City Hall (File photo)

CITY HALL — Workers’ compensation costs are up for City Hall and finance officials expect they will continue to rise.

In the last six months of 2013, City Hall spent about $3.8 million on medical treatment and lost wages that resulted from city employees being injured on the job, Santa Monica city officials said in a recent report. Another $1.21 million went toward 48 settled claims during that time. There were only 27 settled claims over the same period of time the year before.

During fiscal year 2012-13, 349 claims were filed, up 13 percent from the year prior. During the first half of this fiscal year, claims are up 9 percent.

At Big Blue Bus, organizational changes may be tied to the increase in claims. At BBB, the trend started in fiscal year 2011-12, when new work schedules, attendance policies, and job performance standards were put into place.

“Some employees have not adjusted to these changes and may have filed injury claims in response to them,” city officials said in the report. “If so, the increase in claims may persist for a time, until the organization as a whole has adjusted to the operational changes.”

Many of the other claims are the result of the aging workforce, particularly in the police and fire departments.

“Reversing this trend in the short-term will be challenging, if not impossible,” officials said.

External forces, like state legislation, are also contributing to the boosted costs.

The maximum weekly temporary disability benefit, controlled by the state, jumped 11 percent in the last five years.

The permanent disability payment schedule rate spiked 30 percent in two years thanks to legislation passed in late 2012.

State officials predicted that reforms would offset the increases but city officials said that hasn’t happened yet.

“The majority of the reforms focus on making the workers’ compensation system more efficient, and over time, should allow employers to resolve claims more quickly and spend less money on overhead related expenses,” city officials said. “While these changes are certainly welcome, they don’t address the key cost drivers in workers’ compensation: medical expenses and indemnity payments.”

In an attempt to control costs, the Risk Management Division is returning injured employees to modified positions while they heal. Savings in that program is on track to be up $300,000 since 2011.

City Hall also revamped the medical bill process and picked a new medical bill provider, saving $200,000 annually.

In response to the BBB issues, risk management is putting driver candidates through a bunch of job-specific physical tests.

“Over time, this program should improve employee safety and save money on workers’ compensation claims,” officials said.

Three bus driver classes have gone through the testing already and risk management plans to expand the program to all of the physically demanding jobs in the next few years.

City Hall is doing what it can, city officials said.

“These efforts, however, are not sufficient to offset the financial impact of the internal (and) external factors dogging the program,” they said.

For this reason, city finance officials expect the costs will keep rising.

“There are no ‘magic bullets’ to reverse this trend in the short-term,” they said. “And as such, (City Hall) can expect to increase its contribution to the Workers’ Compensation Self Insurance Fund during the next two-year budget cycle.”

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