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Workers' Compensation Costs Rose in Santa Monica Last Year, Report Says

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By Jorge Casuso

January 14, 2020 -- The City's workers' compensation liabilities grew to $32.6 million in the past fiscal year due to a spike in disability payments and settled claims, according to a recent report from the finance department.

The program liabilities -- which represent the total value of the open claims since 1979 -- increased by $2.4 million last year, or 8.3 percent, according to the Workers’ Compensation Annual Report.

"After two years of relative stability, expenses for the Workers’ Compensation Program are again on the rise," said the report to the City Council from Finance Director Gigi Decavalles-Hughes.

"The lion’s share of this increase was attributable to the Police Department and reflects the impact of an aging workforce," the December 30 report said.

During the 2018-19 Fiscal Year, medical and indemnity payments rose from $10.4 million the previous year to $12.8 million, or a 23 percent hike, according to the report.

The payments, which cover lost wages and permanent physical impairments, jumped from $5.9 million to $8 million, or a 53 percent jump.

Medical payments accounted for $4.8 million of the total, a $290,000 increase over the previous year due to temporary disability payments, according to the report.

In addition to medical and indemnity costs, settlement agreements spiked from 98 claims totaling $2.3 million to 150 claims totaling $4.134 million.

By the end of the fiscal year on June 30, the City's overall open claim inventory had grown to 608, a 4.5 percent increase over the previous year, finance officials said.

The rise in total liabilities, however, declined during the first quarter of the current fiscal year -- from July 1 to September 30 -- making staff "hopeful this trend will continue," the report said.

Two trends may help account for the decline, finance officials said.

One is a Third-Party Administrator (TPA) pilot program at the Big Blue Bus (BBB) that has resulted in a "significant reduction" in the agency's total workers' compensation liabilities.

In addition, the City has taken steps to rebuild the reserves in its Workers’ Compensation Self Insurance Fund, reducing this fiscal year's contribution by approximately $4.7 million, compared to the previous fiscal year.

The City also has implemented the “Wow, that’s Fast” Program" that has reduced the number of litigated workers’ compensation claims filed by sworn public safety personnel, officials said.

The program provides police and firefighters with "a comprehensive case management service without the fees that attorneys charge."

Since the program was launched three years ago, 470 of the 543 employees who have filed claims have participated.

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