Think of it as an unintended gift from Ald. Edward Burke to governments throughout Illinois: A private-sector company now will manage the City Hall workers’ compensation program that Chicagoans long described as Burke’s $100 million-a-year fiefdom.
Mayor Lori Lightfoot has hired an outside claims administrator to manage the program, which she aptly describes as vulnerable to corruption. Let’s see: For decades one alderman, his veins coursing as much with politics as with blood, oversees how the city doles out payments to claimants who say their injuries keep them from working. What could possibly go wrong?
A federal charge of attempted extortion against Burke roiled his, well, fiefdom in January. Mayor Rahm Emanuel moved workers’ compensation from the Finance Committee to City Hall’s Finance Department. Emanuel also launched an audit by accounting firm Grant Thornton. To the surprise of no one, a preliminary draft of that review has found “significant control deficiencies and weaknesses.” The audit describes inadequate controls to prevent cheating, insufficient training of employees to spot suspicious claims and no hotline that would let citizens report suspicions of fraud.
Lightfoot’s expectation is that Gallagher Bassett, a company that boasts of handling injury claims for some 4,800 organizations in 60 countries, will save Chicago taxpayers significant money by professionally evaluating claims, helping employees get back to work in reasonable time and perhaps reclaiming payments on fraudulent cases from the Burke years.
Just as important, public officials statewide stand to learn what happens when a big Illinois government puts an important backshop operation in the hands of an apolitical private-sector company accustomed to big caseloads.[
We’ll pause here while defenders of an ever-larger public sector dredge up stories of this or that company that didn’t do a good job for an Illinois government. But rising public opposition to property taxes, plus the enormous budget pressures driven by unfunded pensions, sooner or later will force Illinois governments to change how they do business. Think of all the backshop operations — payroll, benefits administration, purchasing — that private-sector contractors just might handle better, and for less money. At minimum, Chicago’s City Hall won’t incur pension expenses for Gallagher Bassett employees. That alone is a break for city taxpayers.Read: Audit of city’s $100 million-per-year workers’ compensation program »
So let’s all monitor how the company performs, and for what ultimate cost. We keep urging local governments to consolidate, to economize, to do what private-sector employers have been doing more aggressively for more years: Find new ways of serving citizens and employees.
Who knows, maybe this unanticipated experiment — this gift from Ed Burke — will show public officials and taxed-out citizens statewide that a lot of the work done in government offices ought to be done in the private sector. Gallagher Bassett, we’ll all be watching you.
Report on Chicago Comp Program Could Be Just the Start of More Investigations
I anit afraid of da feds Burke
Options By William Rabb (Reporter)
Tuesday, June 18, 2019 | 10,795 read | 0 | 24 min read
An examination of Chicago’s workers’ compensation program suggests that problems extend far and wide, from overpayments on claims, little attempt at subrogation, minimal fraud prevention efforts and a widespread lack of oversight.
Alderman Ed Burke
But watchdogs and fraud investigators say the report by the Grant Thornton accounting firm, released last week, may only scratch the surface, and more investigations and prosecutions are likely to follow in the months ahead.
Chicago’s new mayor, Lori Lightfoot, announced last week that the city had chosen internationally known Gallagher Bassett, a claims management firm with offices in Illinois, to administer the comp program. The firm will have to cull through thousands of claims to determine how many are legitimate, after years of allegations that Alderman Ed Burke ran the program as a jobs and patronage mechanism that awarded benefits to friends and denied compensation as punishment to others.
That means that some workers who have received benefits could soon find themselves under the microscope.
“Generally speaking, if someone is the beneficiary of a false claim, that violates the act, and it’s something we would look at,” said Robert Bauer, assistant deputy director of the Illinois Workers’ Compensation Commission’s fraud division.
The state commission’s statistics reinforce the Grant Thornton report that reducing fraud was not a priority for the city program. In the last three years, Chicago’s comp program has referred only two suspected fraud cases to the state — one in 2016 and one in 2017, Bauer said.
But the winds of change are blowing. After Burke was indicted in January on unrelated federal extortion charges, he stepped down as chairman of the City Council’s Finance Committee, which for three decades had managed the comp program.
Now with the program moved to the mayor’s office and more investigations expected, some of those Burke-favored workers who had been receiving benefits have suddenly returned to their city jobs and have given up benefits, said city worker Patrick McDonough.
“Some of the guys who were on the mystery ship have made miraculous recoveries,” said McDonough, the lead plaintiff in a federal lawsuit against Burke.
McDonough said he met with FBI agents last week and named five city workers who unexpectedly had returned to their jobs, some of whom had been receiving wage-replacement benefits for years. Since then, several other whistleblowers have given statements to federal investigators, he said.
