City Audit: Workers’ Comp Program Had ‘No Formalized Governance Or Oversight Structure

CHICAGO (CBS) — A new audit is providing the first glimpse at how Chicago Ald. Ed Burke (14th) ran the city’s workers’ comp program, which operated for years with no monitoring or oversight.

CBS 2 political reporter Derrick Blakley has the story from City Hall with problems uncovered by the audit.

Chicago Mayor Lori Lightfoot said the city’s workers’ comp program is in such disarray, she’s bringing in a private company, Gallagher Bassett, to operate and reform the program.

As Finance Committe Chairman, Ald. Ed Burke ran the workers’ comp program as his personal fiefdom.

So secretive, even many city council members didn’t know how the program worked.

Mayor Lightfoot’s audit, performed by Grant Thornton Consultants, discovered large scale mismanagement.

“Just as of March 31 of this year, the program had approximately 1,300 open claims, many of which dated back several decades,” Lightfoot said. “Which means we were paying people, taxpayer dollars, without resolving their claims.”

Those 1,300 claims have cost the city almost 300 million dollars. And 600 of those claims are more than a decade old.

“It’s a pretty damning indictment of how this program was administered,” Lightfoot said. “I think there’s virtually no point on which Grant Thornton believed this program was operating anything close to best practices.”

Before Burke’s Finance Committee offices were raided by the FBI last year, his personnel empire included 33 positions just to manage workers’ comp.

Yet the audit said “the program had no formalized governance or oversight structure, which contributed to an overall lack…of controls to prevent fraud, waste and abuse.”

Burke successfully resisted attempts by Inspector General Joe Ferguson to review the program.

“The system that Ed Burke ran was ripe for corruption and we’re going to find and learn more about that as we dig into the details of these old legacy claims,” Lightfoot said.

And a government watchdog group said the change should be a win for tax payers.

“I think literally tens of millions of dollars should be a goal within the first year of the program,” said Laurence Msall of the Civic Federation. “Because there is clear inefficiency.”

The workers’ comp program currently spends around 100 million dollars a year.  But under Burke, the program had no fraud tip hotline and no policies to ensure reliable investigations.

Mayor Lightfoot said the audit wasn’t designed to find criminal violations, but the city will be looking for patterns of fraud as it reviews past claims.

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