibilities of the TPAs, which should be done only under strict CAO-established protocols. The CAO (except for the Sheriff's AOE/COE investigations) assigns claim investigators on a rotational basis without consideration of expertise, ability or geographical location. This assignment basis drives up costs on claims and does not allow for special handling based upon the expertise of the investigator. There is no formal evaluation process for investigation firms. City The City Attorney's Office does not have the resources necessary to perform adequate oversight and communications with the outside law firms. The City Fire Department has cooperated with outside counsel and others, but has not taken an active role in the litigation process on most cases. The City Attorney's Office also is limited in its oversight role because of limitations in its computer-software system, which is not integrated with the Personnel Department's claim software system. Computer Systems County The TPAs are required to use the County claims software which is inadequate by industry standards. The CAO has contracted to upgrade the current software system for use by all four TPAs and all County departments. The new system-modification implementation is underway but has developed operating problems at the TPA level. The CAO lacks the technology resources to implement and maintain a system of this size. Implementations of this magnitude require a detailed plan with sufficient technology resources and expertise. A proper plan was not undertaken and a lack of resources has led to breakdown in the planned system roll-out to the TPAs. Even the new version of the County system does not track or integrate all the information needed to properly analyze and trend losses and risk factors. There is no interface with the payroll system to accurately track salary continuance and Labor Code §4850 benefits. The crucial loss-tracking data elements missing in the system include lost days from work, various medical-management details, and other statistics on case-management performance. The current computer system is not user-friendly and does not allow the departments and the TPAs to run their own reports. The TPAs and departments have not received adequate training in this area. City Although the City is working to upgrade its computer software reporting and interfacing capabilities, the system is inadequate and should be replaced. The cost of a new system would be more than offset by the productivity efficiencies gained by the City Fire Department, City Personnel Department claim processors, TPA claim processors, and bill-review and medical-management processors. At the same time the new system would cost less to maintain; it would provide integrity to the financial accounting system and would provide greater accuracy of the claims data. Safety and Loss Prevention County County The CAO's safety and loss-prevention activities are primarily consultative. Although safety and loss-prevention training and model safety programs are offered to the departments, the model safety program is inadequate as a practical guide to the departments. The County provides no central directive for departments to adopt any particular program or service. Effectiveness in preventing accidents could be improved by augmenting the ability to train and assist departments with routine safety matters by adding trained safety staff under the direction of an experienced safety and loss-prevention manager. County Fire Department The County Fire Department Safety Officer is a highly trained firefighter, not a loss prevention professional. As a captain, this position does not have sufficient rank to interact and effect changes with battalion chiefs. In addition, the Safety Officer position is subject to routine rotation every few years. Such rotation creates continuity problems because new staff are rarely experienced in safety management issues and must learn on the job, which takes time. There is little proactive loss prevention taking place because of understaffing. In addition, training officers do not receive regular safety and loss-prevention training nor participate in safety-committee meetings; they should receive such training. The County Fire Department has an injury-incidence rate of nearly 40% which is very high (see Appendix 1 for comparative data). In part this may be the result of inadequate physical fitness, performing inherently dangerous and physically demanding job functions, but also probably the result of some abuse of the §4850 statute. In response to this problem, County Fire Department has developed a voluntary wellness-and-fitness program; however, this program has not yet been fully implemented nor tested. In addition, the wellness-and-fitness program does not have a mandatory physical-exam element and fitness standards. The County Fire Department incurs a large number of sports and exercise-related injuries. More evaluation of this problem, including better identification of what differentiates sports and exercise-related injuries, is needed to determine appropriate corrective actions. Sheriff's Department The primary role of the Sheriff's Safety Officer position is managing ERTW activities and general safety and claim issues. At the level of sergeant, the Safety Officer does not have sufficient rank necessary to achieve appropriate command authority. We believe the Safety Officer position should be staffed by a Lieutenant, a rank more commensurate with the importance of department safety and loss prevention activities. Also, we believe the current Risk Management Officer position, now a lieutenant, should be elevated to the rank of captain. Because the Safety Officer position is subject to rotation every two to three years), achieving consistent program management with sworn staff is difficult. A trained civilian safety professional reporting to the Safety Officer could alleviate these problems by ensuring that at least one key staff knowledgeable in safety and loss-prevention operations is in place during rotation. Such staffing should help ensure consistent management of safety-related programs over time. Although overall safety and loss prevention is the responsibility of the Sheriff with assistance from the CAO Safety Unit, each watch commander is responsible for developing and implementing safety programs. Because we did not conduct an audit of all field operations, it is uncertain whether and to what extent safety and loss-prevention activities are performed at these levels. An audit of station commander safety and loss-prevention activities is needed to determine whether changes are needed to improve performance. City The City Safety unit (which is in the Finance Department) functions in a capacity similar to County in that its activities are consultative in nature. With only three safety consultants, effectiveness of the Safety Unit is limited. City Fire Department In 2001, a detailed audit of City Fire Department safety and loss-prevention activities was conducted. This department still suffers from the following problems: • 40% of the City Fire Department workforce continues to have back and other soft-tissue injuries annually. We believe this is because many officers are unfit to perform inherently dangerous and physically demanding job functions and that some officers abuse the $4850 benefits in preparation for a disability retirement. • Overall management of City Fire Department safety and loss-prevention efforts is fragmented and inadequately coordinated and staffed. Safety and loss-prevention staff have inadequate command authority. • The City Fire Department uses a safety manual, known as Book 75, which is out of compliance with Cal/OSHA safety requirements, overly detailed, and difficult to apply in practical use. Book 75 does not follow the City-developed safety and injury and illness prevention program model. • Although there is a formal protocol for investigating occupational injuries for the purpose of developing policy and procedures to prevent accidents, only the most serious accidents are actually investigated. • The wellness/fitness program is not mandatory nor is there a mandatory requirement for physical examinations to ensure that firefighters are physically fit for duty.

Recommendations 76

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.