McDonough, a plumber by trade who was injured in 2013 when his foot was smashed by a city truck, is on other side of the program’s alleged favoritism. After McDonough said he blew the whistle on alleged abuses in the city comp department, his own benefits were halted.
“I’ve been out of work for three-and-half years with no benefits whatsoever,” he said Monday.
The plumber said that he also believes Burke was able to keep prying eyes out of the city’s self-insured comp program for so long because he may have funneled workers’ compensation funds to other aldermen. Burke was able to secure city ordinances through the years that blocked audits of the comp program, an arrangement that has now changed.
Burke could not be reached for comment Monday.
Meanwhile, the examination by Grant Thornton, which was commissioned by the city’s Corporation Counsel after aldermen voted last December to move the comp program to the executive branch, highlights a number of questionable practices and what the report called “suspicious behavior.”
A summary was released to the public in May, but the full, 78-page report was not posted until last week. The accounting firm said the assessment stops short of being an audit, and it did not investigate alleged malfeasance. But the document does spotlight several concerns for 2017 and 2018.
Among the findings:
Clusters of claims. Most of the claims came from the southwest sector of Chicago, which includes Burke’s Ward 14.
“Further review of claims filed by claimants residing in these areas should be considered as the clusters could be indicative of a trend or a potential scheme,” the report said.
Benefits for nonclaims. Several claims were “record only” and should not have resulted in benefits. Yet benefits were paid on these, the report said. It did not indicate the dollar amount of the payouts, but noted examiners found that some adjusters’ average payout per claim was well above the average.
A further analysis “can assist in identifying adjusters with a potential misunderstanding of the payments requirements as defined by the program, adjusters with inadequate training or attention to detail, or other suspicious behavior,” the report said.
Out-of-state medical bills. More than 25% of all payments for medical bills were to providers outside Illinois. Some of that was explained by the program’s “preferred medical prescription company” handling most medication payments, which went to providers in Arizona, the report said. It did not provide further detail on that, but noted that when that was adjusted for, 10% of provider payments still went to medical firms outside the state.
Claims failed oversight tests. The accounting firm sampled 109 claims and tested them against state regulations, industry best practices and procedures in place in the city comp program. All claims failed at least three tests. Many were not reviewed by a supervisor in an initial compensability assessment, and others were not assigned to an adjuster within 24 hours.
“Grant Thornton identified three broad areas for improvement that may lead to more robust claims administration,” the report stated. These areas are “(1) developing thoroughly documented policies and procedures that encompass the entire claim administration process and include monitoring and oversight mechanisms, (2) instituting a formalized training regimen for all program employees, and (3) performing a continual assessment of the systems, protocols, and inter-departmental communication channels for operational effectiveness and efficiency to support the program’s ultimate goal of returning employees to work as quickly and safely as possible.”
Many claims, one law firm. One law firm, Hennessy & Roach, handled more claims appeals and litigation than any other. But the type of legal work the firm did was not evident, the report noted.
“Based upon the documentation made available to us, it is unclear as to the amount and duration of any legal support” for 23 claims that Grant Thornton examined. Of 18 other claims examined, no evidence could be found that the program director had authorized settlements.
The accountants recommended that the comp program develop a list of approved external law firms to handle claims cases, and develop criteria on when claims should be referred to attorneys.
Subdued subrogation. Of 11 claims tested, 10 showed no documentation that third-party recovery had been attempted, a standard practice for most insurance carriers.
Overpayments. The accounting firm tested a sampling of claims and found that six of 39 had been overpaid by a total of $14,073.
“All overpayments were related to indemnity benefits being paid after indemnity benefits were stopped or because of incorrect calculation of indemnity benefits,” the report noted.
The findings come as little revelation to those who have followed the city’s compensation program for years.
“There have always been rumblings about what goes on over there, so none of it surprises me,” said Norman Burdick, an attorney and insurance defense-firm investigator. “I suspect you’ll see a lot of prosecutions now.”
Burdick, a former investigator for the state Workers’ Compensation Commission, praised the selection of Gallagher Bassett to administer the city program and examine the thousands of outstanding claims.
“They are a very solid company and are good at handling claims, from what I have seen,” he said. “That’s very good news.”
He suggested that if suspected fraud cases were not handed over to the state compensation commission’s fraud unit, which still has only two investigators statewide, city officials should ask the Cook County prosecutor to take charge.
Another, long-term solution, he said, would be to allow a commercial insurance carrier to write the compensation coverage, which would provide a profit incentive to sniff out and prevent fraud, waste and abuse.
A
new audit of the program revealed Thursday showed 1,300 open cases, 600 of
which are decades old, costing taxpayers more than $294 million.
By
Mary Ann Ahern
Mayor
Lori Lightfoot announces a private company will take control of the city’s $100
million a year worker’s compensation program. NBC 5’s Mary Ann Ahern has the
details.
