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 ends now.”
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 requests.
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 wrote.
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, Lightfoot said.
“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.
Lightfoot said the audit’s conclusion that the program was mismanaged and “utterly ill-equipped to prevent fraud and abuse” should come as no surprise.
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 for corruption.”
“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,” Lightfoot said.
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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