Mayor Lori Lightfoot talks to reporters following a City
Council meeting at City Hall on June 12, 2019. (Jose M. Osorio/Chicago Tribune)
Gregory Pratt and John ByrneContact Reporters
Chicago will transfer day-to-day control of its $100
million-per-year city workers’ compensation program, which for decades was
largely handled in secret under the auspices of now-indicted Ald. Edward Burke,
to a private company, Mayor Lori Lightfoot announced Thursday.
A recent audit, performed by outside auditing firm Grant
Thornton, found that the program did not operate according to industry best
practices, staff members were inadequately trained, and it lacked
“comprehensive policies and procedures governing claim handling, which can lead
to inconsistent claim outcomes for workers,” according to the mayor’s office.
Chicago’s workers’ comp program also lacks key protections
against fraud, though auditors did not specifically identify any in their
report, Grant Thornton said.
To deal with the workers’ comp program going forward, the
city is planning to transfer day-to-day operations to Gallagher Bassett, an
international public sector claims firm, Lightfoot said. The administration has
not yet reached a final agreement on a contract with the firm, Lightfoot said.
“While other cities across the country have long ago
reformed and professionalized their own programs, here in Chicago we continue
to operate in such an opaque and antiquated manner that even members of our own
City Council didn’t know how the program worked,” Lightfoot said. “That all
The workers’ compensation program was thrust into the
spotlight in November, when federal agents raided the City Hall offices of
Burke. At the time, Burke was the powerful City Council Finance Committee
chairman who had kept the program under tight wraps during his more than three
decades of nearly continuous control of the committee, resisting efforts by the
city inspector general to look into the program’s operations.
After federal prosecutors charged Burke in early January
with attempted extortion for allegedly trying to shake down Burger King
restaurateurs, Mayor Rahm Emanuel announced he would remove the program from
the committee and instead put the city Finance Department in charge of it.
Emanuel then ordered the outside audit of workers’
compensation, which was completed days before he left office.
In most cities, workers’ compensation is overseen by the
human resources or law departments. But in Chicago, it’s been controlled
closely by Burke with little oversight.
In 2012, Inspector General Joseph Ferguson sought access to
records related to the workers’ compensation program to review it for waste and
inefficiency. Burke denied Ferguson access to those records, contending they
fell outside the watchdog’s jurisdiction.
That same year, a federal grand jury issued subpoenas for
the program’s database, injury records, medical assessments and claim
investigation records dating to January 2006. Federal authorities also had
subpoenaed similar records in 2006. Nothing appeared to have come of those
In their executive summary, the auditors wrote that the
program “is in need of substantial improvement to operate more effectively as well
as prevent and detect potential fraud, waste and abuse.”
“While we were not tasked with nor did we investigate
potential instances of fraud, we did identify significant control deficiencies
and weaknesses that would create an environment where (fraud, waste and abuse)
could be present,” the auditors said.
Most workers’ comp claims weren’t in compliance with rules
or the program’s own internal claim administration guidelines, the auditors
The workers’ comp program was operating without any fraud
risk policy, offered no anti-fraud training, and did not conduct fraud
awareness initiatives, the report said.
It also did not maintain an anonymous fraud tip hotline and
did not have “documented policies or procedures to ensure consistent, reliable
investigations,” the report said.
The report recommended establishing a fraud risk management
policy and annual anti-fraud training, the report said.
Auditors also recommended establishing guidelines for
regularly analyzing claims “for the identification of unexpected changes over
time,” the report said.
The report recommended checking claims “immediately
following a holiday,” as “a high number of claims immediately following a
holiday could be considered anomalous, outside of work injuries and is often
indicative of (fraud, waste and abuse) in workers’ compensation claims.”
Speaking outside her office about the report, Lightfoot
called the audit “a pretty damning indictment of how this program is
administered. There’s I think virtually no point on which Grant Thornton
believed this program was operating anything close to best practices.”
The review also found that there were nearly 1,300 open
workers’ comp claims, and about 600 of those were a decade or more old,
“The fact that we’ve got these decades-old cases and we’ve
spent about $300 million and these claims are still unresolved, meaning there’s
still a potential additional payout on top of that, doesn’t make sense,”
Lightfoot said the audit’s conclusion that the program was
mismanaged and “utterly ill-equipped to prevent fraud and abuse” should come as
Lightfoot also took the opportunity to decry Burke, a
frequent target whose legal problems helped catapult her longshot bid for mayor
into a victory in the April election. She said the system Burke ran “was ripe
“A program of this size and significance has no business
being controlled by a single member of the City Council, not to mention
controlled without meaningful oversight controls or transparency,”
Asked how much the reform will save taxpayers, Lightfoot
said she didn’t know because there will also be startup costs to modernizing
the workers’ comp program. Much of its work is currently done on paper, not
electronically, she said.
But, she added, “over time, there’s no question it’ll save
us substantial sums.”
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