(Published
Thursday, June 13, 2019)
Lightfoot
Announces Changes to Workers Comp Program
An
outside firm will take over day-to-day operations of the city of Chicago’s $100
million workers compensation program, Mayor Lori Lightfoot announced, calling
out Ald. Ed Burke for running a system that’s “ripe for corruption.”
More
than 12 years ago, NBC 5’s Carol Marin and the Chicago Sun-Times detailed
repeated abuses of the workers compensation program. At the time, Burke, still
the long-time chair of the city’s Finance Committee, said he had
“confidence that the staff on the committee on finance has done the best
that it can in an admittedly very difficult system.”
A
new audit of the program revealed Thursday showed 1,300 open cases, 600 of
which are decades old, costing taxpayers more than $294 million.
“Under
no imagination of best practices did that make sense,” Lightfoot said
Thursday. “People have a right to expect when they file a legitimate
workers compensation claim, that it’s going to be resolved in a timely
fashion.”
The
audit also revealed that the staff is inadequately trained, there is no fraud
policy and no tip hotline in place to report abuse.
“A
lot of this is on paper,” Lightfoot said. “It’s not electronic, so
there’s going to be a massive undertaking to get our arms, our collective arms
around the universe of claims.”
The
third-party firm, Gallagher Bassett, will help create a program that is
“consistent with best practices across the country,” she said.
Among
responsibilities, Lightfoot has tasked Gallagher Bassett with adopting new
technology “to expedite claims review and control medical costs and
improve outcomes for injured employees.”
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 Tribune
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.”
CHICAGO (AP) – In another move to reform how the city
conducts its business, Mayor Lori Lightfoot says Chicago will transfer
day-to-day control of its $100 million-per-year workers’ compensation program
to a private company.
The program for decades was handled in secret under the
control of now-indicted Alderman Edward Burke. The long-time alderman was
charged in January with attempted extortion for allegedly trying to shake down
restaurateurs.
Lightfoot said Thursday a recent audit of the program by
accounting firm Grant Thornton found there were nearly 1,300 open workers’
compensation claims.
Lightfoot noted other cities long ago reformed and
professionalized their own programs. She said Chicago continued to operate in
an opaque and antiquated manner that even members of the City Council didn’t
know how the program worked.
By Craig WallThursday, June 13, 2019 6:17PMCHICAGO (WLS) — Mayor Lori Lightfoot announced a series of changes to the city’s workers’ compensation program after an independent audit exposed widespread issues.
“The system that Ed Burke ran was ripe for corruption,” Lightfoot said.
Burke controlled the workers’ compensation fund as the 30-year chair of the Finance Committee. Grant Thornton LLP audited the workers’ compensation program after Burke’s office was raided by the FBI and he was stripped of his powers.
“There were no controls in place according to Grant Thornton to prevent fraud, waste and abuse,” Lightfoot said.
According to a whistleblower who sued the city last year over Burke’s handling of the program, there were two sets of rules.
“The rules are: If you’re clouted, you’re injured, you get taken care of,” said Patrick McDonough a city Water Department employee currently on disability due to a workers’ compensation accident. “If you’re someone who’s not clouted or a whistleblower such as myself, your checks wouldn’t come in on time, they’d look for any excuse to stop your benefits.”
The report revealed there were more than 1,300 open cases, more than 600 of which are more than a decade old.
“During this time, Chicago taxpayers paid nearly $300 million on these open claims,” Lightfoot said.
The mayor announced a series of reforms including the use of best practices to handle claims, adopting new technology to expedite claims and control medical costs, implementing a comprehensive “return-to-work” program and creating a process to handle legacy claims.
McDonough discovered through a series of Freedom of Information Act requests that many of the people running the program for Burke were not qualified.
“The people Edward Burke was hiring at the Committee on Finance were dog walkers, were hair dressers were people who had no background in workers’ comp whatsoever,” McDonough said.
As part of the effort to reform workers’ comp, the city has hired an outside firm to help introduce new controls and procedures to make the system more accountable.
Lightfoot could not say how much the changes will save the city, but she says going forward it will operate with transparency and oversight by the City Council and the Inspector General’s office.
“The system that Ed Burke ran was ripe for corruption,”
Chicago Mayor Lori Lightfoot said Thursday, June 13, 2019. (WTTW News)
For a long time – decades – a program costing Chicago more
than $100 million a year was in the control of one alderman.
Ald. Ed Burke, the former chair of the City Council’s
Finance Committee, lost control of the workers’ compensation program after
prosecutors accused him of attempted extortion.
But Mayor Lori Lightfoot says that during that time, plenty
of damage was done – at a cost to taxpayers.
“When you have no structure and you have no oversight,
you’re not using best practices, you’re not managing claims on an electronic
basis, of course those kinds of situations are absolutely going to develop,”
Lightfoot said. “The system that Ed Burke ran was ripe for corruption.”
It’s not just the mayor’s opinion.
Lightfoot on Thursday made public an audit conducted by the
Grant Thornton firm. It found the city’s setup to be antiquated. Workers
administering the program didn’t have proper training. There aren’t clear
policies to handle claims.
Critics of Burke say it goes beyond simple mismanagement.
One city worker with an outstanding workers’ compensation
claim, plumber Patrick McDonough, said that Burke used the system to punish
whistleblowers like himself, and to reward political cronies.
Investigating whether there’s any truth to such claims, or
suggestions of potential criminal wrongdoing, was not within the audit’s scope.
Hundreds of cases are still unresolved, years after initial claims were made.
“I don’t think we know that yet,” Lightfoot said. “But
certainly as we look back at legacy claims we’re going to be on the lookout for
any kind of fraud or abuse of the program. But it’s a concern. Obviously when
you have a program of this magnitude that’s operated in the dark, with no
transparency for years, there’s absolutely a concern that decisions are being
made on something other than a merit basis.”
Burke did not a return a call to his ward office seeking
comment.
Lightfoot also announced Thursday she’s hiring a private
company, Gallagher Bassett, to run the program’s day-to-day operations. She
says the firm was chosen in a competitive process, but the contract is still
being finalized so she didn’t share how much Chicago will pay.
The City Council will maintain oversight.
By professionalizing and modernizing the program responsible
for paying claims to city workers, verified to have been injured on the job,
Lightfoot says Chicagoans can expect to realize “substantial” savings in the
long run.
Lightfoot says cleaning up workers’ comp is part of her plan
to clean up City Hall.
She’ll need to prove to residents she’s doing that, given
that – as she reiterated Wednesday after her second City Council meeting –
she’ll be planning to come to them, in some capacity, to pay more for
government services.
“I meant what I said on the course of the campaign. We have
a lot of hard choices we’re going to have to make with regard to city finances
and there’s no question that we’re going to have to come to the taxpayers and
ask for additional revenue,” Lightfoot said.
In another move to reform how the city conducts its business, Mayor Lori Lightfoot says Chicago will transfer day-to-day control of its $100 million-per-year workers’ compensation program to a private company.
The program for decades was handled in secret under the control of now-indicted Alderman Edward Burke. The long-time alderman was charged in January with attempted extortion for allegedly trying to shake down restaurateurs.
Lightfoot said Thursday a recent audit of the program by accounting firm Grant Thornton found there were nearly 1,300 open workers’ compensation claims.
Lightfoot noted other cities long ago reformed and professionalized their own programs. She said Chicago continued to operate in an opaque and antiquated manner that even members of the City Council didn’t know how the program worked.
By Craig WallUpdated an hour agoCHICAGO (WLS) — Mayor Lori Lightfoot announced a series of changes to the city’s workers’ compensation program after an independent audit exposed widespread issues.
“The system that Ed Burke ran was ripe for corruption,” Lightfoot said.
Burke controlled the workers’ compensation fund as the 30-year chair of the Finance Committee. Grant Thornton LLP audited the workers’ compensation program after Burke’s office was raided by the FBI and he was stripped of his powers.
“There were no controls in place according to Grant Thornton to prevent fraud, waste and abuse,” Lightfoot said.
According to a whistleblower who sued the city last year over Burke’s handling of the program, there were two sets of rules.
“The rules are: If you’re clouted, you’re injured, you get taken care of,” said Patrick McDonough a city Water Department employee currently on disability due to a workers’ compensation accident. “If you’re someone who’s not clouted or a whistleblower such as myself, your checks wouldn’t come in on time, they’d look for any excuse to stop your benefits.”
The report revealed there were more than 1,300 open cases, more than 600 of which are more than a decade old.
“During this time, Chicago taxpayers paid nearly $300 million on these open claims,” Lightfoot said.
The mayor announced a series of reforms including the use of best practices to handle claims, adopting new technology to expedite claims and control medical costs, implementing a comprehensive “return-to-work” program and creating a process to handle legacy claims.
McDonough discovered through a series of Freedom of Information Act requests that many of the people running the program for Burke were not qualified.
“The people Edward Burke was hiring at the Committee on Finance were dog walkers, were hair dressers were people who had no background in workers’ comp whatsoever,” McDonough said.
As part of the effort to reform workers’ comp, the city has hired an outside firm to help introduce new controls and procedures to make the system more accountable.
Lightfoot could not say how much the changes will save the city, but she says going forward it will operate with transparency and oversight by the City Council and the Inspector General’s office.
